IN THE MAGISTRATES' COURT OF VICTORIA AT MELBOURNE
A13054980
B E T W E E N
CHARLES A. EXTON
Plaintiff
- and -
KINGLAKE PRODUCE PTY LTD
Defendant
D E C I S I O N
Delivered: 22 November 2011
MR B. WRIGHT, MAGISTRATE
Mr E. Makowski (instructed by Williams Winter) for the Plaintiff
Mr N. Chamings (instructed by Thomsons Lawyers) for the Defendant
Workers Compensation – Weekly Payments Being Paid – Review of “Current Weekly Earnings” - Burden Of Proof – Accident Compensation Act s.5B
(Transcribed but not recorded by Legal Transcripts)
HIS HONOUR:
1 In these proceedings, MrExton seeks to set aside a notice or notices dated 23July 2010 and 17September 2010, seeking to reduce his weekly payments of compensation on the basis of an alleged increase in his “current weekly earnings”. The second notice substantially only confirmed the earlier notice.
2 MrExton is a fourth generation potato farmer in the Kinglake area and is presently aged 58years old. He is also a director and secretary of the defendant. He has been so since 1976 and 2006 respectively, according to the tendered ASIC search of the company.
3 On 6May 1996, he was severely injured when caught for one and a half hours inside a potato gathering machine while trying to clear a potato. He said he was working, at that stage, 70 to 80 hours per week over seven days per week as set out in the claim form at the time. The claim form further stated that in May 1996, he was earning $400 per week over that 70hours, which gave an hourly rate of $5.70 per hour.
4 Presumably, he was regarded as a working director at that stage, as liability was admitted for his injury pursuant to the Accident Compensation Act. He was in rehabilitation for some nine and a half months. Eventually, he was able to return to work. He said that after an unsuccessful return to work on a full time basis, he has worked 8 hours per week earning $10 per hour since July 1997.
5 He said this figure of $10 per hour was struck by his accountant in 1996 on the basis of what he was being paid at that time. He continued to be paid “partial incapacity” and then “current work capacity” payments on the basis of his stated current weekly earnings. However, in cross-examination, he agreed that the amount of his weekly payments varied on several occasions until August 2004, as his hours of work, and consequential notification of current weekly earnings, altered.
6 He maintained that, on the advice of his doctor, he continues to only work 8 hours per week earning $10 per hour. His weekly payments were reduced from the “serious injury” 90% rate to the 70% rate by way of notice dated 3July 2008. As stated, at that date he was being paid weekly payments, taking into account his then stated current weekly earnings of $80. That notice of reduction of weekly payments was referred to the medical panel to assess his whole person impairment to determine whether or not there was a continuing “serious injury”.
7 On 25May 2010, the medical panel determined he had a whole person impairment of 47%. It referred, inter alia, to a L4/5 disc prolapse, mild cervical spondylosis, dysfunction to the right elbow, wrist, and hand following soft tissue injury to the right arm, dysfunction to the left shoulder, arm, elbow, and wrist, scarring and disfigurement to the right upper limb, and a chronic post traumatic stress disorder with depressed mood, and resulting alcoholic abuse disorder.
8 On any view, he has a relatively major impairment. It is to his credit he has been able to return to work at all. By the same token, he is also a fourth generation potato farmer performing director and secretary tasks with the defendant. He is also a shareholder as well of the defendant' which owns property covering about 170acres. Not all of the property is devoted to potato farming at any one particular time, for a number of reasons, being only about 30 to 40acres at a time.
9 Subsequently to the medical panel opinion, this court made a consent order on 24June 2010, reinstating his weekly payments back to the 90% rate effective from the actual date of reduction, being 9August 2008. At that time, the plaintiff (in his capacity as contact person of the defendant), sent in a weekly payment reimbursement request to the authorised agent, QBE. He had in fact sent similar requests over a number of years.
10 That request covering the period from 26June 2010 to 23July 2010, similar to a number of others, set out total hours worked being 8, pre-injury weekly earnings at $504 and gross current weekly earnings at $504.
11 Mr Exton said that this was a mistake, or series of mistakes, in that the $504 figure was wrong. He put in the amount of weekly payments he was receiving at about that time from QBE, being $504 per week. Although it was not admitted that the $504 was a mistake, he was not contradicted on the $504 being his weekly payment rate at about that time.
12 Counsel for the defendant (i.e. VWA by way of QBE), submits that I should see the $504 as genuine current weekly earnings as submitted in the Request by MrExton on his behalf and/or on behalf of the defendant.
13 The two later weekly payment reduction notices “seized” on the $504 current weekly earnings figure and notified adjustment of weekly payments consequently to $15 per week and later $28 per week from July 2009 to August 2010. QBE also reduced the weekly payments on the basis that he salary sacrificed a superannuation amount of $80 per week and that this should also be taken into account as “current weekly earnings”. It now concedes that this aspect was wrongly done.
14 Mr Exton was extensively cross-examined on his company arrangements with the defendant as well as an associated company, High Mountain Pty Ltd. He has been a director of that second company since 2006 as a result of his father's death. This is also a potato growing business and also sells spring water to various bottlers. He says that the High Mountain business is run by his daughter. He says he had some discussions with Coca Cola about mineral water in his capacity as a director of High Mountain, but says he does not work overall for anyone more than eight hours per week.
15 The defendant's property was severely damaged in the Kinglake bushfires in February 2009. It acts as a trustee for the C.A. Exton Family Trust which is the basis of the tax returns filed for the year ending June 2008 and June 2009. It has not made a profit.
16 His personal tax returns for the years ending June 2007 to June 2011 were tendered. They are confusing to say the least. They show his gross income from the family trust as follows; June 2007 $21,087, June 2008 $22,506, June 2009 $25,200, June 2009 (amended return) $9,227, June 2010 $4,160 and June 11 $4,240. Mr Exton was unable to detail how these amounts were constituted except that his weekly payments were cut off in 2009 which resulted in the amended return. He said that the tax returns had been prepared by his accountant, albeit on information supplied by him.
17 His counsel in opening at least foreshadowed the "possible" calling of the accountant and Mr Exton's daughter, whom he said filled out some of the tax forms in this case, to give evidence. Despite the confusion of very many financial details concerning the plaintiff and the extensive referral by Mr Exton to his accountant in preparing tax and other documentation I was informed by his counsel at the end of Mr Exton's evidence that he was not calling the accountant or indeed any other witness.
18 Mr Exton agreed that he had a further worker's compensation injury in November 2009 when he hit his hand while climbing into a tractor while showing a new person how to use the tractor. He said his daughter prepared the claim form which showed pre-injury average weekly earnings at $504 again. Mr Exton said that this was a mistake and was his weekly payments figure, though he was not receiving weekly payments at that rate at that time.
19 He was also cross-examined on a number of withdrawals of $450 from the defendant's business account which he said was a partial repayment of moneys he had advanced the company many years ago. These monies were taken from August 2009 to January 2010, according to the tendered records. Mr Exton said this was the amount he needed to support himself while his weekly payments were extensively reduced. He did not know who wrote the notation "wages" beside a number of those entries.
20 I have already gone into some detail as to the stated current weekly earnings rate of 8 hours per week at $10 per hour since at least 1997. Mr Exton said that he did supervisory work only, supervising contractors, ordering packaging, fertiliser and chemicals and indicating where irrigation was to go. He denied doing any more than 8 hours per week, at least since the last weekly payment variation in August 2004.
21 The defendant has some limited agistment as well. Mr Exton denied carrying out any physical work which is consistent with his undoubted whole person impairment of 47%. The defendant does not employ anybody to work on the farm and only uses contractors. Because of the recent fires and changes to various practices he has had to redesign the farming setup. There was very little cross-examination on his hours of work and certainly no evidence called to contradict his evidence in that regard.
22 There was very much more cross-examination on the actual amounts paid or payable to him which could be seen as “current weekly earnings” as I have discussed. Mr Exton produced no records as to the actual payment to him of $80 per week at any time. In fact, he stated that he has not actually received $80 per week in his hand at any time. Further, there were no such payments to him in the tendered bank records. He said that he thought the money was used by his accountant to pay for fuel for his home, but gave no further detail.
23 There were submissions of both parties as to the issue of burden of proof. For reasons that I will not go into now, I have largely accepted the plaintiff's evidence in this matter. However, if necessary, it seems to me that the defendant (i.e. QBE) has both the evidentiary onus and the legal onus in this matter. I refer to the dicta of His Honour Judge Parish in Drake v. J.G.& A. Nominees (2010) VCC 1320 at paras. 21 to 23, disregarding His Honour's comments about the medical panel which are not relevant for present purposes.
24 The existing, and indeed longstanding, state of affairs was that the plaintiff had been in receipt of weekly payments without variation as far back from 2004. The authorised insurer, QBE, is seeking to further reduce Mr Exton's weekly payments. Thus, a court needs to be satisfied that there was a reasonable basis for such notice.
25 In this case Mr Exton supplied specific information, albeit a clerical mistake according to him, as to his current weekly earnings at the very least for the period from 26 June 2010 to 23 July 2010. It was on the basis of that information that QBE issued the relative notice or notices. Thus, I believe that there was probative material for QBE to issue the notice and thus satisfy the evidentiary onus.
26 As to the legal onus, there is the issue as to persuading the court as a matter of probability of the change in circumstances. I agree that following the two High Court decisions in Phillips v. Commonwealth 110 CLR 347 and Commonwealth v. Muratore 141 CLR. 296, that QBE bears the legal onus as well. The situation is different to that in litigation involving a 130 week notice (see, Public Transport Corporation v. Pitts (2007) VSC. 356. However as I have stated, it is not necessary for me to decide this case on the strict issues of burden of proof.
27 The issue as to the calculation of “current weekly earnings” for a worker employed by his or her own business or company has always been a vexed one. Both counsel referred to a number of decisions in this area going back to Cage Developments v. Schubert (1983) 151 CLR 584. That case was referred to in ACC v. Alger (1993) 1 VR 379 and Martino v. Blakiston (C/C, Judge Higgins, unreported, del. 26 March 1998). As Judge Higgins stated in the Martino decision (which was also a ‘serious injury’ weekly payments case) in Alger the court "considered possible ways in which current weekly earnings could be ascertained in circumstances where a person conducted a business. The court looked at two possibilities, first of all, the actual profit or loss of the business, and secondly, the value of the plaintiff's work in that business". This, of course, referred to the High Court's suggestions in Cage Developments v. Schubert as to the alternative approaches to the calculation of “current weekly earnings” for a self-employed worker.
28 Both Judge Higgins and Ashley JA in Alger considered the former method to be appropriate in cases where there was essentially a one-man operation, particularly involving a supply of services. The present case is not one of those cases. In this case the defendant company substantially grows potatoes for sale and carries out some agistment. Since the fires there have been at least two contractors engaged by the defendant to perform manual labour. Mr Exton agrees that he works a number of limited hours per week performing services of value to the company, for example, supervising and directing contractors if necessary, ordering necessary supplies such as fertiliser, chemicals and packaging. In fact, Mr Exton's work situation is not dissimilar to that of the plaintiff in the Martino decision.
29 I am satisfied on the balance of probabilities that Mr Exton does work, at least on average, 8 hours per week on the limited evidence before me. As he stated the potato industry does substantially depend on the weather. Two thirds of the property is vacant at any one time, for example, because of rotation and limited agistment. There is nothing to dispute that he does not do manual work or indeed anything other than supervising contractors, ordering some materials, etc. There is also the issue that some things he does in relation to the defendant company also involves his position as director/secretary as well, which would appear to be separate to his supervisory and other duties as set out above.