Zona Coatings; Cassegrain Tea Tree Oil Pty Ltd v BBS & Ors

CERTIFICATE OF DETERMINATION OF MEMBER
Citation:	Cassegrain Tea Tree Oil Pty Ltd v BBS & Ors [2022] NSWPIC 590
APPLICANT:	Cassegrain Tea Tree Oil Pty Ltd
first RESPONDENT:	BBS
SECOND RESPONDENT:	BCM
THIRD RESPONDENT:	BDF
PRINCIPAL Member:	Josephine Bamber
DATE OF DECISION:	25 October 2022
CATCHWORDS:	WORKERS COMPENSATION - Apportionment of lump sum death benefit pursuant to section 25 of the Workers Compensation Act 1987 between widow and infant children; issue also relating to awarding of interest under section 109 of the Workplace Injury Management and Workers Compensation Act 1998; Haidary v Wandella Pet Food Pty Ltd, Kaur v Thales Underwater Systems Pty Ltd and Ruby v March considered; Held – discretion exercised to award interest at 2% above the Reserve Bank of Australia cash rate applicable to the period in 2022 for which interest allowed.
determinations made:	1. That the deceased worker, BGA, died on 18 February 2022 from injuries sustained in the course of his employment with the applicant, Cassegrain Tea Tree Oil Pty Ltd. 2. That the compensation payable by the applicant in accordance with s 25(1)(a) of the Workers Compensation Act 1987 on the death of the deceased worker is $849,300. 3. That BBS, his widow, and BCM and BDF, his daughters, were dependent for support upon the deceased worker at the date of his death. 4. That no other persons were dependent for support upon the deceased worker at the date of his death. 5. Pursuant to s 29 of the Workers Compensation Act 1987 the apportionment of lump sum payment between the dependents is as follows: a. BBS $559,941.46; b. BCM $118,690.69; and c. BDF $170,667.85. 6. Pursuant to section 109 of the Workplace Injury Management and Workers Compensation Act 1998 the applicant is to pay interest on the total lump sum of $849,300 at the rate of 2% p.a. above the Reserve Bank of Australia cash rate as applying in the period from 28 July 2022 to 25 October 2022 to be paid in pro-rata shares as per the percentage apportionment used in the calculations at [42] of these reasons. 7. That the applicant is to pay to BBS the sum of $559,941.46 together with interest. 8. Pursuant to s 85 of the Workers Compensation Act 1987 the applicant is to pay to the NSW Trustee the following sums: (a) $118,690.69 together with interest for the benefit of BCM and (b) $170,667.85 together with interest for the benefit of BDF.

STATEMENT OF REASONS

BACKGROUND

BGA, the deceased, died in the course of his employment with the applicant, Cassegrain Tea Tree Oil Pty Ltd on 18 February 2022. As the applicant has admitted liability for compensation flowing from BGA’s death it is not necessary for the details of his injury and death to be summarised in these reasons.
In the Application in Respect of the Death of a Worker (the Application) orders are sought in relation to the apportionment of the lump sum provided by s 25 of the Workers Compensation Act 1987 (the 1987 Act). The Application is amended to insert the lump sum figure of $849,300. The name of the first respondent is also amended in the application to BBS in accordance with her wishes as expressed at the preliminary conference held on 14 October 2022.
BBS is the widow of the deceased worker, and their daughters, BCM and BDF are the second and third respondents respectively. They are the only persons claiming dependency on the deceased worker at the time of his death.
The main issue for the Personal Injury Commission (the Commission) to determine is the amount of the lump sum to be apportioned to BCM and BDF.

PROCEDURE BEFORE THE COMMISSION

Preliminary conferences were convened before me on 20 September 2022 and 14 October 2022. The applicant was represented by Mr Doyle Myles, solicitor, instructed by Ms Liza Dean, icare, and Mr Mark Estreich, EML. BBS was represented by Mr Andrew Joseph, counsel, instructed by Mr Matthew Lindeman, solicitor. BCM was represented by Paul Stockley, counsel, instructed by Katherine Driscoll, solicitor, instructed by Ms Meleika McKinnon described as her tutor and BDF was represented by Mr Joshua Beran, counsel, instructed by Ms Nadia Walker, solicitor. BBS was present.
The parties were directed to file written submissions in relation to the issues relating to apportionment.
The submissions have been received by the Commission and I am satisfied that I have sufficient information to determine the matter “on the papers”.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and taken into account in making this determination:
(a)    the Application;
(b)    first respondent’s Reply;
(c)    second respondent’s Reply;
(d)    third respondent’s Reply;
(e)    submissions filed on behalf of the third respondent dated 12 October 2022;
(f)    submissions filed on behalf of the second respondent dated 14 October 2022;
(g)    Application to Admit Late Documents (AALD) filed by the first respondent dated 18 October 2022 attaching a statement from BBS dated 14 October 2022, written submissions dated 18 October 2022, bank statements, document head debts owing as at 3 October 2022; deceased’s tax return July 2020 - June 2021, a copy of the will of BBS;
(h)    third respondent’s submissions in reply dated 18 October 2022;
(i)    applicant’s submissions dated 21 October 2022.

FINDINGS AND REASONS

BFB the father of the deceased worker and BEI, the sister of the deceased, have each provided a statutory declaration sworn on 25 July 2022 stating that they were not dependent upon the deceased and do not wish to make a claim for compensation[1].
[1] Application pp 20 and 22.
In the Reply filed on behalf of BCM, Meleika McKinnon is referred to as the next friend and the Reply filed on behalf of BDF, Karen Rawson is referred to as the next friend. I note that there are no provisions in the Personal Injury Commission Act 2020 for the Commission to appoint a tutor in workers compensation matters. Ms Rawson is the great aunt of BDF and has provided a brief statement dated 14 September 2022 confirming she makes no claim for dependency on her behalf. She confirmed that BDF was dependent for support on the deceased.
BBS has provided statements dated 12 September 2022[2] and 14 October 2022[3]. In her first statement she sets out details in relation to her husband’s occupation and her occupation as a beauty therapist as well as some details about properties they own. It is not necessary for the purposes of determining apportionment of the lump sum for me to summarise this information in these reasons and also for privacy concerns it is not appropriate that I do so in detail. BBS advises that BCM attends a regional high school in the area near their home and the school fees are about $3,500 to $4,000 per year. I note BCM is presently aged 13 years. BBS advises that it is her expectation that BDF will also attend the same school. At present BDF is aged approximately 10 years. In this statement BBS says it is her wish that the children receive a limited payment. She advised me orally she has concerns about the children receiving a large sum when they turn 18 years.
[2] First respondent’s reply p1.
[3] AALD p 1.
In her second statement BBS attaches a document setting out the family’s debts, a financial budget and details of the mortgage payments for the primary residence and an investment property. She also advises that both children are undergoing orthodontic treatment and she advises the activities by the children which she naturally wants them to still partake of and enjoy.
I am satisfied based upon all of the evidence before the Commission that BBS and BCM and BDF were dependent on the deceased for support at the time of his death. I am also satisfied and find that no other person was dependent for support on the deceased at the time of his death.

SUBMISSIONS

The parties’ counsel have each made submissions setting out their views as to the amount from the lump sum which should be apportioned to the children. I will briefly refer to the same below.

BDF

BDF’s counsel made the first written submission, so it is convenient to summarise those first as the other parties have responded to the same. Mr Beran set out the legal principles in relation to establishing dependency, concerning which there is no issue in this matter.
It is submitted that both children would have remained dependent on the deceased until they reached 21 years. It is submitted that the deceased, had he died eventually of natural causes, would have had a life expectancy of 39 years and that BBS would have remained dependent on him for that period.
At [15] of the submissions Mr Beran sets out the apportionment based upon the percentage of future dependency for each of the family members. This equates to BBS having 65% future dependency and the proportion of the total lump sum of $849,300 is $552,045. BCM has 15% future dependency being $127,395 and BDF 20% being $169,860.
However, despite these calculations based purely on the years of future percentage loss of dependency, Mr Beran at [16] states he concedes BBS should be entitled to a larger proportion as she has lost greater emotional and financial dependence upon the deceased. Mr Beran also submits to maintain family harmony the apportionment should be $649,300 to BBS, BCM $100,000 and BDF $100,000.
He submits on BDF’s behalf her portion should be paid to the NSW Trustee to be managed on her behalf.
Mr Beran has given additional submissions advising the additional evidence filed by BBS does not alter his earlier submissions, but he adopts Mr Stockley’s submissions as to interest.

BCM’s submissions

Mr Stockley based his calculations as the appropriate apportionment of the lump sum by using the years each family member in the future has lost the support of the deceased. His calculation differs to Mr Beran because he has taken the years BBS would have been dependent on the deceased to the deceased’s pension age had he lived, being a further 21 years.
I note the deceased was aged 45 years and four months at the time of his death. At the present time 67 is the age threshold for persons born from 1957 to obtain an age pension, and there are also various other financial criteria.
Mr Stockley submits that the reality of family life these days is that the working arrangements of BBS and her husband would have continued, and she would have remained partially dependent on him for this further 21 years. Mr Beran has based his calculations on the assumption that she would have been dependent on him for the entirety of his natural life expectancy.
Like Mr Beran, Mr Stockley submits each child would have remained dependent on their father for support at least to age 21 to allow time for them to complete academic or vocational training post-school. He calculates, based on their ages, BDF would have remained dependent for 11 years and BCM for 8 years. He adds these figures to the 21 years allowed for BBS to arrive at a total dependency of 40 years and then he calculates the proportion for each person. This equates to 52.5% for BBS $445,882.50, 27.7% for BDF $233,557 and 20% for BCM $169,860.
Mr Stockley submits “apportioning too great amount to the custodial parent puts the child’s portion at risk of misadventure, loss, re-partnering or any number of other eventualities.”
It was also submitted that outstanding debts, mortgages, an investment property and future orthodontic needs are not likely to have a bearing on the losses sustained by the three dependents.
Mr Stockley also makes a claim for interest under s 109 of the Workplace Injury Management and Workers Compensation Act 1998. He submits the claim should date from 29 March 2022 when the claims notification was completed. He also submits the rate should be that of Uniform Civil Procedure Rule (UCPR) 36 being 6% above the reserve bank cash rate, being 6.1% from 29 March 2022 to 30 June 2022 and 6.85% thereafter. He submits this should be paid on the total sum and the interest apportioned pro-rata to each dependent. Mr Stockley submitted the usual practice of the Commission was to use the UCPR rate, however in my experience this has not been the practice recently because the cash rate has been so low and interest, where awarded has been as low as 2%, although this inevitably will increase with the recent rises in the cash rate.

BBS’s submissions

Mr Joseph submits that BBS would have likely been dependent on the deceased for the rest of her life. However, she was about six years younger than her husband and the life expectancy of her husband uninjured would have been 38.85 years[4] and for BBS it is 47.48 years. So the likelihood is that Mr Joseph meant that BBS would not have been dependent on her deceased husband for the rest of her life, but for the rest of his life.
[4] Medium Life Expectancies, Australia, 2022 Furzer Crestani Handbook p 16.
Mr Joseph submits that the proposed apportionment by Mr Beran is supported by BBS. He submits at [10] that this apportionment is a fair outcome as it provides appropriate weight to the mathematical calculations based on the years of dependency and also a recognition of the facts of this case and the ongoing parental role and financial obligations of BBS. It is submitted that the ages of the children are not that different and so an identical sum would be reasonable.
In relation to interest, Mr Joseph in his submissions agrees with that of Mr Stockley and agrees the claim should be regarded as having been made on 29 March 2022. However he submits the proper rate of interest should be that set out in UCPR 6.12(8) which he states is 4.1% from 29 March 2022 to 30 June 2022 and then 4.85% to the date of these reasons.
The applicant employer only made a submission in relation to interest, and this is referred to later in these reasons.

DETERMINATION

As with most cases, precise calculation of loss of financial support cannot be made on the available information. Mr Stockley is correct in his submission that what is relevant is the extent to which each family member has suffered a loss of support from the deceased worker at the time of his death. However, dependency involves looking at past events and future probabilities[5]
[5] Aafjes v Kearney 180 CLR 199, [1976] HCA 5, Aafjes.
In Wratten v Kirkpatrick[6] Egan ACCJ found at [34]-[35]:
“The exercise of power to determine the correct amount to be apportioned to each dependant requires an examination of all relevant facts including the extent of past dependence, the anticipated future dependence, the ages of the dependants, their health, special needs, lifestyle etc.”
[6] [1996] NSWCC2; (1996)15 NSWCCR 32, Wratten.
In the 2021 tax return the deceased declared a gross income of $79,582 from payments made by the applicant employer with a taxable income of $78,056. BBS’s taxable income is listed in this income return as $56,843 and her assessable income $58,582. A printout from joint bank account which appears to relate to a home loan account, and bank statements for account for BBS from 1 January 2022, have also been filed together with a schedule referring to debts owing including $6,494.80 and $5,096.50 for the children’s orthodontic treatment. A schedule of fortnightly expenses totalling $2,865 (or $1,432.50 per week) is provided, noting in addition there should be added sums for the “kids sporting/ uniforms/ school uniforms/ clothing/ activities etc”. A schedule for BDF’s activities for dancing and netball totalling $6,240 per annum and for BCM sporting activities totalling $8,970 per annum. Clearly this level of expenditure together with the mortgage repayments was coming from the income of both parents, as the totality of all of these expenses and the mortgage repayments exceeds the income of the deceased.
Certainly a method of calculation that can be used is that adopted by counsel in this matter, focused on the years of the loss of future dependency caused by the death of the deceased.
Alternately, one could theoretically attempt a calculation similar to that used in Compensation to Relatives cases. This involves calculating the total income of the household and to deduct a sum to approximate the money the deceased would have spent on himself. Then deduct this sum from the deceased’s net weekly income and the figure remaining is the amount of loss to the family for not having the deceased’s income. There are tables attempting this type of calculation in publications such as “Personal Consumption Percentages in Australia- Current Tables for 2018” Vincents Cumpston Sarjeant, with introduction by Professor Emeritus Harold Luntz. The example in Appendix 3 to this publication is for a two parent income family with two children and a gross household income of $137,500 whereas in the BBS BGA case it is $136,638, by just adding the taxable incomes. The personal consumption percentage for a family with two children with this gross household income is stated to be approximately 12.7% and in the example $260 was calculated to be the weekly personal expenditure of the deceased, it would be slightly less in the BBS BGA’s case, say $250. The next step is to determine the deceased’s after tax weekly income, which would be $1,196 and then deduct the $250 leaving $946 as the weekly loss of support to the family.
However, even assuming there is sufficient data before the Commission to attempt such a calculation one then needs to still calculate how much of the balance of the deceased’s income would be spent for each of the respective family members benefit on a weekly basis and then capitalise that sum by use of the 5% multiplier tables.
At the end of the day this type of methodology has multiple assumptions, each of which affect the calculation. Also the lump sum benefit now of $849,300 is much higher than the total loss of support resulting from this type of calculation. This fact is averted to in Mr Stockley’s submission at [11].
Also submissions have not been made by any party on using this sort of methodology nor have detailed submissions been made about the financial records to enable me to embark upon such a calculation with confidence as to its accuracy, and furthermore it is based on several assumptions and so I find is no better a methodology than that used by all of the counsel in their submissions.
The only difference in the submissions is for how long one should allow in years for the loss of support to BBS. Mr Beran has taken to the end of the natural life of the deceased had he not been injured whereas Mr Stockley has taken to what would have been the age pension threshold. So Mr Beran allows 39 years loss of support and Mr Stockley 21 years. I find that it is not realistic to base the calculations on the deceased’s uninjured life expectancy because it is a reasonable inference he would not have worked for the whole of that time. Similarly, I find Mr Stockley’s submission does not take into account the prospect that the deceased would have worked beyond the age of 67. I have no evidence as to his intentions in that regard, but even though 67 is the age at which one can apply for the aged pension there are various income and asset tests in order to qualify for the same and it is not assured he would have had access to a pension then. While acknowledging the imprecision, I propose to calculate the loss of support to BBS by adopting a mid-range approach and allow loss for a further 30 years.
I find that it should be assumed that BCM and BDF are likely to undertake some tertiary study or training and an allowance needs to be made for them to approximately age 21, being 8 and 11 years respectively (in round terms) representing their future for loss of support on the deceased.
This is a total of 49 years of support when adding 30, 8 and 11 years. The base calculation is as follows: 30/49 is 61.22% of $849,300= $519,941.46 for BBS, 8/49 is 16.33% = $138,690.69 for BCM and 11/49 is 22.45% = $190,667.85 for BDF.

There has been mention of the children’s orthodontic treatment costs of $6,494.80 and $5,096.50. While BBS can apply to the NSW Trustee for funds to pay such costs I consider it is reasonable to make an adjustment to the figures to enable her to pay those expenses upfront now and I also make some adjustment for the immediate costs for the activities of BDF and BCM and school fees. Ordinarily I would regard these types of expenses as part of the children’s loss of support resulting in an increase in their percentages, but in this case I am mindful of BBS’s concerns about having the lives of the children proceed with such activities without interruption and this extra amount will enable her time to continue to pay for these expenses in advance for the next year. Accordingly, I propose to make an apportionment to BBS of $559,941.46, BCM $118,690.69 and BDF $170,667.85. I have increased the apportionment to BBS by $40,000 deducting $20,000 from each child’s amount for these immediate expenses.
As to the submission that each child should receive the same amount, the basis the lump sum is paid under the 1987 Act is for the loss of the support of the deceased to each child and BCM being older has had the benefit of the deceased’s support for longer. The reality is the children will not be able to access the funds at the same time, and so BCM does have some benefit in being able to have access to the capital sum earlier.
Therefore, I order that the applicant pay the NSW Trustee the sum of $118,690.69 for the benefit of BCM and $170,667.85 for the benefit of BDF. I order the applicant to pay to BBS the sum of $559,941.46.

Interest

Section 109 of the 1998 Act provides:
“(1)    In any proceedings before the Commission, the Commission may order that there is to be included, in any sum to be paid, interest at such rate as the Commission thinks fit on the whole or any part of the sum for the whole or any part of the period before the sum is payable, subject to the limitations imposed by this section.
(2)     Interest cannot be ordered under this section--
(a) on any compensation payable under Division 4 of Part 3 of the 1987 Act, or
(b) on any compensation payable under this Act for any period before a claim for the compensation was duly made, or
(c) on any compensation payable under this Act for any period during which proceedings before the Commission were adjourned on the application of the claimant for the compensation or pursuant to section 102.
(3)     This section does not--
(a) authorise the giving of interest upon interest, or
(b) apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise.”
In Haidary v Wandella Pet Foods Pty Ltd[7], Deputy President Fleming discussed the reasoning behind an award of interest and the relevant interest rate. She said:
“The award of interest by the Commission, pursuant to section 109 of the 1998 Act is discretionary. Mr Haidary will only be entitled to interest, if awarded, on those amounts of his weekly entitlement that were unpaid, and only from the date that his claim ‘was duly made’. The likely amount of interest that would be due on these sums is small, relative to the whole of his claim, but nonetheless they may form part of Mr Haidary’s entitlement. The purpose of ordering interest on an award is to compensate the worker for the loss of his or her income, not to penalise the employer (Virag v James N Kirby t/as Betts Electric Motors (1990) 6 NSWCCR; Healey v McPherson Binding Pty Ltd (1989) 5 NSWCCR 139).”
[7] [2005] NSWWCCPD 9, Haidary.
In Kaur v Thales Underwater Systems Pty Ltd[8], Keating P said at [139]:
“Section 109(2)(b) of the 1998 Act prohibits interest on any award of compensation payable under the Act for any period before a claim for compensation on behalf of the appellants was duly made. I accept the submission that the claim for compensation on behalf of the appellants was not duly made until the day of the arbitration. I therefore accept Thales’s submission that, as at the arbitration, the appellants could not be entitled to interest pursuant to s 109 of the 1998 Act”.
[8] [2011] NSWWCCPD 6, Kaur.
The determination in relation to a claim for interest is a discretionary exercise.
The applicant/employer has opposed an order in relation to interest. Detailed submissions have been provided dated 21 October 2022. It argues that even though the insurer may have been holding the monies, it does not follow that interest should be awarded in every case. At [2.3] of its submissions it cites cases where interest has not been awarded. Obviously each case turns on its own particular facts.
The applicant sets out at [2.4] the steps it took to deal with the matter proactively, noting it was the party who commenced the proceedings. It states that it notified BBS that liability was accepted on 27 June 2022, but it required information relating to dependency and this was followed up by the applicant on 21 July 2022. It states the information was supplied on 25 July 2022. The applicant argues the matter could have been resolved at the first telephone conference on 20 September 2022 but the solicitors acting for the children wished to obtain counsels’ advice. It further submits that BBS filed further evidence on 18 October 2022.
The applicant submits it should not be prejudiced by these factors and its primary submission is that no interest should be awarded. In the alternative, the applicant submits if the Commission does make an order for interest it should find that there is no basis to commence the order at the date advocated by the respondents, being 29 March 2022. It relies on the decision in Kaur, that the relevant date is when the claim is duly and properly made, and it sets out various decisions of Members of the Commission at [3.5] of its submissions.
The applicant submits in the present case even though the insurer had accepted liability on 27 June 2022 the status of potential dependents were unclear, as persons such as BEI and BFB could have been potential claimants. It notes replies from all dependents were not filed in the Commission until 16 September 2022. It submits if interest is awarded it should be from 18 October 2022 when all the evidence had been filed or 16 September 2022 at the earliest.
In this matter I exercise my discretion to award interest. As found in Haidary the purpose of ordering interest is to compensate for the loss of income, not to penalise the employer. The employer has had the use of the money. However, the more difficult questions are: when should the award date from? And, at what rate should it be awarded?
It is often not clear in these cases when the claim is duly made given the employer’s insurer takes a proactive approach, which is commendable. In this matter I reject the applicant’s submission that the award should date from 18 October 2022 when BBS had filed the last of her evidence. This evidence just added more detail to what was already before the Commission. The alternate date suggested by the applicant is 16 September 2022 being the date all the replies were filed. However, I find that the date that the claim was “duly made” was most likely 28 July 2022 when BBS’s solicitor responded to the insurer’s correspondence and provided statutory declarations from BFB and BEI confirming they did not seek to make a claim[9]. At that point is was clear that the claim was confined to the present respondents and so the claim was duly made then.
[9] Application p 5.
The applicant has included in their submissions that interest should not be awarded in circumstances where there has been an adjournment and mentioned the fact that two preliminary conferences were held to enable the children’s solicitors to obtain counsels’ advice relating to apportionment and the fact that there was no agreement at the first preliminary conference about the amount of the apportionment to each family member. However, I do not regard these facts as determinative because even if parties agree between themselves relating to apportionment, the Commission has the duty under the legislation to determine the apportionment and is not bound by the parties’ agreement. The need for those assisting the Commission, by representing the interests of infant dependents, to obtain counsels’ advice is not in the same character of proceedings having to be adjourned because of some lack of diligence. The reality is in this case the matter has moved quickly from the time of filing to determination.
For these reasons, I propose to allow interest from 28 July 2022 to 25 October 2022.
The applicant has cited cases where interest has been awarded at the rate of 2% or 2.1% The respondents have made reference to the rates in UCPR. I accept the applicant’s submission at [3.16] that regard should be had by the Commission to the rates a claimant could have theoretically obtained from a financial institution referring to the High Court decision in Ruby v Marsh[10] and the various Commission cases that have adopted this approach. The reality in the past few years is that the cash rate has been very low, and I accept that the UCPR is too high in these times and as the applicant submits the Commission is not bound to apply the UCPR figures. However, the cash rate has been increasing in 2022 with interest rates also increasing. The applicant acknowledges this but argues the increase has been only very recent. In the alternative, the applicant submits the rate should be 2% above the RBA cash rates as applicable in the period. In the exercise of my discretion I find this is a fair approach.
[10] [1975] HCA 32, (1975) 132 CLR 642.
I allow interest on the sum of $849,300 at the rate of 2% p.a. above the Reserve Bank of Australia cash rate from 28 July 2022 to 25 October 2022 to be paid in pro-rata shares as per the percentage apportionment used in the calculations at [42] above.

[2022] NSWPIC 590

25 October 2022