Thompson v Primary Producers Improvers Pty Ltd

Case [2004] NTCA 12

Thompson v Primary Producers Improvers Pty Ltd [2004] NTCA 12

PARTIES:THOMPSON, Kevin Douglas

v

PRIMARY PRODUCERS IMPROVERS PTY LTD (ACN 009 611 821)

TITLE OF COURT:  FULL COURT OF THE NORTHERN TERRITORY

JURISDICTION: ON REFERRAL FROM THE SUPREME COURT PURSUANT TO SECTION 21 OF THE SUPREME COURT ACT IN PROCEEDING NUMBER LA12 of 2003 (20208047)

FILE NOS:LA8 of 2004 & LA12 of 2003 (20208047)

DELIVERED:  22 October 2004

HEARING DATES:  24 August 2004

JUDGMENT OF:  MARTIN (BR) CJ, THOMAS J & PRIESTLEY AJ

CATCHWORDS:

WORKERS COMPENSATION

Work Health Act 1986 (NT) – reference of appeal to Full Court from a single Judge – whether non-cash component of wages should be “grossed up” to take into account the effect of income tax – non-cash components – whether remuneration for the purposes of calculating “normal weekly earnings” – s 49(d) whether “gross remuneration” means grossed up remuneration – appeal dismissed.

Fringe Benefits Tax Assessment Act 1986 (Cth)
Fringe Benefits Tax (Miscellaneous Provisions) Act 1986 (Cth), s 23L
Work Health Act (NT), s 49(1) and s 53.

Murwangi Community Aboriginal Corporation v Carole (2002) 171 FLR 116 at 118 and [2001] NTSC 85; AAT King’s Tours Pty Ltd v Hughes (1994) 4 NTLR 185 at 193 and 194; Francese v Corporation of the City of Adelaide (1989) 51 SASR 522 at 526; Victims Compensation Fund Corporation v Brown (2003) 201 ALR 260; GH Michell & Sons (Australia) Pty Ltd v Bockman (1994) 176 LSJS 377; NT Drilling Pty Ltd v McFarland [2004] NTSC 23; Haines v Bendall (1991) 172 CLR 60 at 63; Kingston and Anor v Keprose Pty Ltd (1987) 11 NSWLR 404, applied.

Cullen v Trappell (1980) 146 CLR 1; Atlas Tiles Limited v Briers (1978) 144 CLR 202; Gill v Australian Wheat Board; Gill v Grain Elevators Board of NSW [1980] 2 NSWLR 795; Daniels and Ors (formerly practising as Deloitte Haskins & Sells) v Anderson and Ors; Hooke v Daniels and Ors (formerly practising as Deloitte Haskins & Sells) Daniels and Ors (formerly practising as Deloitte Haskins & Sells) v AWA Ltd (1995) 37 NSWLR 438 at 585, referred to.

REPRESENTATION:

Counsel:

Appellant:C McDonald QC with J Neill

Respondent:  Mr Bryant with D Sweet

Solicitors:

Appellant:Ward Keller

Respondent:  Cridlands

Judgment category classification:         A

Judgment ID Number:  Mar0412

Number of pages:  20

IN THE FULL COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Thompson v Primary Producers Improvers Pty Ltd [2004] NTCA 12

Nos. LA8 of 2004 & LA12 of 2003 (20208047)

BETWEEN:

KEVIN DOUGLAS THOMPSON

Appellant

AND:

PRIMARY PRODUCERS IMPROVERS PTY LTD (ACN 009 611 821)

Respondent

CORAM:     MARTIN (BR) CJ, THOMAS J & PRIESTLEYAJ

REASONS FOR JUDGMENT

(Delivered 22 October 2004)

Martin (BR) CJ:

Introduction

  1. This is an appeal against a decision of the Work Health Court.  The appeal comes to this Court by way of reference from a single Judge.

  2. The appellant was employed by the respondent as a plant operator driving graders and other heavy equipment.  On 3…

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Thompson v Primary Producers Improvers Pty Ltd [2004] NTCA 12
Case
[2004] NTCA 12
Decision Date

CaseChat Overview and Summary

In the case of Thompson v Primary Producers Improvers Pty Ltd, the appellant argued that the employer should be liable for maintaining the value of the worker's exempt income, which is the value clear of taxation liability. The dispute centred on the interpretation of the term "remuneration" as it applies to the definition of "normal weekly earnings" under the relevant legislation. The appellant contended that a purposive construction of the legislative scheme supported the view that the employer should account for the exempt income as the value exempt from tax. This argument was grounded on the notion that while the specific factual scenario might not have been anticipated by the legislature, the purpose of the legislative scheme should guide its interpretation.

The central legal issue before the court was whether "remuneration" in the context of determining "normal weekly earnings" should be interpreted to include the value of non-cash benefits exempt from tax, or if it should consistently mean remuneration before tax is deducted. The appellant's purposive approach suggested a construction that would promote the beneficial character of the Act, arguing that such an interpretation would better achieve the legislative purpose. The court needed to determine if this purposive construction was permissible or if it would amount to legislating rather than interpreting the statute.

The court found that the term "remuneration" should be interpreted consistently throughout the definition of "normal weekly earnings" to mean remuneration before and independent of any taxation liability in the hands of the worker. The court held that attempting to construe the provisions in the manner proposed by the appellant would cross the boundary from permissible construction into legislation. The ordinary meaning of "remuneration" was held to be reward for services before tax, and therefore, the value of the non-cash component of the remuneration should not be grossed up to compensate for the worker's income tax liability. Consequently, the court dismissed the appeal, affirming that the employer was not required to account for the exempt income as the value exempt from tax.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The appellant submitted that as the worker earned a value which was, as a matter of fact, exempt income, it is the value to the worker exempt or clear of taxation liability that the employer is liable to maintain. In substance the appellant argued that while the legislature may not have contemplated this precise factual situation, the nature and purpose of the legislative scheme supports this purposive and beneficial construction which promotes and achieves the object of the scheme. In support of this approach the appellant relied upon the remarks of McHugh J (as he then was) in Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 at 423:“In most cases the grammatical meaning of a provision will give effect to the purpose of the legislation. A search for the grammatical meaning still constitutes the starting point. But if the grammatical meaning of a provision does not give effect to the purpose of the legislation, the grammatical meaning cannot prevail. It must give way to the construction which will promote the purpose or object of the Act.…Purposive construction often requires a sophisticated analysis to determine the legislative purpose and a discriminating judgment as to where the boundary of construction ends and legislation begins. But it is the technique best calculated to give effect to the legislative intention and to deal with the detailed and diverse factual patterns which the legislature cannot always foresee but must have intended to deal with if the purpose of the legislation was to be achieved.”Conclusion As Riley J pointed out in NT Drilling v McFarland, there is no suggestion that the “remuneration” identified in subpara (a) of the definition of “normal weekly earnings” is a reference to any amount other than the remuneration earned before tax is deducted. If the appellant is correct, because in the situation governed by subpara (d)(ii) the “remuneration” is comprised of both cash and non-cash components, the meaning of “remuneration” in subpara (d) is different from the meaning in subpara (a). When applied to both cash and non-cash components, on the appellant’s case “remuneration” means cash component before tax, but non-cash component after tax. Notwithstanding the beneficial character of the Act and the adverse impact upon the worker to which I have referred, in my opinion an attempt to construe the provisions in the manner contended by the appellant crosses the boundary from permissible “construction” into “legislation”. While “remuneration” is undoubtedly a wider concept than “pay”, the ordinary meaning of “remuneration” is reward for services before tax. In my view “remuneration” for the purposes of “normal weekly earnings” must be given a consistent meaning throughout the definition, namely, remuneration before and independent of any taxation liability in the hands of the worker. The amount payable to the appellant to reflect the non-cash component of his remuneration is $200 a week and that amount is not to be grossed up to compensate for the appellant’s liability to pay income tax. The appeal should be dismissed.Thomas J:

Ratio Decidendi

Legal Principle Established

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