QANTAS AIRWAYS LTD v RISTICH [1995] NSWCA 384

QANTAS AIRWAYS LTD v RISTICH SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY, CLARKE and HANDLEY JJA 7 August 1995, 23 August 1995

[1995] NSWCA 384

WORKERS COMPENSATION ACT 1926 — APPEAL — CONSTRUCTION OF s11(1) FACTS The trial judge awarded the respondent $200 per week for a number of different periods and continuing from the date of judgment in June 1992 for partial incapacity under s11(1) of the Workers Compensation Act 1926.

HELD

The trial judge was bound to decline to make any award under s11(1) in respect of a period unless the evidence established that in fact his actual earnings were less than those which appeared in the appellant's wage schedule or the respondent's tax return. Here, the amount actually earned by the respondent during the financial year ending 30 June 1989 was greater than he would have been earning if uninjured and working as a flight steward and the trial judge was obliged, to adopt the actual earnings which reject the claim for that period.

The probability that the trial judge's erroneous application of s11 (1)(a) led to errors in each of the years in question means that this Court is bound to set aside the trial judge's award and remit the proceedings to the Compensation Court for a new trial.

ORDERS

(1) Appeal allowed;

(2) Award of Moroney J on 23 June 1992 set aside;

(3) Proceedings remitted to the Compensation Court;

(4) The respondent's to pay the appellant's costs of the appeal and is to have a certificate under the Suitors Fund Act;

(5) The costs of the first trial to be determined by the judge hearing the retrial.

Priestley JA I agree with Clarke JA.

Clarke JA Qantas Airways Ltd (the appellant) appeals from a judgment of Moroney CCJ in which his Honour awarded Miroslaw Ristitch (the respondent) $200 per week for a number of different periods and continuing from the date of judgment in June 1992 for partial incapacity under s11(1) of the Workers' Compensation Act 1926 (the 1926 Act). The substantial ground of appeal relied upon was that his Honour had failed properly to apply the provisions of s11(1).

The respondent, who was forty five years old at the time of trial, was injured on 23 September 1983 in the course of his employment as a flight attendant. His Honour accepted that the respondent suffered an orthopaedic injury to his lower back together with a functional overlay. He was paid compensation until 29 October 1984 and his claim related both to the period between that date and the time of trial and the future.

When the respondent returned to work with the appellant in 1984 he was given clerical work which he continued to perform until he left that employment in 1985. During the next year he worked as the manager of a 24 hour medical centre doing administrative work. When he left that employment he started up his own business selling kitchens for a number of construction companies, including Style Kitchens, M and N Peninsula Kitchens and Impala Kitchens. His business had

2 UNREPORTED JUDGMENTS

mixed success. Initially he appeared to build up a successful business but then his work dropped off, almost certainly because of a downturn in the building industry.

During this downturn, between mid-1991 and the beginning of 1992 the respondent also worked for a telephone company on a commission basis selling PABX systems. He said he was unable to get a full time position.

As I have said his Honour accepted that the respondent was partially incapacitated for work and proceeded to award the respondent $200 per week in respect of the past and continuing in the future. In making the award in relation to the past his Honour considered what the respondent would probably have been able to earn as a flight steward if uninjured and what he was in fact able to earn in suitable employment in respect of a number of discrete periods. The first period was from 29 October 1984 to 30 June 1985 in which his Honour thought that the respondent probably would have been able to earn, uninjured, $470 and that in fact he was able to earn $270. He awarded the difference. His Honour then considered each succeeding financial year until 30 June 1989 and then considered the period from 1 July of that year to the date of trial. The table which forms part of the judgment indicates that his Honour considered that there would be continuing increases in the probable earnings, uninjured, and those which the respondent was able to earn but in each case the difference turned out to be $200. The appellant submits that his Honour's approach was legally erroneous in that he had failed to observe and obey the terms of s11(1).

His Honour pointed out that both sides had filed wage schedules and that there was a degree of similarity between their schedules. The similarity was not surprising because it is reasonably apparent that the respondent had furnished the appellant with his tax returns. Having referred to those tables his Honour continued:

"However as I say I intend, as this is an old Act claim to regard all of the figures as providing but some sort of guide and I intend to make an assessment based on the discretion that I have particularly in relation to the applicant's ability to earn. Here I think it would be artificial in the extreme just to do sums. It is a case that calls out for an assessment based upon the applicant's ability to earn, restricted as it is by this very real injury to his back which I am satisfied he has."

Senior counsel for the appellant, Mr Poulos, submitted that there were two discernible errors in this approach. First, his Honour was obliged to carry out the exercise of determining what the respondent would probably have been earning but for his injury, the amount he was earning or was able to earn and the difference between the two. It was only after that exercise had been carried out that his Honour was entitled to exercise his discretion. Secondly, his Honour failed to recognise that in the second leg of the equation where there were actual earnings they were to be used, rather than the hypothetical earnings, unless there was some reason to suggest that they did not adequately reflect the appellant's earning capacity.

S11(1)(a) of the 1926 Act provided as follows:

"Tn the case of partial incapacity, the weekly payment shall in no case exceed the difference between the weekly amount which the worker would probably have been earning as a worker but for the injury and had he continued to be employed in the same or some comparable employment and the average weekly amount he is earning, or is able to earn in some suitable employment or business, after the injury, but shall bear such relation to the amount of that difference as under the circumstances of the case may appear proper."

URJ QANTAS AIRWAYS LTD v RISTICH (Clarke JA) 3

In Hill v Bryant [1974] 2 NSWLR 423 Glass JA considered, at 428, the proper construction of s11(1)(a) saying:

"The inquiry to be undertaken in obedience to the section is designed to ascertain a weekly payment not to be exceeded, that maximum being the difference between two weekly amounts. The difference is obtained by subtracting from a sum hypothetically earned the larger of two other sums one actually received as earnings and the other hypothetically earned."

That approach has been applied in more recent decisions of this Court (see, for instance, J C Ludowici and Sons Ltd v Cutri [1992] 26 NSWLR 580 at 589, 596) and is the approach which his Honour was obliged to adopt in this case. The only occasion for failing to pay regard to the actual earnings of the worker is where they are less than the amount that he is able to earn (Hill, per Moffitt P at 425).

According to the appellant's wage schedule the respondent actually earned $726.53 a week during the financial year which ended on 30 June 1989. That figure was clearly drawn from the respondent's tax return, which was in evidence and which stated the taxable income as $37,286. The parties were in broad agreement that his probable earnings, if uninjured, would have been between $637 and $660 per week. In these circumstances his Honour was bound to decline to make any award under s11(1) in respect of that period unless the evidence established that in fact his actual earnings were less than those which appeared either in the appellant's wage schedule or the tax return. The only contrary evidence was the respondent's own wage schedule in which the earnings appeared as $105 per week. There was no evidence to support this proposition which must be understood as a statement of what the respondent was capable of earning during that period. As I have sought to point out the amount actually earned by the appellant during the financial year ending 30 June 1989 was greater than he would have been earning if uninjured and working as a flight steward and his Honour was obliged, adopting the actual earnings, to reject the claim for that period.

It is clear that his Honour totally failed to have regard to those actual earnings. That is apparent from the passage in the judgment which I have quoted and also from his Honour's table relating to the relevant year which read:

"Probable $650

Able $450

Difference $200"

The figure of $450 was unsupported by evidence and demonstrates his Honour's failure to appreciate that he was bound to have regard to the higher of the two figures, that is, the actual earnings. In the financial year in question his actual earnings were higher than those which, according to his Honour, he was able to earn and higher than the probable earnings if uninjured.

The importance of the error is that it reflects his Honour's failure properly to apply the section. What is more his error was not limited to the one year. That is readily apparent from the financial year ending 30 June 1986. Both wages schedules tendered by the parties stated that the respondent's actual earnings during that year were $514 per week. Notwithstanding this agreement his Honour concluded that the respondent was able to earn only $330 during that period. Neither that figure nor any similar figure is to be found in the evidence. It is explicable only upon the basis that his Honour rejected, arbitrarily, the agreement of the parties found in the wages schedules. It was, of course, open to his Honour to adopt that course if there were solid grounds to be found in the evidence for doing so. Regrettably there were none.

4 UNREPORTED JUDGMENTS

In the circumstance that his Honour has failed to apply s11(1)(a) correctly and the probability that his erroneous application of the section led to errors in each of the years in question the court is bound to set his Honour's award aside and remit the proceedings to the compensation court for a new trial.

5 The following orders should be made:

(1) Appeal allowed;

(2) Award of Moroney J on 23 June 1992 set aside;

(3) Proceedings remitted to the Compensation Court;

(4) The respondent's to pay the appellant's costs of the appeal and is to have

10 acertificate under the Suitors Fund Act; (5) The costs of the first trial to be determined by the judge hearing the retrial.

Handley JA I agree with Clarke JA.

15 (1) Appeal allowed; (2) Award of Moroney J on 23 June 1992 set aside; (3) Proceedings remitted to the Compensation Court; (4) The respondent's to pay the appellant's costs of the appeal and is to have a certificate under the Suitors Fund Act; 20 (5) The costs of the first trial to be determined by the judge hearing the

retrial. COUNSEL: Appellant: J POULOS QCRespondent: CT BARRY QC SOLICITORS: 30 Appellant: ABBOTT TOUT RUSSELL KENNEDY Respondent: MCCELLANDS40