What is the correct measurement of diminution in earning capacity for serious injury in Victoria? - Victorian WorkCover Authority v Papaconstantinou [2021] VSCA 145

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By Holly White, Lawyer and Harry Featherby, Lawyer

Background

Andrew Papaconstantinou, a 43-year-old motor mechanic, worked in a family automotive mechanic business when he suffered a serious crush injury to the fingers of his left hand. After three separate surgical repairs, he returned to work doing manual light duties as a mechanic 30% of his time and administrative work 70% of his time.

Mr Papaconstantinou sought leave to make an application to recover pain and suffering damages and pecuniary loss damages under section 335(2)(d) of the Workplace Injury Rehabilitation and Compensation Act 2013 (the Act). The Victorian WorkCover Authority (VWA) conceded that leave should be granted in respect of pain and suffering damages but submitted Mr Papaconstantinou was not entitled to pecuniary loss damages because he had not suffered a loss of earning capacity equivalent to 40% of gross earnings.

Relevant to this point were considerations as to alternate employment and the fact his declared gross earnings were derived from his own business. Ultimately the VWA did not lead evidence as to earnings from suitable alternate employment.

In the first instance, the trial judge allowed Mr Papaconstantinou’s application to recover pecuniary loss on the following basis:

  • Mr Papaconstantinou’s pre-injury earning capacity was his gross earnings in the financial year prior to the incident, being $88,200 per annum.
  • Mr Papaconstantinou’s current earning capacity was his current annual gross earnings at the date of the hearing, being $30,098 per annum.
  • Mr Papaconstantinou therefore had a loss of earning capacity of more than 40%.

Appeal

The VWA sought leave to appeal the decision on the basis that the primary judge erred in assessing current earning capacity by taking gross annual earnings of $30,098 because it failed to take into account the way that figure was reached as a result of Mr Papaconstantinou running his own business and Mr Papaconstantinou’s potential earning capacity, whether in that business or otherwise.

At first instance the VWA made no submissions that Mr Papaconstantinou was fit for alternative employment capable of returning a higher level of income. However, on appeal, the VWA summitted, without elaboration Mr Papaconstantinou could earn almost $53,000 gross per annum as an administration clerk. The Court of Appeal rejected this contention because it would raise a new point in an appeal, causing a real unfairness to Mr Papaconstantinou.

Decision

The Victorian Supreme Court, Court of Appeal refused leave to appeal, finding the trial judge did not err in his assessment of Mr Papaconstantinou’s current earning capacity. Loss of earning capacity is to be assessed as at the date of the hearing and in the foreseeable future. The Court of Appeal held the evidence “as a whole” comfortably justified the trial judge’s conclusions that Mr Papaconstantinou had suffered the required loss of earning capacity, taking into consideration a number of factors going into how Mr Papaconstantinou’s business was run and resulting gross earnings.

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