SPF FORMWORK PTY LTD v SIMONOVIC SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and CRIPPS JJA 19 November 1992, 2 April 1993 [1993] NSWCA 250 This was an appeal against the decision of the trial judge awarding an amount of $25,020 pursuant to s66 Workers' Compensation Act and ordering interest on this amount at the rates prescribed from date of injury to date of hearing. Held: The trial judge had erred in the approach he adopted in relation to the award. In relation to the award of interest, the trial judge's discretion had not miscarried. Workers' Compensation Act 1987, s66, s67 Supreme Court Act 1970 Suitor's Fund Act Jones Bros Bus Company Pty Ltd v Baker (1992) 26 NSWLR 322 MBP(SA) Pty Ltd v Gogic (1991) 171 CLR 657 ORDERS 1. Appeal upheld. 2. So much of Manser CCJ's order as awarded the respondent the sum of $25,020 pursuant to s66 of the Workers Compensation Act 1987 be set aside and in lieu thereof there be entered an award for the respondent in the sum of $15,012. The terms of Manser CCIJ's award otherwise confirmed. 3. The respondent to pay the appellant's costs of the appeal. The respondent to have a Certificate under the Suitor's Fund Act. Mahoney JA Different views have been expressed as to the construction of s66 and s67 of the Workers Compensation Act 1987 and as to the bases on which interest should be calculated on amounts awarded under those sections. It is proper that, within the proper limits of construction and principle, there be uniformity in the law to be applied. I therefore agree with the judgment of Cripps JA and the orders he proposes. Priestley JA I agree with Cripps JA. Cripps JA This is an appeal from the decision of Judge Manser in the Compensation Court on 12 August 1991 awarding the respondent worker lump sum compensation under s66 of the Workers' compensation Act 1987 in the sum of $25,020 and under s67 in the sum of $25,000. Manser CCJ also ordered that the employer appellant pay the worker interest on half the award under s67 at rates prescribed under the Supreme Court Act 1970 and on the full amount of the award under s66. In both cases interest ran from 20 June 1988 to 12 August 1991. The appellant employer appealed to the Court alleging that Manser CCJ erred in law in awarding the sum of $25,020 pursuant to s66 of the Act and that in awarding interest at the rates prescribed from the date of the injury to the date of hearing. The respondent was born on 7 February 1961. He injured his back at work on 20 June 1988. Thereafter, he suffered periods of partial incapacity and received medical treatment. By reason of work related exacerbation of his back condition, his back was manipulated. Later he underwent an operation and his spine was 2 UNREPORTED JUDGMENTS fused. It is unnecessary for me to set out in detail his medical history. Manser CCJ did not conclude he was "a most extreme case". He accepted that the injury was serious and that the impairment to his back was 30%. His factual findings have not been challenged. Prior to the decision of this Court in Jones Bros Bus Company Pty Ltd v Baker (1992) 26 NSWLR 322, there were two views among Compensation Court judges concerning the approach to be taken for the purpose of calculating compensation payable under s66(1) in respect of a found percentage "impairment of the back". Both schools of thought are explained at 330-331 of the judgment of the President. Put shortly, the first school requires a finding of a percentage loss and the calculation of compensation by reference to where it lies within the "range of percentages" in the Table. The second requires that after the first step is taken (being the one referred to above) a second step is required, viz to assess the particular impact of the permanent impairment on the particular worker. The Court endorsed the first approach and rejected the second. The case under appeal was decided before Jones Brothers. Manser CCJ said: "T determine therefore that the percentage of the maximum amount payable under s66(1) is 30 percent. It is agreed that at the date of the applicant's injury the amount was $83,400. The amount of compensation to which the applicant is entitled under s66 is $25,020." It is plain from Manser CCJ's lengthy judgment that he was adopting what the President called the two step approach. That approach was impermissible. Having determined that the impairment was 30% it became incumbent upon Manser J to award the worker 30% of 60% of $83,400. He did not do that. He awarded him 30% of $83,400. The difference is significant. 30% of 60% of $83,400 is $15,012. That sum, incidentally, was the sum claimed by the worker in his application based on an allegation by him that he had suffered 30% impairment of his back. In my respectful opinion, the trial judge erred in law. Mr Sharpe has valiantly attempted to justify Manser CCJ's conclusions by submitting that although at "first glance" the learned judge would appear to have erred, the Court should infer that what he was intending to say was that the worker had suffered 50% impairment of his back with the consequence that the award of $25,020 was justified being 50% of 60% of $83,400. I cannot accept that submission. Manser CCJ's reasons were quite plain. He adopted what has since been held to be the impermissible two step approach. It was also submitted that Manser CCJ erred in his awards of interest. The orders made refer to the rates prescribed under the Supreme Court Act 1970. Pt7 R2 of the Compensation Court Rules provides that unless the Compensation Court otherwise orders, the rates shall be those prescribed pursuant to s95(1) of the Supreme Court Act 1970 or rates prescribed under Pt7 R1 of the Compensation Court Rules whichever is the less. It is submitted that Manser CCJ should not have awarded interest to run on the lump sum awarded under s66 until such time as the respondent worker established permanent impairment entitling him to compensation. If I understand the submission correctly, it is that interest under s66 cannot be awarded until there is a medical opinion to the effect that the appropriate loss has been established. That may be so in some cases but, in my opinion, it has not been established in the present case. It was open to the judge to conclude that there had been a 30% impairment suffered by the worker at the date of injury. It was further URJ SPF FORMWORK PTY LTD v SIMONOVIC (Cripps JA) 3 submitted that his decision to award interest at the rates specified was inconsistent with the decision of the High Court in MBP(SA) Pty Ltd v Gogic (1991) 171 CLR 657. The submission is that generally the incidence of taxation upon an assumed investment and the reduced risk of loss of capital should be reflected in the rate applied. With respect to an award under s66, it may be that some small allowance ought be made in the appropriate case for these matters although, in the present case, even if it were appropriate, the matter would be almost de minimis. The better view, however, is that what he would have done with his money is irrelevant. In any event, it is unnecessary to pronounce upon the matter in view of the orders that are to be made. With respect to the claim under s67, Manser CCJ, presumably, apportioned the award. Whether he was obliged to do so need not be considered. This Court, in other cases, has said that the common law principle that there must be a reduction in an otherwise appropriate interest rate because compensation is awarded in the money of the day of hearing, has no application to awards under s66 and s67 because the sum to which the worker is entitled is fixed as at the date of injury. I am not prepared to assume Manser CCJ failed to have regard to relevant circumstances. He did not, I infer, order that interest be paid on that part of the lump sum referable to future pain and suffering. I am not prepared to infer that he overlooked the circumstance that the past pain and suffering was happening from the date of the injury to the date of the award. His conclusion was open to him. To have this Court interfere, it must be shown that his discretion miscarried. I do not think that has been demonstrated. The Court was invited to reassess the claim. There was no established error with respect to the award of interest. In my opinion, there is no reason why the Court should not adopt Manser CCJ's assessment of 30% of impairment of the back. A consequence of his Honour's finding on a proper application of Jones Bros is that the worker is entitled to a lump sum of $15,012.00 pursuant to s66 of the Workers Compensation Act. Accordingly, I propose the following orders. 1. Appeal upheld. 2. So much of Manser CCJ's order as awarded the respondent the sum of $25,020 pursuant to s66 of the Workers Compensation Act 1987 be set aside and in lieu thereof there be entered an award for the respondent in the sum of $15,012. The terms of Manser CCJ's award otherwise confirmed. 3. The respondent to pay the appellant's costs of the appeal. The respondent to have a Certificate under the Suitor's Fund Act. Counsel for the Appellant: J Poulos QC/P Sweeney Solicitors for the Appellant: Abbott Tout Russel Kennedy Counsel for the Respondent: JL Sharpe Solicitors for the Respondent: Taylor and Scott