Paterson v Stanmorr Pty Ltd
[2000] VSCA 220
•23 November 2000
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No. 7648 of 1998
| VICTORIA PATERSON |
| Appellant |
| v. |
| STANMORR PTY. LIMITED & ANOR.. |
| Respondents |
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JUDGES: | WINNEKE, P., PHILLIPS and BATT, JJ.A. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 18 September 2000 | |
DATE OF JUDGMENT: | 23 November 2000 | |
MEDIUM NEUTRAL CITATION: | [2000] VSCA 220 | |
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Accident compensation – Appellant totally incapacitated by reason of injury at work – Appellant employed as manager of guest house on terms providing for weekly wage plus food and accommodation – Whether appellant entitled to have value of food and accommodation taken into account in calculation of “pre-injury average weekly earnings” and “current weekly earnings” – Meaning of “ordinary time rate of pay for worker’s normal number of hours per week”.
Accident Compensation Act 1985 ss.5A, 5B, 93A and 93B.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr. J.R. Bowman and | Watson Cudlipp & Hughes |
| For the Respondents | Mr. L.R. Boyes Q.C. and Mr. M.J. Richards | Lander & Rogers |
WINNEKE, P.:
The question at issue in this appeal is whether a worker totally incapacitated for work by reason of relevant injury is entitled to recover “weekly payments” pursuant to ss.93A and 93B of the Accident Compensation Act 1985 (“the Act”) which are measured, in part, by payments in kind (food and lodging) which were included in the pre-injury “emolument package” of the worker.
The facts are not in dispute. The appellant/worker (who is now aged 53 years) had, for a period of more than 12 months, been employed by the first respondent as the manager of its guest house “Stanmorr” in the Victorian beach resort of Lorne, when she suffered injury in December 1996. The terms of her employment, which were not covered by any industrial Award, provided that she be paid $450 gross per week, plus food and accommodation (including power and telephone), in return for which she was to provide her services so long as there were residents accommodated in the house. There were no specific hours or days of work fixed. The emoluments were as stated and there was no arrangement for overtime, penalty rates, days off, or annual leave. Both appellant and employer considered that the provision of accommodation and food was of considerable value to the appellant and their provision was the subject of negotiation between them prior to entry into the terms of employment. Following her injury, the appellant lost her job and thereafter paid for her own accommodation and food. The Magistrate, before whom the matter first came, found that for 12 months before the appellant suffered her injury, her remuneration had included the value of the non-pecuniary benefits, but that the relevant provisions of the Act did not permit him to take into account that value in calculating her “pre-injury average weekly earnings”. There was, therefore, no need to assess the value to the appellant of those benefits. The appellant appealed, pursuant to s.109 of the Magistrates’ Court Act 1989, to the Trial Division of the Supreme Court upon a question of law. The question was identified thus:
“Whether the learned Magistrate erred in deciding that the definition of ‘the worker’s pre-injury average weekly earnings’ in s.5A of [the Act] prevented him from taking into account non-pecuniary benefits paid to workers by employers and, in particular, the value of accommodation and food provided.”
The learned judge affirmed the decision of the Magistrate and the appellant has now appealed to this Court. It is accepted that the appellant fell to be compensated on the basis that, at all relevant times, she was totally incapacitated for work. There was no issue that she was a “worker” within the meaning of that term as defined in s.5(1) of the Act, nor was there any issue that she was “entitled to compensation in accordance with the Act” (s.82(1)).
The relevant provisions of the Act, in accordance with which the appeal falls to be determined, are as follows:
“93A. First 26 weeks of incapacity
…
(2)A worker is entitled, subject to and in accordance with this Part, to weekly payments while incapacitated for work during the first 26 weeks of incapacity at whichever of the following rates apply –
(a)if the worker is totally incapacitated, the rate of –
(i)95 per cent of the worker’s pre-injury average weekly earnings; or
(ii)$603 –
whichever is the lesser;
(b)if the worker is partially incapacitated, the rate of –
(i)the difference between 95 per cent of the worker’s pre-injury average weekly earnings and the worker’s notional earnings; or
(ii)the difference between $603 and the worker’s notional earnings –
whichever is the lesser.”
“Pre-injury average weekly earnings” are defined in s.5A of the Act, relevantly, as follows:
“(1)In this Act, ‘the worker’s pre-injury average weekly earnings” means –
(a)the average weekly earnings during the 12 months preceding the relevant injury if the worker has been continuously employed by the same employer for that period; or
(b) …
calculated at the worker’s ordinary time rate of pay for the worker’s normal number of hours per week.
…
(4)For the purposes of sub-section (1), a worker’s average weekly earnings shall be calculated by dividing the sum of amounts payable to the worker calculated at the worker’s ordinary time rate of pay for the normal number of hours per week by the number of weeks during which the worker actually worked or was on annual, sick or other paid leave.
(6)For the purposes of sub-section (1) –
(a)if an ordinary time rate of pay is fixed for the worker’s work under the terms of the worker’s employment and, in addition, a piece-rate is payable, the ordinary time rate of pay shall be deemed to be the sum of the ordinary time rate of pay and the average weekly piece rate payment received by the worker during the relevant period under sub-section (i).
(b)if an ordinary time rate of pay is not fixed for the worker’s work under the terms of the worker’s employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1); and
(c)if the normal number of work hours per week is fixed in any industrial award applicable to a worker, the worker’s normal number of hours per week in that work shall be deemed to be the number so fixed; and
(d)if a normal number of work hours per week is not fixed for the worker’s work under the terms of the worker’s employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1).
… “
(f)if the worker is a person who –
(i)under sections 6, 7 or 8 is deemed to be working under a contract of service; or
(ii)under section 9 is deemed to be a worker –
the worker’s pre-injury average weekly earnings shall be calculated with reference to amounts payable to the worker and deemed to be remuneration under those sections, less any part of those amounts attributable to the supply of capital or materials.
…”
“Remuneration” is defined by s.5(1) of the Act to mean, so far as relevant:
“Any wages, remuneration, salary … or allowances paid or payable (whether at piece-work rates or otherwise and whether paid or payable in cash or in kind) to or in relation to a worker as such …”
“Current weekly earnings” are defined in s.5B of the Act, so as to give content to the concept of “notional earnings” which becomes a relevant factor when determining “partial incapacity” weekly payments pursuant to s.93A(2)(b) of the Act. Such weekly payments are to be calculated by comparing “pre-injury average weekly earnings” with “notional earnings”. The term “notional earnings”, so far as relevant, is defined by s.5(1) of the Act as meaning –
“(a)the current weekly earnings of the worker as a worker or current weekly earnings as a self-employed person …”
Section 5B(1) defines “current weekly earnings” as meaning “the worker’s earnings during the week in respect of which a weekly payment is made, calculated at the worker’s ordinary time rate of pay for the worker’s normal hours per week or, if there is no such ordinary time rate, the worker’s actual earnings during the week”.
Section 5B(2) provides that:“For the purposes of sub-section (1), the worker’s ordinary time rate of pay for the worker’s normal number of hours per week shall be determined in accordance with s.5A(6)(a), (b) and (d) with such modifications as are necessary.
Section 5B(3) provides that:
“For the purposes of sub-section (1) ‘current weekly earnings’ includes the monetary value calculated on a weekly basis of any non-pecuniary benefit or advantage received by the worker in the course of his or her employment (including work as a self-employed person).”
The trial judge concluded that, in calculating the appellant’s weekly payments for total incapacity pursuant to s.93A, the terms of s.5A and s.5B, upon their proper construction, did not permit the value of non-pecuniary benefits to be taken into account when calculating the worker’s pre-injury average weekly earnings. Her Honour said:
“I find no justification, in the objects of the Act or elsewhere, for introducing into the legislation words which Parliament has not chosen to use, and accordingly I find no error in the decision of the Magistrate.”
On the hearing of this appeal, counsel for the respondents supported the conclusion to which her Honour had come. They submitted that the entitlement of an injured worker to weekly payments for total incapacity is wholly geared, by s.93A, to the worker’s pre-injury average weekly earnings. The definition of that term in s.5A - namely “ordinary time rate of pay for the worker’s normal hours per week” – contemplates, so it was submitted, that the calculation of weekly payments is to be based on pre-injury monetary earnings to the exclusion of non-pecuniary benefits (my emphasis). Counsel contended that such a meaning is consonant, not only with the words of s.5A, but also with the historical development of the statutory compensation scheme in this State. Thus, it was said that the Workers Compensation Act 1958 (s.9, clause 4(a)) specifically permitted amounts paid for “overtime hours” to be taken into account in computing “average weekly earnings”; but that in 1985, when the Accident Compensation Act was introduced, the pre-injury average weekly earnings were geared to “ordinary time rate of pay for normal number of hours per week” (s.95(1)), but subject to the proviso in s.95(2) that “the value of other payments to the worker by the employer” could be taken into account only if the figure produced by the “ordinary time rate of pay”, was below the “base rate figures” provided by ss.93(5) and (7) and 94(6) and (8). Thereafter, when s.5A was introduced into the scheme in 1989, all reference to “the value of other payments” in the computation of average weekly earnings was omitted. Respondents’ counsel further submitted that the inclusion within the definitions of “current weekly earnings” and “remuneration” of non-pecuniary benefits only served to emphasise that such benefits were not intended by the legislature to be taken into account when computing pre-injury average weekly earnings.
In opposition to the submission made by the respondents, counsel for the appellant contended that the wide meaning given to “earnings” so as to include non-pecuniary benefits was so deeply ingrained into compensation law in this State that it should be assumed that the legislature intended, when enacting s.5A, not to exclude from weekly payments those workers whose average weekly earnings comprised, wholly or in part, payments in kind. Although the gearing of such earnings to “ordinary time rate of pay” excluded from calculation, in appropriate cases, payments additional to “ordinary time” payments, such as overtime, penalty rates, or shift allowances, there is nothing in s.5A, so the appellant submitted, that evidences an intention to exclude from the calculation of average weekly earnings payments of a non-pecuniary kind which are essential components of the salary package of a totally incapacitated worker. In a case such as this one, where there was no “ordinary time rate of pay for normal hours worked”, it was necessary to compute the pre-injury average weekly earnings by applying s.5A(6) (b) and (d). This required a calculation according to the pre-injury “average weekly rate earned” and, so it was submitted, the application of such a concept to a worker in the position of the appellant comprehended the inclusion of payments in kind of the valuable nature which were included in her salary package. It was contended that, if it were not so, unexplained anomalies would be created where workers such as “share-farmers”, or other persons deemed by the Act to be “workers” or “employed upon contracts of service”, would be excluded from a major component of statutory compensation. In contrast to the respondents’ submission, the appellant contended that the specific inclusion of non-pecuniary benefits in the definition of “remuneration” and “current weekly earnings” emphasised that such payments were intended to be included within the definition of “pre-injury average weekly earnings”.
For my own part, I prefer the construction of s.5A contended for by the appellant. It is true that the concept of “ordinary time rate of pay” is a well known concept derived from industrial law and that, because “ordinary time” is adjectival and qualifies “rate of pay”, the concept does not comprehend additional payments such as over-time or penalty rates[1] or shift rates[2]. In Catlow, the High Court was concerned with the construction of s.95(1) of the Accident Compensation Act, as it then stood (s.95(1) was the precursor to s.5A(1)). McHugh, J. said (at 560):
“In construing the terms of s.95(1), it is helpful to bear in mind that the terms of employment of most workers are governed by industrial awards or agreements which provide for an ordinary time rate of pay for a standard or ordinary number of hours per week. Industrial awards and agreements usually state the number of working hours in each day and week and provide for the payment of overtime and penalty rates of pay for hours worked outside those ordinary hours…
Against the industrial background of awards and agreements, fixing a number of ordinary hours per week, it seems natural to read the expression ‘calculated at the worker’s ordinary time rate of pay for the worker’s normal number of hours per week’ as a reference to the ordinary time rate of pay for the worker’s standard or ordinary hours per week as fixed by award, agreement, or contract. While it is true that on any view the ‘pre-injury average weekly earnings’ calculated under s.95 is a notional and not an actual figure, it would indeed be surprising if the legislature intended that those earnings are to be calculated by multiplying the ordinary time rate by overtime as well as ordinary hours worked. If ‘normal number of hours’ included overtime hours, some other formula to include the overtime rate would surely have been used.”
[1]Catlow v. Accident Compensation Commission (1989) 167 C.L.R. 543.
[2]Robertson v. Accident Compensation Commission [1991] 2 V.R. 333.
The meaning thus attributed to a worker’s “ordinary time rate of pay” was again adopted by the High Court in Scott v. Sun Alliance Australia Ltd[3] when construing s.69(1)(a) of the Workers’ Compensation Act 1988 (Tas.) which provided that a worker, who had suffered total or partial incapacity for work resulting from injury, was entitled (inter alia) to weekly payments –
[3](1993) 178 C.L.R. 1
“(a) in the case of total or partial incapacity … equal to –
(i) the average weekly earnings of the worker; or
(ii) the ordinary time rate of pay of the worker;
whichever is the greater.”
The Court said (at p.5):
“The expression ‘ordinary time rate of pay’ is well known in the industrial relations field in Australia and New Zealand. It and similar terms have long been used in legislation. Unless the context otherwise requires, ‘ordinary time rate of pay’ means the rate of pay for the standard or ordinary hours of work in contrast to the overtime or penalty rate of pay for hours of work other than the standard or ordinary hours of work. When expressed by reference to a week, it refers to the product of multiplying that hourly rate by the standard thirty-five, thirty-eight or forty hour week, as the case may be, fixed by legislation, industrial award or agreement.” (footnotes omitted).
As I read them, these authorities do not mean that an “ordinary time rate of pay” cannot be established in the absence of an industrial award governing the circumstances of a particular worker. The statements to which I have referred indicate that an “ordinary time rate of pay” may be fixed by an award, an agreement or a contract. However, as the Court in Scott’s case pointed out (at p.5):
“… it is not always the case that a worker will have an ordinary time rate of pay. There may be no industrial award or agreement regulating his or her employment, and his or her contract of employment may not distinguish between ordinary and other time rates of pay, or may provide for remuneration by a formula which has no temporal element …”
Counsel for the appellant contended that this was a case where no ordinary time rate of pay for normal hours of work was fixed. They pointed to the uncontradicted evidence that the appellant’s contract of employment provided for no fixed hours of work; and that she was “on call” or “on duty” so long as guests were present in the house. Her employment was not covered by any award, nor did her contract provide for standard time rates or overtime or penalty rates. There was before the Magistrate a letter from her employer dated 21 August 1997 which stipulated, inter alia, that:
”The agreement made with Victoria was that she would be responsible for the day to day management and running of Stanmorr. This included the overseeing of casual staff when bookings reached a pre-determined level and the management of her own time.
Her remuneration was to be a gross salary of $450 per week. Accommodation and some other benefits were also to be provided.
No specific provision was made in relation to hours of work, days off or annual leave.”
In the light of this evidence, counsel submitted that this was not a case where the appellant’s “pre-injury average weekly earnings” during the twelve months prior to her injury could be calculated according to the formula prescribed by s.5A(1), and that accordingly they fell to be determined in accordance with s.5A(6)(b), namely:
“if an ordinary time rate of pay is not fixed for the worker’s work under the terms of the worker’s employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under s.s.(1).”
Although respondents’ counsel submitted, somewhat faintly as it appeared to me, that the terms of the appellant’s employment did fix an ordinary time rate of pay for normal number of hours per week, that contention assumed, as I understood it, that the “basic rate of pay” was $450 per week for such “normal hours” as the appellant was required to work and that the agreement to provide accommodation and food was something outside, and additional to, the ordinary time rate of pay. However, this submission is inconsistent with the respondents’ contention that the terms of the appellant’s employment did not fix any normal or standard number of hours to be worked, in the absence of which it would seem to me to be impossible to calculate the pre-injury average weekly earnings by reference to the appellant’s ordinary time rate of pay. Furthermore, the submission that the $450 was the “ordinary time rate of pay” because it was the appellant’s “basic pay” seems to me to be an argument which is circular and not in accordance with authority. It was said to be supported by the statement made by Crockett and Southwell, JJ. in Robertson v. Accident Compensation Commission[4] that:
“… ‘ordinary time rate of pay’ has reference to the pay fixed by the relevant award or by the contract of employment for the class of work done when performed in ordinary hours and does not vary according to the circumstances of the individual employee. This view of the matter is consistent with the history of the legislation to which McHugh, J. referred [in Catlow] and what we apprehend to be the policy of the Act, which is that entitlement of a worker is to be calculated by reference to the ‘basic pay’ and not actual earnings.” (my emphasis)
Their Honours were referring to a set of circumstances where the worker’s ordinary time rate of pay for normal hours worked had been fixed by a relevant award to the exclusion of “shift allowances”. It was accordingly the “basic rate” in accordance with which average weekly earnings were to be calculated. Their Honours were not intending to suggest that where, as here, the contract fixed a salary package of cash and kind for whatever hours of work were called for, the proper construction of the Act required that the calculation of average weekly earnings should be based on the payments in cash to the exclusion of payments in kind.
[4]supra at pp.339-40
In my view, this was not a case where the terms of the appellant’s employment fixed the ordinary time rate of pay for normal number of hours per week, and was thus not a case where average weekly earnings could be calculated in accordance with sub-section (4) of section 5A. Rather it was a case where the average weekly earnings prior to injury fell to be calculated in accordance with the “average weekly rate earned by the worker during the relevant period under sub-section (1)”. (s.5A(6)(b)).
Although the learned judge referred to the provisions of s.5A and s.5B, and to the decisions of Catlow and Robertson[5], she came to no conclusion as to whether the terms of the appellant’s employment fixed an “ordinary time rate of pay” or “a normal number of hours per week”. Whether this was because no argument was addressed to her on the matter or because she concluded that the matters were of no consequence to the issues debated before her is not clear. At the end of the day, her conclusion was founded upon the proposition that the proper construction of s.5A and s.5B excluded from the calculation of average weekly earnings the value of payments in kind of the type provided for in the appellant’s salary package. Her Honour said:
[5]supra
“6. Sections 93A and 93B of the Act provide that if a worker is entitled under the Act to weekly payments while incapacitated for work, those payments are to be calculated, in the circumstances there defined, at a rate which is the difference between a stated percentage of ‘the worker’s pre-injury average weekly earnings’ and the ‘worker’s notional earnings’.”
Her Honour then referred to the definitions of “notional earnings” in s.5(1), to the meaning given to “pre-injury average weekly earnings” in s.5A(1), (4) and (6)(a), (b) and (d), and to the definition of “current weekly earnings” in s.5B(1) and (3). She continued:
“8. It will be seen from the previous paragraph that in making the calculation described in paragraph 6 above, the value of a non-pecuniary benefit or advantage received by the worker in the course of employment is expressly included as part of the “notional earnings”, by virtue of the definition of “current weekly earnings” in s.5B(3), but is not expressly included as part of “the worker’s pre-injury average weekly earnings” in the definition in s.5A(1)(a). This has the effect that the amount of the weekly payments received by the worker is less than the amount which would be received if the value of the non-pecuniary benefit or advantage were included in both components of the calculation.
9. …
10. In Catlow v. Accident Compensation Commission … the High Court found that where a standard number of ordinary hours had been fixed for a worker’s employment, his ‘normal number of hours per week’ for the purposes of the definition of ‘current weekly earnings’, as it then stood, were those standard hours, excluding overtime, and not the number of hours he usually worked.
11. Similarly, in Robertson v. Accident Compensation Commission …, the Full Court, following Catlow, found that where the worker in question was on continuous shift work, the expression ‘ordinary time rate of pay’ in the same context was not the average weekly rate earned by him during the relevant period, but the base rate paid for standard or normal working hours.”
Her Honour rejected a submission made by counsel for the appellant that the Catlow and Robertson principles only applied to circumstances where the employment was governed by an industrial award. She further noted that the definition of “remuneration” in s.5(1) of the Act expressly referred to “wages and the like, ‘whether payable in cash or kind’,” but that such definition was “of relevance to the calculation of premiums payable by employers, not to the calculation of benefits paid to workers”. She continued:
“14. … But the express reference to payment in kind [in the definition of ‘remuneration’] indicates that, as in the definition of ‘current weekly earnings’, Parliament has directed its mind to the need for inclusion of non-pecuniary benefits, and has decided to make its meaning clear by express words. Similarly, piece-rate payments are expressly included in the ‘ordinary time rate of pay’ by s.5(6)(a). … The Act has been extensively amended since [Catlow and Robertson were decided], notably when s.5B(3) was introduced. Had it been intended that ‘pre-injury average weekly earnings’ should have the meaning for which [counsel] contends, that meaning could have been made clear by express words not left for implication.”
Counsel for the appellant submits that these reasons misconstrue the true meaning which the Act gives to “average weekly earnings” in s.5A and s.5B. Counsel for the respondent contends that they do not. Although these sections give rise to difficulties of construction, I cannot agree with her Honour that, in this case, the value of the non-pecuniary benefits were to be excluded from the meaning of “average weekly earnings” as defined by s.5A of the Act. As I have previously stated, this was a case where, in my view, the terms of the appellant’s employment did not fix either the worker’s “ordinary time rate of pay” or the worker’s “normal number of hours per week”, but rather fixed a salary package of pecuniary and non-pecuniary benefits in circumstances where, because the appellant was “on call” at such times as guests were in the house, the non-pecuniary benefits were integral to the salary package. In those circumstances, it seems to me that the appellant’s ordinary time rate of pay was deemed, pursuant to s.5A(6)(b) to be the “average weekly rate earned by the worker during the relevant period” (in this case, 12 months). The real issue, which was raised on this appeal, was whether the true construction of the Act excluded from “the average weekly rate earned by the worker” the value of the non-pecuniary benefits agreed to be paid to the appellant.
In paragraph 6 of her reasons, her Honour approached this issue as if the appellant was being compensated for “partial incapacity”, when – on the agreed facts – she was being compensated for “total incapacity”. However, as I would understand her Honour’s reasoning, she did this because the entitlement to weekly payments for both total and partial incapacity depended upon a calculation of the worker’s pre-injury average weekly earnings. The learned judge wished to emphasize, as I would understand her reasons, that because – in a case of partial incapacity – s.93A specifically provided that the “current weekly earnings”, which fell to be subtracted from the worker’s pre-injury average weekly earnings, were to include non-pecuniary benefits (s.5B(3)), the legislature could not have intended such benefits to be included within the pre-injury average weekly earnings, whether for the purpose of calculating weekly payments in respect of total or partial incapacity.
It is this chain of reasoning which I cannot accept. Whether a worker is entitled to weekly payments for total or partial incapacity, the first calculation which is to be made is the worker’s “pre-injury average weekly earnings”. This calculation is to be made in accordance with s.5A – namely the “worker’s ordinary time rate of pay for the worker’s normal number of hours per week”. If such an “ordinary time rate of pay” is not fixed by the terms of the employment – as I think is so in this case – then it is “deemed to be the average weekly rate earned by the worker during the relevant period …” (that is, 12 months). The question then is whether the average weekly rate earned by the worker during the 12 months period comprehends a weekly rate of earnings which includes non-pecuniary benefits. It seems to me that, in a case where the contract between the worker and employer demonstrates that the non-pecuniary benefits are an essential part of the worker’s earnings, there is no reason why the value of those benefits are not to be included in the average weekly rate of earnings and, thus, the “pre-injury average weekly earnings” of the worker. The principles established in Catlow and Robertson do not answer that question. They were each cases where the ordinary time rate of pay for standard hours worked had been fixed by the relevant award and where, necessarily, overtime hours and shift rates were excluded because they were outside the fixed ordinary time rate of pay for normal hours worked.
Where, as here, the pre-injury average weekly earnings of the appellant fell to be calculated in accordance with “the average weekly rate earned” by her, such average weekly rate of earnings does, in my view, include the value of earnings in kind which are intended to form a valuable part of the reward for the appellant’s services, in the sense that it can be inferred that the value of the non-pecuniary benefits played a part in depressing the amount of monetary wages paid to her. Although, as her Honour pointed out, the scheme, pursuant to which workers are to be compensated for work related incapacity, has materially changed during the last 20 years in this State, it nevertheless remains true that the word “earnings” has always been broadly interpreted over the years to mean the reward which the employer agrees, by contract or otherwise, to pay the worker for his or her services. Thus, in Glazebrook v. Accident Compensation Commission[6], the appellant was employed as a delivery truck driver by his “employer” on terms that he work a 40 hour week and provide his own truck at his own expense, for which he was to be paid a flat rate of remuneration of $16.60 per hour. For the purposes of determining the appellant’s pre-injury average weekly earnings in accordance with the former s.95(1) of the Accident Compensation Act, the Court rejected the view that it should dissect the agreed “hourly rate” to exclude amounts attributable to operational expenses of the truck. The Court said (at 457):
“In our opinion there is nothing in s.95 or elsewhere in the Act to show that “earnings” is meant to bear a restricted meaning or that the legislature intended that in calculating compensation a Tribunal was required to dissect a worker’s “earnings” in order to compute the proportion which he earned from personal exertion or as ‘reward for labour’.”
[6][1988] V.R. 454
In reaching its conclusion, the Court adopted the meaning attributed by the English courts in interpreting the word “earnings” in the Workmans Compensation Act 1897; namely “the full sum for which a man is engaged to work”[7]. Similarly, unless the language of the statute compels a contrary conclusion, there could be no sound reason for excluding from “earnings” payments in kind, when computing - for the purposes of compensation – a worker’s pre-injury average weekly earnings. In Moxham v. Henderson[8], the Court of Appeal (NSW) was concerned to construe the meaning of the words “average weekly earnings”, where the term was used in s.14 of the Workers’ Compensation Act 1926 (NSW), and where the issue was whether such earnings should be computed according to amounts to which the worker was entitled under an award or according to lesser amounts which, in fact, she was paid. Hope, J.A., speaking for the Court, considered what meaning should be attributed to the word “earnings” in that context. He said (at 285):
“… the word includes the amount which a person is entitled to be paid in law, whether by reference to an agreement, or by statute. It is not limited to that amount, for it may include moneys paid by persons other than the employer – as, for example, tips … or the value of things such as board and lodging provided by the employer … . But, insofar as the true wage factor of the earnings is concerned, the amount is to be determined by reference to entitlement.”
[7]cf. Abram Coal Company v. Southern [1903] A.C. 306 at 308
[8][1981] 2 NSWLR 282
In referring to the payment of “tips” by third parties as being a legitimate component of a worker’s earnings, Hope, J.A. was referring to gratuities paid by customers to waiters employed in restaurants[9]. In referring to the provision of “board and lodging”, his Honour cited the decision of the English Court of Appeal in Rosenquist v. Bowring & Co. Limited[10], where the Court was considering the compensation entitlements of a seaman on one of the respondent’s ships, and whose remuneration included board and lodging, as well as cash payments. The Court of Appeal accepted that the worker’s average weekly earnings – which were to be computed “in such manner as is best calculated to give the rate per week at which the workman was being remunerated” – included the value of the board and lodging provided. Likewise, in Great Northern Railway Co. v. Dawson[11], the Court of Appeal held that the value of clothing provided to a worker by his employer formed part of the emoluments earned in addition to his money wages. Cozens-Hardy, L.J. said (at pp.334-5):
“It must, I think, … be taken to be a fallacy that the wages in money are necessarily to be the measure of the workman’s earnings for the purposes of the Act. It cannot be doubted, for instance, that if a workman is, in addition to his wages in money, allowed to occupy a house belonging to his employer, the value of that occupation must generally be considered as part of his earnings because the necessary inference would be that, but for this privilege, the amount of the wages in money would be higher.”
[9]cf. Penn v. Spiers & Pond Ltd [1908] 1 K.B. 766
[10][1908] 2 K.B. 108
[11][1905] 1 K.B. 331 at 333
It is not disputed that there are many workers in Victoria whose earning capacity is rewarded at least in part, by payments in kind. Managers of boarding or guest houses are but some of them. Domestic servants, residential carers of the young or infirm, school house-masters are others whose terms of employment will often include board and lodging as a valuable part of the reward offered for their services. Furthermore, ss. 6, 7, 8, 9, 11, 13 and 16(4) of the Act deem certain persons, who might otherwise not be regarded as “workers”, to be engaged under “contracts of service” or to be “workers” and deem the amounts paid to them to be “remuneration” within the meaning of the Act. The nature of the service given by such persons is such as to contemplate that rewards for service will, or may be at least partly in kind and, as such, are to form part of their “remuneration” as defined by the Act. Indeed s.11 deems a “share farmer” to be a worker employed by a land owner if, inter alia, he is entitled to receive “as consideration whether in cash or in kind or partly in cash or in kind less than one-third of the income derived from the land”. In these circumstances, it would be surprising if the legislative scheme, which is designed to compensate a worker for loss or diminution of capacity to earn income on the open labour market[12], were to measure such compensation for incapacity solely by reference to earnings in cash to the exclusion of earnings in kind.
[12]cf. Scott v. Sun Alliance Australia Ltd, supra, at 11-12
Yet it was submitted by the respondents that her Honour was correct in concluding that the proper interpretation of the Act leads to that result. They supported this submission by reference to the history of the legislation, by reference to the terms of sub-s.(3) of s.5B and to the definition of “remuneration” in s.5(1). As I have earlier noted, it was their contention that when, in 1985, s.95 of the Accident Compensation Act removed amounts paid for “overtime” from the computation of “average weekly earnings” and geared the calculation of such earnings to the worker’s ordinary time rate of pay for standard hours worked per week, it made clear the legislative intention to confine the calculation to monetary sums to the exclusion of payments in kind. Such an intention, it was submitted, was supported by the inclusion into s.95 of sub-s.(2) which provided:
“If the average weekly earnings of a worker calculated under sub-section (1) are less than the amount calculated under sub-sections 93(5), 93(7), 94(6) or 94(8) (whichever is applicable), the value of any other payments to the worker by the employer shall be taken into account, but not so as to exceed the amount calculated under those sections.”
The respondents submitted that the reference in this provision to “the value of any other payments”, which was apt to refer to payments in kind, served to re-inforce their submission that the Parliament intended to remove such payments from the calculation of “average weekly earnings”. Similarly, it was submitted, that if the Parliament had intended to include into the definition of “average weekly earnings” payments received in kind, it could easily have so stipulated, as it did when it defined “remuneration” in s.5(1), and as it did when it refined the definition of “current weekly earnings” by introducing s.5B(3) in 1992.
These submissions found favour with her Honour. However, none of them can displace what, in my view, is the obvious intention of the scheme which is, in appropriate cases, to measure compensation by reference to earnings in kind as well as in cash. Reference to the history of the legislation does not assist. It is true that, in 1985, the Accident Compensation Act, unlike its predecessors, geared the calculation of “pre-injury average weekly earnings” to “ordinary time rates of pay for normal hours worked per week”. No doubt, this was because the Parliament was aware that many, if not most workers, had their terms of employment regulated by industrial awards. Necessarily, if a worker’s terms of employment were regulated by an award, or contract, which provided for an ordinary time rate of pay for standard hours per week worked, then overtime or other rates for extra-ordinary hours worked would be excluded from the calculation. But, as I have previously indicated, this says nothing about whether the legislature intended, particularly in cases where the worker was employed on terms which did not fix ordinary time rates of pay for standard hours worked, to exclude payments in kind from the calculation of pre-injury average weekly earnings. Indeed in such cases the Act requires the pre-injury average weekly earnings to be calculated in accordance with the “average weekly rate (of pay) earned” and, for reasons which I have previously indicated, there is nothing in the scheme of the legislation to suggest that payments in kind should be excluded where, to do so, would be to underestimate the value of the worker’s pre-injury weekly earnings. Indeed, even in cases where a worker is engaged on ordinary time rates of pay for standard hours worked, payments or allowances in kind which are unvarying across the class of workers to which they are given, and do not import peculiarities of time or circumstance, will not necessarily be excluded from the calculation of “average weekly earnings”[13]. Nor, in my view, is the respondents’ contention advanced by reference to what was formerly s.95 (2) of the 1985 Act. That sub-section, which existed only so long as there were “base rates” of weekly payments fixed by the Act, was designed to allow the “value of other payments” to be taken into account only to ensure that, in appropriate cases, the compensation payments did not fall below those “base rates”. The history and purpose of the sub-section, which was referred to by McHugh, J. in Catlow (supra at 563), was not to evidence an intention to exclude payments in kind from the calculation of pre-injury average weekly earnings, but rather, I suspect, to permit back into the calculation of ordinary time rates of pay, for a limited purpose, the value of payments for overtime, or shift-work, or penalty rates which otherwise would be excluded.
[13]cf. Lismore City Council v. Garland (1992) 26 NSWLR 542 at 551, per Kirby, P.
It would appear from her Honour’s reasons that she came to the conclusion that non-pecuniary benefits were intended to be excluded from the calculation of pre-injury average weekly earnings, principally because the legislature had defined “remuneration” and “current weekly earnings” as specifically including payments “whether in cash or in kind”. This indicated, it was stated, that Parliament had directed its mind, in those areas, to the need to include non-pecuniary benefits and had “decided to make its meaning clear by express words”. Although the Act had been “extensively amended” between 1989, when Catlow was decided, and 1992 when s.5B(3) was introduced, no amending words had been introduced into the definition of “pre-injury average weekly earnings” to suggest that Parliament intended to include non-pecuniary benefits into the calculation of such earnings. Her Honour accordingly concluded that, had the Parliament intended to include non-pecuniary benefits in the calculation of pre-injury average weekly earnings, that “could have been made clear by express words and not left for implication”.
For reasons already stated, I cannot accept her Honour’s conclusion. When the Act was introduced in 1985, and geared the calculation of “pre-injury average weekly earnings” to “ordinary time rate of pay for … normal number of hours per week”, the legislature did not intend, in my opinion, to remove from the calculation of “average weekly earnings” those payments of a non-pecuniary kind which the terms of employment disclosed as a valuable component of the worker’s emoluments; a fortiori where those terms did not fix an ordinary time rate of pay for normal hours per week and where, accordingly, the ordinary time rate of pay was deemed to be the “average weekly rate earned by the worker” during the 12 months, or other period, preceding the relevant injury. Indeed, the view which I take of the legislative intent is, I think, strengthened by the definition given to the meaning of “remuneration”, by reason of which benefits payable in cash or in kind are deemed to be included in the remuneration of those persons deemed to be “workers” by ss. 7-9, 11, 13 and 16(4) of the Act. Although it may be true that the Act intended to give an extended meaning to the definition of “remuneration” for the purposes of calculating premiums or levies payable by employers, that cannot mean, as the learned judge thought, that the definition is of no relevance to the calculation of average weekly rates of pay earned by workers. It would, as I have said, be a strange result if the Act was extending compensation benefits to “deemed workers” who were, or may have been, in receipt of “remuneration” payable wholly or partly in kind, but was intending to exclude such payments in computing their compensation benefits. I agree with her Honour that this is an Act to which many amendments have been made, indeed to the point where, in some instances, it has lost coherence. Some amendments have been made, quite obviously, as ad hoc responses to decisions given by the courts. As the Appeal Division of the Supreme Court pointed out in Accident Compensation Commission v. Alger[14], what is now s.5A(6)(f) was introduced into s.95 of the Act in 1987 (Act 83 of 1987, s.40(5)) following the decision of the Court in Glazebrook (supra) which, as I have previously noted, concluded that, in calculating pre-injury average weekly earnings, expenses incurred by the worker in operating his own delivery truck in the course of his employment with his employer did not have to be called into account. This sub-section, which became s.5A(6)(f) following the general amendments to the Act in 1989, provides that the pre-injury average weekly earnings of persons deemed to be workers or working under contracts of service pursuant to ss. 6, 7, 8 and 9 of the Act are to be “calculated with reference to amounts payable to the worker and deemed to be remuneration under those sections less any part of those amounts attributable to the supply of capital or materials”. If anything, the introduction of that subsection into s.5A of the Act not only re-inforces my view that the definition of “remuneration” remains of relevance to the calculation of pre-injury average weekly earnings, but fortifies the conclusion that such calculation is to take account, where appropriate, of payments in kind as well as payments in cash.
[14][1993] 1 V.R. 379 at 386
It follows from what I have previously said that I cannot accept that the 1992 introduction of sub-s. (3) of s.5B into the definition of “currently weekly earnings” lends support to the construction which her Honour has given to the meaning of “pre-injury average weekly earnings” as defined in s.5A. The definition of “current weekly earnings” is relevant to the worker’s entitlement to weekly payments for partial incapacity, the rate of which, in accordance with s.93A(2)(b), is to be measured by the difference between 95% of the worker’s pre-injury average weekly earnings and the worker’s “notional earnings”, or the difference between $650 and the “notional earnings” - whichever is less. Because, relevantly, “notional earnings” is expressed to mean the “current weekly earnings of the worker as a worker or current weekly earnings as a self-employed person”, s.5B becomes relevant to the calculation. It is apparent that the calculation of “current weekly earnings” in s.5B(1) is directed only to the calculation of the current weekly earnings “in relation to a worker”, although the modification introduced by sub-s.(3), whilst expressed to be “for the purposes of sub-section (1)”, applies to benefits received both by workers and self-employed persons.
It is clear, as Dawson, J. pointed out in Catlow v. Accident Compensation Commission[15], that the calculation of “current weekly earnings” is aimed at a discretely different time period from that which is concerned with the calculation of “pre-injury average weekly earnings”; namely the period following injury and during which the worker, partially incapacitated, has returned to work whilst in receipt of weekly payments. The sub-sections which are now to be found in s.5B (1) and (2) were first introduced as s.94(10) and (11) of the 1985 Act. Those two sub-sections became s.5B(1) and (2) when that section was introduced by Act 64 of 1989. Sub-section (3) was introduced into s.5B in 1992 (Act 67 of 1992), which also introduced the definition of “notional earnings”. Although no explanation is given for the introduction of sub-section (3) in the explanatory memorandum to the Bill which became Act 67 of 1992, it is probable that it was influenced by the decision of the Court in Accident Compensation Commission v. Alger (supra), where it was held that, in the circumstances of the case before the Court, the “actual earnings” of a self-employed partially incapacitated worker, who was running a business in partnership with his wife, were not necessarily to be determined by the worker’s value to the business or the value of benefits which he received from the business, but rather by paying heed to its nett profits or losses.
[15](supra, at p.555)
Because the respective calculations of “pre-injury average weekly earnings” and “current weekly earnings” are each tied to the “worker’s ordinary time rate of pay for the worker’s normal number of hours per week”, her Honour concluded that the inclusion into the definition of “current weekly earnings” of the concept of “non-pecuniary benefits or advantages” necessarily evinced an intention on the part of the legislature to exclude such benefits from the calculation of “pre-injury average weekly earnings”.
If I am correct in concluding that the calculation, required by s.5A, to determine the worker’s pre-injury average weekly earnings does clearly embrace pre-injury earnings in cash or in kind, it must necessarily follow that I cannot agree that the introduction of s.5B(3) has the effect attributed to it by her Honour. Rather it seems to me, having regard to the history of s.5B, that sub-s. (3) was introduced to emphasize that the worker’s post-injury “actual earnings during the week” will include non pecuniary-benefits in appropriate cases just as such benefits are
incorporated, by reference to the scheme of the Act, into pre-injury average weekly earnings. If it were otherwise, it would lead to the anomalous result that a worker, whose pre-injury earnings were fashioned by payments wholly or partly in kind, and who returned, partially incapacitated, to less remunerative employment (again providing payments in kind), would either receive no weekly compensation benefits or benefits which bore no relationship to the true measure of the worker’s lost or diminished working capacity. In my view that was not the result intended by Parliament when it introduced s.5B(3) into an Act, one of the objects of which is to provide “adequate and just compensation to injured workers” and in the construction of which competing interpretations should be resolved in favour of the worker[16].
[16]Wilson v. Wilson’s Tyre Works Pty. Ltd. (1960) 104 C.L.R. 328 at 335, per Fullagar, J.
The result is that, in my view, the appellant’s pre-injury average weekly earnings did include the value of the food and accommodation which the terms of her employment provided. The value of those benefits should have been assessed in determining her entitlement to weekly payments. The appeal should therefore be allowed, the question posed for her Honour’s consideration answered “yes”, and the matter remitted to the Magistrate to re-determine the matter.
PHILLIPS, J.A.:
This is an appeal from a judge in the Trial Division dismissing an appeal under s.109 of the Magistrates' Court Act 1989 from an order made on 12 October 1998 by the Magistrates' Court at Geelong. The proceeding in the Magistrates' Court was brought by the appellant against her employer and its authorised insurer under the Accident Compensation Act 1985. Having suffered an injury in the course of her employment, the appellant claimed that her weekly payments of compensation were incorrectly based on part only of her pre-injury average weekly earnings and accordingly should be increased. Her claim was dismissed in the Magistrates' Court
and hence her appeals, first to the Trial Division and now to the Court of Appeal.
Background
The facts are not in dispute. The appellant, who was born in 1947, was employed from 1 December 1995 to manage her employer's guest house at Lorne. So far as relevant the terms of her employment were as follows, –
(a)she was to receive a cash payment (before tax) of $450 per week;
(b)in addition she was to receive food and accommodation (including power and telephone);
(c)there were no specific or set hours or days which she was required to work;
(d)there was no arrangement for her to be paid overtime, penalty rates, days off or annual leave;
(e)she was required to be on duty no matter how many guests were present, and at times the guest house had an occupancy rate of only 55 per cent; and
(f)it was expected that there would be unspecified periods during which the appellant would be absent from her place of employment.
The provision of food and accommodation in addition to the payment of cash was considered to be of considerable benefit to the appellant and its provision was debated and negotiated by the appellant with her employer when the contract of employment was made.
From 1 December 1995 the appellant worked for her employer in accordance with the foregoing terms of the employment. In about December 1996 she suffered an injury to her back and was hospitalised. After her discharge from hospital the appellant was not permitted to resume accommodation at the guest house because she had been replaced there by another. So the appellant paid thereafter for her own food and accommodation.
It is common ground that the appellant is entitled to weekly payments of compensation under the Act, and on the basis of total incapacity for work. The dispute is only over their amount. The statutory basis for calculating weekly payments of compensation is "pre-injury average weekly earnings" as determined according to s.5A of the Act, and the parties differ only over whether those earnings include the value of the food and accommodation to which the appellant was entitled under the terms of her employment. The respondents say not; they assert that the appellant has been receiving weekly payments calculated on the basis of her pre-injury average weekly earnings which were $450 only, and they say that that is in accordance with the Act. The appellant claims the contrary and, if she is correct, her payments of weekly compensation should have been significantly more than they were. To date, her contentions have been rejected.
The evidence and the submissions before the magistrate were both directed to establishing the proper method of calculating "pre-injury average weekly earnings" when a worker is entitled under the contract of employment to benefits both in cash and in kind; and as the respondents have succeeded thus far, no calculation has yet been attempted of the value of the food and accommodation to which the appellant was entitled while she was working. Should the appellant succeed now in having this Court uphold her contentions about the proper method of calculating her pre-injury average weekly earnings, the matter must be remitted to the Magistrates' Court for further hearing and determination, unless the parties then reach agreement. Some assessment of the value of the food and accommodation would have to be made and, presumably in the absence of agreement, an order for payment of the increase in the amount of weekly payments would be sought.
The relevant provisions of the Act
It is common ground that the relevant form of the Accident Compensation Act (as at December 1996) can be found conveniently in Reprint No. 6 and in what follows I refer to the Act as it is there. Upon becoming incapacitated by reason of her employment injury, the appellant was entitled under s.93 to compensation "in the form of weekly payments subject to and in accordance with this Part". The calculation of those weekly payments was found principally in s.93A for the first 26 weeks of incapacity, and thereafter in s.93B. In both sections the worker's "pre-injury average weekly earnings" had a significant role to play and those earnings fell to be determined according to s.5A. Section 5A(1) read:-
"(1)In this Act, "the worker's pre-injury average weekly earnings" means –
(a)the average weekly earnings during the 12 months preceding the relevant injury if the worker has been continuously employed by the same employer for that period; or
(b)the average weekly earnings for the period less than 12 months preceding the relevant injury for which the worker has been continuously employed by the same employer –
calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week."
The appellant was working for 12 months before the injury with the one employer and so paragraph(a) is relevant, not paragraph (b).
At the outset, some things can be said of s.5A(1) which are not in dispute, mainly because of the decision of the High Court in Catlow v Accident Compensation Commission[17] which, although dealing with the precursor to s.5A(1), has application here. In that case the Full Court[18] considered that the concluding words of what is now found in s.5A(1) (that is, the words following "calculated at") constituted but the one, composite expression describing a rate of pay; in the High Court it was established that those words prescribed two factors which were to be multiplied together in order to arrive at the relevant "average weekly earnings". The first of these was "the worker's ordinary time rate of pay", meaning the rate of pay for ordinary time, as distinct from overtime (or indeed shift work, it was soon held by the Full Court, in Robertson v. Accident Compensation Commission[19]); and the second, "the worker's normal number of hours per week", an expression in which the word "normal" meant not usual or regularly worked, but standard or ordinary as distinct from extraordinary or overtime.
[17](1989) 167 C.L.R. 543
[18][1989] V.R. 214
[19][1991] 2 V.R. 333
The expression "ordinary time rate of pay" is common enough in industrial awards, which will often prescribe, too, the "normal number of hours" during which that ordinary time rate of pay is to apply. That is perhaps the case best suited to s.5A(1), but as was said in Scott v. Sun Alliance Australia[20]:-
[20](1993) 178 C.L.R. 1 at 5
"However, it is not always the case that a worker will have an ordinary time rate of pay. There may be no industrial award or agreement regulating his or her employment, and his or her contract of employment may not distinguish between ordinary and other time rates of pay or may provide for remuneration by a formula which has no temporal element - for example, piece work or commission."[21]
[21]In Linfox Transport (Aust) Pty Ltd v. M M I Workers Compensation (Victoria) Ltd [1999] VSC 436 (Hedigan, J.) the truck driver was paid by the trip, which was probably an example of "remuneration by a formula which has no temporal element". In the result the driver's average weekly rate earned was deemed under s.5A(6)(b) to be his "ordinary time rate of pay".
Where there is no "ordinary time rate of pay" fixed by or under the terms of employment, or no standard hours fixed for the worker's work, then under s.5A recourse was necessary to sub-s.(6), which, so far as presently relevant, read thus:-
"(6) For the purposes of sub-section (1) – …
(b)if an ordinary time rate of pay is not fixed for the worker's work under the terms of the worker's employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1); and
...
(d)if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1); ..."
In this case, the appellant's terms of employment made no distinction at all between the remuneration to which she was entitled for any particular part of her work and that to which she was entitled for some other part of it; it was all to be earned by the week. Nor was there any distinction drawn within any week between some of the hours which she was to work and others. There was no distinction, whether for the rate of pay or the time to be worked each week, between standard or "ordinary" hours and overtime hours, or between an ordinary or "normal" number of hours and any other number of hours. Accordingly, as part of her case the appellant submitted that her pre-injury average weekly earnings fell to be determined according to the concluding words of subs.(6)(b) - that is, by the "average weekly rate earned" by her, an expression which encompassed, it was said, all that the appellant was entitled to under her terms of employment, including the value of food and accommodation. The respondents submitted that, while the terms of employment no doubt did draw no distinction between hours to be worked by the appellant each week, her "ordinary time rate of pay" nevertheless remained a rate of pay and did not include rewards in kind which were not money sums.
Ordinary time rate of pay for normal number of hours
In my opinion, it is unnecessary in this case to dwell very long on the twin factors identified in s.5A(1), the worker's "ordinary time rate of pay" and her "normal number of hours per week". As for the second, it seems plain enough that under the terms of her employment "a normal number of work hours per week" was not fixed for [her] work"; each week she was to work, and did work, for however long was needful. It may be taken that her hours of work varied from one week to another, and so to arrive at a "normal number of hours per week" an average had to be struck under sub-s.(6)(d) of hours actually worked by the appellant over the 52 weeks before the injury, but that step seems to me of no significance in a case like this. Suppose for argument's sake that in each 3 weeks the appellant worked 6, 18 and 24 hours respectively throughout the relevant period of 52 weeks; her average for the year must then have been 16 hours per week. But as she received the same remuneration each week, no matter for how many hours she worked and without differentiation between those hours, the step of averaging is of no consequence. Whether she worked for 6, 18 or 24 hours, or the average of 16 hours, the appellant received the same remuneration. If her weekly earnings were therefore $450 (whether with or without the extra of food and accommodation) her "average weekly earnings" were surely the same and the number of hours which she was required to work can make no difference.
Similarly, it cannot matter in a case like this whether an "ordinary time rate of pay" was actually fixed for the appellant's work under the terms of her employment. The appellant's primary submission was that, given the circumstances, all her hours were "the normal number of work hours" for her work and all the rewards of her labour were the "ordinary time rate of pay" under the terms of employment[22]. There being no reason to differentiate between any of the hours worked or between any part of the remuneration to which she was entitled, it follows, I think, either that under the terms of her employment all her remuneration was "the ordinary time rate of pay" or that no ordinary time rate of pay was fixed, so that the actual rate earned during each of the relevant 52 weeks would fall to be averaged under sub-s.(6)(b). Either way, the end result must be the same in this instance. If her earnings were $450 per week only, the average will be $450. If to that must be added the value of her entitlement to food and accommodation, both counsel seemed to assume - no doubt for good reason - that the food and accommodation to which she was entitled under the terms of her employment (as distinct, perhaps, from that which was in fact consumed) would be valued as a constant (if and when valued); and if that is correct, then again the weekly rate of pay and the average weekly rate of pay are the same and it cannot matter whether recourse is to be had or not to sub-s.(6)(b) to determine the "ordinary time rate of pay" for the appellant's work.
[22]The Victorian Act is plainly distinguishable from the Tasmanian Act considered in Scott, where the High Court held that the term "ordinary time rate of pay" was used impersonally, without reference to the worker's particular position: 178 C.L.R. at 6.
Cash or kind
I have dealt briefly with the problems of the appellant's "ordinary time rate of pay" and "normal number of hours per week" to demonstrate how very different is the real dispute on this appeal, which is whether the reference in s.5A to a "rate of pay" (whether or not for "ordinary time") includes or does not include rewards which were received in kind, not in cash. That is a question which the foregoing leaves altogether unanswered and I turn to the particular arguments relied upon by the parties. There were three in the main: first, the meaning of the word "earnings" as used historically in such legislation as this; secondly, the more immediate legislative history of s.5A; and thirdly, the context in which the phrase "average weekly earnings" occurs in this Act.
As for the first, the use of the word "earnings" historically in legislation like this, this was relied upon by the appellant in support of the contention that her "ordinary time rate of pay" (whether actually fixed by her terms of employment or deemed under sub-s.(6)(b)) included not only cash payments but also rewards in kind. Obviously enough, the word "earnings" means what is earned, in this case by the worker: "the rewards which he received for his efforts" in his employment, as Sugerman, J. put it in Rogers v. State Mines Control Authority[23]. Thus, historically the word "earnings" has included tips from others than the employer (at least if tipping was not proscribed by the employer): for example Penn v. Spiers & Pond Ltd.[24] and Great Western Railway Co. v. Helps[25]. According to Lord Macnaghten in Abram Coal Co. Ltd. v. Southern[26] "'earnings' means the full sum for which the man is engaged to work". In that case the miner had to bear the cost of maintaining his own equipment, and where the employer by agreement deducted that cost from his weekly wages, the miner's "earnings", for the purpose of calculating his compensation when injured, were held to be his wages before the deductions, not after. So too in Midland Railway Co. v. Sharpe[27] Lord Davey said:
"You must take for the purpose of assessing the compensation the actual remuneration for his services which was received by the workman, quite irrespective of the question of what expenses he was put to for the purpose of earning that remuneration."
This passage was subsequently said by Herring, C.J. and Gavan Duffy, J. (in Connally v. Victorian Railway Commissioners[28]) to epitomise the construction to be placed upon the word "earnings" in the Workers Compensation Act 1951 (Vic.) In Glazebrookv. Accident Compensation Commission[29], Connally was considered and applied to the determination of "average weekly earnings" in accordance with the then s.95 (the precursor to s.5A and the very section considered in Catlow).
[23](1964) 64 S.R.(N.S.W.) 486 at 489
[24][1908] 1 K.B. 766
[25][1918] A.C. 141
[26][1903] A.C. 306 at 308
[27][1904] A.C. 349 at 353
[28][1957] V.R. 466 at 471-2
[29][1988] V.R. 454
Of course in this case there is no question of expenses to which the appellant worker was put for the sake of earning her income; that sort of expense has occasioned difficulty from time to time, as witness Connally and Glazebrook[30], but it is not the problem here. Therefore the appellant does not rely upon the detail of the foregoing, but relies rather upon the generality commonly attaching to the word "earnings" (especially in Glazebrook where the context so nearly approached the present). Perhaps of more direct significance, however, was the uniform provided to the worker by his employer in Great Northern Railway Co. v. Dawson[31]. It was argued there that the use of that clothing (property in which remained in the employer) formed no part of the worker's earnings, though it was allowed to him in addition to the wages paid him in money. Collins, M.R. said[32]:
"In this case during the three years prior to the accident the deceased workman appears to have been allowed by his employers to have the use of clothing, which he did use to the extent of the value assumed by both parties to represent the price of the clothing, which was probably less than what the workman would have had to pay if he had himself provided it. I think that must be regarded as an emolument which he received, in addition to his money wages, in return for his services, and which according to the authorities must be taken into account in estimating his earnings. I do not think that it is necessary in this case to go into any distinction between the value of the clothes themselves and the value of the use of them. ... Though it may be right to say that, strictly speaking, it is the value of the use of the clothes, and not the value of the clothes themselves, that must be considered in such a case, in the present case there is really no distinction between them. Therefore I think that the amount taken as their cost in this case ought to be added to the amount received by the workman in money ...".
Much the same was said in Simmonds v. Stourbridge Glazed Brick and Fire Clay Co. Ltd.[33] (a case under the Workmen's Compensation Act 1906) in relation to a load of coal allowed from time to time in addition to wages.
[30]In England, the Workmen's Compensation Act 1906 introduced specific provision for such expenses (in clause (2)(a) of Schedule I) which had the effect, it was said, of reversing Midland Rly. Co. v. Sharpe: see Jones v. International Anthracite Collieries Co. [1919] 1 K.B. 156 at 161-2, where reference is made also to Shipp v. Frodingham Iron & Steel Co. [1913] 1 K.B. 577. It was that 1906 Act which provided that "average weekly earnings shall be computed in such manner as is best calculated to give the rate per week at which the workman was being remunerated", occasioning comment in Connally that the construction given to "earnings" in England was not the same before 1906 as after: [1959] V.R. at 469,471. See also Glazebrook [1988] V.R. at 456-7.
[31][1905] 1 K.B. 331
[32]at 333-4
[33][1910] 2 K.B. 269
Thus it can, I think, be said that historically the word "earnings" included all rewards for labour, both in cash and in kind, and the use in subs.(6)(b) of the expression "the average rate earned" points in that direction. In answer the respondents referred to the more immediate history of s.5A, which they said justified the opposite conclusion. In the Workers Compensation Act 1958 the clauses appended to s.9, which inter alia fixed the amount of weekly payments of compensation, specifically provided that regard should be had "to any payment, allowance or benefit the worker may receive from the employer during the period of his incapacity" (this going then in reduction of the weekly payments otherwise being made). In 1985 when the Accident Compensation Act was first enacted, ss.93 and 94 provided for weekly payments in consequence of incapacity (s.93 dealing with total incapacity and s.94, with partial incapacity) and in both, the calculation of the amount of the weekly payments that were to be made depended from the outset - and in large part - upon the worker's "pre-injury average weekly earnings". Section 95 provided for the determination of those earnings, and in a manner which, with some changes, can now be seen reflected in s.5A.
The respondents pointed specifically to s.95(2), as it then was, which contained an additional provision which is not to be found in s.5A. According to s.95(2), if the average weekly earnings of the worker calculated under sub-s.(1) were less than certain minimum sums elsewhere mentioned, "the value of any other payments to the worker by the employer shall be taken into account but not so as to exceed" those minima. This provision disappeared when the portion of the Act dealing with benefits (division 2 of Part IV) was altogether recast in 1989 by s.10 of the Accident Compensation (General Amendments) Act 1989. General provision was then made in a new s.93 for the worker's entitlement to weekly payments of compensation upon incapacity, the amount of those weekly payments to be calculated under s.93A. The worker's "pre-injury average weekly earnings" were still to play a significant part in that calculation, but those earnings were now to be determined under s.5A - and in that section nothing corresponded to the old s.95(2). When in 1992 WorkCover replaced WorkCare, the portion of the Act dealing with benefits was again substantially recast, taking its present form. Section 5A, however, was not further altered (so far as presently relevant).
The respondents contended that in view of this history, it could not now be said that there should be brought to account, in determining the weekly earnings of a worker under s.5A, "the value of any other payments to the worker by the employer" as once was provided by s.95(2). That may perhaps be so, but it does not seem to me of much relevance in determining the issue on this appeal. Catlow was decided on the Act as it stood before amendment in 1989, and according to Catlow the "ordinary time rate of pay" did not include payments for overtime; and according to Robertson, nor did it include payments for shift work. I should have thought that the value of such payments might have been brought to account, in an appropriate case, under s.95(2); and if that be correct, s.95(2) casts no light on whether the "ordinary time rate of pay" includes or does not include rewards in kind, as distinct from payments in cash. It is true enough that s. 95(2) was apparently dropped in 1989 when the provisions dealing with benefits were recast, yet that may have been simply because s.95(2) lost its context. In 1989 the reference was also dropped to those minimum sums, mentioned in s.95(2), which were all-important to its operation. It may then be more significant for present purposes that until 1989 s.95(2) referred to "the value" of "payments", which, if it is presently relevant at all, suggests that in this legislation the word "payments" may be used to include, not only cash, but also payments in kind. After all, the phrase "payment in kind" is a common enough expression; I have deliberately avoided using it thus far in order not to appear to pre-judge the matter.
The respondents then sought to rely upon the particular context in which the expression "average weekly earnings" was used in the Act at the relevant time. In ss.93A and 93B, that expression appeared (as it does now) in association with both "current weekly earnings" and "notional earnings". The latter term was defined in s.5 and it, too, used the expression "current weekly earnings". The definition of "current weekly earnings" was to be found, as now, in s.5B, the first two subsections of which read:-
"(1)In this Act, 'current weekly earnings', in relation to a worker, means the worker's earnings during the week in respect of which a weekly payment is made calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week or, if there is no such ordinary time rate, the worker's actual earnings during the week.
(2)For the purposes of sub-section (1), the worker's ordinary time rate of pay for the worker's normal number of hours per week shall be determined in accordance with section 5A(6)(a), (b) and (d) with such modifications as are necessary.”
What seems striking in this definition is its similarity to s.5A(1). In s.5A(1) the reference is to average weekly earnings during a period before injury is suffered: in s.5B(1) it is to earnings during a particular week during which compensation is paid and, if there is then no "ordinary time rate of pay for the worker's normal number of hours of work", one is directed to "the actual earnings" for that week. The word "actual" is significant, as Ashley, J. pointed out in Accident Compensation Commission v. Alger[34]; but so far as presently relevant that word seems to me to do no more than point up the obvious contrast between the two sections, the first looking to the earnings of the worker over a period of time and the second to the earnings of the worker in one particular week. It appears sensible, then, that, if there is no "ordinary time rate of pay" fixed by the terms of the employment, the reference in the one is to a weekly average over the relevant period and in the other, to the actual earnings in the week in question.
[34][1993] 1 V.R. 379
The respondents did not rely directly upon Alger; indeed it would be difficult to do so in the light of his Honour's distinguishing expressly the position under s.5B and that under s.5A. The respondents relied instead upon the presence in s.5B of sub-s.(3) which read thus:-
"(3)For the purposes of sub-section (1) 'current weekly earnings' includes the monetary value calculated on a weekly basis of any non-pecuniary benefit or advantage received by the worker in the course of his or her employment (including work as a self-employed person)."
The respondents argued that this was an express provision, inserted quite deliberately in s.5B in 1992, to include rewards in kind, rewards of the type that are here in question; and, as the same provision was not inserted in s.5A, they submitted that s.5A could not be read to include the value of the food and accommodation provided by the employer and to which the appellant was entitled under the terms of her employment. This was the argument that appealed to the judge, by reference to which the appellant's claim was rejected. There is, however, another way of looking at s.5B(3) which tells rather more in favour of the appellant. Perhaps it was that Parliament saw no need to amend s.5A as it amended s.5B. If the word "earnings" was regarded as wide enough, in itself, to include everything received by the worker as a reward for labour over a period of time, it might well have been that the problem being addressed in s.5B(3) was not the inclusion of rewards in kind among earnings generally, but the inclusion of some particular reward in one particular week of earnings. On that view the amendment was needed to effect apportionment of a specific benefit in order to attribute part of it to one week, the significant words being "calculated on a weekly basis". One cannot be sure, but in the end I think that the respondents sought to draw too much from the presence of subs.(3) in s.5B and its absence in s.5A.
I say that because there seems to me to be good reason otherwise in the context of benefits generally for treating the word "earnings" in both ss.5A and 5B as wide enough to include rewards of all kinds (both in cash and in kind) for labour. For if the words "earnings" is wide enough to include both cash and payments in kind, then under ss.93A and 93B, like will be compared with like. Under s.93A, during the first 26 weeks of incapacity, the worker is entitled to weekly payments of compensation which, in the event of total incapacity, are simply 95 per cent (subject to a prescribed maximum sum) of the worker's "pre-injury average weekly earings"; or if the worker is partially incapacitated, are measured by the difference between weekly payments so calculated and the worker's "notional earnings". As I have said, under s.5 "notional earnings" are related to the worker's "current weekly earnings"; and if (by virtue of s.5B) the latter include all rewards of labour, whether in cash or kind, whereas (by virtue of s.5A) the worker's "pre-injury average weekly earnings" include only payments in cash, it is easy to see that the difference between the two must become distorted - and, it would seem, for no good reason. Like would not be compared with like. The same can be said under s.93B in which, for the sake of calculating weekly payments after the first 26 weeks of incapacity, use is made of the worker's "pre-injury average weekly earnings", the worker's "current weekly earnings", if any, and, if none, the worker's "notional earnings".
That like should be compared with like in sections such as ss.93A and 93B is given point, I think, by the position of sharefarmers, of which the appellant sought to make much. Under s.11, a sharefarmer is deemed to be a worker if employed under a contract with the owner of the land under which he or she is entitled to receive "as consideration whether in cash or in kind" less than one-third of the income derived from the land. As pointed out by counsel, if a sharefarmer so becomes a worker, the employer is required to pay levy on remuneration and "remuneration" is defined very widely in s.5 to include wages, remuneration, salary and so on, "paid or payable whether in cash or kind". (Again we see the use of derivatives from "pay" in conjunction with rewards in kind.) Yet notwithstanding this liability in the employer for levy, what weekly payments of compensation would become due when a sharefarmer, who was paid mainly in kind, became incapacitated through injury in the workplace, if in s.5A "average weekly earnings" must be calculated by reference only to payments in cash? That little or nothing should be payable by way of weekly compensation would seem extraordinary, if not absurd, in the light of the employer's liability for levy.
I think it fair to say that the respondents were unable to meet this argument save by pointing out that s.11 had been in the legislation for many, many years, having been largely copied from the old workers' compensation legislation. As already mentioned Parliament has since made significant changes to the calculation of weekly payments of compensation, moving finally to the provisions of ss.5A and 5B in aid of ss.93A and 93B and this, it was suggested by the respondents, had been done without proper regard for s.11. The lack of correspondence now identified between the levy and compensation was no more than an historical accident; the position of sharefarmers under s.11 had simply been overlooked, something which should occasion no surprise given the length and complexity of the statute - and, I would add, the manner and frequency of amendments which tend to be piecemeal. There is, I think, some force in the respondents' contention; perhaps the position of sharefarmers has just been overlooked to date. I would not therefore put much store by an argument based solely upon s.11, but none the less the appellant is entitled to point to the apparent absurdity which her argument, if accepted, would avoid.
Having mentioned in passing the decision of the Full Court in Accident Compensation Commission v. Alger[35], I say something more about it. That was a case in which the expression "current weekly earnings" was considered in the context of a worker who, while in receipt of weekly payments of compensation for partial incapacity, set up in business with his wife, in partnership. The business made losses (before bringing to account any drawings) and the question was whether he had any "current weekly earnings" such as must impinge upon his continuing entitlement to weekly payments. It was conceded by counsel for the Commission that it would be altogether inappropriate to use the weekly gross income of the business as the worker's current weekly earnings: the choice, he said, was between taking the net profit of the business (which was negative, as it was running at a loss) or the estimated cost to the partnership business of paying another to do the work being performed by the husband. The latter was rejected by the Tribunal, which concluded that the worker had no "current weekly earnings" for the particular weeks then in question, and this decision was upheld by the Full Court.
[35][1983] 1 V.R. 379
It should be emphasised that the decision in Alger depended very much upon the statute as it stood at the relevant time: that is, the Act as amended up until 1989 (including by Act No. 64 of 1989)[36]. I say that because since Alger, a number of changes were made to the Act, importantly by Act No. 67 of 1992. They included the introduction of the definition of "notional earnings" and that definition referred not only to the worker's current weekly earnings, whether as a worker or as a self-employed person, but also to the weekly earnings which the Authority determines the worker "could earn from time to time ... in employment" - thus introducing the concept of what the worker is able to earn, which was not available when Alger was decided. The amendments also included the addition to s.5B(3) of the concluding words "including work as a self-employed person", perhaps in an effort to overcome one of the problems identified in Alger, namely, that ss.5A and 5B could apply only with difficulty to the self-employed: compare s.5A(6)(f).
[36]see [1993] 1 V.R. at 381 line 35
To my mind, the decision in Alger is of no particular relevance here, but the reference to s.5A(6)(f) raises another interesting point. I have mentioned that "remuneration" upon which levy is raised is defined very widely in s.5. By s.6(1) certain contractors are deemed to be workers, and when that is so the principal is deemed to be the employer and "the amount payable by the principal to the contractor for the latter's work under the contract shall be deemed to be remuneration". Could it be said there that payments in cash were included but not payments in kind? I think not. And the like comment might be made under ss.8(1) and 9(2)(c).
It must be said that, like so many questions of statutory construction under this Act, the question raised for decision by this appeal admits of no answer that is wholly satisfying. On the one hand, there is the apparent contrast provided by references elsewhere than in s.5A to all rewards, whether in cash or in kind; on the other, there is the notion of "earnings" which must underlie s.5A and statements such as that made by Full Court in Glazebrook (albeit in respect of a different problem):-
"In our opinion, there is nothing in s.95 or elsewhere in the Act to show that "earnings" is meant to bear a restricted meaning . . ."
In the end, I have reached the conclusion that, notwithstanding the arguments of the respondents, those of the appellant are to be preferred. As I see it, the task in s.5A is to determine what are properly, according to the statute, the "average weekly earnings" of the worker before the onset of injury, and (in line with the approach taken in Glazebrook) the section should be read and construed to include, and not to exclude, rewards of all kinds. That assumes, of course, that the section is otherwise silent in that regard. In some cases it might be possible, I suppose, that the facts will demonstrate that rewards in kind form no part of the calculation dictated primarily by s.5A(1); but, even if that is possible in some other case, it is not so here. Here, I see no reason why the appellant should not count in her pre-injury average weekly earnings the value of the food and accommodation to which she was entitled under the terms of her employment, whether that means that her "ordinary time rate of pay" was fixed under the terms of her employment, or whether it fell to be
determined under sub-s.(6)(b). Its value was a significant part of her job remuneration and in the circumstances of this case I see nothing in s.5A to gainsay its inclusion. Indeed I think that the contrary view, if sustainable at all, would be a victory for form over substance and one to which I would not adhere unless it was dictated very plainly by the Act - and it is not.
Conclusion
For these reasons, I would allow the appeal, set aside the order made by the judge, dismissing the appeal, and order in lieu that the appeal be allowed and the appellant's claim remitted to the Magistrates' Court for further hearing and determination, as already explained.
BATT, J.A.:
The reason of Phillips, J.A., which I have had the benefit of reading in draft, express the views to which I have come in this matter, and I agree in the order which his Honour proposes. In essence the question is whether "rate of pay" in s.5A(1) and "rate earned" in s.5A(6)(b) are limited to cash receipts or include receipts in kind. I prefer the latter interpretation. Whilst fairness, logic and symmetry are not of great weight in the case of an Act like this one, there is force in the submission that a sharefarmer deemed to be a worker under s.11(1) most of whose reward is in kind or a resident care worker most of whose recompense for working is in kind would receive very little by way of weekly payments, which would leave the worker largely unprovided for, contrary to the policy of the legislation since workers' compensation legislation was first introduced. Finally, I would make clear my view that the consideration that the subject of a worker's earnings is not properly a rate per se, combined with the context of s.5A(6)(b), has the result that the expression "the average weekly rate earned" found there must be read as "the average weekly rate of pay earned", the expression "the ordinary time rate of pay" having been used a little earlier.