Cage Developments Pty Ltd v Schubert [1983] HCA 37; (1983) 151 CLR 584 (13 October 1983)

HIGH COURT OF AUSTRALIA

CAGE DEVELOPMENTS PTY. LTD. v. SCHUBERT [1983] HCA 37; (1983) 151 CLR 584

Workers' Compensation (N.S.W.)

High Court of Australia
Gibbs C.J.(1), Murphy(1), Brennan(1), Deane(1) and Dawson(1) JJ.

CATCHWORDS

Workers' Compensation (N.S.W.) - Injury to worker - Partial incapacity - Computation of amount - Weekly payment - No evidence of amount of actual earnings during incapacity - Mode of determining amount worker "able to earn" - Workers' Compensation Act 1926 (N.S.W.), s. 11(1)(a).

HEARING

1983, August 12; October 13. 13:10:1983
APPEAL from the Supreme Court of New South Wales.

DECISION

October 13.
THE COURT delivered the following written judgment:-
On this appeal, brought by special leave, the appellant sought to raise two compensation for total incapacity in respect of a period during which the respondent, although unable to work, was receiving moneys from a business. However, the special leave has been rescinded in so far as it related to that question and the remaining question is whether the Workers' Compensation Commission of New South Wales (Judge Westcott) adopted an erroneous approach to the determination of the respondent's actual or potential earnings during a period of partial incapacity in respect of which he claimed compensation under the Workers' Compensation Act 1926 (N.S.W.) ("the Act"). At the time the respondent sustained the incapacitating injury, he was employed by the appellant as the driver of a machine known as a concrete agitator. During the relevant period of partial incapacity, the respondent and his wife carried on, in partnership, a business of carting fuel in a road tanker which was owned by the partnership and ordinarily driven by the respondent. (at p586)

2. Section 11(1)(a) of the Act provides that, in a case of partial incapacity, the weekly payment of compensation 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". The appellant submits that, in a case such as the present where an injured worker has commenced, either alone or in partnership, to carry on a business in which he is actively working, the "average weekly amount he is earning" to which s. 11(1)(a) refers is the amount of the net earnings of the business discounted, "on appropriate evidence", to allow for factors such as the "earnings" of others and a return on invested capital. Judge Westcott refused to adopt that approach to the determination of actual or potential earnings in the present case. His Honour assessed compensation on the basis that the relevant "average weekly amount" was to be ascertained, for the purposes of s. 11(1)(a), by considering what services the worker actually performed in the business and what those services would have been worth if, instead of serving himself, he had been serving an employer or, put in another way, what he would have had to pay another for those services (Willis's Workmen's Compensation Acts, 37th ed. (1945), pp. 300-301). (at p586)

3. The reference in s. 11(1)(a) to the "amount" which a worker "is earning, or is able to earn" is a reference to the amount which he is earning or able to earn as a worker, that is to say, by his own physical and mental exertions (J. & H. Timbers Pty. Ltd. v. Nelson [1972] HCA 12; (1972) 126 CLR 625, at pp 632, 643, 651-652 ). In the present case, the profits of the business carried on by the partnership were earned by the utilization of both capital and labour and were apparently divided between the respondent and his wife without regard to the relative value of the respective contributions of both or either. In those circumstances, neither the net profits of the business nor the respondent's share therein could properly be regarded as representing an "amount" which he was "earning" by his labour. The respondent was not, for the purposes of s. 11(1)(a), "earning" any such "amount" or, for that matter, any other quantified "amount". That being so, it was necessary for Judge Westcott to determine the average weekly amount which the respondent was "able to earn". In a context where it is not suggested that the respondent would have been more gainfully or suitably employed elsewhere, his Honour was entitled to adopt the approach which he did and determine that average weekly amount by reference to the value of the work which the respondent was performing for the partnership during the relevant period of partial incapacity (see, generally, Paterson v. A. G. Moore & Co. 1910 S.C. 29, at pp. 31-32. ; Calico Printers' Association Ltd. v. Higham (1912) 1 KB 93, at p 102 ; J. & H. Timbers Pty. Ltd. v. Nelson (1972) 126 CLR, at pp 631, 643 ). (at p587)

4. The above does not involve a conclusion that the approach adopted by Judge Westcott is the only appropriate one in every case in which a former worker was, during the relevant period of partial incapacity, working in a business of which he was the owner or one of the owners or that his Honour would have necessarily been in error if, had evidence been before him as to the appropriate discounts to make allowance for a return on invested capital, the value of the wife's work and other relevant factors, he had treated the discounted earnings of the partnership as relevant on the question of the value to the partnership of the respondent's work. As Glass and Mahoney JJ.A. pointed out in the Court of Appeal, there is no single way in which the actual or potential earnings of such a former worker must be determined. The circumstances of the particular case will indicate what way or ways are open and what evidence is relevant for that purpose and it is undesirable to confine the Commission within the strict limits of artificial rules laid down in advance by an appellate court. Thus, there may well be cases in which the actual earnings of a business either represent the actual or potential earnings of a former worker during a period of partial incapacity. Where, for example, a business consists essentially of the provision of personal services by the former worker (e.g. a business of a sole plumber or casual gardener) and no significant investment of capital is involved, the actual net earnings of the business might properly be seen as representing the actual "reward for (the) labour" of the former worker (see J. & H. Timbers Pty. Ltd. v. Nelson (1972) 126 CLR, at p 652 ) during a period of partial incapacity. In such a case, if the former worker is carrying on business solely on his own account, the net earnings of the business might properly be seen as representing the "amount he is earning" in a business; if he is carrying on business in partnership or as an employee of a family company, the net earnings might properly be seen as representing the "amount he ... is able to earn" either in employment or in a business. (at p588)

5. It should be mentioned that it was submitted, on behalf of the appellant, that there was no material before the Commission in the present case which enabled the making of any determination as to the potential earnings of the respondent during the period of partial incapacity or to determine the amount of the "difference" to which s. 11(1)(a) refers. That submission was rightly rejected both by Judge Westcott and the Court of Appeal. Once his Honour decided, as he was entitled to do, that it was appropriate to act on the basis that the measure of the amount of actual or potential earnings was the value of the work which the respondent performed for the partnership during the period of partial incapacity, it was relevant to consider what it would have cost the partnership to "employ somebody to do in the business what" the respondent himself did or what the respondent's "work would have been worth in wages if he had been employed by another to do the work" (see J. & H. Timbers Pty. Ltd. v. Nelson (1972) 126 CLR, at p 631 ; Willis, op. cit., p. 301). The evidence before his Honour was such as to entitle him to conclude, as he did, that the amount of $444.20 per week which represented the respondent's probable weekly earnings as a driver "but for the injury" indicated, in his Honour's words, "the value to the partnership of the (respondent's) labour had he not been disabled but worked the full time necessary to perform its contracts". That amount constituted a guide to what it would have cost the partnership to employ someone else to do the work which the respondent would have done but for the injury; or, put in another way, it constituted a guide to what the respondent's work would have been worth in wages if he had not been injured and if he had been employed by another to do it. His Honour was also entitled, in the circumstances of the present case, to accept the evidence that the sum of $102.16 represented the cost of labour to perform work which, but for his partial incapacity, the respondent would have performed as relevant both as a guide to the adjustment which had to be made to determine the value of the work which the respondent actually performed for the partnership and as a direct indicator of the actual difference between the respondent's probable weekly earnings and the value of that work. (at p589)

6. The appeal should be dismissed. (at p589)

ORDER

Appeal dismissed with costs.