Birdon Marine Pty Limited v Glenn Alexander Jepp

[2009] NSWCA 147

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Birdon Marine Pty Limited v Glenn Alexander Jepp [2009] NSWCA 147

FILE NUMBER(S):
40006/2008

HEARING DATE(S):
17 February 2009

JUDGMENT DATE:
17 June 2009

PARTIES:
Birdon Marine Pty Limited (Appellant)
Glenn Alexander Jepp (First Respondent)
Cecmar Pty Limited trading as Macquarie Business Centre (Second Respondent)

JUDGMENT OF:
Allsop P Beazley JA Handley AJA   

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
2093/2007

LOWER COURT JUDICIAL OFFICER:
Finnane DCJ

LOWER COURT DATE OF DECISION:
10 December 2007

COUNSEL:
S C Campbell SC; S M Kettle (Appellant)
M Gilbert; S Maybury (First Respondent)
J Gracie (Second Respondent)

SOLICITORS:
Hicksons Lawyers (Appellant)
GWM Lawyers (First Respondent)
Spark Helmore Lawyers (Second Respondent)

CATCHWORDS:
WORKERS' COMPENSATION - alternative rights against employer and/or third parties and consequences thereof - rights of and against third parties – Workers Compensation Act 1987 (NSW) – s 151Z – successive injuries where second injury causally related to the first injury - third party liable for both injuries and compensation payable under Workers Compensation Act by employer– operation of s 151Z – deductions from judgment to value past paid compensation and future payable compensation- whether principles in Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 correctly applied by trial judge –consideration of conduct of proceedings below - deductions to be dealt with consistent with how submissions were put below – appeal dismissed
WORKERS' COMPENSATION - liability of employer – successive injuries where second injury causally related to the first injury – responsibility for second injury - second injury occurred in conformance with work restrictions suggested by employer – no negligence by employer in relation to second industry  
WORKERS' COMPENSATION - assessment and amount of compensation
Workers Compensation Act 1987 (NSW) – s151H and s151Z

LEGISLATION CITED:
Workers Compensation Act 1926 (NSW)
Workers Compensation Act 1987 (NSW)

CATEGORY:
Principal judgment

CASES CITED:
Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120
Dudley v Condell Park Carrying Co Pty Ltd (1988) 4 NSWCCR 58
Government Insurance Commission v Oakley (1990) Aust Torts Rep 81-003
Hood Constructions Pty Ltd v Nicholas (1987) 9 NSWLR 60
Kempsey District Hospital v Thackham (1995) 36 NSWLR 492
Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343
Mancini v Thompson [2002] NSWCA 38
Manser v Spry [1994] HCA 50; 181 CLR 428
Multicon Engineering Pty Ltd v Federal Airports Corporated (2000) 47 NSWLR 631
Paris v Stepney Borough Council [1951] AC 367
Vanramer Pty Ltd v Higgins (1991) 24 NSWLR 661

TEXTS CITED:

DECISION:
Appeal dismissed.  The appellant to pay the costs of the first and second respondents. 

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

40006/2008

ALLSOP P
BEAZLEY JA
HANDLEY AJA

17 June 2009

BIRDON MARINE PTY LIMITED v GLENN ALEXANDER JEPP

Judgment

1. ALLSOP P:  In 2001, Mr Glenn Jepp approached Birdon Marine Pty Ltd (“Birdon Marine”) for employment.  He was referred to Macquarie Business Centre, which was a labour hire business run by Cecmar Pty Ltd.  (I will refer to this company as “Macquarie”.)  After being engaged by Macquarie, Mr Jepp was sent back to Birdon Marine to undertake his duties as a fitter and turner. 

2. On 11 February 2002, while working in the shipyard run by Birdon Marine Mr Jepp fell from a large circular tank while placing a hose in an opening to the tank.  Mr Jepp suffered injury to his right knee which later required surgery, comprising a right anterior cruciate ligament reconstruction.

3. After Mr Jepp recovered from his injury, he returned to work at Macquarie on 18 October 2002 on light duties, which involved interviewing clients, data entry and office work.  At this time, he was undertaking gymnasium exercising and step walking as part of his rehabilitation to strengthen his knee.

4. The return to work plan prepared by consultants, Professional Injury Management, made recommendations in April 2002 as to Mr Jepp’s return to work identifying work restrictions as:

“.            no lifting greater than 5 kg’s

.              restricted bending

.              restricted pushing / pulling

.              restricted sitting or standing for prolonged periods

.              restricted walking

.              restricted stair and ladder climbing”.
  (emphasis added)

1. In early September 2002, the orthopaedic surgeon who carried out the reconstruction surgery in early August 2002, said the following in a report to Mr Jepp’s treating doctor:

“Glen [sic] Jepp was reviewed coming up to a month since reconstructive surgery.

He has worked very hard with his treating physiotherapist.  He has full active extension and just off full flexion.  His left knee is pain free.

His right knee is troubled by patellar pain and we did note pre operatively the presence of mal tracking and cautioned that realignment may be required if this was to continue.

I would like to see Glen in six weeks to see how he is getting on.

He will continue with his physiotherapy.  I am happy for the physiotherapist to upgrade his activity and commence hydrotherapy.

From my point of view I certainly think he would be fine to return to sedentary duties and I would be happy to liaise with any workplace occupational therapist.  Clearly he needs to avoid at risk situations such as work at heights, uneven ground, repetitive squatting, crouching and excess lifting.  Within these restrictions I would suggest we get him back into select duties and he will come and see you about this upgrade.”

1. On 23 November 2002, Mr Jepp’s supervisor requested him to come to work on a Saturday to replace some ceiling tiles.  Mr Jepp is very tall and he was able to do this task partly by standing on the floor and reaching up.  To complete the task, however, he needed to stand on the first flat step of a low step ladder.  He stepped on to the step with his left (that is good) leg first.  Shortly after getting both feet on to the step, his right knee gave way and he fell to the ground suffering a spiral fracture of the right fibula.  On 5 December 2002, he underwent an open reduction and internal fixation of his right ankle, with the insertion of seven screws.

2. Mr Jepp sued Birdon Marine for his injuries.  Birdon Marine cross-claimed against Macquarie.  The primary judge (Finnane DCJ) was required, amongst other things, to ascertain:

   (a)the respective responsibilities of Birdon Marine and Macquarie for the first and second accidents; and

   (b)          whether there was a causal connection between the two accidents.

3. The primary judge was also required to apply various parts of the Workers Compensation Act 1987 (NSW) (the “WC Act”), s 151Z dealing with circumstances of recovery against both the employer, Macquarie, and the “stranger” (to use the terminology of the section heading to s 151Z), Birdon Marine.

4. It will be necessary, in due course, in order to deal fully with the above issues, to appreciate how the matter was approached by the parties at the hearing below. Before seeking to understand how the primary judge expressed himself in dealing with these issues, it is convenient to set out the relevant parts of s 151Z.

5. Subsections 151Z(1) and (2) are in the following terms:

   “(1)        If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker’s employer to pay damages in respect of the injury, the following provisions have effect:

(a)          the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation,

(b)          if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker’s injury under this Act, and the worker is not entitled to any further compensation,

(c)          if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act,

(d)          if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

(e)          if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages,

(e1)        if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment,

(f)           all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission.

(2)          If, in respect of an injury to a worker for which compensation is payable under this Act:

(a)          the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker’s employer, and

(b)          the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer,

the following provisions have effect:

(c)          the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable,

(d)          the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages,

(e)          if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that:

(i)           if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise—the indemnity referred to in subsection (1) (d) is for the amount of the excess only, and

(ii)          if the compensation paid by that employer does not exceed the amount of that contribution—subsection (1) (d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution.”

1. Two aspects of these provisions arose on the facts here, both before the primary judge and on the appeal.  As will be seen from what follows, one of those aspects was approached on appeal in a different way than it was below.

2. The first aspect concerned the reduction in any judgment against the third party (Birdon Marine) by reference to the responsibility of the employer (Macquarie). None of Mr Jepp’s doctors assessed him to have a whole person impairment (“WPI”) above 15 per cent. By reason of the WC Act, s 151H(1), this meant that no damages would be awarded to Mr Jepp in any common law action against Macquarie, as employer. Also, in these circumstances by reason of the WC Act, s 151Z(2)(c) and (d) Birdon Marine was not able to recover against Macquarie on any cross-claim, though its liability in damages at the suit of Mr Jepp would be reduced by the full amount of any contribution which, but for the WC Act, Part 5, it would have been entitled to recover from Macquarie. So, if the primary judge apportioned responsibility to Macquarie as X per cent, because Mr Jepp’s WPI was less than 15 per cent neither Mr Jepp (because of s 151H(1)) nor Birdon Marine (because of s 151Z(2)(d)) was entitled to recover against Macquarie, but Birdon Marine was entitled to have its liability reduced by X per cent (s 151Z (2) (c)).

3. Secondly, the question of the operation of s 151Z(1) arose. The introductory words or chapeau of s 151Z and the terms of s 151Z(1)(d) have been the subject of authoritative interpretation in this Court. In Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343 in dealing with words in the Worker’s Compensation Act 1926 (NSW), s 64(1)(b) equivalent to the WC Act, s 151Z(1)(c), Glass JA said at 347:

   “It is necessary … that the injury occurred under circumstances which created a liability in damages to the worker.  It does not seem possible to regard a pre-existing liability, which became more extensive on the happening of the [second] injury, as one which was then created.”

4. The same construction was applied in Hood Constructions Pty Ltd v Nicholas (1987) 9 NSWLR 60 at 69, Dudley v Condell Park Carrying Co Pty Ltd (1988) 4 NSWCCR 58 at 65, Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 and Mancini v Thompson [2002] NSWCA 38. As Handley JA pointed out in Thackham at 508, the High Court in Manser v Spry [1994] HCA 50; 181 CLR 428; 68 ALJR 869 at 433; 871 construed comparable South Australian legislation in similar fashion.

5. The consequence of this construction and of the requirement that there be no double compensation is that where a third party tortfeasor is liable for a first injury and compensation is payable under the WC Act for a later injury which is an extension of the injury first caused, s 151Z(1) is not the relevant regime to eliminate any double recovery. Rather, the worker is entitled to a common law judgment against the third party, but one reduced by the value of the compensation payable under the WC Act: Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120, Vanramer Pty Ltd v Higgins (1991) 24 NSWLR 661 and Thackham.

6. Thus, here, if the first injury was caused by the negligence of both Birdon Marine and Macquarie, Birdon Marine would be entitled to a percentage reduction in the judgment against it in favour of Mr Jepp referable to Macquarie’s responsibility, because Macquarie was not liable to Birdon Marine on the cross-claim, Mr Jepp having less than 15 per cent WPI. Any workers compensation payments referable to the first injury would be dealt with in the regimes provided for by s 151Z(1). So, under s 151Z(1)(b), such workers compensation payments referable to the first injury that had been paid would have to be refunded out of the judgment and no further such sums would be payable.

7. If the second injury was caused by Birdon Marine’s negligence which led immediately to the first injury, any workers compensation paid or payable consequent upon the second injury would not be dealt with by the regime under s 151Z(1) for the reasons referred to above. Rather, the value of any future entitlements to workers compensation from the second injury would have to be assessed at the hearing and deducted from the judgment. Likewise, amounts of workers compensation referable to the second injury that had been paid prior to the common law judgment would be deducted from the judgment (rather than included in the judgment and reimbursed as they would be if s 151Z(1) applied).

8. Thus, in summary:

   (a)Birdon Marine was entitled to a percentage reduction in any judgment against it equivalent to Macquarie’s responsibility for the two injuries: s 151Z(2)(c) and (d).

   (b)As to the past workers compensation payments made and referable to the first injury, these were to be included in Mr Jepp’s judgment but refunded to Macquarie: s 151Z(1)(b).

   (c)As to future workers compensation payments otherwise payable in respect of the first injury these are no longer payable: s 151Z(1)(b).

   (d)As to the past workers compensation payments made and referable to the second injury, these were to be deducted from Mr Jepp’s judgment (and so not refunded to Macquarie):  Thackham and the authorities referred to above.

   (e)As to the future workers compensation payments payable in respect of the second injury these are still payable and an assessment of them must be made and their value deducted from Mr Jepp’s judgment:  Thackham and the other authorities referred to above.

9. There was no debate at the appeal about the proper construction of s 151Z, about the cases to which I have referred or about the effect of the construction which I have just identified. An important issue on the appeal, however, was whether the primary judge correctly applied this, somewhat complex, approach.

   The causal link between the first and second accidents

10. The primary judge found that the second accident was caused by the first.  He found the activity of standing on the step ladder to be not hazardous and sufficiently linked to the weakness to the knee brought about by the first accident as to be taken to be caused by it.  He expressed his conclusion at [46] of his reasons by reference to the words of Malcolm CJ in Government Insurance Commission v Oakley (1990) Aust Torts Rep 81-003, as follows:

    “Where the further injury results from a subsequent accident, which would not have occurred had the plaintiff not been in the physical condition caused by the defendant’s negligence, the added damage should be treated as caused by that negligence”.

11. This conclusion was not challenged on appeal.

    The responsibility for the second accident

12. The primary judge concluded that Macquarie was in no way to blame for the second accident.  At [47] of his reasons his Honour said:

    “I am unable to see that Macquarie Business Centres, his employer was in any way negligent in either asking him to do this task or for permitting him to carry it out in the way which he did.  It was clearly foreseeable that the knee might give way at any time and cause the plaintiff further injury.  The ankle injury is not some separate unrelated injury, but is indeed an injury which is causally linked to the first injury.  The defendant is entirely responsible for it.”

13. This finding was challenged.  It was submitted that the finding that it was foreseeable that the knee might give way, together with the nature of the restrictions placed on Mr Jepp’s return to work by the consultants, meant that Macquarie should not have required Mr Jepp to undertake an activity of the kind undertaken on the day in question.

14. I do not accept this submission.  The finding as to foreseeability in the part of the paragraph dealing with causation can be accepted.  That Mr Jepp’s knee was weakened and susceptible was clear.  These circumstances required conformance with the work restrictions suggested.  The activity fell within the constraints of those restrictions and did not amount to any real or apparent risk to him.  In my view, the finding that there was no negligence by Macquarie was correct.

15. Birdon Marine relied in particular upon Paris v Stepney Borough Council [1951] AC 367. Birdon Marine argued that because Mr Jepp was made particularly vulnerable by the first injury Macquarie was subject to a heightened duty of care. In argument it was accepted that the submission went no further than Macquarie, being one of the authors of the first accident, through its own negligence, was in effect fully cognisant of the plaintiff’s problems and the instability and difficulty with the knee. This can be accepted. It does not undermine the conclusion to which the primary judge came and to which I would come that there was no negligence in all the circumstances in permitting Mr Jepp to stand on the lowest rung of a step ladder in fulfilling duties of a non-hazardous or non-strenuous kind, being activity within the work constraints suggested by the consultants.

The effect of Part 5 of the WC Act

1. At [68]-[74] and [84] of his reasons, the primary judge dealt with the relevant operation of the WC Act.

2. Because of the nature of the complaints made on appeal, it is important to set out his Honour’s reasons in full:

“68.        At the time of the first accident, the plaintiff’s employer was Cecmar Pty Ltd, the proprietor of Macquarie Business Centres.  The evidence establishes that the plaintiff first sought employment by a direct approach to the fourth defendant and was referred back to Macquarie Business Centres, which then engaged him to work, by hiring his labour out to the fourth defendant.

69.          I accept the evidence of the plaintiff that no supervisor from Macquarie Business Centres at any time approached him whilst he was working at the shipyard to make any suggestions about how he should carry out his work.  His supervision came entirely from staff at the shipyard.

70. I accept that the employer, Macquarie Business Centres had a non-delegable duty of care and thus if sued, but for the operation of sec 151H of the Workers Compensation Act, 1987, it would be liable to pay damages for the injuries suffered by the worker, if found liable in negligence. In this case, the employer could not be sued, because the plaintiff’s assessment of whole of body impairment did not reach 15% and thus, pursuant to sec 151H of the Workers Compensation Act, 1987, no action could be brought against the employer.

71. However, sec 151Z of the Workers Compensation Act, 1987 applies and I am required to assess the contribution that the employer could be required to make, but for the effects of Part 5 of the Act. That contribution, assessed as a percentage of the total claim, must then be deducted from the damages which the plaintiff recovers against the defendant. (See Forstaff Blacktown Pty Ltd v Brimac Pty Ltd [2005] NSWSCA 423).

72. Whilst the defendant is to be regarded as having the duties of an employer towards the plaintiff, (see TNT v Christie and others [2003] NSWCA 47), the actual employer continues to have duties of care towards him. The fact that it chose not to supervise and not to give any instructions, make it partially responsible for the accident which resulted.

73.          I assess its contribution as 20% because, clearly the defendant had the much greater responsibility for what occurred.  Accordingly, the damages payable by the defendant to the plaintiff will be reduced by 20%.

74. The cross claim by the defendant against the employer must fail, since the plaintiff could not sue the employer at all, because of the effect of sec 151 H of the Workers Compensation Act, 1987. In those circumstances the defendant cannot sue the employer. (See Forstaff Blacktown Pty Ltd v Brimac Pty Ltd [2005] NSWCA 423). I have already directed entry of judgment for the cross defendant against the defendant with costs. This conforms that earlier order.

…

84. The damages must be discounted by 20% because of the operation of sec 151Z of the Workers Compensation Act.”

1. The primary judge expressed various conclusions as to damages based on nine months incapacity at $625 per week and $400 per week thereafter.  He refused past domestic assistance beyond the nine months Mr Jepp was unable to work, seeing no basis for future domestic assistance.  He found Mr Jepp’s claims for loss of superannuation benefits, the “Fox v Wood component” and past out of pocket expenses to be reasonable.  He made an allowance for future physiotherapy, medical attendances, gym memberships and purchase of pharmaceuticals at $30,000.  He assessed Mr Jepp’s non-economic loss at 30 per cent of a most extreme case.

2. The primary judge ordered that there be a verdict for the plaintiff and ordered the plaintiff’s counsel to bring in short minutes to contain the judgment amount.  Later in the week, the plaintiff informed his Honour that the judgment sum which would flow from his findings was $503,270.

3. Birdon Marine submitted that while the reasons revealed an attendance to s 151Z(2)(c) and (d), they reveal a failure to deal with the need to deduct from the judgment workers compensation payments (past and future) referable to the second injury.

4. To assess this argument, it is essential to understand how the case was argued before the primary judge.

5. Birdon Marine relied on written and oral submissions before the primary judge.  In dealing with the possibilities arising out of the first and second injuries, Birdon Marine submitted that Macquarie should be liable for the first accident to the extent of 25 per cent.  It submitted that the damages to be awarded by the primary judge were also subject to the findings to be made in relation to the second accident.  It submitted that Macquarie was responsible for the second accident.  It then submitted that if Macquarie were not liable for the second accident that there should be a deduction referable to workers compensation payments.  The following written submissions were put in this regard:

“Further, if the defendant is found negligent for the first injury but not the employer for the second injury, the defendant is entitled to a discount on any damages awarded in any event because of the ankle injury giving rise to independent workers compensation rights – see Kempsey District Hospital v Thackham (1995) 36 NSWLR 492.”

1. Then, under the heading “Contribution/Indemnity and Section 151Z WCA”, Birdon Marine dealt with the operation of s 151Z(2)(c) and (d) and submitted as follows:

   “The pleaded date of the first injury is 11 February 2002, after the introduction of amendments to the WCA from 27 November 2001. For the plaintiff to successfully sue his employer at common law he must meet a threshold of 15% WPI – see section 151H WCA.

   The state of the medical evidence is such that none of the plaintiff’s doctors have assessed the plaintiff at above 15% WPI.  The highest in evidence is Dr Hopcroft at 14% WPI (7% to the knee).  Any claim at common law brought by the plaintiff against the employer would fail.  Recovery of damages by the plaintiff from the employer is prevented by the imposition of the threshold.

   It is submitted that except for the provisions of Section 151Z WCA, the defendant would otherwise have recovered 30% of any damages award from the employer pursuant to section 5 Law Reform (Miscellaneous Provisions) Act 1946.

   The plaintiff not having sued the employer, his damages are reduced by the amount by which the contribution which the defendant would otherwise recover exceeds the amount of the contribution recoverable by the defendant from the employer – see section 151Z(2)(c). On the present evidence the extent of recovery or contribution payable by the employer to the defendant is nil because there are no damages that would be assessed pursuant section 151Z(2)(d) to which the defendant could look for contribution.

It is submitted that the contribution recoverable by the defendant from the employer would otherwise amount to 30% of any damages awarded in favour of the plaintiff against the defendant.

Section 151z(2)(c) [sic] requires that damages that the plaintiff may recover from the defendant are reduced by the whole amount of the contribution the defendant would have been able to recover from the defendant but for the effect of sub-paragraph (d) [contribution to be assessed as if whole of damages assessed subject to Division 3 WCA].

Therefore any award of damages in favour of the plaintiff would necessarily be discounted by 30% consistent with the terms of section 151Z – see Forstaff Blacktown Pty Ltd [2005] NSWCA 423.”

1. In a schedule to these written submissions, Birdon Marine dealt with “Out-of-pocket” expenses as follows:

“Agreed mathematically at $55,526.54.  Paid by
the Workers Compensation insurer.  Reduced
by one-third  37,416.33”

1. In the same schedule, it dealt with “Future economic loss” as follows:

“The present incapacity does not result in a loss
of earnings and future economic loss is likely
to be nil.  Nevertheless, allowing buffer based
on $100 net per week over two years
(5% multiplier 99.4) or $10,000  Nil”

1. In a document entitled “Notes to Schedule of Damages”, Birdon Marine said the following about out-of-pocket expenses:

“These have been agreed mathematically at $55,526.54 all paid by the Workers Compensation insurer.

This figure incorporates expenses incurred arising from the ankle injury.  Any award for out-of-pocket expenses against the Defendant should be reduced by one-third, reflecting Dr Bodel’s attribution of ongoing disability of one-third to the ankle injury (report 23 March 2007, para 1.7).  This is consistent with Dr Hyde Page’s view (3% WPI attributable to the ankle) and less than that of Dr Hopcroft (6% WPI attributable to the ankle).”

1. Counsel addressed the primary judge orally with regard to these submissions.  The following exchange took place between counsel for Birdon Marine, and the primary judge:

   “HIS HONOUR: All right. But anyhow, you say if it is, I should apply 151Z, whatever it is --

   KETTLE: Yes. Your Honour probably --

   HIS HONOUR: And assess 25 per cent as being attributable to the employer; even though the plaintiff could not recover from the employer, I should ignore that part of it, and there may be some basis for doing that; I know there is some controversy; so you should get against you a verdict which is smaller because the employer is not there.

KETTLE:  That’s right; in summary, the formula works in a way whereby, if your Honour finds that 25 per cent is attributable to the employer, and yet zero or nil is recoverable from the employer because there’s no, I’ll use the word fund, from which to obtain contribution, then that 25 per cent comes off the plaintiff’s damages.  It’s discounted by the difference.

HIS HONOUR: I understand.

KETTLE: Now your Honour, in fact my submission is that there should be a thirty per cent discount, and the reason is twofold. I’ve dealt with that in this, under the issue of liability for the second injury. And the reason is this. In the plaintiff’s case --

HIS HONOUR: Because you say the injury, the second injury, is the fault of the employer --

KETTLE: That’s right.

HIS HONOUR: --as he was working in the employer’s – for the employer at the time.

KETTLE: That’s right.

HIS HONOUR: It was the negligence of the employer in failing to provide a proper system of work, unsafe ladder, etcetera, etcetera, and therefore there should be an overall deduction of 30 per cent.

KETTLE:  That’s right, your Honour.

HIS HONOUR:  Right, I follow that.

KETTLE:  And your Honour, if you find no negligence in the employer in the second incident, and that’s certainly – if you find it, in any event, in our submission, the discount is appropriate in circumstances where, with the second incident, the plaintiff has on-going worker’s compensation rights -

HIS HONOUR:  Yes, I understand.

KETTLE:  -- and there should be a discount along the Thackham Hospital type grounds.

Your Honour, I’ve applied the contribution indemnity section 151Z, but in short, your Honour, I think I’ve covered that, and set out just in brief the principles, subject to my -

HIS HONOUR:  Well, this is very useful, and it’s very clear, so it enables me to understand precisely where you’re going.

KETTLE:  Thank you, your Honour.”

[emphasis added]

1. It is clear from the above that it was submitted by Birdon Marine at the hearing that the appropriate way for the primary judge to deal with the s 151Z(2) and Thackham points was to find Macquarie 25 per cent liable for the first accident and then raise that contribution by a further 5 per cent either because of Macquarie’s negligence or to give a discount for the compensation rights against Macquarie.

2. No attempt was made in evidence to deal in any detail with the value of the future compensation rights.  No detailed attention was given in the evidence or submissions to any valuation of the future economic effect of the future workers compensation payments. 

3. No attempt was made to identify past workers compensation payments as referable to the one injury or the other, with the exception of the call for a one third reduction in the written submissions. 

4. On appeal, senior counsel for Birdon Marine handed up tables of weekly compensation benefits in order to quantify the value of the future workers compensation rights.  Detailed references were also made to the medical evidence in support of the comprehensive approach to the valuation of this issue.

5. In my view, Birdon Marine should not be permitted to raise for the first time a different way of approaching the Thackham issue than was addressed below.  Counsel for Mr Jepp and for Macquarie (the latter in relation to compensation paid) no doubt approached these issues at the trial on the basis of the truncated approach of Birdon Marine.

6. Thackham requires, effectively, a trial within a trial to value the past paid compensation and the future payable compensation that should be deducted from the judgment.  In the proof of these amounts, Birdon Marine bore the onus of proof.  No attempt was made to undertake this task beyond what I have identified.

7. The reasons of the primary judge were terse, and they may, on one view, be seen to betray a failure to deal with the Thackham point. Nevertheless, set against the background of how the submissions were put to him, his 20 per cent deduction can be viewed as the combined discount (though less in amount than claimed by Birdon Marine) urged on him by Birdon Marine, dealing with s 151Z and all issues argued.

8. As to out-of-pockets, during the trial, no attempt was made to separate out expenses factually referable to the second injury.  In that evidential vacuum the following was stated to the primary judge by counsel for Mr Jepp, as the agreed position of the parties:

“GILBERT:  Your Honour I can tell the court that the out-of-pocket expenses in this case are $55,526.54.  The compensation paid is [$]37,416.33.  Those two figures which are repayable to Mr Stanton’s client total [$]92,942.87.  The Fox and Wood is $1,614.10.

HIS HONOUR: Say that again.

GILBERT: $ 1,614.10.

HIS HONOUR: These are the agreed figures is that so?

GILBERT: Yes your Honour.”

1. What is now put is that this Court should embark on an assessment of the medical evidence to assess what proportion of the past out-of-pockets should not be refunded to the employer but should be deducted from the judgment sum.  Notwithstanding the oblique references in the written submissions, no real attempt was made to do this at the trial.

2. In circumstances here where Birdon Marine urged on the primary judge a truncated, broad brush approach without giving any real assistance to the primary judge (or illumination to Macquarie and Mr Jepp) as to evidential or legal issues which might have fleshed out into real form the Thackham point, and in circumstances where Birdon Marine agreed to the calculation and disposition of past expenses, it would be contrary to the due administration of justice to allow the point to be run more fully and, in effect, entirely differently on appeal:  Multicon Engineering Pty Ltd v Federal Airports Corporated (2000) 47 NSWLR 631 at 633, 645-646, and 647.

3. These arguments therefore fail.

The appeal on quantum

1. Birdon Marine attacked the primary judge’s conclusion that Mr Jepp’s future economic loss was $400 per week, measured by the difference between $750 as an earning capacity absent the injury and his Honour’s assessment of his continuing capacity of $350 per week.

2. It was submitted that the primary judge gave inadequate weight to: (a) what Birdon Marine said was the desire of Mr Jepp to work in a lower paid and less stressful environment on the North Coast; (b) Mr Jepp’s actual declared income during the years ended 30 June 2004, 2005 and 2006 of $444.34, $537.11 and $566.88 per week, respectively, rather than the weekly sum of $176.63 net per week in the 2007 year, affected as it was by income splitting with his wife; and (c) the failure to approach employers for fitting and turning work.  In the light of these matters in particular, it was said that the conclusion that Mr Jepp’s earning capacity was only $350 was unjustified.

3. It was also submitted that the $750 per week capacity without injury was an unreasoned over-estimate in the light of the desire of Mr Jepp to work in a lower paid less stressful environment.

4. It was also submitted that the allowance of $30,000 for future physiotherapy, medical attendances, gym memberships and pharmaceutical was overly generous.

5. I reject all these submissions.

6. Whilst the primary judge said that Mr Jepp’s actions were suggestive of him wanting him to work in a lower paid but less stressful environment that does not lead to the conclusion that his earning capacity was not in the order of $750 as found by his Honour.  The evidence was that in Sydney he had been earning $67,000 per year.  This was a sum considerably more than $750 per week.  In considering this evidence it is plain that the primary judge’s conclusion as to earning capacity without injury was less than he had been previously earning in Sydney.  Thus, there was no inconsistency of findings as asserted by Birdon Marine.  This evidence makes reasonable the conclusion that an earning capacity absent the injury would have been in the order of $750 per week.

7. Though there was some evidence that Mr Jepp had told a rehabilitation provider supplied by the insurer that he had reduced his working days from five to four due to non-injury related issues, in cross-examination about this reduction Mr Jepp said that the reason that he reduced his work days was due to the pain and swelling of his knee and ankles.  It was not put to Mr Jepp that this evidence was false or that he had given a contrary history to the rehabilitation provider.

8. The conclusions of his Honour were available and in my view correct when one takes into account Mr Jepp’s evidence:  that he had intended to continue improving his employment (Black 53 V-X), even allowing for the primary judge’s finding that he would have limited his work due to lifestyle considerations; that he would not now be able to return to work as a fitter and turner (Black 88 V-Y) a conclusion supported by the medical evidence; that he did not think he would be able to continue with his handyman work as his disabilities were progressively worsening (Black 97 P-S); that he did not know what he would do as manual work was too hard and he had no office skills, but he wanted to work and would work as best he could (Black 98 D-K); that he took Panadol every day (Black 99 S-W); that at one stage when he was working with Macquarie his hours had been cut back to three days due to his pain (Black 216 C-D); and that his knee and ankle were progressively getting worse to the point that at the date of the trial there was regular clicking and grinding, pain, stiffness and immobility (Black 297 F-K).

9. In the light of the clear findings of credit by the primary judge that Mr Jepp was a witness of truth, the above evidence is a powerful basis to conclude that whatever his remuneration in 2004, 2005 and 2006 might have been, over the medium to long term these levels of income were unlikely to be sustained.

10. The evidence from Mr Jepp that his injuries were causing him more trouble as time progressed was supported by the evidence of a co-worker, Mr Parsons (Black 150 S-151 Q).

11. Mr Jepp’s evidence was that he was forced to reduce his duties at times due to his injuries which he said had got worse.  Although he resigned from employment with Macquarie, his evidence was:  that Macquarie no longer wanted him (Black 86 W); that he stayed with Macquarie as part of the rehabilitation plan and that they were only keeping him to avoid higher premiums (Black 86 S-T); that when he resigned he was only being offered two days a week employment (Black 218 R-S); that when a new office manager was appointed at Macquarie a short time before his resignation that person “was always on [his] case, because [he] had no skills or training that she wanted there” (Black 218 T-X); and that when it was put to him that he had the skills to do the job except for a personal clash with manager, which he denied, he said “I knew I couldn’t.  I knew I had no skills to do the job” (Black 219 D-E).

1. Against the background of the above evidence Mr Jepp’s resignation from Macquarie does not detract from the conclusions of the primary judge.

2. Contrary to the submission of Birdon Marine it is clear that the primary judge took into account the income splitting, referrable to the contents of the 2007 tax returns.

3. Looking at the findings of the primary judge which are not challenged, the evidence of Mr Jepp in particular and the conclusion by the learned primary judge from his position of advantage that Mr Jepp was “a hard working man who has been quite severely injured, who keeps trying to work because he needs the income to support a de facto wife and child, but who is unlikely to be able to continue doing the work he is presently engaged in except on a part-time basis”, together with the medical evidence he could never return to work as fitter and turner or any similar occupation, the conclusion of the primary judge as to future economic loss was correct.

4. As to future out-of-pocket expenses, given the medical evidence, the clear evidence of deterioration and Mr Jepp’s age the assessment of $30,000 for the various heads of expense identified by the primary judge was entirely reasonable and is one with which I agree.

5. Mr Jepp is a young man.  At the trial he was 38 years with a future life expectancy of 47 years.  The evidence was that he was likely to have future surgery and that his injuries were getting worse.  Taking his age, life expectancy and applying a relevant multiplier of 5 per cent his Honour’s award of $30,000 is reflective of an allowance of approximately $30 per week for future out-of-pocket expenditure.  This was, in my view, entirely reasonable.

6. For the above reasons the appeal should be dismissed.

7. The appellant should pay the costs of both the first respondent and second respondent to the appeal, that is Mr Jepp and Macquarie.  At the outset of the appeal Birdon Marine put submissions in effect that Macquarie should not be present.  Notwithstanding this initial attitude, Birdon Marine developed submissions which were immediately and directly contrary to the financial interests of Macquarie.  If Birdon Marine were correct as to the Thackham point as to past medical expenses this would directly affect the financial interests of Macquarie.

8. In all the circumstances it was appropriate that Macquarie be present at the appeal and put submissions contrary to the interest of Birdon Marine.

9. In these circumstances the appellant should pay the costs of the first and second respondents.

10. BEAZLEY JA:     I agree with Allsop P.

11. HANDLEY AJA:  I agree with Allsop P.

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LAST UPDATED:
18 June 2009