Bond v Johnson
[2012] TASSC 81
•4 December 2012
[2012] TASSC 81
COURT: SUPREME COURT OF TASMANIA
CITATION: Bond v Johnson [2012] TASSC 81
PARTIES: BOND, David
v
JOHNSON, Damien
FILE NO: 283/2009
JUDGMENT
APPEALED FROM: Storey's Maintenance Services Pty Ltd v Johnson
[2012] TASSC 23
DELIVERED ON: 4 December 2012
DELIVERED AT: Hobart
HEARING DATE: 27 November 2012
JUDGMENT OF: Blow J
CATCHWORDS:
Statutes – Acts of Parliament – Operation and effect of Acts – Retrospective operation – Amending Acts – Amendment taken to have commenced on past date – Exception as to proceedings commenced but not completed – Issue as to whether person would have been liable if sued between retrospective commencement date and date amendment made.
Workers Rehabilitation and Compensation Amendment Act 2007 (Tas), s2(3).
Wrongs Act 1954 (Tas), s3(1)(c).
West v Gwynne [1911] 2 Ch 1; R v Kidman (1915) 20 CLR 425; Coleman v Shell Co of Australia Ltd (1943) 45 SR(NSW) 27; Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285; State of Victoria v Robertson (2000) 1 VR 465, referred to.
Aust Dig Statutes [1148]
Workers Compensation – Alternative rights against employer and/or third parties and consequences thereof – Rights of and against third parties – Right of employer to indemnity or contribution from third party – Indemnity from "person liable to pay damages" – Retrospective statutory amendment extinguishing liability.
Workers Rehabilitation and Compensation Act1988 (Tas), s134.
Workers Rehabilitation and Compensation Amendment Act 2007 (Tas), s2(3).
West v Gwynne [1911] 2 Ch 1; R v Kidman (1915) 20 CLR 425; Coleman v Shell Co of Australia Ltd (1943) 45 SR(NSW) 27; Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285; State of Victoria v Robertson (2000) 1 VR 465, referred to.
Aust Dig Workers Compensation [281]
REPRESENTATION:
Counsel:
Appellant: P L Jackson
Respondent: B R McTaggart
Solicitors:
Appellant: Dobson Mitchell & Allport
Respondent: Wallace Wilkinson & Webster
Judgment Number: [2012] TASSC 81
Number of paragraphs: 28
Serial No 81/2012
File No 283/2009
DAVID BOND v DAMIEN JOHNSON
REASONS FOR JUDGMENT BLOW J
4 December 2012
This is an appeal from a decision of Holt AsJ granting leave to file and serve a third party notice, and granting an extension of time for that purpose: Storey's Maintenance Services Pty Ltd v Johnson [2012] TASSC 23. The appeal concerns the consequences of statutory restrictions on the rights of workers to sue for damages at common law when they have not suffered a prescribed degree of physical impairment.
The allegations in the relevant proceedings are as follows. In March 2006 a man named Michael Parke was injured in the course of his work at the premises of Cadbury Pty Ltd at Claremont. He was not an employee of Cadbury. He was employed by a labour hire company named Storey's Maintenance Services Pty Ltd. That company had provided his services to Cadbury. The appellant, David Bond, was a project manager employed by Cadbury. The respondent, Damien Johnson, was an independent sub-contractor. He had been engaged by an intermediary named IRBH Pty Ltd, which in turn had been engaged by Cadbury. IRBH provided his services to Cadbury. He was supervising the injured worker, Michael Parke, at the time of his injury. Storey's, as Mr Parke's employer, has made substantial payments of workers compensation to Mr Parke and for his benefit.
The Workers Rehabilitation and Compensation Act 1988 ("the WRC Act"), s134(1), when it applies, permits an employer who has made workers compensation payments to recover an indemnity from a person who is, or would be, liable to pay damages to the injured worker in respect of his or her injury. In April 2009, Storey's sued Mr Johnson, relying on s134(1), alleging he negligently caused Mr Parke's injury, and claiming an indemnity in respect of the workers compensation payments made by it. In July 2009, Mr Johnson commenced third party proceedings against Cadbury, claiming an indemnity or contribution in respect of any amount Storey's might recover against him, alleging that Mr Parke's injury was caused by negligence of Mr Bond, and that Cadbury was vicariously liable for Mr Bond's negligence. In April 2011, Mr Johnson applied for leave to commence similar third party proceedings against Mr Bond, and for an extension of time for that purpose. The learned associate judge granted that application. This is an appeal by Mr Bond from the orders made.
Essentially the learned associate judge concluded that, if Mr Parke's injury was caused by negligence of Mr Bond as alleged, then (a) Storey's could have recovered an indemnity from Mr Bond pursuant to the WRC Act, s134(1), and (b) Mr Johnson therefore had a viable claim for contribution or indemnity against Mr Bond under the Wrongs Act 1954, s3(1)(c). Mr Bond contends that both of those conclusions were incorrect. Mr Johnson contends that they were both correct.
Wrongs Act, s3(1)(c)
This provision reads as follows:
"(1) Where damage is suffered by a person as the result of a wrongful act —
…
(c)a person who is liable in respect of that damage may recover contribution from any other person who is, or would, if sued by the person by whom the damage was suffered at the time when the cause of action arose, have been, liable in respect of the same damage but so that no person is entitled to recover contribution under this section from a person who is entitled to be indemnified by him in respect of the liability in respect of which the contribution is payable; …".
In order for a claim for contribution under s3(1)(c) to succeed, four things need to be established:
· That "damage was suffered by a person".
· That that damage resulted from a "wrongful act".
· That a second person is "liable in respect of that damage".
· That a third person, if sued by the first person when that person's cause of action arose, would have been liable in respect of that damage.
The learned associate judge concluded that the requirements of s3(1)(c) were satisfied on the following bases:
· He concluded, at par[13] of his reasons, that Storey's had suffered "damage", in that it had suffered economic loss as a result of having to make workers compensation payments.
· He accepted, at par[13] of his reasons, that, on the facts pleaded by Storey's, that damage resulted from a "wrongful act" of Mr Johnson – evidently his alleged failure to take reasonable care for the safety of Mr Parke.
· He accepted that, on the facts pleaded by Storey's, Mr Johnson was liable in respect of that "damage" pursuant to the WRC Act, s134(1).
· He accepted, at par[14] of his reasons, that it was at least arguable that Mr Bond, if sued by Storey's when its cause of action under s134(1) first arose, would have been liable in respect of the "damage" suffered by Storey's.
As to the claim under the Wrongs Act, s3(1)(c), the appellant, Mr Bond, contends as follows:
· That a liability to make workers compensation payments does not amount to "damage" for the purposes of s3(1)(c).
· That Storey's liabilities under the WRC Act did not result from any "wrongful act".
· That, because of some retrospective amendments made to the WRC Act in 2007, Storey's must be taken to have been precluded from recovering an indemnity from him at the time when its cause of action under s134(1) arose.
Was "damage" suffered by Storey's?
The Wrongs Act contains the following definition of "damage" in s2:
"'damage' includes loss of life, personal injury, damage to property, economic loss and loss of any other kind".
Mr Johnson contends that Storey's suffered economic loss, in that it made workers compensation payments, and that that economic loss amounted to "damage" as defined.
When an employer makes workers compensation payments in respect of an injury to a worker, and then claims a statutory indemnity from someone who is responsible for the worker's injury, that claim does not amount to a claim for damages: Tuckwood v Rotherham Corporation [1921] 1 KB 526; Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321 per Barwick CJ, with whom McTiernan J agreed, at 327–328; Philip Morris Ltd v Ainley [1975] VR 345 at 349; Borg Warner (Australia) Ltd v Zupan [1982] VR 437; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520 at par[14]; QBE Workers Compensation (NSW) Ltd v BAE Systems Regional Aircraft Ltd [2005] NSWSC 232 at pars[37] – [40].
However it does not necessarily follow that the loss suffered by Storey's as a result of it paying workers compensation fell outside the definition of "damage". There is no reason not to give the words of that definition their ordinary meaning. In my view Storey's suffered economic loss as a result of paying the workers compensation, and that loss constituted "damage" for the purpose of the Wrongs Act. But that is certainly not the end of the matter.
The result of a "wrongful act"?
The term "wrongful act" is defined in the Wrongs Act, s2, as follows:
"'wrongful act' means an act or omission that —
(a)gives rise to a liability in tort or would, if it caused damage to another person, give rise to a liability in tort; or
(b)amounts to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort; or
(c)amounts to a breach of a statutory duty –
and includes an act or omission on the part of a person suffering damage that causes or contributes to the damage and that constitutes a failure on the part of that person to take reasonable care for the protection of his or her person or property."
The liability of Storey's to make payments under the WRC Act to Mr Parke and for his benefit arose irrespective of whether anything anyone did, or omitted to do, constituted any sort of wrongful act. Liabilities to pay compensation under the WRC Act are simply not fault-based. The liabilities of Storey's arose because the worker suffered an injury that arose in the course of his employment and, it would seem, because incapacity for work and the incurring of compensable expenses resulted from that injury: WRC Act, ss25(1), 69(1), and 75.
That is not necessarily the end of the matter. The situation here, as alleged by Storey's, is that that company became liable to pay workers compensation as a result of an injury, and that injury was caused by negligent omissions on the part of Mr Johnson. Those alleged negligent omissions would fall within the definition of "wrongful act". I think it must follow that, if Mr Parke's injury was caused by negligent omissions of Mr Johnson as alleged, and Mr Parke's employer therefore had to pay workers compensation, then the employer's resulting economic loss was suffered by it "as the result of a wrongful act" of Mr Johnson within the meaning of the introductory words of s3(1).
A person who is liable in respect of the damage suffered by Storey's?
It is not alleged that Mr Johnson has any liability to Storey's in tort or contract. Storey's contends only that it has a statutory right to an indemnity from him under s134. As I have said, such a liability is not a liability to pay damages. However that is not necessarily the end of the matter. Mr Johnson contends that, if he is liable to Storey's under s134, then, within the meaning of the opening words of s3(1)(c), he is "a person who is liable in respect of that damage", ie in respect of the economic loss suffered by Storey's. I need not decide that point. For present purposes I will accept, without deciding the point, that that is so.
Hypothetical liability of Mr Bond
If Mr Parke's accident had occurred before 1 July 2001, there would have been no impediment to him suing Mr Bond at common law for damages in respect of his injuries. If those injuries had been caused by negligence on the part of Mr Bond, then Cadbury would have been vicariously liable for damages as Mr Bond's employer. However Parliament decided in 2000 to reduce workers' rights to common law damages for work-related injuries. As a result, the WRC Act was amended by the Workers Rehabilitation and Compensation Amendment Act 2000, which commenced on 1 July 2001. The 2000 Act introduced some new provisions into the WRC Act – ss138AA and 138AB. Those new sections, when they applied, precluded a worker from commencing proceedings for damages unless certain steps were taken before proceedings were instituted. First, under s138AB(2), there had to be either an agreement between the worker and the employer, or else a determination by the Workers Rehabilitation and Compensation Tribunal, that the worker had a whole person permanent impairment of not less than 30%. Then, once there was such an agreement or determination, s138AB(1) required the worker to lodge with the tribunal an election to claim damages. That had to be done before court proceedings could be instituted.
However there was a way to circumvent the new provisions. The wording of the new s138AB(1) limited its application to "a worker who intends to seek damages against his or her employer". Crawford J (as he then was) held in Cook v Miley [2007] TASSC 70 that that subsection did not place any restriction on a worker commencing proceedings for damages against an employee for whose acts the worker's employer, or a person deemed to be the worker's employer, was vicariously liable.
As a result of that decision, Parliament amended the legislation retrospectively. The new amendments were effected by the Workers Rehabilitation and Compensation Amendment Act 2007, ss35 and 36. The words "his or her employer" in s138AB(1) were replaced with "an employer". Section 138AA(3) was amended so that the words "an employer" in the whole of Div2 of PtX, which included s138AB, included "a reference to a person for whose acts the employer is vicariously liable". By virtue of a definition of "employer" in s132, which needed no amendment, the word "employer" included a "principal with a liability under section 29". Typically, a principal liable under s29 is a company that has engaged a labour hire company whose employee is injured in the execution of the principal's work. Thus, the 2007 amendments spread the restrictions on workers' damages claims so that they applied to actions against individuals employed by their actual employers, and by s29 principals. Section 2(3) of the 2007 Act provided that those amendments were "taken to have commenced on 1 July 2001".
However, in fairness to workers with pending actions in relation to injuries suffered on or after 1 July 2001, the 2007 Act inserted a provision exempting those workers' proceedings from the retrospective amendments. That provision was s138ABA of the WRC Act. It read as follows:
"The amendments made to sections 138AA and 138AB by sections 35 and 36 of the Workers Rehabilitation and Compensation Amendment Act 2007 do not apply in respect of proceedings for an award of damages that were commenced, but not completed, before the day on which that Act received the Royal Assent."
The 2007 Act received the Royal Assent on 31 October 2007. As I have said, Mr Parke's accident was in March 2006. If he had sued Mr Bond for damages before 31 October 2007, s138ABA would have prevented the amended ss138AA and 138AB from barring his action. But he did not sue Mr Bond in time, or at all.
Further substantial amendments were made to the relevant provisions by the Workers Rehabilitation and Compensation Amendment Act 2009. However none of those amendments apply in relation to a worker in respect of an injury suffered before 1 July 2010: WRC Act, s164A.
Counsel for Mr Bond made submissions to the learned associate judge to the following effect:
· Cadbury is an "employer" for the purposes of the WRC Act, ss138AA and 138AB. That is because it was a principal by virtue of s29, and therefore fell within the applicable definition of "employer" in s132.
· If Mr Bond was negligent, then Cadbury, as his employer, was vicariously liable for his negligence.
· By virtue of s138AA(3), a reference to "an employer" in s138AB "includes a reference to a person for whose acts an employer is vicariously liable".
· Mr Parke therefore had no cause of action for damages against Cadbury or Mr Bond.
· Section 134 of the WRC Act, before an amendment that took effect on 31 October 2007, enabled an employer – in this case Storey's – to recover an indemnity only "where an injury for which compensation is payable to a worker is caused under circumstances creating a liability in some person other than the employer to pay damages in respect of that injury to that worker".
· As Mr Parke's injury was not caused under circumstances creating a liability in Mr Bond to pay damages in respect of that injury to Mr Parke, Storey's was not entitled to recover an indemnity from Mr Bond.
· As Mr Bond had no liability to Storey's, Mr Johnson was not entitled to contribution from Mr Bond under s3(1)(c) of the Wrongs Act. Mr Bond was not "liable in respect of the same damage" within the meaning of that provision.
Most of those propositions were and are uncontroversial. However the learned associate judge rejected the fourth proposition, on which the whole argument depended. At par[14] of his reasons he said the following:
"14 The contention that the proposed third party claim is not viable for the reasons submitted must fail. It overlooks the fact that the hypothetical action by Storey's against Mr Bond referred to in the Wrongs Act, s3(1)(c), is an action commenced 'at the time when the cause of action arose'. It is agreed that Storey's suffered damage prior to the 31 October 2007 amendments to the Workers Rehabilitation and Compensation Act. Despite the retrospective operation of the amendments, the amending Act, by s37, specified that the retrospective amendments 'do not apply in respect of proceedings for an award of damages that were commenced, but not completed, before the day on which [the amending Act] received the Royal Assent'. The date upon which the third party proceedings might commence, or the date upon which such proceedings might be tried, is irrelevant for the purpose of the existence of a cause of action under the Wrongs Act. The relevant date is the date upon which Storey's acquired a cause of action against the proposed third party and the claim under the Wrongs Act is mandated to be assessed on the presumption that Storey's had issued its writ on that day. Accordingly the hypothetical action presumed to have been brought by Storey's against Mr Bond is at least arguably, if not certainly, immune from the retrospective amendments by the operation of s37. The submission that the proposed claim against Mr Bond lacks viability, for the reason submitted, is rejected."
I think it is clear, with respect, that the learned associate judge erred in that paragraph in his approach to the retrospective amendments to the WRC Act. Section 2(3) of the 2007 Act provided that those amendments "are taken to have commenced on 1 July 2001". For the purpose of determining whether the requirements of s3(1)(c) of the Wrongs Act were satisfied, it was therefore necessary to take those amendments to have commenced on 1 July 2001. Section 138ABA created an exception in relation to proceedings that were in fact commenced before 31 October 2007, but not in relation to hypothetical proceedings that were not in fact commenced. To put it another way, when considering what the situation was when a cause of action accrued to Storey's, it was necessary to ignore the law as it in fact was, and to have regard to the law as it must now be taken to have been. In the words of Buckley LJ in West v Gwynne [1911] 2 Ch 1 at 12, s2(3) required "that as at a past date the law shall be taken to have been that which it was not". That is what the language of the 2007 Act expressly required: R v Kidman (1915) 20 CLR 425, per Isaacs J at 443; Coleman v Shell Co of Australia Ltd (1943) 45 SR(NSW) 27 at 30–31; Commonwealth v SCI Operations Pty Ltd (1998) 192 CLR 285 at 309; State of Victoria v Robertson (2000) 1 VR 465 at pars[1], [18].
Section 3(1)(c) made it necessary to consider whether Mr Bond would, if sued by Storey's at the time when that company's cause of action under s134(1) arose, have been liable to Storey's in respect of the same "damage", ie the economic loss suffered by Storey's as a result of it having to pay compensation. Any cause of action that Storey's had accrued to it when it first paid compensation, evidently before 31 October 2007. The rights of Storey's to recover an indemnity were governed by s134(1) as it read before the 2007 amendments. The amendment to that section effected by the 2007 Act did not operate in relation to earlier accidents or injuries: Fishpool v Incat Tasmania Pty Ltd [2012] TASSC 80 at pars[18] – [31]. Under the unamended s134(1), Storey's could recover an indemnity from Mr Bond only if the worker's injury was caused under circumstances creating a liability in Mr Bond to pay damages in respect of that injury. Because the 2007 amendments to ss138AA and 138AB were retrospective, the hypothetical liability of Mr Bond had to be determined by reference to those sections as amended. The retrospective amendments had had the effect of extinguishing any such liability. Applying the law as it must be taken to have been, Mr Bond had no liability to Mr Parke; Storey's therefore had no right to an indemnity from Mr Bond under s134(1); and Mr Bond therefore was not, within the meaning of s3(1)(c), a person who "would, if sued by the person by whom the damage was suffered [Storey's] at the time when the cause of action arose [when the first compensation was paid], have been, liable in respect of the same damage [Storey's economic loss]".
It follows that Mr Johnson's claim against Mr Bond under s3(1)(c) was not maintainable.
Equitable liability for contribution
If Mr Bond were liable to Storey's under s134(1) of the WRC Act, and the Wrongs Act for some reason did not confer on Mr Johnson a right to claim contribution, he could have a right to recover contribution from Mr Bond in equity: Burke v LFOT Pty Ltd (2002) 209 CLR 282. But, applying the law as it must be taken to have been, Storey's does not have, and never has had, a right to recover an indemnity from Mr Bond. It follows that there is no alternative basis for Mr Johnson to claim an indemnity from Mr Bond.
Conclusion
It follows that the claim for contribution by Mr Johnson against Mr Bond cannot possibly succeed. The learned associate judge should therefore not have made the orders that he did. I will therefore allow the appeal, set aside those orders, and dismiss the interlocutory application filed on 7 April 2011, by which they were sought.
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