Mikajlo and Comcare (Compensation)
[2016] AATA 157
•18 March 2016
Mikajlo and Comcare (Compensation) [2016] AATA 157 (18 March 2016)
Division
GENERAL DIVISION
File Numbers
2012/5843
2013/4611
Re
George Mikajlo
APPLICANT
And
Comcare
RESPONDENT
DECISION
Tribunal Deputy President K Bean
Date 18 March 2016 Place Adelaide 1. In application 2012/5843, the decision under review is affirmed.
2. In application 2013/4611, the decision under review is affirmed.
.................[Sgd].............................
Deputy President K Bean
CATCHWORDS
COMPENSATION – Commonwealth employees – Applicant injured in full-time employment – Whether applicant's part-time Army Reserve earnings should be included in the calculation of his normal weekly earnings – Whether applicant's compensation entitlements should be offset against award of damages at common law – Whether Tribunal has jurisdiction to consider entitlement to compensation for medical expenses – No claim for medical treatment made by applicant – Decisions under review affirmed.
LEGISLATION
Safety, Rehabilitation and Compensation Act 1988, ss 8, 48, 124
Compensation (Commonwealth Employees) Act 1971, ss 25(3), 99
CASES
Breust v Commission for the Safety Rehabilitation and Compensation of Commonwealth Employees (1991) 30 FCR 40
Re Breust and Commission of the Safety, Rehabilitation and Compensation of Commonwealth Employees [1990] AATA 267; (1990) 12 AAR 563
FVNH and Comcare [2013] AATA 832Re Peake and Commonwealth (Defence) [1984] AATA 42
REASONS FOR DECISION
Deputy President K Bean
18 March 2016
The applicant, Mr Mikajlo, was a full-time employee of the Department of Social Security when he was involved in a motor vehicle accident on 29 July 1981. At that time, he was also employed by the Army Reserve on a part-time basis. On 10 December 1981, compensation liability was accepted in respect of a soft tissue injury to Mr Mikajlo’s right shoulder and neck which he sustained in the accident (the 1981 injury).[1]
[1] Exhibit 3, T3/73.
On 16 July 2007, Mr Mikajlo suffered another injury in the course of his then full-time employment with the Department of Defence. As with the earlier injury, he was at that time also employed on a part-time basis, this time by the Australian Army Cadets. Compensation liability was subsequently accepted by Comcare for the injury, described as “aggravation of disorders of bursae and tendons shoulder region (left) and aggravation of sprain of shoulder and upper arm (right)” (the 2007 injury).
In calculating Mr Mikajlo’s normal weekly earnings (NWE) in the context of each injury for the purpose of determining his compensation entitlements, Comcare did not take into account Mr Mikajlo’s part-time earnings from either the Army Reserve or the Australian Army Cadets. At the time of lodging his applications for review, Mr Mikajlo contended that those earnings should have been taken into account, and it is primarily that issue which has given rise to the two applications.
Before addressing the issues arising from the applications more directly, I will first set out the background to each application in more detail.
Application 2012/5843
On 3 December 2008, a Comcare delegate determined, in the context of the 2007 injury, that Mr Mikajlo’s NWE were to be calculated on the basis of his full-time employment with the Department of Defence only, and that his earnings from part-time employment with the Australian Army Cadets were not to be included.[2] Almost four years later, on 30 August 2012, Mr Mikajlo requested a reconsideration of that determination, and following an extension of time being granted, on 7 December 2012 a Comcare Senior Review Officer affirmed the determination.[3] On 21 December 2012, Mr Mikajlo sought review of that decision by this Tribunal, giving rise to application 2012/5843.
[2] Exhibit 1, T10/84.
[3] Exhibit 1, T12/92.
However, at the hearing before me on 13 August 2015, Mr Mikajlo indicated that he was no longer seeking inclusion of any earnings from his part-time employment with the Australian Army Cadets in his NWE in respect of the 2007 injury. On that understanding, and for the reasons given below, I therefore propose to affirm the reviewable decision in application 2012/5843.
Application 2013/4611
On 7 February 2003, a Comcare delegate determined, in the context of the 1981 injury, that Mr Mikajlo was not entitled to incapacity payments for the loss of his part-time Army Reserve earnings.[4] The delegate also noted that Mr Mikajlo’s compensation entitlements would in any event need to be offset against damages he had recovered at common law with respect to the 1981 injury, in the amount of $38,465.69.[5] The Comcare delegate further determined that:
... Comcare will pay for physiotherapy treatment up to and including 14 February 2003. No further medical treatment of any kind, or any other compensation, is payable on your claim after this date.[6]
The determination was affirmed upon reconsideration, on 2 April 2003.[7]
[4] Exhibit 3, T6/109.
[5] Exhibit 3, T6/115. The total amount was $40,000.00, but this was reduced by reference to the amount of $1,534.31, which had already been paid to Mr Mikajlo by way of compensation.
[6] Exhibit 3, T6/115-116.
[7] Exhibit 3, T8/118.
On 19 July 2013, Mr Mikajlo requested an extension of time in which to seek review of the reconsideration decision by this Tribunal. An extension was subsequently granted by the Tribunal, giving rise to application 2013/4611.
ISSUES
It follows that the issues for my consideration (in application 2013/4611) are:
(a)Whether Mr Mikajlo’s earnings from his part-time employment in the Army Reserve should be included in his NWE in respect of the 1981 injury;
(b)To the extent that the issue arises, whether Mr Mikajlo’s compensation entitlements should be offset against his award of damages at common law; and
(c)To the extent that I have jurisdiction to determine the issue, whether Mr Mikajlo is entitled to compensation for medical expenses in respect of the 1981 injury from 14 February 2003.
SHOULD MR MIKAJLO’S PART-TIME ARMY RESERVE EARNINGS HAVE BEEN INCLUDED IN THE CALCULATION OF HIS NORMAL WEEKLY EARNINGS IN RESPECT OF THE 1981 INJURY?
Statutory Framework
Section 8 of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) currently provides:
8 Normal weekly earnings
(1) For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula:
(NH x RP) + A
where:
NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period;
RP is the employee’s average hourly ordinary time rate of pay during that period; and
A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment.
...
(3) Where an employee was, at the date of the injury, employed by the Commonwealth or a licensed corporation in part-time employment or unpaid employment, any earnings of the employee from any other employment shall, for the purposes of this section, be treated as earnings of the employee from his or her employment by the Commonwealth or the licensed corporation.
...
As the 1981 injury was sustained prior to the commencement of the SRC Act, that provision is not directly applicable. However, subs 124(1A) of the SRC Act is relevant in these circumstances. It provides that:
... a person is entitled to compensation under this Act in respect of an injury, loss or damage suffered before the commencing day if compensation was, or would have been, payable to the person in respect of that injury, loss or damage under the 1912 Act, the 1930 Act or the 1971 Act.
Section 25 of the Compensation (Commonwealth Employees) Act 1971 (the 1971 Act) was the equivalent of s 8 of the SRC Act, and was in force at the relevant time, between 1981 and 1988. Subsection 25(3) was in similar terms to subs 8(3). It provided:
(3) Where an employee was, at the date of the injury, employed by the Commonwealth only in part time employment or in employment in respect of which the employee was not paid, any earnings of the employee from any other employment shall be treated for the purposes of this section as if they were earnings of the employee from his employment by the Commonwealth.
Case Law
Mr Krupka, who appeared as counsel for Comcare at the hearing, drew my attention to the decision of the Full Federal Court in Breust v Commission for the Safety Rehabilitation and Compensation of Commonwealth Employees (1991) 30 FCR 40. The issue in that case was whether Mr Breust’s part-time earnings as a member of the Defence Force Reserve should have been taken into account in the calculation of his normal weekly earnings, in addition to his earnings from full-time employment with the Australian Taxation Office, out of which the compensable injury arose. His Honour Justice Davies held:
... s 8 is drafted so as to leave no doubt that the references in s 8(1) to “his or her employment” and “that employment” are references to the employment out of which, or in the course of which, the injury or disease arose or was incurred. This is because the section does not refer to earnings generally but to the number of hours worked each week in an employment, to the employee's average hourly ordinary time rate, to the average amount of allowances payable “in respect of his or her employment” and to “the relevant period”, a term defined in s 9. All these provisions show that s 8 is not concerned with earnings generally. From this, I deduce that the term “employment” has the limited meaning of “the relevant employment”, the meaning which the Tribunal gave to it.
This interpretation is confirmed by s 8(3). This provision distinguishes between part-time employment with the Commonwealth, and “any other employment”. The subsection provides that, where the liability to pay compensation arose out of part-time employment with the Commonwealth, then any other earnings of the employee shall be treated as earnings of the employee from his or her employment.
...
It does not have the effect, for which counsel seemed to contend, of adding to the earnings from full-time employment by the Commonwealth earnings from any part-time employment with the Commonwealth which the employee also had.
...
It follows that, in the case of an officer holding a full-time position with the Commonwealth, who suffers injury or disease arising out of or in the course of that employment, his normal weekly earnings are to be calculated by reference to the incidents of that employment alone. It is only in the case of an employee who suffers injury or disease arising out of or in the course of part-time employment that normal weekly earnings will take account of earnings from other employment. And in that case, the other employment will take account of earnings from any other employment, whether it be employment with the Commonwealth or outside Commonwealth employment.[8]
For present purposes, it is sufficient to note that Beaumont and O'Connor JJ agreed with Davies J. Upon analysis, this Tribunal (constituted by Deputy President Forgie) also arrived at the same conclusion in FVNH and Comcare [2013] AATA 832.
[8] Breust v Commission for the Safety Rehabilitation and Compensation of Commonwealth Employees (1991) 30 FCR 40 at 43-44.
Relevantly, the Tribunal in Breust (constituted by Moss J) also referred to the 1971 Act:
Of considerable significance in construing the above-mentioned sections of the [SRC] Act, is the fact that comparable provisions to the same effect were to be found in the 1971 Act and were not changed in any relevant way in the 1988 Act.[9]
[9] Re Breust and Commission of the Safety, Rehabilitation and Compensation of Commonwealth Employees [1990] AATA 267 at [15]; (1990) 12 AAR 563 at 566.
Contentions
Mr Krupka submitted that the Full Court’s decision in Breust authoritatively deals with the issue of whether Mr Mikajlo’s part-time Army Reserve earnings should have been included in the calculation of his NWE in respect of the 1981 injury. He submitted that subs 25(3) of the 1971 Act is not significantly different from subs 8(3) of the SRC Act, and it is clear from the available authorities that those provisions apply only to injuries sustained during part-time or unpaid employment, and accordingly do not apply where the injury was sustained in full-time employment as in this case.
Mr Mikajlo contended that Breust was decided after the original determination accepting liability for his 1981 injury, and therefore should not be applied ‘retrospectively’ in his case. He said:
When the determination in my favour was made, it was my understanding that I was being paid for lost [Army Reserve] pay ...
...
It is conceded that subsequent to that determination there have been cases where it was determined that Reserve pay should not be paid over and above APS pay. However my case preceded those determinations ...[10]
Mr Mikajlo also referred to an earlier decision of the Tribunal in Re Peake and Commonwealth (Defence) [1984] AATA 42, in which the applicant’s part-time earnings as a member of the (then) Citizen Military Forces (CMF) were included in his NWE. However, it is significant that in that case, the applicant was injured whilst engaged in a training exercise in the CMF, and the Tribunal in fact applied subs 25(3) of the 1971 Act consistently with the later decision of the Full Federal Court (albeit in the context of the equivalent provision, subs 8(3)) in Breust.
[10] Exhibit 4.
Consideration
The Full Court’s decision in Breust, which has not been overruled or distinguished, is binding on this Tribunal. It is also relevant to note that the amendments to s 8 since that case was decided do not affect the Court’s analysis of the effect of the relevant subsections.[11] As I explained to Mr Mikajlo at the hearing, it is immaterial in this context that the decision in Breust was handed down after the original determination accepting liability for his claim in 1981. The law can be clarified at any time, and the Tribunal is obliged to apply the relevant statutory provisions consistently with the currently applicable authorities, including the Full Court’s decision in Breust.
[11] See also FVNH and Comcare [2013] AATA 832.
Accordingly, I am satisfied that Mr Mikajlo’s part-time earnings from the Army Reserve should not be taken into account in calculating his NWE in respect of the 1981 injury, and these were correctly excluded by the reconsideration delegate.
SHOULD MR MIKAJLO’S COMPENSATION ENTITLEMENTS BE OFFSET AGAINST HIS AWARD OF DAMAGES AT COMMON LAW?
Evidence and Contentions
As I understand it, Mr Mikajlo contends that the damages he was awarded at common law were, at least in part, for his Army Reserve pay, and that it is inappropriate for the Commonwealth to ‘claim that money back’ by offsetting his workers’ compensation entitlements against his common law damages.[12]
[12] See also Exhibit 7.
In the course of my consideration of this issue, it became apparent that the materials before me relating to the relevant common law damages payment and what it related to did not paint a clear picture. That material includes:
·a document in the nature of a Statement of Claim in matter F2820/1984 filed in the Local Court of Adelaide relating to a motor vehicle accident on 2 March 1983,[13]
·an “Interlocutory Summons” indicating that that matter, together with another action (F916 of 1984) were listed to be heard together on 24 July 1985,[14]
·a letter from Mr Mikajlo’s then solicitors, Mollison Litchfield, to the Australian Government Solicitor (AGS), dated 17 September 1985,[15] in which Mollison Litchfield advised the AGS that on 24 July 1985, Mr Mikajlo’s “claim for damages” had “settled” for the amount of $40,000, inclusive of interest but exclusive of costs; and
·a letter dated 3 January 2003 written at Mr Mikajlo’s request by Mr Gaezner, solicitor, who apparently acted for him in relation to what Mr Gaezner describes as the “1981 MVA Claim Settlement”.[16] In this letter, Mr Gaezner confirms acting for Mr Mikajlo in his claim arising from a motor vehicle accident on 29 July 1981, which he says settled before trial. He also confirms that the settlement related at least in part to loss of Army Reserve earnings.
[13] Exhibit 2, ST5/9.
[14] Exhibit 2, ST5/7.
[15] Exhibit 2, ST6/12.
[16] Exhibit 2, ST10/19.
Given the ambiguity arising from this material, as to whether the $40,000 damages payment in fact related to the 1981 accident, or a later accident in 1983, subsequent to the hearing I convened a Directions Hearing, on 19 January 2016, at which I sought further information and submissions from the parties. At that Directions Hearing, Mr Krupka helpfully indicated that his instructing solicitors (the AGS) would make inquiries as to whether further information could be obtained, either from the relevant Courts, or the records of the AGS. Unfortunately, those inquiries ultimately proved fruitless, and no further documentary information was provided, either by the respondent or by Mr Mikajlo, although both parties provided further written submissions with respect to this issue.
In his written submission for the respondent, Mr Krupka made the following points:
·Mr Mikajlo had never disputed that the $40,000 damages payment was made with respect to the 1981 accident, and appeared not to dispute this in the context of the current matter; and
·It could be inferred from the letter from Mr Mikajlo’s then solicitors to the AGS that the damages payment referred to in that letter related to the 1981 accident, as the then Commissioner for Employees’ Compensation had no right of recovery with respect to the 1983 injuries. Therefore, there was no reason for Mr Mikajlo’s solicitors to be writing to the AGS with respect to damages paid for those injuries.
Mr Krupka also submitted that the issue of whether the offset was appropriately made was not relevant to the Tribunal’s determination in any event, as “offset decisions” pursuant to s 48 of the SRC Act are not included in the definition of “determination” in s 60, and therefore cannot reconsidered under s 62 of the SRC Act, or reviewed by the Tribunal.
In his further written submissions dated 15 February 2015, Mr Mikajlo did not specifically address the issue of which accident the $40,000 damages payment related to, and did not dispute that this amount was paid in respect of the 1981 accident. He reiterated his argument, referred to above, that as the damages related in part to his Army Reserve earnings, it was unfair to offset that amount against his compensation entitlements if he could not also be paid compensation with respect to those earnings.
Consideration
In these circumstances, I have ultimately concluded that I accept Mr Krupka’s submissions as to the inferences which can be drawn from the available material, and I therefore accept as a matter of fact that the $40,000 damages payment made to Mr Mikajlo related to the 1981 accident.
As to my jurisdiction to consider the ‘offset issue’, I note Mr Krupka’s submission that I lack jurisdiction to review the offset decision and the decision setting the amount of the offset pursuant to s 48 of the SRC Act. However I also note that, as acknowledged by the determination delegate,[17] s 48 was not applicable to the damages payment received by Mr Mikajlo.[18] The decision to offset Mr Mikajlo’s compensation entitlements against his common law damages was made by reference to s 99 of the 1971 Act. It appears that a letter advising Mr Mikajlo as to the likely offset amount was sent to him on or about 15 April 1986.[19] However, this was not in fact a determination under the 1971 Act.[20]
[17] Exhibit 3, T6/109.
[18] See also s 124(11) of the SRC Act.
[19] Exhibit 3, T4/74.
[20] See Commonwealth of Australia v Goodfellow (1980) 31 ALR 533.
In the event therefore, on my analysis, the first determination giving effect to s 99 and formally determining the offset amount was the determination of the primary delegate of 7 February 2003, by which the delegate determined in part that compensation was not payable to Mr Mikajlo by reason of the offset amount. I consider that in addressing the offset issue in the context of determining Mr Mikajlo’s entitlement to compensation for medical expenses, the primary delegate did so pursuant to s 16 of the SRC Act, as affected by the transitional provisions in s 124. As that issue was also squarely before the reconsideration delegate, I therefore consider that I have jurisdiction to consider the ‘offset issue’ to the extent it is relevant to determining Mr Mikajlo’s entitlements under s 16 (being the context in which it arises before me). For completeness, I also note that there is a strong argument to say that in reviewing a decision with respect to compensation entitlements, the Tribunal has jurisdiction to re-visit all of the statutory foundations and prior steps on which that decision is squarely based.[21]
[21] See Secretary, Department of Defence v Gorton (2000) 98 FCR 497; Power v Comcare (1998) 89 FCR 514; and Telstra Corporation Ltd v Hannaford (2006) 151 FCR 253.
In any event, having carefully reviewed the applicable provisions, I am satisfied that the determination delegate was correct to conclude that Mr Mikajlo’s common law damages must be offset against his compensation entitlements resulting from the 1981 injury, including his entitlement to medical expenses. That follows in my view from the combined operation of subs 124(2) of the SRC Act, which provides that compensation is not payable under the SRC Act if it would not have been payable under a previous compensation Act in force at the time of the injury, and s 99 of the 1971 Act, which required the offsetting of common law damages against compensation entitlements where the damages and entitlements related to the same injury.
In relation to Mr Mikajlo’s arguments as to the fairness of the offsetting which occurred, as I sought to explain to him at the hearing, the offsetting provisions in the 1971 Act applied to any damages awarded in respect of an injury for which compensation was payable, regardless of how those damages were arrived at or calculated. It follows that, even assuming that the damages paid to him were calculated by reference to his Army Reserve earnings, in my view this has no bearing on the legitimacy or correctness of the offsetting which has occurred. That is because this offsetting was mandated by the legislation, regardless of the composition of Mr Mikajlo’s common law damages payment, the nature of his relevant compensation entitlements, and the precise relationship between the two.
Accordingly, for the reasons I have given above, I consider that the primary delegate was correct to conclude that Mr Mikajlo’s entitlements must be offset against his common law damages in the sum of $38,465.69,[22] and it was therefore also appropriate for the reconsideration delegate to affirm that aspect of the determination.
[22] See footnote 5, above.
IS MR MIKAJLO ENTITLED TO MEDICAL EXPENSES IN RESPECT OF THE 1981 INJURY FROM 14 FEBRUARY 2003?
It is clear that the determination delegate purported to deal with Mr Mikajlo’s entitlement to medical expenses (in particular, for physiotherapy) and decided that compensation was not payable from 14 February 2003. Although it was not specifically addressed in the reconsideration decision, in the event, the respondent does not dispute that the Tribunal has jurisdiction to consider this issue. However, even accepting that I have jurisdiction, another difficulty for his case is that Mr Mikajlo has not made any claims for compensation in relation to medical treatment since 2003.
At the hearing, Mr Mikajlo explained that he had not in fact had any relevant treatment. He said that although he needs treatment, he had not been able to get it. In a statement dated 16 September 2014, he said:
With the cessation of physiotherapy and manipulation of my neck in 2002 it has become extremely difficult for me to drive safely ... it is important that I get treatment of an ongoing nature.[23]
[23] Exhibit 5.
Mr Krupka submitted that until there is a claim for specific treatment, or evidence that an expense for medical treatment has been incurred, the issue is a “hypothetical” one. He further submitted that there was no evidence upon which the Tribunal could be satisfied that the offset amount of $38,465.69 had been exhausted in any event, such that compensation in respect of medical expenses would be payable.
In these circumstances, I have ultimately concluded that no proper basis has been established upon which it would be open to me to disturb this aspect of the decision affirmed by the reconsideration delegate. The effect of that decision was relevantly to determine that there was no liability to pay compensation for further medical expenses as at 2003, as the offset amount of $38,465.69 had not been exhausted. In the context of this application, Mr Mikajlo has not sought to establish that that amount had or has been exhausted, and nor has he submitted any medical expense for payment.
Arguably, in the event Mr Mikajlo had incurred a further medical expense for which he sought compensation, the appropriate course would have been to seek payment of that expense directly from the respondent. That would have led to a further primary determination, in the context of which the issue of the extent to which the offset amount had been exhausted since 2003 could have been addressed.
Even accepting however that this issue can be addressed in the context of this application, I accept Mr Krupka’s submission that in circumstances where no further medical expense has been incurred and there is nothing before me to suggest that the offset amount has been exhausted, insofar as the reviewable decision affirmed the primary delegate’s treatment of this issue, that aspect of the reviewable decision must also be affirmed.
CONCLUSION
For these reasons, I have accordingly concluded that none of Mr Mikajlo’s complaints with respect to the decision under review in application 2013/4611 have been made out, and that decision should be wholly affirmed.
In the circumstances outlined at paragraph 6 above, I have also decided to affirm the decision under review in application 2012/5843.
DECISION
In application 2012/5843, the decision under review is affirmed.
In application 2013/4611, the decision under review is affirmed.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Deputy President K Bean ................[Sgd]......................................................
Associate
Dated 18 March 2016
Date of hearing 13 August 2015 Date final submissions received 16 February 2016 Applicant In person Counsel for the Respondent Mr B Krupka Solicitors for the Respondent Australian Government Solicitor
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