CATCHWORDE Workers' compensation - Dispute concerning amount of compensation payable - Negctiated set*lement croviding *_¥ iume sum payment in respect af a specified beriod - employee releasin employer from all 44a 'S arrears of compensation payable up to No agreement as to amounts payable after 'he end of that periad ~ Whether employer had acknowledged an obligation tc make weekly payments of compensation so as to make applicable clause 12 of § «the First Schedule to the Woremen's Compensation Jrdinance 1951 {A.C.T.) - Whether sbkligation tc make weeklv payments had been ended Ty acreemert within the meaning of that clause. COMMONWESLTH OF AUSTRALIA v. MARKO BABTC Na. ACT G 40 cf 1954 Gallop, Morling and Neaves Cd Canberra c 9 November 194 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERFITORY z a Red a[-) n= aih bo 'D ine} = DISTRICT REGISTEY wey ewe re GENERAL DIVISTON ON APPEAL FROM THE SUFREME COURT OF THE AUSTRALIAN CAPITAL TERFITCFY BETWEEN : TOMMCNWEALTH OF AUSTRALIA Arpellant AND: MARKO BABIC Pespendent qa a ro) i ie) JUDGES MAKING ORDER : t, Morling and Neaves U7, DATE OF ORDEF 9 November 1984 oo WHERE MADE : Canberra THE COURT CRDERS THAT: 1. The appreal be allowed. 2. The order of the Supreme Court of the Australian Camital Territory be set aside and in i .eu thereof the arpeal to that Ccurt he dismissed with costs. 3. The respondent pay t1e appellart © costs oF the uppeal. IN_THE FEDERAL COURT OF AUSTPALTA AUSTRALIAN CAPITAL TERRITORY No. ACT G 40 of 1384 DISTRICT REGISTRY we wee wee vw GENERAL DIVISION te ON APPEAL FFOM TRE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITCRY BETWEEN : TOMMONWEALTH OF AUSTRALIA Appellant AND: MILRKO BABIC al at sroncent ORAM: GALLOP, MORLING and NEAVES JJ. DATE: ¢ November 1984 REASONS FOR JUDGMENT D THE COUPT: This 1£ an appeal from a decision of the Supreme Court of the Australian Capital Terratory allowing an arpeal from the Court of Petty Sessions at Canberra which dismissela claim for workers compensation by Mr Babic. Although there « some ambiqguitv in the lanquage of the formai award made by th- learned magistrate, 1t was common grouns on the hearing of the appeal that the effect of the award was that Mr Babic's claim for compensation upon the basis of his alleqged total incapacity was dismissed. Mr Babic suffered injury arising out cf or in the course of his employment as a chain saw operator oan 2 August 1975. He thereupon became entitled tc be paid compensation under the provisions of the Workmen's Compensation Ordinance 1951 ("the Ordinance"). On 19 December 1979 Mr Batic and the Commonwealth entered into a deed of release which, so far as 15 relevant, provides as follows: "WHEREAS the releascr claims ta have suffered iniury im an incident occurring on the 2nd dav of August 1975 AND WHEREAS the releasor claims that he is entitled to be paid compensation by the Commonwealth for an incapacity for work arising 4s a result of that incident AND WHEREAS a dispute has arisen between the parties in respect cf the amount of compensation to be paid By the Commonwealth to the releasor for the period between the Ond day of February i976 and the 'fist aay of August 1979 (inclusive of these days! AND WHEREAS 1t has been agreed between the parties that the difference between them in respect cf that verinod should be composed AND WHEREAS it has been further agreed between the varties that an amount of Kine thousand eight hundred and fifty five dollars seventy one cents ($9855.71) ais due from tne Commonwealth to the releasor for the abovementioned period AND WHEREAS it has been agreed between the parties that the sum of One hundred and thirty two dollars has been paic by the Commonweaith to the reieasor AND WHEREAS it has been further acreed that the sum of Gne thouand four hundred and sixty seven dollars twenty seven cents ($1467 27) has been received by the reieasor under the previsicrs of the Social Security Act 1947 AND WHEREAS it has been agreed by the parties that this amount 1s returnable by the Commonwealth from the amount otherwise due t2 the releascr from the Commonwealth. NOW THIS DEEL WITNESSES that in consideration of the payment by the Commenwealth to the releasor the sum of Eight thousand two hundred and fifty c- dollars fourteen cents '$256.14. the relessor hereby releases and discharges the Commonwealtr ats officers servants and agents from all actions eu_te causes of action claims and demands for arrears of workers compensation payments only which the releasor now has or but for execution of this Deed could have had against the Commonwealth its officers servants and agents arising out of the incident of the tind day of August 1975 for the period between the Znd day cf February 1976 and the 3lst day of August 1979 (both inclusive) AND the releasor hereby aindemnifies and agrees ta keer effectively indemnified acainst all actions proceedings claim and demands for such arrears arising out of the sa:d incident for the said period the Commonwealth its officers cervants and agents." The executicn =f the deed was preceded tv correspondence between the Commonwealth ard Mr Babic's solicitors. In a letter dated 26 Sertember i973 the Commonwealth's solicitor wrote to Mr Babic's solicitors manind the offer which subsequently was embodied in the deed of reiease. The letter was in the following terms: "I am instructed to make the 'following offer cf payment in relation ts vour client s claim for retrospective payment of compensation: a. $9855.71 for the perio2@ ur to and including 31.8.19795 b. less $122. previously paid for period 2.2.1976-6. € c. 2ess $1467.27 27 refundable »ursuarnt toe $§.1i25 ces Act 1947 ec. total amount offered, $825¢€.14 Further, I am instructed to advise that 1t has been determined that Mr. Babic 1s entzitied tc weekly compensation as from 31.8.1979 of $29.12 per weer. This has been calculated or the basis that Mr. Babic 1s considered fit for duties as a iaundry assistant. The amount represents the difference between the current rate of way of a chainsaw operator and the current rate of pay of a laundry assistant at the Canberra Hcspitai laundry." On 5 November 1979 Mr Babic's solicitors replied ta the above letter in the followina terms: "We ... advise that we now have anstructions tc accept the sum of $9,855.71 being the arrears payable up to the 21st August. 1979 in this matter. Insofar as the ?ther matters in vour letter are concerned we advise that our instructions are that our Client is totally incapacitated for any work. However, so as to satisfy yourself of this incapacity our Client 1s prepared to commence work as a laundry a¢sistant at the Canberra Hospital laundry providing that vou are prepared to and capable to find him that jek. In the meantime please note that ur tc the time when our Client commenced empioyment in atrerianc with the terms of the decision of Ruiz -v- Canberra Rex Hotel reported in Volume 5 A.C.T.R. page 1. our Client is deemed to be tctail incapacitated and compensation ought to be paid as 'fcr cctal incapacity." € On 20 February 1980 the Commonwealth wrote to Mr Babic enclosing 1ts cheque for $8,256.14, denying that Mr Babic was totally incapacitated, and reiterating that nis entitlement was $29.18 per week. On 26 February i980 Mr Babic's solicitors replied their client was able to work as a laundry assistaxt and was entitled therefore only to the difference between the wages payable to a laundry assistant and those payable to a chain saw oreratar. The letter stated: arbitration and subsequent to that tnere was furt correspondence between the sclicitors for the partie June mn "If the Commonwealth is of the opinion that that is the situation it is for the Commonwealth to make the necessary application to have that determination made." Thereafter Mr Babic made an application m™ 1982 the Commonwealth's solicitor wrote to Mr Babi solicitors saving, inter alia: "The Respondent accepts liability for partial incapacity for work in relation to the iniury by accident caused to the Respondent's left hand on 2 August 1975 whilst he was operating a chain saw pursuant to a contract entered aintc with the Respondent for forestry work. Ycu were notified of the Respondent's view by letter dated 26 September 197%, a copy of which is enclosed herewith. Weekiy payments for partial incapacity from 31 August i979 were not made by the Respondent because you did not accept that your client was partially incapacitatea from 1 September 1979. Gn il Marcr. 1980 your Mr. Romano anformed Ms. Honcope of this Cffice bv telephone that a claim wouid he made con vour client's behalf for total incapacity after the decision in Barbaro v. Leighton Constructions Csicl was handed down by the Full Federal Court. The decision was handed down in Mav i98C. Your letter of 19 January "1981" 'sic: 1962) was the next communication I had from you concerring compensation payable tc your ciient. I did set receive answers to my request for further and better particulars in relation to the payments vou sought until 1 dune 1982. In the meantime vou tad filed and served the above Arrlication. I understand vou are mow prepared to accept partzal 2ncapacity payments im accordance with the formula set out ain My ietter of 2 2é September 197%. Accordingly I have advised the Fespondenz te 6. calculate the amount owing to the Applicant, and to commence makina weekly payments to him for partial incapacity. In the meantime arrangements are being made to have the Applicant medically and psychiatrically examined to determine the Respondent's continuing liability, particularly in relation to the alleged total incapacity of your client. I note that, despite my requests, I have never received ary medical evidence from you to surport your claim that the Applicant 1s totally incapacitated. The payment of arrears n weerly compensation made to your client 7 ve ars ago zncluded payments for partial incapacity from ance uncluding 23 December 1977. Accordingly the onus 1s onthe Applicant to show he is now totally incapacitated." The application for arbitration came before a Special Magistrate at the Court of Petty Sessions, Canberra. Mr Babic's counsel submitted that the payment of atrears made to him under the deed cf reiease represented pavments curing the period of his incapacity of compensation at the rate applicable in respect of tctal incapacity. It was submitted that, since this was the case, Mr Babic's application for compensation was covered by the decision in Barbaro v Lezghtor Contractors Pty. Limited /1980) 30 ALR 122. in accordance with that decision, so it was argued, the Commonwealth was liable to make weekiy payments of compensation to Mr Babic by reason of the provisions of cl. 12 of the First Schedule tao the Workmen's Compensation Ordinance which provides as follows: Pin. A weekly payment (other than a weekly payment referred to in clause (1) of sub-paragrach (a) of paragraph 1 of this Schedule payable under this Ordinance may be varied or ended bv agreement or by arbitration under this Ordinance." The learned Magistrate rejected this submission, holding that, om the facts of the case, there had not been a weekly payment of compensation to Mr Babic and that hence cl1.12 had no application. On appeal from this decision, the learned trial judge held that 1t had nct been estaklished that the Commonwealth had ever acknowledaed that Mr Babic was tctally incapacitated and that he had not received a weekly ravment of compensation in respect of total incapacity. However, he yt) found, in effect, that Mr Babic had been paid weekly parments of compensation, calculated on the basis of partial incapacity, for the period from 22 December 1977 ta 31 August 1979 and that " those payments could not be stopped except as provided by cl , 12. The learned trial jiudae © precise finding was that he proposed to ""allcw the appeal soa far as it relates to the learned maqistrate's ruling as ta the effect of KBarbaro's case." He adiourned the matter for the hearing of further evidence to determine what was the amount of the weekiyv payment in respect of Mr Babic''s partial incapacity which was heing paid to him immedately preceding 31 August i979, The question whach arises on the appeal 1s whether, having regard to the terms of the deed of release, 71.12 of the First Schedule to the Ordinance obliged the Commonweaith to make weekly payments of workers' compensation to Mr Babic after 21 August 1979. It ais established By the judgments . Barbaro's Case (supra), the correctness of which was not disputed on the hearina of the present appeal, that if an 8. employer has acknowledged that weekly payments of compensation are payable under the Ordinance to an employce, the employer cannot unilaterally put an end to his continuing liability to make such payments. The first question to be decided is whether the events that happened in 1979 culminating in the execution of the deed of release can be said to have amounted to an acknowledgment by the Commonwealth of an obligation to make weekly payments under the Ordinance. The learned magistrate was of the view that all that happened between the parties was that "in respect cf a particular period and in respect of a dispute between the variies about the amount of compensation that was payable for that reriod there (was) an agreement that a particular sum was either the correrzt amount or at any rate an amount which the parties were prepared te accept as being payable in respect of that veriod. He thought that all that happened was that, in respect cf the pericd up to 21 August 1979, the obligation of the Commonwealth to pay to Mr Bab:zc any sum of monev in excess of tnat referred to in the Geed, or in the correspondence, hat been terminated hy agreement. In these circumstances, ne was of the view that if Mr Babic wished to obtain an award for the period after 31 August 1979 he had to allege and prove his relevant incapacity. The learned trial iudge was of a different view. In his opinion it was possible to deduce from the ccrrespondence that passed between the parties prior to the execution of the Geed that the amount payable under the deed had beer calculated 9. upon the basis that a continuing weekly payment of compensation was payable to Mr Babic at least in respect of the period from 22 December 1977 to 31 August 1979. He said that the phrase "weekly payment" in para. 12 of the First Schedule to the Ordinance is not to be construed narrowly, and ais not te be confined to payments made week by week to a workman. He pointed out that "weekiy payments" may be made fortnightiy or at other intervals and said that, where a workman :s injured and for some reason there 1s delay ir paying him compensation due to him at the appropriate rate, a2 subsequent lump sum ke he has wu payment calculated by reference to the number of we been incapacitated would properly be described as "weekly payments" for the purposes of the paragraph. Hence, in his Honour's view, since in the present case there nad been a long-standing dispute 4s to the amount of compensation pavable to Mr Babic and it had been resolved by a written agreement, Mr Babic could properly Le said to have received weekly payments under the Ordinance "1f it can be shown that the final payment made represents weekly payments to him of compensation due at an appropriate rate". We do not think it was possible to sav on the mater:al before the learned trial judge that as at 21 Auqust i979 the Commonwealth acknowledged anv current liability to pay weexly payments of compensation to Mr Babic. Plainly there is nothing in the deed of release itself which would support such a finding. The deec refers only to a disagreement between the 10. parties as to the compensation payable to Mr Babic during the period from 2 February 1976 to 31 August 1979. It cannot be deduced from the deed whether the amount payable pursuant to it zncluded an amount in respect of weekly payments of compensation acknowledged by the Commonwealth to be due in respect of the period immediately preceding 31 August 1979, For all that appears from the ceed, the Commonwealth denied any liability on its part to pay compensation as at 3] August 1579. The amount of $9,855.71 referred to in the deed 1s exrressed to have been aaqreed between the parties as being "due from the Commonwealth to the releasor for the abovementionsi reriod", i.e. the period between 2 February 1976 and 21 August 1979. It by no means follows that an agreement to pay an ameunt of monev in respect of an overall claim covering that period is an agreement to pay any particular amount in respect of the period a pay Y £ is Pp i immediately prior to 31 August 1979. Moreover, we do not think there 1s anything in the correspondence that takes the matter any further. Although by letter dated 7 March 1979 the Commonwealth set out the manner in which 1t had calculated the amount which it was prepared to pay for the period from 2 February 1976 to 21 December i977, there 1s nothing in this or any other letter written—--by the Commonwealth from which it can be necessarily inferred that 1% was agreeable to pav, or did pay, anv weekly paymerts to which Mr Babic was entitled as at 31 August 1979. it 1s true that in the letter of 26 September 1°79 the Ccommonwealth advised that ll. "it has been determined that Mr Babic 1s entitled to weekly compensation as from 31 August 1979 of $29.18 per week". But the offer to make a weekly pavment of this sum was not taken up, and although the sum of $9,855.71 referred to ir the deed may well have included some amount for the period immediately prior to 31 August 1973, it cannot be demonstrated from the correspondence that it did. We do not think the decision in Barbaro''s Case (supra) can be applied to the facts of the present case so as to entitle Mr Babic to an award of compensation without the calling of evidence to prove his relevant incapacity. In cur opinion, the payment to him of the amount referred to in the deed of release cannot be taken to involve the making of weekly payments within the meaning of cl. 12. We de not doubt that, 1m an appropriate case, where a workman 1S injured and for some reason there 1s delay in paving him compensation, a subsequent payment of a lump sum calculated bv reference to the number of weeks he has been incapacitated and at a particular rate would properly be recarded as the making cf "weekly payments" for the purposes of the paragraph. In Barbare's Case the emplovee had been injured in 1975 and had received weekly vavmernts of compensation from his employer until 1977 In his d@ecrsion in that case Connor Jj. said 'at p. 144): "An employer might for compassionate reasons make ex gratia payments to a worker which would not be regarded under para 12 of tne First Schedule as 'payable under this Ordinance'. In the present case, however, there was a dramatic accident at work and the workman was taken immediately from his place of work to the hospital on the employer's directions. Thereafter the employer made weekly payments for a period of 18 months at the rate appropriate for total incapacity. I think the inference is irresistible that these pavments were in respect of the respondent's liability to the workman under the Ordinance. Plainly enough the expression "A weekly payment -. payable under this Ordinance', as it appears in para 12, includes a payment pursuant to an award or under a recorded agreement. It frequently heprens, however, that weekly payments are made pursuant to an unrecorded aaqreement written or oral. After injury by accident the workman makes a claim and the employer accepts liability by makina weekly payments of the amount prescribed in the Ordinance. If nothing more appears this amounts to an agreement that there was an injury by accident giving rise to incapacity and an agreement ta make weekly payments for the time being. It seems to me that as a matter of principle such payments are weekly pavments payable under the Ordinance within para 12 because the employer, in making such payments, is discharging his liability under the Ordinance. ' Support for the view expressed by Connor J. ('a view which was shared by Smithers and Franki JJ., the other members of the bench in Barbaro's Case' is to be found in Pudnev v France, Fenwick & Co. Limited (1925) 1 K.B. 346 and Scean Coal Co. Limited v Davies (1927) A.C. 271 and we respectfully aqree with it. However, we think the payment made pursuant to the deed of release was not such a payment as can properly be said to have amounted to the makina of a weekly payment of compensation to Mr Babic. As we have already demonstrated, at is quite impossible to calculate from the lump sum whether any, 13. and if so what, amount was paid ain respect of the period immediately preceding 31 August 1979. It was a payment quite unlike the payment made in Barbaro's Case. In that case the employer made weekly payments as from the date of the employee's injury and continued these payments for a rveriod of wp 9) fu ie) fs rt 18 months at the rate appropriate for total incar y. The Payments made by the employer were demonstrably weewly payments of compensation and it was for that reason that they were found to be payments within cl. 12. In the present cass there was na payment which could be identified as a weekly payment cf any particular amount. There was no payrent which wae suscertible it was not possible to ascertain the amount cf the weekly payment to be varied or ended. Moreover, even if the deed could properly be said 9 have referred to a weekly payment pavable under the Ordinance, we think that, upon a fair reading of its terms, the deed manifests an aqreement between the parties that such payments would end as at 31 August 1979. There was no agreement between the parties as to Mr Babic's entitlement to compensation after 31 Auqust 1979, and that matter was left to future negotiation. But, insofar as there was any agreement to make weekly payments of compensation, 1t was part of that agreement that the payments would end as at 31 August 1379. This circumstance also distinguishes the present case from Barbaro's Case. In that case, when the employer initially 14. made weekly payments of compensation to his employee there was no agreement that they should end at anv point in time. That being so, cl.12 prevented the employer from terminating the weekly payments except by aqdreement with the employee or hv arbitration under the Ordinance. But in the present case, the employes, by executing the deed, agreed that the weekly payments (assuming it 1s correct so to characterise the money baid under the deed) would end 2s at 21 August 1979. We donot think that this conclusion leads to an unfair result. It 1s plain that at the time the deed of release was entered into there was disagreement between the parties as to the amount of anv weekly payment of compensation to which Mr Babic would be entitled in the future. It would be an unfortunate result if the Commonwealth's willingness ta compromise Mr Babic s claim up until 31 Auaust 1979 gave rise to an obligation to make a continuing weekly payment t2M < Babic thereafter. Had it been the intention of the parties that the Commonwealth would make continuing weekly payments of compensation at any particular amount, provisicn for such a payment would surely have been made in the deed itself. 15. For these reasons we are of the opinion that the appeal should be allowed with costs. It will, of course, be open to Mr Babic to pursue a claim for compensation based on any alleged partial incapacity should he be advised ta do so. I certify that this and the preceding 14 pages are a true copy of the Reascns for Judament herein of theiy Honours Mr Justice Gallop, Mr Justice Morling and Mr Justice Neaves. Cally Hoga soci & Dated: 9 November 1984