| The 40% loss of earning capacity test - some cases |
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The 40% loss of earning capacity test - some cases
1 THE MAGIC CASE1.1 Smorgon Tube Mills Pty Ltd v Majkic [2008] VSCA 230 Their Honours rejected this argument. Per Buchanan JA at para 10: “In my opinion the phrase ‘in suitable employment' applies equally to income the worker is earning and is capable of earning. The element to be ascertained is the worker's loss of earning capacity, and requires comparison between what the worker was earning or was capable of earning at the date of the decision and what he was earning or would have earned had the injury not occurred. If the phrase ‘suitable employment' qualifies only the income from personal exertion the worker is capable of earning, the work on one side of the comparison may be a contrived, adventitious, short-term occupation bearing little or no resemblance to the work for which the worker is suited. I consider that the legislature intended that the worker's loss of capacity was to be determined having regard to work that is generally available in the employment market, rather than a position tailored to meet the peculiar needs of an individual worker, who is incapable of performing his normal work. “ The Court agreed with the Judgment below and confirmed a grant of serious injury for both pain and suffering and economic loss. They analysed paragraph (f) of s134AB(38) and determined that its purpose is to measure the worker's loss of earning capacity and it is unlikely that the Act would permit the unqualified actual earnings to be used in the measurement.
2 PLAINTIFF OVER 652.1 Huggins v Lateral Thinking Financial Planning Application for both pain and suffering and loss of earning capacity certificates. Plaintiff was a very fit man still competing in athletic events. Gave evidence that he had no plans for retirement at a particular age but anticipated continuing to work to at least age 75. Plaintiff attempted retraining and was able to return to work on a partial basis as a self employed handyman. Judge accepted the Plaintiff's current earnings as the limit of his capacity and therefore determined that he met the loss of earning capacity test. The fact that he was 69 at the date of hearing was not relevant, despite retirement age commonly being accepted as 65
3 YOUNG PLAINTIFF3.1 Johnson v The Salvation Army (Vic) Property Trust 33 year old female Plaintiff with ‘thoracic outlet syndrome.' Whilst Courts are normally reluctant to determine someone so young has a severely restricted earning capacity for the foreseeable future, in this case they looked favourably on what the Plaintiff had been doing since suffering her injury. After 7 years and surgery the Plaintiff admitted some improvement in her condition. The Defendant relied on this to say she could not meet the required threshold. Although her earnings at the time of injury were quite low, the Plaintiff still met the 40% test because Her Honour accepted, based upon the Plaintiff's many attempts to return to work and increase her hours, that she was working to her maximum capacity. It was accepted that the Plaintiff would not be able to work more than the ten hours per week that she was currently working into the foreseeable future.
4 WORKER AGED UNDER 264.1 Bennetts v Central Highlands Training Incorporated 25 year old apprentice metal worker. Back and shoulder injury. After injury went back to study. Gave evidence that after study he intended to work in computers with a starting salary of approximately $50,000.00. No evidence was provided on what he could actually earn in this field as opposed to a boilermaker, so the Judge could not be satisfied he had met the 40% loss. ie whilst she may have been satisfied of the permanent impairment to his earning capacity, she did not have any figures to use for the calculation. Granted leave for pain and suffering but not loss of earnings. Note: When a worker is aged 26 years or under at the date of injury, pursuant to Section 134AB(38)(e)(i) of the Act he must establish that at the date of the hearing he has a loss of earning capacity of forty per cent or more. Further he must establish pursuant to subsection (e)(ii) that he will after the date of the hearing continue to have a permanent loss of earning capacity which will be productive of a financial loss of forty per cent or more. Subsection (f) which relates to older workers and requires consideration of income from personal exertion in the 3 years before and 3 years after the injury does not apply.
5 MANY OTHER HEALTH PROBLEMS IMPACTING ON CAPACITY FOR WORK5.1 Appeldorff v Oak Park Formwork Pty Ltd & VWA 45 year old male with a back injury. He suffered many other health problems that the Defendant alleged caused his current incapacity. The Judge analysed each of the conditions including depression, alcohol abuse, Hepatitis C and renal cell cancer and their impact on his capacity for work based on doctors opinions. Her Honour determined that the other conditions did not affect his work capacity. She accepted the Evidex report that the Plaintiff had some capacity for work – up to 12 hours per week and calculated his loss of earning capacity on that rate. A certificate was therefore granted for loss of earning capacity and “Accordingly, in this case I accept that, having granted leave in respect to loss of earning capacity consequences, I am not required to also determine that the pain and suffering consequences for this plaintiff (one of which must be the loss of the opportunity to return to his pre-injury labouring employment) amounts to a serious injury in this case.” The Defendant submitted in this case that the Plaintiff could not meet the loss of earning capacity test because of other influences that would have destroyed his earning capacity in any event. These were: the progress of his degenerative spinal disease, his ischaemic heart disease, depression, weight gain, osteoarthritis of the knee and his intention to retire at 55 years of age. “The Defendant argued that the Plaintiff could not satisfy s134AB(38)(e)-(g) because, it was submitted, on the facts, the figure that “most fairly reflects” the plaintiff's earning capacity in the six year window was nil. Secondly, it argued that because the plaintiff had, before this hearing, become disabled by knee problems and had passed his own nominated retirement date, his loss could not be very considerable and, further, he could not establish that, after the date of hearing, such loss of earning capacity would be permanent and productive of a financial loss of 40 per cent or more.” The basis for arguing that without injury earnings would be ‘nil' was that the Plaintiff's other health problems would have taken him out of the workforce within the 3 years after suffering injury and therefore that should be regarded as “that part of the period” that “most fairly reflects” his capacity had the injury not occurred. His Honour thankfully did not accept this argument. He also did not accept the arguments put by the Defendant that the Plaintiff's intended retirement age had passed prior to the date of hearing as destroying his claim. His Honour did not accept that the section was intended to ‘never apply to old blokes.' He said: “I can find nothing in the language or objects of the statute, or in the Minister's speech, which shows an intention to produce the result for which the Defendant contends here, that a loss meeting both of the requirements referred to, must, in the case of a worker of a certain age, meet a third requirement – a loss continuing for the foreseeable future after hearing, regardless of the magnitude of the losses already sustained.” A certificate was therefore granted for both heads.
6 NIL PRE INJURY EARNINGS RECORDED6.1 Suleyman v Victorian Workcover Authority In this case the Plaintiff worked for her husband's business as a quality control officer and supervisor. She suffered injury to her back and pain and suffering was conceded. The issue was whether the Plaintiff could establish any pre-injury earnings as her tax return at the time of suffering injury revealed nil income. The Plaintiff, however, asserted that she was earning $900 per week and she left all of her tax affairs to her husband and accountant. Despite this problem, Her Honour accepted that the Plaintiff's without injury earning capacity was $900 per week and that she was unable to return to work in excess of 2 hours per day. Leave was therefore granted.
7 ‘WITHOUT INJURY EARNINGS' BASED ON AVERAGE OR FIGURE QUOTED ON CLAIM FORM?7.1 Mickovska v Ardeer Cleaning Services Pty Ltd and VWA This case involved a 57 year old woman with chronic regional pain syndrome. She was a manual worker whose native language was not English. There were some credit issues regarding the Plaintiff's alleged level of pain and suffering and video surveillance but His Honour accepted the Plaintiff's evidence in this regard. For the without injury earnings figure the Defendant submitted this should be calculated on an average of 3 years earnings prior to the injury. That equalled $4000 per year. The Plaintiff alleged that it should be based on the figure from her 2003 tax return as that was the amount paid to her by way of weekly payments as these would have been calculated based on what the Plaintiff was earning at the time she was injured. His Honour accepted the Defendant's argument and determined that the average figure was the one to be used. Despite this, His Honour determined that due to the Plaintiff's age, level of education, limited experience in only manual work and no computer skills, she had no capacity for work in any event and a certificate was granted for both pain and suffering and economic loss.
8 MORE THAN BODY PART TO MAKE ONE BODY FUNCTION8.1 Tavendale v The Age Company Ltd In this case His Honour accepted that the body function impaired for the purpose of the application was both the Plaintiff's left and right lower limbs – that is, the function of standing and walking. The Plaintiff had originally injured his left knee and then subsequently injured the right as a result of favouring the left. The injuries were therefore determined to have arisen out of the one incident. Both knees were therefore considered in the consequences in terms of pain and suffering and loss of earning capacity. The Defendant submitted that the Plaintiff had the capacity to perform work similar to that from his return to work plan. His Honour determined that this was a very protected environment and did not provide a measure of the Plaintiff's true capacity for work. This was so whether considering one leg or both. The Judge determined, based on the medical evidence submitted, that the Plaintiff would be able to perform sedentary duties on a full time basis with only his left knee injury, but when combined with the right knee, he only has a part-time capacity. Based on the calculations of part time earnings he therefore met the required loss of earning capacity.
9 SOME CAPACITY BUT NOT QUANTIFIED9.1 Doolan v Rayners Sawmills Pty Ltd & anor [2008] VSCA 219 Appeal against rejection of Serious Injury Application at County Court. Dispute regarding pre existing injury and whether the compensable injury was a cause of the Plaintiff's current condition. Court of Appeal determined that it was and therefore granted a certificate for pain and suffering. Plaintiff/Appellant asserted that he has no capacity for work. Defendant/Respondent relied on the fact that he had moved to alternate employment the year after injury and therefore that this established a level of earning capacity. The Court relied on a vocational assessment that said the Plaintiff should be referred for a literacy course and rehabilitation and then the Plaintiff would have some potential for light work. No evidence was put to court about what that light work might be or how much it might pay. It was determined therefore that the Plaintiff/Appellant had not discharged his evidentiary burden pursuant to 134AB (38)(e) to (g) and his application for a serious injury certificate on the basis of loss of earnings must fail.
10 SOME CAPACITY ON EVIDENCE EVEN THOUGH NOT WORKING10.1 Angeleski v Bitzer Australia Pty Ltd County Court 2.4.09 Wodak J This was a case of a 51 year old manual worker who had returned to work after his back injury but was terminated some 5 years later. He had not returned to work since then. The majority of the medical evidence however, determined that he could work performing light duties for up to 20 hours per week. His Honour also determined that due to the Plaintiff's poor English skills, as well as his age he would not be a good candidate for retraining. His Honour adopted wage rates for a machine operator to calculate what the Plaintiff's earning capacity was and determined that these figures met the required 40% loss. He also accepted that given this test was met, he did not then need to proceed to determine pain and suffering.
11 STUDYING WILL CREATE CAPACITY11.1 Wicklander v Aus-Offal Pty Ltd County Court 12.2.09 Bourke J 36 year old male unskilled manual worker with a knee injury. 5 years after injury the Plaintiff enrolled in a Youth Worker course but deferred because of his inability to concentrate. He had re-enrolled and was due to commence study again shortly after the serious injury hearing. Despite doubts about whether he would be able to complete the course, let alone get a job, Her Honour concluded that he would be able to and would be able to earn at least $50,000 as a full time youth worker. She also noted that he had not discharged his onus in relation to retraining and rehabilitation. Leave was therefore granted for pain and suffering only.
12 REHAB NOT ALWAYS REQUIRED12.1 Leslie v Paccar Australia Pty Ltd & VWA 42 year old male with a back injury. Defendant's counsel made much of the Plaintiff's failure to undertake and retraining or rehabilitation in order to determine whether he has a capacity for work and said that he therefore had not discharged his onus under s134AB(38)(g) to be able to be granted a certificate for loss of earnings. His Honour considered all of the evidence in the case and determined that the evidence demonstrated that the Plaintiff did not have any capacity for work and therefore there is no onus on him to undergo rehab or retraining to try to find work. Serious Injury was granted for both pain and suffering and economic loss.
12.2 Crawford v Brinks Australia Pty Ltd 51 year old male. Back injury. Did return to work after injury attempting various positions and other employment for a further 4 years. His Honour admired the Plaintiff's attempts to continue working and accepted his GP's evidence that he has no capacity for any work. Despite this, His Honour ended up preferring evidence of Dr Horsley that with some rehabilitation he could work 15-20 hours per week. The Plaintiff was still granted leave for pain and suffering and loss of earning capacity because evidence of the salary for various occupations working 15-20 hours per week did not exceed 60% of his without injury earning capacity.
12.3 Agnew v C.E. Bartlett Pty Ltd 44 year old male with lower back injury. Had not sought work since 2003 or undergone any retraining or rehabilitation. Poor literacy skills. His Honour accepted and preferred an opinion of Dr Horsley that if retrained the Plaintiff could work up to 15-20 hours per week. Despite this, he then went on to accept that he has a total loss of earning capacity that is permanent. Pain and suffering was therefore deemed.
13 STARTING OWN BUSINESS13.1 Ross v Patrick Portlink Pty Ltd & VWA Plaintiff was a 54 year old male who could not return to his pre injury employment of truck driving (or any of his pre injury manual employments) due to the injury to his left hand and wrist. Plaintiff attempted to make money through a business of his own and purchased some sticker sign writing equipment. He struggled with this and maintained that he worked to the maximum of his capacity but did not produce clear evidence of how he made money from the business. The Defendant also submitted that the Plaintiff had the capacity to work in a job similar to that which he performed on his return to work plan such as a gatekeeper. The Plaintiff acknowledged that he would give such a job a go, but of course no such job had been offered to him. Her Honour relied on the wages submitted that could have been earned in such a job and determined that even if he didn't have the capacity to work more in his own business, his capacity to work in a job similar to that on his return to work plan would earn him greater than 60% of his without injury earnings. Plaintiff was granted leave for pain and suffering only.
13.2 McLaren v Dubbo Grazing Services This Plaintiff was a shearer who was 33 years old and unable to return to shearing due to his back injury. He had established his own business putting together entire shearing teams and overseeing the whole process. Pain and suffering was conceded but the Defendant disputed loss of earnings. The issue was “how to assess the plaintiff's “after injury” earnings in circumstances where the plaintiff's present income consists of a salary paid to him by a corporate entity established by him, together with wages from other sources.” The Defendant submitted that the company's income should be seen as the plaintiff's gross income from personal exertion, which was about 4 times his pre injury annual earnings. Her Honour analysed other cases where income from a business was considered and determined that in this case, it was most appropriate to look at the wage the Plaintiff was drawing as he actually employed a large team of workers and the expenses were legitimate expenses, not withdrawals to minimise his income. The Judge accepted that the Plaintiff could not physically increase his hours of work, even though the work was available as he could not be in 2 places at once. She therefore accepted that he was working to his full capacity and could not return to his pre injury employment. The Plaintiff's earnings therefore met the 40% test. He had also satisfied the rehabilitation obligations as he had unsuccessfully attempted a computer course.
Lisa MaynardSenior Associate, Holding Redlich Tel: (03) 9321 9803 Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
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40-percent-loss-earning-capacity-test.pdf