Catlow v Accident Compensation Commission

[1989] HCA 43

HIGH COURT OF AUSTRALIA

Brennan, Deane, Dawson, Gaudron and McHugh JJ.

CATLOW v. ACCIDENT COMPENSATION COMMISSION

(1989) 167 CLR 543

5 October 1989

Workers' Compensation (Vict.)—Statutes

Workers' Compensation (Vict.)—Accident compensation—Amount of compensation—Rate of pay for "normal number of hours per week"—Whether actual hours worked or core hours fixed by industrial agreement—Whether number of hours "fixed" by agreement—Accident Compensation Act 1985 (Vict.), s. 95. Statutes—Construction—Extrinsic material—Interpretation of Legislation Act 1984 (Vict.), s. 35.

Decisions

BRENNAN AND GAUDRON JJ. Between September 1981 and 26 October 1985 Mr Catlow, the appellant, was employed by Australian Safeway Stores Pty. Ltd. at its Mulgrave warehouse in Victoria. Since 26 October 1985, Mr Catlow has been and remains totally incapacitated for work by reason of a compensable injury and entitled to payments of weekly compensation as for total incapacity pursuant to the provisions of ss.82 and 93 of the Accident Compensation Act 1985 (Vict.) ("the Act").

2. The Accident Compensation Commission is charged with the responsibility of administering the Accident Compensation Fund, paying compensation to persons entitled and performing the other functions specified in s.20 of the Act. The Commission applied to the Accident Compensation Tribunal pursuant to s.117(6) for a determination of the weekly payments of compensation to be paid to Mr Catlow. The compensation payable to Mr Catlow was in the form of weekly payments payable during the period of total incapacity: s.93(1) and (2). The amount of a weekly payment was fixed by s.93(4) which provides:
"Subject to this section, a weekly payment
to a worker shall be an amount equivalent to - (a) 80 per cent of the worker's pre-injury average weekly earnings; or (b) $400 - whichever is the lesser." (The sum of $400 is subject to indexation.)
The phrase "the worker's pre-injury average weekly earnings" is critical to the correct quantification of a worker's weekly payments. The phrase is defined by s.95(1) to mean:

"(a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been continuously employed by the same employer for that period; or (b) the average weekly earnings for the period less than 12 months preceding the relevant injury for which the worker has been continuously employed by the same employer - calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week."

The terms used in sub-s.(1) to define "the worker's pre-injury average weekly earnings" are themselves expounded by the succeeding sub-sections of s.95. In Mr Catlow's case, the relevant provision is sub-s.(3):

"For the purposes of sub-section (1) - (a) if an ordinary time rate of pay is fixed for the worker's work under the terms of the worker's employment and in addition a piece rate is payable the ordinary time rate of pay shall be deemed to be the sum of the ordinary time rate of pay and the average weekly piece rate payment received by the worker during the relevant period under sub-section (1); (b) if an ordinary time rate of pay is not fixed for the worker's work under the terms of the worker's employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1); (ba) if the normal number of work hours per week is fixed in any industrial award applicable to a worker, the worker's normal number of hours per week in that work shall be deemed to be the number so fixed; (c) if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1); and (d) if the worker is employed by more than one employer at the time of the injury, the worker's average weekly earnings shall be calculated - (i) if the worker works for one employer for at least the normal number of hours per week fixed in any industrial award applicable to the worker, with reference to that work; (ii) if there is no applicable industrial award but the worker works for one employer for at least the prescribed number of hours per week, with reference to that work; (iii) if the worker works for more than one employer for at least the normal number of hours per week fixed in any industrial award applicable to the worker, with reference to the work which yields the higher ordinary time rate of pay; (iv) if the worker works for one employer for at least the normal number of hours per week fixed in any industrial award applicable to the worker and for another employer for at least the prescribed number of hours per week with reference to the work which yields the higher ordinary time rate of pay; (v) if there is no applicable industrial award but the worker works for more than one employer for at least the prescribed number of hours per week, with reference to the work which yields the higher ordinary time rate of pay; or (vi) in any other case, by obtaining the worker's average ordinary time rate of pay for all work carried out by the worker for all the employers and applying that rate to the prescribed number of hours per week or to the total of the worker's normal number of hours per week whichever is the lesser; and (e) if the worker is a person who - (i) under section 6, 7 or 8 is deemed to be working under a contract of service; or (ii) under section 9 is deemed to be a worker - the worker's pre-injury average weekly earnings shall be calculated with reference to amounts payable to the worker and deemed to be remuneration under those sections less any part of those amounts attributable to the supply of capital or materials."

3. To ascertain the application of s.95(3), it is necessary to state some of Mr Catlow's work history. By the terms of his employment he was required to work such hours as the employer required over and above the 72 "core hours" which, by an unregistered industrial agreement, employees of the employer were to work at ordinary rates of pay in every fortnight. Mr Catlow generally began earlier and finished later each day than the general warehouse staff and he worked on rostered days off and on Saturdays as his employer required. His remuneration for the hours of work in excess of the core hours of 72 per fortnight was at rates prescribed for overtime in the unregistered agreement. He was injured at work on 28 October 1984 and was off work on compensation between that date and the end of January 1985. He resumed work at the beginning of February 1985 and thereafter continued to work until 26 October 1985. Between the time that Mr Catlow resumed work in February 1985 and his ceasing work on 26 October 1985, he worked a total number of 1963.5 hours of which 664.5 were paid for at overtime rates, being in excess of the 72 core hours per fortnight. During the 12-month period before 26 October 1985, the ordinary weekly rate of pay for a week of 36 hours was $357 at the commencement of the period, $365.40 as from 13 April 1985 and $367.90 as from a date in August 1985. The Tribunal took the arithmetic average of these three amounts and, dividing that average by 36 to obtain an hourly rate, determined an "ordinary time rate of pay" for the purposes of s.95(1) to be $10.09 per hour. The Tribunal then determined the "normal weekly number of hours" pursuant to sub-s.(3)(c) to be the average weekly number of hours worked by Mr Catlow during the 12 months preceding 26 October 1985 including the period when Mr Catlow was off work between 28 October 1984 and 1 February 1985. By dividing the total hours worked (1963.5) by 52, the Tribunal determined the "normal number of hours per week" for the purposes of s.95(1) to be 37.76. Multiplying $10.09 by 37.76, the Tribunal determined Mr Catlow's average weekly earnings to be $381.

4. Mr Catlow and the Commission both appealed to the Full Court of the Supreme Court pursuant to s.68 of the Act. An appeal lies on questions of law only. The questions which were there argued and which remain alive for present purposes are two. First, whether "the worker's ordinary time rate of pay for the worker's normal number of hours per week" in s.95(1) refers to the amount payable to a worker in respect of the hours to be worked at the ordinary time rate of pay rather than an amount calculated by multiplying an ordinary time rate of pay per hour by the average weekly number of hours worked (the Commission's appeal); and, second, (assuming the answer to the first question is negative) whether the "normal number of hours per week" should have been calculated under subs.(3)(c) by dividing the total number of hours worked by Mr Catlow in the 12 months preceding 26 October 1985 by the number of weeks during which Mr Catlow was in fact working or in receipt of holiday pay (namely, 41) rather than by 52 (Mr Catlow's appeal). The Full Court allowed the Commission's appeal. However, the Full Court held that Mr Catlow's ordinary time rate of pay should not have been calculated at $10.09 per hour but should have been calculated by reference to a weighted average of the ordinary rates payable during the 12 months preceding 26 October 1985. Both parties now accept that a weighted average is the correct average for the purposes of s.95(1).

5. The Full Court held that the phrase "the worker's ordinary time rate of pay for the worker's normal number of hours per week" expressed a single concept, and did not import two factors which were to be multiplied. The Court held that the phrase "the worker's ordinary time rate of pay for the worker's normal number of hours per week" was not the product of two factors - ordinary time rate of pay and normal number of hours per week - but a composite concept in which "the worker's ordinary time rate of pay" is the rate of pay "for the worker's normal number of hours per week". The Commission's argument is that the rate referred to is not an hourly rate but the rate of pay for a normal working week in respect of which the ordinary time rate is payable.

6. The Commission supports the Full Court's construction of s.95(1) by reference to the course of parliamentary proceedings leading to the enactment of the Act, the verbal differences between the Act and earlier statutes which expressly took overtime payments into account and decisions of the Industrial Appeals Court of Victoria and of the Industrial Commission of New South Wales, together with some New Zealand decisions which interpreted "ordinary hours" or "normal hours" in differing statutory contexts as hours prescribed by industrial awards or agreements to be worked at ordinary rates of pay. These considerations, which are more fully stated by McHugh J., tend in favour of the Full Court's interpretation, but they are not conclusive. Apart from s.35 of the Interpretation of Legislation Act 1984 (Vict.), material relating to the evolution of the Act could not properly be taken into account at all: see Bitumen and Oil Refineries (Australia) Ltd. v. Commissioner for Government Transport (1955) 92 CLR 200, at p 212; Commissioner for Prices and Consumer Affairs (S.A.) v. Charles Moore (Aust.) Ltd. (1977) 139 CLR 449, at pp 457, 461,470,477-478; Wacando v. The Commonwealth (1981) 148 CLR 1, at p 25; Hadmor Productions v. Hamilton (1983) 1 AC 191, at p 232. Section 35 of the Interpretation of Legislation Act provides, inter alia:
"In the interpretation of a provision of
an Act or subordinate instrument - (a) ... (b) consideration may be given to any matter or document that is relevant including but not limited to - (i) all indications provided by the Act or subordinate instrument as printed by authority, including punctuation; (ii) reports of proceedings in any House of the Parliament; (iii) explanatory memoranda or other documents laid before or otherwise presented to any House of the Parliament; and (iv) reports of Royal Commissions, Parliamentary Committees, Law Reform Commissioners and Commissions, Boards of Inquiry or other similar bodies." This provision is extremely broad. Unlike s.15AB of the Acts Interpretation Act 1901 (Cth), s.35 does not restrict the purposes for which it is permissible to consider the extrinsic materials referred to in that section. Whether or not extrinsic material is considered in interpreting a statutory provision, it is clear that the meaning attributed to the statute must be consistent with the statutory text. If the meaning which would otherwise be attributed to the statutory text is plain, extrinsic material cannot alter it. It is only when the meaning of the text is doubtful (to use a neutral term rather than those to be found in s.15AB(1) of the Acts Interpretation Act), that consideration of extrinsic material might be of assistance. It follows that it would be erroneous to look to the extrinsic material before exhausting the application of the ordinary rules of statutory construction. If, when that is done, the meaning of the statutory text is not doubtful, there is no occasion to look to the extrinsic material. In our opinion, that is the present case. We do not propose, therefore, to consider matters preliminary to the enactment of the Act. Nor do we think that interpretations placed by tribunals and courts on words found in a different statutory context can be of much assistance in the interpretation of the critical phrases in s.95. Whatever tendency those decisions might have to support the Commission's argument, the judgments of Gibbs J. and Mason J. in Kezich v. Leighton Contractors Pty. Ltd. (1974) 131 CLR 362, at pp 364-365,368-369, can be cited as tending in the opposite direction. We therefore turn, at least in the first instance, to the text of s.95.

7. Section 95(1) provides that the worker's pre-injury average weekly earnings are to be the "average weekly earnings" of the worker while employed by the same employer, whether for 12 months preceding the relevant injury or for a shorter period, "calculated" in the manner therein prescribed. The need for a calculation suggests that there are factors which, when brought into a mathematical exercise, yield the amount of "average weekly earnings" for the purposes of subs.(1). The factors might be those weekly earnings which, during the relevant period, yield an average or they might be the two factors imported by the phrases "ordinary time rate of pay" and "normal number of hours per week". In our opinion, the latter is the natural, if not the necessary, reading of s.95(1) and that construction is borne out by the structure of subs.(3). Sub-section (3) deals distinctly with the two factors referred to in sub-s.(1). It defines "(f)or the purposes of sub-section (1)" the first of these factors in pars (a) and (b) and the second of these factors in par.(c) - and, since an amendment in 1987, in par.(ba).

8. The words "ordinary time" are plainly adjectival, qualifying "rate of pay". If the phrase "for the worker's normal number of hours per week" did not express a separate factor but were merely an adjectival phrase qualifying "rate of pay", the entire phrase would be tautologous. Even if the entire phrase be understood as descriptive of a weekly rate of pay (as the Commission contends), the weekly rate must simply be the amount payable to the worker for all the normal number of hours worked, however ascertained, but leaving out of account any payments or loadings which are not "ordinary time" rates. Reading sub-ss. (1) and (3) together, however, the entire phrase comprehends both a rate (to which pars (a) and (b) of sub-s.(3) relate) and the normal number of hours per week (to which par.(c) - and latterly par.(ba) - of sub-s.(3) relate). As the provisions of sub-s.(3) apply "(f)or the purposes of sub-section (1)", whenever one of the paragraphs of sub-s.(3) applies to the circumstances of the case, the meaning which is given to a phrase in sub-s.(1) which appears in a paragraph of sub-s.(3) is the meaning which that paragraph prescribes. Thus the construction of s.95(1) is governed by the provisions of sub-s.(3). Paragraphs (a), (b), (ba) and (c) of sub-s.(3) apply in every case in which the respective conditions which introduce each of those paragraphs are satisfied. There is no ground for denying their application to any case which falls within them. It is impermissible to construe sub-s.(1) without reference to sub-s.(3) and, in the light of that construction, to read down sub-s.(3) so as to deny its application to cases which otherwise fall within it. That would invert the true process of construction.

9. The Commission places some reliance on par.(d) of s.95(3) to show that the "normal number of hours per week" are the hours to be worked under an award for the ordinary time rate of pay and not the hours normally worked by a particular worker which might include overtime hours. Paragraph (d) governs cases where the worker is employed by more than one employer at the time of the injury. Sub-paragraphs (i), (ii), (iii), (iv) and (v) prescribe the work (that is, the work done for one employer) by reference to which the calculation under s.95(1) is to be made. The language of these sub-paragraphs suggests that the legislature assumed that, whenever an industrial award applied to a worker, the "normal number of hours per week" would be fixed by the award. These sub-paragraphs are followed by subpar.(vi) - "in any other case" - which requires the "worker's average weekly earnings" to be calculated by applying the "ordinary time rate of pay for all work carried out ... for all the employers" to the lesser of the prescribed number of hours (that is, 35: reg.5) or the "total of the worker's normal number of hours per week". Even if par.(d) on its true construction were to exclude overtime hours worked by a worker from being taken into account in cases falling within its terms, the difference in language between par.(c) ("fixed ... under the terms of the worker's employment") and par.(d) ("fixed in any industrial award applicable to the worker") precludes the translation of any policy derived from par.(d) to par.(c). In any event, we do not construe par.(d) as excluding overtime hours. Subparagraphs (i) to (v) do no more than identify the work by reference to which the s.95(1) calculation is to be made and we would read the condition of their application as being either the working of the normal number of hours fixed by an applicable award or the working of at least the prescribed number of hours. A worker who works for those hours is a "full-time worker" as defined by s.5(1): "a worker ... employed for at least the normal number of hours fixed in any industrial award applicable to the worker or if there is no applicable award the prescribed number of hours". (It may be noted that "normal number of hours" in this definition does not appear in a context which refers to the rate of pay for those hours.) The dichotomy in that definition is reproduced precisely in sub-pars (i) and (ii). Of course, the dichotomy is not literally complete for there may be an "industrial award applicable to the worker" which does not fix the normal number of hours. There are few if any awards which do. But, unless the dichotomy is complete in relation to those who are in fact in full-time employment, s.93(7) of the Act, which confers benefits on those who have been predominantly full-time workers, would not cover workers who are in fact in full-time employment under industrial awards which do not fix a normal number of hours. That would be an absurd anomaly. In our opinion, there is no such anomaly: the phrase "if there is no applicable award" covers the case where there is an award which applies to the worker but which does not fix the normal number of hours as well as to workers who work for at least the prescribed number of hours per week under an industrial agreement or simply under the terms of their employment. So construing the definition of "full-time worker" and sub-pars (i) and (ii) of s.95(3)(d), the dichotomy between the two classes of full-time workers is complete. Therefore, an employee who is employed under an award which does not fix the normal number of hours and who works for at least the prescribed number of hours per week for one employer is a "full-time worker" and, if his case falls under par.(d), it falls under sub-par.(ii). His case does not fall under sub-par.(vi) which seems to be designed for cases where a worker works for less than 35 hours for two or more employers. The normal number of work hours per week in a case falling within par.(d)(ii) is ascertained under or consistently with par.(c): that is, either "under the terms of the worker's employment" (by contract) or otherwise by the formula contained in par.(c). For these reasons, the provisions of par.(d) do not require the language of par.(c) to be construed otherwise than in accordance with its natural meaning.

10. So construed, par.(c) of sub-s.(3) applies to Mr Catlow's case. The terms of Mr Catlow's employment, though providing for his working of overtime each week, did not "fix" "a normal number of work hours per week". As that condition of the application of the formula in par.(c) was satisfied, "the normal weekly number of hours" for the purposes of sub-s.(1) is deemed to be the average weekly number of hours worked by Mr Catlow during the 12 months preceding the relevant injury.

11. Mr Catlow's normal number of hours is therefore to be ascertained by dividing the total number of hours worked by him during the 12 months preceding 26 October 1985 by the number of weeks in that "relevant period". The divisor in this calculation is in controversy. The Commission submits that the divisor should be 52; Mr Catlow submits it should be 41 (the number of weeks during which Mr Catlow was actually working or receiving holiday pay).

12. Paragraph (c) of s.95(3) enacts a formula for determining the normal number of hours; it does not simply define what are in fact the normal number of hours for which a worker worked. The "average" of which par.(c) speaks is an average "during the relevant period", and the average "per week" must therefore be ascertained by dividing the total number of hours worked during that period by the number of weeks in that period. In Mr Catlow's case, the period is, or was assumed to be, "12 months preceding the relevant injury": s.95(1)(a). The divisor is therefore 52. It was not argued that a worker who is off work on compensation is not, during that period, "continuously employed by the same employer". Sub-section (1B), which was inserted in 1987 after the Tribunal had determined Mr Catlow's case, may or may not be consistent with this result. It provides:
"For the purposes of sub-section (1), a
worker's average weekly earnings shall be calculated by dividing the sum of amounts payable to the worker calculated at the worker's ordinary time rate of pay for the normal number of hours per week by the number of weeks during which the worker actually worked or was on annual, sick or other paid leave." If the period spent by Mr Catlow away from work on compensation prior to 1 February 1985 is treated as "other paid leave", the divisor under sub-s.(1B) would be 52; if it is not so treated, the divisor would be 41. It may be noted that the number of weeks which answer the description in sub-s.(1B) may differ from the number of weeks in the relevant period under par.(c) unless weeks which do not answer the description do not fall within the relevant period. It is not necessary nor is it desirable to attempt to construe sub-s.(1B) in this case. That should await a case, if earlier clarifying legislation does not resolve the problem, where sub-s.(1B) and sub-s.(3)(c) both apply to the case and would yield different results. The problem does not arise in this case, for sub-s.(1B) was not in operation when the Tribunal made its determination. As s.68(1) limits the appeal to the Full Court to questions of law raised during the proceedings before the Tribunal, the appeal does not extend to a question of law arising from legislation coming into force after that time. The Full Court is required to determine the question of law raised on an appeal under s.68(1) as the Tribunal ought to have decided it. This shuts out any change of law between the Tribunal's determination and the appeal: per Lord Wright in New Brunswick Ry. Co. v. British and French Trust Corporation (1939) AC 1, at p 32. Therefore the law which fell for consideration by the Full Court did not include amendments to the Act made after the Tribunal made its determination.

13. From this discussion, it follows that Mr Catlow's pre-injury average weekly earnings should have been calculated under s.95 as follows:
The Tribunal should first have ascertained the
ordinary time rate of pay to which Mr Catlow was entitled during the "relevant period" which is, or is assumed to be, 12 months. The appropriate means of doing this was to take a weighted average, not an arithmetic average. So much is now agreed. But there is no agreement on whether the weighted rate should be calculated by reference to the whole of the relevant period, that is, 12 months. In our view, it is the ordinary time rate during the whole of that period which is to be ascertained and that requires the inclusion of the period during which Mr Catlow was off work on compensation. From the figures provided to us, the weighted average of ordinary time rates for 36 hours work taken over 52 weeks is $362, slightly less than that calculated by the Tribunal. That rate should have been applied to the quotient obtained by dividing the number of hours worked by Mr Catlow during the 12 months preceding 26 October 1985 (namely, 1963.5) by 52. As Mr Catlow's normal number of hours per week was 37.76, his true average weekly earnings were $379.70. Except for the weighting of the average hourly rate, that is the calculation made by the Tribunal. It arrived at an average weekly earnings figure of $381.

14. The appeal should be allowed, the judgment of the Full Court set aside and in lieu thereof the Commission's appeal to that Court should be allowed in part and Mr Catlow's appeal to that Court should be allowed in part. The determination of the Tribunal should be set aside and in lieu thereof it should be determined that Mr Catlow's pre-injury average weekly earnings were $379.70. The appellant should have two-thirds of his costs both here and in the Full Court.

DEANE J. I agree with the reasons for judgment of McHugh J.

DAWSON J. I agree with McHugh J., for the reasons given by him, that in s.95(1) of the Accident Compensation Act 1985 (Vict.) the words "calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week" exclude from the required calculation hours worked by way of overtime. I would add only the following observations.

2. The same formula is used in s.94(10) and s.95(1) as part of the method for arriving at, in the case of s.94(10), current weekly earnings and, in the case of s.95(1), pre-injury average weekly earnings. Section 94(10) is concerned with the calculation of weekly payments of compensation where the worker is partially incapacitated and remains employed. Section 95(1) is, on the whole, concerned with the calculation of weekly payments of compensation where the worker is totally or partially incapacitated and has ceased to be employed. In both cases the weekly earnings are to be calculated "at the worker's ordinary time rate of pay for the worker's normal number of hours per week".

3. "Current weekly earnings" in s.94 are defined in sub-s.(10) as "the earnings of the worker during the week in respect of which a weekly payment is made calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week or, if there is no such ordinary time rate, the actual earnings of the worker during the week".

4. Now it is perfectly plain that the effect of that definition is to exclude hours worked by way of overtime from the "normal number of hours per week". The definition cannot mean that, in order to calculate the earnings of a worker during an actual week worked, the ordinary time rate of pay should be multiplied by a "normal number of hours" which includes, in some way, overtime. It cannot mean that because, if it did, the final figure could exceed the actual weekly earnings of the worker during the week in question and that is something which the sub-section, referring as it must to actual and not notional earnings, does not contemplate.

5. The appellant concedes that the "ordinary time rate of pay" is the rate of pay for the standard hours worked, the standard being fixed objectively in some manner such as by an award or industrial agreement. In making such a concession the appellant seems to me to concede the argument in relation to both s.94(10) and s.95(1), for the formula for calculating weekly earnings proceeds upon the basis, which is axiomatic, that if there is to be an ordinary time rate of pay it must be ordinary in relation to something. Clearly the thing selected is the normal, or standard, number of hours worked per week. It cannot include overtime hours because they are extraordinary and incompatible with an ordinary time rate of pay. Moreover, for overtime hours to be included, they would have to be averaged over some selected period and s.94 selects no period. But, in any event, as I have said, because current weekly earnings under s.94(10) cannot exceed actual earnings, the phrase "normal hours per week" must in that sub-section exclude overtime.

6. Section 95(1) defines "pre-injury average weekly earnings" principally for the purpose of calculating weekly payments where the worker does not remain employed. It is, therefore, not possible, as it is with s.94(10), to refer to actual weekly earnings. It is necessary to provide a period over which prior weekly earnings may be averaged. The sub-section does this by providing for a period of up to twelve months preceding the injury. Otherwise the formula for calculating the average weekly earnings remains the same as in s.94(10). The same words are used: "the worker's ordinary time rate of pay for the worker's normal number of hours per week". To give the formula one meaning in s.94(10) and another in s.95(1), the context being no different, would be to depart from the basic rules of construction. Since s.94(10) must exclude overtime, s.95(1) must do the same. I agree with McHugh J. that in calculating the average weekly earnings during the period preceding the injury under s.95, as that section stood at the time of the appellant's injury, a weighted average should be used.

7. The proper order is that the appeal should be dismissed with costs.

McHUGH J. In 1985, s.95(1) of the Accident Compensation Act 1985 (Vict.) ("the Act"), so far as was relevant, provided:
"In sections 93 and 94, 'the worker's
pre-injury average weekly earnings' means - (a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been employed by the same employer for that period; . . . calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week."

2. The question in this appeal is whether, when a standard number of ordinary working hours has been fixed for a worker's employment, his "normal number of hours per week" for the purposes of the Act are those standard hours or the number of hours he usually worked.

3. The appeal is brought by Mr Gordon Catlow ("the appellant") against a judgment of the Full Court of the Supreme Court of Victoria. The Full Court held that, for the purpose of the calculation in s.95 of the Act, the worker's "normal number of hours per week" were the 36 "ordinary hours for a week's work" fixed under an unregistered industrial agreement which governed his employment with Australian Safeway Stores Pty. Ltd. The Full Court reversed the holding of the Accident Compensation Tribunal division that the "normal number of hours per week" of the appellant was the number of hours he usually worked including overtime hours.

4. When the appellant was appointed a warehouse supervisor in November 1982, he agreed with his employer that he would work such number of hours in any working week, additional to the 36 hours, as the employer required, that he would habitually commence his daily work earlier than the starting time of the general warehouse staff, that he would finish his daily work at such later hour as the employer or the circumstances required, that he would work on such of his rostered days off and Saturdays as the employer might require of him, and that he would be remunerated for hours of work in excess of the 36 hours per week at the rates prescribed for overtime in the unregistered agreement.

5. The appellant sustained injury on 26 October 1985. His ordinary time rate of pay for the 36-hour week was then $367.90. In October 1984 the rate was $357.00 per week; as from 13 April 1985 it was increased to $365.40 per week; and as from August 1985 it was increased to $367.90 per week. Thus, during the 12 months period before the appellant's injury, he had three ordinary time rates of pay.

6. The Accident Compensation Tribunal division found that in the 12 months prior to 26 October 1985 the appellant had worked a total of 1,963.5 hours of which 664.5 hours were overtime hours. He had been required to work and did work on 14 of his 23 rostered days off and on 27 Saturdays out of 38. In addition he had been totally incapacitated for work for 12 pay periods between October 1984 and January 1985 because of an earlier compensable injury. He had also had four weeks paid holidays.
The Calculation of Pre-injury Average Weekly Earnings

7. Section 82 of the Act provided that, if there was caused to a worker an injury arising out of or in the course of any employment, he was entitled to compensation in accordance with the Act. Section 93, so far as was relevant, provided:
"(1) If a worker's total incapacity for work
results from or is materially contributed to by an injury which entitles the worker to compensation the compensation shall be in accordance with this section. . . . (4) Subject to this section, a weekly payment to a worker shall be an amount equivalent to - (a) 80 per cent of the worker's pre-injury average weekly earnings; or (b) $400 - whichever is the lesser. . . . (7) A weekly payment to a worker who - (a) was not a full-time worker immediately prior to the injury; (b) at the time of the injury was seeking full-time employment; and (c) had been predominantly a full-time worker during the 18 months preceding the injury - shall be calculated as if the worker had been a full-time worker and as if the worker's pre-injury average weekly earnings were the average weekly earnings of the worker while employed in full-time employment during the 18 months preceding the injury."

8. Section 5(1) of the Act defined "full-time worker" to mean:
"a worker who is employed for at least
the normal number of hours fixed in any industrial award applicable to the worker or if there is no applicable award the prescribed number of hours".

9. Section 95, so far as was relevant, provided:
"(1) In sections 93 and 94, 'the worker's
pre-injury average weekly earnings' means - (a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been employed by the same employer for that period; or (b) the average weekly earnings for the period less than 12 months preceding the relevant injury for which the worker has been employed by the same employer - calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week. . . . (3) For the purposes of sub-section (1) - . . . (b) if an ordinary time rate of pay is not fixed for the worker's work under the terms of the worker's employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1); (c) if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1); and (d) if the worker is employed by more than one employer at the time of the injury, the worker's average weekly earnings shall be calculated - (i) if the worker works for one employer for at least the normal number of hours per week fixed in any industrial award applicable to the worker, with reference to that work; (ii) if there is no applicable industrial award but the worker works for one employer for at least the prescribed number of hours per week, with reference to that work; (iii) if the worker works for more than one employer for at least the normal number of hours per week fixed in any industrial award applicable to the worker, with reference to the work which yields the higher ordinary time rate of pay; (iv) if the worker works for one employer for at least the normal number of hours per week fixed in any industrial award applicable to the worker and for another employer for at least the prescribed number of hours per week with reference to the work which yields the higher ordinary time rate of pay; (v) if there is no applicable industrial award but the worker works for more than one employer for at least the prescribed number of hours per week, with reference to the work which yields the higher ordinary time rate of pay; or (vi) in any other case, by obtaining the worker's average ordinary time rate of pay for all work carried out by the worker for all the employers and applying that rate to the prescribed number of hours per week or to the total of the worker's normal number of hours per week whichever is the lesser. . . .
(6) Where a worker at the time of the injury was a full-time student, the worker's pre-injury average weekly earnings under section 93 or 94 - (a) until the time that the worker would have completed the course of studies in which the worker was a full-time student, shall be calculated in accordance with sub-section (1); and (b) as from the time that the worker would have completed the course of studies in which the worker was a full-time student shall be - (i) the weekly earnings which the worker would have received upon being employed on the completion of the course of studies in which the worker was a full-time student; or (ii) $400 - whichever is the lesser."

10. Although these sections have been amended since the appellant sustained his injury, it is convenient to speak of the relevant provisions in the present tense.

11. In this Court the appellant conceded that the phrase "the worker's ordinary time rate of pay" in s.95(1) does not include any overtime rate. He also conceded that, within the meaning of s.95(3)(b), an ordinary time rate of pay was fixed for his work under the terms of his employment. However, he contended that in s.95(1) the "normal number of hours per week" meant the number of hours usually worked by a worker and that they included any overtime hours usually worked during the week. Further, the appellant contended that, since he worked whatever hours were required of him, his hours were not "fixed" under the terms of his employment. Consequently, his "normal number of hours per week" had to be determined in accordance with s.95(3)(c). That is to say, his "normal number of hours per week" were deemed to be the "average weekly number of hours worked by the worker during the relevant period under sub-section (1)". This was the argument which the Tribunal division accepted, but which the Full Court rejected.

12. In construing the terms of s.95(1), it is helpful to bear in mind that the terms of employment of most workers are governed by industrial awards or agreements which provide for an ordinary time rate of pay for a standard or ordinary number of hours per week. Industrial awards and agreements usually state the number of ordinary working hours in each day and week and provide for the payment of overtime and penalty rates of pay for hours worked outside those ordinary hours: cf. Australian Labour Law Reporter, Vol.2, par.30-684; Leonard v. Auckland Electric-Power Board (1950) NZLR 534, at p 551; Basic Wage and Standard Hours Inquiry 1952-1953 (1953) 77 CAR 477, at pp 504-505. Thus, in the present case the industrial agreement under which the appellant was employed provided that the ordinary hours of work should be an average of 36 per week which were to be worked in the manner specified "without payment of overtime": cl.3.

13. Against the industrial background of awards and agreements fixing a number of ordinary hours per week, it seems natural to read the expression "calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week" as a reference to the ordinary time rate of pay for the worker's standard or ordinary hours per week as fixed by award, agreement or contract. While it is true that on any view the "pre-injury average weekly earnings" calculated under s.95 is a notional and not an actual figure, it would indeed be surprising if the legislature intended that those earnings are to be calculated by multiplying the ordinary time rate by overtime as well as ordinary hours worked. If "normal number of hours" included overtime hours, some other formula to include the overtime rate would surely have been used.

14. Judicial decisions on similar expressions in comparable statutes support the view that the "normal number of hours per week" in s.95(1) means the ordinary hours fixed by award, agreement or the terms of the employment. In John A. Gilbert Pty. Ltd. v. Irving (1962) AR 307, the Industrial Commission of New South Wales held that in s.2(1) of the Annual Holidays Act 1944 (N.S.W.), which defined "ordinary pay" to mean "remuneration for the worker's normal weekly number of hours of work calculated at the ordinary time rate of pay", "normal weekly number of hours" meant the hours fixed by the employment. Section 2(2)(a) and (b) of that Act broadly corresponded to the provisions of s.95(3)(b) and (c) of the Act. The Commission said (at p 318):
"The word 'normal' in its ordinary sense
may mean regular or usual, or it may mean conforming to standard. We are of the opinion that, in the definition, a worker's normal weekly number of hours is that number of hours which is fixed by the terms of the worker's employment as the standard of ordinary hours, as distinct from overtime hours, which are to be worked in a week. If 'normal' meant regular or usual, a determination of what was regular or usual would depend on the facts of each case in relation to a period of employment long enough to permit an ascertainment of what was regular or usual, but the language of s.2(2) suggests that terms of employment may fix in advance the weekly hours which are to be normal."

15. In Goodyear Tyre &Rubber Co. (Aust.) Ltd. v. Robinson (1961) AR 127, the Industrial Commission had also considered the meaning of the expression "the worker's normal weekly number of hours of work" for the purposes of the Long Service Leave Act 1955 (N.S.W.). The expression appeared in a definition of ordinary pay and was in the same terms as the definition of ordinary pay in s.2 of the Annual Holidays Act. McKeon J., with whose judgment Taylor P. and Beattie J. agreed, said (at pp 137-138):

"Overtime hours are not hours within a worker's normal weekly number of hours of work; they are hours worked over and above his normal weekly number of hours of work, and a payment which is made for overtime hours cannot, in any sense, be said to be remuneration for one's normal weekly number of hours of work."

16. There seems to be no relevant difference between the phrase "normal number of hours per week" in s.95(1) and the phrase "normal weekly number of hours" in the New South Wales legislation. Indeed s.95(3)(c) uses the two phrases interchangeably. The two decisions of the Industrial Commission, therefore, strongly support the conclusion of the Full Court in the present case.

17. Further support for the proposition that "the normal number of hours per week" means the ordinary hours fixed by the terms of employment arises from various provisions of the Act which assume that the "normal number" of hours per week will be fixed by the industrial award or agreement. Thus, "full-time worker" is defined by s.5 to mean a worker employed for at least "the normal number of hours fixed in any industrial award applicable". Section 95(3)(c) provides that where "a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment", the "normal weekly number of hours" is deemed to be the average weekly hours worked. Section 95(3)(d)(i), (iii) and (iv) refers to "the normal number of hours per week fixed in any industrial award applicable to the worker". These provisions indicate that the legislature understood the phrase "normal number of hours per week" in s.95(1) as the hours fixed under the terms of the worker's employment and not the hours actually worked.

18. Moreover, the terms of s.95(3)(d)(vi) indicate that the general policy of the legislation is that hours actually worked are not to be taken into account if they exceed the prescribed number of hours which is 35 hours per week (reg.5). It is true that the terms of s.95(3)(c) might suggest the opposite conclusion. But since the terms of employment fix the ordinary hours of work for most full-time employees, it seems likely that s.95(3)(c) was intended to operate in respect of casual workers, and most casual workers work less than the 35-40 hours per week which in recent years have constituted the norm for ordinary hours of work. Section 95(3)(c) should therefore be seen as an exception to and not a denial of the policy inherent in s.95(3)(d)(vi).

19. The history of the Act also supports the view that overtime hours usually worked are not to be taken into account in determining the worker's "normal number of hours". Before the passing of the Act, Victorian legislation dealing with workers' compensation expressly required that, in determining the average weekly earnings of a worker, amounts paid by way of overtime were to be included: see Workers' Compensation Act 1928, s.5(1), Second Sched., par.2; Workers Compensation Act 1951, s.5(1), cl.4(a); Workers Compensation Act 1958, s.5(1), cl.4(a). The omission of any specific reference to overtime payments in calculating the "pre-injury weekly earnings" in this Act is significant. Moreover, the explanatory notes on the draft proposal for an Accident Compensation Bill had provided that, for the purpose of calculating pre-injury ordinary time average weekly earnings, overtime payments were to be excluded altogether. However, when the Bill, which became the Accident Compensation Act, was introduced into the Legislative Assembly, s.95(2) provided:
"If a worker received payment for
overtime worked by the worker and the average weekly earnings calculated under sub-section (1) are less than the amount calculated under section 93(5), 93(7), 94(6) or 94(7) (whichever is applicable) the value of overtime payments shall be taken into account but not so as to exceed the amount calculated under those sections." Section 95(2), therefore, made it clear that a worker was not to be given any credit for hours worked as overtime for the purpose of calculating his pre-injury average weekly earnings except for the limited purposes set out in that sub-section. At the Committee stage, further benefits were given to the worker when cl.95(2) of the Bill was amended by omitting "overtime payments" and inserting "any other payments to the worker by the employer". However, "overtime payments" are obviously included within the wider expression "any other payments". Thus, the history of the Bill shows that hours usually worked as overtime were intended to be excluded from the calculation of pre-injury earnings except in the limited circumstances provided for in s.95(2).

20. Accordingly, the ordinary meaning of the phrase "normal number of hours per week" read in its context, the industrial background of the legislation, the judicial exposition of similar phrases, and the history of the legislation all point to the phrase meaning the ordinary or standard hours fixed by the terms of employment. The appellant contended, however, that this interpretation gave rise to at least three anomalies. He pointed out that it led to the situation where a worker gets the benefit of hours actually worked if no ordinary hours of work were fixed under the terms of his employment (s.95(3)(c)), but not if they were fixed. Secondly, if a worker was not a full-time worker at the time of his injury but was then seeking full-time employment, his actual average weekly earnings for the previous 18 months are treated as his "pre-injury" average weekly earnings": s.93(7). Thirdly, where a worker was a full-time student when he was injured, his pre-injury average weekly earnings are calculated from the time he would have completed his studies by reference to the "weekly earnings which the worker would have received upon being employed on the completion of the course of studies": s.95(6).

21. That the construction which the Full Court placed on s.95(1) leads to anomalies must be conceded. But the construction for which the appellant contends does not avoid the anomalies under ss.93(7) and 95(6) which occur in the case of a person who was not a full-time worker but was seeking full-time work or in the case of a worker who was a full-time student when he was injured. Those two sub-sections require pre-injury average weekly earnings to be calculated by reference to the wages earned or to be earned. The appellant's construction of s.95(1) accepts, however, that only the ordinary time rate of pay can be used to calculate pre-injury average weekly earnings even if overtime hours are part of the "normal number of hours per week". Thus, even on the appellant's construction of s.95(1), pre-injury average weekly earnings calculated under that sub-section are different from the actual or potential earnings calculated under ss.93(7) and 95(6). Moreover, so far as the anomaly produced by s.95(3)(c) is concerned, it is unlikely that there will be many cases of full-time employment where the ordinary hours of work are not fixed by the terms of employment. Cases falling within s.95(3)(c), therefore, will usually be those of casual workers whose total working hours will be less than the ordinary hours fixed by industrial awards or legislation. If, as appears to be the case, the policy of s.95 is to ensure that pre-injury average weekly earnings are to be determined primarily by reference to the ordinary hours of employment, nothing in s.95(3)(c) cuts across that policy in the case where that paragraph will usually be applied. That in some situations concerning non-casual employees s.95(3)(c) has an operation inconsistent with the general policy of s.95(1) is not a sufficient reason for construing "normal" in s.95 as meaning "usual".

22. Moreover, the construction for which the appellant contends gives rise to anomalies with respect to s.95(3)(d). Many workers with more than one employer are engaged in work in respect of which an industrial award fixes the normal number of hours per week. Section 95(3)(d) requires that those workers have their pre-injury average weekly earnings calculated by reference to the ordinary hours fixed by their industrial awards even if the appellant's construction of s.95(1) is accepted as correct.

23. The appellant also contended that the decision of this Court in Kezich v. Leighton Contractors Pty. Ltd. (1974) 131 CLR 362 supported the proposition that the "normal number of hours" was the number of hours usually worked and could include hours worked at overtime rates. In Kezich, the Court had to construe the expression "ordinary hours" in a workers' compensation statute which provided:
"For the purposes of this Act,
'weekly earnings' means the amount of the ordinary wage or salary (including any over award payment) the worker would have received for the ordinary hours he would have worked, if he were not incapacitated for work as a result of the injury." The Court held that the phrase "for the ordinary hours he would have worked" meant the hours which he usually worked - which was 60 hours per week - as opposed to the 40 ordinary working hours fixed by an industrial award. Gibbs J. said (at p 365):

"The word 'ordinary' means 'regular, normal, customary, usual'. A man's 'ordinary hours' of work are the hours during which it is usual for him to work. There is nothing in the expression 'ordinary hours' that connotes payment at any particular rate, and to understand the words as meaning 'hours during which work is done for which overtime is not paid' would be to place upon them a meaning which they simply do not bear. The expression 'the ordinary hours he would have worked' in my opinion means the same as 'the hours he would ordinarily have worked' . . ."

24. But the question in the present case is what is meant by the phrase "normal number of hours per week" in a context where the pre-injury earnings are to be calculated by multiplying those hours by the ordinary time rate of pay and where the context shows that the legislature assumed that the normal number of hours per week was fixed by industrial awards. It is true that both Gibbs J. (at p 364) and Mason J. (at p 367) also said that the worker in Kezich "would normally work sixty hours per week". But, as the Industrial Commission of New South Wales pointed out in John A. Gilbert Pty. Ltd. v. Irving, at p 318, "normal" may mean "regular or usual, or it may mean conforming to standard". Thus, while it was accurate in Kezich to speak of the worker's usual hours as his normal hours, it does not follow that in s.95(1) "normal number" means "usual number". Indeed, the different context and history of the phrase "normal number of hours per week" in s.95(1) dictate that it be interpreted as meaning the ordinary or standard number of hours worked and not the usual number of hours worked.

25. Accordingly, in my opinion, in s.95 "normal number of hours per week" means the ordinary or standard hours fixed by the terms of the employment. The appellant's "pre-injury average weekly earnings" in this case had to be calculated by determining what were his total weekly earnings calculated by reference to the ordinary time rate of pay for the ordinary hours for the relevant period and then obtaining a weekly average of that sum. As the appellant had more than one ordinary time rate of pay during the 12 months period, his earnings for each of the three periods had to be grossed in accordance with that formula and then averaged over the relevant period. The Period to be Taken into Account in Determining the Average Weekly Earnings

26. The Tribunal division held that what s.95 contemplated was "the aggregation of hours worked during 12 months and its division by 52 to give an average weekly number". The approach of the Tribunal division resulted in an average figure of $381.00 per week. This was arrived at by adding the three ordinary time rates and dividing by three, then dividing that average ordinary time rate by 36 hours per week to obtain an hourly rate, and then multiplying that hourly rate by the 1,963.5 hours worked. The product was then divided by 52 to obtain "the pre-injury average weekly earnings".

27. For the reasons already given, s.95(1), contrary to the opinion of the Tribunal division, did not require an aggregation of the hours actually worked during the 12 months period. Moreover, the Tribunal division was in error in assuming that what s.95(1) required was a "simple" average weekly rate and that the divisor was always to be 52. A simple average would lead to unfairness in many cases. The correct approach is to obtain a weighted average after deducting periods where the worker was off work on compensation.

28. In the present case the pre-injury average weekly earnings were $363.50. This figure was calculated as follows:
$357.00 x 12 weeks (excluding
12 weeks on compensation) = $4,284.00 $365.40 x 18 weeks (as from 13 April 1985) = $6,577.20 $367.90 x 10 weeks (as from August 1985) = $3,679.00

---------- $14,540.20 ----------

Total earnings divided by 40 weeks = $363.50

Order

29. The appeal should be dismissed with costs.

Orders

Appeal dismissed with costs.