Hooper and Comcare - [2001] AATA 548

DECISION AND REASONS FOR DECISION [2001] AATA 548

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2000/431

GENERAL ADMINISTRATIVE DIVISION       )
           Re      MARK HOOPER
  Applicant
           And    COMCARE
  Respondent

DECISION

Tribunal Mr K L Beddoe (Senior Member)

Date19 June 2001
PlaceBrisbane

Decision      The Tribunal affirms the decision under review.
  (Sgd) K L Beddoe
  Senior Member

Decision No: 548/2001
CATCHWORDS

COMPENSATION – AE factor – suitable employment - whether applicant able to work as driving instructor – ability to earn - out of time application

Safety, Rehabilitation and Compensation Act 1988 s 4, 14, 19, Div 3 Part II

REASONS FOR DECISION

19 June 2001 Mr K L Beddoe (Senior Member)

By a determination notified on 24 January 2000 the respondent determined that the applicant has an ability to earn $434.50 per week as a driving school instructor. On review that decision was affirmed by a delegate who notified her decision on 1 March 2000. On 12 May 2000 the applicant applied for review in this Tribunal. That application was out of time but time was extended, by consent.
Section 14(1) of the Safety, Rehabilitation and Compensation Act 1988 ("the Act") relevantly provides that Comcare is liable to pay compensation in accordance with the Act in respect of an injury suffered by an employee if the injury results in incapacity for work.
Compensation for injuries resulting in incapacity for work is determined by the provisions in Division 3 of Part II of the Act. In particular section 19 is the relevant provision in this case. There is no dispute about normal weekly earnings but there is a dispute about the AE factor. Section 19(2) provides that Comcare is liable to pay compensation to the employee, in respect of the injury for each of the first 45 weeks that the employee is incapacitated of an amount calculated by the formula:

NWE less AE

Where:
NWE is the amount of the employee's normal weekly earnings;
AE is the amount per week that the employee is able to earn in suitable employment

Suitable employment, as defined in section 4(1), in relation to an employee who has suffered an injury in respect of which compensation is payable means:
"(a)     in the case of an employee who, on the day on which he or she was injured was a permanent employee of the Commonwealth or a licensed corporation and who did not subsequently terminate that employment – employment by the Commonwealth or the licensed corporation, as the case may be in work for which the employee is suited having regard to:
(i)        the employee's age, experience, training, language and other skills;
(ii)       the employee's suitability for rehabilitation or vocational retraining;
(iii)where employment is available in a place that would require the employee to change his or her place of residence – whether it is reasonable to expect the employee to change his or her place of residence; and
(iv)      any other relevant matter; and
(b)       in any other case – any employment (including self-employment), having regard to the matters specified in subparagraphs (a), (i), (ii), (iii) and (iv);"

In determining the amount per week that an employee is able to earn in suitable employment regard is to be had to the following:
"(a)where the employee is in employment – the amount per week that the employee is earning in that employment;
(b)where, after becoming incapacitated for work, the employee received an offer of suitable employment and failed to accept that offer – the amount per week that the employee would be earning in that employment if he or she were engaged in that employment:
(c)where, after becoming incapacitated for work, the employee received an offer of suitable employment and, having accepted that offer, failed to engage, or to continue to engage, in that employment – the amount per week that the employee would be earning in that employment if he or she were engaged in that employment;
(d)where, after becoming incapacitated for work, the employee received an offer of suitable employment on condition that the employee completed a reasonable rehabilitation or vocational retraining program and the employee failed to fulfil that condition – the amount that the employee would be earning in that employment if he or she were engaged in that employment;
(e)where, after becoming incapacitated for work, the employee has failed to seek suitable employment – the amount per week that, having regard to the state of the labour-market at the relevant time, the employee could reasonably be expected to earn in such employment if he or she were engaged in such employment;
(f)where paragraph (b), (c), (d) or (e) applies to the employee – whether the employee's failure to accept an offer of employment, to engage, or to continue to engage in employment, to undertake, or to complete, a rehabilitation or vocational retraining program or to seek employment, as the case may be, was, in Comcare's opinion, reasonable in all the circumstances; and
(g)any other matter that Comcare considers relevant." (S 19(4))

At the hearing the applicant conducted his own case and Mr Witt appeared for the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further documents were tendered and marked as exhibits. Oral evidence was given by the applicant.
I make the following findings of fact. The applicant was born on 26 January 1972. He served in the Australian Army from 12 February 1991 to 24 August 1997 when he was discharged from the Army on medical grounds. The cause of his discharge was an injury suffered during his Army service and in respect of which he has been receiving incapacity payments under the Act since his discharge. Those payments were based on normal weekly earnings without reduction for any amount that he was able to earn in suitable employment (T18).
In August 1998 the applicant entered into a rehabilitation program on a trial basis involving training as a driving instructor. The trial was to commence on 17 August 1998 and terminate on 30 August 1998. Prior to entering into the rehabilitation program the applicant had been casually employed as a security guard.
Following the trial period the applicant continued employment with the employer as a driving instructor. That employment continued until 2 October 1998. I accept the applicant's evidence that it was uneconomic for him to continue the employment because of distance and the risk of the customer not showing when the applicant had driven for 45 minutes for the appointment.
In the weeks following the trial period the applicant earned an average amount of $584.94 while employed by that driving school as a sub-contract driving instructor.
That compares with the award rate of $434.50 per week for motor vehicle drivers as per document T35. The casual hourly rate for motor drivers is $12.9264 being a 19% loading on the weekly rate.
By comparison the applicant's company employed a part-time driving instructor who was at arms length from the company at $9 per 1 hour lesson and $22.50 per 2 ½ hours test.
The applicant sought employment with a number of driving schools located within reasonable distance from his home but he was unsuccessful with this.
In October 1998 the applicant commenced his own driving school which was operated by a family partnership, the applicant being one of three partners.
That business has been unprofitable because of seemingly high overhead expenditure. It does not reflect the applicant's ability to earn if only because the gross income to June 1999 was $21,543 (34 weeks) from lesson fees thereby showing that the applicant has a very definite ability to earn income as a driving instructor. The gross earnings per week being $633.61 to June 1999. That is not to suggest that the applicant earned that amount. It was the partnership's business that earned the income.
The business was subsequently taken over by Forest Lake Driving School Pty Ltd of which the applicant and his wife are the directors. The applicant works full-time for the company which also employs two part-time instructors. The company is paying the applicant $300 per week as wages.
If the applicant was employed by the Commonwealth under the terms of the Workplace Agreement for Comcar Employees 1997-1999 as a driver, his basic earnings as a driver employed by the Commonwealth would be $571.54. That the applicant would be able to earn more as an Army driver employed by the Commonwealth is irrelevant because the applicant is unfit for Army service.
The Applicant's Contentions
The applicant based his case on how much he has been able to earn as a driving instructor being a partner in the partnership and then an employee of the company of which he and his wife are the directors and shareholders.
The applicant says that his actual employment including his self employment when in partnership is the best evidence of what he is able to earn.
In applying section 19(4)(a) of the Act it is the actual amount per week earned by the employee that is relevant being the amount per week that the employee is earning in that employment.
To overcome the problem of not being arms length from the employer, the amount paid to an arms-length employee is the relevant indicator.
The Respondent's Contentions
$434 is a mid range figure for what the applicant would be able to earn under the Comcar Workplace agreement. That would be suitable employment by the Commonwealth.
The applicant is able to earn in suitable employment with the Commonwealth between $571.54 and $681.24 per week. The self-employment in the partnership and the employment by the company were not suitable employment by the Commonwealth within the terms of paragraph (a) of the definition of suitable employment.
There is no evidence that the applicant has sought "suitable employment" so that paragraph 19(4)(e) of the Act applies on the basis that it is open to find that the applicant has failed to seek suitable employment, but the respondent concedes that the paragraph does not apply. That is not to say that he has not sought employment. Clearly he has, but he has not sought suitable employment as defined ie employment by the Commonwealth.
The applicant is a person who comes within paragraph (a) of the definition of "suitable employment" in section 4(1) of the Act.
The respondent contends that a process of determining a person's taxable income for income tax purposes is not the process to be followed in determining what a person is able to earn.
The applicant is an employee of Forest Lake Driving School Pty Ltd in at least three capacities – ie instructor, director, company secretary. If anything those additional duties should increase the amount the applicant is able to earn when compared with a driving instructor per se. The applicant's salary paid by the company is not indicative of the amount he is able to earn.
The reference to the award for motor drivers to determine an able to earn amount of $434.50 was reasonable in the circumstances.
Consideration
The applicant is a person to whom section 19 of the Act applies. There is no dispute as to calculation of the applicant's normal weekly earnings; the dispute is about the amount he is able to earn in suitable employment.
There is no doubt, in my view, that paragraph (a) of the definition of suitable employment applies to the applicant's circumstances. He was discharged from the Army on medical grounds and not by his own request. There is nothing in the material before me to suggest that the applicant is not eligible for re-employment, by the Commonwealth, in work for which he is suited taking into account his previous experience, age, training and other skills.
The applicant has established by his own actions and the rehabilitation training that he is suited to being a driving instructor. I infer from this that he is also suited to various kinds of motor vehicle driving. I am not satisfied however, that he would be suited to being a Comcar driver without further training. Also I am not satisfied that the applicant is suited to long distance driving because of his compensible condition.
I am satisfied and find that the applicant is suited for employment as a motor driver of cars, vans and light trucks.
I turn now to sub-section 19(4) of the Act which sets out the matters to be taken into account to determine the amount per week that the applicant is able to earn in the suitable employment. The applicant is presently earning $300 per week as an arbitrary amount paid by a company owned by the applicant and his wife. The payment of wages of $300 per week for employment not at arms length from the employer is not a reasonable basis to determine the amount able to be earned by the applicant.
This is not a case where the Commonwealth has made an offer of suitable employment which the applicant failed to accept. Nor is it a case where the applicant failed to seek suitable employment. In this context I am satisfied and find that the applicant sought employment and that he did not exclude the Commonwealth from his search for employment. Such employment was not offered to him, he did not find it by his own searches and in any event, his compensible condition was such that it might be reasonable to infer that suitable employment was unlikely to be made available.
In considering the amount per week that the applicant is earning in his present employment and his previous employment as a partner in partnership, I am obliged to take into account the fact that in both of these "employments" the applicant was not at arms length from the business entity. In particular the arbitrary salary of $300 per week paid by the company cannot be said to be a sound guide in determining the applicant's ability to earn. The $300 per week is paid out of gross earnings by the business averaging $633.61 per week based over 34 weeks in the year ended 30 June 1999. While it must be accepted, that there were substantial business expenses that had to be met to continue in business, it cannot be accepted, on the material, that most of those expenses were in anyway relevant to the issue of determining the applicant's ability to earn. That is shown by the fact of the applicant working and earning fees for lessons. The fact of the business returning a net loss for the year does not mean that there was a lack of ability to earn in the applicant. The two concepts are mutually exclusive. The profits or losses of the Company are not in any sense relevant to the applicant's ability to earn. The income of the company does however reflect that the applicant has ability to earn.
Quantification is difficult. The applicant disputes the $435.50 per week determined by the applicant's delegate. To the extent that the applicant's submissions take into account the subjective financial position of the partnership and the company, I do not accept that the viability of the business is a factor relevant in determining the applicant's ability to earn. Ability to earn is not to be confused with ability to run a profitable business.
Taking all the material into account and doing the best I can with that material, I am satisfied that the general award rate of pay for a motor driver is a reasonable quantification of the applicant's ability to earn.
The decision under review will be affirmed.
I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Mr K L Beddoe (Senior Member)
Signed:         .....................................................................................
  Associate
Date/s of Hearing  8 February 2001
Date of Decision  19 June 2001
Applicant  In person
Solicitor for the Respondent    Mr Witt