Cocca v Salkeld (No 2) - [2014] SADC 157

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Application)
COCCA v SALKELD (No 2)
[2014] SADC 157
Judgment of His Honour Judge David Smith
5 September 2014
WORKERS' COMPENSATION
Workers' Compensation – Workers Rehabilitation and Compensation Act 1986 (‘WorkCover Act’) – Plaintiff struck by motor vehicle driven by defendant whilst she was crossing road – Injury occurred in course of her employment – Plaintiff claimed and was paid compensation – Plaintiff also instituted this common law negligence action and recovered damages which were reduced by 10 per cent for her contributory negligence – WorkCover has intervened in this action and seeks to recover from the plaintiff the full amount of the compensation payments – Plaintiff contends that the amount of compensation recovered is to be reduced by 10 per cent to account for her contributory negligence – Discussion of the recovery scheme embodied in s 54(7) of the WorkCover Act and in particular the newly amended subsection (iv) of s 54(7)(d).
Held: In the case of a recovery from the plaintiff (injured party), as opposed to a recovery direct from the defendant (wrongdoer), there is no requirement that the amount recovered be reduced for contributory negligence – This case is a recovery from the plaintiff (injured party) and therefore WorkCover is entitled to recover the full amount of the compensation payments made to the plaintiff because the said amount is not in excess of the amount of damages received by the plaintiff (injured party) – Subsection (iv) of s 54(7)(d) has no application to this case which is a recovery from the plaintiff (injured party) – but rather s 54(7)(b)(iv) applies only to recoveries direct from the defendant (wrongdoer).
Workers Rehabilitation and Compensation Act 1986 (SA) s 47, s 54(7); Workers Rehabilitation and Compensation (Employer Payments) Amendment Act 2011 (SA) s 2, referred to.
Maxwell v Murphy (1957) 96 CLR 261; Paglia v Trice (1991) 56 SASR 62; Cocca v Salkeld (Unreported Judgment, District Court of South Australia 28 June 2014); Salkeld v Cocca [2013] SASCFC 138, considered.

COCCA v SALKELD (No 2)
[2014] SADC 157
Introduction

By leave of the Court, WorkCover Corporation of South Australia (‘WorkCover’) has intervened in this action. It claims a first statutory charge, pursuant to s 54(7) of the Workers Rehabilitation and Compensation Act 1986 (SA), (‘WorkCover Act’), in the sum of $46,055.16 upon the judgment sum of $213,820 awarded, in this action, in favour of the plaintiff against the defendant. WorkCover seeks this order on the basis that the extent of its entitlement should not to be reduced on account of the finding of contributory negligence of the plaintiff.
The plaintiff opposes such an order, and argues that WorkCover’s entitlement should be reduced to take account of the plaintiff’s contributory negligence. Further, the plaintiff claims that WorkCover is not entitled to recover interest it paid to the plaintiff under the WorkCover Act.
Background Circumstances
On 5 April 2007, the plaintiff was injured when she was struck by a motor vehicle driven by the defendant whilst she was walking across Glen Osmond Road at Parkside. On 12 October 2009, she instituted a claim for damages against the defendant, in common law negligence. On 28 June 2013, following a trial, this Court found that the defendant was liable to the plaintiff for damages, which, before apportionment, were assessed at a total of $237,577. That sum was reduced by 10 per cent, for the plaintiff’s contributory negligence, resulting in a judgment in favour of her against the defendant, of $213,820 (see Agreed Facts [6]: see also Cocca v Salkeld (Unreported Judgment, District Court of South Australia, 28 June 2013)). An appeal against that Judgment was unsuccessful (see Salkeld v Cocca [2013] SASCFC 138).
It should be noted that the quantum of the judgment sum was amended by consent after the publication of the primary judgment, from $213,264, after apportionment, to $213,820 (see amended judgment 16 August 2013). In the result there are slight variations of the dollar amounts referred to from time to time in the papers. These variations are immaterial. It is not necessary to set out a rationalisation of them.
The plaintiff’s injuries arose from her employment. She was in the course of doing her employer’s banking when she was struck by the motor vehicle driven by the defendant. Accordingly, following a claim, WorkCover made payments to her pursuant to the WorkCover Act, totalling $46,055.16, over the period of her disabilities. That sum was made up of, amounts for medical and like expenses, lump sum compensation for non economic loss, compensation by way of weekly payments of income maintenance, and an amount of interest augmenting arrears of weekly payments (see Agreed Facts [3]).
On about 14 February 2012 WorkCover gave notice to the plaintiff and defendant of its claimed entitlement to recover the compensation payments (see s 54(7)(e)). As a result WorkCover had a first charge on the damages payable by the defendant to the plaintiff (see s 54(7)(e)).
The plaintiff by her solicitors responded to the claims for recovery by contending that the amount recovered should be reduced by 10 per cent to account for the finding of contributory negligence against the plaintiff. WorkCover did not accept that.
On 21 August 2013 this Court ordered:
·that WorkCover be given leave to intervene in this action;
·that there be a stay on that part of the Judgment which is the subject of the recovery claim by WorkCover namely, $46,189.76; and
·that the said sum of $46,189.76 be paid into the District Court Suitors’ Fund to await the determination of the disagreement.
The Arguments
WorkCover contends that, properly construed, s 54 of the WorkCover Act entitles it to a first charge on the judgment monies recovered by the plaintiff, of $46,055.16, with no reduction for contributory negligence.
The plaintiff contends that, having regard to s 54(7)(d)(iv) of the WorkCover Act, the amount to be recovered by WorkCover must be reduced by the extent to which her negligence has been found to have contributed to the trauma – namely 10 per cent. The plaintiff also argues that WorkCover is not entitled to recover the sum of $3278.99 which was an amount of interest which augmented arrears of weekly payments under s 47 of the WorkCover Act.
Is the recovery by WorkCover of compensation to be reduced by contributory negligence by reason of s 54(7)(d)(iv)?
The resolution of the arguments requires construing s 54 of the WorkCover Act. I set out hereunder the material portions of the provisions:
Division 9—Miscellaneous
Subdivision 1—Limitations on liability
54—Limitation of employer's liability
(1)     …
(2)     …
(3)     …
(4a)    …
(4b)    …
(5)     Where—
(a)     compensation is paid or payable under this Act in respect of a compensable injury;
(b)     a right of action exists against a person other than the employer for damages in respect of the injury,
the person by whom the compensation is paid or payable is entitled to recover from that other person the amount of the compensation in accordance with subsection (7).
(6)     Where—
(a)     a compensable injury arises out of the use of a motor vehicle;
(b)     the employer was or ought to have been insured against liability for the injury under the law of compulsory third-party motor vehicle insurance;
(c)     compensation is paid or payable by the Corporation or a self-insured employer under this Act in respect of the injury,
the Corporation or a self‑insured employer (as the case requires) is entitled to recover the amount of the compensation in accordance with subsection (7).
(7)     Where—
(a)     compensation is paid or payable to a person (the injured party) under this Act;
(b)     the injured party has received, or is entitled to, damages from another person (the wrongdoer) in pursuance of rights arising from the same trauma as gave rise to the rights to compensation under this Act;
(c)     the person by whom the compensation is paid or payable under this Act (the claimant) is entitled to recover the amount of the compensation by virtue of subsection (5) or (6),
then the following provisions apply:
(d)     the claimant is entitled to recover the amount of compensation paid or payable under this Act from the wrongdoer or the injured party but subject to the following qualifications:
(i)no amount may be recovered from the wrongdoer in excess of the wrongdoer's unsatisfied liability to the injured party; and
(ii)the claimant must exhaust its rights against the wrongdoer before recovering against the injured party; and
(iii)no amount may be recovered from the injured party in excess of the amount of the damages received by the injured party; and
(iv)in a case involving contributory negligence on the part of a worker, the amount to be recovered from the wrongdoer by the claimant under this subsection must be adjusted to the extent that is just and equitable having regard to the extent to which the wrongdoer establishes that the contributory negligence contributed to the occurrence of the relevant injury;
(e)     the claimant shall, on giving notice to a wrongdoer of an entitlement to recover compensation under this section, have a first charge, to the extent of the entitlement, on damages payable by the wrongdoer to the injured party;
(f)    any amount recovered by the claimant against a wrongdoer under this subsection shall be deemed to be an amount paid in or towards satisfaction of the wrongdoer’s liability to the injured party;
(g)     an action for the recovery of compensation under this subsection—
(i)may be heard and determined in proceedings brought in the District Court of South Australia; and
(ii)must be commenced within 3 years after the date of the trauma referred to in paragraph (b).
(7a)    …
(7b)    ...
(7c)    …
(8)     In this section—
contributory negligence means a failure by a worker to take reasonable care for his or her own protection or the protection of his or her own interests;
damages includes any form of compensation payable apart from this Act in respect of a compensable injury;
employer includes—
(a)      any person for whose torts an employer is vicariously liable;
(b)      any person who is vicariously liable for the torts of an employer;
the law of compulsory third-party motor vehicle insurance means—
(a)Part 4 of the Motor Vehicles Act 1959 (including a policy of insurance under that Part); or
(b)the law of another State or a Territory of the Commonwealth that corresponds to Part 4 of the Motor Vehicles Act 1959 (including a policy of insurance under such a law).
As indicated the plaintiff contends that, having regard to s 54(7)(d)(iv) of the WorkCover Act, the amount to be recovered by WorkCover must be reduced to the extent to which the plaintiff has been contributorily negligent – in this case 10 per cent.
The first problem with that contention, linked as it is to s 54(7)(d)(iv), is that it is doubtful that the subsection applies to this proceeding. Subsection (iv) was amended into s 54(7)(d) by the Workers Rehabilitation and Compensation (Employer Payments) Amendment Act, 2011 (SA), (‘Amending Act’). That amendment came into operation on a day to be fixed by proclamation (see s 2 of Amending Act). That day was 1 July 2012 (see Government Gazette dated 29 March 2012 at p1294). Amendments which affect substantive rights are presumed to have only prospective operation (see Maxwell v Murphy (1957) 96 CLR 261 per Dixon CJ at 267). The character of s 54(7)(d), particularly the amendment, is substantive. It relates to the relative rights and liabilities of the three parties to this proceeding. The Amending Act is expressed to be operative from 1 July 2012 and there are no other transitional provisions. This proceeding was instituted on 12 October 2009. The trauma giving rise to the injury was on 5 April 2007. The giving of the Notices of Charge occurred in February 2012. Therefore, all the critical events pre-dated the commencement of the amending provision. Whilst I doubt that the amendment applies to this proceeding, because of the view I take of its construction, it does not matter.
I turn now to the construction of s 54.
The broad object of s 54 is to provide a scheme whereby WorkCover or a self insured employer, is able to recover paid compensation; from the injured person, if that person has recovered damages from the wrongdoer; or from the wrongdoer, if there has been no recovery from the wrongdoer by the injured person.
In Paglia v Trice (1991) 56 SASR 62 at p69 King CJ, with whom Millhouse and Debelle JJ agreed, said, as follows about the recovery scheme:
... it is necessary to arrive at a view of the scheme of recovery established by s 54. Subsection (5) of that section confers a right of recovery upon the person, referred to as “the claimant” and including, of course, the Corporation, by whom compensation is paid or payable under the Act. The claimant is entitled to recover the amount of the compensation paid or payable under the Act from the wrongdoer to the extent of the wrongdoer's unsatisfied liability and from the injured party to the extent of any amount not recovered from the wrongdoer but not exceeding the damages which the injured party has received. These amounts may be recovered by action and any such action must be instituted within three years of the trauma giving rise to the entitlement to damages and compensation. The charge on damages payable by the wrongdoer to the injured party conferred by s 54(7)(e) extends to the amount of the claimant's entitlement to recover compensation from the wrongdoer.
…
I think, however, that a consideration of the section as a whole makes it plain that the claimant’s entitlement to recover compensation is co-extensive with the liability to pay compensation. The intention disclosed is that the claimant is to be indemnified to the extent of the wrongdoer’s liability to damages.
(The emphasis is mine).
First s 54(7)(a), (b) and (c) sets out three qualifying or threshold requirements. Provided they are satisfied, the claimant – in this case WorkCover – is entitled to proceed to recover compensation. Second s 54(7)(d)(i) to (iv) prescribes a number of parameters or restrictions on the extent of recovery. Then finally, s 54(7)(e), (f) and (g) provides some machinery or procedural requirements.
In this case the three qualifying or threshold requirements are satisfied.
Compensation has been paid to the injured plaintiff (see s 54(7)(a)). The injured plaintiff has received damages from the defendant wrongdoer, in pursuance of rights arising from the same trauma, namely the collision of 5 April 2007, which entitled her also to compensation under the WorkCover Act (see s54(7)(b)). And finally, pursuant to s 54(5), the claimant WorkCover, is entitled to recover from a person other than the employer, namely the defendant wrongdoer, the amount of compensation paid to the plaintiff (see s 54(7)(c)).
Nothing turns on what I have called the machinery or procedural requirements (i.e. s 54(7)(e) to (g)).
I turn to what I have called the prescribed parameters of recovery in s 54(7)(d)(i) to (iv). The focus of the argument here is upon these provisions.
As the introductory sentence in s 54(7)(d) announces, the claimant (i.e. WorkCover), is entitled to recover in one of two ways namely, first, directly from the wrongdoer (i.e. defendant), or second, from the injured party (i.e. plaintiff). The extent of recovery is separately circumscribed in each of the two cases. In this case WorkCover has not sought recovery direct from the wrongdoer but, as indicated, it has a statutory first charge on the damages recovered by the plaintiff from the wrongdoer (see s 54(7)(e)). The only limitation on the extent to which WorkCover can recover compensation from the plaintiff, is that prescribed in s 54(d)(iii) namely:
No amount may be recovered from the injured party in excess of the amount of the damages received by the injured party …
There is no reference to any reduction for contributory negligence. Further, there is no other basis, discernible in the statutory scheme, upon which to read into the entitlement to recover from the injured party, any reduction for contributory negligence.
Accordingly WorkCover is entitled to recover from the plaintiff the full amount of compensation paid by it to her, without any reduction for contributory negligence, because the only statutory pre-requisite to such recovery has been satisfied, namely, the quantum of the compensation sought does not exceed what the plaintiff recovered from the defendant.
The submission of the plaintiff is that the amendment, that is, s 54(7)(d)(iv), changes that position and requires an adjustment for any contributory negligence.
For ease of immediate reference I repeat the terms of s (iv) of s 54(7)(d):
(iv)in a case involving contributory negligence on the part of a worker, the amount to be recovered from the wrongdoer by the claimant under this subsection must be adjusted to the extent that is just and equitable having regard to the extent to which the wrongdoer establishes that the contributory negligence contributed to the occurrence of the relevant injury.
(The emphasis is mine).
It can be seen immediately that s 54(7)(d)(iv) does not apply to a recovery from the injured party. Rather it is predicated upon the case where recovery is sought directly from the wrongdoer. It is confirmatory of or explanatory of s 54(7)(d)(i). It makes it clear that, in the case of a recovery directly against the wrongdoer by WorkCover, the amount recovered cannot exceed the wrongdoer’s liability or responsibility for the subject trauma. Although the injured party will not be a party to the direct recovery action against the wrongdoer, account must be taken of the degree to which the injured party contributed to, or was responsible for, the trauma.
If the plaintiff in this action had chosen not to institute proceedings for damages for common law negligence against the defendant, but remained content with the compensation payments from WorkCover of $46,055.16, WorkCover could have instituted a direct recovery action against the wrongdoer defendant. Assuming that the Court who heard this hypothetical recovery action also apportioned responsibility on a 90 per cent – 10 per cent basis in favour of the plaintiff, WorkCover would recover 90 per cent of $46,055.16 that is $41,449.64. That sum is obviously much less than the plaintiff’s entitlement to damages at common law. Accordingly, it would ‘… be deemed to be an amount paid in or towards satisfaction of the wrongdoer’s liability to the injured party.’ (see s 54(7)(f).
So the clear intention of the legislature with respect to subsection (iv) is to reinforce s 54(7)(d)(i), and make it abundantly clear that in the direct recovery action, the wrongdoer is entitled to rely upon the contributory negligence of the injured party, as he or she would have been entitled to do, in any common law action instituted by the injured party. The Second Reading Speech of the Minister confirms that intent. With reference to the amendment the Minister said:
The workers compensation scheme in South Australia is a no fault system that protects employers from common law liability arising from work related injuries.
Workers can however pursue their common law right to sue a third party or parties whose negligence has caused or contributed to their injury. Where an injured worker brings an action against a negligent third party, the negligent third party can reduce its liability if it can establish that the worker’s own negligence caused or contributed to the worker’s injury.
WorkCover can bring its own action under the Act against the negligent third party to recover compensation paid and payable to the injured worker.
This Bill removes any doubt that WorkCover recovery actions are limited by a worker’s contributory negligence.
This change will not impact on the level of compensation provided to injured workers.
(See Hansard House of Assembly, 1 December 2011, p6232).

Therefore the primary contention of the plaintiff must fail. The Intervener WorkCover, is entitled to recover the full amount of the compensation paid to the plaintiff in this matter.
I turn to the second contention.
Are interest payments made by WorkCover to the injured party pursuant to Section 47 of the WorkCover Act recoverable?
The argument of the plaintiff is that the interest payment to her by WorkCover is not to be characterised as compensation within the meaning of s 54(5)(a) of the WorkCover Act, and therefore, is not recoverable by WorkCover.
Section 47 of the WorkCover Act provides:
47—Augmentation of weekly payment in consequence of delay
(1) Subject to subsection (2), where—
(a)a weekly payment, or part of a weekly payment, is not paid as and when required to be paid under this Act; or
(b)the making of a weekly payment is delayed pending resolution of a dispute under this Act,
any amount in arrears shall be increased by interest at the prescribed rate.
(2)No interest is payable under this section if the delay is attributable to some fault on the part of the worker.
Pursuant to the above section, WorkCover paid the plaintiff the sum of $3278.99 as interest on delayed weekly payments. The WorkCover Act, by s 3, defines compensation as including ‘… any monetary benefit payable under this Act …’ Clearly, payments made under s 47 are monetary benefits payable under the Act, and so are compensation payments which are recoverable.
I have had close regard to the plaintiff’s Outline of Argument and to the submissions of Mr Walsh QC, (57-61). There is simply no basis to regard the interest payments as anything else but payments of compensation, which like the other compensation payments, are recoverable from the plaintiff. There is no warrant to further agitate this obvious point.
Therefore the second contention must also fail.
Conclusions
In the result the Intervener, WorkCover, is entitled to recover from the plaintiff the full amount of the compensation paid by it to the plaintiff and its statutory charge is not to be reduced on account of the finding of contributory negligence against the plaintiff. Further, the payment of interest by WorkCover to the plaintiff, pursuant to s 47 of the WorkCover Act, is part of the recoverable compensation.
The parties should fashion and proffer to the Court a Minute of Order implementing this decision and providing for payment out of the Suitors’ Fund to the Intervener.
I will hear the parties as to costs.