Tran v Victorian WorkCover Authority (No. 2)
[2015] VCC 946
•14 July 2015
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
COMMON LAW DIVISION
WORKCOVER LIST
Case No. CI-14-01039
| ANH TRAN | Plaintiff |
| v | |
| VICTORIAN WORKCOVER AUTHORITY | Defendant |
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JUDGE: | HIS HONOUR JUDGE DYER | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 and 23 June 2015 | |
DATE OF JUDGMENT: | 14 July 2015 | |
CASE MAY BE CITED AS: | Tran v Victorian WorkCover Authority (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2015] VCC 946 | |
REASONS FOR JUDGMENT
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Subject: ACCIDENT COMPENSATION
Catchwords: Calculation of weekly payments – gradual process injury – pre-injury earnings – evidentiary matters
Legislation Cited: Accident Compensation Act 1985 s3, 5A(1), 5AA(1)(a); 5AB(1), 5AC
Judgment: PIAWE determined in the sum of $951.80 per week.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Dimsey | Maurice Blackburn Lawyers |
| For the Defendant | Mr I McDonald | Russell Kennedy Lawyers |
HIS HONOUR:
Introduction
1 Mr Tran suffers a serious medical condition. In July 2014 proceedings concerning the determination of his entitlement to compensation proceeded before me and judgment was given in his favour on 4 August 2014.[1]
[1]Anh Tran v VWA [2014] VCC2010
2 In essence the judgment determined the question of liability for compensation in the nature of statutory entitlements under the provisions of the Accident Compensation Act 1985 (“the Act”) by reason or Mr Tran’s exposure to welding fumes in the course of his employment in the 1990s. The determination of that case concerned the industrial disease provisions of the Act, and did not relate to any occurrence of injury or incapacity during that earlier employment.
3 Notwithstanding the judgment delivered last year, the parties have remained in dispute in terms of the actual entitlement to statutory benefits which should flow from the judgment handed down and the orders made.
4 The parties were initially unable to agree on a date of incapacity. This has now been agreed as 15 October 2013. There remains a disagreement as to the calculation of the Pre-Injury Average Weekly Earnings (“PIAWE”) figure which must be either agreed or determined in order to generate the correct weekly payment during Mr Tran’s period of incapacity.
5 Part of the difficulty faced by the parties (and ultimately by the Court) was due to Mr Tran changing his career path from welding in the 1990s to real estate in more recent times.
6 Fortunately, the provisions of the Act do provide assistance as to the manner in which the PIAWE figure is to be calculated in such circumstances. It was apparent that both parties had prepared both an evidentiary basis and careful arguments to assist me in reaching a decision.
7 I am mindful of not only the overarching provisions of the Civil Procedure Act 2010, but also the desirability of determining the level of entitlement as promptly as justice will allow, where the plaintiff suffers the ongoing effects of a serious illness.
The evidence
8 Mr Tran gave evidence as to the circumstances of his employment up until the date of incapacity in October 2013, and also in relation to a number of documents that were tendered in support of his claim. The evidence was quite brief, and can be summarised as follows:
·He was manager of Century 21 Wilson Pride Real Estate Agency in Springvale.
·The business was operated through a company, Far Eastern Pty Ltd, of which Mr Tran was the sole director. His role as manager, and also director of the company, was to manage the business including the sales and the rent roll.
·The business employed a few people, including Mr Tran, who was actually employed by the company.
9 The business was being wound down in the latter part of 2013 as Mr Tran’s health deteriorated. The rent roll of the business was sold, and various outstanding commissions were received in that period.
10 The staff would come and go at the business, but in 2013 there were approximately six or seven paid people, which then reduced to three when he ceased the business.[2]
[2]Transcript (“T”) 22, Line (“L”) 30-T23, L2
11 Mr Tran gave evidence that his base wage was $800 per week “but I’m not always withdraw wages with me”.[3]
[3]T23, L2-3
12 Mr Tran identified in evidence his personal taxation returns for the financial years ended 30 June 2013 and 30 June 2014, which were tendered.[4]
[4]Exhibits A and B, respectively
13 He also produced a payroll book prepared by Mr Tran personally, and dating from 2 July 2010 to 8 October 2013.[5]
[5]Exhibit C
14 Mr Tran also identified bank statements relating to personal accounts and accounts of the company. The personal accounts were from the Commonwealth Bank of Australia Limited (“CBA”) and covered the period 1 June 2012 to 13 November 2013.[6] The company accounts were from the Westpac Banking Corporation (“Westpac”) and covered the period 1 November 2012 to 31 December 2012.
[6]Exhibit D
15 Mr Tran gave evidence that the company account was the account that received loans from him and paid back those loans, together with wages.[7]
[7]T34, L8-L12
16 In cross-examination, Mr Tran was pressed on several occasions concerning the lack of reference to wages being mentioned in the bank statements, and also the lack of correlation between what was described as a “loan” between his personal accounts and the company accounts not correlating with Mr Tran’s claim as to his wages.
17 Without traversing this aspect of the evidence in detail, it is reasonable to conclude that the bookkeeping arrangements showing Mr Tran as being paid $800 per week as a base salary could not be correlated with the bank statements.
18 I noted, in particular, the puttage by Mr McDonald, who appeared for the defendant, to the extent that the amount described as loans in the company bank statements totalled an amount in excess of $200,000 over a period of approximately 12 months. Although Mr Tran did not admit to loan amounts as put, it was clear from the subsequent evidence called that the amounts in the bank statements were consistent with this puttage.
19 Mr Tran was taken to the tax returns and agreed that the amount stated as his income in the 2013 financial year was based on his own calculations, which were then given to his accountant.[8] He also confirmed the accuracy of a statement he had made in a statutory declaration relevant to this claim in February 2014.
“I am the Director and also an employee of Far Eastern Property Ltd. My base salary is $800.00 per week before tax plus commissions earned. Approximately $40,000 per year.”[9]
He also confirmed that since having his left lung removed in 2006 he had not actually paid himself any commission.[10]
[8]T43, L24-31
[9]T49, L25-T50, L3
[10]T50, L4-L7
20 In re-examination, Mr Tran confirmed that receipts totalling $159,000 appearing in his personal bank statements on 14 August 2006 showing credits from the company were related to the sale of the business rent roll.[11] He also confirmed that the payroll book payments, if not actually paid, showed that the company owed money to Mr Tran that would be repaid by way of loan payments.[12]
[11]T57, L9-L28
[12]T58, L5-L14
21 The defendant called evidence from Mr Peter Wilkinson, chartered accountant, who had prepared a report dated 28 May 2015.[13] Mr Wilkinson set out a number of questions on which his opinion had been sought. In essence, his opinion was sought as to the possibility or actuality of verifying the payments set out in Mr Tran’s tax returns, being $35,360 in the 2012-2013 financial year and $24,334 in the period from 1 July 2013 to 15 October 2013. Mr Wilkinson’s report set out a considerable volume of documentation with which he had been provided in order to give his opinion. The documentation included the exhibits tendered in this proceeding, save for the payroll book (Exhibit C).
The accounting evidence was of considerable assistance in this matter. I noted in particular, aspects of Mr Wilkinson’s evidence as follows:
· “In small business, loan accounts are used almost as a bucket account. Often there’s wages that are drawn and payment of personal expenses or amounts are drawn as loans. But if there’s wages, there’s normally some sort of underlying record that there’s going to be wages paid, hence there’s a certain amount of PAYG tax liability that’s incurred in respect to these.”[14]
· Mr Wilkinson would expect that there would be some record of what the wage level was, largely because of the need to comply with taxation obligations, such as the lodgement of quarterly BAS statements.[15]
[13]Exhibit 1
[14]T6, L25-T7, L1
[15]T8, L15-T8, L26
22 When cross-examined, Mr Wilkinson confirmed that there were considerable difficulties in actually identifying particular transactions shown in the bank statements as correlating to the salary set out in Exhibit C. I was assisted by the following evidence:
·One of the big problems with a lot of small businesses is that they tend to treat their business account as a personal account and, as a result, it is very hard to identify certain transactions.[16]
·The quarterly BAS statements, involving GST obligations and PAYG obligations, had been prepared and filed.[17]
·The $24,344 recorded as received in the 2014 financial year appear to be consistent with records, but are commission amounts rather than wage amounts.[18]
·It would be very unusual for an individual tax return to record an income amount that is higher than the receipt of wages.[19]
·The annualised figures for the 2014 financial year would total $54,093.
[16]T12, L13-18
[17]T12, L23-31
[18]T13, L19-T14, L1
[19]T14, L2-6
23 Mr Wilkinson was re-examined and confirmed that he had been unable to verify the $24,334 shown as received in the 2014 financial year, as there were only two pay slips which were replicated by deposits on the bank statement.[20]
[20]T17, L15-20
24 For completeness, I should record that, in response to a question put by the Court as to the relationship between the actual receipts shown in the bank statement and the proportion of annualised income suggested on behalf of Mr Tran, Mr Wilkinson agreed that the proportion would be what he would expect to see in a normal business arrangement.[21]
[21]T16, L21-31
Analysis
25 The position adopted by the plaintiff was that the figures set out in the actual tax returns tendered in Exhibit A and Exhibit B should form the basis for the calculation of PIAWE in this case. There was no argument between the parties that the calculation was to be governed by s5AA(1)(a) of the Act which mandates the period of 52 weeks immediately before “the injury” as being the relevant period. Therefore a calculation should be made for the period of 52 weeks immediately preceding 15 October 2013.
26 On the basis of the income recorded in Mr Tran’s taxation returns, this period would yield a PIAWE figure of $951.80 per week. This figure made allowance for the fact that $18,000 in director’s fees recorded in the 2014 financial year would be for the entirety of that financial year and not limited to the period ending 15 October 2013. Therefore, the total income in the 52 weeks preceding the notional date of injury would be $49,494, equating to the PIAWE as submitted in the sum of $951.80.
27 Mr McDonald submitted that the income shown in the 2014 financial year of $24,334, effectively all earned in the period leading up to 15 October 2013, was artificially inflated and should be disregarded for the purposes of the calculation of PIAWE. His principal submission was that a figure of $680 per week, based upon the 2013 tax return, would be a fair and reasonable figure upon which the PIAWE should be based. Such an approach effectively excises the “income” received in the post July 2014 period from the calculation to be made.
28 I am guided by the statutory provisions and particularly s5A of the Act in this proceeding. The Court has no discretion to make an assessment of what might appear to be fair or reasonable, but must be guided by an application of the statutory provisions. I accept the evidence of Mr Wilkinson to the extent that it shows a lack of accounting prowess by Mr Tran in making records in Exhibit C showing the weekly payment of wages when these amounts could not regularly be compared with the transactions revealed in either bank statement. I also accept the evidence of Mr Wilkinson, particularly in response to a question put by me, that the total transactions shown in the financial year of $378,000 would be consistent with a small business producing earnings for its sole director and principal employee in the order of $50,000 per annum.
29 In my view, there is nothing disclosed in the bank statements which is suggestive of any fraudulent or deceptive behaviour on behalf of the plaintiff. I take into account the fact that the plaintiff was suffering from declining health and winding down the business in the months leading up to 15 October 2013. It is not unreasonable, in my view, for the manager of a real estate business, and sole director of the company conducting that business, to collect outstanding commissions or to receive director’s fees during that period when the business is being wound up. I note in particular the receipt of $159,000 on 14 August 2014 which was said to be due to the sale of the rent rolls. This again is consistent with the business being wound down during that period.
30 It would not be appropriate to include as income for the period leading up to 15 October 2013 the total sum of director’s fees received by Mr Tran in respect of the whole of the 2014 financial year, in my calculation. Indeed, Mr Dimsey submitted that such an approach was the appropriate one.
31 In those circumstances, I accept that the plaintiff’s earnings in the period between 15 October 2012 and 15 October 2013 were in the total sum of $49,494. I therefore find the PIAWE as at 15 October 2013 to be the sum of $951.80 per week.
Conclusion
32 I determine the PIAWE to be the sum of $951.80 per week as at 15 October 2013.
33 I will hear the parties further in relation to any formal orders sought and the question of costs.
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