Mitsubishi Motors Australia Limited v James Kelly Love No. SCGRG 92/849 Judgment No. 3715 Number of Pages 5 Workers' Compensation

[1992] SASC 3715

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(2), COX(1) AND MATHESON(3) JJ

CWDS
Workers' compensation - assessment and amount of compensation - weekly earnings - Workers Rehabilitation and Compensation Act 5.4(8) - only certain overtime to be taken into account - meaning of "component". Workers Rehabilitation and Compensation Acts.4(8).

HRNG ADELAIDE, 13 October 1992 #DATE 10:12:1992
Counsel for appellant:     Mr T J P O'Callaghan
Solicitors for appellant:    Piper Alderman
Counsel for respondent:     Mr A P Durkin
Solicitors for respondent: Duncan Groom Hannon

ORDER
Appeal dismissed.

JUDGE1 COX J The respondent suffered a compensable disability, as the WorkersRehabilitation and Compensation Act 1986 calls it, at work on Friday, 10 May, 1991 in the course of his employment by the appellant. As a result he was unable to work the next day. He returned to work on the following Monday. Had it not been for the disability he would have worked overtime on the Saturday. The question is whether the appellant, in assessing the respondent's claim for payments of income maintenance, was entitled to disregard the overtime that the respondent had worked prior to May 10 and would have worked on May 11. 2. The answer depends upon the proper interpretation of an amendment to the Workers Rehabilitation and Compensation Act that was made last year. However, it is instructive to consider first the situation with respect to overtime under the Act as originally passed. By s.35 a worker who suffered a compensable disability that resulted in incapacity for work was entitled to weekly payments in accordance with the principles set out in the section. The basis of the worker's compensation was to be his "notional weekly earnings" which, by virtue of the definition in s.3, usually meant his average weekly earnings. However, in accordance with sub-s.(8) of s.4 any "prescribed allowance" was to be disregarded for the purpose of determining the average weekly earnings of a worker, and s.3 defined "prescribed allowance" to mean any amount received by the worker "... (c) by way of overtime, other than amounts paid in respect of overtime worked in accordance with a regular and established pattern." 3. There was a corresponding provision with respect to weekly earnings in sub-s.(7) of s.35. 4. So overtime could be taken into account in the worker's favour provided that it was overtime worked "in accordance with a regular and established pattern." 5. Precisely what those words meant was considered in Francese v. City of Adelaide (1989) 51 SASR 522. In that case a worker who was employed as a caretaker and cleaner worked overtime in almost all of the fortnightly pay periods in the twelve months before he was disabled, but he did not work any set number of hours of overtime each week or fortnight or work overtime on any particular day or days of the week. He simply worked overtime when he was needed. The result was that the number of hours of overtime that he worked was rarely the same from one fortnight to another. The Tribunal held that his overtime payments could not be taken into account because the overtime was not worked in accordance with a regular and established pattern. The Full Court disagreed. 6. The learned Chief Justice noted that the Workers Compensation Act 1971 had excluded overtime completely from the computation of a worker's average weekly earnings. The thrust of the Workers Rehabilitation and Compensation Act, however, was quite different -
    "...The emphasis is upon estimating what the worker could
    reasonably have expected to earn during the period of
    disability. Average weekly earnings during the previous 12
    months are merely taken into account as part of the process of
    estimation. The estimate is to include overtime worked in
    accordance with a regular and established pattern but not
    otherwise. I think that those considerations throw light upon
    the meaning to be attributed to the expression "regular and
    established pattern" as used in the section. The objective of
    the provisions appears to be to provide to the worker during
    disability amounts by way of compensation equivalent to the
    earnings which he could have counted upon receiving if there had
    been no disability. I think that the expression should be
    understood in the sense which best achieves that objective.
    Understood in that light, I think that the expression means no
    more than that the overtime, to be included in the computation
    of average weekly earnings, must be sufficiently established and
    worked with sufficient regularity to form part of the worker's
    regular income which is to be maintained during disability, and
    to constitute a solid basis for an estimate of the earnings
    which the worker could reasonably have been expected to earn
    during disability. "Pattern" in this context does not import
    any notion of uniformity in, or even correspondence between, the
    number of hours worked in the various pay periods. If overtime
    is worked regularly and is an established incident of the
    employment so as to form in practice part of the regular income,
    a regular and established, albeit perhaps an uneven or
    disjointed, pattern exists. On the contrary, if overtime is
    worked only occasionally or spasmodically in response to busy
    periods or special demands so that it does not form part of the
    regular income, it cannot be said to be worked in accordance
    with a regular and established pattern. The amount of overtime
    which is to be included in the computation of the amount that
    the worker could reasonably be expected to have earned during
    the period of disability, is to be estimated taking into account
    the average earned during the previous 12 months." (at 526-7) 7. That meant, as Legoe J and Millhouse J agreed, that the Tribunal's interpretation of the definition of "prescribed allowance" had been too narrow. Overtime was not to be excluded from the computation merely because the hours worked in different pay periods were not uniform. The worker's appeal was therefore allowed. 8. Last year, by s.4 of the Workers Rehabilitation and Compensation (Miscellaneous Provisions) Amendment Act 1991, sub- s.(8) of s.4 of the principal Act was repealed and replaced by the following sub-section -
    "(8) For the purposes of determining the average weekly
    earnings of a worker -
    (a) any component of the worker's earnings attributable to
    overtime will be disregarded unless-
    (i) the worker worked overtime in accordance with a regular
    and established pattern;
    (ii) the pattern was substantially uniform as to the number
    of hours of overtime worked; and
    (iii) the worker would have continued to work overtime in
    accordance with the established pattern if he or she had not
    been disabled. and
    (b) any prescribed allowances will be disregarded." 9. By s.3 of the amending Act, par.(c) of the definition of "prescribed allowance" (s.3) was deleted. 10. It is a matter of applying the new provisions to the situation of the present respondent. 11. The review officer, in his carefully expressed reasons, set out in table form the overtime worked by the respondent in the period of ten months prior to his disability on 10 May 1991. At first he worked overtime irregularly. However, from mid-March 1991 he was put onto an overtime roster for Saturday work and this meant that he worked about eight hours of overtime almost every Saturday before and after May 10. The appellant conceded that, had the respondent not been incapacitated on May 11, he would probably have worked eight hours of overtime that day. However, the table showed that the respondent sometimes worked overtime on other days as well. Such overtime, however, was irregular. It was only available sometimes and the amount of it varied from occasion to occasion. 12. The appellant's case was that all of the respondent's overtime had to be disregarded in determining his average weekly earnings because it did not meet the conditions laid down in sub-s.(8). The review officer did not accept that submission. He held that the pattern of overtime worked each Saturday met the conditions. The other overtime was simply to be ignored. He made a determination under s.96(2) of the Act accordingly. His decision was upheld by the Tribunal. 13. I think that there is more than one way of interpreting sub-s.(8). There is no great problem about sub-par.(i) of par.(a). It repeats for the most part the terms of par.(c) of the old definition of "prescribed allowance" and is to be interpreted in accordance with the decision in Francese v. City of Adelaide. However, it is not enough now to meet only the requirements of the sub-par.(i). Sub-paragraph (ii) requires that the pattern must also be substantially uniform as to the number of hours of overtime worked. One way of interpreting par.(a) of sub-s.(8), indeed the most obvious way, is to apply it to the whole of any overtime worked by the particular worker so that all overtime will be disregarded unless the number of hours of overtime worked was much the same in each relevant period or section of the pattern. That is the interpretation for which the appellant argues. However, to read the Act in this way would produce very strange results. It would mean that a worker who worked overtime, say, every Saturday morning for four hours and worked no other overtime at all would have his overtime taken into account for the purpose of determining his average weekly earnings while his fellow worker, who also worked four hours every Saturday morning but happened (like the respondent) to do additional overtime irregularly on other days, simply as occasion required, would get no allowance for any of the overtime. I cannot see what underlying policy of the 1991 amendment could usefully be served by such a harsh and apparently capricious result. One therefore looks for a more acceptable meaning of the sub-section that may fairly be supposed to express the intention of the Legislature. 14. Paragraph (a) begins with the words "any component", and it is possible that this refers not necessarily to the whole of a worker's overtime but to so much of the overtime as meets the pattern requirements of sub-pars.(i) and (ii). (Strictly speaking, a component under par.(a) is a part or an ingredient of a worker's earnings attributable to overtime, not of the overtime itself, but nothing appears to turn on that distinction and it is cumbersome and unnecessary, for present purposes, to keep using the longer formula.) On that view of the matter an appropriate part, or component, of this respondent's overtime was the overtime he worked each Saturday. Such overtime formed a regular and established pattern that was substantially uniform as to the number of hours of overtime worked. So to interpret the amendment invites the criticism, perhaps, of manufactured uniformity - a component of overtime is to be defined as that portion of overtime which, when taken with others like it, will constitute a regular and established and substantially uniform pattern. Precisely what additional characteristics or limitations may be implied in the term "component" it is not easy to discern. It is enough for this case that the earnings from the respondent's regular Saturday morning overtime are readily identifiable as a component for the purpose of par.(a). To apply the word "component" in this way, with respect to a complete shift or session of overtime, does not strain the language of the paragraph to breaking point and avoids the more extreme and, as it seems to me, unfair result for which the appellant contends. I think the Court should interpret the amendment accordingly. Whether earnings with respect to a part only of any session of overtime could in any circumstances constitute a component does not have to be decided in this case. 15. I expect that para.(a), in its present form, will continue to cause difficulty and concern, as there is an obvious tension between giving effect to the 1991 amendment - it must have been intended to make a change in the existing law - and producing a practical result that is even-handed and just to those who work overtime. It would help, if I may respectfully say so, if Parliament were to make its policy and precise intention on this subject clearer. 16. There was no real dispute in this case about the respondent's situation meeting the requirements of sub-par.(iii). Nor could there be any objection to the review officer having regard only to the period subsequent to the middle of March 1991 in considering whether there was a relevant pattern discernible in any component of the respondent's overtime. 17. In my opinion, the review officer and the Tribunal came to the correct decision. I would dismiss the appeal.

JUDGE2 KING CJ I concur.

JUDGE3 MATHESON J I also concur.