Ryan v Workcover Corporation/Cgu

4 On 30 August 1993 the worker sustained a compensable disability to his right elbow arising out of or in the course of his employment with Woodcroft Furniture Designs ("Woodcroft") ("the first disability"). The worker sought and obtained compensation pursuant to the Act and came to be in receipt of weekly payments of income maintenance. As at 18 October 1996, those weekly payments were in the amount of $458.74 per week representing 80 per cent of his notional weekly earnings, the figure having been reduced to that amount because his incapacity for work as a result of that disability had extended beyond 12 months.

5 On 18 October 1996 the worker entered into a Redemption Agreement with the Corporation wherein he agreed to discharge the Corporation's ongoing liability to pay weekly payments of income maintenance in respect of the first disability for a lump sum of $49500 ("the Redemption Agreement").

6 The Redemption Agreement stipulated that the s 35(6a) figure was an amount of $25.73 per week.

7 On 24 June 1997 the worker commenced employment with Kellyvale Pty Ltd trading as Samech Labour ("Samech") as a labourer.

8 Between that date and 6 July 1997 the worker suffered a further disability comprising of an injury to his left elbow and an aggravation of the earlier injury to his right elbow that he sustained whilst working for Woodcroft ("the second disability") in respect of which he sought compensation pursuant to the Act.

9 By determination dated 21 August 1997 the Corporation accepted the worker's claim in respect of the second disability and determined that he was entitled to receive weekly payments of income maintenance in the amount of $655.87 per week. It arrived at this figure, having determined that the worker's notional weekly earnings in respect of his employment with Samech amounted to $681.60 per week and from that amount it subtracted the amount of $25.73 being the amount referred to in the Redemption Agreement as the s 35(6a) figure.

10 And so from that date the worker received weekly payments of income maintenance in the sum of $655.87 per week.

11 By determination dated 7 July 1999 the Corporation reviewed the worker's entitlement to weekly payments of income maintenance having regard to s 38A and s 39. It determined the worker's weekly payments of income maintenance as follows:-

"New notional weekly earnings rate (100 per cent) $712.57

Less payments received (the s 35(6a)

figure in the previous Redemption Agreement) $25.73

12 The worker challenged the correctness of this calculation and this is the issue that is now before us.

The Corporation's position in respect of the application of s35(6a)

13 In making its determination, the Corporation relies upon s 35(6a) which presently provides as follows:-

"If a liability to make weekly payments is redeemed, the worker is taken, for the purposes of this section, to be receiving the weekly payments that would have been payable if there had been no redemption".

14 The Corporation contends that as a result of this provision the worker is taken to be continuing to receive weekly payments of income maintenance of $25.73 per week and that this amount must be subtracted from all determinations concerning the calculation of his entitlement of income maintenance, including entitlements arising from a disability sustained in the course of his employment with Samech.

15 Mr Walsh advanced a number of arguments in support of this. He suggested that if the worker was earning an income of $25.73 after sustaining the second disability that would have to be taken into account and that this is no different. Next he said that where s 35(6a) talks of "taken ...to be receiving the weekly payments" it means weekly payments for all purposes including the entitlement to weekly payments in respect of a later disability. Finally he says that if we are not with him on these arguments we should conclude that in respect of a redemption, the position was different. He suggested that because the worker had received a lump sum payment and in this case, a relatively sizeable lump sum, it would be unfair if, in respect of a subsequent disability, the benefits of that lump sum payment could not be taken into account.

16 Although the word "earnings" is not specifically defined in the Act, it is clear from s 4 which deals with "average weekly earnings" that what it is concerned with is what a worker earns from the sale of his or her labour. In any event, even if the amount of $25.73 is to be treated as earnings, it does not assist the Corporation's argument. If it is, it was earnings that the worker was receiving when he sustained the second disability. Presumably that amount would be included in the calculation of his average weekly earnings pursuant to s 4(2)(a) in respect of the second disability, and then it would be subtracted from the calculation of his weekly payments of income maintenance pursuant to s 35 (1)(a)(ii). In other words if it is to be treated as earnings it would provide no net benefit to the Corporation.

17 Had it been Parliament's intention for an existing entitlement to weekly payment of income maintenance to be subtracted in all circumstances from a later right to income maintenance in respect of a different compensable disability, one would have expected Parliament to have made specific provision to that effect. Moreover, one would wonder why Parliament felt the need to enact 35(6) which provides:-

"A worker is not entitled to receive for two or more disabilities weekly payments in excess of the worker's notional weekly earnings."

If the weekly payments for the earlier disability were to be deducted in every case the worker could never receive, in respect of two or more disabilities weekly payments exceeding his or her notional weekly earnings. If Mr Walsh's argument as to the effect of s 35(6a) were correct, s 35(6) would be unnecessary.

18 A plain reading of the Act suggests that in the case of two or more disabilities which generate entitlements to weekly payments of income maintenance the only relevance of an entitlement in respect of one disability in connection with the other is that their combined sum cannot exceed the worker's notional weekly earnings. Subject to that qualification, the receipt of payments in respect of one disability has no impact upon the entitlement to weekly payments in respect of another. That was the point made in Ryan v WorkCover Corporation/ Royal and Sun Alliance Workers Compensation (SA) Pty Ltd (Kellyvale (No 40) Pty Ltd Samech Labour) JD8/1999 where it was said:-

"We commence by noting that it follows from authorities such as Doudie v. Kinneil Cannel and Coking Coal Company Limited [1947] A.C. 377 and Sydney City Council v. Ince (1989) 16 N.S.W.L.R. 690, that as a matter of principle, there can be concurrent partial incapacities for work arising out of separate compensable disabilities, each of which can produce independently of each other an entitlement to weekly payments of income maintenance."

19 S 35(6) moderates this by putting an outer limit on the amount of weekly payments that can be received for two or more compensable disabilities. But that is all that it does.

20 As to the argument that because a lump sum is involved we should treat it differently to weekly payments, that is not what the provision says. The provision speaks of the weekly payments that would have been payable had there been no redemption.

21 In other words, the s 35(6a) figure having been identified, the worker is to be treated for the purposes of s35 as if he continued to receive that figure.

22 In this instance, because the worker's entitlement to weekly payments in respect of the second disability has been reduced to 80 per cent on account of the incapacity exceeding 12 months, his combined entitlements, that is after the weekly payment that he is deemed to be receiving in respect of the earlier disability is notionally added, are less than his notional weekly earnings. Accordingly, s 35(6) does not come into play.

23 The worker is therefore entitled in respect of the second disability to receive weekly payments in the amount of $570.06.

24 We therefore set aside the Corporation's determination and determine in lieu thereof that from 7 July 1999 the worker is entitled to weekly payments in that amount.

25 I have the following to add to the reasons of the majority.

26 The duty of the Court is to ascertain the legislative intent. The route to the legislative intent is via the words used. This is subject to occasions when the context of the words, the consequences of a literal or grammatical approach or the clear purpose Parliament was seeking to achieve may require the literal approach to be modified: see Cedic v WorkCover [2000] SAWCT 54.

27 Approaching the provisions before this Tribunal, the analysis commences with an acknowledgment of the function of s 35 of the Act. Its role is to set the amount of the entitlement to weekly payments see GMH v Workers Rehabilitation and Compensation Corporation (1991) 55 SASR 395, Workers Rehabilitation and Compensation Corporation v James (1991) 56 SASR 414, Mitsubishi Motors Australia Limited v Sosa (unreported 1995 Judgment No S5084).

28 S 35 contemplates variable entitlements set according to the period of the incapacity. The worker in this case sustained injury which resulted in a period of incapacity exceeding one year and brings into operation the provisions of s 35(1)(b)(i) which state:-

"(b) if the period of incapacity for work exceeds one year, the worker is entitled to weekly payments determined in accordance with paragraph (a) for the first year of the period of incapacity and thereafter -

(i) the worker is, if totally incapacitated for work, entitled for the period of incapacity to weekly payments equal to 80 per cent of the worker's notional weekly earnings;"

29 The reference to par (a) for the first year is to an entitlement to weekly payments equal to the worker's notional weekly earnings. That is as defined by s 3 and in turn reckoned by s 4. But the deeming provision of s 35(6a) operates with immediate effect upon that entitlement. It states:-

"If a liability to make weekly payments is redeemed, the worker is taken, for the purposes of this section, to be receiving weekly payments that would have been payable if there had been no redemption."

30 This deeming provision is a factor in setting the amount of the notional weekly earnings. It does so from the moment of redemption: cf WorkCover v Blocki [2000] SAWCT 92.

31 This appreciation of the way the scheme operates requires the outcome contended by Mr Saies. The Corporation's method of calculating the entitlement to effect the 80 per cent reduction is wrong. It ignores the deeming effect of s 35(6a). The notional weekly earnings involves an application of s 35(6a). Once the notional weekly earnings is ascertained, but only then, does the 80 per cent come into operation. The provision contemplates a progression of steps. The 80 per cent applies next after ascertainment of the notional weekly earnings. This is so even if redemption occurs after the first fixing of the notional weekly earnings as each weekly entitlement is severable.

32 The worker is entitled on the material before us to receive weekly payments in the sum of $570.06 per week.