Spaul v Comcare

Federal Court of Australia|2012-07-11|Before: Gray J

The nature and history of the proceeding 1 This appeal is from a decision of the Administrative Appeals Tribunal ("the Tribunal"), given on 23 June 2011. It concerns the calculation of the amount to which the applicant is entitled pursuant to the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act"). The applicant's complaint is that the Tribunal failed to deal with an argument put on his behalf as to a matter that might have affected the rate of compensation. Instead of dealing with that argument, the Tribunal treated the applicant as having put an argument that he had in fact abandoned, which it determined against him. The applicant's contention is that, if the Tribunal had dealt with the argument he put, it would have upheld that argument. 2 The applicant was employed by Medicare Australia (formerly the Health Insurance Commission and referred to from time to time as "the HIC") from 1988 until 7 September 2004. It was not disputed before the Tribunal that the applicant suffered an injury on 7 September 2004, characterised as aggravation of adjustment disorder with mixed anxiety and depressed mood. It was not disputed that his employment with Medicare Australia contributed materially to this injury, or that the injury resulted in total incapacity for work. It was not disputed that the applicant was entitled by s 19(2) of the SRC Act to receive payments of compensation from 8 September 2004. 3 The respondent had made a reviewable decision on 3 November 2010, determining the entitlement of the applicant to compensation, without regard to the injury of 7 September 2004. 4 The Tribunal's decision of 23 June 2011 is expressed as follows: The Tribunal sets aside the reviewable decision of 3 November 2010 and substitutes the following decision: (1) Mr Spaul sustained an injury described as adjustment disorder with mixed anxiety and depressed mood on 7 September 2004 which resulted in total incapacity for work commencing on 8 September 2004; (2) Mr Spaul is entitled to compensation for incapacity under s 19 of the Safety, Compensation and Rehabilitation Act 1988 (the SRC Act) from 8 September 2004 as follows: (a) 100 per cent of his normal weekly earnings ($1635.66) for a period of 45 weeks; and (b) 75 per cent of the appropriate figure for normal weekly earnings from the expiry of that period of 45 weeks to 2 December 2007. (3) Mr Spaul's normal weekly earnings for the purposes of s 8 of the SRC Act are to be calculated on the basis of Mr Spaul's annual salary as follows: With effect from Annual salary 8 September 2004 $85,327.00 1 July 2005 $88,313.45 1 July 2006 $92,022.61 1 July 2007 $95,703.51

(4) The costs of the proceedings are to be as agreed between the parties. If there is no agreement either party may apply to the Tribunal within 14 days of the decision for costs to be determined.

The legislation 5 Section 8 of the SRC Act contains provisions governing the calculation of "normal weekly earnings". The resulting figure is then used as the basis for the calculation of compensation, pursuant to s 19 of the SRC Act. 6 In its reasons for decision at [4], the Tribunal set out the following provisions of s 8 of the SRC Act as being relevant to the decision it was required to make: (6) Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of: (a) the attainment by the employee of a particular age; (b) the completion by the employee of a particular period of service; or (c) the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment; the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be. ... (9) The normal weekly earnings of an employee before the date of the employee's injury, as calculated under the preceding subsections, must, while the employee continues to be employed by the Commonwealth or a licensed corporation, be increased or reduced by the relevant percentage. (9A) For the purposes of subsection (9), relevant percentage means the same percentage as the percentage of increase or reduction in the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury as a result of: (a) the operation of a law of the Commonwealth or of a State or Territory; or (b) the making, alteration or operation of an award, order, determination or industrial agreement or the doing of any other act or thing, under such a law. (9B) The normal weekly earnings of an employee before injury, as calculated under subsections (1) to (8) and as increased or reduced under subsection (9) must, if the employee has ceased, or ceases, to be employed by the Commonwealth or a licensed corporation, be further increased, with effect from each indexation date in relation to that cessation, by reference to the percentage of increase (if any) of an index that is prescribed for the purposes of this subsection over the year ending on the 31 December preceding each such indexation date. (9C) For the purpose of subsection (9B), the indexation date, in relation to a cessation of employment, is: (a) the 1 July next following: (i) the date on which this Act receives the Royal Assent; or (ii) the date of that cessation of employment; whichever last occurs; and (b) each subsequent 1 July. ... (10) If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed: (a) where the employee continues to be employed by the Commonwealth or a licensed corporation - the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work; or (b) where the employee has ceased to be employed by the Commonwealth or a licensed corporation - whichever is the greater of the following amounts: (i) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury; (ii) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation ceased; the amount so calculated shall be reduced by the amount of the excess.

The Tribunal's reasons for decision 7 At [5] of its reasons for decision, the Tribunal identified the matters not in dispute (referred to in [2] above). The Tribunal identified two issues before it, as follows: • Did Mr Spaul cease to be an employee of Medicare Australia on 7 September 2004 for the purposes of the SRC Act?; and • What is the correct approach to determining Mr Spaul's normal weekly earnings during the period 8 September 2004 to 2 December 2007? 8 At [6]-[13], the Tribunal determined the first of these issues adversely to the applicant, finding that he ceased to be an employee of Medicare Australia on 7 September 2004, when Medicare Australia terminated his employment. There is no issue in this appeal concerned with that decision. 9 The Tribunal then proceeded to deal with the second of the issues. At [14]-[15], the Tribunal set out two tables, showing the rates of annual salary determined by the respondent with effect from various dates between 8 September 2004 and 1 July 2007, used as the basis for the calculation of normal weekly earnings, and the submission on behalf of the applicant as to what the correct amounts should be. In each case, the starting figure at 8 September 2004, was $85,327.00. The respondent's figure with effect from 1 July 2007 was $95,703.51. This was reached in three steps, each commencing on 1 July of the years in between. The applicant's calculation involved five increases on various dates, leading to a figure with effect from 1 July 2007 of $96,212.00. 10 The Tribunal's reasons then continued as follows: 16. There was no dispute that Mr Spaul's annual salary was $85,327.00 on and from 8 September 2004 based on his salary as at 7 September 2004 as Principal Executive Officer Class B (PEO B) at the third pay point (later included in the broad banded HIC 8 classification) under the Health Insurance Commission (Managing Change) Certified Agreement 2003-5 (the 2003 Agreement) which came into effect on 4 December 2003. Mr Spaul stated that on 1 October 2004 his salary would have increased by 4.25 per cent to $88,953.00 (the third pay point of HIC 8) because the 2003 Agreement provided for increases in salary for any person at the PEO B (HIC 8) level as an accrued right at the time of the termination on the basis that the first increment contained in the 2003 Agreement was fixed before the injury occurred. 17. Mr Spaul submitted that there is nothing in the SRC Act to suggest that an accrued right to a future salary increase existing at the date of injury can be retrospectively ignored, and that the increase on 1 October 2004 is properly described as an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment (s 8(6)(c) of the SRC Act). He said that if he had continued as an employee he would have occupied the position as at 1 October 2004, and even after termination he would remain entitled to any increment under s 8(6) of the SRC Act because of his history of achievement and nature of the work that he had been undertaking. Mr Spaul said that but for his injury he would have progressed to the highest level of the new HIC 8 classification until the end of the period covered by the 2003 Agreement (2 December 2005). 18. In Military Rehabilitation and Compensation Commission v Perry [2007] FCA 1586 Bennett J held that s 8(6) continues to operate in respect of employees and former employees when they are no longer employed. He [sic] stated at [27]: 27 The normal weekly earnings of the employee are as calculated under ss 8(1) to 8(8) of the Act. That includes the increment (s 8(6)). Section 8(6) is directed to increments in remuneration payable to an employee by reason of the attainment of a level of seniority or the passage of time, including actual increments and hypothetical increments. Section 8(6) applies to injured employees who continue to be employed by the Commonwealth and, as is apparent from 'would have been increased if the employee had continued in that employment', continues to operate in respect of employees after employment has ended. That is, the subsection provides that, whether in employment or whether employment has ceased, the normal weekly earnings shall be increased by the percentage by which they would have been increased before injury. 19. The Tribunal takes into account that when Mr Spaul was transferred to the position of Manager Physical Security on 3 July 2003 he was paid at the level of PEO B (third pay point), and when the 2003 Agreement came into operation this became HIC 8 at the third pay point. At the time his employment was terminated on 7 September 2004 he remained at the third pay point of HIC 8. Under paragraph 8.4 of the 2003 Agreement an employee had to satisfy certain criteria in order to progress to the fourth pay point of HIC 8 (which at the time was $88,953.00). The Tribunal then referred to a provision of the 2003 Agreement to the effect that access to the fourth pay point of the classification called HIC 8 could only occur after a merit selection process had been conducted or there had been a determination by the managing director, in accordance with specified terms and conditions of employment, that an employee could be advanced automatically without a merit selection process. 11 At [20], the Tribunal found that no employee had progressed to the fourth pay point of HIC 8 on 1 October 2004 and that performance assessment of the applicant was not possible because he had worked only two days in the 14 months prior to the date of termination of his employment. The Tribunal did not accept that the applicant's salary would necessarily have increased to the fourth pay point on 1 October 2004, "as there was no guarantee that his salary would have increased because of the attainment of a particular age (s 8(6)(a) of the SRC Act); the completion by Mr Spaul of a particular period of service (s 8(6)(b) of the SRC Act) or by way of an increment to his salary (s 8(6)(c) of the SRC Act)." The Tribunal then said that any predictions about the applicant's advancement to the fourth pay point after the date of termination remained speculative and were not either actual increments or hypothetical increments of the kind to which Bennett J had referred. 12 At [21]-[22], the Tribunal discussed and rejected the argument that the applicant had an accrued right, and concluded that the argument did not assist him. At [23], the Tribunal concluded that, on 1 October 2004, the applicant's salary for the purposes of calculating normal weekly earnings was $85,327.00, the same figure as the starting figure at 8 September 2004. 13 At [24], the Tribunal referred to an argument advanced on behalf of the applicant to the effect that, on 2 December 2005 a new certified agreement came into force, which would have increased the applicant's annual salary on that date and on 14 December 2006, if the applicant had remained in his employment with Medicare Australia, subject to reduction under s 8(10) of the SRC Act. At [25], the Tribunal applied the indexation provisions in s 8(9B) and s 8(9C) of the SRC Act, and made findings as to the percentages of increases each 1 July. At [26], the Tribunal applied these percentage increases to the figure for the applicant's annual salary as at 8 September 2004 and made calculations of the figures that resulted up to 1 July 2007. As the Tribunal said at [27], these findings corresponded with the amounts listed in the respondent's determination in respect of normal weekly earnings.

The notice of appeal 14 By s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), an appeal to this Court from a decision of the Tribunal is limited to a question of law. In para 2 of his notice of appeal, the applicant specified what were said to be two questions of law raised in the appeal: 2.1 Did the Tribunal misconceive the central contention put on behalf of the Applicant concerning the Applicant's salary increase in October 2004? 2.2 Was the Applicant's salary increase in October 2004, as fixed under the HIC (Managing Change) Certified Agreement 2003-5 ("the 2003 Agreement"), properly described as "an increment in a range of salary" for the purposes of paragraph 8(6)(c) of the SRC Act? 15 In para 3 of the notice of appeal, the applicant sought an order setting aside the decision of the Tribunal, the making of a finding by the Court pursuant to s 44(7) of the AAT Act that the applicant's normal weekly earnings under s 8 of the SRC Act, and his entitlements under s 19 of the SRC Act, be calculated in accordance with the table set out in [15] of the Tribunal's reasons for decision (which contained the figures for which the applicant contended before the Tribunal), and an order that the respondent pay the applicant's costs of the appeal and of the proceedings in the Tribunal. 16 The grounds specified in para 4 of the notice of appeal are: 4.1 The Tribunal misconceived the central contention put on behalf of the Applicant concerning the Applicant's salary increase in October 2004, in that − (a) the Tribunal considered that the Applicant was contending that his entitlement to a salary increase in October 2004 was based on a claimed progression to the fourth pay point of the Principal Executive Officer Class B ("PEO-B") classification: Reasons for Decision at [17]-[20]; and (b) the true position was the Applicant had expressly abandoned in his written submissions any claimed progression to the fourth pay point of the PEO-B classification and based his primary submission on the salary increase in October 2004 affecting the third pay point of the PEO-B classification, being the pay point which already applied to the Applicant prior to September 2004. 4.2 Having misconceived the central contention being put on behalf of the Applicant concerning the Applicant's salary increase in October 2004, the Tribunal erred in failing to find that the salary increase in October 2004 affecting the third pay point of the PEO-B classification was properly described as "an increment in a range of salary … applicable to the [Applicant] or to his ... office, position or appointment" within the meaning of that phrase in paragraph 8(6)(c) of the SRC Act.

The first question 17 As it is expressed in para 2.1 of the notice of appeal, the first question is not a question of law. It invites a comparison of what is described as the central contention put on behalf of the applicant with the Tribunal's reasons, for the purpose of determining whether the Tribunal misconceived that contention. A misconception as to a contention is an error of fact. 18 As explained in para 4.1 of the notice of appeal, and in written and oral submissions in the appeal, the first question can be seen to involve a concealed question of law. That question is whether the Tribunal failed to deal with an issue raised in the proceeding before it. In Dunstan v Comcare [2011] FCAFC 108 at [67]-[68], the Full Court held that the failure by the Tribunal to deal with an issue raised in the proceeding was an error of law. In that case, as in this, the Tribunal had mentioned the issue as one that needed to be determined, but had failed to proceed to determine it. On the basis of what the Full Court said in Dunstan, the respondent in the present appeal conceded that the Tribunal had made an error of law. 19 In the course of the proceeding before the Tribunal, counsel for the applicant handed up a lengthy document entitled "APPLICANT'S OUTLINE OF SUBMISSIONS". In para 2.3 of that document, after referring to the absence of any dispute about the applicant's rate of annual salary at the starting point on 8 September 2004, the applicant's counsel said: The complication that arises in this matter is that the 2003 Agreement, and its successor, the Medicare Australia Certified Agreement 2005-2008 ("the 2005 Agreement") provided for salary increases for persons in the position of the Applicant. There is also the question of whether the Applicant would have progressed to the fourth pay point, as he has consistently maintained, based on his previous exemplary performance. For the purposes of these proceedings, that argument is not pressed, and the matter is to be determined on the basis that at all times the Applicant was to be remunerated at the third pay point of PEO-B (later included in the broad banded HIC 8 classification). That paragraph involved a complete withdrawal of the contention that the applicant would have progressed to the fourth point in the pay scale under the 2003 Agreement. The withdrawal of the contention was repeated by counsel for the applicant in the course of oral argument. The transcript records the applicant's counsel as saying: Now, as I say in paragraph 2.3, Mr Spaul − if you look at the history of this matter − Mr Spaul has consistently argued that he would have progressed to the fourth pay point, which would have taken him above the figures that I've just taken you to, to the − in effect − to the figures on the next line down, which are separated by a dotted line across these tables. Now, whether that is or is not correct, and Mr Spaul has good reasons for saying it would have been correct, the argument being put by the other side is that you could never consider that increase to be an increment because it requires a qualitative judgment to be made by the head of Medicare Australia or someone with the appropriate delegation, that the person should advance. For these proceedings, we are not going to press the argument that Mr Spaul would have advanced to the fourth pay point, so you don't have to concern yourself with that. We are saying that he would have been entitled to the − if he had remained an employee − he would have been entitled to the increases that I've taken you to, that is the October '04 increase As this submission demonstrates, the applicant was putting the contention that, if he had remained in his employment after 7 September 2004, he would have received an automatic increase in his annual salary on 1 October 2004, as a consequence of general increases that were part of the operation of the 2003 Agreement. 20 The Tribunal failed to refer in its reasons for decision to the withdrawal of the contention that the applicant would have progressed to the fourth pay point. At [16]-[17], the Tribunal summarised accurately the contention that the applicant was making, that he would have been entitled to a salary increase at the third pay point of the scale designated as HIC 8 on 1 October 2004. In the last sentence of [17], however, the Tribunal slipped into dealing with the withdrawn contention that the applicant would have progressed to the fourth pay point on that scale. Thereafter, the Tribunal dealt with the submission as if it were the one the applicant's counsel had withdrawn, and ignored the submission that counsel for the applicant was pressing. The Tribunal's findings that were adverse to the applicant on the elements of s 8(6)(a), (b) and (c) of the SRC Act, expressed at [20] of its reasons for decision, were not findings related to the question whether those provisions would have entitled the applicant to have taken into account in the calculation of his normal weekly earnings any pay increase to which he might have been entitled on 1 October 2004 while remaining at the third pay point of the scale. They were findings that the supposed elevation to the fourth pay point on that scale would not have given rise to any entitlement to have any consequent increase in salary taken into account under s 8(6) of the SRC Act. 21 It follows that, although the Tribunal summarised accurately the contention that the applicant was making, it did not deal with that contention. The Tribunal thereby made an error of law.

The second question 22 The question stated in para 2.2 of the notice of appeal assumes the existence of a fact, described as "the Applicant's salary increase in October 2004" and asks whether that increase was properly described as "an increment in a range of salary" for the purposes of s 8(6)(c) of the SRC Act. Whilst this may be described as a question of law, it does not in any way arise from the Tribunal's decision. Nowhere did the Tribunal make the finding of fact that, if the applicant had remained employed by Medicare Australia, the 2003 Agreement would have entitled him to a pay increase on 1 October 2004. The Tribunal did no more than to state that this was part of the contention made on behalf of the applicant, rather than to reach any conclusion as to whether the facts alleged in that contention should be found in favour of the applicant. 23 The Court has a limited power to make findings of fact, conferred by s 44(7) of the AAT Act. That is not a power that should be exercised so as to usurp the function of the Tribunal. The occasions on which it should be exercised are few and the task of fact-finding in an appeal limited to a question of law must necessarily be approached with great caution. Only the Tribunal has available to it all of the evidence. In this case, I decline to exercise the power to make any finding of fact as to whether the applicant would have been entitled to a pay increase on 1 October 2004 if he had remained in his employment. 24 Because the assumed fact is not the subject of a finding by the Tribunal, the question of the characterisation of any such increase, for the purposes of s 8(6)(c) of the SRC Act does not arise. Any attempt to answer the question would amount to the giving of an advisory opinion and consequently would not be an exercise of the judicial power of the Commonwealth. In this appeal, there is no live controversy as to that issue. Only if the Tribunal had determined the question could the Court embark on considering whether the Tribunal made an error of law, a function which is at the heart of the limitation of an appeal from a decision of the Tribunal to a question of law.

Conclusion 25 On the basis of the error of law made by the Tribunal, underlying the first question raised in the notice of appeal, the appeal must be allowed. The Tribunal's decision must be set aside and the case must be remitted to the Tribunal to be heard and decided again.

Costs 26 In the circumstances, the question of how the costs of the appeal should be borne as between the parties is not easy. Clearly, the parties were agreed on a proper basis that the Tribunal had made an error of law in failing to deal with the applicant's contention as to the effect of the pay rise on 1 October 2004. On that basis, it would have been unnecessary for the appeal to be heard. Provided that some means were adopted of conveying to the Tribunal why it was that the appeal had been allowed, it would have been appropriate simply to allow the appeal by consent and to remit the case to the Tribunal to be heard and decided again. The fact that the applicant pursued in the appeal a question that did not arise suggests that the applicant ought to be deprived, at least in part, of the costs of the appeal to which he would normally be entitled as the successful party. The problem is that the respondent, in contending in the appeal that it would be futile to remit the case to the Tribunal, because the Tribunal could never reach the conclusion that a salary increase on 1 October 2004 could have amounted to an "increment", for the purposes of s 8(6)(c) of the SRC Act, effectively encouraged the applicant to continue with the appeal. For this reason, the applicant should have an order for costs in his favour, in accordance with the principle that costs follow the event. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.

Safety, Rehabilitation and Compensation Act 1988(Cth)ss 8, 8(6)(a), 8(6)(b), 8(6)(c), 8(9B), 8(9C), 8(10), 19, 19(2)

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