Guthrie v Campion Education (Aust) Pty Ltd

[2009] VCC 1141

IN THE COUNTY COURT OF VICTORIA Unrevised

Not Restricted

AT MELBOURNE
CIVIL DIVISION

SERIOUS INJURY

Case No. CI-08-04864

SHANE GUTHRIE	Plaintiff
v
CAMPION EDUCATION (AUST) PTY LTD	Defendant

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JUDGE:	HIS HONOUR JUDGE COISH
WHERE HELD:	Melbourne
DATE OF HEARING:	20 and 21 August 2009
DATE OF JUDGMENT:	11 September 2009
CASE MAY BE CITED AS:	Guthrie, Shane v Campion Education (Aust) Pty Ltd
MEDIUM NEUTRAL CITATION:	[2009] VCC 1141

REASONS FOR JUDGMENT

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Catchwords: Accident Compensation Act 1985 s.134AB Serious Injury – Income from personal exertion, s.134AB(38)(a) and (f) Accident Compensation Act 1985 and s.6(2) Transport Accident Act 1986

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J. Philbrick SC with	Maurice Blackburn
Mr G. Chancellor
For the Defendant	Mr R. Middleton with	Lander & Rogers
Ms M. Taaffe

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HIS HONOUR:

1 This is an application for leave to bring proceedings for the recovery of damages pursuant to s.134AB(16)(b) of the Accident Compensation Act 1985 (“the Act”) in respect of injury to the low back the plaintiff alleges occurred in the course of his employment on or about 14 January 2003.

2 The plaintiff alleges that the low back injury involving aggravation of degenerative changes in the lumbar spine and disc injury is a serious injury within the meaning of paragraph (a) of the definition of serious injury in s.134AB(37).

3          The relevant body function in which there has been impairment or loss is the lumbar spine.

4          The application is in respect of both pain and suffering and loss of earning capacity.

5 The defendant denies that the plaintiff has a serious injury as defined however the principle issue in dispute is the meaning of the expression, “ … the worker’s gross income from personal exertion (expressed at an annual rate) which the worker is earning or is capable of earning in suitable employment … ” in s.134AB(38)(f).

6 The plaintiff has made great efforts to rehabilitate himself since injuring his back in the course of his employment in January 2003. In early 2005 he purchased a garden maintenance and lawn mowing business and since this time he has been self-employed conducting that business. His hours of work are restricted due to his back injury. It is submitted by the defendant that in conducting the comparison required in s.134AB(38)(f) between after injury earnings and without injury earnings the starting point, the after injury earnings, is the plaintiff’s turnover in his business or earnings without any deduction for the expenses incurred in generating those earnings. It is

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submitted on behalf of the plaintiff, however, that the after injury earnings is
the plaintiff’s income less expenses before tax.

7          The onus of proof is on the plaintiff.

8 I have had regard to s.134AB(38)(h) which provides:

“(38)(h) The psychological or psychiatric consequences of a physical injury are to be taken into account only for the purposes of paragraph (c) of the definition of serious injury and not otherwise”.

9          Only the plaintiff gave evidence. The Plaintiff’s Court Book containing documentation in respect of his injury, medical reports and court documents, together with his taxation returns, were tendered on his behalf. Two videos of surveillance undertaken on 12 December 2008, 15 December 2008 and 18 June 2009, medical reports, a resume prepared by the plaintiff and his physiotherapist’s clinical records were tendered on behalf of the defendant. This was a very sensible course to adopt in view of the limited issues in dispute.

10        The plaintiff is 49 years of age having been born on 22 December 1959. He is married with two young children. The plaintiff was educated to Year 9 level. He completed an apprenticeship in landscape gardening. He has worked as a landscape gardener, storeman, forklift driver, warehouse manager and operations manager.

11        The plaintiff commenced employment with the defendant as a warehouse manager in approximately June 2000.

12        On 14 January 2003 the plaintiff was lifting heavy crates when he injured his lower back. He saw his general practitioner, Dr Fung, on 15 January 2003 and 20 January 2003. He was experiencing lower back pain and sciatic pain down both legs. A CT scan was undertaken on 20 January 2003. Dr Fung referred the plaintiff to Mr Stanley Schofield, orthopaedic surgeon, on

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28 March 2003. The plaintiff was experiencing persisting back and leg pain mainly involving the left leg. Mr Schofield arranged for an MRI scan of the plaintiff’s spine to be undertaken on 1 April 2003. Dr Fung also referred the plaintiff to a second orthopaedic surgeon, Mr de la Harpe, on 28 April 2003.

13        The plaintiff discussed spinal surgery with both Mr Schofield and Mr de la Harpe in view of his severe persisting symptoms. He decided to undergo a microdiscectomy. He was admitted to the Epworth Hospital on 8 July 2003 for this operation but he had an acute anxiety/panic attack and it was therefore decided not to proceed with the spinal surgery.

14        In late 2003 the plaintiff had some acupuncture treatment. He also had physiotherapy treatment which ceased in about March 2004.

15        As the plaintiff was unfit to return to employment with the defendant his employment was terminated on 9 January 2004. The plaintiff sought alternative employment. He undertook a real estate agent’s course in April 2004 and worked as a real estate agent for approximately nine months from May 2004. The plaintiff was not able to cope with this work as sitting for long periods aggravated his back pain as did walking, standing and driving a motor vehicle.

16        In early 2005 the plaintiff purchased a garden maintenance and lawn mowing business. The plaintiff’s wife has helped him in this business. The plaintiff is limited in the amount and type of work he can perform. Generally he is not able to cope with more than about five to six hours of work per day. The plaintiff uses a self-propelled motor mower. He has ramps to enable the mower to go onto and off his trailer. The mower has a spring-loaded starting mechanism. The plaintiff uses other equipment such as hedge clippers, weighing approximately five kilograms; a blower, weighing approximately six to seven kilograms; a whipper snipper and rakes and brooms. He loads garden rubbish into bags and transports these in his trailer to a tip. The

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plaintiff said that some of his work was moderately physically demanding. His work is self-paced and he regulates his hours of work to accommodate his back injury. He does approximately one to one and a half hours of stretching throughout the day to assist in the mobility of his back.

17        The plaintiff continues to take medication for pain relief. He usually takes Tramal each day and when he has an acute flare-up of back pain he takes Diazepam for muscle spasm.

18        During cross-examination of the plaintiff 50 minutes of video surveillance undertaken on 12 December 2008, 15 December 2008 and 18 June 2009 were shown. The plaintiff was seen standing drinking his morning tea, driving a motor vehicle, putting fuel in hedge clippers, using the hedge clippers, climbing onto the trailer, taking a ladder from the trailer, collecting a rake, towelling himself down after working, putting the blower onto the trailer, carrying a ladder, walking, operating the whipper snipper, using the lawnmower and the blower. One of the properties at which the plaintiff was working belonged to an elderly mother of one of his friends.

19        In my opinion the video surveillance was completely consistent with the plaintiff’s evidence of his activities in his gardening maintenance and lawn mowing business.

20        The plaintiff was cross-examined extensively about his work activities and he maintained that he has been working in his business to his full physical capacity. He stated that if he had been able to work longer hours he would have done so. He said that he could not return to regular fulltime employment as his back is liable to break down. He loses approximately 30 days per year as a result of severe back pain. On these occasions he is forced to rest. When working he has to stop and take breaks. He restricts his activities and he has refused requests to undertake paving work and the building of retaining walls as he does not believe that he could cope with these duties.

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21        The plaintiff has constant lower back pain which varies in intensity but is generally worse by the end of the day. He has intermittent leg pain. His sleep is disturbed by pain. He has become socially withdrawn. Before his accident he played cricket in a veteran’s competition. He has been unable to play cricket since he injured his back. His social, recreational and domestic activities have all been adversely affected by his back injury.

22        The plaintiff was cross-examined about symptoms of back pain that he had experienced before his injury in January 2003. He stated that he did have episodes of back and neck pain which led to him receiving physiotherapy in 1998, 2000 and 2002, however these symptoms were nothing like the pain he experienced in the work incident in January 2003.

23        The plaintiff only sees his general practitioner a few times a year. He receives prescriptions for medication. He has not seen his orthopaedic specialists for treatment for many years but he has been reviewed by them for medico-legal purposes. He has not received physiotherapy treatment since approximately March 2004.

24        There is much common ground in the medical evidence presented by both parties and, accordingly, I shall deal briefly with that medical evidence with particular reference to the most up to date orthopaedic opinions. There is no dispute amongst the doctors who have examined the plaintiff that he suffered lower back injury in the course of his employment in January 2003 involving aggravation of degenerative changes and disc injury.

25        In a report dated 27 December 2008 the plaintiff’s treating general practitioner, Dr Epstein, has expressed the opinion that the plaintiff continues to experience chronic lower back pain which is reasonably well controlled with medication and the avoidance of aggravating activities.

26        Mr Stanley Schofield was of the opinion that the injury which occurred in January 2003:

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“ … was a compression/extension type stress on the degenerate lumbosacral disc, which caused a prolapse, including rupture of the poster longitudinal ligament an extrusion of some of the nuclear material from inside the disc to the neural canal, causing the left sciatica.”

27        Mr Schofield was of the opinion that the plaintiff suffered a disc prolapse in the lifting incident in 2003. Further the soft tissue component of this injury has, in his opinion, failed to heal and the disc rupture has caused further aggravation of degenerative changes.

28        In his recent reports, dated 1 June 2009 and 29 July 2009, Mr Schofield expressed the opinion that the plaintiff’s future prognosis with respect to the continuation of physical work remains guarded. He believed the plaintiff’s capacity for light work will gradually reduce as the degenerative changes and nerve root compression increase.

29        Mr de la Harpe diagnosed the plaintiff as suffering from a degenerate L5/S1 disc with a small focal prolapse which was compressing the S1 nerve root. In his most recent report, dated 11 August 2009, he expressed the opinion that whilst the lumbar disc prolapse had resolved with the passage of time, unfortunately the lumbar sacral disc has continued to disintegrate and the plaintiff is constantly incapacitated because of this. Mr de la Harpe was not sure how much longer the plaintiff would be able to continue working in the manual role in his gardening business.

30        Mr Michael Dooley, orthopaedic surgeon, examined the plaintiff at the request of the defendant on 16 June 2009. In his report, dated 15 July 2009, he expressed the following opinions:

“Mr Guthrie suffers from degenerative disc disease of the lumbar spine affecting mainly the lumbosacral levels. He has been previously mildly symptomatic from this condition. He described the onset of lower back pain and then left lower limb pain after lifting and manoeuvring crates of books in an awkward posture. I believe that in this episode he sustained a disc prolapse on the left side at the lumbosacral level on the background of naturally occurring degenerative disc disease of the lumbar spine …

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I believe that Mr Guthrie is capable of working as a self-employed gardener. As noted above he does have to modify some of the duties he carries out. He works at his own pace. He does suffer intermittent exacerbations of pain that require rest to settle. On balance, I believe that he would struggle to hold down a fulltime job as an employer in either heavy physical, light physical or clerical work.”

31        There was no attack upon the plaintiff’s credit. I found the plaintiff to have been a very straightforward witness. In my opinion he was a reliable witness of truth. I accept his evidence on the nature and extent of his injury and its effects upon him. His evidence is entirely consistent with the recent orthopaedic opinions of Mr Schofield, Mr de la Harpe and Mr Dooley. They each describe significant ongoing pathology in the lumbar spine with resultant symptoms and limitations of activity. These up to date orthopaedic opinions, particularly the opinion of Mr Dooley who examined the plaintiff at the request of the defendant, provide strong support for the plaintiff.

32        I find the plaintiff suffered compensable injury in January 2003, being the aggravation of degenerative changes in the lumbar spine and disc prolapse. I find that as a result of this injury the plaintiff has a permanent impairment or loss of function of the lumbar spine.

33 I accept the plaintiff’s evidence on the pain and suffering suffered by him. He has had psychological treatment for anxiety, depression and grief related to his loss of capacity to perform his manual work and domestic activities. According to his treating psychologist, Patricia Greig, the plaintiff responded well to this treatment and made excellent progress in dealing with his psychological issues arising from his back injury. I accept this opinion of Ms Greig. I have been careful not to include psychological or psychiatric consequences of a physical injury when assessing permanent serious impairment or loss of a body function in accordance with s.134AB(38)(h).

34        I am satisfied the impairment or loss of body function of the lumbar spine has resulted in pain and suffering consequence which is, when judged by

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comparison with other cases in the range of possible impairment or losses of body function, fairly described as being more than significant or marked and as being at least very considerable (s.134AB(38)(c)).

35        It was submitted on behalf of the defendant that having regard to the plaintiff’s good range of movement demonstrated in the activities seen in the video surveillance compared with his restricted movement when examined by doctors, his cessation of physiotherapy treatment in 2004, his lack of active ongoing treatment and infrequent visits to general practitioners I ought to conclude that the plaintiff can work more than his current level. I do not accept this submission for these reasons. The plaintiff self-manages his back condition. He conscientiously stretches and takes medication regularly. He is managing with conservative treatment, having received advice from two orthopaedic surgeons and having in the past demonstrated a preparedness to undergo spinal surgery. The plaintiff’s condition varies. His range of movements are not consistent. There was no suggestion from any of the orthopaedic surgeons who have examined the plaintiff that his range of movements as demonstrated to them in formal examinations was not genuine. I have already stated that I found the plaintiff to be a genuine witness. He is exceptionally well motivated. I accept his evidence that he is working to his maximum physical capacity.

36 I find the plaintiff is permanently restricted in the type and amount of work he is able to undertake. I have taken into account the factors referred to in the definition of “suitable employment” in s.5 of the Act and I am satisfied that the plaintiff’s work in his garden maintenance and lawn mowing business is “suitable employment” but he has been and remains working at his maximum physical capacity.

37        I have considered the consequences to the plaintiff of the impairment or loss of body function with respect to loss of earning capacity when judged by comparison with other cases in the range of possible impairments or losses of

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body function. I am satisfied the impairment or loss of body function has resulted in loss of earning capacity consequence which is, when judged by comparison with other cases in the range of possible impairments or losses of body function, fairly described as being more than significant or marked and as being at least very considerable (s.134AB(38)(c)).

38 It is necessary for the plaintiff to establish not only that the loss of earning capacity consequence is at least very considerable but also that he has a permanent loss of earning capacity of 40 per cent or more measured in accordance with s.134AB(38)(f). That paragraph provides:

“134AB(38)(f)

(f) for the purposes of paragraph (e)(i), a worker's loss of earning capacity is to be measured by comparing the worker's gross income from personal exertion (expressed at an annual rate) which the worker is earning or is capable of earning in suitable employment as at that date with the gross income (expressed at an annual rate) that the worker was earning or was capable of earning from personal exertion or would have earned or would have been capable of earning from personal exertion during that part of the period within 3 years before and 3 years after the injury as most fairly reflects the worker's earning capacity had the injury not occurred.”

39        It is agreed between the parties that the plaintiff’s gross earnings in the financial year ending 30 June 2002, $46,041, best represents his without injury earning capacity.

40        It is also agreed that if the plaintiff’s submission on the interpretation of gross income from personal exertion which the plaintiff is earning is correct the plaintiff will satisfy the 40 per cent loss of earning capacity statutory requirement; whereas if the defendant’s interpretation is accepted the plaintiff will fail to meet this statutory requirement. In the 2008/09 financial year the plaintiff’s total receipts or turnover was $31,466, his taxable income, earnings less expenses, was $18,249.

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41        In my opinion the expression “ … the worker’s gross income from personal exertion (expressed at annual rate) which the worker is earning … ” in the context of a self-employed person conducting his own business means the plaintiff’s pre-tax earnings less expenses. I have reached this conclusion for the following reasons:

(i)  Section.134AB(38) provides:

“(38)	For the purposes of the assessment of serious injury in
accordance with subsections (16) and (19)—
(a) the following definitions apply—

…

income from personal exertion has the same meaning as in section 6(2) of the Transport Accident Act 1986”;

Section 6(2) of the Transport Accident Act 1986 provides:

“(2)

In this section—

…

income from personal exertion in relation to a person
means—

(a)	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; and
(b)	the proceeds of any business carried on by that person either alone or in partnership with any other person …”

Paragraph (b) of the definition of income from personal exertion in s.6(2) of the Transport Accident Act 1986 is relevant as the plaintiff is carrying on the business he purchased in 2005, the garden maintenance and lawn mowing business.

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In proceedings under the Transport Accident Act 1986 the expression “the proceeds of any business” in s.6(2)(b) has been held to mean the profit of the business, that is the earnings of the business less expenses. In Martinson v Transport Accident Commission [1996] VCAT 142 Deputy President JM Galvin stated:

“ … in my view, the proceeds of a business is the profit of the business in a particular financial year and needs to be equated with the income from personal exertion for that year. It is in effect the applicant’s pre-tax profit for that year. That is not only consistent with the wording of the Act, it is consistent with the object of providing suitable and just compensation. It is not an object of the Act to provide compensation which would exceed what the applicant would actually have earned after deduction of expenses and before payment of income tax. In any year, in any business, there may well be various expenses reducing gross profit to profit or taxable income some of which may be of a recurring nature and some of a non-recurring nature. In pursuit of fair and reasonable compensation, it is the Tribunal’s task to discover the taxable earnings and not to assess compensation by reference to gross income … ”

This interpretation has been consistently applied in cases under the Transport Accident Act 1986. No contrary authority was provided to me by the defendant’s counsel. In Rogers v Transport Accident Commission (unreported decision of Judge Bowman, Vice President, dated 3 October 2002) the Tribunal was considering the earnings of the applicant who was self-employed on a full-time basis as a painter and decorator. Judge Bowman held that the earnings of the applicant after deduction of expenses incurred in producing income was to be considered.

Not only does s.134AB(38)(a) state that income from personal exertion has the same meaning as in s.6(2) of the Transport Accident Act 1986, it is also clearly desirable that there be consistency in the interpretation of this expression as it occurs in both the Transport Accident Act 1986 and the Accident Compensation Act 1985.

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(ii)        In my opinion it is necessary to compare “like with like”. This will only be achieved in the case of this plaintiff, who has been an employee wage earner but is now self-employed, if the plaintiff’s income before tax without injury is compared with his income before tax after injury such income being his earnings after deduction of relevant expenses.

(iii)       To ignore the expenses incurred in earning income in conducting the garden maintenance and lawn mowing business would result in great unfairness to this plaintiff. The defendant’s counsel, correctly in my opinion, submitted that “ … logic would demand and common sense would demand that there would be some allowance for expenses associated with the production of income … ”. To simply use the plaintiff’s turnover or total receipts as the measure of his gross income from personal exertion would unfairly represent his true after injury income.

(iv)       It was submitted on behalf of the defendant that the decision of the Full Court in Glazebrook v Accident Compensation Commission (1998) VR 454 supported the submission that the correct interpretation of income from personal exertion in s.134AB(38)(f) was the total earnings of the business without any deduction for expenses. In Glazebrook’s case the Full Court held that “earnings” in s.95 of the Act meant the gross rate of pay paid by the employer without deduction of the costs incurred by the worker in operating and maintaining his truck. In that case the Full Court was concerned with the interpretation of pre-injury average weekly earnings in s.95 of the Act. It held that it was not appropriate to construe “earnings” narrowly or to equate “earnings” with remuneration.

In the subsequent case of Accident Compensation Commission v Alger [1993] 1 VR 378 the Court of Appeal considered the meaning of “current weekly earnings” in s.5B(1) of the Act in the context of a

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worker operating an aquarium business with his wife. The Court of Appeal specifically noted that counsel for the ACC (the predecessor of the VWA):

“ … acknowledged that application of Glazebrook could produce the result that the weekly gross income of the business was to be treated as the worker's current weekly earnings. He conceded that this would be absurd and inconsistent with an object of the Act, viz.: ‘to provide suitable and just compensation to injured workers’: see s3(c).”

In Alger’s case the Court of Appeal distinguished Glazebrook’s case. Alger’s case concerned the problem of interpretation raised by the use of the phrase “actual earnings” in s.5B(1) which was a problem particularly highlighted by the circumstances of a worker engaging in a business.

(v)       It is clear from the authorities of Glazebrook and Alger and the many cases referred to in them on the concept of “earnings” that great care must be taken in ensuring a statutory provision is interpreted correctly in context. There are great dangers in relying upon an authority such as Glazebrook’s case when considering an entirely different statutory provision to the sections of the Act then under consideration. In my opinion Glazebrook’s case is not relevant to the interpretation of s.134AB(38)(f) of the Act and s.6(2)(b) of the Transport Accident Act 1986.

42        I am therefore satisfied that the plaintiff’s income from personal exertion refers to the proceeds of his business which is the profit of the business, the earnings less expenses.

43        The word “gross” which occurs twice in paragraph (f) in connection with both after injury and without injury earnings is a reference to the worker’s pre-tax income. There was no contrary submission put by the counsel for the defendant in respect of this meaning of “gross”.

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44        The issue of the current interpretation of the expression “gross income from personal exertion … which the worker is earning” has been the subject of a number of decisions of this Court and there is a clear divergence of opinion amongst Judges of this Court. My conclusion is consistent with the decisions of Her Honour Judge Pannam in B.J. Peoples v I.&C. Hunt Pty Ltd [2005] VCC 1138 and Her Honour Judge Lewitan in A.W. Thompson v Concept Hiring Services Pty Ltd (unreported 14 November 2008). Insofar as my conclusion is not consistent with the decisions of His Honour Judge Strong in S. Boskovic v Road Maintenance Pty Ltd [2006] VCC 51, Her Honour Judge Wilmoth in R. Caratozzolo v Metroll Pty Ltd & Anor [2007] VCC 1006 and His Honour Judge Misso in S. Alter v Alcon Laboratories (Australia) Pty Ltd [2008] VCC 713, I respectfully disagree with these decisions.

45        I am therefore satisfied as at this date that the plaintiff has a loss of earning capacity of 40 per cent or more and the plaintiff will, after this date, continue permanently to have a loss of earning capacity which will be productive of financial loss of 40 per cent or more (s.134AB(38)(e)). I am also satisfied that the plaintiff does not have a capacity for any employment which, if exercised, would result in the plaintiff earning more than 60 per cent of gross income from personal exertion as determined in accordance with paragraph (f) had the injury not occurred (s.134AB(38)(g)).

46        Accordingly the plaintiff is granted leave to bring proceedings for the recovery of damages for pain and suffering and loss of economic capacity in respect of injuries sustained in the course of his employment on or about 14 January 2003.