Telstra Corporation Limited v Warner
[1994] FCA 622
•6 September 1994
TELSTRA CORPORATION LIMITED v. FREDERICK JAMES WARNER
No. VG467 of 1993
FED No. 622/94
Number of pages - 10
Worker's Compensation
(1994) 20 AAR 259
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
HEEREY J
CATCHWORDS
Worker's Compensation - compensation payments under Safety Rehabilitation and Compensation Act 1988 - whether injured worker an "employee" or "former employee" - whether injured worker "able to earn in suitable employment" - worker in receipt of pension under superannuation scheme - calculation of rate of compensation payable
Safety Rehabilitation and Compensation Act 1988 (Cth) ss.4(1)(9), 5(1)(9), 14(1), 19(1)(4), 123, 124(1)(1A), 131(1)(2), 132A(1)-(4)
Brennan v Comcare (1994) 122 ALR 615
HEARING
MELBOURNE, 25 July and 30 August 1994
#DATE 6:9:1994, ADELAIDE
Counsel for the applicant: Mr J E Barnard QC with Mr G Harris
Solicitor for the applicant: Hunt and Hunt
Counsel for the respondent: Mr S B Spittle
Solicitor for the respondent: McMullin Coate and Co
ORDER
The Court orders:
1. Appeal allowed.
2. Determination of the Administrative Appeals Tribunal dated 7
October 1993 set aside.
3. Order that the application be remitted for calculation of the rate
of compensation payable to the respondent under s.132A of the Safety Rehabilitation and Compensation Act 1988 (Cth) in accordance with these reasons for judgment.
4. No order as to costs.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules
JUDGE1
Introduction
HEEREY J On 1 December 1988 (the commencing day) the Safety Rehabilitation and Compensation Act 1988 (Cth) (the 1988 Act) came into operation. The respondent Frederick James Warner (Mr Warner) had suffered injury in the course of his employment with the applicant's predecessor Australian and Overseas Telecommunications Corporation (Telecom). He had ceased employment with Telecom before the commencing day. This appeal from the Administrative Appeals Tribunal (the Tribunal) raises the question as to which provisions of the 1988 Act apply to the calculation of Mr Warner's compensation. Relevant provisions of the 1988 Act are appended to these reasons for judgment.
Background
2. Mr Warner is aged 52. He commenced employment with Telecom in about 1968 as a linesman. In the course of that employment, and in particular between August 1974 and August 1978, he suffered a number of episodes of back pain which caused and/or aggravated a lumbo-sacral disc injury. Mr Warner reported the episodes and made claims for compensation which were accepted by Telecom.
Mr Warner has not worked since August 1978. Soon thereafter he was retired by Telecom on the grounds of invalidity. In addition to the payments for compensation for incapacity under the compensation legislation then in force, the Compensation (Commonwealth Government Employees) Act 1971 (the 1971 Act), Mr Warner qualified for and still receives a pension under a superannuation scheme. Mr Warner continued to receive weekly payments of compensation after the commencing day: see 1988 Act, s.124(1A).
On 22 November 1989 a delegate of Telecom issued a determination under the 1988 Act finding that Telecom was not liable to pay compensation to Mr Warner in respect of lumbo-sacral disc degeneration on and from that date. After the determination was affirmed upon reconsideration, Mr Warner applied to the Tribunal for review (application No. V 90/484). On 2 August 1991 the Tribunal, constituted by Senior Member Handley, handed down its decision.
After reviewing the evidence, including medical evidence (as to which there was a substantial conflict), the Tribunal found that Mr Warner's previous employment did continue to contribute to his incapacity. The Tribunal rejected evidence on behalf of Telecom that only age factors were relevant to Mr Warner's present condition and that the employment incidents merely produced a temporary aggravation. The Tribunal said:
"I am satisfied that the applicant is unable to undertake his former job, but is not totally incapacitated. On his own evidence, he is fit for clerical or counter type work and on the evidence of the doctors, he would be fit for work performing light cleaning, local driving or a driveway attendant or bench work where he could sit or stand at will."
The formal decision of the Tribunal was as follows:
"The Tribunal decided that the decision under review be set aside and in substitution therefor it is decided:
1. (Mr Warner) has been partially incapacitated by employment from 22 November 1989.
2. The applicant be remitted to (Telecom) with the direction that it pay compensation to (Mr Warner); The rate of compensation shall take account of the capacity of (Mr Warner) to engage only in employment not involving bending, lifting, twisting, stooping or work in crouched or confined positions and where (Mr Warner) can sit or stand at will.
3. (Telecom) pay (Mr Warner's) costs upon the appropriate County Court of Victoria scale, in default of agreement such costs to be taxed by the Registrar.
4. Liberty to both parties to apply generally, and to return to the Tribunal to argue the rate of compensation payable in the absence of agreement."
Between 22 October 1991 and 20 December 1991 Mr Warner personally sought employment from 37 employers in the Ballarat area. Enquiries outside this period of time were made of the Commonwealth Employment Service and through vacancies as advertised in the local newspaper.
In the meantime, on 1 November 1991, a delegate of Telecom issued the following determination under the 1988 Act:
"In accordance with s.132A(2) of the said Act, an amount of Nil per week is payable for incapacity for the period 23.11.89 to a date to be determine (sic)."
Mr Warner by an affidavit sworn on 25 April 1992 provided details of his unsuccessful attempts to obtain work but on 12 November 1992 another delegate of Telecom issued a further determination that the amount of compensation payable to Mr Warner "in respect of incapacity on and from 23 November 1989 is nil". After that decision was affirmed upon reconsideration, Mr Warner again applied to the Tribunal for review (application No. V 93/219).
On 7 October 1993 the Tribunal, constituted again by Senior Member Handley, handed down a decision in the following terms:
"The decision under review shall be set aside and in substitution therefor IT IS DECIDED that (Mr Warner) has not been able earn in suitable employment from 22 November 1989. The application be remitted to (Telecom) to calculate the rate of compensation payable to (Mr Warner) consistent with these reasons pursuant to s.19(2) and s.19(3) of the Safety Rehabilitation and Compensation Act 1988."
Telecom appealed to this Court against that decision.
The Tribunal's Reasons
12. In the course of its reasons the Tribunal noted that the parties acknowledged that the application was not concerned with the extent or severity of Mr Warner's injury. The competing arguments were, on behalf of Mr Warner, that entitlement to the compensation payable should be determined under s.19(4) of the 1988 Act upon the basis that Mr Warner "did not have an ability to earn in suitable employment" and that the rate of compensation should be determined by s.19(3). On behalf of Telecom it was argued that s.132A of the 1988 Act applied.
After referring to the definition of "employee" in s.5(1) and the inclusion within that term, in certain circumstances, of persons who have ceased to be employees (s.5(9)) the Tribunal said:
"The relevance of (Mr Warner) being deemed to be an employee is to be found in s.19(4) of the Act which provides that the amount per week that an employee is able to earn in suitable employment shall determine the rate of compensation payable. The expressions `former employee' and `ceased to be an employee' are not defined. Logic would dictate that the expressions referred to a person previously, but no longer employed. I am therefore not satisfied that (Mr Warner) is excluded from s.19, having regard to s.5(9)."
However, "former employee" is in fact defined in the 1988 Act by s.123. The expression is defined to mean a "... a person who, immediately before the commencing day, was receiving weekly payments of compensation under the 1971 Act in respect of an injury resulting in an incapacity and had ceased to be an employee within the meaning of that Act before that day". That definition clearly covered Mr Warner. Section 5(9) is concerned with a person who ceases to be an employee after the commencing day.
The Tribunal continued:
"Section 19 of the Act does not require a finding of total or partial incapacity. It requires a finding pursuant to s.19(1) of `incapacity', `as a result of an injury'. Section 19(2) and (3) refers to the rate of compensation payable within the first 45 weeks of incapacity and the rate payable after the first 45 weeks of incapacity. Section 19(4) says that certain matters are to be considered when determining, for the purpose of s.19(2) and (3) whether an employee is able to earn in suitable employment."
The Tribunal then reviewed the evidence as to Mr Warner's attempts to obtain employment and the state of the labour market in Ballarat. The Tribunal said:
"... it would appear that if there is evidence that no offer of suitable employment has been made to the injured worker and the injured worker has been unable to secure suitable employment himself, the respondent employer should determine that the rate of compensation payable is to be determined by reference to ss.(2) and (3) of s.19 of the Act."
Under the sub-heading "Conclusion" the Tribunal said:
"(Mr Warner) has not, since 22 November 1989, been `able to earn' in suitable employment.
Having regard to the definition of `suitable employment' in S.4(1) of the Act, I am satisfied that (Mr Warner) has been unable to engage in any `... employment ... for which (he) is suited having regard to' his age of 51 years, his domicile in a rural community with a severely depressed labour market, his limited work and academic skills, the extent of his injuries, the period out of the workforce and the length of time since he last worked (15 years). It would not be reasonable for (Mr Warner) to change his place of residence and in any event, I could not be satisfied that even if he were prepared to do so, that he would, having regard to the above factors, secure any employment outside Ballarat. I note also, for the purposes of these findings, that
(Telecom) has not made any offer of employment or retraining or rehabilitation despite (Mr Warner) applying to Telecom on two occasions for work.
Having regard to the earlier comments of Deputy President Todd in Re Stevanovic, I am satisfied (Mr Warner) has not been `able to earn'.
Observing that the qualification for payment of compensation under S.132A of the Act is, in part, a finding that a former employee is `capable of earning an amount per week in suitable employment', it follows that the rate of compensation payable to (Mr Warner) is not to be under S.132A of the Act as Mr Gorton submitted, but pursuant to S.19(4) of the Act.
So far as S.19(4) of the Act is concerned, I have decided that (Mr Warner) is not able to earn in suitable employment. None of sub-sections (a) to (g) are relevant or apply to (Mr Warner). He is not in employment (sub-section (a)), he has not received any offer of suitable employment (sub-section
(e)). For these reasons, sub-section (f) is not relevant and there is nothing about (Mr Warner) or his endeavours to seek employment which might fall within whatever is intended by sub-section (g) to permit a finding of him being able to earn in suitable employment.
In the circumstances, the decision under review should be set aside and in substitution for it, it is decided that (Mr Warner) has been unable to earn in suitable employment and the rate of compensation payable to him shall be calculated by reference to S.19(2) and S.19(3) of the Act."
Does Section 19 or Section 132A Apply?
18. I was told that the practical consequence of this question is that, if s.132A applies, Mr Warner's superannuation benefits will be taken into account in the calculation (s.132A(1) and (2)(a) applying s.131(2)) but if s.19 applies no deduction would be made. In itself it would seem a surprising intention to impute to Parliament that a retired worker in Mr Warner's position should get both pension and compensation without deduction whereas a person still in employment would get compensation alone.
But the 1988 Act provides separately for (i) persons who are employees on and from the commencing day and (ii) former employees. In the case of (i), where an employee who is entitled to compensation retires and receives a pension under a superannuation scheme, that pension will be taken into account: s.20. Section 19 does not apply to such an employee: s.19(1). As already noted, Mr Warner is a "former employee", not an "employee". His entitlement to compensation does not come from s.14(1) and s.19 does not apply to the calculation of his compensation because he is not an "employee".
As might be expected, a person entitled to compensation under the 1971 Act did not lose benefits by reason only of the introduction of the new legislation. But the comprehensive transitional provisions of Part X of the 1988 Act are, in the words of Gummow J in Brennan v Comcare (1994) 122 ALR 615 at 623,
"... transitional in a particular way. They are not concerned with the preservation of the old legislation in respect of rights and liabilities accrued thereunder. Rather, they deal with the creation and substitution from the commencement of new rights in respect of past events."
Division 3 of Part X is concerned, as its heading indicates, with "Special transitional provisions relating to certain former employees". Initially those "certain former employees" were former employees under 65 on the commencing day who were unable to engage in work and who were either in receipt of a pension under a superannuation scheme (s.131) or not in receipt of such a pension (s.132). By Act No. 68 of 1990, s.132A was introduced to cover a former employee under 65 on the commencing day who (unlike the s.131 and s.132 former employees) is capable of earning an amount per week in suitable employment.
Sections 131, 132 and 132A provide a regime for former employees under 65 on the commencing day, making specific provision for those who did, and those who did not, then receive a pension under a superannuation scheme. Thus ss.131,132 and 132A mirror ss.19 and 20, which deal in similar respects with employees, that is to say those in employment on or after the commencing day.
In my opinion, the Tribunal was in error in failing to hold that Mr Warner's entitlement to compensation came from s.124(1A) and the calculation of that compensation was governed by s.132A. The amount of Mr Warner's compensation is determined under s.132A(2) because he was in receipt of a pension under a superannuation scheme on the commencing day. Had he not been in receipt of such a pension, s.132A(3) would have applied.
The function of s.132A(4) is to assist in ascertaining what, in a given situation, the former employee "is able to earn in suitable employment". Section 132A(4) requires regard to be given to the factors mentioned in s.19(4)(a),(b),(c),(d),(e), (f) and (g) "as if those paragraphs referred to the former employee" (emphasis added). This in itself strikes me as a clear indication that s.19(4) does not apply to Mr Warner of its own force, but because s.132A, which on its terms clearly applies to him, incorporates by reference the s.19(4) factors.
"Capable of Earning", "Able to Earn"
25. In my opinion, the expression "capable of earning an amount per week in suitable employment" in s.132A(1) refers to capacity to work.
It was established by the first Tribunal hearing that Mr Warner is capable of earning an amount per week in suitable employment because he has the physical capabilities and skills to carry out some, albeit limited, kinds of employment. The availability in fact of work for Mr Warner becomes relevant at the stage when the calculation under s.132A(2)(a) is being carried out.
For the purpose of determining what Mr Warner is "able to earn in suitable employment", reference must be made to the definition of "suitable employment" in s.4(1), which includes personal attributes such as age, experience etc and to s.132A(4). As previously noted, s.132A(4) requires the s.19(4) factors to be considered. None of factors (a),(b),(c) or (d) apply. The Tribunal made a finding of fact that Mr Warner had not "failed to seek suitable employment". No challenge is made to that finding, so (e) does not apply either. Telecom would therefore have to have regard to factor (g). A relevant matter in considering what Mr Warner is able to earn in suitable employment would be the actual availability of such employment for him. The Tribunal's findings are to the effect that no such employment is available.
Conclusion
28. In making its finding of fact that Mr Warner was not "able to earn" any income "in suitable employment" the Tribunal made a finding which was open to it. As a matter of law there was an error because the Tribunal mistakenly thought it was applying the s.19(4) factors in an assessment under s.19 whereas in truth s.132A applied.
In summary, the following is established:
(i) Mr Warner was on the commencing day a former employee of Telecom and was under 65.
(ii) As at 7 October 1993 he was capable of earning an amount per week in suitable employment.
(iii) As at 7 October 1993, and since 22 November 1989, he had not been able to earn any amount in suitable employment.
The determination of the Tribunal dated 7 October 1993 should be set aside and Mr Warner's application be remitted for calculation at the rate of compensation payable to him pursuant to s.132A of the 1988 Act, taking into account his pension.
Since the applicant has failed in part in that it did not upset the finding that Mr Warner is not capable of earning an amount per week in suitable employment, and only succeeded on its alternative ground for recalculation, there should be no order as to costs.
Relevant Provisions of Safety Rehabilitation and Compensation Act 1988 (Cth)
4. (1) ...
"suitable employment", in relation to an employee who has suffered an injury in respect of which compensation is payable under this Act, means:
(a) in the case of an employee who, on the day on which he or she was injured was a permanent employee of the Commonwealth or a licensed corporation and who did not subsequently terminate that employment - employment by the Commonwealth or the licensed corporation, as the case may be in work for which the employee is suited having regard to:
(i) the employee's age, experience, training, language and other skills;
(ii) the employee's suitability for rehabilitation or vocational retraining;
(iii) where employment is available in a place that would require the employee to change his or her place of residence; and
(iv) any other relevant matter; and
(b) in any other case - any employment (including self-employment), having regard to the matters specified in subparagraphs (a)(i),(ii),(iii) and (iv)." ...
(9) A reference to this Act to an incapacity for work is a reference to an incapacity suffered by an employee as a result of an injury, being:
(a) an incapacity to engage in any work; or
(b) an incapacity to engage in work at the same level at which he or she was engaged by the Commonwealth or a licensed corporation in that work or any other work immediately before the injury happened.
5. (1) In this Act, unless the contrary intention appears: "employee" means:
(a) a person who is employed by the Commonwealth or by a Commonwealth authority, whether the person is so employed under a law of the Commonwealth or of a Territory or under a contract of service or apprenticeship; or
(b) a person who is employed by a licensed corporation.
(1A) - (8) ...
(9) A reference to an employee in a provision of this Act that applies to an employee at a time after Comcare, an administering authority, a licensed authority or a licensed corporation has incurred a liability in relation to the employee under this Act includes, unless the contrary intention appears, a reference to a person who has ceased to be an employee.
14. (1) Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment.
(2) ...
(3) ...
19. (1) This section applies to an employee who is incapacitated for work as a result of an injury, other than an employee to whom section 20,21,21A or 22 applies.
(2) ...
(3) ...
(3A) ...
(4) In determining, for the purposes of subsections (2) and (3), the amount per week that an employee is able to earn in suitable employment, comcare shall have regard to:
(a) where the employee is in employment - the amount per week that the employee is earning in that employment;
(b) where, after becoming incapacitated for work, the employee received an offer of suitable employment and failed to accept that offer - the amount per week that the employee would be earning in that employment if he or she were engaged in that employment;
(c) where, after becoming incapacitated for work, the employee received an offer of suitable employment and, having accepted that offer, failed to engage, or to continue to engage, in that employment - the amount per week that the employee would be earning in that employment if he or she were engaged in that employment;
(d) where, after becoming incapacitated for work, the employee received an offer of suitable employment on condition that the employee completed a reasonable rehabilitation or vocational retraining program and the employee failed to fulfil that condition - the amount that the employee would be earning in that employment if he or she were engaged in that employment;
(e) where, after becoming incapacitated for work, the employee has failed to seek suitable employment - the amount per week that, having regard to the state of the labour-market at the relevant time, the employee could reasonably be expected to earn in such employment if he or she were engaged in such employment;
(f) where paragraph (b), (c), (d) or (e) applies to the employee - whether the employee's failure to accept an offer of employment, to engage, or to continue to engage, in employment, to undertake, or to complete, a rehabilitation or vocational retraining program or to seek employment, as the case may be, was, in Comcare's opinion, reasonable in all the circumstances; and
(g) any other matter that Comcare considers relevant.
(5) - (14) ...
20. (1) ...
(2) ...
(3) ...
123. In this Part:
...
"former employee" means a person who, immediately before the commencing day, was receiving weekly payments of compensation under the 1971 Act in respect of an injury resulting in an incapacity and had ceased to be an employee within the meaning of that Act before that day.
124. (1) Subject to this Part, this Act applies in relation to an injury, loss or damage suffered by an employee, whether before or after the commencing day.
(1A) Subject to this Part, a person is entitled to compensation under this Act in respect of an injury, loss or damage suffered before the commencing day if compensation was, or would have been, payable to the person in respect of that injury, loss or damage under the 1912 Act, the 1930 Act or the 1971 Act.
(2) - (12) ...
131. (1) This section applies to a former employee who:
(a) on the commencing day, was under 65 and in recept of a pension under a superannuation scheme; and
(b) is not capable of engaging in any work.
(2) Subject to this Division, if the former employee's total benefit immediately before the commencing day was equal to or more than 95% of his or her normal weekly earnings as at that day, the amount of compensation payable per week to the former employee under this Act is the amount that, when added to the former employee's superannuation amount, results in a combined benefit equal to 955 of those normal weekly earnings.
(3) - (6) ...
132A.(1) This section applies to a former employee who was under 65 on the commencing day, and who is capable of earning an amount per week in suitable employment.
(2) Where a person to whom this section applies was in receipt of a pension under a superannuation scheme on the commencing day, then, subject to this Division, the amount of compensation payable per week to the former employee is:
(a) the amount of compensation per week that would have been payable under section 31 if that section had applied to the former employee, less the amount per week that he or she is able to earn in suitable employment; or
(b) the amount of compensation per week that would have been payable under section 20 if that section had applied to the former employer;
whichever is greater.
(3) Where a person to whom this section applies was not in receipt of a pension under a superannuation scheme on the commencing day, then, subject to this Division, the amount of compensation payable per week to the former employee is:
(a) the amount of compensation per week that would have been payable under section 132 if that section had applied to the former employee, less the amount per week that he or she is able to earn in suitable employment; or
(b) the amount of compensation per week that would have been payable under section 19 if that section had applied to the former employee, less an amount equal to 5% of his or her normal weekly earnings;
whichever is the greater.
(4) In determining, for the purposes of this section, the amount per week a former employee is able to earn in suitable employment, Comcare must have regard to the factors mentioned in paragraphs 19(4) (a), b), (c), (d), (e), (f) and (g) as if those paragraphs referred to the former employee.
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