Andrew Robert Jeisman and Kirsty Kneebone v South Australia No. SCGRG 92/2667 Judgment No. 4144 Number of Pages 7 Workers' Compensation (1993) 60 Sasr 595

[1993] SASC 4144

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), OLSSON(2) AND DEBELLE(3) JJ

CWDS
Workers' compensation - miscellaneous matters - other matters - first appellant receiving income maintenance for injuries caused by the second appellant - instituted civil action which agreed to settle - respondent sought injunction to prevent action settling - whether settlement would prevent respondent recovering against second appellant pursuant to Workers Rehabilitation and Compensation Acts54 - consideration of s54 - whether right of subrogation exists employer able to recover from wrongdoer amount of 'unsatisfied liability'. Workers Rehabilitation and Compensation Act 1986 ss 43, 54, 54(7) and Workers Compensation Act 1971 s84. Seatainer Terminals Ltd v Dunn (1981) 27 SASR 21 and Cowell v General Motors-Holden Ltd (1977) 17 SASR
148, discussed.

HRNG ADELAIDE, 9 July 1993 #DATE 1:9:1993
Counsel for appellants:     Mr S Walsh
   with Mr A Ward
Solicitors for appellants: Ward and Partners
Counsel for respondent:     Mr J Doyle QC
   with Mr M Penhale
Solicitors for respondent: Crown Solicitor

ORDER
Appeal allowed.

JUDGE1 KING CJ The facts and the course of proceedings are set out in the judgment of Olsson J. 2. The learned Solicitor General sought to support the injunction as an injunction in aid of a right of subrogation. I am unable to see any legal basis for a right of subrogation in the respondent. The respondent and the appellant Kneebone are under different legal liabilities to the appellant Jeisman. In making payments of workers compensation to Jeisman, the respondent did not make those payments in relief of the common law liability of Kneebone but in discharge of its own liability under the WorkersRehabilitation and Compensation Act. In those circumstances I know of no principle upon which a right of subrogation could be based. There is no statutory right of subrogation. The statute provides its own remedy for an employer in the position of the respondent, in the provisions of s.54 subsections (5) and (7). In my view there is no right of subrogation and this argument fails. 3. I agree with Olsson J that the decision of this Court in Seatainer Terminals Ltd v Dunn (1981) 27 SASR 21 has no application to s.54 of the present Act which is in different terms from s.84 of the repealed Workers Compensation Act 1971. 4. I agree also with Olsson J's construction of s.54. It follows that the respondent cannot be prejudiced by Jeisman's acceptance of Kneebone's offer or by any consent judgment entered in the District Court. There is therefore no basis for the injunction. In my opinion the appeal should be allowed, the order appealed from should be set aside and the injunction dissolved.

JUDGE2 DEBELLE J I have had the advantage of reading the draft judgments of the Chief Justice and Olsson J. I agree with their reasons and the orders proposed by the Chief Justice.

JUDGE3 OLSSON J This is an appeal, by leave, against an order made by Thompson A/DCJ on 16 November 1992. By that order he enjoined the parties to an action between them in the District Court not to proceed to seal and enter a judgment designed to give effect to the acceptance by a plaintiff of an offer of settlement filed by a defendant. 2. The relevant facts may simply be stated. It is common ground that, on 5 August 1988 the appellant Jeisman ("Jeisman") was employed by the Department of Agriculture and thus an officer of the public service of this State. On that day he was driving a departmental vehicle in the course of his duties. The appellant Kneebone ("Kneebone") was then driving another vehicle which came into collision with the vehicle driven by Jeisman. It is asserted by Jeisman that the collision was due to the negligence of Kneebone and that he suffered disability as a consequence of it. 3. On 10 August 1988 Jeisman submitted a notice of disability and compensation claim form to the department seeking payments of compensation pursuant to the provisions of the Workers Rehabilitation and Compensation Act ("the Act"). That claim was accepted by the State of South Australia ("the State"), which, in terms of the Act, is an exempt employer. Thereafter income maintenance payments were commenced in accordance with the relevant statutory provisions. A claim by Jeisman for a lump sum pursuant to s.43 of the Act has not, as yet, been finalised. 4. As at about the time of the order now appealed against, the State had already paid Jeisman income maintenance payments and met medical and like expenses in respect of his disability totalling approximately $107,302. It anticipated, at that time, that it would probably be liable to make further payments bringing the total payout to a figure in excess of $200,000. 5. By summons dated 5 August 1991, Jeisman instituted proceedings ("the subject proceedings") against Kneebone in the District Court claiming damages in negligence in respect of personal injuries said to have been sustained by him as a consequence of the collision to which I have referred. 6. During the pendency of those proceedings, on 21 September 1992, the State caused its solicitors to send to the solicitors acting for Jeisman a notice of its claim, pursuant to s.54(7) of the Act, for recovery, from any judgment recovered by him against Kneebone, of all amounts paid or payable by it to Jeisman pursuant to the Act. 7. A pre-trial conference was, in due course, convened by the District Court in the subject proceedings on 8 October 1992. This was apparently attended by the solicitor for the State in an observer capacity. 8. At that time the solicitor for Jeisman expressed the view that there did not appear to be any material benefit to his client in pursuing the proceedings further. The solicitor for the State was further informed that Jeisman was disposed to accept an offer made on behalf of Kneebone to settle the action for the sum of $7,200.68, plus costs and disbursements. 9. So far as I can determine, the pre-trial conference was adjourned in view of the intimation by the solicitor for the State that it desired to take steps to protect its position. 10. On 20 October 1992 the State instituted proceedings in the Industrial Court of South Australia ("the section 54 proceedings") against Kneebone for recovery of compensation paid or payable by the State to Jeisman pursuant to the Act. The section 54 proceedings are still pending. By letter dated 13 November 1992 to the solicitors for Jeisman, the solicitors for Kneebone confirmed a formal offer to agree his claim for damages in the sum of $13,661.58, inclusive of costs and disbursements. 11. The proposal was accepted by the solicitors for Jeisman by letter dated 30 November 1992, following a verbal acceptance of the proposal at an adjourned pre-trial conference held in the subject proceedings in the District Court on 13 November 1992, on the footing that $7,200.68, being the damages component, would be held in trust, to abide resolution of outstanding issues involving the State. 12. In the meantime, on 5 November 1992, the State instituted separate proceedings in the District Court against Jeisman and Kneebone, in which, in effect, it was asserted that an entry of judgment to give effect to any proposed settlement by the parties of the subject proceedings had the potential to prejudice the rights of the State sought to be enforced in the section 54 proceedings. It sought an urgent injunction to prevent entry of any such judgment. This was granted by Thompson A/DCJ on 16 November 1992 and is the order now appealed against. 13. In essence, the contention of the State is that a consummation, by judgment, of the proposed settlement of the subject proceedings would have the practical effect of either defeating an asserted right of subrogation (arising from the right of recovery conferred on it by section 54 of the Act) to assume control of those proceedings, or, alternatively, that, having regard to the reasoning of this Court in Seatainer Terminals Ltd v Dunn (1981) 27 SASR 21, its rights in the section 54 proceedings could well be almost negated. 14. During the course of this appeal substantial argument was addressed by counsel as to both facets, and it was signalled that the parties may well wish to put in question the correctness of the decision of the majority of the Full Court in Seatainer Terminals. However, having regard to the firm conclusion to which I have come, it appears to me unnecessary to plumb various aspects of those contentions to the depths. In my view the issues arising on this appeal may simply be disposed of on the basis of the proper interpretation of section 54 itself. 15. I merely content myself with expressing my tentative view that no right of subrogation arises in favour of the State by virtue of the provisions of s.54. Quite apart from the fact that, unlike, for example, corresponding provisions of the Commonwealth Employees' Rehabilitation and Compensation Act (which expressly confer a statutory right of the nature of subrogation), the argument of the Crown is this case seems to me to ignore the fundamental fact that, as is pointed out in Meagher, Gummow Lehane "Equity Doctrines and Remedies" 3rd edn at paragraph 904, the concept of subrogation developed in the equitable jurisdiction was a remedy to permit one party, who had no right at law to sue a third party upon another's rights in the name of that person (having sustained and met a relevant liability on behalf of that person arising from the actions of the third party) to assume and pursue the rights of the other person, in his name, against the third party. In the instant case the State is given an express statutory right to sue the third party in its own name to achieve the same end result. The concept of subrogation would seem quite foreign to such a situation. 16. Be that as it may, the critical issue which here arises is whether or not the reasoning of the Full Court in Seatainer Terminals has any logical application to the provisions of s.54 of the Act. Clearly, if it does not, then the problem perceived by the State simply does not exist and there is no need for an injunction of the nature sought and obtained by it. 17. Seatainer Terminals arose out of a consideration of the former s.84 of the Workers Compensation Act, 1971, now repealed. That section was expressed in these terms -
     "84. Where the injury for which compensation is payable
    under this Act was caused under circumstances creating a legal
    liability in some person other than the employer (which other
    person is hereinafter called 'the third party') to pay damages in
    respect thereof the following provisions shall apply -
     (a) the workman may take proceedings both against the third
    party to recover damages and against the employer for
    compensation;
     (b) a workman who receives any money from a third party in
    respect of an injury and compensation under this Act shall repay
    to the employer such amount of that compensation as does not
    exceed the amount recovered from the third party;
     (c) upon notice to the third party, the employer shall have a
    first charge on moneys payable by the third party to the workman,
    to the extent of any compensation which the employer has paid to
    the workman;
     (d) if the workman has received compensation under this Act, but
    no damages or less than the full amount of the damages to which he
    is entitled, the third party shall be liable to indemnify the
    employer against so much of the compensation paid to the workman
    as does not exceed the damages for which the third party is still
    liable and the employer may enforce the indemnity against the
    third party by action; and
     (e) payment of money by a third party to the employer pursuant
    to paragraph (d) of this section shall, to the extent of the
    amount paid, be a satisfaction of the liability of the third party
to the workman." 18. Notwithstanding the then existence of a strong line of authority which suggested to the contrary, the majority of the Full Court, in effect, held that the entry of a consent judgment as between an alleged tort feasor and an injured worker and payment by the tort feasor of the amount of that judgment to the worker operated to discharge the tort feasor from all further liability to indemnify an employer under s.84. 19. It is manifest that, in arriving at that conclusion, the majority of the Full Court was heavily influenced both by the concept introduced by the initial wording of the section and the phrase "for which the third party is still liable" appearing in sub-paragraph (d), having regard to what had fallen from an earlier Full Court in Cowell v General Motors-Holden Limited (1977) 17 SASR 148, particularly at pp.158-9. However, when one turns to s.54 of the Act a very different mode of expression is to be found. Insofar as its provisions are relevant for present purposes, that section stipulates that -
    "Limitation of employer's liability 54.
     (1) Subject to subsection (2), no liability attaches to an
    employer in respect of a compensable disability arising from
    employment by that employer except -
     (a) a liability under this Act;
     or * * * * * * * *
     (2) Subsection (1) does not affect a liability arising out of
    the use of a motor vehicle, being a liability against which the
    employer was or ought to have been insured under the law of
    compulsory third-party motor vehicle insurance.
     (3) A court before which an action is brought against an
    employer for non-economic loss arising from a compensable
    disability (being a disability that arises out of the use of a
    motor vehicle and gives rise to a liability of a kind referred to
    in subsection (2)) shall make due allowance for any lump sum paid
    or payable under Division V or VI to the person by or on whose
    behalf the action is brought.
     (4a) ....
     (4b) ....
     (5) Where -
     (a) compensation is paid or payable under this Act in respect of
    a compensable disability;
     (b) a right of action exists against a person other than the
    employer for damages in respect of the disability, the person by
    whom the compensation is paid or payable is entitled to recover
    from that other person the amount of the compensation in
    accordance with subsection (7).
     (6) Where - (a) a compensable disability arises out of the use
    of a motor vehicle;
     (b) the employer was or ought to have been insured against
    liability for the disability under the law of compulsory
    third-party motor vehicle insurance;
     (c) compensation is paid or payable by the Corporation under
    this Act in respect of the disability, the Corporation is entitled
    to recover the amount of the compensation in accordance with
    subsection (7).
     (7) Where -
     (a) compensation is paid or payable to a person ('the injured
    party') under this Act;
     (b) the injured party has received, or is entitled to, damages
    from another person ('the wrongdoer') in pursuance of rights
    arising from the same trauma as gave rise to the rights to
    compensation under this Act;
     (c) the person by whom the compensation is paid or payable under
    this Act ('the claimant') is entitled to recover the amount of the
    compensation by virtue of subsection (5) or (6), then the
    following provisions apply:
     (d) the claimant is entitled to recover the amount of
    compensation paid or payable under this Act from the wrongdoer or
    the injured party but subject to the following qualifications:
        (i) no amount may be recovered from the wrongdoer in excess of
    the wrongdoer's unsatisfied liability to the injured party;
        (ii) the claimant must exhaust its rights against the
    wrongdoer before recovering against the injured party; and
        (iii) no amount may be recovered from the injured party in
    excess of the amount of the damages received by the injured party;
     (e) the claimant shall, on giving notice to a wrongdoer of an
    entitlement to recover compensation under this section, have a
    first charge, to the extent of the entitlement, on damages payable
    by the wrongdoer to the injured party;
     (f) any amount recovered by the claimant against a wrongdoer
    under this subsection shall be deemed to be an amount paid in or
    towards satisfaction of the wrongdoer's liability to the injured
    party;
     (g) an action for the recovery of compensation under this
    subsection -
        (i) may be heard and determined by the Industrial Court; and
        (ii) must be commenced within 3 years after the date of the
    trauma referred to in paragraph (b)." 20. It is at once to be seen that subsection (5) confers a specific right of recovery by an employer against a tort feasor against whom a right of action for damages lies at the instance of a disabled worker. That right, which is unqualified in terms, is to be "in accordance with subsection (7)". 21. There is something of a circuity of expression as between subsections (5) and (7), but the latter merely relevantly qualifies the right conferred by the former by imposing the qualifications set out in placita (i) to (iii) inclusive set out in subsection (7)(d). 22. It seems to me that placitum (i), in limiting the amount which may be recovered from a wrongdoer to the wrongdoer's "unsatisfied liability to the injured party" is erecting a concept quite different from that to which Seatainer Terminals directed its attention. Nowhere is there to be seen any expression such as "for which...(the wrongdoer)...is still liable". 23. What is plainly in contemplation in placitum (i) (by way of contradistinction from the old section 84) is an "unsatisfied liability", in the sense of a claim which could be enforced against a wrongdoer, as at the time when the relevant entitlement of the employer conferred by the section first arose. The section is clearly pre-occupied with the concept of the unqualified rights initially vested by it in the employer, due credit being given, however, for such payments as may already have been made, by the wrongdoer to the worker, when notice of the employer's claim is given. 24. So it is, in the present case, if the consent judgment is entered in the subject proceedings, that judgment cannot have the effect of "capping" any possible liability as between the wrongdoer and the employer, which the section has already conferred. Any liability pursuant to such a judgment as between the wrongdoer and the worker will, in any event, be subject to the statutory charge arising by operation of the notice already given by the State to the parties to the subject proceedings. 25. It follows, on that construction of the section, that it is unnecessary to consider the correctness or otherwise of the decision in Seatainer Terminals or the question of any possible subrogation. 26. It is further apparent that the need for the injunction sought and obtained was misconceived. 27. I would allow the appeal and set aside the order made in the District Court.