Allied Constructions Pty Limited v Norbedo

[1993] HCATrans 25

•

.

~

•

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S76 of 1992

B e t w e e n -

ALLIED CONSTRUCTIONS PTY

LIMITED

Applicant

and

FRANK NORBEDO

Respondent

Application for special leave

to appeal

MASON CJ TOOHEY J McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 FEBRUARY 1993, AT 12.27 PM

Copyright in the High Court of Australia

Allied 1 12/2/93

MR P.J. DEAKIN, OC: If the Court pleases, I appear for the

applicant in this matter with my learned friend,

MR S.G. CAMPBELL.	(instructed by Hickson Lakeman &
Holcombe)

MR D.F. JACKSON, QC:  May it please the Court, I appear with

my learned friend, MR T.J. WILLIS, for the

respondent. (instructed by Taylor and Scott)

MR DEAKIN:  Could we hand to Your Honours a bundle, most of

which we would be confident we need not take

Your Honours to, but it includes an outline of our

submissions and such cases as we consider are

relevant to the argument before Your Honours.

MASON CJ:  Is it really necessary to copy as much material

as this for a special leave application in relation

to a very confined point?

MR DEAKIN:  We are confident not, but we thought there may

be some statements of general principle there we

might need to have recourse to. But we accept what

Your Honour says, that it is very unlikely that, with two possible exceptions, we will be taking

Your Honours to the case material that is in that

bundle.

I do not know whether Your Honours wish to be

taken to the provisions which now appear in the

1987 Act dealing with questions of partial

incapacity. Your Honours are probably - - -

MASON CJ:	We do not need to be taken to them unless you want to place particular reliance on some provision
in support of your argument.

MR DEAKIN:  No, we do not, Your Honour. We would

submit -

McHUGH J: Let me ask you this, though. How do all these

theoretical arguments arrive, having regard to the

finding of the trial judge at page 7?

MR DEAKIN:  The finding at the top of the page?

McHUGH J: Yes. He said:

Doing the best that I can with the evidence, I think it probable -

MR DEAKIN:  Your Honour, if the learned trial judge had not

had resort to what we submit are impermissible

considerations -

McHUGH J:	What are they?
Allied	12/2/93
MR DEAKIN:	- - -then that finding could not be disturbed.

MCHUGH J: But what are these impermissible considerations?

MR DEAKIN:  We would be submitting to Your Honours that

where the error occurred, both at first instance and perpetuated in the Court of Appeal, was that for the first time factors going to the

availability of work and the likelihood of the

worker obtaining work from another employer were

taken into account in assessing the quantum of

compensation payable to the worker. We submit that

the taking into account of matters of that kind is

outside anything contemplated by the section and

not supported by any prior authority. This Court

has firmly stated, and it is clear beyond doubt,

that the assessment of what is the true amount

representing the worth of someone's labour, if he

is employing, is not to be bound by some strict

rules and it is to be a flexible test, depending on

the circumstances of the case. That is firmly

established by the Cage Development case.

But, Your Honours, what is firmly established

by Cage Development and all of the authoriti~s that

led up to that is that it is nevertheless an
assessment of the worth of that work by reference

to the work and not be reference to matters

extraneous to the work being performed, namely
considerations of whether some employer may or may

not offer the worker some work similar to or

identical to the work that he is in fact

performing. It is the combination of that factor,

together with what we submit is the other

fundamental error in what the court below invoked,

and that is that the - and perhaps we can take

Your Honours to the outline of submissions

conveniently - the other matter which we say was

not only a taking into account of those matters

which are irrelevant under the Act, but it was also

an assessment done without any recourse to the fact	that this man was working established hours, namely	50 to 60 hours, in a particular employment, namely
conducting his own shop.

McHUGH J: But the section requires you to take into account

the average weekly amount which he is earning or is

able to earn in some suitable employment.

MR DEAKIN:  Yes, Your Honour.

McHUGH J: Well, he was not earning.anything.

MR DEAKIN:  No, Your Honour, we accept that.

Allied 3 12/2/93

McHUGH J:  Then the question was, what is he able to earn in

some suitable employment? The trial judge said,

doing the best I can, it is $250.

MR DEAKIN: That process would be unimpeachable, we concede, if she had firstly had proper regard to, and looked

at, the value of the work which he was performing.

We say she did not do that - - -

McHUGH J:	How do you know she did not?
MR DEAKIN:	Because she makes no reference to any assessment

of the value of that work.

McHUGH J:  That does not mean anything. She did not say she

did not take it into account.

MR DEAKIN:	Your Honour, she does not refer to it in fact, neither as to the hours he was working or in any
details the nature of the work that he was in fact
performing.
McHUGH J:	I know, but it seems to me that this whole case,

you have put up a straw man to knock down.

MR DEAKIN:  We submit two critical issues do arise from a

consideration of this case, the first being, what

relevance should the court attach to the fact of a

person being engaged in full time employment when

assessing the amount of compensation to be paid to

him by reference to section 40 where it talks about

what he is able to earn. We submit that the

starting point, as it is well established on the

authorities when he is earning, should be the fact

of him working those hours and the work which he is

performing.

MASON CJ: But he was not deriving any income from that at

all.

MR DEAKIN:  No, we accept, Your Honour, that it was a

business making a loss, but that is, with respect,

the second question, namely, looking at the worth
of that work, how does one then go about fairly

assessing the value of that work.

MASON CJ:  But how do you get to the point of valuing that

work? He was earning nothing from it so that is

the end of it, is it not?

MR DEAKIN:  No, with respect, not, Your Honour. There are a

number of methods which have been well established

on the authorities for valuing that sort of work:

by reference to either what he would have to pay

someone else to do the work; alternatively, what he

would be paid by someone else to perform that work;

and there are other adjustments which can be made

Allied 4 12/2/93

by reference to return on capital and there are

numerous such tests and methods of valuing it which

are set out in these authorities that we have

referred to.

But those are all matters which, with respect,

we would submit arise from the second stage,

namely, the valuing of the work. But what

Her Honour failed to do, with respect, was to make

any attempt at valuing the work that he was

performing, neither by looking at the nature of the

work that he was doing nor by looking at the hours

of work which he was performing.

McHUGH J:	I do not know how you can say that.
MR DEAKIN:	Your Honours, we submit that is what Her Honour

failed to do. She refers to it - and we should

take Your Honours to her findings in her own

judgment which is reproduced in

Mr Justice Mahoney's judgment, but her own

judgment, on the page Your Honour Justice McHugh

has referred me to, Your Honours see - - -

MASON CJ:	What page is this?
MR DEAKIN:	Page 6 of the application book, Your Honour,

commencing at about lines 7 or 8:

I accept the applicant's evidence that his
lack of formal education, limited literacy and

numeracy, prevents his calculating or

understanding simple bookkeeping procedures in

connection with a retail establishment.	As I
understand the worker's evidence, those

deficiencies proved a substantial handicap and

prevented his completing an apprenticeship and proved a disability on the open labour market,

even at a time when the applicant was much

younger and not physically disabled.

Considering the applicant's age, his working

experience, his lack of a formal trade or

other qualification, it seems to me that even

without his present disability, he would be

unlikely to obtain any type of full-time work

which required basic arithmetical, writing and

literacy skills.

Pausing there, Your Honours, firstly it is clear that she is referring to the position both before and after the injury because she refers to even

without his present disability, therefore it is

something which should be taken into account both

on the positive and the negative side, but leaving

that point aside, what she there refers to is not

his capacity to work, with respect, Your Honours;

Allied 12/2/93

not his ability to perform tasks, but that he would

be unlikely to obtain any type of full-time work

requiring those matters. That is by reference to
not his capacity, not his work that he is
performing or is able to perform, but the

likelihood of someone offering his such a job.

McHUGH J: That is just a step on the way to determining

what he is able to earn in some suitable employment
which is defined to mean what he "is able to earn

in the general labour market reasonably accessible

to" him.

MR DEAKIN: With respect, what we point to is the fact that

that introduces an extraneous consideration which

is not included in the Act as being any matter that

the court should have regard to in assessing what

ability to earn the man has, nor is it supported by

any other authority dealing with the assessment of

compensation. There is no authority, we would put

the proposition as high as this, to support the

proposition that in assessing capacity or ability

to earn, the court is entitled to have regard to

availability of work or the likelihood that some

employer would offer the man work. Those are

matters extraneous to the worker himself and, we

say, permeate the whole of this judgment and

constitute a manifest error amounting to an error

of law.

MASON CJ: But what about section 40(1A)?

MR DEAKIN:  Your Honour, subsection (lA) of section 40

refers to suitable employment in the general labour

market - - -

McHUGH J:  "is able to earn in the general labour market

reasonably accessible to the worker".

MR DEAKIN:	Yes.
McHUGH J: That is not talking about some hypothetical

economic construct; it is talking about the real

world.

MR DEAKIN: But, Your Honour, the real world has always been

defined by reference to his ability to perform work

in those areas and not by reference to whether

someone would or would not give him a job. It has

always been defined consistently, both in this

Court and in lower courts, by reference to a

calculation of the worth of his labour, if he is

working, or alternatively, his capacity to work in

that employment or in some suitable employment.

MASON CJ: But you cannot overcome the words:

Allied 6 12/2/93

reference to the amount that the worker is
able to earn in the general labour market

reasonably accessible to the worker -

We cannot write those words out of the statute.

MR DEAKIN:  We would submit that the authorities which have

been in place in relation to section 11(1) as long

ago as 1948 when Mr Justice Starke, on our

researches, I think, first introduced the words of

the "open labour market", show that the test is one

which is referable to what work he is capable of

performing in some such employment and that those

words that Your Honours have referred me to does

not alter the law which has been in place in

respect of the old section 11(1) in any material

way. What he "is able to earn in the general

labour market reasonably accessible to" him is, in

this case, firstly, we put, defined and prima facie

established by the fact of the work he is actually

performing and, as we have put to Your Honours,

that is something that the court has not properly

addressed and has not attempted to calculate in any

way, and even if - - -

MASON CJ: But he was self-employed there, was he not?

MR DEAKIN:	He was, Your Honour, yes.
MASON CJ:	And he did not earn anything in that capacity

because it was a loss-making venture.

MR DEAKIN:  It was, Your Honour. But it nevertheless

demonstrated - - -

MASON CJ:  You are suggesting that really he is able to

secure employment in loss-making ventures in the

future in which he is not paid.

MR DEAKIN:  Your Honour, the distinction that is drawn is,

as Your Honour put to me very early in my

submissions, either he is earning, and we accept

that he is not and he is not to be treated as

earning because he is not in receipt of regular

income, or he is to be assessed as to what he is

able to earn. And in circumstances where he is

working full-time, we submit that, prima facie,
that the test of what he is able to earn is one
which not necessarily exclusively - we do not
suggest that to Your Honours - but that it
nevertheless derives prima facie from the

demonstrated capacity to work which flows from the

work he is performing.

It is not to say that other matters are to be

excluded, but it is a matter, with respect, which

we submit is to be taken into account as the

Allied 7 12/2/93

starting point. The authorities that we have set

out in our outline of argument show that in cases

where a man is working in employment - and I refer

Your Honours to para 1.2 and the cases listed

thereafter - the amount of what he is earning in

employment is treated prima facie as the basis for

the compensation payable. As those passages - - -

MASON CJ: That has no application here.

MR DEAKIN: It does not; we accept that, Your Honour. There

is no case which has any direct application here,
but what we submit is that if, and for the purposes

of completeness, at the top of page 3 after the

reference to Pantaleo, I should also give

Your Honours a reference to a more recent decision

of the Court of Appeal which is extracted in the

bundle which has been handed to Your Honours and

appears on the list of authorities, J.C. Ludowici &

Son Limited v Cutri, (1992) - - -

MASON CJ: Whereabouts is it in this bundle?

MR DEAKIN: It is at the back, Your Honour. It is a

decision of the Court of Appeal.	It only confirms
what those earlier cases say.	The ·particular

passage that we draw to Your Honours' attention is

at page 593 in the judgment of Mr Justice Kirby,

the President, at the very top of that page.

His Honour says there - he refers to his view of what - this is a section 40 case, Your Honours, by

the way, not a section 11 case. The principle:

is that where the worker -

McHUGH J:  What page is this?

MR DEAKIN:  Page 593, at the very top. He talks about what

is the correct construction of paragraph 40(l)(b)

and His Honour says, at the top of page 593, the

correct construction:

It is that where the worker is earning, the

average weekly amount produced thereby is
normally to be taken as the par (b) component

of the equation. It is only otherwise where the decision-maker concludes that the worker is able to earn more than that sum in some

suitable employment.

So it is only confirming the principles that we

have set out in those written submissions.

MASON CJ: But it does not have any application to this

case.

McHUGH J: It has nothing to do with this case.

Allied	12/2/93
MR DEAKIN:	Your Honours, we do not suggest that it is

directly applicable to the question in this case.

There is no authority, we submit, that is directly

applicable. But the starting point, with respect,

Your Honours, is this, that if a man is working and

is earning money and that is to be prima

facie -

MASON CJ: There is no dispute about that.

MR DEAKIN:  Yes, Your Honour, then we would submit, by

parity of reasoning and logically, when the same

question is being asked under the heading of

ability to earn, the same approach should be

adopted, namely that the starting point should be,

in determining what capacity for work he has, to

determine what work the man is in fact performing,

because that is the best evidence of what he is

capable of, and what hours he is working. And

although we are not suggesting to Your Honours that

that should be exclusively the matters that the

court should have regard to, that should be the

starting point.

McHUGH J: But the learned trial judge began with what he

could do, what he was doing, and then she said, he can do that in his own loss-making business but it

is irrelevant; it is totally useless in the real

world because nobody would employ this person,

except on a very limited basis because of his

capacity.

MR DEAKIN: Well, Your Honours, we submit that

notwithstanding the words in section 40(1A) where there is reference to "the worker is able to earn in the general labour market reasonably accessible
to the worker", that the law as it has been in

place and, we submit, not altered by those words,

is that that does not call for an assessment of

either the general labour market, the level of

unemployment or the sort of considerations which

Her Honour dealt with, namely the likelihood of

some other employer providing him with work.

But even if we are wrong on that proposition

and, Your Honour, we accept that it could be argued

that those words do mean what Your Honour the

Chief Justice has put to me, but even if we are

wrong on that, we submit nevertheless that an

assessment of the value of the work which he is

performing is required as at least a starting point

or as part of the process of calculating what is

appropriate compensation in section 40(1A) and we

submit Her Honour failed to do that and a similar

error permeated the judgment of Mr Justice Mahoney

which was the central judgment in the Court of

Appeal.

Allied 9 12/2/93

Although we concede there is no statement

squarely applicable which determines the issue, we

do submit that in Aitkin's case, which is the first

case in the bundle handed to Your Honours, Aitkin v

Goodyear Tyre & Rubber Co. (Aust) Ltd, (1946)
46 SR(NSW) 20 - one note of warning, Your Honours,

as an authority on the question of onus of proof

this decision was overruled in the High Court, but

in other respects it has not in any way been

interfered with. The facts, I do not think, need

not trouble Your Honours particularly for the

purposes of the argument. The passage that I wish

to take Your Honours to is at page 23 in the

judgment of the Chief Justice, Mr Justice Jordan.

At about point 3, point 4, on page 23, Your Honours see the sentence commencing, "If, however, he is

not earning anything":

If, however, he is not earning anything, or,

for some good reason, what he is earning

cannot be treated as a proper basis, regard

must be had to the alternative basis provided

by the section - what he is "able to earn."

It has been held that this means physically

capable of earning remuneration of a

particular amount in some suitable employment

or business, -

and this is the part we wish to emphasize,

Your Honours -

irrespective of whether the demand for workers

in the suitable employment is such as to admit

of his getting a job. Hence, if he is not

earning anything, he is entitled to

compensation calculated only on the basis of

the excess of his pre-injury average weekly

earnings over what he could earn in some

suitable employment if he could get a job.

MASON CJ: That does not seem to me to be consistent with

subsection (lA) of section 40.

McHUGH J: Indeed, there was any equivalent

MR DEAKIN:  We accept that. But the reference that was

being relevant to a determination of the issues in a case, one is not entitled to have regard to whether there is a demand for workers in

consistently part of the common law in respect of matters
section 11 included a reference to the general
labour market, as I put to Your Honours at least

since 1948 in the decision by Mr Justice Starke.

suitable employment being able to admit to getting

a job and that one is to have regard only to those

calculations, whether or not he could get a job, as

Allied 10 12/2/93

Sir Frederick Jordan says in Aitkin's case, then we

submit it was not intended by the legislature in

(lA) to alter that position and what was intended

was to simply have a statutory restatement of what

the common law had already established.

McHUGH J:	I do not think Sir Frederick Jordan could have had in mind what you are submitting in this case in
any event. Supposing there were no jobs at all anywhere in the general labour; there would not be
a general labour market, would there?
MR DEAKIN:	Can I, with the very greatest respect, say that

is a somewhat extreme example but the fact of the

matter is that the general labour market was always

part of the consideration of what a man's ability

to earn was, consistently through all of the

authorities dealing with section 11(1) from 1948

onwards. At no stage was it ever considered that

within the definition of the "general labour

market" or the "open labour market", which was

Mr Justice Starke's words, was there a

consideration arising from whether or not the man

would get a job.	The distinction is one
between - - -

McHUGH J:	I appreciate that, but all it meant was that if you were fit to do the work of a steelworker, the
fact that BHP were not taking many people on at the
present time was irrelevant. That is a long way
removed from this case.
MR DEAKIN:	We submit that it is clearer than this case but, nevertheless, the principle is what permeates and
fatally flaws, we submit, the judgment of both
Judge O'Toole and the Court of Appeal because in
the judgment of Mr Justice Mahoney - and we ask
Your Honours, if we could, to take Your Honours to
that - the failure to distinguish those two matters is the very essence of the error that
Mr Justice Mahoney made, flowing on from the error
that we submit Judge O'Toole made.  I do not want
to take Your Honours to all of that, but could I take Your Honours most relevantly to page 21 of the application book. The findings that I have already
invited Your Honours to read in Judge O'Toole's
judgment are conveniently reproduced in the
application book within Mr Justice Mahoney's
judgment at pages 19 to 20, but on page 21 at
line 13 His Honour says:

As I have indicated, her Honour concluded

that he would not be suited for work full-time

in a retail establishment because of his lack

of "basic arithmetical, writing and literary

skills".

Allied 11 12/2/93

And that is a reference to the finding that I

already read to Your Honours on page 6. But what

we draw to Your Honours' attention is that what

Mr Justice Mahoney is confusing is the very thing -

he is confusing, with respect to His Honour, the

very distinction we are trying to impress upon

Your Honours, namely the distinction between his

suitability for work, which is what he there refers

to, that he would not be suited for work full-time,

and what Her Honour actually found at line 15 on page 6, that "he would be unlikely to obtain any

type of full-time work which required basic

arithmetical, writing and literacy skills."

Similarly, a few lines further down:

He would not be able to undertake "the heavier forms of physical labour".

That is a correct reproduction of what Her Honour

found. Next:

Accordingly, she concluded, he was suited to

part-time work of a less onerous nature.

Now, that is the very thing that Her Honour did not

conclude.	Her Honour made no findings of
suitability or capacity for work at all.	What she

found was that he was working full-time, but

because if he were to try to get a job away from

his own business, she did not think that some other employer, in a notional or theoretical sense, would

offer him the work anrl it was for that reason that

he would not be able to hold down a full-time job.

That appears at the foot of page 6 where Her Honour

says:

I think the applicant would experience difficulty obtaining suitable process work or

similar work on the general labour market:

Those are the matters that Her Honour relied on,

limited to those theoretical employers who may or

may not have provided him with work. That is

translated, in Mr Justice Mahoney's judgment, as

being equated with and indistinguishable from a

capacity or suitability for work. They are clearly

distinct. This judgment confuses them. It is an

important matter on the construction of section 40

and we would submit that it warrants special leave

in the circumstances.

MASON CJ:  The Court need not trouble you, Mr Jackson.

The Court is of the opinion that the judgment

of the Court of Appeal is not attended with

sufficient doubt to justify the grant of special

Allied 12 12/2/93

leave to appeal.	The application is therefore
refused.

MR JACKSON:  I ask for costs, if the Court pleases.

MASON CJ: You do not oppose that, Mr Deakin? The

application is refused with costs.

AT 12.55 PM THE MATTER WAS ADJOURNED SINE DIE

Allied 13 12/2/93