Ric Developments Pty Ltd (t/as Lane Cove Poolmart) v Muir

[2008] NSWCA 155

Reported Decision: 71 NSWLR 593

New South Wales

Court of Appeal

CITATION:	Ric Developments trading as Lane Cove Poolmart v Muir [2008] NSWCA 155
HEARING DATE(S):	24 June 2008
JUDGMENT DATE:	4 July 2008
JUDGMENT OF:	Basten JA at 1; Campbell JA at 5; Rein J at 54
DECISION:	Appeal dismissed with costs.
CATCHWORDS:	WORKERS COMPENSATION – entitlement to and liability for compensation – respondent worker injured right arm while employed by appellant as sales assistant and pool cleaner – worker suffered agreed 15% permanent loss of efficient use of right arm at or above elbow – appellant terminated worker’s employment – worker obtained part-time work in supermarket – appellant’s insurer paid worker weekly compensation to make up difference in pre- and post-injury wage – at request of appellant’s insurer worker took vocational capacity tests – on basis of results of tests appellant’s insurer reduced worker’s weekly payments to nil on grounds that worker’s ability to earn in some alternative employment was higher than average pre-injury wage – claim by worker for weekly payments during partial incapacity for work under s 40 Workers Compensation Act 1987 – claim for lump sum compensation brought under s 66 Workers Compensation Act 1987 settled – arbitrator of Workers Compensation Commission determined worker had no entitlement to weekly payments under s 40 – appeal – Commission constituted by Presidential member awarded worker weekly payments under s 40 – amount of entitlement subject to injured worker’s ability to earn in “suitable employment” – s 40(3) and s 43A Workers Compensation Act 1987 – results of vocational capacity tests considered – appeal – proper question to be asked in deciding whether worker’s earning capacity is diminished – whether proved incapacity reduced worker’s earning capacity in the labour market as actually available to him below the earnings he would have made if uninjured – necessity of assessing practical realities of injured worker being able to get and keep employment in accordance with factors set out in s 40 and s 43A Workers Compensation Act - APPEAL – appeal to Commission constituted by Presidential member from determination of arbitrator – s 352(2) Workplace Injury Management and Workers Compensation Act 1998 – appeal to Court of Appeal from decision of Commission constituted by Presidential member – s 353(1) Workplace Injury Management and Workers Compensation Act – nature of appeal involved when right of appeal granted to a person “dissatisfied with” or “aggrieved by” a decision of a tribunal “in point of law” – whether powers of Commission constituted by Presidential member to revoke decision of arbitrator and substitute new decision exercisable only when demonstrated that decision of arbitrator affected by some legal, factual or discretionary error - STATUTORY INTERPRETATION – relationship between s 40 and s 66 Workers Compensation Act – entitlement to award of compensation under s 66 does not support inference of entitlement to weekly payments under s 40
LEGISLATION CITED:	Motor Accidents Compensation Act 1999 Workers Compensation Act 1926 Workers Compensation Act 1987 Workplace Injury Management and Workers Compensation Act 1998
CATEGORY:	Principal judgment
CASES CITED:	Akawa Australia Pty Ltd v Cassells (2003) 25 NSWCCR 385 Alexander v Ashfield Municipal Council (Court of Appeal, 27 October 1982, unreported) Aluminium Louvers and Ceilings Pty Ltd v Zheng [2006] NSWCA 34 Amaca Pty Ltd (under NSW External Administration) v A B & P Constructions Pty Ltd [2007] NSWCA 220; (2007) Aust Torts Reports 81-910 Arnott’s Snack Products Pty Ltd v Yacob [1985] HCA 2; (1985) 155 CLR 171 Brown v Lewis [2006] NSWCA 87; (2006) 65 NSWLR 587 Cowra Shire Council v Quinn (1996) 13 NSWCCR 175 Jeffery v Lintipal Pty Ltd [2008] NSWCA 138 Jones Bros Bus Company Pty Ltd v Baker (1992) 26 NSWLR 322 The King Island Company Ltd v Deery [2005] NSWWCCPD 1 Lovett Building Company Pty Ltd v Burns (1993) 29 NSWLR 475 Mangion v Visy Board Pty Ltd (1992) 8 NSWCCR 175 Muir v Ric Developments Pty Ltd t/as Lane Cove Poolmart [2007] NSWWCCPD 161 Seltsam Pty Limited v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1 Summerson v Alcan Australia Ltd (1994) 10 NSWCCR 571 Wallaby Grip Ltd v Peirce [2000] NSWCA 299; (2000) 24 NSWCCR 193 Yacob v Arnotts Snack Products Pty Ltd [1982] 1 NSWLR 632
TEXTS CITED:	CP Mills, Workers Compensation (New South Wales), 2nd ed (1979) Butterworths
PARTIES:	Ric Developments Pty Limited t/as Lane Cove Poolmart (Appellant) Jeremy Muir (Respondent)
FILE NUMBER(S):	CA 40536/07
COUNSEL:	P Rickard (Appellant) R Goodridge (Respondent)
SOLICITORS:	Hicksons, Sydney (Appellant) Firths, Sydney (Respondent)
LOWER COURT JURISDICTION:	Workers Compensation Commission
LOWER COURT FILE NUMBER(S):	WCC17972-06
LOWER COURT JUDICIAL OFFICER:	Deputy President Bill Roche
LOWER COURT DATE OF DECISION:	19 July 2007
LOWER COURT MEDIUM NEUTRAL CITATION:	Muir v Ric Developments Pty Ltd t/as Lane Cove Poolmart [2007] NSWWCCPD 161

CA 40536/07
WCC 17972/06

BASTEN JA
CAMPBELL JA
REIN J

4 JULY 2008

RIC DEVELOPMENTS PTY LIMITED t/as LANE COVE POOLMART v JEREMY MUIR

Judgment

1 BASTEN JA: On 19 July 2007 the Deputy President of the Workers Compensation Commission awarded an amount of compensation to Mr Muir under s 40 of the Workers Compensation Act 1987 (NSW): Muir v Ric Developments Pty Ltd t/as Lane Cove Poolmart [2007] NSWWCCPD 161. Mr Muir’s former employer appeals against that decision, as a party aggrieved, pursuant to s 353 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW).

2 The appeal lies only if the appellant is aggrieved “in point of law”. The point of law relied on in this case concerned the reference made by the Deputy President to the fact that Mr Muir’s injury involved a 15% permanent loss of use of his right arm at or above the elbow. That assessment was agreed upon for the purpose of making a lump sum payment pursuant to s 66 of the Workers Compensation Act. The award made under s 40 involved a different test, being the reduction in weekly earnings for a period of partial incapacity.

3 It would have been an error for the Deputy President to apply in some manner the calculation of permanent loss under s 66 in order to determine the application under s 40. However, the fact that the Deputy President referred in his reasons to the assessment under s 66 does not mean that he applied it in preference to the calculation required by s 40. As Campbell JA explains, a fair reading of his reasons does not demonstrate such an error.

4 The jurisdiction of this Court is limited to considering whether there was error in point of law: it does not extend to considering the result of applying the correct test. No legal error having been established for the reasons given by Campbell JA, the appeal should be dismissed with costs.

5 CAMPBELL JA:

Nature of the Appeal

6 The Appellant operated a pool shop in Lane Cove. In February 2001 it employed the Respondent (who I shall refer to as the “Worker”) as a sales assistant and pool cleaner. In May 2001 the Worker injured his right arm while unloading some pool chemicals at work. His arm did not respond to treatment, and he remained unfit to carry out the full range of the duties of his employment.

7 In consequence, the Appellant terminated the Worker’s employment in September 2002. The Worker obtained part-time work in a supermarket, which he performed from December 2002 until late January or early February 2006. It did not pay as much as the Worker had received while working for the Appellant, so the Appellant’s insurer paid the Worker weekly compensation to make up the difference. The Worker applied for various other jobs, without success.

8 In December 2004, at the request of the Appellant’s insurer, the Worker took a variety of tests, at the Vocational Capacity Centre (“VCC”), that were administered by a physiotherapist and a psychologist, and were designed to ascertain his capacity to work.

9 In September 2005, on the basis of the results of those tests, the Appellant’s insurer advised the Worker that his workers compensation weekly payments would be reduced to nil from 28 October 2005 on the ground that his ability to earn in some alternative employment was higher than his average pre-injury wage. In accordance with that notification, the insurer ceased paying the weekly benefits.

10 On 30 November 2006 the Worker registered an Application to Resolve a Dispute in the Workers Compensation Commission, seeking weekly compensation from 28 October 2005 to date, and continuing, plus a general order for payment of medical expenses.

11 That application was referred to an arbitrator. On 16 February 2007 the Arbitrator issued a certificate of determination under section 294 of the Workplace Injury Management and Workers Compensation Act 1998 (“WIMAct”) that:

“1. Award for the Respondent as regards the Applicant’s claim for weekly benefits.
2. No order as to costs.”

12 An accompanying statement of reasons for decision came to the conclusion that:

· “The Applicant is capable of full-time employment in suitable duties covering a wide range.

· The most appropriate vocational choices include the five positions listed in the five page Report of Allison Figg dated 22 December 2004 but probably also include a general manager’s position, a return to retail and other positions considered appropriate by the Applicant himself and the subject of his job application evidence.”

13 The Worker appealed against that determination. On 19 July 2007 Deputy President Bill Roche gave his determination concerning that appeal. The Deputy President’s order was:

“The Arbitrator’s determination dated 16 February 2007 is revoked and the following orders made:
‘1. Award for the Applicant under section 40 of the Workers Compensation Act 1987 in the sum of $117.00 per week from 28 October 2005 to date and continuing.
2. The Respondent is to pay the Applicant worker’s costs as agreed or assessed.’”

14 The present proceedings are an appeal to this Court against that determination.

The Statutory Framework

15 In March 2003 the Worker and the Appellant had settled a claim for lump sum compensation that the Worker had made. That claim was brought under section 66 Workers Compensation Act 1987 (the “CompensationAct”). In the form it had prior to 1 January 2002 (the relevant form, given the date on which the Worker sustained his injury) section 66 provided:

“66(1) A worker who has suffered the loss of a thing mentioned in the Table to this Division as the result of an injury is entitled to receive from the worker’s employer by way of compensation for the loss, in addition to any other compensation under this Act, the amount equal to the percentage of $100,000 set out opposite to that loss in that Table.”

The Table provided a figure of “80” for loss of right arm at or above elbow. Section 68 of the Compensation Act in its pre-1 January 2002 form enabled a worker who had lost a proportion (but not all) of a thing mentioned in the Table to recover that proportion of the amount derived from the Table. The compensation that the Appellant agreed to pay to the Worker was stated to be “$12,000 in respect of 15% permanent loss of use of the dominant right arm at or above the elbow” , plus a further amount for pain and suffering.

16 The claim for weekly compensation that the Worker made claimed a partial incapacity for work, rather than a total incapacity, and the Appellant did not allege that the Worker had unreasonably rejected suitable employment. In those circumstances the following provisions of section 40 Compensation Act apply:

“(1) Entitlement. The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work is to be an amount not exceeding the reduction in the worker’s weekly earnings, but is to bear such relation to the amount of that reduction as may appear proper in the circumstances of the case.
(2) Calculation of reduction in earnings of worker – general. The reduction in the worker’s weekly earnings is (except as provided by this section) the difference between:
(a) the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment (but not exceeding $1,000); and
(b) the average weekly amount which the worker is earning, or would be able to earn in some suitable employment, from time to time after the injury (but not exceeding $1,000).
…
(3) Ability to earn in suitable employment. The determination of the amount that an injured worker would be able to earn in some suitable employment is subject to the following:
(a) the determination is to be based on the worker’s ability to earn in the general labour market reasonably accessible to the worker;
(b) the determination is to be made having regard to suitable employment for the worker within the meaning of section 43A.”

17 In circumstances where employment had not been provided by the Worker’s employer, the relevant provisions of section 43A were:

“(1) for the purposes of section … 40:
suitable employment , in relation to a worker, means employment in work for which the worker is suited, having regard to the following:
(a) the nature of the worker’s incapacity and pre-injury employment;
(b) the worker’s age, education, skills and work experience;
(c) the worker’s place of residence;
(d) the details given in the medical certificate supplied by the worker;
(e) the provisions of any injury management plan for the worker;
(f) any suitable employment for which the worker has received rehabilitation training;
(g) the length of time the worker has been seeking suitable employment;
(h) any other relevant circumstances.”

18 After the Arbitrator had made his determination that the Worker had no entitlement to weekly payments under section 40, the Worker’s appeal against that decision was made pursuant to section 352 WIM Act. That appeal to the Deputy President was, pursuant to section 352(5) WIM Act, “by way of review of the decision appealed against”.

19 The present appeal against the decision of the Deputy President is brought under section 353 WIM Act, which provides:

“(1) If a party to any proceedings before the Commission constituted by a Presidential member is aggrieved by a decision of the Presidential member in point of law, the party may appeal to the Court of Appeal.
(2) The Court of Appeal may, on the hearing of any appeal under this section, remit the matter to the Commission constituted by a Presidential member for determination by the Commission in accordance with any decision of the Court and may make such other order in relation to the appeal as the Court thinks fit.”

20 Various cases have considered the nature of the appeal involved when a right of appeal is granted to a person "dissatisfied with" or "aggrieved by" a decision of a tribunal "in point of law": eg Wallaby Grip Ltd v Peirce [2000] NSWCA 299; (2000) 24 NSWCCR 193 at [5]-[9]; Seltsam Pty Limited v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1 at [148]-[159]; Amaca Pty Ltd (under NSW External Administration) v A B & P Constructions Pty Ltd [2007] NSWCA 220; (2007) Aust Torts Reports 81-910 at [25]; Jeffery v Lintipal Pty Ltd [2008] NSWCA 138 at [8]-[10], [12]-[13]. The present case does not turn on any argument about the nature of the right of appeal that the Appellant is exercising.

The Nature of the Evidence

21 The Worker was born in June 1967. Thus, he was aged 33 at the time of the injury, and 39 at the time of the determination of the Arbitrator. He had completed high school, but had no tertiary education of any significance. He had worked at a wide variety of office, sales and labouring jobs – indeed so many that a potential employer told of his work history might be wary about his ability to stick at a job. There was clear medical evidence of an ongoing disability in his right arm.

22 After the Worker had had a battery of tests in December 2004, the VCC produced a series of reports relating to him. A summary report concluded that he “should be capable of returning to some jobs within his pre-injury occupation as a swimming pool service person”, and that he “is also suitable for a range of other occupations”. Testing of his intellectual and analytical abilities showed him to be in the average to high-average range, and it was reported that he “presents well”. Comment was made on his “somewhat erratic work history”, and the prospect that it would make many employers suspicious, and this was seen as “an issue, [but] not one which would preclude him from securing skilled employment”. Physical testing showed that he had certain limitations, that I shall mention in more detail later. One report identified a number of jobs that, in the opinion of the author, were within the capacities of the Worker. The report stated the general nature of the duties associated with any such job, the award wage for each such job (both before and after tax), and a figure derived from a publication that purported to state market rates of pay for such jobs “based on year 2003 labour market statistics for workers aged 30 years and over”. Those jobs were divided into ones that were “the most appropriate vocational choices”, “other examples of suitable options”, and jobs for which the Worker would be suitable with formal training.

The Decision of the Deputy President

23 As the present appeal is against the decision of the Deputy President, it is that decision that must be the focus of these reasons for judgment.

24 The Deputy President gave express consideration to the nature of the review he was conducting. He referred to authority that the review was not a rehearing, not dealing with the matter de novo, and not arriving at a fresh decision based on all the evidence available at a later time; rather, he held, the powers to revoke the decision of the Arbitrator and substitute a new decision are exercisable only when it is demonstrated that the decision of the Arbitrator is affected by some legal, factual or discretionary error: The King Island Company Ltd v Deery [2005] NSWWCCPD 1 at [19]. He referred to authority for a review being a different process to an appeal, with the matters which may be considered in it and the manner in which they may be considered being somewhat wider: Aluminium Louvers and Ceilings Pty Ltd v Zheng [2006] NSWCA 34 at [38]. While there might be room to argue that the Deputy President took too narrow a view of his power of review (cf Jeffery v Lintipal at [11]), no submission is made in this appeal that the Deputy President misdirected himself concerning the nature of the review he was conducting.

25 The Deputy President reviewed the medical evidence relating to the condition of the Worker, as that evidence had unfolded over the period of time since the Worker’s injury, at para [44]-[57] of his determination.

26 The Deputy President then considered the various reports produced by VCC. He expressed the view that there was an inconsistency between the opinion of Ms Figg, the physiotherapist from VCC, that the Worker did not demonstrate any physical signs of restriction that would prevent him from returning to his pre-injury occupation, and her finding that the Worker

“… may need to avoid repetitive medium and heavy manual handling with his right arm. He may need to avoid repetitive force or heavy hand gripping with the right hand. He may need to avoid lifting weights above 13 ½ kilos to overhead positions due to weakness in the right upper limb.” (at [60])

27 That inconsistency was, he thought, apparent in light of her having recorded that it was a requirement of the Worker’s job before he was injured that he lift and carry pool chemicals weighing 25 kgs.

28 The Deputy President then went on to consider how the Arbitrator had dealt with evidence about the Worker’s physical limitations (at [62]):

“The Arbitrator preferred the evidence of Ms Figg that Mr Muir was restricted to avoiding lifting weights above 13 ½ kilograms to overhead positions, which he felt was “certainly not a major restriction” (Reasons paragraph 32). However, that was not the only restriction Ms Figg placed on Mr Muir. She also restricted him to a maximum ‘right carry’ weight of 13.5 kilograms. Both restrictions were on the basis that such weights would only be lifted for between one and five percent of an eight hour day. If lifting was required for between 34%-66% of an eight-hour day, the weight restriction was six kilograms for the overhead lift and nine kilograms for the ‘right carry’. These results clearly demonstrate that Mr Muir has reduced strength in his right arm and that he is unfit for his pre-injury work with the Respondent Employer which required him to regularly lift weights of 25 kilograms. The Arbitrator failed to consider the relevance and impact of this part of Ms Figg’s evidence.”

In other words, the Arbitrator had not taken into account the full extent of the physical limitations that the Worker had.

29 The Deputy President went on to disagree with the conclusion that the Arbitrator had reached that the Worker had both experience and qualifications as a manager (par [74]) and to express the view that the Arbitrator had placed too much weight on the Worker’s alleged experience as a “general manager” (par [76]).

30 The Deputy President also said (at [82]):

“The Arbitrator found … that Mr Muir was fit for the position of a ‘shop manager’. Subject to what I say below about the availability of that work for a person with a 15% permanent loss of efficient use of the right arm at or above the elbow, that finding was open on the evidence. In addition, the Arbitrator found … that Mr Muir could do the five positions listed at paragraph [69] above, which included the position of ‘swimming pool service person’. The evidence is clear that Mr Muir is unfit for that work and to the extent that he found otherwise the Arbitrator was in error.”

31 A critical part of the reasoning of the Deputy President (at [83]-[84]) is as follows:

“It is also argued that the Arbitrator failed to take into account in any real sense the fact that Mr Muir has an agreed permanent loss of efficient use of his right arm at or above the elbow of 15%. Whilst the Arbitrator referred to that fact at paragraph 18 of his Reasons, he made no other mention of it in his determination. Nor did the Arbitrator consider the availability of work for a person with Mr Muir’s disability and no formal tertiary qualifications. This error has clearly impacted on the award made. The availability of work is a crucial factor in assessing ability to earn under section 40(2)(b). That availability must be measured in light of Mr Muir’s particular circumstances.
Whilst assessments of the kind conducted by VCC are often useful in determining the general area of work that may be suitable for an injured worker, the recommendations in such reports must be considered in the light of the authorities and the realities of the labour market faced by a worker with a proven disability. The Arbitrator failed to do this.”

32 The Deputy President identified the proper question to be asked, in deciding whether there is an incapacity, by citing the following from CP Mills, Workers Compensation (New South Wales), 2nd ed (1979) Butterworths at 285:

“The question is whether the injury has left the worker in such a position that in the open labour market his earning capacity is less than it was before the injury ( Williams v Metropolitan Coal Co Ltd [1948] HCA 8; (1948) 76 CLR 431 per Starke J), and it is not limited to the effect on his capacity for his former work (per Dixon J). In Ball v Hunt [1912] AC 496, Lord Loreburn had said that there is incapacity when a man has a physical defect which makes his labour unsaleable in any market reasonably accessible to him, and there is partial incapacity when such a defect makes his labour saleable for less than it would otherwise fetch: see Commissioner for Railways v Agalianos [1955] HCA 27; (1955) 92 CLR 390 per Dixon CJ.”

33 He referred to the statement of Hutley JA in Alexander v Ashfield Municipal Council (Court of Appeal, 27 October 1982, unreported) at 2, that:

“Capacity is diminished, even though in selected instances the worker can earn as much as he did before, if there are fields from which he is excluded, by reason of the injury, in which he laboured at the time of injury.”

(I mention that from the context it is clear that the “capacity” Hutley JA was talking about is earning capacity, and that in Alexander Samuels JA agreed with Hutley JA’s reasons.)

34 The Deputy President referred to Summerson v Alcan Australia Ltd (1994) 10 NSWCCR 571 and Akawa Australia Pty Ltd v Cassells (2003) 25 NSWCCR 385 as examples of situations where a worker with a physical disability, who had actually been paid more than his or her pre-injury rate of pay, was held nonetheless to have a partial incapacity, because of the greater difficulty that a person with such a disability had in obtaining and retaining work. The Deputy President also referred to the converse situation that had arisen in Mangion v Visy Board Pty Ltd (1992) 8 NSWCCR 175, where Judge Burke of the Compensation Court of NSW had found that a Commissioner had fallen into error in failing to award any weekly compensation on the ground that the worker was able to earn more in a particular job than he had in his pre-injury job. The principle on which Judge Burke held there was error in that case (at 180) was:

“When assessing a capacity to earn under section 40(2), it is not sufficient to merely identify a particular potential avenue of employment and attribute the income from such a job as a man’s capacity to earn. Allowance must be made for the availability of work – availability, not so much in the sense of a presently depressed labour market but in the sense of the general availability in any labour market. A rarely available niche in the labour market which carries, perhaps, substantial remuneration, does not serve as a sole criterion of capacity to earn.”

35 The Deputy President noted that the Court of Appeal in Cowra Shire Council v Quinn (1996) 13 NSWCCR 175 expressly approved the approach of Judge Burke in Mangion.

36 The Deputy President concluded (at [94]-[95]):

“Given the above authorities it was for the Arbitrator to assess Mr Muir’s section 40 entitlement in light of the fact that he had an agreed 15% permanent loss of use of his right arm at or above the elbow and that he had a proven incapacity on the labour market. Such an incapacity will ordinarily be reflected in a reduced earning capacity even though there may be some other job or jobs that the worker could perform if they were available. The VCC reports provided no guidance as to the availability of the jobs identified as being suitable for Mr Muir. Even if they were readily available in the labour market accessable to Mr Muir there is the real probability, based on Mr Muir’s unsuccessful efforts to obtain employment between December 2002 and November 2005, that he will suffer longer periods of unemployment because of his injury and, as a result, suffer an economic loss as a result of his injury.
Therefore, the Arbitrator was in error in not considering the impact of the agreed 15% permanent loss of use of Mr Muir’s right arm at or above the elbow on his ability to earn in the labour market available to him. That error requires that the Arbitrator’s decision be revoked and that the matter be re-determined.”

37 The Deputy President went on to determine the quantum of the appropriate award.

The Grounds of Appeal

38 Though the Notice of Appeal raised seven alleged grounds of appeal, only two grounds were pressed in oral argument. These are:

“1. The Deputy President erred in law in finding that the Arbitrator was in error in not considering the impact of the agreed 15% permanent loss of efficient use of Mr Muir’s right arm at or above the elbow on his ability to earn in the labour market available to him.
2. The Deputy President erred in law in considering that the Consent Award of 15% permanent loss of efficient use of Mr Muir’s right arm at or above the elbow under Section 66 of the Workers Compensation Act 1987 was indicative of a partial incapacity under Section 40 of the Workers Compensation Act 1987 .”

39 Mr Rickard, counsel for the Appellant, submitted that an award under section 66 of the Compensation Act “does not engage” section 40 of that Act. I take that submission to be that the making of an award under section 66 is dependent upon different concepts to those upon which the making of an award under section 40 depends, in consequence of which one cannot infer from the making of an award under section 66 that any award should be made under section 40.

40 Mr Rickard reminded us that the pre-1 January 2002 version of section 66 of the Compensation Act is based on section 16(1) of the Workers Compensation Act 1926 (the “1926 Act”). Both were based upon a table that provided a tariff for the loss of particular bodily parts or bodily functions. In Jones Bros Bus Company Pty Ltd v Baker (1992) 26 NSWLR 322 Kirby P (with whom Gleeson CJ and (in this respect) Clarke JA agreed) said, at 325, that section 16 of the 1926 Act established:

“… a relatively objective system in the sense that the percentage loss calculated was concerned with the loss of the full efficient use of the specified limb or function across the generality of workers. It was not concerned with the particular impact of the loss of function of the particular worker, having regard to his or her peculiar employment activities. To the extent that such activities were relevant, their impact was left to be determined by the provisions of the Act dealing with other entitlements, notably those to weekly compensation for total or partial incapacity.”

41 Mr Rickard also referred us to Lovett Building Company Pty Ltd v Burns (1993) 29 NSWLR 475 at 484, where Clarke, Handley and Sheller JJA said, concerning section 66 of the Compensation Act:

“The scheme set up under the Act is, in respect of the loss of efficient use of a limb, conceptually similar to the scheme under the 1926 Act. For this reason, and another mentioned below, the system can be regarded as a relatively objective one in that one is only concerned to measure, relevantly, the loss of efficient use of a limb. For this purpose it is irrelevant whether for instance, the worker is a violinist or a labourer. The court is required to determine what are the permanent disabilities suffered by the worker in the relevant limb and then to assess the extent to which that disability diminishes the efficient use of that limb. The scheme is objective in the sense that no account is to be taken of the effect that the permanent disability has upon the worker in his or her work as, for instance, a violinist.”

42 Their Honours went on to agree with the remarks of Kirby P in Jones Bros Bus Company, that I have already quoted.

43 The reference to a violinist in the passage just quoted is to an example frequently given in explaining the notion of incapacity as used in the Workers Compensation Act. That example was clearly expressed by Mahoney JA (with whom Hope and Samuels JJA agreed) in Yacob v Arnotts Snack Products Pty Ltd [1982] 1 NSWLR 632 at 636, that:

“… the loss of a finger on his left hand would be disastrous for a violinist, but might result in no relevant incapacity for a trial lawyer.”

44 By contrast with section 66, Mr Rickard submits, section 40 is concerned with providing compensation measured solely by reference to the circumstances of the particular worker in question. He refers us to Arnott’s Snack Products Pty Ltd v Yacob [1985] HCA 2; (1985) 155 CLR 171 at 176-178, to the effect that “incapacity for work” means a physical incapacity for actually doing work in the labour market in which the employee was working or might reasonably be expected to work, and that compensation is awarded for that incapacity only where it reduces the employee’s ability to sell his labour in the open market. As Mason, Wilson, Deane and Dawson JJ said of the analogue of section 40(1) in Arnott’s at 178:

“Under s 11(1) an applicant’s entitlement to compensation will depend on his loss of earning power. This flows, not from the concept of partial incapacity for work, but from the nature of the express limitation which the sub-section places on the amount of compensation payable.”

45 Mr Rickard also referred us to Brown v Lewis [2006] NSWCA 87; (2006) 65 NSWLR 587. Though that was a case arising under the Motor Accidents Compensation Act 1999 (the “MAC Act”) that Act contains provisions somewhat similar to those of the Compensation Act, requiring assessment to be made of the degree of permanent impairment of a person as a consequence of an injury, and economic loss that arises as a consequence of the injury. Under the MAC Act the role that the percentage incapacity plays is different to the role played by an assessment of loss of percentage use under section 66 Compensation Act – under the MAC Act having a degree of permanent impairment greater than 10% is a precondition to the award of certain heads of damage, rather than being in itself occasion for an award of damages. Mr Rickard drew our attention to the remarks of Mason P (with whom Santow and McColl JJA agreed) at [23], that,

“Extreme caution is required before anything relevant or useful could be extrapolated from a certificate under s 61(2) for the purpose of calculating economic loss. Section 61(2)(a) only deals with the threshold issue whether the degree of permanent impairment is greater than 10 per cent. Section 133 points to information … that does not concern itself with the economic consequences of injury, and excludes information … that may be critically important to assessing economic loss. In short, the statutory concept of (permanent) “impairment” is not to be equated to the notion of incapacity (permanent or temporary) that may be a stepping-stone in a case involving damages for economic loss. … Those provisions do not engage the statutory concept of “permanent impairment”.
It is conceivable that matters certified or reported in the reasons of the medical assessor may have bearing on factual issues touching damages for economic loss. But everything would depend on the nature of the particular inquiry. Some injuries that would not produce a greater than 10 per cent degree of permanent impairment would have catastrophic economic impact on some plaintiffs (for example, the violinist who lost the tip of a finger). Conversely, some injuries that produced a greater than 10 per cent degree of permanent impairment would have minimal economic impact on most plaintiffs.”

46 I do not, with respect, find those remarks of Mason P of assistance in the present case. They depend on peculiarities of the concept of “impairment” as used in the MAC Act.

47 Even so, Mr Rickard is correct in submitting that one cannot infer, from an award having been made in favour of a worker under section 66 of the Compensation Act, that that worker is entitled to any award at all under section 40 Compensation Act. If the Deputy President had argued that, because the Worker had received an award under section 66, he must be entitled to an award under section 40, the Deputy President would have been committing an error of law, in consequence of which the appeal would have succeeded.

48 It is here that Mr Rickard’s argument encounters an insuperable difficulty. The Deputy President did not reason in the way Mr Rickard submits he did. Though Mr Rickard concentrated his attack on the conclusion that the Deputy President reached at [94]-[95] of his reasons (quoted at para [36] above) that conclusion is a continuation of the process of reasoning expressed in paras [83]-[84] of his reasons (quoted at para [31] above). Taking his reasons as a whole, the Deputy President recognised that the Worker had a physical impairment, namely the 15% permanent loss of his right arm at or above the elbow, and a “proven incapacity on the labour market” (at [94]), in the form (at least) of his being unable to do the job he had previously had with the Appellant. The Deputy President recognised, it seems to me, that before such a proved incapacity resulted in an award of compensation under section 40, that incapacity had to, in fact, reduce his earning capacity, in the labour market as it was actually available to him, below the level of earnings he would have made if uninjured. Such a requirement arises, as the Deputy President recognised at [83] of his reasons, from the words of section 40(2)(b). The error that the Deputy President saw in the Arbitrator’s reasoning was that the Arbitrator had not paid attention to the practical realities of the Worker, in his injured condition, actually being able to get and keep a job. The VCC reports did not address the Worker’s practical prospects in the labour market. Rather, they assessed his physical and mental capacities, and matched them to the tasks required to be performed in various jobs. That the Worker had the physical and mental capacity to carry out the tasks involved in some particular job is not sufficient to establish that there was a realistic prospect that anyone would actually give him such a job, or that he would be able to keep it. A further enquiry was needed concerning those matters, and it was that further enquiry that, in the Deputy President’s view, the Arbitrator had failed to carry out.

49 As I read it, section 40(1) sets as an upper limit on the amount of weekly compensation “the reduction in the worker’s weekly earnings”. Section 40(2) requires calculation of ‘the reduction in the worker’s weekly earnings” to be carried out in three steps. The first is ascertaining (as required by section 40(2)(a)) the likely weekly earnings of the worker if he or she had remained uninjured and kept on doing work comparable to that being done at the time of the injury. The second is ascertaining (as required by section 40(2)(b)) the amount the worker is actually earning, or would be able to earn in “some suitable employment”. The third is to take the difference between those two amounts. Ascertaining, for the purpose of the second of these steps, the amount the worker would be able to earn in “some suitable employment” is required to be done in accordance with section 40(3), which in turn brings in the factors listed in section 43A(1).

50 Those factors are all ones that concern the practical realities of the worker, in his or her injured condition and with his or her actual age, abilities, limitations and circumstances in life, being able to get and keep employment. In my view the Deputy President was right in taking the view that the practical realities of the Worker actually getting and keeping a job, in his injured condition, were required to be assessed. Further, in my view the Deputy President was right in reaching the conclusion that the Arbitrator had not assessed those practical realities.

51 In his conclusion at [94]-[95], that I have set out at para [36] above, the Deputy President to some extent foreshadowed the result of carrying out that factual enquiry, when he said that the incapacity that the Worker had would “ordinarily be reflected in a reduced earning capacity”, and that there is “the real probability” based on his unsuccessful efforts to obtain employment that he will suffer longer periods of unemployment. However, these are put as factual matters, not as matters of law.

52 In my view, the decision of the Deputy President is not erroneous in point of law.

Order

53 The order I propose is:

Appeal dismissed with costs.

54 REIN J: I agree with Campbell JA.

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