Comcare v Thompson

REASONS FOR JUDGMENT 1 In introducing the chapter on "The Equity of the Statute" in Sutherland, Statutes and Statutory Construction, Vol 2B, 5th Ed, it is stated: "s54.01 The spirit of a statute as a guide to its interpretation People often speak with illustrative particularity when their object is to communicate a general principle or idea. If a court believes this has happened in a legislative text, it will implement the general principle by applying the statutory rule to situations other than those particularly mentioned in the statute. In this circumstance it is said that the decision is premised on the equity or the spirit of the statute, as distinguished from its strictly 'literal' meaning. In this context, 'equity' is used in a sense unrelated either to fairness or to the historic division of judicial power between law and equity. Instead, it is more or less synonymous with 'spirit' or 'principle'. (reference omitted)" 2 It could reasonably be said that the Administrative Appeals Tribunal ("the Tribunal") in reaching the decision the subject of the present application has acted much as Sutherland has described when construing s 8(6) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act"). The correctness of the construction the Tribunal adopted is the principal issue before me in this "appeal" under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"). The Statutory Setting 3 One of the critical components in the calculation of the compensation payable under the SRC Act to a person incapacitated for work by a compensible injury is "normal weekly earnings". The method of calculation of such earnings is provided in s 8 of the SRC Act. Where the incapacitated employee no longer is employed by the Commonwealth, a purpose of the Act is to make some provision (reflected in the compensation payable) for the employee's participation in what I will loosely describe as changes in remuneration that the employee would have enjoyed had he or she remained in the Commonwealth's employment. Section 8 of the Act evidences that purpose in the manner in which it allows for adjustments to be made to normal weekly earnings to take account of types of predictable salary increases and payments. 4 Insofar as presently relevant s 8 provides: "Normal weekly earnings 8.(1) For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula: (NH x RP) + A where: NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period; RP is the employee's average hourly ordinary time rate of pay during that period; and A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment. … (6) Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of: (a) the attainment by the employee of a particular age; (b) the completion by the employee of a particular period of service; or (c) the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment; the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be. … (9) If the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury is increased or reduced on or after that date as a result of: (a) the operation of a law of the Commonwealth or of a State or Territory; or (b) the making, alteration or operation of an award, order, determination or industrial agreement, or of the doing of any other act or thing, under such a law; the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased or reduced by the same percentage as the percentage by which that minimum amount was so increased or reduced, as the case may be." 5 To the extent that it is necessary to make reference to the Workplace Relations Act 1996 (Cth) ("the WR Act") I would note that it enables an employer and an individual employee to make an "Australian workplace agreement" ("an AWA") being an agreement that "deals with matters pertaining to" the employer-employee relationship (including remuneration etc): s 170VF(1). Such an agreement is specific to the individual employee concerned. It can last up to three years: s 170VH. Likewise its terms can be varied by the written agreement of the parties to it: s 170VL. An AWA displaces any award and can displace an agreement that would otherwise apply to the employee concerned: s 170VQ. Factual Setting 6 The facts in this matter are not in dispute. For convenience I will give an adapted version of the factual narrative provided with the written submissions of the applicant, Comcare. 7 1. In 1985, Mr Thompson, the respondent, was employed in the Australian Public Service at the National Library of Australia ("the Library") in the position of Assistant Director-General. His salary was paid at the rate applicable to Level 2 in the Second Division of the Public Service. 8 2. In that year, Mr Thompson became incapacitated for work for the purposes of the Compensation (Commonwealth Government Employees) Act 1971 (Cth) ("the 1971 Act") and commenced to receive total incapacity payments under that Act. Mr Thompson retired from the Australian Public Service on the ground of invalidity and commenced to receive payments under the Superannuation Act 1976 (Cth). 9 3. On the coming into effect of the SRC Act, he commenced to receive weekly payments pursuant to s 131(4) of that Act. The annual salary for the Second Division of the Public Service was at that time fixed at $57,775 by Determination No 224 of 1988, made under s 82D of the Public Service Act 1922 (Cth). Mr Thompson's "normal weekly earnings" were calculated under s 8 of the SRC Act by reference to the amount fixed for the Second Division of the Public Service by that determination (and its successor). 10 4. Determination No 224 of 1988 and its successors also fixed the scales within which salaries were payable at that time to Administrative Service Officers ("ASOs") in the Public Service. Under Determination No 224 of 1988, there were 34 levels or increments within 8 classes for an ASO, ranging from $16,545 to $45,848. 11 5. With effect from 4 January 1990, the Senior Executive Service ("the SES") was established in the Australian Public Service. As from that date, a minimum of $55,999 and a maximum of $62,038 were specified for Band 1 of the SES. From that date, Mr Thompson's "normal weekly earnings" were treated by Comcare as equivalent to the maximum rate for Band 1 of the SES. Over the succeeding five years, the range applicable to Band 1 of the SES was regularly adjusted, consequential upon National Wage Case decisions and agreements and there was a consequential re-calculation of Mr Thompson's "normal weekly earnings". 12 6. The Senior Executive Service (Salaries and Specific Conditions) Award 1995 ("the Award") was made by the Industrial Relations Commission under the Industrial Relations Act 1988 (Cth) and commenced on 14 December 1995. The Award stipulated a salary range for the SES Band 1 of $64,546 to $72,480. Mr Thompson's "normal weekly earnings" were re-calculated by reference to the higher amount fixed by the Award. 13 7. In 1996, the Continuous Improvement in the Australian Public Service Enterprise Agreement 1995-96 ("the CI Agreement") was certified by the Industrial Relations Commission under the Industrial Relations Act. Initially, the CI Agreement provided that the salary range for the SES Band 1 was $65,837 to $79,242, with effect from 2 January 1996. As amended, the CI Agreement provided that the salary range for the SES Band 1 was $68,228 to $82,120, with effect from 17 October 1996. The effect of the CI Agreement was to displace the Award where there was any inconsistency. 14 8. A determination gazetted on 16 November 1995 under s 82D of the Public Service Act provided for the payment, to SES Band 1 officers, of a fortnightly cash payment in lieu of the provision of a privately plated Commonwealth vehicle (the cash option), with effect from 2 November 1995. 15 9. On 29 November 1996, a delegate of Comcare decided, on reconsideration of an earlier decision, that the weekly rate of compensation payable to Mr Thompson was $247.85, being an amount calculated by reference to Mr Thompson's "normal weekly earnings" based on the CI Agreement and excluding any cash option. Mr Thompson applied to the AAT for review of that decision. 16 10. In 1996 the WR Act scheme for AWAs was established. The earnings of the substantial majority of SES employees are now fixed under each employee's AWA, rather than by the CI Agreement or the Award. 17 11. On 15 June 1998, the Library entered into AWAs with four of the Library's SES employees. Each AWA provided for a 3% increase in salary on 16 or 17 June 1998 and for a further 3% increase twelve months after the first increase. The 3% increases did not reflect any Library-wide policy relating to the payment of salaries, but were part of each salary package negotiated between the Library and each SES employee. 18 12. Four months later, on 16 October 1998, a certified agreement was entered into between the Library and its non-SES employees ("the Library Agreement"). The Library Agreement provided for a 3% increase in salaries from the date of certification; and for a further increase in salaries of 3% from the first pay day in July 1999. The Library Agreement did not flow on to SES employees. 19 13. In the first half of 1999, the Library entered into AWAs with three further SES employees. Each of those AWAs provided for a 3% increase in salary on the first pay day in July 1999. Again, the 3% increase did not reflect any Library-wide policy relating to the payment of salaries, but was part of each salary package negotiated between the Library and each SES employee. 20 14. On 21 July 1998, the Library advised Mr Thompson that "The Library has recently applied an increase of 3% to all of its SES positions" and that "the remuneration package for your former SES position would have increased your salary from $82,120 to $84,584 per annum". The salary of $82,120 was the maximum base salary payable under the CI Agreement. 21 15. On 5 November 1998, the Tribunal decided, pursuant to s 42C of the AAT Act, that the decision of 29 November 1996 (see above) should be set aside and a decision substituted that Mr Thompson was entitled to compensation under s 134(1) of the SRC Act, at a normal weekly earnings rate which incorporated: (a) an increase from 16 June 1998 in Mr Thompson's base salary from $82,120 to $84,584; and (b) the cash option from 2 November 1995, at varying rates for different periods. 22 16. On 18 November 1998, a delegate of Comcare decided that the weekly rate of compensation payable to Mr Thompson was $450.48 with effect from 12 November 1998. On 8 June 1999, a delegate of Comcare decided that the weekly rate of compensation payable to Mr Thompson was $440.96 with effect from 8 June 1999. 23 17. Following requests for reconsideration, a delegate of Comcare decided, on 1 July 1999, to vary the decisions of 18 November 1998 and 8 June 1999 by increasing the weekly rate of compensation payable to Mr Thompson. The rate of compensation was calculated by reference to Mr Thompson's superannuation payments and his "normal weekly earnings", which the delegate calculated on the basis of: (a) the mean of the salary rates fixed by individual AWAs for persons occupying SES Band 1 positions - $86,132; and (b) the average AWA vehicle allowance at 31 December 1998 - $15,861. 24 18. The delegate refused Mr Thompson's request that his "normal weekly earnings" should be based on the earnings of the person occupying Mr Thompson's former position at the Library, as fixed by the AWA between that person and the Library. 25 19. On 6 July 1999, Mr Thompson applied to the AAT for review of the decision of 1 July 1999. The Tribunal's Decision 26 The issue for the Tribunal was whether s 8(6) - and in particular s 8(6)(c) - of the SRC Act could accommodate itself to salary increases obtained by SES officers as a result of individually negotiated AWAs. The Tribunal recognised that since the introduction of the AWA system the occupants of Mr Thompson's former position had negotiated salaries that replaced the previous "cross the board" fixed salary system embodying incremental increases. 27 Candidly the Tribunal acknowledged that "[s]ubsection 8(6)(c) of the SRC Act was not drafted with this system of wage fixing in mind. It has not been amended to accommodate the change." But it likewise asked whether, if s 8(6)(c) did not admit of a construction that included increases in pay that had been individually negotiated, then was Mr Thompson's "compensation to be 'frozen' as a consequence of the introduction of AWAs?" 28 Resorting to the concept of "legitimate" or "reasonable expectation", the Tribunal found that, had he remained in his position, Mr Thompson would have had the expectation that his remuneration would be based on an AWA and it was likely that he would have obtained an AWA as favourable as that negotiated by his successors. From this it found that the best evidence of the increases in salary he was likely to have received was "the salary currently being paid to the occupant of the position". 29 It then asked whether, for the purposes of s 8(6)(c) of the SRC Act, those increases fell within the meaning of "increment in a range of salary, wages or pay". By the taking of two steps, it found that it did. 30 The first step involved the interpretation of "increment". The Tribunal reasoned: "36. The Macquarie Dictionary provides the following meanings of 'increment': 1. Something added or gained; an addition or increase. 2. Profit. 3. The act or process of progression within a graduated scale of salaries, designed to reward an employee for increases in skill or experience. The last meaning clearly incorporates the term of art that the word 'increment' has assumed in the APS. The definition of 'increment' is broad enough to bear the meaning of any increase in salary, wage or pay. That the drafters of the SRC Act envisaged a particular meaning to be attributed to it is not reason enough for the word to be given only that restricted meaning when it can bear a wider meaning more beneficial to the applicant." 31 It was emboldened to take the step of ascribing the wider meaning to the word: "37. The SRC Act is a remedial statute beneficial in nature. His Honour Justice McHugh observed in Saraswati v The Queen (1991) 172 CLR 1 at 21 that if the literal or grammatical meaning of a provision does not give effect to the purpose of the legislation, that meaning cannot be regarded as 'the ordinary meaning' and cannot prevail. In circumstances whereby 'cross the board' graduated increments in salaries are, so far as the position is concerned, a thing of the past, such a restricted meaning would be contrary to the spirit of the Act. The SRC Act must be construed such that the purpose and object of the Act will be served (see DP Blow in Re Spurr and Comcare (1999) 28 AAR 424 at 428)." 32 There remained, nonetheless, the difficulty that the increment s 8(6)(c) envisaged was "in a range of salary". A range required termini - a minimum and a maximum. In the AWA system in the Library the evidence was that consideration was given to the minimum level of salary but there was no maximum. The Tribunal did not consider this to be fatal to Mr Thompson's claim. "The AWA is negotiated within a range, in the applicant's case Band 1, with a maximum established by the negotiating process." 33 Thus the Tribunal could conclude: "42. I find that it is open to the tribunal in applying the provisions of the SRC Act to determine the applicant's NWE with reference to the AWA negotiated salary paid in respect of the position. This approach is consistent with the spirit of that Act. It requires the identification of increase in that base salary and applicable allowances such as the motor vehicle allowance, for the calculation of the applicant's NWE in accordance with subsection 8(6)(c)." Conclusion 34 I mean no disrespect to the helpful submissions made by counsel in not setting these out in any detail. It is clear that both the methodology employed by the Tribunal, and the construction given s 8(6)(c) of the SRC Act, were impermissible. 35 Whatever else might be said of individually negotiated salary increases in a scheme devoid of a fixed ceiling by way of maximum, those increases cannot be characterised as "increments in a range of salary". As Sundberg J indicated in McDonald v Department of Defence [1993] FCA 882 at [12], "[t]he section contemplates the existence of a pay range which the employee may 'work up through' over time." Such a range, and an increment within it, cannot be manufactured in the manner proposed by the Tribunal. Formally, the Tribunal's reasoning process is that the range is determined by the increase negotiated, which increase provides the increment in the range which is the increase received for s 8(6)(c) purpose. In substance, what the Tribunal has done so as to give effect to "the spirit of the Act", has been to add a new paragraph (d) to the sub-section that reads, in effect - "(d) the receipt by the employee of a negotiated increase in salary." As I will indicate below, it is this that harkens back to the doctrine of the "equity of the statute" to which I referred at the beginning of these reasons. 36 If the phrase "an increment in a range of salary" ought not have been manipulated as I have described neither should the word "increment" itself in its setting. As the Tribunal itself acknowledged, s 8(6)(c) of the SRC Act was not drafted with the AWA system in mind. 37 It may be conceded that the SRC Act is beneficial in nature and that s 8(6) is one of the instruments to be used in effectuating that end of the statute. But the subsection was crafted for, and reflected the characteristics of, a public sector that was structured in a particular fashion and which provided in known ways for the setting of the terms and conditions of employment including remuneration of public sector employees. It is unnecessary to describe that world other than to say that it embodied the characteristics of prescribed entitlements and allowances that were externally fixed (in the sense of not being agreed with the individual employee) and that applied "across the board" to positions of a particular type, level or designation or else applied in designated circumstances: see generally the discussion in McCarry, Aspects of Public Sector Employment Law (1988) 178ff. It was in that environment that s 8(6) was intended to do its work. And it could do so intelligibly. To the extent that that environment still subsists - as it does for much the greater number of employees in the Library - the subsection is capable of doing the work envisaged for it. 38 What was not envisaged at the time of the SRC Act (or for that matter of its predecessor in the 1971 Act: see s 25(9) introduced by way of amendment in 1974 on which see Hansard, 31 October 1974 at 3251-3252) was a quite different system of securing individual salary increases. The machinery provided by s 8(6)(c) allowing for incapacitated ex-employee participation in subsequent salary increases is simply inappropriate to the AWA system because of the very presuppositions that informed, and are expressed in, the language in which it is cast. 39 Unlike the Tribunal, I do not then regard the observations of McHugh J in Saraswati v The Queen (1991) 172 CLR 1 at 22 as mandating any departure from the ordinary meaning s 8(6)(c) had, and was intended to have, in effectuating the statute's purpose when it was re-enacted in 1988. His Honour there observed: "where the text of a legislative provision is grammatically capable of only one meaning and neither the context nor any purpose of the Act throws any real doubt on that meaning, the grammatical meaning is 'the ordinary meaning' to be applied. A court cannot depart from 'the ordinary meaning' of a legislative provision simply because that meaning produces anomalies." 40 Likewise the form of purposive construction enjoined by s 15AA of the Acts Interpretation Act 1901 (Cth) provides no "warrant for redrafting legislation nearer to an assumed desire of the legislature": R v L (1994) 49 FCR 534 at 538; see also Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 262. Indeed we have no source from which it is possible to ascertain first, whether the legislature would wish to carry the policy of s 8(6) over to negotiated increases or secondly, more importantly, if it did then how it would wish to carry that into effect. These two considerations highlight two additional concerns. 41 First, they caution against the too-ready assumption of what Bentham called the legislator's "hypothetical will" to deal with, in this instance, the new type of salary increase: see Bentham as quoted in Evans, Statutory Interpretation (1988), 183. As was indicated in Rodriguez v United States 480 US 522 at 525-526 (1987): "no legislation pursues its purposes at all costs. Deciding what competing values will or will not be sacrificed to the achievement of a particular objective is the very essence of legislative choice - and it frustrates, rather than effectuates, legislative intent simplistically to assume that whatever furthers the statute's primary object must be the law." 42 Secondly and contrary to what is the case, even if it could be said that the failure to make provision for increases arising from negotiated agreements resulted from legislative inadvertence, the court cannot "supply the deficiency": Tokyo Mart Pty Ltd v Campbell (1988) 15 NSWLR 275 at 283; see also Pearce and Geddes, Statutory Interpretation in Australia, 4th Ed, s2.5 and s2.16. It would not be - "possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless [that] condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. It becomes a usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts." Wentworth Securities Ltd v Jones [1980] AC 74 at 105-106; see also R v Young (1999) 46 NSWLR 681. 43 Finally, having referred to "the equity of the statute", I should make the following observations. Strictly speaking there are probably at least two distinct principles having discrete provenances (the one Aristotelian, the other the ancient common law) that are encompassed within what is now referred to as the "equity of the statute": see Evans, Statutory Interpretation, 178-179; Thorne, "The Equity of a Statute and Heydon's case", (1936) 31 Illinois LR 202; and see Bacon's Abridgement, Vol 7, 7th Ed, 1832, 458-461 and the editor's notes thereto. In one manifestation it admitted of restrictive interpretation of the literal meaning of statutory language; in another, of extensive interpretation so as to apply to situations within the meaning though not the letter of a statute: see eg Sutherland, ss54.04-54.08. Bentham's assault on the latter usage in particular brought at least that part of the doctrine into disfavour in common law countries in the nineteenth century: see Nelson v Nelson (1995) 184 CLR 538 at 552-554. For present purposes it is unnecessary to explore the extent to which if at all aspects of that usage survive beyond the techniques we now have in relation (a) to purposive construction of statutes and (b) to overcoming inadvertent omissions: cf Gummow, Change and Continuity,1999 at 21-22. Given, as I have indicated, there is no proper basis for assuming in the present case that salary increases of the type that result from AWAs would be ones that the legislature could be taken to have intended would fall within the compensatory regime of the SRC Act, there would be no basis in any event for extending the statute to them - even if some surviving vestige of the equity of the statute doctrine allowed for extensive interpretation beyond the techniques to which I have referred above. 44 I am, then, of the view that the Tribunal erred in its construction of s 8(6)(c). This is not to say that the sub-section has no work to do in relation to Mr Thompson. The evidence before me is that the CI Agreement is still on foot though, doubtless, because of the introduction of the AWA system, it offers little of advantage to him. Whether s 8(6) applies to the 3 per cent increase given to SES officers in 1998/1999 is a matter for the Tribunal to re-determine. 45 To avoid the adverse consequence to Mr Thompson of the construction I have placed on s 8(6), both parties have submitted that the AWA increases can be secured to him via s 8(9). Though this matter was argued before the Tribunal it did not determine the matter in view of its decision on s 8(6)(c). As I indicated to counsel when this matter was agitated before me, even if s 8(9) could properly be applied to negotiated increases under AWAs, it would presuppose a quite different factual matrix to that which was before the Tribunal. Moreover, unless and until the factual setting appropriate to such a s 8(9) claim is laid out, I would be reluctant to venture upon a consideration of whether the subsection could be so used. 46 My reluctance is exaggerated by the considerations (i) that those characteristics of s 8(6) which locate it in a pre-AWA remuneration regime would seem at first blush to be present as well in s 8(9) - I refer in particular to the mechanisms prescribed in s 8(9)(a) and (b) from which the minimum amount per week results; and (ii) that where, as in the present case, the possible "class of employees" to which Mr Thompson belonged at the date of his injury has undergone at least one metamorphosis - and possibly another if the AWA process itself has that effect - it may be that the point has been reached in which AWA employees cannot be said still to be relevantly in the class of employees envisaged by the sub-section. 47 Though conscious of the importance of the question not only to the present parties, I am not prepared to express a view on the proper construction of the subsection on the material and submissions before me. Conclusion 48 I will order that the decision of the Tribunal be set aside and that the matter be remitted to it for redetermination. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.