McDonald v Department of Defence [1999] FCA 882

FEDERAL COURT OF AUSTRALIA

McDonald v Department of Defence [1999] FCA 882 WORKERS COMPENSATION – Commonwealth employees – Injury in 1972 – Incapacity and compensation claim in 1993 – Calculation of compensation – Normal weekly earnings – Average rate of pay during two weeks preceding injury – Whether calculation to be based on employee's rate of pay in period preceding injury or preceding incapacity. Safety, Rehabilitation and Compensation Act 1988, s 8(1), (3), (6).

MAX JOHN McDONALD v DEPARTMENT OF DEFENCE T2 OF 1999 SUNDBERG J 1 JULY 1999 HOBART

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY T2 of 1999

BETWEEN: MAX JOHN McDONALD

APPLICANT

AND: DEPARTMENT OF DEFENCE

RESPONDENT

JUDGE: SUNDBERG J

DATE OF ORDER: 1 JULY 1999

WHERE MADE: HOBART

THE COURT ORDERS THAT: 1. The application be dismissed.

2. The applicant pay the respondent's costs of the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

TASMANIA DISTRICT REGISTRY T2 of 1999

BETWEEN: MAX JOHN McDONALD

APPLICANT

AND: DEPARTMENT OF DEFENCE

RESPONDENT

JUDGE: SUNDBERG J

DATE: 1 JULY 1999

PLACE: HOBART

REASONS FOR JUDGMENT 1 The applicant seeks an extension of time in which to file and serve a notice of appeal from a decision of the Administrative Appeals Tribunal affirming the decision of the respondent ("the Department") as to the rate at which the applicant was entitled to incapacity payments. The Tribunal's decision was given on 5 February 1999. The time for instituting an appeal under s 44(2A) of the Administrative Appeals Tribunal Act 1975 expired in early March. The applicant did not file a notice of appeal within that time as required by O 53 r 7 of the Rules. 2 On 20 April 1999 Heerey J ordered that the matter be heard "on its merits" on 18 June 1999. Because the applicant was to be in Melbourne for a medical appointment on that day, the matter was listed for directions on 15 June. I was then told that what Heerey J intended by a hearing "on the merits" was that the point of law involved would be argued as if an appeal had been instituted within time. If the point so lacked merit that there was no point in extending time, the application for extension would be dismissed. On the other hand, if the point was reasonably arguable, an extension would be granted, and the appeal would be decided in the usual way on the basis of the aforesaid argument. The only ground upon which an extension was opposed was that the grounds of appeal were so lacking in merit that it would be pointless to permit an appeal to take place. 3 Section 19 of the Safety, Rehabilitation and Compensation Act 1988 makes Comcare liable to pay compensation to an employee who is incapacitated for work as a result of an injury. The amount payable is calculated in accordance with a formula, one of the components of which is the employee's "normal weekly earnings". The concept "normal weekly earnings" is dealt with in s 8. Section 8(1) provides in part: "For the purposes of this Act, the normal weekly earnings of an employee … before an injury shall be calculated in relation to the relevant period under the formula: (NH x RP) + A where: NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period; RP is the employee's average hourly ordinary time rate of pay during that period; and A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period …." 4 So far as material to the present case, the word "employee" is defined in s 5 as a person employed by the Commonwealth or by a Commonwealth authority. The "relevant period" is "the latest period of 2 weeks before the date of the injury during which the employee was continuously employed by the Commonwealth ...": s 9(1). Section 8(3) provides that "Where an employee was, at the date of the injury, employed by the Commonwealth … in part‑time employment or unpaid employment, any earnings of the employee from any other employment shall, for the purposes of this section, be treated as earnings of the employee from his or her employment by the Commonwealth …." 5 Sub‑section (6) provides: "Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth … at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of: (a) the attainment by the employee of a particular age; (b) the completion by the employee of a particular period of service; or (c) the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment; the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be." 6 The applicant served in the Citizen Military Forces ("CMF") between November 1971 and June 1972. In early 1972 he suffered an injury. He did not become incapacitated for work or claim compensation in respect of the injury until 1993. The Department admitted liability to pay compensation in August 1993. The Department calculated the rate of payment of compensation on the basis of the applicant's civilian pay at the date of the injury, together with his pay in the CMF at that date, and the rate of payment was increased from time to time as salaries of persons in those positions increased. That is to say, the starting point for the calculation of his normal weekly earnings was his earnings in early 1972. The applicant claimed that his compensation should be paid at a rate equivalent to that which he earned, or could have earned, immediately prior to the incapacity in 1993. As I have said, the Tribunal affirmed the Department's decision. The applicant seeks an extension of time in which to have that decision reviewed by the Court. 7 The Tribunal was not impressed by the applicant. It said he was a poor historian as to his work history and his income since 1972. He was evasive and aggressive in cross‑examination and appeared not to answer questions with candour. The Tribunal said it would require corroboration of his evidence before accepting it. The Tribunal found that the applicant enlisted in the CMF on 18 November 1971 and was discharged on 16 June 1972. On 20 February 1972, while on a tactical exercise, he injured his left ankle. Concurrently with his Army service he was employed as a civilian at a rate of pay equivalent to that received by an ASO1 grade clerk employed by the Commonwealth. During his service he attended three Tuesday night parades per month. Although the Tribunal was unable on the evidence to determine the applicant's actual net income immediately preceding the commencement of his incapacity in 1993, it was not satisfied that that income was greater than that earned by a Commonwealth ASO1 clerk combined with the income from the CMF based on three parades per month. 8 The Tribunal described the way in which the Department had performed the calculation required by s 8. It said the Department had determined the applicant's normal weekly earnings by reference to the salary of an ASO1 clerk in the Commonwealth Public Service, which was the closest Public Service grade to the applicant's civilian employment at the time of the injury in 1972. The Department combined that income with the income the applicant would have earned in the CMF if he had attended three night parades per month. The applicant was paid compensation based on a normal weekly earnings equivalent of the wage of a clerk ASO1 and a private in the CMF adjusted from time to time as salaries of persons in those positions increased. 9 The Tribunal was of the opinion that the Department had correctly calculated the rate of compensation. It rejected the applicant's contention that the salary that should be used in the calculations was the salary he was receiving immediately prior to his period of incapacity in 1993, and not that immediately prior to his injury. It went on to say that even if the applicant's submission were correct as a matter of law, this could not result in any increased weekly payments, since the Tribunal was not satisfied that his income in 1993 was greater than that of an ASO1 Clerk. 10 In my view the Tribunal was correct in its construction of s 8. Sub‑section (1) requires "the normal weekly earnings of an employee … before an injury" to be calculated in relation to the relevant period in accordance with the formula. The "relevant period" is the latest period of two weeks "before the date of the injury" during which the employee was continuously employed by the Commonwealth. Sub‑section (3) deals with earnings "at the date of the injury". Sub‑section (6) speaks of the amount per week payable in respect of the employment "at the date of the injury". The percentage increase with which that sub‑section is concerned is in respect of "the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections". It is quite clear from these provisions that the starting point for the calculation of an employee's normal weekly earnings is what he was paid in the two weeks before the injury. There is in my view no reasonable argument that the employee's "normal weekly earnings" are to be based on actual earnings immediately before incapacity. 11 The applicant's case would not be improved even if his legal contention were sound, and the starting point for the calculation of his normal weekly earnings was in May 1993. The Tribunal had evidence of the wage of an ASO1 clerk. The applicant's evidence was that he resigned his position as a car salesman in mid‑1989, and was a self‑employed motor vehicle broker thereafter until May 1993. His evidence about the brokerage fees he received from the business was sketchy. He said the fee per vehicle ranged from $20 to $600 or even more. The fee depended on the price of the vehicle. The top figure he could recall was more than $600 but less than $1,000. He could not be more specific. He said that "quite a few costs" had to come out of the fee, not all of which went into his own pocket. A spotter's fee might have to be paid. In a good month, he would be lucky to broker ten vehicles. In a bad month, he would broker none. The Tribunal found the applicant's evidence as to his work history and salary unsatisfactory, and said it would require corroboration before it would accept it. There was no corroboration in relation to his earnings as a broker. But even if the Tribunal had accepted his evidence on this point, it could not have been satisfied that his income in the period preceding his incapacity in May 1993 was greater than that of an ASO1 clerk. Its conclusion on that point was in any event a finding of fact which is not amenable to review. 12 The applicant contended that the Tribunal had failed to apply s 8(6). He submitted that s 8(6) required the Department, when calculating his normal weekly earnings, to take into account the fact that he would have been promoted in both the CMF and in his civilian employment. He says that had he been able to continue in the Army "he is sure" he would have been promoted to sergeant. At the date of the injury he was being trained as a manager in his civilian employment, attending night school in business management, and on completion of this training would have been paid more as a manager than an ASO1 clerk. This issue was not raised before the Tribunal. Section 8(6)(c) requires the respondent to take into account pay increases resulting from "the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment". The increase must be an increment in a range applicable to the employee specifically or to the position held. The section contemplates the existence of a pay range which the employee may "work up through" over time. The increase must be achieved within that position. A pay increase resulting from a change in position would not be "by way of an increment in a range". The opening words of s 8(6), which require increases in "the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth at the date of the injury" to be taken into account, support this view. Thus, what is to be considered is the employee's position at the date of the injury, not any position to which the employee may be promoted after that date. That s 8(6) is not concerned with increases in pay attributable to an employee's promotion is confirmed by sub‑s (7), which deals expressly with that subject (in a manner which does not avail the applicant). 13 The applicant also contended that the Tribunal had not applied s 8(6)(a), in that it had failed to increase his normal weekly earnings, as calculated under the previous sub‑sections, to account for the fact that he turned 21 some three years after the injury. This claim was not put to the Tribunal. Had it been, the respondent could have adduced evidence on the point. It is not open to the applicant to raise the objection now, not having flagged it as an issue before the Tribunal. I would not have upheld the contention even if it were open to the applicant. He has not satisfied me that the calculation of his normal weekly earnings did not take account of his turning 21. The applicant did not assert that any particular calculation in the papers before the Tribunal was wrong because it did not reflect an adult wage. I would in any event infer from the fact that the Department's calculation, insofar as it relates to civilian employment, was based on the top increment of ASO1, that the applicant was treated as an adult.