Transport Contract Services (NSW) Pty Ltd v Employers Mutual NSW Limited

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Transport Contract Services (NSW) Pty Ltd v Employers Mutual NSW Limited & others [2022] NSWPIC 81
APPLICANT:	Transport Contract Services (NSW) Pty Ltd
FIRST RESPONDENT:	Employers Mutual NSW Limited
SECOND RESPONDENT:	Peter Buchan
PRINCIPAL MEMBER:	John Harris
DATE OF DECISION:	25 February 2022
CATCHWORDS:	WORKERS COMPENSATION - The worker suffered an Achilles injury and was paid all entitlements under the Workers Compensation Act 1987 (1987 Act) by the insurer; the worker was a courier driver who provided his own truck and was paid for the work based on the matters such as the size of the delivery and the travel distance; higher rates were paid for priority deliveries and those occurring outside normal business hours; the issues were whether the employer could litigate this dispute and whether business expenses should be deducted from the income in calculating the pre-injury average weekly earnings (PIAWE) under Schedule 3 of the 1987 Act; Held- section 287(1)(b) of the Workplace Injury Management and Workers Compensation Act 1998 is expressed in clear words that a dispute can arise between an employer and the insurer; the dispute between the employer and the insurer need only be in connection with a claim for compensation and did not require a dispute on the worker’s claim brought against the insurer; insurer’s submission that the provision read contextually with the mandatory provisions of the insurance policy rejected; reference made to authorities that subsequent delegated legislation cannot aid in the construction of an Act; Mine Subsidence Board v Wambo Coal Pty Ltd applied; further, clause 24 of the mandatory insurance provisions specified that the policy was subject to the provisions of the Act; insurer’s submission is inconsistent with other provisions in the 1987 Act where an employer can dispute an insurer’s decision; it would be incorrect to read section 287(1)(b) of the 1987 Act down and restricted to those situations where the 1987 Act expressly provided a right to contest an insurer’s decision; insurer’s submissions that a plain reading of the section would create “all sorts of litigation” were rejected; there were proper reasons based on premium effects why an employer should be able to contest an insurer’s decision in the Commission; the employer was entitled to litigate the issue in the Commission; as to PIAWE; the earnings in clauses 2 and 6 of Schedule 3 of the 1987 Act did not specify that expenses necessarily incurred were deducted from earnings; this contrasted with the premium provisions in section 174 of the 1987 Act which were contextually different and did not assist in the interpretation; the agreement between the employer and the worker specified the rates which were dependent upon work performed and were properly classified as earnings within the meaning of Schedule 3 the 1987 Act; the insurer had correctly assessed the worker’s PIAWE based on the provisions of the agreement.
DETERMINATIONS MADE:	1. The proceedings are dismissed.

STATEMENT OF REASONS

BACKGROUND

These proceedings are brought by Transport Contract Services (NSW) Pty Ltd (the employer) against its insurer. Mr Peter Buchan (the worker) was joined as the second respondent.
It is common ground that Mr Buchan is a deemed worker of the employer who suffered a compensable injury to his right ankle on 13 January 2021. Mr Buchan is being paid his compensation entitlements by the insurer pursuant to the Workers Compensation Act 1987 (WC Act).
The insurer is a scheme agent of the Nominal Insurer appointed pursuant to Part 7 of the WC Act.
As part of the worker’s entitlements to compensation for the injury, the insurer calculated the worker’s pre-injury average weekly earnings (PIAWE) at $720.28.[1] The employer alleges that the PIAWE should be no more than $540.21 and has sought an order that the insurer pay the worker at the rate of $513.20 per week adjusted in accordance with the WC Act from 13 January 2021 to date and continuing.
[1] Miscellaneous Application, page 74.
It was common ground at the arbitration hearing that the insurer continued to pay the worker weekly compensation based on its proposed PIAWE.
The employer asserts that the dispute between it and the insurer is justiciable in the Personal Injury Commission (the Commission) pursuant to s 287(1) of the Workplace Injury Management and Workers Compensation Act 1998 (WIM Act). That section relevantly provides:
“(1) This Part applies to a dispute in connection with a claim for compensation between—
(a)the person who makes the claim and a person on whom the claim is made, or
(b)the employer on whom the claim is made and the insurer on whom the claim is made.”
Accordingly, these proceedings are brought by the employer against the insurer and the worker seeking a finding and orders that payments of weekly compensation from 13 January 2021 are based upon the PIAWE of $540.21.[2]
[2] Transport Contract Services (NSW) Pty Ltd v Employers Mutual NSW Ltd, 14 February 2022, Transcript, (T), page 2.

ARBITRATION HEARING

The matter was listed on 14 February 2022. Mr Stanton appeared for the employer and
Ms Roberts appeared for the insurer. The worker did not appear.
The following material was admitted into evidence:[3]
(a)    Miscellaneous Application;
(b)    Employer’s Application to admit late documents dated 14 October 2021;
(c)    Insurer’s Reply;
(d)    Employer’s Application to admit late documents dated 17 January 2022, and
(e)    Employer’s late Application to admit late documents dated 27 January 2022.
[3] T, page 1.
During the arbitration hearing the legal practitioners forwarded evidence of communication to Mr Buchan. That material was also admitted as evidence in the proceedings.
There was no objection to any document. There was no request to adduce oral evidence.

Service on Mr Buchan

In its written submissions, the insurer’s counsel asserted that it was “very concerned” that
[4] Insurer’s further written submissions, [31] – [34].
Mr Buchan had not played an active role in the proceedings and that it was “difficult to see how Mr Buchan could be afforded procedural fairness”.[4]
The documents filed by the respective legal practitioners show that Mr Buchan was served with all relevant documents. The insurer’s legal practitioner sent correspondence to
Mr Buchan, which was not in evidence, but is understood to have recommended to
Mr Buchan that he contact the Independent Review Officer for free legal representation.
Mr Buchan was connected into the first telephone conference which was recorded.
Mr Buchan disconnected after a brief period expressing his view that he did not want to participate in the conference.
Mr Buchan otherwise did not comply with a notice to produce served by the employer.
I reject the insurer’s submission that Mr Buchan has been denied procedural fairness. I adopt the following submission made by the employer.[5]
“The (employer) notes that the worker has been served and repeatedly advised to seek legal advice which would be at no cost to him. There is no breach of procedural fairness if a worker is properly joined to the proceedings and chooses not to participate. The worker has had ample time to arrange an appearance and, in the circumstances, he has been afforded procedural fairness.… In this case the [worker] has not appeared but has been given the opportunity on multiple occasions to do so, such that there is no breach of procedural fairness.”

EVIDENCE

[5] Employer’s further written submission [42].

Contractual arrangements

The employer and the worker entered into an owner-driver agreement dated 12 December 2019 (the agreement).[6] The worker was engaged as a freight courier and deliverer. Pursuant to clause 4.1 the worker was required to provide a vehicle considered suitable by the employer and otherwise maintain the vehicle in a sound state of mechanical repair.[7]
[6] Miscellaneous Application, page 13.
[7] Clause 4.2.
The worker was required to pay all expenses associated with the vehicle including the cost of petrol, repairs and insurance.[8] The agreement otherwise specifically provided that the worker was required to maintain a compulsory third party insurance and comprehensive or third-party property insurance in respect of the vehicle with a minimum coverage of $5,000,000.[9]
[8] Clause 4.8.
[9] Clause 7.1.
The worker was also required to obtain his own carriers liability insurance or pay a pro-rate contribution if he elected to participate in the employer’s group carrier liability insurance policy.[10] The worker agreed to participate in the employer’s group carrier insurance policy[11] and also agreed to pay a weekly fee for load liability insurance of $22 per week.[12]
[10] Clauses 7.4 – 7.6.
[11] Miscellaneous Application, page 25.
[12] Miscellaneous Application, page 25.
Schedule 3 of the agreement sets out the rates payable based on a number of matters including the weights of items and the distance travelled. Higher rates are payable if the delivery is classified as “priority”, “premium” or outside normal business hours.[13]
[13] Miscellaneous Applications, pages 28 – 29.

Dispute between the employer and the insurer

Mr Tony Spiezia is the employer’s occupational health and safety manager and provided an undated and unsigned statement.[14] Mr Spiezia stated that Mr Buchan drove a 1 tonne Hilux and referred to various correspondence between the employer, the insurer and the State Insurance Regulatory Authority (SIRA). He stated that the employer “disputes the calculation of PIAWE” made by iCare.
[14] Miscellaneous Application, page 97.
By letter dated 30 March 2021 the employer wrote to the insurer requesting that a figure of 75% be adopted to reflect the fact that a proportion of the income paid to the worker was to cover expenses.[15] The employer relied on the iCare NSW Wage Definition Manual which provided that for motor vehicles of 10 tonnes or less, 75% represented the labour component and 25% represented the costs associated with running the contractor’s business.
[15] Miscellaneous Application, page 85.
By email dated 4 May 2021 the insurer requested “evidence supporting the component paid that represents income for work performed in any employment”.[16] The insurer noted that the NSW Workcover Wage Manual is used for the calculation of an employer’s premium and cannot be used for the calculation of PIAWE. The insurer otherwise confirmed that the payroll summary over the previous 52 weeks showed gross earnings of $37,454.75 which equated to a PIAWE of $720.28.
[16] Miscellaneous Application, page 87.
By letter dated 7 May 2021 the employer wrote to SIRA disputing the calculation made by iCare and requesting the body to direct as to the appropriate figure.[17] By email dated 22 June 2021 SIRA advised that the issue was outside the scope of a regulatory review by that body.[18]
[17] Miscellaneous Application, page 89.
[18] Miscellaneous Application, page 91.
The employer previously commenced proceedings against the insurer in June 2021 which were discontinued in August 2021.[19]
[19] Employer’s further written submissions, [16] – [17].

Schedule of days worked and kilometres travelled by Mr Buchan

The employer filed a schedule attached to its further submissions which calculated that
Mr Buchan worked 166 days and travelled 31,353 km in the performance of his duties under the agreement for the 12 months prior to injury.
During the hearing the employer advised that the source information for that table was the invoices contained in the Reply.[20] The insurer made no submissions contesting the accuracy of the table.

EMPLOYERS RIGHT TO BRING THE DISPUTE IN THE COMMISSION

[20] Reply, pages 20 – 126, T, page 34.

Employer’s submissions

The employer submitted that the wording of s 287 of the WIM Act invites no competing interpretation and was “clear, unambiguous and without controversy”[21]. It otherwise referred to ss 22 and 22B of the WC Act which expressly provide a right by the employer to challenge an insurer’s decision and the right recognised by the Court of Appeal in GRE Workers Compensation Insurance Ltd v Nohil Pty Ltd[22] that an employer could file proceedings against the insurer under s 145 of the WC Act. It submitted that the right to bring the proceedings is consistent with the exclusive jurisdiction of the Commission conferred by
[21] Employer’s further written submissions, [38].
[22] (1996) 13 NSWCCR 74.
s 105 of the WIM Act to “hear and determine all matters arising” under the WC Act and the WIM Act.
The employer submitted that s 287 deals with a dispute in connection with a claim for compensation which is a broad concept and must only be “in connection with a claim”.[23] A dispute about PIAWE is self-evidently connected with a claim for compensation. There is no reason to read words into the section limiting its operation.[24]
[23] T, page 3.
[24] T, page 5.
The employer also referred to an employer’s right to challenge an insurer’s decision under
[25] Wrightville Services Pty Ltd v Return to Work Corporation of South Australia [2020] SAET 93; Envirogen Industrial Services (Aust) Pty Ltd v Return to Work Corporation of South Australia [2020] SAET 101.
s 99 of the Return to Work Act 2014 (SA) and various authorities which recognised the employer’s entitlement to contest an insurer’s decision under the South Australian workers compensation scheme.[25]
The employer referred to the competing interests of the employer and the insurer as an adverse claim and higher cost would affect premium calculations. The competing interests between the employer and the insurer favoured an interpretation that gave the employer a right to contest the insurer’s decision. This could be undertaken efficiently in the Commission consistent with the broad powers conferred on it under s 105 of the WIM Act.
The doctrine of subrogation deals with the concept of the insurer being entitled to defend or bring proceedings in the name of the insured. That is not the case here as this is a dispute “ultimately about the premiums which are payable by an employer with respect to the contract of insurance”.[26]
[26] T, page 7.
The employer’s counsel conceded that the written submission relying on s 234 of the WIM Act, the prohibition of contracting out, was withdrawn.[27]
[27] T, page 9, line 5.

Insurer’s submissions

The insurer noted that s 287 commenced on 1 January 2002 and was introduced by the Workers Compensation Legislation Amendment Act 2001. It submitted, consistent with the explanatory note for the amending legislation, that the work intended by s 287(1)(b) was “in relation to disputes about liability or apportionment”.[28]
[28] Insurer’s submissions, Reply, page 2, [8].
The insurer submitted that the employer has no standing to commence proceedings as these rights are subrogated to the insurer under the mandatory provisions in the employer’s insurance policy provided in Schedule 3 of the Workers Compensation Regulation 2016 (the WC Regulations).
The insurer submitted that the maintenance of these proceedings by the employer against the insurer was in breach of clauses 10, 11 and 12 of the mandatory provisions. The commencement of these proceedings is inconsistent with each of these clauses which provide that an employer not incur any expense in the litigation (clause 10), allow the insurer to use the name of the employer in any proceedings (clause 11) and subrogate all rights to the insurer (clause 12).
The insurer submitted that the employer had pointed to no extrinsic materials in support of its assertion that these proceedings were contemplated by the legislature. It submitted that there was a well-established regime whereby the rights of the employer were subrogated to insurers and that the WC Regulations provided “valuable assistance” in understanding the nature of the scheme established by the WIM Act so as to “better interpret the statute in light of its purpose”.[29] Reference was made to the decisions of the High Court in Master Education Services Pty Ltd v Ketchell[30] and Alphapharm Pty Ltd H Lundbeck A-S.[31] Practice Note 15 issued by the Commission also states that in work capacity decisions the applicant will be the worker and the respondent will be the employer and is another example of extrinsic material that does not assist the employer’s interpretation.[32]
[29] Insurer’s further submissions, [28].
[30] [2008] HCA 38 (Ketchell) at [19].
[31] [2014] HCA 42 (Alphapharm) at [39].
[32] T, page 10.
The insurer accepted that there “are circumstances where there can be a dispute between an employer and an insurer and that appears to be what this section is intended to capture”.[33]
[33] T, page 10.
Whilst the employer has “some interest” in the matter, its interpretation “could potentially result in all sorts of litigation about all sorts of issues and that just isn’t an interpretation that is needed”.[34]
[34] T, page 12.

Reasons

As the plurality stated in Military Rehabilitation and Compensation Commission v May[35] the “question of construction is determined by reference to the text, context and purpose of the Act” citing Project Blue Sky Inc v Australian Broadcasting Authority [36]and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue.[37]
[35] [2016] HCA 19 (May) at [10].
[36] [1998] HCA 28 [69]-[71].
[37] [2009] HCA 41 (Alcan) at [47].
In Grain Growers Limited v Chief Commissioner of State Revenue (NSW)[38] Beazley P stated (with whom Bathurst CJ and Leeming JA agreed) that “the starting point and end point is with the text of the provision”, citing the comments of the High Court in Alcan at [47] when the plurality stated:
“This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.” (footnotes omitted)
[38] [2016] NSWCA 359 at [108].
In its supplementary note, the insurer submitted that the “interpretation that would best achieve the purpose or object of the statute is to be preferred”. The basis of that submission was said to be Alcan, Project Blue Sky and the following passage from SZTAL v Minister for Immigration and Border Protection[39] where the High Court stated:
“The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.” (footnotes omitted)
[39] [2017] HCA 34 at [14].
I agree with the employer’s submission that the words of the section are clear. Subsection (1) refers to disputes “between” and then sets out two different types of disputes, that is between a person who makes a claim and on whom the claim is made, “or” between the employer and the insurer.
The word “between” at the end of clause (1) highlights that a category of disputes is between the employer and the insurer. That dispute must only be “in connection with a claim of compensation”.
The word “or” between subclauses (a) and (b) clearly show the alternative types of disputes.

I accept that there is a dispute between the employer and the insurer. That dispute arises from the correspondence exchanged between the employer and the insurer and is in relation to the correct PIAWE.[40] As the employer correctly submitted, such a dispute is “in connection with a claim for compensation” as it is intimately connected with the appropriate rate of weekly compensation payable to the worker.
[40] See [21] – [24] herein.
I reject the insurer’s submission that the dispute in s 287(1) must be between the worker and the insurer.[41]
[41] T, pages 12 – 14.
The wording of s 287(1)(b) requires that the dispute is between the employer and the insurer. The insurer’s submission that the dispute must be between the worker and the insurer ignores the clear wording of s 287(1)(b). The submission is also inconsistent with its concession that there are some disputes clearly recognised by the WC Act between the employer and the insurer such as those specified in ss 22 or 22B of the WC Act that would fall within the ambit of s 287(1)(b).
The insurer referred to the meaning of “in connection with” and submitted that the specific degree of connection required will be guided by the statutory connection citing Australian Securities & Investments Commission v Westpac (No 2)[42]. In that case Beach J stated:
“Of course, the expression ‘in connection with’ requires a relation between one thing and another, but the specific degree of connection required understandably varies with the statutory context. But a causal relationship is not required.”
[42] [2018] FCA 751 (ASIC v Westpac (No 2)) at [2172].
No submission was made by either party about the specific degree of connection. However, it is relevant in the interpretation of s 287(1)(b) that the requisite dispute is between the employer and the insurer and is “in connection with a claim for compensation”. Consistent with the observations expressed by Beach J in ASIC v Westpac (No 2), there does not need to be a dispute of a claim for compensation. Contextually the words would apply to the employer’s dispute with the insurer about the worker’s claim even if the insurer had met the claim.
Section 288 provides that any party to a dispute about a claim may refer the dispute to the Commission. Contextually the provision is consistent with the wide ambit of s 287(1)(b).
Section 289 was not referenced in the submissions. The section provides the circumstances and specific time limits for referring various categories of disputes to the Commission. The section does not address all disputes as those arising between an employer and insurer as disputes under ss 22 and 22B are not covered by the section. Accordingly, s 289 probably refers to that category of s 287(1)(a). This conclusion is consistent with the words “on whom the claim is made” which appear in the various subsections of s 289.
Section 105 of the WIM Act provides that “the Commission has exclusive jurisdiction to examine, hear and determine all matters arising” under the WC Act and the WIM Act. In Sabanayagam v St George Bank Ltd[43] Sackville AJA stated:[44]
“Pursuant to s 105(1) of the WIM Act, in order for the Commission to have jurisdiction over ‘matters’, they must ‘arise under’ the WC Act or the WIM Act. The general principle is that a matter arises under a law of Parliament if the right or duty in question owes its existence to the law or depends on the law for its enforcement.”
[43] [2016] NSWCA 145 (Sabanayagam).
[44] Sabanayagam at [125], Beazley P agreeing.
I accept that the right of an employer to contest an insurer’s decision has a proper basis within the statutory scheme. An adverse decision by an insurer will likely have an impact on the employer’s premium. In that sense there is nothing inconsistent with the scheme that the employer should not be able to contest an insurer’s decision.
In Ketchell the High Court observed that it “may be useful to read together regulations and the Act with which they were made, in order to identify the nature of the legislative scheme”.[45]
[45] Ketchell at [19].
The relevant passage in Alphapharm cited by the insurer was expressed by the plurality of the High Court in the following terms:[46]
“The parties did not contest the established principle of statutory construction that, while it may be useful to read regulations together with the statute under which they were made in order to understand a legislative scheme, it is not legitimate to construe a statute by reference to the wording of regulations made under it.”
[46] Alphapharm at [42].
The mandatory provisions of the statutory insurance policy are contained in Schedule 3 of the Regulations. Clause 24 states that the policy is “subject to the provisions of the Act”.
I do not accept the insurer’s submission that subsequent delegated legislation can be used to “guide the interpretation”[47] of the legislation. The submission is inconsistent with fundamental principles which are clearly set out in Mine Subsidence Board v Wambo Coal Pty Ltd[48] when Tobias JA stated:[49]
“41. Although the appellant sought to call in aid the terms of a regulation made for the purpose of s 12A(2)(a), accepting that no such regulation had been made for the purpose of s 12A(2)(b), in my opinion it is well established that as a general rule it is impermissible to call in aid in the construction of an Act delegated legislation made under that Act: Pearce & Geddes ‘Statutory Interpretation in Australia’, 6^th ed. (2006), Chatswood, [3.41] pp.104-105 and the cases there cited. It was not suggested by the appellant that the regulation in question and the Act formed part of a legislative scheme which, for the purpose of ascertaining but not construing that scheme, permits of a partial exception to the general rule.”
[47] T, page 13.
[48] [2007] NSWCA 137.
[49] (Wambo) at [41], Hodgson and Santow JJA agreeing.
The decision is referred to in Pearce & Geddes, Statutory Interpretation in Australia, 8th edition (Pearce & Geddes) which also refers to the observations of French CJ in Plaintiff M47-2012 v Director-General of Security[50] when his Honour stated:[51]
“Generally speaking an Act which does not provide for its own modifications by operation for regulations made under it, is not be construed by reference to those regulations: Hunter Resources Ltd v Melville (1988) 164 CLR 234 at 244 per Mason CJ and Gaudron J.”
[50] [2012] HCA 46.
[51] At [56].
Not only is the insurer’s submission including an authority supposedly cited in support of its construction contrary to the general principle, clause 24 of the mandatory provisions provides that the policy states that it is “subject to the provisions of the Act”. The insurer’s submission that the mandatory policy somehow restricts the clear words of the Act when it is expressed to be subject to it, is thereby contrary to settled authority that it is rare that delegated legislation will assist in the interpretation of the legislation. It is otherwise contrary to the express wording of clause 24.
I do not accept that the insurer’s position creates a “harmonious”[52] approach between the WC Act and the subordinate legislation. What it proposes is a contradictory construction on the clear words of the relevant provision.
[52] T, page 16.
The insurer stressed in its oral submissions and supplementary note that there was no “dispute” because the “statute does not anticipate disputes commenced by an employer about the quantum of a weekly payment where this has been assessed by the insurer and agreed by the worker”.[53] It was said that this is reflected in s 78 of the WIM Act and the right of a worker to request a review (s 287A of the WIM Act).
[53] Insurer’s supplementary note, [6].
The worker’s right to request a review in s 287A gives rise to a penalty if it is not performed by the insurer. I do not accept that the right to request a review, which flows from the dispute process in s 287(1)(a), somehow contextually limits the ordinary meaning of s 287(1)(b). The right of review is an additional remedy afforded to a worker which does not apply to the employer.
The insurer also referred to s 78 as contextually limiting the ordinary meaning of s 287(1)(b). However, s 78 is a requirement on insurers to provide notice of disputes to workers and cannot contextually affect the ordinary meaning of s 287(1)(b).
These provisions are said to form the basis of the insurer’s submission that an employer, as opposed to an insurer, cannot raise a dispute about the quantum of a weekly payment. The insurer appeared to accept that the work in s 287(1)(b) only related to those provisions where the legislation expressly provided that the employer could bring proceedings such as “in relation to disputes about liability or apportionment”.[54] The submission was not developed in its written submissions and briefly raised in oral submissions.[55]
[54] Insurer’s submissions, Reply, page 2, [8].
[55] T, page 17.
It is otherwise unclear how the explanatory note to the amending legislation could assist in the interpretation of the section.
The difficulty with the insurer’s submission is that it appeared to accept that the employer has a right to raise disputes between it and the insurer where they are expressly provided, such as in ss 22 and 22B of the WC Act. In these circumstances it is unclear how the insurer suggests that the general words of s 287(1)(b) be limited.
The insurer did not suggest that it was reading words into the statutory provision although it was seeking to limit what reads as a general entitlement.
The test for reading words into a statutory provision is articulated in Taylor v The Owners-Strata Plan No 11564[56] where the plurality stated:[57]
“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’.”
[56] [2014] HCA 9 (Taylor).
[57] At [38].
The principles set out in Taylor have been applied by the Court of Appeal in two appeals concerning the construction of the WC and WIM Acts: State of NSW v Chapman-Davis[58] and Cram Fluid Power Pty Ltd v Green.[59]
[58] [2016] NSWCA 237 at [1] and [49].
[59] [2015] NSWCA 250 at [1], [12], [88] and [131].
I do not accept there is a proper basis to reads words into the section to limit the operation of the provision to the circumstances articulated by the insurer, such that the general right to raise a dispute is limited to the specific situations specified elsewhere in the WC Act and/or WIM Act. It would be incorrect to read s 287(1)(b) down and restricted to those situations where the WC Act expressly provided a right by an employer to contest an insurer’s decision.
The insurer otherwise submitted a purposive interpretation based on its rights under the mandatory provisions of the insurance policy.
I do not accept that reading the words in accordance with their ordinary meaning will create an absurd outcome. It was suggested by the insurer that this would create “all sorts of litigation about all sorts of issues”.
On the contrary, there are proper reasons for reading s 287 in accordance with the employer’s interpretation.
Employers will be impacted by the statutory insurer’s decision because it can affect the employer’s premium. That this will result in litigation is neither an absurd result as it allows the employer to dispute the decision in accordance with the ordinary meaning of the section. If anything, the provision provides a proper and suitable pathway for an employer to dispute what can otherwise be a serious financial impost on the employer.
For completeness, the employer’s submission that an employer’s right to challenge an insurer’s decision under the South Australian legislation does not assist in the interpretation of the WC Act, WIM Act and the subordinate legislation.
For these reasons I conclude that the employer is entitled to litigate the dispute with the insurer about the amount of the worker’s PIAWE.

CALCULATION OF PIAWE

Employer’s submissions

The employer submitted that Mr Buchan is a deemed worker and the provisions for PIAWE are largely drafted on the basis that the worker is a wage or salary earner.[60]
[60] T, pages 28-29.
In accordance with the schedule provided by the applicant, the expenses were at least $100 per week[61] and is probably more as that figure does not include maintenance, tolls, repairs or accountancy costs.[62] This was based on the kilometres travelled by the worker, the expenses payable under the contract such as insurances and maintenance and that Mr Buchan did not comply with the notice to produce.
[61] T, pages 35 – 36.
[62] T, pages 40 – 41.
It was submitted that the Commission had specialised knowledge of the amount of business expenses.[63] In its supplementary written submissions the employer noted that judicial notice can be taken of notorious facts in the absence of evidence citing Smith Family v Dafinis.[64]
[63] T, pages 37 – 38.
[64] [1991] NSWCA 250.
The premium impact of deemed workers is chargeable in accordance with s 174(9)(b) of the WC Act. This provision did not determine the PIAWE.[65]
[65] T, page 43.
In the case of a contractor, the matter must be assessed on the basis of net earnings after expenses are taken out.[66] The closest relevant provisions are clauses 2(1) and 6(2) of Schedule 3. The income the contractor receives is not the total gross payments but what is received after expenses are deducted. That interpretation is harmonious with the meaning of wages in s 174(9) of the WC Act.[67]
[66] T, page 45.
[67] T, page 46.
The employer submitted that awarding gross income before expenses would amount to either “double compensation” referring to Franklins Self Serve Pty Ltd v Wyber[68] and Hood Constructions v Nichols[69] or overcompensation citing Alcan Australia Ltd v Jordan.[70] If earnings was interpreted in the way suggested by the employer, then this was avoided.[71]
[68] [1999] NSWCA 390 (Wyber).
[69] (1987) 9 NSWLR 60 (Hood Constructions).
[70] (1995) 11 NSWCCR 475; [1995] NSWCA 12 (Jordan).
[71] T, page 49.
The employer referred to J & H Timbers v Nelson[72] as an example of where the Workers Compensation Commission used its own experience to assess the post-injury capacity of a deemed worker whose accounts were too disorganised.[73]
[72] (1970) 92 WN (NSW) 637 (J & H Timbers); overturned on different basis J & H Timbers v Nelson [1972] HCA 12.
[73] Employer’s supplementary list of authorities, note 4.

Insurer’s submissions

The insurer submitted that clause 6(2) of Schedule 3 does not provide that business expenses are deducted and “absent very clear evidence or a reflection in the agreement that should not happen”.[74]
[74] T, page 58.
In its supplementary written submission, the insurer stated:
“If an agreement clearly provided that stipulated sum was for a fixed or overhead cost, then it may be possible to conclude that the specified amount did not comprise part of a worker’s earnings…. Absent such a clear indication, the language of the statute supports the figure that the worker is currently receiving.”
The insurer noted that the matter was briefly addressed in Eftimovksi v Toll Global Express Courier[75] where Member Holman held that expenses were not deducted from earnings.
[75] [2021] NSWPIC 288 at [84].
The insurer otherwise submitted that some costs such as insurance are probably still being paid by the worker and the cost of other possible overheads are not known or matters generally within the Commission’s knowledge.

Reasons

Clause 2(1) of Schedule 3 of the WC Act provides:
"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.
The relevant period for the calculation of PIAWE is 52 weeks prior to injury although the Regulations may provide for an adjustment of that period (sub-clauses 2(2) and (3)).
Earnings is defined in clause 6(1) to mean “the income of the worker received by the worker for work performed in any employment during the week”. Income does not include various matters provided by clause 6(2) such as superannuation payments and non-monetary benefits.
Section 174 of the WC Act relates to the requirement that the employer is to keep a record of all wages paid to employees. The Authority may order an employer to produce these records (s 174(5)) and supply these records to an insurer for the purpose of the correct premium calculation (s 174(5A)). Wages is defined in s 174(9)(b) to include:
“payment (whether by way of commission, fee, reward or otherwise) under a contract (whether referred to as a contract, agreement, arrangement or engagement) by reason of which the person paid is deemed by Schedule 1 to the 1998 Act to be a worker, after deducting such amount for costs necessarily incurred by that person in performing that contract as may be agreed on or, in default of agreement, as may be determined by the Authority”.
The employer submitted that this provision related to the calculation of the premium for deemed workers and did not relate to the determination of PIAWE.[76] The employer’s submissions was that this provision was “harmonious” with its proposed construction.
[76] T, page 43.
The parties were referred to Part 4 of the Regulations and accepted that this was not relevant to the quantification of Mr Buchan’s PIAWE.
The insurer referenced the decision of Member Holman in Eftimovksi which supported its submission that expenses were not deducted from income in assessing PIAWE.
The employer referred to J & H Timbers. As it correctly noted in its written submissions, the decision relates to assessing a worker’s post-injury capacity. That exercise was described by Kirby P in Australian Wheat Board v Pantaleo[77] of a worker returning to employment in a business which may require the assessment of the “cost to employ someone else as a worker” to do the work.[78]
[77] [1984] 3 NSWLR 530 at 541
[78] [1984] 3 NSWLR 530 at 541.
As Roche DPP noted in Wollongong Nursing Home Pty Ltd v Dewar[79], care must be exercised when assessing the extent of capacity in light of the 2012 amendments.
[79] [2014] NSWWCCPD 55 at [54].
The authorities referenced by the employer on the issue of the value of the worker’s business post-injury capacity have little, if any relevance to the calculation of the value of PIAWE under Schedule 3 of the WC Act in light of the recent amendments.
The employer in its supplementary submission referred to the rule against double compensation citing Hood Constructions and Wyber. I accept that there “can be no duplication of compensation and damages”[80] and that there is a recognised principle against double compensation.[81] However I do not accept that this principle has any relevance to the construction of PIAWE in Schedule 3 of the WC Act.
[80] Hood Constructions at 70.
[81] Franklins at [121].
The employer also referred to Jordan in support of the principle of a direction against over-compensation in workers compensation disputes. The finding by the Court of Appeal in Jordan was that the error made by the primary judge was a failure to ascertain the appropriate partial incapacity, which “clearly overcompensated the worker”.[82] However, the decision did not provide a general principle but was a comment directed to error in accordance with the relevant statutory provision that resulted in an incorrect figure in excess of the worker’s entitlement. Further, some of the expenses in this case were “fixed”, such as insurance costs, and were incurred regardless of the receipt of income. There could not be “overcompensation” in respect of those expenses.
[82] Jordan [1995] NSWCA 12 at 6.

The employer correctly observed that the meaning of the words “gross earnings” do not properly translate to the situation of a deemed worker operating a business.
Earnings are defined in clause 6(1) to mean the “income of the worker” with certain exclusions provided in clause 6(2). None of those exclusions include expenses in operating a business whilst wages in s 174(9)(b) expressly excludes deductions for expenses necessarily incurred.
I do not accept that the clauses in Schedule 3 are to be read contextually with s 174 because the respective provisions relate to different subject matters. The definition of wages in s 174(9) is in the context of the redetermination of premiums (s 173B) whilst clause 2 is described in terms of “earnings” and “income”.
The agreement between the worker and the employer specifies that the employer is to pay the worker various rates as provided in the Schedule.[83] These rates are dependent upon the size of the delivery, the travel distance for the delivery and other matters such as the number of “drops” and “detention”. Higher rates are payable if the delivery is classified as “priority” or “premium” or is delivered outside normal business hours. The agreement between the employer and the worker specified the rates which were dependent upon work performed and were properly classified as earnings within the meaning of Schedule 3. No portion of the rates payable by the employer under the agreement are properly characterised as an expense.
[83] Miscellaneous Application, pages 28 – 29.
The parties agreed that the PIAWE was assessed on the income paid by the employer to the worker under the agreement for the 12 months prior to injury. The gross amount of income (used in a neutral term) before expenses was also agreed. Whilst the worker obviously has a right to claim a deduction because various costs are properly incurred expenses, I agree with the insurer’s submission that the rates provided in the agreement are earnings as defined in clauses 2 and 6 of Schedule 3 of the WC Act. For this reason, I conclude that the insurer has correctly assessed the worker’s PIAWE based on the provisions of the agreement.
For these reasons, it is unnecessary to determine the amount of the worker’s expenses properly incurred in earning the income.

FINDINGS AND ORDERS

In its oral submissions the employer only sought a finding as to the correct PIAWE. It conceded that no recovery had been sought from the worker and one was probably unavailable in the Commission.[84]
[84] T, pages 21 – 25.
The insurer noted that the grant of declaratory relief “must be directed to the determination of legal controversies” and should not be granted where this would “produce no foreseeable consequences for the parties”: Ainsworth v Criminal Justice Commission.[85]
[85] (1992) 175 CLR 564 at 582.

Given the findings on PIAWE, it is unnecessary to consider the appropriate relief as the proceedings must be dismissed. The order is set out in the Certificate

[2022] NSWPIC 81

25 February 2022