State of Tasmania v Clifford [2011] TASSC 10 (24 February 2011) Last Updated: 24 February 2011 [2011] TASSC 10 COURT: SUPREME COURT OF TASMANIA CITATION: State of Tasmania v Clifford [2011] TASSC 10 PARTIES: STATE OF TASMANIA v CLIFFORD, Patrick George FILE NO/S: 891/2010 JUDGMENT APPEALED FROM: State of Tasmania v Clifford [2010] TASWRACT 30 DELIVERED ON: 24 February 2011 DELIVERED AT: Hobart HEARING DATE: 11 February 2011 JUDGMENT OF: Blow J CATCHWORDS: Workers Compensation – Proceedings to obtain compensation – Determination of claims – Procedure – Procedure before hearing – Whether "reasonably arguable case exists". Workers Rehabilitation and Compensation Act 1988 (Tas), s81A(3). St Helens Oysters Pty Ltd v Coatsworth [2007] TASSC 90 ; (2007) 17 Tas R 43 , followed. Aust Dig Workers Compensation [307] REPRESENTATION: Counsel: Appellant: P Turner Respondent: C N Dockray Solicitors: Appellant: Director of Public Prosecutions Respondent: C N Dockray Judgment Number: [2011] TASSC 10 Number of paragraphs: 15 Serial No 10/2011 File No 891/1010 STATE OF TASMANIA v PATRICK GEORGE CLIFFORD REASONS FOR JUDGMENT BLOW J 24 February 2011 1 This appeal concerns a dispute between a public servant, Patrick Clifford ("the worker"), and his employer, the State of Tasmania, as to whether he is entitled to weekly payments of workers compensation. 2 The worker is employed at the Ashley Youth Detention Centre as a youth worker. On 12 April 2010 a pornographic DVD was found at Ashley. Subsequently, officers of the relevant department, the Department of Health and Human Services, suspected that the worker may have been involved in making one or more inappropriate DVDs available to detainees without permission, and contrary to written instructions in documents called "Standard Operating Procedures". An officer of the department, Mr Witt, recommended a formal investigation. The secretary of the department accepted that recommendation and, on 4 May 2010, wrote to the worker advising him that he intended to investigate allegations that he may have committed breaches of the State Service Code of Conduct. An interview of the worker was arranged for 31 May 2010 as part of the investigation. The worker ceased work on 22 May 2010 and claimed weekly payments of compensation. He presented a medical certificate that said he was incapacitated for work as a result of work-related stress. 3 The State decided to dispute liability for the payment of compensation. It referred the matter to the Workers Rehabilitation and Compensation Tribunal ("the tribunal") under the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s81A. There was a hearing before a commissioner of the tribunal. The State contended that, pending the determination of the worker's claim, it should not be required to make weekly payments. It relied on the Act, s25(1A)(c) , and contended that no compensation was payable because the worker was suffering from an illness or disorder of the mind which arose substantially from "reasonable administrative action taken in a reasonable manner". The learned commissioner held that the State did not have a reasonably arguable case, and ordered the payment of compensation pursuant to s81A(3)(a). The State contends that it did have a reasonably arguable case, and that the learned commissioner erred in law in holding that it did not. 4 In summary, the relevant provisions of the Act provide as follows: • If, in any employment, a worker suffers a "disease" arising out of and in the course of that employment, and to which the employment "contributed to a substantial degree", the employer is liable to pay compensation, subject to certain exceptions: s25(1)(b). • Compensation is not payable in respect of an illness of the mind or a disorder of the mind which arises substantially from reasonable administrative action taken in a reasonable manner by an employer in connection with a worker's employment: s25(1A)(c). • As a general rule, an employer is required to commence making weekly payments of compensation to a worker following the receipt of a claim for compensation: s81. • An employer who disputes liability to pay compensation must, within 84 days of receiving a claim for compensation, serve the worker with written notice that it disputes liability, inform the worker of the reasons for disputing liability, and refer the matter to the tribunal: s81A(1). • The tribunal must then decide whether it considers that a reasonably arguable case (for the employer) exists as to the payment of compensation. If it considers that the employer has a reasonably arguable case, the tribunal must determine that compensation is not to be paid by the employer. Otherwise, it must order the employer to make payments: s81A(3). The "reasonably arguable case" test is an objective test: St Helens Oysters Pty Ltd v Coatsworth [2007] TASSC 90 ; (2007) 17 Tas R 43 at par[10]. • Determinations and orders under s81A(3) are interim ones. The unsuccessful party may fully contest the question of liability before the tribunal at a later hearing: Walker v J & A Freeman Building Services [2006] TASSC 90 ; (2006) 16 Tas R 87 at par[23]. • If any party to a proceeding before the tribunal is aggrieved by a determination or order "in point of law", that party may appeal to this Court: s63(1). If the material before the tribunal compelled a conclusion that a reasonably arguable case existed, but the tribunal held otherwise, there was an error in point of law: Protective Security Pty Ltd v Bedelph [2004] TASSC 128 ; (2004) 13 Tas R 354 ; Tanase v Acme Engineering (Tas) Pty Ltd [2006] TASSC 100 at pars[21] – [26]; St Helens Oysters Pty Ltd v Coatsworth (supra) at par[15]. If, on the material before the tribunal, reasonable minds could differ as to the existence of an arguable case, a conclusion one way or the other could not, of itself, be regarded as indicating any error of law. 5 There does not appear to be any dispute between the parties as to the following matters: • The worker became incapacitated for work. • His incapacitating illness was precipitated by his receipt of the secretary's letter of 4 May 2010 advising him of allegations of possible misconduct and the intended formal investigation. • The initiation of the formal investigation and the writing of that letter constituted administrative action taken in connection with the worker's employment. 6 However there is a dispute as to whether the decision to initiate a formal investigation as to whether the worker had breached the State Service Code of Conduct amounted to reasonable action taken in a reasonable manner within the meaning of s25(1A)(c). 7 The learned commissioner recognised that the critical question for him to determine was whether the State had an arguable case as to that issue. He referred to St Helens Oysters Pty Ltd v Coatsworth , and correctly stated that answering that question required a consideration of "the material available in relation to the claim". He correctly acknowledged that it was not his role to assess the credibility or merit of the material, but to assess "whether that material could, if accepted after a contested hearing, make it reasonably arguable that the employer's action in initiating its investigation of the worker was reasonable". 8 The State contends that the learned commissioner, having correctly stated the approach that he was required to take, proceeded to err in the way he applied the law to the facts. The learned commissioner said this: "7 What then is 'the material?' As I have set out above the employer became aware on 12 April 2010 that prohibited material in the form of a pornographic DVD had been found within AYDC. Its enquiries indicated that Mr Deane [the worker's team leader] had brought onto the premises a folder of DVDs which CCTV footage suggested included the offensive video and that the worker's actions had enabled a resident access to [sic] the folder. On 18 April the worker was questioned about these events. He explained that a resident had requested to see Mr Deane's DVDs and that he sought and received Mr Deane's permission for the resident to choose a DVD from the folder. The evidence also shows that the worker asserted that he was unaware a pornographic DVD was within the folder, that he believed Mr Deane had sought and received permission to bring the folder onto the premises and that he was doing nothing wrong by enabling a resident access to the folder when Mr Deane, as his Team Leader, had expressly permitted him to do so. It is pertinent for me to note that the employer has not put before the Tribunal any information which contradicts the assertions made by the worker or in any way suggests a differing account consistent with misconduct on the worker's part. 8 It is not reasonable for an employer to arbitrarily initiate the investigation of a worker for misconduct without a proper basis for doing so. In the case at hand the information before the employer, at the time it took its decision to formally investigate the worker, showed that he was unaware of the existence of the offensive DVD, that the folder supposedly containing it had not been brought onto the premise [sic] by him and that he had only enabled access to it by residents after receiving the permission of his superior to do so. In these circumstances it could not, in my opinion, be reasonably arguable that the employer's decision to initiate a formal investigation of the worker for misconduct was reasonable administrative action reasonably taken by the employer. It therefore follows that I am not satisfied that a reasonably arguable case exists concerning the worker's claim. There will be an order dismissing the employer's reference." 9 Counsel for the worker made submissions to me that were based on premises that (a) the secretary's initiation of a formal investigation could be reasonable only if he had evidence of the worker having contravened the Code of Conduct; and (b) the only material before the secretary as to the worker's conduct comprised the worker's exculpatory version of events. He referred me to the State Service Act 2000, ss7 – 10 . Under s8 the secretary, as a Head of Agency, was obliged to uphold, promote and comply with the "State Service Principles". Those principles are listed in s7(1). Amongst other things, they provide that the State Service "is apolitical, performing its functions and in an impartial, ethical and professional manner"; that it "is a public service in which employment decisions are based on merit"; that it "establishes workplace practices that encourage communication, consultation, cooperation and input from employees on matters that affect their work and workplace"; that it "provides a fair, flexible, safe and rewarding workplace"; and that it "promotes equity in employment": s7(1)(a) , (b), (h), (i) and (k). It was submitted that these were "good faith obligations". Section 9 sets out a list of conduct requirements that are defined in that Act as the "Code of Conduct". They govern the conduct of State Service employees in the course of their employment. Employees are required by s9(1) to "behave honestly and with integrity"; by s9(2) to "act with care and diligence"; by s9(6) to "comply with any standing orders"; by s9(13) to "behave in a way that upholds the State Service Principles"; and by s9(14) to "behave in a way that does not adversely affect the integrity and good reputation of the State Service". Under s10 , the relevant Minister may impose sanctions for breaching the Code of Conduct. Those sanctions range from counselling to the termination of employment. Provision is made in s10(3) for the establishment of "procedures for the investigation and determination of whether an employee has breached the Code of Conduct". 10 Counsel for the worker submitted that, on the material before the tribunal, there was no evidence that the worker knew that any DVD he was handling was pornographic, and that his obligation of "care and diligence" under s9(2) could not reasonably be regarded as requiring him to check the contents of the folder of DVDs when, on his version of events, he believed that his team leader had obtained permission to bring them into Ashley. In my view all those submissions are based on a fundamentally incorrect premise. Evidence of a contravention of the Code of Conduct was not essential for the initiation and notification of an investigation to be reasonable. 11 It is important to recognise the nature of the administrative action taken by the secretary on 4 May 2010. The secretary did not decide to deal with the worker for breaches of the Code of Conduct. He decided to initiate an investigation as to whether or not the worker had committed any such breaches. In evaluating whether that action was reasonable it is therefore not appropriate to consider only whether the available material contained direct evidence of contraventions of the Code by the worker. The very nature of an investigation is that it involves a quest for additional evidence. 12 According to the material before the learned commissioner, the secretary had the following information: • A pornographic DVD had been found on 12 April. • Mr Deane admitted bringing DVDs into Ashley on 10 April, but denied knowledge of the one that had been found. • According to Mr Witt's report, there was "indirect evidence from CCTV footage to suggest the pornographic DVD was among those brought on site by Mr Deane." • The worker admitted providing DVDs to detainees on 10 April, said they were brought on site by Mr Deane, said he believed Mr Deane had permission to bring them in, and denied any knowledge of a pornographic DVD. • Mr Deane did not have authority to bring any DVDs on site. 13 There was no mention in Mr Witt's report of any evidence tending to suggest that the pornographic DVD might have been brought into Ashley by anybody other than Mr Deane or the worker. It is clear that the secretary had not spoken to either of those two men, and was not in a position to make any assessment as to the credibility of their assertions that they knew nothing about it. It would therefore not have been reasonable for him to conclude that either of them had not contravened the Code of Conduct. All questions as to the culpability of those two employees and/or other staff were wide open. When there is evidence of a breach of the Code of Conduct, but no conclusive evidence as to who breached it, it cannot be unreasonable to investigate those who might have committed the breach. If the argument advanced on behalf of the worker is correct, it would not be reasonable to investigate anyone in relation to an established breach unless there was evidence as to who committed it. 14 A formal investigation in this case could have involved examination of the relevant CCTV footage, and the interviewing of the worker, Mr Deane, other staff, and detainees. It was reasonably possible that a formal investigation might have shed further light on the question whether the worker had contravened the Code of Conduct. If it was reasonable to initiate the investigation, then I can see no basis for suggesting there was anything unreasonable about the way the worker was notified of that investigation. I think it follows that it was reasonably arguable that the decision to initiate a formal investigation and the writing of the letter notifying the worker of that decision constituted reasonable administrative action taken in a reasonable manner. In my view there was no basis for any other conclusion. That is to say, I consider that the material before the tribunal compelled a conclusion that a reasonably arguable case existed, and that the learned commissioner erred in law in deciding that there was no such reasonably arguable case. 15 I therefore order that the appeal be allowed, and that the determination of the tribunal be set aside. I determine that, pursuant to s81A(3)(c) and (d), compensation and the costs of benefits payable under Div2 of PtVI of the Act are not to be paid by the appellant.