Steggles Pty Ltd v Vandenberg

[1987] HCA 35

HIGH COURT OF AUSTRALIA

Mason C.J., Wilson, Deane, Toohey and Gaudron JJ.

STEGGLES PROPRIETARY LIMITED v. VANDENBERG

(1987) 163 CLR 321

12 August 1987

Worker's Compensation (N.S.W.)

Workers' Compensation (NSW)—Compensation—Payment during incapacity Paid "rostered leisure day"—No loss of wages under contract of employment—No consequential economic loss—Whether compensation thereby precluded-Workers' Compensation Act 1926 (NSW), ss.9(1), 13

Decision

MASON C.J., WILSON, DEANE, TOOHEY AND GAUDRON JJ.: The Compensation Court of New South Wales held that the respondent employee was entitled to workers' compensation for total incapacity for work on 17 February 1984, although it was a day on which she was paid for "a rostered leisure day". The Court of Appeal, by majority (Hope and McHugh JJ.A., with Mahoney J.A. dissenting) dismissed an appeal from the award made by the Compensation Court in favour of the respondent. The appellant employer now appeals from that order.

2. It is common ground that the respondent was incapacitated for work on the day in question as a result of an injury which she sustained. Her contract of service was subject to the provisions of the Poulterers' (State) Award. By cl.4 of that Award 38 ordinary hours constitute a week's work, being five days of 7 hours 36 minutes each, Monday to Friday inclusive, between 7.00 a.m. and 5.00 p.m. Clause 5 of the Award makes provision for the implementation by alternative means of the reduction of working hours from the previous standard of 40 hours per week to 38 hours per week. The means chosen by the appellant was to require workers to work eight ordinary hours each day with the additional 0.4 of an hour "being aggregated for accrued leisure time which shall fall due after 19 ordinary week days" (cl.5(i)). The following provisions in cl.5 are material:

"(b) The day off shall be on a fixed roster. The payment for the day off will be on the basis of 0.4 hours for each day worked. For payment purposes 'a day worked' shall include sick leave and paid public holidays, but shall not include a day on compensation or unpaid sick leave or annual leave.

...

(e) The employer may elect not to roster leisure time in any short week or to reduce the incidence of leisure time, providing 28 days notice is given.

...

(g) If any employee is not granted the leisure time within 28 calendar days from the day due, the employee shall be paid time and a half for the credit period as full discharge of that credit. This clause shall not be read so as to imply that an employee may decide to appear for duty on a rostered leisure day.

...

(j) In the event of sickness occurring on pre-arranged leisure time, no sick leave deductions will be made, however, the employee shall retain the paid leisure payment for that day."

On Friday 17 February 1984 the respondent was entitled to a rostered leisure day in respect of which she received payment "on the basis of 0.4 hours for each" of the nineteen days which she had previously worked eight hours.

3. Section 7(1)(a) of the Workers' Compensation Act 1926 (N.S.W.) as amended ("the Act") provides that a worker who has received an injury at his place of employment shall receive compensation from his employer in accordance with the Act. Section 7(2B) provides that compensation is to be paid in accordance with the provisions of the Act to a worker in respect of any period of incapacity notwithstanding that the worker has received or is entitled to receive in respect of such period any payment, allowance or benefit for holidays, annual holidays or long service leave under any Act, award or industrial agreement, or contract of employment and the amount of compensation so payable shall be the amount which would have been payable to the worker had he not received or been entitled to receive in respect of such period any such payment, allowance or benefit.

4. Section 9(1) provides that, subject to the provisions of that section and ss.11 and 13, where total or partial incapacity for work results from the injury, the compensation payable by the employer under the Act shall include the worker's current weekly wage rate in respect of the first 26 weeks of any period of incapacity. The same sub-section also provides for payment where the incapacity is for part of a week. Section 11 provides that, in the case of partial incapacity, the weekly payment shall not exceed the difference between the weekly amount which the worker would probably have been earning but for the injury, in the same or some comparable employment, and the average weekly amount which he is earning, or is able to earn, in some suitable employment, after the injury. Section 13 provides:

"In fixing the amount of the weekly payment, regard shall be had to any payment, allowance, or benefit (other than any payment, allowance, or benefit from a superannuation or similar fund to which the worker has contributed) which the worker may receive from the employer during the period of his incapacity."

5. The appellant's first submission, which takes up the gist of the dissenting judgment of Mahoney J.A. in the Court of Appeal, is that the liability imposed upon an employer by s.9(1) is not a liability to pay money but rather a liability in respect of which the tribunal can exercise a discretion to make a declaration. According to the argument, where a worker sustains injury resulting in physical incapacity there arises under the Act not a right to payment but a right to secure the exercise by the tribunal of the discretion given to it by ss.9 and 11. This discretion, so the argument runs, will not be exercised unless the physical incapacity of the worker results in economic loss measured by loss or reduction in wages. The consequence of the appellant's argument, if it be correct, is that the question whether there is a liability to pay compensation is different from the question whether there is a physical incapacity for work and that the receipt of wages for the leisure day means that the respondent sustained no reduction of earning capacity for that day or any consequential economic loss.

6. In support of this submission the appellant relies on the comments of Latham C.J. in Thompson v. Armstrong and Royse Pty. Ltd. (1950) 81 CLR 585 where his Honour said, at p 598:

"The cases show that in order that an employer should become liable actually to pay compensation in respect of a particular period there must be (1) an injury of the worker as defined in the Act; (2) a resulting incapacity for doing the work for which he was earning wages; (3) a consequent economic loss of wages. If in fact he is still receiving those wages in respect of a particular period he fails to establish the third element and the employer is not liable in respect of that period - though he would become liable if, the incapacity continuing, he ceased to pay the wages."

However, when this passage is read in context, it is seen, as McHugh J.A. pointed out in the Court of Appeal, that Latham C.J. was basing his comments on the provisions of s.13, not on an interpretation of s.9. His Honour had discussed s.13 and the English authorities on the interpretation of that section, concluding with the observation, at p.597:

"It is in my opinion by the application of s.13, and not by reason of the application of any principle that there is no incapacity if wages are paid, that the payment of an amount as wages in excess of the amount claimable as workers' compensation prevents a right to claim payment of compensation arising for any period in respect of which wages are paid."

Earlier his Honour rejected the argument that independently of s.13, a worker must show that his incapacity results in a loss of wages before he is entitled to compensation under s.9, stating, at p.595:

"The phrase 'where total or partial incapacity for work results from the injury' must refer to physical injury resulting in physical incapacity for actually doing work. That incapacity is relevant where it produces an incapacity to earn his living as he did before the injury ... in a market for his labour which was reasonably accessible to him ..."

7. McTiernan J. (at p.603), Fullagar J. (at p.613) and Kitto J. (at p.621) each expressed a similar view based on s.9. Only Williams J. (at pp.608-609) and Webb J. (at pp.609-610) were of the opinion that proof of loss of wages under the contract of employment as a result of incapacity is a necessary condition to obtaining an award of workers' compensation. In the result, a majority of the Court in Thompson affirmed the proposition that a worker who is physically incapacitated for work can recover compensation, although his incapacity does not result in loss of wages under the contract of employment.

8. What we have just said re-states in rather more detail the account of the judgments in Thompson given by Mason, Wilson, Deane and Dawson JJ. in Arnotts Snack Products Pty. Ltd. v. Yacob (1985) 155 CLR 171, at pp 177-178. And our remarks reflect a view of s.9 of the Act that has been consistently applied by the Court of Appeal in recent cases: see Cage Developments Pty. Ltd. v. Schubert (1981) 2 NSWLR 227, at p 229 (which was affirmed by this Court on another point: (1983) 151 CLR 584); State Rail Authority of New South Wales v. Belgrove (1982) 2 NSWLR 738, at p 745.

9. It follows that, subject to s.13, the respondent was entitled to compensation under s.9. The latter section is not expressed to be subject to a discretion, so that it is under s.13, if at all, not s.9, that the payment of wages referable to the rostered leisure day is to be taken into account.

10. The interpretation of s.13 and of its ancestor, s.7(1) of the Workmen's Compensation Act 1906 (U.K.), has a long history, beginning with McDermott v. Owners of S.S. Tintoretto (1911) AC 35 and Considine v. McInerney (1916) 2 AC 162. In both decisions the House of Lords held that the sub-section referred only to such payments, allowances or benefits as were received in respect of the worker's incapacity and in respect of that period of incapacity that is or would otherwise be covered by compensation. In Thompson, McTiernan J. (at pp.604-605), Fullagar J. (at pp.617-618) and Kitto J. (at p.624) accepted this interpretation. Latham C.J. (at p.597) and Webb J. (at p.611) considered that s.13 could, consistently with McDermott, be reasonably interpreted as requiring a tribunal to take into account payments made by an employer in his capacity as an employer which are made in respect of the period during which the worker is incapacitated. In Thompson the question was whether the wages received by the worker during the period of his annual holidays were to be taken into account. By majority it was held that the wages, not having been received in respect of the injury and the consequent incapacity to earn, were not a payment which the worker received from the employer in respect of his incapacity. The difference of opinion with respect to the interpretation of s.13 which arose in Thompson was resolved by the joint judgment of Dixon, Williams, Webb, Fullagar and Kitto JJ. in The Commissioner for Railways (N.S.W.) v. London (1951) 85 CLR 95, where their Honours said with reference to the section, at p 101:

"The generality of its words have been restrained by judicial construction to what is received by the workman in respect of the incapacity."

Those comments were, of course, made in a context where the relevant payment could not properly be seen as being for work done or for work which, but for the incapacity, would have been done during the holiday period.

11. The appellant invited us to adopt the interpretation of the section favoured by Latham C.J. and Webb J. in Thompson in preference to that adopted by the Court in London, on the footing that the statement which we have quoted from London was no more than obiter dicta. We must reject this invitation. The interpretation unanimously adopted in London affirmed the majority opinion previously expressed in Thompson which was in turn supported by long-standing authority in the House of Lords.

12. The payment for the rostered leisure day was in no sense a payment in respect of the respondent's incapacity. Nor was it a payment of wages for work which was done or which would, but for the incapacity, have been done on that day. It was in truth a payment of wages for work done within the ordinary working week, being work done in 0.4 of an hour on nineteen previous days in accordance with the provisions of cl.5 of the Award. The case is therefore not one in which a worker receives both a payment of compensation and a payment of wages for work done on the same day.

13. We would dismiss the appeal.

Orders

Appeal dismissed with costs.