Thompson v Armstrong & Royse Pty Ltd - [1950] HCA 46 - HCA 1950 case summary — Zoe

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Thompson v Armstrong & Royse Pty Ltd

[1950] HCA 46

High Court of Australia|1950-07-01|Before: Kitto JJ

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Court

High Court of Australia

Decision date

1950-07-01

Before

Kitto JJ

Source

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Judgment (104 paragraphs)

[1]

High Court of Australia Latham C.J. McTiernan, Williams, Webb, Fullagar and Kitto JJ. Thompson v Armstrong & Royse Pty Ltd [1950] HCA 46

[2]

This is an appeal from an order of the Full Court of the Supreme Court of New South Wales made upon a case stated by the Workers' Compensation Commission pursuant to s. 37 (4) of the Workers' Compensation Act 1926-1947 N.S.W.. The appellant was employed by the respondent in a timber mill. On 18th December 1947 he cut the back of his left hand by coming into contact with a hanging saw. He was totally incapacitated for work until 2nd January, when he resumed work. The injury arose out of and in the course of his employment. He therefore became entitled to receive compensation from his employer in accordance with the Act, ss. 7 and 9. He was paid compensation in respect of 18th and 19th December. The Federal Timber Workers' Award, under which he was working, provided for fourteen consecutive days' annual leave in the case of the appellant, who had been continuously employed by the respondent for a period of eleven years. The respondent closed down its works on 20th December in order to allow the employees the fourteen days' leave. The appellant was paid wages at his full rate in respect of these fourteen days. Christmas Day, Boxing Day and New Year's Day were holidays under the provisions of the award in respect of which the appellant was entitled to be paid. He was paid full wages in respect of these holidays. He claimed workers' compensation at the rate of £5 15s. 0d. per week (£3 10s. 0d. for himself, £1 5s. 0d. in respect of his wife and £1 in respect of his two children). His Honour Judge Rainbow held that he was not entitled to be paid workers' compensation in respect of the public holidays because he was not expected to perform any service on those days, so that he had received all that he was entitled to get under his contract. In the case of the annual leave, however, his Honour was of opinion that he was entitled to workers' compensation for that period because his earning capacity in respect of some possible other employment was destroyed for that period. The appellant contended that he was entitled both to holiday pay and to workers' compensation in respect of the public holidays as well as in respect of the period of annual leave, and the employer contended that he was not entitled to workers' compensation in respect of either the public holidays or the annual leave. The learned judge stated a case for the opinion of the Supreme Court upon the following questions of law: - "(a) Is an incapacitated employee, working under the terms of the Timber Workers (Federal) Award, entitled for the period of the annual holidays both to compensation and holiday pay? (b) Is such a worker entitled under the award for the public holidays Christmas Day and Boxing Day both to wages and compensation for each day?"

[18]

It is not entirely easy to construe the words of Lord Loreburn - "payment in respect of the incapacity". Workers' compensation itself is plainly paid in respect of incapacity. If an employer pays full wages during a period of incapacity is a distinction to be drawn between a first case where a considerate employer pays out of compassion so that the payment may perhaps be said to be made in respect of the incapacity, and a second case where the employer pays because, though he may have no compassion for the worker and believes that the worker caused his injury by his own carelessness, he thinks on the whole that it is prudent, for some reason, to pay his wages? There may be a third case where the employer pays full wages because he considers that he is bound to pay under the contract of employment notwithstanding the incapacity. As a general rule wages are payable only as consideration for work done and if no work is done no wages are payable. Whether this is so depends entirely upon the terms of the contract (O'Grady v. M. Saper Ltd. [1] ). The terms of a contract of employment may be such that wages are payable even though no work is done. Thus a worker may be paid compensation for a period during which he does no work, but the payment of compensation does not alter the terms of a subsisting contract of employment, though Elliott v. Liggens [2] shows that an employee may be estopped from alleging that wages are due for a period during which he has claimed and taken compensation - the right to which depended upon the absence of a right to wages. Thus there may be a third case where a worker is entitled under his contract to be paid wages notwithstanding incapacity and is paid accordingly. In such a case it would be difficult to say that wages were paid "in respect of the incapacity". The attempt to apply distinctions between such cases and possible other cases in order to decide whether a payment was made "in respect of the incapacity" would, in my opinion, result in confusion and injustice. The judgment of their Lordships in McDermott v. Owners of S.S. Tintoretto [3] can, in my opinion, be reasonably interpreted as requiring a tribunal to take into account payments made by an employer in his capacity as an employer which are made in respect of the period during which the worker is incapacitated. It is in my opinion by the application of s. 13, and not by reason of the application of any principle that there is no incapacity if wages are paid, that the payment of an amount as wages in excess of the amount claimable as workers' compensation prevents a right to claim payment of compensation arising for any period in respect of which wages are paid.

[20]

This view is, in my opinion, supported by the decision of the Court of Appeal in Funnell v. Allen West & Co. Ltd. [4] and the group of cases reported with that case. In Funnell's Case [4] there was in fact a partial physical incapacity for work, but the employer nevertheless paid the workman full wages. The County Court judge said that the workman had "to show that at this moment there is a diminution of his earning capacity and, in my opinion, he has entirely failed to show any such thing. He is employed by his old employers, at his old work, and is in receipt of the same wages that men of his standing get who have never had an accident at all" [1] . The learned judge then pointed out that if the incapacity increased and he was unable to earn full wages the workman could apply to have compensation re-assessed. It was accordingly held that there was no "compensatable incapacity at this moment". This decision was upheld in the Court of Appeal [2] . It was said that there was physical incapacity but that a physical incapacity which did not reduce the value of the workman's labour in the open market did not entitle him to compensation. Therefore if the worker is in fact receiving full wages he cannot in respect of the period during which he is paid such wages recover workers' compensation, though if there is a continuing incapacity he is entitled to a declaration which will enable him to have compensation assessed if he is no longer paid such wages and the incapacity still persists (Chandler v. Smith [3] ; King v. Port of London Authority [4] ). The effect of the cases is, in my opinion, accurately stated in Willis's Workmen's Compensation, 31st ed. (1938), at p. 299, where it is said that - "It may happen that the injured workman cannot at the time show that he is entitled to any pecuniary payment, because, for example, his employer is paying his full wages " See also Halsbury's Laws of England, 2nd ed., vol. 34, p. 930 - "If the injury, though serious, does not cause incapacity for work or interference with the wages, no compensation can be awarded."

[67]

In Ball v. William Hunt & Sons Ltd. [3] Earl Loreburn L.C. said: "I think there is incapacity for work when a man has a physical defect which makes his labour unsaleable in any market reasonably accessible to him, and there is partial incapacity for work when such a defect makes his labour saleable for less than it would otherwise fetch." Lord Macnaghten said: "Now "incapacity for work" as the phrase is used in the schedule seems to me to be a compendious expression meaning inability to earn wages or full wages as the case may be at the work in which the injured workman was employed at the time of the accident" [4] . Both these statements have been frequently cited in subsequent cases. Earl Loreburn's statement seems to me to be more favourable to the employer than that of Lord Macnaghten because the latter said that incapacity for work occurs whenever the injury affects the capacity of the worker to earn the same wages at the work in which he was employed at the time of the accident, whereas Earl Loreburn said that the injury only causes incapacity for work when it results in the worker being unable to earn the same wages as before, not necessarily at the same work but at any form of work reasonably accessible to him. In Ruocco v. Surrey County Council [1] Evershed L.J. said that "on the basis of the statements by Earl Loreburn and Lord Macnaghten which have been read, the test to be applied is in reference, not to the fact of the applicant's ability physically in all respects to do the work which he did before, but rather to the fact of his capacity to earn his living as he did before the accident." There are statements to the same effect in Williams v. Metropolitan Coal Co. Ltd. [2] . The present appellant was physically incapacitated for work for a short period but during the whole of this period he was paid his full pre-accident wages. There is no evidence that the injury left any after effects which might in the future make his labour saleable for less than it would otherwise fetch. As Jordan C.J. said in Carmichael's Case [3] : - "Hence, the injury did not disable the worker from doing everything that he was required to do under his subsisting contract of employment - namely, nothing - in order to be entitled to receive his full wages the injury had no relevant disabling effect." The appellant's physical incapacity for work during its short existence at no time produced any economic loss. He was able to earn his full wages at the work at which he was employed at the time of the accident because it happened that in this period he was entitled to full wages without having to do any work. He was not therefore incapacitated for work within Lord Macnaghten's test, and no case arose for applying Earl Loreburn's test because, whilst he remained in his existing employment, it was unnecessary to inquire whether there was some other equally profitable employment reasonably accessible to him. He was not therefore entitled to any compensation, and in the absence of any evidence of any possible after effects to even a declaration of liability. His present application fails, I think, upon the reasoning of the Court of Appeal in Funnel v. Allen West & Co. Ltd. [4] and Bailey v. Ransomes & Marles Bearing Co. Ltd. [5] . The appellant was not paid any wages out of compassion. He was paid his full wages because he was legally entitled to them. His disability caused no loss of earning capacity present or future. During the whole of the period he was able to earn his living as he did before the accident. As Scott L.J. said in Everett v. Associated Equipment Co. Ltd. [1] , his right to compensation was dormant and it remained dormant during the whole period of his incapacity.

[71]

Workers' compensation is given for loss of the power of earning (McDermott v. Owners of S.S. Tintoretto [2] ), and that loss is, I think, measured in a case like this by what the worker would have earned, and not by what he could have earned, if he had not been incapacitated. His employment was not terminated by his incapacity: he continued to be the employee of the respondent. Section 9 (1) of the New South Wales Act, like the corresponding provision of the English Act, provides that compensation is to be a proportion of past earnings in the service of the employer liable to pay the compensation. Lord Macnaghten said in Ball v. Wm. Hunt & Sons Ltd. [1] , that compensation under the English Act was for loss or diminution of the capacity to earn wages in the employment in which the injured workman was engaged at the time of the accident. Later, in Harwood v. Wyken Colliery Co. [2] , Duckley L.J. observed that the workman would be compensated, if within the statutory limits, he were put in a position as good as that in which he would have been if he had not been injured. If the appellant had not been injured he would have been on paid annual leave from 20th December 1947 until 1st January 1948, i.e., beyond the period covered by his incapacity; so that his incapacity did not reduce his earnings. But although he lost no pay during his incapacity he had no recreation as distinct from rest. The award suggests that an annual rest period, but not necessarily a recreation period, of fourteen days is essential for the wellbeing of timber mill workers, as it requires the leave to be taken and prohibits acceptance of a monetary equivalent. If recreation, and not merely rest, was necessary, and the appellant could have obtained leave for it, it would have been without pay. Without compensation then the appellant would not in fact have been in a position as good, within the statutory limits, as that in which he would have been if he had not been injured. However, as stated by Lord Atkinson [3] and Lord Macnaghten [1] , the compensation is for loss of the power of earning, and loss of earning power does not include loss of recreation. There was no submission to the contrary. Loss of earning power resulting from incapacity to work due to injury by accident arising out of or in the course of employment does not necessarily entitle the injured worker to compensation. Take, for example, an employee who works during the day for one employer, but at night for another employer, in the same industry, but on different tasks. The employee suffers an injury at his day work which does not incapacitate him from performing the day work, but does incapacitate him from performing the night work, e.g., the injury causes the loss of fingers which does not interfere with the performance of the day work but prevents him from doing the night work. He cannot recover compensation, although he suffers a loss of earning power. It follows that mere loss of earning power does not give a right to compensation. It must be a loss of earning power in respect of the work being done when the injury occurs. Until that loss is suffered there is no right to compensation. No such loss occurred here. Payment for the holidays and leave period prevented that.

[73]

If I am wrong in holding that the test in a case like this, where the contract of employment continued throughout the period of incapacity, is what the employee would have earned, and not what he might have earned, but for his incapacity, then I agree with the Chief Justice that leave pay is a proper deduction under s. 13, as it was a payment during and in respect of the period of his absence from work and because of such absence. It mitigated the loss of earning power during the period of incapacity and in the circumstances I think it is properly set off against that loss. The contrary is not, I think, indicated by Lord Loreburn's test in the Tintoretto Case [1] , i.e., that the payment to be a set off against compensation must be in respect of the incapacity. His Lordship must be taken to have had in mind the economic consequences of the incapacity, and not the incapacity itself, i.e., the absence from work and consequent loss of earning power. I do not think we should take his Lordship as indicating that the employer should pay twice for this economic result to the employee by refusing to allow the employer a set off of payments made for the period under the contract of employment, more particularly when the compensation is required to be based on wages earned in the same employment. It is immaterial, I think, that the payment of compensation is for an enforced absence. As a matter of fact, the respondent company closed down for the period of annual leave, as it had the right to do under the award: the employees had no option but to absent themselves from work during the period in question; but I do not rely on this right to close down. Keeping in mind that the compensation is not for the accident itself, or for pain or suffering, but for the economic consequences of absence from work and loss of earning power, no reason for refusing a set off under s. 13 of leave pay suggests itself to me. Payment for the leave period and payment of workers' compensation if made would be for the same purpose, i.e., for the support of the appellant during a particular period. The leave payment is not properly regarded merely as a sum based on past services: it is a payment to the employee for his support during a specified period, his period of leave, which in this case included the whole of the period of his incapacity for which compensation is claimed. If workers' compensation is payable in addition to the holiday and leave payments, then the legislature has required a double payment for the same period and purpose. I do not think that was intended.

[77]

I think that I have fairly stated the argument presented for the respondent. I think that it adopts the only legitimate analytical approach to the question which arises in this case. It recognizes that the question turns on the meaning of the words "incapacity for work". But I am of opinion that it cannot be supported. A man is totally incapacitated for work when he is, by reason of his injury, physically unable to work. The words in their natural and primary sense mean that. When their meaning has been expounded by reference to inability to earn wages, the purpose has been to make the meaning more specific, and the result has been to extend rather than restrict the meaning. Thus in Ball v. William Hunt & Sons Ltd. [1] the worker had recovered his ability to work, but, because the accident had left him with only one eye, he found it impossible to obtain employment. The House of Lords held that he was entitled to compensation. It was with reference to the facts of that case that Lord Loreburn [2] delivered his often quoted definition of incapacity for work. So Lord Macnaghten [3] spoke of "inability to earn wages, or full wages, as the case may be": Lord Atkinson [4] spoke of "loss of the power to earn wages": and Lord Shaw [5] of the "incapacity to earn a wage". The case of Birch Bros. Ltd. v. Brown [6] was a similar case, and Lord Macmillan said: - "It is now accepted that by incapacity for work is meant incapacity to earn wages by working" [7] . Incapacity to earn wages by working includes physical inability to perform any work. The cases cited, and others to the same effect, decide that it includes more. To say that, although there is physical inability to do any work, yet, because wages have been paid, there is no incapacity for work is, I think, to misconceive the purpose and effect of what was said by the learned Lords in the cases cited and to attribute to the words "incapacity for work" a meaning which they cannot bear. I think that this is the real and sufficient answer to the argument for the respondent. The matter, however, is by no means free from authority.

[84]

Speaking with the greatest respect, I am unable to think that Carmichael's Case [1] was rightly decided. In so far as it rests upon a restrictive interpretation of the words "incapacity for work", it does not seem to me that it can be supported. The words cannot, as I have said, be read as referring to anything but a physical condition, and the question of the existence or non-existence of a physical condition cannot be answered by reference to the terms of a particular contract or to what is required for the performance of a particular contract. It is true, of course, that the fact that a worker is being paid full wages by his employer is relevant to the question whether an injury has resulted in incapacity for work. But this is only because prima facie employers do not pay full wages to men who are unable to do any work. And it is never conclusive evidence. It would, of course, be conclusive evidence if "incapacity for work" meant inability to obtain wages from a particular employer. But the expression means inability for physical reasons to sell his labour in the open market. This is the whole point of Funnell v. Allen West & Co. Ltd. [2] . In that case Morton L.J. (as he then was), speaking for the Court of Appeal, said: - "The workman appeals, and his counsel contend that the county court judge failed to apply Lord Loreburn's definition of "incapacity for work" in Ball v. William Hunt & Sons Ltd. [3] . They contend that he wrongly took the view that there cannot possibly be a partial incapacity for work if a man is employed by his old employers at his old work, and is in receipt of the same wages as those received by men of his standing who have never had an accident. We agree that a partial incapacity for work may exist in the circumstances just stated; for instance, the employers may be paying the workman, out of compassion, more than his labour is actually worth in the open market" [2] . I would add that they might be paying him because an industrial award compelled them to pay him, in which case the position would be the same, though a question might arise as to whether s. 13 or its counterpart could be invoked. Morton L.J. proceeded: - "No doubt the fact that a man is doing his old work, and is in receipt of the same wages as those received by men of his standing who have never had an accident, is strong evidence that there is no "incapacity for work" within Lord Loreburn's definition; but it is not conclusive evidence" [1] . His Lordship then proceeded to examine the reasons which the county court judge had given for his decision, and came to the conclusion that he had not misunderstood or misapplied Lord Loreburn's definition. Certain passages in the judgment indicated that the learned judge had "had the open market in view". If he had not had the open market in view, but had acted on the assumption that the question of incapacity for work was conclusively determined by reference to the relation between the worker and his continuing employer, the case would have been sent back to him. The well-established position is clearly put by Starke J. in Williams v. Metropolitan Coal Co. Ltd. [2] . His Honour said: - "Compensation is not payable for the injury but for the loss of power to earn caused by the injury, that is, for incapacity for work which results from the injury." The question is whether the injury has left the worker in such a position that in the open labour market his earning capacity in the future is less than it was before the injury (Birmingham Cabinet Manufacturing Co. v. Dudley [3] ; Jackson v. Hunslet Engine Co. [4] ). The words "in the future" in this passage refer, of course, to the time of commencement of the incapacity, and it does not matter whether the duration of the incapacity is one week or many years. The italics are mine.

[86]

In so far as the decision in Carmichael's Case [5] depends on an implication from the nature and object of the Act, it is, in my opinion, at variance with the whole trend of English and Australian authority. The Act has always been construed from the point of view that its nature and object are those of an Act to benefit the worker. In Williams v. Metropolitan Coal Co. Ltd. [2] , in a passage following immediately on that which I have quoted above, Starke J. said: - "It is erroneous to say that the whole object of the Act is to compensate a worker for injury whether by disease or otherwise only to the extent to which he is thereby incapacitated from earning his full wages in the employment in which the injury arose, or that the clear intention of the Act is to limit its operation to the matter of restoring the financial position of the worker in relation to the industry in which he had been working at the time of the injury." Striking examples of a refusal to introduce any implication which would take away or limit the right of the worker to compensation if the statutory conditions are literally fulfilled are to be found in McCann v. Scottish Co-operative Laundry Association Ltd. [1] , and the cases collected in the judgment of Lord Thankerton [2] . These cases show that compensation is payable during incapacity resulting from an accident notwithstanding that the worker, even if he had met with no accident, could not have earned anything because of some disease unconnected with the accident, or because of another accident unconnected with the employment, or because he is undergoing a term of imprisonment, or because of a strike. As Hamilton L.J. (as he then was) said in Harwood v. Wyken Colliery Co. [3] : - "The Act is a guarantee of workmen against the risk of accident. It is not founded on indemnity, and the ideas of retribution for wrong-doing and of restoratio in integrum are foreign to it." Hamilton L.J. did not, of course, mean that (apart from provisions which correspond to s. 16 of the New South Wales Act) the Act gave compensation for injury as such. He meant that the Act must be allowed to speak for itself, and that its own express provisions with regard to the consequences of an accident are not to be qualified or limited by the importation of ideas developed in the law of tort and in equity. So the receipt of a pension or superannuation allowance is never held to destroy or limit the worker's right to compensation, unless it can be brought within a provision corresponding to s. 13 of the New South Wales Act as interpreted by the courts. See, e.g., Yates v. Hemsworth Rural District Council [4] .

[88]

It remains only to consider whether s. 13 of the Act can be applied in this case. Actually Mr. Barwick expressly declined to invoke s. 13, and I think that he was right in so declining, because the authorities seem to be conclusively against its application to such a case as the present. We begin with McDermott v. Owners of S.S. Tintoretto [5] . We may note in passing that we do here find an implication introduced, but it is an implication in favour of the worker. In that case the worker, a seaman, had received certain payments by way of maintenance under the Merchant Shipping Acts, and Lord Loreburn L.C., said: - "It is clear that compensation is to begin exactly where the right to maintenance ends. Reading the words of the Act which we have to construe in the light of what I have just said, I have no difficulty in seeing where their generality is limited. It is not every payment, allowance, or benefit which the workman may receive from the employer during the period of his incapacity that the county court judge must have regard to. It is only such as are received in respect of the incapacity, and received in respect of that period of it which is covered by the compensation. It means, in short, that the man is not to be paid twice over, by the overlapping of benefits derived from two separate Acts of Parliament" [1] . Lord Atkinson said that the provision in question meant that regard should be had to "any payment allowance or benefit which the workman should receive from his employer in respect of the injury and the consequent incapacity to earn " [2] . It is the language of Lord Loreburn that is always quoted. Both Lord Loreburn's language and the (perhaps more general) language of Lord Atkinson must, it was said, be read in the light of the actual facts of the case, and it is clear that the actual decision does not govern the present case. But the rule laid down has been held to be of general application. It has been used as providing the test by which it is to be decided whether a pension or superannuation allowance is to be brought into account against the worker. In Considine v. McInerney [3] it was held that the particular allowance there in question had to be taken into account, but Lord Buckmaster, Lord Loreburn and Lord Atkinson all applied the test laid down in the Tintoretto Case [4] . Lord Buckmaster, after coming to the conclusion that the worker would not have been entitled to the superannuation allowance but for the fact that he had become physically infirm, said: "The occasion, therefore, on which the pension was payable was inseparable from his injury" [5] . Lord Loreburn said: - "These words are quite general, but it is obvious there must be some limitation, or the declared purpose of the Act will be frustrated. They can refer only to what the workman receives in respect of the incapacity. If that were not so, then the employer might be relieved of his statutory burden by the accident that he had given to the workman some money or some benefit for a perfectly different purpose, or connected with a perfectly different duty" [6] . Lord Atkinson said that it was obvious that a payment allowance or benefit to be taken into account was a payment allowance or benefit "given in respect of that for which the compensation is to be awarded, namely, the injury received by the workman" [1] . (See also Langford v. Port of London Authority [2] ; Yates v. Hemsworth Rural District Council [3] and Williams v. Metropolitan Coal Co. Ltd. [4] ). In Denning v. Metropolitan Water, Sewerage and Drainage Board [5] Judge Perdriau, referring to s. 47 of the Act, which contains a provision analogous to that of s. 13, said: - "In my opinion the phrase "benefits under any other Act" in subsection (1) of section 47 means those which as a result of his injury the worker is entitled to under some Act other than the Workers' Compensation Act; there must be a connecting link between the injury and the benefits - e.g., sick leave on full pay or other benefit which accrues as a result of the injury." In Glendenning v. State Coal Mines Control Board [6] the same learned Judge said: - "In Denning v. Metropolitan Water, Sewerage, and Drainage Board [7] I ruled that the term "benefits under any other Act" in section 47 (1) of the Workers' Compensation Act, 1926-1929, did not include the value of extended and annual leave under an industrial award, and that the cash value of these paid to the deceased worker's widow were not deductible from the lump sum payable to her and other dependants under the said Act. I then expressed the opinion that there must be a connecting link between the injury and the benefits before the value of the benefits could be deducted from the compensation payment, and, I think, a similar principle should be applied here." In these two passages his Honour was, in my opinion, correctly interpreting high English authority.

[95]

This is made abundantly clear by Lord Loreburn's frequently quoted definition in Ball v. William Hunt & Sons Ltd. [3] : - "There is incapacity for work when a man has a physical defect which makes his labour unsaleable in any market reasonably accessible to him, and there is partial incapacity for work when such a defect makes his labour saleable for less than it would otherwise fetch." The inquiry, then, must be as to the result of a man's physical defect in relation to the market for his labour. If his physical defect is such that he cannot go into the market at all, because he cannot offer to perform any labour, it seems to me to follow necessarily that he has a total incapacity for work. He has no labour to sell; and to say that nevertheless he is not incapacitated for work, because he is getting wages under a continuing contract of employment which in the circumstances does not require him to give any labour in return for wages, appears to me to involve a complete desertion of Lord Loreburn's definition. His Lordship's expression "any market reasonably accessible to him" has often been paraphrased as "the open market"; see, for example, Funnell v. Allen West & Co. Ltd. [4] . It is the general market in which the worker, but for his injury, could reasonably have offered his labour. To concede, as I think one must, that total incapacity for work exists whenever an injury makes a worker's labour unsaleable in the general market for such labour, is to admit that its existence is not disproved by the fact that a particular employer is paying him wages for doing nothing. Indeed, the fact that a worker, after receiving an injury, is found to be in receipt of wages is never decisive of capacity for work. This fact may or may not point towards the conclusion that he has capacity for work; and whether or not that is the proper conclusion depends upon the circumstances. To the extent to which the wages are produced by anything other than work, e.g., by the compassion of the employer, the receipt of them is irrelevant to the question of capacity for work: Funnell v. Allen West & Co. Ltd. [1] ; Hawkins v. Australasian United Steam Navigation Co. Ltd. [2] ; and the clearest possible case of wages being produced by something other than work would seem to be the case where wages are paid because of a legal obligation to pay them for a period in which no work is performed.

[97]

It was said in the Supreme Court that the right to claim compensation and the right to be paid wages are mutually exclusive rights; and the Court applied a statement by Judge Perdriau in Davey v. Commissioner for Railways [3] that "it is clear that compensation is to begin exactly where the right to full wages ends". These statements, in my opinion, propound an erroneous test of incapacity for work. Such a test finds no warrant in the words of the Act, or, so far as I know, in any of the English decisions. One case relied upon in support of them is Elliott v. Liggens [4] ; but that case is to be understood, I think, as deciding only that, by claiming and accepting compensation on the basis that his earnings after the accident were less than his earnings before it, a worker is estopped from asserting that he was entitled during the period covered by the compensation to wages at the same rate as before the accident. Again, in Birch Bros. Ltd. v. Brown [5] , Lord Macmillan said: "Even the actual obtaining of employment by a handicapped workman may not prove his recovered economic capacity to earn wages, for the job may have been given to him out of philanthropy or be merely nominal. In such a case the compensation is diminished or ended not because the workman is really proved to have recovered his earning capacity but because wages and compensation are mutually exclusive." But this means, I think, what the same learned Lord said in McCann v. Scottish Co-operative Laundry Association Ltd. [1] : - "It is true that if the workman has resumed work after his accident, and is in fact earning the same wages as before his accident, the employer is freed from liability so long as that state of matters continues, even if the workman is still partially incapacitated, but this is because the statutory method of calculating compensation yields nothing." Thus it is true to say, in a case of partial incapacity, that wages and compensation are mutually exclusive, not in the sense that the receipt of wages necessarily proves capacity for work and therefore negatives a right to be paid compensation, but in the sense that post-injury wages reduce the amount of compensation payable because the weekly compensation must not exceed the difference between the worker's average weekly earnings before the injury and his average weekly earnings after the injury: see s. 11 of the New South Wales Act. The doctrine of mutual exclusiveness affords no touchstone for, and indeed has no relevance to, the determination of the question whether a worker is entitled to be paid compensation as being totally incapacitated for work.