Secretary, Department of Communities and Justice v Stewart
[2023] NSWPICPD 35
•23 June 2023
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY A MEMBER | |
CITATION: | Secretary, Department of Communities and Justice v Stewart [2023] NSWPICPD 35 |
APPELLANT: | Secretary, Department of Communities and Justice |
RESPONDENT: | Paul Stewart |
INSURER: | QBE Insurance (Australia) Ltd as agent for Treasury Managed Fund |
FILE NUMBER: | A1-W697/22 |
PRESIDENTIAL MEMBER: | Deputy President Elizabeth Wood |
DATE OF APPEAL DECISION: | 23 June 2023 |
ORDERS MADE ON APPEAL: | 1. Order Number 1 of the Certificate of Determination dated 28 June 2022 is confirmed. 2. Order Number 2 of the Certificate of Determination dated 28 June 2022 is amended to read: “The relevant earning period for the calculation of the pre-injury average weekly earnings is adjusted to 1 February 2020 to 19 November 2020 pursuant to regulation 8E of the Workers Compensation Regulation 2016.” |
CATCHWORDS: | WORKERS COMPENSATION – Clause 2 of Schedule 3 to the Workers Compensation Act 1987 – calculation of pre-injury average weekly earnings – whether regulations 8C, 8D or 8E of the Workers Compensation Regulation 2016 apply to exclude from the “relevant earning period” the period when workers compensation payments were received in respect of an earlier injury – statutory construction – Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; Taylor v The Owners – Strata Plan No 11564 [2014] HCA 9; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16 applied |
HEARING: | 24 May 2023 |
REPRESENTATION: | Appellant: |
| Ms S Warren, counsel | |
| Hall & Wilcox | |
| Respondent: | |
| Mr F Doak, counsel | |
| Bell Lawyers | |
| DECISION UNDER APPEAL | |
MEMBER: | Mr C Burge |
DATE OF Member’s DECISION: | 28 June 2022 |
INTRODUCTION AND BACKGROUND
Mr Paul Stewart (the respondent) was employed by the Secretary, Department of Communities and Justice (the appellant) as a Senior Prison Officer. On 20 November 2020, the respondent sustained a shoulder injury in the course of his employment. He was incapacitated for work from that date until 1 February 2021. Liability for that injury was accepted by the appellant and he was paid weekly payments of compensation for that period.
On 1 February 2021, the respondent lodged a claim for workers compensation for a psychological injury in the form of a post-traumatic stress disorder resulting from the “nature and conditions” of his employment. Liability was accepted for that injury.
This appeal concerns a dispute between the parties as to how the respondent’s pre-injury average weekly earnings should be calculated given that during the 52 weeks prior to the pleaded date of injury, the respondent was in receipt of weekly payments of compensation. The Member determined that the period during which the respondent received weekly payments of compensation should not be included in the 52 week period, applying Regulation 8D of the Workers Compensation Regulation 2016 (the 2016 Regulation).
WHETHER THE APPEAL SHOULD BE DETERMINED ON THE PAPERS
Section 52(3) of the Personal Injury Commission Act 2020 provides:
“(3) If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act and enabling legislation without holding any conference or formal hearing.”
Both parties submit that the appeal can be determined on the basis of the documents and their written submissions.
I have had regard to Procedural Directions PIC2 – Determination of matters ‘on the papers’ and WC3 – Presidential appeals and questions of law, and the documents and submissions that are before me. I was not satisfied that I had sufficient information to proceed ‘on the papers.’ In order to afford the parties procedural fairness and to provide the parties with the opportunity to address certain matters I considered relevant to the issues in dispute, a formal hearing was therefore conducted on 24 May 2023.
THRESHOLD MATTERS
There is no dispute between the parties that the threshold requirements as to quantum and time pursuant to ss 352(3) and 352(4) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) have been met. The decision appealed is not interlocutory in nature, therefore leave to appeal in accordance with s 352(3A) of the 1998 Act is not required.
THE LEGISLATION
Clause 2 of Sch 3 to the Workers Compensation Act 1987 (the 1987 Act) relevantly provides:
“Meaning of ‘pre-injury average weekly earnings’
(1) Pre-injury average weekly earnings, in relation to an injured worker, means the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.
Note—
See also clauses 3–5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.
(2) Except as provided by this clause (or by regulations made under this clause), in calculating the pre-injury earnings received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (the relevant earning period).
(3) The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period)—
(a)to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or
(b)to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.
(4) … .”
Clauses 6(1) and 6(2) of Sch 3 to the 1987 Act relevantly provide:
“Meaning of ‘earnings’
(1) The earnings received by a worker in respect of a week means the amount that is the income of the worker received by the worker for work performed in any employment during the week.
(2) The income of a worker does not include—
(a)…
(b)…
(c)any payment in respect of loss of earnings under a scheme to which the workers compensation legislation relates or under any other insurance or compensation scheme, or
(d)...”.
Regulation 8AA of the 2016 Regulation defines “the relevant earning period” as having “the same meaning as in clause 2(2) of Schedule 3 to the 1987 Act”.
Division 2 of Pt 4 of the 2016 Regulation (reg 8A to reg 8EA) provides for an adjustment of the “relevant earning period” under cl 2(2) of Sch 3 for the purpose of calculation of the worker’s pre-injury average weekly earnings. Regulation 8A provides for adjustment in the following circumstances and in the following order:
(a) adjustment for workers not continuously employed (reg 8B);
(b) adjustment for financially material change to earnings (reg 8C);
(c) alignment of relevant earning period with pay period (reg 8D);
(d) adjustment for unpaid leave (reg 8E), and
(e) adjustment for prescribed periods relating to COVID-19 (reg 8EA).
The issue in dispute in these proceedings concerns consideration of the following regulations within the 2016 Regulation:
“8B Adjustment for workers not continuously employed—Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker in employment is to be adjusted in accordance with this clause if the worker was not engaged in the employment from the beginning of the unadjusted earning period.
(2) The relevant earning period for the worker in the employment is to be adjusted by excluding any period before the day on which the worker was first engaged in the employment.
8C Adjustment for financially material change to earnings—Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during the unadjusted earning period, there was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker (for example, a change from full-time to part-time work).
(2) The relevant earning period is to be adjusted by excluding from the period any period before the change to the earnings of the worker occurred.
8D Alignment of relevant earning period with pay period—Schedule 3, clause 2(3)(b) of 1987 Act
(1) The relevant earning period for a worker in employment may be adjusted to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.
(2) The relevant earning period is not to be adjusted as provided by this clause unless the insurer is reasonably satisfied that the amount of pre-injury average weekly earnings calculated by reference to the period as so adjusted is not less than the amount that it would have been but for the adjustment.
8E Adjustment for unpaid leave—Schedule 3, clause 2(3)(a) of 1987 Act
(1) The relevant earning period for a worker is to be adjusted in accordance with this clause if, during any period of not less than seven consecutive calendar days within the unadjusted earning period—
(a)no earnings in the employment were paid or payable to the worker, and
(b)the worker took a period of unpaid leave (the unpaid leave period) commencing on the first day of that consecutive period.
(2) The relevant earning period is to be adjusted by excluding each day (whether or not the day was a usual work day for the worker) of the period commencing on the first day of the unpaid leave period and ending immediately before the day on which earnings in the employment once again became payable to the worker.”
THE MEMBER’S REASONS
The Member briefly set out the factual background, identified the issue in dispute and reproduced cl 2(3) of Sch 3 to the 1987 Act. He noted that, in accordance with cl 6(2)(c) of Sch 3, the appellant had not included the payments of weekly compensation that the respondent had received between 20 November 2020 and 1 February 2021 in its calculation of the amount of the respondent’s pre-injury earnings. The Member observed, however, that the appellant had not adjusted the 52 weeks to exclude that period from the calculation, with, in his view, the “extraordinary” result that the appellant had calculated the pre-injury average weekly earnings over 52 weeks on the basis of 42 weeks of income.
The Member indicated that there was no doubt that cl 2(3) of Sch 3 provided that the 2016 Regulation could make provision for the circumstances in which an adjustment to the 52 week period could be made. He turned to Div 2 of Pt 4 of the 2016 Regulation, which he said set out the circumstances in which the 52 week period could be adjusted. The Member referred to the circumstances set out in reg 8B, reg 8C and reg 8E and noted that the respondent relied upon reg 8D. That is, that the relevant earning period could be aligned with any regular interval that the worker was entitled to receive payment of earnings for work performed in their employment. The Member also noted that the respondent did not rely upon reg 8C, because the calculation would result in a pre-injury earnings figure of zero as the regulation operated to exclude the respondent’s earnings he received prior to the payment of weekly compensation in respect of the earlier injury.
The Member observed that the appellant submitted in relation to reg 8C that there was no ongoing change in the employment relationship because during the relevant period, the respondent remained in full time employment with the appellant. The Member further observed that the appellant submitted that it is not a matter for the Commission to “unilaterally determine what is fair and to pay compensation accordingly without regard to the relevant statutory provisions.”[1]
[1] Stewart v Secretary, Department of Communities and Justice [2022] NSWPIC 333 (reasons), [13].
The Member noted that the appellant submitted that a meaning had to be given to the word “ongoing”, that is, that the employment change was one of an ongoing nature. The Member said that the appellant submitted that there was no material financial change to the respondent’s earnings resulting from the receipt of workers compensation payments. The Member noted that the appellant asserted that reg 8C did not apply, so that the result would be that the amount of weekly payments would be excluded from the earnings and the earnings would be divided by the entire 52 weeks, in accordance with cl 6(2) of Sch 3 to the 1987 Act.
The Member referred to the respondent’s reliance on reg 8D, which the respondent said would operate to re-align the period of time used in the calculation to reflect the period during which the respondent was working. The Member accepted that submission, observing that:
“Schedule 3 of the 1987 Act and cl 8D of the Regulation have the effect of aligning the relevant period for PIAWE calculation to the regular interval during which the [respondent] was entitled to receive earnings from his employment. That is, in my view, those provisions have the effect of removing from calculation both the workers compensation payments received by the [respondent] for the unrelated injury and the period for which those payments were received.”[2]
[2] Reasons, [16].
The Member said that, otherwise, a calculation of the pre-injury average weekly earnings over a period of 52 weeks, when the respondent did not earn for all of those weeks, would amount to a misfortune for the respondent simply because he had received weekly compensation for an unrelated injury.
The Member concluded that the effect of removing the period during which compensation payments were received resulted in an adjustment to the relevant earning period to be from 1 February 2020 to 19 November 2020. The Member said that that approach would create a consistency between the period worked and the income earned.
The Member noted that the appellant took the position that the respondent’s reliance on reg 8D was contrary to the intention of the regulation, which was that reg 8D permitted aligning the 52 weeks to fit within disparate pay periods, such as when a worker was paid fortnightly or monthly. The Member accepted the respondent’s submission in reply that reg 8D specifically referred to a period when the worker was entitled to receive payment of earnings for work performed in the employment, which the respondent said excluded the period from 20 November 2020 to 1 February 2021.
The Member reasoned that the construction put forward by the appellant was contrary to the beneficial nature of the legislation. He observed:
“The legislation must work together and harmonise the intention so that a productive outcome is obtained. Where there is any ambiguity in the provision, it should be interpreted with the beneficial nature of the legislation for the applicant in mind. I agree that a finding of meaning in statutory language that produces an unjust or capricious result should be avoided.”[3]
[3] Reasons, [21].
The Member formed the view that such an unjust or capricious outcome would result if the weekly payments of compensation were excluded but the entire 52 weeks would be included in the calculation of the respondent’s pre-injury average weekly earnings. The Member further observed that, if reg 8C applied, it would also produce an unjust result because the respondent’s pre-injury average weekly earnings would be calculated as zero. He concluded that applying either of those scenarios would produce an absurd result. He confirmed, on balance, that he accepted the respondent’s submission that reg 8D applied and found that the relevant period should be adjusted to the period from 1 February 2020 to 19 November 2020.
The Certificate of Determination issued on 28 June 2022 records:
“The Commission determines:
1. The relevant earning period for the calculation of pre-injury average weekly earnings should be adjusted to exclude the period where the [respondent] was paid workers’ compensation benefits for an unrelated injury.
2. The relevant earning period for the calculation of pre-injury average earnings should therefore be adjusted to 1 February 2020 to 19 November 2020.”
GROUNDS OF APPEAL
The appellant relies upon four grounds of appeal. The grounds assert that the Member erred in law and are expressed as follows:
(a) Ground One: the Member erred in law in the application of the provisions of the Workers Compensation Act 1987 and the Workers Compensation Regulation 2016 in respect of the “relevant period”;
(b) Ground Two: the Member erred in law by entering an award in favour of the respondent that the relevant earning period for the calculation of pre-injury average weekly earnings should be adjusted to exclude the period where the respondent was paid workers compensation benefits for an unrelated injury;
(c) Ground Three: the Member erred in law when finding that the relevant earning period for the calculation of pre-injury average earnings should be adjusted and reduced to 1 February 2020 to 19 November 2020, and
(d) Ground Four: the Member erred in law in determining that reg 8D of the Workers Compensation Regulation 2016 applied.
NOTICE OF CONTENTION
The respondent responded to the appeal grounds but also lodged a Notice of Contention. The respondent contends that the definition of pre-injury average weekly earnings in cl 2 of Sch 3 to the 1987 Act of itself provides for the reduction of the earnings period, so that in any event the respondent’s relevant earning period can be adjusted.
SUBMISSIONS ON THE APPEAL
As to Ground One
The appellant’s written submissions
The appellant provides a legislative background of the provisions relevant to an entitlement to weekly payments of compensation. The appellant reproduces the contents of cl 2 of Sch 3 of the 1987 Act, which the appellant says sets out the meaning of “pre-injury average weekly earnings” and restricts the earnings used to calculate the pre-injury average weekly earnings to earnings received in the “relevant earning period.” The appellant points out that the provision provides that no regard is to be had to the period before, or after, the 52 weeks immediately prior to the injury. The appellant says that sub-cl 2(3) of Sch 3 provides that the regulations may make provision for the adjustment of the relevant period and submits that there is no discretion to adjust the relevant period other than in the circumstances provided for in the regulations.
The appellant submits that the calculation of the pre-injury average weekly earnings is a “step through” process. It submits that the first step is to identify the relevant earning period, which is defined in cl 2(2) of Sch 3 to the 1987 Act. The appellant refers to cl 8A(2) of the 2016 Regulation, which sets out the five circumstances in which the period can be adjusted.
The appellant asserts that the relevant earning period can only be altered in accordance with those five circumstances and there is no discretion vested in the insurer or the Commission to otherwise alter the period. The appellant further asserts that none of the circumstances set out in regs 8B to 8EA apply to the respondent, so the relevant earning period cannot be adjusted.
The appellant submits that:
(a) reg 8EA clearly does not apply because there was no change in the respondent’s arrangements because of the COVID-19 pandemic;
(b) reg 8E does not apply because the respondent had not taken unpaid leave during the relevant earning period, and
(c) reg 8B is not applicable because the respondent was employed by the appellant for the whole 52 weeks.
The appellant says that reg 8C and reg 8D are the only arguable circumstances potentially allowing an adjustment of the period in favour of the respondent. The appellant refers to reg 8C, and the example of its application in circumstances where the worker’s employment changes from full-time to part-time employment (or vice versa), which satisfies the requirement in reg 8C that there is “a change of an ongoing nature of employment arrangement resulting in a financially material change”.
The appellant submits that there was no such change in the ongoing nature of the respondent’s employment arrangement that resulted in a financially material change in the respondent’s earnings. In any event, the appellant refers to the Member’s observation that, if reg 8C applied, the pre-injury average weekly earnings would result in a zero amount.
The appellant points out that the Member ultimately determined that reg 8D applied, which the appellant asserts is erroneous. The appellant submits that the regulation clearly imposes a strict interpretation, that is, for the relevant earning period to align with the worker’s pay periods, or, in other words, shift the relevant period to align with weekly, fortnightly or monthly pay periods, in order to make the calculation simpler. The appellant asserts that those circumstances were not applicable to the dispute before the Member, because the respondent was seeking to reduce the period for calculation, not re-align the period.
The appellant disputes the respondent’s assertion that there is a broad discretion in reg 8D to adjust the relevant earning period. The appellant asserts that reg 8D is a way of adjusting the period to align with pay periods, and not finding some back way to shifting the relevant earning period to better suit the respondent. The appellant submits that on a full and clear reading of the regulation, the term “regular interval” adopted in reg 8D and defined in a dictionary as “a period between two events”, “does not fit”[4] with the respondent’s circumstances and cannot be ignored. The appellant contends that the respondent’s suggested interpretation does not work.
[4] Appellant’s written submissions, [44].
The respondent’s written submissions
The respondent submits that the Member’s decision, and the findings upon which the decision was based, were open to the Member and disclose no error. The respondent refers to s 352(5) of the 1998 Act, which limits the right of appeal to the identification of error, it is not a re-hearing, and any submissions made by the appellant that are not directed to the identification of error of fact or law should be disregarded.
The respondent asserts that the appellant’s submissions in support of its allegation that the regulations do not apply to the respondent involves a misreading of the regulation and should be rejected. The respondent points to cl 2 of Sch 3 to the 1987 Act in which the meaning of pre-injury average weekly earnings is defined and to the meaning of “earnings” as defined by cl 6 of Sch 3. In particular, the respondent emphasises cl 6(2)(c), which excludes any payment of weekly compensation from the calculation of the pre-injury average weekly earnings. The respondent asserts that because the clause excludes those payments, the period between which the weekly payments were received is not to be taken into account in the calculation of the pre-injury average weekly earnings.
The respondent points to cl 2(2) of Sch 3, which provides that no regard is to be had to earnings in the employment before or after the relevant earning period, that is, before or after the 52 weeks before or after the date of injury. The respondent asserts that the 52 weeks is the maximum period and the clause does not require that the maximum of 52 weeks is to be applied. The respondent submits that the words “average” and “earnings” directs the attention to the average amount of weekly earnings for work performed before the injury. The respondent says that it follows that the calculation is to be made “having regard to the average earnings received by the worker for periods in which a worker has worked … ”.[5] The respondent asserts that the periods during which the respondent has not received income for work performed in any week are therefore not to be included in the calculation.
[5] Respondent’s written submissions, [18].
The respondent submits that reg 8D provides a broad discretion to adjust the earning period to align with “any regular interval at which the worker is entitled to receive payment of earnings for work performed in employment.” The respondent says workers compensation payments are excluded because they are not payments for work performed. The respondent asserts that “the adjustment to align [the] ‘relevant earning period’ with a regular interval permits the reduction of the 52 week period to exclude the period prior to the period from 20 November 2020 to 1 February 2021.”[6]
[6] Respondent’s written submissions, [22].
The respondent submits that the Member did not err by applying reg 8D to adjust the period to exclude the period between 20 November 2020 and 1 February 2021, because during that period he was not “entitled to receive payment of earnings.”
As to Ground Two
The appellant’s written submissions
The appellant submits that the Member fell into error by misinterpreting and misapplying the legislative provisions. The appellant asserts that, in the application of reg 8D, the Member shortened the period for calculation rather than realigning the pay periods so that the weekly amount would be consistent. The appellant says that the approach was contrary to the intention of reg 8D. The appellant submits that it is not a matter for the Commission to determine what is fair without regard to the statutory provisions. The appellant maintains that it is clear that the relevant earning period is 52 weeks prior to the date of injury and can only be adjusted in accordance with Div 2 of Pt 4 of the 2016 Regulation.
The appellant further maintains that the Member erred by taking into consideration the fact that workers compensation payments are not to be included in the calculation when determining the relevant period. The appellant says that the Member confused the definition of earnings, which is calculated once the relevant period is established. The appellant asserts that in doing so, the Member misinterpreted the legislation and thus fell into error.
The appellant further asserts that if there was a discretion in respect of the weeks to be included in the period, there would be no purpose for or work to be done by the relevant clauses and regulations. The appellant refers to Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT)[7] as authority to say that statutory interpretation should not go beyond the ordinary and grammatical sense of the words.
[7] [2009] HCA 41.
The appellant points to cl 2(2) which specifically states “except for as provided by this clause (or the regulations made under the clause).” The appellant submits that, if the respondent’s position was accepted, those words would have no purpose. Further, if any weeks were to be excluded because the worker had not worked in those weeks, such a scenario could have been included in the regulations, such as in reg 8E, which dealt with unpaid leave. The appellant asserts that, if weeks, in addition to weeks when workers were on unpaid leave, were to be excluded, the exclusion would apply to paid recreation leave and public holidays, which would be inconsistent with the calculation of pre-injury average weekly earnings. The appellant submits that the legislature would have expressly included such a scenario in the regulations or in cl 2(2) of Sch 3 to the 1987 Act.
The appellant contends that it is not necessary to be concerned about the definition of earnings in cl 6 of Sch 3 when determining the relevant earning period. The appellant asserts that the relevant earning period is clearly defined and there is provision for altering the period in specific circumstances. The appellant says that the exclusion of workers compensation from the calculation of the pre-injury average weekly earnings is to be taken into account in the next step, after the period has been determined.
The appellant maintains that reg 8A expressly states that Div 2 of Pt 4 provides for the circumstances in which the period can be adjusted and that excluding periods when weekly payments of compensation were received is not dealt with in the Division.
The respondent’s written submissions
The respondent submits that sub-cl (1) of reg 8D allows the adjustment of the relevant earning period with any regular interval in which the worker is entitled to receive earnings for work performed at regular intervals, and the adjustment is in respect of payment of earnings at regular intervals.
The respondent asserts that, for the 52 weeks prior to 20 November 2020, he was in receipt of earnings for work performed at regular intervals. He submits that he was not entitled to earnings for the period when he received workers compensation payments, that is, between 20 November 2020 and 1 February 2021, so that reg 8D permits the exclusion of the period from 20 November 2020 and 1 February 2021 in the determination of the relevant earning period.
The respondent submits that the Member did not err in applying reg 8D of the 2016 Regulation.
As to Ground Three
The appellant’s written submissions
The appellant reiterates that there is no discretion vested in the Commission that enables the Commission to adjust the relevant earning period on any other basis than the five specific circumstances prescribed in Div 2 of Pt 4 of the 2016 Regulation.
The appellant submits that none of the regulations 8B to 8EA apply to the respondent, so that his relevant earning period remains the 52 weeks prior to the injury. The appellant asserts that the Member fell into error when he determined that the respondent’s relevant earning period could be adjusted because none of the provisions providing for an adjustment were applicable to the respondent.
The respondent’s written submissions
The respondent indicates that, in his view, Ground Three is the same allegation of error as Ground Two and he therefore repeats his submissions made. The respondent submits that, on a proper reading of reg 8D, the approach taken by the Member was open to him.
As to Ground Four
The appellant’s written submissions
The appellant maintains that there is no legislative basis upon which the respondent’s relevant earning period can be adjusted, and that the Member fell into error in finding that there was such a basis. The appellant repeats its submission that, on a proper construction of the legislation and following the “step through” process, the respondent’s relevant earning period is that applied by it, that is, from 1 February 2020 to 1 February 2021.
The respondent’s written submissions
The respondent maintains that, as with Ground Three of the appeal, the appellant’s argument is a re-statement of matters raised in Ground One and Two of the appeal, without raising any new or additional submission.
The appellant’s submissions in reply
The appellant lodged submissions in reply to the respondent’s submissions which were also expressed to be in response to the respondent’s Notice of Contention. The appellant’s submissions were not directed to any particular ground of the appeal and did not differentiate between submissions in reply or the response to the Notice of Contention. The following summary of the submissions is a summary of the entire response.
The appellant maintains that, on a proper interpretation of the legislation, the relevant period must be 52 weeks and the only manner in which the period can be adjusted is in accordance with regulations 8A to 8EA and otherwise than in the regulation the period cannot be adjusted. The appellant contends that parts of the legislation are not beneficial in nature, and the framework of the legislation puts limitations and restrictions on the benefits and compensation payable in order to preserve the compensation scheme. The appellant says that a submission that the legislation should be interpreted to the benefit of the worker cannot be sustained. The appellant cites the High Court authority of Australian Education Union v Department of Education and Children’s Services,[8] to say that in construing a statute, the primacy is of the text of the statute, and the first consideration is the ordinary and grammatical meaning of the words. The appellant submits that the legislature could have expressly invoked the meaning of earnings in a determination of the relevant earning period, but it did not. The appellant asserts that the legislation clearly expressed the relevant earning period as being 52 weeks in length and did not describe it as the “maximum” period, which could be adjusted outside of the provisions of sub-cl 2(3) of Sch 3 and the regulations made pursuant to that subclause. The appellant submits that it is clear that the relevant earning period is 52 weeks and the only way in which that can be adjusted is in accordance with the circumstances set out in those regulations.
[8] [2012] HCA 3.
The respondent’s submissions in respect of his Notice of Contention
The respondent contends that the definition of pre-injury average weekly earnings in cl 2 of Sch 3 to the 1987 Act of itself provides for the reduction of the earnings period, so that in any event the respondent’s relevant earning period can be adjusted to exclude the period from 20 November 2020 to 1 February 2021.
The respondent submits that the definition of pre-injury average weekly earnings in sub-cl 2(1) of Sch 3 and the definition of earnings in sub-cl 6(1) directs attention to the period or periods of gross income received by a worker for work performed. The respondent refers to sub-cl 2(2) of Sch 3, which provides that no regard is to be had to any period of earnings before or after 52 weeks prior to the injury and sub-cl 6(2)(c) excludes from the calculation any weekly payments of compensation received during the 52 weeks.
The respondent maintains that the relevant earning period as defined does not require the whole period of 52 weeks to be utilised in the calculation of the pre-injury average weekly earnings, it merely excludes the periods before and after the 52 weeks. The respondent submits that the words “average” and “earnings” adopted in the definition direct attention to the earnings received for periods during which the respondent worked, before the date of injury. The respondent says that it follows that the calculation of the pre-injury average weekly earnings requires consideration of the average earnings the respondent has earned for performing work during the 52 weeks prior to the injury. The respondent asserts that those periods during which he did not receive income for work performed should be excluded from the “relevant earning period” when calculating the pre-injury average weekly earnings.
The respondent submits that the question should be asked as to whether the pre-injury average weekly earnings was to be calculated over the whole 52 weeks if the respondent had only worked for two weeks in that period. The respondent says that if so, it would produce an absurdity and would be contrary to the clear intention of the legislation.
The respondent asserts that it is well established that the workers compensation legislation is beneficial in nature, so that, adopting the principles of statutory construction, in interpreting the legislation, if an interpretation is available that benefits the worker, it should be preferred. The respondent asserts that the appellant’s position that the whole 52 weeks prior to the injury must be applied is wrong.
The oral submissions
The parties were given the opportunity to make oral submissions, which were transcribed, in response to:
(a) certain matters that pertained to the issues on appeal;
(b) queries that I had in respect of the Notice of Contention raised by the respondent and,
(c) in the eventuality that the Member had erred and the matter required re-determination, further matters that had not been addressed.
Both parties are of the view that the words “in the following order” contained in reg 8A mean that the regulations are to be applied sequentially until one, if any, of the circumstances were applicable.
The respondent concedes that the argument raised in his Notice of Contention was not raised before the Member but asserts in the appeal and in the Notice of Contention that cl 2 of Sch 3 of itself provides for the reduction of the 52 week period and there is no need to look to the regulations.
The appellant maintains that the period can only be adjusted as provided for in regulations 8A to 8EA.
The respondent submits that the workers compensation legislation is beneficial in nature and should be interpreted accordingly. The appellant submits that not every provision in the legislation could be considered to be beneficial because there are a number of provisions that reduce or limit the injured worker’s entitlements. The appellant asserts that each provision of the legislation cannot be interpreted beneficially. The appellant cites ADCO Constructions Pty Ltd v Goudappel[9] as authority for that proposition.
[9] [2014 HCA 18 (Goudappel).
The parties’ attentions were drawn to reg 8E, which provides for an adjustment of the 52 week period when the worker took unpaid leave. The parties were invited to make submissions as to the applicability of that regulation in the respondent’s circumstances.
The appellant submits that the period during which the respondent was in receipt of workers compensation could not be considered to be unpaid leave because that would mean that cl 6 of Sch 3 would have no work to do. Further, if the legislature intended to include leave while in receipt of weekly payments in the provision, it would have said so.
The respondent submits that it is arguable that reg 8E applies and could be construed to mean leave taken while on compensation payments.
THE RELIEF SOUGHT
The appellant seeks to have the Certificate of Determination issued by the Member revoked and the matter re-determined by the Presidential Member, with orders that:
(a) the relevant earning period for the calculation of the respondent’s pre-injury average weekly earnings is not to be adjusted, and
(b) the relevant earning period for the calculation of the respondent’s pre-injury average weekly earnings is from 1 February 2020 to 1 February 2021.
The respondent submits that the appeal should be dismissed, and the Member’s decision should be confirmed.
CONSIDERATION
Section 352(5) of the 1998 Act provides that an appeal from a non-presidential member is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error. The appeal is not a review or new hearing. The respondent seeks to rely upon a Notice of Contention, which raises a new argument that was not ventilated by the parties at arbitration. A Notice of Contention can only be filed if a respondent to the appeal seeks to contend that the Member’s decision should be affirmed on grounds other than those relied on by the Member but does not seek a discharge or variation of any part of that decision.[10] In the context of an appeal from a decision of a non-presidential member, where the appeal is limited to the identification of error on the part of the Member and the correction of the error, matters referrable to the respondent’s contention which were not raised before the Member cannot be relevant to an assessment of whether the Member erred but can become relevant to any re-determination.
[10] Procedural Direction WC3 – Presidential appeals and questions of law.
The grounds of appeal, while expressed as four separate grounds, all assert error on the part of the Member in determining that the respondent’s relevant earning period could be adjusted in accordance with reg 8D of the 2016 Regulation. The appellant submits that the regulation is limited in its application to only allow a re-alignment of the 52 week period so that it aligns with the worker’s pay periods, such as when a worker is paid fortnightly or monthly. The appellant further submits that the respondent’s circumstances do not fit within the circumstance described in the regulation and that the term “regular interval” within the regulation, which, when afforded a dictionary definition, means “a period between two events”, must be given work to do.
I accept the appellant’s submission that reg 8D does not apply to the respondent’s circumstances and that the Member’s interpretation of reg 8D was erroneous. On a proper reading of reg 8D, it does not operate to shorten the 52 week period, which the Member did. Further, the Member did not explain how the term “regular interval” sat with the respondent having worked for a finite period and then remaining off work on workers compensation.
Clause (1) of the regulation provides:
“(1) The relevant earning period for a worker in employment may be adjusted to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.” (my emphasis).
When a court or tribunal seeks to construe a statutory provision it must strive to give meaning to every word of the provision.[11] The Member did not provide any consideration of the term “any regular interval”, other than to say that reg 8D has:
“… the effect of aligning the relevant period for PIAWE calculation to the regular interval during which the [respondent] was entitled to receive earnings from his employment. That is, in my view, those provisions have the effect of removing from calculation both the workers compensation payments received by the [respondent] for the unrelated injury and the period for which those payments were received.”[12]
[11] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 (per McHugh, Gummow, Kirby and Hayne JJ), [71].
[12] Reasons, [16].
The appellant submits that the dictionary definition of “interval” is a period between two events. The appellant does not indicate the source of that definition and it is rare for a dictionary definition to assist in seeking the legal meaning of a provision.[13] However, the task in statutory construction is to construe the language of the statute, not the individual words.[14] I consider that the proper construction of the composite phrase “regular interval” denotes something that occurs repetitiously, or on a number of periodic occasions. Such occurrences do not apply in the respondent’s circumstances. That construction is logical and is consistent with the legislative intention expressed in cl 2(3)(b) of Sch 3 to the 1987 Act. I accept the appellant’s submission that the regulation provides for the 52 week period to be re-aligned so that it reflects the regular intervals at which a worker receives payment (such as fortnightly or monthly payments) for work performed.
[13] Campbell v R [2008] NSWCCA 214, [49].
[14] St George Bank Ltd v Federal Commissioner of Taxation [2009] FCAFC 62, [28].
As a consequence, the Member was in error to apply reg 8D in this case.
Section 352(6A) provides that, in an appeal, the Member’s decision may be confirmed or revoked and a new decision made in its place. Alternatively, the matter can be remitted to a non-presidential member for re-determination. I consider it appropriate and in the interests of the parties to re-determine the matter.
RE-DETERMINATION
Clause 2(2) of Sch 3 to the 1987 Act defines the relevant earning period as 52 weeks from the date of injury, excluding any period prior to or after that period. I note that the matter proceeded on the basis of a date of injury of 1 February 2021, despite the respondent having not worked since 20 November 2020. Neither party agitated for a different date of injury.
The respondent contends that cl 2 only defines the maximum period and that the clause itself, when read with cl 6(2)(c), allows for the 52 week period to be shortened to account for the period during which weekly payments of compensation were paid in respect of the earlier injury. That was not a submission made to the Member and it did not form part of the Member’s reasoning. It is not generally open to a party to raise a new issue or make a new submission on appeal.[15] However, the matter requires determination, and the appellant has had the opportunity to reply to the contention. I propose to deal with the issue in this re-determination.
[15] Super Retail Group Services Pty Ltd v Uelese [2016] NSWWCCPD 4, [92]; Dick’s Diesel Pty Ltd v Caddaye [2015] NSWWCCPD 68, [68].
I reject the submission. The interpretation put forward by the respondent as to the effect of cl 2(2) requires additional words to be read into the regulation in order to arrive at that meaning. There is nothing in the clause that indicates that the relevant earning period is a “maximum” of 52 weeks.
As the plurality observed in Taylor v The Owners – Strata Plan No 11564:[16]
“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’.”[17]
[16] [2014] HCA 9 (Taylor), per French CJ, Crennan and Bell JJ.
[17] Taylor, [38].
There is no apparent simple, grammatical or drafting error in cl 2(2) of Sch 3 that defeats its purpose, which is to provide for a period over which a worker’s earnings are to be taken into account in the calculation of the pre-injury average weekly earnings. The inclusion of the concept that the 52 weeks is to be considered a “maximum” period is not consistent with the principles of statutory construction and is not permissible. Further, cl 2(2) of Sch 3 defines the “relevant earning period” as the “52 weeks immediately prior to the injury”.
The respondent contends that the definition of pre-injury average weekly earnings in cl 2 of Sch 3 to the 1987 Act of itself provides for the reduction of the earnings period, so that in any event the respondent’s relevant earning period can be adjusted. Clause 2 of Sch 3 does no more than:
(a) define “pre-injury average weekly earnings” as the weekly average of the gross pre-injury earnings that the worker received for work performed (sub-cl 1);
(b) provide that any income received before or after 52 weeks immediately before the injury is not to be included unless there is provision to do so in the clause, or in the regulations made under the clause (sub-cl 2);
(c) define the “relevant earning period” as that 52 week period immediately prior to the injury” (sub-cl 2), and
(d) permit the regulations to adjust the relevant earning period by extending or reducing the period in the circumstances described (sub-cl 3).
There is no provision in the clause itself to provide for the relevant earning period to be adjusted. The clause is limited to a delegation of the power to the 2016 Regulation to adjust the period in the circumstances where there has been a period of unpaid leave, other change in the worker’s earnings circumstances or, as discussed in [72] to [76] above, to align the period with the worker’s pay periods.
The respondent contends that because cl 6(2)(c) excludes payments of weekly compensation from the earnings calculation then the period during which the weekly payments were made is also to be excluded. From the perspective of fairness, that proposition is reasonable, but it has no foundation on any reading of cl 2 or cl 6, or the clauses when read together. Clause 6 defines “earnings” as the amount of income the worker received for work performed in any employment during the week (sub-cl(1)), and prohibits the inclusion of payments of weekly compensation in the calculation of the pre-injury earnings (sub-cl(2)(c)).
Thus, the only relief available for an injured worker in the circumstances where the worker received payments of weekly compensation during the relevant earning period is that provided for in Div 2 of Pt 4 of the 2016 Regulation, regulations 8A to 8EA.
Regulation 8A provides for adjustment in the following circumstances and in the following order:
(a) adjustment for workers not continuously employed (reg 8B);
(b) adjustment for financially material change to earnings (reg 8C);
(c) alignment of relevant earning period with pay period (reg 8D);
(d) adjustment for unpaid leave (reg 8E), and
(e) adjustment for prescribed periods relating to COVID-19 (reg 8EA).
At the oral hearing, both parties were in agreement that the application of each of the regulations 8B to 8EA were to be considered in the order in which they are listed. Neither party asserted that reg 8B or reg 8EA applied and I have already determined that the respondent’s circumstances did not fall within reg 8D.
In Secretary, Department of Communities and Justicev Pell,[18] I confirmed the non-presidential member’s decision that the injured worker’s circumstances fell within reg 8C. In that case, the respondent to the appeal was incapacitated from 30 August 2021 to 28 September 2021 as a resulting of contracting COVID-19, which was accepted as being work-related and compensable. A dispute arose as to the calculation of the respondent’s pre-injury earnings because the entire 52 weeks prior to the injury were included, but from the commencement of that period and up to 11 May 2021, the respondent had been in receipt of weekly payments for an earlier injury. I confirmed the non-presidential Member’s conclusion that the respondent had experienced an ongoing change in the nature of his employment resulting in a financially material change to the respondent’s earnings in accordance with reg 8C.
[18] [2023] NSWPICPD 19 (Pell).
The facts in this case are different to those in Pell. The respondent in this case did not return to work after he was incapacitated because of his earlier injury. There was, therefore, no ongoing change in the nature of his employment that resulted in a financially material change to his earnings. The parties, as well as the Member below, acknowledged that, if reg 8C was applied, it would result in a capricious or unjust outcome in that the respondent’s pre-injury average weekly earnings would be zero. I do not consider that reg 8C is applicable in the respondent’s circumstances and it is therefore necessary to descend further into the regulations in order to consider whether the subsequent regulations provide relief in favour the respondent.
The only remaining regulation that can be considered is reg 8E, which provides that, in circumstances where no earnings in the employment were paid or payable to the worker during a period of unpaid leave, the relevant earning period is to be adjusted by excluding that period of unpaid leave. The respondent submits that it is arguable that reg 8E applies and could be construed to mean leave taken while on compensation payments.
At the oral hearing, both parties were given the opportunity to make submissions as to whether reg 8E applied in this case. The appellant submits that the period during which the respondent was in receipt of workers compensation could not constitute unpaid leave because that would mean that cl 6 of Sch 3 would have no work to do. I do not accept that submission. Clause 6 provides that “earnings” means the income of the worker for work performed and further provides for a number of exclusions, including the receipt of workers compensation payments, from the concept of “earnings”. Those matters are most relevant to a consideration of whether the respondent could be classed as being on “unpaid leave”. I do not see how a construction that the worker was on unpaid leave when receiving workers compensation would result in cl 6 having no work to do.
The appellant further submitted that if the legislature intended to include leave while in receipt of weekly payments in the provision, it would have said so. I reject that submission. The process of statutory interpretation begins and ends with the text but context and purpose must also be considered.[19] The context within which the regulation sits is to allow for an adjustment to be made to the earning period where it would be unjust to one or the other of the parties to avoid such an adjustment, or to re-align the earnings period in order to facilitate a more accurate assessment.
[19] Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55, [39]; Commissioner of Taxation v Unit Trend Services Pty Ltd [2013] HCA 16; 250 CLR 523, [47].
In my view, an unjust outcome would result if a narrow view was taken to the term “unpaid leave.” If it was construed as referring only to a period during which a worker took leave without pay, for example for personal reasons, such a construction would entitle the worker to have the “relevant earning period” adjusted to discard the period of unpaid leave. On the other hand, a worker in the circumstances of the respondent in this case, who was not in receipt of “earnings” because he had suffered a work-related injury and the weekly payments were not included in “earnings”, would be unable to have the “relevant earning period” adjusted. Such an outcome would be plainly unfair and contrary to the intention of legislation, which was clearly to apply fairness to the calculation of the pre-injury average weekly earnings.
The “earnings” received by a worker in respect of a week are defined as the amount that is the income the worker received for work performed in any employment during the week. It follows that the respondent did not receive “earnings”, and earnings were not payable, when he was incapacitated and in receipt of weekly payments of compensation. By operation of cl 6(2)(c) of Sch 3, weekly payments of compensation are excluded from the earnings calculation.
In the context where weekly payments of compensation are excluded from the calculation of earnings, and no earnings were paid or payable to the respondent, I conclude that the respondent was on “unpaid leave” for the period during which he was incapacitated because of his prior injury, in accordance with reg 8E of the 2016 Regulation. The relevant earning period is therefore to be adjusted to the period from 1 February 2020 to 20 November 2020 in accordance with reg 8E.
I note that in Pell, I determined that the worker’s relevant earning period could be adjusted because of the operation of reg 8C. The regulations are to be applied “in the following order.” As the respondent describes it, this requires a “cascade” approach so that each regulation is to be considered in turn and if one regulation applies then it is not necessary to descend further into the regulations. Thus, there is no inconsistency between this matter and the decision in Pell, as the different circumstances in each case find redress in different regulations.
I further note that the relevant earning period is to be adjusted to the same period as that determined by Member Burge, but for different reasons. I therefore confirm orders 1 and 2 of the Certificate of Determination issued on 28 June 2022, save that order 2 is amended to read:
“The relevant earning period for the calculation of the pre-injury average weekly earnings is adjusted to 1 February 2020 to 19 November 2020 pursuant to regulation 8E of the Workers Compensation Regulation 2016.”
DECISION
Order Number 1 of the Certificate of Determination dated 28 June 2022 is confirmed.
Order Number 2 of the Certificate of Determination dated 28 June 2022 is amended to read:
“The relevant earning period for the calculation of the pre-injury average weekly earnings is adjusted to 1 February 2020 to 19 November 2020 pursuant to regulation 8E of the Workers Compensation Regulation 2016.”
Elizabeth Wood
Deputy President
23 June 2023
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