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[2001] VCAT 212
procedural. The Tribunal set aside the Respondent's 3 March 1998 decision that the Applicant's nett weekly loss of earning capacity benefit was $50.72, and remitted the matter for reconsideration. The...
VCAT (Senior Member R J Ball) held that the Transport Accident Commission wrongly calculated Ms Balint's loss of earning capacity by effectively attributing a fixed small share of partnership profits without applying the statutory test in s49(5)/s50(5) of the Transport Accident Act 1986. The Tribunal set aside TAC's decision of 3 March 1998 and remitted the matter for reconsideration, directing TAC to determine the weekly amount the Applicant had the capacity to earn before the accident in employment reasonably available to her in view of her training, skills and experience. The Tribunal found the evidentiary materials (diaries, testimony) insufficient for the Tribunal itself to make a reliable finding on the precise contribution or earnings. Costs were reserved.
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Stela Balint, a partner in a small welding business conducted with her husband, was injured in a transport accident on 26 August 1996. The Transport Accident Commission (TAC) accepted her claim for medical and related expenses, and later assessed a loss of earning capacity benefit. TAC's computation rested on partnership tax and accounting material: it identified a peak partnership net income year of $25,740 (1994/95) and informed the Applicant that her contribution to the partnership was in the order of 10%, which TAC converted into a nett weekly benefit (initially $49.50 in correspondence and ultimately notified as $50.72) ([2], [3], [6]).
Ms Balint sought VCAT review, asserting she had earned more than the figure TAC used ([4]). At hearing the Applicant gave sworn evidence describing substantial on-site and administrative work in the business, and documentary material (diaries, tax returns) was tendered ([5], [6], [13]). TAC relied on its earlier allocation and submissions that the real dispute was the appropriate percentage attribution of partnership income to Ms Balint (10% per TAC; 25–33.3% contended by Applicant's counsel) ([9]).
Senior Member R J Ball held that the Commission had applied the wrong statutory test. The Tribunal concluded TAC should have applied the definition of 'pre-accident earning capacity' in s49(5) (and the analogous provision in s50(5) for partial loss), which defines the relevant amount as the weekly amount the earner had the capacity to earn before the accident in employment reasonably available to the earner in view of the earner’s training, skills and experience (less tax). The Tribunal set aside TAC's decision of 3 March 1998 and remitted the matter for reconsideration, directing TAC to consider the Applicant's pre-accident capacity to earn in employment reasonably available to her given her training, skills and experience. Costs were reserved ([1], [10], [11], Order).
Two core reasons underpin the Tribunal's decision.
First, statutory interpretation. The Tribunal accepted the Applicant's submission that for loss of earning capacity the proper statutory source is s49(5) (and s50(5)), not the self-employed pre-accident weekly earnings provision in s5. The Tribunal adopted and agreed with the reasoning in Re Rowe (AAT decision reported in (1997) 12 VAR 219) that the Act's definition of 'pre-accident earning capacity' looks to the earner's capacity to earn in employment reasonably available at the pre-accident time in view of training, skills and experience, and is not to be equated mechanically with what the person actually earned at that time. The Rowe passage emphasises that the Commission is not tied to actual earnings and can consider underemployment or employment reasonably available before the accident ([8], [11]; quoting Re Rowe at [11]).
Second, evidentiary and administrative sufficiency. The Tribunal found the documentation (diaries, oral accounts) was inconsistent and did not allow the Tribunal itself to make a reliable finding about the Applicant's precise contribution to partnership income. Moreover, TAC's approach, allocating a fixed percentage without a clear inquiry into the Applicant's capacity to earn in available employment given training, skills and experience, failed to apply the statutory test. Accordingly, the appropriate remedy was to set aside TAC's determination and remit for reconsideration, with a direction to apply the s49(5)/s50(5) test. The Tribunal also pointed to relevant judicial observations about attribution of partnership income (Motor Accidents Board v Scott) as useful considerations for TAC on remittal ([12]-[17]).
Before this decision (and as the parties debated), two different statutory references were being used in practice: s5 (which deals with pre-accident weekly earnings of self-employed persons) and s49(5)/s50(5) (which define pre-accident earning capacity in terms of capacity in employment reasonably available given training, skills and experience). The key legal question is which statutory provision governs the calculation for loss of earning capacity benefits.
VCAT in Balint clarifies (and applies) that for loss of earning capacity the operative statutory definition is s49(5) (and the s50(5) analogue). The Tribunal explicitly adopts the AAT's reasoning in Re Rowe to the effect that 'pre-accident earning capacity' is a capacity-based metric, not simply a replication of historical earnings. Thus, after Balint, decisions that simply rely on an accounting allocation or a literal reading of tax-assessed partnership profit shares, without articulating the s49(5) enquiry, are susceptible to being set aside and remitted.
Practically, administrative decision-makers (TAC) must inquire into the earner's capacity to earn in employment reasonably available to them, having regard to training, skills and experience, rather than simply taking a partner's tax allocation or an isolated year's profit as determinative.
Quoted/relied passages and their plain-English translations, with paragraph citations from the decision:
Para 10 (holding and direction):
Para 11 (adoption of Re Rowe):
Para 14 (evidence reliability):
Para 16 (on Scott):
This decision will be most directly engaged where:
If those features are present, Balint indicates a reviewing tribunal is likely to require reconsideration under the s49(5)/s50(5) test rather than accept a mechanical allocation.
Within the reasoning of this decision the Tribunal explicitly follows and adopts the AAT reasoning from Re Rowe about the correct statutory reading of s49(5) and distinguishes statutory 'capacity' from 'actual earnings' ([11]). Balint is an administrative-level decision (VCAT Senior Member) that confirms Re Rowe's approach and endorses judicial guidance from Scott on partnership income attribution as a factual/legal lens to apply on remittal ([16]-[17]). Practitioners should read Balint as consistent with the line that requires a capacity-based inquiry under the Act.
Because Balint is a VCAT decision, subsequent tribunals and decision-makers would treat it as persuasive in Victoria, particularly where similar fact patterns arise, but its authority is subordinate to higher courts. The decision emphasises process and statutory fidelity: when TAC has not applied the s49(5)/s50(5) statutory test, the appropriate remedy is set-aside and remittal with a focused direction.
Several practical and doctrinal issues remain for later adjudication and practice:
Quantifying 'capacity' where documentary records are inconsistent
Interaction between s5 and s49(5)/s50(5)
Attribution approaches for family-run or tax-driven partnerships
Remedies when Tribunal could make a reliable finding but chooses to remit
Application to part-time, irregular, or gig-type pre-accident work patterns
Readers should consult the actual text of s49(5), s50(5), and s5 of the Transport Accident Act 1986 when applying these principles, and consider that Balint is an administrative tribunal decision adopting persuasive reasoning from other tribunals and courts.
Disclaimer: This is a structured information analysis of the VCAT decision Balint v TAC [2001] VCAT 212. It is not legal advice. I can make mistakes. Before you act on this, rely on it, or use any draft or interpretation, have a qualified Australian lawyer check it.
General List - Transport Accident Act 1986 - Sections 5, 44, 45, 49 & 50
1. The decision made by the Respondent on 3 March 1998 that the Applicant is entitled to loss of earning capacity benefits assessed at a net weekly benefit of $50.72 is set aside and the matter is remitted for reconsideration by the Respondent.
2. In its reconsideration the Respondent is directed to consider the amount the Applicant had the capacity to earn before the accident in employment reasonably available to her in view of her training skills and experience.
For the Applicant Mr S McCredie, Barrister, instructed by
For the Respondent Mr W R Middleton, Barrister instructed by
1. The Applicant was involved in a transport accident on 26 August 1996 and on 19 September 1996 the Respondent wrote to the Applicant accepting her claim for medical and like expenses.
2. The Respondent assessed the financial records and taxation returns of the Applicant and the Applicant's husband and determined that she was entitled to loss of earnings benefits in the amount of $49.50 nett per week and informed her of the this decision by letter dated 7 October 1996. In a response to her then Solicitors the Respondent advised by letter dated 18 February 1997 as follows:-
"It is accepted that the partnership between Mr and Mrs Balint derived $25,740.00 annually (or $495.00 per week) prior to 26 August 1996 (1995 income tax return).
Stela's contribution to the partnership is in the order of 10% which equates to a weekly figure of $49.50....."
3. By letter dated 3 March 1998 the Respondent informed the Applicant that her claim for loss of earning capacity benefits had been accepted. The letter stated:
"TAC has assessed your nett weekly benefit at $50.72. This is based on your gross pre-accident earnings of $49.50 per week."
4. It is from this decision that the Applicant sought a review by this Tribunal. In her application for review she stated:
"The Applicant earned in excess of the sum of $49.50 alleged by the Transport Accident Commission. In the financial year ending 30 June 1996, the Applicant earned the sum of $7,575.00 gross. The decision of the Transport Accident Commission is therefore incorrect".
5. From the evidence presented to the hearing it appears that the Applicant and her husband were partners in a welding business. In a sworn statement adopted by the Applicant at the hearing she stated at follows:-
"On approximately 20th September 1993, my husband and I established a business known as Elba PSB Welding. This business involved welding, manufacturing, boiler-making and construction. It was conducted from our home.
My husband would negotiate various contracts to perform welding tasks on a sub-contract basis. He also manufactured handrails on various sites and partly manufactured them from our home.
I performed a number of duties in the business. I was involved in painting handrails at various sites after they had been installed by my husband. I also assisted with light to medium labouring work on various sites. I was with my husband on various sites at least two days a week and up to four days a week. I averaged approximately three days a week in this capacity. On the days when I was present, I worked for up to 16 or 17 hours.
On site, I was involved in painting, marking chalk lines, holding tape measures, measuring lengths of material for later construction, carrying and rolling out electric extension leads and handing bolts or screws to my husband who would then use them in the work he was performing. I otherwise generally assisted my husband in his duties.
Were I not present to assist my husband, he would have been compelled to hire a trades assistant.
In addition to the work I performed on the site, I also did the paperwork for the business. This involved invoice preparation, processing requests for contracts, answering the telephone, taking and passing on messages, keeping account books and ordering and controlling stock. I dealt with suppliers such as BOC Gases. I also paid the accounts of the business and conducted the banking of the business.
I worked approximately five days per week for the business either on site or performing administrative duties.
Whilst I was working in the business, it traded well and was making a profit."
6. The Tribunal was informed that in the three-financial years prior to the transport accident on 26 August 1996 the partnership between the Applicant and her husband made net earnings which were attributed to the two partners equally as follows:
In its calculations of the Applicant's loss of earning benefits and loss of earning capacity the Respondent used the highest of these figures namely the 1994/95 figure of $25,740.
7. Mr McCredie, on behalf of the Applicant, asserted in his final submissions that both he and Mr Middleton who appeared on behalf of the Respondent had erroneously referred to Section 5 of the Transport Accident Act 1986 ("the Act") in their submissions during the course of the hearing. This section is headed Pre-Accident Weekly Earnings - Self-Employed Persons and defines the meaning of this term for "an earner who is a self employed person."
8. Mr McCredie asserted that in correctly determining the Applicant's loss of earning capacity reference should be made to Section 49 of the Act and the definition of Pre-Accident Earning Capacity contained in sub-section (5) of that section. In respect of a partial loss of earning capacity Section 50(5) also contains a similar definition. Mr McCredie submitted that the Respondent has incorrectly calculated the Applicant's loss of earning capacity benefits by reference to Section 5 of the Act and has not had regard to the provisions of Section 49(5) or Section 50(5).
9. On the other hand in written submissions filed by the parties at the direction of the Tribunal subsequent to the hearing Mr Middleton stated:
"The real dispute in this Review is the 10% determination by the Respondent reflecting the Applicant's contribution to the partnership income. This is demonstrated by the opening by Counsel for the Applicant when he suggested that 25% to 33.3% was appropriate, a submission repeated in the Applicant's written submissions of the 8th of May 2000."
10. Having considered the submissions made by both parties the Tribunal is of the view that the submissions made by Counsel for the Applicant are correct and that as suggested by him the Tribunal should set aside the decision under review and remit the matter for reconsideration by the Respondent with a direction that in making its decision it give consideration of the capacity of the Applicant to earn before the accident in employment reasonably available to her in view of her training, skills and experience, being the test referred to in Section 49(5) and 50(5) of the Act.
11. The Tribunal finds that this is the correct decision having regard in part to the comments and views expressed by Presiding Member A Coghlan in a decision of the former Administrative Appeals Tribunal in re Rowe and Transport Accident Commission (1997) 12 VAR 219 where at pps 226 and 227 she said:
"The issue in this case is about determining the amount of the weekly payment to which Mr Rowe is entitled with respect to his "pre-accident earning capacity": s49(1) and (2). Although the section heading in s49 is "Total loss of earning capacity", section headings are not part of the Act (see Note 3 of the Act referred to earlier).
Section 49(5) defines "pre-accident earning capacity" by reference to a formula. That formula includes the components "A", "B" and "C". "B" and "C" account for the most recent particular average weekly earnings and what they were before the accident. Where an amount cannot be determined according to that formula, s49(5) provides that it means 60 per cent of average weekly earnings of all employees for Victoria last published by the Australian Statistician in respect of a quarter.
"'A' is the amount the Commission determines as the weekly amount the earner had the capacity to earn before the accident in employment reasonably available to the earner in view of the earner's training, skills and experience (less tax)...."
The legislation specifically refers to a calculation made by the reference to the capacity of the person to earn before the accident in employment reasonably available to that person in view of their skills and experience. In my view, this means that one looks at the person's capacity at that point in time. There are no words used to indicate that the calculation is to be made by reference to loss of earning capacity or what one's earning capacity might have been but for the accident or had it not been for the accident. The words used do not, in my view, permit one to import into the specific definition common law principles applicable to establishing loss of earning capacity, particularly when the definition does not use that phrase, but uses the phrase "capacity to earn before the accident". They are clearly different things.
Counsel for Mr Rowe, in final submissions, said that if one was to look at what a person was earning at the time of the transport accident, one needed to ask why the legislation did not use those words. He submitted that the legislation referred to "earning capacity" and there is a difference in the concepts; it is not simply the amount a person earned at the time. Whilst I agree with the applicant's submissions that there is a difference between what a person was earning, being a loss of earnings and loss of earning capacity, I do not agree that the difference makes it appropriate in determining Mr Rowe's pre-accident earning capacity for the purpose of the calculation of the amount of his benefits under the Act, to look at what Mr Rowe would have done with his life in the future and what would have happened to his ability to earn income. In my view, the calculation expressed in the way it is, allows the Commission to calculate an amount where a person, for example, at the time may have been underemployed or in part-time employment. The Commission is not tied to what a person may have actually earned at the time, and can consider matters such employment reasonably available and the person's training, skills and experience. This is clearly something different from an actual loss of earnings."
This Tribunal adopts and agrees with Mrs Coghlan's statements and views and finds that the Respondent has been in error in the calculation of the Applicant's entitlements to loss of earning capacity benefits.
12. In his written submissions Mr McCredie, on behalf of the Applicant, said that it would be useful for the Tribunal on the basis of the evidence it has heard to make a finding of the income that the Applicant "earned" in the partnership business pre-accident. The Tribunal does not think that it is appropriate for such a finding to be made by it.
13. During the course of the hearing evidence was given by both the Applicant and her husband as to the nature and quantum of her involvement in the partnership business. An extract of the Applicant's statement setting out the nature of her involvement is set out in para 5 above and detailed evidence was given from diaries kept by the Applicant and her husband in the conduct of the business. Various inconsistencies were demonstrated between the evidence of the two of them as to the number of hours that the Applicant actually worked in the business which gave rise to doubts the accuracy of their respective statements. Some of the records in the diaries were said to be completed by the Applicant's husband some by her and some by her children and it was difficult to identify who made which particular entries and whether the entries were made in the diaries on site where the partnership business was being carried out or subsequently at the Applicant's home by her husband her or one of her children.
14. The Tribunal accepts that the prime purpose of the keeping of the diaries was to record the hours worked by the partners on a particular job at a particular site in order to make appropriate charges for the work carried out. As a record of the individual contributions of the two partners by way of hours worked the Tribunal finds that no clear indication of the number of hours worked by the Applicant in the business prior to the accident can be drawn.
15. The Respondent asserts that the Applicant's contribution to the partnership income was in the order of 10% and as already indicated Mr McCredie on behalf of the Applicant suggested it would be 25% to 33.3%. The Tribunal, on the evidence presented to it, is unable to make any finding as to the extent of the Applicant's contribution but notes the comments of Mr Justice Tadgell in Motor Accidents Board v Scott (unreported) where in a judgement delivered on 27 May 1982 His Honour made comments and observations which this Tribunal considers appropriate to the application before it.
16. In Scott's case Justice Tadgell was dealing with an appeal against a finding of the Motor Accidents Tribunal involving a claim by a widow arising out of the death of her husband in a motor vehicle accident. At the time of the deceased's death he and his widow were conducting a business as partners in equal shares, sharing the profits equally. The following are extracts taken from His Honour's judgment:
"The partnership business which was carried on with her husband until his death involved the delivery of newspapers and magazines in Melbourne and Victorian Country areas. She could not have carried on the business by herself and the work was heavy and necessitated constant driving. She was totally dependent on her husband's working capacity.........
According to the reasons for its decision the Tribunal found the following additional facts.........
It would not have been economical for her to have employed a driver to perform the work previously performed by the deceased and the partnership business was accordingly terminated on his death. The sole purpose of the partnership was to obtain such taxation benefit as resulted from the splitting of the family income......
The argument addressed to the Tribunal was that regard should not have been had to the fact that the Respondent had been a partner of the deceased's: that the true situation so far as the family was concerned was that the deceased was the sole bread winner, the Respondent having been fully engaged in her duties as a wife and mother and having taken no significant part in the business......
The earnings the deceased would have been likely to receive as net income from personal exertion must be considered and these, while providing in this case an indication of the value to him of his capacity to earn, give an incomplete reflection of it. Because the greater part of the partnership's income was attributable to the deceased's earning capacity, the partnership's income before the accident is also relevant. For the same reason, the likelihood of the partnership's continuance for two years after the accident (but for the occurrence of the accident) and its likely income during that period, be it more or less than previously, would also be relevant. The mere fact that the respondent received half of the partnership's income and was assessable to tax in respect of it is not significant save as to the extent that her income was attributable to her own earning capacity and not to the deceased's. [Tribunal's underlining]."
17. In the Tribunal's view no proper inquiry has been made by the Respondent to determine the Applicant's loss of earning capacity as required by the Act and when the matter is reconsidered by it in accordance with the Tribunal's order the comments of Justice Tadgell should be taken into account also.
18. The question of costs was not raised during the course of the hearing and they will be reserved.
Balint
TAC [2001] VCAT 212
The Tribunal set aside the Respondent's 3 March 1998 decision that the Applicant's nett weekly loss of earning capacity benefit was $50.72, and remitted the matter for reconsideration. The Tribunal directed the Respondent to consider 'the amount the Applicant had the capacity to earn before the accident in employment reasonably available to her in view of her training, skills and experience.' Costs reserved. (Order and Paras 1, 2, 3, 10).