Nicholson v Victorian WorkCover Authority
[2016] VSCA 146
•24 June 2016
SUPREME COURT OF VICTORIA
COURT OF APPEAL
| S APCI 2016 0021 | |
| DAVID JAMES NICHOLSON | Plaintiff |
| v | |
| VICTORIAN WORKCOVER AUTHORITY | Defendant |
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| JUDGES: | OSBORN, BEACH and McLEISH JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 17 June 2016 |
| DATE OF JUDGMENT: | 24 June 2016 |
| MEDIUM NEUTRAL CITATION: | [2016] VSCA 146 |
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ACCIDENT COMPENSATION – Case stated – Worker injured in course of employment – Serious injury application – Application for leave to commence a proceeding claiming damages for pecuniary loss – Pecuniary loss damages – Loss of earning capacity – Loss of earning capacity of 40 per centum or more measured as set out in s 134AB(38)(f) of the Accident Compensation Act 1985 – Gross income from personal exertion – Meaning of ‘Gross income from personal exertion’ – Allowances – Allowances received in capacity of employee – Whether allowances form part of gross income from personal exertion – Whether expenses incurred should be deducted from allowances – Accident Compensation Act 1985, ss 134AB(38)(a), 134AB(38)(e) and 134AB(38)(f) – Transport Accident Act 1986, ss 6, 44 and 45.
WORDS AND PHRASES – Gross income from personal exertion – Meaning of ‘Gross income from personal exertion’ – Accident Compensation Act 1985, ss 134AB(38)(a) and 134AB(38)(f) – Transport Accident Act, s 6(2).
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr B E Walters QC with Mr C S Smale | Ryan Carlisle Thomas |
| For the Respondent | Mr S A O’Meara QC with Ms F A L Ryan | IDP Lawyers |
OSBORN JA
BEACH JA
McLEISH JA:
Introduction
On 27 September 2010, the plaintiff suffered an injury to his left knee in the course of his employment with Epping Timber Prefab Co Pty Ltd (‘Epping Timber’). The plaintiff did not return to work with Epping Timber beyond September 2010, and his employment was terminated on 21 February 2013. In May 2013, the plaintiff commenced employment as a part-time support worker for the Pyrenees Shire. In his new employment the amounts paid to the plaintiff by his new employer have included a travelling allowance and a clothes allowance (collectively, ‘the allowances’).
On 14 August 2014, the plaintiff filed an originating motion in the County Court seeking leave to issue a proceeding for the recovery of damages, in respect of his knee injury, pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 (‘the Accident Compensation Act’). The plaintiff’s originating motion came on for hearing in Ballarat on 24 September 2015. On the second day of the hearing, the defendant, the Victorian Workcover Authority, conceded that the plaintiff should be permitted to bring a proceeding against Epping Timber for ‘pain and suffering damages’ as defined in s 134AB(37) of the Accident Compensation Act.
Following the defendant’s concession, the issue that remained (and remains) between the parties is whether the plaintiff should be given leave to bring a proceeding against Epping Timber claiming ‘pecuniary loss damages’.[1]
[1]‘Pecuniary loss damages’ is defined in s 134AB(37) of the Accident Compensation Act to mean:
… damages for loss of earnings, loss of earning capacity, loss of value of services or any other pecuniary loss or damage.
In order for the plaintiff to obtain leave to commence a proceeding claiming pecuniary loss damages, the plaintiff must establish that he has suffered a loss of earning capacity of 40 per centum or more ‘measured … as set out in paragraph (f)’ of s 134AB(38) of the Accident Compensation Act, and that he will ‘continue permanently to have a loss of earning capacity which will be productive of financial loss of 40 per centum or more’.[2]
[2]Section 134AB(38)(e)(i)–(ii) of the Accident Compensation Act.
During the course of the hearing before the County Court judge, two issues arose as to the construction and operation of paragraph (f) of s 134AB(38). Pursuant to s 76(1) of the County Court Act 1958, the judge reserved the following questions for the opinion of this Court:
(a)Does the plaintiff’s ‘gross income from personal exertion’ (expressed at an annual rate) for the purposes of s 134AB(38)(f) include the allowances?
(b)If yes to (a), how is the plaintiff’s ‘gross income from personal exertion’ to be calculated? In particular, is it calculated by deducting from his income (including allowances) the deductions claimed in his tax returns for work related motor vehicle and clothing expenses?
The relevant legislative provisions
Section 134AB(38)(e) of the Accident Compensation Act relevantly provides:
(e)where a worker relies upon paragraph (a), (b) or (c) of the definition of serious injury in subsection (37), … a court shall not grant leave under subsection (16)(b) on the basis that the worker has established the loss of earning capacity required by paragraph (b) unless the worker establishes in addition to the requirements of paragraph (c) or (d), as the case may be, that —
(i)at … the date of the hearing of an application under subsection (16)(b), the worker has a loss of earning capacity of 40 per centum or more, measured … as set out in paragraph (f); and
(ii)the worker … will after the date … of the hearing continue permanently to have a loss of earning capacity which will be productive of financial loss of 40 per centum or more.
Section 134AB(38)(f) of the Accident Compensation Act provides:
(f)for the purposes of paragraph (e)(i), a worker's loss of earning capacity is to be measured by comparing—
(i)the worker's gross income from personal exertion (expressed at an annual rate) which the worker is—
(A)earning, whether in suitable employment or not; or
(B)capable of earning in suitable employment —
as at that date, whichever is the greater, and —
(ii)the gross income (expressed at an annual rate) that the worker was earning or was capable of earning from personal exertion or would have earned or would have been capable of earning from personal exertion during that part of the period within 3 years before and 3 years after the injury as most fairly reflects the worker's earning capacity had the injury not occurred.
The expression ‘income from personal exertion’ in s 134AB(38)(f) is defined in s 134AB(38)(a) in the following terms:
income from personal exertion has the same meaning as in section 6(2) of the Transport Accident Act 1986.
Section 6 of the Transport Accident Act 1986 (‘the Transport Accident Act’) provides:
(1)In this Act a reference to loss of earnings in relation to a person in the first 18 months after a transport accident is to be taken to be a reference to the loss incurred or likely to be incurred having regard to the loss of earnings which the person has incurred and the likely loss of future earnings which that person will incur by reason of the injury.
(2) In this section—
earnings means such amount as, in the opinion of the Commission, the person concerned would have received by way of income from personal exertion but for the transport accident;
income from personal exertion in relation to a person means—
(a)the amount that is the income of that person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered; and
(b)the proceeds of any business carried on by that person either alone or in partnership with any other person; and
(c)any amount received as bounty or subsidy in carrying on a business; and
(d)the income from any property where that income forms part of the emoluments of any office or employment of profit held by that person; and
(e)any profit arising from the sale by that person of any property acquired by the person for the purpose of profit-making by sale or from the carrying on or carrying out of any profit-making undertaking or scheme —
but does not include —
(f)interest, unless that person's principal business consists of the lending of money, or unless the interest is received in respect of a debt due to that person for goods supplied or services rendered by the person in the course of the person's business; or
(g) rents or dividends; or
(h) any employer superannuation contribution.
As can be seen from the text of s 6 of the Transport Accident Act, the expression ‘income from personal exertion’ is a defined expression that forms part of the definition of the word ‘earnings’ referred to in sub–s (1) of that section. In the Transport Accident Act, the question of an injured person’s loss of earnings in the first 18 months after the transport accident (as referred to in s 6(1)) is dealt with in ss 44 and 45 of the Transport Accident Act. Sections 44 and 45 of the Transport Accident Act deal with the payment of no fault benefits in respect of losses of earnings in the first 18 months after the relevant transport accident.
Agreed facts
Since May 2013 the plaintiff has been employed as a part-time support worker for the Pyrenees Shire. The plaintiff’s work involves attending the homes of elderly or disabled clients and providing them with personal care and cleaning assistance. He also takes clients to outings and appointments. The plaintiff uses his own vehicle.
The plaintiff is paid the allowances, comprising (as we have said) a travel allowance and a clothing allowance. The allowances are paid to him as part of his fortnightly pay.
The travel allowance is divided into three types: domestic, respite and personal. The bulk of the travel allowance is made up of what is described as ‘travel — domestic’. The travel allowance is paid to the plaintiff regardless of whether he spends the money. The plaintiff’s evidence is that he is not sure how the travel allowance is calculated, but he believes that it is calculated on a per kilometre basis. In his tax returns, the plaintiff claims work-related motor vehicle expenses. These expenses vary from year to year.
As we have said, the plaintiff also receives a clothing allowance from his new employer. The clothing allowance forms part of the plaintiff’s fortnightly pay. In his tax returns, the plaintiff claims a deduction for work-related clothing expenses.
The plaintiff's 2014 tax return reveals that the plaintiff earned $26,164 gross, of which sum $6,169 was paid in respect of allowances ($6,039 travel allowance and $128 clothing allowance).[3] Against his taxable income, the plaintiff claimed work-related motor vehicle expenses of $7,718 and work-related clothing expenses of $150.
[3]While the figures of $26,164 and $6,169 were agreed by the parties, the correct figures were $26,162 and $6,167 respectively. The error in the parties’ agreed figures was created by the incorrect addition of the plaintiff’s allowances in his 2014 tax return. That said, nothing turns on this error so far as this proceeding is concerned.
The plaintiff's 2015 tax return reveals that the plaintiff earned $25,694 gross, of which $6,998 was paid in respect of allowances ($6,877 travel allowance and $120 clothing allowance). Against his taxable income, the plaintiff claimed motor vehicle expenses of $3,850 and work-related clothing expenses of $150.
The parties agree that a fair reflection of the plaintiff's without injury earnings pursuant to s 134A8(38)(f)(ii) of the Accident Compensation Act is $35,479 gross per annum.
In the years ended 30 June 2014 and 30 June 2015, if the plaintiff's gross income from personal exertion includes the allowances, and is not reduced for the work-related expenses claimed in his tax returns, then he does not satisfy the 40 per cent loss of earning capacity required by s 134AB(38)(e)(i) of the Act. However, if his gross income including allowances is reduced by the deductions claimed in his tax return for work-related expenses then he will satisfy s 134AB(38)(e)(i).
Analysis
This case concerns the construction of s 134AB(38)(f) of the Accident Compensation Act and, by the incorporation of the definition of ‘income from personal exertion’ in s 134AB(38)(a), the construction of a part of s 6(2) of the Transport Accident Act. As the High Court has repeatedly said, the task of statutory construction must begin and end with a consideration of the statutory text.[4]
[4]See, eg, Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ).
Section 134AB(38)(f) of the Accident Compensation Act is concerned with (and concerned to measure) the difference between the gross income an injured worker was earning (or was capable of earning) before suffering injury and the gross income that worker is earning (or is capable of earning) after suffering injury. Other provisions in the Accident Compensation Act, dealing with the issues of earning and income, deal with net earnings or net income or earnings and income net of various payments or allowances.[5]
[5]See for example ss 5A–5E of the Accident Compensation Act.
Section 134AB of the Accident Compensation Act was inserted into that Act by the Accident Compensation (Common Law and Benefits) Act 2000. In the Second Reading Speech in the Legislative Assembly for the Accident Compensation (Common Law and Benefits) Bill, Mr Cameron, the Minister for Workcover, said in respect of the comparison now referred to in s 134AB(38)(f) of the Accident Compensation Act:
The comparison is to be made on an examination of pre and post-injury gross income rather than net income. This will enable the analysis to have a simple basis of calculation and to avoid dispute as to a net income figure.[6]
[6]Hansard, Legislative Assembly, vol 446, 13 April 2000, p 1003.
On its face, paragraph (a) of the definition of ‘income from personal exertion’ in s 6(2) of the Transport Accident Act includes ‘allowances’ or, if it be necessary, ‘allowances … received in the capacity of employee’. If one was simply to look at the statutory text, one would conclude that the travel allowance paid to the plaintiff and the clothing allowance paid to the plaintiff constituted allowances within the meaning of that word (or allowances paid to the plaintiff in his capacity as an employee) as set out in paragraph (a) of the definition of ‘income from personal exertion’.
In submitting to the contrary, the plaintiff sought to rely upon the dissenting judges’[7] approach to the construction of the word ‘allowance’ in the Pay-roll Tax Assessment Act 1941–1942 (Cth) in Mutual Acceptance Company Ltd v Federal Commissioner of Taxation.[8] Immediately it must be noted that the context in which the word ‘allowance’ appears in the Pay-roll Tax Assessment Act 1941-1942 is, of course, completely different from the statutory context we have to consider.[9] In the context of the Transport Accident Act, a narrow construction of the expression ‘income from personal exertion’ would potentially limit or reduce amounts of compensation for loss of earnings that would otherwise be paid by the Transport Accident Commission under ss 44 and 45 of the Transport Accident Act.
[7]Rich and Dixon JJ.
[8](1944) 69 CLR 389 (‘Mutual Acceptance’).
[9]Similarly, Glazebrook v Accident Compensation Commission [1988] VR 454, Accident Compensation Commission v Alger [1993] 1 VR 379, Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation (1946) 73 CLR 604 and Abram Coal Company Ltd v Southern [1903] AC 306, to which the plaintiff referred, all involve quite different provisions with varying purposes and are not of assistance.
If one turns to the measuring exercise that s 134AB(38)(e) requires must be performed in accordance with s 134AB(38)(f), narrowing or limiting the amounts that may be taken into account when determining an amount of ‘income from personal exertion’ has the capacity to act to the detriment of one group of injured workers (those whose pre-accident earnings included allowances), but to the advantage of another group of injured workers (those who might be able to structure their post-accident income in a way that includes allowances).
In contending that the answer to the first of the questions reserved for the opinion of this Court should be ‘No’, the plaintiff submitted that attention needed to be given to the words ‘from personal exertion’ in the expression ‘income from personal exertion’. The plaintiff submitted that an employee’s income from personal exertion does not ordinarily encompass a payment made by the employer to the employee for the provision of an employee’s asset for the benefit of the employer. Whether that proposition is true may be debated.
First, for present purposes, it is sufficient to note that the words ‘from personal exertion’ are not contained in the definition of the expression ‘income from personal exertion’ in s 6(2) of the Transport Accident Act; and thus they do not specifically fall to be construed.
Secondly, as was conceded by the plaintiff, the definition of ‘income from personal exertion’ in s 6(2) of the Transport Accident Act appears to have its origin in the definition of the expression ‘income from personal exertion or income derived from personal exertion’ in s 6 of the Income Tax Assessment Act 1936 (Cth) (the ‘Income Tax Assessment Act’). ‘Income from personal exertion or income derived from personal exertion’ is defined in s 6 of that Act to mean:
Income consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, superannuation allowances, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered … but does not include:
(a) interest …;
(b) rents, dividends or non-share dividends.[10]
[10]Emphasis added.
We did not understand the plaintiff to seriously contend that the allowances in the present case did not form part of his ‘income from personal exertion or income derived from personal exertion’ within the meaning of the Income Tax Assessment Act. Indeed, as was noted in argument, the plaintiff’s income tax returns for 2014 and 2015 declared the allowances as part of his assessable income. At least in the context of the Income Tax Assessment Act 1936, the allowances must be regarded as having been received by the plaintiff ‘in the capacity of employee or in relation to any services rendered’. Further, it is to be noted that these same words (‘in the capacity of employee or in relation to any services rendered’) appear at the conclusion of paragraph (a) of the definition of ‘income from personal exertion’ in s 6(2) of the Transport Accident Act. Subject to any differences arising from their respective contexts and purposes, one would expect that identical words in the Transport Accident Act would be construed no more restrictively than they would be construed in the Income Tax Assessment Act. That is, authority that requires the allowances to be determined to be income from personal exertion in the Income Tax Assessment Act equally requires the allowances to be determined to be income from personal exertion in the Transport Accident Act.
In his submissions, the plaintiff submitted that the Accident Compensation Act was concerned with the physical and mental capacity of a person to work, rather than their ability to provide an asset. He points to the objects of the Accident Compensation Act which include:
(d) to provide adequate and just compensation to injured workers;
…
(g) to enhance flexibility in the system and allow adaption to the particular needs of disparate work situations;[11]
[11]See s 3 of the Accident Compensation Act.
The objects of the Accident Compensation Act do not assist in the resolution of the present issues. While the plaintiff contended that excluding the allowances from consideration when measuring his post-accident income would give him an entitlement to greater compensation by way of common law damages than he would otherwise be entitled to (and would thus facilitate the provision of ‘just compensation’ to him), the construction contended for by the plaintiff has the same capacity to disentitle an equivalently injured worker whose pre-injury employment (but not whose post-injury employment) included allowances of the kind now under consideration.
The plaintiff’s argument based on the minority judgments in Mutual Acceptance was essentially that the elements in the definition of ‘income from personal exertion’ were all forms of remuneration by way of a substantial benefit for the work of the employee. The words preceding ‘allowances’ were descriptive of remuneration akin to earnings, salary, wages, commissions or bonuses received in return for an employee’s work, rather than as a contribution towards an employee’s expenditure, and ‘allowances’ was to be construed eiusdem generis with that class.[12] Some support for distinguishing the contrary view of the majority in that case may be drawn from the presence in the Pay-roll Tax Assessment Act 1941-1942 of the words ‘without limiting the generality of the foregoing’, upon which both Latham CJ and Williams J relied.[13]
[12]Mutual Acceptance (1944) 69 CLR 389, 399 (Rich J), 403–4 (Dixon J).
[13]Ibid 395, 404.
However, the context in Mutual Acceptance was the calculation of a tax on the amount of wages paid, and the very description ‘pay-roll’ to describe the tax was an indication of the subject matter of the tax. In addition, the definition referred to amounts ‘paid or payable … to any employee as such’, further emphasizing the need to examine the character in which the employee received the payment. These grounds for reading the word ‘allowance’ restrictively are absent in the present case. Instead, the definition in s 134AB(38)(a) is used, as already indicated, to provide a means of comparing a worker’s earning capacity before and after an injury. Since that exercise will inevitably favour some workers over others, whichever construction is adopted, the context and purpose here provide no basis for departing from the ordinary meaning of the words.[14]
[14]If anything, the context in which the definition is used in the beneficial provisions of the Transport Accident Act may provide a basis for the wider, rather than a narrower, meaning. Given our conclusions as to the Accident Compensation Act, it is not necessary to explore this issue further. As to the circumstance where a definition from one Act (the first Act) is incorporated into another Act (the second Act), and whether its meaning in the second Act may be influenced by the context provided by the first Act, see CertainLloyd’s Underwriters v Cross (2012) 248 CLR 378, 391–2 [30]–[31] (French CJ and Hayne J).
In the end, it is the plain words of the relevant sections of the Accident Compensation Act and the Transport Accident Act which require the first of the questions reserved for the opinion of this Court to be answered ‘Yes’.
The answer to the second of the questions reserved for the opinion of this Court falls similarly to be answered by reference to the text of the definition of ‘income from person exertion’ in s 6(2) of the Transport Accident Act, construed in its relevant context. The text of the definition in s 6(2) of the Transport Accident Act is specific as to what is to be included and what is to be excluded. There is no warrant in the statutory text for excluding or, as the plaintiff would have it, ‘deducting’ so-called ‘deductions’ that may or may not have been claimed in an injured worker’s income tax returns.
The plaintiff argued that the definition was confined by the word ‘gross’ in s 134AB(38)(f). It was submitted that ‘gross’ had more than one meaning, and that here it was used, not to distinguish ‘net’ payments, but only to make it clear that tax was not to be deducted from the calculation. Nothing in the legislation provides any support for this contention. Section 134AB(38(f) is not concerned with questions of taxation. The word ‘gross’, unlike the expression ‘income from personal exertion’, is not drawn from any definition traceable to the Income Tax Assessment Act. It is more consistent with the purpose of s 134AB(38)(f) that ‘gross’ is used by the legislature to make it clear that deductions of the kind proposed by the plaintiff are not to be made. That way, the amount an employer pays can more readily be ascertained and ‘gross income from personal exertion’ easily calculated for the purpose of undertaking the comparison required by the sub-section.
The second of the questions reserved for this Court’s opinion must be answered:
It is to be calculated in accordance with the text of the definition contained in s 6(2) of the Transport Accident Act 1986. It is not to be calculated by deducting, from the plaintiff’s income, deductions claimed in the plaintiff’s income tax returns for work-related motor vehicle and clothing expenses.
We note for the sake of completeness that this answer accords with the Minister for Workcover’s Second Reading Speech in relation to the Accident Compensation (Common Law and Benefits) Bill wherein the Minister (as we have already noted) said that the analysis to be made involved a comparison of pre and post injury gross income so as to have ‘a simple basis of calculation and to avoid dispute as to a net income figure’.[15]
[15]Hansard, Legislative Assembly, vol 446, 13 April 2000, p 1003.
During the course of argument, we were referred to a number of County Court decisions concerning the construction of paragraph (b) of the definition of ‘income from personal exertion’ in s 6(2) of the Transport Accident Act. The present case does not require this Court to express a view on the proper construction of that paragraph or the relevance of the term ‘gross’ in that context. The answers we will give to the questions reserved for the opinion of this Court depend upon the construction of paragraph (a) of the definition of ‘income from personal exertion’ in the context in which that paragraph appears, as we have identified. In the circumstances, it is not necessary for us to say anything about the operation of paragraph (b) of that definition.
Conclusion
The questions reserved for the opinion of this Court will be answered:
(a) Yes.
(b) It is to be calculated in accordance with the text of the definition contained in s 6(2) of the Transport Accident Act 1986. It is not to be calculated by deducting, from the plaintiff’s income, deductions claimed in the plaintiff’s income tax returns for work-related motor vehicle and clothing expenses.
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