Return to Work Corporation of South Australia v Robinson
[2018] SASCFC 32
•11 May 2018
Supreme Court of South Australia
(Full Court)
RETURN TO WORK CORPORATION OF SOUTH AUSTRALIA v ROBINSON
[2018] SASCFC 32
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Blue and The Honourable Justice Stanley)
11 May 2018
WORKERS' COMPENSATION - ASSESSMENT AND AMOUNT OF COMPENSATION - AMOUNT OF COMPENSATION DURING INCAPACITY - CALCULATION OF WEEKLY EARNINGS
WORKERS' COMPENSATION - PROCEEDINGS TO OBTAIN COMPENSATION - DETERMINATION OF CLAIMS
WORKERS' COMPENSATION - ASSESSMENT AND AMOUNT OF COMPENSATION - ENTITLEMENTS REDEEMED OR COMMUTED TO A LUMP SUM
Appeal by Return to Work Corporation against answers by Full Bench of South Australian Employment Tribunal to questions of law.
In 1998 the respondent Ms Robinson suffered a work injury. Her notional weekly earnings were initially $312. In 2000 her weekly payments were reduced to $54 on the basis that she had the capacity to earn $297 as a change room attendant. In 2001 the Corporation paid $31,500 to her in redemption of her entitlement to weekly payments. Ms Robinson acknowledged in the redemption agreement that for the purposes of subsection 35(6a) of the Workers Rehabilitation and Compensation Act 1986 (SA) she was taken to be receiving a continuing weekly payment of $291 (being the amount of her weekly payments before the reduction to $54).
In 2014 Ms Robinson suffered a second work injury in different employment. Her notional weekly earnings in respect of that injury were $347 being the award rate. The Corporation determined that her weekly payment entitlement was capped at $304 pursuant to section 49 of the Return to Work Act 2014 (SA). This figure comprised adjusted notional weekly earnings of $595 calculated by reference to the 1998 injury less $291 per week that the Corporation determined Ms Robinson was deemed by subsection 49(2) to be receiving as payments that would have been payable in respect of her earlier injury if there had been no redemption.
Ms Robinson brought an application in the Tribunal contending that the Corporation should have determined that pursuant to section 42 of the Act she was entitled to weekly payments of $333 being the adjusted federal minimum wage rate. Ms Robinson contended that section 42 was paramount in its operation over section 49.
The Full Bench by majority answered the questions stated that on the proper construction of sections 42 and 49 Ms Robinson’s weekly payment rate could not be less than the federal minimum wage rate and that her weekly payment rate was $333.
On the hearing of the appeal the question arose whether the Court should proceed on the basis (assumed by the parties before the Employment Tribunal) that, leaving aside section 42, subsection 49(2) should be construed so as to result in a cap on weekly payments of $304.
Held:
1. Per the Court: This Court should itself determine the proper construction of subsection 49(2) and not merely proceed on the assumption made by the Employment Tribunal (per Kourakis CJ and Blue J (at [69]-[70]) and Stanley J (at [166]-[169]).
2. Per the Court: On the proper construction of section 49, if a redemption agreement includes a provision that the worker acknowledges that the worker will be taken, in respect of an entitlement to weekly payments arising from a subsequent injury, by subsection 49(2) to be receiving weekly payments in a specified amount, such acknowledgment does not affect the amount deemed by subsection 49(2) to be received by the worker which is to be determined objectively rather than by reference to the acknowledgment (per Kourakis CJ and Blue J (at [121]-[123]) and Stanley J (at [185]-[188]).
3. Per Kourakis CJ and Blue J: On the proper construction of subsection 49(2), it refers to the weekly payments that would have been payable at the present time by reason of the previous injury if there had been no redemption (at [120]).
Per Stanley J, dissenting: On the proper construction of subsection 49(2) it refers to the weekly payments payable at the time of redemption by reason of the previous injury continuing indefinitely (at [187]).
4. Per the Court: On the proper construction of sections 42 and 49, section 49 is paramount over section 42 (per Kourakis CJ and Blue J (at [145] and Stanley J at [211]-[212]).
5. Per the Court: Appeal allowed. Answers by Tribunal set aside. In lieu thereof the stated questions are answered as follows:
(1) On the proper construction of sections 42 and 49 of the Return to Work Act 2014 (SA), can Ms Robinson’s weekly payment rate be a rate which is less than the FMW rate?
Answer: Yes.
(2) In light of the above, what is Ms Robinson’s weekly payment rate?
Answer: This question cannot be answered in the absence of further evidence. The weekly payment rate was the lesser of:
(a) Ms Robinson's notional weekly earnings (being $346.74); and
(b) $595.45 less the amount of weekly payments (if any) that Ms Robinson would have received for the relevant week as a result of the TCC injuries if there had been no redemption.
(Per Kourakis CJ and Blue J at [148] and Stanley J at [216]).
Fair Work Act 2009 (Cth) Parts 2 to 6; Return to Work Act 2014 (SA) Sections 5(15), 39, 42, 43, 45, 46, 47, 48, 49, 53, 60, 64 and 66; Workers Rehabilitation and Compensation Act 1986 (SA) Sections 4(15), 35, 39, 42 and 42A , referred to.
Lloyd v WorkCover Corporation/Allianz Australia Workers' Compensation (SA) Ltd (Bi-Lo Pty Ltd) [2004] SAWCT 59; Mericka v Employers Mutual/WorkCover Corporation (Pollard Brothers Pty Ltd) [2014] SASCFC 99, (2014) 120 SASR 137; Palios Megan & Nicholson Holdings Pty Ltd v Shore [2010] SASCFC 31 and (2010) 108 SASR 31; Ryan v WorkCover Corporation/Royal and Sun Alliance Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd/Samech Labour) [1999] SAWCT 8; Ryan v WorkCover Corporation/CGU Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd (Samech Labour) [2000] SAWCT 196; Tsimpinos v WorkCover Corporation/Allianz Australia Workers Compensation (SA) Limited (K and A Transport Pty Ltd) [2001] SAWCT 138; Tsimpinos v WorkCover Corporation/Allianz Australia Workers Compensation (SA) Limited (K and A Transport Pty Ltd) [2002] SAWCT 62; Wellington Capital Limited v Australian Securities and Investments Commission [2014] HCA 43, (2014) 254 CLR 314, considered.
RETURN TO WORK CORPORATION OF SOUTH AUSTRALIA v ROBINSON
[2018] SASCFC 32Full Court: Kourakis CJ, Blue and Stanley JJ
KOURAKIS CJ AND BLUE J: This is an appeal by the Return to Work Corporation of South Australia against answers given by the Full Bench of the South Australian Employment Tribunal to questions of law referred by a single member of the Tribunal.[1]
[1] Pursuant to the South Australian Employment Tribunal Act 2014 (SA) section 22.
The respondent Brenda Robinson suffered a work injury arising out of her part time employment with DD & DJ Pty Ltd. This resulted in total incapacity for work from 29 July 2015. Her average weekly earnings over the previous 12 months were $318 per week.[2] This was less than the adjusted Federal minimum wage of $333 per week and the amount payable under the applicable award of $347 per week (the award rate). She was therefore prima facie entitled to weekly payments of workers compensation of $347 per week pursuant to section 39 of the Return to Work Act 2014 (SA) (the Act).
[2] All dollar figures referred to herein are rounded to the nearest whole dollar except where otherwise shown.
Ms Robinson had suffered an earlier work injury in different employment in 1998. This had resulted in incapacity for work. Her notional weekly earnings calculated by reference to that injury were initially $312 but if she had remained incapacitated and in receipt of weekly payments they would have been adjusted to $595 as at July 2015. In 2000 the Corporation determined that Ms Robinson had the capacity to earn $297 per week and her weekly payments were reduced to $54. But for the reduction Ms Robinson would have been receiving $291 per week (80 per cent of her adjusted notional weekly earnings). In 2001 the Corporation paid $31,500 to Ms Robinson in redemption of her entitlement to weekly payments.
The Corporation determined in 2015 that Ms Robinson’s entitlement to weekly payments in respect of her 2015 work injury was capped at $304 pursuant to section 49. This figure comprised adjusted notional weekly payments of $595 (by reference to the 1998 injury) pursuant to subsection 49(1) less $291 per week that the Corporation determined Ms Robinson was deemed by subsection 49(2) to be receiving as payments that would have been payable in respect of her earlier injury if there had been no redemption.
Ms Robinson contended in the Tribunal that the Corporation should have determined that pursuant to section 42 of the Act she was entitled to weekly payments of $333 being the adjusted Federal minimum wage rate.
A single member referred two questions to the Full Bench, namely:
1.On the proper construction of sections 42 and 49 of the Act, can Ms Robinson’s weekly payment rate be less than the FMW rate?
2. In light of the above, what is Ms Robinson’s weekly payment rate?
The Full Bench by majority answered question 1 ‘no’ and question 2 ‘$333’. Gilchrist DPJ dissented and would have answered question 1 ‘yes’ and question 2 ‘$304’.
The Corporation appeals against the Tribunal’s orders, contending that it should have answered the questions in accordance with the reasons for judgment of Gilchrist DPJ.
On the initial hearing of the appeal, the question arose whether this Court should proceed on the basis that subsection 49(2) should be construed in the manner assumed by the Tribunal to result in a cap on weekly payments of $304 or should itself determine its proper construction and if so what is it (the subsection 49(2) construction questions). The Court heard submissions from the parties concerning these questions and invited submissions by an amicus curiae Mr Wells QC. The Attorney-General also intervened to make submissions on the subsection 49(2) construction questions.
Background
The 1998 TCC injury
Ms Robinson was born in August 1961. In 1998 she was employed part time by 21st Century Catering Pty Ltd (TCC). In the 12 months ending on 1 September 1998 her average weekly earnings were $312 per week.
On 1 September 1998 Ms Robinson suffered a work injury to her shoulders, arms and neck (the TCC injuries).[3] The Corporation[4] accepted that she was entitled to weekly payments pursuant to section 35 of the Workers Rehabilitation and Compensation Act 1986 (SA) (the Former Act). The Corporation commenced making payments of $312 per week.
[3] Ms Robinson suffered further injuries on 14 July and 28 September 1999. The nature of these injuries is not known but it is likely that she had not returned to work and these injuries were secondary injuries to the primary September 1998 injury. We refer to her 1998 and 1999 injuries collectively as the TCC injuries.
[4] Then known as WorkCover Corporation of South Australia. That body was continued in existence as Return to Work Corporation of South Australia pursuant to section 4 of the Return to Work Corporation Act 1994 (SA).
On 15 August 2000 the Corporation adjusted with effect on 1 September 2000 Ms Robinson’s notional weekly earnings to $364 by reason of movements in the relevant Australian Bureau of Statistics index of wages (the ABS index) since 1 September 1998 pursuant to section 39 of the Former Act. The Corporation reduced Ms Robinson’s weekly payments to $291 being 80% of her notional weekly earnings pursuant to section 35 of the Former Act.
The Corporation undertook a review of Ms Robinson’s entitlements. It obtained a medical report from Dr Meagan, who expressed the opinion that she was capable of performing the duties of a change room attendant for four hours per day five days per week. Ms Robinson undertook a work trial with Target which the Corporation regarded as successful.
On 4 September 2000 the Corporation determined that Ms Robinson was capable of performing the duties of a change room attendant earning $297 per week (based on 20 hours per week). It determined that her designated weekly earnings were $297 per week and she was entitled to weekly payments of $54 per week (80% of ($364-$297)) with effect from 25 September 2000. Ms Robinson disputed the determination. The parties negotiated.
On 9 March 2001 Ms Robinson and the Corporation entered into an agreement (the redemption agreement) pursuant to section 42 of the Former Act for the redemption by a capital payment of $31,500 of the Corporation’s liability to make weekly payments.
No evidence was adduced as to how or why the Corporation and Ms Robinson reached agreement on the sum of $31,500. All that can be said is that the parties were prepared to agree to the amount having regard to their respective personal and business interests and their subjective risk/benefit assessments.
Clauses 1 and 2 of the redemption agreement provided for redemption of the Corporation’s liability to make weekly payments by a capital payment of $31,500, which discharged the Corporation’s future liability to make weekly payments by reason of Ms Robinson’s injuries arising out of her employment with TCC. Clause 3 provided:
The worker further ACKNOWLEDGES that for the purpose of Section 35(6a) of the Act the worker is taken to be receiving a continuing weekly payment of $291.22.
No evidence was adduced as to how this clause came to be included in the agreement or how the figure of $291.22 was arrived at. It is not known for example whether the Corporation simply adopted a fixed practice of insisting on inclusion of a figure representing 80% of notional weekly earnings regardless of the worker’s residual working capacity.[5] Again all that can be said is that the terms of clause 3 were acceptable to both the Corporation and Ms Robinson in order to secure a redemption.
[5] In Cunningham v WorkCover Corporation/Mercantile Mutual Insurance (SA Workers Compensation) Ltd (Wingfield Bottle Depot) [2001] SAWCT 145 at [18] Gilchrist DPJ referred to such a practice.
Between March 2001 and late 2010 Ms Robinson suffered various non-compensable conditions. She did not work over this period as a result. In late 2010 she commenced work at a cafe working 15 hours per week.
The 2014 Jaspers Cafe injury
In May 2011 Ms Robinson commenced working for DD & DJ Pty Ltd trading as Jaspers Cafe (Jaspers Cafe) working 15 hours per week. She was unable to work more than this due to her non-compensable conditions.
In the twelve months ending on 1 December 2014 Ms Robinson’s average weekly earnings were $318 per week. However under the Restaurant Industry Award 2010 (the Award) she was entitled to be paid the award rate of $347 per week. Under the Federal minimum wage she was entitled to be paid at the rate of $333 per week.
On about 1 December 2014 Ms Robinson suffered depression arising out of her employment. She was totally incapacitated from working as a result from 29 July 2015.
The Corporation determined that Ms Robinson was entitled to weekly payments. It determined that her average weekly earnings in her Jaspers café employment were $347 by reference to the Award.
The Corporation determined that Ms Robinson’s relevant notional weekly earnings for the purpose of subsection 49(1) were $595 being her notional weekly earnings of $312 in her TCC employment as at 1 September 1998 adjusted by reference to the ABS index up to 1 September 2014. It determined that she was deemed by subsection 49(2) of the Act to be receiving weekly payments of $291 per week as a result of her TCC injuries by reason of ‘a redemption of your entitlement to weekly payments of $291.22 per week in (or about) 2001’. It determined that her weekly payments were capped by section 49 at $304 being $595 less $291.
Ms Robinson sought review by the Tribunal of the Corporation’s decision, contending that it should have decided that she was entitled to weekly payments of $333 in accordance with the Federal minimum wage pursuant to section 42 of the Act.
The weekly payments regime
The Act generally commenced on 1 July 2015[6] but applies to compensable injuries under the Former Act attributable to trauma occurring before 1 July 2015.[7]
[6] Some provisions commenced on 4 December 2014 and some provisions commenced on 1 January 2015 but those provisions are not relevant to this appeal.
[7] Return to Work Act 2014 (SA) Schedule 9 clause 29.
Entitlement to weekly payments
A worker is, subject to certain time limits, entitled to weekly payments of compensation if the worker suffers a work injury that results in incapacity for work.[8] This imports a causation test analogous to the causation test at common law for the tort of negligence.[9] Incapacity for work means an inability to return to the worker’s employment at the time of the occurrence of the injury.[10]
[8] Sections 39 and 41. Compare Worker's Rehabilitation and Compensation Act 1986 (SA) sections 35A to 35C.
[9] See Harwood v Wyken Colliery Company [1913] 2 KB 158 at 162 per Cozens-Hardy MR, 164-167 per Buckley LJ and 169 per Hamilton LJ; Ward v Corrimal-Balgownie Collieries Ltd (1938) 61 CLR 120 at 129-133 per Latham CJ and 140-142 per Dixon J; Bushby v Morris [1980] 1 NSWLR 81 at 87 per Lord Keith of Kinkel delivering the judgment of the Privy Council (Lords Diplock, Simon of Glaisdale, Salmon, Russell of Killowen and Keith of Kinkel). Compare March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506 at 515-517 per Mason CJ (with whom Toohey J and Gaudron J agreed) and 522-524 per Deane J (with whom Gaudron J also agreed) as to the common law test of causation.
[10] Section 36. Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 35.
If the work injury results in partial incapacity for work such that the worker is able to return to work in suitable employment, the worker is entitled to weekly payments:
·during the first 52 weeks: equal to 100 per cent of the difference between his or her notional weekly earnings and his or her designated weekly earnings;[11]
·during the next 52 weeks: equal to 80 per cent of the difference between his or her notional weekly earnings and his or her designated weekly earnings;[12]
·after 104 weeks for seriously injured workers the amount is the same as during the second 52 weeks; for non-seriously injured workers there is no entitlement to weekly payments after 104 weeks.[13]
[11] Sections 39(1)(a)(ii) and 41(1)(a)(ii). Under section 35 of the Worker's Rehabilitation and Compensation Act 1986 (SA) the position was the same up to 30 June 2008. From 1 July 2008 sections 35A(1)(b) and (2)(b) provided that 100 per cent was payable for an aggregate of 13 weeks' incapacity and then 90 per cent was payable for the next aggregate period of 13 weeks' incapacity. In both cases if the worker could not return to work in any suitable employment (total incapacity), there are no designated earnings in the formula.
[12] Sections 39(1)(b)(ii) and 41(1)(b)(ii). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) the position was the same up to 30 June 2008. From 1 July 2008 section 35A(3)(b) provided that 80 per cent was payable for an aggregate of 104 weeks incapacity after an aggregate of 26 weeks incapacity. In both cases if the worker could not return to work in any suitable employment (total incapacity), there are no designated earnings in the formula.
[13] Return to Work Act 2014 (SA) sections 39(1)(b), 39(3) and 41(1)(b). Under s 35 of the Worker's Rehabilitation and Compensation Act 1986 (SA)up to 30 June 2008, there was no change after two years. From 1 July 2008 section 35C provided that non-fully incapacitated workers had no automatic entitlement to weekly payments after an aggregate of 130 weeks' incapacity but the Corporation was empowered, on application by the worker, to continue weekly payments at 80 per cent if satisfied that the worker was in employment and by reference to the opinion of the medical panel the worker was likely to continue indefinitely to be incapable of undertaking further or additional work which would increase his or her current weekly earnings.
The entitlement to weekly payments terminates upon the worker attaining retirement age.[14] Retirement age is the earlier of the normal retiring age for workers in the same kind of employment or the eligibility age for the age pension.[15]
[14] Section 44(2). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) subsection 35(2). This is subject only to an entitlement to weekly payments for 104 weeks if the incapacity for work occurs within two years before retirement age: section 44(3) (compare Worker's Rehabilitation and Compensation Act 1986 (SA) subsection 35(3)).
[15] Section 44(1). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 35(8)(d).
Notional weekly earnings are defined to mean the worker’s average weekly earnings as adjusted under the Act[16] subject to a cap of twice State average weekly earnings.[17] Absent a change in circumstances, the principal adjustment is a periodic economic adjustment to reflect movements in wages over time under section 47.
[16] See sections 45, 46 and 47.
[17] Section 4. Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 3 definition which does not include the reference to twice State average weekly earnings.
Average weekly earnings are defined generally[18] to mean the average weekly amount earned during the 12 months preceding the injury in employment with each employer by whom the worker was then employed.[19] Average weekly earnings are subject to a cap of twice State average weekly earnings.[20] If the worker’s remuneration (pro rata if part time) is less than:
·the Federal minimum wage; and/or
·an applicable award or industrial agreement (collectively an industrial instrument),
average weekly earnings are adjusted upwards to the amount that would have been paid at the Federal minimum wage rate or industrial instrument rate as the case may be.[21]
[18] Subject to the qualifications, exceptions and extensions set out in section 5.
[19] Subsections 5(1) and (2). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 4.
[20] Section 5(15)(c). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 4(15).
[21] Subsection 5(15). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) subsection 4(15) in similar terms except it referred to a prescribed amount rather than the FMR.
Designated weekly earnings are defined to mean:
the current weekly earnings of the worker in employment or self‑employment (if any) but not so as to include a prescribed benefit.[22]
[22] Subsections 4(1), 39(2) and 41(2). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) subsection 4(15).
Section 43 imposes an obligation on a worker to make reasonable efforts to return to work in suitable employment. Subsection 46(5) authorises the Corporation to adjust weekly payments if there has been a change in the worker’s incapacity with a consequent change in the amount the worker could earn in suitable employment.[23]
[23] Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 35A(4)(b) and (5) which deemed subject to certain conditions earnings the Corporation determined could be earned in suitable employment to be part of designated earnings.
Federal minimum wage
As noted above, the adjustment to the definition of ‘average weekly earnings’ effected by subsection 5(15) of the Act effectively increases average weekly earnings to the Federal minimum wage (adjusted on a pro rata basis for part time) if the worker was being paid at a lower rate.
(15) Despite a preceding subsection—
(a) if an injured worker's remuneration was, at the relevant date, covered by an award or industrial agreement, the worker's average weekly earnings will not be less than the weekly wage to which the worker was then entitled under the award or industrial agreement; and
(b) if, but for this paragraph, the average weekly earnings of a worker (not being a self‑employed worker) would be less than the Federal minimum wage applying in relation to the worker (adjusted, in the case of a worker who was working at the relevant date on a part‑time basis, in accordance with the regulations so as to provide a pro‑rata amount), the average weekly earnings will be fixed at the Federal minimum wage (or, if relevant, the Federal minimum wage as so adjusted); and
(c) the average weekly earnings of a worker will in no case be fixed at more than twice State average weekly earnings.
In addition, section 42 provides:
42—Federal minimum wage safety net
(1) Despite the preceding sections in this Subdivision, if the combined amount that a worker would receive in respect of any incapacity for work in any week applying under any such section would result in the worker receiving less than the Federal minimum wage (adjusted, in the case of a worker who was working at the relevant date on a part‑time basis so as to provide a pro‑rata payment), the amount of compensation payable under this Subdivision will be increased so that the combined amount equals the Federal minimum wage (or, if relevant, the Federal minimum wage as so adjusted).
(2) For the purposes of this section—
(a)a reference to the combined amount is a reference to the combined total of the amount of compensation that would otherwise be payable under this Subdivision and the amount of the designated weekly earnings of the worker; and
(b)a reference to the relevant date is a reference to the date on which the relevant injury occurs; and
(c)a reference to a worker who is working on a part‑time basis will be determined after taking into account the usual work patterns of workers in employment of the kind in which the worker was working at the relevant date.
(3) The component of the relevant amount under subsection (1) that is constituted by the Federal minimum wage will be adjusted from time to time to reflect changes to the wages applying under a national minimum wage order under Part 2‑6 of the Fair Work Act 2009 of the Commonwealth in accordance with a scheme prescribed by the regulations.
There was no equivalent of section 42 in the Former Act. Section 42 effectively provides that the amount of compensation payable under Subdivision 2 is to be adjusted such that a worker receives in respect of any incapacity for work (adjusted on a pro rata basis for part time) the Federal minimum wage adjusted since it was last fixed to reflect changes to the wages applying under a national minimum wage order under Part 2‑6 of the Fair Work Act 2009 (Cth) (the FMW rate).
Redemption
A liability to make weekly payments may be redeemed under section 53 by a capital payment to the worker by agreement (a redemption agreement).[24] Preconditions to the making of the agreement include that a recognised health practitioner has certified that the extent of the worker’s incapacity resulting from the work injury can be determined with a reasonable degree of confidence and that the worker has first received competent professional advice about the consequences of redemption.[25]
[24] Section 53. Compare Worker's Rehabilitation and Compensation Act 1986 (SA) section 42.
[25] Subsection 53(2). Compare Worker's Rehabilitation and Compensation Act 1986 (SA) subsection 42(2).
Between 1 July 1987 and 25 May 1995 section 42 of the Former Act gave to the Corporation a discretion, exercisable on application by the worker, to commute a liability to make weekly payments to a lump sum representing the capitalised value of those payments (a commutation redemption). A worker who disputed the Corporation’s assessment could lodge a notice of dispute with the Workers Compensation Appeal Tribunal in which case that Tribunal would determine the capitalised value. A discount rate of three per annum was used to calculate the present value of future weekly payments.[26] With effect on 1 July 1994 section 42 was amended amongst other things to limit commutations to those in respect of which the actuarial equivalent of the weekly payments did not exceed the prescribed sum ($65,300 indexed by reference to movements in the Consumer Price Index since 1985).
[26] Worker's Rehabilitation and Compensation Corporation v Quee (Supreme Court of South Australia, Full Court, unreported S4621 23 June 1994) per Matheson, Prior and Nyland JJ; Workcover Corporation (Pine Village Holiday Resort) v Winning [1997] SAWCAT 54 per DPJ Parsons.
Between 1 July 1993 and 1 July 2008 section 42A of the Former Act empowered the Corporation on its own motion to assess a worker’s loss of future earning capacity as a capital loss (an assessed redemption). The capital sum was required to represent the present value (applying a discount rate prescribed to be three per cent per annum[27]) of the difference between the worker’s notional earnings (after tax) and the amount the worker had a reasonable prospect of earning in suitable employment. A worker who disputed the Corporation’s assessment could lodge a notice of dispute with the Workers Compensation Appeal Tribunal/Workers Compensation Tribunal in which case that Tribunal would determine the present value. We refer to the Workers Compensation Appeal Tribunal, the Workers Compensation Tribunal and the Employment Tribunal collectively as the Tribunal.
[27] Worker's Rehabilitation and Compensation Regulations 1987 (SA) regulation 8AA(1).
In the case of both commutation and assessed redemptions where the worker had a partial incapacity, there were two variable integers being the prospective term over which the worker would be incapacitated (the incapacity term) and the prospective weekly earnings the worker could earn given the partial incapacity (weekly earning capacity). Once these integers were determined, the weekly earning capacity was deducted from notional weekly earnings to give the prospective weekly payment entitlement the subject of the redemption (the weekly payment entitlement), subtracting income tax and calculating present value using the discount rate of three per cent.
Between 25 May 1995 and 1 July 2015 section 42 of the Former Act provided for redemption by agreement of liability to make weekly payments by a capital payment to the worker (an agreed redemption). This was in similar terms to section 53 of the Act.
On 1 July 2009 section 42(2)(e) was inserted which severely curtailed the use of agreed redemptions. A liability to make weekly payments could only be redeemed by agreement if the weekly payments did not exceed $30 (indexed); the worker was at least 55 years old and the worker had no current work capacity; or the Tribunal determined that the continuation of weekly payments was contrary to the best interests of the worker from a psychological and social perspective.
Serial injuries
If a worker is partially incapacitated as a result of a work injury while employed by one employer (the first injury) and later incapacitated as a result of a work injury while employed by another employer (the second injury), prima facie the worker is entitled to weekly compensation payments from each employer in respect of the incapacity caused by the injury suffered while employed by that employer.[28]
[28] Doudie v Kinneil Cannel & Coking Coal Co Ltd ([1947] AC 377 at 382 per Viscount Simon and 387 per Lord Macmillan (with whom Lord Simonds agreed) and 389 per Lord du Parcq in respect of section 9 of the Workmen’s Compensation Act 1925 (UK); Sydney City Council v Ince (1989) 16 NSWLR 690 at 701 per Clarke JA (with whom Hope and Meagher JJ agreed) in respect of section 9 of the Workmen’s Compensation Act 1926 (NSW).
If the second injury is an aggravation of the first injury, prima facie the worker would be entitled to weekly compensation payments from both employers.[29] This would lead to double compensation to the extent of the overlap. Section 49 was enacted to prevent double compensation of this kind.
[29] Wardleworth v Green (1996) 66 SASR 421 at 431-436 per Doyle CJ (with whom Bollen and Nyland JJ agreed). In that case this Court followed the same approach in respect of the Former Act as this Court had adopted in respect of the Workmen’s Compensation Act 1971 (SA) in Bratovich v Rheem (Aust) Pty Ltd (1971) 2 SASR 33 at 39-44 per Bray CJ (with whom Walters J agreed) and King J adopted in Australian Eagle Insurance Co Ltd v Federation Insurance Ltd (1976) 15 SASR 282 at 289.
Section 49 provides:
49—Protection from excess payments
(1)A worker is not entitled under this Division to receive, in respect of 2 or more injuries, weekly payments in excess of the worker's notional weekly earnings.
(2)If a liability to make weekly payments is redeemed (whether under this Act or the repealed Act), the worker is taken, for the purposes of this Act, to be receiving the weekly payments that would have been payable if there had been no redemption.
(3)If a liability to make weekly payments is discharged under a deed of release under section 66(7), the injured party (within the meaning of that section) is taken, for the purposes of this Division, to be receiving the weekly payments that would have been payable if the deed of release had not been entered into.
Section 49 does not fix the amount of weekly payments: rather it imposes a cap on the weekly payments that would otherwise be payable for the current injury and for the earlier injury.
The reference in subsection 49(1) to ‘the worker's notional weekly earnings’ is ambiguous. The equivalent provision in the Former Act has been held to mean the higher of the notional weekly earnings in respect of the first and second injuries.[30]
[30] Ryan v WorkCover Corporation/Royal & Sun Alliance Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd/Samech Labour [1999] SAWCT 8.
The Corporation accepts that construction and applied it in Ms Robinson’s case in the manner summarised at [24] above. If an injury is a second work injury and the worker suffered an earlier injury with respect to which he or she either remains entitled to weekly compensation or is taken to be receiving compensation with respect to it pursuant to section 49 of the Act, the worker’s notional weekly earnings are the highest of those earnings, as adjusted by section 45, 46 or 60.
That that is so with respect to an entitlement which has not been redeemed follows simply because a worker will make his or her claim with respect to the incapacity flowing from the injury suffered in that employment which generates the greater notional weekly earnings. There is no difficulty conceptually with this approach when the subsequent injury is an aggravation or exacerbation of an earlier one. However, the approach is problematic if the injuries are not related.
Under the 1971 Act, employers were individually liable and insured. A subsequent employer’s liability for weekly compensation was limited to the worker’s notional weekly earnings in that employment. Similarly the first employer was not liable for the effects of a subsequent injury which was a novus actus interveniens.
By contrast, the premise of the universal scheme enacted by the Former Act and the Act is that there is a single employer for the purposes of determining notional weekly earnings. In addition, by necessary implication, a worker’s notional weekly earnings, in a case in which the entitlement to compensation from a previous injury has been redeemed, must also be the highest of the notional weekly earnings. If it were otherwise, the deeming provision would deny compensation to a worker who returns to work in such part-time or alternative duties as are within his or her residual capacity but at a significantly reduced average weekly wage.
The operation of the Act on the various premises outlined in the preceding paragraph can be illustrated by the following example of a worker who suffers a major incapacitating injury to her lower limbs in employment (A) but returns to work on lower paid sedentary manual labour (employment B) before suffering a subsequent unrelated incapacity injury to her upper limbs:
Weekly
IncomeWeekly Compensation Employment A – Notional Weekly Earnings (NWE)
$750 -- Residual capacity exercised in employment B post injury
11
$500
($750 - $250)Reduction in compensation
after first year$400
(80% of $500)Compensation following subsequent injury based on NWE in employment A (no redemption)
Nil $600
(80% of $750)Compensation following subsequent injury if limited to NWE in employment B (no redemption)
Nil $250 Post-redemption compensation based on NWE in employment B if deemed receipt of $400/week on redemption of employment A injury
Nil
($250 less deemed receipt of $400)Post-redemption compensation based on NWE in employment A if deemed receipt of $400/week on redemption of employment A injury
$200 (80% of $750 less deemed receipt of $400)
The table does not adjust the notional weekly earnings amount for subsequent wage increases. Such increases would serve to exacerbate the loss of income in real terms of a worker in the postulated circumstances if notional weekly earnings were not assessed by reference to employment A.
Subsection 35(6) of the Former Act when originally enacted contained the equivalent of subsections 49(1) and 49(2) in a single subsection which we artificially divide into two notional paragraphs (a) and (b) as follows:
(a)A worker is not entitled to receive in respect of separate disabilities weekly payments in excess of the workers notional weekly earnings and
(b)where a lump sum has been paid to a worker in commutation of weekly payments the worker shall for the purposes of this subsection be deemed to be receiving the weekly payments represented by that lump sum.
With effect on 1 July 1993 the Corporation was empowered to assess a worker’s loss of future earning capacity as a capital loss under new Division IVA (section 42A) as summarised at [39] above.[31] With effect on 1 July 1993 new subsection 35(6a) was inserted as follows:
(6a)A worker’s entitlement to weekly payments under this section in respect of a disability that occurs after the Corporation has decided to pay compensation under Division IVA in respect of a prior disability will be reduced to such extent as may be fair and reasonable in view of the payment of compensation under Division IVA.
[31] Workers Rehabilitation and Compensation Act (Miscellaneous) Amendment Act 1992 (SA).
It is to be observed that section 35(6a) implicitly required an assessment of the extent of the worker’s ongoing incapacity from the previous injury and the degree to which the worker was compensated for that incapacity by the lump sum. With effect on 1 July 1994 section 42 was amended amongst other things to limit commutations to those in respect of which the actuarial equivalent of the weekly payments did not exceed the prescribed sum.
With effect on 1 July 1994 section 35 was amended to substitute new subsections 35(6), (6a) and (6b) as follows:
(6)A worker is not entitled to receive for two or more disabilities weekly payments in excess of the worker's notional weekly earnings.
(6a)If a liability to make weekly payments is commuted into a liability to make a capital payment, the worker is presumed, for the purposes of this section, to be receiving the weekly payments that would have been payable if there had been no commutation.
(6b)If a worker ceases to be entitled to weekly payments because the Corporation makes a capital payment for loss of earning capacity under Division 4A, the worker is presumed, for the purposes of this section, to be receiving the weekly payments the worker would have been receiving if there had been no commutation.
It is to be observed that to this point the weekly compensation that would have been payable but for the commutation redemption or assessed redemption would, in the event of a dispute over the capital sum paid, be determined by the Tribunal.
With effect on 25 May 1995 section 42 was amended to substitute for commutation by the Corporation provision for redemption agreements as summarised at [37] and [41] above.[32] At the same time subsection (6a) was substituted for the previous version so that subsections 35(6), (6a) and (6b) now provided as follows:
(6)A worker is not entitled to receive for two or more disabilities weekly payments in excess of the worker's notional weekly earnings.
(6a)If a liability to make weekly payments is redeemed, the worker is taken, for the purposes of this section, to be receiving the weekly payments that would have been payable if there had been no redemption.
(6b)If a worker ceases to be entitled to weekly payments because the Corporation makes a capital payment for loss of earning capacity under Division 4A, the worker is presumed, for the purposes of this section, to be receiving the weekly payments the worker would have been receiving if there had been no such capital payment.
[32] Workers Rehabilitation and Compensation Act (Miscellaneous Provisions) Amendment Act 1995 (SA).
With the amendment of section 42 and the introduction of agreed redemptions, there was no mechanism in respect of agreed redemptions for a determination by the Tribunal of the capital sum which should be paid and, therefore, the weekly payment to which the worker would have been entitled but for the redemption.
With effect on 1 July 2008 a new regime for weekly payments was substituted and section 42A present value assessments were abolished. As part of these changes, new subsections 35(4) and (5) were substituted for previous subsections 35(6) to (6b) as follows:
(4)A worker is not entitled under this Division to receive, in respect of 2 or more disabilities, weekly payments in excess of the worker's notional weekly earnings.
(5)If a liability to make weekly payments is redeemed, the worker is taken, for the purposes of this Division, to be receiving the weekly payments the worker would have been receiving if there had been no redemption.
The reasons of the Tribunal
McCusker PJ referred to and quoted from decisions of the Full Bench in Ryan No 1 and No 2,[33] Tsimpinos No 1)[34] and Lloyd[35] (addressed below) concerning the meaning and operation of subsections 35(6) to (6b) of the Former Act. McCusker PJ proceeded on the assumption that Ms Robinson was deemed by subsection 49(2) to be receiving $291 per week by reason of the 2001 redemption.
[33] Ryan v WorkCover Corporation/Royal and Sun Alliance Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd/Samech Labour) [1999] SAWCT 8; Ryan v WorkCover Corporation/CGU Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd (Samech Labour) [2000] SAWCT 196.
[34] Tsimpinos v WorkCover Corporation/Allianz Australia Workers Compensation (SA) Limited (K and A Transport Pty Ltd) [2001] SAWCT 138.
[35] Lloyd v WorkCover Corporation/Allianz Australia Workers’ Compensation (SA) Ltd (Bi-Lo Pty Ltd) [2004] SAWCT 59.
McCusker PJ considered the text of sections 42 and 49 and their context in the Act generally and in particular with respect to section 39, which McCusker PJ regarded as pivotal to the calculation of weekly payments. McCusker PJ concluded that the statutory intention was that the step required by section 49 was to be factored into the calculation of weekly payments effected pursuant to section 39 and section 42 operated after this step. McCusker PJ said:
The respondent’s argument involves the implication that by the removal of the provision in s 35(5) to a later subdivision (now s 49(2)) and the words, ‘the amount of compensation that would otherwise be payable under this Subdivision’ in s 42(1) shows Parliament intended to change how weekly payments were to be calculated.
I am not persuaded that Parliament intended such a change by that relocation. Particularly so when, as I say, s 49(2) speaks to and operates within s 39 at the point of calculation of weekly payments. As stated s 42 needs to have the weekly payment calculation completed before it can determine if that amount is less than the Federal minimum wage.
Therefore I conclude the weekly payments the worker is entitled to, is determined by the operation of s 39(1). That is in the first designated period, either the notional weekly earnings, a calculation requiring the application of ss 49(1) and (2), or exactly the same figure less the designated weekly earnings. In the second designated period it is 80 per cent of those alternatives. In each case reaching the s 39(1) figure necessitates the application of ss 49(1) and (2).
…
I turn to the function and purpose of s 42. The express purpose is that a worker in receipt of weekly payments will receive no less than the Federal minimum wage and pro rata in the case of part-time employment. The notion of a minimum wage federally has a long history dating back to 1907 and well understood in industrial jurisprudence. It is expressed in terms of a rate, and measured singularly on need. It seems somewhat a contradiction in terms to introduce a provision based upon need and then qualifying that to effect a reduction. I would be slow to attribute such an intent to the legislation.[36]
[36] Footnotes omitted.
Dolphin DP agreed with McCusker PJ. Dolphin DP referred to the decision in Lloyd and also proceeded on the assumption that Ms Robinson was deemed by subsection 49(2) to be receiving $291 per week. Dolphin DP gave additional reasons including the following:
Having set the rate of average weekly earnings, the case manager’s next task would be to ascertain the amount of weekly payments that an injured worker would be entitled to receive pursuant to s 39 of the RTW Act. … When considering the question as to the amount of weekly payments, the effect of any earlier redemption lump sum payment is also part of the matrix. Enter s 49(2).
At this stage of the process s 49(2) would require the case manager to consider the deemed weekly amount from the redemption agreement as the weekly payment that the injured worker would be taken to be receiving and then apply the formula as set out in Lloyd’s case to arrive at the answer as to the amount of weekly payments that the injured worker would be entitled to receive. …
Having arrived at the answer as to the amount of weekly payments that an injured worker should receive, in my view, the next question for the case manager would be whether the combined amount of weekly payments that the injured worker would receive is more or less than the Federal minimum wage. Enter s 42. If the answer is that the combined amount is equal to or greater than the Federal minimum wage then no further action is required. However if less than the Federal minimum wage, then the next task would be to increase the amount of weekly payments so that the combined amount that the injured worker would receive equals the Federal minimum wage.[37]
[37] Footnotes omitted.
Gilchrist DPJ dissented. Gilchrist DPJ referred to the decisions in Ryan and Lloyd and also proceeded on the assumption that Ms Robinson was deemed by subsection 49(2) to be receiving $291 per week. Gilchrist DPJ held that the text of sections 42 and 49 and the purpose of the other provisions of the Act indicated that section 49 was to be applied after section 42. Gilchrist DPJ said:
It is instructive that s 42 commences with the words ‘Despite the preceding sections in this Subdivision…’ (emphasis mine). In my view this plainly demonstrates that the purpose of s 42 is to ensure whatever a worker’s notional weekly earnings are, as determined by the provisions contained in sub-division 2 of Division 4 of the Act, and notwithstanding the reduction of income support to 80% of notional weekly earnings as provided for by s 39, a worker will not be paid less than the Federal minimum wage as adjusted on a pro rata basis.
If the intended reach of s 42 was to extend to offering protection from a reduction in weekly payments occasioned by the application of s 49, I would have expected s 42 to be expressed in terms such as: ‘Despite any other provision in this Act…’ , or ‘in the Division’ (emphasis mine).
As such, I think a textual analysis of the relevant provisions supports Gallagher Bassett’s suggested construction.
…
Whilst it is understandable that Parliament would want to ensure that an incapacitated worker, even after the reduction to 80% of notional weekly earnings as provided for by s 39, would not be paid less than the Federal minimum wage as adjusted on a pro rata basis, it is not so obvious why that would be so in respect of a worker who had converted an ongoing entitlement to weekly payments to a lump sum. After all, as Wilson J observed in Harrington v Harrington, ‘the fundamental idea implicit in the notion of redemption was always that of a conversion from one form to another of the liability of an employer to pay compensation to a worker.’
…
The difficulty that has arisen in this case that gives force to the submissions advanced by Mr McDonald, is that it is likely that the redemption here was not a fair exchange that simply converted one liability, ie an ongoing entitlement to weekly payments, into another, ie a lump sum.
But the facts in this case cannot dictate how the provision should be construed.
…
In cases where there has been a fair exchange, it makes no sense why Parliament would feel the need to give a worker the protection of the Federal minimum wage in the event of a further compensable injury. Indeed, a person who has redeemed who subsequently obtains employment will, if the redemption has been a fair exchange, be in a better position than a comparable worker who has not redeemed. That is so because the worker who did not redeem will have had his or her weekly payments payable on account of the earlier injury reduced because the earnings from the later employment will be treated as designated earnings for the purposes of s 39 of the RTW Act.
The Tribunal by majority answered the questions reserved as follows:
1.On the proper construction of ss 42 and 49 of the Return to Work Act 2014 (SA), can Ms Robinson’s weekly payment rate be a rate which is less than the FMW rate?
Answer: No
2.In light of the above, what is Ms Robinson’s weekly payment rate?
Answer: $332.58 per week.
The subsection 49(2) deemed weekly payments
During submissions before the Tribunal, the parties proceeded on the assumption that, subject only to the operation of section 42, the Corporation’s October 2015 determination that by the operation of section 49 Ms Robinson’s weekly payment rate was capped at $304 was correct.
An issue on appeal?
During submissions in this Court on appeal, the validity of the assumption made in the Tribunal as to the construction of section 49 was questioned. The Court invited submissions on the subsection 49(2) construction questions.
Although both parties invited the Court to determine the appeal on the basis that subsection 49(2) is to be construed in accordance with the assumption made by the Tribunal without regard to the merits of the assumption, it is impossible to proceed on that basis for two reasons. First and foremost, as observed by the members of the Tribunal in their reasons for judgment, sections 42 and 49 cannot be construed in isolation but must be construed within the context of the Act as a whole. It was the ostensible unfairness of the assumed construction of section 49 (as exemplified in Ms Robinson’s case) that was relied on in part by the majority as justifying the construction of section 42 they adopted. This Court is required to consider the true context and meaning of the Act and cannot proceed on an artificial basis that the effect of section 49 is different to its true effect.
Secondly there were two questions reserved to and answered by the Full Bench. The Corporation appeals against the answers to both questions. This Court is therefore required to consider whether, whatever be the answer to question 1, the answer to question 2 should as a matter of law be $332 per week as decided by the majority or $304 as decided by Gilchrist DPJ or some other figure or the question cannot not be answered on the material before the Tribunal. We acknowledge that this Court could, if not satisfied that the premise on which the Tribunal and the parties have proceeded was sound, set aside the Tribunal’s answer to the second question and substitute the answer ‘We decline to answer’. However both because it affects the proper construction of section 42 and in the interest of finality the validity of the premise should be addressed.
Alternative constructions
Subsection 49(2) provides that, if there has been a redemption of weekly payments, the worker is taken to be receiving the weekly payments that would have been payable if there had been no redemption.
On the hearing of the appeal, four potential alternative constructions of the words italicised above were identified. For ease of expression, the weekly payments that the worker is taken to be receiving are called the deemed weekly payments; the previous injury the subject of the redemption is called the previous injury; the injury the subject of the current claim is called the current injury; and the alternative constructions are expressed in respect of the week following the current injury (the relevant period) on the assumption that the injury caused immediate incapacity.
The alternative constructions are that the subsection refers to:
1.the weekly payments that would have been payable in the relevant period by reason of the previous injury (the objective construction);
2.the weekly payments implicit (or explicit) in the redemption sum in respect of the relevant period in respect of the previous injury (the redemption sum construction);
3.the weekly payments that would have been predicted at the time of redemption to be payable in the relevant period by reason of the previous injury (the prospective construction);
4.the weekly payments payable (or paid) at the time of redemption by reason of the previous injury (the historical construction).
Ms Robinson advances the first construction, with the second and third constructions as alternatives. The Corporation advances the fourth construction.
An additional construction was identified under which the subsection refers to the amount of weekly payments acknowledged by the worker in the redemption agreement (if specified) as the amount of weekly payments to be deemed to have been payable for the purpose of section 49 (the acknowledgement construction). We address this construction below but observe at this point that it is incapable of comprising the primary construction of subsection 49(2) for at least two reasons. First, because the Act does not contemplate such a specification, the legislature cannot have intended it to be the sole or even the primary method of identification of the deemed weekly payments. Secondly it is fundamental that both the construction, and application to the facts, of subsection 49(2) are matters for the properly constituted Tribunal under the Act and not matters for the parties to agree privately.
Prior authorities
In Ryan No 1[38] the Full Bench rejected the objective construction advanced by Ryan but it is not clear whether it adopted the historical, prospective or redemption sum construction. The Full Bench gave very brief reasons on the construction issue. The Full Bench did not regard the parties as bound by a term of the redemption agreement that the amount of weekly payments being redeemed was $26 per week and considered that the true amount being redeemed could be determined by reference to evidence if that figure were challenged. Jennings PJ, Parsons DPJ and Gilchrist DPJ said:
Mr Saies would have it, that if we come to that conclusion what is required is an assessment of what the worker would have in fact been receiving by way of weekly payments as opposed to those which were ostensibly redeemed. The scope of such an inquiry might involve a number of different considerations such as changes in the availability of overtime to comparable workers continuing to be employed by the employer of the worker at the time of the original compensable disability, changes in the level of the worker’s incapacity for work and changes in the rate of remuneration payable to comparable workers, just to name a few. Whilst we concede that that is a possible interpretation of section 35(6a), bearing in mind that the assessment of what the worker’s entitlements to weekly payments would have been at the time of the occurrence of a further disability, and that that might be many years after the disability that was the subject of the redemption agreement occurred, we think it highly unlikely that that is what Parliament intended. We think it far more likely that Parliament intended that in a case where a worker has agreed to redeem the Corporation’s liability to pay future weekly payments, section 35(6a) would deem a worker for the purposes of section 35(6) to be receiving the weekly payments that were redeemed, and we do not think that it unduly strains the language used in that provision to come to that conclusion.
In this case it was represented to us that the worker and the Corporation agreed that the quantum of the weekly payments that were redeemed was $25.73 per week. Notwithstanding the submissions made by Mr Saies during the course of his argument, that that figure might have been arrived at by way of an artificial means, there is no evidence to back that up, and as a result, we think it appropriate to proceed upon the basis that that figure is correct.[39]
[38] Ryan v WorkCover Corporation/Royal & Sun Alliance Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd/Samech Labour) [1999] SAWCT 8.
[39] At pages 5-6.
In Tsimpinos No 1[40] the Corporation made an interim assessment pursuant to section 42A of Tsimpinos’ capital loss based on the net present value of weekly payments of $288. The parties then entered into a redemption agreement which contained a term whereby Tsimpinos acknowledged that for the purpose of subsection 35(6b) he was taken to be receiving a continuing weekly payment of $288. When Tsimpinos suffered a new work injury, the Corporation determined that subsection 35(6b) deemed him to be receiving weekly payments of $288.
[40] Tsimpinos v WorkCover Corporation/Allianz Australia Workers Compensation (SA) Limited (K and A Transport Pty Ltd) [2001] SAWCT 138.
At first instance Thompson ADP upheld the Corporation’s determination.[41] The Full Bench overturned this decision on appeal. The Full Bench rejected the Corporation’s contention that the figure of $288 recorded in the redemption agreement was determinative of the weekly payments that were redeemed. It is not clear whether the Full Bench adopted the historical or redemption sum construction. The Full Court Bench gave only brief reasons on the construction issue. Jennings PJ, Cawthorne DPJ and McCouaig DP said:
In our view, the expression ‘taken … to be receiving the weekly payments that would have been payable if there had been no redemption’ must mean the weekly payments that are being converted to the lump sum. After all, that is the liability that is being converted. ….
The Corporation would have it that it is sufficient to simply record the agreed figure in the redemption agreement…
…
…, whilst we would expect a redemption agreement to identify the weekly payment that is being redeemed, we do not think that the agreement can of itself, without more, create the liability that is being redeemed. In our respectful opinion, in reaching the contrary conclusion the learned Deputy President erred.
In this case it appears that at the time of the making of the redemption agreement the worker was in receipt of a capital payment for loss of future earning capacity under s 42A. By virtue of s 35 (6b) he is presumed to have then been receiving the weekly payments that he would have been receiving had there been no such capital payment. What that figure is, is a question of fact. Having received supplementary written submissions from the parties, we now know that it is not the figure referred to in the redemption agreement.[42]
[41] Tsimpinos v WorkCover Corporation/Allianz Australia Workers Compensation (SA) Limited (K and A Transport Pty Ltd) [2000] SAWCT 201.
[42] At [35]-[36], [39]-[40].
The Full Bench remitted the matter back to Thompson ADP to reconsider in light of its reasons. Surprisingly, the only further evidence adduced by either party on the remittal was ‘evidence’ by Tsimpinos’ solicitor that he was told by Tsimpinos at the time of the redemption agreement that he was receiving weekly payments of compensation of $275. Thompson ADP held that the figure of $288 was the amount of the liability for weekly payments redeemed because it represented the interim capital sum of $14,964 divided by 52.[43]
[43] Tsimpinos v WorkCover Corporation/Allianz Australia Workers Compensation (SA) Limited (K and A Transport Pty Ltd) [2002] SAWCT 21.
In Tsimpinos No 2,[44] the Full Bench again overturned Thompson ADP’s decision. The Full Bench held that, as the only evidence adduced by the parties on the remittal was the evidence that Tsimpinos had been receiving weekly payments of $275 at the time of the redemption, this was the only basis on which a determination could be made. The Full Bench apparently adopted the historical construction but gave only brief reasons on the construction issue. Jennings PJ, Cawthorne DPJ and Gilchrist DPJ said:
The task of the learned Deputy President was to identify what the quantum of the payments payable at the time of executing the redemption agreement were, it having been held by the Full Bench in Tsimpinos [No 1] that the parties could not by their agreement, without more, create the liability that was being redeemed.
Mr Crawley, the solicitor advising the worker when the redemption agreement was negotiated, made a statement that was placed before the learned Deputy President. It contained the following:-
‘He [ie the worker] informed me that he was presently receiving workers compensation of $275 per week gross; his private company was paying him $515 gross per week.’
…
That being the case, the only finding that could have been made as to the quantum of weekly payments payable immediately prior to the redemption agreement was $275 per week.
What then of the fact that the redemption agreement purports to redeem a higher liability than that? The reasoning of Tsimpinos [No 1] leads to a conclusion that absent a determination or order stipulating that the worker was in fact entitled to be paid a higher amount of weekly payments as reflected by the redemption agreement than he was in fact entitled to be receiving at the time of the execution of that agreement, the Corporation cannot rely upon the higher figure stipulated in the redemption agreement.
…
In this case the only finding reasonably available on the evidence presented below was a finding that the worker was entitled to receive a weekly amount of $275 per week at the time of the execution of the redemption agreement. That being so, it should have been found that that was the amount that was being redeemed and that that was the figure that had to be taken into account pursuant to s 35(6a) in respect of a later disability.[45]
[44] [2002] SAWCT 62.
[45] At [25]-[26], [32]-[33], [37].
The Full Bench also addressed an argument by Tsimpinos that Thompson ADP should have found that the incapacity period underlying the redemption sum was a limited period and not until he turned 65. The Full Bench accepted that parties could enter into a redemption agreement on such a basis under the 1971 Act and (without deciding) considered that it was arguable that they could also do so under the Former Act. The Tribunal proceeded on the basis that, if the parties did enter into such a redemption agreement and it was permitted by the legislation, the deeming provision would operate for the limited term. Jennings PJ, Cawthorne DPJ and Gilchrist DPJ said:
Conceptually we have no difficulty with the notion that there can be a redemption of a future liability to pay weekly payments for a fixed period…
Under the Workers Compensation Act 1971 … it was common place for redemptions to be struck on the basis that the incapacity for work underpinning the redemption would cease at some future point in time. ...
As for the situation under the Act, because the Act does not enable the Tribunal to determine a liability to pay weekly payments for a specific and limited period in the future, there must be some doubt as to whether the parties can formalise their agreement in respect of such a liability in a way necessary to underpin a redemption agreement. On the other hand, it might be thought that in requiring a worker to obtain a certification from a recognised medical expert as to whether the extent of the worker’s incapacity for work can be determined with a reasonable degree of confidence, Parliament had such redemptions in mind.[46]
[46] At [15]-[17].
The Tribunal went on to say that there was no reason to find that the incapacity term was other than the period until Tsimpinos turned 65. The Tribunal construed the redemption agreement as impliedly so providing. Jennings PJ, Cawthorne DPJ and Gilchrist DPJ said:
It is not, however, necessary for us to explore this further, because in our view, the redemption agreement speaks for itself. If it purported to redeem the Corporation’s liability to pay weekly payments for some period other than to the age of 65, it would have said so. In our view, there is no basis to assume that some lesser period was being agreed. The fact that the lump sum payment does not reflect a capital sum that an actuarial calculation based upon a discount rate of three percent would reveal for a weekly payment of $287.77 up to the date of the worker’s 65th birthday is not to the point.[47]
[47] At [18].
In Lloyd[48] the parties entered into a redemption agreement pursuant to which the Corporation’s future liability to pay weekly payments was redeemed for $49,500 based on a liability for weekly payments of $287. When he suffered a subsequent work injury, the Corporation determined that subsection 35(6a) deemed him to be receiving weekly payments of $287. Lloyd did not challenge this part of the Corporation’s determination. The only issue involved the application of subsection 35(6) and whether, as Lloyd contended, the Corporation should have started with the higher of the weekly earnings Lloyd was earning in his new employment or the weekly earnings he had been earning in his previous employment adjusted for economic adjustments since the date of redemption. Lloyd’s contention in this respect was upheld by the Full Bench.
[48] Lloyd v Workcover Corporation/Allianz Australia Workers’ Compensation (SA) Limited (Bi-Lo Pty Ltd) [2004] SAWCT 59.
This Court has not previously considered the issue of construction of section 49 that now arises.
In Palios Megan & Nicholson Holdings Pty Ltd v Shore,[49] Shore sued her solicitors for negligence in amongst other things not advising her that payments of compensation in respect of any future injury might be reduced by $532, she having entered into a redemption agreement with the Corporation that contained a term in which she acknowledged that ‘I am aware of the application of section 35(6a) of the Workers Rehabilitation and Compensation Act, 1986 and I will be taken to be receiving a continuing weekly payment of $532.70 had it not been for this redemption’. The trial Judge found that she was not given such advice but this factual finding was overturned by this Court on appeal in light of Shore’s signed acknowledgement. The action was between Shore and her solicitors: the Corporation was not a party. Shore conducted her case on the premise that payments of compensation in respect of any future injury would be reduced by $532 and Palios Megan took no issue with that.
[49] [2010] SASCFC 31, (2010) 108 SASR 31.
In Mericka v Employers Mutual/WorkCover Corporation (Pollard Brothers Pty Ltd),[50] Mericka contended that advice he received from his solicitors before entering into a redemption agreement was not ‘competent professional advice about the consequences of redemption’ as required by section 42(2)(a) of the Former Act. He made no complaint about the advice insofar as it addressed section 35(6a): his complaint was that he did not receive adequate advice about the loss of weekly payments in respect of the injury the subject of the redemption. This Court by majority held that he failed to establish that the Full Bench erred in law in concluding that he had not proved that the advice was not competent in this latter respect.
[50] [2014] SASCFC 99, (2014) 120 SASR 137.
Neither of these two authorities addressed in any way the issue of construction of subsection 35(6a) of the Former Act that arises on the present appeal.
The proper construction of subsection 49(2)
Section 49 provides:
49—Protection from excess payments
(1)A worker is not entitled under this Division to receive, in respect of 2 or more injuries, weekly payments in excess of the worker's notional weekly earnings.
(2)If a liability to make weekly payments is redeemed (whether under this Act or the repealed Act), the worker is taken, for the purposes of this Act, to be receiving the weekly payments that would have been payable if there had been no redemption.
(3)If a liability to make weekly payments is discharged under a deed of release under section 66(7), the injured party (within the meaning of that section) is taken, for the purposes of this Division, to be receiving the weekly payments that would have been payable if the deed of release had not been entered into.
Starting with the text of subsection 49(2), the plain and ordinary meaning of the phrase ‘the weekly payments that would have been payable if there had been no redemption’ is the weekly payments objectively payable at the present time on the present facts (excluding the fact of the redemption). That is, subsection 49(2) refers to the worker’s present actual incapacity to work as a result of the previous injury. The text indicates the objective construction and not the alternative constructions.
Turning to the context of subsection 49(2) within section 49, the purpose of subsection 49(2) is principally ancillary to subsection 49(1) which imposes a cap on a worker’s entitlement to weekly payments in respect of two or more injuries equal to ‘the worker's notional weekly earnings‘. While subsection 49(2) is expressed to be ‘for the purposes of this Act’ and applies also for the purposes of other sections such as section 42 and section 64 considered below, it is clear that its principal purpose is as being ancillary to subsection 49(1). As noted above, it is common ground on appeal that it is implicit in subsection 49(1) that the reference to ‘the worker's notional weekly earnings‘ is a reference to the higher (or highest) of the worker’s notional weekly earnings in respect of either or any of the two or more injuries in question.
Subsection 49(1) only addresses the situation in which a worker is still incapacitated to some extent by reason of two or more compensable injuries. Subsection 49(1) caps a worker’s entitlement to weekly payments at the higher (or highest) of the worker’s notional weekly earnings in respect of each compensable injury.
In the absence of subsection 49(2), in a case in which a worker is no longer receiving weekly payments in respect of a previous injury because the Corporation’s liability to pay them has been redeemed by payment of a lump sum, subsection 49(1) would have no effective operation notwithstanding that but for the redemption the worker would be receiving weekly payments in respect of the previous injury. No allowance by way of reduction could be made for the capitalisation of the weekly compensation payable for the previous injury.
The context of subsection 49(2) within section 49 suggests that it requires the fact of the redemption to be disregarded and the Corporation (or Tribunal on review) to determine the amount of weekly payments that the worker would otherwise be receiving at the relevant time. This context supports the objective construction.
Subsection 49(3) is also a deeming provision ancillary to subsection 49(1). It applies when a worker has concurrent entitlements to damages paid or payable by a third party (the wrongdoer) and weekly payments paid or payable by the Corporation (or a self-insured employer) and the worker and the Corporation (or self-insured employer) enter into a subsection 66(7) agreement (deed of release) pursuant to which the worker discharges the liability of the Corporation (or self-insured employer) to pay future compensation on the basis that the worker is entitled to retain the full amount of the damages paid or payable by the wrongdoer after repayment of any compensation already received. In this case subsection 49(3) deems the worker to be receiving the weekly payments that would have been payable if the deed of release had not been entered into. In the case of subsection 49(3) only the objective construction is apposite. The alternative constructions simply cannot apply. This is a strong indication that the objective construction applies also to subsection 49(2).
Turning to the evident purpose of subsection 49(2), as observed above it was necessary for the legislature to include some provision to avoid the purpose of subsection 49(1) being frustrated in the case in which a worker is not receiving any weekly payments in respect of the previous injury by reason only of the liability to make weekly payments having been redeemed. This purpose supports the objective construction.
In Wellington Capital Limited v Australian Securities and Investments Commission[51] Gageler J said:
Ordinarily, a legal fiction is not construed to have a legal operation beyond that required to achieve the object of its incorporation.[52]
This supports the objective construction.
[51] [2014] HCA 43, (2014) 254 CLR 314.
[52] At [51]. See also Re Levi; Ex parte Walton (1881) 17 Ch D 746 at 756 per James LJ; Commissioner of Taxation v Comber (1986) 10 FCR 88 at 96 per Fisher J.
The Corporation contends that the objective construction would be potentially unfair to it if after the redemption sum is paid a worker’s capacity to work improves to a greater extent than the basis on which the redemption sum was calculated and the legislature is unlikely to have intended the possibility of such unfairness. There are several answers to this argument. First, considered at the macro-level at which the Corporation ultimately operates, the legislature is likely to have expected that swings would balance roundabouts: in some cases workers’ capacity to work would improve to a greater extent but in other cases it would improve to a lesser extent than the basis on which the redemption sum was calculated. Ultimately it is within the power of the Corporation to manage that risk. In addition, it may be expected that the lure of a capital sum will entice workers into accepting redemption sums less than the present value of their likely future entitlements.
Secondly, if in a particular case a worker’s capacity to work improves to a greater extent than the basis on which the redemption sum was calculated, this will be the case regardless of whether the worker suffers a subsequent injury. In other words, if a redemption agreement proves disadvantageous to the Corporation compared to the continuation of weekly payments during the period of incapacity, the disadvantage is the result of the terms on which the Corporation negotiated the redemption agreement and not of the fact that the worker might suffer a subsequent injury. The position is broadly analogous to the position that would apply on an assessment of damages at common law in respect of the current injury under which, regardless of whether there had been a redemption in respect of the previous injury, the court would take into account the actual pre-existing incapacity by reason of the previous injury (if any) in assessing the incremental effect of the current injury on the worker’s capacity to work. While the position is not identical because the common law assessment is flexible and the Act contains formulae that must be applied in the assessment, the underlying approach is the same.
Thirdly and most importantly, the alternative construction advanced by the Corporation (the historical construction) involves potentially much greater unfairness (addressed below).
The Corporation contends that the objective construction is complex because it requires an assessment of the worker’s incapacity at the relevant time as a result of the previous injury. This is not a particularly complex or unusual task. It is of the same nature as the assessment required in any event of the worker’s incapacity as a result of the current injury. It is similar to the assessment required when determining the respective contributions of successive employers if a partially incapacitated worker suffers an additional injury whilst exercising his or her residual capacity. Moreover, the historical construction advanced by the Corporation requires an assessment of the worker’s incapacity at the time of redemption as a result of the previous injury which would ordinarily be more difficult.
We turn to consider the alternative constructions. The Corporation advances the historical construction under which the reference to the ‘weekly payments that would have been payable if there had been no redemption’ is a reference to the weekly payments payable at the time of the redemption. This construction is advanced on the basis that the weekly payments payable at the time of the redemption are deemed by subsection 49(2) to continue until the worker ceases to be eligible for any weekly payments (usually when the worker reaches retirement age). The Corporation recognises that it would be arbitrary and inappropriate to fasten on the amount of the weekly payments that were paid at the time of redemption and instead advances a construction under which the amount of weekly payments payable at the time of redemption is picked up.
The text of subsection 49(2) does not accommodate the historical construction. The reference to ‘the weekly payments that would have been payable if there had been no redemption’ is a reference to the time addressed by section 49 which is the relevant time (ie the current time) in respect of which weekly payments must be calculated. It is not a reference to weekly payments that were payable at some historic time. If the liability to pay weekly payments arising out of the previous injury has not been redeemed, subsection 49(1) precludes the worker receiving in respect of the previous and current injuries combined weekly payments in excess of the worker's notional weekly earnings. The reference to the amount the worker is receiving is plainly a reference to the current amount the worker is actually receiving and not to the historical amount the worker received when first injured. There is no reason why subsection 49(2) should take a different approach and refer to the weekly entitlement amount determined potentially many years earlier at the time of redemption. Moreover, as is demonstrated below, it serves no rational purpose to determine the amount of any reduction by reference to a historical incapacity. The historical construction requires the reading of additional words into subsection 49(2).
Textually there is nothing in subsection 49(2) that deems weekly payments that were payable at an historical time to continue until the worker ceases to be eligible for any weekly payments. There is no precondition for a redemption that it can only occur if the worker will be incapacitated until retirement age. A redemption can be made under section 53 of the Act, and could be made under section 42 of the Former Act, on the basis that for example the worker will be incapacitated for five years but thereafter will return to full capacity. The historical construction requires the reading of considerable additional words into subsection 49(2) in this respect.
If the legislature had intended to deem the weekly payments that were payable at the time of redemption to continue until a worker reaches retirement age (which may be 40 years in the future), it may be expected that it would have expressly so provided. Moreover it would have been faced with several policy and drafting choices which it would have been necessary to resolve. First, is the historical amount fixed by reference to the amount that was paid at the time of redemption or the amount that would have been payable if objectively determined by the Tribunal? Secondly is the historical amount to be adjusted by reference to changes in rates of remuneration pursuant to section 47 of the Act and section 39 of the Former Act?
The statutory fiction enshrined in s 49(2) is that, for the purposes of the RTW Act, where a liability to make weekly payments has been redeemed, the worker is taken to be receiving the weekly payments that would have been payable if there had been no redemption. The provisions of s 49(2) derive from the fundamental concept implicit in the notion of redemption, which is a conversion from one form to another of the liability to pay compensation, namely, weekly payments to a lump sum.[69] The statutory fiction reflects this idea of conversion. The worker is deemed to be receiving the weekly payments that she would have received if there had not been a redemption. It is that liability which has been converted into a lump sum. It deems a worker in those circumstances to be in receipt of an amount by way of weekly payments the worker is not actually receiving. The statutory fiction notionally provides that the worker is in receipt of weekly payments and the amount of those payments is the actual amount of the weekly payments the Corporation was liable to pay at the time of the redemption; but it is not merely the amount of the notional weekly payments that the provision deems. It is also the duration of those payments. That is implicit in the operative expressions “receiving” and “payable”.
[69] Harrington v Harrington [1981] HCA 42, (1981) 155 CLR 317 at 332.
The respondent submits the payments are deemed to continue only for so long as it would take to exhaust the amount of the redemption sum. However, the very concept of redemption does not necessarily imply, as the respondent submits, at least in the context of this provision, that there must be some actuarial equality between the amount of the lump sum and the notional weekly payments, given the underlying purpose of s 49 is to reduce the Corporation’s liability to pay compensation for the subsequent injury or injuries. There are two features to the statutory fiction. The first concerns quantum. The second concerns duration. Section 49(2) deems the worker to be receiving the weekly amount that the worker was actually entitled to receive immediately before redemption. That follows from the use of the phrase “that would have been payable if there had been no redemption”. In its context, that phrase must be understood to mean payable as at the date of the redemption. This is a single inquiry. It also deems the worker to be in receipt of that amount indefinitely. This follows from the fiction enshrined in s 49(2) that there has been no redemption. It is illogical to treat the period during which the deemed payments are made as being dictated by the amount of the redemption sum when the hypothesis posited by s 49(2) is that there is no redemption. In these circumstances, it follows that, for the purposes of s 49(2), the deemed duration of the weekly payments that the worker is taken to be receiving, rather than being limited by the amount of a lump sum that notionally has not been received, is indefinite.
That construction is consistent with the purpose of the provision which is to reduce the liability of the appellant to pay that deemed amount by way of weekly payments in respect of an incapacitating subsequent work injury. It also avoids unnecessary complexity and uncertainty in assessing the duration of the period during which the redemption sum would be exhausted by reference to discount rates, interest rates and taxation considerations. Calculating the precise duration of those weekly payments would present real difficulty. That is undesirable in any legislation but particularly is to be avoided, if possible, in legislation in this area.
Further, I do not accept the respondent’s construction as it involves reading into s 49(2) the words “until the redemption sum is exhausted”. The principles applicable to the circumstances in which a court can legitimately read words into legislation for the purposes of interpretation were considered in Taylor v The Owners – Strata Plan No 11564 and Others (Taylor),[70] in the majority judgment of French CJ, Crennan and Bell JJ who said:[71]
[70] [2014] HCA 9, (2014) 253 CLR 531.
[71] [2014] HCA 9 at [35]-[40], (2014) 253 CLR 531 at 547-549.
In Young Spigelman CJ suggested that the authorities do not warrant the court supplying words in a statute that have been "omitted" by inadvertence per se. Construing the words actually used by the legislature in "their total context", Spigelman CJ suggested that the process of construction admits of reading down of general words or giving the words used an ambulatory operation. His Honour cited Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation as an instance of the former and Bermingham v Corrective Services Commission (NSW) as an instance of the latter. In R v PLV his Honour expanded on his analysis in Young, observing:
"The authorities which have expressed the process of construction in terms of 'introducing' words to an Act or 'adding' words have all, so far as I have been able to determine, been concerned to confine the sphere of operation of a statute more narrowly than the full scope of the dictionary definition of the words would suggest. I am unaware of any authority in which a court has 'introduced' words to or 'deleted' words from an Act, with the effect of expanding the sphere of operation that could be given to the words actually used. … There are many cases in which words have been read down. I know of no case in which words have been read up."
(Emphasis in original)
In Leys the Victorian Court of Appeal was critical of Spigelman CJ's characterisation of purposive construction as a process of construing "the words actually used" (emphasis in original). Their Honours said that the process requires the court to determine whether the modified construction is reasonably open in light of the statutory scheme and against a background of the satisfaction of Lord Diplock's three conditions. Their Honours questioned the utility of the distinction between "reading up" and "reading down" and rejected the proposition that a purposive construction may not result in an expanded operation of a provision.
Consistently with this Court's rejection of the adoption of rigid rules in statutory construction, it should not be accepted that purposive construction may never allow of reading a provision as if it contained additional words (or omitted words) with the effect of expanding its field of operation. As the review of the authorities in Leys demonstrates, it is possible to point to decisions in which courts have adopted a purposive construction having that effect. And as their Honours observed by reference to the legislation considered in Carr v Western Australia, the question of whether a construction "reads up" a provision, giving it an extended operation, or "reads down" a provision, confining its operation, may be moot.
The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills "gaps disclosed in legislation" or makes an insertion which is "too big, or too much at variance with the language in fact used by the legislature".
Lord Diplock's three conditions (as reformulated in Inco Europe Ltd v First Choice Distribution) accord with the statements of principle in Cooper Brookes and McColl JA was right to consider that satisfaction of each could be treated as a prerequisite to reading s 12(2) as if it contained additional words before her Honour required satisfaction of a fourth condition of consistency with the wording of the provision. However, it is unnecessary to decide whether Lord Diplock's three conditions are always, or even usually, necessary and sufficient. This is because the task remains the construction of the words the legislature has enacted. In this respect it may not be sufficient that "the modified construction is reasonably open having regard to the statutory scheme" because any modified meaning must be consistent with the language in fact used by the legislature. Lord Diplock never suggested otherwise. Sometimes, as McHugh J observed in Newcastle City Council v GIO General Ltd, the language of a provision will not admit of a remedial construction. Relevant for present purposes was his Honour's further observation, "[i]f the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances."
Lord Diplock's speech in Wentworth Securities laid emphasis on the task as construction and not judicial legislation. In Inco Europe Lord Nicholls of Birkenhead observed that even when Lord Diplock's conditions are met, the court may be inhibited from interpreting a provision in accordance with what it is satisfied was the underlying intention of Parliament: the alteration to the language of the provision in such a case may be "too far-reaching". In Australian law the inhibition on the adoption of a purposive construction that departs too far from the statutory text has an added dimension because too great a departure may violate the separation of powers in the Constitution.
(Footnotes omitted.)
Lord Diplock’s three conditions are that before interpreting a statute by adding or omitting words, the Court must be certain:[72]
(1)of the intended purpose of the statute or provision in question;
(2)that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and
(3)of the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed.
[72] Inco Europe Ltd v First Choice Distribution (a firm) [2002] 2 All ER 109 at 115 per Lord Nicholls, citing Jones v Wrotham Park Settled Estates (or Wendworth Securities Ltd) [1979] 1 All ER 286 at 289 per Lord Diplock.
Lord Diplock emphasised that the third of these conditions was crucial. Otherwise, any attempt to determine the meaning of the legislation would transgress the boundary between judicial construction and judicial legislation.
In this case, for the reasons set out above, the purpose of the provision is one of limitation. To read into s 49(2) the words for which the respondent contends generally would have the effect of expanding the potential liability of the Corporation. That would be contrary to a purposive construction. I note that was the approach adopted by the majority in Taylor.
The respondent’s construction is also contrary to the legislative history of s 49(2) and its predecessors in the repealed Act. When the repealed Act was first enacted, s 35(6) relevantly provided:
A worker is not entitled to receive in respect of separate disabilities weekly payments in excess of the worker’s notional weekly earnings and where a lump sum has been paid to a worker in commutation of weekly payments the worker shall for the purposes of this subsection be deemed to be receiving the weekly payments represented by that lump sum.
(Emphasis added.)
The language of the subsection as it was originally enacted would have supported the construction of s 49(2) for which the respondent contends. The concept of the weekly payments represented by the lump sum paid to commute such payments is consistent with the proposition that the legislature is identifying an amount restricted by reference to the amount of the lump sum. However, Parliament subsequently amended the provision in 1994 so that it read:
… the worker is presumed, for the purposes of this section, to be receiving the weekly payments that the worker would have been receiving if there had been no commutation.
The deletion by the Parliament of the phrase “the worker shall, for the purposes of this subsection, be deemed to be receiving the weekly payment represented by that lump sum” contraindicates adoption of the respondent’s construction. The change of language in the 1994 amendment, which is largely reflected in the terms of s 49(2), is a departure from the pre-existing statutory provision that deemed the worker to be receiving the weekly payment that would have been payable if there had been no redemption, but only until receipt of those payments would have exhausted the amount of the lump sum.
Further, I do not accept that the issue of constructional choice can be resolved by recourse to normative considerations of the fairness of the outcomes resulting from the adoption of a particular construction. That involves the making of an a priori assumption about statutory purpose. As the authorities to which I have referred earlier explain, statutory purpose is to be found in the text and structure of the statute.
Neither do I accept the appellant’s construction. Adopting the agreed amount of the worker’s weekly payments acknowledged in the redemption agreement has no basis in the text of s 49(2). Section 49(2) does not provide for agreement between the parties as to the amount the worker is taken to be receiving in the redemption agreement. Necessarily, s 49(2) does not give any legal force or effect to such an agreement.
An alternative approach to the issue of constructional choice would be to require the Corporation and the Tribunal to undertake an objective assessment of the weekly payments that the worker would be receiving from time to time had the worker not entered into a redemption agreement. I would not adopt such a construction. Section 49(2) operates in respect of weekly payments that would have been payable if there had been no redemption. As I say, that requires a single inquiry into the position as at the date of the redemption and not from time to time thereafter. The preferred construction offers the virtue of both simplicity and certainty. It avoids the myriad of complex assessments of fact and questions of law that might be required from time to time if the provision required an assessment to be made of what benefit, if any, a worker was deemed to be receiving in consequence of the payment of a lump sum at some earlier time. Those assessments of fact conducted on a counterfactual basis would include the worker’s physical and/or psychiatric condition from time to time. In addition, the respondent’s alternative constructions would include actuarial calculations revolving around the amount of weekly payments the worker is deemed to be receiving. Those questions of law would involve relevant changes to the statutory scheme of entitlements that might have occurred over a particular period. A construction that promotes simplicity and certainty in workers’ compensation legislation, that must be applied by compensating authorities and understood by workers, is to be preferred over a contrary construction, where the text, context and purpose of the legislation permits such a construction.
It follows that, in my view, the Ryan (No. 1) line of authority should not be followed to the extent that it treats the amount of the payments the worker is taken to be receiving as being the amount the parties agreed in the redemption agreement. Rather, the deemed amount is the actual amount of the weekly payment to which the worker was entitled immediately prior to entry into the redemption agreement. That is not necessarily the amount the worker was actually being paid. Rather, it is the actual liability of the Corporation to pay weekly payments of compensation to that worker. That will require an inquiry into the actual level of the worker’s incapacity and the application of the governing statutory provisions.
In this regard, the terms of the redemption agreement acknowledging that, for the purpose of the Act, the worker is taken to be receiving a continuing weekly payment of a specified amount which, if it differs from the actual amount of the weekly payment to which the worker was entitled immediately prior to entry into the redemption, cannot establish an estoppel against the statute. The admission of an estoppel against either the Corporation or the worker would nullify the statutory provision in s 49(2). The Corporation is required to obey the imperative provision in the subsection.[73] The worker’s “acknowledgement” cannot permit the parties to act contrary to their statutory obligations.
[73] Crofton v Workcover Corporation [2002] SASC 64 at [22], (2002) 82 SASR 47 at 51.
Reasons of the Tribunal
The President, McCusker J, held that the express purpose of s 42 is to provide that a worker in receipt of weekly payments will receive no less than the Federal minimum wage. The Federal minimum wage is measured on need. His Honour considered it a contradiction in terms to introduce a provision in s 42 based on need and then qualifying that provision to effect a reduction in weekly payments pursuant to s 49. His Honour reasoned that s 49(2) operates within s 39 at the point of calculation of weekly payments. The calculation of weekly payments has to be completed before a determination is made pursuant to s 42 whether the combined amount is less than the Federal minimum wage. Accordingly, he concluded that the weekly payments the worker is entitled to is determined by the operation of s 39. In calculating the s 39 payment, s 49 must be applied. It seems that the President concluded that as that process produced a calculation of weekly payments in an amount less than the Federal minimum wage, the weekly payments had to be increased to equal the Federal minimum wage.
Deputy President Judge Dolphin agreed with the reasons of President McCusker J. In addition, he considered that the calculation of weekly payments involved a three-step process commencing with the calculation of average weekly earnings pursuant to s 5 followed by a calculation of the amount of weekly payments that a worker would be entitled to receive pursuant to s 39. Next, s 49(2) would operate to reduce the amount payable if the worker had redeemed an entitlement to weekly payments. Finally, s 42 must be applied. The Deputy President described this process as “the determination sequence”.[74] Underpinning his reasoning was his conclusion that the purpose of s 42 is to increase the amount of weekly payments an injured worker would receive to equal the Federal minimum wage in all situations including when the 80 per cent reduction in weekly payments occurs one year on from injury. He considered s 42 is directed to providing a safety net below which weekly payments should not fall so that an injured worker would receive at least a living wage while they were incapacitated for work.
[74] Robinson v Return to Work SA (Jasper's Cafe) [2017] SAET 27 at [127].
Deputy President Judge Gilchrist came to a different conclusion from the other members of the Full Bench. His Honour held that a textual analysis of the relevant provisions supported the appellant’s determination. He reasoned that if the intended operation of s 42 was to offer protection from a reduction in weekly payments occasioned by the application of s 49, he would have expected s 42 to be expressed in terms such as: “Despite any other provision in this Act …”, or “In [this] Division …”. He rejected a construction that the purpose of s 42 was to ensure that workers who have redeemed an entitlement to weekly payments, who suffer a later compensable injury, are guaranteed the Federal minimum wage. He concluded that s 42 was confined to cushioning the effect of the provisions within Subdivision 2 of Division 4 of Part 4 of the RTW Act.
Submissions on appeal
The appellant submits that s 42(1) applies in calculating the amount of weekly payments prima facie payable in respect of a work injury under Subdivision 2 of Division 4 of Part 4 of the RTW Act. However, just as other provisions of the RTW Act may result in a cessation or reduction of the amount payable, s 49 must be considered in the case of a worker who has entered into a redemption in respect of an earlier work injury. The approach of the majority of the Full Bench in treating s 42 as controlling and overriding the effect of s 49(2) is incorrect. It erroneously treats s 49(2) as an integer in the process of quantifying entitlements to amounts “payable” in s 39 and, thus, as subordinate to s 42. Section 49(2) operates to ensure that when the ultimate assessment of weekly payments to be paid to a worker in relation to a subsequent work injury is made, the worker is taken already to be receiving a weekly amount relating to the earlier redeemed injury. This construction is to be preferred to that adopted by McCusker P and Dolphin DP. That construction would permit a worker who, having redeemed an earlier liability, suffers a subsequent injury where the worker’s entitlement to weekly payments in respect of that injury falls below the Federal minimum wage solely because the worker is taken to be in receipt of weekly payments because of the receipt of that redemption sum, to have his or her weekly payments increased to equal the Federal minimum wage. That construction does not give any credit for the potentially significant sum that was receipt in redemption of that earlier liability.[75] Nothing in the language of the RTW Act and, in particular, nothing in the language or structure of Subdivision 2, suggests that the Federal minimum wage is to constitute an immutable safety net applicable regardless of whether the worker has received a redemption sum.
[75] This assumes no residual earnings but the principle is unaffected if that was the case.
The respondent submits that the effect of s 49(2) must be taken into account in determining what is “payable” under s 39(1) of the RTW Act, and that the Federal minimum wage safety net provided by s 42 is to be applied after any reduction required by s 49(2) so as to increase the amount otherwise payable to an amount equivalent to the pro rata adjusted Federal minimum wage. The fact that a worker is “taken” to be receiving a certain amount by way of weekly payments pursuant to s 49(2) is just not relevant to the operation of s 42. The focus of s 42 is the “combined amount”. The first integer of the combined amount is the amount of compensation that would otherwise be payable under Subdivision 2, namely, s 39, s 40 or s 41. No amount is payable pursuant to s 49, and it would be wrong to treat as “payable”, an amount provided for by s 49 which is not actually payable under the RTW Act. The respondent contends that the approach taken by the appellant risks producing circumstances in which a worker, despite having received a redemption sometimes many years previously, may not be receiving any continuing actual financial benefit from that redemption. Such workers may need the protection of the Federal minimum wage safety net as much as other workers entitled to weekly payments. Accordingly, the approach taken by the majority of the Full Bench is correct.
Consideration
The appeal is concerned with the interrelationship of s 39, s 42 and s 49 in the scheme of the RTW Act, relating to the entitlement to compensation by way of weekly payments.
Section 39 and s 42 are found in Subdivision 2 of Division 4 of Part 4 of the RTW Act which provides for the entitlement to weekly payments. Section 49 is found in Subdivision 5 of Division 4. Division 4 is concerned with income support. Section 5 is also relevant. It is the provision which defines the meaning of “average weekly earnings”.
For the disposition of this appeal the provisions of s 39, s 42 and s 49 must be construed within the structure and scheme of the RTW Act so that each section is consistent with the language and purpose of all the provisions of the statute. The true construction of each provision is to be identified by reference to the language of the RTW Act viewed as a whole. The process of statutory construction commences and concludes with a textual analysis of these provisions.[76] But the statutory text from beginning to end is construed in context, and an understanding of context has utility only to the extent that it assists in fixing the meaning of the statutory text.[77] In this case the purpose of these provisions is to be found in the text of the RTW Act and in the context of its legislative history, which reflects its statutory purpose.
[76] Federal Commissioner of Taxation v Consolidated Media Holdings Limited [2012] HCA 55 at [39], (2012) 250 CLR 503 at [519].
[77] SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 at [37].
Section 39 is an entitlement provision. It provides for the entitlement to weekly payments in respect of an incapacity for work as a result of a work injury suffered by a worker, other than a seriously injured worker. The scheme established by s 39 provides for payment in two designated periods of 52 weeks each. In the first designated period where the worker has no current work capacity the worker is entitled to weekly payments equal to the worker’s notional weekly earnings. During that same period if the worker has a current work capacity the worker is entitled to weekly payments equal to the difference between the worker’s notional weekly earnings and the worker’s designated weekly earnings. In the second designated period where a worker has no current work capacity the worker is entitled to weekly payments equal to 80 per cent of the worker’s notional weekly earnings. In the same period where the worker has a current work capacity the worker is entitled to weekly payments equal to 80 per cent of the difference between the worker’s notional weekly earnings and the worker’s designated weekly earnings. “Designated weekly earnings” are defined in s 39(2) to be taken to be the current weekly earnings of a worker in employment or self-employment (if any) but not so as to include a prescribed benefit. Prescribed benefits are defined in s 37 of the RTW Act.
“Notional weekly earnings” are defined in s 4(1) of the RTW Act to mean the worker’s average weekly earnings or average weekly earnings adjusted to take account of changes in levels of earnings as prescribed by the RTW Act. As has been noted, “average weekly earnings” are defined in s 5 of the RTW Act.
Section 42 is a protective provision. Section 42(1) of the RTW Act provides that “[d]espite the preceding sections in this Subdivision” if the combined amount that a worker would receive in respect of any incapacity for work in any week applying under any such section would result in a worker receiving less than the Federal minimum wage (adjusted in the case of a worker who was working at the relevant date on a part-time basis so as to provide a pro-rata payment), the amount of compensation payable under Subdivision 2 will be increased so that the combined amount equals the Federal minimum wage (or, if relevant, the Federal minimum wage as so adjusted).
“The Federal minimum wage” is defined in s 4(8) as follows:
For the purposes of this Act, a reference to the Federal minimum wage is a reference to a wage applying under a national minimum wage order under Part 2-6 of the Fair Work Act 2009 of the Commonwealth prescribed by the regulations under this subsection.
Section 42(2)(a) provides that for the purposes of s 42, a reference to the combined amount is a reference to the combined total of the amount of compensation that would otherwise be payable under Subdivision 2 of Division 4 of Part 4 of the RTW Act and the amount of the designated weekly earnings of the worker.
“Designated weekly earnings” are defined in s 4(1) to mean designated weekly earnings determined under s 39.
For the purpose of s 42, the preceding sections in Subdivision 2 of Division 4 of Part 4 of the RTW Act are ss 39 to 41. Those sections are made subservient to the operation of s 42. Its provisions prevail over any inconsistent provisions in those preceding sections. I have addressed the operation of s 39 in the scheme of the RTW Act earlier. Section 40 provides for supplementary income support for incapacity resulting from surgery after the end of the second designated period. Section 40 is not relevant to this appeal. Section 41 is the counterpart to s 39. It provides for the entitlement to weekly payments for seriously injured workers.
It can be seen that the work to be performed by s 42(1) in the scheme of Subdivision 2 of Division 4 of Part 4 of the RTW Act is that it provides a safety net during a period of incapacity for work. Yet the extent of the safety net provided by s 42 is limited. The effect of the qualification found in parentheses in s 42(1) makes clear that the net provided to part-time workers by s 42 does not ensure that they receive no less than the Federal minimum wage. Accordingly, I do not accept the respondent’s submission that the purpose of s 42 is to guarantee that a worker who is receiving weekly payments of compensation will have, by way of income support, no less than the Federal minimum wage. The respondent’s submission is not supported by a textual analysis of its provisions. Its purpose is more limited. I accept the submission of the appellant that the primary purpose of s 42 is to protect the worker’s income during, and subsequent to,[78] the second designated period where the worker’s entitlement to weekly payments is reduced to 80 per cent of the worker’s notional weekly earnings where the worker has no current work capacity, or is reduced to 80 per cent of the difference between the worker’s notional weekly earnings and the worker’s designated weekly earnings where the worker has a current work capacity. There is also scope for s 42 to operate in circumstances where, in the first designated period of incapacity, a partially incapacitated worker’s designated weekly earnings, i.e. actual earnings, and the compensation that would otherwise be payable, is less than the Federal minimum wage. That is the obvious work to be performed by that section following, as it does in the scheme of the RTW Act, ss 39 to 41.
[78] In the case of seriously injured workers.
Subdivision 2 is followed by Subdivision 3 which provides for the adjustment of weekly payments and Subdivision 4 which provides for the reduction or discontinuance of weekly payments. Section 49 is found in Subdivision 5.
Section 49 operates “for the purposes of this Act”. Accordingly, reading the RTW Act as a whole, s 49 prevails over any other operative provision to the extent of any inconsistency. It follows that, in applying s 42(1), the appellant must take a worker, such as the respondent, who has redeemed a liability to pay weekly payments, to be receiving by way of weekly payments of compensation the amount that would have been payable if there had not been a redemption. The reference in s 42(2)(a) to “the amount of compensation that would otherwise be payable under this Subdivision” (i.e. Subdivision 2 of Division 4 of Part 4 of the RTW Act) is to be understood to include the amount of compensation that a worker would receive by way of weekly payments in accordance with the deemed receipt of weekly payments pursuant to s 49(2). While s 49(2) is not found in Subdivision 2, it operates “for the purposes of this Act”. That includes Subdivision 2. Section 49(2) deems the worker to be receiving the weekly payments that would have been payable if there had not been a redemption. The statutory fiction of payment established by s 49(2) must be taken to deem the payment to be made in accordance with Subdivision 2.
I accept there is some tension between s 42 and s 49(2). It is not easy to harmonise the operation of these provisions so that s 42 is consistent with the language and purpose of all the provisions of the RTW Act, including in particular s 49(2). The construction I have adopted imposes some strain on the language of s 42. The deemed payment pursuant to s 49(2) sits uncomfortably with the concept found in s 42(2)(a) of “the amount of compensation that would otherwise be payable under” Subdivision 2 of Division 4 of Part 4. But this construction is consistent with the structure of the RTW Act where s 49(2) applies for the purposes of the whole of the RTW Act while s 42 is confined in its operation to determining the amount of compensation payable under Subdivision 2 of Division 4 of Part 4. Section 49 is the controlling provision. The express terms of s 42(1) confine its operation to Subdivision 2. The operation of s 42 is not expressed to govern s 49, which is not in Subdivision 2. The work to be performed by s 42 is enlivened only where the combined amount a worker could receive “under any such section” would result in the worker receiving less than the Federal minimum wage. “[A]ny such section” is a reference to ss 39 to 41. It is not a reference to s 49. Section 49 has an independent operation. That is consonant with its legislative history.
The cognate provision to s 49 in the repealed Act was s 35(6). This provision became s 35(6a) and later s 35(5) following amendments to the repealed Act.[79] The relevant difference between the predecessor provisions in the repealed Act and s 49 of the RTW Act is that s 49 is expressed to apply “for the purposes of this Act”, while s 35(6a) operated “for the purposes of this section” and s 35(5) operated “for the purposes of this Division”. The latter was a reference to Division 4 of Part 4 of the repealed Act, which provided for the entitlement to payment, and the calculation of the amount, of weekly payments and the conditions for their adjustment, review, reduction and discontinuance.
[79] Act No. 49 of 1994, s 8 (commencing 1 July 1994) and Act No. 17 of 2008, s 15 (commencing 1 July 2008).
The interpretation favoured by the respondent would make s 42 the paramount provision in Division 4 of the RTW Act. Yet that construction is contrary to the language of s 42(1) and s 49(2). Section 42(1) is expressly confined to apply to calculating “the amount of compensation payable under this Subdivision” (i.e. Subdivision 2 of Division 4), while s 49(2) expressly applies “for the purposes of this Act”. Obviously that includes s 42. For the purposes of s 42 the worker is taken to be receiving the weekly payments that would have been payable if there had not been a redemption. Contrary to the submission of the respondent, s 49(2) in terms does not require a reduction of weekly payments, it merely deems the worker to be in receipt of an amount by way of weekly payments she or he is not actually receiving. The effect of s 49(2) is another matter.
The general rule that a court is to construe legislation in a manner that promotes its purpose or object may be of little assistance where a statutory provision strikes a balance between competing interests and the problem is one of doubt about the extent to which the legislation promotes a purpose. In Carr v Western Australia Gleeson CJ said:[80]
Legislation rarely pursues a single purpose at all costs. Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose.
[80] [2007] HCA 47 at [5], (2007) 232 CLR 138 at 143.
Ultimately, the meaning of the provision is to be found in its text, construed according to the principles of interpretation I have referred to earlier. On that basis I reject the respondent’s submission that the Parliament, in enacting s 42, understood that s 49(2) might operate unfairly in respect of workers who received a lump sum payment by way of redemption, sometimes many years earlier, as a result of which they were receiving no continuing effective benefit from that payment, and accordingly, intended that s 42 should operate to satisfy their need for a minimum wage safety net in the same way as other workers on weekly payments. On the contrary, if the respondent’s interpretation was accepted, no matter how many redemption payments a worker received, her or his weekly payments could never be less than the Federal minimum wage. That result would be inconsistent with the language of the RTW Act which seeks to strike a balance between competing interests.[81] It gives rise to the prospect of over-compensation, personally and relative to other injured workers, in circumstances where the objects of the RTW Act seek to achieve a balance between ensuring injured workers are supported financially and employers’ costs are contained within reasonable limits. It can be seen that contrasting prospective outcomes consequent upon adopting a particular construction is of little assistance in these circumstances. Accordingly, the Court is left to interpret the RTW Act, and in particular, s 42 and s 49, by reference to text, context and purpose.
[81] Sections 3(2) and (3).
To adopt the respondent’s construction would deprive s 49(2) of its full purpose. Consideration of the text, context and purpose of s 42 does not support excluding the operation of s 49(2) in respect of s 42 while otherwise maintaining its operation with respect to the quantification of the amount of a worker’s entitlement to weekly payments.
In the case of the respondent, the amount of compensation that would otherwise have been payable under Subdivision 2 is the amount calculated in accordance with s 39 and s 49(2). That is because of the statutory fiction enshrined in the latter provision which applies for all purposes of the Act, that the respondent is taken to be receiving the weekly payments that would have been payable if she had not received the redemption payment of $31,500. In accordance with the Ryan (No. 1) line of authority, that is a weekly amount of $291.22, but for the reasons explained above this Court should not apply the approach in the Ryan (No. 1) line of authority.
Conclusion
The application of s 49(2) to the circumstances of the respondent’s case means that for the purposes of s 42 she is deemed to be receiving by way of weekly payments $595.45 less the actual amount that she was entitled to be paid by way of weekly payments immediately prior to the redemption agreement being made. Evidence of this latter amount is not before the Court. Accordingly, the appeal must be allowed and the matter remitted to the Tribunal for the determination of that amount. It may be that, once that amount is determined, the respondent will be deemed to be receiving more than the Federal minimum wage. In those circumstances there will be no work for s 42 to perform. That is a matter for the Tribunal to determine.
In the circumstances, I would allow the appeal and remit the matter to the Tribunal for further consideration in accordance with these reasons.
The questions referred are to be answered as follows:
1.On the proper construction of ss 42 and 49 of the Return to Work Act 2014 (SA) can Mrs Robinson’s weekly payment rate be a rate which is less than the FMW rate?
Answer: Yes.
2.In the light of the above, what is Mrs Robinson’s weekly payment rate?
Answer: The question cannot be answered. It is a matter to be determined by the Tribunal on remittal.
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