FEDERAL COURT OF AUSTRALIA

Zdziarski v Telstra Corporation Limited [2015] FCA 207

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

THE COURT ORDERS THAT:

1.    The appeal be allowed with costs.

2.    The decision of the Administrative Appeals Tribunal delivered at Sydney on 28 February 2014 in Zdziarski v Australian Postal Corporation Ltd 2012/1067 be set aside.

3.    The matter be remitted to the Administrative Appeals Tribunal for hearing according to law.

4.    The Administrative Appeals Tribunal be reconstituted when conducting that hearing.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

REASONS FOR JUDGMENT

1. Introduction

1    Mr Zdziarski is a former employee of Telstra with whom he commenced working in 1973 as a technician. On 17 September 2001, he was injured at work when a table upon which he was leaning collapsed after one of its legs gave way. Mr Zdziarski fell backwards on to his left side with his legs spreadeagled. As a result of this fall he pulled muscles in his shoulder, ruptured a disc in his spine and suffered injuries to both his knees. Following intermittent periods of time off Mr Zdziarski was eventually retrenched in December 2003.

2    He made a claim for compensation which was accepted by Comcare in 2004. It concluded that the accident had aggravated pre-existing degenerative changes to his lumbar spine and knees, that it had caused meniscal tears to the right knee and an impingement syndrome in his left shoulder. None of this is in dispute.

3    The thirteen years which have passed since his original accident have been unpleasant for Mr Zdziarski to say the least. He has had operations on his knees and continuing pain in his lower back which radiates down into his buttocks, thighs and groins. He is no longer able to straighten his knees and cannot crouch, squat or kneel because of the pain. Various treatments which have been explored have proved largely ineffective. Recent scans of his spine have shown advanced disc degeneration and he has advanced arthritis in both knees. His partner left him and he now lives alone with his Rottweiler. In 2004 his treating doctor thought that he was depressed and prescribed anti-depressants. Over time he has also been prescribed powerful analgesics. He is not in good shape.

4    On 22 November 2010 Mr Zdziarski made a further claim for compensation on Telstra for major reactive depression, emotional stress and physical stress. This claim Telstra rejected and, after various intermediate reviews, he appealed to the Administrative Appeals Tribunal (‘the Tribunal’) which affirmed an earlier decision that the claim should be refused. It is from that determination that Mr Zdziarski now appeals to this Court.

2. The basic issue for determination on Mr Zdziarski’s claim

5    The basic issue, stripped of legal and medical terminology, is whether Mr Zdziarski is suffering from an emotional disorder of some description and whether, if he is, it has been caused by his employment with Telstra. Telstra accepts that Mr Zdziarski is suffering from a condition but it says this condition is substance abuse and that it was not caused by anything it did because the problem pre-dated Mr Zdziarski’s fall. There is an ancillary issue as to whether any substance abuse problem found to exist was caused by the treatment he was given for his fall, i.e., the drugs which he was prescribed by his treating physician, Dr Bergin.

6    There is no doubt that Mr Zdziarski is a heavy user of prescription medicines of the more serious variety. He says that his taking of prescription pain killers was itself caused by the injury inflicted upon him by Telstra’s collapsing table. Telstra says that it is true that he has only taken the prescription medicine since the fall, but says that he was a substance abuser prior to that and he has merely switched between substances. It points to a series of drink driving convictions before his fall to make good this proposition.

7    In resolving these debates the Tribunal was assisted by the opinions of three medical practitioners. The first was Mr Zdziarski’s treating doctor, Dr Bergin. Dr Bergin has been treating Mr Zdziarski since shortly after the accident. He gave evidence in his report of Mr Zdziarski’s painful travails and reported that he had needed to prescribe high doses of analgesics. He diagnosed him in 2004 as suffering from reactive major depression resulting from his crippled state and the failure of his relationship. He prescribed anti-depressants for a time.

8    Mr Zdziarski’s lawyers also sent him to see Dr Geoffrey Robinson, a psychiatrist. He concluded that he was suffering from an adjustment disorder with anxiety. Dr Robinson took a history of prescription drug use and a drinking history but concluded that his adjustment disorder was not the result of either.

9    Telstra required Mr Zdziarski to be examined by another psychiatrist, Dr Yvonne Skinner, who concluded that he had sustained a psychological/psychiatric condition, which was substance abuse. The substances were prescribed narcotic analgesics, benzodiazepine tranquilisers and possibly alcohol. She disagreed with Dr Robinson’s view that his anxiety was not caused by substance abuse.

10    When the matter came on for hearing before the Tribunal it was obliged to choose between these competing diagnoses and also to determine, in the event that it accepted one of them, whether it was caused by Mr Zdziarski’s employment. At the hearing, evidence was adduced about his prior history of alcohol abuse as well as material which indicated that he used the prescription medicines at much higher levels than the prescriptions provided for.

11    The Tribunal concluded that the report of Telstra’s psychiatrist, Dr Skinner, was to be preferred to the reports of Dr Bergin and Dr Robinson. It therefore found that Mr Zdiarski was suffering from the condition of substance abuse and not reactive depression (as Dr Bergin had suggested) or an adjustment disorder with anxiety (as Dr Robinson had thought). The Tribunal then reasoned that Mr Zdziarski’s history of alcohol abuse had commenced before his fall in 2001 and concluded that his substance abuse problem could not therefore have been caused by that fall. Mr Zdziarski contended as an alternate argument that if the Tribunal concluded that he was suffering substance abuse then it should find that it was caused by the treatment he had received for the injuries he suffered in the fall. The Tribunal rejected this argument too, finding that whilst the fall was the sine qua non of his taking of pain relief medicine it was not the ‘operative cause’ of his substance abuse.

12    It therefore affirmed the conclusion that his claim should be rejected.

3. The Appeal

13    An appeal to this Court only lies in respect of a question of law: s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). Mr Zdziarski’s lawyers identified two such questions. First, it was said that the Tribunal had applied the incorrect standard of causation in assessing whether the substance abuse problem was caused by his employment. It had applied a test of asking whether the substance abuse problem had been contributed to ‘to a significant degree’ by his employment when it should have asked whether it had been contributed to ‘to a material degree’. Secondly, the Tribunal asked itself the wrong question when considering whether the substance abuse condition was caused by the treatment he had received for the fall. It had asked itself whether it was an ‘operative cause’ when it should have asked itself whether it was a ‘material cause’. The first of these arguments should be accepted, the second not. Accordingly, the appeal must be allowed.

4. The first question: did the Tribunal apply the correct causation test in assessing whether Mr Zdziarski’s substance abuse problem was caused by his employment?

14    Mr Zdziarski’s claim for compensation was made under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (‘the Act’). The Act erects a no fault-system for workers’ compensation. An employee is entitled to statutory compensation ‘in respect of an injury suffered by an employee’ (s 14(1)). In ordinary parlance an injury connotes some sort of physical trauma but the Act has always extended the meaning of ‘injury’ to include a disease arising from employment as well. In this case, Mr Zdziarski’s initial descent from the table and his ensuing injuries were each an ‘injury’ but the mental ailments involved in the present case were diseases.

15    From the inception of the Act in 1988 there have been provisions specifying the connexion necessary to make good a claim for compensation between the disease suffered by an employee and the course of his employment. These provisions, however, changed sharply on 12 April 2007 with the entry in to force of the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2007 (Cth). Prior to that day the Act had required that the ailment suffered by an employee should have been contributed to ‘in a material degree’ by employment in order for it to qualify as a disease within the meaning of the Act: s 4(1), definition of ‘disease’ (as originally enacted). After 12 April 2007, however, this requirement was repealed and replaced with a new definition of ‘disease’ containing a new requirement that the ailment had to be contributed to ‘to a significant degree’ by an employee’s employment: s 5B(1). A ‘significant degree’ was defined to mean ‘a degree that is substantially more than material’: s 5B(3). This tightening of the causation standard followed the report of the Productivity Commission into workers compensation entitled National Workers Compensation and Occupational Health and Safety Frameworks (Report No 27, Canberra, 16 March 2004) which had recommended (at p 182) that workers’ compensation legislation should be reformed by the uniform introduction of a test of causation of significant contribution. On the second reading of the Bill introducing the amendments the responsible minister observed:

‘The act currently requires a material contribution by employment to a disease before compensation is payable. When originally enacted this provision was meant to establish a test requiring that an employee – and I quote from the then minister’s second reading speech in 1988 – ‘demonstrate that his or her employment was more than a mere contributing factor in the contraction of the disease’. The issue being addressed was – and again I quote from the then minister’s 1988 second reading speech – ‘the Commonwealth being liable to pay compensation for diseases which have little, if any, connection with employment’. Notwithstanding this clear expression of legislative intent, the courts have read down the expression ‘in a material degree’ to emphasise the causal connection between the employment and the condition complained of rather than the extent of the contribution itself.

The bill therefore includes an amendment to restore the initial legislative intent by requiring that an employee’s employment must have contributed in a significant way to the contraction or aggravation of the employee’s ailment.’

16    An issue naturally arose about when this new stricter test should apply from. This was dealt with in the legislation introducing the new stricter standard, the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2007 (Cth), in cl 41 of Sch 1 which provided:

‘(1)    The definition of disease in the Safety, Rehabilitation and Compensation Act 1988, as amended by this Schedule, applies in relation to:

(a)    an ailment suffered by an employee; or

(b)    an aggravation of such an ailment;

that the employee suffers on or after the day after this Act receives the Royal Assent.

(2)    For the purposes of subitem (1), an employee suffers an ailment or aggravation on the day determined under subsection 7(4) of the Safety, Rehabilitation and Compensation Act 1988.’

17    The date on which the amending legislation received the Royal Assent was 12 April 2007. Because of cl 41(2), the question is, therefore, whether the date determined by s 7(4) of the Act was on or after 12 April 2007. Section 7(4) provides:

‘For the purposes of this Act, an employee shall be taken to have sustained an injury, being a disease, or an aggravation of a disease, on the day when:

(a)    the employee first sought medical treatment for the disease, or aggravation; or

(b)    the disease or aggravation resulted in the death of the employee or first resulted in the incapacity for work, or impairment of the employee;

whichever happens first.’

18    The question of which test of causation applied in the instant case could only be answered by asking the question in s 7(4)(a), which was when did Mr Zdziarski first seek treatment, or the question in s 7(4)(b), viz, when did the disease first impair him. The Tribunal did not address either of these questions although an explicit submission was made to it that Mr Zdziarski had first consulted Dr Bergin in 2004. That submission, if correct, meant that the earlier and more lenient causation definition applied. The Tribunal entirely overlooked resolving this issue and instead simply assumed that it was the later, stricter definition which applied.

19    Telstra initially submitted that this was not so for three reasons:

(a)    the Tribunal had found that Mr Zdiarski was not suffering from his claimed ailments of major reactive depression, emotional stress and physical stress;

(b)    there was no evidence of any substance abuse prior to 12 April 2007; and

(c)    propositions (a) and (b) together with the Full Court’s decision in Smith v Comcare (2013) 212 FCR 335 at 339 [17], 342 [34] and 346-347 [54] meant that the Tribunal was not obliged to answer the s 7(4) questions.

20    Proposition (a) is correct but besides the point. The Tribunal did indeed reject the claimed ailments but the present inquiry arose in the context of it considering substance abuse as an alternative ailment. For the purposes of this inquiry, what it had found in respect of the claimed ailment was irrelevant.

21    I return to proposition (b) in more detail below. Insofar as proposition (c) is concerned, Telstra accepted in written submissions delivered after the hearing in a response to a query by me that Smith v Comcare had to be distinguished because there was no issue in that case about cl 41 of Sch 1 which required the s 7(4) question to be asked. It seems to me likely that cl 41 undermines the reasoning in Smith v Comcare, however, I do not need to go further than distinguishing it which both sides ultimately agreed that I should do. The Smith v Comcare argument, therefore, is not in play in this case as it was finally pursued in this Court.

22    That leaves in place my conclusion that the s 7(4) questions had to be answered and that the Tribunal did not do so. As a fall back position, Telstra submitted that the evidence before the Tribunal only permitted one answer to the s 7(4) questions to be given and that this was a date after the crucial date of 12 April 2007. This argument in effect conceded the Tribunal’s error but claimed that it was not material.

23    The debate which this engenders is not about what this Court thinks the correct date is. It takes as its assumed premise that the Tribunal did make an error by failing to answer the s 7(4) question but seeks to resist the appeal by arguing that no error in the result of the case occurred because the evidence before the Tribunal could permit only of an answer favourable to Telstra. Mr Zdziarski will be entitled to resist this argument if there was any evidence before the Tribunal favouring his position which it could sensibly accept.

24    To succeed, therefore, Mr Zdziarski only needs to show that there was some evidence that would lead to either of the s 7(4) questions being answered with a date prior to 12 April 2007. This is the consequence of the words ‘whichever happens first’ in s 7(4).

25    Mr Zdziarski is plainly entitled to succeed under s 7(4)(b) where success is understood in the sense just discussed. There were two aspects to the material which were of assistance to Mr Zdziarski on this issue:

(a)    a table prepared at the request of the Tribunal by Dr Bergin following the hearing which showed that Mr Zdziarski had been taking Panadeine Forte and Valium since early 2005. This table seems to have been included as part of Exhibit A11. It showed that in the period 17 March 2005 to 19 February 2007 Dr Bergin had prescribed Mr Zdziarski 550 Panadeine Forte tablets and 250 Valium tablets. This is substantial and may be of assistance in establishing the existence of a substance abuse problem for Mr Zdziarski prior to 12 April 2007; and

(b)    evidence that he had a drinking problem dating back to the 1970’s and 1980’s. Dr Skinner thought that Mr Zdziarski’s substance abuse problem was first manifest then because, as she said in her report of 4 July 2013, ‘[p]ersons who have a history of abuse of a substance often abuse other substances or transfer their preferences from one substance to another’.

26    Either of these is evidence putting Mr Zdziarski’s impairment prior to 12 April 2007. Mr Zdziarski did not contend for (b), no doubt, because it would place the substance abuse problem prior to the occurrence of his workplace injury. He is, however, entitled to have the Tribunal consider what he has to say about (a) and its interaction with s 7(4)(b). I cannot say that his case under (a) will not be accepted. The taking of very large doses of painkillers and benzodiazepine mood adjusters in 2006 may well justify a diagnosis of substance abuse at that time. It follows that Telstra’s submission that it was bound to win under s 7(4)(b) before the Tribunal cannot be correct. In those circumstances, the Tribunal did not answer the question in s 7(4) of the Act and there was evidence before the Tribunal that would have permitted an answer to the s 7(4)(b) question which was favourable to Mr Zdiarski. The appeal must be allowed with costs.

27    It is not, therefore, necessary to consider the position under s 7(4)(a). Had it been, it is likely that it would not have yielded any answer since Mr Zdziarski had never consulted a doctor about substance abuse.

5. The second question: did the Tribunal apply the correct causation test in assessing whether Mr Zdziarski’s substance abuse problem was caused by his course of treatment?

28    Here the issue was whether Mr Zdziarski’s substance abuse problem had resulted from the prescriptions he had been given for pain relief and depression by Dr Bergin. The test to be applied is set out in s 4(3) of the Act in these terms:

‘For the purposes of this Act, any physical or mental injury or ailment suffered by an employee as a result of medical treatment of an injury shall be taken to be an injury if, but only if:

(a)    compensation is payable under this Act in respect of the injury for which the medical treatment was obtained; and

(b)    it was reasonable for the employee to have obtained that medical treatment in the circumstances.’

29    This erects a causation requirement using the words ‘as a result of’. The Tribunal correctly identified this as the question at [61]:

‘Paragraphs (a) and (b) are satisfied; the issue to be determined is whether Mr Zdziarski’s substance abuse was “as a result of” treatment received for pain relief.’

30    It then went on to deal with the matter this way at [62]-[63]:

62.    Mr Edwards submits in effect, that the phrase “a result of” imposes a “but for” test. (For a discussion of the “but for” test see March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 per Mason CJ at 515–516). I do not agree. Hart v Comcare [2005] FCAFC 16; (2005) 145 FCR 29 is authority for the proposition that the phrase “a result of” in the context of the Act, means an operative or material cause. The “but for” test imposes a low threshold that merely relates to a condition or factor that is necessary but not, by itself, sufficient to establish causation. The test under s 4(3) requires a determination of whether an operative cause of Mr Zdziarski’s substance abuse was the treatment he received for his accepted injury (Hart at 33). There is no requirement that the treatment be the sole, dominant or proximate cause of the substance abuse (Roncevich v Repatriation Commission [2005] HCA 40; (2005) 222 CLR 115 at 121).

63.    But for the injury, Mr Zdziarski probably would not have had the need for pain relief medication. While that treatment provided Mr Zdziarski with the opportunity to take excessive dosages of prescription medication, in my opinion it was not an operative cause of his substance abuse.

31    I do not read Hart v Comcare (2005) 145 FCR 29 at 33 (‘Hart’) as itself authority for the proposition that the expression ‘as a result of’ requires the presence of an operative or material cause. There was no issue in that case as to what the standard of causation actually was and the Court reached no conclusion about that matter. The Act contained a carve out from the ordinary right of an employee to obtain compensation where the injury in question arose ‘as a result’ of an unsuccessful attempt to obtain a promotion. The Tribunal in Hart had accepted that there were two operative causes of the injury one of which, by itself, would have given rise to a right to compensation. The only question in Hart was whether the fact that there were two operative causes of the injury – one of which removed the entitlement to compensation, one of which did not – meant that compensation could not be recovered in respect of the non-excluded operative cause. The Court concluded that compensation for it could not be recovered. The appeal happened against a backdrop in which it had already been found that there were two operative causes and it had no occasion to consider what the words ‘as a result of’ required and it did not do so apart from its consideration of the dual causation issue. Hart is capable of operating harshly particularly in cases where the role of the failure to get a promotion in causing the injury is minor (although ‘operative’) whereas the injury is largely caused by another (compensable) cause (such as work place stress). In such cases, as long as the failure to obtain a promotion is an operative cause it defeats the entire claim. The real point in Hart is that the carve out in what is now s 5A of the Act is not limited to situations where the cause is predominant, principle or sole.

32    Nevertheless, two subsequent Full Courts have assumed that Hart does establish that the causes contemplated by the words ‘as a result of’ are ‘operative’ causes: Commonwealth Bank of Australia v Reeve (2012) 199 FCR 463 at 481-482 [55]; Drenth v Comcare (2012) 128 ALD 1 at 7 [29]. Quite apart from those decisions I would, in any event, reach the same conclusion. The words ‘as a result of’ indicate a causal connexion which gives rise to a question of fact: Fagan v. Crimes Compensation Tribunal (1982) 150 CLR 666 at 673. There is really no point trying to break this test down into further linguistic formulas. For myself, I do not understand ‘operative’ (as suggested in Commonwealth Bank of Australia v Reeve and Drenth v Comcare) as having any different or further meaning. The only real guidance one can give in cases of this kind is to point out what the words do not mean. They do not, for example, connote a mere satisfaction of the ‘but for’ test – if it were otherwise then s 4(3) would permit recovery where an employee was injured at a doctor’s rooms by a falling satellite; nor does ‘as a result of’ connote a necessity for the cause to be direct rather than indirect (Fagan v Crimes Compensation Tribunal); nor does it necessarily import a requirement that the cause be the sole, predominant or principle cause: Roncevich v Repatriation Commission (2005) 222 CLR 115 at 126 [27]. Apart from those negative matters it is safest to ask the question posed by the statute: was the injury suffered as a result of medical treatment.

33    I do not think that the Tribunal departed from this approach in its reasons at [61]-[63]. For completeness, I reject Mr Zdziarski’s submission that Hart stands for the proposition that ‘as a result of’ requires a test of ‘material contribution’ for the reasons just given.

6. Conclusion

34    The appeal should be allowed with costs and the decision of the Tribunal set aside. The matter should be remitted to the Tribunal for hearing. In view of the negative views about Mr Zdziarski’s credit reached by the former Tribunal member, the Tribunal should be freshly constituted to avoid any apprehension of bias.

Associate:

Dated:    13 March 2015