Paul Ross and Comcare

Case [2014] AATA 476

Administrative Appeals Tribunal

ADMINISTRATIVE APPEALS TRIBUNAL             )
  )        No’s:    2012/4919
General Administrative Division               )                    2013/0508   2013/0509

Re: Paul Ross
Applicant

And: Comcare
Respondent

CORRIGENDUM

TRIBUNAL:             Mr R G Kenny, Senior Member

DATE:   18 July 2014

PLACE:                  Brisbane

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975 (Cth), to alter the text of the decision in this application as follows:

1.Replace “$1879.10” on the front page of the Decision with “$1889.46”.

2.Replace “July 1998” with “February 1998” in line 1 of paragraph 1.

...............................Sgd.................................

Senior Member

[2014] AATA 476

Division GENERAL ADMINISTRATIVE DIVISION

File Numbers

2012/4919

2013/0508

2013/0509

Re

Paul Ross

APPLICANT

And

Comcare

RESPONDENT

Decision

Tribunal

Mr R G Kenny, Senior Member
Date 15 July 2014
Place Brisbane

The Tribunal sets aside the decisions under review and substitutes its decision that the amount per week that the applicant is able to earn in suitable employment is $1,879.10 per week and remits the matters to Comcare to recalculate the applicant’s compensation entitlements in accordance with these reasons. 

.............................Sgd...........................................

Mr R G Kenny, Senior Member

Catchwords

WORKERS’ COMPENSATION – Acceptance of liability under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“the Act”) for right knee condition – Reviewable decision to revoke determinations relating to incapacity payments from 1 July 2007 until 8 July 2012 (“the relevant period”) – Further reviewable decision that incapacity entitlement in the relevant period was nil – Assessment of ability to earn in suitable employment – Decisions set aside and substituted – Matters remitted to Comcare for recalculation

Legislation

Safety, Rehabilitation and Compensation Act 1988 (Cth), ss 4, 19

CASES

Arbuckle v Comcare [2005] AATA 820
Cage Developments Pty Ltd v Schubert (1983) 151 CLR 584
Comcare v Davies [2008] FCA 393
Hooper v Comcare [2001] AATA 548
J & H Timbers Pty Ltd v Nelson (1972) 126 CLR 625
Leach v Ross and Babes in Paradise Pty Ltd as Trustee for the Babes in Paradise Trust [2013] QSC 333

Warnock v Comcare [2008] AATA 567

REASONS FOR DECISION

Mr R G Kenny, Senior Member

15 July 2014

Background

  1. In July 1998, while employed by the Australian Federal Police (“AFP”), Paul Ross


    (“the applicant”) suffered a right knee injury for which Comcare accepted liability under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“the Act”). The applicant’s employment was terminated on 15 February 2005. Between 4 July 2007 and


    27 June 2012 (“the relevant period”), Comcare made determinations in relation to the applicant’s entitlement to incapacity payments for the period from 1 July 2007 until


    8 July 2012. After a reconsideration of those determinations by own motion, Comcare, on 5 September 2012, made a reviewable decision to revoke them (“September reviewable decision”) [Ref: 2012/4919].

  2. On 11 September 2012, Comcare determined that the applicant had an ability to earn $2,468.05 in suitable employment from 9 July 2012 and, on 19 September 2012, Comcare determined that the applicant was not entitled to incapacity payments during the relevant period. On 12 December 2012,…

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Details
AGLC
Paul Ross and Comcare [2014] AATA 476
Case
[2014] AATA 476
Decision Date

CaseChat Overview and Summary

The case of Paul Ross and Comcare involved a dispute over the assessment of Mr Ross's incapacity payments under the Safety, Rehabilitation and Compensation Act 1988 (Cth). The Tribunal was tasked with reviewing Comcare's decisions to revoke incapacity payments from 1 July 2007 until 8 July 2012 and to declare that Mr Ross's incapacity entitlement during this period was nil. The legal issues centred on the proper assessment of Mr Ross's ability to earn in suitable employment, specifically whether his earnings from his business could be considered as income for the purposes of calculating his incapacity payments. The evidence presented included reports from medical professionals and occupational experts, which assessed Mr Ross's physical limitations and the types of employment he could reasonably undertake.

The Tribunal found that Comcare's assessment of Mr Ross's ability to earn in suitable employment was flawed. The Tribunal determined that the appropriate benchmark for assessing Mr Ross's earning capacity was the income he would have earned if he had been employed in a suitable position, rather than the profits of his business. The Tribunal relied on the Australian Bureau of Statistics data for owner-managers of incorporated enterprises, adjusted for a 35% increment, to arrive at an appropriate weekly earning figure of $1,889.46 for 2012. The Tribunal concluded that this figure should be applied to the other years in the relevant period. The Tribunal also noted that Mr Ross's actual earnings from his business were not reflected in his reported annual salary of $30,000, as he received additional benefits such as personal expenditure covered by the business.

The Tribunal set aside Comcare's decisions and substituted its own decision that Mr Ross's ability to earn in suitable employment was $1,889.46 per week. The case was remitted to Comcare for recalculation of Mr Ross's compensation entitlements in accordance with the Tribunal's reasons. The Tribunal's decision clarified that the measure of an individual's earnings for the purposes of calculating incapacity payments should be based on the remuneration or wages they would earn in suitable employment, rather than the profits derived from their business.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Dr David Fitzgerald is an occupational physician. He completed an assessment report of the applicant’s right knee condition on 26 March 2013. He diagnosed meniscal damage, meniscectomy and degenerative changes in the right knee. Dr Fitzgerald was aware of the nature of the business in which the applicant is engaged and the nature of his responsibilities in relation to it. He described the applicant’s physical limitations as preventing him from doing significant weight bearing and mobilisation or doing anything more than sedentary work. In particular, his opinion was that the applicant is able to undertake clerical or managerial roles provided he is seated and is able to stretch out his right leg. Also, he concluded that the applicant was fit to work as a finance and operations manager in a business with an annual turnover of circa $850,000 and to assume responsibility for compliance operations, staffing, financial stability and success of the business.Occupational evidence David Morris, an occupational therapist with Advantage Injury Management Services, provided a report, dated 21 May 2013.[12] Mr Morris noted the applicant’s physical limitations described by Dr Fitzgerald. With those in mind, he recommended that the following types of employment would be suitable for the applicant: administration officer, receptionist, accounts clerk, call centre operator, data entry officer, loss adjustment officer and court officer. He considered that the applicant’s limitations in driving and travel would confine him to work in the Gold Coast area. Mr Morris set out the likely salary that the applicant would receive in those positions in each year from 2006 to 2013. In 2012, these ranged from $39,936 to $59,800. He concluded that the applicant would earn less that he was earning with the AFP. [12] Exhibit 5. He also completed a short supplementary report on 7 June 2013 (exhibit 6). Tony de Ambrosis is a rehabilitation consultant and a physiotherapist with Working Well Australia (“WWA”). Georgia Blackwell is a rehabilitation consultant and a psychologist with that organisation. They completed a report on 20 May 2013.[13] They denied that WWA had advised the applicant to allocate himself a salary of $30,000 per year. They wrote that such a level was below his AFP salary but was also lower than any which had been identified in suitable vocations in the local labour market. Mr de Ambrosis had advised the applicant several times that, if his salary did not match his pre-injury wage, he would be required to look elsewhere for work. Ms Blackwell and Mr de Ambrosis, noting the applicant’s limitations, considered that he would be suited to work as an administrative assistant, a customer service advisor, a call centre operator and a compliance/investigation officer. They concluded that such positions were available at the Commonwealth government level and, to a lesser degree, with the State government on the Gold Coast. The City Council was considered to have reasonable availability of work. They also reported that some such positions were available in the private sector. Their labour market research led them to conclude that, with the Department of Human Services, a customer service advisor in a Tweed Heads Call/Smart Centre would earn from $54,435 to $60,671, and at a Customer Service Centre the level would be from $60,672 to $67,222. With the Gold Coast City Council, the level was $43,000 to $62,000. They reported that private sector earnings were $20 to $24.99 per hour and that a Customer Service Advisor or Compliance / Investigations Officer with the Department of Human Services received a salary in the range of $60,672 to $73,017.[13] Exhibit 30. They also completed a short supplementary report on 29 July 2013 (exhibit 31).SubmissionsMr John Dwyer

Decision

Reasons for decision

I am satisfied that the AE value in the formula in s 19(2) of the Act is to be assessed under the ABS data[19] of owner manager of an incorporated enterprise in category 1399 “Other specialist managers” with an additional increment of 35%. For 2012, this is $1,889.46 per week. The ABS data for the previous years will need to be applied to other years in the relevant period. [19] Exhibit 28.DECISION The Tribunal sets aside the decisions under review and substitutes its decision that the amount per week that the applicant is able to earn in suitable employment is $1,889.46 per week and remits the matters to Comcare to recalculate the applicant’s compensation entitlements in accordance with these reasons.

Ratio Decidendi

Legal Principle Established

In the alternative, Ms Ford submitted that the applicant had an ability to earn $50,000 per year during the relevant period as an employee in other suitable employment. Consideration Under s 19(4)(a) of the Act, where the employee is in employment, including self-employment, regard must be had to the amount per week that the employee is earning in that employment. I am satisfied that the applicant’s actual earnings from the business are not reflected in his annual salary of $30,000. This was agreed by Mr Dwyer and Ms Ford. The applicant received additional benefits by means of items of personal expenditure being attributed to the business. This included certain grocery items, travel costs and restaurant costs. Prior to the business’ purchase of the vehicle in 2009 for the applicant to use, it also included fuel costs. Ms Michie’s evidence was that the applicant’s personal expenditure met by the business amounted to $17,140 in 2012.[15] Payment of the applicant’s personal items by using them to reduce the level of the applicant’s loan to the business was equivalent to treating them as capital owed by the business to the applicant. The evidence is far from clear as to the precise amounts of personal expenditure which were dealt with in that way. Indeed, the evidence is that the amount of his loan actually increased over the years and no explanation was provided by the applicant in that regard. Ms Michie also gave the taxable value of the vehicle supplied to the applicant as being $20,968 in the financial years 2010 and 2011 and $16,130 in the financial year 2012.[16] The structure of the company and the trust would have enabled the applicant to receive the profits of the business but his evidence was that he chose not to do so because of the need to accumulate a capital sum with which to discharge any future obligations the applicant and/or the company may have to Mr Leach as a result of the Supreme Court proceedings. It seems, from the Court’s decision, that this may have proved to be a prudent approach. However, the applicant’s involvement with Mr Leach should bear no relationship to what constitutes income to the applicant.[15] See paragraphs 23, 26 and 27 (above).[16] See paragraph 26 (above). Reference has been made to the turnover and the profits of the business. On Ms Michie’s evidence, this was as high as $864,893 in 2011 and averaged in the order of $750,000 per year from 2007 to 2012. Annual profits were reported by Ms Michie to average in the order of $92,000 from 2008 to 2011. However, I accept the submissions of both counsel that the measure of the applicant’s earnings should be: the remuneration [of the] fruit of his labour, his wages or equivalent. It should not be measured by the profits he derives by embarking his capital in a business or by his usual capital equipment in earning money.[17][17] J & H Timbers Pty Ltd v Nelson (1972) 126 CLR 625 at 643. See also Hooper v Comcare [2001] AATA 548 at [36]; Comcare v Davies [2008] FCA 393; Warnock v Comcare [2008] AATA 567 at [41]; Cage Developments Pty Ltd v Schubert (1983) 151 CLR 584; Arbuckle v Comcare [2005] AATA 820 at [95].