Haidary v Wandella Pet Foods Pty Ltd
[2005] NSWWCCPD 9
•18 February 2005
WORKERS COMPENSATION COMMISSION
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:Haidary v Wandella Pet Foods Pty Limited, Dynamix Pty Ltd and Burrangong Pet Foods Pty Ltd [2005] NSW WCC PD 9
APPELLANT: Khodad Haidary
RESPONDENTS: Wandella Pet Foods Pty Limited, Dynamix Pty Ltd and Burrangong Pet Foods Pty Ltd
INSURERCGU Workers Compensation (NSW) (No.2) Pty Limited
FILE NUMBER: WCC6253-04
DATE OF ARBITRATOR’S DECISION: 18 August 2004
DATE OF THIS DECISION: 18 February 2005
SUBJECT MATTER OF DECISION: Determination of amount of compensation, further to appeal decision of 23 December 2004 in Haidary v Wandella Pet Foods Pty Limited [2004] NSW WCC PD 94.
PRESIDENTIAL MEMBER: Dr Gabriel Fleming, Deputy President
HEARING:On the papers
REPRESENTATION: Appellant: McCabe Partners Lawyers
Respondents: Moray & Agnew Solicitors
ORDERS MADE ON APPEAL: The previously revoked decision of the Arbitrator, dated 18 August 2004, is replaced with the following decision:
The Respondents are to pay Mr Haidary weekly payments of compensation for partial incapacity from 24 September 2003 to 13 April 2004, pursuant to section 40 of the Workers Compensation Act 1987, and interest on that sum, calculated in accordance with these reasons.
Determination of Award of Weekly Compensation
On 23 December 2004 I determined Mr Khodad Haidary’s appeal and ordered that:
“The decision of the Arbitrator, of 18 August 2004, is revoked. The parties are to file and serve submissions on or before 27 January 2005 addressing the details of Mr Haidary’s alleged entitlement to weekly benefits compensation, including reference to all relevant statutory provisions, awards, and payments made, on or before 27 January 2004”.
Both parties have now made written submissions and I have taken them into account in making this determination.
The payments of weekly compensation in dispute relate to a closed period between 24 September 2003 and 13 April 2004. Liability is not an issue. Mr Haidary, through his legal representative, submits that he is entitled to additional benefits for this period, in the sum of $3,892,53.00, plus interest of $121.65 (from 24/9/03 to 13/4/04) and $343.98 (from 14/4/04 to 28/01/05), being a total of $5313.08.
The Respondents: Wandella Pet Foods Pty Limited, Dinamix Pty Ltd and Burrangong Pet Foods Pty Ltd, share the same insurer, CGU Workers Compensation (NSW) (No2) Pty Ltd and the same legal representation. I note that in the original proceedings, now restored (Haidary v Wandella Pet Foods Pty Limited [2004] NSW WCC PD 94), all three Respondents were also nominated. Liability for weekly compensation payments is not disputed. However it is not clear from the documents before me which Respondent has accepted liability for payments that have already been made for the relevant period in dispute. No submissions have been made on this issue and consequently it will remain a matter for the parties to work through.
The Respondents submit that Mr Haidary has not provided details of any incorrect payment, and that he has at all times been paid the correct rate of weekly compensation.
Mr Haidary contends that the Respondents have underpaid compensation because:
“The calculation of weekly compensation for partial incapacity is the difference between PWE [Probable Weekly Earnings but for injury] and actual earnings (section 40(2)[of the Workers Compensation Act 1987]). Subject to maxima based on extent of dependants (not relevant here) and CWE [Current Weekly Earning] (sections 40(5) and 37(2)). The basic error in the Respondent’s approach has been to consider that the total of actual earnings and compensation cannot exceed CWE, whereas it is only the compensation rate, which cannot exceed CWE.
In applying the above formula to this case the weekly pay periods can be conveniently divided into two groups. The key to distinguishing the two groups is the difference between PWE and CWE of $156.45. This figure is important because, if the Applicant’s actual earnings in any pay period is less than $156.45, his maximum compensation rate is his CWE of $602.76 and not just the difference between PWE and actual earnings. This is due to the provisions of section 40(5) and 37 (2)”.
The parties have made no final submissions as to Mr Haidary’s entitlements pursuant to section 36 and 37 of the Workers Compensation Act 1987 (‘the 1987 Act’) and the dates over which such an entitlement is maintained. The dispute is over the amount of Mr Haidary’s entitlement to compensation during periods of partial incapacity (pursuant to section 40 of the Workers Compensation Act 1987). I will deal with the matter on this basis.
Mr Haidary’s entitlements to weekly compensation under section 40, for the relevant period of partial incapacity, should be calculated as follows:
7.1The amount that Mr Haidary would probably have been earning, but for the injury and had he continued to be employed by Wandella or some comparable employment (section 40(2)(a) of the 1987 Act), is $759.21. Mr Haidary submits this figure as his average earnings for the period 3.12.2002-30.6.2003 and there is no evidence put by the Respondents to contradict it.
7.2The average weekly amount that Mr Haidary was earning or was able to earn in suitable employment from time to time after his injury (section 40(2)(b)) is quantified as the amount that he earned per week at Wandella Pet Foods Pty Ltd during the relevant period. These amounts are detailed in the Schedule of Payments attached to correspondence from the Respondent’s solicitor, dated 18 August 2004, and are Attachment ‘Q’ to the ‘Application to Appeal Against the Decision of an Arbitrator’ and Attachment ‘L’ to the submissions in reply to the appeal. Taking one disputed week of incapacity as an example: from 8/10/03-14/10/03 Mr Haidary worked for 10.05 hours and earned $151.13.
7.3The figure derived from 2 above should be subtracted from the figure derived from 1 above. For the week of 8/10/03-14/10/03 this is $759.21 less $151.13, which leaves $608.08.
7.4There is then a residual discretion within the decision-maker to adjust this amount ‘as may appear proper in the circumstances of the case (section 40(1)). There is no apparent reason to exercise this discretion to adjust the amount in this matter, other than in accordance with the statute, as discussed below.
7.5Subject to any other applicable statutory provisions, the award of weekly compensation to Mr Haidary would be that arrived at as a result of the above calculation. Section 40(5) of the 1987 Act provides that;
“Maximum rate of compensation. The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is not to exceed the weekly payment that would be payable to the worker if it were a period for total incapacity for work”
Mr Haidary has been compensated for total incapacity pursuant to section 36. If he continued to be totally incapacitated, section 37 would form the basis of his entitlement (see Ritchie v Department of Community Services [1998] 16 NSWCCR 727 for the application of a similar calculation).
As at 8 October 2003 (to continue the example above) the statutory benefit rate for a worker and four dependents was $712.20.
Mr Haidary’s ‘current weekly wage’ at that time was the award rate of ‘LR Casual Slaughterman’ Award 38 hours @ $15.8621 pre hour, which equals $602.76 per week.
As Mr Haidary’s ‘current weekly wage’ is less than the statutory benefit rate he cannot receive more in compensation under section 37 than his ‘current weekly wage’ (section 37(2) and section 42). Therefore the weekly payment of compensation to Mr Haidary during any relevant period of partial incapacity for work (24/09/03-13/04/04) cannot exceed $602.76, as this is the weekly payment that would be payable to him if he were totally incapacitated for work (section 40(5)).
Mr Haidary’s total weekly earnings and compensation for periods of partial incapacity cannot exceed his probable weekly earnings of $759.21.
Two examples illustrate the proper calculation of Mr Haidary’s entitlement:
8/10/03-14/10/03 Probable Weekly Earnings $759.21
Actual Weekly Earnings $151.13
Difference $608.08
Maximum Rate of Compensation $602.76
Compensation Payable $602.76
Amount of Compensation Paid
(According to the Schedule of
Payments (Annexure L to the Reply
to the Appeal) $443.35Underpayment $159.41
3/12/03-9/12/03 Probable Weekly Earnings $759.21
Actual Weekly Earnings $180.45
Difference $578.76
Maximum Rate of Compensation $602.76
Compensation Payable $578.76
Amount of Compensation Paid
(according to the Schedule of
Payments (Annexure L to the Reply
to the Appeal) $412.41Underpayment $166.35
Interest
Mr Haidary claims interest on the ‘total additional claims’ of weekly compensation, at the rate of ‘9% x ½’ for the period 24/9/03 to 13/04/04, and 9% on the sum of the arrears for the period 14/4/04-28/1/05. No submissions are made as to the basis of this rate and the formula for calculation.
The award of interest by the Commission, pursuant to section 109 of the 1998 Act, is discretionary. Mr Haidary will only be entitled to interest, if awarded, on those amounts of his weekly entitlement that were unpaid, and only from the date that his claim “was duly made”. The likely amount of interest that would be due on these sums is small, relative to the whole of his claim, but nonetheless they may form part of Mr Haidary’s entitlement. The purpose of ordering interest on an award is to compensate the worker for the loss of his or her income, not to penalise the employer (Virag v James N Kirby t/as Betts Electric Motors (1990) 6 NSW CCR; Healey v McPherson Binding Pty Ltd (1989) 5 NSWCCR 139).
I have considered the failure of Mr Haidary’s legal advisors to properly detail the basis of his claim to the Respondents at an early stage (noted below in relation to costs) however, ultimately, I do not consider that this conduct is sufficient to deny Mr Haidary interest on the award. Neither the Act nor the Workers Compensation Regulations 2003 specify the applicable rate of interest that the Commission may award.
I have been unable to find any authorities to guide me as to the appropriate rate and method of calculation of interest on an award of weekly benefits. The challenge posed by this calculation may have led to few such claims, or, alternatively, agreement between disputing parties on a nominal figure to represent interest on an award. The Compensation Court grappled with the difficulty in setting an appropriate rate for interest on awards of compensation in August 1994, when it issued the ‘Jamberoo Schedule’. At that time the Court had the power to award interest on lump sum payments under sections 66 and 67 of the 1987 Act, however this power was withdrawn, by amendment to the Act, in 1995. This may explain why the ‘Jamberoo Schedule’ remains fixed only until 1993.
It is not clear from the ‘Jamberoo Schedule’ itself, how the Court established the rate of interest for an award under section 66 of the 1987 Act, which formed the reference point for the setting of the interest rate to apply to weekly payments. The Court’s prescribed interest rate (set out in the ‘Jamberoo Schedule’) for section 66, from 1987-1993, did not reflect the Supreme Court interest rates (Schedule J of the Supreme Court Rules 1970) for the same period. The District Court interest rates mirror those of the Supreme Court. Nothing in the ‘Jamberoo Schedule’ indicates why the Supreme Court rate was not adopted, nor can I find any record of why this was so.
In relation to the award of weekly payments the Court set two different approaches, depending upon whether the award was ‘continuing’ or for a ‘closed period’. Interest on arrears of weekly payments where there was a ‘continuing’ award was set at a rate half that of interest payable on a section 66 or 67 lump sum. The rationale for this approach appears to be that the payment of interest rate on an award should take account of the “progressive nature of the debt” (Lloyd v Norther Rivers Charity Racing Association [2001] NSWCC 27), between the date of the claim and the final determination. Another way of viewing this is to consider the difference between a compound interest calculation and a simple interest calculation on the weekly payments due. The calculation of interest on a continuing weekly award was to be made on the sum of the weekly payments from commencement to the date of judgement. Interest on arrears of weekly payments where the award was for a closed period was set at the same rate of interest as was payable on a section 66 or 67 lump sum. This calculation was to be based on a date mid-way through the period of the award to the date of the judgement, thus the interest rate was calculated on the sum of the arrears from the date mid way through the closed period.
The Compensation Court ‘s expertise clearly informed the determination of these methods of calculating interest on weekly awards. There seems to me to be no reason to go further behind the recommended methods of the calculation of interest on awards of weekly compensation. However in my view the most relevant benchmark for the setting of the appropriate base rate of interest is the Supreme Court rate for any relevant period. The rates set in the Jamberoo Schedule are now some eleven years out of date. Taking this approach, during the relevant ‘closed period’ 24/9/03-13/4/04, the interest rate applicable is 9%, calculated as for the ‘closed period’ method in the Jamberoo Schedule, and described above.
Orders
The above findings resolve the principles in dispute between the parties. This methodical calculation of entitlements will need to be undertaken in relation to each of the weeks where Mr Haidary had a section 40 entitlement. The schedule of payments produced by the Respondents, details the payments made to Mr Haidary during the claimed periods of partial incapacity. It is not disputed that these payments have been made and must be taken into account in any recalculation of his entitlement. Those payments do not appear to have been calculated in accordance with the method set out above and may therefore be incorrect, resulting in Mr Haidary not receiving his proper entitlements.
Costs
The Respondents submits that throughout the life of the claim and the proceedings in the Commission, Mr Haidary’s legal representative failed to properly detail the basis of the claim for underpayment, failed to provide evidence to support that claim and failed to respond to requests to ascertain the basis of the dispute.
Mr Haidary’s dispute was originally based upon a claim for a greater rate of weekly benefits due to his dependency status. He was unsuccessful on that submission. The submissions put in relation to the calculation and the amount of the award, made after proceedings had commenced in the Commission (and at the very late stage of final submissions), do not appear to have been detailed previously and notified to the Respondents.
The Respondents are correct to assert that the basis of Mr Haidary’s claim was not properly detailed. In my view this matter was eminently capable of being resolved without recourse to the Commission. However I am not satisfied that the appeal was such that it can be considered ‘frivolous or vexatious, fraudulent or made without proper justification’ (section 341(4) of the 1998 Act).
If the result of the recalculation of Mr Haidary’s entitlement is that his award increases by more than $5000 then he has been ‘successful’ on the appeal (section 345(3) of the Workplace Injury Management and Workers Compensation Act 1998). As I have left it to the parties to undertake these detailed calculations it is not apparent whether this threshold will be reached. If it were, then my order as to costs would be that the Respondents pay the Appellant’s costs. If the threshold is not reached then the appropriate order is ‘no order as to costs’. I urge the parties to come to an agreement as to costs, taking these comments into account.
Decision
The previously revoked decision of the Arbitrator, dated 18 August 2004, is replaced with the following decision:
The Respondents is to pay Mr Haidary weekly payments of compensation for partial incapacity from 24 September 2003 to 13 April 2004, pursuant to section 40 of the Workers Compensation Act 1987, and interest on that sum, calculated in accordance with these reasons.
Dr Gabriel Fleming
Deputy President
18 February 2005
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF DR GABRIEL FLEMING, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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