Commonwealth v Muratore

The facts briefly stated were as follows. The respondent, Vittorio Muratore, was an employee of the Postmaster-General's Department when he was injured in the course of his employment at various times between 1956 and 1963. He received compensation under the Commonwealth Employees' Compensation Act 1930 when he was not working. In 1966 the Delegate of the Commissioner for Employees' Compensation under the last-mentioned Act determined that the condition suffered by the respondent and causing incapacity for work since 1st June 1965 was not the result of injury by accident arising out of or in the course of his employment by the Commonwealth and was not the result of a disease due to the nature of the employment. The respondent appealed from that determination to the District Court at Sydney and on 18th November 1966 the District Court allowed the appeal and found "that the appellant did suffer personal injury by accident arising out of and in the course of his employment by the Commonwealth and that he is suffering at the present time as a result of that injury (and) that he is partially incapacitated for work by this injury and that he is fit for any work which does not require heavy lifting or frequent bending or which does not require the use of a jackhammer "

Shortly afterwards the respondent went off work on weekly compensation of $54.56 per week and did not thereafter return to work with the Postmaster-General's Department. In some way by 1968 these payments had been reduced to about $28 per week. Then on 7th April 1971 a determination was made by the Delegate of the Commissioner whereby it was determined as follows:

(1) The weekly pay of the said Vittorio Muratore at the date of injury as since varied to 15 March 1971 is $58.64.

(2) Since 15 March 1971 the said Vittorio Muratore has been able to earn in some suitable employment or business, a weekly amount of $46.70.

(3) In accordance with the provisions of paragraph (1) (c) of the First Schedule he is thereby entitled to $11.94 per week from 15 March 1971 until a date to be determined by the Commissioner for Employees Compensation or his Delegate.

The respondent lodged an appeal to the District Court but on 28th November 1972 the appeal was withdrawn and dismissed. In the meantime on 30th August 1972 a further determination was made by the Delegate of the Commissioner (now under the Compensation (Commonwealth Government Employees) Act 1971). This the Commissioner was entitled to do by virtue of s. 20 (4) (a) of the 1971 Act, the earlier determination of April 1971 made under the old Act being deemed to be a determination under the 1971 Act (s. 107 (2)). The determination was as follows:

(1) The evidence before me, including specialist medical opinion, indicates that since 24 June 1971 the said Vittorio Muratore has been able to earn, in some suitable employment or business, a weekly amount which is not less than his weekly pay at the date of injury as since varied.

(2) now therefore, in pursuance of the provisions of the Compensation (Commonwealth Employees) Acts 1971 including sections 4 (2), 104 (15) and 107 (2) of that Act, and further to the determinations previously made, I hereby determine: - since 24 June 1971 the said Vittorio Muratore has been able to earn in some suitable employment or business a weekly amount not less than his average weekly earnings before the injury and he is therefore not entitled to compensation under section 46 (2) of the said Act from and including 24 June 1971.

Application for a judicial review of this determination was made by the respondent under s. 63 (1) (b) and in accordance with s. 90 of the Act to the Workers' Compensation Commission of New South Wales, the prescribed tribunal. The application came on before Judge Ferrari, who held that the onus of proof of matters which would entitle the Commonwealth to have the entitlement of the respondent under the 1971 determination reduced from $11.94 per week to nothing lay upon the Commonwealth. Judge Ferrari found that it had not been affirmatively established that there had been a change in circumstances which disentitled the respondent to further payments on the basis of partial incapacity. He made an order the form of which is not material to any matter argued on this appeal. Sweeney J. dismissed the appeal. He varied the order of Judge Ferrari in one respect which is also not material to this appeal.

The argument on behalf of the appellant can be shortly stated. It is conceded that the appeal from the Commissioner to Judge Ferrari was an appeal by way of rehearing de novo. It is also conceded that in certain cases where the Commonwealth seeks to have a prior determination varied the onus will be upon the Commonwealth. It is not said that Phillips v. The Commonwealth [1] , decided on the old Act, is not equally applicable in its reasoning to the 1971 Act. But, it is said, Phillips v. The Commonwealth was a case where the Commonwealth sought a determination that a condition of total incapacity no longer existed, and it was held that the Commonwealth bore the onus of establishing that fact. The present case, it is said, is different. Here there is no challenge to the earlier determination that the respondent suffered injury arising out of or in the course of his employment nor to the determinations at earlier times (and lastly by implication on 7th April 1971) that he was partially incapacitated for work as a result of his injury. But it is submitted that the Commissioner on 30th August 1972 determined no more than that the respondent was no longer suffering economic loss and that the proof of continued economic loss lies upon the employee.

In support of the submission that partial incapacity for work can thus be distinguished from economic loss consequent upon that partial incapacity, the Commonwealth relied upon the following passage in the judgment of Latham C.J. in Thompson v. Armstrong & Royse Pty. Ltd. [2] :

The cases show that in order that an employer should become liable actually to pay compensation in respect of a particular period there must be (1) an injury of the worker as defined in the Act; (2) a resulting incapacity for doing the work for which he was earning wages; (3) a consequent economic loss of wages. If in fact he is still receiving those wages in respect of a particular period he fails to establish the third element and the employer is not liable in respect of that period - though he would become liable if, the incapacity continuing, he ceased to pay the wages. However, in my opinion the argument attempts to obtain from the judgment of Latham C.J. more than his words will support. It has always been recognized that "incapacity for work", those words being taken to refer to physical incapacity, is only relevant where it produces an economic incapacity. In Thompson's Case, Latham C.J. said [3] : The case for the employer was argued upon the basis that when full wages were paid there was no incapacity within the meaning of the Act because the fact that the worker was paid full wages showed that his economic capacity was unimpaired whatever might be the case with respect to his physical capacity. The strange result of the adoption of this argument in the present case would be that the worker was incapacitated for work within the meaning of s. 9 of the Act on 18th and 19th December, but that he became capable for work during the succeeding period of about two weeks, even though he might not have been able to get out of his bed. In my opinion this argument does not give proper effect to the words of s. 9. The phrase "where total or partial incapacity for work results from the injury" must refer to physical injury resulting in physical incapacity for actually doing work. That incapacity is relevant where it produces an incapacity to earn his living as he did before the injury (per Evershed L.J. in Ruocco v. Surrey County Council [4] ) in a market for his labour which was reasonably accessible to him (Birch Brothers Ltd. v. Brown [5] ). Otherwise it is irrelevant for the purposes of the Act. It is in this sense that "incapacity" in s. 9 can be said to mean incapacity to earn wages. The fact that incapacity for work (regarded as physical incapacity) is only relevant where it produces an incapacity to earn a living has led at times to the formulation that the words actually mean incapacity to earn a living. See, for example, the judgment of Williams J. in Thompson's Case [6] , and the cases which are there cited. But even that formulation either expressly or impliedly supposes physical inability to earn a living. 1. (1950) 81 C.L.R. 585, at p. 598. 2. (1950) 81 C.L.R., at p. 595. 3. (1947) 177 L.T. 613, at p. 616. 4. [1931] A.C. 605. 5. (1950) 81 C.L.R., at p. 607.

The difference in formulation can in particular circumstances lead to a difference in result. The different conclusion of Williams J. from those of McTiernan, Fullagar and Kitto JJ. in Thompson's Case on the question whether a worker who received payment of his full wages by his employer during the period of his annual holidays could be totally incapacitated for work during that period seem to me to spring from the different concepts. But these differences of approach do not justify a conclusion that on the approach of Latham C.J. and McTiernan, Fullagar and Kitto JJ. in Thompson's Case, economic loss can be regarded as an element wholly separate from incapacity for work. In particular the approach of these judges in Thompson's Case does not support the submission that despite the reasoning in Phillips v. Commonwealth [7] the onus always lies on the employee to prove economic loss even if he has in his favour a previous finding of partial incapacity for work.

An employee who has been found to be partially incapacitated for work has his incapacity measured by the extent that the amount per week that he is able to earn in some suitable employment or business is less than his average weekly earnings before his injury. See s. 46 (2) of the 1971 Act. His partial incapacity for work is only relevant in so far as such a measurement can be made, that is to say, in so far as it produces incapacity to earn the wages which he was previously able to earn. Therefore the Commonwealth when it alleges that the employee is physically able to earn, in some suitable employment or business, a weekly amount which is not less than his weekly pay at the date of injury is alleging nothing relevantly different from an allegation that he has no physical incapacity for work producing an incapacity to earn those wages. The position would be no different if it were alleged that his degree of incapacity for work had diminished so that his compensation should be reduced. In both situations the Commonwealth is, or would be, alleging that the circumstances of the employee had changed; and the onus lies upon the party alleging the change of circumstances to prove it. The position is quite different if there has been no previous finding of partial incapacity with a consequent assessment of the compensation payable. It is established that the employee then bears the onus of proving the partial incapacity for work and its reflection in the degree of his loss of ability to earn: J. & H. Timbers Pty. Ltd. v. Nelson [8] .

The present case is precisely covered by the following statement in Phillips v. Commonwealth [9] :

Likewise, the application of the same principles may well mean that in some cases the onus of proving critical facts may rest upon the Commonwealth. Such a case would be where the Commissioner has purported to terminate an employee's right to compensation under an antecedently existing determination by reason of a material change of circumstances. This proposition was disputed by the Commonwealth on the authority of observations made in Pethick v. The Commonwealth of Australia [10] , but that case was not concerned with the termination of a right to compensation by reason of any change in material circumstances; it was concerned with the question whether the appellant ever had a right to compensation. On this aspect of the case we were referred to Quinn v. M'Callum [11] and Smeaton & Sons Ltd. v. Taylor [12] and we, ourselves, have referred to the observations of the Master of the Rolls in Cory Brothers & Co. Ltd. v. Hughes [13] . We do not doubt the authority of those cases and think that they clearly establish the validity of the propositions which we have set out. 1. (1964) 110 C.L.R., at p. 350. 2. (1960) 103 C.L.R. 643, at p. 649. 3. (1908) 2 B.W.C.C. 339. 4. (1933) 26 B.W.C.C. 369. 5. [1911] 2 K.B. 738, at p. 743.

The decision of the English Court of Appeal, to which the Court lastly refers in the above passage, is on all fours with the present case. The observations of the Master of the Rolls are as follows [13] :

there is an express power given to either party to review the amount of compensation, which may be either increased or diminished or terminated. The employer may say "I am now paying you too much"; the man may say "You are now paying me too little"; or the employer may say "I ought now to pay you nothing at all." But whoever makes that application is the person on whom the burden of proof lies. Here it is to my mind impossible to escape from the conclusion that the burden is on the employers to satisfy the Court that the man at this moment is not under any incapacity by reason of the accident which admittedly befell him. 1. [1911] 2 K.B. 738, at p. 743.

The question is whether on a judicial review under Division 4 (ss. 90 to 93) of the Compensation (Commonwealth Government Employees) Act 1971, as amended, the onus lies on the worker who has applied for the judicial review to show why a variation by the Commissioner of a determination adverse to him should not stand. The judicial review is "in the nature of a re-hearing" (see s. 92 (1)). The re-hearing is not an appeal in the strict sense but is a hearing de novo (see Phillips v. Commonwealth [14] ; Builders Licensing Board (N.S.W.) v. Sperway Constructions (Syd.) Pty. Ltd. [15] ; Proctor & Sons v. Robinson [16] ; Cardiff Corporation v. Hall [17] ; Cory Brothers & Co. Ltd. v. Hughes [18] ; J. & H. Timbers Pty. Ltd. v. Nelson [19] ).

1. (1964) 110 C.L.R., at p. 351. 2. (1976) 135 C.L.R. 616. 3. [1911] 1 K.B. 1004, at pp. 1007-8. 4. [1911] 1 K.B. 1009, at pp. 1016-1025. 5. [1911] 2 K.B. 738, at p. 743. 6. (1972) 126 C.L.R., at p. 644.

Where a variation of a previous determination (by the Commissioner or on appeal) is made by the Commissioner and judicial review is sought, the onus is on the Commonwealth to prove the facts and circumstances which justify the variation. It is a simple application of the principle that he who asserts must prove. This was held in this case by the Workers Compensation Commission of New South Wales (constituted by Judge Ferrari) and confirmed by the Australian Industrial Court (constituted by Sweeney J.). The same would apply, it seems to me, on a reference (under Div. 3) to a Compensation Tribunal.

The problem in Phillips's Case [20] was somewhat different. The Commissioner varied his determination of total incapacity by finding that there was no total incapacity; in these circumstances the court held that on an appeal by way of re-hearing, the onus was on the Commonwealth to show that total incapacity had ceased, but if that onus were discharged (and there were questions whether the worker was partially incapacitated, if so and to what extent) the onus was on the worker to show that there was partial incapacity and the degree of partial incapacity. In my opinion, while the decision in Phillips's Case was on the basis that the Act deals with total incapacity and partial incapacity separately, this incorrectly elevates form above substance. If the Commissioner varies a determination adversely to the worker, then on appeal by way of judicial review, the onus lies upon the Commonwealth to justify the variation to the extent to which it is adverse to the worker. It is not enough for the Commonwealth to establish that there is something less than total incapacity and then leave it to the worker to establish the full extent of the partial incapacity. This would put the worker in a worse position than if he had been found to be partially (although almost totally) incapacitated in the determination previous to the variation, which would be irrational.

In this appeal I have had the advantage of reading the reasons for judgment of my brother Jacobs with which I am in complete agreement. Accordingly, I would dismiss the appeal.