FEDERAL COURT OF AUSTRALIA Wood v ASP Ship Management Pty Ltd [2007] FCA 459 ADMINISTRATIVE LAW – appeal from a decision of the Administrative Appeals Tribunal – calculation of worker's compensation payments – whether the Tribunal applied proper construction of s 13(6) of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) Administrative Appeals Tribunal Act 1975 (Cth), s 44 Seafarers Rehabilitation and Compensation Act 1992 (Cth), ss 13(5), (6) Comcare v Thompson (2000) 175 ALR 163 at [45] cited Re Thompson and Comcare (2002) 69 ALD 762 at [28] cited STEVEN SIDNEY WOOD v ASP SHIP MANAGEMENT PTY LTD NSD1428 OF 2006 EMMETT J 28 MARCH 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1428 OF 2006 BETWEEN: STEVEN SIDNEY WOOD Applicant AND: ASP SHIP MANAGEMENT PTY LTD Respondent JUDGE: EMMETT J DATE OF ORDER: 28 MARCH 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The decision of the Administrative Appeals Tribunal made on 30 June 2006 be set aside. 2. The matter of the review by the Administrative Appeals Tribunal of the respondent's determination not to increase the applicant's incapacity payments be remitted to the Administrative Appeals Tribunal for reconsideration according to law. 3. The respondent pay the applicant's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1428 OF 2006 BETWEEN: STEVEN SIDNEY WOOD Applicant AND: ASP SHIP MANAGEMENT PTY LTD Respondent JUDGE: EMMETT J DATE: 28 MARCH 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This appeal from a decision of the Administrative Appeals Tribunal (the Tribunal), pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (the Tribunal Act), concerns the proper construction of s 13(6) of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (the Act). Section 13(6) relevantly has the effect that, if the amount per week payable to employees in a class to which an employee belonged when that employee became incapacitated, is later increased, the compensation payable to the employee as a result of the incapacity must be increased by the same percentage as that by which that amount per week was so increased. 2 The Tribunal found that the appellant, Steven Sidney Wood (the Seafarer), was employed by the respondent, ASP Ship Management Pty Ltd (ASP), as a catering attendant although he is also referred to as a catering assistant. Nothing appears to turn on the difference. The Seafarer was employed by ASP until his career ended in January 1997 as a result of incapacity connected with his employment. The Seafarer received compensation payments from ASP but contends that they have been incorrectly calculated in that increases required by s 13(6) of the Act have not been taken into account. The Tribunal held that there are no longer any members of the class of employees to which the Seafarer belonged at the time of his incapacity. The Tribunal concluded, therefore, that s 13(6) could have no operation and the payments to the Seafarer should not be adjusted under that provision. 3 The Seafarer contends, in his notice of appeal, that the Tribunal made an error of law in reaching that conclusion. ASP disputes that there was any error on the part of the Tribunal in reaching its conclusion. ASP says, in addition, that, if there was any error on the part of the Tribunal, it was not an error of law and, accordingly, there is no appeal under s 44 of the Tribunal Act, which limits the right of appeal to an error of law. No suggestion has been made that the Seafarer seeks Constitutional writ relief pursuant to s 39B of the Judiciary Act 1903 (Cth). THE EMPLOYMENT OF THE SEAFARER IN THE AUSTRALIAN SHIPPING INDUSTRY 4 The evidence before the Tribunal, to which it referred in its reasons, was to the effect that there are two segments of the Australian shipping industry, being the blue water segment, consisting of the coastal cargo trade, which includes voyages to South East Asia, on the one hand, and the offshore segment, consisting of gas and oil operations, on the other hand. The evidence indicated that the two segments are quite distinct industries, although seafarers could move between industries in their work. 5 The evidence indicated that the conditions of employment in the two segments are different. Thus, crew employed in the blue water segment have greater security, more regular working hours, more generous quarters and fewer crew members to look after than crew employed in the offshore segment. The cyclical nature, the less regular working hours and more cramped quarters of crew in the specialist vessels of the offshore segment have the consequence that pay rates are higher than the pay rates for the blue water segment. 6 At the time of his incapacity in 1997, the Seafarer was employed by ASP as an assistant caterer on "Australian Endeavour". Australian Endeavour was a container ship trading in the blue water segment, mainly to south east Asian ports. The Seafarer was paid under the Maritime Industry Modern Ships Award (the Award). The Award applied only to the blue water segment. 7 The Award set pay rates by reference to category of vessel and number of crew. Australian Endeavour was classed as a dry cargo vessel of over 39,000 tonnes, manned by more than 18 crew. At the time of his incapacity the Seafarer was being paid pursuant to the Award specifically as a catering assistant on a Category 3 Dry Cargo vessel with a crew of more than 18. 8 In about 1997 or 1998, following a rationalisation in relation to the blue water segment, whereby the position of catering assistant was abolished, ASP, as operator of vessels in the blue water segment, no longer employed catering assistants. The Seafarer's duties on Australian Endeavour involved helping prepare meals, cleaning the vessel, loading stores and similar work of that kind. His duties were similar to those of a chief steward, but without the administrative duties of ordering stores, keeping records and making price calculations. The classification of chief caterer after the rationalisation combined both roles, with the nature of the duties being essentially the same as prior to the rationalisation. 9 However, vessels operating in the offshore segment maintained their existing manning. The evidence indicated that over the years, the blue water segment has reduced and the offshore segment has expanded. 10 As at January 1997, when the Seafarer became incapacitated, ASP employed 35 catering assistants. None of those individuals are now employed by ASP, the latest having terminated in March 2000. The bulk of the individuals terminated their employment in 1997 or 1998. Catering assistants affected by the rationalisation either took voluntary redundancy or found employment as chief caterers with ASP or employment as catering assistants on other vessels. About one-third accepted redundancy, the remaining two-thirds finding work elsewhere. THE TRIBUNAL'S DECISION 11 The Seafarer submitted to the Tribunal that the class to which he belonged is that of "catering assistant", and that that class of employees continues to exist for the purposes of s 13(6) in relation to vessels operating in the offshore segment. He says that the calculation of any percentage variation under s 13(6), therefore, should be done on the basis of figures attaching to catering assistants under a range of enterprise agreements concerning such offshore vessels. He proposed that the Tribunal choose one of those enterprise agreements or direct that an average be taken in order to arrive at an indicator for an appropriate percentage increase. 12 There was evidence before the Tribunal, for example, that enterprise agreements entered into in relation to some six offshore vessel operators provided identical rates of pay for caterers from October 2001 to July 2004. Enterprise agreements entered into by other offshore vessel operators provided for similar rates of pay for periods from January 2005. The Seafarer contended, in effect, that the work performed by caterers under those enterprise agreements was the same type and kind of work that he was performing on Australian Endeavour prior to his incapacity. Accordingly, the Seafarer contended, caterers who were subject to those enterprise agreements were employees in a class to which the Seafarer belonged at the time when he became incapacitated. It was, therefore, possible to make an adjustment under s 13(6) by reference to the amount payable to caterers under such agreements. 13 ASP contended, on the other hand, that s 13(6) requires, not only the identification of a class, but the identification of the amount per week payable to employees in that class. ASP said that, because it no longer employs any catering assistants, the class to which the Seafarer belonged no longer exists. It also argued that, even if the class of catering assistants is not restricted to employees of ASP, no such class exists because of various differences between the blue water industry and the offshore industry and the importance of those differences to levels of remuneration. 14 The Tribunal concluded that s 13(6) requires the identification not only of a class to which an employee belonged, but also of "the amount per week payable to employees in the class to which such an employee belonged". The Tribunal said that the class is inextricably tied to, and identified by, the amount of its remuneration and must be linked in that way in order for the percentage variation under the provision to be calculated. 15 The Tribunal approached its task by identifying the class to which the Seafarer belonged by reference to the Award and the Award's categorisation of size of vessel and manning. The Tribunal said that it would "accommodate" the changes wrought by the rationalisation concerning cargo vessels "by extending the class to all vessels of at least that size and manning in the blue water industry". The Tribunal concluded, on that basis, that the class to which the Seafarer belonged when he became incapacitated was the class of catering assistants working on vessels of over 39,000 tonnes with a crew of more than 18. 16 However, since the Tribunal considered that it had no evidence of the continuity of that class, it concluded that the calculation provided for by s 13(6) could not be performed. The Tribunal considered that, since there are no longer any members of that class, s 13(6) can have no operation and there can be no percentage increase. For that reason, the Tribunal concluded that the amount of weekly payments to the Seafarer could not be adjusted under s 13(6). 17 The Tribunal rejected the contention on behalf of the Seafarer that the class be identified simply as "catering assistants". The Tribunal considered that, to do so, would be to ignore "the central feature of remuneration" and that, while it would identify a class whose continuation is beyond doubt, it would render impossible the task of identifying a percentage increase. CONTENTIONS ON APPEAL 18 The Seafarer complains that the Tribunal took the view that the single most important factor in the evidence, if not the critical factor, for the purposes of identifying a class, is remuneration. He says that the Tribunal erred in concluding, substantially on the basis that the Tribunal could not discern evidence of parity of income or something like it, that the class had ceased to exist so that there was no scope for the operation of s 13(6). 19 The Seafarer complained that the Tribunal's reasons proceed as though the definite article were used in s 13(6), so as to compel a search for a job virtually identical with the Seafarer's old job, essentially by reference to income or remuneration. The Seafarer contended that the Tribunal's approach overlooked that, as a matter of logic, work will identify a class, because the work must be done by someone. That in turn will identify an income stream or range of income relevant for the application of s 13(6). He says that the Tribunal's approach was erroneous in looking at income first and crucially, when it was but one factor to include in a broader inquiry. 20 The Seafarer pointed out that, on the evidence, it was not correct to say that a class of work involving catering had disappeared. By its very nature, work of that kind must continue to exist or there could be no shipping industry. No matter what the title or designation may be, there is always going to be work, performed by the seafarer, of the type that can be described as catering. 21 ASP accepted that, while it is appropriate to identify the work or the kind of work that was done by the Seafarer prior to his incapacity, it is equally important to identify the total context in which that work was done and the conditions that applied to the employment. ASP says that the class of employees of which the Seafarer was a member at the date of incapacity must specifically be those who have a common interest in the amount of remuneration paid to them, notwithstanding that the particular features that identify such persons may change over the years. 22 For example, there may be instances in which persons with such a common interest may be identified by the type of work that they perform, the qualifications that they hold, the category or level of position that they hold or any combination of these or other features. It is imperative, however, that regard is had to the features that identified those who had "a common interest" in remuneration at the date of the Seafarer's incapacity. Particular reference was made by ASP to a decision of the Tribunal relied upon by a Tribunal in this case: Re Thompson and Comcare (2002) 69 ALD 762 at [28]. 23 ASP emphasised the evidence before the Tribunal, to which it referred in its reasons, that, although seafarers could move between industries in their work, the blue water and offshore industries are quite distinct. ASP pointed to the different regime under which seafarers are employed in the offshore segment compared with the regime that operated in the blue water segment at the time of to the Seafarer's incapacity. The latter was regulated by the Award. Since at latest 2001, employment in the offshore segment has been regulated by enterprise agreements negotiated against the background of the different conditions that apply to employment in that segment as compared with employment in the blue water segment. Employment under such enterprise agreements involves a different factual matrix to employment under the Award (see Comcare v Thompson (2000) 175 ALR 163 at [45]). 24 ASP contended that the Tribunal made no error of law in its approach to the task of identifying a class to which the Seafarer belonged at the time of his incapacity. The Tribunal sought to find a category of employees whose basis of remuneration was sufficiently similar to that of the Seafarer for a conclusion to be reached that the Seafarer belonged to that class of employees. That, ASP said, involved no error of law and the Tribunal's conclusion that there are no longer employees in that class is a finding of fact. RESOLUTION OF THE ISSUE 25 The essential question is whether the Tribunal adopted an erroneous approach to its task of identifying a class of employees to which the Seafarer belonged. It is a question of law as to what the phrase "class to which [the Seafarer] belonged" means when it is used in s 13(6). However, whether or not there is a continuing class, as the term is properly understood, to which the Seafarer belonged, is a question of fact which is within the province of the Tribunal alone. If the approach adopted by the Tribunal discloses a misapprehension of its task so as to indicate a misconception as to the meaning of "class of employees to which [the Seafarer] belonged" it made an error of law. 26 The object of s 13(6), clearly enough, is to ensure that the relativity is maintained between the compensation payments received by an incapacitated employee and the amount of salary payable to employees doing the same sort of work as the injured employee was doing at the time of his injury. It is conceivable that, over a period of time, the type of work performed by a particular employee at the time of incapacity is no longer performed anywhere because, for example, automation and technological advances mean that a particular type of work is no longer needed and is no longer performed. It is conceivable that, in such circumstances, the intended operation of s 13(6) might be frustrated. 27 Section 13(6) must be construed in its context. Section 13(1) provides that, if an employee who is a seafarer suffers an injury, the employee's normal weekly earnings, for the purposes of determining compensation payable under the Act, is to be an amount equal to the amount payable weekly to the employee by way of salary immediately before the injury happened. Sections 13(5) and 13(6) provide for adjustment of that amount of the employee's normal weekly earnings in two ways. Under s 13(5), if the amount per week payable to an employee would have been increased because that employee reaches a particular age, completes a particular period of service, or receives an increase in salary by way of an increment in a range of salary that applies to that employee, the normal weekly earnings must be increased by the same percentage as that by which the amount per week would have been increased. In the case of s 13(5), the increase does not depend upon being able to identify a specific class to which an employee belonged. 28 Nevertheless, the purpose of both s 13(5) and s 13(6) is to ensure that the compensation payable to a seafarer does not remain static but is to be adjusted in much the same way as the salary of the employee would have been adjusted but for the incapacity. It follows that the reference to class in s 13(6) must be construed broadly as a reference to the type of work that was being performed by a seafarer at the time of incapacity. That involves an enquiry as to the salary being paid to seafarers who perform that or similar work from time to time. 29 ASP contends that, even if work of the type that was performed by the Seafarer prior to his incapacity is being performed on any vessel, increase in the remuneration for that work would be an appropriate indicator for the application of s 13(6), only if the context in which, and the conditions under which, that work is performed are similar to the context in which and the conditions under which the Seafarer was employed as a catering assistant at the time of his incapacity. 30 In making a finding as to a class of employees whose remuneration is to be the comparator for adjustment under s 13(6), the Tribunal is engaged in a fact finding exercise. It is a question of fact as to whether there is a class of employees presently performing work of the same kind or type as and in a context and such conditions sufficiently similar to the work being performed by the Seafarer at the time of his incapacity. The Tribunal rejected the Seafarer's contention that caterers working under enterprise agreements on vessels engaged in the offshore segment of the Australian shipping industry are performing work of a kind or type sufficiently similar to that being performed by the Seafarer prior to his incapacity. 31 As a matter of principle, in determining whether the work is of a kind or type that is sufficiently similar, the Tribunal ought to have regard to the context in which, and the conditions under which, work was performed by the Seafarer and under which work is being performed by the putative class. However, the Tribunal does not appear to have directed proper attention to that question. The Tribunal identified the class to which the Seafarer belonged by reference to the Award. It did not undertake an enquiry as to whether the work performed by caterers on vessels engaged in the offshore segment, and the context in which and conditions under which that work is performed, is sufficiently similar to the circumstances in which the Seafarer worked as a catering assistant prior to his incapacity. 32 The amount per week payable to employees is a factor to be considered in determining whether work is of a type or kind that is sufficiently similar. However, it is not decisive and factors other than remuneration are also relevant. There is nothing in s 13(6) that requires a class to be identified only by the amount of remuneration as the Tribunal appears to have concluded. 33 I consider that the Tribunal misdirected itself by treating the remuneration received by the Seafarer on the one hand and caterers engaged under enterprise agreements on vessels in the offshore segment on the other hand, as paramount to the question required to be addressed by it. The Tribunal accepted that by identifying the relevant class of employees as "catering assistants", a class whose continuation is beyond doubt would be identified. Quite clearly, the Seafarer was a catering assistant and must therefore be taken to have been a member of class whose continuation is beyond doubt. 34 While remuneration is a relevant, and no doubt an important consideration, in determining whether there is a class of employee, it should not have been given the paramountcy given by the Tribunal. The Act does not limit the investigation called for by s 13(6) to employees of a single employer. As I have said, the evidence before the Tribunal indicated a degree of commonality among enterprise agreements. To suggest that the task of identifying a percentage increase was impossible indicates a misapprehension on the part of the Tribunal of the task that it should have undertaken. The conclusion of the Tribunal that there is no class of employees still in existence of which the Seafarer had been a member involves an error of law. CONCLUSION 35 The appeal should be upheld. The decision of the Tribunal should be set aside. The matter of the review by the Tribunal of ASP's determination not to increase the Seafarer's incapacity payments should be remitted to the Tribunal for reconsideration in accordance with these reasons. The constitution of the Tribunal, of course, is a matter for the President of the Tribunal. ASP should pay the Seafarer's costs of the appeal. I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 28 March 2007 Counsel for the Applicant: Mr L King SC with Mr HA Halligan Solicitor for the Applicant: McNally Jones Staff Counsel for the Respondent: Mr J Lenczner Solicitor for the Respondent: Holman Fenwick & Willan Date of Hearing: 19 March 2007 Date of Judgment: 28 March 2007