Paterson v Stanmorr Pty Ltd [1999] VSC 65

Wilson v Wilson's Tile Works Pty Ltd (1960) 104 CLR 328

Dodd v Executive Air Services Pty Ltd [1975] VicRp 66; [1975] VR 668

Accident Compensation Act 1985 (Vic)

Magistrates' Court Act 1989 (Vic)

Accident Compensation Act 1985 (Vic) - appeal from the decision of a Magistrate - meaning of "pre-injury average weekly earnings" - whether non-pecuniary benefits paid to a worker by an employer should be taken into account - whether the value of accommodation and food provided by the respondent should be included in the calculation of the appellant's pre-injury average weekly earnings.

2. This is an appeal under section 109 of the Magistrates' Court Act 1989 against an order made on 12 October 1998 by the Magistrates' Court at Geelong constituted by Mr O'Dwyer, Magistrate, whereby the Appellant's proceeding in respect of the calculation of weekly payments under the Accident Compensation Act 1985 ("the Act") was dismissed and the appellant was ordered to pay the respondents' costs.

5. On 10 November 1998, Master Wheeler ordered that the question of law shown by the appellant to be raised by the appeal was:

whether the learned Magistrate erred in deciding that the definition of "the worker's pre-injury average weekly earnings" in section 5A of the Accident Compensation Act 1985 prevented him from taking into account non-pecuniary benefits paid to workers by employers and in particular the value of accommodation and food provided.

9. The evidence given before the Magistrate, which is not in dispute, was that the appellant is currently receiving weekly payments of compensation under the Act as a result of a back injury which she suffered in December 1996. At the time of the injury she was employed by the first respondent as manager of a bed and breakfast establishment at Lorne. She had made an oral agreement with a director of the first respondent that she was to be paid $450 gross per week plus accommodation (including power and telephone) and food ("the non-pecuniary benefits"). No fixed hours were agreed upon. She was on duty at the establishment no matter how many guests were present, and at times the establishment had only 55% occupancy. The salary was a fixed amount, and there was no arrangement for overtime, penalty rates, days off or annual leave.

12. The Magistrate found that it was clear that prior to the injury, for the relevant twelve month period, the remuneration of the appellant included the value of the non-pecuniary benefits, but that the Act did not allow him to take the value of non-pecuniary benefits into account for the purpose of calculating pre-injury average weekly earnings.

15. He made no finding as to the actual value of the non-pecuniary benefits, counsel agreeing that this was an issue to be determined at a later stage if necessary.

18. Sections 93A and 93B of the Act provide that if a worker is entitled under the Act to weekly payments while incapacitated for work, those payments are to be calculated, in the circumstances there defined, at a rate which is the difference between a stated percentage of "the worker's pre-injury average weekly earnings" and "the worker's notional earnings".

21. The other applicable provisions of the Act as they stood at the relevant time were sections 5, 5A and 5B, which read as follows, so far as relevant:

(1) In this Act unless inconsistent with the context or subject-matter -

"notional earnings" in relation to a worker means -

(a) the current weekly earnings of the worker as a worker . . .

"remuneration" means any wages, remuneration, . . . paid or payable (whether at piece work rates or otherwise and whether paid or payable in cash or in kind) to or in relation to a worker as such . .

(1) In this Act, "the worker's pre-injury average weekly earnings" means -

(a) the average weekly earnings during the 12 months preceding the relevant injury if the worker has been continuously employed by the same employer for that period; . . .

calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week.

(4) For the purposes of sub-section (1), a worker's average weekly earnings shall be calculated by dividing the sum of amounts payable to the worker calculated at the worker's ordinary time rate of pay for the normal number of hours per week by the number of weeks during which the worker actually worked or was on annual, sick or other paid leave.

(a) if an ordinary time rate of pay is fixed for the worker's work under the terms of the worker's employment and in addition a piece rate is payable, the ordinary time rate of pay shall be deemed to be the sum of the ordinary time rate of pay and the average weekly piece rate payment received by the worker during the relevant period under sub-section (1); and

(b) if an ordinary time rate of pay is not fixed for the worker's work under the terms of the worker's employment, the ordinary time rate of pay shall be deemed to be the average weekly rate earned by the worker during the relevant period under sub-section (1);

(d) if a normal number of work hours per week is not fixed for the worker's work under the terms of the worker's employment, the normal weekly number of hours shall be deemed to be the average weekly number of hours worked by the worker during the relevant period under sub-section (1);

(1) In this Act, "current weekly earnings", in relation to a worker, means the worker's earnings during the week in respect of which a weekly payment is made calculated at the worker's ordinary time rate of pay for the worker's normal number of hours per week or, if there is no such ordinary time rate, the worker's actual earnings during the week.

(3) For the purposes of sub-section (1) "current weekly earnings" includes the monetary value calculated on a weekly basis of any non-pecuniary benefit or advantage received by the worker in the course of his or her employment . . .

Sections 5A and 5B(1) and (2) were both introduced in to the Act by Act No. 64 of 1989. Section 5B(3) was introduced by Act No. 67 of 1992.

47. It will be seen from the previous paragraph that in making the calculation described in paragraph 6 above, the value of a non-pecuniary benefit or advantage received by the worker in the course of employment is expressly included as part of the "notional earnings", by virtue of the definition of "current weekly earnings" in section 5B(3), but is not expressly included as part of "the worker's pre-injury average weekly earnings" in the definition in section 5A(1)(a). This has the effect that the amount of the weekly payments received by the worker is less than the amount which would be received if the value of the non-pecuniary benefit or advantage were included in both components of the calculation.

50. Mr Bingeman, for the appellant, submitted that this could not be the intention of the legislation, and that "pre-injury average weekly earnings" must be intended to include the value of a non-pecuniary benefit or advantage received by the worker.

53. In Catlow v Accident Compensation Commission [1989] HCA 43; (1989) 167 CLR 543, the High Court found that where a standard number of ordinary working hours had been fixed for a worker's employment, his "normal number of hours per week" for the purposes of the definition of "current weekly earnings" as it then stood were those standard hours excluding overtime, and not the number of hours he usually worked.

56. Similarly, in Robertson v Accident Compensation Commission [1991] VicRp 73; [1991] 2 VR 333, the Full Court, following Catlow, found that where the worker in question was on continuous shift work, the expression "ordinary time rate of pay" in the same context was not the average weekly rate earned by him during the relevant period, but the base rate paid for standard or normal working hours.

59. Mr Bingeman submitted that Catlow and Robertson related only to the circumstance where the employment was governed by an industrial award and did not apply to a situation such as the one with which the Court is here concerned, where the terms of employment had been orally agreed between the parties. However, I note that at page 561 of Catlow, McHugh J, with whom Deane and Dawson JJ agreed, said:

Judicial decisions on similar expressions in comparable statutes support the view that the "normal number of hours per week" in s. 95(1) means the ordinary hours fixed by award, agreement or the terms of the employment.

There are other passages in the judgment which use the expression "the terms of the worker's employment" or "the terms of the employment", indicating that in His Honour's mind the operation of the principle was not limited to the circumstance where those terms derived from an industrial agreement. Similarly, in Robertson at 339, Crockett and Southwell JJ, with whom Young CJ agreed, said, referring to the judgment of McHugh J in Catlow:

His Honour's judgment does, we think, leave it clear that the phrase "ordinary time rate of pay" has reference to the pay fixed by the relevant award or by the contract of employment for the class of work done when performed in ordinary hours and does not vary according to the circumstances of the individual employee. [Emphasis added]

I find Catlow and Robertson to be of general application to any "worker" to whom the Act applies.

66. Immediately following the passage cited in the preceding paragraph, Crockett and Southwell JJ went on to say:

This view of the matter is consistent with the history of the legislation to which McHugh J. referred and what we apprehend to be the policy of the Act which is that entitlement by a worker is to be calculated by reference to the "basic pay" and not actual earnings.

Mr Boyes, for the respondents, submitted that, consistently with Catlow and Robertson, the non-pecuniary benefits should similarly be excluded from the calculation of "pre-injury average weekly earnings".

71. It is to be noted that the definition of "remuneration" in section 5 expressly refers to wages and the like "whether paid or payable in cash or kind". That definition is of relevance to the calculation of premiums payable by employers, not to the calculation of benefits paid to workers. But the express reference to payment in kind indicates that there, as in the definition of "current weekly earnings", Parliament has directed its mind to the need for inclusion of non-pecuniary benefits, and has decided to make its meaning clear by express words. Similarly, piece rate payments are expressly included in the "ordinary time rate of pay" by section 5A(6)(a). Catlow was decided in 1989 and Robertson in 1990. The Act has been extensively amended since, notably in 1992 when section 5B(3) was introduced. Had it been intended that "pre-injury average weekly earnings" should have the meaning for which Mr Bingeman contends, that meaning could have been made clear by express words and not left for implication.

74. I find no ambiguity in the relevant provisions which would enable the application of the well-known principle that "where two constructions of a Workers' Compensation Act are possible that which is favourable to a worker should be preferred" (Fullagar J in Wilson v Wilson's Tile Works Pty Ltd (1960) 104 CLR 328 at 335, applied by Newton and Norris JJ in Dodd v Executive Air Services Pty Ltd [1975] VicRp 66; [1975] VR 668 at 679 and 682).

77. Mr Bingeman sought to rely on section 35(a) of the Interpretation of Legislation Act 1984, which requires that in the interpretation of a provision of an Act a construction that would promote the purpose or object underlying the Act is to be preferred to a construction which would not have that effect. He referred to the objects of the Act, set out in section 3, and particularly section 3(d):

(d) to provide adequate and just compensation to injured workers;

However, as Mr Boyes pointed out, that provision must be read with section 3(e) and (h):

(e) to ensure workers compensation costs are contained so as to minimise the burden on Victorian businesses:

(h) to establish and maintain a fully-funded scheme;

87. I find no justification, in the objects of the Act or elsewhere, for introducing into the legislation words which Parliament has chosen not to use, and accordingly I find no error in the decision of the magistrate. The appeal will be dismissed. Counsel may wish to make submissions as to costs.

HIH WINTHERTHUR WORKERS' COMPENSATION (VIC) LIMITED (ACN 005 297 781)