New South Wales Court of Appeal CITATION : Wrigley v Holland [2002] NSWCA 109 FILE NUMBER(S) : CA 40585/01 HEARING DATE(S) : 22 March 2002 JUDGMENT DATE : 2 May 2002 THE WRIGLEY CO PTY LTD PARTIES : v KYLIE HOLLAND JUDGMENT OF : Handley JA at 1; Hodgson JA at 29; Ipp AJA at 30 LOWER COURT JURISDICTION : Compensation Court LOWER COURT CC 52701/00 FILE NUMBER(S) : LOWER COURT Walker CCJ JUDICIAL OFFICER : COUNSEL : Appellant - J D Hislop QC/N E Chen Respondent - R Goodridge SOLICITORS : Appellant - Price Waterhouse Coopers Legal Respondent - Firths The Compensation Lawyers CATCHWORDS : WORKERS COMPENSATION ACT - section 40 - weekly compensation - effect of worker's pregnancy - discretion - PROCEDURAL FAIRNESS LEGISLATION CITED : Workers Compensation Act 1987 (NSW) Australian Wire Industries Pty Limited v Nicholson (1985) 1 NSWCCR 50 Stead v State Government Insurance Commission (1986) 161 CLR 141 Morgan v Commissioner for Railways (1972) 46 WCR 33 CASES CITED: Myer Sydney Ltd v Buckley [1980] 54 WCR 319 Hirst v Illawarra Area Health Service (2000) 21 NSWCCR 82 Kesen v Luke Singer Pty Limited (1989) 18 NSWLR 566 NRMA Insurance Ltd v B & B Shipping and Marine Salvage Co Pty Ltd (1947) 47 SR (NSW) 273 DECISION : Appeal allowed - orders made IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40585/01 CC 52701/00 HANDLEY JA HODGSON JA IPP AJA 2 May 2002 THE WRIGLEY CO PTY LTD v KYLIE HOLLAND workers compensation act – section 40 – weekly compensation – effect of worker's pregnancy – discretion procedural fairness Under s 40 of the Workers Compensation Act 1987 (NSW) the Compensation Court is required to determine two distinct amounts. The first under s 40 (2)(a) is the weekly amount which a worker would probably have been earning but for the injury if the worker had continued to be employed in the same or some comparable employment. The second under s 40(2)(b) is the average weekly amount that the worker is earning or would be able to earn in some suitable employment after the injury. The Court must then, in its discretion, award weekly compensation which does not exceed the difference. In the first period covered by the award of the trial Judge, the worker was working or looking for work. In the second period she was not working or looking for work. The employer's counsel submitted that in the exercise of the Judge's discretion under s 40 (1) an amount of under $50 per week should be awarded. The worker's counsel submitted that an amount of $100 per week should be awarded. The Judge found that for the entire period there was a reduction in earnings of $547.41, and in his discretion he awarded $391.41 per week for both periods. The appellant submitted that the trial Judge had failed to take into consideration in the exercise of his discretion that the worker would not have continued in the same or some comparable employment because of her pregnancy and baby. HELD: (1) The trial Judge was bound, as a matter of law, to take into account in exercising his discretion the submission by the worker's counsel that an appropriate award would be $100 per week. His Honour erred in law because he either failed to take this into consideration or failed to give reasons for not doing so. Australian Wire Industries Pty Limited v Nicholson (1985) 1 NSWCCR 50 applied. (2) The Judge, in not allowing the employer's counsel an opportunity to address on the question of awarding substantially more than the amount sought by the worker's counsel, denied the employer procedural fairness. Stead v State Government Insurance Commission (1986) 161 CLR 141 applied. (3) The Judge erred in law in failing to treat the worker's pregnancy as highly relevant to the exercise of his discretion. Hirst v Illawarra Area Health Service (2000) 21 NSWCCR 82 applied. ORDERS (1) Appeal allowed; (2) Award of the Compensation Court under s 40 of the Workers Compensation Act 1987 set aside; (3) Proceedings remitted to the Compensation Court, differently constituted, to be heard and determined according to law; (4) No order as to the costs of this appeal. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40585/01 CC 52701/00 HANDLEY JA HODGSON JA IPP AJA 2 May 2002 THE WRIGLEY CO PTY LTD v KYLIE HOLLAND Judgment 1 Handley JA: This is an appeal by an employer from an award under s 40 of the Workers Compensation Act made on 6 July 2001 by Walker CCJ. The award covered the period after 1 August 1999 for an amount of $397.41 per week and was continuing. The appeal is limited to questions of law. 2 The award covered two distinct periods, the first until some date in November 2000 when the worker "stopped work" (Black 8) apparently because she was expecting another child, and the period thereafter until the trial when the worker was not in paid employment and was not attempting to obtain such work (Black 14). 3 Section 40 requires the Compensation Court to determine the weekly amount which the worker would probably have been earning but for the injury if the worker had continued to be employed in the same or some comparable employment (s 40 (2)(a)) and the average weekly amount that the worker is earning or would be able to earn in some suitable employment after the injury (s 40 (2)(b)). The Court is to award an amount not exceeding the reduction in the worker's weekly earnings ascertained in accordance with s 40 (2) (the reduction in earnings) that appears proper in the circumstances of the case (s 40 (1)). 4 There was no dispute in the appeal that the amount referred to in s 40 (2)(a) was $628.20. There was a dispute as to the amount referred to in s 40 (2)(b). On 4 June 2001, in due time before the trial, the solicitors for the worker served on the solicitors for the employer a schedule of actual or probable earnings in an attempt to invoke CCR Pt 9 r 6. The schedule showed that the worker's actual earnings averaged over the period from 1 August 1999 to the date of the notice were $30.79 gross per week. 5 The appellant did not take any of the steps provided for in the Rule to challenge this schedule and at the start of the trial it was tendered without objection (Black 3). The Judge noted that the facts in the schedule were taken to be admitted. When the Judge asked counsel for the employer what were the issues that the Court had to "worry about", he was told "whether there is any permanency of impairment" (4). No point was ever taken about the schedule of earnings at the trial, the worker was not cross-examined about her actual weekly earnings at any particular time, and the employer called no evidence on this issue. 6 The Judge accepted the figure of $30.79 as fixing the average weekly amount that the worker was earning in the period after 1 August 1999 up to the date of trial, and determined that the worker's reduction in earnings was $597.41 per week. He then, in the exercise of his discretion under s 40 (1), reduced this amount by $200 per week because the worker was able to work for up to 10 hours per week as a data processor earning $20 per hour. His award of $397.41 per week reflected the difference between these figures. 7 The first point made by Mr Hislop QC, who appeared for the appellant, was that both the schedule under CCR Pt 9 r 6 and the award covered two distinct periods, that s 40 required them to be treated differently, and the Judge erred in law in treating them as a single period. In the first period from 1 August 1999 until about 1 November 2000, the worker was working, although not full time, and when she was not working she was looking for work. The actual earnings referred to in the schedule were received during this period. There being no other evidence on the point, those earnings, which averaged over this shorter period approximately $45 per week, were properly available to the Judge under s 40 (2)(b), although it was open to him to find, as he did, that she was able to earn a higher figure. 8 However, after 1 November or thereabouts, the worker was not working, or looking for work, and she had no actual earnings during this period. Accordingly the second limb of s 40 (2)(b) applies, and the Court was required to determine the amount the injured worker was able to earn in some suitable employment. CCR Pt 9 r 6 does not apply in this situation because it refers to "the actual or probable earnings of a worker during any relevant period". The reference to actual earnings is to the figure in the first limb of s 40 (2)(b). The reference to probable earnings is to the figure in s 40 (2)(a). The amount that the injured worker "is able to earn" referred to in the second limb of s 40 (2)(b) is not within the Rule. 9 The Judge determined that the worker was able to earn $200 per week and purported to exercise his discretion under s 40 (1) by deducting this amount in arriving at his award. This was an error of law. On the Judge's findings, the amount of $200 per week was the amount the injured worker was able to earn in some suitable employment for the purposes of s 40 (2)(b), although while she was seeking work she only earned an average of approximately $45 per week. The amount of $200 a week should have been deducted as a matter of obligation under the second limb of s 40 (2)(b), but since this figure represented the most the worker could earn, it subsumed or covered her actual earnings and the Judge erred in deducting both. On his findings, the worker was not able to earn $245 per week in some suitable employment. The first error of law was immaterial, and the second favoured the employer. The second error also swamped the Judge's third error in deducting the worker's actual earnings, averaged over the whole period, instead of over the shorter period to November 2000. These errors do not provide grounds for setting aside the award for the period up to 1 November 2000. 10 During final addresses, counsel for the employer asked the Judge to exercise the discretion in s 40 (1) and submitted that the appropriate award would be something under $50 per week (Black 14). Counsel for the worker said (14): "I would say that in fairness the wage loss is more like $100 a week because she did try, it was not just giving up altogether. … She did try and do other work. She has found that unsuitable … on two occasions, the last one she frankly admitted was fine, that was part time light work. It is more likely to be at least $100 a week your Honour". 11 The Judge reserved his decision overnight and made an award, in the first instance, for amounts varying from $272.60 per week to $291.10 per week for different periods from and after 1 August 1999 and continuing. These amounts appear to be the maximum awards, as indexed from time to time, that are permitted by s 37 (1)(a)(i) and s 40 (5). In his reasons for judgment the Judge said: "… in the exercise of my section 40 discretion I propose to reduce the section 40 difference I have found to $397.41. That would still entitle Mrs Holland to a statutory maximum under section 40". 12 For reasons which do not appear, the amounts specifically awarded were later increased to $397.41 in each case. These changes were not challenged in the appeal, but neither were they explained. Neither counsel were able to tell the Court what were the maximum awards of compensation at the relevant times. Research undertaken since the Court reserved its judgment has demonstrated that $272.60 was the indexed amount referred to in s 37 (1)(a)(i) incorporated in s 40 (5) that was in force between 1 April 1999 and 30 September 1999, and likewise for the other weekly amounts referred to in the original award. 13 The differences between the original figures and the adjusted figure of $397.41 cannot be explained by the existence of dependent children, carrying a consequential entitlement to additional compensation in accordance with s 37 (1)(c), because para 9 of the amended application for determination (Red 10) made no claim for dependents. There appear to have been no amendments to the statute between 1999 and the date of trial which could explain the increases in the original award. The award, as amended, appears on its face to be beyond power, and during the hearing neither counsel were able to justify or explain it. 14 In these circumstances, and since public monies are involved, I was of the view that the Court should consider invoking SCR Pt 51 r 22 and exercising its powers under the Act and the Rules although there was no appeal from the decision to vary the original award, and the contravention (if any) of s 40 (5), read with s 37 (1), had not been made the subject of a ground of appeal. Compare Electricity Commission of New South Wales v Yates (1991) 30 NSWLR 351. I would therefore have proposed that the Court publish its reasons for judgment and direct the filing, within 14 days, of further written submissions directed to the changes to the original award and their validity. 15 However in my judgment the award should be set aside in any event. The submission by counsel for the worker that the award should be $100 per week, or at least $100 per week, was something that the Judge could not properly ignore. He was not bound by this figure, but he said nothing during argument to indicate that he was considering going outside this claim and making awards, initially for 150% more than asked for, and in the final result for nearly 300% more. 16 The Judge, in exercising his discretion, was bound, as a matter of law, to take into account the claim advanced by the worker's counsel in argument, and if he decided to disregard that claim and award substantially more, he was bound to give adequate reasons for doing so. He either failed to take this relevant consideration into account or failed to give his reasons for disregarding this submission and on either view he erred in law. See Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50 at 56-7 per McHugh JA. This Court should assume that the Judge has complied with his duty to give reasons, and if he has not referred to a material matter, the Court should conclude that he did not consider it was material. See Sullivan v Department of Transport (1978) 20 ALR 323, 353 per Fisher J; Baldwin & Francis Ltd v Patents Appeal Tribunal [1959] AC 663, 693 per Lord Denning. 17 The Judge also denied procedural fairness to the employer whose counsel had no opportunity to deal in address with the Judge's reasons for disregarding the submission of counsel for the worker and awarding so much more than had been sought on her behalf. Compare Stead v State Government Insurance Commission (1986) 161 CLR 141. In that case the trial Judge, during final addresses, stopped counsel for the plaintiff addressing further on his client's credit, but in his reserved judgment found against the plaintiff on that issue. The High Court ordered a new trial because there had been a denial of natural justice affecting the entitlement of a party to make submissions on an issue of fact. 18 There was a further error in respect of the second period after November 2000, because the worker "stopped work then" and had her next child in April 2001 (Black 8). In respect of the period after the birth of her child, she said that she had full time activity at home, and had not been in a position to look for regular work (14). 19 The application of s 40 to a woman while she is unable to work because she is expecting a baby, having the baby, or is engaged full time looking after the baby (pregnancy etc) has been dealt with in the cases. The worker's supervening pregnancy etc does not affect the determination of the amount referred to in s 40 (2)(a) "because the continuation of the worker's employment is part of the hypothesis which [the section] requires. Whether or not the actual facts of the worker's employment are consistent with that hypothesis is beside the point". (Australian Wire Industries Pty Ltd v Nicholson (1985) 1 NSWCCR 50, 54 per McHugh JA; Morgan v Commissioner for Railways (1972) 46 WCR 33, 38 per Asprey JA.) 20 The worker's pregnancy etc is relevant at the second stage of the enquiry because, as a result of this condition and its consequences, she was not able to earn anything in some suitable employment up to the date of the trial (s 40 (2)(b)). This flows from the language of the section, but was confirmed in Myer Sydney Ltd v Buckley [1980] 54 WCR 319, 324 per Glass JA in a passage quoted by Neilson CCJ in Hirst v Illawarra Area Health Service (2000) 21 NSWCCR 82, 91-2. Glass JA said: "It was submitted that the pregnancy and subsequent motherhood represented a self-imposed disability which placed the applicant within the exception to the general proposition that incapacity due to a supervening cause does not exclude a right to compensation. In my opinion the submission involves a misreading of the exception … As I understand it, no exception is made out unless there is demonstrated not only a self-imposed disability but also an ability to earn. The evidence establishes that during the relevant period the applicant was unable to earn by reason of those supervening events". 21 Since the worker was not able to earn anything in some suitable employment during the second period, up to the time of the trial, her reduction in earnings during this period was $628.20 per week. However the Court must then consider the exercise of its discretion under s 40 (1). As McHugh JA said in Australian Wire Industries Pty Ltd v Nicholson at 55, 57: "It is at this stage that the Compensation Court can and must examine all the facts. The matters which can be examined include such matters as retirement, other supervening illnesses or injuries, the personal employment history of the worker, and so on … Compensation for lost earnings as the result of work injuries remains the primary purpose of the statute. Money which was not likely to be earned cannot be regarded as lost earnings for that purpose". 22 See also Kesen v Luke Singer Pty Limited (1989) 18 NSWLR 566, 569. 23 In Hirst v Illawarra Area Health Service (above) at 92, Neilson CCJ applied these decisions and held that a worker's pregnancy etc had to be taken into account in the exercise of the Court's discretion under s 40(1). However, where there is a reduction of earnings, the Court is not entitled, in the exercise of this discretion, to dismiss the claim of a partially incapacitated worker, but must make some award in his or her favour. See Kesen v Luke Singer Pty Limited above at 568; Morgan v Commissioner for Railways (1972) WCR 33, 37 per Asprey JA. 24 Counsel for the employer (who did not appear on the appeal) referred the trial Judge to the decision in Hirst, not because he had done the necessary research himself, but because his solicitor told him about the decision during his address. The case had already been reported. Counsel said, correctly, that this decision "goes to this very area we are looking at of a person who for other reasons is not in the workforce but may have some partial incapacity" (Black 20). 25 The Judge did not refer either to the worker's pregnancy etc or to the decision in Hirst. His original award, and even more so his revised award, demonstrates that he failed to exercise his discretion according to law. He misdirected himself as to the amount referred to in s 40 (2)(b) which, during this period, was nil. This error can perhaps be disregarded but he made no allowance for the fact that the worker was unable or unwilling to work after November 2000 up to the time of the trial because of her pregnancy etc. His award therefore demonstrates that he totally disregarded this highly relevant fact which, on any view, required a substantial deduction. In Hirst's case the award made by Neilson CCJ which, in his words, was "fairly nominal", was $10 per week (above at 93-4). The award made by O'Meally CCJ in Kesen v Luke Singer Pty Limited, after the proceedings had been remitted to him by this Court, was $1 per week for the period when the worker was out of the workforce because of his decision to spend 3 years in Turkey with his sick father. 26 In my judgment therefore the award for the second period must be set aside for the reasons which require the award for the first period to be set aside, and for the additional reasons applicable to this period. 27 The appeal has succeeded on grounds which were either not taken below or were taken in a perfunctory fashion which gave the Judge very little assistance. In such circumstances the Court will generally deprive the successful appellant of the costs of the appeal. See NRMA Insurance Ltd v B & B Shipping and Marine Salvage Co Pty Ltd (1947) 47 SR (NSW) 273, 282. 28 In my opinion the following orders should be made: (1) Appeal allowed; (2) Award of the Compensation Court under s 40 of the Workers Compensation Act 1987 set aside; (3) Proceedings remitted to the Compensation Court, differently constituted, to be heard and determined according to law; (4) No order as to the costs of this appeal. 29 HODGSON JA: I agree with Handley JA. 30 IPP AJA: I agree with Handley JA. ****** 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.