Reported Decision : (2002) 23 NSWCCR 385 Compensation Court of New South Wales CITATION : Naylor v SAS Trustee Corporation [2002] NSWCC 19 PARTIES : Stephen Craig Naylor SAS Trustee Corporation MATTER NUMBER(S) : 1425 of 2001 JUDGMENT OF: Armitage J at 1 CATCHWORDS: Statutes & Delegated Legislation :- LEGISLATION CITED: CASES CITED: DATES OF HEARING: 10/4/02 DATE OF JUDGMENT: 04/10/2002 FOR APPLICANT: Mr J J Klarica instructed by Messrs Taylor & Scott. LEGAL REPRESENTATIVES: FOR RESPONDENT: Mr T M Ower instructed by Brian Matthews. JUDGMENT: 1. This is an appeal pursuant to s 21 of the Police Regulation (Superannuation) Act 1906 by Stephen Craig Naylor against the SAS Trustee Corporation, in which by his Application for Determination he simply claims an annual superannuation allowance under s 10(1A) of the Police Regulation (Superannuation) Act 1906. However as the matter was developed in argument by counsel it eventually appeared that Mr Naylor had already been granted, as a result of what was admitted by the Commissioner of Police to be injury as a result of being "hurt on duty" within the statute abovementioned, a police superannuation pension of 72.75 per cent of his "salary of office" within s 10(1A) of the abovementioned statute. 2. An affidavit was tendered by Mr Ower for the respondent before me, it being of Brian Thomas Matthews, his instructing solicitor, sworn on 12 March 2002. It set out the matters which had emerged in the course of counsel's argument and in particular set out the initial pension which the appellant was granted as discussed above. It also set out that this pension was paid from the date of the appellant's discharge from the Police Force on 13 August 1999. It also set out that this pension was subsequently increased to 77 per cent of the "salary of office" within s 10(1A) of the abovementioned statute, this increase occurring in circumstances set out in annexure "B" of the affidavit just mentioned and dating from 14 August 1999, that being the date of discharge abovementioned. In the manner in which the matter was contested by the parties, it was perfectly clear that what the appellant sought by this appeal was the setting aside of that determination by the Board and an increase in that pension from the date of discharge abovementioned and not from some later date. 3. A preliminary point has arisen in relation to the proper interpretation of s 10 of the statute abovementioned, which the appellant and respondent agree I should deal with before hearing the substantive appeal. The parts of s 10 which are relevant to the present argument are as follows: (1) In this section: "disabled member of the Police Force" means: (a) a member of the Police Force who is discharged after being certified, pursuant to s 10B(1), to be incapable, from a specific infirmity of body or mind, of discharging the duties of his office; or (b) a former member of the Police Force who resigned or retired and who, according to a certificate given pursuant to s 10B(2) at any time after his resignation or retirement, would have been incapable, from an infirmity of body or mind, of discharging the duties of his office at the time of his resignation or retirement, that infirmity being determined, pursuant to s 10B(3) or on appeal, to have been caused by the member being hurt on duty or the former member having been hurt on duty when he was a member of the Police Force, as the case may be; "retired " includes discharged as referred to in s 7 or 14; "salary of office " means: (a) In relation to a member of the Police Force who is discharged - his salary of office at the day of his discharge; or (b) in relation to a former member of the Police Force who resigned or retired, his salary of office at the date of his resignation or retirement (1A) Subject to this section, the annual superannuation allowance for a disabled member of the Police Force is: (a) an amount that is equal to 72.75 per cent of his salary of office; (b) except that par (c) applies, an additional amount that is: (i) not more than 12.25 per cent of his salary of office; and (ii) commensurate, in the opinion of the Board, with his incapacity for work outside the Police Force . . . 4. It is agreed by the parties that s 10(1A)(c), which follows these provisions, does not apply in this case. 5. Mr Ower's simple contention for the respondent is that the expression "salary of office" where defined in s10(1), and otherwise referred to in the parts of the section just quoted, means the net salary at the time active duties were being performed by the superannuant as a member of the Police Force. Mr Klarica for the appellant submits that the gross salary is what is referred to here. By "gross salary" I understand counsel to mean the salary paid to a person in the relevant position who is a serving member of the Police Force without deduction for such matters as tax and superannuation, whereas "net salary" refers to the salary after such deductions. 6. As I have said, an affidavit of the solicitor for the respondent, Mr Matthews, was read in Court, although its admissibility was disputed by Mr Klarica on the ground of relevance. It was however agreed that I should read the affidavit for purposes of determining the preliminary argument just described. 7. If I can put it as simply as I can, par 11 of the affidavit establishes the following. The appellant at the time of discharge from the Police Force was performing duties as a Senior Constable Level 6, and it is agreed that the "salary of office" within s 10(1) quoted above is the salary payable to a person occupying that position. 8. Par 11 establishes that the annual salary of that office in gross terms is $58,845. This would appear to be confirmed by annexure "F" to Mr Matthews' affidavit which is a document headed "Non-commissioned Police Officers" setting out certain salaries, including that presently being discussed. 9. Par 11 of the affidavit also establishes, again in gross terms, that the appellant's present superannuation pension, payable on the basis of 77 per cent incapacity, if I may put it loosely, is $1,640.75 per fortnight. 10. Par 11 also establishes that the appellant's pension after deduction of income tax, payable on the basis that the appellant is a superannuant rather than a person receiving income from personal exertion, is in the sum of $1,513.75 per fortnight, whereas the sum received by a Senior Constable Level 6 at the present time according to par 11 of Mr Matthews' affidavit (and indeed annexure "F" to the affidavit just referred to) is but $1,511.50 per fortnight. That is firstly because the rate of income tax payable by such a Senior Constable earning money from personal exertion is in a greater sum than that which would be payable by a superannuant, such as the appellant, and secondly because the hypothetical Senior Constable just referred to would pay a superannuation contribution of $3,530 a fortnight, whereas the appellant would pay no such impost, he being of course already a recipient of superannuation. 11. These features account for the difference between the appellant's superannuation pension on the basis of 77 per cent incapacity which he presently receives in the sum of $1,513.75 per fortnight, as against the sum of $1,511.50 per fortnight receivable by the hypothetical Senior Constable just mentioned at the same level as the appellant was before he left the Police Force. 12. Mr Ower's simple point is that the expression "salary of office" in s 10(1) abovementioned cannot be construed in such a way as to believe the appellant better off than if he was still a serving member of the Police Force in the position and level abovementioned, namely Senior Constable Level 6. 13. Mr Klarica resists this interpretation and his simple argument is that the expression "salary of office" is not defined in s 10(1), other than for present purposes in subparagraph (b) of the definition which I have quoted above, which reads: In relation to a former member of the Police Force, he resigned or retired - his salary of office the date of his resignation or retirement 14. Mr Klarica simply says that had Parliament intended such matters as the differential incidence of taxation on superannuants as against active police, if I may so call them, earning income from personal exertion, and superannuation contributions made by such active police and not by superannuants to be taken into account in determining what was the "salary of office" within s 10 (1) and (1A), it would have so provided in the definition of "salary of office" in s 10(1). 15. He takes me further to the Police Superannuation Regulation 1995 where in cl 5, headed "Salary of office", that term is defined for purposes of the Regulation as follows: (1) For the purposes of par (a) of the definition of "salary of office" in s 1(2) of the Act, remuneration received by a member of the Police Service to whom the definition relates by way of any of the following allowances is prescribed as exempt: (a) a soiled clothing allowance, (b) a shift allowance, (c) a stopping allowance. (2) the definition of "salary of office" in s 1(2) of the Act, includes any remuneration received by the member of the Police Service concerned by way of a bonus for the member's having obtained any of the following qualifications . . .. 16. After the word "qualifications" in subclause (2) are set out certain qualifications which need not detain me here, such as the degree of Bachelor of Laws. Mr Klarica employs this clause to suggest that quite apart from the terms of s 10(1) itself, the drafter of the Regulation just quoted had another opportunity to indicate that the incidence of taxation and superannuation contributions should be taken into account in determining the "salary of office" within s 10(1) and (1A), and did not do so. Hence, says Mr Klarica, the expression "salary of office" should be taken to have the ordinary meaning attached to it in common parlance, which is the sum received by way of gross income by the person earning it before deduction for taxation, superannuation etc. 17. Mr Klarica takes me to Shepherd v State Authorities Superannuation Board (1996) 12 NSWCCR 710 where Judge Neilson dealt with the matter in this way, and also to Poole v State Authorities Superannuation Board (unreported, 21 August 2000, Curtis J) where again the matter was dealt with in the way he suggests is appropriate, i.e. by construing "salary of office" in s 10(1) and (1A) as meaning gross salary before deduction for superannuation and taxation. He says that in Carette v SAS Trustee Corporation (unreported, 5 September 2001, Neilson J) the matter was also dealt with in this way. 18. Mr Ower's capable argument first draws attention to the fact that the present point was not argued in these cases, so that it simply did not arise, and to the fact that neither Judge Neilson nor Judge Curtis engaged in any specific analysis of the meaning of the term "salary of office" in s 10(1) and (1A). This is undoubtedly the case. He further says that the principle underlying the statute abovementioned, and in particular s 10(1) and (1A), is restitutio in integrum and consequently, he says, the statute should not be interpreted in such a way as to leave the superannuant in a better position than would be the case where he or she is a serving member of the Police Force. He says that this would be the result of the interpretation contended for by Mr Klarica, because, he says, if a superannuant was granted superannuation on the basis set out in Shepherd's case, the result would be that because of the differential incidence of taxation on a serving member of the Police Force as against a superannuant, as established by Mr Matthews' affidavit in the way I have discussed, and because of the absence of superannuation contributions from a superannuation pension as against the salary of a serving member of the Police Force, the result of paying a superannuant on the basis of a particular percentage loss of gross income in accordance with the principles in Shepherd's case would be unjust enrichment. 19. I discussed in argument with counsel a hypothetical case in which a superannuant would have been paid, had he or she not been hurt on duty, a "salary of office" in the sum of $1,000 per week. Suppose that this person was hurt on duty, and was being paid a superannuation pension, as here, on the basis of 77 per cent of that "salary of office" in accordance with s 10(1A)(a) and (b). Suppose that the Board (or this Court on Appeal) determined that the true level of the superannuant's earning capacity was the sum of $200 per week. It would follow, according to Mr Klarica's interpretation, that such a superannuant would be entitled to a pension under s 10(1A)(a) and (b) equivalent to 80 per cent of the gross salary of such an officer. That is so, says Mr Klarica, because the superannuant's "economic loss", in the way that expression is employed by Judge Neilson in Shepherd's case (with whose reasoning I generally agree), would be the sum of $800 per week, being the difference between his or her capacity to earn at $200 per week and his or her "salary of office" of $1,000 per week. The result would therefore be as I have said that such a hypothetical superannuant would receive a pension of 80 per cent of his or her "salary of office". 20. Mr Ower says that because such a hypothetical superannuant would be taxed less than a serving member of the Police Force receiving $1,000 per week as his or her "salary of office", and because such a hypothetical superannuant also would not to have to pay superannuation contributions, as would an active member of the Police force receiving the abovementioned "salary of office", the superannuant concerned is better off than he or she should be, and would be unjustly enriched because the differential incidence of taxation and the superannuation contributions of an active member of the Police Force not paid by a superannuant had not been taken into account. 21. It is easy to follow Mr Ower's submission that unjust enrichment occurs in these circumstances and it is equally possible to sympathise with it, but the plain answer I think to his argument is to look at the definition of "salary of office" in s 10(1) quoted above, and to observe that it does not take into account the differing incidence of taxation, nor the superannuation contributions paid by a serving member of the Police Force in the way that Mr Ower suggests should occur. Certainly Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321 (per Barwick CJ at 331) and similar cases indicate that statutes should not be given unjust or absurd results unless their language is intractable. Mr Ower of course draws attention to the existence of the principle of restitutio in integrum in relation to common law damages for economic loss, and in particular to Fox v Wood (1981) 148 CLR 438, and suggests that the principles contained in that case should be employed in determining the meaning of "salary of office" in s 10(1) and (1A). I disagree. 22. I agree with Mr Ower's submission that the present statute is not in terms a compensation statute, as is the Workers Compensation Act 1987 or its 1926 predecessor. However, I agree with Judge Neilson and Judge Curtis in Shepherd, Poole and Carette, both as a matter of judicial comity and because I am affirmatively convinced that they are right, in the contention that the inquiry mandated by s 10(1A)(b)(ii) abovementioned is an inquiry into economic loss. It refers after it all to "his [or her] incapacity for work outside the Police Force . . .". 23. The expressed "incapacity for work" is one dealt with in authority on innumerable occasions, and I can see no reason in principle why it should receive a different interpretation in this statute. That expression where used the Workers Compensation Act refers to the diminished or abolished capacity of a partially or totally incapacitated worker to sell his or her labour on the open labour market: see Ball v William Hunt & Son Pty Ltd (followed in Ward v Corrimal-Balgownie Collieries Ltd (1938) 61 CLR 120). What was done by Judge Neilson in Shepherd and Carette and by Judge Curtis in Powell in varying ways (the differences between which I do not need to resolve for present purposes) was to enquire to what extent the superannuant's capacity for work on the open labour market, which is what "outside the Police Force" in s 10(1A)(b)(ii) seems to me to mean, was diminished as a result of the superannuant being "hurt on duty" within the statute. 24. There seems to me no warrant in s 10(1) or (1A) for interpreting "salary of office", which is the top line of the calculation mandated as it seems to me by s 10(1A)(b)(ii), as meaning, because of some general principle of restitutio in integrum, only net as against gross salary as suggested by Mr Ower. 25. Further, as I pointed out to Mr Ower in argument, this is contraindicated by such cases as Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50, where an award of weekly payments for an injured worker persisting after the date of retirement was held by the Court of Appeal to be open to the trial judge, in circumstances where the evidence established that the worker would more probably than not have been obliged to retire in any event by reason of age, having reached 65 years. Undoubtedly the principle of restitutio in integrum was ineffective in that case because the plain words of the statute contraindicated, or at least did not import it. 26. The same seems to me to be the case here, admittedly in a different statutory context. Had Parliament intended the interpretation contended for by Mr Ower, it could have provided for it in plain words in the definition of "salary of office" in s 10(1) or in the Regulation to which Mr Klarica referred (assuming an amendment of the Act of that kind enacted by regulation to be within power, a matter I do not have to decide here). Parliament did not take this opportunity. It seems to me that in those circumstances, any supposed inequities as a result of the situation to which Mr Ower draws attention are a matter for Parliament and not for this Court. 27. For all of these reasons, I am of the view that the expression "salary of office" in s 10(1) and (1A) refers to the gross salary of the superannuant in question, were he or she still occupying the position he or she had as at date of discharge. 28. That concludes the preliminary point that I have been asked by the parties to decide and I shall now hear evidence. Mr J J Klarica, instructed by Messrs Taylor & Scott, appeared for the applicant. Mr T M Ower instructed by Brian Matthews appeared for the respondent. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.