FEDERAL COURT OF AUSTRALIA

Military Rehabilitation & Compensation Commission v Perry

[2007] FCA 1586

ADMINISTRATIVE LAW – appeal from Administrative Appeals Tribunal – effect of amendment to s 8(9) of Safety, Rehabilitation and Compensation Act 1988 (Cth) – whether s 8(6) of Act continues to apply to Commonwealth employee who has ceased to be employed – how s 8(9B) of Act applies where injury suffered prior to commencement of subsection – section 8(9B) of Act provides for continued application of s 8(6) – whether s 8(9B) has retrospective operation – amendment has future action on past events and is not retrospective

Acts Interpretation Act 1991 (Cth) ss 8, 15AA

Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 4, 8(1), 8(6), 8(9)-(9D), 14, 19, 19(2)

Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 (Cth)

Coleman v Shell Co of Australia Ltd (1943) 45 (SR) 27 cited

Doro v Victorian Railways Commissioners [1960] VR 84 cited

Esber v Commonwealth (1992) 174 CLR 430 cited

Fisher v Hebburn Ltd (1960) 105 CLR 188 cited

Kingston v Keprose Pty Ltd (1987) 11 NSWLR 404 cited

Kraljevich v Lake View and Star Ltd (1945) 70 CLR 647 applied

Maxwell v Murphy (1957) 96 CLR 261 cited

Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 cited

Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 cited

Robertson v City of Nunawading [1973] VR 819 cited

Pearce DC & Geddes RS, Statutory Interpretation in Australia (6^th ed, Lexis Nexis Butterworths, 2006)

MILITARY REHABILITATION AND COMPENSATION COMMISSION v DAVID PERRY

NSD 546 OF 2007

BENNETT J

16 NOVEMBER 2007

SYDNEY

THE COURT ORDERS THAT:

1.                  The application is dismissed.

2.                  Parties are to provide written submissions on costs within seven (7) days.

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

REASONS FOR JUDGMENT

INTRODUCTION

1                     Mr Perry enlisted in the Royal Australian Navy on 4 March 1991.  He served as an Aircrew Observer.  In December 2000 he developed an undiagnosed viral illness while on duty in the Solomon Islands, which precipitated post viral fatigue syndrome.  Mr Perry lodged a claim for compensation with the Military Rehabilitation and Compensation Commission (‘the Commission’) in October 2001 and liability was accepted in February 2002.  That is, Mr Perry sustained an injury that led to impairment, which impairment was accepted by the Commission.  Mr Perry was discharged from the Navy on 7 July 2002 with the rank of Lieutenant.  As of that date, Mr Perry was a person who had ceased to be employed by the Commonwealth. 

2                     Persons serving in the Navy in Mr Perry’s position were entitled to flying allowances based on seniority which increased automatically every two years until “top tier” (‘the increment’).  Mr Perry was in receipt of the increment as at his date of discharge and would have been entitled to the increment had he not been medically discharged due to his compensable condition.

3                     The chronology set out is relevantly:

·                     Mr Perry was injured in December 2000.

·                     On 1 October 2001 the Safety, Rehabilitation and Compensation and Other Legislation Amendment Act 2001 (Cth) (‘the Amending Act’) which amended the Safety, Rehabilitation and Compensation Act 1988 (‘the SRC Act’) came into force.  Relevantly s 8(9) of the SRC Act was repealed and replaced with ss 8(9) and 8(9A) to (9D).  Mr Perry was still in employment.

·                     On 29 October 2001 Mr Perry lodged a claim for compensation.

·                     On 4 February 2002 the Commission accepted liability for the condition.

·                     On 7 July 2002 Mr Perry was discharged from the Navy and became a person who ‘has ceased…to be employed by the Commonwealth’ within s 8(9B) of the SRC Act as amended (‘the Act’).

4                     A delegate of the Department of Veterans’ Affairs (‘the Delegate’) determined that Mr Perry continued to be entitled to the increment by the application of s 8(6) of the Act.  On review of the Delegate’s decision (‘the Determination’), the authorised reconsideration officer (‘the Officer’) concluded that the Delegate’s decision was incorrect, stating:

After careful consideration of the matter, I determine that you are eligible for Flying Allowance (Qualification & Skill) at the increment 2-4 years, which was the increment at the time of your discharge.  I further determine that you are not eligible for any further incremental increases of your allowance, and that your allowance should only increase by the Wage Cost Index increase which occurs annually on 1 July.

5                     The Officer concluded that s 8(9B) of the Act ‘relates to clients who have ceased employment with the Commonwealth, stating that Normal Weekly Earnings (including allowances) are to be increased in accordance with Wage Cost Index increases, not salary/wage/pay increases’.  Mr Perry, who had been receiving the increment, was told that he had been overpaid $5,914.30.

6                     Mr Perry sought reconsideration of the Determination and asserted that he remained entitled to the increment, as provided for in s 8(6) of the Act.  The decision under review (‘the Decision’) was made on 10 May 2006.  The decision maker affirmed the Determination and stated that she was satisfied that the issue was whether s 8(9B) of the Act applied and not s 8(9) of the SRC Act.

7                     On review of the Decision, the Administrative Appeals Tribunal (‘the Tribunal’) decided that s 8(9B) of the Act did not have retrospective effect so as to preclude Mr Perry’s entitlement to the increment.  The Tribunal rejected the arguments that the legislative intent was to alter the basis upon which any right to compensation was to be calculated where a person had ceased to be employed by the Commonwealth.  It looked to the presumption against retrospective operation and the justice of the case and concluded that s 8(9B) was not applicable to Mr Perry.  Accordingly, the Tribunal set aside the decision under review in so far as it directed Mr Perry to repay the amount of $5,941.30, which had been said to represent an overpayment relating to the time period in question (at [47]).

8                     The Commission seeks to set aside the order of the Tribunal and to affirm the Decision.

THE ACT

9                     Relevantly, s 14 of the Act creates liability for payment and provides that Comcare is liable to pay compensation in accordance with the Act in respect of an injury if the injury results in incapacity for work.  There is no provision in s 14 for the method of calculation.  Formulae for the calculation of compensation for injuries resulting in incapacity are provided for in s 19 of the Act.  The formula for that payment is based on the amount of the employee’s normal weekly earnings.  “Normal weekly earnings” are defined in s 4 to mean ‘normal weekly earnings of an employee calculated under section 8’.  Section 8 applies to ascertain the normal weekly earnings where an employee has been injured and is incapacitated for work, for the purposes of the calculation in s 19.  That is, if the employee is injured, Comcare is liable to pay compensation once the injury results in incapacity.  That payment is calculated and paid for each week of incapacity.  It accrues and stands to be determined on a weekly basis.  Section 19(2) of the Act provides that an employee is to be paid for each week during which the employee is incapacitated. 

10                  The issue in these proceedings is how s 8(9B) of the Act applies to Mr Perry, who had suffered an “injury” as defined in s 4 (which includes “disease”) prior to the commencement of that subsection and had ceased to be employed by the Commonwealth after its introduction. 

Section 8 of the Act

11                  A formula is set out in s 8(1) of the Act which includes an integer for any allowance payable to the employee in each week.  The increment is one such allowance.

12                  Section 8 of the Act then relevantly provides:

(6)       Subject to this section, if the minimum amount per week payable to an employee in respect of his or her employment by the Commonwealth or a licensed corporation at the date of the injury is increased, or would have been increased if the employee had continued in that employment, because of:

            …

(c)        the receipt by the employee of an increase in salary, wages or pay by way of an increment in a range of salary, wages or pay applicable to the employee or to his or her office, position or appointment;

the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased by the same percentage as the percentage by which that minimum amount per week is increased, or would have been increased, as the case may be.

…

(9)       The normal weekly earnings of an employee before the date of the employee's injury, as calculated under the preceding subsections, must, while the employee continues to be employed by the Commonwealth or a licensed corporation, be increased or reduced by the relevant percentage.

(9A)     For the purposes of subsection (9), relevant percentage means the same percentage as the percentage of increase or reduction in the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury as a result of:

(a)        the operation of a law of the Commonwealth or of a State or Territory; or

(b)        the making, alteration or operation of an award, order, determination or industrial agreement or the doing of any other act or thing, under such a law.

(9B)     The normal weekly earnings of an employee before injury, as calculated under subsections (1) to (8) and as increased or reduced under subsection (9) must, if the employee has ceased, or ceases, to be employed by the Commonwealth or a licensed corporation, be further increased, with effect from each indexation date in relation to that cessation, by reference to the percentage of increase (if any) of an index that is prescribed for the purposes of this subsection over the year ending on the 31 December preceding each such indexation date.

(9C)     For the purpose of subsection (9B), the indexation date, in relation to a cessation of employment, is:

(a)        the 1 July next following:

(i)         the date on which this Act receives the Royal Assent; or

(ii)        the date of that cessation of employment;

whichever last occurs; and

(b)        each subsequent 1 July.

(9D)     For the purpose of subsection (9B), the regulations may specify the manner of calculating the further increase referred to in that subsection by reference to the movement of the index that is prescribed for the purposes of that subsection.

(emphasis in subss (6) and (9) added)

13                  Section 8(10) of the Act operates to ensure that if, as a result of the increases by reference to the preceding subsections the normal weekly earnings of the injured employee, whether still employed or not, is greater than the earnings of an employee if he or she were not incapacitated for work, the amount so calculated is reduced by the amount of the excess.

14                  The Commission agrees that Mr Perry would have been entitled to receive the increment by the application of s 8(6) had he remained in employment as part of his normal weekly earnings.  Section 8(6) applies to the employee as an individual.  Section 8(9), by s 8(9A), applies to the employee as a member of a class of employees.

15                  There was no change to s 8(6) in the Amending Act.

16                  Before amendment, s 8(9) of the SRC Act provided for the matters now encompassed in ss 8(9) and 8(9A) of the Act but did not distinguish between persons who are employees or those no longer employed:

If the minimum amount per week payable in respect of employees included in a class of employees of which the employee was a member at the date of the injury is increased or reduced on or after that date as a result of:

a)                 the operation of a law of the Commonwealth or of a State or Territory; or

b)                 the making, alteration, or operation of an award, order, determination or industrial agreement, or of the doing of any other act or thing, under such a law;

the normal weekly earnings of the employee before the injury, as calculated under the preceding subsections, shall be increased or reduced by the same percentage as the percentage by which that minimum amount was so increased or reduced, as the case may be.

17                  Section 8(9) before amendment and subss (9) to (9D) after amendment, operate to increase or reduce remuneration as a result of operation of law or some other action that affects the class of employees.

SUBMISSIONS

18                  The question addressed by the Tribunal was whether ss 8(9) and 8(9B) of the Act should be regarded as prospective in operation and inapplicable to employees whose injuries arose prior to 1 October 2001, when the Amending Act came into effect.  In deciding whether s 8(9B) of the Act applied to Mr Perry to preclude him from entitlement to incremental increases, the Tribunal did not consider the operation of s 8 generally, the construction of s 8(9B) or the reference to ss 8(1) to 8(8).  It only examined the question of retrospectivity.  That reflected the way the case was argued in the Tribunal.  That was also the way the matter first proceeded in this Court.  The matter was adjourned after preliminary submissions to enable the parties to consider the effect of s 8(6) of the Act on the construction of s 8(9B).

19                  Mr Perry now contends that, if the Tribunal erred in its conclusion that the Amending Act had no application to an employee who suffered an injury before the commencement of the Amending Act, there is still no basis for setting aside the Tribunal decision.  This is because he says that the increment, payable to the employee by reason of s 8(6) of the Act, continues to be taken into account in the calculation of the normal weekly earnings of an employee before any application of s 8(9) and, in particular, of s 8(9B).

20                  It is not in dispute that Mr Perry had been a person to whom s 8(6) applied prior to his discharge.  The Commission says that s 8 of the Act provides that the increment is only payable to persons who remain employed by the Commonwealth, doing work such as Mr Perry was doing at the time that he was injured.  Those amounts are not, the Commission contends, payable once the employee is discharged.  With the passage of the Amending Act, once Mr Perry was discharged, the increment is said to be no longer payable.  Normal weekly earnings can then only be further increased after discharge for the purposes of calculating any entitlement to compensation in accordance with s 8(9B) of the Act.  That means, according to the Commission, s 8(9B) to the exclusion of any further application of s 8(6).  It is not in dispute that Mr Perry is, by the application of s 8(9B) of the Act, entitled to increases by reference to the percentage increase of a prescribed index (‘the Wage Cost Index’).

21                  The Commission relies on the fact that the Amending Act was intended to substitute a new, simpler regime for further altering normal weekly earnings of a person with respect to future weeks and that that regime involves a distinction between those who continue to be employed by the Commonwealth and those who do not.  That may be so but it does not answer the question of the increases to which the further increase provided for in s 8(9B) applies.  The Commission submits that subs (9B) applies to further increases to the normal weekly earnings after cessation of employment ‘calculated only in accordance with that subsection’, that is by application of the Wage Cost Index.  This does not, however, address what constitutes normal weekly earnings.  The Commission submits that the first indexation increase would work upon a base figure.  That base figure is what, prior to the person becoming a person who has ceased or ceases to be employed by the Commonwealth, were ‘the normal weekly earnings of (the) employee before injury, as calculated under subsections (1) to (8) and as increased or reduced under subsection (9)’.

CONSIDERATION

22                  The alternatives proposed for the application of s 8(9B) of the Act to Mr Perry, as an employee who has been injured and has ceased to be employed by the Commonwealth, are:

·                     Does s 8(9B) provide for the continued application of s 8(6) prior to the increase by reference to the Wage Cost Index, so that the employee has the benefit of s 8(6) increments as well as the indexed increases?  That is, are the normal weekly earnings calculated under subs (6) and, if the employee has ceased to be employed, further increased by reference to the Wage Cost Index?

·                     If not, does s 8(9B) have retrospective operation to deprive the employee of the increments otherwise payable under s 8(6)?  That is, are normal weekly earnings increased by the application of ss 8(6) and 8(9) up to the date of cessation of employment and thereafter increased only by reference to the Wage Cost Index?

23                  The effect of the construction contended for by Mr Perry is that the normal weekly earnings, as calculated under subs (6) must be further increased by reference to the Wage Cost Index (emphasis added).

24                  The effect of the construction contended for by the Commission is that the normal weekly earnings as calculated under subs (6) must, once he has ceased to be employed by the Commonwealth, be further increased (that is after he has ceased to be employed) only by reference to the Wage Cost Index.

25                  Section 8 of the Act is referable to three stages:

1.         the injury of an employee;

2.         the continued employment of an injured employee; and

3.         the cessation of employment because of the injury and consequent incapacity.

26                  Section 8(9B) of the Act deals with an injured employee ‘if the employee has ceased, or ceases, to be employed’.  “If” means in context ‘in case that; granting or supposing that; on condition that’ (Macquarie Dictionary Revised Third Edition). 

27                  The normal weekly earnings of the employee are as calculated under ss 8(1) to 8(8) of the Act.  That includes the increment (s 8(6)).  Section 8(6) is directed to increments in remuneration payable to an employee by reason of the attainment of a level of seniority or the passage of time, including actual increments and hypothetical increments.  Section 8(6) applies to injured employees who continue to be employed by the Commonwealth and, as is apparent from ‘would have been increased if the employee had continued in that employment’, continues to operate in respect of employees after employment has ended.  That is, the subsection provides that, whether in employment or whether employment has ceased, the normal weekly earnings shall be increased by the percentage by which they would have been increased before injury.

28                  Sections 8(9) and 8(9A) are directed to increases in remuneration payable to a class of employees, to which a continuing employee continues to belong, where those increases come about because of the operation of the law or an industrial determination or agreement.  Those increases are applicable while the employee continues to be employed.  The increases in remuneration contemplated by ss 8(9) and 8(9A) are not increments that become payable to a particular employee because of the attainment of a level of seniority or the passage of time.  Those employees have the benefit of the “relevant percentage” defined in s 8(9A) to operate with respect to a class of employees.  That increase or decrease operates on the normal weekly earnings calculated under the preceding subsections including, relevantly, s 8(6).

29                  The “relevant percentage” (ss 8(9) and 8(9A)) is not concerned with individual entitlements or the kinds of factors as set out in subss 8(6)(a) to (c).  It applies after increases due to classification of or allowances due to the employee.  The relevant percentage is referable to increases and reductions by operation of law.  This separation is emphasised in s 8(9B), which separates the calculations under ss 8(1) to 8(8) and the increases or reductions under s 8(9).

30                  Section 8(9B) refers both to increases in remuneration payable to the individual employee and to increases payable to the class of employees to which a former employee had belonged.

Extrinsic material

31                  The problem sought to be overcome by the Amending Act, as explained in the Explanatory Memorandum to the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2000 (‘the Amendment Bill’), was the complexity of and delay in ascertaining the relevant percentage of s 8(9), as defined in s 8(9A) of the Act.  That definition requires the taking into account of not only the operation of law but also, for example, the making or alteration of awards or industrial agreements.  The Wage Cost Index provides a substitution for that calculation of the increase.

32                  The Explanatory Memorandum gives the following explanation of the amendments to the SRC Act contained in the Amending Act:

2.26     This amendment will repeal the existing subsection 8(9) and substitute new subsections 8(9) to 8(9D).  The amendment is proposed to provide that the normal weekly earnings of people who are no longer employed by the Commonwealth be updated by reference to a prescribed index.

2.27     The current provisions allow for the adjustment of the minimum amount payable to recipients of compensation, either employees or former employees of the Commonwealth or a licensed authority, if their normal weekly earnings are either increased or reduced by way of changes in awards, agreements or other instruments affecting ordinary hours and hourly rates of pay.  The updating of normal weekly earnings for former employees under the existing subsection 8(9) has, however, become problematic due to the increasingly decentralised nature of wage fixing.  This has resulted in uncertainty and delay for recipients in receiving their correct entitlements.

2.28     The proposed amendment will identify an indexation date and allow for an index to be prescribed by regulation to be applied from that date to provide certainty and timeliness in the adjustment of normal weekly earnings for the recipients of compensation.  The provision will allow for the annual indexation of the ‘normal weekly earnings’ by increasing the minimum amount per week payable to the employee at the date of the injury by reference to a prescribed index.  The indexation date has been identified as 1 July following the date on which the Act received Royal Assent or the date of cessation of employment (which last occurs) and each subsequent 1 July.  The index is applicable over the one year ending on 31 December preceding each indexation date.  Regulations may specify the manner in which the increase is calculated by reference to the prescribed index.

33                  Nothing in the Amending Act suggested that it was intended to affect the operation of s 8(6) other than the reference to the “minimum” amount per week which reflects the language of s 8(6).  The Explanatory Memorandum referred to ‘changes in awards, agreements or other instruments affecting ordinary hours and hourly rates of pay’ (at [2.27]).  There was, however, no statement that it was intended to affect the correlation between incapacity payments and increments that were or would have been payable within the terms of existing awards, agreements or other instruments or payments or increments payable to individual employees by reason of seniority of position.

34                  The Second Reading Speech to the Amendment Bill addressed the compensation of former employees.  Senator Campbell said that the Amendment Bill ‘ensured that compensation payments for former employees are maintained at 70% of indexed normal weekly earnings and that normal weekly earnings of former employees are updated by reference to a prescribed index’.

35                  Therefore, the purpose of the Amending Act as outlined in the extrinsic material does not appear to extend to affect the operation of s 8(6).

The construction of s 8(9B)

36                  The first construction of s 8 is that subs (6) provides that the increment continues to be payable to an employee who has been injured and who would, if he or she had continued in that employment, have received the increment as part of normal weekly earnings.  The language of subs (9B), taken in isolation, says that the normal weekly earnings continue to be calculated under, relevantly, subss (6) and (9) and then, on cessation of employment, further increased by reference to the Wage Cost Index.  This would mean that the normal weekly earnings of an employee who has ceased to be employed by the Commonwealth after an injury would be higher than those of an injured employee who remains in employment.  By subs (10), the normal weekly earnings would be reduced by the excess.  That makes this construction of the section unlikely.

37                  That is, the first construction provides to the person who has ceased to be employed his or her normal weekly earnings (including the increment), the relevant percentage and the Wage Cost Index.  This in turn requires the normal weekly earnings to be reduced under s 8(10).  

38                  The second construction differentiates between the normal weekly earnings of the individual employee as calculated under subs (6) and the increase or reduction applicable to the employee as a member of a class of employees by operation of subs (9).  The further increase on cessation of employment by reference to the Wage Cost Index replaces the increase due to the class by application of subs (9).  This accords with the apparent intention of the amendment as described in the Explanatory Memorandum.

39                  That is, the second construction provides to the person who has ceased to be employed his or her normal weekly earnings (including the increment) and the Wage Cost Index. 

40                  The reference to “further increased” in s 8(9B) is equivocal.  Mr Perry emphasises those words as an indication that the increases in ss 8(1) to 8(6) continued to apply and that they, in turn, were additionally or further increased, with effect from each indexation date, by reference to the Wage Cost Index.  However, the words could also indicate that, once the injured employee has ceased employment, additional or further increases after that cessation are by reference to the Wage Cost Index only.

41                  The third construction is that the normal weekly earnings are as calculated under subs (6) and as increased or reduced by the application of subs (9) while the injured employee remains employed.  Upon cessation of employment, all further increases are by reference to the Wage Cost Index and the employee is not entitled either to the increment under subs (6) or to the increase or reduction by application of subs (9).  The apparent inconsistency with subs (6) is answered by the fact that subs (6) applies “subject to” the section, specifically in this case subs (9B).  This can be said to be not inconsistent with the Explanatory Memorandum which refers to the replacement of subs (9) and is silent on the effect of the amendment on subs (6).

42                  That is, the third construction provides to the person who has ceased to be employed his or her normal weekly earnings (but not including the increment) with increases by reference only to the Wage Cost Index.

43                  Each construction faces problems with the language of subs (9B), the context s 8 as a whole, the Explanatory Memorandum and common sense.

44                  It is not logical that the intention was to make the normal weekly earnings of an employee who ceased employment higher than those of an employee who remains in employment.  There is no point in making the earnings higher and then reducing the excess by application of subs (10).  Contrary to the third construction, subs (6) clearly provides that increments payable under that subsection remain payable to the individual employee upon cessation of employment.  If it were intended to remove the right to this payment, it would be expected that the Explanatory Memorandum, which did address the effect of the amendment on subs (9), would also address the effect on subs (6).  There is a difference between increments due to the individual employee by reasons of his or her position such as the flight allowance, and the adjustment by the relevant percentage of subs (9).  The reason for the replacement of a percentage determined by the operation of law or an industrial agreement by a prescribed percentage is explained in the Explanatory Memorandum.  If that is what was intended, the employee, on cessation of employment, does not receive more than he or she would have earned if the employment continued and does not lose the benefit of increments due to the employee by reason of age, period of service or position or appointment.

45                  Section 15AA of the Acts Interpretation Act 1991 (Cth) provides that:

In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.

46                  The second construction satisfies the direction in s 15AA of the Acts Interpretation Act.  I am of the view that the second construction applies to subs (9B) and that it is neither an unreasonable nor unnatural construction (Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113 per McHugh J).  Section 8(9B) does not apply to deprive Mr Perry of the increment.  It follows that the decision of the Delegate was correct and the Decision incorrect.  That is, Mr Perry is entitled to continue to receive the increment as part of the calculation of his normal weekly earnings.

Does s 8(9B) have retrospective operation?

47                  As I have determined that s 8(9B) does not deprive Mr Perry of his entitlements under s 8(6), it is not necessary to decide the question whether s 8(9B) has a retrospective effect.  However, as that was the basis of the Tribunal decision, I shall consider it briefly.

48                  Both before and after amendment, s 8 applied to persons who had been injured.  Section 8(9B) refers to the circumstance ‘if the employee has ceased, or ceases, to be employed…’.  These are words which should be given a meaning (Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at [71] per McHugh, Gummow, Kirby and Hayne JJ).  Section 8(9B) specifies application both to a person who has been injured and has already ceased to be employed and to a person who has been injured and who ceases to be employed.  Contrary to the Tribunal’s conclusion and Mr Perry’s submission, the subsection does apply to persons injured before the commencement date.  It applies to periods of incapacity after its commencement and changes the method of calculation of normal weekly earnings.

49                  As s 8(9B) is drafted, it is not the injury but the cessation of employment that is the condition that imports the application of the subsection, with effect from each future indexation date in relation to that cessation, by reference to the Wage Cost Index.  There is no dispute that Mr Perry suffered an injury prior to the commencement of the Amending Act and the operation of s 8(9B) and ceased to be employed after that date.  Mr Perry contends that, if s 8(9B) applies to preclude him from payment of the increments to which he would have been entitled under s 8(6) but for the amendment, it will visit new legal consequences on facts or events occurring before its commencement.

50                  Mr Perry contends that his rights to compensation by way of payments calculated under s 8(9) before amendment accrue as at the date of injury, or impairment.  He says that those rights to payment continue in perpetuity until certain events prescribed in the statute take place, which are not relevant, or Parliament legislates to alter or remove those rights.  That must be done clearly and the intent made clear before such an amendment would have retrospective effect to take away his rights (Kraljevich v Lake View and Star Ltd (1945) 70 CLR 647).  The right to payment or compensation extends to the manner of calculation (Kraljevich at 650 per Latham CJ).  If s 8(9B) affects those rights to compensation, he submits that it operates retrospectively.  Accordingly, he submits, the subsection does not apply to an injury which occurred before the commencement date.

51                  Subject to a reasonably certain intention to the contrary, an amending Act should be understood as not applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events (Maxwell v Murphy (1957) 96 CLR 261 at 267 per Dixon CJ).  Prima facie, it is construed as having a prospective operation only and as not attaching new legal consequences to facts or events which occurred before its commencement (Fisher v Hebburn Ltd (1960) 105 CLR 188 at 194 per Fullager J).

52                  Mr Perry relies on s 8 of the Acts Interpretation Act which provides that, unless the contrary intention appears, the repeal of s 8(9) cannot affect his rights acquired under the SRC Act.  He submits that the language of the Amending Act and s 8(9B) in particular, does not include clear indicia of retrospectivity nor clear indication that the “unjust result” or “palpable injustice” of an effect on his right to compensation were intended (Doro v Victorian Railways Commissioners [1960] VR 84 at 86 per Adam J).

53                  The words of s 8(9B) make it clear that the subsection is intended to apply to former employees and also to a person who subsequently ceases to be an employee.  This is also apparent from the extrinsic material.  The Second Reading Speech refers to “former employee” and the Explanatory Memorandum to ‘people who are no longer employed by the Commonwealth’ as well as to ‘former employees’. 

54                  The right to this compensation under s 8(9B) is not a right unlimited as to time or entitlement.  It is activated when the employee ceases employment.  It ceases if the employee ceases to be incapacitated.  Weekly payments of compensation under the Act with respect to future weeks are contingent upon the employee being incapacitated for work as a result of his or her injury during those future weeks.

55                  It is not the injury itself that creates the liability to pay compensation; it is the fact that the injury results in incapacity.  Compensation is payable while that incapacity results in loss.  If the conditions contained in s 19 of the Act are fulfilled, liability arises under s 14 to compensate the employee for incapacity for work.  Mr Perry was, upon injury and incapacity, entitled each week to normal weekly earnings calculated to include the s 8(6) increment, adjusted by the “relevant percentage”.  After the amendment, his entitlement to normal weekly earnings is maintained.  Even if he lost the right to the increment on cessation of employment by reason of subs (9B), the subsection did not operate on the right to compensation but on the method of calculation of the amount of compensation.  The method of calculation of that compensation for future weeks is, in accordance with the Act, variable.  There was no existing substantive right to the precise method of calculation which is made weekly.  There are no entrenched rights to the method of quantum of payment.

56                  Mr Perry's situation is different to those in Kraljevich and Esber v Commonwealth (1992) 174 CLR 430.  In Kraljevich it was held that the injured employee had an entitlement to be compensated ‘for a sum of money calculated in a particular way’ (at 650 per Latham CJ).  This was, however, in the context of a right of redemption, which accrued on injury.  Similarly, in Esber, there was a substantive right in existence at the time of the relevant repeal and amendment.

57                  Section 8(9B) does not have a retrospective operation.  The amendment has a future action on past events and not a prior effect on past events (Pearce DC and Geddes RS, Statutory Interpretation in Australia at [10.4], Coleman v Shell Co of Australia Ltd (1943) 45 (SR) 27).  ‘It takes account of antecedent facts and circumstances as a basis for what it prescribes for the future, and it does no more’ (Robertson v City of Nunawading [1973] VR 819 at 824). 

58                  The Amending Act does not differentiate between injuries that occurred before and after it came into force.  It does not affect employees’ rights to payments due on cessation of employment but only the calculation of those payments as made from week to week, the procedure or mode of calculation (cf Kraljevich).  The rights of the employee are fixed by reference to the injury and the continuation in or cessation of employment.  The changes brought about by amendment were not to those rights but to the practice and procedure applied to enforce or calculate them (Maxwell at 267 per Dixon CJ).  Those changes do not have a retrospective operation on Mr Perry’s rights.

CONCLUSION

59                  Mr Perry’s normal weekly earnings were correctly calculated by reference to increments in his flying allowance that would have been payable to him if he had continued in employment, as s 8(6) required.  Neither s 8(9) as it stood before the Amending Act nor s 8(9B) as it stood after the Amending Act, had any relevance to that calculation.  Section 8(9B) affects the increases or decreases that would have been applied by s 8(9) of the SRC Act.

60                  Although the Tribunal did not consider the proper application of the subsection, the Tribunal’s decision to restore the incapacity payments determined by the Commission on 18 August 2005 and to set aside the Officer’s decision to recover overpayments said to have been made in consequence of the Commission’s determination was the correct decision.  However, the Tribunal’s conclusion that s 8(9B) of the Act should be regarded as prospective in operation and inapplicable to employees whose injuries arose prior to the date of commencement of the Amending Act was incorrect.  The legislative scheme does not give an accrued right to a particular amount of compensation on injury alone but a right to compensation while incapacitated and payments calculated from time to time in accordance with the Act.

61                  The decision of the Tribunal, in so far as it restores the incapacity payments determined by the Commission on 18 August 2005 and sets aside the Officer’s decision to recover overpayment from Mr Perry, is affirmed.

62                  Both parties are to provide written submissions as to costs within seven (7) days of judgment. 

Associate:

Dated:         15 November 2007