Australian Telecommunications Commission v Newson , P.J

[1985] FCA 315

Re: AUSTRALIAN TELECOMMUNICATIONS COMMISSION
And: PETER JOHN NEWSON
No. WAG 114 of 1984
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Woodward J.
Toohey J.
Pincus J.

CATCHWORDS

Administrative Law - Commonwealth employees compensation - appeal from Administrative Appeals Tribunal allowing employee's request for lump sum redemption of further payments - employees earning $40 nett per week as self-employed gardener and carpenter - whether partially or totally incapacitated for employment - whether self-employment must be profitable - proposed use of lump sum in small business - whether decision-maker should consider details of proposal - whether lump sum prospect can be taken into account in assessing level of incapacity - meaning of "particularly advantageous to the employee."

Administrative Appeals Tribunal Act 1975 s.44 (1)

Compensation (Commonwealth Government Employees) Act 1971 ss.26,49

HEARING

PERTH
#DATE 12:7:1985

ORDER

The appeal be dismissed with costs.

(Settlement and entry of orders is dealt with by 0.36 of the Federal Court Rules.)

JUDGE1

This is an appeal, on questions of law pursuant to s.44(1) of the Administrative Appeals Tribunal Act 1975, from a decision of the Administrative Appeals Tribunal ('the Tribunal') in a matter arising under the Compensation (Commonwealth Government Employees) Act 1971 ('the Act'). The questions of law relate to the respondent's claimed entitlement to continue to be treated as only partially incapacitated for employment, and to have his future payments of compensation redeemed by payment of a lump sum.

The case takes on an unusual appearance when it is realized that it is the employee who is alleging partial incapacity and the employer which claims that he should really be classed as totally incapacitated. The employee's attitude is explained by the fact that he can only receive a lump sum redemption if he is partially incapacitated and, since he wants to establish himself in a small business, purchase a home, and invest any surplus monies, he requires funds to meet these capital expenses.

The employer argues that the proposed business would probably not prove viable and that the Commissioner for Employees' Compensation ('the Commissioner') - who refused the original application for redemption - has a duty to protect the respondent from his own decision to sacrifice a total incapacity pension, to which he could establish entitlement, for a doubtful business venture. The Tribunal decided that the respondent's payments should be redeemed and it referred the matter back to the Commissioner to determine an appropriate lump sum. This is the decision appealed against.

The sections of the Act which are relevant to this dispute are ss.26 and 49, which are in the following terms:

"26. For the purposes of this Part, an employee shall be deemed to be totally incapacited for work if his incapacity is such that he is fitted only for employment of a kind that is not commonly available and employment of that kind is not reasonably available to him."

"49. (1) Subject to this section, where payments of compensation in respect of an injury have been made to an employee under section 46 for a continuous period of not less than six months, the employee may request the Commissioner in writing that the liability of the Commonwealth to make further payments to the employee under that section be redeemed by the payment to the employee of a lump sum.

(2) A request under the last preceding sub-section shall be in writing and shall specify the manner in which the employee intends to use the lump sum if the request is granted.

(3) Where a request is made under sub-section (1), the Commissioner shall, unless the employee has, by notice in writing to the Commissioner, withdrawn the request, determine -

(a) whether the liability of the Commonwealth is to be redeemed by the payment to the employee of a lump sum; and

(b) if he determines that the liability is to be so redeemed - the amount of the lump sum.

(4) The amount of the lump sum is the amount determined to be the value, as at the date of the determination by the Commissioner that the liability is to be redeemed, of the right of the employee to receive further payments of compensation under section 46 and, in the determination of the value of that right, regard shall be had to the nature of the injury to the employee, the age and occupation of the employee and any other relevant matters.

(5) The Commissioner shall not make a determination that the liability of the Commonwealth to make further payments to an employee under section 46 is to be redeemed unless he is satisfied that -

(a) the injury is not likely to result in the employee becoming totally incapacited for work;

(b) the employee intends to use the lump sum in a manner that is particularly advantageous to the employee; and

(c) in all the circumstances it is desirable in the interests of the employee that the liability of the Commonwealth be redeemed.

(6) . . . . . . . . . ."

The salient facts of the case are that the respondent suffered a back injury in 1973 in circumstances entitling him to compensation under the Act. His physical condition is now static and his disability is permanent. He has a 30% loss of function of his back. He is only capable of performing comparatively light work, and needs to have breaks from time to time to rest his back. Although he has been treated as permanently incapacitated for lengthy periods up to 1982, he is presently classified, in accordance with his own wishes, as partially incapacitated because he has been able to earn some money at tasks such as lawn mowing, gardening and carpentry. He has the physical capacity and other abilities required to run a small carpentry business, which he wants to do. However he has not investigated, in any depth, the viability of such an enterprise in the township and district of Northam, which it is not practicable for him to leave.

The first question of law raised by the applicant concerns the meaning of "employment" in s.26. The applicant conceded (I think rightly, but I prefer not to express a concluded view without argument) that work as an independent contractor, or other self-employment, is included in the concept of employment for purposes of this section. However it was argued that, though the respondent was fitted for certain types of gardening and lawn-mowing or carpentry work, provided they were not heavy or continuous, such employment, in the sense of profitable employment, was not available to him. It was said that the scheme of the Act required that the work concerned, if it did not carry a wage, must at least show a reasonable profit for the time spent. There was evidence that the respondent had earned about $40 per week nett from such activities, though his taxation return showed negligable earnings after deductions for depreciation of equipment and purchase of stock.

I am inclined to agree that, if the only employment available to a partially incapacitated person is such as to provide negligable financial returns, though it may have other advantages, then employment, within the meaning of s.26, is "not reasonably available to him", and he is entitled to (or obliged to accept) payments on the basis of total incapacity. But what would constitute a prospective rate of earnings which would suffice to take the employee concerned out of the ambit of s.26 must be a question of fact for the relevant tribunal. It is true that in the present case the Tribunal did not expressly advert to this issue, but with evidence of nett earnings of $40, and expressions of confidence by the respondent that this could be improved, I think the Tribunal was entitled to accept without discussion that this was reasonably available "employment" within the meaning of s.26. As was pointed out by Morling J in Anderson v Australian Postal Commission (1981) 39 ALR 94 at 99-100,

". . . . the ambit of the class of work comprehended by the words "employment of a kind that is not commonly available" cannot be determined without reference to the physical and other capacities possessed by the particular employee . . . ."

Section 26, of course, is not intended to cover the field of total incapacity. One begins with the case where total incapacity is clear and requires no definition. On the other hand there is the case where a person is clearly fitted, in the sense of having both the mental and physical capacities, for a wide range of part-time clerical jobs, for example. In between lies the person who is fitted only for a limited range of jobs and who is not able to find such employment. It is obvious that the legislature intended to deal only with this last type of case in s.26. The present respondent is fitted for part-time gardening, lawn-mowing, carpentering and perhaps odd-job work. It may be that such work is commonly available in the Northam district, but even if it is not, he claims that it is reasonably available to him and the Tribunal has accepted that evidence. I see no sufficient reason to interfere with that finding.

An interesting question which arose in argument, but which I do not find it necessary to decide, is whether a person who is at first sight totally incapacitated, can be deemed only partially incapacitated because the grant of a lump sum redemption payment would enable him or her to set up and personally operate a business which would bring in a reasonable return. I am inclined to believe that, given the physical capacity and skill to perform such work and the other requirements of intelligence and motivation to bring about a successful result, the fact that the only source of funds for the equipment required would be a lump sum payment should not disentitle the person concerned from receiving such a payment. In referring to motivation I have in mind that the same factual situation could produce different results depending upon whether the opportunity was being actively sought by a worker, as in the present case, or was being postulated by an employer resisting a claim for a total disability pension. The inquiry in each case should, I believe, relate to the physical and mental capacities, training, experience and surrounding circumstances of the incapacitated person, not to that person's present or future financial status. That may however be relevant in considering the application of s.49(5)(b) of the Act.

The only other issue raised by the applicant concerned the proper interpretation of s.49(5)(b) of the Act, which requires the Commissioner to be satisfied that the employee intends to use the lump sum "in a manner that is particularly advantageous" to him. Sub-section (2) of the same section requires the employee to "specify" the manner in which he intends to use the lump sum, if granted. I take this as requiring the employee to make clear the nature of his plans, but not necessarily to give detailed particulars of them.

The question which arises is whether s.49(5)(b) requires a detailed and critical examination of the employee's plans, or merely a general approval of the nature of the expenditure proposed. There is also a subsidiary question as to whether "particularly" in this passage has a meaning akin to "peculiarly" or to "very".

The Tribunal followed an earlier decision of a differently constituted Tribunal in El-Hassan v The Commonwealth of Australia, 9 November 1984, unreported, in holding that general approval of the nature of the expenditure was required, but not a detailed economic justification for a specific project.

This was challenged by counsel for the applicant, who argued that the Commissioner has a paternalistic responsibility under the Act to safeguard the interests of injured employees. He pointed to the fact that there is no provision for redeeming total diability payments; this, he said, underlines the care with which redemption of partial disability payments should be approached.

In my view this is a valid point and the decision-maker must always have regard to the best interests of the employee, considered objectively. However I do not believe that much can be expected of the decision-maker by way of detailed checking of any proposal. My main reason for saying this is that there is no provision in the Act for any oversight of the recipient of the lump sum after it has been paid over. There could then be a change of plans which resulted in the money being put to a varied or completely different purpose. For that reason I think the decision-maker need only be satisfied of the genuineness of present intentions and of the probability that the lump sum will be used in a manner which will prove to be "particularly advantageous" to the recipient. In the context of the Act, I believe that phrase should be read as meaning "advantageous to the employee in his particular circumstances". The intention is to direct the mind of the decision-maker to the special circumstances of the individual case.

The evidence on this issue before the Tribunal was meagre, but the Tribunal had the great advantage of seeing and hearing from the employee himself and I can see no sufficient reason to interfere with its decision. I do not believe it can be said to have erred in its application of the relevant legislation, and there was some material before it on which it was entitled to act, even if that material was not highly persuasive. The Tribunal might well have required further evidence of the viability of the respondent's proposals but, for the reasons I have given, I cannot say that it erred in law in not doing so. I think the appeal should be dismissed with costs.

JUDGE2

The relevant facts and the issues raised by this appeal are set out in the reasons for judgment of Woodward J. I agree with his Honour that this appeal should be dismissed and I agree generally with his reasons for reaching that conclusion. However I wish to add some comments of my own.

As Woodward J. has pointed out, the parties to this appeal have adopted unusual stances, with the applicant employer contending that the respondent employee is totally incapacitated for work and the respondent arguing against that contention. The Tribunal found that the respondent was only partially incapacitated and was not totally incapacitated for work. This was a finding the Tribunal was entitled to reach having regard to the medical evidence and to the respondent's account of his work activities before and after the accident. In my view s.26 of the Compensation (Commonwealth Government Employees) Act 1971 ("the Act") includes in the notion of "employment" work which an employee is capable of doing on his own account. In the present case the respondent had, since the accident, carried on a lawn mowing business for some time and had done some carpentry work, though of a somewhat desultory nature.

An appeal to this Court from a decision of the Tribunal must be an appeal "on a question of law" (Administrative Appeals Tribunal Act 1975 sub-s.44(1)). A finding of partial incapacity is a finding of fact unless, in making that finding, the Tribunal misunderstood the relevant legislative provisions or unless there was no evidence upon which the Tribunal could properly arrive at the finding. The applicant failed to demonstrate either that the Tribunal misunderstood the relevant provisions of the Act or that there was no evidence to justify its finding. It may be that, in the circumstances of this case, a finding by the Tribunal of total incapacity would have been difficult to challenge but that is not a situation with which this Court is concerned.

There was some debate before the Court as to whether it is relevant to take into account, in determining whether an employee is totally or partially incapacitated for work, money he may receive by way of a lump sum redemption payment. It is unnecessary to reach a firm conclusion on this matter because, if the implications of a lump sum payment are relevant, it can only strengthen the case for partial rather than for total incapacity. As presently advised, I am of the view that the payment of a lump sum in redemption of weekly payments is not a relevant consideration in determining whether an employee is totally or partially incapacitated. I do not think that s.26 of the Act is intended to be exhaustive. It is a deeming provision and an employee's condition may be such that he is clearly totally incapacitated for work of any kind without the need to resort to a consideration of his fitness "for employment of a kind that is not commonly available". But, in my view, incapacity for work is not to be assessed by reference to factors that include the possible receipt of a lump sum by way of redemption. Section 26 stands independent of s.49. The latter presupposes only partial incapacity for work; indeed sub-s.(5) precludes the Commissioner from ordering redemption unless he is satisfied inter alia that:

"(a) the injury is not likely to result in the employee becoming totally incapacitated for work;"

In the ordinary course, the case for total incapacity will be argued by an employee rather than by his employer. The redemption provisions would be largely self defeating if an employer could contend that there was no total incapacity because the payment of a lump sum would put the employee in a position where he could apply the money towards some business or other activity productive of income. As the Full Court of this Court said in Reitano v. Commonwealth of Australia (unreported decision, delivered 5 August 1983) in regard to the Act:

"What sub-s.49(4) requires to be valued is the right of the employee to receive further payments of compensation under s.46. The right which that section confers is a right to receive compensation only during the period during which the employee is partially incapacitated for work due to injury". (at p.7)

A further ground of appeal was that the Tribunal erred in its construction of para.49(5) (b) of the Act in that it failed to construe the word "manner" as requiring it "to have regard to the particular advantages to the Respondent of using the lump sum for the specific business enterprise proposed by him".

The Tribunal followed the earlier decision in El-Hassan v. Commonwealth of Australia (Administrative Appeals Tribunal No. N84/194, unreported decision delivered on 9 November 1984). I agree with Woodward J. that the words in para. (b) "particularly advantageous to the employee" mean "advantageous to the employee in his particular circumstances". This does not mean, as was suggested in El-Hassan, that the Commissioner need only be satisfied that the payment of a lump sum would be advantageous to the employee in establishing any successful business. But equally, as was said in El-Hassan, the employee is not required to place before the Commissioner, as a condition of obtaining redemption, detailed proposals of the business he contemplates. Sub-section 49(6) enables an employee, at any time before payment of a lump sum, to notify the Commissioner that he no longer wishes the employer's liability to be redeemed. But the Act does not confer any supervisory function upon the Commissioner once a payment has been made. There appears to be nothing to prevent an employee from putting forward a proposal for the use of money received by way of redemption and then to use that money for a different purpose. I agree with Woodward J. that the Commissioner need only be satisfied of the genuineness of the employee's present intentions and of the probability that a lump sum will be used in a manner which will be advantageous to him in his particular circumstances. While the Tribunal relied upon the decision of El-Hassan, it did in fact direct its attention to the advantages to the respondent of using the lump sum to by a house and to establish a carpentry business. In that respect the Tribunal applied a test perhaps more onerous to the respondent than El-Hassan requires, but a test which I think the Act demands.

The appeal should be dismissed with costs.

JUDGE3

I have had the advantage of reading in draft the reasons of Woodward J. and those of Toohey J. I am in general agreement with them, subject to the comments which follow.

I have had difficulty with the question whether the definition in s.26 of the relevant Act, set out in the reasons of Woodward J., applies in this case. It would seem odd that a different test should be applied where the question is whether proof of a degree of fitness for some work as an independent contractor, as opposed to work under a contract of service, renders an employee not totally incapacitated. Whether or not the definition governs such a case as this, on its proper construction, it should in my view be used as a guide applicable by analogy, so to speak. The legislature surely did not intend that a man able to work for himself, but unable to undertake work as a servant, should necessarily be deemed totally incapacitated.

I agree that the definition of total incapacity in s.26 is not exhaustive of the subject. One reason is that an employee who simply cannot do any work at all is not within the definition, yet must be regarded as totally incapacitated.

It was argued before the Court that one must take into account, in deciding whether there is total or partial incapacity, monies which may be paid as a lump sum under s.49 of the Act. I am of the view that incapacity must be determined without regard to the possibility of payment of such a lump sum. A pre-condition of a determination under s.49(5) is that total incapacity is not likely to result from the injuries; the intention appears to be that the issue of the existence of that condition will be decided before, and independently of the effect of, payment of the lump sum.

Lastly, I am unable to concur in the view that s.49(5)(b) of the relevant Act uses the expression "particularly advantageous to the employee" in the sense of "advantageous to the employee in his particular circumstances". I think the expression "particularly advantageous" here means "markedly advantageous". It is not clear to me that the word "particular" adds anything when placed as suggested by Woodward and Toohey JJ. As used by the legislature, it plainly qualifies "advantageous" and is, in my respectful opinion, intended to convey the idea that a pronounced and easily identifiable degree of advantage must be shown.

I agree with their Honours that the appeal should be dismissed, with costs.