Arentz v Workers' Compensation (Dust Diseases) Board
[2014] NSWDC 205
•15 August 2014
District Court
New South Wales
Medium Neutral Citation: Arentz v Workers' Compensation (Dust Diseases) Board [2014] NSWDC 205 Hearing dates: 6 June 2014 Decision date: 15 August 2014 Before: Neilson DCJ Decision: Appeal allowed
Catchwords: DAMAGES - STATUTORY COMPENSATION - Double recovery - Plaintiff obtained damages in a common law action against non-employer tortfeasor pursuant to settlement - Pursues claim for statutory benefits from the Dust Diseases Board - Settlement amount did not apportion between economic loss and medical expenses and general damages - Whether statutory claim breaches principle against double compensation Legislation Cited: Police Regulation (Superannuation) Act 1906
Victims Compensation Act 1996
Workers Compensation (Dust Diseases) Act 1942Cases Cited: Amaca Pty Ltd v King [2011] VSCA 447
CSR Ltd v D'Arcy (1996) 40 NSWLR 721
Downes v Amaca Pty Ltd [2010] NSWCA 76; (2010) 9 DDCR 432
James Hardie and Co Pty Ltd v Newton (1997) 42 NSWLR 729
SAS Trustee Corporation v Budd [2005] NSWCA 366; (2005) 3 DDCR 382Category: Principal judgment Parties: Leonard David Arentz
Workers' Compensation (Dust Diseases) BoardRepresentation: Solicitors
Maurice Blackburn (Plaintiff)
Catherine Morgan (Defendant)
Counsel
Mr D Russell SC (Plaintiff)
Mr J Sheller (Defendant)
File Number(s): RJ64/14 Publication restriction: No
Judgment
This is an appeal pursuant to section 8I of the Workers Compensation (Dust Diseases) Act 1942 ("the Dust Act"). By letter dated 16 August 2012 the defendant ("DDB") advised the plaintiff that he was not entitled to statutory benefits under the Dust Act. A reason given by the DDB at the time is now formally admitted to have been erroneous. However, the DDB continues to resist the plaintiff's claim. The issue for determination involves the operation of the Dust Act where a worker has obtained damages at common law from a non-employer tortfeasor.
Background
The plaintiff was born on 5 January 1949 in Tumbarumba. At the time of the hearing (6 June 2014) he was 65 years old. He attended Tumut Primary School and Tumut High School, leaving school at the age of 15. In 1965 he started work in a sawmill as a timber stacker, which he did for 18 months. In 1967 he commenced another period of approximately 18 months employment at Tumut Brick Works, stacking bricks.
His next periods of employment exposed him to asbestos dust and fibres. Pars 3 to 5 of the statement of claim (which are admitted) are:
"3. From on or about 1969 until on or about 1973 (the relevant period), the plaintiff was employed as a domestic painter by Ernie Beveridge at Tumut, in the State of New South Wales.
4. During the relevant period, the plaintiff was also employed as a builder by Royce Lett at Batlow, in the State of New South Wales.
5. Whilst performing work for Ernie Beveridge and Royce Lett during the relevant period, the plaintiff was exposed to, and inhaled, asbestos dust and fibres emanating from asbestos containing materials."
Thereafter the plaintiff had a varied and interesting work history. In 1987 he found work in the ACT in the construction of the new Parliament House. By 1990 he had moved to Victoria where he found work as a hardware salesman. In 1992 he qualified as a carpenter after completing a TAFE course. He was then self-employed in the Camberwell area as a carpenter working on renovations. In or about 2004 he went to Western Australia where he worked as a carpenter at Geraldton. His last employment was for Decmil Australia Pty Ltd with whom he commenced on 14 August 2012. He worked as a carpenter on the Wheatstone Project which involved his working both in Perth and at Onslow in the Pilbara. His average weekly earnings whilst he was onsite at Onslow were $4,229.42. Those earnings were made up from an hourly rate of $42.88, a site allowance of $7.18 per hour as well as applicable overtime rates with accruals. His typical working hours were 10 hours per day over a 13 day fortnight, working four weeks at Onslow and one week in Perth. His service to this company ended on 29 November 2012 because of the plaintiff's ill health.
Although he had been working in Western Australia since 2004, the plaintiff maintained his residence at Mooroolbark, a suburb of Melbourne. It appears that sometime after commencing work with Decmil Australia the plaintiff developed a dry cough without associated weight loss or chest pain. He had that for at least two months before he came under the care of Dr Michael Clarence, a respiratory physician, at Lilydale. A high resolution CT scan of his chest was performed on 14 November 2012. The conclusion reached by the radiologist, Dr Mark Percy, was:
"There is a right sided pleural thickening particularly involving the mediastinal pleura, most prominent anteriorly inferiorly. There is an associated pulmonary consolidation and atelectasis particularly in the right middle and lower lobes. A pleural biopsy is advised, as is drainage of the effusion. A malignancy is suspected, the differential [diagnoses] would include mesothelioma and metastatic disease."
The plaintiff was sent for care to St Vincent's Hospital, Melbourne where he came under the care of a number of specialists, including Dr Matthew Conron. In a report dated 18 December 2012 Dr Conron said this:
"I first saw Mr Arentz on the 19/11/2012. On examination he had clinical evidence of a moderate pleural effusion without any chest wall tenderness. A CT chest had been performed on the 14/11/2012 confirming the presence of pleural thickening and an effusion. I arranged an ultrasound guided drainage of the pleural effusion on the 21/11/2012 that confirmed a malignant process most likely to be a mesothelioma. A follow up PET scan on the 22/11/2012 again favoured an underlying diagnosis of mesothelioma.
Given this man's relatively young age and good performance status I referred this man to Mr Gavin Wright a Thoracic Surgeon who saw Mr Arentz on the 28/11/2012. He discussed with him that the most likely diagnosis was of malignant mesothelioma and this could be confirmed with a biopsy at the time of a pleurectomy decortication that was performed on the 10/12/2012. The surgical resected specimen was reviewed at our multidisciplinary thoracic malignancy meeting on the 14/12/2012. Dr Prue Russell our Pathologist with an interest in thoracic malignancy confirmed that the biopsy contained malignant mesothelioma of epitheliod subtype. Following his procedure Mr Arentz has had problems with persistent air leak and on the 18/12/2012 remains an inpatient."
Whilst the definitive diagnosis could not be made until the histopathology examination was carried out on 10 December 2012, the plaintiff was advised earlier that the (most likely) diagnosis was mesothelioma. The plaintiff sought legal advice. To that end Mr Andrew Dimsey, then a partner in Maurice Blackburn, solicitors, of Melbourne attended upon the plaintiff at his home on Friday 30 November 2012. Mr Dimsey has since been called to the Bar. The plaintiff told Mr Dimsey of his diagnosis and of his exposure to asbestos in New South Wales and of his use of the products of James Hardie and Co Pty Ltd, now known as Amaca Pty Ltd ("Amaca"). He also advised Mr Dimsey of his possible exposure to some asbestos cement products when he was self-employed as a carpenter, but the current defendant accepts that the relevant exposure to asbestos products was in New South Wales. Mr Dimsey gave the plaintiff advice about his common law right to damages from Amaca. That advice is encapsulated in a letter to the plaintiff of 3 December 2012 (exhibit B p007). Mr Dimsey also gave the plaintiff some advice about seeking statutory benefits from the DDB. That occurred prior to 17 January 2013 (see exhibit B p066) and the plaintiff's affidavit (exhibit A par 8) confirms that it was given "in about January 2013". I shall discuss the plaintiff's common law claim and his claim for statutory benefits separately.
The plaintiff's common law claim
Mr Dimsey acted quickly. On Monday 3 December 2012 he caused a writ to issue out of the Supreme Court of Victoria naming Amaca as the defendant. The writ was generally endorsed, claiming damages for personal injury sustained as a consequence of exposure to asbestos, its dust and fibres between approximately 1969 and 1980 in products of Amaca and due to that company's negligence. The writ carried an election for trial by "judge and jury of six". The writ was served on Amaca, in Sydney, on Friday 7 December 2012 at 10.40am. A statement of claim was filed on 14 December 2012. The plaintiff relied upon the work he did for Ernie Beveridge at Tumut and Royce Lett at Batlow as exposing him to Amaca's asbestos-based products. On 4 January 2013 Ms Barbara de Brouwer of Messrs DLA Piper Australia, solicitors, of Melbourne filed a defence. That pleading admitted Amaca's incorporation and capacity to be sued and its manufacture and distribution of certain asbestos products but otherwise did not admit or denied the remaining allegations in the statement of claim.
On 15 January 2013, Ferguson J set the plaintiff's action down for trial on 15 May 2013. On 13 February 2013 Amaca filed a summons in the plaintiff's Supreme Court proceedings, seeking an order that they be transferred to the Common Law Division of the Supreme Court of New South Wales, pursuant to the Victorian cross-vesting legislation. That summons was supported by an affidavit of Mr Kieran John O'Brien a partner at DLA Piper Australian, Ms de Brouwer's supervisor. Par 10 of this affidavit is:
"Further, some of the matters presented for determination in the proceedings are matters arising under, or involving questions as to the application of New South Wales legislation. For example, as the plaintiff alleges to have been exposed to asbestos dust and fibre during the course of his employment in New South Wales, he is potentially entitled to statutory benefits from the Dust Diseases Board in addition to any common law entitlements."
This summons was heard on 4 March 2013 by Hollingworth J and determined by her Honour on 7 March 2013. The relief sought was refused. [4] and the footnote to it of her Honour's reasons are:
"In fact, Amaca does not intend that the proceeding would be determined by the NSW court; rather, if transferred, it would seek to have the proceeding further transferred to the NSW Dust Diseases Tribunal ("the tribunal"). There is no dispute that, if transferred to the NSW court, the proceeding would be further transferred to the tribunal which would be the only appropriate NSW jurisdiction, by virtue of s 11(1) of the Dust Diseases Tribunal Act 1989 (NSW)."
[12] and the footnote to it are:
"Amaca points out that Mr Arentz may be entitled to claim statutory payments in NSW under the Workers' Compensation (Dust Diseases) Act 1942 (NSW). But it is not suggested that the total amount for which Amaca might ultimately be liable would be affected by such an entitlement. Even if Mr Arentz claimed statutory benefits in NSW, s 8E of the Workers' Compensation (Dust Diseases) Act 1942 (NSW) provides a mechanism by which Amaca could be required to reimburse the Dust Diseases Board in respect of any such statutory payments made by it."
In the meantime, preparation of the plaintiff's action for trial continued. On 14 February 2013, the plaintiff filed a "List of Special Damages", equivalent to particulars under UCPR 15.12. In particular, the plaintiff claimed reimbursement of out-of-pocket expenses paid by Medicare and his private health insurer and for future out-of-pocket expenses for medical treatment and care. He also claimed loss of earnings from 20 November 2012 until his intended retirement on his 70th birthday. Particulars of these claims were requested by Ms de Brouwer on 19 February 2013 and supplied on 25 February 2012. On 11 February 2013 the Supreme Court had fixed a pre-trial conference for 4 April 2013 at 10.00am. Prior to this date there were some settlement discussions. Mr Dimsey made two file notes on 28 March 2013. They are confusing and Mr Dimsey's oral evidence did not elucidate what happened. The file note at exhibit B p114 concerns an attendance on the plaintiff and suggests that Mr Dimsey had put an offer to Amaca of $1.3 million. However it may mean that he suggested to the plaintiff such an offer. The file note at exhibit B p115 concerns an attendance on Ms de Brouwer and records his putting an offer of $1.485 million plus $58,000 for costs, including disbursements of $10,000. The file note records that Ms de Brouwer requested that the pre-trial conference be adjourned to 15 April (transcript, 6 June 2014 of evidence given by video-link from Melbourne, line 21) but the file note suggests to me that the requested adjourned date was 18 April. Ms de Brouwer also asked Mr Dimsey to advise her of the amount paid by the plaintiff's private health insurer and the plaintiff's instructions as to stockists of Amaca's products in Tumut and Batlow. Mr Dimsey then sent an email to Ms de Brouwer which explains why the adjournment was sought:
"Further to our recent informal discussions I advise that I am prepared to adjourn the pre-trial conference to the week commencing 15 April 2013 so that we may obtain and digest your expert forensic accountant's report.
I have also obtained instructions that the Plaintiff is to commence his chemotherapy treatment on 18 April so ideally we can have the pre-trial conference on the 17th to avoid the possibility that the Plaintiff is debilitated and unable to provide instructions."
The pre-trial conference was then fixed for 17 April 2014.
Amaca's forensic accounting report was made by Ms Tamara Lindsay of Forensis Accounting on 9 April 2013 and served by Ms de Brouwer on Mr Dimsey on that day. Amongst other things Ms Lindsay had regard to the WorkCover Benefits Guide, April 2013, a NSW publication. [50] of Ms Lindsay's report lists assumptions that she was instructed to make. One of them was:
"the Plaintiff may be entitled to DDB benefits."
Later, the following is stated:
"72. I have estimated the Plaintiff's DDB benefits by reference to the statutory maximum rates by WorkCover (up to 31 March 2013 - $1,868.50, then $1,903.70 per week, during first 26 weeks, and then $447.70 per week after 26 weeks).
73. The Plaintiff's DDB benefits, net of tax, receivable in the period from 20 November 2012 to 15 May 2013 are quantified in Schedule 9 hereto. I have calculated average tax rates applicable to the DDB benefits on the assumption that the Plaintiff's taxable income comprises only his wages from Decmil Australia Pty Limited and DDB benefits in the 2013 year.
74. The present value of the Plaintiff's future DDB benefits, net of tax, receivable from 16 May 2013 to his assumed date of death (being 28 February 2014) are quantified in Schedule 10 hereto. I have calculated average tax rates applicable to the DDB benefits on the assumption that the Plaintiff's taxable income comprises only his wages from Decmil Australia Pty Limited and DDB benefits in the 2013 year, and then only DDB benefits in the 2014 year."
Schedule 9 is:
PAST DUST DISEASES BOARD BENEFITS
From
To
No of weeks
Weekly amount pre-tax
Tax applicable
Weekly amount post-tax
Total
(A)
(B) Note 1
(C) Note 2
(D) = (B) - (C)
(E) = (A) x (D)
20-Nov-12
31-Mar-13
18.9
1,869
(461)
1,407
26,536
01-Apr-13
15-May-13
6.4
1,904
(470)
1,434
9,217
PAST DUST DISEASES BOARD BENEFITS
$35, 753
Note 1 - assume maximum weekly rate for first 26 weeks per WorkCover Benefits Guide Apr 2013
Note 2 - average tax rate, assuming the Plaintiff's actual taxable income comprises only wages from Decmil Australia Pty Limited and DDB benefits in the year 2013, then only DDB benefits
Schedule 10 is:
PAST DUST DISEASES BOARD BENEFITS
From
To
No of weeks
3% multiplier/PV factor
Weekly amount pre-tax
Tax applicable
Weekly amount post-tax
Total
(A)
(B) Note 1
(C) Note 2
(D) = (B) - (C)
(E) = (A) x (D)
16-May-13
21-May-13
0.9
0.9
1,904
(470)
1,434
1,228
22-May-13
30-Jun-13
5.7
5.7
448
(111)
337
1,922
01-Jul-13
28-Feb-14
34.7
34.2
448
0
448
15,327
FUTURE DUST DISEASES BOARD BENEFITS
$18,477
Note 1 - assume a maximum weekly rate for first 26 weeks then post 26 weeks statutory rate until death per WorkCover Benefits Guide Apr 2013
Note 2 - average tax rates, assuming the Plaintiff's actual taxable income comprises only wages from Decmil Australia Pty Limited and DDB benefits in the year 2013, then only DDB benefits
It should be noted that in his report of 18 December 2012 addressed to Mr Dimsey, Dr Conron stated that his estimate of the plaintiff's life expectancy was "approximately 12-24 months". One of the assumptions that Ms Lindsay was asked to make was that the plaintiff had "a life expectancy of 12 to 18 months from early December 2012." On that basis Ms Lindsay assumed that the plaintiff would survive until 28 February 2014.
Mr Dimsey briefed Mr Michael Wilson SC to appear with him at the pre-trial conference. Mr Dimsey's notes of that conference commence at exhibit B p147. Initially Ms de Brouwer put on an offer of $700,000 "all inclusive" i.e. inclusive of all out-of-pocket expenses (in particular medical expenses) and of costs. Eventually Mr Wilson advised Ms de Brouwer that he assessed the plaintiff's damages as being between $1.2 million and $1.4 million and described Ms de Brouwer's offer as "silly" because it represented a settlement of $600,000 plus costs. Ms de Brouwer then put on an offer of $825,000 inclusive of costs which was viewed by those representing the plaintiff as $760,000 plus costs. After "time out" enabling Mr Wilson and Mr Dimsey to discuss the matter and take instructions, Mr Wilson put on an offer to Ms de Brouwer of $1.3 million plus costs, assessed at $61,000. Amaca replied with a counter-offer of $900,000 inclusive of costs. This pre-trial conference was held before a Deputy Prothonotary of the Court. The conference ended with a direction by the Deputy Prothonotary that Mr Dimsey was to contact him between 9am and 9.30am on Monday 29 April 2013 to advise as to whether there was any further progress in attempts to shorten the matter, thus avoiding the hearing fixed for 15 May 2013.
On 18 April 2013, the day after the pre-trial conference, the plaintiff filed and served an offer of compromise for $1.24 million plus costs. That offer was open for 14 days. On Monday 22 April 2013, Ms de Brouwer advised Mr Dimsey that she was seeking instructions on that offer. On Friday 26 April 2013 Ms de Brouwer filed and served an offer of compromise of $1.1 million plus party/party costs. A copy of this offer of compromise was sent to Mr Dimsey at 12.32pm that day. At 12.40pm Mr Dimsey sent an email to Mr Wilson SC stating that he had received an offer of compromise of $1.1 million. The terse email continued:
"Probably hard to resist. Your thoughts?"
On Monday 29 April 2013 Mr Wilson replied at 7.51am:
"Very good result."
Minutes earlier, at 7.40am, Mr Dimsey sent an email to plaintiff advising him that he would telephone him that morning about "significant progress" in his case. In that call, Mr Dimsey advised the plaintiff that this was a good offer and the plaintiff instructed Mr Dimsey to accept it. That acceptance was communicated to Ms de Brouwer by Mr Dimsey's email of 9.39am.
The advice communicated by Mr Dimsey to the plaintiff on the morning of 29 August 2013 is summarised in a letter bearing that date. The substance of the letter is this:
"We confirm that the defendant has made a formal offer of compromise. The offer is to pay to you $1,100,000 plus a contribution towards your total legal costs and disbursements. The offer is open for acceptance only until 10 May 2012.
We confirm that an offer of compromise is a strategy employed to put pressure on you to accept the offer. If the offer is accepted the claim is finalised and the compensation must be paid within 14 days. If the offer is not accepted it will remain a secret from the Court. If your claim proceeds to trial and you are awarded a sum less than the offer of compromise of $1,100,000, then the Court will be told of the offer and it is likely that you will be ordered to meet the defendant's legal costs from the date of the offer. These are likely to be in the range of $100,000 to $140,000. This would clearly significantly reduce the net value of your compensation award.
We confirm that in our opinion, and the opinion of Michael Wilson SC, the offer of compromise should be accepted. We are not confident that we will be able to achieve a better compensation result either in further negotiations or at trial particularly once legal costs are taken into account.
We confirm that in the event that you accept the offer you will receive approximately $975,000 after the following deductions are made:
1. Reimbursement to AHM for past medical expenses, $95,361;
2. Reimbursement to Medicare for past medical expenses, $1,400;
3. Legal costs and disbursements not recovered from the Defendant, $25,000.
We also confirm that we will need to enter discussions with AHM to endeavour to agree a capped contribution towards future medical costs."
Later on 29 August 2013 Mr Dimsey advised the Prothonotary of the Supreme Court that the plaintiff's claim had settled and that the hearing date could be vacated and that notice of discontinuance would be filed as soon as possible. That document appears to have been filed on 16 May 2013 (exhibit B p177). On 30 April 2013 Mr Dimsey advised the plaintiff that he would not be required to enter into a "Release" (probably a deed of release) as his claim had "settled by acceptance of a formal Offer of Compromise". There was a delay in payment of the settlement money. The initial cheque sent by Amaca was thought to have been lost in the mail and cancelled and a new cheque was sent (email from Mr Dimsey to the plaintiff dated 15 May 2013, exhibit B p178). Messrs Maurice Blackburn sent a cheque for $95,361.13 to the plaintiff's private health insurer on 21 May 2013 "in reimbursement of Mr Arentz's past medical expenses."
A claim calling for compromise
There appears to have been no real issue on the question of Amaca's liability to pay damages to the plaintiff. Ms de Brouwer admitted as much in her conference with Mr Dimsey on 28 March 2013. However there were issues regarding the quantification of the plaintiff's damages.
(a) General damages
In Amaca Pty Ltd v King [2011] VSCA 447, the Victorian Court of Appeal declined to disturb a jury award of $730,000 general damages for mesothelioma. Mr Dimsey had carriage of that matter for the plaintiff. That had been the first jury award made in a mesothelioma case "for a long time." Mr Dimsey thought it was for a period of up to 15 years (Transcript, video-link evidence, 6 June 2014 p28.37). Mr Dimsey also gave this evidence:
"...in Victoria the... potential range for general damages is greater than in New South Wales. That's by virtue of the fact that it's a jury system and in particular there had been the case of [Amaca Pty Ltd v King] which significantly increased the range and thereafter made that process perhaps a little harder, so there was always a range, depending on the jury, depending on how they feel about the plaintiff and the plaintiff's predicament."
Later he gave his evidence:
"Q ... I assume that there's a risk, or would've been a risk in Mr Arentz's case that the jury might've come back with 300 or 400?"
A. Yes
Q. Being the sort of non-Victorian style award, if I can put it that way?
A. Yes, I'd expect that the defendant would promote that at trial."
In a file note made on 27 March 2013 for his own benefit, Mr Dimsey proposed a figure "in the order of $500K." At the pre-trial conference held on 17 April 2013 Mr Wilson SC initially proposed a range between $500,000 and $600,000. It would appear on this evidence that the range for general damages would be between $300,000 and $730,000.
(b) Loss of life expectancy
In his file note to which I have just referred, Mr Dimsey suggested a figure for this head of damage of $30,000. At the pre-trial conference the range discussed by Mr Wilson SC and Mr Dimsey between themselves was $20,000 to $30,000.
(c) Economic loss/ Loss of earning capacity
This appears to have been the most contentious area. Mr Dimsey asked his forensic accountants, Munday Wilkinson, to undertake an assessment based on three scenarios:
Scenario 1: 2012 tax year earnings
Scenario 2: Average over the past five full financial years
Scenario 3: Annual earnings of $200,000
The accountants were also asked to assume that the plaintiff intended to work until retiring at 70 years of age. That led the accountants to produce this table:
Scenario
Assumption
Loss of Wages
Loss of Superannuation
Total
1
Based on 2011/12
$444,985
$52,316
$497,301
2
Five Year Average
$230,818
$23,360
$254,448
3
$200,000 per annum
$747,645
$95,511
$843,156
This table clearly shows a very wide range. The plaintiff's earnings in the 2012 financial year were much greater than they had been in the past:
Financial Year
Taxable Income
2008
$39,071
2009
$61,038
2010
$18,691
2011
$13,993
2012
$114,090
There was no guarantee that the plaintiff would, after November 2012, continue to obtain well paid work as a carpenter in the mining industry in Western Australia. The plaintiff instructed Mr Dimsey that he had received an offer from Monadelphous to do carpentry work on Barrow Island, earning $200,000 pa. However, that company was unable to comment on the likelihood of the plaintiff's securing work on an ongoing basis with it (exhibit B p 081). Furthermore one could expect Amaca's solicitor to argue that the plaintiff would not have worked until the age of 70 years. This is precisely what Ms de Brouwer did. Her forensic accountant, Ms Lindsay, calculated economic loss to both ages 65 and 70 years, using two scenarios:
Scenario 1: Plaintiff self-employed as a carpenter
Scenario 2: Plaintiff continued to work in a position similar to that
with Decmil Australia or Monadelphous
On those bases Ms Lindsay's figures were:
Self-employment to age 65: nil (bearing in mind DDB benefits)
Employment to age 65: $59,544
Self-employment to age 70: $54,544
Employment to age 70: $484,488
Accordingly figures that might have been left to the jury ranged between nil and $843,156. Clearly, compromise was called for.
The plaintiff's claim for statutory benefits - prior to settlement
On 17 January 2013, Mr Dimsey wrote to the plaintiff explaining to him his right to statutory benefits under the Dust Act. He enclosed a DDB application form which had been completed at Mr Dimsey's office and was asked to check it, amend it if necessary, sign it and to return it to Mr Dimsey so that he could forward it to the DDB. The plaintiff was also asked to provide the necessary proof of identity documentation required by the DDB. The plaintiff did as he was asked to do. Mr Dimsey forwarded the completed application and all necessary supporting documents to the DDB on 30 January 2013. The DDB replied on 1 February 2013. The substance of the reply was this:
"Can you please clarify whether the action taken in the Supreme Court of Victoria was in regard to any possible economic loss incurred by your client.
As you are aware a claim of this nature cannot be made in both jurisdictions."
However, nothing prevented the plaintiff suing a third-party tortfeasor in the Supreme Court of Victoria and pursuing a claim for statutory benefits from the DDB. On 7 February 2012, Mr Dimsey advised the DDB that the plaintiff's claim in the Supreme Court included a claim for loss of earnings and loss of earning capacity, the usual distinction between past and future economic loss.
On 12 February 2013, the DDB wrote to Mr Dimsey in these terms:
"In light of Mr Arentz's proceedings in the Supreme Court of Victoria can you please confirm you are withdrawing your claim with the Board."
and sought his further advice. On 15 February 2013 Mr Dimsey wrote this to the DDB.
"It appears that there is some confusion regarding this matter. My client pursues his Dust Diseases Board entitlements and in addition has commenced a claim for common law damages in the Supreme Court of Victoria.
I am currently unable to appreciate a basis upon which he is not so entitled. Could you kindly outline the basis upon which you believe that the current DDB claim should be withdrawn."
The DDB's response was dated 18 February 2013 and referred to s 8AA(2)(b) of the Dust Act which "outlines certain circumstances whereby compensation is not payable." This drew a lengthy response from Mr Dimsey dated 22 February 2013 explaining why that provision was not applicable, a position the DDB now accepts. Mr Dimsey's letter concluded:
"We invite you to properly consider Mr Arentz's application for benefits from the DDB in accordance with section 8(1)(a) of the Act. If the DDB takes the view that Mr Arentz is not entitled to any benefits whatsoever, then we invite you to reject his application so that we may seek redress under section 8I of the Act."
That drew this response from the DDB on 28 February 2013:
"Thank you for your letter dated 22 February 2013.
The Workers' Compensation Dust Diseases Board concurs with your interpretation of section 8AA of the Workers' Compensation (Dust Diseases) Act 1942. Mr Arentz is entitled to lodge a claim for compensation and to have that claim determined by the Board irrespective of whether he has commenced action for compensation in another jurisdiction.
However, as Mr Arentz' common law claim includes a claim for economic loss, the Board, while able to determine Mr Arentz's entitlement to compensation, cannot determine an amount of compensation, if any, payable to him until the Supreme Court proceedings are concluded and the details of any award for economic loss is provided to the Board.
It is unusual for an applicant to the Dust Diseases Board to also make a concurrent claim for economic loss in a common law jurisdiction. The practice in New South Wales for claimants lodging claims with both the Dust Diseases Board and the Dust Diseases Tribunal is not to include a claim for economic loss in claim before the Tribunal where the applicant considers he or she has an entitlement to receive statutory compensation from the Dust Diseases Board. This allows the Dust Diseases Board to determine the application and an eligible applicant to receive compensation as quickly as possible.
I apologise for any misstatements made by the Board's staff in this matter.
While I acknowledge your client's entitlement to make concurrent economic loss claims in both jurisdictions, I am sure you will appreciate that it will delay the final determination of his application to the Dust Diseases Board.
I would be grateful if you could provide the Board with a copy of the judgment delivered in the proceedings before the Supreme Court and details of any award for economic loss made within 7 days of the making of that award so that we may finally determine Mr Arentz's claim before the Board."
I have reservations as to whether the existence of the plaintiff's common law proceedings inhibited the DDB from making an award for the plaintiff.
On 12 March 2013, Mr Dimsey responded:
"I note that you have confirmed that the DDB is able to determine our client's entitlement to compensation while not able to finalise the determination of the amount of compensation.
Could you kindly reach a prompt determination in relation to my client's entitlement to compensation for medical and like expenses. If the entitlement remains undetermined this will cause difficulties in the finalisation of the Victorian Supreme Court proceedings which are listed for pre-trial conference on 4 April 2013.
I confirm that once the Supreme Court matter is resolved I will notify you so that you may finalise your determination in relation to the amount of compensation which may be awarded to my client."
That communication drew this reply from the DDB on 19 March 2013:
"Could you please advise if Mr Arentz's common law proceedings in the Victorian Supreme Court include a claim for damages for reasonable and necessary medical and like expenses?
Should Mr Arentz's common law claim include a claim for reasonable and necessary medical and like expenses, the Board will be unable to determine your client's entitlement to compensation for reasonable and necessary medical expenses, if any, payable to him until the Supreme Court proceedings are concluded and the details of any award for medical and like expenses is provided to the Board."
Again, I have reservations as to whether the plaintiff's action inhibited the DDB from paying his hospital and medical expenses. Mr Dimsey replied to the DDB on 22 March 2013.
"I refer to your letter dated 19 March 2013 in this matter and in the matter of Meighan.
I confirm that medical and like expenses are claimed in Mr Arentz's Victorian Supreme Court proceedings. In the event that his medical and like expenses are met by the DDB then the claim for medical and like expenses will be withdrawn from the Supreme Court proceedings.
I am confused by your letter as it appears that, in relation to Mr Arentz, you are indicating that the DDB will not make a determination as to liability for Mr Arentz's medical and like expenses until after his Supreme Court proceedings are concluded. Unfortunately, if this is your position, this will be a significant practical impediment to settlement of the Supreme Court proceedings.
I note that in the matters of Meighan and Emerson (also matters in the Victorian Supreme Court with concurrent DDB claims) the position communicated by the DDB has been that a determination as to liability will be made with a final determination as to the amount of compensation being [made] only after the conclusion of the Supreme Court proceedings. This would appear to be a pragmatic outcome.
Could you kindly clarify your position in relation to Mr Arentz's claim."
On the evidence before me that letter drew no immediate response from the DDB.
The plaintiff's claim for statutory benefits - after settlement
After settlement of the common law proceedings, Mr Dimsey wrote this to the DDB on 30 April 2013:
"I write to provide an update as to progress in Mr Arentz's common law claim. Fortunately this claim has been resolved by his acceptance of a formal offer of compromise in the amount of $1,100,000. This amount includes an unquantified component for medical expenses and for loss of earnings and earning capacity. I note that the settlement already contemplates that Mr Arentz has an entitlement to a DDB pension and medical expenses.
Could you kindly provide an update as to progress in processing the DDB claim."
The DDB's response of 7 May 2013 was this:
"I would be grateful if you could clarify as to whether Mr Arentz's common law claim included a deduction made to damages awarded for medical expenses and for loss of earning capacity to take into account any entitlement that Mr Arentz may have to receive statutory compensation benefits paid in accordance with the Workers' Compensation (Dust Diseases) Act 1942.
I note that in previous matters of a similar nature your office has provided copies of "Deeds of Release". I would be grateful if you could provide copies of similar documents, including a copy of the judgment delivered in the proceedings before the Supreme Court, and details of any award for medical expenses and economic loss so that we may determine Mr Arentz's claim before the Board."
That drew this response from Mr Dimsey on 9 May 2013.
"I confirm that as our client's alleged asbestos dust exposure was in NSW employment his potential DDB entitlements were contemplated in settlement of his common law claim.
I have obtained details of his past medical expenses which have been met by his private health insurer, AHM. He is contractually obliged to repay AHM $95,361.63. A copy of a letter from AHM is enclosed.
I confirm that there is no settlement documentation save for the enclosed Offer of Compromise dated 26 April 2013 and letter accepting the offer dated 29 April 2013. There was no apportionment made of the compensation amount as between general damages for pain and suffering and loss of earnings.
Finally, I enclose a copy of the Affidavit of Kieran O'Brien sworn 12 February 2013 in support of a cross-vesting application made by the Defendant. You will discern that the common law claim related to NSW employment with specific mention being made of DDB entitlements (see paragraph 10)."
That letter appears to have caused the DDB to write to Amaca's solicitors in Melbourne. On 20 May 2013, Ms De Brouwer sent this letter to the DDB:
"I refer to your letter dated 14 May 2013 to Mr Kieran O'Brien of this office. Please note that I have had conduct of this file under the supervision of Mr O'Brien.
I confirm that Mr Arentz's claim against Amaca Pty Limited was resolved following his acceptance of an Offer of Compromise for $1,100,000, plus costs, but inclusive of any amount owed to Medicare Australia under the Health and Other Services (Compensation) Act 1985.
I also confirm that the above Offer did not include any amount that Mr Arentz may be entitled to receive in accordance with the Workers Compensation (Dust Diseases) Act 1942."
Mr Russell SC, for the plaintiff, has submitted that the last sentence of that letter should be read as indicating that the agreed settlement amount was exclusive of the plaintiff's statutory entitlements, in other words, that it had been reduced to take into account those entitlements. Such construction is, in my view, the proper interpretation of what is written. However, it may not reflect what Ms de Brouwer intended to convey to the DDB.
On 24 May 2013 one of Mr Dimsey's assistants, probably Ms Irma Campara, had a telephone conversation with Ms Denise Farlow of the DDB. Ms Campara enquired about whether there had been any further development since Mr Dimsey's letter of 9 May 2013. Ms Campara's file note (exhibit B p185) records Ms Farlow as saying:
"DDB have been in contact with DLA Piper. They have confirmed that their settlement offer did not take into account client's statutory entitlements with DDB. This is an issue that they're working out. Client was sent an Industrial History Report to sign & return on 11 April. He is yet to do that. They can't continue process without that."
Ms Campara asked for a confirmatory email, which was sent at 10.43am that day. It is this:
"Further to our conversation this morning, please note the following in relation to Mr Arentz:
1. DLA Piper, acting on behalf of Amaca Pty Limited, have advised that their offer of $1.1 million did not include a deduction to damages awarded for economic loss and medical expenses to take into account any entitlement to statutory benefits that Mr Arentz may have under the Workers' Compensation (Dust Diseases) Act 1942.
2. On 11 April 2013, the DDB forwarded to Mr Arentz a copy of his industrial history (detailing all known occupational and non-occupational exposures to dust) with a request that he sign and return to the DDB. As of today's date, Mr Arentz has not returned his signed industrial history to the DDB."
On 7 June 2013, the DDB wrote another letter to Mr Dimsey. The first substantive paragraph of that letter refers yet again, and inappropriately, to s 8AA(2) of the Dust Act. The second substantive paragraph refers to the offer of compromise made by Amaca and then states:
"The DDB has also been informed that the amount of $1,100,000.00 included damages for past and future loss of earnings, and past and future medical expenses."
The letter concludes:
"Accordingly, I would be grateful if you could provide the following information to assist the Board in determining, what, if any entitlement Mr Arentz may have to receive an award of compensation under the Act:
· A copy of the consent judgment/order
· A copy of Mr Arentz's statement of particulars filed in the Victorian Supreme Court
· The total amount of damages awarded for the loss of past and future earnings occasioned by his diagnosis of mesothelioma together with loss of superannuation entitlements, loss of service and other statutory entitlements. Please also indicate the age up until [which] Mr Arentz had intended to continue working if not for his diagnosis of mesothelioma
·The total amount of damages awarded for past and future medical expenses
Where relevant, please include copies of documents to support your claims."
The third and fourth requests are inappropriate requests for information where there has been a lump sum compromise settlement. Mr Dimsey replied on 12 June 2013:
"I refer to your letter dated 7 June 2013 and to my letters dated 9 May 2013 and 30 April 2013 which traverse the same issues as those raised in your recent letter.
I confirm that Mr Arentz' common law claim was a claim in which the sole allegation of asbestos exposure was in the course of his employment in the State of New South Wales. This was made clear in the pleadings and in the affidavit of Mr Kieran O'Brien, a copy of which has also been provided to you. The common law claim was not made pursuant to any Act or ordinance but pursuant solely to his right to claim damages at common law.
On this basis it was contemplated that Mr Arentz would have an entitlement to compensation pursuant to the Workers' Compensation (Dust Diseases) Act 1942 ("the Act"). I note that this claim was made by remains undetermined.
I confirm that Mr Arentz's common law claim was resolved by way of his acceptance of a formal Offer of Compromise. I have earlier provided you with a copy of the offer. This is the only available documentation in relation to the settlement of the claim. I confirm, as earlier advised, that the Offer of Compromise included all components of the claim but the heads of damages were not quantified. For this reason I am unable to provide any details of any award for loss of past and future earnings or medical expenses. I was instructed that Mr Arentz' intention was to work until the age of 70, however this issue remained in dispute in settlement negotiations.
I note that Mr Arentz's common law claim included a claim for past and future loss of earnings and medical and like expenses. I enclose as requested a copy of the List of Special Damages served in the proceeding. Mr Arentz had an obligation to mitigate his losses by establishing his entitlements under the Act. I was required to include the claim for loss of past and future earnings and medical expenses in the common law claim notwithstanding my expectation that these elements of the claim would fall away once the DDB claim was accepted.
I note that the Defendant to the claim has indicated that in its opinion, compensation for medical expenses and past and future loss of earnings were included in the settlement figure. I confirm that in the Plaintiff's opinion the settlement contemplated that the Plaintiff would be entitled, pursuant to the Act, to payment of medical expenses and like expenses and weekly payments in addition to his common law settlement.
I note that the affidavit of Mr O'Brien discloses his contemplation of Mr Arentz's potential entitlement to "statutory benefits from the Dust Diseases Board in addition to any common law entitlements". I further note that the Defendant served expert material from which it appears that the Defendant contemplated the Plaintiff's additional entitlement under the Act and took this into account as a discounting factor in the assessment of damages. As this material was served in the proceeding I am governed by my implied undertaking in relation to discovery which prevents me from providing a copy of this material. I have written to the solicitors for the Defendant requesting that they provide consent for disclosure.
Bearing in mind the above I am unable to appreciate a basis upon which the DDB is empowered, pursuant to s 8AA(2) of the Act to adjust Mr Arentz' entitlement under the Act in circumstances where he has made no claim and received no compensation under any Act or ordinance of the Commonwealth or any State (other than New South Wales) or Territory of Australia.
I look forward to hearing from you further."
On 20 June 2013 the Medical Authority, established under the Dust Act s 7, certified under s 8 that:
(i) the plaintiff had pleural mesothelioma,
(ii) the level of his disablement due to the mesothelioma was 100%,
(iii) the disablement was reasonably attributable to his exposure to the inhalation of dust as a worker in an occupation under the Dust Act, and
(iv)the disablement was deemed to commence on 30 October 2012.
That certificate entitled the plaintiff to receive an award from the DDB and to compensation at the prescribed rates from the Fund established under s 6 of the Dust Act.
The plaintiff's claim was submitted to a meeting of the DDB held on 15 August 2013. For that meeting, a submission was prepared for the DDB by one of its officers on 27 July 2013. Part of that submission is this:
"In a number of court cases including Harris v. Commercial Minerals Ltd [1996] HCA 49; 186 CLR 1; 103 CSR Ltd v. D'Arcy (1996) 40 NSWLR 721 and, most recently, Downes v. Amaca Pty Ltd [2010] NSWCA 76 (the judgment) the Courts have concluded that the principle against double recovery by a claimant operates with respect to compensation payable under the Worker's Compensation (Dust Diseases) Act 1942 (paragraph 50 of the judgment) and, to avoid that result, the benefits payable as compensation for economic loss suffered as a result of work injuries falling within the scope of the Act, are to be deducted from any award of damages in respect of those injuries.
The Court of Appeal in Downes concluded:
· where there is an acknowledged existing entitlement, the only mechanism available to avoid double recovery is to reduce the damages payable in the future by the present value of the anticipated future payments (paragraph 52); and
· where there is no recognised existing entitlement to compensation payments, an alternate course for preventing double recovery would be an implied limitation on the right of the worker to claim such damages once damages have bee recovered (paragraph 53)"
With respect, the reference to [53] of Downes v Amaca Pty Ltd [2010] NSWCA 76; (2010) 9 DDCR 432, which was not cited in full, was inappropriate. Basten JA said:
"50. The following approach should be adopted in this case. First, the principle against double recovery by a plaintiff should be accepted, in respect of future payments of compensation, as in respect of past payments. That principle operates with respect to compensation payable under the Workers Compensation Act and under the Dust Diseases Act.
51. Secondly, where there is no termination of an entitlement to payments in circumstances where damages are obtained, this Court can neither divest the plaintiff of such rights as he or she may have in respect of statutory compensation, nor accept an undertaking not to pursue such rights. The same situation inheres in the Tribunal.
52. Thirdly, where there is an acknowledged existing entitlement, the only mechanism available to avoid double recovery is to reduce the damages payable in the future by the present value of the anticipated future payments.
53. Fourthly, where there is no recognised existing entitlement to compensation payments, an alternative course for preventing double recovery would be an implied limitation on the right of the worker to claim such payments once damages have been recovered including such losses. However, the present case was not argued on that basis and, as it could give rise to issues which have not been debated, it should not be determined on that basis.
54. Fifthly, the correct approach is, therefore, to uphold the obligation of the Tribunal to reduce the damages awarded to take account of the possibility that a future entitlement to compensation payments may arise under the Act. In undertaking that assessment, the respondent had to satisfy the Tribunal that, if the appellant did not reapply for compensation, that conduct would constitute an unreasonable failure to mitigate his loss. Further, the amount of the reduction required consideration of when such an award would be made, whether and to what extent it was likely to cover past payments, the chance that the medical authority would decline certification and any other relevant contingencies. These considerations are required by the principles identified at [22] above."
I shall refer later to other parts of this decision.
The submission to the DDB then contains this matter:
"It is rare for a common law matter to be finalised without a deduction being made to take into account statutory entitlements where the plaintiff has declared that they have lodged an application with the Dust Diseases Board. However, it is also rare for a dust disease common law matter to be finalised prior to the Medical Authority issuing a certificate of disablement and the Board making an award of compensation under the Act."
The submission then refers to the various claims made by the plaintiff in the common law action and continues:
"The defendant in the common law action agrees with Maurice Blackburn and advises that the offer of compromise did not include provision for statutory compensation entitlements from the DDB."
That statement contains the same problem of construction to which I referred at [19] above. Finally, the submission recommended to the Board that it decline to make an award of weekly benefits to the plaintiff and decline to pay his past and future medical expenses.
The DDB made its decision on 15 April 2013 and communicated it to the plaintiff's solicitor on the following day. The reasons given for the decision were:
"The Board determined that while Mr Arentz had an entitlement to compensation under the Act, it had authority to adjust that entitlement under the provisions of section 8AA(2) of the Workers' Compensation (Dust Diseases) Act 1942 to take into account the compensation he had received in proceedings before the Supreme Court of Victoria for the dust disease which included damages for past an future loss of earnings, and past and future medical expenses.
The Board declined to award compensation to Mr Arentz on the basis that to award compensation in this matter would amount to a double recovery of compensation for the dust disease."
Why the DDB based its decision, in part, on s 8AA(2) of the Dust Act is not clear, but the present defendant accepts that it fell into error in so deciding.
Submissions
Mr J Sheller, for the DDB provided written submissions date 11 June 2014. Mr Russell SC provided written submission on behalf of the plaintiff, dated 16 June 2013. Mr Sheller provided a submission in reply dated 23 June 2014. Mr Sheller's submissions are based solely on the "prohibition" of double compensation. The relevant part of Mr Russell's submissions is this:
"31. It is a question of fact to be determined by the District Court as to whether there really has been double recovery in the present case. If the matter proceeded to judgment in the Supreme Court of Victoria, the court would have been obliged to reduce the common law damages for the likely receipt of statutory compensation in New South Wales - see paragraph [18] above. The Board would then have paid compensation, and would have been entitled to be indemnified by Amaca for that compensation because of the operation of Section 8E of the 1942 Act.
32. Instead, what happened was that the action was settled for a compromise figure. Clearly both parties had the DDB entitlements in mind when they negotiated the settlement."
Mr Russell then summarised the evidence relevant to this last submission. Ms de Brouwer was called by Mr Sheller to give oral evidence. In cross-examination she said that she had no instructions to waive privilege in giving her evidence. She gave no evidence as to how either she and/or Amaca had calculated the offer of compromise of $1,100,000 nor did she give any evidence as to whether in calculating that sum she and/or her client had taken into account benefits that the plaintiff might yet receive from the DDB nor did she give evidence as to whether Amaca had retained any amount that it might pay to the DDB pursuant to s 8A of the Dust Act. Furthermore, Ms de Brouwer did not give any evidence about what she intended to convey in her letter of 20 May 2013, which I discussed at [19] above, to clarify any ambiguity. Ms de Brouwer's evidence led Mr Russell to make this submission:
46. Ms de Brouwer did not give any evidence about how she calculated the figure of $1.1 million offered to Mr Arentz, so the evidence of Mr Dimsey stands unchallenged i.e. that in his assessment the claim was worth up to $1.485 million, but there were reasons to discount it.
47. It is obvious from the documentation referred to above that from time to time DLA Piper had in mind that Mr Arentz had DDB entitlements which he was pursuing, in addition to his common law entitlements.
48. If Ms de Brouwer had intended the common law settlement to cover all of the plaintiff's entitlements, so that he could no longer claim from the DDB (which would leave Amaca at risk that the DDB would seek a reimbursement from Amaca under Section 8E of the 1942 Act), then she could have made the offer conditional upon Mr Arentz withdrawing his DDB application, or acknowledging that in some fashion that the common law settlement included all damages, including full compensation for economic loss and medical expenses both past and future.
49. While it is correct that Amaca did not in its Defence in Victoria specifically plead a reduction in damages because of the DDB entitlements, Ms de Brouwer in her evidence was not certain as to whether such a matter had to be pleaded or not (T40/12).
50. If Amaca wanted to protect itself from the risk of this appeal succeeding and the Board seeking a re-imbursement from Amaca under Section 8E, it could have waived privilege for Ms de Brouwer and she could have given the evidence if, on her side of the negotiations that led to settlement, there was a view that the settlement included any amounts claimable from the Board. Amaca did not take that course."
Consideration
Mr Russell has submitted that a question of fact to be determined by this Court is whether "there really has been a double recovery in the present case." That question must be answered in the negative for the simple reason that the DDB has not paid anything at all to the plaintiff. There are really two questions before me: if the DDB is required to pay benefits to the plaintiff (a) will there be or (b) might there be a double recovery? I am hesitant about my jurisdiction to answer such questions, questions about the future, but neither party has addressed me about or even adverted to the question of jurisdiction.
There is, however, one question of fact which I can determine. I am not persuaded on the balance of probabilities that Amaca did not take into account in forming its offer of compromise that the plaintiff might be entitled in futuro to benefits from the DDB. As I recited in [8] above Ms de Brouwer's supervising partner, Mr O'Brien, swore an affidavit supporting Amaca's application to cross-vest the plaintiff's claim to New South Wales, in which he deposed to the plaintiff's potential entitlements to statutory benefits from the DDB. This was also referred to by Hollingworth J in her reasons of 7 March 2013 in which her Honour pointed out that if the plaintiff obtained such statutory benefits, Amaca would be required to reimburse the DDB pursuant to s 8E of the Dust Act. At [10] above, I recited the forensic accounting report of Ms Tamara Lindsay, qualified on behalf of Amaca, which asked her to assume that the plaintiff might be entitled to DDB benefits and to Ms Lindsay's calculations concerning such benefits. When requesting particulars on 19 February 2013, Ms de Brouwer asked this:
"Please advise whether your client has applied to the [DDB] for any benefits, whether his application has been accepted and, if so, what benefits he is receiving."
Unfortunately, Mr Dimsey did not answer that question in his response of 25 February 2013. However, the important point is that Amaca, through its solicitor, was well aware of the plaintiff's, at least, potential entitlement to statutory benefits. At [19] above I discussed Ms de Brouwer's letter of 20 May 2013 to the DDB and provided my finding as to its proper construction. At [25] above, I discussed the oral evidence of Ms de Brouwer, in particular what she did not say, and Mr Russell's submissions about her evidence. I accept those submissions as proper inferences to be drawn from the facts of this matter and from the evidence of Ms de Brouwer and therefore cannot find that Amaca has not complied with its obligation under s 8E of the Dust Act. That, of course is only a finding which binds the present plaintiff and the DDB. That finding cannot bind Amaca which is not a party to this appeal.
It follows from my last finding that I cannot find that if the plaintiff be paid statutory benefits by the DDB that there will be a double recovery. It follows that the plaintiff is entitled to an award of statutory benefits. However if I be wrong in reaching that conclusion, and because of the arguments of counsel, I shall consider the matter further.
The prohibition of double compensation is well enshrined in our common law. However, it is a principle of the common law. In SAS Trustee Corporation v Budd [2005] NSWCA 366; (2005) 3 DDCR 382 the Court was called upon to consider s 12E of the Police Regulation (Superannuation) Act 1906 which, inter alia, required any lump sum gratuity payable under s 12D of that Act to be reduced by any compensation paid to the claimant under the Victims Compensation Act 1996. Mason P (with whom Handley and McColl JJA agreed) said:
"32. Section 12E(2) seeks to prevent the injustice of double compensation. In one sense it goes no further than ensuring that a common law principle of general application is not overlooked when considering the unusual juridical concept of a statutory entitlement to a "gratuity". The provision reinforces the application of a general principle frequently applied in relation to statutory schemes for the payment of damages or compensation (see generally Boncristiano v Lohmann [1998] 4 VR 82 at 89, Franklins Self Serve Pty Ltd v Wyber [1999] NSWCA 390; (1999) 48 NSWLR 249 at 254).
33. The rule against double compensation may be invoked by one or more defendants. If it can be shown that the plaintiff/claimant has already received recompense in any form in respect of the loss for which compensation is claimed against the defendant invoking the rule, then the plaintiff's loss requiring compensation from that defendant is regarded as discharged pro tanto. To award compensation with respect to that loss against that defendant would be to permit double recovery by the plaintiff in respect of a loss no longer calling to be compensated."
The development of the principle has been outlined by Campbell JA in Downes v Amaca Pty Ltd at [79] to [92]. In our legal system, the Queen in Parliament is sovereign. Parliament can enact laws, amend laws and repeal laws. It can vary, amend and repeal the common law. If Parliament provides a statutory right or statutory benefit the grantee of the right or benefit can not be deprived of it by the common law except in certain cases by the principles of waiver and estoppel.
It has long been established that the recovery of damages at common law does no affect a worker's right to recover statutory benefits under the Dust Act and, therefore, a worker's common law damages are to be reduced to reflect that entitlement. In Downes v Amaca Pty Ltd Basten JA outlined the basic position thus:
"7. The entitlement to damages in the present case arose under the general law; the entitlement to payment of benefits from a statutory fund arose under the Dust Diseases Act. Where a person has an entitlement to both, questions will arise as to whether recovery of both involves double compensation, whether when damages are recovered, an obligation to refund the compensation payments arises or whether the damages are to be reduced by the amount of the compensation receivable.
8. In Manser v Spry [1994] HCA 50; 181 CLR 428, the High Court had held (in relation to similar legislation in South Australia) that a deduction should be made on the basis that (at 439):
'The compensation benefits paid or payable under the Act are ordinary incidents of a worker's employment which must be taken into account in assessing the damages of a plaintiff-employee for loss and damage for which a tortfeasor is liable at common law.'
9. For that reason, in Manser the Court held that the plaintiff was not entitled "both to receive and retain compensation by way of weekly payments ... and to recover damages in the common law action assessed without reduction on account of compensation received or to be received": at 432. The conclusion in Manser does not directly apply in this case, as in Manser the authority responsible for paying compensation had no right to obtain recoupment from an award of damages. Section 8E (discussed below) has expressly varied that situation.
10. It was authoritatively established in Harris v Commercial Minerals Ltd [1996] HCA 49; 186 CLR 1, in relation to the Dust Diseases Act, applying principles enunciated in Manser at 434-437, that double recovery was not permitted and, to avoid that result, that benefits payable as compensation for economic loss suffered as a result of work injuries falling within the scope of the Act, were to be deducted from any award of damages against an employer in respect of those injuries: at 18. In that case, the present value of the future benefits payable under the Dust Diseases Act was held to be deductible from the damages: at 16.
11. Harris is distinguishable in two respects from the present case. First, it was a case in which the worker's entitlement had already been accepted by the Board prior to the judgment for damages. The trial judge in Harris had deducted amounts already paid, so that the only issue related to future benefits payable pursuant to an entitlement which had been accepted by the body responsible for making the payments.
12. A somewhat different issue arises in respect of cases where no such entitlement has been made out at the date of judgment in the damages proceedings."
His Honour went on to consider CSR Ltd v D'Arcy (1996) 40 NSWLR 721 and James Hardie and Co Pty Ltd v Newton (1997) 42 NSWLR 729 and then said:
"22. The principles which are to be derived from D'Arcy and Newton are not beyond doubt, but appear to include the following:
(1) where a person has a clear entitlement to a benefit under the Dust Diseases Act, his failure to obtain the benefit must be assessed in terms of mitigation of loss, the onus being on the respondent to establish that the claimant's conduct in not seeking the benefit was unreasonable; and
(2) where the entitlement to the benefit has not been accepted by the Board, the possibility that a benefit will be payable in the future must be assessed on the basis that it is an hypothetical event, in accordance with Malec principles."
To deal with the factual circumstances arising in that case his Honour then set out the five principles which I quoted in [22] above. In the same case, Campbell JA said in [93]:
"93.There is no provision in the Dust Act or any connected legislation that provides for benefits to cease, or for the worker to repay any of the benefits received in the past, if the worker receives an award of damages.."
His Honour went on to conclude thus:
" 116. In my view, it remains the law that if a worker has a legal right to apply for a benefit under the Dust Act, but has not applied for that benefit, the present value of that benefit can be deducted from damages only if either:
(i) there is a finding that the worker is likely to apply for the benefit and would then obtain it, or
(ii) there is a finding that the failure of the worker to apply for the benefit is, or would be, an unreasonable failure to mitigate damages.
117. In the present case the Tribunal did not proceed in either of those fashions. The finding that the Tribunal made, that if the Appellant re-applied to the Dust Diseases Board he would be certified as disabled and entitled to receive the prescribed benefits, is insufficient as a matter of law to lead to the conclusion that the benefits should be deducted, when questions of whether the worker would actually reapply, and of whether, if he did not, his failure to do so would be an unreasonable mitigation of damage, were not gone into. In my view, the matter should be remitted to the Tribunal to reconsider the extent, if any, to which a deduction should be made for past and future medical expenses and future care.
118. The capacity for workers to receive a windfall gain on this view of the law is quite limited. If the worker has not applied for a benefit at the time of seeking damages, or (as the judge in the present case thought was the Appellant's situation) has applied and been rejected, but has suffered a material deterioration in his condition since being rejected, it is for the defendant to raise an issue about whether, in the situation as it is at the time of the trial, the worker's failure to have made a recent application is an unreasonable failure to mitigate damages. It is only in the situation where such an issue is raised, and it is held that the failure to apply is reasonable, and the worker later applies for and obtains benefits, that the worker will obtain a windfall gain. The possibility of there being such a windfall gain is a consequence of the legislation that Parliament has enacted."
Handley AJA said:
"132. The 1942 Act does not terminate a worker's right to future benefits when damages are recovered. His statutory rights are not affected, and future benefits are "deducted" from his damages at common law to prevent over compensation."
In the following paragraph his Honour pointed out the deduction was not made under s 8E of the Dust Act, but at common law, on the principle prohibiting double recovery. Section 8E "operates on that deduction whatever it might be and however it was assessed." His Honour went on to say:
"136. The statutory scheme is clear. The plaintiff, despite recovering damages for his dust disease, remains entitled to benefits under the 1942 Act. If, prior to s 8E, a plaintiff's damages were reduced, the wrongdoer got the benefit, and the Board bore the expenses. Section 8E transfers this benefit from the wrongdoer to the Board which can recover the benefit as a debt."
In the current case I do not know if any deduction was made by Amaca from its assessment of the plaintiff's damages which led to its offer of compromise. If a deduction were made I do not know how it was calculated. The evidence is silent on those issues. As I have already stated, I can not find that no such deduction was made. Clearly, Amaca ought to have made a deduction. It runs the risk of paying twice. Section 8E(3) provides:
"(3) Reimbursement where damages recovered If:
(a) a person (the first person) recovers damages from some other person (the second person ) in respect of the disablement or death pursuant to the final determination of the relevant proceedings, and
(b) there is deducted from the damages the amount of any compensation already paid to the first person under this Act, or the present value of future benefits payable to the first person under this Act, or both,
the following provisions have effect:
(c) the second person is liable to pay to the board an amount equal to the amount or amounts so deducted,
(d) the amount that the second person is liable to pay under this subsection is payable within 42 days after recovery of the damages or within such other period as is provided by Schedule 1A or prescribed by the regulations or as is (subject to the regulations) allowed by the board,
(e) the amount that the second person is liable to pay under this subsection, or any unpaid portion of it, together with interest as provided by Schedule 1A, is recoverable by the board in a court of competent jurisdiction as a debt owing to the board."
Section 8E(8) provides:
"(8)Determination of amount of compensation In a case in which the deduction from damages referred to in subsection (3)(b) is not apparent or readily ascertainable from the terms of any judgment or award in respect of the damages, the amount of the deduction is as determined in accordance with Schedule 1A."
Section 8E(10) provides definitions which defines "damages" to include damages payable under a settlement and "final determination" to include "final determination by settlement, agreement, dismissal, discontinuance or otherwise." The settlement effected in the present case clearly, in my view, falls within the purview of section 8E.
In my view it is irrelevant that Mr Dimsey, in making this calculation of the plaintiff's damages included his past medical expenses and hospital expenses and made a provision for future medical expenses. This evidence was given:
"[HIS HONOUR:]
Q. Assume this, Mr Dimsey: were the expenses still outstanding and were paid by the Dust Diseases Board, then if her Honour's view of the law is correct, then the Dust Diseases Board would be entitled to recover expenditure from Amaca; correct?
A. Yes.
Q. So ultimately Amaca would have to pay, ultimately as tortfeasor; correct?
A. Yes, your Honour. Yes.
Q. So that if Amaca has paid the expenses, then really there's no recourse to the Board because the expenses have been paid. There's nothing outstanding, in other words.
A. Yes, I see. Thank you. My difficulty is that Amaca paid a sum of money and from that money the private health insurer put its hand up for reimbursement. But Mr Arentz maintained his entitlement to have his medical expenses paid. So it's a situation in which, while at one level all of these ingredients went into the mix, we say that at that time my position for him was that he still had the entitlement to those expenses being paid by the Board and that the fact that he had to make reimbursement himself didn't concede that point that was required of him by his contract with his private health insurer.
SHELLER
Q. But, Mr Dimsey, for that situation to apply, can I suggest, you would not have put on the table in your negotiations with Amaca for the settlement of Mr Arentz's common law claim, medical expenses?
A. We had to, because we didn't have an accepted DDB claim. We couldn't not claim and then be left short. We had to claim."
The point made by Mr Dimsey is perfectly valid. He had no option other than to include medical and hospital expenses in his client's claim. Had the DDB not vacillated and accepted the plaintiff's claim, as Mr Dimsey had asked it to do, the present proceedings may have been completely unnecessary.
It follows from this reasoning that the plaintiff's right to statutory entitlements is not defeated by his common law settlement or by any default of Amaca in doing what the law required it to do.
I propose the following orders but will hear the parties on any other appropriate form of orders:
(a) Appeal allowed.
(b) The determination of the DDB made on 15 August 2013 which was communicated to the plaintiff by letter dated 16 August 2013 is set aside.
(c) I make an award for the plaintiff for weekly payments for total disablement commencing on 30 October 2012 to continue until the plaintiff's death.
(d) I make an award for the plaintiff under section 8(2)(d) of the Dust Act.
(e) I order the defendant to pay the plaintiff's costs of this appeal.
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Decision last updated: 04 December 2014
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