Victorian WorkCover Authority v Vitoratos [2005] VSCA 261

Court of Appeal (Vic)|2005-11-16|Before: CALLAWAY, BUCHANAN and NETTLE, JJ.A.

Accident compensation - Interest on outstanding weekly payments - Interest is to be calculated on the entire amount of outstanding weekly payments from the date of incapacity to the date of the decision of the Magistrates' Court or the County Court - Income tax and the amount of Centrelink payments are not to be deducted before interest is calculated - Accident Compensation Act 1985, s.114E.

7 The respondent was employed by a plastics company as a machine operator. On 2 March 1999 the respondent suffered an epileptic seizure, which she alleged was caused by her employment. As a result of the seizure the respondent collapsed and injured her shoulder. The respondent claimed that she was incapable of working as a result of the seizure and her injured shoulder.

8 Section 93 of the Accident Compensation Act 1985 ("the Act") provides that a worker incapacitated for work as a result of a compensable injury is entitled to compensation in the form of weekly payments. The applicant lodged a claim for weekly payments of compensation with her employer. The claim was rejected on the grounds that the respondent had not sustained any compensable injury and was not incapable of working. The respondent brought proceedings against the appellant in the County Court for compensation. The appellant stood in the shoes of the respondent's employer after it was wound up. After a trial it was held that the respondent was entitled to compensation for incapacity which continued after 2 March 1999. The appellant was ordered to pay weekly compensation from 2 March 1999 "to date and continuing" and to pay interest in accordance with the provisions of the Act.

9 The parties agreed that the arrears of weekly payments owing to the respondent amounted to $78,482, but were unable to agree upon how interest was to be calculated.

10 The entitlement to interest was conferred by s.114E(1)(b) of the Act, which provided:

"(1) The amount of outstanding weekly payments and interest at the prescribed rate on that amount are payable to the worker in the following circumstances and in respect of the periods specified in relation thereto -

...

(b) if a decision to reject a claim for weekly payments is set aside by ... the County Court, from the day on which the incapacity commenced until the day on which the decision is set aside ..."

The expression "weekly payment" was defined in s.5 as "a weekly payment of compensation under section 93A, 93B or 93C or under section 93CA, 93CB, 93CC or 93CD". Each of the sections mentioned in the definition provided for the calculation of the amount of weekly payments during different periods of incapacity. The sections did not provide for the deduction of income tax or allowances paid to the worker by Centrelink in determining the amounts[10]. The "prescribed rate" of interest was the rate fixed for the time being under s.2 of the Penalty Interest Rates Act 1983 (s.5).

11 The time for making weekly payments was regulated by s.114D(6), which provided:

"(6) A weekly payment must be made to a worker -

(a) before the expiry of 7 days after the end of the week in respect of which it is payable; or

(b) if the worker would be paid less frequently if the worker were at work, at such time or at such intervals as he or she would be paid if at work."

12 The respondent claimed interest on the full amount of the weekly payments for the entire period from 2 March 1999 to the date of the County Court decision. The appellant, on the other hand, contended that interest should be calculated on each weekly payment from the date on which it accrued until the date of the decision and that interest should be calculated on the amount of each weekly payment which was paid to the respondent after the appellant had deducted income tax and allowances paid to the worker by Centrelink.

13 The dispute returned to the Court pursuant to reservation of liberty to apply. A judge ruled that interest was to be calculated on the total gross amount of outstanding weekly payments. He said that s.114E(1)(b)

"... was clear on its face, and ... the words 'on that amount' contemplate the accumulation of the worker's entitlement to weekly payments in accordance with the judgment delivered and not the segmentation of the calculation of interest based on the length of time that a particular payment had been outstanding."

Similarly, his Honour held that to deduct income tax and Centrelink payments before calculating interest meant that the appellant "would not be paying interest on the amount of outstanding weekly payments as ordered by the judgment ..."

14 From the enactment of the Accident Compensation Act in 1985 until 1994 interest in respect of outstanding weekly payments was to be calculated on each weekly payment from the time when the payment became due until the payment was made. Sub-sections 120(1) and (2) provided:

"(1) In this section, 'outstanding weekly payments' means a weekly payment to which a worker would have been entitled during the period from the day -

(a) on which the incapacity of the worker commenced;

(b) on which weekly payments are reduced or terminated; or

(c) on which an application under s.110 was received -

until the day on which the decision rejecting the claim or reducing or terminating weekly payments or rejecting the application is set aside on a review.

(2) A worker shall be entitled to an amount equal to -

(a) the total of any outstanding weekly payments to that worker; and

(b) interest at the prescribed rate upon each outstanding weekly payment, calculated from the time when that payment would have been payable until the money is paid."

15 In 1989 the Division in which s.120 appeared was replaced. Section 121C in the new Division repeated s.120. In 1994 the Division was replaced again. Section 121C was repealed and s.114E was enacted. Instead of dealing separately with outstanding weekly payments and interest thereon, and making provision for interest on each weekly payment, the Act now deals with arrears of payments and interest together and, for the purpose of calculating interest, eschews the distinction between the total amount of weekly payments and each weekly payment.

16 On its face the change in the method of calculating interest effected by the 1994 amendment is dramatic. Workers are to be paid interest as if all future weekly payments fell due on the date upon which incapacity commenced. A rate of interest which was already set at a penalty rate has been doubled. This result was not remarked upon or explained in the parliamentary debates.

17 The appellant contended that the expression "outstanding weekly payments" in s.114E(1)(b) was to be construed as a weekly payment to which a worker would have been entitled during the period from the day on which the incapacity of the worker commenced, and interest was to be paid on each weekly payment for the period for which it was outstanding. It was submitted that the words "in respect of the period specified" did not necessarily mean the whole of the period specified, but could relate only to that part of the period for which a particular payment was outstanding. The appellant's construction broke down the phrases "outstanding weekly payments" and "periods specified" to each weekly payment and the period for which that amount remained unpaid. In effect the appellant would resurrect s.121C and ignore the facts that s.114E(1)(b) deals with all weekly payments at once and has omitted the words which limited interest to the period during which a particular weekly payment was due but unpaid.

18 The courts' jurisdiction is to determine what is the meaning of statutes passed by parliament. The courts are not to cross the boundary between construction and legislation. As it is no part of the function of a court to amend legislation, a judge cannot alter the clear meaning of the words appearing in a statute or introduce words into a statute. On occasion it is necessary, in order to construe the words appearing in an Act, to give the words an effect they would have if there were additional words, but that can only be done if it is necessary to do so in order to give effect to the meaning derived from the Act itself. So additional words may be introduced only where "clear reason for it is to be found within the four corners of the Act itself",[11] or "they are required in order to make the provision intelligible"[12]. As Spigelman, C.J. said in R. v. Young[13]:

"The process by which words omitted by inadvertence on the part of the draftsperson may be supplied by the court, must remain capable of characterisation as a process of construction of the words actually used."

19 In the present case changes and additions to the words appearing in s.114E(1)(b) are required to produce the result contended for by the appellant. The words "the amount of outstanding weekly payments" are to become "the amount of each outstanding weekly payment", the words "from the day on which the incapacity commenced" are to become "from a day a weekly payment fell due" and the words "after the deduction of income tax and the amount of payments recoverable pursuant to the provisions of the Social Security Act 1991 (Cth)" are to be added. The changes are not giving effect to the meaning derived from the Act itself. The Act read as a whole reveals no purpose relating to the awarding of interest which requires the reintroduction of a repealed section or the deduction of income tax and Centrelink payments by the introduction of new words. Nor are the words which actually appear in the section reasonably open to the construction urged by the appellant. The construction is not based on the text of the statute but upon the view that a doubling of the rate of interest awarded on outstanding weekly payments is unreasonable and was not intended by parliament and that injured workers are not to receive any more by way of interest than is necessary to compensate them for being kept out of their money.

20 A court construing a statute may depart from a literal construction of the words used in the statue. In certain circumstances a court may choose between competing constructions of the words used by parliament.[14] The court's task, however, remains one of construction even if, on occasion, the construction is strained. Accordingly, the construction chosen by the court must be reasonably open. As Mason and Wilson, JJ. said in Cooper Brookes (Wollongong) Pty Ltd v. Commissioner of Taxation[15]:

"[T]here cases in which inconvenience of result or improbability of result assists the court in concluding that the alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernable from other provisions in the statue."

On the other hand, if the words in a statute bear only one meaning, the courts must give effect to that meaning. As Lord Reid said in Cramas Properties Ltd v. Connaught Fur Trimmings Ltd[16]:

"Of course we must go by the words of the Act and if they are only capable of one meaning then we must take that meaning however irrational the result."

21 In the present case I am of the view that there is no available choice between competing constructions of s.114E(1)(b). The literal meaning of the words in the section is clear. The appellant's position can only be reached by a redrafting of the section. Certain techniques of construction, such as reading down general words[17] and giving words an ambulatory construction[18] may appear to read words into statutes, but they are based upon the text of the statutes. The resurrection of s.121C of the Act desired by the appellant is not the result of a recognised technique of construction based upon the text of s.114E(1)(b).

22 In Jones v. Wrotham Park Settled Estates[19] Lord Diplock said that there were three conditions that must be fulfilled before a court could read into a statute words which were not expressly included in it. They were:

"First, it was possible to determine from a consideration of the provision of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law."[20]

23 In my view in this case those conditions were not satisfied so as to enable s.114E(1)(b) to be construed as if it incorporated the words appearing in the repealed s.121C and contained words requiring that deductions be made for income tax and Centrelink payments before interest is to be calculated. Although an object of the Act is to provide "adequate and just compensation to injured workers"[21], I do not think it follows that the only possible purpose of the provision in s.114E is to compensate workers for being kept out of their money, as if the section were equivalent to the provisions concerning damages in the nature of interest contained in the Supreme Court Act 1986. While the courts had power to increase amounts of compensation where there was "unreasonable delay"[22], the increase in the penalising effect of an award of interest may have been made to spur on employers, Victorian WorkCover Authority and self-insurers to ordinarily act speedily and carefully in dealing with claims for weekly payments and compensation, thereby increasing the prospect that injured workers will receive timely compensation. In my view it is not apparent that the draftsman and parliament had by inadvertence overlooked the fact that all weekly payments did not accrue on the first day of incapacity. This was not a case like Cooper Brookes (Wollongong) Pty Ltd v. Federal Commissioner of Taxation, where Gibbs, J. could say that the history of the legislative provisions the court was construing "explains how the mistake occurred."[23] I am not sure that either

s.114E(1)(b) is to be described as a "mistake" or that the repeal of s.121C and the enactment of s.114E(1)(b) shows how a mistake occurred.

24 For the foregoing reasons I am of the opinion that the words appearing in s.114E(1)(b) are not reasonably capable of being construed in the manner contended for by the appellant.

25 I would dismiss the appeal.

26 I have had the advantage of reading in draft the reasons for judgment of Buchanan, J.A. and I gratefully adopt his Honour's recitation of the facts and statement of the authorities.

27 I have, however, reached a different conclusion. Despite the difficulties in the language of s.114E to which Buchanan, J.A. refers, I consider that the effect of the section properly construed is that interest is to be calculated on the amount of weekly payments outstanding from time to time during one or other of the periods to which the section refers.

28 As Buchanan, J.A. explains, until the Act was amended in 1994, s.121C provided in terms that "outstanding weekly payments" meant "a weekly payment [that was outstanding]" and that interest was to be computed and on the amount of each outstanding weekly payment for the period that it was outstanding. While therefore the Act was in that form it evinced a clear intention that an injured worker should receive compensation in the form of weekly payments and that, if a weekly payment were not made timeously, the worker should be compensated for the delay by means of interest calculated and paid on the weekly payment for the time that it remained outstanding.

29 As Buchanan, J.A. also explains, on a literal construction the effect of s.114E is to make interest payable on a different basis, which evidently bears no relationship to the loss caused by delay. I differ from Buchanan, J.A. only inasmuch as I do not think that the language of the section is so intractable as to compel that construction.

30 Apart from the verbiage of s.114E, there is nothing in the Act, and there is nothing in any of the extrinsic materials, which suggests that Parliament's intention in enacting s.114E was to change the basis on which interest on outstanding weekly payments is to be calculated. Contrastingly, if the section is construed literally, it would mean (in the case of a stream of outstanding weekly payments to which s.114E(1)(c) applies) that all save the longest outstanding of them would attract interest for a period greater than that for which the payment had stood due. So, for example, if weekly payments were improperly stopped on 30 June 2004, and if all arrears were paid on 1 October 2004, the interest on the last in time (which is to say the weekly payment which did not fall due for payment until 23 September 2004) would be computed from 1 July 2004, and so it would be with each outstanding payment, except the first, reducing the period of calculation by a week each time over the whole of the series. It is I think inherently unlikely that Parliament intended to achieve that result or otherwise to change the method of calculation of interest to a basis unrelated to the loss suffered by the worker by reason of delay.

31 I am unable to accept that Parliament would enact such a change in order to spur employers, WorkCover or self-insurers to act speedily and carefully in processing claims. For in the majority of cases it is likely that they would act with all the speed and care that the law could reasonably expect of them and yet still be found by a court to have made the wrong decision. Why then should they be punished, and what else would be achieved by penalising them with an inflated interest burden and a windfall gain for the worker?

32 As Gibbs, C.J. said in Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation[24], it is an elementary and fundamental principle that the object of the court in interpreting a statute is to see what is the intention expressed by the words used. One may begin with the assumption that the words mean what they say. But no part of a statute can by considered in isolation from its context - the whole must be considered - and upon such a consideration there are cases in which the result of giving the words their ordinary meaning will appear so irrational that the court is forced to the conclusion that the draftsman has made a mistake. Where that occurs, the canons of construction are not so rigid as to prevent a realistic solution in such a case.

33 In my judgment this is such a case. I think that the draftsman and Parliament made a mistake in failing to carry over to the Act as amended the definition of "outstanding weekly payments" which used to appear in s.121C or, alternatively, by assuming that, in the absence of that definition, the expression "outstanding weekly payments" would continue to be interpreted as it had been defined.

34 So much is not only suggested by the history of the legislation and the irrational consequences of a literal construction, but I think is implied by the terms of s.114E(1)(e) (which, significantly, forms part of the immediate context in which s.114E(1)(c) is to be construed). It provides that :

"(1) The amount of outstanding weekly payments and interest at the prescribed rate on that amount are payable to the worker in the following circumstances and in respect of the periods specified in relation thereto -

(a) ...

(b) ...

(c) ...

(d) ...

(e) if an employer, the Authority or a self-insurer fails to make any weekly payment as and when required by the Act to be made to a worker, from the day after the payment was required to be made until the day before the payment is made."[25]

35 Relevantly, that shows two things:

• First, where an employer fails for a time to make payments and later rectifies the position without the intervention of a Conciliation Officer or Court, interest is only payable on each outstanding payment for the time which it is outstanding. It is difficult to suppose that Parliament intended to achieve a different result within the confines of the same section in a case where the position is rectified because of Conciliation or Court proceeding.

• Secondly, because s.114E(1)(e) forms part of s.114E(1), and is therefore to be read as one with the opening words of s.114E(1), it is apparent that the draftsman conceived of "the amount of weekly payments" in the opening words of s.114E(1) as something which meant or at least was capable of including "a weekly payment to which the worker would have been entitled."

36 It is then but a short step to the conclusion that when the draftsman wrote in the opening part of s.114E(1) that interest would be payable on "that amount" of "outstanding weekly payments," he had in mind that interest would be payable on "the" or "each" amount of "a weekly payment to which a worker would have been entitled", and that by using the expression "in respect of the [following] periods" (as opposed to "for the following periods") he intended to convey to the reader that interest would be computed on each payment for so much of "the following periods" as it should be outstanding.

37 Therefore, to adopt and adapt the words of Gibbs, C.J. in Cooper Brookes, "[o]n a full view of the Act, considering its scheme and its machinery and the manifest purpose of it", I conclude that when Parliament applied s.114E to the case of a stream of outstanding weekly payments, Parliament intended "outstanding weekly payments" to mean "a weekly payment to which a worker would have been entitled" during the specified period.[26]

38 In R v Young[27] Spigelman, C.J. stated that the court may construe words in a statute to apply to a particular situation or to operate in a particular way, even if the words used would not on a literal construction so apply or operate, if the words which actually appear in the statute are reasonably open to such a construction.[28] Consistently with that precept, I would construe s.114E(1) to operate upon a stream of outstanding weekly payments by computing interest on each payment for the period that that payment is outstanding.

39 Alternatively, if it remains necessary to satisfy the three conditions laid down in Wentworth Securities v Jones[29] in order to "read words into a statute", I consider that they are satisfied in this case:

40 As I have said already, I consider that it is possible to determine from a consideration of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy. Relevantly, it was to ensure that a worker receives compensation in weekly payments under s.93 during the period of incapacity for work and, if compensation not be on time, that the worker be put in the position in which he or she would have been if it had been paid on time.

41 In my judgment it is apparent that the draftsman and Parliament have by inadvertence overlooked and so omitted to deal with an eventuality that required to be dealt with if the purpose of the Act were to be achieved. They overlooked that, without retention of the definition of "outstanding weekly payments" which used to appear in s.121C, it would no longer be as clear as it had been that interest is to be calculated on each outstanding payment for the time that the payment remains outstanding, rather than upon the aggregate of outstanding payments from the time that the first of those payments became outstanding.

42 In my view it is possible to state with certainty where the additional words would have been inserted or, in this case, substituted, by the draftsman and approved by Parliament if their attention had been drawn to the omission before the Bill passed into law. The word "the" with which s.114E(1) begins should be read as "each".

Conclusion

43 For the reasons given, I consider that s.114E(1) is to be read as if the opening words were: "Each amount of outstanding weekly payments and interest at the prescribed rate on that amount", and on the basis that the requirement to pay interest "in respect of" the periods mentioned means that interest is to be paid on each outstanding payment for so much of the relevant period as it is outstanding.

44 I would therefore allow the appeal and vary the order below by re-calculation of the interest to accord with that construction.

[1] Compare the old s.120(2)(b), set out below at [14].

[2] I speak, of course, not of the subjective intention of the responsible minister or of honourable members but of an imputed or objective intention ascribed to the legislature.

[3] It is not certain that it was a mistake. A single calculation of interest on one sum may, as counsel for the respondent submitted, have been the price intentionally paid for simplicity.

[4] [2004] VSCA 161 at [26] - [27].

[5] [1980] A.C. 74 at 105 - 106.

[6] [1965] 1 W.L.R. 892 at 898.

[7] [1981] HCA 26; (1981) 147 C.L.R. 297 at 310.

[8] The passage is set out by Buchanan, J.A. at [20] below.

[9] [1999] NSWCCA 166; (1999) 46 N.S.W.L.R. 681.

[10] The requirement to withhold income tax from weekly payments of compensation is derived from s.12-120 of Schedule 1 to the Taxation Administration Act 1953 (Cth). The requirement to deduct allowances and payments made by Centrelink is found in s.96(1)(a) of the Act and Part 3.14 of the Social Security Act 1991 (Cth).

[11] Vickers & Maxim Ltd v. Evans [1910] A.C. 444 at 445 per Lord Loreburn, L.C.

[12] Wills v. Bowley [1983) A.C. 57 at 78 per Lord Lowry.

[13] [1999] NSWCCA 166; (1999) 46 NSWLR 681 at 686.

[14] Stock v. Frank Jones (Tipton) Ltd (1978) 1 W.L.R. 231 at 236 per Lord Simon of Glaisdale.

[15] [1981] HCA 26; (1981) 147 C.L.R. 297 at 320.

[16] [1965] 1 W.L.R. 892 at 898.

[17] See, for example, Jones v. Wrotham Park Settled Estates [1980] A.C. 74; R. v. Wilson ex parte Kisch [1934] HCA 63; (1934) 52 C.L.R. 234 at 244 per Dixon, J.; Smith v. East Elloe Rural District Council [1956] UKHL 2; [1956] A.C. 736 at 764-5 per Lord Morton of Henryton.

[18] See, for example, Bermingham v. Corrective Services Commission (N.S.W.) (1988) 15 NSWLR 292.

[19] Above.

[20] Above at 105. See also Newcastle City Council v. GIO General Ltd [1997] HCA 53; (1997) 191 C.L.R. 85 at 113 per McHugh, J.

[21] Section 3(b).

[22] See s.128 of the Act.

[23] Above at 306.

[24] [1981] HCA 26; (1981) 147 C.L.R. 297 at 304.

[25] Emphasis added.

[26] Cf. Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 C.L.R. at 306 per Gibbs, C.J.

[27] [1999] NSWCCA 166; (1999) 46 N.S.W.L.R. 681.

[28] ibid. at 687-8, per Spigelman, C.J.

[29] [1980] A.C. 74 at 105-6, per Lord Diplock; Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 C.L.R. 85 at 113, per McHugh, J.

At a glance

Court

Decision date

Before

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Judgment (28 paragraphs)

Parties

Cases Cited (2)