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COLES SUPERMARKET PTY LTD -v- KOVACEVICH [ 2015] WADC 87  (31 July 2015)

Last Updated: 5 August 2015

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION : PERTH

CITATION : COLES SUPERMARKET PTY LTD -v- KOVACEVICH  [2015] WADC 87 

CORAM : DERRICK DCJ

HEARD : 17 JUNE 2015

DELIVERED : 31 JULY 2015

FILE NO/S : APP 126 of 2014

BETWEEN : COLES SUPERMARKET PTY LTD

Appellant

AND

KARL KOVACEVICH

Respondent

ON APPEAL FROM:

For File No : APP 126 of 2014

Jurisdiction : WORKERS' COMPENSATION ARBITRATION SERVICE (WA)

Coram : ARBITRATOR RUTHERFORD

Citation : A8817

Catchwords:
Workers' compensation - Appeal from Workers' Compensation Arbitration Service - Appeal against finding of total incapacity - Whether appeal involves question of law - Arbitrator found total incapacity by reason of 'illness conviction' - Whether evidence of illness conviction adduced - Whether arbitrator erred in finding total incapacity by reason of illness conviction in absence of evidence - Whether arbitrator erred in making a finding on issue that was not the subject of conciliation proceedings

Legislation:
Worker's Compensation and Injury Management Act 1981 (WA)

Result:
Leave to appeal granted
Appeal allowed

Representation:

Counsel:

Appellant : Mr D R Clyne

Respondent : Mr T J Hammond

Solicitors:

Appellant : Kott Gunning

Respondent : Simon Walters

Case(s) referred to in judgment(s):

Atanasoska v Inghams Enterprises Pty Ltd [2009] WASCA 17

Ausden Joinery v 'P.J.' [2011] WACC C4–2011

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321

BHP Billiton Iron Ore Pty Ltd v Brady [2008] WASCA 250

Catholic Education Office of WA v Granitto [2012] WASCA 266

Fox v Percy [2003] HCA 22; (2003) 214 CLR 118

Glennan v Commissioner of Taxation [2003] HCA 31; (2003) 77 ALJR 1195

Kaur v Victorian WorkCover Authority [2014] VSCA 300

Michael v Panetta (Unreported, WASCA, 18 December 1995, Library No 950700)

Pacific Industrial Co v Jakovljevic [2008] WASCA 60

Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361

Rodriguez v Telstra Corporation Limited [2002] FCA 30

SDR Australia Pty Ltd v Nedic [2009] WACC C3-2009

1 DERRICK DCJ: This is an application for leave to appeal against the decision of Arbitrator Rutherford (the arbitrator) that the respondent is to be paid weekly payments of compensation for total incapacity from 22 June 2009.

Background to the appeal

2 In 2006 the respondent was employed as a butcher by the appellant.

3 On or about 12 October 2006 the respondent suffered a groin injury while at work (the injury). The injury was subsequently diagnosed as bilateral indirect inguinal hernias.

4 The respondent made a claim for workers' compensation pursuant to the provisions of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act). The appellant admitted liability and paid expenses associated with the injury. The respondent did not initially make any claim for weekly payments of compensation.

5 The respondent continued working for the appellant despite the injury. During this time the respondent obtained medical advice in relation to the injury. The advice was to the effect that the hernias were relatively small and that surgery was not required.

6 The respondent stopped working for the appellant in September 2008. He did so because he found that the physical demands of his work as a butcher were causing him to suffer increased pain in his groin region.

7 A few months later the respondent started working for Woolworths as a shelf filler. However, on 22 June 2009 the respondent stopped working for Woolworths due to further and increased groin pain.

8 After the respondent left Woolworths it was discovered that the hernias had developed. They were larger than they had been in October 2006.

9 On 3 October 2009 the respondent underwent repair surgery for the injury. The repair surgery was performed by Mr Graeme Clarke, general surgeon.

10 The respondent subsequently made a claim under the Act for the recurrence of the injury and the costs of the surgery. The appellant admitted liability for the recurrence and paid the costs of the surgery.

11 After the surgery the appellant wrote to the respondent asking for information about his rate of pay at Woolworths so that weekly payments of compensation could commence. The requested information was not provided by the respondent. Consequently the appellant did not commence making weekly payments despite having admitted liability for the recurrence of the injury.

12 Despite the repair surgery, the respondent has not returned to work in any capacity since ceasing his employment with Woolworths.

13 On 23 October 2009 the respondent lodged an application for arbitration seeking an order for weekly payments of compensation for total incapacity from 22 June 2009 at the rate of $784.22 gross per week plus statutory allowances arising from the recurrence of the compensable injury. The respondent therefore sought an order for weekly payments for a period of approximately five years to the date of the arbitration and beyond. The respondent did not make an alternative claim for partial incapacity.

14 The application went to arbitration on 1 August 2014.

15 At the arbitration hearing the appellant disputed the claim substantially on the basis that on all of the available medical evidence the respondent had recovered from the surgery and the injury by December 2009 at the latest. The appellant also contended that the respondent had failed to mitigate his loss by failing to seek further medical treatment or employment.

16 On 3 December 2014 the arbitrator handed down his decision. He published written reasons. The arbitrator found that the respondent had been totally incapacitated since the date of the surgery. He ordered that the appellant pay to the respondent weekly payments of compensation for total incapacity from 22 June 2009. He also ordered that the appellant was liable for any expenses pursuant to cl 17 to cl 19 of sch 1 of the Act.

17 In arriving at his decision the arbitrator, critically in the context of the present appeal, made the following findings:

1. The surgery resulted in the respondent being totally incapacitated 'on a physical basis' from the date of the surgery to March 2010, this being the period of post-surgery recuperation: [138], [198];
2. From March 2010 the respondent was not totally incapacitated 'from a physical point of view' or from a 'physical perspective': [138], [140];
3. The appellant had failed to meet its onus of proving that the respondent had failed to mitigate his loss: [170];
4. The respondent developed an 'illness conviction' which originated shortly after the surgery and which continued to the date of the arbitration: [171], [188] – [189], [198]; and
5. Consequently, the injury was totally incapacitating: [190].

18 It is apparent from the arbitrator's reasons that he considered an illness conviction to be a genuine belief on the part of the respondent that he was and had been in pain and by reason thereof incapacitated to a greater extent than was organically justified by the injury: [179], [189].

Grounds of appeal

19 Against the above background the appellant seeks leave to appeal against the arbitrator's decision on two grounds. The grounds are expressed in the following terms:

1. The arbitrator erred in law in that having found:

(i) that the respondent had not established that from a physical perspective he was totally incapacitated for work; and

(ii) that there was no evidence of partial incapacity before him,

then found that the respondent was totally incapacitated for work from an 'illness conviction' in circumstances where there was no evidence at all before him of such a condition and no evidence at all that such a condition, if it existed, incapacitated him from employment.

2. The arbitrator erred in law in making findings at arbitration in respect to the respondent's incapacity from 22 June 2009 to 3 October 2009, when that issue had not previously been conciliated.

20 The appellant seeks an order that the respondent's application for weekly payments be dismissed.

Nature of the appeal

21 The appeal is brought under s 247 of the Act. Section 247, so far as is relevant, provides as follows:

(1) If written reasons for an arbitrator's decision under Part XI in respect of a dispute are given to a party to the dispute (whether as required by section 213 (3) or otherwise), the party may, with the leave of the District Court, appeal to the District Court against the decision.
(2) Subject to subsection (3), the District Court is not to grant leave to appeal unless —

(a) in the case of an appeal in which an amount of compensation is at issue —

(i) a question of law is involved and the amount at issue in the appeal is both —

(I) at least $5 000 or such other amount as may be prescribed by the regulations; and

(II) at least 20% of the amount awarded in the decision appealed against;

or

(ii) a question of law is involved and, in the opinion of the District Court, the matter is of such importance that, in the public interest, an appeal should lie;

and

(b) in any other case, a question of law is involved.

...
(4) An application for leave to appeal cannot be made later than 28 days after the day on which the written reasons for the decision appealed against were given to the party making the application.
(5) An appeal under this section is to be by way of review of the decision appealed against and, except as provided by this Part or section 267, is to be conducted in accordance with the rules of court of the District Court.
(6) Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against cannot be given on an appeal to the District Court except with the leave of the District Court.
(7) On hearing an appeal made under this section, the District Court may —

(a) affirm, vary, or quash the decision appealed against, or substitute, and make in addition, any decision that should have been made in the first instance; and

(b) subject to section 267, make any further or other decision, as to costs or otherwise, as the District Court thinks fit.

22 In the present appeal the amount of compensation is in issue: s 247(2)(a). Further, it is not in dispute that the amount of compensation in issue (at least insofar as the first ground of appeal is concerned), exceeds $5,000 and is more than 20% of the amount awarded in the decision appealed against: s 247(2)(a)(i).

23 As is apparent from s 247(2)(a), leave to appeal cannot be granted unless the ground of appeal 'involves' a question of law.

24 If the pre-conditions specified in s 247(2)(a)(i)(I) and s 247(2)(a)(i)(II) are met there is no limit or restriction placed on the discretion to grant leave to appeal, other than that the appeal involve a question of law. If a question of law is involved leave should be granted if, in all the circumstances of the particular case, it is in the interests of justice that there should be a grant of leave: Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; (2007) 33 WAR 361 [16]; BHP Billiton Iron Ore Pty Ltd v Brady [2008] WASCA 250 [20]. If no question of law can be identified in the appeal there is no jurisdiction in the court to grant leave to appeal: Pacific Industrial Co v Jakovljevic [2008] WASCA 60 [17]; Catholic Education Office of WA v Granitto [2012] WASCA 266 [54].

25 An appeal 'involves' a question of law where either an error of law, or an error of mixed law and fact is involved: BHP Billiton Iron Ore v Brady [3]; Atanasoska v Inghams Enterprises Pty Ltd [2009] WASCA 17; Catholic Education Office of WA v Granitto [53]. An appeal does not 'involve' a question of law merely because a party asserts that it does: Glennan v Commissioner of Taxation [2003] HCA 31; (2003) 77 ALJR 1195 [14]; BHP Billiton v Brady [1], [15], [19]. Thus in Atanasoska v Inghams Enterprises Buss JA (Wheeler & Pullin JJA agreeing) said [21]:

If a ground of appeal by a party, properly analysed, does not involve a question of law, linguistic gymnastics in the formulation of the ground cannot alter the position. A ground that asserts a decision is against the evidence and the weight of the evidence does not raise an issue involving a question of law. A court, tribunal or statutory decision-maker does not make an error of law merely because the court, tribunal or decision-maker finds facts wrongly or upon a doubtful basis. Generally, see Paridis v Settlement Agents Supervisory Board [53] - [55] and the cases there cited.

26 If some question of law is involved, the whole decision appealed from is open to review and not merely the question of law identified: Pacific Industrial Co v Jakovljevic [18], [30], [31]. The review is neither a hearing de novo nor an appeal in the strict sense: Pacific Industrial v Jakovljevic [20], [30], [31]. Rather the review must be conducted on the materials before the arbitrator: Pacific Industrial v Jakovljevic [18], [30], [31]. The court must within the constraints marked out by the nature of the appellate process conduct a real review: Pacific Industrial v Jakovljevic [20], [24].

27 Where leave is granted and a review is undertaken, an appellant must still, for the purposes of the review, provide a proper basis for disturbing the arbitrator's decision by pointing to some error in it. An appellant may not simply invite the court to ignore the arbitrator's decision and start again with a view to having the court substitute its own decision for that of the arbitrator: Pacific Industrial v Jakovljevic [20], [26]; Catholic Education Office of WA v Granitto [57].

Ground 1

Question of law involved

28 In Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 [87], Mason CJ said:

The question whether there is any evidence of a particular fact is a question of law ... Likewise the question whether a particular inference can be drawn from facts found or agreed is a question of law ... This is because, before the inference is drawn, there is the preliminary question of whether the evidence reasonably admits of different conclusions ... So, in the context of judicial review, it has been accepted that the making of findings and the drawing of inferences in the absence of evidence is an error of law ...

29 The complaint contained in appeal ground 1 is, in essence, that the arbitrator erred by finding that the respondent had developed an illness conviction and was consequently totally incapacitated for work when there was no evidence capable of supporting such a finding. It follows that the pleaded ground of appeal clearly involves a question of law and that consequently the pre-conditions for the grant of leave to appeal specified in s 247(2)(a) are met in the present case.

30 Before turning to deal with the merits or otherwise of the ground of appeal it is necessary, in order to place the ground and the arguments advanced in relation thereto in context, to refer to the relevant evidence that was adduced at the hearing, the circumstances in which the illness conviction issue was raised at the arbitration hearing, and the arbitrator's reasons for finding that the respondent had developed an illness conviction.

Evidence adduced at the hearing

31 At the arbitration hearing the respondent gave evidence in support of his claim. The respondent's evidence-in-chief was adduced by the tendering of two proofs of evidence signed by him and dated 4 September 2013 and 26 March 2014.

32 The respondent also adduced in support of his claim evidence from his general practitioner, Dr David Collis, from his treating surgeon Mr Clarke, and from a medico-legal consultant, Dr David Kennedy. This medical evidence was adduced by tendering with the appellant's consent the various reports provided by each of these medical practitioners. The appellant did not require any of the medical practitioners to attend the hearing for cross-examination.

33 The appellant adduced evidence from consultant pain specialist Dr Geoffrey Gee, from consultant occupational physician Dr Brian Dare, and from another of the respondent's general practitioners Dr Neal MacDonald. The evidence of these medical practitioners was adduced by tendering with the respondent's consent the various reports prepared by each of them. The respondent did not require any of the medical practitioners to attend the hearing for cross-examination.

Respondent's evidence

34 The respondent's relevant evidence-in-chief, as set out in the more recent of his two proofs of evidence, was, in substance, as follows.

35 He stopped working as a butcher for the appellant because he could not lift and had problems standing in the one spot.

36 He had problems working in night fill at Woolworths because he could not lift the boxes. He had difficulty pulling the pallets. He had problems crouching and putting things on shelves.

37 Since the occurrence of the injury he has always suffered pain and discomfort in his left and right groin. He has small areas of sensory change in the left upper thigh and also in the right groin. He has discomfort when he sleeps and he tends to use a cushion between his legs at night. When straining to go to the toilet his groin pain increases. He experiences intermittent throbbing pain in his left and right groin, radiating to his testicles and penis. He experiences stinging and burning sensations. He has partial left thigh numbness and partial right groin numbness. The pain also radiates through both his hips and his stomach below his belly button. He experiences pain when his bladder is full. He has continued to see his general practitioner, Dr Collis, every three months for medication as a result of pain after surgery.

38 Although Mr Clarke and Dr Dare have said that he is fit to return to work on a restricted basis, he is not sure that this is possible with his current symptoms. He fears that he will not be able to find any suitable employment which will accommodate his limitations resulting from the injury.

39 The injury has severely affected his day-to-day living. He is unable to sleep properly due to pain. He cannot lift anything because it causes him intense pain in his groin area. He has to take pain medication daily to manage his pain. He is unable to work and have a productive life. He is not happy with the outcome of the operation and the constant pain that he has been left with. However, he is always hopeful that he will make a recovery and return to normal.

40 In cross-examination the respondent in substance maintained his position as set out in his proof of evidence. Relevantly, he also said the following.

41 He used to play soccer, cycle, hike and swim. However, he has stopped engaging in these activities because if he does his pain gets worse. The last time he engaged in these activities was in mid-2009.

42 If he goes to lift something his pain level, on a scale of 1 to 10 is 9 or 10. The pain will then last for most of the day at a worse level than what he would ordinarily experience.

43 He still believes he is going to get better.

44 He takes prescribed medication in the form of Panamax and Endep. He takes the Endep because he cannot sleep at night due to his pain.

45 He is satisfied that his hernias have been repaired. However, he is not satisfied as to what is still causing the pain in his groin area.

46 Dr Collis did at some point refer him to a pain specialist. However, because Wesfarmers had stopped paying for his 'medication and everything' he had no way to pay for a consultation with a pain specialist. He did not know that he could organise to see a pain specialist through the public health system. He was not told that he could do this by either Dr Collis or the solicitor who was handling his workers' compensation claim.

47 The medical practitioners who have said that he is able to return to work are entitled to their opinions. He can only explain how he feels. He knows how he feels and what he lives with and he does not really care what anyone else thinks.

48 He did see a urologist, a Dr McRae, because of a sharp pain in the central area of the groin in his bladder. The urologist told him that the bladder was intact and had not been damaged. He still gets the pain in his bladder now when his bladder is full. He does not know how he paid for the urologist. He does not know if he had to scrape the money together or whether he was still at that stage getting paid by Wesfarmers.

Respondent's medical evidence

49 The respondent tendered two reports prepared by Dr Collis dated 22 February 2013 and 20 June 2014.

50 In his report dated 22 February 2013 Dr Collis stated that there were currently no findings of note on his physical examination of the respondent. He then proceeded to say the following:

Current symptomatology is his complaint of groin and lower abdominal pain which is associated with physical activities. I note that this complaint has been of long standing, having been mentioned in previous medical reports from back in 2008 which I have been able to read. Mr Kovacevich relates these pains to the repair of his inguinal hernias in late 2009. He has subsequently seen a Urologist in relation to this but there have been no significant abnormalities found in his urinary tract which enlighten us as to the origin of his discomfort. The ongoing management of this symptom has been frustrated by his inability to see a pain specialist to whom he was referred in October 2011. Karl's belief in this regard is that he is unable to see the specialist because the insurer is not willing to provide recompense for the expenses involved.

51 I pause here to note that Dr Collis' reference to the respondent's inability to see a pain specialist and his reasons for not doing so is consistent with the evidence that the respondent gave in relation to this issue.

52 In his report dated 20 June 2014 Dr Collis said the following:

1. Clinical findings – these remain essentially unchanged since my report of last year. There are no major abnormalities to be found on physical examination and there has been no change since February last year. As has been noted in the various reports which have been done by various specialists over the years, Karl does not have problems walking or doing simple everyday activities, and this has not, to my knowledge, ever been in contention. As noted in the various reports, there has never been any claim by Karl that his walking, squatting and other normal daily movements was affected. The contention has arisen due to his claimed inability to do tasks which require heavy lifting and carrying. I also note in several of the reports that mention is made of the level of his anxiety, and it does not appear that this has been seriously considered in relation to his overall symptomatology.
2. Again, the symptomatology has not changed significantly in the last 12 months or more, and relates to the dysaesthesiae and pains in the groin area associated with heavy physical activities, not with light day-to-day activities. As you are no doubt aware from previous correspondence, despite numerous investigations and examinations by specialists in various disciplines, there is no physical evidence with which to back up his reported symptoms. The issue of pain management was first raised, that I am aware of, by Graeme Clarke in his letters of review in 2010, shortly after the bilateral hernia repairs were performed.
3. The area of work capacity also remains contentious, as to whether or not his symptoms are of sufficient severity to prevent him from working. Again referring to various reports related to the surveillance undertaken in 2010 and 2011, this shows that he has no difficulty, as stated above, with walking and other general light daily activities. However, lifting animal carcasses and various other activities related to butchery does not come under the category of light general daily activities, and his capacity in this regard would be best assessed with a graded physical capacity assessment. Further, since there appears to be a large amount of anxiety related symptomatology which has been referred to at various times in the reports about him over the years, it would seem reasonable to seek to have some sort of thorough psychological assessment done in the [sic] regard.

...

7. Benefits of treatment to date – His hernia repair has been a success from a physical point of view, he has no recurrence of hernia demonstrated on ultrasound since the date of the surgery. Furthermore, physically the wounds from the surgical repair have healed as expected. As mentioned above, numerous examinations and investigations by other specialists have also not shown any definable abnormalities to explain the current impasse. As to psychological assessment and counselling, I am not in a position to provide any estimate as to the cost of any such investigation/treatment programming as I am not qualified as a psychologist.

53 The reports of Mr Clarke that were tendered by the respondent are dated 29 September 2009, 21 October 2009, 22 February 2010 and 4 August 2010.

54 In his report dated 29 September 2009 Mr Clarke referred to his initial examination and assessment of the respondent and the fact that he had arranged for the respondent to undergo surgery.

55 In his report dated 21 October 2009 Mr Clarke stated that he had performed mesh repair of the respondent's bilateral inguinal hernias, that the respondent had made an excellent recovery, that the wounds were 'very satisfactory', and that the respondent was slowly returning to normal activities. He stated that he thought that the respondent should be off work from 3 October 2009 to 14 November 2009, and then be on light duties for a further month after that. He stated that by that stage the respondent should 'really have the capacity for working as a butcher'.

56 In his report dated 22 February 2010 Mr Clarke stated that he had reviewed the respondent on 18 February 2010. He then said the following:

He continues to present with neuralgia. He pointed out that it is 19 weeks since his surgery. I don't think there's a structurally correctable cause for his symptoms. I have arranged for him to have an ultrasound of his groin to confirm the integrity of his repair. I think that he will require pain specialist assistance.
The whole matter is now compounded by him having initiated litigation. He seemed surprised when I told him that this would extend the time it's going to take him to get better, but, regrettably, that is the truth. We will see him with the results of his ultrasound.

57 In his report dated 4 August 2010 Mr Clarke stated that the nature of the respondent's ongoing groin pain was not clear cut. He said that the ultrasound scans done on 5 March 2010 and 5 July 2010 showed some thickening of the conjoint tendon but no other substantive abnormality. He confirmed on the basis of the two ultrasound reports, and also on the basis of his clinical examination of the respondent, that the respondent had had a satisfactory repair of his hernias. He then went on to say the following:

It's not clear quite what the cause of this man's pain is.
That he has some thickening within the conjoint tendon is to be expected; after all he has mesh on both sides of the conjoint tendon for which an inflammatory response is created, and, at the end of the day it is in fact his fibrotic reaction on scar tissue that forms the strength of his repair.
Whether or not this is causing pain, I don't know. Whether there's some nerve entrapment, I don't know. The occasional patient does get some chronic groin pain and, regrettably, this seems more prevalent in those involved in workers' compensation cases.
By and large, the majority of chronic groin pains after inguinal hernia surgery have resolved within twelve to twenty four months. There is a small percentage of chronic unresolved groin pain.

58 The reports of Dr Kennedy that were tendered by the respondent are dated 23 March 2010, 6 September 2010 and 12 March 2014.

59 In his report dated 23 March 2010, which was addressed to the respondent's solicitor and which related to his clinical assessment of the respondent conducted on 9 March 2010, Dr Kennedy set out the respondent's account of his symptoms. The account was broadly consistent with the evidence subsequently given by the respondent at the arbitration as to his pain symptoms. Dr Kennedy then went on to make the following comments in response to questions that had been asked of him by the respondent's solicitor:

1. Mr Kovacevich is unfit for his pre-accident employment because of the persistent problems in both inguinal regions, despite undergoing open indirect inguinal hernia repairs.
2. Mr Kovacevich is fit to engage in more sedentary work provided he avoids heavy lifting or repetitive bending, twisting and turning and straining his abdomen and inguinal region under load or stress. Mr Kovacevich should undergo further retraining to enable him to return to modified occupational duties of a more sedentary nature.
3. Mr Kovacevich is fit to engage in sedentary occupational duties that avoid excessive load and stress on his abdominal and inguinal regions up to 38 hours per week.
4. Mr Kovacevich is fit to engage in occupational duties of a modified nature up to five days per week.

60 In his report dated 6 September 2010, which was a 'report on evaluation of the degree of permanent impairment' prepared pursuant to s 146H(1) of the Act, Dr Kennedy stated that on examining the respondent's abdomen and inguinal regions:

There were bilateral oblique ... surgical scars with swelling in the inguinal region bilaterally, associated with tenderness in both inguinal regions, with tenderness to palpation around the entire inguinal regional bilaterally, with altered sensation to light touch and pin prick around the inguinal region just distal to the surgical scar.

61 Further, under the heading 'Diagnosis and Impairments' Dr Kennedy stated that the respondent continued to have pain 'in both inguinal regions in the distribution of the ilio-inguinal nerve with significant dysesthesia in the distribution of the ilio-inguinal nerve resulting in a permanent impairment of the left and right upper extremities'.

62 In his report dated 12 March 2014 Dr Kennedy confirmed that he had re-examined the respondent on 11 March 2014. He stated that since he had last seen the respondent on 9 March 2010 there had been no significant changes to the 'constant throbbing, stinging, burning pain across his inguinal region extending up his lower abdominal region to below the umbilicus and across towards the anterior pelvic region'. He stated that the respondent also had 'radiating pain into his scrotum, testicles and penis'. Dr Kennedy then proceeded to say the following:

On re-examining the lower abdominal, pelvic and inguinal regions, there were two horizontal surgical scars slightly oblique ... There was significant induration around the surgical scar on the right with involvement of local cutaneous nerves, although there was no radiating pain into the upper inner thigh ...
Mr Kovacevich's function or capacity for work is clearly restricted and this in turn restricts his vocational capacity and vocational options.
...
Mr Kovacevich needs to undergo further evaluation with a MRI scan of his lower inguinal region bilaterally and then referral to an appropriate pain management specialist for treatment for the ongoing problems involving the diathesia in both inguinal regions with clinical signs of scarring and induration, particularly around the right oblique inguinal surgical scar. There are no signs of recurrence of the inguinal hernia bilaterally but Mr Kovacevich's ongoing problems restrict him significantly in regard to any functional activities that load the lower abdominal musculature, causing a rise in the intra-abdominal pressure in the lower abdominal and inguinal regions.
If Mr Kovacevich is to return to occupational duties and it is my opinion that Mr Kovacevich wants to return to the workforce, then he needs to undergo the appropriate evaluation, assessment and treatment for the ongoing problems involving both inguinal regions.
This situation has been going on for almost eight years and since Mr Kovacevich was assessed in relation to his level of permanent impairment on 9 March 2010 he has not undergone any further specific treatment for the ongoing problems involving both inguinal regions.

Appellant's medical evidence

63 I turn to the medical evidence adduced by the appellant at the arbitration.

64 The appellant adduced two reports of Dr MacDonald, one dated 1 February 2010 and the second dated 29 July 2010.

65 In his report dated 1 February 2010 Dr MacDonald, in response to questions asked of him, said the following:

1. Karl has bilateral scars from his hernia repair.
2. He complained of pain around the scar and his genitalia.
3. Karl should be able to return to work but to avoid heavy lifting and straining.
4. Karl has not worked since the initial complaint of groin pain
5. Karl has attended the surgery in June, November, December 2009 and January 2010.

66 In the second of the reports Dr MacDonald, again in response to questions asked of him, confirmed that the ultrasound of 5 July 2010 revealed that there was no recurrence of the hernia, stated that the respondent was still complaining of pain in his groin and supra pubic region which meant that he could not work full-time/part-time, stated that the respondent had said that he was unable to even do part-time butcher work, and stated that the respondent may be able to work in some other occupation which does not involve lifting or heavy work.

67 The appellant tendered a number of reports prepared by Dr Dare dated 30 November 2009, 4 March 2010, 22 March 2010, 19 July 2010, 18 August 2010, 16 November 2010 and 1 August 2011. It was the appellant that had arranged for the respondent to be reviewed by Dr Dare. It is not necessary for me to refer to the content of each of Dr Dare's reports. It suffices for me to make the following comments.

68 In the first of his reports dated 30 November 2009 Dr Dare, having examined the respondent on that date, expressed the opinion that the respondent was recovering appropriately from surgery and that there had been no significant complications associated with surgery. He stated that he agreed with Mr Clarke that the respondent would be fit to resume full-time work as a butcher in mid-December 2009. He stated that the respondent was presently fit for alternative work but was not yet fit for full unrestricted duties as a butcher.

69 Dr Dare produced his report dated 4 March 2010 after having seen the respondent on 3 March 2010. In his report Dr Dare recorded the respondent's report of his symptoms. The respondent's report of his symptoms was substantially consistent with the evidence that he subsequently gave at the arbitration hearing in relation to his pain symptoms. Dr Dare stated that the respondent 'appears to have become significantly distressed and anxious regarding his ongoing symptoms'. He stated that on examination of the respondent's inguinal region there was no evidence of recurrent hernia. He stated that the respondent had described some tenderness to palpation over the groin region and altered sensation in the left upper anteromedial aspect of the left thigh and also the left testis. He stated that there was some minor altered sensation in the right inguinal region but not involving the thigh or the testis significantly. Then, in answer to specific questions asked of him Dr Dare said the following:

... Certainly, after this type of surgery, it is not uncommon to have discomfort as well as a number of symptoms of neuralgia or symptoms related to damage or cutting of the nerves during the surgery. However, the extent of Mr Kovacevich's symptoms are significantly greater than I would have expected, taking into account the type of surgery that was performed and the findings on clinical examination. Certainly there are the altered sensory changes, but again, these are not uncommon with this type of surgery.
...
He is taking Panadol for his discomfort. He is having no other treatment and he does not require any other treatment. He certainly does not require further surgery. I do not believe review by a Pain Management Specialist is indicated.
I consider Mr Kovacevich needs to be reassured regarding his surgery and the present symptoms he has.
...
I appreciate that Mr Kovacevich has some ongoing discomfort, but I do not consider his symptoms are of such severity as to restrict his work capacity. I consider he is fit to work full time as a Butcher without restrictions. I have no problems with him lifting normal weights.
...
There is no reason why his pain should not settle with further time, although he is likely to continue to have the minor sensory loss.

70 In his report dated 19 July 2010 Dr Dare confirmed that the ultrasound of both of the respondent's groin regions undertaken on 5 March 2010 confirmed his clinical impression when he examined the respondent on 3 March 2010 that the respondent's hernia repairs were intact and that there was no other significant pathology to explain his persistent symptoms. He stated that the non-specific fibrotic thickening revealed by the ultrasound was of little clinical significance and was to be expected with this type of surgery. He stated that the thickening relates to the normal healing process, or scarring, when someone has had this type of surgery. He said he would not necessarily consider the tenderness or pain relates to any specific fibrotic thickening. He said that when he examined the respondent, the respondent had generalised tenderness in his groin region around the scars but that these symptoms are subjective and that as noted on the ultrasound there is no objective evidence of recurrence of the respondent's hernias or other significant pathology.

71 In his report dated 18 August 2010 Dr Dare referred to surveillance footage of the respondent which had been provided to him by the appellant's solicitors, and which was subsequently relied upon by the appellant during the arbitration hearing. He expressed the view that overall the activities he observed the respondent performing in the surveillance footage did not differ from the activities that the respondent had told him that he was able to do. Dr Dare did, however, go on to express the opinion that if the respondent had significant groin discomfort he would have some difficulty with bending forward or squatting and that this did not appear to be the case from the surveillance footage.

72 Dr Dare further stated in his report that he did not believe that the respondent had objective evidence of pathology or abnormality in his groin which would cause significant pain or result in restriction of his day-to-day activities at home or in the workplace. He stated that the surveillance footage did not alter his diagnosis or opinion in regard to the respondent's symptoms and that he did not consider that there was a mechanism of injury which would result in the respondent having significant ongoing problems in the groin sufficient to restrict his work capacity.

73 In his report dated 16 November 2010 Dr Dare confirmed that he had seen the respondent on 15 November 2010. He stated that on physical examination the respondent again described some tenderness to palpation over the groin region both in the left and the right, and that he had also described the altered sensation in the left upper anteromedial aspect of the left thigh and in the left testis. He noted that there was a minor altered sensation of the right inguinal region but not involving the thigh or testis significantly. He then answered various questions asked of him in the following terms:

Mr Kovacevich has no recurrence of his inguinal hernias and he has had a good result from the surgical repair, but does describe the ongoing pain impairment.
It is thought his ongoing pain relates to dysaesthesiae of the inguinal nerves, but I would not consider his symptoms are of such severity as to restrict his activities, and certainly not of such severity to restrict his work capacity.
He has recovered from his inguinal hernia surgery and he has had a good result with the recurrence of his hernias but, as outlined, he has the ongoing pain which is thought to be related to dysaesthesiae.
This diagnosis is a clinical diagnosis based on his subjective symptoms, and it is not possible to confirm the symptomatology with any objective tests.
...
I would still be confident his pain would settle with further time.
He does have some minor sensory loss, mainly on the left, but this would not result in significant impairment in regard to function and certainly not in regard to work activity.
I am not able to offer any specific treatment options.
...
A review by a pain management specialist is a reasonable option now that his symptoms are continuing.
...
I still consider he is fit to work full time and I consider he would be fit for his pre-injury occupation.
I do not consider there is any medical reason why he should continue to be certified totally unfit.

74 In relation to Dr Kennedy having given in his report dated 6 September 2010 an impairment rating for both the left and right sides in regard to ilio-inguinal nerve dysaesthesiae, Dr Dare said that on his assessment these symptoms are principally on the left and that he would not change his opinion.

75 In his final report dated 1 August 2011 Dr Dare dealt with some further surveillance footage that was provided to him by the appellant's solicitors and which was subsequently relied upon by the appellant at the arbitration. He stated that what he observed in the footage did not cause him to change his diagnosis of dysaesthesiae in the groin secondary to hernia repair and that he would not expect the respondent's symptoms to be severe in the future or result in significant impairment. He stated that he still believed that the respondent had the capacity to undertake full-time employment without restriction.

76 The reports of Dr Gee that were tendered by the appellant are dated 7 February 2011, 8 March 2011 and 19 July 2011. Again, it was the appellant that arranged for the respondent to attend upon Dr Gee.

77 In his report dated 7 February 2011 Dr Gee confirmed that the respondent had attended for a consultation with him on that date. He stated that he examined the respondent clinically. He detailed the respondent's account of his pain symptoms which account was broadly consistent with the evidence given by the respondent at the arbitration. He set out in his report the results of his examination of the respondent. Then, in response to the question, 'What is your diagnosis?' Dr Gee said the following:

Mr Kovacevich's diagnosis relates to complaints of continuing pain subsequent to his injury and surgery. I am unable to provide you with a specific reason for this pain although I do note some tenderness through the adductor tendon and muscles on the left and over the symphysis pubis.

78 In answer to further questions asked of him Dr Gee said the following:

Normally I would anticipate a full recovery from open surgical procedures by now so his prognosis would seem rather guarded.
I cannot readily provide a medical reason why Mr Kovacevich should continue to be certified unfit for work even on a part-time basis.
Based on his clinical assessment he would be fit for his pre-accident occupation on a full time and unrestricted basis, although given the prolonged period away from work a graduated return to work would seem appropriate.
...
I certainly believe that he has the capacity to perform alternate duties on a full-time basis.
I do not believe that he requires further medical treatment. Rehabilitation may provide him with a greater capacity to undertake his work duties.

79 In an addendum to his report Dr Gee noted that the respondent had attended his practice in 2003 following a motor vehicle accident and that 'at that time he had a back injury and his progress was extremely slow despite normal MRI scannings of his lumbar spine'.

80 In each of his reports dated 8 March 2011 and 19 July 2011 Dr Gee commented on video surveillance footage of the respondent that had been provided to him and which was subsequently relied upon by the appellant at the arbitration. In each of these reports Dr Gee stated, in effect, that the activities which the respondent was shown in the footage to be performing would appear consistent with the respondent's status at the time that he examined the respondent on 7 February 2011. In each report Dr Gee reaffirmed his opinion that the respondent had the capacity to undertake employment and that his observations of the respondent in the footage would leave him with the opinion that the respondent's prognosis was for recovery.

81 In his report dated 8 March 2011 Dr Gee also stated that it was still difficult to provide a clear diagnosis of the respondent's ongoing pain. He noted that an x-ray report indicated minimal cortical irregularity of the pubic symphysis with no other abnormalities demonstrated. He stated that the x-ray report was reassuring.

The raising of the illness conviction issue

82 The respondent at no time during the conciliation proceedings, the arbitration proceedings (which included two interlocutory applications that were filed prior to the arbitration hearing) or the arbitration hearing itself asserted that he suffered from an illness conviction. The appellant at no point raised the issue. Further, and as is apparent from my above summary of the medical evidence adduced by the parties, none of the medical witnesses expressly adverted in their reports to the concept of an illness conviction.

83 The first person to directly raise the issue of whether the respondent could be suffering from an illness conviction (referred to during the below cited exchanges as 'abnormal illness behaviour' or 'psychological overlay') was the arbitrator. The arbitrator did this for the first time during the course of the appellant's counsel's closing submissions. The relevant exchange during which the issue was first raised by the arbitrator occurred as follows (ts 60 – 61):

MR ARMELI: But then, sir, if I can refer you to Dr Gee's letter, it's an addendum at document number 10, where he says, "Mr Kovacevich attended this practice in 2003 following an MV accident. At that time he had a back injury and his progress was extremely slow despite normal MRI scanning of his lumbar spine". I think it's the worker's perception of this pain when there is a clear history that even when all investigations seem to give the all-clear, this particular applicant seems to still perceive either slow progress, as the case was apparently in the MV accident, or ongoing pain now since October 2009.
MR RUTHERFORD: Doesn't that raise then the prospect of illness behaviour or psychological overlay?
MR ARMELI: That hasn't been put forward by the applicant, sir, and there is no evidence. It's just an assumption that we could make, but that hasn't been diagnosed by anyone.
MR RUTHERFORD: (indistinct) doesn't have to be diagnosed. In fact (indistinct) appeal (indistinct) Court of Appeal. I think there's authority for the proposition that an illness, a psychological overlay (indistinct) condition there doesn't have to be medical evidence for that. It can be inferred from the evidence.
MR ARMELI: No, I don't think it applies here, sir.
MR RUTHERFORD: Why not?
MR ARMELI: Because even if you were to take that the applicant is suffering pain, and let's say that you take the incapacity argument as true, he is not incapacitated because of a compensable injury or the surgery to treat the compensable injury. We don't know what this pain – it could be true. Let's say the alternative argument that the pain is in fact true, but it's not related to his employment with Coles.
MR RUTHERFORD: Where else did it come from?
MR ARMELI: This is the problem, sir. There have been investigations for five years.
MR RUTHERFORD: As to the physical cause, but what about the proposition that arising out of the physical cause and (indistinct) treatment the man has developed psychological overlay?
MR ARMELI: Pain behaviour is often diagnosed by a pain specialist.
MR RUTHERFORD Yes. It would be good evidence if it was there but - - -
MR ARMELI: Yes, but Dr Gee didn't see that, and also the applicant was told to go to a pain specialist. He was referred to Dr Paul Graziotti and he didn't go.
MR RUTHERFORD: I understand that. It still doesn't necessarily prevent a finding of psychological overlay.
MR ARMELI: No. No, sir. The respondent's submissions are that for such a finding there really needs to be some medical evidence that there is psychological overlay. What I think you could consider is the worker has pain but it is just completely unrelated to his compensable injury.
MR RUTHERFORD: Where does it come from then? There's no other identified source of the cause of his pain. The respondent hasn't alleged any. There's no evidence to suggest there is any other source of pain other than compensable injury and the surgical (indistinct).

84 The issue was returned to by the arbitrator a little later during the appellant's counsel's submissions. The relevant exchange was as follows (ts 64 - 66):

MR ARMELI: If you don't accept my argument that if liability is in his favour nothing is absolutely going to change with this man, but at least my submission is it's not related to the hernia, it's not related to the surgery.
MR RUTHERFORD: (indistinct) before I go to Mr Charouhas, just the reference to SPR Australia Pty Limited and Nedich. I recall Commissioner McCann's comments about psychological overlay. I just want to come back to that for a moment, because an authority of Bobic and the City of Armadale – it appears that an arbitrator still nonetheless has an obligation to consider all the evidence and even if a case hasn't necessarily been put by the applicant (indistinct) must otherwise see if the evidence substantiates an alternate proposition or (indistinct) this case incapacity. Now, this is why I'm raising at this stage.
MR ARMELI: In this scenario, sir, with this particular applicant, no, there is no - - -
MR RUTHERFORD: Yes. I'll just read this out to you.
MR ARMELI: Yes.
MR RUTHERFORD: This is Commissioner McCann, paragraph 9, page 5:
As I understand it, the term 'illness conviction' is in effect used to describe ... (read) ... the causal connection between the relevant injury and the perceived consequences.
Now, I'm not suggesting that you address me on this issue at the moment because it's one that I've raised. If you wish, you can make written submissions to me on this as to what the respondent's position is as to a finding of that nature. Should I accept – I'm not saying I am, I'm saying however, that a number of findings can be made in relation to a matter like this. One is the pain is genuine a cause has not been determined, or the applicant is lying, or there is a psychological overlay. There are other findings as well. Those are at least three conclusions that can be drawn, or another one (indistinct) the applicant's (indistinct) so I would have to (indistinct) first and third ones.
...Well, in this case, it seems to me I have got a number of doctors saying there is no objective test but subjectively the man has got an incapacity. So what do I do with that? Is he genuine or does it matter? And that is why I'm bringing this to your attention. I don't want to go down a track - - -
MR ARMELI: No. I guess reserving the rights, the proper term to actually consider that decision - - -
MR RUTHERFORD: I'm happy (indistinct) to have submissions, I assume.
...
MR ARMELI: ... The respondent's submissions are that it would be wrong, inappropriate, to make such a finding without that evidence. I take your point but, that if that evidence was available that it would be open to you. In this case, it is not. I do apologise, sir. Unfortunately, considering I deal with it all the time – I forget the acronym used, some sort of pain syndrome, but - - -
...
MR RUTHERFORD: Yes. So you're saying that the evidence doesn't ultimately go to that?
MR ARMELI: No. If there was such evidence, then I think, sir, yes, you could consider that, but there is no evidence before you to show that, and I think it would have been open to the applicant to obtain – the onus is on the applicant.

85 Unsurprisingly, when the respondent's counsel was making his closing submissions he took the opportunity towards the end of his submissions to pick up on the issue of illness conviction raised by the arbitrator. He did so in the following way (ts 82 – 84):

MR RUTHERFORD: That's a difficulty I have here with his evidence with the urologist. It was in fact in the papers before (indistinct) your evidence about it. He says, 'I'm concerned about pain in my bladder.' So off he goes to see a urologist. Urologist says, 'I checked it all out'. There was a camera went into his bladder and looked around. It was fine and he was reassured that his bladder is fine, and yet he's describing the same pain.
MR CHAROUHAS: Well, maybe you're right that maybe the worker is suffering with abnormal illness behaviour which is unconscious, which should be compensable.
...
MR RUTHERFORD: Well, if it's conscious, then it's equivalent to malingering. It's just - - -
MR CHAROUHAS: I know. I agree, yes.
MR RUTHERFORD: (Indistinct)
MR CHAROUHAS: So maybe that's where it leads, I suppose, if you believe the worker is truly complaining about pain.
MR RUTHERFORD: I think that (indistinct) abnormal illness behaviour. Psychological overlay is what I call it, only because it's an issue which it's possible to draw conclusions about arising from the evidence. That hasn't been part of the applicant's case so far. Now, I only raise it because that's an issue that arose on an appeal in the matter of Bobic (indistinct) occasions to admit the evidence overall. The question is though, has it been put that way, that there's abnormal illness behave? [sic] If so, then as I said to Mr Armeli, then I need to have some submissions about that (indistinct) respond (indistinct) to consider that as a possible finding. Mr Armeli said, well, frankly there's no evidence (indistinct) that and this isn't the type of case where abnormal illness behaviour is an inference that ought to be properly got, but is it something that I – has been raised.
...
MR RUTHERFORD: I think I'm familiar with that case, but in any event, some of the – Commissioner McCann (indistinct) a couple of decisions. There was evidence in at least two of these cases that one or more doctors has said there's abnormal illness behaviour and the doctor said, 'I don't know if this is conscious or unconscious.' The issue was raised in the medical evidence.
MR CHAROUHAS: Well, that was next thing I was going to say, that I'm not sure that Dr Collis is actually saying that.
MR RUTHERFORD: No, there's nothing here in the evidence that's raised that directly.
...
MR RUTHERFORD: As to this business of the illness behaviour, psychological overlay, although it's behaviour (indistinct) I think on the basis of fairness, I ought to give the parties the ability – especially (indistinct) the ability to make submissions to me (indistinct) and the submissions can cover – well, first of all, whether I ought to consider that as a possible finding – whether I should consider that, whether there's any evidence to even get past the first stage, and basically what the parties say as to that as a possible finding as to how it relates to this case and the issues.

86 At the conclusion of counsels' submissions the arbitrator made an order granting leave to each party to file and serve by 22 August 2014 'written submissions as to the potential further issue of abnormal illness behaviour'. The arbitrator also made an order granting the parties liberty to apply 'as to this further issue'.

87 Both parties took the opportunity to file supplementary written submissions in relation to the illness conviction issue.

88 In the supplementary submissions filed by the respondent it was contended, in effect, that the arbitrator could find on the evidence before him that the respondent had suffered a 'psychological sequelae' or an illness conviction as a consequence of the injury and was, by reason thereof, totally incapacitated. In support of this contention the respondent referred in the submissions to the decisions in Michael v Panetta (Unreported, WASCA, 18 December 1995, Library No 950700); and, SDR Australia Pty Ltd v Nedic [2009] WACC C3-2009.

89 In the supplementary submissions filed by the appellant, it was contended that there was no evidence before the arbitrator that the injury had caused the respondent to suffer from abnormal illness behaviour, that the respondent had never asserted as part of his case that he was suffering from abnormal illness behaviour, and that consequently the condition of abnormal illness behaviour had no relevance to the issues argued at arbitration, namely the cause of the respondent's alleged ongoing symptoms and incapacity. It was also contended by the appellant in the supplementary submissions that there was no evidence before the arbitrator that the respondent was suffering from abnormal illness behaviour or any psychiatric condition and that consequently it was not open to the arbitrator to make a finding that the respondent suffers from abnormal illness behaviour or any other psychiatric condition.

The arbitrator's reasons

90 In his reasons for decision the arbitrator spent some time summarising the evidence given by the respondent: [28] – [64]. In doing so the arbitrator made some comments about the respondent's evidence which on the face of it would seem to suggest that the arbitrator had some misgivings about the credibility of the respondent's evidence as to the nature and extent of his pain symptoms. For example, the arbitrator observed that the respondent's use of the mild sedative Panamax seemed 'incongruent' with his 'ongoing complaint of pain levels preventing him from working, with at time levels of severe pain': [56]. Having made this observation, however, the arbitrator went on to point out that the respondent's evidence was that his daily night-time taking of the sedative Endep made him drowsy most mornings 'which may lead to difficulties with employment': [56].

91 The arbitrator also made the point that on his evidence the respondent, apart from pursuing his concern about his bladder, did not actively seek any alternative medical treatment. The arbitrator expressed the view that this seemed inconsistent with the respondent's 'other evidence that he strongly desires to get well, obtain a diagnosis as to what is wrong with him, and get back to work': [59]. Again, however, the arbitrator followed this comment up with reference to the fact that the respondent had given evidence that he believed that he could not obtain other medical advice as he was not in receipt of any income and could therefore not afford to pay for additional advice. The arbitrator further noted in this context that it was put to the respondent in cross-examination that he could have sought further medical advice using the public health system and that he had said that he was not aware that he could do so: [60].

92 The final example of the arbitrator apparently expressing some concern about the respondent's credibility appears from his comments relating to the respondent's evidence as to why he did not attempt to consult a general practitioner other than Dr Collis despite his expressed dissatisfaction with Dr Collis. The arbitrator noted in this context that in cross-examination the respondent's evidence was that he did not feel that he should obtain the services of another general practitioner because if he did change general practitioners this would be seen in an adverse light: [62]. In respect of this evidence the arbitrator expressed the view that this 'again appears a curious focus, given his express desire to obtain a diagnosis, to get better and get back to work': [62].

93 Having dealt with the evidence of the respondent, the arbitrator then turned to summarising the medical evidence that was before him: [65] - [101]. At the conclusion of this summary the arbitrator stated that Dr Dare had examined the respondent on a number of occasions during the period 2008 to 2010, that Dr Dare's reports were thorough and his conclusions supported by Dr Gee, and that where the opinions of Dr Dare and Dr Gee differed to those expressed by Dr Kennedy 'during this period' he preferred those of Dr Dare and Dr Gee. The arbitrator noted that neither Dr Dare nor Dr Gee reviewed the respondent after 2010.

94 Under the heading 'Observation about the medical evidence' the arbitrator said the following:

102. In summary, all the various medical practitioners who have examined Mr Kovacevich consistently record his complaints of groin and related area pain, and the circumstances where he states the pain becomes more severe.
103. However, there has been no diagnosed medical cause for the complaints of ongoing pain, and therefore no doctor has been able to identify precisely what, if anything, is causing the pain described by Mr Kovacevich, other than the general description of 'dysaethesiae' [sic]. In that regard it appears that some patients post-surgery continue to complain of pain for some considerable period, for reasons which are unclear. I accept Mr Clarke's evidence that in some cases pain from some inguinal repair surgery cases does not resolve, though the majority of groin pains 'resolve within 12 to 24 months'.
104. Nonetheless, from a physical perspective, the surgery appears successful.

95 The arbitrator next turned his attention to the evidence in the form of the surveillance footage that was put before him as part of the appellant's case and which was taken of the respondent in 2010 and 2011. It was this footage that had previously been provided to Dr Dare and Dr Gee for their consideration and comment. The arbitrator concluded that he was not persuaded that the respondent's activities as shown in the surveillance footage were inconsistent with a man in chronic pain 'other than perhaps the crouching beside a car for some minutes, which may be inconsistent with Mr Kovacevich's evidence that crouching causes his pain to increase': [112]. The arbitrator said that nonetheless the activities were for a few minutes only on one day and that as there was no such further evidence he would accord the surveillance footage evidence 'little, but some, weight': [112].

96 Having dealt with the surveillance footage evidence the arbitrator, under the heading 'Commentary on the evidence' said the following:

113. It is clear that Mr Kovacevich has suffered a compensable injury in 2006, has had surgical repair to the injured site, and continues to complain of disabling pain to such an extent that Mr Kovacevich says that he is unable to even consider returning to work.
114. Mr Kovacevich's complaint of his pain before and after surgery as being essentially the same pain, is difficult to reconcile with the evidence that the repair surgery was effective and there is no diagnosed physical cause linking his pain to the surgery or injury.
115. Nonetheless a failure to diagnose a medical cause does not necessarily lead to a conclusion that there is no cause for pain, or that the pain does not exist. I also note that it was about three years from the date of injury to the date of surgery and, as I understand the evidence, Mr Kovacevich was in some pain throughout that time and that the pain increased until surgery. I conclude therefore that Mr Kovacevich had chronic pain prior to surgery.
116. On the other hand, a lack of diagnosis by a number of doctors may lead to a conclusion that as there is no medical cause for the professed pain, therefore Mr Kovacevich ought not be believed when he gives evidence that pain not only exists, but is incapacitating.

97 At this point in his reasons the arbitrator posed for himself the question, 'Did and does Mr Kovacevich suffer pain arising from the compensable injury?'. The arbitrator then answered this question in the following terms:

117. Mr Kovacevich has consistently reported pain to the various medical practitioners. Surgeon, Mr Clarke, accepts that some patients suffer from chronic pain after surgery, some for a considerable period of time.
118. On balance I am of the view that Mr Kovacevich was in pain to varying degrees from the date of the original injury and after surgery.
119. What is to be further considered, however, is the extent of the pain suffered throughout the claimed period, as it is the extent of the pain which is said by Mr Kovacevich to be the reason for his claimed total incapacity.

98 Having made the finding that the respondent was in pain to varying degrees from the date of the original injury and after surgery, the arbitrator turned his attention to the question whether the respondent was 'totally incapacitated as a result of the compensable injury and if so for what period?' In dealing with this question the arbitrator first made a finding that the evidence 'establishes on a common sense basis that Mr Kovacevich was totally incapacitated from 22 June 2009 until the date of his surgery on 3 October 2009: [129] - [130]. The arbitrator based this finding on the evidence given by the respondent to the effect that his pain increased after he started working at Woolworths to such an extent that he had to stop working, on the evidence that the respondent's hernias increased in size between 2006 and 2009, and on the evidence in the form of a progress medical certificate dated 22 June 2009 in which the respondent was certified as totally unfit for work: [122] - [129].

99 The arbitrator next turned to the question whether the respondent had been totally incapacitated since the date of his surgery. In this regard the arbitrator said the following:

131. Although Mr Kovacevich is strident in his evidence that he is suffering from real pain and resented the implication that he was lying or exaggerating, his evidence seems inconsistent with a lack of prescribed or any strong pain-killing medication other than night time use of Endep, which is more a sedative than a painkiller.
132. His evidence is to the effect that his pain before and after surgery is the same; yet the evidence is that surgery was effective and the hernias repaired. How then is the pain the same?
133. It may be that Mr Kovacevich has some underlying physical cause which then results in pain, especially upon lifting. That cause, however, has not been diagnosed. There may be other non-physical reasons for the pain to seem to continue. I will return to that later aspect in these Reasons.
134. Mr Kovacevich also has now not worked for approximately five years and yet has not insisted on any further medical opinion to determine any physical cause of his ongoing pain.
135. These matters seem inconsistent with a person determined to get better and get back to work.
136. There is no evidence of any attempts by Mr Kovacevich to obtain employment of any kind.

...

138. Given all the circumstances I am not convinced that Mr Kovacevich is totally incapacitated from a physical point of view other than after a few months following his surgery.
139. In that regard, Mr Clarke anticipated Mr Kovacevich would be fully fit for work from about December 2009. To some extent, of course, that view was speculative. There was some evidence of inflammation of the scar which may have produced some difficulties until about March 2010, but thereafter there is medical evidence that the inflammation resolved. Dr Dare certified Mr Kovacevich fit to return to his pre-injury role as a butcher from March 2010.
140. I am therefore unconvinced Mr Kovacevich has established on the balance of probabilities that, from a physical perspective, he is totally incapacitated after March 2010. Even if the evidence does not establish fitness to return to work as a butcher, it is clear that the medical evidence is to the effect that Mr Kovacevich in about March 2010 had a physical capacity to return to some work, therefore is not totally incapacitated.
141. As earlier indicated, partially incapacitated [sic] has not been claimed and it was specifically not argued. In any event, I do not consider there is any or any sufficient evidence from which I can properly make any findings on partial incapacity, given that there is no evidence of loss of earnings on alternate employment.
142. That, however, does not end matters.
143. Notwithstanding that this contention was not raised, towards the conclusion of the arbitration I suggested that the evidence raised the possibility that the development of an 'illness conviction' could be an explanation for Mr Kovacevich's circumstances.

...

145. I consider this issue later in these Reasons, but first turn to another but related issue.

100 So, in summary, the arbitrator found that the respondent had failed to prove that there was, beyond March 2010, some physical cause for the ongoing pain which the respondent asserted he had been suffering from since the repair surgery.

101 At this point in his reasons the arbitrator turned to deal with the appellant's contention that the respondent had failed to mitigate his loss. The arbitrator found that the appellant had not discharged its burden of proving that the respondent had failed to mitigate his loss: [170], I do not need to say anything further about this aspect of the arbitrator's reasons. In arriving at this conclusion the arbitrator expressed the view that there was 'little if any evidence establishing [the appellant's] contention that [the respondent] is malingering or exaggerating his condition for financial gain': [168].

102 Having dealt with the issue of failure to mitigate, the arbitrator returned his attention to the issue of the 'illness conviction'.

103 The arbitrator defined the term 'illness conviction' as an 'unconscious belief' by a person that he 'has pain and/or total incapacity in circumstances where there is no diagnosed or any physical cause for the pain': [172]. The arbitrator noted that this is not the same as a 'conscious belief, i.e. malingering': [173].

104 The arbitrator then turned to deal with the supplementary written submissions that had been filed by the appellant and the respondent in response to the orders that he had made at the conclusion of the arbitration hearing. In doing so he referred to the decisions in Michael v Panetta and SDR Australia v Nedic.

105 With respect to the decision in Michael v Panetta the arbitrator expressed the view that the case is 'not authority for the proposition that there is some kind of prima facie forensic threshold, but rather that there is no forensic requirement for there to be any medical evidence to establish a finding of illness conviction': [177]. For reasons that I will explain in due course, I do not agree that the decision in Michael v Panetta is authority for the proposition that there is no forensic requirement for there to be any medical evidence to establish a finding of illness conviction.

106 So far as the decision in SDR Australia v Nedic is concerned, the arbitrator's consideration of the decision was limited to him quoting part of a paragraph of the judgment of Commissioner McCann in that case: [179]. The relevant paragraph of Commissioner McCann's judgment, quoted in full, is as follows:

9. The term 'illness conviction' was not otherwise explained in the expert evidence or in the arbitrator's reasons. However, both counsel concur that the following explanation, which Mr Nugawela offered during the hearing before me, adequately sums up the arbitrator's finding. An illness conviction is the genuine belief of an injured person that he is unfit or incapacitated to a greater extent than is organically justified by the actual physical injuries. Such conviction or belief is a form of psychological overlay and is to be contrasted with conscious exaggeration (i.e. malingering). Mr Nutt conceded in the appeal that an illness conviction could be regarded as a disease in some circumstances (transcript page 8). However, I do not believe this is justified by the evidence or the authorities. As I understand it, the term 'illness conviction' is, in effect, used to describe a person's subjective but genuine over-reaction to their symptoms. It is not a 'disease' in its own right for the purposes of the definitions of 'injury' in s 5(1)(b) to (d) of the Act, not is it a secondary disease in the sense addressed in Kanowna Belle Goldmines v Feirabend [2003] WASCA 246 per Parker J at [21] and [24]. It is not necessary for expert psychological or psychiatric evidence to be led in order to establish the causal involvement of an illness conviction (see Michael v Panetta ... per Pidgeon J at 37). Panetta is authority for the proposition that a genuine illness conviction (or psychological overlay) which magnifies a person's subjective appreciation of the effect of their symptoms or, at least, which prevents him from comprehending his true level of capacity, or which explains his failure to mitigate, does not, of itself, constitute a novus actus or otherwise preclude a finding being made as to the causal connection between the relevant injury and the perceived consequences.

107 I note, that although I do not take issue with the proposition that as a matter of general principle it is not necessary for expert psychological or psychiatric evidence (as opposed to medical evidence of some sort) to be led in order to establish the causal involvement of an illness conviction, I do not, for reasons that I will elaborate upon in due course, share the view apparently expressed by Commissioner McCann that the decision in Michael v Panetta is authority for this proposition.

108 Having made the references to Michael v Panetta and SDR Australia v Nedic the arbitrator, erroneously in my view, concluded that the decisions 'establish that a finding of illness conviction can be made in the absence of such evidence': [181].

109 In dealing with the supplementary submissions the arbitrator also stated that the appellant had not submitted that the arbitrator should not have regard to, or consider the possible finding of, illness conviction on the basis 'say, that this was not an issue raised by the applicant': [182]. With respect, this was an incorrect reading by the arbitrator of the respondent's supplementary submissions. As I have previously pointed out, the respondent in its supplementary submissions did make the point that the respondent had never asserted as part of his case that he had been suffering from abnormal illness behaviour (that is, an illness conviction) and that consequently the condition was of no relevance to the issues argued at arbitration.

110 Having addressed the supplementary submissions, the arbitrator then turned his attention to the question whether the respondent had deliberately exaggerated his pain symptoms. The arbitrator found that the respondent had not deliberately exaggerated his symptoms. His process of reasoning in this regard was expressed in the following terms:

183. Coles also submitted that the surveillance films are evidence of Mr Kovacevich exaggerating his condition and that together with all the medical evidence provides no basis for a finding of illness conviction. Coles invited a conclusion that the 'Applicant is simply exaggerating his condition for financial gain'.
184. I deduce from that submission that Coles contends that Mr Kovacevich is deliberately exaggerating his symptoms of pain.
185. As earlier indicated, I do not accept that submission. There is little if any evidence to support that contention. There may be suspicions, but that is not enough. Indeed there is little if any persuasive evidence that Mr Kovacevich's protestations of pain are not genuine.
186. The surveillance evidence suggests that his ability to squat is more than he professes. However, in my view given the relevant evidence is over a comparatively short period of time (a few minutes on one day), the evidence by itself carries little weight.
187. Coles have challenged Mr Kovacevich's credibility. However, in my view, there is little if any evidence from which I can properly find that Mr Kovacevich is setting out to deceive the doctors, when he tells them he is in pain. The doctors do not point to, say, inconsistencies in formal and informal presentation which may suggest deception, rather they either they [sic] cannot diagnose the cause of the pain, or express a view that the pain levels should not be as incapacitating as professed. That is not the same thing as malingering or evidence of some deliberate exaggeration. It is simply evidence that something is unexplained or unexpected.
188. After considering all the evidence, including having the opportunity to listen to and observe Mr Kovacevich giving evidence, I am satisfied the evidence establishes that Mr Kovacevich has developed an illness conviction which originated at least shortly after his surgery and continues to date.
189. I am satisfied that Mr Kovacevich genuinely believes he is and has been in pain, and further genuinely believes that the pain is incapacitating to such an extent that he cannot and has not been able to perform any work. It is possible that the grounding for this belief is the years between the original injury and the surgery, during which Mr Kovacevich suffered entrenched pain.
190. In these circumstances I find the work injury to be totally incapacitating.
191. This conclusion seems to be the 'best fit' for the evidence viewed as a whole.
192. I was concerned about the lack of ongoing medical treatment and strong pain medication. However, that needs to be seen in the light of there being no diagnosed cause for the pain, i.e. I conclude the treating doctors did not know what treatment to give and simply maintained minimal medication.
193. I do not consider there is any or any sufficient evidence from which I can properly draw adverse conclusions about Mr Kovacevich's credibility. It may seem unusual for an otherwise healthy appearing individual to live a sedentary and impecunious lifestyle for years, but nonetheless, I am satisfied his evidence about his ongoing pain was given honestly.
194. I also accept that, at least to some extent, Mr Kovacevich has self-determined his incapacity. That, however, needs to be seen in the light of his illness conviction, which explains his self-determined incapacity and his failure to take steps to mitigate his loss.

111 At the end of his reasons the arbitrator summarised his findings as follows:

197. Ultimately, I am required to find whether any incapacity is a result of the compensable injury.
198. After weighing up and considering all the evidence, I find the inguinal hernias, the physical injuries, are compensable. That much is admitted. I also find the surgery resulted in a period of total incapacity on a physical basis, being the recuperative period from date of surgery to March 2010. I further find that, notwithstanding what appeared to be successful surgery, nonetheless Mr Kovacevich thereafter either had disabling pain for an undiscovered reason (refer to the evidence of surgeon Mr Clarke, that some patients have ongoing pain post-surgery) and/or (and more likely), Mr Kovacevich developed 'an illness conviction which rendered his self-perceived level of incapacity (or lack of mitigation) as acceptable' – refer Nedic par 14.

112 There is before me no ground of appeal which contains a complaint about the adequacy of the arbitrator's reasons. Nonetheless, I will make some brief observations about the arbitrator's reasoning process as revealed by the above quoted paragraphs of his judgment.

113 First, contrary to his statement in [185] the arbitrator had not, prior to this point in his judgment, expressly rejected the appellant's submission that the respondent had deliberately exaggerated his symptoms. The only definite finding that the arbitrator had made prior to this point in relation to the respondent's evidence concerning his pain symptoms was that he had been in pain to varying degrees from the date of the injury and after surgery. The arbitrator had, however, and as I have already pointed out, expressed the view in dealing with the appellant's failure to mitigate argument that there was little if any evidence establishing the appellant's conclusion that the respondent was malingering or exaggerating his condition for financial gain.

114 Second, it is, in my respectful view, not entirely clear from the arbitrator's above cited statements or his reasons generally, precisely how he came to his conclusion that the respondent had developed an illness conviction. Did the arbitrator make a positive stand-alone finding that the respondent gave honest evidence about his perception of the extent of his pain symptoms and then, on the basis of that finding and in light of the medical evidence that there was no organic cause for the perceived symptoms, conclude or infer that the respondent had developed an illness conviction? Alternatively, did the arbitrator, having arrived at a generally favourable view of the way in which the respondent gave his evidence, look for an explanation for how the respondent could be experiencing the symptoms as described by him in the absence of any organic cause for the symptoms and then, having found an explanation in the notion of an illness conviction, go on to make a positive finding that the respondent had given honest evidence and had in fact developed an illness conviction? My uncertainty in this regard arises particularly from the statements made by the arbitrator above at [132], [143], [188 - 189] and [191] of his judgment. I think, on reading the arbitrator's reasons as a whole, that he took the first of the two approaches that I have identified, although as I have indicated I am not certain of this. The respondent's position, as I understand it, is that the arbitrator took the first approach.

115 Third, the arbitrator's finding stated in [198] that the respondent after surgery 'either had disabling pain for an undiscovered reason ... and/or (and more likely) ... developed an illness conviction which rendered his self-perceived level of incapacity (or lack of mitigation) as acceptable' is, with respect, problematic. The arbitrator's reference to an 'undiscovered reason' is clearly a reference to some undiscovered physical reason. However, given the arbitrator's earlier expressed finding that he was not convinced that the respondent had established on the balance of probabilities that he was totally incapacitated 'from a physical point of view' other than for a few months following surgery ([140]), it is difficult to understand how the arbitrator could then find (or indeed why he would find) that a cause (albeit less likely cause) of the disabling pain could be an undiscovered physical injury. In any event, the issue is not one which has been raised by the parties. Both have obviously approached the matter on the basis that the arbitrator's use of the words 'more likely' in the passage in question indicates, particularly when read in the context of the remainder of his judgment, that the fact found by the arbitrator on the balance of probabilities was that the cause of the respondent's perceived disabling pain after surgery was his illness conviction. I am satisfied that the approach taken by the parties in this regard is correct.

Analysis and decision

The arguments

116 The submissions made on behalf of the appellant on the appeal are substantially the same as those which were made in the appellant's supplementary submissions filed in response to the orders made by the arbitrator at the conclusion of the arbitration hearing. It is submitted that there was absolutely no evidence adduced at the arbitration hearing in relation to the issue of an illness conviction. More specifically, it is submitted that there was no evidence adduced as to what an illness conviction is or to the effect that the respondent suffered from such a condition. It is submitted that the only evidence adduced by the respondent as to his incapacity was in respect of the physical injury and that consistently with this evidence the respondent never asserted as part of his case that he suffered from an illness conviction. It is submitted that the fact that it may not have been expressly put to the respondent in cross-examination that he was lying about his symptoms does not alter the position bearing in mind that the onus was on the respondent to prove his incapacity and that the 'whole thrust' of the appellant's case was that there was nothing wrong with the respondent. It is submitted that in the absence of any evidentiary basis for a finding that the respondent developed an illness conviction which rendered him totally incapacitated for work, the arbitrator made an error of law in making such a finding. It is submitted that the arbitrator's decision should therefore be set aside.

117 On behalf of the respondent it is submitted that the arbitrator's findings that the respondent had suffered both an injury and a total incapacity were, 'having regard to both his statutory duties [under s 185 and s 188 of the Act] and general principles', permissible and based upon an inference drawn from the facts found by him to have been established. It is submitted that contrary to the appellant's submission that there was no evidence of an illness conviction (said by the respondent's counsel to be a 'label used to describe a person's subjective but genuine overreaction to the symptoms' (ts 17)) and no proper basis for the making of such a finding, it is clear that the arbitrator could properly infer the existence of an illness conviction from the following:

1. The medical evidence, all of which was consistent in noting the worker suffered from a pain condition;
2. The evidence and demeanour of the respondent, which was consistent with him suffering a pain condition; and
3. The absence of any case put against the respondent that he was lying about his symptoms.

118 It is submitted that the evidence 'is uncontradicted in what the fundamental nature of an illness conviction is' (ts 17). It is submitted that there is no 'material difference' between the nature of the evidence that was before the arbitrator and the nature of the evidence that had been adduced in the arbitration the subject of the appeal in SDR Australia v Nedic. It is further submitted that it cannot be said that the inference drawn by the arbitrator falls into the category of being 'glaringly improbable' or 'contrary to compelling inferences': Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [29].

The case put against the respondent

119 It is convenient to commence my analysis of the competing arguments advanced by the parties by dealing with the respondent's contention that the appellant did not put a case against the respondent that he was lying about his symptoms.

120 In support of the contention that the appellant did not put a case against the respondent that he was lying about his symptoms the respondent points to the fact that during cross-examination the appellant's counsel did not actually expressly suggest to the respondent that he was lying and at one point actually said to the respondent, 'It's not that I'm calling you a liar' (ts 34). However, in my view it is important not to take this one comment in isolation and out of the context of the entire cross-examination. It does appear to me, from reviewing the cross-examination in its entirety, that the essential thrust of the cross-examination was aimed at demonstrating that the respondent had not in the past, and was not, suffering from the pain symptoms he had described and did not believe that he was so suffering; or to put it another way, that there was nothing wrong with the respondent. Indeed, prior to making the statement that he was not calling the respondent a liar, the appellant's counsel put to the respondent in cross-examination that he had just been lazy, that he expected Wesfarmers to pay him and that he was 'playing on' the injury (ts 28). Further, later in the cross-examination, and after he had made the statement that he was not calling the respondent a liar, the appellant's counsel in the course of questioning the respondent about whether he could have borrowed money to see a pain specialist, asked the respondent whether he saw it as an emergency that he had 'been in this constant pain, alleged constant pain, for the last five years?' (ts 48) (emphasis added). In addition, it is apparent from paragraphs of the arbitrator's reasons that I have quoted above that the arbitrator was aware that the essential thrust of the appellant's case was that the respondent was exaggerating his symptoms: arbitrator's reasons: [183] - [184].

121 In summary, I do not accept the submission made on behalf of the respondent that the appellant did not at the arbitration put a case against the respondent that he was lying, or in other words, deliberately exaggerating his pain symptoms.

Section 185 and s 188

122 I will refer in more detail to s 185 and s 188 of the Act later in these reasons. However, for the purpose of dealing with this ground of appeal it suffices for me to say, in response to the respondent's stated reliance on these sections, that in my view nothing in the sections detracts from or alters the fundamental principle that before a trier of fact can make a finding of fact there must be some evidence which is capable of providing a basis for that finding. Section 188 in particular, while providing that an arbitrator is not bound by the rules of evidence (s 188(2)(a)) and may inform himself on any matter as he thinks fit (s 188(3)), does not abrogate the rule that there must be some form of evidence before the arbitrator which is capable of supporting a finding of fact made by the arbitrator. The more flexible procedure for the reception of evidence which is in effect provided for by s 188(2)(a), s 188(3) and s 188(4)(a) does not permit findings of fact to be made without there being a basis in the evidence for making such a finding: Rodriguez v Telstra Corporation Limited [2002] FCA 30 [25]; Ausden Joinery v 'P.J.' [2011] WACC C4-2011.

The decisions in Michael v Panetta and SDR Australia v Nedic

123 I need at this point, particularly given the respondent's reliance on them, to return to the decisions in Michael v Panetta and SDR Australia v Nedic.

124 In Michael v Panetta the appellant appealed against the quantum of damages awarded to her for a whiplash injury received in a motor vehicle accident. All of the expert medical witnesses who were called to give evidence at the trial had proceeded on the basis that the appellant 'was perceiving the symptoms as she described them and ... were looking for a cause for the purposes of seeing whether there was a cure': [35] - [36]. Further, at trial and unlike in the present case, medical evidence was adduced which was to the effect that the appellant may have been perceiving the pain as she described by reason of psychological factors. The evidence in this regard included the following:

1. Evidence from a psychologist that the appellant suffered from feelings of depression, anxiety and anger that her injury restricted her engaging in a number of activities, and that psychotherapy had focussed on helping the appellant to recognise the connection with her intense feelings of anger and frustration and the impact that this had on her perception of pain (10, 25);
2. Evidence from a pain relief specialist that the appellant's associated anger, anxiety and depression had a considerable feedback effect on her pain and disability hence his recommendation for her to undergo 'psychological techniques' (11);
3. Evidence from a specialist physician in occupational and rehabilitation medicine that the appellant had sustained a soft tissue injury of the cervical and thoracic spine, and that there was 'undoubtedly a psychological overlay in the problem which is perhaps not unexpected some four years after the accident' (14);
4. Evidence from a second specialist physician in occupational and rehabilitation medicine to the effect that the appellant was genuinely suffering symptoms but that there was a cause independent of the accident which accounted for some of the symptoms, namely a definite psychological enhancement of her symptomatology (22);
5. Further evidence from the second specialist physician in occupational and rehabilitation medicine that from a physical point of view his findings on examination of the appellant were relatively minor but that added to the physical findings was a psychological overlay with a strong suggestion of abnormal illness behaviour, and that the appellant's pain seemed to be coming from a psychological rather than an organic source (28 - 29); and
6. Evidence from an orthopaedic surgeon that on an objective analysis he could not see that the appellant had any physical abnormality or disability, but that it appeared to him that there was a very large psychological component to the appellant's reluctance to work and that the appellant's problems were essentially psychological (23).

125 The trial judge found that the appellant, as a result of her whiplash injury, had suffered some disability but not the kind of disability that she claimed in her evidence (32).

126 In the course of dealing with the appeal Pidgeon J, with whom the other members of the court agreed, said the following (36 - 37):

A very important question arose as to whether her perception was psychological reason without there being an organic cause ...
PSYCHOLOGICAL OVERLAY
If there was no organic cause, then a real possibility arises on the evidence that the appellant may perceive significant pain by reason of psychological factors. This was referred to by the consultants called by the respondent and to an extent by those called by the appellant. This psychological possibility called for a determination by the trial judge whether there was a genuine psychological factor arising from the accident. The way his Honour dealt with it was by saying: 'It may be that the initial effects of the accident which were no doubt quite extreme caused her such a degree of upset so as to have a dramatic effect on her psychological state thus producing an introverted and self complaining person. There was no psychiatric evidence called to demonstrate whether this had indeed occurred'. His Honour later returned to this when he said: 'However, as I have noted, there was no psychiatric evidence called to demonstrate that such a factor existed or that it was accident caused'.
As there was no psychiatric evidence his Honour did not give the matter further consideration. The problem which this raises and the question to be resolved is summarised in Luntz Assessment of Damages at 78 where it is said:

Many cases today turn on whether the plaintiff is genuinely suffering from a severe psychological reaction to a relatively trivial physical injury – ie whether there is a 'functional' overlay for which there is no organic cause – or whether the plaintiff is merely malingering (see 1.2.21). This latter paragraph contains an analysis of the problem

If it can be inferred from the evidence which is accepted that there is such an overlay arising from the accident, then it would be compensable by the respondent. There would be no requirement to call psychiatric evidence. The condition being examined would not necessarily be a condition producing an introverted and self complaining person. There could well be a person genuinely feeling that he or she is suffering the symptoms complained of. I consider, therefore, that his Honour in failing to deal with this by reason of there being no psychiatric evidence, was in error. As I read the evidence it was not suggested in cross-examination that the appellant was relating symptoms that she did not in her own mind believe existed. The thrust of the cross-examination was that she could have made a greater effort to get back to work and that she should have worked accepting the symptoms or possibly increased symptoms. I have mentioned that it would be unlikely that the appellant would have accepted and undergone all the medical procedures I have identified, many of which were uncomfortable and unpleasant, if she did not believe she was suffering from the symptoms ... It is apparent from his Honour's comments and some of the findings that he was acting on the evidence of Drs Gilmour and Pearce. Each of these persons saw the psychological explanation. She had been, in fact, earlier treated for it but the treatment did not continue when it was apparently not causing improvement. If it were found that there was no organic cause for symptoms, then in my view, the weight of evidence makes a finding, that there was a psychological overlay, compelling. It is also clear in my judgment it would originate from the accident. There was no disability prior to the accident and the history that I have outlined must arise from it. Once this finding is made, it becomes difficult to see how it can be said that the appellant is exaggerating her symptoms. She has a belief in their existence. (emphasis added)

127 A little later in his reasons Pidgeon J said (43):

I would, therefore, having regard to his Honour's findings in this area, assess the matter on the basis that the cause of the symptoms at present being noticed is a psychological overlay with no organic cause.

128 Rowland J, in expressing his agreement with Pidgeon J, said the following (53):

The primary issue in this appeal is relatively simple, albeit that it involves a detailed consideration of much of the evidence. In the end, it comes down to the complaint that the learned trial Judge has erred in his general approach to the plaintiff's claim in that he has looked to the appellant's credit as a witness without first considering from the evidence whether the symptoms described by the appellant, and which cannot be clinically detected, are the result of a functional overlay arising from the accident, or have been deliberately manufactured by the appellant for the purpose of obtaining an excessive award of damages. (emphasis added)

129 It is apparent from Pidgeon J's above cited statements that his Honour did not, contrary to the view expressed by the arbitrator, state as a matter of principle or otherwise that there is no forensic requirement for there to be any medical evidence to establish a finding of an illness conviction. All that his Honour did say was that there was no requirement to call psychiatric evidence in order to establish the existence of a psychological or functional overlay. His Honour made this comment in the context of a case in which, as his Honour recognised and as I have pointed out, there was a significant amount of medical evidence, albeit not psychiatric evidence, which provided a basis for the finding that the appellant was not deliberately exaggerating her symptoms but rather was genuinely perceiving her pain symptoms by reason of psychological factors. The decision in Michael v Panetta is not on any view of the matter authority for the proposition that there is no requirement for there to be medical evidence to establish a finding of illness conviction.

130 I turn to the decision in SDR Australia v Nedic.

131 In SDR Australia v Nedic the applicant employer sought leave to appeal against a decision of an arbitrator ordering the applicant to pay weekly payments to the respondent for total incapacity.

132 As is apparent from reading Commissioner McCann's judgment, during the arbitration hearing the evidence adduced from a number of the medical practitioners was to the effect that there was a psychological component in the respondent's clinical presentation: [8]. More specifically, there was evidence from a medical practitioner that he had noted the respondent had signs of depression and anxiety with the result that he had referred the respondent to a psychiatrist, evidence from an occupational physician that he had noted the respondent to have a heightened somatic awareness, an anxiety component and the adoption of illness conviction and other physiological factors, evidence from an orthopaedic surgeon that the respondent had presented with a degree of disease conviction, and evidence from a neurosurgeon that he suspected that in the case of the respondent there was either psychological overlay or some other factors contributing to his level of clinical symptomatology. The findings made by the arbitrator were summarised by Commissioner McCann in the following terms:

7. The worker's evidence was not favourably regarded by the arbitrator, who summarised it as follows in his reasons for decision (at para 18):

'It is fair to say that generally speaking the applicant in his evidence constituted by his statement has offered no explanation of why the pain and discomfort in the various areas of his anatomy prevent him working, save insofar as it is said the pain is too great.'

The arbitrator found (para 96) that although the applicant 'did and does suffer from pain and discomfort from his injuries' he had failed to prove why such pain and discomfort precluded him from working from an anatomical or physical point of view save for on the day of the accident. Thus, the arbitrator found that the worker's injuries per se were not incapacitating. However, based on the medical evidence the arbitrator found (at para 105) that the worker had acquired 'a degree of illness conviction' which caused him to believe that he was totally unable to work.

133 The process of reasoning which the arbitrator had adopted in arriving at his conclusion that the respondent had acquired a 'degree of illness conviction' was described by Commissioner McCann in the following terms:

12. ... At para 118 he held that, in the absence of any organic basis for a finding of total incapacity, and bearing in mind that total incapacity had been conceded, a 'process of elimination' suggested that the cause or a cause of that incapacity 'must be the applicant's psychological condition'. The arbitrator then said (at para 119) that there were two potential causes of the psychological condition open on the evidence, namely the workplace injuries and the multiple sclerosis. He held (at para 120) as follows:

'... I am satisfied that the injuries the applicant sustained on 12 April 2005, and more particularly the residual neck and thoracic spine symptoms resulting therefrom, are a material contributing cause to the applicant's psychological condition and hence his admitted total incapacity.'

13. So, the arbitrator found that for the purposes of the Act the worker was totally incapacitated by his work injuries as a result of his illness conviction to that effect...The logic of the arbitrator's decision was that a worker's residual neck and thoracic spine symptoms were a cause of a psychological condition (namely an illness conviction) which in turn was a cause of his total incapacity ...

134 One of the grounds of appeal was that the arbitrator had erred in law by applying a process of elimination to find that the cause of the respondent's incapacity must be a psychological condition and that the finding was without evidence. Commissioner McCann did not accept the argument underpinning this ground of appeal (although he did allow the appeal on other grounds). In rejecting the applicant's 'process of elimination argument' the Commissioner made the statements at [9] of his judgment which I have previously quoted in the context of discussing the arbitrator's reasons for decision in the present case. In addition, the Commissioner also made the following remarks in this context:

14. The arbitrator's reasoning to this point might be open to criticism in one respect, in that he may have regarded the psychological overlay as if it was a compensable condition in its own right. Based on the authorities, particularly Panetta, it is more correct to regard the physical injuries as compensable and the illness conviction or psychological overlay as being a factor which rendered the worker's self-perceived level of incapacity (or lack of mitigation) as acceptable. Having said this, I do not regard the arbitrator's reasoning as being fundamentally flawed on this point. He made all necessary findings to support his findings, namely that the worker had a symptomatic work related injury (albeit of modest significance from an objective point of view), he had acquired an illness conviction which rendered the injury totally incapacitating in his mind and such belief was genuine. Under those circumstances the arbitrator was entitled to apply Panetta and find that the work related injury was totally incapacitating.

135 Finally in this context the Commissioner said (emphasis added):

20. ... The arbitrator followed a similar form of reasoning to the Full Court in Panetta in which Pidgeon J said (at 38):

'If it were found that there was no organic cause for symptoms, then in my view, the weight of evidence makes a finding, that there was a psychological overlay, compelling.'

In essence his Honour here countenanced a process of elimination whereby if, on the evidence, two possible causes of an incapacity are open, and one is eliminated, then the trier of facts is entitled to find, as a matter of common sense, that the other was the cause. It is simply more probable than the other finding. In my view this is what the arbitrator did in this case. He took the approach that, given the multiple sclerosis was only partially incapacitating, the absence of any other organic cause for the worker's total incapacity led to a conclusion that the illness conviction was a probable cause.

21. Accordingly, I am satisfied that the arbitrator did not err in finding that the worker's total incapacity resulted from his work related injuries for the purposes of s 21 and the arbitrator did not err in proceeding on the basis that the multiple sclerosis was not a novus actus in terms of the cause of the worker's total incapacity.

136 As I have already stated, and for reasons which should now be readily apparent from my above discussion of the decision in Michael v Panetta, I do not share the view expressed by Commissioner McCann in [9] of his judgment that Michael v Panetta is authority for the proposition that it is not necessary for expert psychological or psychiatric evidence to be led in order to establish the causal involvement of an illness conviction. In Michael v Panetta there was relevant psychological evidence before the court and Pidgeon J limited his remarks to the need to adduce psychiatric evidence.

137 Leaving this issue aside, what is clear from a review of the decision of Commissioner McCann in SDR Australia v Nedic is that the decision is not, contrary to the view expressed by the arbitrator in the present case, authority for the proposition that a finding of illness conviction can be made in the absence of medical evidence. There was, as my above discussion of the case reveals, a significant amount of medical evidence, even if not psychological or psychiatric evidence, which provided a basis for the decision of the arbitrator in that case that the respondent suffered from an illness conviction.

138 In summary, in my opinion nothing in the decisions in Michael v Panetta and SDR Australia v Nedic alters the fundamental and trite principle, that before a trier of fact can make a finding of fact there must be some evidence which is capable of providing a basis for the making of that finding.

Was there evidence of illness conviction?

139 Against the background of the relevant authorities, I turn to what is the essential question raised by this ground of appeal, namely whether there was before the arbitrator any evidence upon which he could properly find that the respondent had developed an illness conviction.

140 The respondent did not give evidence capable of providing a basis for finding that he was suffering from illness conviction or some form of psychological overlay. However, for obvious reasons one would not expect him to. If a person genuinely believes that he is suffering from the pain symptoms he describes he is hardly going to be in a position to give evidence that his honest belief may be unfounded and the result of an illness conviction.

141 As is apparent from my above summary of the medical evidence adduced before the arbitrator, not one of the medical witnesses in their reports made reference to the possibility that the appellant had an illness conviction, or abnormal illness behaviour or a psychological overlay. Further, and as is again apparent from my summary of the medical evidence, the only passing references to what might loosely be described as psychological issues (none of which were specifically drawn to my attention by either the appellant's counsel or the respondent's counsel at the hearing of the appeal) were made by Dr Collis, Mr Clarke and Dr Dare.

142 Dr Collis in his report dated 20 June 2014 stated that he had noted 'in several of the reports' that mention had been made of the respondent's level of anxiety and that it did not appear that this had been seriously considered in relation to the respondent's overall symptomatology. He also stated that 'since there appears to be a large amount of anxiety related symptomatology which has been referred to at various times in the reports over the years, it would seem reasonable to seek to have some sort of thorough psychological assessment done in that regard'. It is not clear from Dr Collis' report or any of the other evidence that was before the arbitrator precisely what other reports he is referring to. In any event, Dr Collis' statements amount to nothing more than a reference to what other unidentified report writers have said or 'mentioned' about the respondent's anxiety related symptomatology and an assertion that in light of these other reports it would seem reasonable for the respondent to be psychologically assessed. Dr Collis' statements cannot be construed as some expression of opinion by Dr Collis that the respondent was experiencing some enhanced level of anxiety that was related to his symptomatology. They certainly cannot be construed as indicating that Dr Collis' opinion was that the respondent had developed an illness conviction or psychological overlay.

143 In his reports dated 22 February 2010 and 4 August 2010 Mr Clarke expressed the view, in effect, that the experiencing by a patient of chronic groin pain following hernia repair surgery is more prevalent in those patients, like the respondent, who have initiated workers' compensation litigation. Mr Clarke's statements to this effect cannot be interpreted as amounting to an expression of opinion that a possible explanation for the respondent's perception of his symptoms is an illness conviction.

144 Dr Dare, in his report dated 4 March 2010, stated that the respondent 'appears to have become significantly distressed and anxious regarding his ongoing symptoms'. Again, a statement that the respondent was distressed and anxious regarding his symptoms is not evidence that the respondent's perception of the severity of his symptoms may be being enhanced by an illness conviction or a psychological overlay.

145 I note that in stating that the only passing references to psychological issues are contained in the above referred to reports of Dr Collis, Mr Clarke and Dr Dare, I have not overlooked the addendum to Dr Gee's report dated 7 February 2011. As I have previously noted, in that addendum Dr Gee stated that the respondent had attended his practice in 2003 following a motor vehicle accident and that 'at that time he had a back injury and the progress was extremely slow despite normal MRI scannings of his lumbar spine'. This statement by Dr Gee, even if it can be construed as some sort of hint or suggestion by him that there may have been psychological issues at play back in 2003 (and I am not by any means sure that the statement can be so construed), is quite obviously not evidence that the respondent had an illness conviction or psychological overlay when he examined the respondent in February 2011.

146 In short, and unlike the situation that existed in both Michael v Panetta and SDR Australia v Nedic, there was no medical evidence or other evidence before the arbitrator which was to the effect that a possible explanation for the severity of the respondent's symptoms as described by the respondent, in the absence of an apparent organic explanation for the symptoms, was an illness conviction or some form of psychological overlay. There was, quite simply, no such evidence. Indeed, there was not even evidence of what an illness conviction is, the arbitrator having informed himself of the meaning of this concept by reference to other cases in which evidence of such a condition had been adduced.

147 I do not accept that a finding by the arbitrator that the respondent gave honest evidence in relation to his symptoms, assuming that the arbitrator did make this positive finding before deciding if he could infer the existence of an illness conviction, provided in itself a basis for inferring that the explanation for his perception of his symptoms was, in the absence of an organic explanation, an illness conviction. The issue of whether or not the respondent had developed an illness conviction was not one on which an ordinary person could form a sound judgment without the assistance of expert evidence. In the absence of some psychological evidence, psychiatric evidence or other form of medical evidence as to what an illness conviction is and how it might be applicable to the case of the respondent, I do not consider that it was open to the arbitrator, whatever view he had taken of the respondent's credibility, to draw the inference that the respondent had developed an illness conviction: Rodriguez v Telstra Corporation Limited [21], [25] – [27]; Kaur v Victorian WorkCover Authority [2014] VSCA 300 [42] – [44].

148 Alternatively, if the arbitrator adopted the approach of taking into account the possibility of the respondent having an illness conviction in determining if he should believe or accept the respondent's evidence as to the extent of his symptoms, there was no basis in the evidence for him to do so. Again, in the absence of psychological evidence, psychiatric evidence or other form of medical evidence supporting the existence of an illness conviction in the respondent's case it was not in my view permissible for the arbitrator to take into account the possibility of the respondent suffering from such a condition in deciding whether to accept the respondent's evidence as to his symptoms: Rodriguez v Telstra Corporation Limited [21], [25] – [27]; Kaur v Victorian WorkCover Authority [42] – [44].

149 For the reasons I have stated I am satisfied that the arbitrator made an error of law in finding, in the absence of evidence, that the respondent had developed an illness conviction with the consequence that the injury was totally incapacitating. I would therefore grant leave to appeal on ground 1 and allow the appeal.

Ground 2

150 I turn to the second ground of appeal. The essence of the complaint contained in this ground is that the arbitrator made a finding that the respondent was totally incapacitated for work during the period 22 June 2009 to 3 October 2009 when the issue of his incapacity during this period was not the subject of conciliation. The ground of appeal was not addressed in any detail by either counsel at the hearing of the appeal.

151 The appellant's argument advanced in support of the ground is based on a reading of s 182E, s 182O, s 182ZT and s 182ZU of the Act. The submission ultimately made was that on a proper construction of these provisions an arbitrator cannot determine a matter in dispute between the parties unless the conciliation officer certifies that the matter needs to be resolved. I note that it was at no point contended by the appellant that it was denied natural justice or in some other way prejudiced in its defence of the claim by reason of the arbitrator dealing with the issue of the respondent's incapacity during the period 22 June to 3 October 2009.

152 The ground as pleaded and as argued clearly involves a question of law. However, counsel in argument did not deal with the question whether the amount of compensation in issue by reason of this ground is an amount equal to or greater than the amounts specified in s 247(2)(a)(i) of the Act. Further, I am not able to confidently work this out for myself based on the material before me. Therefore I will, for the time being, proceed to deal with the merits of the ground on the assumption that the requirements of s 247(2)(a)(i) are met.

Relevant factual background

153 On 22 June 2013 the respondent made an application under s 182E(1) of the Act for resolution of a dispute between himself and the appellant by conciliation. The application was made in the form approved by the Workers' Compensation Conciliation Service (Form 100). In the section of the application headed 'Section O – Outcomes Sought' the respondent stated that he sought 'weekly payments being reinstated from 3 October 2009 until the present day at a rate of $784.22 gross or $602.32 net per week and associated statutory allowances'. In the same section of the form the respondent also stated that he sought 'payment of medical expenses including consultations with his General Practitioner, review by the treating surgeon, review by a pain specialist and associated treatments'.

154 On 1 October 2013 a conciliation conference took place. The conference did not result in the resolution of the dispute between the appellant and the respondent. In accordance with s 182O(2) of the Act the conciliation officer, at the conclusion of the conciliation, issued a certificate setting out the outcome of the conciliation. The terms of the certificate were, so far as is relevant, as follows:

1. Issues referred for conciliation

1. Determination of liability – The applicant worker seeks weekly payments of compensation from 3 October 2009 to date at a rate of $784.22 gross per week or $602.32 net per week and statutory allowances in relation to hernias sustained on 12 October 2006.

2. Issues resolved

Not Applicable.

100. Issues remaining in dispute

1. 1/10/2013 – Minimal prospect of resolution – The respondent reserves its rights to dispute liability for any recurrence claimed by the applicant in June 2009 and puts in issue the extent of the injury. The respondent disputes the period and extent of incapacity for work claimed by the applicant. The respondent reserves its rights in relation to the costs of this application and any application for Arbitration.

4. Payment directions made

Not Applicable.

5. Details of Outcome

At the conciliation conference held on 1 October 2013 the parties were unable to resolve the issues in dispute.
The conciliation officer considers there is minimal chance of the parties reaching an agreement at conciliation.

6. Comments

The Conciliation Service file has been finalised.

155 On 21 October 2013, following the unsuccessful conciliation proceedings, the respondent made an application under s 182ZT of the Act for the dispute between himself and the appellant to be determined by arbitration. The application was made in the form approved by the Workers' Compensation Arbitration Service (Form 150). The application had attached to it, as required by s 182ZU, the certificate issued by the conciliation officer.

156 In the section of the form headed 'Section N - Issues remaining in dispute following conciliation which require arbitration' the respondent stated the following:

The Applicant seeks weekly payments being reinstated from 22 June 2009 until the present day at a rate of $784.22 gross or $602.32 net per week and associated statutory allowances.
The Applicant seeks payment of medical expenses and reasonable future medical expenses including consultations with his General Practitioner, review by the treating surgeon, review by a pain specialist and associated treatments.

157 In the next section of the form headed 'Section O - Additional Issues NOT included in the Application for Conciliation' the respondent stated:

The Applicant originally sought weekly payments from 3 October 2009. The Applicant submits that weekly payments should be reinstated from 22 June 2009.

158 It should be noted in this regard that immediately under the heading to section O of the form the following words, which were part of the standard form, appeared in brackets:

The Arbitrator will advise whether these issues will be included in the scope of the arbitration of this application.

159 As is apparent from my above recitation of the factual background, the respondent did in his application for the dispute to be resolved by arbitration raise an issue that was not the subject of the conciliation proceedings, namely his right to weekly payments for the period 22 June 2009 until 3 October 2009.

The statutory provisions

160 I turn now to the precise terms of the relevant statutory provisions.

161 Section 182E provides, so far as is relevant:

(1) A party to a dispute (referred to in this Division as the dispute) may apply to the Director in accordance with this Act and the conciliation rules for resolution of the dispute by conciliation.
...

162 Section 182O of the Act provides, so far as is relevant:

(1) Conciliation of the dispute ends when —

(a) agreement is reached by the parties on all matters in dispute; or

(b) the conciliation officer believes that there is minimal chance of agreement or further agreement, as the case may be, being reached; or

(c) the time limit for conciliation, as provided or extended under the conciliation rules, has expired.

(2) At the end of conciliation of the dispute the conciliation officer is to issue a certificate in accordance with the conciliation rules setting out —

(a) the outcome of conciliation; and

(b) the terms of any direction currently in force under section 182K or 182L.

...

163 Section 182ZT provides:

If a dispute has not been resolved by conciliation, a party to the dispute may apply to the Registrar in accordance with this Act and the arbitration rules for determination of the dispute by arbitration.

164 Section 182ZU provides:

(1) An application for arbitration cannot be accepted by the Registrar unless it is accompanied by —

(a) a certificate issued by the Director under section 182H stating that no matter in dispute is suitable for conciliation; or

(b) a certificate issued by a conciliation officer under section 182O identifying the matter or matters in dispute that have not been resolved by conciliation.

(2) The Registrar may reject an application for arbitration if it does not comply with the arbitration rules.
(3) Arbitration commences when an application for arbitration is accepted by the Registrar.

165 I pause here to note that s 182ZU does not provide that a registrar cannot accept an application for arbitration which specifies as an issue in dispute an issue that was not the subject of the conciliation proceedings. The fact that the section does not so provide is consistent with both the above referred to 'Section O' of the application for arbitration form which clearly envisages that additional issues may be included in the application for arbitration, and the below referred to in s 189.

166 Section 185 of the Act provides, so far as is relevant:

(1) The arbitrator to whom a dispute is allocated is to determine the matter or matters in dispute in accordance with this Act and the arbitration rules.
...

167 Section 188 relevantly provides:

(1) An arbitrator is bound by rules of natural justice except to the extent that this Act authorises, whether expressly or by implication, a departure from those rules.
(2) The Evidence Act 1906 does not apply to proceedings before an arbitrator and an arbitrator —

...

(b) is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.

...

168 Section 189 provides:

(1) The granting of relief or redress under this Act is not necessarily to be restricted to the specific claim made nor to the subject matter of the claim.

(2) However subsection (1) does not prevent the arbitrator from determining that a matter is beyond the scope of the application for conciliation that preceded the application for arbitration and should be the subject of another application for conciliation.

169 I note that implicit in the wording of s 189(2) is the proposition that the arbitrator is not precluded from dealing in the arbitration with a matter that is beyond the scope of the conciliation that preceded the application for arbitration.

170 Finally, and to complete the picture, s 190 provides:

(1) An arbitrator may give directions at any time in a proceeding and do whatever is necessary for the speedy and fair conduct of the proceeding.

(2) An arbitrator may give directions on the initiative of the arbitrator or on the application of a party.

(3) A directions hearing conducted by an arbitrator may be held for the purposes of this section before the hearing of the proceeding.

Analysis and decision

171 As is apparent from what I have already said in setting out the relevant provisions of the Act, I do not accept that the arbitrator made an error of law by finding that the respondent was totally incapacitated for work during the period 22 June 2009 to 3 October 2009 by reason of the fact that the issue of his incapacity during this period was not specifically raised during the conciliation proceedings. In my opinion there is simply no basis in the wording of the above cited relevant statutory provisions for concluding that an arbitrator, in dealing with an arbitration, is confined to determining the issues that were actually in dispute and dealt with during conciliation proceedings. The position is, in my opinion, as follows.

172 If a dispute has not been resolved by conciliation a party to the dispute can apply to the registrar for determination of the dispute by arbitration: s 182ZT. The party can at this point include in his or her application an issue in dispute which was not the subject of conciliation. If the application is accepted by the registrar the arbitration commences: s 182ZU(3). It is then a matter for the arbitrator to decide if the issue in dispute which is identified in the arbitration application but which was not the subject of conciliation should be determined by the arbitration: s 185(1), s 189, s 190(1). In deciding this question the arbitrator must give consideration to issues of procedural fairness and the need to act according to equity, good conscience and the substantial merits of the case: s 188(1) and s 188(2)(b). Clearly, if (as in the present case) the additional issue in dispute identified in the application for arbitration is one that arises out of, or is closely related to, the issue or issues that were in dispute at conciliation, and the issue is one which can be dealt with in the arbitration without causing prejudice to the other party, then the arbitrator will be more likely to exercise his or her discretion to deal with the issue as part of the arbitration.

173 In the present case the arbitrator obviously and understandably decided to determine the question of the respondent's incapacity during the period 22 June 2009 to 3 October 2009 even though this was not an issue that was raised or in dispute during the conciliation proceedings. This was something that he was entitled to do under the statutory provisions to which I have referred.

174 In my opinion, and for the reasons I have stated, this ground of appeal is without merit. I therefore, assuming in the appellant's favour that the requirements of s 247(2)(a)(i) are met, refuse leave to appeal on this ground.

Conclusion

175 As I have previously indicated, the appellant seeks an order that the respondent's application for weekly payments that was before the arbitrator be dismissed. The respondent's counsel did not seek to argue that if I upheld the appeal on ground 1 any other form of order was appropriate.

176 The arbitrator's findings were that the respondent's chronic pain caused by the injury rendered the respondent totally incapacitated for work from 22 June 2009 ([123] – [130]), that he was not satisfied that the respondent was totally incapacitated from a physical point of view other than for a few months following his surgery ([138]), that he was unconvinced that the respondent had established that from a physical perspective he was totally incapacitated after March 2010 ([140]), and that it was clear that the medical evidence was to the effect that the respondent in about March 2010 had a physical capacity to return to some work and was therefore not totally incapacitated ([140]). It is therefore apparent that the arbitrator's ultimate finding was that the respondent was for physical reasons, as opposed to by reason of an illness conviction, totally incapacitated for work during the period 22 June 2009 to March 2010 ([198]). Given that I have found that the arbitrator's error lay in finding that the respondent had developed an illness conviction with the consequence that the injury was totally incapacitating, it is not in my view appropriate to make an order dismissing the respondent's application for weekly payments to the extent that the application related to the period 22 June 2009 to the end of March 2010.

177 I will hear the parties as to the precise terms of the orders I should make in order to give effect to my decision. However, subject to hearing from the parties I would propose to make orders in terms similar to the following:

1. Leave to appeal is granted.
2. The appeal is allowed.
3. The decision of Arbitrator Rutherford that the appellant pay to the respondent weekly payments of compensation for total incapacity from 22 June 2009 is varied so as to require the appellant to pay the respondent weekly payments of compensation from 22 June 2009 to 31 March 2010 only.