Lembcke v SAS Trustee Corporation - [2003] NSWCA 136

No judgment structure available for this case.

Reported Decision:
(2003) 56 NSWLR 736

Court of Appeal

CITATION: Lembcke v SAS Trustee Corporation [2003] NSWCA 136

HEARING DATE(S): 06/05/2003

JUDGMENT DATE:
29 May 2003

JUDGMENT OF: Meagher JA at 1; Santow JA at 9; Ipp JA at 54

DECISION: 1. The appeal is allowed; 2. The orders of the trial judge are set aside as also the decision of the SAS Trustee Corporation; 3. Pursuant to s10(1A)(b), the Appellant should receive an additional amount by way of annual superannuation allowance of $20.74 per week which, when added to the amount presently received by way of additional amount of $47.06 totals $67.80 per week; 4. The Respondent to pay the Appellant's costs of the appeal and of the proceedings in the Compensation Court of New South Wales.

CATCHWORDS: POLICE REGULATION (SUPERANNUATION) ACT 1906 - approach to the assessment of additional entitlement to superannuation allowance under s10(1A) - whether proper to have recourse to the principles of s40 Workers Compensation Act 1987 - assessment of incapacity for work

LEGISLATION CITED: Compensation Court Act 1984 (NSW) s32(1)
Police Regulation (Superannuation) Act 1906 s10(1A)
Police Regulation (Superannuation and Appeals) Amendment Act 1979
Workers' Compensation Act 1987 s40

CASES CITED: Atkin v Goodyear Tyre & Rubber Co Austin (Ltd) (1945) 46 SR(NSW) 20
Carrette v SAS Trustee Corporation (2001) NSWCCR 586
Re Goodyear Australia Limited (2002) 167 FLR 1
Malcolm Towers v SAS Trustee Corporation (Bishop J, Compensation Court of New South Wales No 4223 of 2001, 10 July 2002, unreported)
The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569
Pepper v Hart [1993] AC 593
Pira Pty Ltd v Tucker (1996) 14 NSWCCR 26
Poole v State Authorities Superannuation Board (2000) 20 NSWCCR 633
Shepherd v State Authority Superannuation Board (1996) NSWCCR 710

PARTIES :
Neil LEMBCKE (Appellant)
SAS TRUSTEE CORPORATION (Respondent)

FILE NUMBER(S): CA 40937/02

COUNSEL: R W Seton, SC/ K Sant (Appellant)
J D Hislop, QC/ T M Ower (Respondent)

SOLICITORS: Oates & Smith (Appellant)
Brian Matthews - SAS Trustee Corporation (Respondent)

LOWER COURTJURISDICTION: Compensation Court

LOWER COURT FILE NUMBER(S): CC5409/01

LOWER COURT
JUDICIAL OFFICER : Ashford J

CA 40937/02
CC 5409/01

MEAGHER JA
SANTOW JA
IPP JA
29 MAY 2003

Neil LEMBCKE v SAS TRUSTEE CORPORATION

Catchwords

1906 – approach to the assessment of additional entitlement to superannuation allowance under s10(1A) – whether proper to have recourse to the principles of s40 Workers Compensation Act 1987 – assessment of incapacity for work

Facts

The Appellant was a police officer who was medically retired from the NSW Police Force having received a medical discharge for serious back injuries on 12 October 2000.

Pursuant to s10(1A)(a) of the Police Regulation (Superannuation) Act 1906 the Appellant was entitled to a superannuation allowance equal to 72.75% of his salary of office at the date of discharge. This amounts to a weekly allowance of $805.62 per week.

Under s10(1A)(b)(i) the Appellant was entitled to apply for, and if thought justified by the Respondent, to obtain an additional superannuation allowance of not more than 12.25% of his attributed salary of office. The additional superannuation allowance must be commensurate, in the opinion of the Respondent, with the member’s incapacity for work outside the police force.

The Appellant applied for the additional 12.25% allowance. The Respondent determined that the Appellant was entitled to an additional 4.25% of his salary of office on discharge.

The Appellant was not satisfied with the determination and appealed to the Compensation Court of NSW. Ashford J held that there was no justification for any further increases to the superannuation pension that was being paid to the Appellant.

The Appellant appealed that decision.

Held per Santow JA, with Meagher and Ipp JJA agreeing:

1. s10(1A) of the Act makes no express reference to the principles in s40 of the Workers Compensation Act 1987. There are apparent difficulties in resorting to a purported linguistic connection between s40 of the Workers Compensation Act and s10(1A) of the Act. It is clear that extensive modifications would be required to s10(1A) as it presently stands for s40 of the Workers Compensation Act to be used as a point of reference. The difference between the two sections are simply too great to bridge by merely sidestepping the differences.

2. The Curtis J approach to the interpretation of s10(1A) of the Act is the preferred approach to the assessment of entitlement to additional superannuation allowances. Tis approach simply requires a consideration of what additional amount is, in the opinion of SAS Trustee Corporation, commensurate, in the sense of proportionate, with the member’s incapacity for work outside the police force. The steps involved in this approach are:

(b) Then multiplying that figure by 12.25%

(c) Then applying that percentage to pre-injury earnings; and

(d) Finally adding that result to the base rate of 72.25% to derive the total pension.

3. In determining incapacity, one may draw upon the well established principle that a worker’s actual earnings are likely to be the measure for incapacity for work outside the police force, unless it is established that the worker’s actual earnings are not a proper test.

Per Ipp JA commenting, with Meagher JA agreeing:

4. A superannuation payment is akin to a pension payment and is not ordinarily regarded as compensatory. Once it is recognised that s10(1A) does not provide for compensation the foundation of the Respondent’s argument, that recourse should be made to the principles of s40 of the Workers Compensation Act, falls away.

5. The section requires one question only to be addressed, what is applicant’s incapacity for work outside the police force?

orders

1. The appeal is allowed.

2. The orders of the trial judge are set aside as also the decision of the SAS Trustee Corporation.

3. Pursuant to s10(1A)(b), the Appellant should receive an additional amount by way of annual superannuation allowance of $20.74 per week which, when added to the amount presently received by way of additional amount of $47.06 totals $67.80 per week.

4. The Respondent to pay the Appellant’s costs of the appeal and of the proceedings in the Compensation Court of New South Wales.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40937/02
CC 5409/01

MEAGHER JA
SANTOW JA
IPP JA

29 MAY 2003

Neil LEMBCKE v SAS TRUSTEE CORPORATION

Judgment

1 MEAGHER JA: I agree with Santow JA and Ipp JA.

2 Mr Lembcke was “hurt on duty” and has been medically retired from the Police Force. He was initially paid a superannuation allowance equal to 72.5 per cent of his salary as at the date of discharge. This was later increased by the respondent to 77 per cent. He applied for a further increase to 85 per cent. This application was heard by Ashford J. It failed. Hence this appeal.

3 The relevant statutory background may simply be stated. It consists of part of Police Regulation (Superannuation) Act 1906 s.10 (1A), which is in the following terms:

“(1A) Subject to this section, the annual superannuation allowance for a disabled member of the police force is:

(a) an amount that is equal to 72.75 per cent of his salary of office; and

(b) except where paragraph (c) applies, an additional amount that is:

(i) not more than 12.25 per cent of his salary of office; and

(ii) commensurate, in the opinion of the Board with his incapacity for work outside the police force;”

4 It will be observed that the section requires, on such an application, one question, and one question only, viz. what is the applicant’s incapacity for work outside the police force? That, not surprisingly, was the opinion of Curtis J in Poole v State Authorities Superannuation Board (2000) 20 NSWCCR 633, which has been followed in the Compensation Court at least once.

5 Her Honour was not minded to follow that decision, preferring a rival line of authority commencing with Neilson J’s decision in Shepherd v State Authority Superannuation Board (1996) NSWCCR 710, according to which, on a s.10 (1A) application, regard may be had to all manner of things, and (in particular) to s.40 of the Workers’ Compensation Act 1987.

6 In my view, it is crystal clear that Curtis J was correct and Neilson J was wrong. Section 10 (1A) contains no reference to s.40 of the Workers’ Compensation Act, nor to the matters contained in that section. It follows that, on an application such as the present, no regard should be paid to such factors as what salary the applicant would have been earning had he not been injured and was still employed in the Police Force.

7 Learned counsel for the respondent had no reply to these arguments, but, instead, took the astonishing course of quoting the Second Reading speech of the Minister when s. 10 (1A) was enacted. This must be deplored. Second Reading speeches have almost never any value in elucidating a legal problem; but, when a statute happens to be perfectly clear (quod raro accidit) they certainly should not be employed for the purpose of obscuring the meaning of that statute.

8 Her Honour made a finding that an uninjured person in the applicant’s position could make $500 a week outside the police force, whereas he could make no more than $250 a week outside the police force. That must support an entitlement to an extra 6.12 per cent, not to a dismissal of his claim.

9 SANTOW JA:

INTRODUCTION

Police Regulation (Superannuation) Act

Police Regulation (Superannuation and Appeals) Amendment Act

(b) except where paragraph (c) applies, an additional amount that is:

(ii) commensurate, in the opinion of STC, with the member's incapacity for work outside the police force, …”

10 The present appeal involves no issue as to whether the Appellant is “a disabled member of the police force”. Rather, the question is what is the correct basis for calculating the so-called “additional amount”, over and above the base 72.75%.

11 It is important to emphasise that the issue between the parties is not merely whether s10(1A) is compensatory in character in the way the additional amount is quantified. It is whether such compensatory character is based on s40 of the Workers Compensation Act 1987 and thereby carries the consequence that any additional pension amount must not over-compensate; by rendering the former police employee better off with the additional amount plus his base pension of 72.75% plus his earnings outside the police force, than he was on his pre-disablement salary. The additional amount already bears a cap of 12.25%, as is not disputed. Does it bear as well this constraint on over-compensation?

12 The Appellant contends that the trial judge was in error in making the award by reference to the compensatory principles to be found in s40 of the Workers Compensation Act 1987 (NSW). That they would prevent such over-compensation is said to be irrelevant. In so doing, says the Appellant, the trial judge was applying an impermissible gloss to the plain language of s10(1A) of the Act, ignoring the insurance character of the statutory pension. Thus the Appellant contends that what is provided is in effect not a scheme for compensation as such, so that such windfall gain is not precluded. The statute thus gave no warrant to the trial judge to look beyond its plain words, to ascertain what was “commensurate … with the member’s incapacity for work outside the police force” [emphasis added]. It was not therefore permissible to imply a further limitation based on the pre-injury “attributed salary of office”. The latter is merely the denominator of a calculation based on percentage incapacity. It is ordinarily measured by reference to post-injury earnings (ex hypothesi outside the police force) compared to pre-injury earnings in the police force.

13 The Respondent in response relies on the additional amount being in that way compensatory in nature. It does so emphasising the context of an Act which introduced both “the additional amount” of pension, based on a “hurt on duty” workers’ compensation test, and other important elements of the Workers Compensation compensatory scheme.

14 For present purposes, it suffices if I set out ss(1), (2) and (5) of s40 of the Workers compensation Act, insofar as these are the provisions which preclude windfall gain from the payment of compensation and which were used as a reference point by the trial judge:

40. Weekly payments during partial incapacity---general (cf former ss 9, 11)

Entitlement

Calculation of reduction in earnings of worker---general.

(a) the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment (but not exceeding $1,000), and

…..

Maximum rate of compensation.

15 As is apparent from the salient facts of the present case, which I set out later along with a worked calculation of the financial outcome, the amount paid would be greater if the trial judge’s invocation of s40 of the Workers Compensation Act were set aside; that is, with its preclusion of any windfall gain or over-compensation.

16 In essence, the Appellant contends that Ashford J in the Compensation Court of New South Wales, was in error because she took into account irrelevant matters when considering the Appellant’s incapacity for work outside the New South Wales Police. In particular it is contended that the trial judge should have followed not the line of authority in the Compensation Court of New South Wales associated with Nielson J, but the line of authority associated with decisions of Curtis J commencing with Poole v The State Authority Superannuation Board [2000] NSWCCR 633. The latter was followed most recently by Bishop J in Malcolm Towers v SAS Trustee Corporation (Bishop J, Compensation Court of New South Wales No 4223 of 2001, 10 July 2002, unreported). Under what I will call the Curtis J approach, calculation of additional amount for pension is done by the following steps:

(i) by determining the percentage diminution of capacity looking at that solely by reference to capacity for work outside the police force;

(ii) then multiplying that figure by 12.25%;

(iii) then applying that percentage to pre-injury earnings; and

17 Thus the first step is to look at the disabled policeman’s capacity to work outside the police force (ordinarily by reference to his or her actual earnings compared to those of a non-disabled person). That comparison is therefore to an uninjured person doing the equivalent work outside the police force. The comparison is not to his pre-injury police earnings as would preclude over-compensation. In contrast, the trial judge followed what I will call the Nielson J approach. That line of authority commenced with the latter’s decision in Shepherd Re State Authorities Superannuation Board (1996) 12 NSWCCR 710 at 712C:

It is, as I put to Mr Edwards for the applicant, really an inquiry under s40 of the

Workers Compensation Act

1987 where the minimum which the applicant may receive is 72.75 per cent of the salary of his office

18 Subsequently in Carrette v SAS Trustee Corporation (2001) NSWCCR 586 Neilson J drew on analogy with s40 of the Compensation Act in concluding that s10(1A)(b) of the Police Regulations (Superannuation) Act 1906 did not operate to allow an applicant an additional amount of superannuation where his ability to earn after injury (his actual earnings) exceeded his probable earnings but for injury.

19 The reasoning of Neilson J appears at 589-90 which I quote so far as relevant:

“12. … The Police Regulation (Superannuation) Act 1906 does provide a general superannuation scheme for members of the New South Wales Police Service who joined prior to 1 April 1988. However, grafted onto those general superannuation provisions, are extra benefits for those members of the New South Wales Police Service who are medically discharged on the grounds of having been ‘hurt on duty’. ‘Hurt on duty’ is defined in that Act as meaning:

injured in such circumstances as would, if the member were a worker within the meaning of the Workers Compensation Act 1987, entitle the member to compensation under that Act.

13. The Superannuation Act also makes provision for the payment of ‘gratuities’ equivalent to benefits under s60, 266 and s67 of the Workers Compensation Act 1987. Therefore, it can be seen that elements of workers compensation have been imported into the Police Regulation (Superannuation) Act 1906. It must be recalled that, at common law, constables of police were not employees and therefore were not employed under contract of service and not entitled to benefits under the Workers Compensation Acts. Indeed, in New South Wales, the Act used specifically to exclude from its operation members of the Police Service, but that was merely reflecting the common law.

14. Since the closure of the Police Superannuation Fund with effect from 1 April 1988, members of the New South Wales Police Service who join from 1 April 1988 are deemed by the Workers Compensation Acts to be workers within the meaning of those Acts so that they can obtain benefits under the workers compensation legislation and their superannuation entitlements are now differently administered. It would be otiose in such circumstances to give the words ‘incapacity for work’ in s10(1A) a construction different to the construction of ‘incapacity for work’ when used in workers compensation legislation. …”

20 The conflict between the approach of Curtis J in Poole (supra) is not acknowledged by Neilson J in Shepherd. He rather affirms that he follows Curtis J insofar as the latter concluded in Poole that the inquiry mandated by s10(1A)(b)(ii) is not into physical incapacity but incapacity in an economic sense. But it needs to be appreciated that the judgment in Poole did not require Curtis J to apply s40 of the Workers Compensation Act 1987 to reduce the amount that would otherwise be payable so that the claimant did not receive more than his pre-injury earnings. That is apparent when one reads what Curtis J says in Poole at 636 [12]:

Were

21 Thus while Curtis J evidently concluded that the s40 discretion was not applicable in the case at hand, it has remained for more recent decisions to emphasise the difference in approach. A good example is Malcolm Towers v SAS Trustee Corporation (supra) where Bishop J expressly preferred the approach in Poole to that in Shepherd and Carrette. Bishop J’s reasoning is to be found at [18] to [20] where he expresses with some cogency the difficulty in resorting to s40:

Shepherd and Carrette

Poole

Shepherd

SALIENT FACTS OF THE PRESENT CASE

22 I have set out in some detail the conflicting lines of authority in the Compensation Court of New South Wales. The present case clearly requires a choice to be made between those competing lines of authority as is apparent from the salient facts which follow and the reasoning of the trial judge. I take these salient facts, being essentially uncontroversial, from the Appellant’s written submissions with minor emendation.

(b) The Appellant was certified upon discharge as suffering “cervical spondylosis and thoracic and lumbar intervertebral disc disease with referred pain to the leg”.

(c) Pursuant to s10(1A)(a) of the Police Regulation (Superannuation) Act 1906 (“the Act”) the Appellant was entitled to a superannuation allowance equal to 72.75% of his police salary at the date of his discharge.

(d) The Appellant qualified for this pension superannuation allowance because, pursuant to s10(1) of the Act the Appellant was “incapable, from a specified infirmity of body or mind, of discharging the duties of (his) office”.

(e) The Appellant was in receipt of a salary of $1,107.38 per week at the date of his medical discharge and thus was automatically entitled to a superannuation allowance of $805.62 per week, being 72.75% of his salary at discharge.

(f) The Appellant is 41 years of age (D.O.B. 2/2/61) and suffers from, inter alia, a discal tear at L4/5, discal herniation at T8/9, disc bulge at T6/7, probable annular tear at L5/S1 and possible discal injury to C6/7 and C5/6. These spinal defects result in symptoms in the Plaintiff’s neck, back and legs.

(g) The Respondent is responsible for the conduct of the Superannuation Fund of which the Appellant is a member.

(h) Pursuant to s10(1A)(b)(i) of the Act the Appellant was entitled to apply for and, if thought justified by the Respondent, to obtain an additional amount of superannuation allowance of “not more than 12.25% of (his) attributed salary of office. The additional amount of superannuation allowance, in accordance with sub paragraph (ii) must be “commensurate, in the opinion of (the Respondent), with the member’s incapacity for work outside the police force”.

(i) The Appellant applied to the Respondent for an additional sum of superannuation allowance being not more than 12.25% of his salary on discharge, alleging that he had an incapacity for work outside the police force.

(j) The Respondent considered the Appellant’s application, having regard to medical evidence and made a determination in the Appellant’s favour awarding him an additional 4.25% of his salary on discharge. That represented an additional $47.06 over and above the standard 72.75% or $805.62. Accordingly the Appellant then received a total superannuation allowance of 77% of his income at discharge totalling $852.68. (i.e. 72.75% + 4.25% = 77%).

(k) The Appellant was not satisfied with the Respondent’s determination and he appealed to the Compensation Court of NSW pursuant to s21 of the Act.

(l) On 14 June, 2002 Her Honour Judge Ashford of the Compensation Court heard the Appellant’s appeal, taking oral and documentary evidence and hearing submissions.

(m) On 20 June, 2002 Her Honour handed down judgment in which she concluded that the Appellant had an earning capacity of $254.69 per week and that in the circumstances “there is no justification for an increase in the superannuation pension presently being paid”.

(n) The Appellant appeals from Her Honour’s judgment.
RESOLUTION OF THE APPEAL

23 The grounds of appeal are summarised below:

Workers Compensation Act

(ii) the trial judge failed to give proper or adequate reasons as to why the Appellant had a capacity for work outside the police force of $254.69 per week;

(iii) having concluded that a full-time unskilled clerical worker would earn approximately $500 per week and that the Appellant had a capacity for work outside the police force of $254.69 per week the trial judge erred in not treating those figures as evidencing a 50% (or thereabouts) loss of capacity for work outside the police force.

24 The necessary extension of time for the lodgement of this appeal is conceded. There is no dispute that the trial judge was entitled, pursuant to s21(4) of the Act to consider the Appellant’s application under s10(1A)(b) de novo. Nor is there any dispute that the Appellant is entitled to appeal in the circumstances of the question in issue relating to an amount of $20,000 or more, as is the case here, pursuant to s32(1) of the Compensation Court Act 1984 (NSW).

25 It is not necessary that I consider the medical evidence beyond noting that there appears no dispute that, judging the Appellant’s position by reference solely to his incapacity for work outside the police force, on that evidence the Appellant as found had an incapacity for work of approximately 50%. It would follow that if what I call the Curtis J approach were followed, he would be entitled to 50% of 12.25% in addition to the 72.75% base allowance, making a total entitlement of 78.75%. That should be compared to the result in the present case as set out below:

Result in present case
Salary at discharge $1,107.38
77% of salary at discharge $852.68 (awarded by STC)
72.75% of salary at discharge $805.62
4.25% of salary at discharge $47.06
Capacity to earn outside police force
assessed at $254.70
Difference between $1,107.38 and
$852.62 is $254.70

Formula applied by Ashford J: Comparison must be to pre-injury salary (not to capacity of uninjured person to earn outside police force); so $1,107.38 minus $254.70 equals $852.62 (or 77% of salary at discharge) Therefore no need to alter current pension which is already $852.62.

On Curtis J’s approach, 50% or thereabouts loss of capacity for work outside the police force ($254.69 per week capacity to earn versus approx $500 per week earned by a full-time unskilled clerical worker)

6.125% of $1,107 = $67.80

26 It is instructive to compare now two hypothetical examples as given by the Appellant. This is in order to illustrate the difference between what I refer to as the Curtis J approach and the approach adopted by Ashford J following the line of authority associated with Neilson J.

Example 1
Salary at discharge $1,107.38
Automatic entitlement to 72.75% i.e. $805.62
But for disabilities plaintiff could earn in computer industry $1,000 per week

i.e. Incapacity for work outside police force is reduced by at least half (so earns $500 per week), even before considering other jobs now denied to the plaintiff due to his disability

Plaintiff should receive at least half of 12.25% of salary at discharge extra, on Curtis J approach, that is a further $67.82.

In other words, as $805,62 + $500 exceeds salary at discharge ($1,107.38) no further amount is paid on Ashford J approach.

Example 2

Plaintiff is totally incapacitated with no earning capacity at all.

$1,107.38 – Nil = $1,107.38

Because $1,107.38 is more than $805.62 pension should be increased so as to reflect the differential between $1,107.38 and $805.62 i.e. $301.76

BUT it cannot because differential is greater than 12.25% of $1,107.38 i.e. $135.65

Therefore only increase pension by maximum amount of $135.65 i.e. 12.25%
In other words, due to total incapacity increase pension by 100% of maximum amount allowable.

My additional comment:

27 These examples were put by the Appellant as pointing to gross anomalies or perverse result from the trial judge applying the Neilson J approach, compared to the Curtis J approach. I do not agree, however, that either example produces a necessarily perverse result. The Respondent, for its part, points to the anomaly which it finds in the Curtis J approach. That anomaly is that the superannuation allowance is not further capped to prevent the total of that allowance exceeding the salary at discharge so producing a windfall gain, for life moreover. However, that is to beg the question as to whether such a result is perverse. Thus the Appellant would contend that the superannuation entitlement, being akin to an insurance policy as opposed to statutory payments for incapacity as provided by the Workers Compensation Act 1987, does not purport to eliminate the possibility of a windfall gain.

28 Example 2 really fares no better as an anomaly supposedly favouring the Appellant’s preferred interpretation; it is really neutral as I explain. That example is predicated upon total incapacity. It would, on the figures used, produce the same result under either the Neilson J approach or the Curtis J approach. In each case the only cap capable of application, on the facts, is the 12.25% of the salary at discharge.

29 Much reliance was placed by the Respondent on the legislative history of the Act, in pressing for an interpretation giving a hybrid effect to s10(1A). That is to say, an interpretation which treated the automatic entitlement to 72.75% as a true superannuation policy entitlement akin to an insurance policy, whereas the additional amount was said to be compensatory, albeit capped at 12.25%. Its compensatory character was said to be determined by reference to what the trial judge described as an “economic inquiry similar to s40 of the Workers Compensation Act 1987”; at [25].

30 In support of that submission the Respondent refers to the fact that s10(1A) was inserted into the Act by the Police Regulation (Superannuation and Appeals) Amendment Act 1979 so as to introduce the additional amount of up to 12.25% over and above the 72.75% that pre-existed. Before this amendment, police officers who were hurt on duty (“HOD”) were only entitled to pensions at the fixed rate of 72.75% salary of office. The amending Act introduced, inter alia, further benefits that were referable to workers compensation legislation. That was done however by specific reference to that legislation. The absence of such specific reference in the case of s10(1A) of the Act tends if anything against its introduction, even as a reference point, though not conclusively. The specific, express references to the legislation included gratuities, which became payable for loss of use of body parts pursuant to s12D(1), which makes specific cross-reference to Divisions 3, 4 and 5 of Pt 3 of the Workers Compensation Act 1987. Likewise there is express reference in s12B of the Act to gratuities where a member dies as a result of being hurt on duty, by specific cross-reference to Division 1 of Pt 3 of the Workers Compensation Act 1987.

31 The amending Act also changed the appellate procedure for decisions concerning these further benefits. Appeals were now to be heard by the Workers Compensation Commission (and later the Compensation Court following the demise of the Commission in 1984), rather than the Government and Related Employees Appeal Tribunal.

32 This amending Act further recognised that, historically, police officers were not “workers” at common law. They had been specifically excluded from the benefits afforded under workers compensation legislation. The amending legislation addressed this problem by allowing for certain workers compensation benefits to be paid in addition to the usual superannuation benefits. Moreover the definition of “hurt on duty” incorporated in the earlier s10(1) is now to be found in s1(2). It there is defined to mean “injured in such circumstances as would, if the member were a worker within the meaning of the Workers Compensation Act 1987, entitle the member to compensation under that Act”.

33 Turning to s10(1A) itself in the absence of express reference to s40 of the Workers Compensation Act, the Respondent sought to rely on some, albeit limited, equivalence of language. Thus in s10(1A)(b) reference is made to “incapacity for work”. That is an expression connected by context to the preceding s10(1). There appears the definition of “disabled member of the police force”. It means one who is discharged after being certified “to be incapable, from a specified infirmity of body or mind, of discharging the duties of a member’s office” or who “resigned or retired” with a certificate given pursuant to the Act of such infirmity. In either case that infirmity must have been determined to be caused by “the member being hurt on duty”. That, it is said, brings to bear the broader ambit of s40 of the Workers Compensation Act, as a reference point of principle for an economic enquiry.

34 This resort to linguistic connection between the Workers Compensation legislation and s10(1A) is however strained. It is based on slight foundations and does not overcome the fundamental difficulty that they are separate Acts with separate purposes. Moreover when one looks more closely at s40, one sees that it requires extensive modification before it could even be a point of reference. That is why, no doubt, the trial judge did not purpose to apply s40 in its terms. She merely used it as justification for an “economic enquiry similar to s40 …”. The word “similar” points to the artificiality of the exercise.

35 The difficulties to which I refer become apparent upon a closer comparison to s40 of the Workers Compensation Act. First, the expression the latter uses is “partial incapacity for work” rather than “incapacity for work”. That emphasises the dichotomy between “incapacity” for police duties which is clearly derived from s10(1), and partial incapacity for work, which is not so derived but rather, and here arises, in non-police employment. That distinction therefore affords no springboard to apply s40; indeed to the contrary.

36 Further difficulties arise if one attempts to apply s40 to s10(1A) cases. First, the actual calculation of the reduction in earnings of a worker that is made in s40(2) incorporates a monetary limit of $1,000. There is no such monetary limit in s10(1A). Indeed none of the cases applying the Neilson J approach, including the present case, pay any attention whatsoever to the $1,000 monetary limit in making the comparison, supposedly mandated by s40(2), to a partially incapacitated worker. That comparison is between two amounts. The first is the weekly amount which the worker would probably have been earning as a worker but for the injury, had the worker continued to be employed in the same or some comparable employment (but not exceeding $1,000). It is compared to the average weekly amount that the worker is earning, or would be able to earn in some similar employment, from time to time after the injury (but not exceeding $1,000).

37 Nor do the differences stop there. In making the earlier mentioned comparison, it is clear from s40(2)(b) that “the average weekly amount that the worker is earning, or would be able to earn in some suitable employment, from time to time after the injury …” could be in work outside the employment that the worker was engaged in prior to injury. But, unlike s10(1A) it could also be in employment with the same employer albeit that it must be “some suitable employment” having regard to the worker’s injury. Whereas, s10(1A) in the context of a disabled member of the police force clearly does not contemplate the comparison being with respect to work in the police force but only outside it.

38 Again, s40(1) of the Workers Compensation Act employs a somewhat different overall test to that in s10(1A) of the Act. For workers’ compensation, the weekly payment of compensation to an injured worker in respect to any period of partial incapacity for work, is to be “an amount not exceeding the reduction in the worker’s weekly earnings” (see s40(2) for its quantification). But it “is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case” [emphasis added]. Whereas, in s10(1A) of the Act, what is required within the 12.25% cap is payment of an additional amount that is “commensurate”, in the sense of proportionate to “the member’s incapacity for work outside the police force”.

39 Thus one is immediately confronted with a wider discretion under s40(1) in its invocation of what is “proper” in the circumstances of the case as compared to what is “commensurate with” a member’s incapacity for work outside the police force. The later is clearly a more precise criterion. There is real difficulty in attempting to impose on an already precise expression in s10(1A) the more general notion of what is “proper” in s40(1).

40 Moreover s40 permits (as Bishop J pointed out in Malcolm Towers (supra)) both increase and decrease in payment, whereas s10(1A) permits only an increase. Section 40(1) quite clearly introduces an express requirement that the weekly payment of compensation must not exceed the reduction in the worker’s weekly earnings. Yet there is no such express reference in s10(1A) of the Act. To attempt to imply it by recourse to s40, fails to recognise that the two sections are simply not aligned in the ways identified. The difficulties cannot be sidestepped by referring to an “economic inquiry similar to s40 of the Workers Compensation Act”. The differences are simply too great to bridge in that way.

41 Finally, the Respondent sought to find support in the Minister’s second reading speech which introduced the 1979 legislation incorporating s10(1A), with particular emphasis on the following passage (Hansard 16 October 1979 at 1843-4):

“I am pleased to announce that Cabinet has now approved of major improvements to the benefits and entitlements for Police who are hurt on duty.

The new benefits have been determined following the undertaking given by the Premier to establish a Committee of Inquiry concerning this matter.

The main changes will be to bring benefits to Police in line with those under the Workers’ Compensation Act which has been used to determine the level of lump sum benefits for the loss of a limb, the loss of an eye, etc., and also in the event of death.

Pensions on discharge due to injury may be increased from the 72.75 per cent of salary to 85 per cent provided such increase does not exceed the amount that would have been paid as a weekly allowance had the Workers’ Compensation Act applied.”

42 However, several things need to be said. First, as I have said, s10(1A) makes no reference whatsoever to the Workers Compensation Act beyond the earlier reference in s10(1) to a definition of “hurt on duty”. Elsewhere, where workers compensation provisions are introduced, they are introduced expressly; see, for example, ss12B and 12D.

43 Second, it is ironical to rely upon a second reading speech which refers to major improvements to the benefits and entitlements for police as requiring the importation of s40 unannounced. The irony lies in the fact that s40 actually limits those benefits when it comes to the additional amount above the 72.75%. That limitation is to be found, were s40 applicable, in the requirement that a worker cannot receive by way of compensation more than the reduction in the worker’s weekly earnings. If anything, the second reading speech favours a more generous interpretation.

44 Third, while the Minister’s statement appears to proceed on an assumption to the contrary of the above, later in the Minister’s second reading speech appears the following, perfectly accurate statement (at 1845):

maximum

45 Finally, as I pointed out in Re Goodyear Australia Limited (2002) 167 FLR 1 at 13:

Metal Manufacturers Limited v Lewis

Southern Cross Interiors Pty Ltd (in liq) v DCT

Monier v Szabo

Re Boulton; ex parte Bean

46 To that I would adopt what is said so powerfully by Lord Steyn in his paper “The Intractable Problem of The Interpretation of Legal Texts” published in (2003) 25 SLR 5 particularly at 14:

Pepper v Hart

47 Lord Steyn then poses the possibility, though finding difficulty with it, that Pepper v Hart [1993] AC 593 might be justified as confined to an admission against the executive, categorical assurances given by Ministers to Parliament. But even if that were so, what is here contained in the Minister’s second reading speech is no more than broadly descriptive. Moreover, when what the Minister says is aligned with the language of the statute, it appears, with respect, to be an inaccurate description at that.

48 I would conclude that the Neilson J approach should not be followed in the interpretation of s10(1A) of the Act. The Curtis J approach is to be preferred. I do not agree with the Respondent’s submission that it lacks transparency of reasoning and relies heavily upon a broad-brush discretionary approach that cannot be effectively tested. If anything it is more precise than recourse to what is “proper” in the circumstances. Section 10(1A) is plain and clear in its terms. It requires simply a consideration of what additional amount is, in the opinion of STC, commensurate, in the sense of proportionate, with the member’s incapacity for work outside the police force, the member being discharged from the police force. It arises, it should be emphasised, not as simply workers’ compensation payments during working life, but in the context of a superannuation payment by way of pension for the life of that disabled former member of the police force. In determining incapacity, one may draw upon well-established principle that a worker’s actual earnings are likely to be the measure of incapacity for work outside the police force, unless it is established that the worker’s actual earnings are not a proper test: Pira Pty Ltd v Tucker (1996) 14 NSWCCR 26 at 31-2 applying the reasoning in Atkin v Goodyear Tyre & Rubber Co Austin (Ltd) (1945) 46 SR(NSW) 20.

49 That recourse to authority is of course very different from attempting to apply s40 of the Workers Compensation Act more broadly. Here, all one is doing is treating as a reasonable proxy for incapacity, the level of reduction of actual earnings, recognising that it is a prima facie test capable of being displaced.

50 Nor do I agree with the Respondent that it is a valid criticism of the Curtis J approach that it disregards the compensatory character of pension benefits between 72.75% and 85%. That proposition simply begs the question of whether it is in truth a compensatory regime of the hybrid character postulated by the Respondent, or whether, like the 72.75%, the additional 12.25% is likewise of an insurance character.

51 Finally I do not consider that application of the Curtis J approach in the present circumstances would yield the same outcome as the Neilson J approach. The differences are clearly illustrated from the earlier worked numerical analysis of the two approaches.

52 I consider that this Court should perform its own assessment of the Appellant’s entitlement to an additional amount for superannuation allowance, based on the Curtis J approach. That assessment, as the earlier calculations explain, would produce an additional $20.74 per week, accepting the trial judge’s conclusion of a 50% loss of capacity for work outside the police force.

ORDERS

53 I propose the following orders:

2. The orders of the trial judge are set aside as also the decision of the SAS Trustee Corporation.

3. Pursuant to s10(1A)(b), the Appellant should receive an additional amount by way of annual superannuation allowance of $20.74 per week which, when added to the amount presently received by way of additional amount of $47.06 totals $67.80 per week.

4. The Respondent to pay the Appellant’s costs of the appeal and of the proceedings in the Compensation Court of New South Wales.

54 IPP JA: I have read the draft reasons to be published by Santow JA and agree therewith. I would merely add the following comments.

55 There is nothing in s 10(1A) of the Police Regulation(Superannuation) Act 1906 that warrants construing it as if it were a part of the Workers Compensation Act 1987. The Police Regulation(Superannuation) Act is an entirely separate and independent statute and phrases in it must be construed by reference to its own context, not the context of the Workers Compensation Act or any other statute. The fact that like phrases are used in parts of the two Acts does not necessarily result in those phrases bearing the same meaning.

56 Section 10(1A) provides for a superannuation allowance. Superannuation allowances are akin to pension payments. Pension payments are not ordinarily regarded as compensatory – even, for example, when they are conditional upon the beneficiary being blind: The National Insurance Company ofNew Zealand Limited v Espagne (1961) 105 CLR 569. Superannuation payments, like pension payments, are granted after a consideration of the applicant’s position and are entirely for the applicant’s use and benefit, but not to compensate the applicant for loss (see Espagne at 574 per Dixon CJ).

57 Once it is recognised that s 10(1A) does not provide for compensation for loss, the foundation of the respondent’s argument falls away.

**********

Last Modified: 05/30/2003

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Citations

Lembcke v SAS Trustee Corporation [2003] NSWCA 136

Most Recent Citation

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CITATION:	Lembcke v SAS Trustee Corporation [2003] NSWCA 136
HEARING DATE(S):	06/05/2003
JUDGMENT DATE:	29 May 2003
JUDGMENT OF:	Meagher JA at 1; Santow JA at 9; Ipp JA at 54
DECISION:	1. The appeal is allowed; 2. The orders of the trial judge are set aside as also the decision of the SAS Trustee Corporation; 3. Pursuant to s10(1A)(b), the Appellant should receive an additional amount by way of annual superannuation allowance of $20.74 per week which, when added to the amount presently received by way of additional amount of $47.06 totals $67.80 per week; 4. The Respondent to pay the Appellant's costs of the appeal and of the proceedings in the Compensation Court of New South Wales.
CATCHWORDS:	POLICE REGULATION (SUPERANNUATION) ACT 1906 - approach to the assessment of additional entitlement to superannuation allowance under s10(1A) - whether proper to have recourse to the principles of s40 Workers Compensation Act 1987 - assessment of incapacity for work
LEGISLATION CITED:	Compensation Court Act 1984 (NSW) s32(1) Police Regulation (Superannuation) Act 1906 s10(1A) Police Regulation (Superannuation and Appeals) Amendment Act 1979 Workers' Compensation Act 1987 s40
CASES CITED:	Atkin v Goodyear Tyre & Rubber Co Austin (Ltd) (1945) 46 SR(NSW) 20 Carrette v SAS Trustee Corporation (2001) NSWCCR 586 Re Goodyear Australia Limited (2002) 167 FLR 1 Malcolm Towers v SAS Trustee Corporation (Bishop J, Compensation Court of New South Wales No 4223 of 2001, 10 July 2002, unreported) The National Insurance Company of New Zealand Limited v Espagne (1961) 105 CLR 569 Pepper v Hart [1993] AC 593 Pira Pty Ltd v Tucker (1996) 14 NSWCCR 26 Poole v State Authorities Superannuation Board (2000) 20 NSWCCR 633 Shepherd v State Authority Superannuation Board (1996) NSWCCR 710
PARTIES :	Neil LEMBCKE (Appellant) SAS TRUSTEE CORPORATION (Respondent)
FILE NUMBER(S):	CA 40937/02
COUNSEL:	R W Seton, SC/ K Sant (Appellant) J D Hislop, QC/ T M Ower (Respondent)
SOLICITORS:	Oates & Smith (Appellant) Brian Matthews - SAS Trustee Corporation (Respondent)

LOWER COURTJURISDICTION:	Compensation Court
LOWER COURT FILE NUMBER(S):	CC5409/01
LOWER COURT JUDICIAL OFFICER :	Ashford J