ADELAIDE, 10 June 1997 (hearing), 1 July 1997 (decision)

This is an appeal by leave against a decision of the Workers Compensation Appeal Tribunal ("the Tribunal"). There is also a cross-appeal. The appeal is brought under s100 of the Workers Rehabilitation and Compensation Act ("the Act"). The appeal is limited to a question of law.

The appeal raises two points. They arise from an application by Mr Pizzorno ("the worker") to review a determination by the Workers Compensation Corporation ("the Corporation") accepting a claim for compensation and fixing the amount of his notional weekly earnings. Both issues relate to the amount of the notional weekly earnings.

The first point is whether, in determining the average weekly earnings of the worker, a particular amount should be excluded on the basis that it was a site allowance. That point has been decided in favour of the worker by the Review Officer and by the Tribunal. It is the subject of the cross-appeal by the Corporation.

The second point is whether amounts attributable to overtime, which the worker was working at the time of the injury, should be disregarded. The Review Officer held in favour of the worker that such amounts should not be disregarded. The Tribunal reversed that decision. That is the subject of the appeal.

The worker began work for Bettaform Constructions (SA) Pty Ltd ("Bettaform") on 2 August 1994. For some seven weeks he worked at Roxby Downs. There he worked ten hours a day, seven days a week. Then he returned to Adelaide and worked for Bettaform at its Clovelly Park factory. He had been working there for about two weeks when he suffered an injury in compensable circumstances on 13 October 1994. During those two weeks, he worked at least one hour's overtime each day and he worked each Saturday for eight hours.

At about this time Bettaform got into financial difficulties. The finding of the Tribunal was that the worker would have continued to work for Bettaform, and would have continued to work overtime in accordance with the same pattern, until mid February 1995.

The Tribunal found that at about that time, due to Bettaform's financial problems, the factory closed down and overtime would have ceased. The Tribunal found that the worker was retrenched, along with other workers on 27 April 1995. Apparently a closely related company took over the business of Bettaform. The Tribunal found that, but for his injury, the worker would have been employed by that related Corporation from mid-August. It found that thereafter overtime would have resumed in accordance with the pattern that existed at the time of the injury.

The findings of the Review Officer in relation to overtime before the injury and subsequent to August were to the same effect. The Review Officer does not appear to have made any finding in relation to events between mid-February and mid-August.

The worker's remuneration was regulated by an Enterprise Agreement. That provided for a "Productive rate of pay". As I understand the facts, that rate was payable when the worker was actually working. In the case of the worker, a carpenter, the productive rate of pay comprised a basic hourly rate of $13.57 per hour, plus a "Productivity Allowance" of $1 per hour. Accordingly, if the worker was at work and working, he was paid $14.57 per hour. If he was at work but not working, for example, due to inclement weather, he would be paid the basic hourly rate of $13.57 per hour.

The Enterprise Agreement said that the Productive rate of pay:

"Shall be a basic hourly rate inclusive of site allowance plus a productivity allowance."

There was also a "Non-Productive rate of pay". This was payable for sick leave, annual leave and any other leave. It was a rate of $12.75 per hour.

It appears from the findings that site allowances were no longer to be calculated or paid. Site allowances had previously been paid. As a matter of history, the new rate had been struck at a level which included the amount which previously was paid as a site allowance but, as I have already said, there is no suggestion that site allowances were fixed or claimed or paid under the Enterprise Agreement.

A worker who suffers a compensable disability that results in incapacity for work, is entitled to weekly payments "equal to the worker's notional weekly earnings": s35(1)(a) of the Act. Section 3(1) of the Act defines "notional weekly earnings" to mean, relevantly, "the worker's average weekly earnings." There is an extended definition of "average weekly earnings" in s4 of the Act. Section 4(1) provides as follows:

"Subject to this section, the average weekly earnings of a disabled worker are the average amount that the worker could reasonably be expected to have earned for a week's work if the worker had not been disabled."

Section 4(8) provides as follows: "For the purposes of determining the average weekly earnings of a worker -

(a) any component of the worker's earnings attributable to overtime will be disregarded unless -

(i) the worker worked overtime in accordance with a regular and established pattern;

(ii) the pattern was substantially uniform as to the number of hours of overtime worked;

(iii) the worker would have continued to work overtime in accordance with the established pattern if he or she had not been disabled.

(b) any prescribed allowances will be disregarded."

A "prescribed allowance" is defined in s3 to mean: "... any amount received by the worker from an employer -

(a) .... (b) .... ******** (d) by way of site allowance;"

As the Tribunal held, it is clear that the amount of a former site allowance had been factored into the basic hourly rate. But that amount was no longer being paid as a site allowance. The basic hourly rate, which according to the Enterprise Agreement was "inclusive of site allowance" was paid to all workers covered, whether the worker or the work being performed would or would not previously have qualified for a site allowance.

I agree with the conclusion of the Review Officer and of the Tribunal that the amount of the former site allowance, even if it were possible to quantify it, could no longer be regarded as an amount received "by way of site allowance." In my opinion the character of the relevant amount has to be determined by reference to the circumstances under which it is paid. Whatever the relevant amount, and whatever its origin, it was no longer being paid as a site allowance. The relevant amount did not retain that character because, as a matter of history, it had once been paid as a site allowance. It would be identifiable as, and to be excluded as, a site allowance only if, in my opinion, it was paid under circumstances such that it retains the character of a site allowance. In my opinion the effect of the Enterprise Agreement was that it had simply become a component of the basic hourly rate.

A moment's reflection on the terms of s4(8)(a) of the Act will indicate that its terms are likely to cause difficulty in their application.

The statutory concept of "average weekly earnings" has been considered by this Court in previous cases. In Francese v City of Adelaide [1989] SASC 1796; (1989) 51 SASR 522 this Court considered the statutory provision as it was in an earlier form. In his judgment King CJ made three points which are worth repeating. The first is that in relation to weekly earnings the present Act differs from its predecessor the Workers Compensation Act, 1971. Under that Act the weekly payments of compensation for total incapacity were equal to the average weekly earnings during the preceding twelve months. In addition, overtime was completely excluded from the computation. Secondly, under the present Act the concept of average weekly earnings is directed to the future and not to the past. It involves an estimate of what the worker could be expected to have earned if not disabled. Thirdly, under the present Act earnings attributable to overtime are to be included under certain circumstances.

The provision in its present form was considered by this Court in Mitsubishi Motors Australia Limited v Love (1992) 59 SASR 339. Some of the difficulties of application were there alluded to. I respectfully agree with what Cox J there said (at 343) about the difficulty of arriving at "...a practical result that is even-handed and just to those who work overtime."

There was no challenge to the findings made below that sub-paragraphs (i) and (ii) were satisfied in the present case. The case turns on the provisions of sub-paragraph (iii). The Review Officer appears to have ignored the events that occurred between mid-February and mid-August. The basis upon which he did so is not clear to me. It may be that he intended to find that there would have been no interruption to the pattern of overtime, and there is evidence upon which such a finding was possible. Be that as it may, the Tribunal made clear findings to the effect that the established pattern of overtime would have been interrupted from mid-February.

The argument for the respondent is that any component attributable to overtime is to be disregarded unless the worker can show that the worker would have continued to work overtime in accordance with the established pattern up to the time at which the relevant decision is made, and for the indefinite future thereafter. The respondent's submission is that if the established pattern (I will use that as a convenient shorthand) has ceased at any stage prior to the making of the relevant decision, or if there is a finding that it would cease at any stage after the making of the relevant decision, then there is no entitlement to have earnings attributable to overtime included in the initial determination of the worker's notional weekly earnings.

The effect of that submission appears from the following examples. Assume that a worker is working overtime in accordance with an established pattern, would have continued to work overtime for one year after the injury, but that the overtime would then have stopped. Assume that the Tribunal made its decision some time later again. There would be no entitlement to have earnings attributable to overtime included in the notional weekly earnings as at the time of injury. Assume that a worker is working overtime in accordance with an established pattern, is injured, that overtime remained available in accordance with the established pattern, but that when the Tribunal made its decision it was foreseeable that that overtime would cease, say, one year later. Once again, there would be no entitlement to have earnings attributable to overtime included in the notional weekly earnings applicable to the time of injury.

It can be seen from this that underlying the submission for the respondent is the assumption that the requirement of s4(8)(a)(iii) that the worker "would have continued to work overtime" is a requirement that is satisfied only if the established pattern has, at the time of the relevant decision, continued without interruption and, as at that time, will continue for the indefinite future.

In my opinion, that is not the natural meaning of the words used.

In my opinion, what s4(8)(a)(iii) requires is that the worker show that the worker would have continued to work overtime in accordance with the established pattern. Although no time is specified as the time for which overtime would have continued, in my opinion the words used do not import the notion of the indefinite continuation of the pattern. What they require is that the overtime would have continued to be worked for a sufficient period of time for one to say that that amounts to continued working of the overtime in accordance with the established pattern. That is a question of fact.

I appreciate that there is an element of imprecision in this. It is not possible to identify a period of time such that, if the established pattern of working continued, it can be said in advance that in all cases the requirement of the section is met. Each case will turn upon its own facts. But all that has to be established is that the worker would have continued to work overtime, and would have done so for a sufficient period of time for one to conclude that the established pattern would have continued. I would not think that continuance for a day or, even a week, would suffice. But, on the other hand, I reject the suggestion that the section requires a finding that the pattern has continued without interruption and will continue indefinitely.

I can think of no reason to interpret the statutory provision in the manner suggested by the respondent. In my opinion that meaning has nothing to commend it. The forward looking aspect of s4(1) of the Act does not suggest it. I accept that the concept of average weekly earnings is much qualified by the restrictions imposed by s4 of the Act. I accept also that Parliament has taken a restrictive approach to the inclusion of amounts attributable to overtime and the other allowances identified in s4(8). But, making allowance for all that, I do not accept that that leads to the conclusion that the initial determination of notional weekly earnings will exclude amounts attributable to overtime unless the extremely demanding test suggested by the respondent is met. Nor can I see any particular rationale for that test.

Under the scheme of the Act, once the amount of weekly payments is determined, the amount of those payments is open to variation. By s36(2) of the Act, weekly payments can be reduced under certain circumstances. One of those circumstances is described as follows:

"(bb) where the weekly payments include a component for overtime - the Corporation is satisfied that if the worker had continued in the work in which he or she was last employed before becoming incapacitated, he or she would not have continued to work overtime or the pattern of overtime would have changed so that the amount of overtime would have diminished;"

The Act provides a procedure for the making of a reduction by the Corporation, and a procedure for the worker to challenge the making of that reduction. Section 38 of the Act provides that the Corporation may review the amount of weekly payments on its own initiative, and shall do so if requested by a worker or by a employer. The Corporation must review the amount of weekly payments if a period of incapacity continues for more than one year: s38(1a). Section 39 of the Act provides for an annual review of weekly payments, and for any adjustment to be based on changes in rates of remuneration payable to workers generally or to workers engaged in the kind of employment from which the worker's disability arose, and for adjustments to be made on the basis of changes in rates of remuneration prescribed by an Award or by an Enterprise Agreement.

These provisions give rise to their own difficulties of interpretation. But, whatever their precise effect may be, there is no reason to think that once a worker's notional weekly earnings are fixed as at the time incapacity commenced, the rate thereby fixed is beyond adjustment.

In my opinion this tends to support the view that when deciding whether overtime is to be included in a determination of the worker's notional weekly earnings at the time of incapacity, there is no reason to take the approach suggested by the respondent. A rate of weekly payments which includes earnings by way of overtime can, in the event that overtime would later have ceased, be adjusted downwards pursuant to s36(2)(bb). There may be other bases for making adjustments both downwards and upwards in respect of overtime. I do not have to decide that. But I do not accept that the scheme of the Act is so rigid as to suggest that Parliament intended that, when first fixing notional weekly earnings, it should be necessary to make a finding about the likely continuance of overtime earnings in accordance with the established pattern into the foreseeable future.

The Tribunal was correct to reject the argument that the Review Officer could and should determine what it described as "multiple assessments" of average weekly earnings, reflecting adjustments that might have occurred if the Corporation and later the worker had made use of the procedures under ss 36, 38 and 39. In my opinion the only matter before the Review Officer was the determination of the worker's notional weekly earnings at the time the worker suffered incapacity. The Review Officer was entitled to make only one determination: Weichmann v Lovering (1992) 59 SASR 203.

But the Tribunal was in error to the extent that its decision proceeded on the basis that the established pattern of overtime had to continue without interruption.

In my opinion it was open to the Review Officer to conclude, on the facts of this case, that the established pattern of overtime would have continued. In my opinion the finding of fact, which has not been disputed, that the pattern would have continued until mid-February, was capable of satisfying the requirement imposed by s4(8)(a)(iii). It was capable of satisfying that requirement, even if the Tribunal was right to find that the established pattern would have ceased at about that time. For the reasons I have indicated, the fact that it would have ceased at about that time is not fatal to the worker's case.

There has been no finding made below applying the approach which I consider to be the correct approach. But neither party asked us to remit the matter for further findings to be made. And, because I consider that on the facts a finding should have been made in favour of the worker, it does not seem to me to be appropriate to remit the matter for further findings to be made.

Finally, I should add that in my opinion it remains open to the Corporation to take steps, under the sections already referred to, to have adjustments made to the worker's notional weekly earnings in the light of events that did occur or would have occurred after the worker suffered incapacity for work. It may also be open to the worker to make use of those sections. I say this merely to make it clear, in case it is overlooked, that all that our decision in this case determines is the amount to be determined as the average weekly earnings of the worker at the time that he suffered from incapacity.

For those reasons I would allow the appeal, set aside the decision of the Tribunal, and substitute a decision confirming the determination of the Review Officer that the notional weekly earnings of the worker as at 13 October 1994 was an amount of $921.55, and confirming the determination of the Review Officer that amounts that have not been paid to the worker at that rate should be increased under s47 of the Act by interest at the prescribed rate.

I was initially attracted to Mr Stanley's interpretation of s4(8)(iii) of the Workers Rehabilitation and Compensation Act, but on further reflection I have decided that it should be rejected for the reasons given by Doyle CJ. I agree with the orders proposed.