Nitchell v Secretary (Department of Communities and Justice)

[2022] NSWPIC 625

CERTIFICATE OF DETERMINATION OF MEMBER 

Citation:

Nitchell v Secretary (Department of Communities and Justice) [2022] NSWPIC 625

APPLICANT:

Ingrid Nitchell

RESPONDENT:

Secretary (Department of Communities and Justice)

Member:

John Wynyard

DATE OF DECISION:

14 October 2022

CATCHWORDS:

WORKERS COMPENSATION - Applicant claimed incorrect pre-accident average weekly earnings (PIAWE); whether insurer had power to calculate PIAWE on 52 week basis where during that period the worker had been in receipt of compensation for an unrelated injury; whether insurer had power to include as earnings the income received by such a worker whilst on suitable duties in rehabilitation from the unrelated injury; Held – noted that three other cases decided as to this practice at least one was on appeal; consideration of Schedule 3 of the Workers Compensation Act 1987 (1987 Act) and cognate regulations; anomaly found in that Schedule 3(6)(2)(c) of the 1987 Act excluded such payments from PIAWE, yet 52 week calculation period not able to be adjusted to reflect exclusion pursuant to Schedule 3(2)(2) and (3) of the 1987 Act; section 33 of the Interpretation Act 1987 considered; Personal Injury Commission decisions of Sidhu v the Secretary of the Department of Communities and Justice and Stewart v Secretary of Department of Communities and Justice considered;  ADCO Constructions Pty Ltd v Goudappel, to Alcan (NT) Alumina Pty Limited v the Commissioner of Territory Revenue (NT) and Bermingham v Corrective Services of NSW considered; anomaly corrected by reading words into Schedule 3 (2)(2) of the 1987 Act; short minutes to be filed accordingly.

determinations made:

1. The insurer contravened the provisions of Schedule 3(6)(2)(c) when it included in its calculations of the pre-injury average weekly earnings (PIAWE) the earnings received by the applicant whilst she was performing suitable duties with regard to her unrelated injury.

2. The insurer contravened the provisions of Schedule 3(6)(2)(c) when it included in the calculation of the PIAWE the period when the applicant had been in receipt of compensation for her unrelated injury.

3. The 52 week period provided for the calculation of the PIAWE is adjusted by deducting the 14 weeks to which Schedule 3(6)(2)(c) applied.

ORDERS MADE:

1.     The parties are to bring in short minutes of order in accordance with these reasons.

2.     The parties have liberty to apply.

STATEMENT OF REASONS

BACKGROUND

1. Ingrid Nitchell, the applicant brings an action for payment of weekly payments of compensation against Secretary (Department of Communities and Justice), the respondent with regard to an injury that occurred on 17 March 2022.

2. Dispute notices were issued and proceedings were subsequently commenced by filing of an Application to Resolve a Dispute (ARD) and Reply thereto.

ISSUES FOR DETERMINATION

1. The parties agree that the following issue remains in dispute:

   (a)    what is the correct pre-injury average weekly earnings (PIAWE).

PROCEDURE BEFORE THE PERSONAL INJURY COMMISSION (the Commission)

1. The matter was heard by way of video conciliation and arbitration conference on
   30 August 2022.  The applicant was represented by Mr John Mrsic instructed by Mr Graham Watson from Grieve Watson Kelly Lawyers.  The respondent was represented by Ms Sarah Warren of counsel instructed by Ms Nina Israil from Messrs Bartier Perry Lawyers. Also on the call was Ms Stephanie Neville and Ms Karen Teuma for the insurer.

2. I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied.  I have used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them.  I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute. 

EVIDENCE

Documentary evidence

1. The following documents were in evidence before the Commission and considered in making this determination:

   (a)    ARD and attached documents;

   (b)    Reply and attached documents, and

   (c)    respondent’s application to Admit Late Documents (ALD) dated 15 August 2022.

Oral evidence

1. No application was made in respect of oral evidence.

FINDINGS AND REASONS

1. The facts are not in dispute.  Ms Nitchell had been employed in various roles by the NSW Government since February 1992. She was employed on a permanent part time basis four days a week as a child protection case worker with the respondent at Pennant Hills. She was required to work overtime and did not take any unpaid leave during that time.

2. She did however have a period of time off work from 12 November 2021 when she sustained a back injury in a lift malfunction.

3. She was off work until she returned to work on a graduated basis on 27 January 2022, returning to her usual pre-injury hours of duty on 21 February 2022.

4. The injury on 17 March 2022 was a psychological injury which was accepted by the respondent. 

5. On 6 June 2022 the insurer advised the applicant that she would be paid weekly compensation at the rate of $1,184.75[1].  On 29 June 2022 a work capacity assessment was issued by the insurer[2] which confirmed that the appropriate rate was $1,184.75 pursuant to
   

   [1] ARD p 4.

   [2] ARD p 8.

   s 36 of the Workers Compensation Act 1987 (the 1987 Act). 

6. The applicant lodged a payment schedule which showed the income received by the applicant from 18 March 2021 to 17 March 2022, which schedule included the amount of workers compensation received over the 14 weeks she was receiving workers compensation payments.  This schedule provided:[3]

   [3] ARD p 36.

Period ending	Gross wage	Gross W/C	Total
18/03/2021	$3,206.56	$0.00	$3,206.56
1/04/2021	$3,077.31	$0.00	$3,077.31
15/04/2021	$3,077.31	$0.00	$3,077.31
29/04/2021	$3,077.31	$0.00	$3,077.31
13/05/2021	$3,077.31	$0.00	$3,077.31
27/05/2021	$3,709.26	$0.00	$3,709.26
10/06/2021	$3,077.28	$0.00	$3,077.28
24/06/2021	$3,345.19	$0.00	$3,345.19
8/07/2021	$3,077.31	$0.00	$3,077.31
22/07/2021	$3,206.59	$0.00	$3,206.59
5/08/2021	$3,077.31	$0.00	$3,077.31
19/08/2021	$3,397.45	$0.00	$3,397.45
2/09/2021	$3,270.63	$0.00	$3,270.63
16/09/2021	$3,140.08	$0.00	$3,140.08
30/09/2021	$3,140.08	$0.00	$3,140.08
14/10/2021	$3,140.08	$0.00	$3,140.08
28/10/2021	$3,140.08	$0.00	$3,140.08
11/11/2021	$3,270.64	$0.00	$3,270.64
25/11/2021	$3,844.91	$0.00	$3,844.91
9/12/2021	$1,099.28	$3,014.96	$4,114.24
23/12/2021	$0.00	$3,014.96	$3,014.96
6/01/2022	$200.17	$3,014.96	$3,215.13
20/01/2022	$0.00	$3,168.56	$3,168.56
3/02/2022	$785.02	$2,260.65	$3,045.67
17/02/2022	$1,513.97	$1,531.72	$3,045.69
3/03/2022	$2,971.86	$156.42	$3,128.28
17/03/2022	$4,031.54	$0.00	$4,031.54
Total	$71,954.53	$16,162.23	$88,116.76
Average pw (incl WC)			$1,694.55
Average wages pw (excluding weeks WC paid)			$1,720.64

1. At the outset of the hearing a discussion occurred as to the appropriate procedure in light of the fact that there are three other cases decided by my colleagues.  These were Sidhu v the Secretary of the Department of Communities and Justice [2021] NSWPIC 522, a decision by Member Elizabeth Beilby, Stewart v Secretary of Department of Communities and Justice [2022] NSWPIC 333 a decision of Member Cameron Burge, and Pell v Secretary  Department of Communities and Justice, a decision determined ex tempore by Member Phillip Young.

2. I was advised that Pell is on appeal. An application for leave out of time may have been made in Stewart.  The parties agreed that it was likely that all three decisions would be considered at the appellate level and the discussion ensued as to what the appropriate procedure was to be.

3. The respondent submitted that the matter should be adjourned until a decision is made in this matter, but the applicant submitted that the matter should proceed. I accordingly proceeded with the matter.

4. The issue that has arisen in this case is as to the accuracy of the calculation of the insurer’s calculation of the PIAWE.  It is convenient to set out the relevant legislation at this point.

Workers Compensation Act 1987

1. Schedule 3 provides:

   “1 Application

   The words and expressions defined in this Schedule apply for the purposes of Division 2 of Part 3 of this Act.

   2 Meaning of ‘pre-injury average weekly earnings’

   (1)    ‘Pre-injury average weekly earnings’ , in relation to an injured worker, means the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.

   Note : See also clauses 3-5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.

   (2)    Except as provided by this clause (or by regulations made under this clause), in calculating the ‘pre-injury earnings’ received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (‘the relevant earning period’ ).

   (3)     The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period)--

   (a) to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or

   (b) to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.

   ….

   6 Meaning of ‘earnings’

   (1)    The ‘earnings’ received by a worker in respect of a week means the amount that is the income of the worker received by the worker for work performed in any employment during the week.

   (2)     The ‘income’ of a worker does not include--

   (a) any minimum amount paid to a superannuation fund or scheme in respect of the week to avoid an individual superannuation guarantee shortfall, within the meaning of the Superannuation Guarantee (Administration) Act 1992 of the Commonwealth, for the worker, or

   (b) the monetary value of any non-monetary benefit provided to the worker for the performance of work by the worker, or

   (c) any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme, or

   (d) any payment made without obligation by the employer.

   …..

   WORKERS COMPENSATION REGULATION 2016

   8AA DEFINITIONS

   In this Part--
   ‘pre-injury average weekly earnings agreement’ --see clause 8H.
   ‘the relevant earning period’ has the same meaning as in clause 2(2) of Schedule 3 to the 1987 Act.
   
   
   ‘unadjusted earning period’ --see clause 8A(3).

   8A OPERATION OF DIVISION

   (1)    This Division provides for the adjustment of the relevant earning period under clause 2(2) of Schedule 3 to the 1987 Act for a worker in employment for the purposes of calculating the pre-injury average weekly earnings in relation to the worker.

   (2)    The relevant earning period in respect of the employment is to be adjusted in accordance with the provisions of this Division in the following order-

   (a) Clause 8B (Adjustment for workers not continuously employed),

   (b)Clause 8C (Adjustment for financially material change to earnings),

   (c) Clause 8D (Alignment of relevant earning period with pay period),

   (d) Clause 8E (Adjustment for unpaid leave),

   (e) Clause 8EA (Adjustment for prescribed periods relating to COVID-19).

   (3)  Accordingly, a reference in a provision of this Division-

   (a) to the relevant earning period is a reference to the relevant earning period as adjusted in accordance with any preceding provision applicable to the worker, or

   (b)to the ‘unadjusted earning period’ is a reference to the relevant earning period as so adjusted, but without regard to any adjustment under the provision in which the expression is used.

   8C Adjustment for financially material change to earnings--Schedule 3, clause 2(3)(a) of 1987 Act

   (1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during the unadjusted earning period, there was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker (for example, a change from full-time to part-time work).

   (2) The relevant earning period is to be adjusted by excluding from the period any period before the change to the earnings of the worker occurred.

   8D alignment of relevant earning period with pay period- Schedule 3, clause 2(3)(b) of 1987 Act

   (1)    The relevant earning period for a worker in employment may be adjusted to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.

   (2)     The relevant earning period is not to be adjusted as provided by this clause unless the insurer is reasonably satisfied that the amount of pre-injury average weekly earnings calculated by reference to the period as so adjusted is not less than the amount that it would have been but for the adjustment.

   8E Adjustment for unpaid leave--Schedule 3, Clause 2(3)(a) of 1987 Act

   (1)    The relevant earning period for a worker is to be adjusted in accordance with this clause if, during any period of not less than seven consecutive calendar days within the unadjusted earning period-

   (a) no earnings in the employment were paid or payable to the worker, and

   (b)the worker took a period of unpaid leave (‘the unpaid leave period’ ) commencing on the first day of that consecutive period.

   (2)    The relevant earning period is to be adjusted by excluding each day (whether or not the day was a usual work day for the worker) of the period commencing on the first day of the unpaid leave period and ending immediately before the day on which earnings in the employment once again became payable to the worker.”

SUBMISSIONS

1. Mr Mrsic submitted that regulation 8C was the justification for adjusting the 52 week PIAWE calculation period to account for the receipt by Ms Nitchell of her workers compensation payments for her unrelated back injury.  This reflected the reasoning of Member Beilby in Sidhu. Member Beilby found that the receipt of workers compensation payments constituted a material change to the applicant’s earnings and that, as I understood Mr Mrsic, regulation 8C(2) was the provision that authorised the exclusion of the period of receipt of compensation from the 52 week period mandated in Schedule 3(2)(2).

2. Member Beilby’s rejection of regulation 8E as applicable in those circumstances was “perhaps a little hasty”, Mr Mrsic argued.  Absence on the grounds of workers compensation, using the “ordinary and grammatic sense of the statutory words,” was an alternative pathway if I was in doubt about the applicability of cl 8C.  This was because the applicant in Sidhu was in fact not paid earnings for a period of not less than seven days when off on compensation for an unrelated injury, so the relevant earning period could therefore be adjusted as provided in that clause.  

3. Mr Mrsic also referred to Stewart in which the same factual situation pertained. Member Burge referred to Schedule 3(6)(2)(c) and found that the provisions of cl 8D provided the basis for his not including the period during which workers compensation payments were received, and for reducing the statutory 52 week period accordingly.

4. Mr Mrsic submitted that both decisions had the same result, but by different pathways. He referred to comments made by Member Burge that the respondent’s construction of the legislation would result in a “logically absurd outcome” and that it was inconsistent with the beneficial nature of the legislation.  Mr Mrsic said that both decisions relied on the principle of statutory construction that an ambiguity in the legislation should be construed in favour of the worker where the legislation was beneficial.

5. Mr Mrsic submitted that the respondent’s construction unfairly advantaged the respondent in both cases (and indeed in the case before me) and would result in a “palpably unjust” decision.

6. Mr Mrsic made a further submission in addition to the grounds relied on in both cases, that Schedule 3 (6)(2)(c) clearly excluded the receipt of workers compensation payments from the definition of “earnings”. There was accordingly no need to go to the Regulation, which was solely concerned with adjustments of earning periods.

7. Following a discussion with Mr Watson, the applicant’s solicitor who had calculated the relevant hypothetical entitlements on the basis of the schedule at [13] above, the applicant submitted firstly that by applying the terms of Regulation 8C(2) the only relevant figure was the “financially material change” – which in Ms Nitchell’s case was the change from the receipt of weekly compensation to full duties on 3 March 2022 – in dollar terms from the weekly amount she was receiving when she was last paid compensation of $1,485.93 to $2,015.77 on 17 March 2022. This latter amount became the appropriate PIAWE, and there was no need to consider the previous 52 week earnings, as it was excluded by the terms of regulation 8C(2).

8. Mr Watson’s calculations also showed secondly that, if regulation 8E were applied, the unpaid leave period would apply for the 14 weeks Ms Nitchell received compensation, and, pursuant to the regulation, no regard could be had for the income over that period.  Accordingly the 52 week period would be adjusted to 38 weeks, the period 9 December 2021 to 3 March 2022 being excluded, and the resultant PIAWE would be $1,720.64.

9. Mr Mrsic submitted that the methodology used in Sidhu and Stewart of calculating the PIAWE in terms of only the income received and excluding the workers compensation payments was consistent with the statutory intent and the beneficial nature of the legislation.

Ms Warren

1. The respondent submitted that the Commission had no power to alter the calculation of the PIAWE by virtue of the terms of Schedule 3(2)(2) of the 1987 Act, except as provided by Schedule 3(2)(3), or by regulations made under the clause. Ms Warren submitted that the exceptions provided in the regulations were not applicable in the present case and accordingly the calculation by the 52 week earning period remained.

2. She referred to the provisions of the 1987 Act regarding weekly compensation, being ss 33, 36, 37 and 38, which defined the entitlement period, all of which were concerned with applying the PIAWE as defined.

3. Ms Warren submitted that the definition of “earnings” in Schedule 3 did not need to concern the determination of the relevant earning period, as the earning period was clearly defined in regulation 8AA and Schedule 3(2)(2), and the exclusion of workers compensation payments became relevant at the next step, once the 52 week period had been determined. The exceptions to the 52 week requirement were only permitted by the adjustments provided in the five situations set out in regulation 8A(2).

4. Ms Warren contended that Mr Mrsic’s suggestion that Schedule 6(2)(c) had the effect of removing the payment of weekly compensation from the definition of “earnings”, and thus the regulation had no application, had in fact been considered in Stewart. Such an interpretation, Ms Warren argued, would have the effect that the “provisions” (I assume she meant the provisions of regulation 8A(2)) would have no purpose, as, if the weeks not worked were meant to be excluded, other entitlements such as paid leave, holidays “et cetera” would be excluded, which was inconsistent with the calculation of PIAWE, both before and after the 2019 amendments. 

1. If it had been the legislature’s intention to exclude such periods, either the Schedule or the regulation would have also made provision for adjustments, but the adjustments were clearly defined by regulation 8A(2) and the clauses therein set out, Ms Warren said.  The absence of any provision for an adjustment for the exclusion of weekly payment provided for in Schedule 6(2)(c) was an unambiguous expression by the legislature that no such adjustment was intended.

2. Ms Warren submitted that Sidhu was incorrectly decided and that there was no basis for Member Beilby’s application of regulation 8C, as it could not be said that payment of workers compensation constituted any financial change “of an ongoing nature” to the employment arrangement. 

3. Similarly Ms Warren submitted that the provisions of 8E were not applicable, as was found by Member Beilby as it could not be said that unpaid leave was in the same category as workers compensation benefits.

4. Ms Warren also submitted that the reliance on the legislation being beneficial was not as universally applicable as was submitted by Mr Mrsic or indeed as applied by Members Beilby and Burge.

5. She referred to Alcan (NT) Alumina Pty Limited v the Commissioner of Territory Revenue (NT)[4] and Construction Forestry Mining & Energy Union vMammoet Australia Pty Ltd[5] in submitting that a purposive approach to the construction of legislation was to firstly examine the text itself.  Ms Warren referred to the second reading speech for the Workers Compensation Amendment Act 2015 and the Minister’s reference to its objectives, which were both to support injured workers to recover and return to work and not to compromise the financial sustainability of the scheme.

   [4] [2009] HCA 41.

   [5] [2013] HCA 36.

6. Ms Warren submitted that accordingly whilst some aspects of the legislation might be seen by some to result in an injustice, the legislature needed to ensure that benefits did not compromise the financial sustainability of the scheme.  Not all provisions in the legislation were beneficial, and where there was no ambiguity in the text of the legislation, the applicant could not rely on the tenet that beneficial legislation should be construed in favour of the worker. 

Mr Mrsic in reply

1. Mr Mrsic repeated his submission that the receipt of workers compensation could not be regarded as loss of earnings. He repeated that accordingly the definition in Schedule 3(2)(1) excluded the receipt of workers compensation weekly payments.

2. In discussion as to how that interpretation was to be applied in the context of Schedule 3(2)(2) Mr Mrsic submitted that the approach by my fellow Members was correct. Instead of using the 52 weeks mandated as the relevant earning period, the Commission was able to adjust the period by excluding the period during which compensation had been received – in this case 14 weeks.

CONSIDERATION

1. The applicant argued that the provisions of Schedule 3(6)(2)(c) should be applied, and the respondent agreed, arguing that had in fact been the basis of its calculation, as it had not included the monies received by the applicant as weekly compensation.

2. The parties therefore have not regarded the “payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates” as income, in conformance with Schedule 3(6)(2)(c). However, there appears to be a practice by insurers of nonetheless applying the 52 week period as the divisor, regardless of the fact that compensation for an unrelated injury was paid within that time, as the same problem occurred in Sidhu and Stewart.

3. The real question thus relates to the legislative authority for the insurer to do so.  This question is further complicated in the facts of the present case, as the applicant did in fact receive some earnings whilst in receipt of compensation as she was being rehabilitated on suitable duties.  Before turning to this issue, it is necessary to address the evidence briefly.

Evidence discrepancy

1. The insurer claimed the appropriate PIAWE was $1,184.75 in the work capacity decision of 29 June 2022.  This was reached by taking the gross amount received over the 52 week period and subtracting the amount of compensation paid to arrive at a figure which, when divided by 52, came to $1,184.75. 

2. In considering the calculations, it became apparent that the figures relied on by the insurer were different to those which formed the basis of the submissions.     

3. Applying the formula adopted by the insurer to the figures in [13] above, the resultant PIAWE is in fact $88,116.76 (the gross amount) less $16,162.23 (the compensation paid) to arrive at $71,954.53 which divided by 52 equals $1,383.74 (not $1,184.75).  The applicable PIAWE claimed in the ARD form was $1,720.64 which Mr Watson explained in a letter dated
   

   [6] ARD p 7.

   22 May 2022 had been calculated by excluding the period during which compensation had been paid.[6]  This period was agreed in submissions to have been 14 weeks.  Again, applying the figures in the schedule at [13], $71,954.53 divided by 38 weeks equals $1,893.54 (not $1,720.64).

4. In view of this discrepancy, I shall order the parties to bring in short minutes of order in accordance with my findings.  Regardless of the correct figure, the issue before me is of the construction of the relevant legislation and I anticipate that the above discrepancies can be addressed once my findings have been considered.

Beneficial interpretation

1. The first issue is as to whether there is in fact any ambiguity or anomaly in the legislation. In both decisions cited, it was held that there were, and the tenet of construction that favoured a beneficial interpretation favourable to the worker was applied.

2. In Sidhu the worker had received nine weeks compensation for an unrelated injury during the relevant 52 week period.  Member Elizabeth Beilby determined that the period should be adjusted by excluding the nine week period in the calculation of the PIAWE.  The evidence did not disclose whether the worker had received income for suitable duties during the nine week period he was receiving compensation.

3. Member Beilby applied the provisions of regulation 8C, finding that there had been a “financially material change” to the worker’s earnings when he had resumed his ordinary earnings after receiving compensation for nine weeks.  The “ongoing nature” of the change was that the worker’s ordinary earnings had continued since he came off compensation, in respect of which he had been receiving 95% of his income pursuant to s 36 of the 1987 Act.  Member Beilby said:

   “22. The words financial material change, to my mind mean that there can be a change in the amount the worker is paid, and/or additionally there can be a change in the method and type of payment. In the circumstances of this case, bearing in mind the beneficial intent of the legislation, the worker has shown that there is a change in ongoing nature to the employment arrangement. That is that the worker is receiving payment from his employer as opposed to the workers compensation insurer….”

4. Member Beilby rejected a submission that the provisions of cl 8E had any application, saying at [24]:

   “…in the circumstances of this case the applicant was not taking unpaid leave but was being paid workers compensation benefits. To find that the applicant was taking unpaid leave would to my mind be going beyond the “ordinary and grammatical sense of the statutory words”. This was not unpaid leave…”

   (Authority omitted).

5. In Stewart, Member Cameron Burge considered an application in which the worker had been on compensation for an unrelated matter for 10 weeks.  Again, the evidence did not disclose whether the applicant was receiving any earnings for suitable duties during that time.  Member Burge found that the period should be adjusted to exclude the 10 week period.  He found that regulation 8D provided the authority to adjust the relevant period by excluding the 10 weeks that the worker was in receipt of compensation.  Member Burge said from [20]:

   “Mr Doak submitted in reply that 8D in fact applied in this instance, as it referred specifically to a period during which a worker is entitled to receive payment of earnings for work performed in the employment. He submitted the period from 20 November 2020 to 1 February 2021 when the applicant received compensation payments was not a period where the applicant could receive earnings for work carried out. This being so, the applicant submitted that period should be excluded and the relevant period for calculation of PIAWE should be 1 February 2020 to 19 November 2020.

   21.On balance, I accept this submission. The construction of the Regulations put forward by the respondent are, in my view, inconsistent with the beneficial nature of the legislation. The legislation must work together and harmonise the intention so that a productive outcome is obtained. Where there is any ambiguity in the provision, it should be interpreted with the beneficial nature of the legislation for the applicant in mind. I agree that a finding of meaning in statutory language that produces an unjust or capricious result should be avoided.”

6. Member Burge also noted counsel’s submission that, had 8C applied, the period when the applicant was actually earning income from his employment would be excluded when the worker began to receive compensation, thus resulting in a zero PIAWE, which Member Burge described as an absurdity, as was a literal application of regulation 8D.

7. Whilst I note the analyses by my colleagues in Sidhu and Stewart, there appears to be a factual distinction in both those cases, as the schedule at [13] in this case shows that whilst Ms Nitchell was receiving weekly compensation, as she improved she was given suitable duties, which resulted in her receiving income that was at first $200 on 6 January 2022, but which had increased to $2,971.86 by 3 March 2022, when the compensation quotient of her pay was $156.42. Nonetheless it is clear that Members Beilby and Burge were satisfied that an ambiguity had been established.

8. The respondent resisted the suggestion that there was in fact any ambiguity, as can be seen from Ms Warren’s submissions. In applying the provisions of the legislation, the insurer has interpreted the terms of Schedule 3(6)(2)(c) as requiring it to exclude from its calculation the payments made for weekly compensation. It has further interpreted the provisions of Schedule 3(6)(1) as requiring it to include in its calculation the applicant’s earnings whilst on suitable duties, and it has applied the divisor of 52 weeks because, it argued, that had been the intention of the legislature.

9. Whilst provision had been made for adjustments of that period by virtue of Schedule 3(2)(3) and regulation 8A(2), no adjustment had been made for this exclusion. The legislature needed to balance the interests of the injured worker with the financial sustainability of the scheme, and had accordingly passed legislation that whilst appearing unjust, was a necessary balance between the two concepts. The transcript will show that I was struggling to identify a case which is on point, which I have subsequently located.

10. In ADCO Constructions Pty Ltd v Goudappel[7] the plurality stated at [29]:

    “It can be accepted…. that the WCA's remedial characterhttp:// - reflects a beneficial purpose which requires a beneficial construction, if open, in favour of the injured worker. But to accept the beneficial purpose of the WCA as a whole does not mean that every provision or amendment to a provision has a beneficial purpose or is to be construed beneficially. The purpose of the provision must be identified….”

    [7] [2014] HCA 18.

11. Ms Warren submitted accordingly that a beneficial interpretation or construction of the legislation was not open.  The insurer was bound by the words of the statute which enabled the regulations, she argued. 

12. Schedule 3(2)(1) was unequivocal in its terms, that the PIAWE means the weekly average of the gross pre-injury earnings “in any employment in which the worker was engaged at the time of the injury”. Ms Nitchell was engaged in such employment when she returned to work on suitable duties and accordingly the gross earnings received, notwithstanding that she was receiving a lesser wage as she recuperated, had to be included in the calculation over the relevant earning period of 52 weeks.

13. The respondent’s submissions must be rejected.

The enabling legislation

1. I agree with Member Beilby that the terms of regulation 8E do not avail the applicant for the reasons she gave – in this jurisdiction “unpaid leave” has a meaning that is independent of the receipt of compensation. However, the matter does not end there, as cl 8E was enabled by Schedule 3(2)(3)(a) of the 1987 Act, as the heading of the clause acknowledged.

2. It can be seen that Schedule 3(2)(3)(a) provided in addition that the regulations may also take into account any “other change in earnings circumstances in the employment”. It does not take much imagination to identify a common change in a worker’s earning circumstances as being the reduced earnings paid to an injured worker when he/she returns to work on suitable duties whilst being rehabilitated.

3. A perusal of the heading of regulation 8C demonstrates that the enabling provision was also Schedule 3(2)(3)(a). The contents of 8C are somewhat curious, but before examining them another aspect of the enabling legislation needs to be considered.

Schedule 3(6)(2)(c)

1. The insurer has not included the amount of compensation paid to Ms Nitchell in its calculation of the PIAWE. Schedule 3(6)(2)(c) however is not limited to simply excluding from the PIAWE calculation the payment of compensation. The sub-paragraph relevantly provides for the exclusion of “any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates”.

2. Weekly compensation is certainly a “payment in respect of loss of earnings” under the legislation, but so is the actual loss of earnings incurred by a worker when he/she is on suitable duties.  An integral and significant part of the workers compensation scheme and legislation, enshrined now in three separate Acts and numerous guidelines and regulations, is the concept of rehabilitation.  

3. Accordingly, the terms of Schedule 3(6)(2)(c) apply to exclude payment of compensation and associated loss of earnings whilst a worker is on suitable duties, from the definition of “earnings,” as defined in Schedule 3(6)(1). This in turn excludes such income from the definition of ‘pre-injury average earnings’ provided by Schedule 3(2)(1).

An anomaly

1. It follows that the calculation of the PIAWE may not include either the payment of compensation or the reduced earnings paid to an applicant whilst on suitable duties. Accordingly, the calculation of the 52 week period provided by Schedule 3 (2)(2) becomes inapplicable to this period. A difficulty then arises, as the terms of Schedule 3(2)(2) are specific, and mandate that the relevant earning period is limited to the 52 weeks immediately before the injury (which in Ms Nitchell’s case, would be 16 March 2022) “except as provided by this clause”.

2. The clause is Schedule 3, cl (2), and the exclusory clause relating to loss of earnings under the workers compensation scheme is Schedule 3, cl (6), so there is no authority given to adjust the 52 week period by virtue of clause (6). Whilst Schedule 3 (2)(2) appears to authorise an adjustment, a perusal of its terms shows that the only lawful way to make any adjustment is that which appears in parenthesis – “(or by regulations made under this clause)”.

3. Thus an apparent anomaly arises – cl (6) provides that the period when compensation and reduced earnings were paid is to be excluded from the PIAWE (as the income is not “earnings”) but cl(2)(2) requires an insurer to apply the period of 52 weeks ending immediately before the date of the subject injury in calculating the PIAWE.  The only lawful adjustment to the period is pursuant to the regulations which “may” be made, which brings us back to regulation 8C.

Regulation 8C

1. The regulation does not in terms refer to “other change in earnings circumstances”, which is authorised by Schedule 3(2)(3)(a). Instead it speaks of “a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker”.

2. Member Beilby found that the words “ongoing nature” referred to the change in income from compensation from the insurer to earnings from the employer.  Member Burge however said that cl 8C applied to the change from earnings from the employer to receipt of compensation from the insurer.  Both interpretations were no doubt tied to the factual circumstances in each case, but there are two aspects of the regulation that need to be acknowledged.

3. Firstly, the example given (“for example, a change from full time to part time work”) would indicate that the draftsman did not consider Schedule 3(6)(2)(c) in the regulation, but was concerned with situations which changed within the context of the contractual aspects of the employment itself. Secondly, this view is confirmed by the terms of regulation 8C(2), which the applicant relied on in one of its alternative scenarios, that excluded from the PIAWE calculation any period before the change in earnings, the intention being to assess the appropriate compensation on the lesser income in the example given, or presumably the greater income if the change had been from part time to full time work.

4. Thus the legislation provided by Schedule 3(6)(2)(c) that the receipt of compensation and reduced earnings whilst on suitable duties was excluded from the definition of the PIAWE.

   It was excluded from the definition of “income” by cl (6)(2), and income was defined as “earnings” by cl (6)(1). The definition of “pre-injury average weekly earnings” at Schedule 3 (2) accordingly cannot apply as, obviously, that income is not “earnings” at all.

   The applicant submitted that therefore the whole of Schedule 3(2), including the requirement for a 52 week earning period to be assessed (subclause (2)) and the power to adjust that period (subclause (3)), could be ignored.

5. However such a construction would leave an insurer with no statutory guidance as to how to calculate the PIAWE, as it was not authorised to adjust the 52 week period in that eventuality.  This lacuna in the scheme has resulted in the insurers applying the whole period notwithstanding that part of it related to the receipt of income which was expressly excluded from the calculation.  This is unconscionable.

The solution

1. Section 33 of the Interpretation Act 1987 provides:

   “33 REGARD TO BE HAD TO PURPOSES OR OBJECTS OF ACTS AND STATUTORY RULES

   In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.”

2. In Alcan (NT) Alumina the Full Court held at [4]:

   “The starting point … is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaudron J in Corporate Affairs Commission (NSW) v Yuill as:

   ‘dictated by elementary considerations of fairness, for, after all, those who are subject to the law's commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage.’

   In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy’.”

   (Citation omitted)

1. In context, the ordinary and grammatical sense of the words “other change in earnings circumstances” in Schedule 3(2)(3) demonstrates a legislative purpose to exclude the income defined by Schedule 3(6)(2)(c) from the calculation of the PIAWE. However, although this income is to be excluded, the statute is silent as to how the adjustment of the properly defined PIAWE is to be made.

2. The requirement in Schedule 3(2)(2) that “except by this clause (or by regulations made under this clause” the calculation of the PIAWE must not be made before or after 52 weeks “ending immediately before the date of injury” (which in the present case was
   17 March 2022) cannot be complied with because the 14 week period (12 November 2021 – 21 February 2022) prior to the date of injury has been excluded as indicated.

3. An elementary consideration of fairness in these circumstances is informed by the beneficial nature of the schedule in providing that injured workers be compensated for their incapacity by an assessment of the weekly average of their gross pre-injury earnings as provided by Schedule 3(2)(1). It is highly unlikely that the intention of the policy makers was to include a period when injured workers were not earning their gross pre-injury earnings, as has been in the case in these three cases and perhaps the case of Pell also, although we have no data in that regard. 

4. This is the “anomaly” in the construction by the insurer of its calculation by reference to a 52 week period, when for 14 weeks of that period Ms Nitchell had been in receipt of compensation and rehabilitation. 

5. There are two ways of remedying this situation.  The first is to adopt the reasoning of Member Beilby and find that the provisions of regulation 8C are apposite. 

6. I was not, with respect, attracted to the application of regulation 8C suggested by the applicant, as on a fair reading it did not relate (although perhaps it should have) to the circumstances of claimants who had suffered prior unrelated injuries for which they had received compensation during the PIAWE calculation period of 52 weeks.  The contrasting results found in Sidhu and Stewart attest to the problems in this approach.

7. The second is to read the words “immediately before the date of injury” in Schedule 3(2)(2) as meaning “immediately before the date of injury, or as adjusted where a worker receives income as defined by Clause 6((2)(c) hereof”.

8. In Bermingham v Corrective Services of NSW[8] McHugh JA said at 203:

   “[It] is not only when Parliament has used words inadvertently that a court is entitled to give legislation a strained construction.   To give effect to the purpose of the legislation, a court may read words into a legislative provision if by inadvertence Parliament has failed to deal with an eventuality required to be dealt with if the purpose of the Act is to be achieved.”

   [8] (1988) 15 NSWLR at 292.

9. Such a situation pertains in the present case.[9]

   [9] See discussion in Nightingale v Blacktown City Council [2015] NSWCA 423 from [105].

DECISION

1. The insurer contravened the provisions of Schedule 3(6)(2)(c) when it included in its calculations of the PIAWE the earnings received by the applicant whilst she was performing suitable duties with regard to her unrelated injury.

2. The insurer contravened the provisions of Schedule 3(6)(2)(c) when it included in the calculation of the PIAWE the period when the applicant had been in receipt of compensation for her unrelated injury.

3. The 52 week period provided for the calculation of the PIAWE is adjusted by deducting the 14 weeks to which Schedule 3(6)(2)(c) applied.

4. The parties are to bring in short minutes of order in accordance with these reasons.

5. The parties have liberty to apply.