Allianz Australia Insurance Limited v Insurance Australia Limited t/as NRMA Insurance
[2006] ACTCA 26
•13 December 2006
ALLIANZ AUSTRALIA INSURANCE LIMITED v INSURANCE AUSTRALIA LIMITED t/as NRMA INSURANCE [2006] ACTCA 26 (13 December 2006)
APPEAL – Worker’s compensation – rehabilitation expenses – whether statutory rehabilitation expenses recoverable from common law damages award.
Workers’ Compensation Act 1951, s 15C, s 22, s 23
Safety, Rehabilitation and Compensation Act 1988 (Cth)
Disability Service Act 1986 (Cth)
Commercial and General Insurance Company Ltd v Government Insurance Office of New South Wales (1973) 129 CLR 374
Albion Insurance Company Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342
Harris v Commercial Minerals Ltd (1995) 186 CLR 1
Sharman v Evans (1977) 138 CLR 563
Comcare v Fyfe [1999] FCA 1368
ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
No. ACTCA 21-2006
No. SC 569 of 2005
Judges: Crispin P, Connolly and Moore JJ
Court of Appeal of the Australian Capital Territory
Date: 13 December 2006
IN THE SUPREME COURT OF THE ) No. ACTCA 21-2006
) No. SC 569 of 2005
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:ALLIANZ AUSTRALIA INSURANCE LIMITED
ACN 000 122 850
Appellant
AND:INSURANCE AUSTRALIA LIMITED t/as NRMA INSURANCE
ACN 000 016 722
Respondent
ORDER
Judges: Crispin P, Connolly and Moore JJ
Date: 13 December 2006
Place: Canberra
THE COURT ORDERS THAT:
The appeal be dismissed with costs.
The cross-appeal be allowed and the judgment of 21 April 2006 be set aside and in lieu thereof it be ordered that proceedings SC 569 of 2005 be dismissed with costs.
IN THE SUPREME COURT OF THE ) No. ACTCA 21-2006
) No. SC 569 of 2005
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:ALLIANZ AUSTRALIA INSURANCE LIMITED
ACN 000 122 850
Appellant
AND:INSURANCE AUSTRALIA LIMITED t/as NRMA INSURANCE
ACN 000 016 722
Respondent
Judges: Crispin P, Connolly and Moore JJ
Date: 13 December 2006
Place: Canberra
REASONS FOR JUDGMENT
THE COURT:
This appeal raises the question of the appropriate construction of provisions, now repealed and re-enacted, of the Workers’ Compensation Act 1951 (the Act) regulating the situation where a person who has been in receipt of worker’s compensation entitlements subsequently succeeds in recovering damages in a common law claim. It has always been the case that the injured worker who subsequently recovers such damages will be required to repay worker’s compensation payments, and the legislation provides for this. In practice, such payments are made by way of adjustments between insurers, and when an award of damages is made by a court or by settlement agreement between the parties, the plaintiff will receive a cheque for the damages award, less the repayments.
The issue in this appeal is whether rehabilitation expenses paid by the employer under s 15C of the Act constitute an amount received by the worker for the purposes of either s 22(1)(b) or s 23(3)(a) which must be repaid or accounted for when the worker receives damages in relation to the same injury. Section 15C is part of the statutory scheme in Part IIA of the Act which requires employers to undertake efforts to get the injured worker back in the workplace.
The appeal arose from circumstances where there had been double insurance, in that a worker was injured in the course of unloading certain items from the employer’s truck. He immediately became entitled to payments by way of wage support and medical costs from the worker’s compensation insurer, and in due course he brought a common law claim. Because of the nature of the accident, he was able to bring a common law claim against his employer, based on breach of the duty to provide a safe system of work, and against the insurer of the employer’s truck, as compulsory third party insurer. In this jurisdiction, as in other parts of Australia, injuries “arising out of the use of a motor vehicle” are covered by the compulsory third party motor vehicle insurance (Commercial and General Insurance Company Ltd v Government Insurance Office of New South Wales (1973) 129 CLR 374).
Settlement negotiations between the plaintiff and the defendants followed and the motor vehicle and employer insurers agreed that, because this was a situation of dual insurance, where two policies covered the same risk - in this case injury arsing from the unloading of the truck - they would each contribute one half of the settlement figure. This is in accordance with established principle (Albion Insurance Company Ltd v Government Insurance Office of New South Wales (1969) 121 CLR 342). A satisfactory settlement figure was reached between the plaintiff and the defendants in due course.
The dispute between the insurers arose when it came time for the motor vehicle insurer, the present respondent, to make its contribution to the settlement sum. It took the view, based on previous decisions of Masters of this Court as set out in [6] below, that adjustments for workers’ compensation payments made to the injured worker should only cover weekly payments and medical expenses, and should not take into account the rehabilitation expenses incurred by the employer.
The learned trial judge accepted this view. His Honour said at [12]-[18] which are worth setting out in full:
[12]The defendant adopted this attitude because of a decision of Master Harper in Andrikis v The Nominal Defendant (2004) 190 FLR 136. In that case, the Master expressed the view that a worker’s compensation insurer may not be obliged to indemnify the employer of a worker in respect of a payment of rehabilitation expenses that an employer has paid pursuant to s 15C(1) of the Act, as it was at the time of the Master’s decision and as it stood at the relevant time of these proceedings. Section 15C(1) was in Part IIA of the Act at the time of the incidents giving rise to the worker’s claim and was in these terms:
Where a worker claims compensation for an injury, the employer shall provide the worker with occupational rehabilitation at the employer’s expense unless the employer is of the opinion, based on reasonable grounds, that the worker is not entitled to compensation.
Penalty: $5000
The whole concept of occupational rehabilitation had been enacted in Part IIA of the Act and these provisions were placed in the Act after the general compensation provisions originally enacted in Part II of the Act.
[13]In his decision in Andrikis (supra), the Master pointed to the distinction that can be drawn from the provisions of the Act between the concept of payment of compensation to a worker and the implementation of an occupational rehabilitation scheme at the employer’s expense. That led him to observe, as far as an insurer’s policy with a worker’s employer was concerned (at 140 [17]):
The policy, then, indemnifies the employer against liability to a worker for ‘compensation under the Act’ and for ‘any other amount in respect of the employer’s liability independently of the Act for any injury to’ the worker. The policy does not on its face indemnify the employer in respect of the cost of occupational rehabilitation under s 15C.
[14]Mr Stretton, who appeared for the plaintiff in these proceedings, submitted that the Master’s reasoning had overlooked the definition of “compensation” in s 6 of the Act. That definition provides:
“compensation” means an amount payable under this Act in respect to an injury to, or the death of, a person.
However, in my view, that definition only reinforces the conclusion to which the Master came. A payment for the provision of occupational rehabilitation is just that. It is the payment of the employer’s expense for rehabilitation being provided to the worker. It is not an amount payable under the Act in respect of an injury to or the death of a person.
[15]More importantly, I am unable to see how an employer’s payment for occupational rehabilitation is a recoverable amount under the Act. Section 22(1)(b) of the Act provides:
(1) If an injury in respect of which compensation is payable under this Act is caused under circumstances which appear to create a legal liability in some person other than the employer to pay damages in respect of the injury -
…
(b) where the worker receives both amounts under this Act and damages from that other person, her or she shall repay to the employer so much of those amounts as does not exceed the amount of the damages received from that person;
Section 21A(3) of the Act provides:
Where compensation is paid or payable to a person for the benefit of another person, a reference in this Part to a person to whom compensation is paid or payable, as the case may be, shall be read as a reference to the person for whose benefit the compensation is paid or payable.
[16]In the case of the provision of occupational rehabilitation at the employer’s expense, it cannot be said that the worker has received “an amount under this Act” in terms of s 22(1)(b) of the Act. Nor is it “compensation ... paid or payable to a person for the benefit of another person” so as to invoke s 21A(3) of the Act. The Master reached the same conclusion in Andrikis at 140 [18]. In Brooker v Adecco Australia & Adecco Centacom P/L & Australian Capital Territory [2002] ACTSC 71 (26 July 2002), [Master Connolly (as he then was)] observed that rehabilitation services were an expense related to the worker’s compensation process and neither an allowable common law claim nor a recoverable amount pursuant to the worker’s compensation payback provisions. Although no reasons were expressed for this conclusion, for the reasons I have given, it is, with respect, a correct conclusion.
[17]Mr Stretton called evidence to suggest that workers’ compensation insurers had always indemnified employers against their obligation under s 15C of the Act. That does not assist in whether such indemnity was rightly assumed. Mr Stretton also, quite properly, drew my attention to the concern, that the employer might not be indemnified under the policy, as manifesting itself in a proposed amendment to the Act presently before the Legislative Assembly (see Workers Compensation Amendment Bill 2006 (ACT), s 13 (amending Workers Compensation Act 1951, s 70).
[18]The issue must be determined on the proper construction of s 15C of the Act as it stood at the time of the worker’s proceedings against the plaintiff. In that respect, I accept the reasoning and conclusions of the Master in Andrikis as being correct.
The purpose of the statutory provision obliging a worker who has received worker’s compensation and who subsequently receives a common law settlement or damages award to repay certain amounts is clear enough. It is to avoid unjust enrichment by way of double dipping. This is clear from the terms of the repayment provision in s 22(1)(b), which states:
where the worker receives both amounts under this Act and damages, and which obliges him to repay to the employer so much of those amounts as does not exceed the amount of damages.
Although the original hearing proceeded on the basis that s 22(1)(b) was the relevant repayment provision, counsel, at the appeal, submitted that the relevant provision was s 23, covering liability of the employer independently of the Act, on the basis that the worker was injured during his employment (creating a statutory liability) and brought the common law claim against the employer both as employer and as owner of the motor vehicle. Section 23 provides:
(1) Except as provided by this section, a worker shall not be entitled, in respect of personal injury arising out of or in the course of his or her employment, to receive compensation on any payment by way of compensation from his or her employer both independently of and also under this Act.
...
(3) Where a worker is awarded damages against his or her employer in respect of an injury independently of this Act –
(a) amounts received by him or her under this Act in respect of that injury shall, to the extent that they do not exceed the damages, be deemed to have been paid by the employer in or towards satisfaction of the damages; and
(b) he or she shall be entitled to recover under this Act so much (if any) of the amount which, but for this section, would be payable under this Act as does not exceed any unsatisfied balance of the damages.
This repayment or deduction provision in both s 22 and s 23 is focussed on “amounts received” by the worker. This clearly covers the weekly wage replacement monies received by the worker, as well as medical and other expenses paid on his behalf. It can be understood that the wage payments are amounts received by the worker, and where the worker has his or her medical expenses paid, these expenses, which defray debts that otherwise the worker would have incurred, can also be seen as amounts received by him. The statutory obligation on the employer to provide occupational rehabilitation, however, is not an amount received by the injured worker, nor is it a sum payable on the worker’s behalf to a medical practitioner in respect of accident related injuries. The worker has not received this money and is not “double dipping” if not required to repay it to the workers’ compensation insurer. On the contrary, the effect of such a requirement would be that the common law insurer is in effect having to make a payment to the workers’ compensation insurer in respect of an employment expense of the employer that would not, it seems to us, be otherwise recoverable as a common law head of damages. As the High Court observed in Harris v Commercial Minerals Ltd (1995) 186 CLR 1 at 18 (per Dawson, Toohey, Gaudron, McHugh and Gummow JJ):
... the fundamental rule in an action for damages for tort is that a Plaintiff cannot recover an amount more than he or she has lost.
A plaintiff may recover in his or her common law claim lost wages and medical expenses reasonably related to the accident-related injury, and this can include costs reasonably incurred by the injured worker in rehabilitation (Sharman v Evans (1977) 138 CLR 563 at 573). In the absence of any provision to the contrary, money spent by an employer in meeting statutory obligations to provide rehabilitation services could not be claimed by a plaintiff, who had incurred no corresponding loss or liability, any more than money spent by the employer in meeting its statutory obligations to ensure adequate occupational health and safety.
A statutory obligation on an employer to provide rehabilitation services will not transform this into a reasonable claim by a plaintiff if the plaintiff has not incurred any loss, any more than an employer’s costs incurred in meeting statutory obligations to provide adequate occupational health and safety could form part of an injured worker’s claim.
In Comcare v Fyfe [1999] FCA 1368, Finn J held that compensation paid by way of medical expenses to third party service providers fell within the relevant repayment provision of the Safety, Rehabilitation and Compensation Act 1988 (Cth) and, in supplementary submissions, counsel for the appellant drew this to our attention. However, we note that this case did not relate to equivalent rehabilitation expenses and turned on the specific language of the Commonwealth Act. In construing these provisions, Finn J observed at [22] that the repayment provision is:
designed, inter alia, to prevent “double benefit” to employees in respect of the same injury in the event of a successful damages claim relating to that injury.
This is entirely consistent, it seems to us, with the approach his Honour adopted because there is no double benefit accruing to the injured worker.
It seems to us that his Honour was correct in adopting the approach that he has adopted. Although Andrikis was eventually reversed on appeal, this was because of the provision of an express statutory provision in the Disability Service Act 1986 (Cth) that had not been brought to the attention of the Master. The statutory workers’ compensation scheme, at the relevant time of this claim, only obliged a worker to repay “amounts received” by the worker, and it seems to us that this statutory formulation does not extend to compensation expenses incurred by the employer. It is not necessary for us to express a view as to whether the statutory form of insurance policy covers the employer for such expenses, and that matter has in any event subsequently been clarified by Parliament.
Having held that the rehabilitation expenses were not a repayable amount pursuant to the Act, his Honour made orders requiring the respondent insurer to pay the plaintiff insurer a certain sum, but staying that until the plaintiff insurer made a payment to the injured worker. Counsel were in agreement that these were not appropriate orders, and that, if the view of the Court of Appeal was that his Honour’s reasoning in respect of the repayment obligation was correct, the appropriate order below would have been simply to dismiss the claim with costs, and the respondent file a cross-appeal to give effect to this. We agree that this is the appropriate disposition.
The order of the Court, therefore, is that:
(1) The appeal be dismissed with costs.
(2) The cross-appeal be allowed, and the judgment of 21 April 2006 be set aside, and in lieu thereof it be ordered that proceedings SC 569 of 2006 be dismissed with costs.
One final matter should be noted. We should not be taken to have determined that a payment made by an employer under s 15C was not a payment of compensation for the purposes of the statutory policy (Schedule 3 of the Act) and for which an employer is indemnified, by that policy. There are arguments of substance that it is.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.
Associate:
Date: 13 December 2006
Counsel for the Appellant: Mr G Stretton
Solicitor for the Appellant: Minter Ellison
Counsel for the Respondent: Mr SG Campbell SC
Solicitor for the Respondent: Moray & Agnew
Date of hearing: 8 November and 1 December 2006
Date of judgment: 13 December 2006
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