FEDERAL COURT OF AUSTRALIA Comcare v Hart [2004] FCA 1067 WORKERS COMPENSATION – Commonwealth employees – appeal from Administrative Appeals Tribunal (AAT) – statutory compensation entitlement calculated by reference to 'normal weekly earnings' (NWE) of employee – whether adjustment to NWE required in circumstances where relevant workplace had been restructured such that duties equivalent to those performed by the injured employee at date of injury had been re-classified by the employer Safety, Rehabilitation and Compensation Act 1988, s 8 COMCARE v JOHN HART A 32 OF 2003 GYLES J 19 AUGUST 2004 SYDNEY (HEARD IN CANBERRA) IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 32 OF 2003 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: COMCARE APPLICANT AND: JOHN HART RESPONDENT JUDGE: GYLES J DATE OF ORDER: 19 AUGUST 2004 WHERE MADE: SYDNEY (HEARD IN CANBERRA) THE COURT ORDERS THAT: The proceeding stand over to a date to be fixed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 32 OF 2003 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: COMCARE APPLICANT AND: JOHN HART RESPONDENT JUDGE: GYLES J DATE: 19 AUGUST 2004 PLACE: SYDNEY (HEARD IN CANBERRA) REASONS FOR JUDGMENT 1 This is an appeal on a question of law from a decision of the Administrative Appeals Tribunal (the Tribunal) given on 5 November 2003 which set aside a decision by Comcare (the applicant) as to the normal weekly earnings (NWE) of John Anthony Hart (the respondent) pursuant to s 8 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Act). 2 In 1998 the respondent was employed at the Quamby Youth Detention Centre in the Australian Capital Territory. His substantive position was at the level of Administrative Services Officer (ASO) Class 2 but he was acting at ASO Class 3 level. He suffered injury in the form of a psychiatric condition, 'depression with anxiety symptoms', which was accepted as the basis of a claim for compensation under the Act effective from 10 February 1998. His normal weekly earnings (NWE) for the purpose of s 8 of the Act included overtime and penalties. 3 Later, the employment arrangements at Quamby were restructured. The substantive ASO 2 position was abolished and a new ASO Grade 3 Youth Worker position was created and there were also new ASO 4 and ASO 5 positions. On 4 April 2000 Comcare determined that the respondent's compensation payments should be calculated according to s 8(10) of the Act by reference to the NWE of an ASO 3 Youth Worker at Quamby which would include average overtime and penalties for such a worker. 4 Following a review of the penalties and overtime for ASO 3 Youth Workers for the period 1 July 2000 to 30 June 2001, on 8 October 2001 Comcare determined that the respondent's NWE exceeded the amount per week of earnings that he would have received if he was not incapacitated for work and, in accordance with s 8(10) of the Act, that his NWE should be reduced by the amount of the excess. That determination was the subject of a reconsideration which in turn is the decision under review by the Tribunal. The operative part of the decision under review was as follows: 'Having considered all of the issues, and in accordance with the provisions of the Act, I am satisfied that for the purposes of calculating the employee's entitlement to compensation under section 19 of the Act, his NWE should be determined on a quarterly basis, taking into account the average overtime and penalties paid to ASO3 Youth Workers in the previous quarter. Accordingly, I vary the determination dated 8 October 2001 to find that the employee is entitled to compensation for the following periods: 25 October 2001 to 31 December 2001: 1 January 2002 to 31 March 2002: 1 April 2002 to 30 June 2002: 1 July 2002 to 30 September 2002; This matter will be remitted back to the claims manager for calculation of entitlements (if any).' 5 The decision of the Tribunal was as follows: 'The decision under review is set aside. In its place the tribunal decides that, with effect from 18 October 1999, the applicant's NWE should be regarded as the NWE of an ASO 4 officer at Quamby Youth Detention Centre. The decision having been favourable to the applicant, he qualifies for payment of his costs associated with this application in accordance with the provisions in the tribunal's General Practice Direction.' 6 To understand the difficulty which has arisen, it is necessary to have regard to s 8 of the Act as a whole: 'Normal weekly earnings (1) For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula: 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, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment. (2) Where an employee is required to work overtime on a regular basis, the normal weekly earnings of the employee before an injury shall be the amount calculated in accordance with subsection (1) plus an additional amount calculated in relation to the relevant period under the formula: where: NH is the average number of hours of overtime worked in each week by the employee in his or her employment during the relevant period; and OR is the employee's average hourly overtime rate of pay during that period. (3) Where an employee was, at the date of the injury, employed by the Commonwealth or a licensed corporation 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 or the licensed corporation. (4) Where, because of the shortness of the relevant period, it is impracticable to calculate the normal weekly earnings of an employee before an injury under subsection (1) or (2), the normal weekly earnings of the employee before the date of injury shall be taken to be the normal weekly earnings before that date of another employee performing comparable work, being normal weekly earnings from employment by the Commonwealth or a licensed corporation and calculated under subsection (1) or (2), as the case requires. (5) Where, because of the shortness of the relevant period, the normal weekly earnings as calculated in relation to the relevant period under subsection (1) or (2) would not fairly represent the weekly rate at which the employee was being paid in respect of his or her employment before the injury, the normal weekly earnings before the date of the injury shall be calculated in relation to such other period as Comcare considers reasonable for the purpose of arriving at an amount that does fairly represent the weekly rate at which the employee was being so paid. (6) Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation 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. (7) Subject to this section, if: (a) an employee continues to be employed by the Commonwealth or a licensed corporation after the date of an injury; and (b) the minimum amount per week payable to the employee in respect of that employment is increased because of the promotion of the employee; 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. (8) Subject to this section, where: (a) the employment of an employee is of a kind referred to in subsection 5(4) or (6) or subsection (3) of this section; and (b) the employee is not receiving earnings from any other employment at the date of the injury; the normal weekly earnings of the employee before the injury shall be an amount determined by Comcare to be the amount per week that the employee would have been able to earn at the date of the injury (including any amount in respect of overtime worked on a regular basis) if he or she had engaged in suitable paid employment. (9) The normal weekly earnings of an employee before the date of the employee's injury, as calculated under the preceding subsections, must, while the employee continues to be employed by the Commonwealth or a licensed corporation, be increased or reduced by the relevant percentage. (9A) For the purposes of subsection (9), relevant percentage means the same percentage as the percentage of increase or reduction in the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury as a result of: (a) the operation of a law of the Commonwealth or of a State or Territory; or (b) the making, alteration or operation of an award, order, determination or industrial agreement or the doing of any other act or thing, under such a law. (9B) The normal weekly earnings of an employee before injury, as calculated under subsections (1) to (8) and as increased or reduced under subsection (9) must, if the employee has ceased, or ceases, to be employed by the Commonwealth or a licensed corporation, be further increased, with effect from each indexation date in relation to that cessation, by reference to the percentage of increase (if any) of an index that is prescribed for the purposes of this subsection over the year ending on the 31 December preceding each such indexation date. (9C) For the purpose of subsection (9B), the indexation date, in relation to a cessation of employment, is: (a) the 1 July next following: (i) the date on which this Act receives the Royal Assent; or (ii) the date of that cessation of employment; whichever last occurs; and (b) each subsequent 1 July. (9D) For the purpose of subsection (9B), the regulations may specify the manner of calculating the further increase referred to in that subsection by reference to the movement of the index that is prescribed for the purposes of that subsection. (10) If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed: (a) where the employee continues to be employed by the Commonwealth or a licensed corporation—the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work; or (b) where the employee has ceased to be employed by the Commonwealth or a licensed corporation—whichever is the greater of the following amounts: (i) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury; (ii) the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation ceased; the amount so calculated shall be reduced by the amount of the excess.' 7 The Tribunal posed the issue for determination as being whether the respondent's NWE should be assessed by reference to the NWE of the current Quamby ASO 4 positions and answered that question in the affirmative. The reasoning appears to have been as follows: (1) The class of employees within which the respondent was included at the time of his injury was ASO 3. (2) That class became the new ASO 4 after the Quamby restructure based upon a comparison between the job specifications of the various positions. (3) Had the respondent applied for appointment to the ASO 4 position advertised as part of the restructure process, he would have been successful in his application (presumably on the basis that he did not have work-related stress). The respondent disclaims any reliance on or responsibility for the third finding. 8 The questions of law said to be raised on the appeal are as follows: '1. Whether the subject decisions were authorised by sections 8 and 67 of the Act respectively;' 2. Do sub-sections 8(9) and 8(9A) of the Act apply in circumstances other than where the minimum amount payable to the whole of a class of employees is varied (upwards or downwards); 3. Whether factual findings made by the Tribunal were supported by any evidence.' 9 The grounds are as follows: '1. The Tribunal erred in law in that it misconstrued sub-sections 8(9) and 8(9A) of the Act in finding that these sub-sections applied in circumstances other than where the minimum amount payable to the whole of a class of employees is varied (upwards or downwards). 2. The Tribunal erred in applying sub-sections 8(9) and 8(9A) of the Act by taking into account an irrelevant consideration, namely that had the respondent applied for appointment to the ASO 4 positions advertised as part of the restructure process he would have been successful in his application. 3. The Tribunal erred in applying sub-sections 8(9) and 8(9A) of the Act by taking into account an irrelevant consideration, namely whether the duty statement and selection criteria for the old ASO 3 class more closely resembled the new ASO 3 or 4 classes. 4. The Tribunal erred in applying sub-sections 8(9) and 8(9A) of the Act by failing to take into account a relevant consideration, namely that not all members of the old ASO 3 class won positions in the new ASO 4 class. 5. The Tribunal's finding of fact that the process by which old ASO 3's became new ASO4's did not involve a process properly regarded as a promotion process was unsupported by any evidence.' 10 The orders sought are: 'That the decisions of the Tribunal be set aside; That there be substituted a decision affirming the reviewable decision before the Tribunal that the respondent's normal weekly earnings (NWE) for the purposes of the Act should be regarded as the NWE of an ASO 3 officer at Quamby.' 11 The argument on appeal concentrated closely upon the reasoning of the Tribunal. That is, of course, necessary. It was submitted by the appellant that the course taken by the Tribunal was not authorised by any provision of s 8 and, therefore, must be set aside. In my opinion, that submission is clearly correct. The decision seems to have proceeded upon a misapprehension as to the question for determination – a misapprehension that ran through much of the argument on this appeal. The reviewable decision purported to be made pursuant to s 8(10) of the Act. That provision operates to reduce the NWE that would otherwise be applicable, by the amount of the excess thrown up by the comparison to which that provision refers. Section 8(10) is presumably to have an ambulatory effect so that the excess from time to time would be reflected in the adjusted NWE, although that issue was not explored in argument. Section 8(10) would certainly not authorise substituting an NWE based upon some existing position in lieu of the original NWE calculated in accordance with s 8(1) and s 8(2) (with any appropriate adjustments over time pursuant to the other subsections). There is no power to substitute an NWE of an ASO 4 Officer at Quamby Youth Detention Centre for the NWE calculated as a result of the application of subss (1) to (9D) inclusive of s 8. 12 The respondent sought to support the decision of the Tribunal as being an application of s 8(9) and s 8(9A) of the Act. The manner in which the Tribunal referred to various other cases gives support to the view that the Tribunal saw it that way. With respect, that was not the way in which the decision under review proceeded and no view of s 8(9) and s 8(9A) could authorise the order made by the Tribunal. Those subsections relate to percentage increases or decreases in minimum wages by the operation of law, either original or delegated. That is simply irrelevant to the issue here. 13 On the other hand, in a practical sense, the Tribunal did, on one view, address the question in the same way as did the decision under review – by asking what amount per week the applicant would be earning at Quamby if he were not incapacitated for work. That was the point of the decision under review. The reasoning in that decision was that as the former positions had been abolished, in order to assess what this respondent would have earned if he were not incapacitated for work, it was necessary to form a view as to where in the hierarchy he would be employed and on what basis. That is close enough to the task that the Tribunal undertook and about which it formed a view in the third step to which reference has been made. The question posed thereby is a question of fact and, if it were the right question, the factual answer would be committed to the Tribunal and could not be subject to review on appeal to the Court. 14 It is clear enough that, if the Tribunal were correct, s 8(10)(a) would not apply. It could not be established that if the respondent were uninjured he would be earning less than the NWE, bearing in mind the current earnings of an ASO 4. That being so, a possible result would be to set aside the Tribunal's decision and substitute an order pursuant to the power vested in the Court by s 44(4) and s 44(5) of the Administrative Appeals Tribunal Act 1975 (Cth) setting aside the reviewable decision in whole, thus leaving the NWE where it is. It would be a great waste of time and resources to have the matter remitted to the Tribunal for determination of a factual question that is virtually identical with that which has been determined. However, the reasons of the Tribunal are not directed to s 8(10) and the argument on this appeal has not explored the proper approach to that subsection. I have concluded that I should not take that course without receiving further submissions from the parties. 15 I should say that it is arguable that the decision of the appellant which was under review misconstrued s 8(10)(a) as incorporating the tests in s 8(10)(b). It may be that the amount the respondent would receive if he were not incapacitated for work should take into account all work opportunities for him on that assumption, not being limited to the precise pre-injury employment. That would mean that, even if the Tribunal were wrong in fact as to what would have occurred at Quamby, the decision under review would have to be set aside in any event. 16 The proceeding will stand over to enable submissions to be received as to the appropriate order to be made in the light of these reasons. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 19 August 2004 Counsel for the Applicant: T Howe Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: H Selby Solicitor for the Respondent: KJB Law Date of Hearing: 25 May 2004 Date of Judgment: 19 August 2004