Alan Esam v ASP Management [1998] FCA 1129 (10 September 1998)

Last Updated: 15 September 1998

FEDERAL COURT OF AUSTRALIA

WORKERS' COMPENSATION - injured Seaman - application for review of Administrative Appeals Tribunal decision - error of law - interpretation of Seafarers' Rehabilitation and Compensation Act 1992 (Cth) - inability to engage in suitable employment because of economic circumstances - whether state of labour market is a relevant consideration when calculating amount of compensation - beneficial construction of remedial legislation - terms of specific compensation scheme - causal link between injury and exposure to labour market conditions.

Seafarers Rehabilitation and Compensation Act 1992 (Cth) ss 31(5)(a), 32

The Safety Rehabilitation and Compensation Act 1988 (Cth) s 19(3)(a)

Wilson v Wilson's Tile Works Pty Ltd [1960] HCA 63; (1960) 104 CLR 328, cited

Hill v Bryant [1974] 2 NSWLR 423, cited

Associated Steamships Pty Limited v Hore (1995) 61 FCR, cited

Re Rawling and Comcare Administrative Appeals Tribunal Decision No 8467, distinguished

Comcare v Rawling [1993] FCA 248; (1993) 42 FCR 421, cited

Telstra Corporation Ltd v Warner [1994] FCA 1312; (1994) 20 AAR 259, cited

Ball v William Hunt & Sons Ltd [1912] AC 496, distinguished

D C Pearce and R S Geddes, Statutory Interpretation in Australia, 4^th edn par 9.2 ff.

Second Reading Speech, Social Security Legislation Amendment Bill 1986 House of Representatives, 17 April 1986, p 2557.

ALAN ESAM v ASP SHIP MANAGEMENT

NG 158 OF 1998

TAMBERLIN J

SYDNEY

10 SEPTEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 158 of 1998

BETWEEN:	ALAN ESAM Applicant
AND:	ASP SHIP MANAGEMENT Respondent
JUDGE:	TAMBERLIN
DATE OF ORDER:	10 SEPTEMBER 1998
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the AAT be set aside.

3. The matter be remitted to the AAT for determination in accordance with these reasons for decision.

4. The respondent pay the applicant's costs of the AAT hearing and the hearing of this appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	ng 158 of 1998

BETWEEN:	ALAN ESAM APPLICANT
AND:	ASP SHIP MANAGEMENT RESPONDENT

JUDGE:	TAMBERLIN
DATE:	10 SEPTEMBER 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Alan Esam ("the applicant") is presently 37 years of age. He began employment as a rating in 1989 and became a permanent member of the crew of the MV "Tranztas Trader" in 1989. He worked for ASP Ship Management ("the respondent") on board that vessel without mishap until 13 March 1995. On that day, in the course of his employment, he was undoing a hatch when he suffered injury to his right knee. He was then assigned to light duties and was subsequently certified unfit as a result of a ligament injury to his knee. He was, thereafter, seen by a range of doctors. He underwent a functional and capability assessment and was found to have demonstrated co-operative behaviour throughout the assessment procedure. His assessment results indicated that he was not fit for employment which involved squatting and performing lifting tasks below waist level and that he was physically suited to sedentary work. For some time he has actively sought work. He has pursued a number of courses in order to improve his skills. However, he has been unsuccessful in his attempts to find suitable employment.

On 18 March 1997, the applicant sought review by the Administrative Appeals Tribunal ("the AAT") of a decision by the respondent made on 12 March 1997, reducing the amount of weekly compensation payable to him, effective as and from 3 February 1997. The AAT dismissed his application for review.

In its reasons for decision, the AAT points out that although the respondent's decision purported to rely on a determination by an officer of Comcare that the applicant had not sought suitable employment, it was conceded by Counsel for the respondent that this particular ground could not be made out.

The AAT found that, as at 3 February 1997, clerical work was suitable employment for the applicant and that he would have earned an award wage, which, as at 13 January 1997, amounted to $437.00 per week gross. In its reasons, the AAT accepted that the applicant had tried but was unable to obtain a clerical position. It stated that this failure to secure work was due to economic circumstances and not to any incapacity caused by work. It is implicit in the AAT reasons that the inability of the applicant to obtain work was not relevant because it was attributable to general economic conditions in the labour market and was not, therefore, related to his injury.

The AAT rejected a submission on behalf of the applicant that pursuant to s 31(5)(a) of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) ("the Act"), he was entitled to payment of 75% of his normal weekly earnings as a seafarer up until early October 1997. At this time he obtained employment as a drinks' waiter one night per week for which he was paid $54. He submitted that after he engaged in part-time employment he was entitled to payment pursuant to s 31(5)(b) of the Act.

Legislation

The relevant statute provisions set out in the Act are:

"Compensation for injuries resulting in incapacity

31.(1) This section applies to an employee who is incapacitated for work as a result of an injury...

(2) ... compensation for the injury is payable to the employee, for each of the first 45 weeks ... during which the employee is incapacitated ....

(3)....

(4) ... compensation for the injury is payable to the employee, for each week during which the employee is incapacitated, being a week to which subsection (2) does not apply.

(5) The amount of compensation per week payable under subsection (4) to an employee is:

(a) if the employee is not employed during that week - an amount equal to 75% of his or her normal weekly earnings less the amount (if any) that he or she was able to earn during that week in suitable employment; or

(b) if the employee is employed for 25% or less of his or her normal weekly hours during that week - an amount that, when added to the amount that he or she was able to earn during that week in suitable employment, results in an amount equal to 80% of his or her normal weekly earnings; or

...." (Emphasis added)

Determination of suitable employment

32. An employer who determines, for the purposes of section 31, the amount per week that an employee is able to earn in suitable employment must have regard to the following:

(a) ...

(b) ...

(c) ...

(d) ...

(e) if, after becoming incapacitated for work, the employee has not sought suitable employment - the amount per week that, having regard to the state of the labour-market at the relevant time, the employee could reasonably be expected to earn in such employment if he or she were engaged in such employment; ...

(f) ...

(g) any other matter that the employer considers relevant." (Emphasis added)

The dispute

The present dispute turns on the interpretation of s 31(5)(a) and, in particular, the content meaning and effect of the expression "the amount that he ... was able to earn ... in suitable employment", which represents the amount to be deducted from 75% of his normal weekly earnings.

The applicant's submission, in brief, is that the AAT erred in law in accepting a submission that where an employee was unable to actually engage in suitable employment because of economic circumstances, the employer was not required to pay the total 75% of normal weekly earnings. Rather, that the employer was only required to pay 75% less an amount which the employee would have been able to earn if he had been in paid employment. The applicant says that the true position is that in the case of a worker who has tried to get work within his or her reduced capacity, the fact that the labour market is adverse is not intended to diminish the worker's entitlement to compensation. Counsel for the applicant submits that in the case of such a worker who has been put out of employment by an injury and who is limited or restricted in his range of work, the state of the labour market must be taken into account in his favour.

It is further said that the state of the labour market is a relevant material consideration, which the employer is bound to take into account when calculating the amount an employee is able to earn under s 32. The state of the labour market cannot be ignored or treated as irrelevant in assessing whether an employee is able to work. The fact that the ability to work depends on market conditions does not preclude the need for a consideration of the impact of those conditions the applicant's ability to earn. Labour market conditions which bear on employability must be adverted to and evaluated.

The applicant also submits that because, in the present case, the work caused incapacity and exposed the applicant to the fluctuating circumstances of the labour market for clerical work, then the state of the market ought to be taken into account. It cannot be said to be a consideration which is divorced or discrete from the physical injury as the statement of the AAT suggests.

The respondent submits that the fact the applicant cannot find work because of the state of the labour market is immaterial. The relevant question concerns the capacity or ability of the person to work and not whether work is actually available in the prevailing labour market from time to time for clerical workers. Counsel for the respondent points out that the considerations specified in s 32(a) - (f) of the Act are not relevant to the present applicant's circumstances and that s 32(g) is expressed in the most general terms. It is said that the way in which the considerations are to be taken into account in the evaluation and the weight to be given to them are both matters for the AAT and not for this Court. More importantly, Counsel for the respondent argues that ss 31 and 32 must be read against the background of settled case law relating to other compensation law provisions of a similar nature. It is said that in those decisions the relevant case law focuses on the capacity or ability of the individual to earn and not with the economic question of whether, due to prevailing circumstances in the market, employment is non-existent, scarce or plentiful for clerical workers.

Considerations

Two preliminary observations are important to bear in mind. The first is that the Act is remedial in nature and ought be given a beneficial construction: see Wilson v Wilson's Tile Works Pty Ltd [1960] HCA 63; (1960) 104 CLR 328 at 335; D C Pearce and R S Geddes, Statutory Interpretation in Australia, 4^th edn par 9.2 ff. A statute conferring entitlements to workers' compensation benefits is not to be narrowly construed, nor are its terms to be restricted or denied because of the difficulties that may arise in the wide variety of circumstances involved in its application to particular facts; see Hill v Bryant [1974] 2 NSWLR 423 at 428 per Glass JA.

The second preliminary observation is that case law, which relates to other legislation, must be approached with caution. Each compensation scheme must be examined according to its own specific terms. This is particularly important in the present case. The Act is designed to provide a totally new, detailed and comprehensive code with respect to the compensation of seafarers: see the Full Court decision in Associated Steamships Pty Limited v Hore (1995) 61 FCR 506. It is, therefore, inappropriate to approach the interpretation of ss 31 and 32 of the Act on the basis that their operation is confined by the earlier case law.

An additional reason for placing emphasis on the particular language employed in s 32 is because that language was originally introduced into federal compensation law in order to reduce the uncertainty generated by earlier decisions as to the meaning of the expression "able to earn", by setting out the factors to be taken into account: see the Second Reading Speech, Social Security Legislation Amendment Bill 1986 (House of Representatives, 17 April 1986 2557 at 2559), where the Minister introducing the Bill refers to "the state of the labour market at the relevant time". The identical language finds expression in s 32(e) of the Act. This last mentioned provision is important because it makes specific reference to the state of the labour market in relation to an employee who has not sought suitable employment. In such circumsatnces, when determining the amount which an employee might be able to earn, regard must be had to the state of the labour market at the relevant time. Counsel for the applicant adverted to this provision and submitted that it points to the relevance and importance of labour market considerations when determining the amount per week the employee could reasonably be expected to earn. It is said that it would be anomalous if regard could be had to the condition of the labour market in favour of an employee in circumstances where he had not endeavoured to find employment but that such a matter is irrelevant in the case of an employee who had taken steps to obtain employment but was unsuccessful.

In my view, there is force in this line of reasoning and it serves to indicate that the state of the labour market from time to time is a relevant circumstance to take into account.

In support of its conclusion, that economic circumstances governing the labour market were not relevant, the AAT referred to an earlier decision in Re Rawling and Comcare (Tribunal Decision No 8467), which concerned a provision in substantially identical terms; namely, s 19(3)(a) of the Safety Rehabilitation and Compensation Act 1988 (Cth). The AAT there said:

"It is appropriate that the Tribunal pauses to consider the above legislation and in particular the phrase `able to earn' as it appears in sub-ss.(3)(a) and (4) of the Act. The Tribunal is of the view that the deduction referred to in subs-s.(3)(a) is the amount that could have been earned by a person possessed of the ability and opportunity to engage in suitable employment. The sub-section refers to an employee not employed and thus it is axiomatic that the amount actually earned by such an employee will always be nil. To suggest that the phrase `able to earn' is to be equated with actual receipt is to render the sub-section otiose. In examining the question of opportunity, the Tribunal considers that, in general terms, the labour market existing in the area wherein the applicant is located is to be used as the yard-stick. A conscious decision to move to a location void of employment opportunities would require a different approach." (Emphasis added)

In my view, this extract does not assist the respondent in the present circumstances. Here, there is no suggestion that the applicant has moved location to an area of lower employment potential. In the present case the question is whether inability to find work because of scarcity of opportunity in the labour market is a relevant consideration. Indeed, the quotation points the other way in that it indicates that the local labour market is to be used as the "yardstick".

The decision in the Rawlings case was appealed to this Court. In the course of his reasons for judgment on appeal, O'Loughlin J referred to the absence of job opportunities as being a relevant matter in the context of an employee moving interstate: see Comcare v Rawling [1993] FCA 248; (1993) 42 FCR 421 at 426-427. It is interesting to note that his Honour also refers to the availability of employment "in more propitious times", which suggests the appropriateness of considering the changing state of the labour market.

The actual availability of employment to a worker who has sought employment was considered by Heerey J to be a relevant matter when deciding what the worker was able to earn in suitable employment: see Telstra Corporation Ltd v Warner [1994] FCA 1312; (1994) 20 AAR 259 at 264. His Honour, in that case, was considering the expression "able to earn".

In the present case, the AAT also quoted from an observation made in the speech of Lord Shaw in Ball v William Hunt & Sons Ltd [1912] AC 496 at 508; namely,

"My Lords, it is necessary to keep clearly in view such cases the distinction between inability to obtain work arising as the result of the injured or disfigured condition of the workman and inability to obtain work arising from the state of the labour market. It does to appear to me to be any part of the scheme of the statute to make the employer responsible for a non-employment which is owing to general economic causes. The non-employment, as I say, must be connected with the injury which has been received and with the incapacity for work which has been thereby produced. ... But the refinements in these cases have been so frequent that I desire to say once for all that the entire results causally connected with an injury ought to enter into the estimate, but that results attributable to economic causes, such as the state of the labour market, ought to be excluded therefrom." (Emphasis added)

The above observation was not necessary for the decision. It is not binding on this Court because, in that case, it was agreed by all members of the House of Lords that disfigurement of the employee destroyed his ability to secure employment. Moreover, that decision concerns different legislation and is far removed from the present context in time and place. It is worthy of note that the Lord Chancellor, who agreed in the result in that case (at 499-500), referred to:

"... the worker's labour being unsaleable in any market reasonably accessible to him" (Emphasis added).

This reference, to some extent, supports the view that the availability or accessibility of a market or of a position in the market is a relevant matter to take into account. Of course, the importance and consequences which flow from the state of the market will vary from time to time.

An additional and important consideration in the present case is that the applicant was exposed to the adverse labour market as a consequence of the work-related injury which he suffered. Accordingly, it is difficult to support, in the present case, a view that the inability to find work was due to economic circumstances or the state of the labour market alone. The two considerations of injury and labour market conditions are related in the present case. There is a close causal connection in the sense that the applicant would not be seeking work "but for" the injury. The position might be different where, for example, an injured person who had been retained in employment after injury was later forced on to the labour market as a consequence of the employer going bankrupt and not for any reason related to the injury. In the latter case it might properly be suggested that his unemployment was not caused by his injury but solely by the market or by economic considerations.

The above matters lead me to the conclusion that the AAT erred in law in failing to give proper consideration and weight to the state of the labour market at the relevant time. It is apparent on the face of the reasons that the AAT considered that because there was an adverse labour market, no weight should be given to the applicant's inability to obtain employment notwithstanding the repeated efforts made by him which evidenced the unavailability of appropriate work.

Three further matters were touched on in submissions and I should briefly refer to them. The first was the reference in s 31(5)(a) of the Act to the words "if any". The AAT considered that if the paragraph had been intended to have the meaning suggested by the applicant there would have been no cause to insert the words "if any". However, I am satisfied that these words are neither unnecessary nor otiose and that they are used to cover a situation where the incapacity for work contemplated by s 31(1) is total incapacity. The subsection clearly includes both partial and total incapacity.

The second matter related to the calculation of the worker's entitlement after he had found part-time employment. Both parties agreed that the sum of $54, which he earned, had wrongly been taken into account in the calculations.

The final matter was that the AAT appears to have failed to take into account the application of ss 31(8) and (9) of the Act in fixing the amount of the applicant's entitlement. No doubt this will be taken into account when the AAT reconsiders this matter.

Conclusion

The AAT erred in law its interpretation of ss 31 and 32 of the Act and also its application of s 31(5)(b). The appropriate orders are that the appeal be allowed and the decision of the AAT be set aside. The matter should be remitted to the AAT for determination in accordance with these reasons for decision. The respondent should pay the costs of the applicant both of the hearing before the AAT and before this Court.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin

Associate:

Dated: 10 September 1998

Counsel for the Applicant:	Mr L King SC Mr A Hughes
Solicitor for the Applicant:	W G McNally and Co
Counsel for the Respondent:	Mr C R R Hoeben SC
Solicitor for the Respondent:	Middletons Moore & Bevins Solicitors
Date of Hearing:	20 August 1998
Date of Judgment:	10 September 1998