Johns Perry Hayward Pty Ltd v Greaves (No 2)
[1991] TASSC 42
•21 March 1991
Serial No 13/1991
List "A"
COURT: SUPREME COURT OF TASMANIA
CITATION: Johns Perry Hayward Pty Ltd v Greaves (No 2) [1991] TASSC 42; (1991) Tas R 20; A13/1991
PARTIES: JOHNS PERRY HAYWARD PTY LTD
v
GREAVES
FILE NO/S: LCA 16/1991
DELIVERED ON: 21 March 1991
JUDGMENT OF: Wright J
Judgment Number: A13/1991
Number of paragraphs: 42
Serial No 13/1991
List "A"
File No LCA 16/1991
JOHNS PERRY HAYWARD PTY LTD v GREAVES (NO 2)
REASONS FOR JUDGMENT WRIGHT J
21 March 1991
On 20 December 1990 Crawford J dismissed an appeal by Johns Perry Hayward Pty Ltd (the employer) against a Workers' Compensation Commissioner's determination that Greaves (the worker) was a "worker" within the meaning of the Workers' Compensation Act 1988.
The parties being unable to agree upon the rate at which compensation should be paid to the worker, an application was made to the Commissioner to review weekly payments pursuant to s88 of the Act.
On 13 February 1991, a Commissioner determined that the rate at which weekly payments should be made to the worker during his incapacity was $844.00 per week. The employer, being dissatisfied with that assessment, now appeals to this Court pursuant to s63 of the Act.
The Notice of Appeal originally contained 4 grounds but grounds 2 and 3 were not pursued.
Grounds 1 and 4 alleged error on the part of the learned Commissioner in that he:
"(1)Applied a divisor of 33 (weeks), in lieu of a divisor of 52 (weeks), to the earnings of the Respondent" (the worker) "during the period of 12 months ending at the commencement of the period of incapacity.
...
(4)Failed to apply or properly apply the provisions of Sections 69 and 70 of the Workers' Compensation Act 1988."
Though separate in form, these grounds were not really distinct in substance. The real point at issue was that raised by Ground 1. It was properly conceded by counsel for the worker that the appeal was an appeal "in point of law" and was therefore competent within s63 of the Act.
The relevant provisions of ss69 and 70 are as follows.
"69–(1) Subject to this section, where total or partial incapacity for work results from an injury suffered by a worker and where the existence of such total or partial incapacity is supported by a certificate in the prescribed form from a medical practitioner, the compensation payable to him under this Act is, in addition to any lump sum that may be payable under section 71 or 72 in respect of that injury –
(a)in the case of the total incapacity of the worker for work, weekly payments equal to –
(i)the average weekly earnings of the worker; or
(ii)the ordinary time rate of pay of the worker (as expressed by reference to a week) for the work in which he was engaged immediately before the period of incapacity,
whichever is the greater; or
(b) ...
(2) In this section, 'average weekly earnings' in relation to a worker who is incapacitated for work, means the average weekly earnings of the worker over the period of 12 months ending at the commencement of the period of incapacity.
(3) If, during a period of incapacity of a worker, the ordinary time rate of pay (as expressed by reference to a week) for any work on which he was engaged immediately before the commencement of that period increases or decreases, the compensation payable to him shall correspondingly be increased or decreased by the like amount.
(4) ...
(5) In determining the amount of compensation payable under any of the foregoing provisions of this section, no regard shall be had to any sum paid or payable under any contract of assurance or insurance (including a contract made with a friendly society or other benefit society or association or a trade union) or out of any relief, superannuation, or sustentation fund, or other fund (whether statutory or otherwise) of the like nature.
(6) ...
70 –(1) For the purposes of section 69, a reference to the average weekly earnings of a worker shall be construed as a reference to the average weekly earnings of the worker as determined by subsection (2).
(2) The average weekly earnings of a worker shall be determined in accordance with the following provisions:–
(a)in computing average weekly earnings, amounts paid for overtime worked by the worker shall be included, but any amounts paid to the worker at the discretion of his employer by way of bonus, gratuity, or other similar payment shall be excluded;
(b)where, by reason of the shortness of time during which the worker has been in the employment of his employer, or by reason of the terms of his employment, it is impracticable to compute the average weekly earnings of the worker under that employer during any relevant period under that employer, those average weekly earnings shall, for the purposes of section 69, be taken to be the average weekly earnings during that period by a person in the same grade employed at the same work by the same employer, or, if there is no person so employed, by a person in the same grade employed in the same class of employment in the same district;
...".
From the evidence given before the learned Commissioner it is plain that during the twelve month period immediately before sustaining the accident which caused his incapacity the worker had received the following gross income from the following sources:
Payer From To Amount
1) TRACS. 7389 12389 $ 1751.14
2) Johns Perry (i) 12389 22689 (App))
Hayward Pty Ltd (ii) 18989 (App) 7290) $28577.00
3) Dept. of Social 30689 (App) 18989 (App)
Security (Cwth)
Unemployment
Benefits $ 2800.20
Total $33128.34
In giving reasons for his determination the learned Commissioner made the following observations:
"The evidence produced to me and my inspection of the above documentation satisfies me that the employee during the various periods of engagement by the employer, would account to it, at intervals, by a form of invoice setting out details of hours worked and in some cases, hours involved in travelling, which would be sufficient for the employer to raise a cheque in payment. Such cheque would be for a nett sum (after deduction of prescribed payments which were required to be made to the Australian Taxation Office).
Obviously, if no work was done, no invoice was raised and no cheque was paid.
Travelling time was paid (where appropriate) at $14 per hour and working time at $20 per hour.
Many of these invoices are silent as to travelling time and I infer there from that in such periods no travel was undertaken for which there was any entitlement.
I find that between 23–3–89 and the 7–3–90 (the date of accident) there were 50 weeks precisely, or 350 days.
The material available to me does not enable me to determine the number of days or weeks worked because in many instances the employee simply claimed for a particular number of hours, without identifying the number of days to which those hours related.
However, the employer's records indicate that some work was carried out in what I assess as being in the order of between 31 and 35 weeks. I have assessed these two figures by looking at the number of hours claimed and endeavouring to relate them to a week or two weeks, respectively in conjunction with the dates of the invoices.
In my initial review, I will ignore travel time but deal with it separately.
In that period of between 31 and 35 weeks, the hours worked appear to be in the order of 1400 hours.
These figures are of only limited assistance because, for instance, although I am told by both parties that the agreed rates were $20 per hour for work and $14 per hour for travelling time, I observe that a 20% discount was given from late October 1989, for no reason that I can discern.
In addition, for a period relating to late June 1989 there appears the following notation:
'Rate per hour $20.00
Hours Worked 42.50
less 2.5040.00
Total $800.00'
I can only use these figures in a general sense to deduce a pattern of work, of averaging my estimates, 33 weeks, for a total actual payment of $28,577. Of this amount as far as I can determine, some $735 only was paid for travelling time, leaving a nett sum for income of $27,842.00. Assuming this to have been earned in 33 weeks equates to an average weekly earnings of $844.00, for those weeks.
.................................................
The employer has argued that I should recognise the long periods of actual unemployment and assess average weekly earnings on the basis of the amount earned (assessed by reference to the Award) and average that over the 50 weeks in question.
I do not think that that approach is correct.
In this case I have been able to identify an average weekly earnings actually earned and paid to the employee for the weeks that he did work.
Section 69(2) of the Act defines average weekly earnings to mean,
'the average weekly earnings of the worker over the period of 12 months ending at the commencement of the period of incapacity.'
As I have shown, the average weekly earnings, for the weeks worked in that time, have been $844 per week.
To assess compensation on the basis argued by the employer would be not to assess average weekly earnings, but the actual earnings in the 12 months (or the average income earned in that year, by reference to one fifty second of the amount earned) which is not what I am required to do.
In my opinion the average weekly income assessed as required by Section 69 is $844 per week. Because of the small amount paid for travelling time and the fact that it was neither claimed nor paid with any frequency I do not consider that it is appropriate to increase my assessment to cover that small factor."
In his concluding remarks the learned Commissioner referred to a number of authorities dealing with the question of "average" earnings. He also adverted to the question of "ordinary time rate of pay" as that expression is used in s69(1)(a)(ii) of the Act but found it unnecessary to determine that rate in the circumstances.
It is conceded by the employer that the learned Commissioner should have included the worker's earnings from TRACS., and that he should have included payments for travelling time which the worker received both from TRACS. and his present employer, in calculating average weekly earnings. It was submitted however that the learned Commissioner assessed the worker's entitlement at too high a figure by averaging his earnings over 33 weeks only, rather than over 52 weeks. It was further submitted that in making this calculation unemployment benefits received by the worker from the Department of Social Security should be left out of account as they did not constitute "earnings" during the relevant period.
I shall consider both of these arguments separately.
Coming to the first problem unaided by authority, and approaching it simply as a matter of statutory construction, I would have had little difficulty in concluding that the employer's argument is correct viz., that as "average weekly earnings" means "the average weekly earnings of the worker over the period of 12 months ending at the commencement of the period of 12 months ending at the commencement of the period of incapacity" (s69(2)) one must look at total earnings over that period and divide that total by 52, being the number of weeks in a year. This would seem to be a simple enough exercise in the normal case even if the worker had been employed by numerous employers or had not worked at times during the relevant year.
If this formula was intended to provide the sole yardstick for measuring the worker's entitlement to compensation one could see that injustice may well result to a worker who did not work for the full year immediately before his injury. However this problem has been confronted in the Act by the inclusion of s69(1)(a)(ii) which enables the alternative calculation on the basis of "ordinary time rate of pay" to prevail if it is a greater sum than that produced by the average weekly earnings calculation.
It is plain that there may be difficulties in determining an "ordinary time rate of pay" for a worker who is employed as Mr. Greaves was in the present case. There was no industrial award by which his remuneration was fixed and he was free (within limits) to work as many hours per week as he chose at the one rate of $20 per hour. One might also contemplate difficulty in assessing an appropriate amount in respect of the travelling time component to be included when using this alternative formula. One may ask, "if the worker had not worked at all during the 12 month period immediately before the day on which his compensable accident occurred, how would his entitlement have been calculated under s69(1)(a)(ii)?" Assume he was injured two hours after commencing employment. How would one "express" his ordinary time rate of pay "by reference to a week"?
It is not possible to say a week for such purposes is necessarily one of 35, 38 or 40 hours as he was free to work as many hours as he wished but it seems to me that such apparent difficulties would be overcome by applying the views of Cozens–Hardy MR in Anslaw v Cannock Chase Colliery Co Ltd (1909) 2 B.W.C.C. 361 at p363 where he suggested that in such circumstances a week should be taken as being an aggregate of time, whether days or hours, amounting to a week reckoned at the working time constituting the normal week for the particular employment in question. This same concept underlies the calculation of average weekly earnings provided for in s70(2)(b) and is not inconsistent with the approach to be perceived in s69(3). It is perhaps surprising that specific statutory provision has not been made for calculating "ordinary time" rates of pay where the injured employee has been at work less than a week but I think that Cozens–Hardy MR's approach is plainly correct.
In presenting their arguments both counsel referred to a number of authorities and in particular to Perry v Wright [1908] 1 KB 441. In that decision the Court of Appeal held that in the ordinary case the "average weekly earnings" were to be calculated by dividing the total earnings of the worker during the relevant period, not by the number of weeks in that period, but by the number of weeks actually worked within that period. Days on which no work was done and no wages earned were to be disregarded unless the limitation upon the time actually worked arose from the nature of the employment itself ie, where a certain amount of discontinuity was an inescapable incident of the employment in question.
The statutory provisions in question in Perry v Wright required compensation to be paid as follows:
"Where total or partial incapacity for work results from the injury, a weekly payment during the incapacity not exceeding fifty per cent of his average weekly earnings during the previous 12 months, if he has been so long employed, but if not then for any less period during which he has been in the employment of the same employer, .... [My emphasis].
(2) For the purposes of the provisions of this schedule relating to 'earnings' and 'average weekly earnings' of a workman, the following rules shall be observed:– (a) average weekly earnings shall be computed in such manner as is best calculated to give the rate per week at which the workman was being remunerated. Provided that where by reason of the shortness of the time during which the workman has been in the employment of his employer, or the casual nature of the employment, or the terms of the employment, it is impracticable at the date of the accident to compute the rate of remuneration, regard may be had to the average weekly amount which, during the twelve months previous to the accident, was being earned by a person in the same grade employed at the same work by the same employer, or, if there is no person so employed, by a person in the same grade employed in the same class of employment and in the same district ... (c) employment by the same employer shall be taken to mean employment by the same employer in the grade in which the workman was employed at the time of the accident, uninterrupted by absence from work due to illness or any other unavoidable cause;"
These provisions differ in material respects from the 1988 Tasmanian Act.
In Blenkiron v Westport–Stockton Coal Co Ltd [1934] NZLR 474 Myers CJ observed that in view of the considerable differences between the New Zealand and English legislation upon this matter "the English authorities have little or nothing to do with the question", and that any attempt to apply the English decisions "can only lead to confusion and difficulty".
I share this view. In my opinion the decision in Perry v Wright is inappropriate to the current Tasmanian legislation.
The Full Court of this State determined in Hudson v Huon Co–Operative Transport Pty Ltd [1932] Tas LR 13 that, notwithstanding the differences between the Workers' Compensation Act 1927 (Tas) and the English legislation, the phrase "average weekly earnings" referred to in the Tasmanian Act was to be interpreted in the same way as in England. It should be noted however that the relevant provisions in the Tasmanian Act, (Pt.III, r.3 in the Schedule) were vastly different in their original form from the equivalent provision that existed in the 1927 Act immediately before its repeal in 1988. The present Act (1988) draws heavily upon the terminology of the 1927 Act as it existed immediately before it was superseded by the current legislation, but it is not that terminology with which Hudson's case was concerned.
In Huett v Clark [1956] Tas SR 39 at p54, Crisp J had occasion to refer to and apply the principle espoused in Hudson's case. But it should be noted that at that time r3 had been altered after Hudson's decision and that it was changed once again after Huett v Clark (supra). I therefore consider Hudson's case and Huett's case not to be binding upon me in any way in the present matter. Indeed I think the statutory provisions are now so very different from those considered in each of those cases that the views expressed therein are of only marginal assistance in my task of interpreting the current legislation.
For the same reason it is unnecessary for me to consider whether or not the worker's lack of employment during part of the year in question was the result of seasonal factors associated with the industry in which he was engaged producing discontinuity in the employment, or of his personal decision not to work during the relevant period or perhaps some other cause.
One or two examples will I think tend to show the unbalanced result which would flow from a construction of s69 other than that contended for by the appellant.
Assume that worker A is somewhat indolent and chooses to work only two weeks of the year. He takes the remainder off to go fishing. During the two weeks that he works he works overtime every day for 4 hours. His ordinary rate is $10 per hour for 8 hours. His overtime rate is $15 per hour. His daily pay would thus be $160 ie, $800 per week. After enjoying his 50 week vacation he resumes work with a new employer, X, who pays $10 per hour but has no overtime available. On his first day in this new employment A is incapacitated by injury.
Worker B is employed in the same employment as that in which worker A commenced. He receives $800 per week at first because the same overtime is available to him. However after 2 weeks, overtime runs out and he receives $400 per week only thereafter. He commences a new job with employer X on the same day as A and on that day B is also incapacitated by accident. His average weekly earnings for 12 months are (4 x $800) and (48 x $400)—52 = $430 per week, because he has been in work for the full year without interruption. In these circumstances an application of the rule in Perry v Wright would suggest that A should receive compensation of $800 per week (being the average of the two weeks he chose to work) whilst B should receive only $430 per week.
Take the case of worker C. He is more industrious than A but, unlike B, he chooses to move about the country working at many different jobs – some well paid and others not so well paid. He returns to Tasmania after 12 months, is injured at work and seeks compensation. If the learned Commissioner's view of the law is correct, C has an almost irresistible interest in notifying his employer only of those highly paid jobs he undertook and in claiming that he was not working or seeking work during the remainder of the year. By this means he would ensure that a very substantial "average weekly earning" formed the basis of his entitlement to weekly compensation. If he disclosed his total earnings for the year his compensation would be diminished.
Such anomalies as these cannot have been intended by the Act and fortunately, in my opinion, an interpretation leading to these results is not justified by the plain words used in s69(1)(a)(i).
If one takes a divisor of 52 it will, of course, frequently produce a figure of small proportions because the worker involved has been out of work or absent from work for a substantial part of the 12 months period. But s69(1)(a)(ii) will take care of this situation and ensure that the worker is compensated at least at the rate of pay he was receiving for the job in hand when he met with his accident. This seems to me to be the scheme of the Act and, irrespective of problems which may arise in computing "ordinary" time rates "expressed by reference to a week" to which I have already referred this difficulty will normally not be encountered, and, when it is, it should be capable of resolution by taking evidence as to the relevant facts.
I am fortified in my construction of the provision now in question by the views expressed in two English cases which were not referred to by counsel.
In Keast v Barrow Haematite Co 63 JP 56 where the statutory phrase being considered was "average weekly earnings during the previous 12 months" – a phrase which is indistinguishable from that used in s69(2) of the present Tasmanian Act – the court ruled that the total actual amounts earned by the worker during the 12 month period had to be added together and divided by 52.
Views consistent with this approach were expressed by Cozens–Hardy MR in Cox v Geo Trollope & Sons (1916) 9 BWCC 524 at pp528–529 where shortly before expressing agreement with the views of Fletcher Moulton LJ in Perry v Wright (supra) he said:
"The mathematical computation is the only thing you can look at, I agree, if there has been twelve months with the same employer." (He was referring to the phrase "average weekly earnings during the previous twelve months, if he has been so long employed" in the then current English legislation), and he continued "There you are told to do the sum, and you are not to have regard to anything more than the twelve months, nor anything less than the twelve months. You take that finally and conclusively, and that is the root and primary principle."
I thus conclude that the divisor to be used in making the calculation envisaged in s69(1)(a)(i) is, in all cases, 52.
I turn now to consider the question whether unemployment benefits received by the worker during the period of 12 months prior to his accident are to be taken into account in assessing average weekly earnings.
"Earnings" are not defined in the Act. It is plain I think that "earnings" are not synonymous with "income". In my opinion a man earns what he receives by way of recompense for the exercise of his labour or skill. I am unable to regard unemployment benefits as earnings. Certainly they are funds received in lieu of earnings but they are not recompense for time and effort expended by the recipient.
Counsel for the respondent referred to Evans v Muller (1982–83) 151 CLR 117 in which the High Court discussed the extent to which unemployment benefits received could be taken into account in reduction of an award for lost earning capacity in an action for damages arising from a tort, but in my opinion that discussion does not assist in the resolution of the present issue. Nor in my opinion does s69(5) which provides that in determining compensation payable no regard shall be had to sums payable from a "sustentation fund, or other fund of the like nature". I agree with counsel for the respondent that monies provided out of Consolidated Revenue by a Government department cannot appropriately be regarded as a fund of this kind.
In Gough v Crawshaw Brothers, Ltd. (1908) 1 BWCC 374 the appellant's deceased husband had been involved in a previous accident at his work and was paid weekly compensation for his resultant partial incapacity. He resumed employment on light duties at a greatly reduced wage.
At p376 Fletcher Moulton LJ said:
"The appellant claims that the amount of compensation which he was receiving should be taken into consideration as part of his weekly earnings. I am of opinion that this contention is unsustainable. What the Court has to assess in the present case is compensation based on his 'average weekly earnings' and this is no more affected by the fact that he was in receipt of weekly payments by way of compensation for a previous accident than it would be affected by the fact that he was in receipt of weekly payments left to him by a friend in his will."
Similarly in McClure v Secretary of State for War (1936) 9 BWCC (Sup) 64 it was held that the amount of a pension payable to the deceased workman could not be taken into account as "earnings" in assessing the entitlement of his dependants to compensation.
I am therefore confirmed in the view which I have formed that unemployment benefits are not "earnings" for the purposes of the Workers' Compensation Act 1988. If such had been intended it would have been a simple matter to provide a statutory definition to this effect. Accordingly such income must be left out of account in performing the calculation required by s69(1)(a)(i).
On the material before the learned Commissioner and in accordance with counsels' concessions and my interpretation of the statute that calculation should have been as follows:
Gross income from TRACS and the appellant = $30,328.14. $30,328.14—52 = $583.23.
The learned Commissioner's finding therefore should have been that the respondent worker's average weekly earnings at the relevant time were $583.23 per week.
In the Notice of Appeal before me the assertion is made that the learned Commissioner "determined that the rate at which weekly payments of workers' compensation to which the respondent is entitled during his period(s) of incapacity is $844.00" and in view of the concession made that the appeal was properly instituted under s63 I am prepared to proceed on the basis that such was the learned Commissioner's determination. However the Notice of Order appearing at p56 of the Appeal Book is plainly deficient in not reproducing in formal terms the actual determination or order made. All it does is refer to the learned Commissioner's reasons which are attached. Those reasons do not formulate an order in the terms suggested in the Notice of Appeal, and, in future appeals to this Court I can foresee very considerable difficulties arising as to the exact scope and nature of an appeal if the determination or order under challenge has not been clearly expressed in a formal manner.
As the learned Commissioner chose to assess the respondent's entitlement on the basis provided for in s69(1)(a)(i) rather than s69(1)(a)(ii), I have reached the conclusion that I should hear from counsel as to the form of the order I should make in the circumstances. It may be that it is agreed that I should simply substitute my calculation for the learned Commissioners and vary his determination accordingly. However it may be that a s69(1)(a)(ii) calculation would produce a higher sum so that the respondent has an entitlement to a greater amount than $583.23 per week, in which case the matter should be remitted to the learned Commissioner for further consideration unless I can reach a view on this question for myself.
I have not been addressed by counsel as to this and I will require further submissions before finally disposing of this matter.
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