ALLIED CONSTRUCTIONS PTY LTD v NORBEDO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, MAHONEY AP and PRIESTLEY JA 5 May 1992, 29 May 1992 [1992] NSWCA 7 APPEAL from Compensation Court — Assessment of amount which worker, in injured state, "is able to earn" within s40(1) of the Workers Compensation Act 1987 — Factors to be taken into account in such assessment — "Value" of work done not determinative — Correction of errors in calculation. Gleeson CJ I agree with the judgment of Mahoney JA. Mahoney JA On 3 May 1988 the worker Frank Norbedo was injured in the course ofhis employment with Allied Constructions Pty Ltd. He claimed compensation under the Workers Compensation Act 1987. Compensation was paid to him until 14 December 1988. The worker claimed compensation from 14 December 1988. On 9 May 1990 her Honour Judge O' Toole held that he had been "partially incapacitated between 15 December 1988... and continuing", "that comparable earnings exceeded the applicant's capacity to earn by an average of $290 per week", and made an award for the applicant in the sum of $290 per week "between 15 December 1988 date and continuing pursuant to s40". The company has appealed to this Court against her Honour's award. It is agreed that the appeal is brought in respect of alleged errors in law: there is, in respect of the award, no appeal relevantly in respect of fact. The amended notice of appeal specifies five grounds. The first ground relates to her Honour's award of $290 per week. It is agreed that her Honour erred in awarding compensation in this amount and that, by virtue of s37(1) and s40(3) the maximum amounts of compensation are as follows: 15.12.88 to 31.3.89 169.30 1.04.89 to 30.9.90 173.50 1.10.89 to 30.3.90 179.80 1.04.90 to 30.9.90 183.60 1.10.90 to 31.3.91 192.10 1.04.91 to 30.9.91 194.60 1.10.91 to 31.1.92 196.00 1.02.92 to 31.3.92 235.00 1.04.92 to date and continuing 242.20 The appeal therefore must, to this extent, be upheld. The remaining grounds in the amended notice of appeal are based upon the company's submissions in respect of s40 and in particular upon subs(1) and (1A) of that section. As far as is here relevant, the section provides: "40. (1) The weekly payment of compensation to an injured worker in respect of any period of partial incapacity for work shall be an amount not exceeding the difference between: 2 UNREPORTED JUDGMENTS (a) the weekly amount which the worker would probably have been earning as a worker but for the injury and had the worker continued to be employed in the same or some comparable employment (but not exceeding $545.70); and (b) the average weekly amount which the worker is earning, or is able to earn in some suitable employment, from time to time after the injury (but not exceeding $545.70), but shall bear such relation to the amount of that difference as may appear proper in the circumstances of the case. (1A) A reference in this section to an injured worker's ability to earn in some suitable employment is a reference to the amount that the worker is able to earn in the general labour market reasonably accessible to the worker, and for the purpose of determining that amount regard may be had (subject to subs(2)) to: (a) the kind of employment for which the worker has received any approved rehabilitation training (as defined in s38A); and (b) suitable employment (as so defined) for the worker." It is accepted for the purposes of this appeal that the worker was, during the relevant period, partially incapacitated and that the employer did not offer to the worker suitable employment. It is accepted that, for the purposes of s40(1)(a), the weekly amount which the worker would probably have earned as a worker but for the injury is $250. What is in question is "the average weekly amount which the worker... is able to earn in some suitable employment from time to time after the injury..." within s40(1)(b). It is in the calculation of this average weekly amount that, it has been submitted, the relevant errors of law occurred. Those errors relate essentially to the use which the learned judge made of the fact that, for some time during his partial incapacity, the worker had been carrying on a business. In order to understand the submissions made, it is necessary to refer shortly to the facts as the learned judge found them. The plaintiff had been involved in "physically strenuous work". He was a person of "limited literacy and numeracy" and had "a working history in physical and similar labour". The judge found that "his learning difficulties and consequent limited literacy and numeracy had precluded his completion of an apprenticeship". The thrust of the worker's case was that consequent upon his injury he had suffered difficulty with his back, in particular in bending and heavy lifting. There had been a steady and substantial improvement in the condition of the back but, at the date of the hearing, he remained partially incapacitated. The judge concluded that he was "incapacitated for heavy lifting, repetitive bending and other work stressing his spine". The determination of "the amount which the worker is able to earn on the general labour market reasonably accessible to the worker": s40(1A); is to be made in the context of such partial incapacity. The learned judge was required to have regard to such "suitable employment" as is referred to in s40(1)(b) and, in accordance with s38 and accordingly s38A, her Honour had regard to the definition of "suitable employment" in the latter section. That definition provides that "suitable employment" means "employment in work for which the worker is suited, having regard to" the matters there specified. Her Honour was, at the trial, asked by the respondent to assess "the average weekly amount..." for the purposes of s40(1)(b) by reference to the wages payable to a shop assistant pursuant to the relevant industrial award. She was asked to use those figures as a guide. Before this Court, Mr Poulos QC for the company referred to $10 per hour as being the relevant hourly rate under that URJ ALLIED CONSTRUCTIONS PTY LTD v NORBEDO (Mahoney JA) 3 award. He submitted that her Honour should have taken into consideration the period per week for which the plaintiff would have been able to work at the date of the trial and assessed the compensation payable by reference to that hourly rate. The learned judge concluded that the plaintiff would not be able to obtain full-time work "with a retail establishment". She concluded that it was improbable that the suggested calculations represented the worker's earning capacity "'on the general labour market". She concluded that he could undertake part-time work and assessed "the average weekly amount" as $250 per week. In view of the submissions that have been made, I shall set forth the relevant portions of her Honour's judgment. She said: "T accept the applicant's evidence that his lack of formal education, limited literacy and numeracy, prevents his calculating or understanding simple bookkeeping procedures in connection with a retail establishment. As I understand the worker's evidence, those deficiencies proved a substantial handicap and prevented his completing an apprenticeship and proved a disability on the open labour market, even at a time when the applicant was much younger and not physically disabled. Considering the applicant's age, his working experience, his lack of a formal trade or other qualification, it seems to me that even without his present disability, he would be unlikely to obtain any type of full-time work which required basic arithmetical, writing and literacy skills. I think it highly improbable that the proprietor of a shop business would now employ the applicant on a permanent basis for the long hours that he presently works in his own shop. Particularly because of the applicant's limited social skills, he is to be commended for his flexibility in finding alternative work and his persistence in that occupation but I think it improbable that the arithmetical calculations appearing in the respondent's counsel's schedule represent the applicant's earning capacity on the general labour market. Accepting the applicant's preclusion from the heavier forms of physical labour and accounting the whole of the evidence including matters to which I have specifically referred, I think the applicant would experience difficulty obtaining suitable process work or similar work on the general labour market; that if suitable work were available it would more probably be on a part-time, rather than a full-time basis. Doing the best that I can with the evidence, I think it probable that at relevant times the applicant has had an earning capacity on the generally labour market, averaging $250 per week." Mr Poulos QC submitted that her Honour's reasoning to the conclusion that "the average weekly amount" was $250 demonstrated an error or errors in law in the application of s40. Counsel based himself essentially upon the fact that for some time (it was said from 2 March 1990 to 9 May 1990), he had worked in a shop selling clothing conducted by a friend without payment of wages and had subsequently operated a business on his own account from premises next door. Counsel summarised the position in this regard by saying that he had worked 50-60 hours per week conducting that business, with the assistance of a paid employee, and had in the course of it approached other persons in business. He had, it was accepted, conducted the business at a loss. I shall assume for present purposes that what was put by counsel provides an appropriate description of the work which the worker was doing. 4 UNREPORTED JUDGMENTS It is, as I have said, essentially the significance of the work which the worker was doing upon which, for the purposes of these submissions, Mr Poulos QC has relied. He has put the matter in a number of different ways. It is not necessary to recapitulate all of the matters which have been put. He has, in the end, submitted that the principles laid down in Cage Developments Pty Ltd v Schubert (1983) 151 CLR 584; (1981) 2 NSWLR 227; Novello v Zinc Corporation (1988) 14 NSWLR 25 and Australian Iron and Steel Pty Ltd v Elliott (1966) 67 SR 87, and the cases there referred to, indicate that her Honour erred as the grounds of appeal suggest. In practical terms, her Honour was required to consider, inter alia, three things: the employment which was within the plaintiff's capacity, the period per day or per week he could work in that employment, and the amount which he would earn from it. As I have indicated, her Honour concluded that he would not be suited for work full-time in a retail establishment because of his lack of "basic arithmetical, writing and literary skills". He would not be able to undertake "the heavier forms of physical labour". Accordingly, she concluded, he was suited to part-time work of a less onerous nature. He would "experience difficulty obtaining suitable process work or similar work on the general labour market". Accordingly, it may be, her Honour saw his employment in retail shopping or similar work. There is, in my opinion, no error in that conclusion: a fortiori, there is no error of law. It was submitted that her Honour should - perhaps that she could not but - have concluded that the worker could work in such a part-time occupation for the same period as he had spent in his own business, viz, 50-60 hours a week. Therefore, the suggestion inferred, that should be the time for calculation of his prospective income. I do not think that that is correct: at least her Honour was not, under penalty of error of law, required so to conclude. The evidence did not suggest or compel the conclusion that there was part-time work available offering 50-60 hours per week. Nor did it follow that, because the worker may have spent time of that order in his own business, he would have been able to spend that time in such other part-time occupation as might become available. That would depend, inter alia, upon the nature of the duties in his own and the other employment. In my opinion, having regard to the evidence which the parties put before her, her Honour was entitled to conclude that such part-time work as was apt to be in the relevant labour market and was within the plaintiff's capacity would, if hourly rates were applicable, be available for periods significantly less than 50-60 hours per week. Mr Poulos' submissions, in one of their forms, suggested I think that a conclusion of this kind failed to take proper account of what the plaintiff was doing in his own business and of "the value" of what he was then doing. I do not think that that submission should be accepted. As is made clear by, eg, Cage Developments Pty Ltd v Schubert (supra), the calculation of the weekly wage amount in this context may be approached in more than one way and each way may, for purposes of the statute, be acceptable. It is not necessary, in approaching such matter, to "value" the work done by the worker for himself or in his own business. What he does and what he can earn from it is, of course, relevant for purposes of the determination of the matter posed for decision by the statute, namely, "the average weekly amount which the worker... is able to earn in some suitable employment from time to time after the injury". The time that he can spend in his own business is relevant for this purpose but it does not determine URJ ALLIED CONSTRUCTIONS PTY LTD v NORBEDO (Priestley JA) 5 the period of work which from week to week is available in "some suitable employment" "in the general labour market reasonably accessible to the worker". He may be able to work, eg, twenty hours per week but the employment which he is fitted for may offer no more than ten hours per week. It was for her Honour to take into account the impression - for it may well have been no more than an impression on the evidence produced - which the case conveyed to her. Her Honour did not specify, as a precise time or a range, the period of the work which in this regard should be taken into account. It was not necessary for her to do so. To attempt to do so would, I think, have been to give a greater degree of certainty to the matter than intellectual honesty could achieve. It was not argued that the judge had erred in principle by confusing the question of the employment apt to be found in the relevant labour market within the worker's capacity and the question of whether, because of recession or otherwise, that kind of employment could be found at any relevant time. The amount per hour which would be paid for such work was not clear. There was, as I have said, the suggestion that a shop assistant would be paid at $10 per hour. There was no evidence as to the hourly rate for other relevant occupations. However, it is commonplace that a judge of the Compensation Court may, within appropriate limits, take judicial notice of matters of this kind. I see no error in what the learned judge did in this regard. In considering the significance of the evidence as to what the worker did in his own business, it is to be borne in mind that what he did produced no net income. The business was, it is conceded, operating at a loss. Mr Poulos QC submitted that the effect of this may have been that the capital value of the business was being increased during the period of operating loss. But there was, in my opinion, no examination of this question. I do not think that her Honour was in error in law in not referring to considerations of this kind. In my opinion, therefore, the award made was correct except in relation to that part of it which awarded $290 per week between 15 December 1988 "and continuing". I understand it to be the consensus of the parties that the Court should substitute for that portion of the award an award in terms of the amount which I have set forth. I come now to the costs of the appeal. The company has succeeded but only in respect of an amount which the worker has conceded. It has not succeeded in respect of the other grounds of the appeal. Those grounds have occupied almost all of the time devoted to the argument of the appeal before this Court. The Court has invited submissions from counsel as to the order to be made for costs. If at the outset the worker had made clear that he would consent to the amendment of the award in respect of the matter not in contest, that fact would, of course, have been of particular significance in determining the order for costs which should be made. Mr Hislop QC for the worker submitted that had been done; Mr Poulos QC for the company did not accept that it had. No evidence has been placed before the Court on that matter and the Court should therefore, in my opinion, proceed upon the basis that the worker did not so act. Therefore, in my opinion, the company should have the costs of the appeal. The worker should, if entitled, and if it be appropriate, have a certificate under the Suitors Fund Act. Priestley JA I agree with the reasons of Mahoney JA for thinking that this appeal fails except to the extent necessary to correct the mistake made by the trial judge which both parties are now agreed must be corrected. 6 UNREPORTED JUDGMENTS There is one argument which was put for the appellant about which I wish to say something. If I understood it correctly, this argument was to the effect that the trial judge made an error of law in not giving any consideration to a submission made on behalf of the appellant before her that she was bound to consider the quantification of what the respondent was earning at relevant times as an alternative to and separately from what he was able to earn in some suitable employment at those times. The submission was based on the words of s40(1)(b) of the Workers Compensation Act 1987. The steps in the submission were that the respondent was working in his own business, that that work had a value, that there was evidence of the value of that work, that the Judge should have taken into account a figure for the value of the work and have considered that figure as the amount the worker was earning within the first of the two alternatives in s40(1)(b). This process was said to be required by past authorities decided on s11 of the Workers Compensation Act 1926 in which the same alternatives appeared. In particular, Cage Developments Pty Ltd v Schubert (1983) 151 CLR 584 was relied on. I may be doing counsel for the appellant an injustice in fastening the foregoing submission upon him. It may be that, as with the bulk of his submissions, he was directing what he said to the second limb of s40(1)(b); however, I emerged from the argument with the impression that the submission was as I have stated it, and think that I should make it clear that if such a submission were made, I do not agree with it. On the facts as Mahoney JA has recounted them, it seems to me to be quite impossible in law to say that the respondent in this case, when working in his own business and losing money, was earning anything, either as a worker or in any other fashion. A paragraph in the joint reasons of the Judges of the High Court in Cage Developments starting at the foot of 586 seems to me to bear this out quite amply. I agree with Mahoney JA that the appeal should be upheld only so that the award can be corrected, that the appellant should have the costs of the appeal in the absence of evidentiary material enabling the court to decide otherwise, and that the respondent should, if entitled, have a certificate under the Suitors Fund Act. (1) Appeal upheld. (2) Award made by O'Toole J set aside. (3) Award substituted as follows: Award for the application pursuant to s40 in the following amounts: 15.12.88 to 31.3.89 $169.30 per week 1.04.89 to 30.9.90 $173.50 "" 1.10.89 to 30.3.90 $179.80 "" 1.04.90 to 30.9.90 $183.60 *" 1.10.90 to 31.3.91 $192.10 "" 1.04.91 to 30.9.91 $194.60 "" 1.10.91 to 31.1.92 $196.00 "" 1.02.92 to 31.3.92 $235.00 "" 1.04.92 to date and continuing $242.20 " " Medical and hospital expenses s60. (4) Respondent to pay appellant's costs of appeal and, if entitled, to have a certificate under the Suitors Fund Act. URJ ALLIED CONSTRUCTIONS PTY LTD v NORBEDO (Priestley JA) Counsel for Appellant: J POULOS QC/DA BAKER Instructed by: HICKSON LAKEMAN and HOLCOMBE Counsel for Respondent: JD HISLOP QC/TJJ WILLIS Instructed by: TAYLOR and SCOTT