Dawson v Dept of Justice

IN THE COUNTY COURT OF VICTORIA

Unrevised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

SERIOUS INJURY

Case No. CI-10-01432

SUSAN JEAN DAWSON	Plaintiff
v
DEPARTMENT OF JUSTICE	Firstnamed Defendant
– and –
ALLIANZ WORKERS COMPENSATION	Secondnamed Defendant

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JUDGE:	HIS HONOUR JUDGE BOWMAN
WHERE HELD:	Melbourne
DATE OF HEARING:	21, 22, 23 and 24 February 2011
DATE OF JUDGMENT:	22 July 2011
CASE MAY BE CITED AS:	Dawson v Dept of Justice & Anor
MEDIUM NEUTRAL CITATION:	[2011] VCC 982

REASONS FOR JUDGMENT

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Catchwords: Accident Compensation Act 1985 – s.134AB – application for leave in respect of pain and suffering damages and pecuniary loss damages – reliance upon sub-paragraph (c) of the definition of serious injury – mental or behavioural disturbance or disorder as a result of bullying and workplace stresses – plaintiff has returned to part-time employment – method of calculation of earnings – whether burden of proof discharged – meaning of “gross income from personal exertion” – failure of counsel to deliver written submissions – factors to be considered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D.G. Brookes SC with	Stringer Clark
Mr N.R. Bird
For the Defendant	Mr P.A. Scanlon QC with	Lander & Rogers
Mr P.B. Jens
HIS HONOUR:

Background
1 This matter comes before me by way of an application pursuant to s.134AB(16)(b) of the Accident Compensation Act 1985, hereinafter referred to as “the Act”. The plaintiff seeks leave in relation to both pecuniary loss damages and pain and suffering damages. In bringing her application, the plaintiff relies upon sub-paragraph (c) of the definition of serious injury contained in s.134AB(37) of the Act. In essence, the application could be described as a stress claim based upon an allegation of bullying and the like in the workplace and resulting in an injury which is described in various ways, including a Chronic Adjustment Disorder with depressed mood and anxiety. Whilst, as I understand it, reliance is placed upon the course of employment, the period from approximately May 2000 until late 2006 seems to be the timeframe upon which the plaintiff places particular reliance. I might say at this stage that the interests of the defendants overlap entirely. Henceforth I shall refer only to “the defendant”, meaning the Department of Justice, by which entity the plaintiff was employed and in whose employment the plaintiff suffered the injury or injuries alleged.
2          Mr D Brookes SC with Mr N Bird of counsel appeared on behalf of the plaintiff. Mr P Scanlon QC with Mr P Jens of counsel appeared on behalf of the defendant. The plaintiff was called to give evidence and was cross-examined. Oral evidence was also adduced from Mr Geoffrey Soma, the Director of the Western Region Alcohol & Drug Centre (“WRAD”), being the current employer of the plaintiff. Oral evidence was also adduced from Ms Dawn Bermingham, the Office Manager of WRAD. The balance of the evidence was documentary in nature and was tendered by consent.
3          I am familiar with the numerous decisions of the Court of Appeal which bear upon applications such as this and shall endeavour to apply the principles set out in them in coming to a decision in this case. I shall not list such cases here but shall refer to any cases which I consider to be specifically relevant in the course of this judgment. It was not argued but that the plaintiff bears the burden of proof.
4          The handing down of this judgment has been more than somewhat delayed for the following reason. This originating motion ran over some four days. Towards the end of the third day, and after the conclusion of the evidence, I stated that I would be assisted by written submissions in relation to such things as what is meant by gross income from personal exertion and how the method of payment in the present case fitted in with this. I expressed the view that the Court appeared to be faced by a somewhat novel point. I repeated that I would be assisted by written submissions in relation to matters such as those referred to above. The prospect of written submissions was again referred to by me at Transcript (“T”) 188 and T 194. On the fourth day of the hearing and towards the end of Senior Counsel for the defendant’s closing address, it was again confirmed that there would be written submissions on the issue of economic loss – see T 221. At T 226 Senior Counsel for the defendant indicated that the written submissions would also address the issue of the applicability of the decision in Advanced Wire Cable Pty Ltd & Anor v Abdulle [2009] VSCA 170 to a situation where the injury under consideration is a mental one with the associated requirement of proving severity. The general desirability of written submissions was again discussed. At T 227 Senior Counsel for the plaintiff confirmed that the plaintiff’s submissions in relation to economic loss would be in writing and there was no demur from the defendant’s end of the Bar table when I stated that this would be the same situation as that prevailing in relation to the defendant. At T 251 I asked that both sides, in their written submissions, addressed the question of the date of injury for the purposes of the six year “window” in sub-s.134AB(38)(f). I emphasised that the date of injury would have to be specified, bearing in mind the evidence given, for the purpose of calculations.
5          At T 252 I was asked by Junior Counsel for the defendant, who was apparently going to do the written submissions, whether “next week” would be too late. I would point out that this discussion was taking place on 24 February, which was a Thursday. My answer was that I did not know whether counsel for the defendant would have time to get the submissions done in a week, but it would be helpful if that could be done. Senior Counsel for the plaintiff said that a timeframe of approximately one week would suit him. I then stated that I would not impose a deadline but it would be helpful if the written submissions were in by the end of “next week”, which would have been 4 March. Subsequently, at T 253, Junior Counsel for the defendant stated that certain aspects of the economic loss argument relating to tax rates and the like would be expanded upon in the written submissions. I reminded counsel that I would be assisted by any further submissions as to whether the decision in Abdulle applied. Essentially the case was adjourned pending the receipt of the submissions and other matters in the list received attention. No submissions were received prior to the conclusion of the circuit.
6          Despite subsequent requests by myself and by my associate the written submissions were not forthcoming. I then went on leave in mid-April for some five weeks. Upon returning, I found that the written submissions had still not been delivered. Again, further requests, both formal and informal, were made by my associate and myself.
7          Ultimately the matter was listed for mention before me on Monday 27 June. On this occasion the written submissions on behalf of the plaintiff were produced. Mr Jens appeared on behalf of the defendant. Whilst he apologised to the Court, the defendant’s written submissions were still not available. I was asked if I would extend the time until Thursday 30 June. I pointed out that, between Wednesday 29 June and Friday 1 July, I would be absent at the Biennial District and County Court Judges’ Seminar in Adelaide, and I would be resuming work on Monday 4 July. I warned that, if the defendant’s written submissions had not been received by that time, I would commence work on the judgment without them.
8          In the event, I allowed yet another week in the optimistic but futile expectation that the defendant’s written submissions might be forthcoming. They were not. Perhaps the particularly annoying aspect of this is that the quite technical argument concerning tax rates and the like which prompted the initial discussion concerning written submissions was one put forward on behalf of the defendant, and it was counsel on behalf of the defendant who suggested that the decision in Abdulle does not apply where the required test is “severe” rather than “serious”.
9          In any event, I have moved onto judgment without the benefit of the defendant’s written submissions. Counsel from neither party have covered themselves in glory in relation to this whole affair where the parties have long been waiting for judgment, but at least, even if somewhat belatedly, I do have the written submissions on behalf of the plaintiff. There is no sign of the defendant’s submissions. I am proceeding to judgment without them.

Factual background
10        The following findings of fact are made for the purposes of this application and are not intended to be findings which are in any way determinative in relation to issues such as negligence, the quantum of damages, entitlement to statutory benefits and the like.

(i) The plaintiff
11        The plaintiff presented as a somewhat unusual person who had provided very extensive affidavit material in support of her application. She was cross- examined at great length about her engagement in various activities away from the workplace, in addition to being questioned concerning her level of involvement with, and her capacity to engage in, her present employment. Extraction of some of this evidence took a certain amount of time and the results did not always sit comfortably with what was contained in the affidavit material. It may be that the difficulties encountered in this regard were due to the nature of the plaintiff and her illness, but it seemed to me that the picture which ultimately emerged in relation to questions such as whether the plaintiff had become a recluse and was very limited in participating in activities differed considerably from the picture portrayed in the affidavits. Surveillance and cross-examination revealed a person who was certainly not leading a hermit-like existence and did not appear to be avoiding contact with other people to the extent of the impression contained in the affidavit material. However, it must be said that in the surveillance film of her playing the poker machines she cut a somewhat lonely and solitary figure and I tend to agree with her counsel’s submissions in this regard. I accept the plaintiff’s oral evidence as ultimately adduced in relation to some of the difficulties which she experiences. However, it is certainly an issue as to whether that evidence, viewed without having recourse to the pecuniary loss situation, establishes a case of sufficient strength to discharge the burden of proof in relation to the more demanding requirement of severity as set out in sub-paragraph (c) of the definition.

(ii) The central issues to be determined
12        I would say at the outset that, in relation to pain and suffering damages viewed in isolation, in my opinion the consequences of the injury suffered by the plaintiff would not of themselves be sufficient to satisfy the test of severity contained in sub-paragraph (c) of the definition. She is engaged in part-time employment where her performance seems to be satisfactory; she is involved with Rotary and has been involved with the Warrnambool Harness Club; she is involved with the Wimmera Hearing Society and other community activities; and she goes caravanning with friends, albeit at a time when the caravan park is less crowded and arguably at a different and less popular location within the park. She has not been treated by a psychiatrist, as opposed to a psychologist, and the level of medication which she is on is not great. In short, were this simply an application for leave in respect of pain and suffering damages, the plaintiff would not have discharged the burden of proof.
13        However, the plaintiff is also seeking leave in respect of pecuniary loss damages. In those circumstances, two key issues emerged, together with a supplementary issue, and it is in respect of those that I had requested, and hoped to obtain, written submissions, and particularly from defendant’s counsel who had raised contentious questions in relation to such issues. Firstly, there is the question as to whether the plaintiff has discharged the burden of proof in respect of the 40 per cent financial loss required by s.134AB(38)(e) and (f). This received considerable attention, particularly in the cross-examination of Mr Soma and Ms Bermingham, with some documentary evidence also being tendered. A somewhat novel argument was also suggested, the issue going beyond that of capacity and extending into the method of taxation of the plaintiff’s current earnings and how they should be treated as a result. Secondly, there is the issue of whether, if the required 40 per cent loss is established, the decision in Advanced Wire Cable Pty Ltd & Anor v Abdulle [2009] VSCA 170 applies in relation to an injury as defined in sub-paragraph (c). Mr Scanlon submitted that the effect of the decision in Abdulle was confined to a serious injury and not applicable to a severe injury, stating that this would be a question addressed in written submissions – see T 226.
14        A further issue which is supplementary to the first question referred to above concerns the date of injury for the purposes of the six year “window” contained in s.134AB(38)(f), and again I asked for the assistance of written submissions in this regard.
15        Accordingly, bearing in mind my finding above as to leave in respect to pain and suffering, the first issue to be determined relates to the required financial loss of 40 per cent or more, this in turn involving matters such as the date of injury and the method of calculation of “after injury” earnings in this particular case. The issue concerning the applicability of the decision in Abdulle is a question of law which, if necessary, can be dealt with subsequently. There is then no need for any further discussion concerning interference with the plaintiff’s lifestyle, pain and suffering consequences and the like, except insofar as such matters may have some bearing upon her capacity for employment.
16        The occurrence and circumstances of injury were not placed in issue. Mr Scanlon indicated at the outset that this was effectively “a range case”, referring to the consequences of injury as being moderate and, in essence, not satisfying the statutory requirements – see T 6. Certainly that is in accord with how the case was conducted. In any event, the plaintiff’s affidavit material in this regard was not challenged and I accept that she suffered a compensable injury in the circumstances described.

(iii) The plaintiff’s education, background and training prior to the injury
17        The plaintiff is aged 58 years, having been born on 16 September 1952. She is a married woman with three adult children. A fourth child was killed in a motor vehicle accident whilst he was a university student.
18        The plaintiff was educated to Year 10 level. Prior to commencing employment with the defendant she had worked in a number of occupations, such employment being interrupted by the birth of her children and the raising of them in their early years. Initially she worked in the Warrnambool Woollen Mills doing accounts before working as a legal secretary. She performed this work, at times on a relieving basis and interrupted by the birth of children, between approximately 1971 and 1976. In 1980 she commenced employment with the Warrnambool City Council as a full-time secretary to the town clerk before ceasing with her fourth pregnancy in July 1983. In December 1984 she commenced working as a stenographer with the defendant on a full-time basis before being asked to become a community corrections officer. After training, she commenced working in that capacity for the defendant at Warrnambool in March 1985.
19        The plaintiff’s son was tragically killed in a motor vehicle accident in approximately November 1995, and the plaintiff required some psychological counselling at this time. She continued with her employment. She had also done in-service training programs over the years, and in January 1998 was promoted to the position of a senior community corrections officer, supervising some four others as well as attending to her own caseload.
20        In June 2000 there was some restructuring of her department with the management of the Warrnambool regional office being transferred to Ballarat. There was also a reduction in the number of employees and the plaintiff became, in essence, the senior officer in the office. The overall manager at Ballarat was a Mr Murphy, and difficulties arose in regard to the working relationship between the plaintiff and Mr Murphy. Thereafter over the years there occurred developments and circumstances involving clashes, allegations of bullying and the like, which gave rise to the compensable injury.

(iv) The injury
21        As stated, the actual occurrence of injury, as opposed to the severity of the consequences, was not at the centre of this dispute.

(a) The state of the plaintiff’s health prior to the injury
22        The plaintiff had suffered from some problems that could broadly be described as psychological prior to the period during which she suffered the relevant injury. She underwent psychological counselling following the tragic death of her son.
23        However, prior to suffering the compensable injury, she had coped with her work. I do not regard any prior health problems or conditions as being of relevance to the issues remaining for determination.

(b) The injury and its assessment, and particularly in relation to
capacity

(1) The date of injury
24        The plaintiff is alleging bullying, harassment and difficulties commencing from approximately June 2000 with sick leave being taken between December 2002 and February 2003 and thereafter some further periods of absence. She began seeing Mr Murray Kingsley, a psychologist, in January 2003, having been referred by Dr Kay, a general practitioner. Anti-depressant medication seems to have been prescribed and the plaintiff then worked on and off, alleging further harassment and bullying, until the cessation of employment in October 2006. It was submitted on her behalf that 1 October 2006 should be treated as the date of injury as it was thought that, as at that date, she could not continue working any longer. The various claim forms for statutory benefits lodged on her behalf do not specify a date of injury but refer to ongoing abuse and harassment. Whilst a date of injury of 24 November 2003 is set out in the headings of some reports obtained on behalf of the defendant, it is quite apparent that she worked on beyond that date and that further stresses occurred. Whilst relevant events occurred in November 2003, there also seem to have been significant happenings thereafter. I would refer to paragraphs 58 and following of the plaintiff’s affidavit of 16 November 2009. It seems to me that the plaintiff may in fact have continued working beyond 1 October 2006, although by December 2006 she was on extended sick leave. Dr Michael Duke, consultant psychiatrist, saw the plaintiff on 13 December 2006, and his comparatively contemporaneous report refers to her ceasing work again on 9 October 2006. It is not apparent whether she worked on that day. In the circumstances I shall select 8 October 2006 as the date of injury. It seems apparent to me that the occurrence of injury was indeed an ongoing event and that the plaintiff was suffering injury up until the date of cessation of work. I might add that little, if anything, hinges upon the distinction between 1 October 2006 and 8 October 2006.

(2) The nature of the injury suffered
25        Turning to the injury sustained, Dr Louise Seward, consultant psychiatrist, assessed the plaintiff on 2 March 2004 and diagnosed Adjustment Disorder with depressed mood. The examination by Dr Seward was at the request of the plaintiff’s solicitors. Dr Michael Epstein, consultant psychiatrist, examined the plaintiff at the request of her solicitors, reporting firstly on 6 September 2007 when he diagnosed a Chronic Adjustment Disorder with depressed mood and anxiety as a consequence of workplace harassment, effectively confirming this on review on 28 September 2010. Dr Michael Duke, examining on behalf of the defendant, saw the plaintiff on a number of occasions in July 2004 diagnosing Adjustment Disorder with mixed anxiety and depressed mood, although stating that this had remitted when reporting on 9 March 2005. However, when he saw her again on 13 December 2006 he stated that there had been a recurrence of the Adjustment Disorder with mixed anxiety and depressed mood. Dr Norman Rose assessed the plaintiff on 14 January 2010, diagnosing chronic major depression and implicating the bullying at work. Dr Rose was also examining on behalf of the defendant. Dr Martin van der Linden, consultant psychiatrist, examined the plaintiff at the request of the defendant on 21 September 2007 and also diagnosed an Adjustment Disorder with depressed and anxious mood which is chronic. The treating psychologist, Mr Kingsley, diagnosed that the plaintiff suffered from severe anxiety and severe depression.
26        There is not a great deal of difference in the opinions of the examiners, as is apparent from the above. In the circumstances I accept that the injury suffered by the plaintiff is one of a Chronic Adjustment Disorder with anxiety and depression.
27        I also accept that the consequences of this injury are permanent within the meaning of the Act in that they will persist for the foreseeable future. The plaintiff’s symptoms have been active, and her treatment has now been going on, for in excess of eight and a half years. Examining her in September 2007, Dr Epstein expressed the view that the plaintiff’s current work capacity was nil and was unlikely to improve in the near future. Whilst this is an opinion in relation to capacity, it also reflects permanency. Although she had returned to part-time employment when seen by him again on 24 September 2010, in essence his view as to the prognosis for the symptoms had not changed in that he stated that her current capacity for work remained very diminished and was likely to remain so indefinitely. He also considered her condition to be stable with the prognosis for improvement very limited. Another recent examiner was Dr Rose, who seems to have been concentrating more upon the necessity for medication. In any event, when reporting on 14 January 2010 he expressed the opinion that the plaintiff was suffering from a chronic major depression which had not resolved and considered that she needed long-term psychological support, together with the taking of anti-depressant medication indefinitely. In the circumstances, I accept that the consequences of the injury which the plaintiff has suffered are permanent within the meaning of the Act and will continue for the foreseeable future.
28        Insofar as the injury is in the nature of an aggravation, in accordance with the authorities it is the injury as aggravated which I shall consider. However, whilst the plaintiff had previously suffered some psychological problems, and particularly in relation to the death of her son, the injury under consideration does not seem to me to represent an aggravation of a pre-existing condition. It is to be remembered that the plaintiff was coping with her employment until the events associated with the injury occurred. Essentially the consequences from which she now suffers are the consequences of that injury.

(3) The opinions of medical examiners in relation to capacity
29        I turn now to the estimates of capacity given by the medical examiners. As early as March 2004 Dr Seward was expressing the opinion that the plaintiff was incapable of performing her occupation with the defendant, although this proved not to be the case until October 2006. Nevertheless, it could be said that Dr Seward was ringing warning bells at this time. I have already referred to the views of Dr Epstein, who, in his more recent report, referred to her capacity for work being very diminished. He pointed out that she had been able to return to work doing receptionist duties part-time but was unlikely to be able to return to work full-time and certainly could not work in a job involving more pressure and responsibility. He further stated that it was to her credit that she had attempted to return to work and had remained in employment. The other recent psychiatric examiner, Dr Rose, expressed the opinion that, whilst the plaintiff was currently working two days a week in another occupation, if treatment ceased she could not do this work. In his most recent report of 13 October 2010, Mr Kingsley stated that, from a psychological point of view, the plaintiff would be unable ever to return to her former employment or any other job that entailed high level responsibility. Indeed, he strongly encouraged retirement so that she could concentrate on psychological rehabilitation.
30        Bearing in mind the above, I am of the opinion that the plaintiff could not return to her previous employment with the defendant or to similar employment involving pressure and responsibility. I shall return to the question of capacity and the necessary calculations shortly.

(iv) The plaintiff’s employment since the injury
31        The plaintiff has been engaged in voluntary work of a community nature with various entities since the injury. This has not been paid employment. On 15 October 2008 the plaintiff commenced part-time employment with the WRAD. Her duties are essentially those of a telephonist and receptionist. The hours and the number of days per week that she works seem to vary. She is contracted to work 7.6 hours per day, two days per week, although, as shall be discussed, she seems to be averaging three days per week.
32        I am not of the view that s.134AB(38)(g) operates to the detriment of the plaintiff. I regard her as well-motivated, and it is to her credit that she has returned to the workforce. The factors set out in s.134AB(38)(g) have no adverse impact.

Ruling

33

As stated, at this stage I am dealing only with pecuniary loss damages. I shall turn firstly to “without injury” earnings. It has been submitted on behalf of the plaintiff that the figure that I should select in this regard is that of the income earned in the last full financial year immediately preceding the date of injury, which I have fixed as being 8 October 2006. I agree with this proposition. There is no evidence as to what, if any, increases in salary for a like position that may have occurred since. The amount earned by the plaintiff in the last full financial year prior to injury seems to me, in this particular case, to be a logical way in which to approach the problem of fixing the figure that most fairly reflects the plaintiff’s earning capacity had the injury not occurred. Accordingly, I determine that the gross annual figure of the plaintiff’s “without injury” earnings is $58,050, as submitted and as established by her tax return, although I note that this may be doing her a slight disservice. Her actual gross earnings from the defendant for the 2005/06 financial year appears to me to be $59,617 from which a loss of some kind has been deducted. In any event, it was submitted on behalf of the plaintiff that her earnings for the year 2005/06 were $58,050 and I accept that.

34

I turn now to “after injury” earnings. It was in relation to these that considerable, somewhat complicated debate arose, emanating in particular from a line of cross-examination advanced on behalf of the defendant. Written submissions, so as to expand upon exactly what the defendant was putting and any authorities in that regard, would have been helpful.

35

As stated, the plaintiff is now working on a part-time basis at WRAD. She commenced such work on 15 October 2008. Leaving to one side for the moment the question of whether she is working to her capacity with WRAD, I shall now deal with the issue of what she is in fact earning. The letter of Mr Soma of 22 February 2010 indicates that, for the financial year 2009/10, the plaintiff was paid a salary of $11,902.50 as taxable income, with fringe benefits payable through salary packaging of $14,113.14, which amount is tax free. Whilst it is not referred to in Mr Soma’s letter, these two items total $26,015.64. If it is assumed that these two items should be so combined so as to provide an “after injury” earnings figure most fairly reflecting the plaintiff’s earning capacity had the injury not occurred, when the appropriate comparison is made with the “without injury” earnings the resultant financial loss comfortably exceeds 40 per cent, being a little in excess of 55 per cent.

36

However, there is a further complication which apparently, at least in part, results from WRAD being a not-for-profit organisation. This complication also involves Fringe Benefits Tax (“FBT”). I found this a little difficult to understand and indeed it was described by Mr Soma, who seemed to be well acquainted with matters financial, as “unexplainable” – see T 124. A further complicating gloss is put on the matter because the plaintiff is permitted to, and indeed did, accept part of her earnings in wages and part by way of payment of household bills, this being a perfectly legal “tax break” and the non-taxable salary packaging referred to above. An independent accountant is employed to calculate some of these matters and particularly the FBT implications – see T 127. A formula involving the “Goods and Services Tax” (“GST”) is also employed.

37

As I understand the manner in which the system works, and taking as an example the financial year ending 30 June 2010, the plaintiff received gross wages of $11,902.50, which income was taxable. Pursuant to the arrangement between WRAD and the Australian Taxation Office, $14,113.14 worth of household accounts or bills was also paid for the plaintiff by WRAD, and this amount is not taxable. A formula is then applied, with factors relating to GST playing a role. After the application of the formula, the benefit reportable to the Australian Taxation Office increases. For example, in the financial year ending 30 June 2009 WRAD paid for the plaintiff’s bills and accounts to the value of $5,510, but, after the application of the formula, the reportable benefit was $10,299.29. In that financial year, the plaintiff was paid a total of $9,990, being $4,480 gross salary and $5,510 worth of bills paid. It was agreed by Mr Soma that this was the amount which, one way or the other, was paid to the plaintiff. Similar calculations with an increased reportable amount were carried out in the 2010 financial year.

38

The matter is further complicated by the fact that, as we know, income tax is assessed on the basis of a financial year commencing 1 July and ending 30 June of the following year, whereas the calculation of FBT is based upon a year commencing 1 April and concluding 31 March of the next year. Mr Soma stated that the whole “set-up” was in place because there were not adequate awards available for employees of not-for-profit organisations and to ensure that such organisations could be competitive in trying to attract staff.

39

Mr Soma agreed that what was occurring was a notional “building back” into the fringe benefit that was paid by way of payments of accounts for employees such as the plaintiff, so that the end result was, in effect, a gross amount, including the 46.5 per cent which would otherwise be payable, it being the FBT amount. He also agreed that the hourly rate paid to the plaintiff was a little under $23 per hour.

40

I would point out that, if the figure of $26,015.64 paid to the plaintiff in the 2010 financial year, being a combination of gross cash wages and accounts paid on behalf of the plaintiff, is divided by 48 weeks (see T 132 – the plaintiff did not receive holiday pay), it would indicate that the plaintiff was “earning” $542 per week. At approximately $23 per hour, this would mean that, on face value, and at a rate of $23 per hour, she was working approximately 23.6 hours per week, which is much closer to three days than two. However, whether this conclusion is entirely accurate, given the complications introduced by the “payment of accounts” method, is debatable, although it seems to me to have some logical basis. Incidentally, if the correct divisor for the number of weeks worked per year was 50, as suggested by Mr Soma at T 132 and 133, the weekly allowance by way of gross cash and accounts paid would be $520.31.

41

I might add that the evidence of Mr Soma was that the plaintiff essentially worked two days a week – see T 134. However, he also agreed that, in the last financial year, the plaintiff’s earnings were equivalent to working approximately three days per week, and referred to the fact that there were some staff members who had been forced to go on leave, and that the plaintiff covered for them. He also explained that staff such as the plaintiff might work three days per week at, say, a $23 per hour rate, but would then designate how much such staff member would take home and how much would be taken out by way of salary packaging. When the limit in relation to salary packaging is reached, the staff member is notified and for the balance of the financial year paid in a normal fashion.

42

Mr Soma also pointed out that the employment of part-time staff such as the plaintiff depended upon funding. Her employer is committed to providing two days’ work per week, but there is also some filling-in to do if other members of the reception team are unavailable.

43

Mr Soma indicated that, for the present financial year, the plaintiff had in essence almost used up the salary packaging (or account paying) component of her earnings and was now receiving cash payments only. The figures available reveal that, for the current financial year, and again adding both components, the plaintiff was receiving on average approximately $524 per week (counsel for the defendant put similar figures). Mr Soma agreed that the amount paid represented work of approximately three days per week on average, although the plaintiff is employed on contract for two days a week. He also agreed that, at times, the plaintiff had worked more than the contract hours, and, on a couple of occasions, more than three days per week. This occurred on occasions when there was an absence of some other staff member.

44

Mr Soma agreed again that the ultimate figure for the purposes of the reportable fringe benefit amount was the figure paid in respect of bills and accounts multiplied by a multiplier representing the GST figure. I have dealt with the evidence of Mr Soma at some length because essentially it was the cross-examination of him that raised these somewhat complicated questions.

45

It seems to me that the plaintiff’s gross income from personal exertion is the amount which she in fact receives for her labours, rather than the artificial amount created by reason of the arrangement operating between WRAD and the Australian Taxation Office. Section 134AB(38)(a) contains a definition of “income from personal exertion” which takes one back to s.6(2) of the Transport Accident Act 1986. Sub-paragraph (a) of the definition contained in that section reads as follows:
“the amount that is the income of that person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered”.

46        The other sub-paragraphs of the definition do not seem to be on point. Thus, the “income from personal exertion” received by the plaintiff in the present situation seems to me to be the income which consists of earnings, salaries, wages and the like. The earnings, salaries and wages received by the plaintiff could be divided into two components. These are, firstly, the cash receipts, and, secondly, the amounts allocated to the payment of household bills and the like. The gross figure is the total of the two components prior to the deduction of tax. It seems to me to matter not that for one component (the payment of household accounts), because of the peculiar arrangement prevailing the amount of tax deducted is, quite legally, zero. For the other component, namely payment by way of cash, tax is deducted. The plaintiff’s gross income from personal exertion seems to me to be the combination of the two components prior to the deduction of tax.
47        It seems to me to be irrelevant that, in relation to the amount paid by WRAD in respect of bills and accounts, some scheme then operates as between WRAD and the Australian Taxation Office, or some liability (or benefit) concerning FBT then exists in respect of WRAD. The plaintiff is paid in respect of her labours. She is taxed accordingly. Tax is deductible in respect of one component, but not the other. However, tax is assessed upon the total benefit which she receives from WRAD in respect of her labours. The assessment in relation to the cash component is in accordance with the tax scales, whereas the assessment in relation to the salary packaging in relation to bills and accounts is zero. The two components combined represent the gross income from personal exertion.
48        It may be that in any one financial year the plaintiff has deductions. To my mind these would be subtracted from her total income in the normal fashion. The end result would be her net income. In other words, the end result of the approach which I have adopted would be what could be described as a normal tax situation. The fact that some formula is then applied as between WRAD and the Australian Taxation Office is of no concern.
49        I am reinforced in this view by the following. In the revised third edition of the Macquarie Dictionary, the relevant definition of gross is “whole, entire, or total, especially without having been subject to deduction as for charges, loss, etc”. In relation to the gross income of a deceased estate, in Yates v Yates (1913) 33 NZLR 281 this was described as “the total income from all of her estate without deducting the cost of the management and working of the whole or any part of the estate”. In Friends Provident and Century Life Office v Investment Trust Corpn Ltd [1951] 2 All E.R. 632, a distinction was drawn between a “clear sum”, namely what remained after deduction of income tax from a larger sum, and a “gross sum”, being a sum from which income tax at a certain rate is to be deducted.
50        Bearing the above in mind, I turn now to the plaintiff’s present earnings. I am basing this calculation on the basis that the plaintiff is earning $23 per hour, and working three days per week, each working day being for 7.6 hours, as indicated by the evidence, and allowing 50 weeks of paid work per year. These assumptions seem to me to be the most favourable that the defendant could establish on the basis of the evidence, leaving to one side the issue of capacity. If that be so, gross income for the 2010/11 financial year would be $26,220. When compared with “without injury” earnings of $58,050, this would produce a financial loss of 54.8 per cent. Thus, unless I am persuaded that the plaintiff has a capacity to work more than three days per week, the loss required by s.134AB(38)(e) and (f) has been established.

51        I am not so persuaded. Whilst the plaintiff may on occasions have worked more than three days per week, the average number of days which she has been able to work each week is just under three, and that figure may be stretching her capacity to the limit. Her treating psychologist, Mr Kingsley, when reporting on 13 October 2010, strongly encouraged complete retirement. Dr Norman Rose, reporting to the defendant on 14 January 2010, noted that the plaintiff was having problems working for two days a week, and also stated that if her treatment were to cease she could not do that work. When Dr Michael Epstein initially reported on 6 September 2007, he considered the plaintiff’s work capacity to be nil, and unlikely to improve. When he reported again on 28 September 2010 he noted that she was working two days but had also done some initial relieving work. He noted that she still felt depressed between three to five days per week, the depression lasted all day, and on those occasions she found it especially difficult to work. Dr Epstein reported that her condition was stable, and that the prognosis for improvement was very limited. He considered her to be unfit for her previous employment or any other employment for which she is suited by reason of training, education or experience, and that she would not benefit from any rehabilitation program because of her psychiatric state. He considered it to be to her credit that she had attempted to return to work and had remained in employment.
52        The plaintiff has sworn that she is, in essence, protected in her present employment. In her affidavit of 16 November 2009 she swore that, with WRAD, attempting two days per week was all she could manage, and in her subsequent affidavit of 21 September 2010 repeated this. She noted that she had tried working three days, but on the third day found it almost impossible to do her work. In her third affidavit, of 18 February 2011, she referred to the fact that she is in essence protected in her employment, at least in part because of her friendship with Ms Bermingham, but still made mistakes. I note that Mr Soma gave evidence that there have been times when the plaintiff refused to work four days in a week – see T 142.
53        On the balance of the evidence, and particularly the more recent evidence, I am of the view that three days’ work per week at WRAD is the maximum that the plaintiff could hope to average, and this is pushing her capacity for suitable employment to the limit.
54        It follows that, when the required comparison is made, the financial loss produced is 40 per cent or greater, and indeed, as set out above, exceeds 50 per cent. Such loss is permanent within the meaning of the Act, has already been occurring for some time, and warrants the description of “severe”.

(3) Does the decision in Abdulle apply?
55        The operation of the decision in Abdulle, as stated, is another matter which was to be the subject of the defendant’s written submissions, it having been suggested (in no depth) that the decision in Abdulle did not apply in the case of an injury pursuant to sub-paragraph (c) of the definition. Of course, no written submissions were forthcoming.
56        I am of the view that the decision in Abdulle is applicable. I would refer to paragraph 63 of the decision, where it is stated as follows:
“There is no analogue of s 134AB(17) limiting an applicant who satisfies the loss of earning capacity requirements of s 134AB, but not the pain and suffering requirements, from claiming pain and suffering damages. The appellants eventually conceded that this was so. A plain reading of s 134AB permits a plaintiff who satisfies the loss of earning capacity requirements of that section to claim damages for both loss of earning capacity and pain and suffering. The history of s 134AB confirms this proposition. If there was any further reason for doubt, this is dispelled in the Second Reading Speech ...”

57 I appreciate that the decision in Abdulle dealt with the consequences of a physical injury. However, what was said by the Court of Appeal was broad and sweeping in nature. I see no reason why a similar approach should not be adopted in relation to mental or behavioural disturbances or disorders. I would refer to the previous decision of this court in Muir v Oak Park Formwork (in liquidation) and Anor [2011] VCC 1765, in which, following agreement in relation to this proposition, I ruled accordingly, observing that I considered it to be correct. A similar approach was adopted by Her Honour Judge Kennedy in Yilmaz v Link Property Services Pty Ltd [2011] VCC 88.
58 Accordingly, I am of the view that the plaintiff should be granted leave to bring proceedings for pain and suffering damages.

Conclusion
59 The plaintiff is successful. She has discharged the burden of proof. Leave is granted to her to bring proceedings in respect to both pain and suffering damages and pecuniary loss damages. I shall hear the parties as to any ancillary orders that are required.

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Ruling
33	As stated, at this stage I am dealing only with pecuniary loss damages. I shall turn firstly to “without injury” earnings. It has been submitted on behalf of the plaintiff that the figure that I should select in this regard is that of the income earned in the last full financial year immediately preceding the date of injury, which I have fixed as being 8 October 2006. I agree with this proposition. There is no evidence as to what, if any, increases in salary for a like position that may have occurred since. The amount earned by the plaintiff in the last full financial year prior to injury seems to me, in this particular case, to be a logical way in which to approach the problem of fixing the figure that most fairly reflects the plaintiff’s earning capacity had the injury not occurred. Accordingly, I determine that the gross annual figure of the plaintiff’s “without injury” earnings is $58,050, as submitted and as established by her tax return, although I note that this may be doing her a slight disservice. Her actual gross earnings from the defendant for the 2005/06 financial year appears to me to be $59,617 from which a loss of some kind has been deducted. In any event, it was submitted on behalf of the plaintiff that her earnings for the year 2005/06 were $58,050 and I accept that.
34	I turn now to “after injury” earnings. It was in relation to these that considerable, somewhat complicated debate arose, emanating in particular from a line of cross-examination advanced on behalf of the defendant. Written submissions, so as to expand upon exactly what the defendant was putting and any authorities in that regard, would have been helpful.
35	As stated, the plaintiff is now working on a part-time basis at WRAD. She commenced such work on 15 October 2008. Leaving to one side for the moment the question of whether she is working to her capacity with WRAD, I shall now deal with the issue of what she is in fact earning. The letter of Mr Soma of 22 February 2010 indicates that, for the financial year 2009/10, the plaintiff was paid a salary of $11,902.50 as taxable income, with fringe benefits payable through salary packaging of $14,113.14, which amount is tax free. Whilst it is not referred to in Mr Soma’s letter, these two items total $26,015.64. If it is assumed that these two items should be so combined so as to provide an “after injury” earnings figure most fairly reflecting the plaintiff’s earning capacity had the injury not occurred, when the appropriate comparison is made with the “without injury” earnings the resultant financial loss comfortably exceeds 40 per cent, being a little in excess of 55 per cent.
36	However, there is a further complication which apparently, at least in part, results from WRAD being a not-for-profit organisation. This complication also involves Fringe Benefits Tax (“FBT”). I found this a little difficult to understand and indeed it was described by Mr Soma, who seemed to be well acquainted with matters financial, as “unexplainable” – see T 124. A further complicating gloss is put on the matter because the plaintiff is permitted to, and indeed did, accept part of her earnings in wages and part by way of payment of household bills, this being a perfectly legal “tax break” and the non-taxable salary packaging referred to above. An independent accountant is employed to calculate some of these matters and particularly the FBT implications – see T 127. A formula involving the “Goods and Services Tax” (“GST”) is also employed.
37	As I understand the manner in which the system works, and taking as an example the financial year ending 30 June 2010, the plaintiff received gross wages of $11,902.50, which income was taxable. Pursuant to the arrangement between WRAD and the Australian Taxation Office, $14,113.14 worth of household accounts or bills was also paid for the plaintiff by WRAD, and this amount is not taxable. A formula is then applied, with factors relating to GST playing a role. After the application of the formula, the benefit reportable to the Australian Taxation Office increases. For example, in the financial year ending 30 June 2009 WRAD paid for the plaintiff’s bills and accounts to the value of $5,510, but, after the application of the formula, the reportable benefit was $10,299.29. In that financial year, the plaintiff was paid a total of $9,990, being $4,480 gross salary and $5,510 worth of bills paid. It was agreed by Mr Soma that this was the amount which, one way or the other, was paid to the plaintiff. Similar calculations with an increased reportable amount were carried out in the 2010 financial year.
38	The matter is further complicated by the fact that, as we know, income tax is assessed on the basis of a financial year commencing 1 July and ending 30 June of the following year, whereas the calculation of FBT is based upon a year commencing 1 April and concluding 31 March of the next year. Mr Soma stated that the whole “set-up” was in place because there were not adequate awards available for employees of not-for-profit organisations and to ensure that such organisations could be competitive in trying to attract staff.
39	Mr Soma agreed that what was occurring was a notional “building back” into the fringe benefit that was paid by way of payments of accounts for employees such as the plaintiff, so that the end result was, in effect, a gross amount, including the 46.5 per cent which would otherwise be payable, it being the FBT amount. He also agreed that the hourly rate paid to the plaintiff was a little under $23 per hour.
40	I would point out that, if the figure of $26,015.64 paid to the plaintiff in the 2010 financial year, being a combination of gross cash wages and accounts paid on behalf of the plaintiff, is divided by 48 weeks (see T 132 – the plaintiff did not receive holiday pay), it would indicate that the plaintiff was “earning” $542 per week. At approximately $23 per hour, this would mean that, on face value, and at a rate of $23 per hour, she was working approximately 23.6 hours per week, which is much closer to three days than two. However, whether this conclusion is entirely accurate, given the complications introduced by the “payment of accounts” method, is debatable, although it seems to me to have some logical basis. Incidentally, if the correct divisor for the number of weeks worked per year was 50, as suggested by Mr Soma at T 132 and 133, the weekly allowance by way of gross cash and accounts paid would be $520.31.
41	I might add that the evidence of Mr Soma was that the plaintiff essentially worked two days a week – see T 134. However, he also agreed that, in the last financial year, the plaintiff’s earnings were equivalent to working approximately three days per week, and referred to the fact that there were some staff members who had been forced to go on leave, and that the plaintiff covered for them. He also explained that staff such as the plaintiff might work three days per week at, say, a $23 per hour rate, but would then designate how much such staff member would take home and how much would be taken out by way of salary packaging. When the limit in relation to salary packaging is reached, the staff member is notified and for the balance of the financial year paid in a normal fashion.
42	Mr Soma also pointed out that the employment of part-time staff such as the plaintiff depended upon funding. Her employer is committed to providing two days’ work per week, but there is also some filling-in to do if other members of the reception team are unavailable.
43	Mr Soma indicated that, for the present financial year, the plaintiff had in essence almost used up the salary packaging (or account paying) component of her earnings and was now receiving cash payments only. The figures available reveal that, for the current financial year, and again adding both components, the plaintiff was receiving on average approximately $524 per week (counsel for the defendant put similar figures). Mr Soma agreed that the amount paid represented work of approximately three days per week on average, although the plaintiff is employed on contract for two days a week. He also agreed that, at times, the plaintiff had worked more than the contract hours, and, on a couple of occasions, more than three days per week. This occurred on occasions when there was an absence of some other staff member.
44	Mr Soma agreed again that the ultimate figure for the purposes of the reportable fringe benefit amount was the figure paid in respect of bills and accounts multiplied by a multiplier representing the GST figure. I have dealt with the evidence of Mr Soma at some length because essentially it was the cross-examination of him that raised these somewhat complicated questions.
45	It seems to me that the plaintiff’s gross income from personal exertion is the amount which she in fact receives for her labours, rather than the artificial amount created by reason of the arrangement operating between WRAD and the Australian Taxation Office. Section 134AB(38)(a) contains a definition of “income from personal exertion” which takes one back to s.6(2) of the Transport Accident Act 1986. Sub-paragraph (a) of the definition contained in that section reads as follows:

[2011] VCC 982

22 July 2011