The Herald & Weekly Times Ltd & Anor v Jessop [2014] VSCA 292

1 This is an appeal against an order of a judge of the County Court granting leave to the respondent ('Ms Jessop') to bring a proceeding against the first appellant ('HWT') for the recovery of both pecuniary loss damages and pain and suffering damages.[1] The order was made pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 ('Act'). [2]

2 As discussed in more detail below, s 134AB(38)(e) and (f) of the Act set out a test that a worker must satisfy in order to be given leave to make a claim for damages for loss of earning capacity. In essence, the worker must establish that, due to a workplace injury, his or her earning capacity, expressed as gross annual income, decreased by 40 per cent or more.

3 For the purposes of the loss of earning capacity analysis required by s 134AB(38)(f)(ii) of the Act, the judge held that Ms Jessop's gross annual income was to be calculated by reference to the number of hours per week that she was capable of working rather than by reference to the number of hours per week that she actually worked. His Honour held that Ms Jessop had the capacity to work in excess of the average of 19.95 hours per week that she actually worked in the 12 month period leading up to her workplace injury and that she had a capacity to work up to 37.25 hours per week.[3]

4 The issue in this appeal is whether the judge misconstrued s 134AB(38)(f)(ii) of the Act.

5 For the reasons set out below, we would dismiss the appeal.

6 Ms Jessop commenced employment with HWT in 1986 or 1987 as a casual permanent publishing hand. Her role required her manually to place inserts into newspapers and to place inserts into a machine that automatically put them into newspapers.

7 In 2004 Ms Jessop injured her cervical spine by way of aggravation of underlying cervical spondylosis. She continued to work her regular hours and to perform her normal duties until February 2009, when she ceased working until May 2009. At the County Court hearing of Ms Jessop's leave application, the parties agreed to treat 28 February 2009 as the date of Ms Jessop's injury for the purposes of s 134AB(38) of the Act. Ms Jessop was then 48 years of age.

8 Upon her return to work in May 2009, Ms Jessop gradually increased her hours to 4.5 hours per night, three nights per week (13.5 hours per week). In December 2012, Ms Jessop accepted a redundancy package.

9 At the County Court hearing, Ms Jessop tendered a summary of her payslips for the period from 1 March 2008 until 28 February 2009. The payslips showed that during that 12 month period: Ms Jessop worked 47 weeks; the number of hours Ms Jessop worked varied from 10.50 to 37.25 hours per week; Ms Jessop worked 31 weeks in excess of 20 hours, one week of 22.5 hours, 18 weeks of 23 hours or more and six weeks of 30 hours or more; and Ms Jessop worked 30 hours per week on three occasions, 35.25 hours per week on one occasion and 37.25 hours per week on two occasions. It was common ground that the average number of hours that Ms Jessop worked per week during that period was 19.95 hours.

10 Based on Ms Jessop's tax returns, which were tendered at the County Court hearing, the parties agreed to adopt $35,000 as the gross annual income that Ms Jessop earned prior to the injury. As 60 per cent of $35,000 is $21,000, if the 40 per cent test in s 134(AB)(38)(e) and (f) of the Act is confined to gross annual income actually earned, Ms Jessop would not satisfy the test. This is because in each financial year following the injury until she accepted a redundancy package, Ms Jessop's gross annual income exceeded $21,000. Her gross annual income in those financial years was as follows: $24,446 in the 2010 financial year, $22,411 in the 2011 financial year and $23,861 in the 2012 financial year.

11 At the County Court hearing, gross annual income figures were calculated on the basis that Ms Jessop's hourly rate was $34.20 and that she was paid annually for 52 weeks. The parties agreed that the maximum of 13.5 hours per week that Ms Jessop worked after the injury represented the maximum hours per week that she was capable of working after February 2009. That number of hours, when multiplied by the hourly rate of $34.20, produces gross annual income of $24,008.40. The maximum of 13.5 hours per week is more than 60 per cent of the average of 19.95 hours per week that Ms Jessop worked in the 12 month period prior to the injury and therefore the reduction in the hours per week that Ms Jessop worked after the injury is less than 40 per cent.

12 Further, on the basis that the test in s 134AB(38)(e) and (f) is confined to gross annual income earned as calculated by reference to Ms Jessop's average hours per week of 19.95 hours, she would not satisfy the test. This is because those hours would produce gross annual income of $35,479.08 and create a 60 per cent threshold of $21,287.44.

13 On the other hand, if the preinjury gross annual income were based on the highest number of hours per week that Ms Jessop worked in the period from 1 March 2008 until 28 February 2009, namely 37.25, she would satisfy the test. This is because her gross annual income would be $66,245.40, and the 60 per cent threshold would be $39,747.24. Ms Jessop would also satisfy the test if the preinjury gross annual income were based on 23 hours per week or more. This is because 23 hours would result in gross annual income of $40,903.20 and the 60 per cent threshold would be $24,541.92.

14 At the County Court hearing, Ms Jessop relied upon three affidavits sworn by her, upon which she was cross-examined. The effect of her evidence is summarised below.

(a) Ms Jessop commenced working at HWT after having her first child. She chose to work at HWT so that she could work night shifts.

(b) Prior to commencing on restricted duties in May 2009, Ms Jessop's hours varied depending on how busy HWT was. She approximated those hours to be between 20 and 25 hours per week.

(c) Ms Jessop was always available when HWT needed her. If HWT had offered her 38 hours per week, she would have worked those hours.

(d) Ms Jessop never asked to work additional hours. She was happy to work her rostered hours and described herself as 'an easygoing employee' who did not want to cause 'any worries' for her employer. However, she had hoped to work extra night shifts as HWT became busier.

(e) After May 2009, the workload for other employees at HWT increased. This was attributable to retiring employees not being replaced and some employees being offered redundancy packages in 2012.

(f) In the period between 2009 and 2012, the hourly rate for HWT employees increased.

15 Section 134AB(16)(b) of the Act provides that, if the assessment of the degree of impairment of a worker as a result of an injury is less than 30 per cent, the worker may not bring proceedings for the recovery of damages in respect of that injury unless: 'a court ... on the application of the worker ... gives leave to bring the proceedings'. Section 134AB(19)(a) provides that the court must not give leave under s 134AB(16)(b) unless it is satisfied on the balance of probabilities that the injury is a 'serious injury'.

16 Section 134AB(37) of the Act sets out a definition of 'serious injury' which contains four alternative limbs. Only the first limb is presently relevant, namely, 'permanent serious impairment or loss of a body function'.

17 Section 134(AB)(38) of the Act contains provisions that a court must apply '[f]or the purposes of the assessment of serious injury in accordance with subsections (16) and (19)'. Paragraphs (b), (c) and (d) provide a narrative test for determining whether a worker may make a claim for damages for pain and suffering and/or loss of earning capacity, and paras (e), (f) and (g) impose additional tests that must be satisfied in determining whether a claim may be made for damages for loss of earning capacity.[4] In the present case, the focus at the County Court hearing was on the requirements of paras (e) and (f).

18 Section 134AB(38)(e) of the Act states that the court shall not grant leave to a worker to bring a proceeding under sub-s (16)(b) unless the worker establishes that:

(i) at the date of ... the hearing of an application under subsection (16)(b), the worker has a loss of earning capacity of 40 per centum or more, measured ... as set out in paragraph (f); and

(ii) the worker ... will after the date of the ... hearing continue permanently to have a loss of earning capacity which will be productive of financial loss of 40 per centum or more ...[5]

19 Section 134AB(38)(f) of the Act sets out the formula for measuring loss of earning capacity for the purposes of sub-s (38)(e)(i). It states:

(f) for the purposes of paragraph (e)(i), a worker's loss of earning capacity is to be measured by comparing -

(i) the worker's gross income from personal exertion (expressed at an annual rate) which the worker is -

(A) earning, whether in suitable employment or not; or

(B) capable of earning in suitable employment -

as at that date, whichever is the greater, and -

(ii) the gross income (expressed at an annual rate) that the worker was earning or was capable of earning from personal exertion or would have earned or would have been capable of earning from personal exertion during that part of the period within 3 years before and 3 years after the injury as most fairly reflects the worker's earning capacity had the injury not occurred ...

20 Section 134AB(38)(g) of the Act provides as follows:

[A] worker does not establish the loss of earning capacity required by paragraph (b) where the worker has, or would have after rehabilitation or retraining, and taking into account the worker's capacity for suitable employment after the injury and, where applicable, the reasonableness of the worker's attempts to participate in rehabilitation or retraining, a capacity for any employment including alternative employment or further or additional employment which, if exercised, would result in the worker earning more than 60 per centum of gross income from personal exertion as determined in accordance with paragraph (f) had the injury not occurred ...

21 The expression 'suitable employment' is defined in s 5(1) of the Act as follows:

suitable employment, in relation to a worker, means employment in work for which the worker is currently suited -

(a) having regard to -

(i) the nature of the worker's incapacity and the details provided in medical information including, but not limited to, the certificate of capacity supplied by the worker; and

(ii) the nature of the worker's pre injury employment; and

(iii) the worker's age, education, skills and work experience; and

(iv) the worker's place of residence; and

(v) any plan or document prepared as part of the return to work planning process; and

(vi) any occupational rehabilitation services that are being, or have been, provided to or for the worker; and

(b) regardless of whether -

(i) the work or the employment is available; and

(ii) the work or the employment is of a type or nature that is generally available in the employment market ...

22 The second reading speech for the Accident Compensation (Common Law and Benefits) Bill 2000 contains the following statements:

[T]he bill provides an objective criterion of a loss of earning capacity measured at the date of the hearing of the application as a loss of earning capacity of 40 per cent or more and also continuing to be a permanent loss of earning capacity of that degree.

The loss of earning capacity is to be measured by firstly comparing the worker's income from personal exertion or capacity to earn income on a beforeinjury and afterinjury basis. The focus time period for determining the capacity to earn income on a beforeinjury basis is limited to three years before the injury and three years after the injury in order to remove openended inquiries which may have varying degrees of speculative judgment. The examination is one which is to fairly reflect the worker's earning capacity had the injury not occurred. Consistent with that understanding, in the threeyear period prior to the injury, the court may have regard to the vagaries of the worker's preinjury employment history and the impact of the worker's social, health and other factors on the capacity to work in that period. In respect of the three years after the injury, the earnings and/or capacity for earnings but for the injury will enable the court to have regard to the probable increases or decreases in earnings that may have occurred or the achievement of other employment opportunities within that time had the injury not occurred.[6]

23 At the County Court hearing, HWT conceded that Ms Jessop suffered an injury to her cervical spine in the course of her employment but submitted that she had failed to prove a 40 per cent loss of earning capacity.

24 In the absence of any alternative evidence from HWT, the judge accepted the summary of Ms Jessop's payslips for the 12 month period prior to the injury as being representative of her earnings. His Honour relied on some of the evidence summarised at [9[7]] above.7 The judge accepted that, prior to the injury, Ms Jessop was 'ready, willing and able' to work up to 37 hou[8]s per week.8

25 The judge held that in Barwon Spinners Pty Ltd v Podolak,[9] the Court of Appeal considered that capacity to earn income from personal exertion for the purposes of s 134AB(38)(f)(ii) is more 'sophisticated' than just a worker's actual earnings.[10] His Honour concluded that the test for serious injury is a threshold test which is purely a creature of statute and not to be confused with the analysis to be undertaken when assessing a damages case.[11]

26 In his Honour's view, the phrase 'would have been capable of earning from personal exertion during that part of the period' in s 134AB(38)(f)(ii) of the Act is intended to include a physical capacity for work which, if exercised, would lead to an economic yield.[12] In reaching this conclusion, his Honour relied upon the following observations in Barwon Spinners on the phrase 'a capacity for any employment ... which, if exercised, would result in the worker earning more than 60 per centum of gross income from personal exertion' in s 134AB(38)(g):

[T]he mere reference to 'capacity for any employment' does not, on its face, suggest that Parliament was concerned with an economic capacity rather than a physical or mental capacity. For instance, in para (g) what is relevant, after considering rehabilitation or retraining or the possibility of rehabilitation or training, is:

... a capacity for any employment including alternative employment or further or additional employment which, if exercised, would result in the worker earning more than 60 per centum of gross income from personal exertion ...

In our opinion, the expression 'if exercised' means 'if exercised in employment'. Parliament is looking here to a physical capacity for work which, if exercised in employment, would bring about the result that the worker was earning more than the limit relevant to serious injury. It is not concerned with whether employment will or will not be obtained: it is concerned rather with the economic yield of such work, if the capacity for that work was in fact exercised in employment.[13]

I accept [Ms Jessop's] evidence that she would have worked and had the capacity to work well in excess of the 19.5 hours average that she worked in the relevant twelve-month period if that work had been available to her. This evidence is corroborated by the weekly hours worked ... and demonstrates a capacity to work up to 37 hours. In my view, the residual capacity as demonstrated by the 'after injury' earnings represented by the 13.5 hours per week clearly reveals that [Ms Jessop] has suffered a loss of earning capacity in excess of 40 per cent which can readily be expressed at an annual rate ...[14]

28 In its notice of appeal, HWT relied on the following two grounds of appeal:

1. The learned primary judge misconstrued s 134AB(38)(f) of the [Act] in assessing [Ms Jessop's] pre injury work capacity in accordance with that section.
2. In consequence, the learned primary judge erred at [25] in finding that [Ms Jessop] had the capacity to work well in excess of the average 19.5 hours per week that she actually worked in the 12 month period leading up to her injury, and that she had a capacity to work up to 37 hours per week.

29 At the commencement of the appeal, Ms Jessop was granted leave to file a notice of contention. The notice of contention stated that, as Ms Jessop was capable of working a maximum of 13.5 hours per week after the injury, she only needed to demonstrate a pre-injury working capacity of greater than 22.5 hours per week to satisfy the 40 per cent statutory test. The notice contended that the evidence summarised at [9] and [14] above demonstrated that such hours were available and that Ms Jessop had the capacity to work, and would have worked, those hours.

30 The meaning of s 134AB(38)(f)(ii) of the Act must be ascertained by applying the principles of statutory interpretation and any authorities that may assist that process.

31 The principles of statutory interpretation that are presently relevant were authoritatively stated by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority.[15] The Court stated that the primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all of the provisions of the statute. The meaning of the provision must be determined by reference to the language of the statute viewed as a whole. Thus, the process of construction must always begin by examining the context of the provision that is being construed.[16] The duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, the legal meaning will correspond with the grammatical meaning of the provision. However, the context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.[17]

32 In accordance with Project Blue Sky, we will consider the purpose of the Act generally and s 134AB(38) in particular, including whether the principles for assessment of damages at common law are applicable to that provision. We will then consider the words of s 134AB(38)(f)(ii) and the context in which they appear, with a focus on the scope of the phrase 'as most fairly reflects the worker's earning capacity'. We will then discuss the meaning of 'earning capacity' in s 134AB(38)(f)(ii) to the extent necessary to deal with the issues raised by the parties in this case. Finally, we will apply that meaning to the present case in the context of the judge's findings and the notice of contention.

Purpose of the Act generally and s 134AB(38) in particular

33 The objects of the Act set out in s 3 include 'to provide adequate and just compensation to injured workers' and 'to ensure workers compensation costs are contained so as to minimise the burden on Victorian businesses'. These general objects do not assist in the interpretation of s 134AB(38)(f)(ii) of the Act.

34 The purpose of s 134AB(38) of the Act is to establish a gateway that ensures that only claims that satisfy the definition of 'serious injury' can be the subject of a common law action for damages. In order to pass through the gateway, a worker must satisfy the specific requirements of the section rather than any common law requirements.

35 It is not the purpose of the section to determine whether a worker is entitled to common law damages or the quantum of any such damages. Those issues are to be determined at the trial of a common law action if and when a determination is made that the requirements of s 134AB(38) are satisfied and the worker is given leave to bring such an action.[18]

36 It follows from the above analysis that common law principles for assessing damages for economic loss are not applicable to para (f) of s 134AB(38) of the Act except to the limited extent that the language of that provision might be said to reflect some aspects of those principles.

37 The position was usefully summarised as follows by J Forrest J in

First, and importantly, s 134AB(38)(f) is a gateway provision which either precludes or permits a worker to bring a claim for damages for loss of earning capacity. It is a part of the serious injury process, not that of assessment of damages. It does not involve any determination (interim or final) of actual loss of earning capacity sustained by the worker.

Second (and a corollary of the first proposition), in determining without injury earning capacity, the Court is not required to make an assessment, at this stage, of loss of earning capacity as in a claim for damages. Rather, it compares the worker's earning capacity, as defined, with the statutory formula for the assessment of after injury earnings (considered subsequently).

Third, the fixing of the gross income which most fairly reflects the earning capacity is a limited inquiry not to be confused with that made in a damages claim. It ... is confined to those matters which go to the practical exercise of that capacity, not its diminution by outside events. In that regard I have in mind those matters referred to by the Minister in the Second Reading Speech, namely, increases/decreases in wages and other employment opportunities. The exercise is not to determine loss of earning capacity - which is a damages issue, but, rather, to focus on earning capacity in a limited context.

Fourth, the sub-section does not mandate a mathematical assessment of without injury earnings, such as a formula based upon the earnings of the worker over a particular period prior to the injury or at the time of injury. Rather, it requires the Court to fix a figure which 'most fairly reflects the worker's earning capacity' without injury.[20]

The wording of s 134AB(38)(f)(ii) of the Act and its context

38 On the appeal, the parties disagreed on the interpretation of the components of sub-para (ii) of s 134AB(38)(f) of the Act and, in particular, whether the phrase 'as most fairly reflects the worker's earning capacity' qualifies only the words 'that part of the period within 3 years before and 3 years after the injury' that immediately precede the phrase or whether the phrase qualifies the whole sub-paragraph. HWT advocated the former interpretation whereas Ms Jessop advocated the latter interpretation.

39 In support of its preferred interpretation, HWT relied on the following statement in Barwon Spinners:

The latter, without-injury earnings, are to [be] calculated by reference to 'that part of the period within 3 years before and 3 years after the injury as most fairly reflects the worker's earning capacity', had there been no injury. The court is therefore required to go well beyond actual pre-injury earnings and consider (on the hypothesis that the worker was and remained free of the compensable injury at base) both earnings and capacity to earn during that portion of the six years marked out 'as most fairly reflects the worker's earning capacity'. As it stands, that task is not inconsiderable.[21]

40 Ms Jessop, on the other hand, relied on the following statement of J Forrest J in Acir:

Section 134AB(38)(f) of the Act requires the Court to examine a variety of scenarios to determine which most fairly reflects the worker's earning capacity. ... The Court must then determine which of these scenarios (if more than one is applicable on the evidence) most fairly reflects the earning capacity of the worker without injury.[22]

41 In our view, the statement set out at [39] above does not constitute a finding by the Court of Appeal in Barwon Spinners that the phrase 'as most fairly reflects the worker's earning capacity' qualifies only the words 'that part of the period within 3 years before and 3 years after the injury'. The Court was not addressing the issue of whether that phrase extends to the whole sub-para (ii), but was emphasising the role of the phrase in selecting the appropriate period. On the other hand, J Forrest J in Acir expressly found that the phrase extends to the whole sub-paragraph. His Honour did so after quoting the statement in Barwon Spinners set out at [[](#_Ref4 > the gross income (expressed at an annual rate) that the worker:

• was earning from personal exertion; or
• was capable of earning from personal exertion; or
• would have earned from personal exertion; or
• would have been capable of earning from personal exertion,

during that part of the period within three years before and three years after the injury,

as most fairly reflects the worker's earning capacity had the injury not occurred.

43 When s 134AB(38)(f)(ii) of the Act is broken down as set out at [42] above, it becomes clear that the final phrase is needed to qualify not only the words that immediately precede it but also the four alternative scenarios in the sub-paragraph. The final phrase provides the criterion to be used to select not only the period (within the maximum period of six years), but also one of the four alternative scenarios. Unless the final phrase is read as qualifying the sub-paragraph as a whole, the sub-paragraph would not provide any basis for choosing which scenario is the most appropriate.

44 On the basis of the above interpretation, what is required under s 134AB(38)(f)(ii) of the Act is ascertainment of a worker's gross annual income that most fairly reflects his or her earning capacity had the injury not occurred.

45 Having regard to the above general principles, it is now necessary to consider the meaning of 'earning capacity' in s 134AB(3)(f)(ii) of the Act in the context of the issues raised by the parties.

Meaning of 'earning capacity' in s 134AB(38)(f)(ii) of the Act

46 HWT submitted that, in interpreting the meaning of 'earning capacity' in s 134AB(38)(f)(ii) of the Act, that sub-paragraph must be read with sub-para (i) and para (e). According to HWT, these provisions are directed to an assessment of whether a workplace injury resulted in the worker suffering a financial loss in the form of a loss of earning capacity of 40 per cent or more.[24] Thus, so it was said, the Act directs attention not solely to the worker's physical capacity to work, but also to the worker's willingness to work particular hours, the availability of work for the hours that the worker wishes to work and other factors that may be relevant to a particular case. [25]

47 HWT contended that, unlike sub-para (i) of s 134AB(38)(f) of the Act,

sub-para (ii) does not contain the defined term 'suitable employment' which involves consideration of a worker's capacity to perform work irrespective of whether that work is available. It follows, so it was said, that sub-para (ii) requires the worker to adduce evidence of the availability of work that he or she is capable of performing, whether at the current workplace or other workplaces. According to HWT, where, as in the present case, a worker only adduces evidence of the hours that the worker actually worked for a particular employer, that evidence is the best evidence of the availability of hours of work and the worker's capacity to work those hours. In such a case, so it was said, an assessment of the worker's pre-injury earning capacity for the purposes of sub-para (ii) is to be made on the basis of those hours.

48 According to HWT, the judge erred in not considering the availability of work. Such an approach was said to be capable of leading to absurd results, as an assessment of a worker's capacity without regard to the actual hours worked and actual availability of work could produce an artificially high number of hours for the purposes of s 134AB(38)(f)(ii). Further, it was said that a worker's particular life circumstances and choices - such as opting for part-time rather than full-time work - must be considered pursuant to s 134AB(38)(f)(ii) in order to avoid artificial outcomes.

49 Ms Jessop submitted that HWT's interpretation of sub-para (ii) of s 134AB(38)(f) of the Act impermissibly imported into that provision common law principles of assessment of damages. According to Ms Jessop, 'earning capacity', for the purposes of sub-para (ii), is a capital asset possessed by a worker which, when exercised, produces income from personal exertion. On this basis, earning capacity can be measured by a worker's physical and mental capacities to perform work for particular hours irrespective of whether those hours of work are available either in the worker's workplace or in another workplace. Ms Jessop conceded that the availability of work may be relevant in some cases, such as where a worker seeks to include overtime in the calculation of pre-injury earning capacity. However, she contended that availability of work is not relevant to her case.

50 Ms Jessop submitted that the intention of the Act is to measure the loss of capacity possessed by a worker as distinct from the capacity actually exercised in the statutory period. She contended that the phrase 'as most fairly reflects' in s 134AB(38)(f)(ii) of the Act is directed to the fair determination of quantum of earnings that may be realised by the exercise of the capacity possessed by the worker. Ms Jessop submitted that the provision contains two tests for determining pre-injury earning capacity: first, what the worker 'was earning or was capable of earning'; and, secondly, what the worker 'would have earned or would have been capable of earning'. The relevant question in this case was said to be the meaning of the second of these tests.

51 Ms Jessop submitted that the approach preferred by HWT fails to take account of this second test. The judge's approach was said to take into account the second test and to allow for consideration of a range of possible circumstances in which a stricter, more mechanical approach would lead to an unjust result.

52 Ms Jessop contended that the judge's decision is consistent with the principles in Acir that are set out at [37] and [40] above. Ms Jessop also relied on a statement in Guppy v Victo[26]an Workcover Authority26 that, in looking at preinjury capacity, the Court should take into account the 'full picture' of the work that the worker performed o[27]r the relevant period.27 According to Ms Jessop, this demonstrates that the approach for determining pre-injury capacity is designed to be a sophisticated approach to ensure that loss of earning capacity 'most fairly reflects' the worker's loss of earning capacity.

53 We agree with Ms Jessop's submission that, for the purposes of s 134AB(38)(f)(ii) of the Act, a worker's earning capacity represents a capital asset which, when exercised, produces income from personal exertion. It follows that a worker's ability to earn income through personal exertion depends on the nature and quality of the worker's capital asset and his or her capacity and willingness to use it to earn income. Thus, the worker's physical and mental capacities to work are relevant, as are the type of work the worker is able to perform, the remuneration for that work and the hours that the worker is willing to work.

54 The facts of each case and the manner in which the worker presents his or her case will influence which factors are relevant to the application of s 134AB(38)(f)(ii) of the Act and the relative importance of those factors. The availability of work at the worker's preinjury place of employment will not necessarily be relevant to an assessment of a worker's earning capacity for the purposes of s 134AB(38)(f)(ii). It may, however, have probative value in some cases. For example, it may inform an assessment of a worker's willingness to work where, over many years, work has been plentiful but the worker has always refused to accept offers to work beyond a certain number of hours per week. Availability of overtime work at the worker's preinjury place of employment may also be relevant where the worker seeks to include a particular level of overtime in his or her calculations of without injury earning capacity.[28]

55 The actual hours worked by a worker and his or her actual earnings are not always the best evidence of the worker's earning capacity for the purposes of subpara (ii) of s 134AB(38)(f) of the Act. They will be the best evidence under the first scenario - 'the gross income ... that the worker was earning' - but they will not necessarily be the best evidence in relation to the other three scenarios. Under those scenarios, the court is required to fix a representative figure for earning capacity which may take into account the amount of income earned but will not necessarily equate to that amount. In Acir, J Forrest J succinctly summarised the position as follows:

In most cases, the inquiry will be relatively simple; the wages at [the] time of injury will be established (scenario (a)) and generally, as the Second Reading Speech makes clear, the only other question will be determining whether, pursuant to scenario (c), there has been an increase or decrease in wages and the prospects of promotion. However, at times, scenarios (b) and (d) may need to be considered, such as, where it is necessary to examine the capabilities or capacity of the worker in terms of wages which could have been potentially earned or were prospectively available post-injury (e.g., if he or she was not working full-time at the time of the injury).

The essence, then, of the inquiry is to fix a figure which 'most fairly' reflects the earning capacity of the injured worker, absent the subject injury.[29]

56 Our analysis is not inconsistent with the High Court decision in

Husher v Husher,[30] upon which HWT relied. That case discussed the common law principles for assessment of damages for loss of earning capacity arising from a personal injury. The specific issue was whether the existence of an equal partnership at will between the plaintiff husband and the defendant wife meant that the plaintiff's loss of future earning capacity caused by the wife's negligence should be assessed on the basis that the partnership would have continued and that he would have received only half of the profits of the partnership. The plaintiff's physical labour and skill generated the entire income of the partnership. The Court held that, as the plaintiff had the ability to terminate the partnership and retain all future income derived from his personal exertion, the existence of the partnership should be disregarded in assessing the plaintiff's loss of earning capacity.

57 In Husher, the plurality (Gleeson CJ, Gummow, Kirby and Hayne JJ) stated:

The financial loss occasioned by impairment of earning capacity is the loss of what (if there had been no accident) the injured plaintiff would (as opposed to could) have expected to have had under his or her control and at his or her disposal by exercising that capacity.[31]

58 HWT relied on the above statement for the proposition that s 134AB(f)(ii) directs attention to what a worker would have earned based on the work actually available to him or her rather than what the worker theoretically could have earned if the availability of work is ignored.

59 In our opinion, Husher does not assist HWT because the common law principles for assessing damages for loss of earning capacity with which that case was concerned are not directly applicable to s 134AB(38)(e) and (f) of the Act.[32] In any event, the High Court rejected the proposition that it was appropriate to assess damages on the assumption that the past arrangements (the equal sharing of income pursuant to the partnership) would continue in the future. Instead, the Court emphasised the capacity of the plaintiff to exercise control over the income he earned and its disposal, and how this capacity was affected by the plaintiff's injury.

60 In the present case, prior to the injury, Ms Jessop had the capacity to work up to 37.25 hours per week and she was willing to exercise that capacity. After the injury, Ms Jessop no longer had the capacity to work up to 37.25 hours per week; her capacity was reduced to a maximum of 13.5 hours per week. The injury deprived Ms Jessop of the capacity to exercise control over whether she sought to earn income as a full-time employee as distinct from a part-time employee.

61 We do not accept HWT's submission that the absence of the defined term 'suitable employment' in subpara (ii) of s 134AB(38)(f) means that a court can only take into account work that is actually made available to a worker. As J Forrest J pointed out in Acir, only the first of the four scenarios in that subparagraph is based on proof of historical facts; the other three scenarios require findings as to hypothetical situations.[33]

Application of s 134AB(38)(f)(ii) to the present case

62 HWT submitted that, having regard to the evidence summarised at [9] and [14] above, there was no evidentiary basis for the judge to find that there were 37 hours per week of work consistently available to Ms Jessop. HWT contended that it can be inferred that the hours that Ms Jessop worked represented the hours of work that were available to her prior to the injury. According to HWT, the amount that Ms Jessop actually earned in the 2009 financial year, rounded up to $35,000, was the appropriate figure for the purposes of the assessment of without injury earning capacity under s 134AB(38)(f)(ii) of the Act. It therefore followed, so it was said, that Ms Jessop could not establish that her earning capacity had been reduced by 40 per cent or more as[34] result of the injury.34

63 Ms Jessop submitted that the judge was correct to determine that her loss of earning capacity should be calculated on the basis that she could work up to 37 hours per week. She relied on her evidence that she worked to a roster provided by HWT that varied from week to week and emphasised that the judge had accepted her evidence that she was ready, willing and able to work up to the 37 hours per week for which she was occasionally rostered. The judge's conclusion about Ms Jessop's 'without injury' earning capacity was said to take account of the 'full picture' of her ability to earn money in the workforce prior to 28 February 2009.

64 In our opinion, the evidence unequivocally established that, prior to Ms Jessop's injury, she was physically and mentally capable of working 37.25 hours per week and she was willing to work those hours if they were offered to her. Ms Jessop's willingness to exercise her capacity to work 37.25 hours per week was demonstrated by the fact that she worked those hours on two occasions in the 12 month period prior to the injury.

65 As discussed at [43] above, s 134AB(38)(f)(ii) of the Act requires the court to select one of four scenarios, and a period within the relevant period of six years, that most fairly reflects Ms Jessop's earning capacity had the injury not occurred. The annual period that most fairly reflects Ms Jessop's earning capacity is the period of 12 months prior to the injury and the scenario that most fairly reflects her earning capacity is the gross annual income that she would have been capable of earning from personal exertion if the injury had not occurred, rather than the gross annual income that she in fact earned prior to the injury. This is because Ms Jessop worked fewer hours than she would have been capable of working if the injury had not occurred. Ms Jessop was capable of working 37.25 hours per week and thus of earning gross annual income of $66,245.40. This is sufficient to satisfy the 40 per cent sta[35]tory test.35

66 It is important to stress that the above analysis does not mean that, in an action for common law damages, any pecuniary damages awarded to Ms Jessop would be assessed on the basis that, without the injury, she would have worked 37.25 hours per week. In such an action, damages would be assessed by applying common law principles. Those principles require consideration of many factors, including the period that Ms Jessop would have continued working, the number of hours that she would have worked per week and the level of remuneration that she would have received. Those principles also require consideration of, and the making of appropriate adjustments for, the vicissitudes of life.

67 It follows from the above discussion that the judge correctly concluded that Ms Jessop satisfied the statutory test in s 134AB(38)(e) and (f) of the Act. The judge's reasons are broadly consistent with the principles set out at [53] above.

68 Our conclusion at [67] above means that it is not necessary for us to consider Ms Jessop's notice of[36]ontention.36 However, as the parties made submissions on the notice of contention, we will discuss it briefly. Our discussion of the notice of contention below assumes that, contrary to our conclusions at [54] and [55] above, the availability of work and the actual hours worked by a worker at his or her pre-injury place of employment must generally be taken into account in assessing the worker's earning capacity for the purposes of s 134AB(38)(f)(ii) of the Act ('Assumed Requirement').

69 In our opinion, Ms Jessop's oral evidence about increases in the workload at HWT arising from retirements and redundancies and about her aspiration to work extra night shifts did not, standing alone, provide a sufficient evidentiary basis for a conclusion that she satisfied the Assumed Requirement. This is because that evidence was vague and imprecise and could not support a finding that, if Ms Jessop had not suffered the injury, she would have been capable of earning gross annual income which exceeded the amount of $24,008.40 - which is calculated on the basis of the maximum of 13.5 hours per week that she was capable of working after the injury[37] - by more than 60 per cent.

70 On the other hand, it may have been possible for Ms Jessop to satisfy the Assumed Requirement on the basis of the summary of her payslips for the 12 month period prior to the injury - from 1 March 2008 until 28 February 2009 - that was tendered at the County Court hearing. This is because the payslips demonstrate that the average of the hours per week that Ms Jessop was offered to work and actually worked was increasing in the lead up to the injury. Although the weekly average for the 12 month period prior to the injury was 19.95 hours, the average increased to 22.18 hours for the nine month period prior to the injury, to 22.55 hours for the six month period prior to the injury, and to 24.13 hours for the three month period prior to the injury.

71 In the light of Ms Jessop's evidence and the payslips, it may have been open to the judge to infer that the abovementioned trend of increasing hours offered and actually worked per week would continue in the absence of the injury, particularly in circumstances where HWT was reducing staff and other employees were performing more work. On this basis, the judge could have concluded that 'the period within 3 years before and 3 years after the injury ... [that] most fairly reflects [Ms Jessop's] earning capacity had the injury not occurred' is the period of three months prior to the injury and that 'the gross income (expressed at an annual rate) ... [that] most fairly reflects [Ms Jessop's] earning capacity had the injury not occurred' is the amount of $42,912.79. This is calculated by adopting the average hours per week that Ms Jessop was offered to work and actually worked in the three month period prior to the injury (24.13 hours), multiplying it by her hourly rate of $34.20 and then multiplying the resultant weekly figure by 52 to obtain an annual figure.[38] The amount of $42,912.79 exceeds by more than 60 per cent the amount of $24,008.40, which represents the annual income produced by the maximum of 13.5 hours per week that Ms Jessop was capable of working after the injury.

72 It follows that, if the judge had erred in calculating Ms Jessop's without injury gross annual income by reference to 37.25 hours per week, it may have been possible for his Honour to have found in favour of Ms Jessop by calculating that income by reference to 24.13 hours per week.

73 As the parties did not refer to the possible analysis outlined at [70] to [72] above, either at the County Court hearing or on the appeal, we have not taken that possible analysis into account in determining the outcome of the appeal.

74 For the reasons set out at [30] to [67] above, we would dismiss the appeal.

[1] Jessop v Herald & Weekly Times Ltd [2014] VCC 308 ('Reasons').

[2] All references to the Act are to the Act as in force as at 11 February 2013.

[3] In the Reasons, the judge rounded the average hours per week to 19.5 and 37 respectively.

[4] Acir v Frosster Pty Ltd [2009] VSC 454, [146] ('Acir').

[5] Paragraph (e) only applies where the worker relies on the first, second or third limbs of the definition of 'serious injury' in sub-s (37), and therefore applies to the present case.

[6] Victoria, Parliamentary Debates, Legislative Assembly, 13 April 2000, 1003 (Robert Cameron).

[9] [2005] VSCA 33; (2005) 14 VR 622 ('Barwon Spinners').

[13] Barwon Spinners [2005] VSCA 33; (2005) 14 VR 622, 636-7 [27] quoted in Reasons [22].

[15] [1998] HCA 28; (1998) 194 CLR 355 ('Project Blue Sky').

[16] Project Blue Sky [1998] HCA 28; (1998) 194 CLR 355, 381.

[17] Project Blue Sky [1998] HCA 28; (1998) 194 CLR 355, 384.

[18] It is well established that an assessment of common law damages for loss of earning capacity requires consideration not only of a worker's ability to work in some sort of occupation, but also the availability of work in that occupation. See Bremert v Clark (1971) 8 SASR 294, 296 ('Bremert').

[19] Acir [2009] VSC 454.

[20] Acir [2009] VSC 454, [171]-[174] (citations omitted) (emphasis in original).

[21] Barwon Spinners [2005] VSCA 33; (2005) 14 VR 622, 635 [23] (emphasis in original).

[22] Acir [2009] VSC 454, [165].

[23] Acir [2009] VSC 454, [163] quoting Barwon Spinners [2005] VSCA 33; (2005) 14 VR 622, 635 [23].

[24] HWT relied on Husher v Husher (1999) 197 CLR 139, 143 [7]-[8] ('Husher') for the proposition that, for the purposes of assessing damages, loss of earning capacity is a financial loss.

[25] To support this proposition, HWT relied on Harold Luntz, Assessment of Damages for Personal Injury and Death (2nd ed, Butterworths, 1983) 228 [5.1.03], Faulkner v Keffalinos (1971) 45 ALJR 80, 85 and Bremert (1971) 8 SASR 294, 296. See also Harold Luntz, Assessment of Damages for Personal Injury and Death (4th ed, Butterworths, 2006) 304 [5.1.5].

[26] [2010] VSCA 164; (2010) 56 MVR 10 ('Guppy').

[27] Guppy [2010] VSCA 164; (2010) 56 MVR 10, 16 [38].

[28] Smorgon Steel Tube Mills Pty Ltd v Majkic [2008] VSCA 230; (2008) 21 VR 193, 197 [13]-[14].

[29] Acir [2009] VSC 454, [166]-[167].

[30] Husher [1999] HCA 47; (1999) 197 CLR 138.

[31] Husher [1999] HCA 47; (1999) 197 CLR 138, 147 [18] (emphasis in original).

[32] See [36] above.

[33] Acir [2009] VSC 454, [165].

[34] See [10] above.

[35] See [10], [13] above.

[36] See [29] above.

[37] See [11] above.

[38] See [11] above.