Hastings Deering (Australia) Ltd v Smith [2004] NTSC 2

PARTIES:	HASTINGS DEERING (AUSTRALIA) LTD

	v

	SMITH, David John

TITLE OF COURT:	SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:	SUPREME COURT OF THE NORTHERN TERRITORY exercising Territory jurisdiction

FILE NO:	LA 17 of 2003 (20118381)

DELIVERED:	22 January 2004

HEARING DATES:	22 December 2003

JUDGMENT OF:	THOMAS J

CATCHWORDS:
WORKERS COMPENSATION – EMPLOYER COMPULSORY SUPERANNUATION CONTRIBUTIONS – whether part of normal weekly earings.
Work Health Act 1992 (NT) s 49(d)(ii)
Murwangi Community Aboriginal Corporation v Carroll [2002] NTCA 9, Fox v Palumpa Station Pty Ltd (1999) NTMC 024, Normandy NFM Ltd v Turner [2003] NTSC 112, Re Manufacturing Grocers’ Employees Federation of Australia & Anor; Ex Parte The Australian Chamber of Manufacturers & Anor (1986) 160 CLR 341, A Condon v G James Extrusion Company Dec 313/97 Print N9963 at 378, applied.
Bortolazzo and Saffron v Comcare Australia (1997) 75 FCR 385, Reynolds v Southcorp Wines Pty Ltd & Anor [2002] FCA 712, considered.
REPRESENTATION:

Counsel:
	Appellant:	D Trim QC and M Grant
	Respondent:	S Southwood QC
Solicitors:
	Appellant:	Hunt & Hunt
	Respondent:	Ward Keller

Judgment category classification:	C
Judgment ID Number:	tho200401
Number of pages:	11

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Hastings Deering (Australia) Ltd v Smith [2004] NTSC 2
No. LA 17 of 2003 (20118381)

	In the matter of an appeal under the Work Health Act

	BETWEEN:

	HASTINGS DEERING (AUSTRALIA) LTD
	
Appellant

	AND:

	DAVID JOHN SMITH
	Respondent

CORAM:	THOMAS J

REASONS FOR JUDGMENT

(Delivered 22 January 2004)

[1]	This is an appeal from a decision of the Work Health Court delivered on 19 June 2003.  In her reasons for decision, the learned stipendiary magistrate made the following findings:
“40.	I have come to the conclusion that the arguments currently available to me militate in favour of allowing compensation for the employer funded contribution component to be included in normal weekly earnings. In coming to this conclusion, I fully appreciate that the contribution originally under s 20 Superannuation Guarantee (Administration) Act was 3% and by 2002-03 had increased to 9%. In making relevant calculations, the parties will need to ensure that the correct and relevant percentage is applied, and even then, must not be calculated to double up with any part of the contribution this Employer currently continues to make on behalf of the Worker.
41.	I have come to the view that the Worker may well be entitled under either s 49(1)(a) or (d)(ii) Work Health Act, that is, the superannuation contributions may be regarded on one view as remuneration simpliciter. Alternatively, it may be more readily grounded in s 49 (1)(d)(ii). Initially I thought there may be a strong point in the Employer's argument that all workers could claim superannuation under this section but my researches since argument before me reveal at least one category of exempt employees being persons who work predominantly in a private or domestic nature for less than 30 hours per week: (Superannuation Guarantee (Administration) Act 1992 (CW), s 12(11)).
42.	As a general principle I do bear in mind that the Work Health Act (NT) is beneficial legislation and I should not readily interpret it in such a way to restrict access to benefits. The structure of the Work Health Act readily permits remuneration such as that discussed to be incorporated into the calculation of normal weekly earnings.”
[2]	The single ground of appeal is that:
“The learned stipendiary magistrate erred in law in finding that the respondent’s normal weekly earnings were properly calculated for the purposes of the Work Health Act (NT) by adding the value of superannuation contributions made by the appellant to the respondent’s weekly monetary wage.”
[3]	Mr Trim QC, counsel for the appellant, contends that the Work Health Court misdirected itself as to the law in finding that the superannuation “contributions” paid by the employer formed part of the respondent’s normal weekly earnings within the meaning of the Act.  Alternatively, the Court misapplied the law to the facts in finding that the appellant’s contributions formed part of “remuneration” in the relevant sense.
[4]	Mr Trim QC submits the Act has to be construed given the specific social purposes it addresses and having regard to its specific terms.  He referred to the statement of Heerey J in Bortolazzo and Saffron v Comcare Australia (1997) 75 FCR 385 at 388:
“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.”
[5]	The argument for the appellant is that following the decision of the learned stipendiary magistrate the worker would be better off.  Similarly, it is the appellant’s contention that the intention of the Work Health Act is not to compensate the worker for the damages sustained by him as a result of the injury but to provide for his maintenance on an ongoing basis during the period of the incapacity with the income that he might otherwise be expected but for the injury to have at his disposal.
[6]	In his written submissions Mr Southwood QC, counsel for the respondent, has summarised the facts as follows:
“The Facts
2.	The worker is a worker within the meaning of the Work Health Act (NT).
3.	At all material times the worker was employed by the employer as a heavy equipment fitter.
4.	During the course of his employment with the employer between January 2000 and August 2000 the worker suffered an injury namely, an aggravation and acceleration of an underlying degenerative back condition.
5.	As a result of the injury the worker remains partially incapacitated for work and he has suffered and he continues to suffer a loss of earning capacity.
6.	At all material times prior to the injury the employer paid superannuation contributions into a fund for the benefit of the worker in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth).
7.	The worker has been and continues to be entitled to ongoing payments of weekly benefits of compensation in accordance with s 65 Work Health Act (NT).
8.	The relevant parts of section 49(1) of the Work Health Act (NT) state as follows:
‘normal weekly earnings’, in relation to a worker, means -
(a)	subject to paragraphs (b), (c) and (d), remuneration for the worker’s normal weekly number of hours of work calculated at his or her ordinary time rate of pay;
(b)	n/a
(c)	n/a
(d)	where -
(i)	n/a
(ii)	subject to paragraph (b) and (c), the worker is remunerated in whole or in part other than by reference to the number of hours worked, the average gross weekly remuneration which, during the 12 months immediately preceding the date of the relevant injury, was earned by the worker during the weeks that he or she was engaged in paid employment.”
[7]	Mr Trim QC, counsel for the appellant, argues that; there is nothing in the definition or application of the concept “normal weekly number of hours of work” which can incorporate any contributions of superannuation.
[8]	Further it is argued for the appellant that “ordinary time rate of pay” the second limb to the formula, has a long established meaning in industrial law (see Scott v Sun Alliance Australia Ltd & Anor (1993) 178 CLR 1 at 5).  It is argued that it is a term used by the legislature, not only in the Act, but also in such legislation as the Annual Leave Act.  It does not extend to superannuation contributions or other benefits, including non-cash benefits, not actually received by the worker - See Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712 par 96.  See also Robertson v Accident Compensation Commission [1991] 2 VR 333; CSA Pty Ltd v Lawrence (1985) 10 IR 327; Re Meat Industry Employees - Riverstone Meat Co Pty Ltd (Long Service Leave) Award [1957] AR (NSW) 135.
[9]	On the argument of counsel for the appellant, Mr Trim QC states that the only possible available basis for the inclusion of superannuation contributions as part of “normal weekly earnings” is by operation of s 49(d)(ii).  In his submissions, Mr Trim QC expounds the argument for the appellant as follows:
[10]	The term “average gross weekly remuneration” as it appears in s 49(d)(ii) cannot be construed as extending to superannuation contributions.  This Court was referred to the decision of the High Court in Re Manufacturing Grocers’ Employees Federation of Australia & Anor; Ex Parte The Australian Chamber of Manufacturers & Anor (1986) 160 CLR 341 at 357:
“…  No doubt the payments represent money earned in an industrial relationship, but they do not represent money to which an employee is himself presently entitled.  They must be regarded as having been made to the fund by the employer in his capacity as employer and not as an agent acting on behalf of an employee.”
[11]	Mr Trim QC also made reference to the decision of Hely J in Reynolds v Southcorp Wines Pty Ltd & Anor (supra) at par 96:
“Amounts paid by the company to a superannuation fund may be a cost to the company in consequence of the employment, but the employee cannot access the benefits derived from these contributions except in the circumstances permitted by the trusts on which the fund is constituted.  The employer’s contributions to that fund are not part of the employee’s ordinary pay.”
[12]	This Court was also referred to the decision of Wilcox CJ in Ardino v Count Financial Group Pty Ltd (1994) 126 ALR 49 at 55 and the Mutual Acceptance Co Ltd v The Federal Commissioner of Taxation (1944) 69 CLR 389 at 398.
[13]	These authorities are relied on by the appellant in support of its argument the employer’s contribution to superannuation is not part of the worker’s remuneration or pay.  Mr Trim QC submits the learned stipendiary magistrate was in error in seeking to draw a distinction between remuneration and pay because in the submission for the appellant there is no material distinction.  Mr Trim QC further argues that although remuneration or pay may involve non-cash benefits (Murwangi Community Aboriginal Corporation v Carroll [2002] NTCA 9) it cannot include payments made to a third party to which the employee has no present entitlement.
[14]	Mr Trim QC made the comparison between superannuation and long service leave benefits or accrued sick leave and argues that if the respondent were to succeed in its argument for superannuation to be included in remuneration then allowance would also have to be made for the monetary value of prospective long service leave and sick leave entitlements even though these entitlements do not give rise to any immediate monetary benefit on the part of the worker.
[15]	Mr Trim QC asserts that the determinations from the Industrial Relations Court relied on by the learned stipendiary magistrate are of no assistance because remuneration in the context of the Workplace Relations Act is for a one off payment whereas the Work Health Act contemplates ongoing weekly benefits in the context of an income maintenance scheme.
[16]	It was argued for the appellant that the learned stipendiary magistrate was wrong to dismiss the appellant’s argument that if the respondent worker’s submissions were correct then s 49(1)(a) would be superfluous.  The appellant’s contention is the learned stipendiary magistrate dismissed its argument on the basis of one limited group of exempt employees in respect of whom s 49(1)(a) would operate.
[17]	Mr Trim QC asserts this failed to take account of the fact that the effect of the respondent’s contention is that other entitlements such as long service leave and sick leave would also serve to attract the operation of s 49(d)(ii) rather than s 49(1)(a) which would render s 49(1)(a) as otiose in all cases.  On behalf of the appellant, it is asserted that this could not have been the intent of the legislators - see Minister of Resources & Anor v Dover Fisheries Pty Ltd (1993) 116 ALR 54 at 63.
[18]	Finally, it is argued for the appellant that the respondent’s contention should be rejected because of the practical difficulties in calculating the amount of superannuation contributions to be included in normal weekly earnings.  This is because on the appellant’s argument, payments by the employer of contributions or tax to the Deputy Commissioner of Taxation are subject to various administrative charges and levies.  This means there is less available for investment on behalf of the worker than actual contributions.  If the worker is not to be over compensated then this has to be taken into account.  This presents difficulties which is at odds with the legislative intent that earnings be capable of certain and ready reckoning.
[19]	I do not accept the arguments advanced by counsel for the appellant.
[20]	I agree with the submissions made by Mr Southwood QC, counsel for the respondent, that remuneration is different to wages.  It is a broad concept which includes the total sum for which the worker is entitled as a reward for services rendered (Murwangi Community Aboriginal Corporation v Carroll [2002] NTCA 9:
“In our view the benefits received by the worker in this case in respect of rent, board and electricity are not allowances and they are therefore not “other allowances” as contemplated by s 49(2) of the Act.  Rather they are part of the remuneration of the worker simpliciter.  They, along with the amount that he is paid in cash, make up his remuneration.  …”
See also Palumpa Station Pty Ltd v Fox (1999) 132 NTR 1, Fox v Palumpa Station Pty Ltd (1999) NTMC 024 and Normandy NFM Ltd t/as The Granites Gold Mine v Turner [2003] NTSC 112.
[21]	The Superannuation Guarantee (Administration) Act 1992 is Commonwealth legislation.
[22]	The amount of the superannuation contribution by the employer to the fund on behalf of the worker is calculated upon the basis of wages earned by the worker during the period of employment.
[23]	In Manufacturing Grocers’ Employees Federation case (supra) the Court held at 356 - 357:
“…  The observation made in relation to pensions by Webb J in Hamilton Knight; Ex parte Commonwealth Steamship Owners’ Association (1952) 86 CLR 283 in the passage which we have cited applies a fortiori to contributions made by an employer to a superannuation fund during the continuance of his relationship with his employee.  Those payments do not cease to be remuneration for service during the relationship merely because the benefit from them is deferred until after the service has been finally performed and the relationship has ended.  The obligation of the employer to make the payments ends with the relationship between him and his employee unlike the obligation of an employer to pay a pension, which necessarily extends beyond the period of employment.  It is in our view of no significance that an employee receives no immediate benefit, other than such interest as he might have in the superannuation fund, from the payment of contributions to the fund by his employer.  …”
[24]	In that case the High Court held that the superannuation payments represent money earned in an employment or an industrial relationship.
[25]	I note also the decision of Deputy President Watson in the Australian Industrial Relations Commission in the matter of A Condon v G James Extrusion Company Dec 313/97 Print N9963 at 378:
“The consideration of the superannuation issues by Wilcox CJ in Ardino occurred entirely in the context of ‘relevant wages’.  As noted above, Wilcox CJ in May made clear the distinction intended in the 1988 Act between the terms ‘relevant wages’ and ‘remuneration’, with remuneration denoting a concept wider than wages.
Accordingly, I do not accept the applicant’s position that the observation of Wilcox CJ in Ardino directed to relevant wages, has immediate application in respect to ‘remuneration’.
In my view the observations of Wilcox CJ in Ardino cited above do not have application to the term ‘remuneration’.  Remuneration is a broader concept, with superannuation in my view forming a part of that broader concept, whether by way of statutory obligations or contributions beyond those required by legislation.”
[26]	I have come to the conclusion the learned stipendiary magistrate was correct in stating at par 38 of reasons for decision:
“On behalf of the Employer it has been argued that Justice Hely in Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712 provides competing authority militating against the incorporation of superannuation in the context of a common law, termination of employment action and the question of offsetting severance pay against damages. At pages 22 and 23 Justice Hely refers to a possible entitlement (as a component of the whole package) under the Annual Holidays Act 1944 (NSW). The Annual Holidays Act provided entitlement for ordinary pay for holidays that had accrued at the point of termination. Under that Act, ordinary pay, means remuneration for the worker's weekly number of hours calculated at the ordinary time rate of pay. Of the superannuation it was stated by the Court the employee cannot access the benefits derived from those contributions except in the circumstances permitted by the trusts on which the fund is constituted. The employer's contributions to that fund are not part of the employees ordinary pay. The similarity between the wording of that part of the Annual Holidays Act 1994 (NSW) and the relevant parts of s 49 Work Health Act (NT) is striking, however, the Work Health Act (NT) does refer to a concept of normal weekly earnings, not normal (or ordinary) pay which is I think, one reason for the exclusion of superannuation in that case. It would be wrong in my view to conclude that the compulsory employer superannuation was not earnt, even though the employee does not receive it as take home pay. That interpretation would unnecessarily restrict the concept of remuneration in the context of normal weekly earnings. There is nothing before me to indicate that these payments are not regularly paid to the fund as they are earned, they are simply not paid to the worker.”
[27]	I agree with the conclusion of the learned stipendiary magistrate that the respondent is entitled to compensation for the employer funded contribution component to be included in normal weekly earnings.
[28]	Accordingly, the appeal is dismissed.

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