FEDERAL COURT OF AUSTRALIA

Shillingford v Comcare [2020] FCA 775

ORDERS

THE COURT ORDERS THAT:

1.    The amended notice of appeal be dismissed.

2.    The applicant pay the respondent’s costs, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GRIFFITHS J:

introduction

1    Mr Shillingford appeals under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) from a decision dated 26 November 2019 by the Administrative Appeals Tribunal (AAT). The AAT affirmed a reviewable determination of Comcare that, on and from 11 September 2017, Mr Shillingford’s incapacity entitlement, as determined under s 19 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act), was $0 because his normal weekly earnings under s 8(10)(a) of the SRC Act were calculated as $0. In coming to that view Comcare took into account that Mr Shillingford would not be earning any income irrespective of his compensatable injuries because there was no work available for him in his area as a casual food safety meat assessor.

2    On 23 February 2017, Mr Shillingford sustained an injury while working as a food safety meat assessor for the Department of Agriculture and Water Resources (Department) at the Cobram abattoir. Comcare accepted liability to make weekly payments of compensation under the SRC Act in respect of this injury, which incapacitated Mr Shillingford for work from 24 February 2017.

3    Mr Shillingford was engaged by the Department on a casual basis as a non-ongoing APS employee pursuant to s 22(2)(c) of the Public Service Act 1999 (Cth) (PS Act) in various short term engagements as a food safety meat assessor. A central issue in the appeal is whether he had ceased to be an employee when the compensation determination was made.

4    By letter dated 5 June 2015, the Department made Mr Shillingford an “offer of engagement” under s 22(2)(c) of the PS Act for “irregular or intermittent (casual) duties”. The letter advised that acceptance of the offer meant that Mr Shillingford would be placed in a pool of casual employees and might be offered work during peak periods and other periods when the Department was unable to meet its work demands through its ongoing staff . He was also told that the Department would be under no obligation to offer him work and he was under no obligation to accept working even if it might be offered to him. He was further advised that he should not have an expectation of regular employment hours or ongoing employment with the Department.

5    After the injury he sustained on 23 February 2017, and up until 11 September 2017, Comcare paid Mr Shillingford compensation in the form of incapacity payments under the SRC Act. The amount of compensation was based on Mr Shillingford’s normal weekly earnings (NWE), being $1,362.88 gross per week for 22.23 normal weekly hours, which had been determined by Comcare on 9 May 2017 pursuant to s 8 of the SRC Act.

6    It is also undisputed that, on 4 May 2017, the Department approved that Mr Shillingford be subject to a rehabilitation program with a goal of having him return to “pre-injury hours and duties”. This rehabilitation program continued after weekly compensation payments ceased on 11 September 2017. The program did not cease until 3 October 2017.

7    As noted above, on 11 September 2017, a primary determination was made by Comcare that it had no present liability to pay Mr Shillingford incapacity payments under s 8 of the SRC Act.

8    Following a request by Mr Shillingford for the primary determination to be reconsidered, Comcare made a reviewable determination on 8 November 2017. The primary determination was affirmed, but varied in that the reviewable determination was stated to be made under s 19 of the SRC Act, rather than s 8 which had provided the stated basis for the primary determination.

9    In making the reviewable determination, Comcare determined that Mr Shillingford’s entitlement to compensation pursuant to s 19(2) of the SRC Act was $0, resulting from the application of s 8(10)(a).

10    This reviewable decision was affirmed by the AAT. The AAT noted the undisputed evidence of an Assistant Director of the Department that, after March 2017, Mr Shillingford would not have been offered any work by the Department, even if he was not incapacitated, due to the closure of abattoirs in Deniliquin and Cobram, the numbers of permanent staff available to perform work in other abattoirs operating in the region around Corowa (where Mr Shillington lived) and a general downturn in the industry.

11    The AAT also noted that, by a letter dated 9 June 2017, Mr Shillingford received another offer of employment from the Department. The letter stated that it was an “offer for non-ongoing (casual) employment” in accordance with s 22(1) of the PS Act for the period up to 6 July 2018. The letter included statements in substantially similar terms to those set out in the previous letter dated 5 June 2015, as summarised at [4] above.

12    The AAT made a finding that Mr Shillingford accepted that offer of employment and agreed to the terms and conditions set out in the letter dated 9 June 2017. I will summarise the AAT’s primary findings and reasons for affirming the reviewable decision in a later section of these reasons for judgment.

13    Both parties filed detailed outlines of submissions in support of their respective positions in the appeal. On 4 May 2020, the parties requested the Court, by consent, to determine the appeal on the papers and without an oral hearing. This is what has occurred.

relevant legislation summarised

14    It is appropriate to first summarise the relevant provisions of the SRC Act before summarising the relevant provisions of the PS Act.

(a) SRC Act

15    Section 14(1), which is in Pt II, provides that, subject to Pt II, Comcare is liable to pay compensation in accordance with the SRC Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment.

16    Section 19 is another significant provision. It is also in Pt II. It provides the formula which is to be applied to calculate the amount of compensation which Comcare is liable to pay to an incapacitated employee. Importantly, the amount is not necessarily the same for the entire period of incapacitation. That is because the amount is to be calculated by reference to each week which is a “maximum rate compensation week”, as defined in s 19(2A). Sub-sections 19(1) and (2) provided:

19    Compensation for injuries resulting in incapacity

(1)    This section applies to an employee who is incapacitated for work as a result of an injury, other than an employee to whom section 20, 21, 21A or 22 applies.

(2)    Subject to this Part, Comcare is liable to pay to the employee in respect of the injury, for each week that is a maximum rate compensation week during which the employee is incapacitated, an amount of compensation worked out using the formula:

where:

AE is the greater of the following amounts:

(a)    the amount per week (if any) that the employee is able to earn in suitable employment;

(b)    the amount per week (if any) that the employee earns from any employment (including self employment) that is undertaken by the employee during that week.

NWE is the amount of the employee’s normal weekly earnings.

…

17    The phrase “maximum rate compensation week” is defined in s 19(2A):

(2A)    For the purposes of subsection (2), a week is a maximum rate compensation week, in relation to an employee to whom this section applies, if:

(a)    it is a week during which the employee’s incapacity prevents the employee working the employee’s normal weekly hours because the employee is unable to work or unable to work at the level at which the employee worked before the injury; and

(b)    the total number of hours that the employee has been prevented from working, or working at that level, during that incapacity, in that week and in all previous weeks, if any, to which paragraph (a) applies, does not exceed 45 times the employee’s normal weekly hours.

18    Sub-section 19(2A) requires attention to be focussed on each week during an employee’s incapacitation. For present purposes, it is sufficient to note that, when read together with ss 19(2C) and (2D), the effect is that an injured employee will receive compensation at the “maximum rate” for the first 45 weeks of the employee’s incapacity. Assuming that incapacity continues thereafter, compensation will be paid at a reduced rate in accordance with s 19(3).

19    The critical point is that the formula set out in s 19(2) has to be applied to each week of the employee’s incapacitation. This constitutes “a fundamental principle” of the legislative scheme, as noted by Perry J in Comcare v Simmons [2014] FCAFC 4; 220 FCR 102 at [50], citing Dowsett J (with whom Spender J agreed) in John Holland Group Pty Ltd v Robertson [2010] FCAFC 88; 185 FCR 566 at [19] and Heerey J in Bortolazzo v Comcare [1997] FCA 515; 75 FCR 385 at 388.

20    The phrase “normal weekly earnings” (or NWE) is defined in s 8, which is another important provision for the purposes of the appeal. It is a lengthy provision. It is convenient to break it down to the following relevant elements. Sub-section 8(1) provides for a formula to be used in calculating NWE for the purposes of the SRC Act:

8    Normal weekly earnings

(1)    For the purposes of this Act, the normal weekly earnings of an employee (other than an employee referred to in subsection (2)) before an injury shall be calculated in relation to the relevant period under the formula:

where:

NH is the average number of hours worked in each week by the employee in his or her employment during the relevant period;

RP is the employee’s average hourly ordinary time rate of pay during that period; and

A is the average amount of any allowance payable to the employee in each week in respect of his or her employment during the relevant period, other than an allowance payable in respect of special expenses incurred, or likely to be incurred, by the employee in respect of that employment.

21    The reference to “the relevant period” in s 8(1) takes one to s 9 of the SRC Act, which defines what is the “relevant period”. Sub-section 9(1) provides that, for the purposes of calculating the NWE of an employee before an injury, a reference in s 8 to the relevant period is, subject to the balance of s 9, “a reference to the latest period of 2 weeks before the date of the injury during which the employee was continuously employed by the Commonwealth or a licensed corporation”.

22    Returning now to the critical phrase “normal weekly earnings” in s 8 of the SRC Act, s 8(2) of the SRC Act provides for the inclusion in the NWE of overtime payments. Further adjustments to NWE are specified in ss 8(3) to (9G). It is relevant to note that the adjustment of the subject of s 8(3) relates to an employee who, at the date of the injury, was employed by the Commonwealth (or a licensed corporation, which does not arise here) in part-time employment or unpaid employment. In such a case, any earnings of the employee from any other employment is to be treated for the purposes of s 8 as earnings of the employee from his or her employment by the Commonwealth (or the licensed corporation).

23    Sub-section 8(10) is another significant provision. It is designed to reduce the amount of the NWE in certain circumstances. As Perry J observed in Simmons at [71], the effect of s 8(10) is to impose a cap upon the amount of pre-injury NWE of an employee which has been calculated under the preceding sub-sections of s 8. It does so by requiring a reduction to be made of NWE by the amount of any excess which is arrived at by applying either sub-paragraph (a) or (b). It is notable that sub-paragraphs (a) and (b) address two different situations. The former sub-paragraph applies where the employee continues to be employed by the Commonwealth (or a licensed corporation), whereas the latter sub-paragraph applies where the employee has ceased to be so employed.

24    It is further notable that sub-paragraph (b) of s 8(10) has two separate limbs in sub-paragraphs (i) and (ii).

25    Section 8(10) provides:

(10)    If the amount of the normal weekly earnings of an employee before an injury, as calculated under the preceding subsections, would exceed:

(a)    where the employee continues to be employed by the Commonwealth or a licensed corporation—the amount per week of the earnings that the employee would receive if he or she were not incapacitated for work; or

(b)    where the employee has ceased to be employed by the Commonwealth or a licensed corporation—whichever is the greater of the following amounts:

(i)    the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury;

(ii)    the amount per week of the earnings that the employee would receive if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which the employment by the Commonwealth or the licensed corporation ceased;

the amount so calculated shall be reduced by the amount of the excess.

26    It is convenient to now summarise provisions in the SRC Act relating to the concept of an “employee”. That term is relevantly defined in s 5(1) as follows:

5    Employees

(1)    In this Act, unless the contrary intention appears:

…

employee means:

(a)    a person who is employed by the Commonwealth or by a Commonwealth authority, whether the person is so employed under a law of the Commonwealth or of a Territory or under a contract of service or apprenticeship; or

(b)    a person who is employed by a licensed corporation.

27    It is now desirable to say something briefly about provisions in the SRC Act relating to rehabilitation. A rehabilitation authority (as defined in s 4(1)) may determine a rehabilitation program for an employee who suffers injury resulting in incapacity for work (see s 37(1)). It should also be noted that the effect of s 5(9) of the SRC Act is to extend the definition of “employee” to include “a person who has ceased to be an employee”, with the consequence that a rehabilitation program may be determined in respect of an employee who has suffered an injury resulting in incapacity for work notwithstanding that the employee has ceased to be an employee when that rehabilitation determination is made. Sub-section 5(9) provides:

(9)    A reference to an employee in a provision of this Act that applies to an employee at a time after Comcare, an administering authority, a licensed authority or a licensed corporation has incurred a liability in relation to the employee under this Act includes, unless the contrary intention appears, a reference to a person who has ceased to be an employee.

28    By s 40(1), where an employee is undertaking or has completed a rehabilitation program, the “relevant employer” must take all reasonable steps to provide the employee with, or assist the employee to find, suitable employment.

(b) PS Act

29    Section 22 provides for the engagement of APS employees:

22    Engagement of APS employees

(1)    An Agency Head, on behalf of the Commonwealth, may engage persons as employees for the purposes of the Agency.

(2)    The engagement of an APS employee (including an engagement under section 72) must be:

(a)    as an ongoing APS employee; or

(b)    for a specified term or for the duration of a specified task; or

(c)    for duties that are irregular or intermittent.

Note:    The usual basis for engagement is as an ongoing APS employee (see paragraph 10A(1)(b)).

…

30    Section 7 of the PS Act defines an “APS employee” as a person who is engaged under ss 22 or 72. “Ongoing APS employee” is defined in s 7 as a person engaged under s 22(2)(a) and a “non-ongoing APS employee” is defined in s 7 as an APS employee who is not an ongoing APS employee. As noted, Mr Shillingford was engaged under s 22(2)(c) for duties “that are irregular or intermittent” and was therefore a “non-ongoing APS employee”.

primary and reviewable determinations

31    As mentioned, a primary determination was made by Comcare on 11 September 2017 that it had no present liability to pay incapacity payments under s 8 of the SRC Act. Accordingly, weekly payments of compensation to Mr Shillingford ceased from that date.

32    On 3 October 2017, the rehabilitation program in respect of Mr Shillingford which had commenced on 23 June 2017 terminated with the stated reason that he “is partially incapacitated but unable to be placed in suitable employment” and “was unable to achieve his Rehabilitation goal of pre-injury hours and duties due to his pre-injury employment site ceasing trade”.

33    As mentioned, on 8 November 2017, Comcare made a reviewable decision under s 62 of the SRC Act concerning the primary determination. The reviewable decision affirmed the primary determination to cease weekly payments, but the stated basis for that determination was changed from s 8 to s 19 of the SRC Act. In making the reviewable determination, Comcare’s review officer noted that the Department had advised that the abattoir where Mr Shillingford was working had closed permanently and that the abattoirs at Deniliquin and Cobram were also both closed. The Department advised that Mr Shillingford would not be getting any work at Wodonga as there are usually two permanent employees there. The Department further advised that it was unlikely that there would be any work available in NSW for Mr Shillingford due to the industry downturn, which affected all casual meat inspectors. Accordingly, the review officer concluded that Mr Shillingford would not be “earning an income regardless of your compensable injuries as there is no work available in your area for casual meat inspectors”. The review officer rejected Mr Shillingford’s contention that he should be considered as an ex-employee if there was no available work on an ongoing basis and his attention was drawn to the contract of employment in place for the period 6 June 2017 until 6 July 2018.

34    The review officer calculated Mr Shillingford’s NWE under s 8(10)(a) of the SRC Act on the basis that he remained an employee. She reasoned that, if his NWE is determined as $0 under that provision, his incapacity entitlement would also be determined as $0 for the period when there was no available employment due to the nature of his casual employment and closure of abattoirs. Thus, she concluded that although Mr Shillingford continued to have an incapacity for work, his entitlement to compensation under s 19 is $0 due to the application of s 8(10)(a).

aat’S DECISION AND REASONS

35    The AAT made the following relevant findings:

(a)    It appeared that the Department’s letter dated 5 June 2015 provided the basis upon which Mr Shillingford was working when he was injured on 23 February 2017 ([18]).

(b)    Mr Shillingford did not dispute that he accepted the Department’s subsequent offer of employment as set out in its subsequent letter dated 9 June 2017, but he contended that neither this letter nor the Department’s previous letter were, in substance, a contract of employment ([21]).

(c)    Mr Shillingford contended that, as a non-ongoing temporary employee who had not been engaged for any actual work by the Commonwealth after he was injured, he was not in fact an employee and his entitlement to incapacity payments fell to be determined under s 8(10)(b) of the SRC Act ([23]).

(d)    A contract of employment may exist even though no actual work is performed, applying the AAT’s previous decision in Dunstan v Comcare [2014] AATA 208; 139 ALD 691 at [56] ([29]).

36    Against a background of those findings, in affirming the reviewable decision, the AAT’s reasons were essentially as follows:

(a)    Contrary to Mr Shillingford’s primary contention, he remained a Commonwealth employee on 11 September 2017 and his entitlement to incapacity payments therefore fell to be determined under s 8(10)(a) of the SRC Act because that provision applies where an employee continues to be employed by the Commonwealth at the date of calculation (see [16] and [37]).

(b)    The AAT explained why it rejected Mr Shillingford’s central contention concerning his employment status. It emphasised that the terms of s 22(2)(c) of the PS Act made clear that a contract of employment under that legislation may be for duties which are irregular or intermittent, as was also made explicit in both letters from the Department offering Mr Shillingford employment on a casual basis. The effect of s 22(2)(c) was to deem Mr Shillingford’s engagement as a non-ongoing APS employee to be a contract of employment whatever might be the position at common law (at [24]-[28]).

(c)    Applying the reduction test in s 8(10)(a), because there was no available work for Mr Shillingford, he would have earned nothing even if he was not incapacitated (at [38]).

(d)    As the threshold so calculated under s 8(10)(a) was nil, the excess is the full amount of NWE calculated under s 8(1) (i.e. $1,362.88) and, once that excess is deducted from Mr Shillingford’s NWE, the balance is nil (at [38]).

(e)    Although the AAT did not come to a concluded view, it indicated that if Mr Shillingford’s entitlement to incapacity payments on 11 September 2017 fell to be determined under s 8(10)(b) on the basis that he had ceased to be an employee (as claimed by him), and if the approach taken in a previous AAT decision in Dunstan was applied, the outcome under s 8(10)(b)(i) would be the same, namely that Mr Shillingford would be entitled to compensation at a nil amount (at [44]-[46]).

NOTICE OF APPEAL

37    Mr Shillingford did not dispute Comcare’s summary of the questions of law and corresponding grounds of appeal as raising the following issues for determination:

(a)    Whether the AAT erred in law by determining that no compensation was payable to Mr Shillingford under s 19 by reason of s 8(10)(a) without having considered the provisions of the SRC Act limiting the circumstances in which termination of continuing benefits can occur.

(b)    Whether the AAT erred in law by construing the words “continues to be employed” in s 8(10)(a) so as to apply to Mr Shillingford as a person engaged for duties that are irregular or intermittent pursuant to s 22(2)(c) of the PS Act.

(c)    Whether the AAT erred in law by failing to construe s 8(10)(b) and apply it to the facts and circumstances pertaining to Mr Shillingford.

MR SHILLINGFORD’S SUBMISSIONS SUMMARISED

38    In brief, Mr Shillingford contended that:

(a)    the SRC Act did not support any of the determinations, including that of the AAT, to terminate Mr Shillingford’s entitlement to receive compensation payments on and from 11 September 2017; and

(b)    in any event, the AAT should have found that Comcare was liable to make continuing payments under s 19 because Mr Shillingford ceased to be employed by the Commonwealth from 24 February 2017 and the amount calculated under s 8(1) of the SRC Act would not have been more than his hypothetical NWE determined under s 8(10) of the SRC Act.

39    In respect to the first of those matters, Mr Shillingford argued that continuing compensation benefits could only be terminated in accordance with the relevant statutory provisions and where the evidence pointed to a change in circumstances which justified a termination decision. He added that the “burden of persuasion” lies on the person who seeks to change the existing entitlement citing, inter alia, Phillips v Commonwealth [1964] HCA 22; 110 CLR 347 at 350 per Kitto, Taylor and Owen JJ. Mr Shillingford accepted that termination might validly occur where the injury no longer resulted in incapacity for work, which necessarily must remove the basis for any entitlement to compensation. He contended, however, that there was no such change in his circumstance because he continued to have an incapacitating injury.

40    As to the AAT’s finding that the Department would not have engaged Mr Shillingford for any irregular or intermittent duties after he sustained his injury because there was no longer a demand for his work, Mr Shillingford emphasised that, up until 11 September 2017, Comcare had accepted that he was entitled to compensation. He contended that although Comcare then found that the entitlement no longer existed, there was no material change in his circumstances to justify the outcomes of any of the primary determination, the reviewable determination or the AAT’s decision.

41    Mr Shillingford contended that the AAT failed to address the submissions made by him concerning the correct statutory tests. He added that, had the correct statutory tests been applied, there was no evidence upon which the AAT could have approved the termination of his continuing benefits on 11 September 2017.

42    On the issue of “employment” in the context of the SRC Act, Mr Shillington noted that the terms “employed” and “employment” are not defined in the SRC Act. He emphasised the importance of determining whether or not a claimant for compensation was an employee at the relevant time because that affected whether s 8(10)(a) or (b) would apply.

43    Mr Shillingford contended that:

(a)    the terms “employment” or “employed” for the purposes of s 8(10) have the same meaning as they do at general law, namely a contract of service where the employer retains the right to direct the employee to work in exchange for paying the employee wages for the work performed;

(b)    his engagement by the Department under s 22(2)(c) of the PS Act was not for continuing employment, but rather was for a series of individual engagements, each of which constituted employment when he was so engaged; and

(c)    he did not perform any work for the Department after the date of his injury. He had not been employed by the Department since that time, with the consequence that s 8(10)(b) applied in determining his NWE (i.e. an employee who has ceased to be employed by the Commonwealth), and not s 8(10)(a) (which applies to an employee who continues to be employed by the Commonwealth).

44    On the basis of Mr Shillingford’s contention that the determination of any reduction in his NWE under s 8(10) for the purposes of the compensation formula in s 19(2) fell to be determined under s 8(10)(b) and not s 8(10)(a), Mr Shillingford contended that the AAT erred notwithstanding that it did not express a concluded view as to the operation of s 8(10)(b). In particular, he challenged the AAT’s tentative view that the application of s 8(10)(b) would also have produced a nil amount. This was because, at the date of his injury, Mr Shillingford was working and earning income. Mr Shillingford relied upon what Dowsett J said in John Holland at [76] that s 8(10)(b)(i) contemplated “the notional continuation of the previous employment”, the purpose of which was to “identify likely earnings in the event that such employment had been so extended” and “does not contemplate the notional formulation of conditions of employment which had never existed”.

COMCARE’S SUBMISSIONS SUMMARISED

45    In brief, Comcare’s response in defending the AAT’s decision was as follows. First, it criticised Mr Shillingford’s characterisation of the AAT’s decision as one dealing with the “termination of continuing compensation benefits for incapacity for work” in circumstances where s 19 is more correctly viewed as relating to an employee’s eligibility for compensation. Comcare submitted that the AAT did not disturb Mr Shillingford’s eligibility for compensation under s 19(1), but rather it (together with the primary and reviewable determinations by Comcare) determined that the amount of compensation payable to Mr Shillingford as at 11 September 2017 was $0 (applying the formula in s 19(2) by reference to the calculation of NWE under s 8(10)(a)). Thus, Comcare submitted that Mr Shillingford remained eligible for compensation under s 19(1) and that the amount of compensation payable to him under s 19(2) may have increased above $0 in subsequent weeks if relevant circumstances changed.

46    Secondly, Comcare emphasised that it was a fundamental principle of the legislative compensation scheme that the compensation formula be applied to each week of incapacity, citing inter alia John Holland at [19] per Dowsett J.

47    Thirdly, Comcare defended the AAT’s approach, which was to take into account as a relevant circumstance the fact that, as at 11 September 2017, Mr Shillingford would not have been offered any work by the Department at that time and consequently would not have earned any income from his employment with the Department even if he had not been injured.

48    Fourthly, with reference to the issue whether the AAT wrongly construed the phrase “continues to be employed” in s 8(10)(a), which provision the AAT then applied to Mr Shillingford, Comcare pointed to the relevant definition of “employee” in s 5 of the SRC Act and submitted that those provisions militate against Mr Shillingford’s contention that being “employed” for the purposes of the SRC Act is restricted to persons who might be classified as employees under the general law. Comcare emphasised that the term “employee” is defined in s 5 as including a person “employed under a law of the Commonwealth” and the PS Act is a law of the Commonwealth. As mentioned, under the letters dated 5 June 2015 and 9 June 2017, Mr Shillingford was offered employment as a non-ongoing employee under s 22(2)(c) of the PS Act. Thus, although under the terms of his employment, Mr Shillingford’s duties would be irregular or intermittent (if they were offered at all and accepted by him), this did not mean that his employment or engagement was irregular or intermittent.

49    Fifthly, as to what would be the result if the compensation formula in s 19(2) was determined under s 8(10)(b) and not s 8(10)(a), Comcare submitted that, applying authorities such as John Holland, there was no basis for Mr Shillingford’s contention that the result could not have been “nil” because, as at 23 February 2017, Mr Shillingford was working and earning income. Comcare contended that this approach was flawed because the relevant inquiry under s 8(10)(b) as to likely earnings falls to be determined as at the date of calculation and not at the date of injury (citing John Holland at [75]-[76] per Dowsett J and Simmons at [91] per Perry J). Comcare contended that it would be relevant for the purposes of s 8(10)(b) to include the circumstance that, as at the date of the calculation, there was no need by the Department for casual meat assessors because of abattoir closures and a general downturn in the industry. It emphasised that these were objective facts which were unrelated to any personal choice by Mr Shillingford and were “circumstances that affected the position generally”, citing Simmons at [95] per Perry J. Thus, in applying s 8(10)(b), Comcare submitted that if Mr Shillingford had continued to be employed by the Department the amount per week he would have received would be $0 and, therefore, his NWE would be reduced under that provision by the full amount of his pre-injury NWE, leaving a NWE of $0. Thus, Comcare submitted that any error by the AAT relating to s 8(10)(b) was not material.

mr shillingford’s rePly submissions summarised

50    In reply to Comcare’s submissions regarding the distinction between eligibility for weekly payments and the calculation of the amount of those payments, Mr Shillingford submitted that both the reviewable decision and the AAT’s affirmation of that decision explicitly purported to terminate Mr Shillingford’s entitlement to compensation.

51    Mr Shillingford also contested Comcare’s contention that the AAT did not err in viewing as a relevant change of circumstance the fact that Mr Shillingford would not have been offered any work by the Department and would not have earned any income as a casual employee even if he had not been injured. Mr Shillingford contended that the Department’s failure to provide him with suitable duties was relevant only to his ability to earn. He accepted that, under s 19, his ability to earn was $0, but submitted that this supported his continuing entitlement to weekly payments of compensation consistently with the amount he received prior to the primary determination.

52    On the issue of “employment”, Mr Shillingford argued that even though employees are engaged under s 22 of the PS Act, they are still employed under a contract of service and the statutory nature of the engagement did not affect any contractual rights pertaining to the underlying contract of service. He submitted that it was not correct to equate “employment” with “engagement” because different rights and obligations applied.

53    Mr Shillingford also defended his contention that s 8(10) of the SRC Act cannot fall to zero because the earnings “before injury” would still be earnings for work performed regardless of the absence of overtime or other allowances from its non-availability at the subsequent time, as discussed in cases such as John Holland, Simmons and Bortolazzo.

54    In reply to Comcare’s submissions concerning s 8(10)(b), which Comcare said would also produce a nil amount, Mr Shillingford reiterated that it was not relevant to take into account the fact that Mr Shillingford’s services were no longer required. Rather, effect had to be given to the “actual terms of employment” (not the absence of employment), as Dowsett J stated in John Holland at [75]-[76], so submitted Mr Shillingford.

55    Mr Shillingford submitted that the termination of employment could not be relevant to a consideration of the level of earnings prior to the injury when employment existed, or to the calculation of the level of compensation payable by reasoning of the former employee’s incapacity for work, because such an approach “would undermine the SRC Act’s provisions (in Part III) for rehabilitation of incapacitated employees, reinforced by continuing payment of weekly compensation (pursuant to s 19) if rehabilitation proves impracticable”.

CONSIDERATION AND DETERMINATION

56    It is convenient first to make some general observations regarding relevant caselaw and principles before applying those matters to the circumstances here and bearing in mind the importance of giving effect to the AAT’s relevant findings of fact unless there is some good reason in law demonstrated by Mr Shillingford for not doing so.

(a) Caselaw and relevant principles

57    Unsurprisingly, both parties referred to various cases regarding the construction and operation of the SRC Act, as well as caselaw on the common law meaning of employment. There is nothing wrong with that approach as long as it does not derogate from the fundamental importance of applying now well settled principles of statutory construction to relevant provisions of the SRC Act and PS Act having regard to the unchallenged findings of fact made by the AAT. It is also relevant to note that neither party invited the Court to make findings of fact pursuant to s 44(7) of the AAT Act and although Mr Shillingford contested the AAT’s reasoning in construing and applying various provisions in both the SRC Act and PS Act, I did not understand him to contend that any finding of fact made by the AAT was vitiated by an error of law.

58    In summarising the parties’ respective submissions, reference has been made to the relevant authorities relied upon by the parties. It is desirable to say something further regarding John Holland, which is probably the leading relevant authority for the purposes of this appeal. In John Holland, Dowsett J (with whom Spender J agreed) highlighted some important features of s 8(10) of the SRC Act. As his Honour noted at [18], the effect of a reduction under s 8(10) is to reduce the amount of compensation payable pursuant to s 19. Other important features of s 8(10) were identified by Dowsett J at [19] and [20]:

19.    Section 8(10) differentiates between employees who continue to be employed by the Commonwealth or a licensed corporation (to whom s 8(10)(a) applies) and employees who have ceased to be so employed (to whom s 8(10)(b) applies). However the section does not expressly identify the point in time at which a relevant employee’s employment status is to be determined. The compensation payable pursuant to s 19 is weekly compensation, being the amount of the NWE less the amount which the employee earns in the week for which he or she is to be compensated, or the amount which he or she is capable of earning in suitable employment. I infer that s 8(10) is to operate according to the circumstances which obtain in each week in respect of which compensation is otherwise payable. In Bortolazzo v Comcare (1997) 75 FCR 385 at 388, Heerey J took that approach.

20.    The amounts identified in ss 8(10)(a) and (b) are hypothetical amounts. In s 8(10)(a) the identified amount is the amount of weekly earnings which the employee “would receive if he or she were not incapacitated for work”. In the context of s 8(10) this provision contemplates the possibility that the employee, even if not injured, may, in the week in question, have received less than his or her NWE as otherwise calculated. Section 8(10)(b) prescribes reduction of that figure by the difference between it and the greater of two other amounts. The first amount is the weekly earnings which the employee would have received if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date of the injury. The second amount is the amount which the employee would have received if he or she had continued to be employed by the Commonwealth or the licensed corporation in the employment in which he or she was engaged at the date on which employment by the Commonwealth or the licensed corporation ceased.

59    As Dowsett J observed in John Holland at [73] it seems to be more consistent with the purpose of the SRC Act to treat the word "employment", when used in that legislation, as describing more than merely a trade, calling or classification of employees. Instead, the SRC Act is “very much concerned with conditions in which employees work and their terms of engagement, rather than how they may be classified”.

60    Paragraphs 74 and 75 of Dowsett J's reasons in John Holland are also relevant in highlighting some important differences between s 8(10)(a) and (b):

74.    Clearly, s 8(10) seeks to limit the compensation payable to an injured employee by reference to his or her notional earnings derived from employment with the same employer had he or she not been injured. Section 8(10)(a) demands a notional enquiry which commences with the employee's actual current employment. The enquiry is as to his or her earnings in that employment had he or she not been injured. Such enquiry would involve consideration of how, in those circumstances, the employee would have been employed, including consideration of whether he or she would have continued to perform the same duties as were being performed at the time of the accident.

75    Section 8(10)(b) involves different considerations. It assumes continuation of either the pre-injury employment or other actual employment undertaken subsequent to the injury with the same employer. The decision-maker is not directed to assume that the employee was not incapacitated. The enquiry pursuant to s 8(10)(b)(ii) involves only consideration of the employee's actual employment at the date at which he or she ceased to be employed by the employer and of the earnings which would have been derived had the employee been in such employment in the week for which he or she is to be compensated. It seems unlikely that the basis for comparison was meant to be anything other than the actual earnings, adjusted to reflect changes in circumstances between the cessation of employment and the date of calculation. In particular, it seems unlikely that it was intended that the actual terms of employment were to be ignored, and the calculation based on the notional employment at rates payable to persons in a particular trade, calling or classification.

61    There is one further aspect of Dowsett J’s reasons in John Holland which should be noted. It relates to what his Honour said at [21] and [22] concerning the proper construction of s 8(10) and its general operation. Those paragraphs are as follows:

21.    Section 8(10), in more or less its present form, has been in the Act since its initial enactment. In the Second Reading Speech, the relevant Minister said (Parliamentary Debates, House of Representatives, 2192):

The level of weekly benefits payable to an injured employee who is capable of returning to work will be calculated by subtracting the amount the employee is earning, or would be able to earn in suitable employment, from his or her normal weekly earnings. Suitable employment for an employee who is permanently employed by the Commonwealth will mean employment by the Commonwealth or a statutory authority. In the case of a casual employee, suitable employment may include self employment or employment in private industry. This distinction reflects the government’s commitment to maintaining the employer/employee relationship and reinforces the nexus between an employee’s contract of employment and his or her rights to compensation.

22.    As I have observed, the Act was, at that time, to apply only to Commonwealth employees and the employees of some governmental corporations. This passage seems to suggest that s 8(10)(a) was generally to apply to permanent Commonwealth employees whilst s 8(10)(b) was generally to apply to temporary Commonwealth employees.

62    While I consider that these passages provide helpful general guidance concerning the proper construction and operation of s 8(10), it is important not to lose sight of the fact that Dowsett J’s observations at [22] are expressly stated at a level of generality, as is reflected in his Honour’s use of the term “generally”. His Honour presumably did not have in mind the unusual circumstances applying to Mr Shillingford and, in particular, the fact that there were two offers of engagement which he accepted, one before his injury and the other after his injury. I do not view Dowsett J as stating that s 8(10)(a) will never apply to a temporary employee (or “non-ongoing APS employee”).

(b) Application of relevant principles to the circumstances of this appeal

63    Taking into account the AAT’s unchallenged findings regarding Mr Shillingford’s circumstances, the scheme of the SRC Act may be summarised as follows. First, liability to pay compensation in accordance with the SRC Act is imposed on Comcare in respect of any injury (as defined in s 5A) suffered by an employee if the injury results in incapacity for work.

64    Secondly, the amount of compensation which Comcare is liable to pay such a person is calculated by reference to the formula set out in s 19(1). The amount is to be calculated for each week that the employee is incapacitated that constitutes a “maximum rate compensation week” as defined in s 19(2).

65    Thirdly, part of the formula in s 19(1) requires Comcare to calculate the employee’s NWE as defined in s 8.

66    Fourthly, in its own terms, the definition of an employee’s NWE focusses on various matters pertaining to the employee’s work in a particular period of time (i.e. the “relevant period” as defined in s 9) before the employee was injured.

67    Fifthly, generally speaking, the relevant period is the latest period of 2 weeks before the date of injury during which the employee was continuously employed by the Commonwealth (s 9(1)).

68    Sixthly, there are three key elements of the formula for calculating NWE under s 8(1), namely:

(a)    the average number of hours worked in each week by the employee in his or her employment during the same relevant period (i.e. “NH” as defined in s 8(1));

(b)    the employee’s average hourly ordinary time rate of pay during that same relevant period (i.e. “RP” as defined in s 8(1));

(c)    the average amount of any allowance payable to the employee in each week in respect of his or her employment during that same relevant period, apart from “special expenses” (i.e. “A” as defined in s 8(1)).

69    Seventhly, having determined an employee’s NWE before an injury in accordance with ss 8(1) to (9G), it is necessary to determine whether the amount needs to be reduced under s 8(10).

70    Eighthly, in determining the amount of any such reduction required by s 8(10), a distinction is drawn between an employee who continues to be employed by the Commonwealth and an employee who has ceased to be so employed.

71    Ninthly, the point in time at which a relevant person’s employment status is to be determined is not expressly identified in the legislation, but there is binding authority in John Holland at [19] that it is to be inferred that it is by reference to the circumstances which obtain in each week in respect of which compensation is otherwise payable (see [58] above).

72    Tenthly, the amount of NWE determined in accordance with s 8(1) is an actual amount which is calculated with reference to the latest period of two weeks of continuous employment by the Commonwealth before the date of injury.

73    Eleventhly, in contrast, there are the following two differences with the amounts identified in s 8(10)(a) and (b):

(a)    those amounts are hypothetical amounts as described by Dowsett J in John Holland at [20] (see [58] above);

(b)    those hypothetical amounts relate not to a period before the date of injury but rather relate to any particular week after those dates while the person is incapacitated and in respect of which week Comcare remains liable to pay the person compensation.

74    For the following reasons, I am not satisfied that Mr Shillingford has established any reviewable error in respect of the AAT’s conclusion that, at all relevant times, he continued to be employed by the Commonwealth, with the consequence that s 8(10)(a) of the SRC Act applied to him.

75    First, as noted, the definition of “employee” in s 5(1)(a) includes “a person who is employed by the Commonwealth or by a Commonwealth authority, whether the person is so employed under a law of the Commonwealth… or under a contract of service…” (emphasis added). I accept Comcare’s submission that these provisions militate against Mr Shillingford’s proposition that being “employed” for the purpose of the SRC Act is restricted to those persons who might be classified as employees under a general law “contract of service where the employer retains the right to direct the employee in the work in exchange for wages for the work performed”. It is significant that the definition in s 5(1)(a), as paraphrased above, contemplates that a person may be an employee for the purposes of the legislation by virtue of either a law of the Commonwealth or a contract of service.

76    Secondly, I accept Comcare’s submission that, under the PS Act, the term “engagement” means “employment”, having regard to the text of s 7 which defines “APS employee” to mean either a person engaged under s 22 or a person who is engaged as an APS employee under s 72 and “APS employment” is defined to mean “employment as an APS employee”.

77    In my view, the AAT was correct to construe the phrase “continues to be employed” in s 8(10)(a) of the SRC Act as encompassing Mr Shillingford’s engagement as a non-ongoing employee under s 22(2)(c) of the PS Act, consistently with the terms of the letters of offer of employment dated 5 June 2015 and 9 June 2017. The terms of his employment under both those letters meant that his duties could be irregular or intermittent, assuming that he was offered and agreed to do any work at all, but this did not meant that his employment was irregular or intermittent. Mr Shillingford’s employment status did not change before or after his injury on 23 February 2017 until 6 July 2018, when the second engagement expired.

78    Thirdly, I reject Mr Shillingford’s contention that his employment status should have been viewed as a series of separate contracts of employment whenever he was offered and accepted casual work intermittently. In my view, the correct analysis is that Mr Shillingford was employed under a law of the Parliament, being the PS Act, the terms and conditions of which were contained in the two contracts of employment as set out in the letters dated 5 June 2015 and 9 June 2017 for the relevant periods covered by those letters. In my opinion, the occasions upon which Mr Shillingford was offered, and accepted, casual employment are not to be viewed as independent contracts of service within the definition of “employee” in s 5(1) of the SRC Act but rather are more properly viewed as “incidents” of his employment by the Department under the PS Act (see by analogy Telstra Corporation Ltd v Peisley [2006] FCAFC 79 at [36] per Wilcox and Conti JJ).

79    For the following reasons, I also reject Mr Shillingford’s contentions that the AAT fell into reviewable error because it failed to consider provisions of the SRC Act which limited the circumstances in which his continuing benefits could be terminated.

80    First, as Comcare pointed out, it is doubtful that the AAT was dealing with the “termination of continuing compensation benefits for incapacity for work” in the sense suggested by him. The AAT’s decision did not disturb Mr Shillingford’s eligibility for compensation under s 19(1). The AAT determined the amount of compensation to which Mr Shillingford was entitled as at 11 September 2017, applying the formula in s 19(2) and the calculation of NWE under s 8(10)(a), which produced a nil amount. As Comcare pointed out, Mr Shillingford remained eligible for compensation under s 19(1) and the amount might increase beyond $0 in future weeks if circumstances which are relevant to the application of s 8(10) were to change. This approach is consistent with the fundamental principle underpinning the SRC Act that the compensation formula be applied to each week of incapacity.

81    Secondly, neither the text nor context of relevant provisions in the legislation indicate that application of the reduction factors in s 8(10) cannot produce a result of $0 compensation. As Comcare pointed out, Mr Shillingford has not explained why the reduction factors could apply to reduce the compensation amount to say $1, but not $0.

82    Thirdly, I do not consider that the AAT erred in viewing as a relevant changed circumstance that Mr Shillingford would not have had any work from the Department as at 11 September 2017, with the consequence that he would not have earned any income from his employment with the Department, even if he had not been injured and incapacitated. The AAT’s approach is broadly consistent with Dowsett J’s observations in John Holland at [19] and [75] (as set out at [58] and [60] above) that s 8(10)(a) operates “according to the circumstances which obtain in each week in respect of which compensation is otherwise payable”. As noted, s 8(10)(a) requires a hypothetical amount to be determined and there is no reason why the “circumstances which obtain” at the relevant time do not include evidence which demonstrates that work would not have been available to the employee during the relevant week.

83    It is important to bear in mind that the amount calculated under s 8(10)(a) is an amount referrable to a weekly period after the date of incapacitation, but it is necessarily hypothetical because it is predicated on an assumption that the claimant has not ceased to be an employee. As Heerey J observed in Bortolazzo at 388, the “provision of compensation is to operate from week to week”. Moreover, the “underlying policy is that an injured employee should not be worse off during the period of incapacity as a result of work-related injury. However, it follows conversely that the injured employee should not be better off”. I respectfully agree with those observations noting, however, that they do not displace the paramountcy of the legislation itself.

84    Given that the provision of compensation operates week to week post incapacitation, there is no error if the amount of calculation for each of those weeks takes into account evidence or other material which establishes that if the claimant had not been incapacitated no casual work would have been available in any event during the relevant week. That is the approach which was taken by Heerey J in Bortolazzo, where his Honour rejected the contention that the AAT had erred in applying s 8(10)(a) by taking into account the fact that, post the date of incapacitation of two employees, shift penalties were no longer paid because there were then no duties which required shift work. Justice Heerey noted at 389 that, in these circumstances, had the claimants not been injured, they would in any event have suffered a reduction in income as a result of the cessation of overtime work. He added that the legislation “does not place them in any better position because they were not working at that date but in receipt of compensation”.

85    Having regard to my conclusions in respect of the above matters relating to the application of s 8(10)(a) to Mr Shillingford, it is unnecessary to determine ground 3.6 of his amended notice of appeal, which relates to the construction and application of s 8(10)(b). It should also be noted that the AAT explicitly declined to express a concluded view on this matter having regard to its finding that Mr Shillingford’s case fell to be determined by reference to s 8(10)(a).

86    For completeness, however, if it had been necessary for me to determine the issue, I would have rejected Mr Shillingford’s contentions for substantially the same reasons as those set out by Comcare in its outline of written submissions, as summarised above.

conclusion

87    For these reasons, the amended notice of appeal will be dismissed, with costs.

Associate:

Dated:    9 June 2020