Perry Engineering Co Ltd v Mermingis

The sections of this Act which are relevant to the resolution of the questions asked in the case stated are - s. 4 (1) which makes an employer liable to pay compensation in accordance with the Act where personal injury by accident arising out of and in the course of the employment is caused to a workman; s. 18 (1) which provides that in the case of total or partial incapacity for work resulting from such an injury, the amount of compensation shall be a weekly payment during the incapacity, within certain stated monetary limits; s. 18 (3) which provides: "The total liability of the employer in respect of payments under this section shall not exceed" (as at the date of this injury) "three thousand pounds".

Lastly, s. 28 which provides: "Where any weekly payment has been continued for not less than six months, the liability therefor may, on application by or on behalf of either the workman or the employer, be redeemed by the payment of a lump sum to be settled, in default of agreement, by arbitration under this Act, and such lump sum may be ordered by the arbitrator or special magistrate to be invested or otherwise applied as abovementioned. Where permanent disability for work results from the injury, weekly payments made prior to an application under this section shall, notwithstanding anything in this Act, be in addition to any such lump sum. Provided that nothing in this section shall be construed as preventing agreements being made for the redemption of a weekly payment by a lump sum."

The italicized sentence was inserted in s. 28 by s. 8 of the Workmen's Compensation Amendment Act No. 11 of 1960.

The workman at the date of his application for redemption had already been paid a total sum of £2,303 in respect of the liability of the employer to make weekly payments pursuant to ss. 4 and 18 of the Act. If regard were had only to the nature of the disability due to the injury and to the prognosis of the workman's condition and if the weekly payments of compensation already made were ignored, a sum assessed in redemption of the employer's liability would exceed the difference between the total amount of those payments and the sum of three thousand pounds which is set by s. 18 (3) as the total liability of the employer under s. 18 (1). In practical terms, therefore, the question in this case is whether the award of a lump sum in redemption is limited to that difference or whether it may be greater than that difference by the amount of the total of those payments.

The appellant submits that the liability which is to be redeemed by the payment of a lump sum is the liability to make weekly payments up to a total of £3,000, and that the amendment made to s. 28 in 1960 neither affected the upward limit set by s. 18 (3) nor altered the nature or extent of the liability which is to be redeemed by the payment of a lump sum. The appellant's counsel emphasized this point by saying that before the amendment when a lump sum had been fixed in redemption under s. 28, it was a sum which was in addition to the weekly payments which had already been made. He insisted that the reference to any "such lump sum" in the amendment to s. 28 is a reference to the sum fixed as the redemption of a liability under s. 18. He said that the expression "notwithstanding anything contained in this Act" in the amendment is not directed to s. 18 (3) but was inserted by the draftsman in some vague endeavour to be cautious and that in truth the words have no operation at all. He therefore submitted that the words added in 1960 have achieved no alteration of the law. He conceded that it may be that Parliament intended to make some special provision for workmen who had suffered permanent disability for work by reason of a compensable injury, but that any such purpose of the legislature had misfired for want of the use of appropriate language.

The Supreme Court were not prepared to accept this view and were of opinion that the magistrate should be told, in substance, that in fixing the lump sum by way of redemption he should ignore the amount of weekly payments which had already been made to the respondent by the appellant. The approach of the members of that Court to this conclusion was not identical. Mayo J. agreed that the presence of the word "such" in describing the lump sum in the sentence inserted by amendment in s. 28 indicated that the lump sum was the same lump sum as would have been awarded but for the amendment but that the phrase "notwithstanding anything in this Act" meant "notwithstanding the limitation of the total liability under s. 18 (3)"; he concluded that therefore the amendment did effectively provide that after the lump sum had been determined in accordance with the earlier and unamended part of s. 28, the amount of the antecedent weekly payments which had been subtracted in the process of determining that lump sum should be added to it for the purpose of making the award. Travers J. thought that the meaning of the amending provision was that in computing the lump sum in redemption of the liability for weekly payments the amount of the antecedent weekly payments should not be deducted, or in other words, that the lump sum should be determined without regard to the amount of the antecedent weekly payments. Hogarth J. thought that the words of the amending section taken literally effected no change in the law. But because the Court was under a duty to give effect to the intention of Parliament as expressed in the statutes, he thought it should approach the amendment in the expectation that Parliament intended to make some change, and that therefore it was proper to infer that Parliament intended that there should be an alteration in the manner of making the calculation to arrive at a lump sum in redemption of the liability to make weekly payments. He considered that that change was to be by omission of the step of deducting the weekly payments which had already been made.

It cannot be disputed that the language of the amendment creates great difficulty but I have come to the conclusion that its meaning is reasonably clear. The liability to make the weekly payments which ss. 4 and 18 (1) impose is given monetary expression in the first place by an award of compensation of weekly payments. This award is subject to review from time to time pursuant to s. 27 of the Act, both the workman's physical condition and changes in his earning capacity being taken into account. Whether or not the liability to make weekly payments will ever, or when it will, reach the upward limit of total liability set by s. 18 (3) is a question the answer to which at any point of time would call for an examination not merely of the workman's then condition and entitlement under the award but of the prognosis of the earnings of his employment and of other contingencies which might supervene to end or vary the employer's liability to make the weekly payments.

It is, in my opinion, this liability which is referred to in the opening words of s. 28. The interaction of ss. 18 (3) and 28 provides a process for determining the lump sum which may be awarded in redemption of the employer's liability to make weekly payments under an award of compensation. Section 18 (3), in setting a ceiling to total liability, requires the present value of the future liability of the employer to be compared with a figure which takes account of the total weekly payments already made. It may be said that it necessitates the deduction of that total in determining the ceiling of total liability in the particular case and, therefore, in the process of determining the lump sum which may be awarded, the deduction of that total of weekly payments.

Apart from the amendment to s. 28, the first step in this process is to determine a sum which presently represents the prospective liability to make the weekly payments. Having regard to the factors that I have mentioned, a sum may result which, even in the face of the total weekly payments that have already been made, does not approach the upward limit of liability set by s. 18 (3), or it may be that at an early stage in the process of assessing what the future liability of the employer to make weekly payments will be, it becomes plain, because of that total of weekly payments or of the nature and anticipated longevity of the workman's incapacity or of both, that the ceiling set by s. 18 (3) will certainly be pierced. In a practical sense then there would be no need to complete the computation of the present value of the future liability and the process would stop, the award being based upon the unpaid amount of the total liability set by s. 18 (3). In order to determine whether the ceiling would be pierced, regard would have to be had to the total weekly payments already made. But although, because of the operation of s. 18 (3) in the process of determining the lump sum to be awarded, that total of weekly payments would have been taken into account, that total would not in any relevant sense be "in addition to" the sum which would be fixed as the redemption of the employer's liability to make further weekly payments.

Of course when the lump sum has been determined it can properly be said that the total payment made by the employer will be constituted by the total of the antecedent weekly payments and the lump sum. In that sense, but only in that sense which in my opinion is not a relevant sense, the lump sum can be said to be "in addition to" the weekly payments. But even so, in my opinion it cannot properly be said that the weekly payments are "in addition to" the lump sum which has been awarded.

It is in these circumstances that the amendment intruded into s. 28 the sentence I have quoted, including the phrase "notwithstanding anything in this Act". The amendment in my opinion provides that in the process of determining the lump sum, and therefore in applying s. 18 (3) in that process, the amount of the antecedent weekly payments shall be an addition, or, having regard to the process formerly called for by s. 18 (3), shall not be a deduction, or, if you will, that they shall be disregarded. I do not read the amendment as referring in the phrase "any such lump sum" to the awarded lump sum but to be referring to the lump sum in process of determination, to the lump sum to be fixed. The amendment in my view is directed to an alteration in that process.

In thus construing the amendment I have confined myself to the actual words used by the draftsman in the context of the Act he was amending and I have felt no need to resort to the undoubted principles, that one should not, unless inescapably driven to it, conclude that Parliament has completely misfired and by its legislation achieved nothing, or that the intention of the legislature is to be found in what it has said. To my mind the language of the draftsman conveys a reasonably certain meaning in the sense which I have already discussed. In my opinion the question asked by the special magistrate ought to be answered in the same sense as that proposed by the Supreme Court though I have not been able to adopt all the reasons of their Honours for so answering the question. The appeal should be dismissed.

The Workmen's Compensation Act, 1932-1963 S.A. by s. 4 imposes a liability upon an employer to pay compensation in accordance with the Act if personal injury by accident arising out of and in the course of the employment is caused to a workman. By s. 6 the compensation is made payable to or for the benefit of the workman, or, if death results from the injury, to or for the benefit of his dependents. In the case of a workman who survives, the employer's liability is primarily for weekly payments during any total or partial incapacity for work which results from the injury. This appears from s. 18, which provides for the basis upon which the weekly amount is to be assessed and (read as it stood at the date which is material in this case) limits the employer's total liability in respect of payments under the section to £3,000. (I say the primary liability because there may also be a liability for a fixed sum where the injury is of a kind specified in s. 26.)

By s. 28, with the interpretation of which we are here concerned, certain provisions are made with respect to the redemption of an employer's liability for a weekly payment of compensation under the Act after the weekly payment has been continued for not less than six months. The main provision is that "the liability therefor", i.e. the liability for the payment which has been so continued, may be redeemed, on application by or on behalf of either the workman or the employer, by the payment of a lump sum, to be settled, in default of agreement, by arbitration under the Act. In 1960 an amending Act added this sentence: "Where permanent disability for work results from the injury, any weekly payments made prior to an application under this section shall, notwithstanding anything in this Act, be in addition to any such lump sum".

The present case is one of permanent disability for work, resulting from an injury which, under the combined operation of ss. 4, 6 and 18, entitled the respondent, the workman, to receive from the appellant, his employer, a weekly payment of £4 7s. 0d. up to the limit of £3,000. The appellant, having made the weekly payment for more than six months, applied to the appropriate tribunal (a special magistrate acting under s. 40 of the Act) to have settled a lump sum by payment of which the liability for the weekly payments might be redeemed. On the hearing of the application it was established that the weekly payment had been made to an aggregate amount of £2,303. A question then arose, and was taken to the Supreme Court by case stated, as to the operation, in the circumstances of the case, of the sentence which the 1960 amendment added to s. 28. For the respondent workman it was contended that in the settling of the lump sum the added provision required that the £2,303 be ignored, so that s. 18 (3) should be regarded as having no application to the case except to set a limit of £3,000 to the employer's future liability for the weekly payment. For the appellant employer, on the other hand, it was contended that as the amendment had left the main provision of s. 28 standing as a provision for the redemption of a future liability which was limited to the difference between the payments already made and the maximum of £3,000, the lump sum to be settled could not exceed the amount of that difference, namely £697. The latter contention meant that the amendment of s. 28 had produced no effect beyond making explicit what had always been necessarily implied; but the submission was that that was an inevitable conclusion since a provision that something shall be in addition to "such lump sum" cannot possibly be read as affecting the process by which "such lump sum" is to be arrived at.

The learned Judges who considered the matter in the Supreme Court were divided in opinion. They were at one in thinking that some effect by way of altering the pre-existing law had to be given to the amendment, and therefore they rejected the respondent's contention. Mayo J. accepted the argument that had been put in support of that contention down to the point of holding that the amendment left untouched the method of computing the lump sum: the lump sum was to be the amount appropriate for the redemption of a liability for future payments not exceeding in the aggregate the difference between £3,000 and the total of the payments already made. But his Honour interpreted the amendment as requiring that there should be added to the lump sum when thus ascertained an amount equal to the payments already made. This meant, of course, that in order to redeem a future liability for the unpaid balance of £3,000 an employer would have to pay the lump sum appropriate to that future liability and, in addition, to pay over again what he had already paid. It seems necessary to look for an interpretation producing some less arbitrary result.

The other members of the Court, Travers and Hogarth JJ., held that the sentence added to s. 28 should be read, notwithstanding that in terms it purports to operate after the lump sum has been ascertained, as altering one of the steps in the process of ascertaining the lump sum. Their Honours treated it as requiring that the amount of the weekly payments already made be not subtracted from the maximum of £3,000 in determining the amount of the future liability. In other words the amount of the past payments is not to be in addition to the lump sum as the amendment seems to say, but is to be in addition to the outstanding liability, so that the amount to be fixed as the lump sum is the amount which is appropriate for redemption of the liability as it would have stood if no weekly payments had ever been made.

At first sight it may seem that such a result is not likely to have been intended. One must bear in mind, however, that s. 28 is not a provision made for the benefit of the employer alone. It will give the employer a practical benefit in some cases, even on the construction which their Honours accepted. But it gives the workman too a right to apply for redemption. An amendment which makes redemption more advantageous to the workman than a continuance of weekly payments would not be inherently improbable. The more formidable criticism of the conclusion which prevailed in the Supreme Court is that it fails to give due weight to the fact that the main provision of s. 28 was left in its original terms, so that it still purports, notwithstanding the added sentence, to be a provision for redemption of an actual and not a fictional liability.

This criticism assumes, as indeed the judgments in the Supreme Court assumed, that the liability to which the main provision of s. 28 refers is the employer's future liability to make weekly payments. When the language of the section is looked at closely, however, it is seen that "the liability therefor" is the liability, not for weekly payments in the future, but for a weekly payment which has been continued for not less than six months. It is the whole liability which arose on the workman's becoming totally or partially incapacitated for work as a result of his injury. It is a liability which, though pro tanto discharged by the weekly payments already made, has not been completely discharged. The section is directed to the settling of a sum upon payment of which the partly-discharged liability is to be considered completely discharged. It seems to me that the draftsman of the amendment has recognized this, and that the meaning of the language he has used is that the lump sum shall henceforth be arrived at upon the footing that the weekly payments which have been made are additional to, and are therefore not to be considered as having been made in reduction of, the liability for a weekly payment to which the workman's injury gave rise. The result in practice is the same as that which Travers and Hogarth JJ. reached, but the difference is that the words of the amendment all receive due effect without any violence being done to them; the amendment becomes explicable on the basis of a logical policy; and the main provision of s. 28 still takes effect as a provision for the redemption of the liability to which it always referred.

To make clear what I mean I go back to s. 28 as it stood before the amendment and as it still applies to cases of non-permanent disability for work. The manner of its working may be conveniently described by quoting a passage from the judgment of Hogarth J. in the present case. His Honour said: "In applications for the redemption of weekly payments in cases in which the nature of the disability was such that the total amount payable in weekly payments, if made week by week, would have exceeded £3,000 had it not been for the provisions of section 18 (3), the arbitrator, in first determining the possible extent of the employer's future liability, had to bear that limit in mind. He would usually start his calculations by taking the figure of £3,000; and from that figure he would deduct the total of payments already made. The answer to this calculation gave him the greatest amount for which the employer could be liable, if payments were to be continued week by week. The arbitrator would normally discount that amount to take account of the fact that the workman was receiving a present payment instead of payments spread over a period, and to take account of contingencies such as the death of the workman. See Nicholls & Co. Ltd. v. Higgs [1] . He would then arrive at a lump sum at which the employer's future liability might be redeemed. The amount of that lump sum would usually be less than the difference between £3,000 and the weekly payments already made; in no case would it exceed the difference between these amounts. It followed that in all these cases the workman would receive a lump sum in addition to the weekly payments which he had already received [1] ".

1. (1935) 37 W.A.L.R. 85. 2. [1964] S.A.S.R., at p. 161.

In general no harm is done by speaking as if the liability to be redeemed were the future liability to make weekly payments; but that, as I have said, is not in fact the liability to which the section refers. It speaks, since the amendment as well as before it, of the whole liability for the weekly payment (singular). The amendment, on the other hand, turns to the weekly payments (plural) that were made prior to the application. What it says about them is that they are to be considered as additional to the lump sum. That necessarily means that they are to be treated as irrelevant in the process of settling the lump sum. In other words, it means that they are to be treated as having been made, not in pro tanto discharge of the liability which payment of the lump sum will redeem - the liability for a weekly payment which arose upon the workman's becoming incapacitated for work - but as additional to that liability. If that is what the draftsman of the sentence intended it to mean, he was right to leave the main provision standing in unaltered terms; for the purpose of the section as a whole remains what it always was, namely to provide for the redemption of the original liability for a weekly payment, though now it is to be on the new footing that the payments already made had nothing to do with that liability, which therefore remains completely undischarged. Naturally enough the draftsman found it necessary to insert "notwithstanding anything in this Act".

Interpreted in the manner suggested, the 1960 amendment, instead of being either arbitrary in its result or a mere statement of the obvious, is explicable along logical lines. The key to the reason for its enactment lies in the opening words by which it is made to apply only where permanent disability for work results from the workman's injury. At no earlier point in the Act does anything turn upon whether a disability for work is permanent or not. But when considering the redemption of a liability for weekly payments of compensation it is not difficult to see an analogy between, on the one hand, the case where, permanent disability for work having resulted from the injury, redemption by a lump sum is sought after some weekly payments have been made, and, on the other hand, the case where death results from the injury after some weekly payments have been made. In the latter case, as I have said, s. 16 provides for a sum, a lump sum, to be paid to the dependants. Originally the Act required by s. 16 (3) that the weekly payments made to the workman in his lifetime should be deducted from the sum payable to the dependants. But in 1954 a new s. 16 (3) was enacted, providing that all amounts paid or payable before the death as weekly payments of compensation for total or partial incapacity for work resulting from the injury shall not be deducted from, but shall be payable in addition to, the compensation payable to the dependants. This provision still stands. Obviously the view that has prevailed is that where a lump sum is to be paid as compensation in respect of the permanent loss of earning power which occurs upon the workman's death, weekly payments of compensation which have been made to him (on the basis not of permanent incapacity for work but of total or partial incapacity for work whether permanent or not) are to be treated as if paid in respect of a separate head of compensation, and are therefore to be put on one side as additional to the lump sum. The amendment made to s. 28 in 1960 applies the same general idea to the case where a workman who does not die of his injury suffers permanent loss of earning capacity. The order of words adopted reflects the same train of thought in each case: like s. 16 (3), the amendment to s. 28 provides that the weekly payments that have been made shall be in addition to a single amount newly payable, and not, as temporal sequence might have suggested, that the new single amount shall be in addition to the weekly payments already made.

For these reasons I am of opinion that the decision of the majority of the Supreme Court was right, and that the appeal should be dismissed.

In my opinion this appeal should be dismissed. The reasons of the Chief Justice express the views which I have formed and I do not wish to add anything.

I agree that this appeal should be dismissed. I concur in the reasons of my brother Kitto.

This is an appeal by special leave from the decision of the Supreme Court of South Australia (Mayo, Travers and Hogarth JJ.) on a case stated by a special magistrate for the opinion of that Court under s. 41a of the Workmen's Compensation Act, 1932-1963 [1] .

The facts are that the applicant for compensation, the respondent to this appeal, suffered personal injury by accident arising out of and in the course of his employment by the appellant and was permanently disabled for work. An award was made in his favour for weekly payments of compensation and up to 18th March 1964 the payments made to him under that award totalled £2,303. On that date an application was made by the respondent to the special magistrate for an order for the payment of a lump sum in redemption of the appellant's liability to make further weekly payments. The application was made under s. 28 of the Act and it was conceded that the case was one in which it was proper to make an order for redemption. A question arose, however, as to the proper method of determining the amount of the lump sum payment to be awarded and it was on this point that the case was stated.

The right to compensation for personal injury by accident arising out of and in the course of the workman's employment is given by s. 4 of the Act and, by s. 18, where total or partial incapacity for work results from the injury, the amount of the weekly payments to be made are to be calculated in accordance with that section. At the relevant date s. 18 (3) provided that "the total liability of the employer in respect of payments under this section shall not exceed three thousand pounds". Section 28 was, however, in these terms: "Where any weekly payment has been continued for not less than six months, the liability therefor may be redeemed by the payment of a lump sum to be settled by arbitration under this Act . Where permanent disability for work results from the injury, any weekly payments made prior to an application under this section shall, notwithstanding anything in this Act, be in addition to any such lump sum." The words which I have italicized were added to the section by Act No. 11 of 1960 and it is on their meaning and effect that the decision in the present case turns.

The questions submitted by the special magistrate to the Supreme Court were whether, in determining the amount of the lump sum to be awarded under s. 28 (1) He should deduct the total amount of weekly payments made prior to the application for redemption from the maximum sum payable under s. 18 and award a lump sum not in excess of the difference; or whether (2) He should disregard the weekly payments already made and award a lump sum not in excess of the maximum payable under s. 18. In the Supreme Court, their Honours answered the first of these questions "No" and the second "Yes".

Before s. 28 was amended in the way that I have indicated, the task of the arbitrator or special magistrate was to determine what, in the circumstances of the particular case, was the proper sum to award in redemption of the employer's liability to make future weekly payments of compensation to the workman. The liability for weekly payments already made no longer existed. It had been discharged by payment. But, since s. 18 (3) set a limit to the employer's liability of £3,000 in respect of payments under s. 18, that limit had to be taken into account in order to ensure that it was not exceeded by the amount of the weekly payments already made when added to the lump sum awarded in redemption of the employer's future liability. In some cases the amount to be awarded as a redemption payment could only be determined by first deducting from the maximum limit of £3,000 the total of the weekly payments already made in order to ascertain how much of the £3,000 remained available for redemption purposes. To take, by way of example, a case in which the workman was a young man who had been seriously and permanently disabled. He obtains an award for weekly payments of £5 and let it be supposed that up to the time of the application for redemption the amounts paid under it totalled £2,000. If it were not for the limit of £3,000 for which s. 18 (3) provided, the appropriate lump sum to redeem the employer's future liability would be, let it be assumed, £6,000. But there is an overall maximum sum prescribed and the lump sum awarded cannot exceed that maximum less the amount of the weekly payments already received. This means that in such a case £1,000 would thus be the lump sum awarded and the workman would receive that amount and would retain the weekly payments already received by him. In that sense, the weekly payments (£2,000) would be received "in addition to" the lump sum payment (£1,000) although, in arriving at that figure of £1,000, the £2,000 already received would have been earlier subtracted from the prescribed maximum. In other cases it would be unnecessary to make that subtraction. Suppose a case in which the workman's injury was a relatively minor one and weekly payments totalling only £100 were made up to the time of the redemption application. In such case it might be considered that £1,000 would be the proper amount to award as a lump sum. If so, it would be unnecessary to make the deductions that were involved in the first illustration that I gave because there would be an ample margin between £100 and £3,000 to provide the appropriate lump sum. In such a case the amount of the weekly payments already made would, in every sense of the words, be "in addition to" the lump sum payment of £1,000 and, if regard is had to the serious nature of the injuries sustained by the workman in the first case and the lesser injuries sustained in the second case, the workman with the lesser injuries would, by comparison with the former, fare much better. It is, I think, with these considerations in mind that the amendment to s. 28 must be read in order to see whether, as counsel for the respondent contends, the intention was to provide that, where the workman's injury results in permanent disability for work and an application for redemption is made, the amount of the redemption payment is in all cases to be calculated without taking into account the weekly payments already made with the result that, no matter how much had been paid earlier by way of weekly payments, a lump sum not exceeding £3,000 might still be awarded notwithstanding anything contained in s. 18 (3).

Counsel for the appellant submitted with some justification that, whatever may have been the purpose in amending s. 28, the words in fact used produce no result. As the Act stood before the amendment the weekly payments already made to the injured workman were "in addition to" whatever lump sum was awarded under s. 28. He retained them and also received the lump sum awarded. The amendment, counsel suggested, did no more than declare what was already the law. But that the amendment was not intended to be merely declaratory is plain if only because it is to operate "notwithstanding anything in this Act". It was obviously intended to confer some additional benefit upon a permanently disabled workman and, if it has not succeeded in doing so, the provision is completely ineffectual. If, however, it is reasonably possible to give it an operative effect, the Court should and must give it that operation. And, when regard is had to the manner in which, before the amendment, the redemption payment must often have been calculated, namely by first deducting from the maximum of £3,000 the amount of weekly payments already made in order to ascertain how much was left available to redeem the employer's liability to make future weekly payments, I think the provision should be read as a direction that the calculation of the lump sum shall be made without regard to weekly payments already made so that, notwithstanding the provisions of s. 18 (3), the full amount of £3,000 and not that figure less those earlier payments shall be the maximum available for the provision of the lump sum.

For these reasons I am of opinion that the appeal should be dismissed.