Davis v Cockatoo Dockyard Pty Ltd

[2000] NSWDDT 6

(2000) 19 NSWCCR 594

DAVIS v COCKATOO DOCKYARD PTY LTD
[2000] NSWDDT 6

Dust Diseases Tribunal of New South Wales: Curtis J

12,13 April 2000 (H)
20 April 2000 (J)

Dust Diseases Tribunal - Damages - Deductions - Collateral benefits received under foreign industrial legislation - Principles governing deductibility

Dust Diseases Tribunal - Damages - Deductions - Weekly payments of industrial injuries benefits under UK legislation - Benefits not deductible - Social Security Contributions and Benefits Act 1992 (UK)

Dust Diseases Tribunal - Damages - Deductions - Lump sum payment in respect of asbestos-related disease under UK legislation - Lump sum payment deductible - Pneumoconiosis Etc (Workers Compensation) Act 1979 (UK)

M.P. Cahill, for the plaintiff

T.G.R. Parker, for the defendant

Cur adv vult

1. CURTIS J: The plaintiff, now aged 71, contracted asbestos-related pleural disease as a result of inhalation of asbestos dust and fibre while employed by the defendant as an apprentice fitter for two years and two months between May 1948 and July 1950. The defendant admits this inhalation occurred as a result of its breach of duty and also that in consequence of this breach the plaintiff suffered a material contribution to his disease.

1. The plaintiff was, however, further exposed to the inhalation of asbestos when employed as a ship’s engineer by an English shipping company, Shaw Savill & Albion & Co, between April 1951 and June 1959. This employment also made a material contribution to the disease.

1. On 5 December 1995 an adjudicating medical authority established pursuant to the Social Security Contributions and Benefits Act 1992 (UK) (the UK Social Security Act) certified that the plaintiff suffered the disease of bilateral diffuse pleural thickening and assessed his disablement at 20 per cent. The plaintiff has been in receipt of an industrial injuries benefit pursuant to that legislation since that time, presently at the rate of A$78.52 per week. The payments were backdated to 1 January 1992 and appear to be indexed for inflation.

1. On 22 October 1996 the plaintiff was also paid the lump sum of £3,750 (then A$7,397) pursuant to an entitlement created by the Pneumoconiosis Etc. (Workers Compensation) Act 1979 (UK) (the UK Workers Compensation Act) in respect of his asbestos-related disease.

1. It is common ground that all asbestos exposure has contributed to the plaintiff’s asbestos-related pulmonary disease and that I should, having assessed the plaintiff’s damages, apportion to the liability of the defendant only that part of an appropriate award of damages as may reflect the defendant’s contribution to the plaintiff’s total fibre burden and disablement: see Brear v Commonwealth (1999) 18 NSWCCR 637.

1. Three issues arise:

1.What is an appropriate quantum of damages?

2.What proportion of that sum should be borne by the defendant?

3.Should moneys paid and payable to the plaintiff pursuant to the UK Social Security Act and the UK Workers Compensation Act be deducted from any damages?

Damages

The plaintiff’s evidence

1. The plaintiff was born on 1 April 1929 and is now 71 years old. He retired from the sea in 1959 and worked as an engineer at the Rowntree factory in York, England, until his retirement in May 1998 at the age of 59. The plaintiff in his affidavit said that in early 1995 he developed what seemed to be a simple cold, which developed into a persistent cough. Towards the end of April 1995 he found that he was waking up during the night with difficulty breathing. The symptoms persisted and he consulted his general practitioner, Dr N. Moran, who referred him to a consultant physician, Dr Hunter. Dr Hunter arranged for the plaintiff to undergo a lung function test and a CT scan. These tests revealed the asbestos-related pulmonary disease from which the plaintiff now suffers.  It is the evidence of the plaintiff that this was the first occasion on which he became aware of his condition.

[At [8] to [31] his Honour considered evidence relevant to his determination of an appropriate assessment of damages and concluded that the amount for general damages should be $50,000 with other amounts for special damages to be reflected in his award. At [32] to [43] his Honour considered the evidence relevant to the issue of apportionment and concluded that liability for the plaintiff’s damage should apportioned as 75 per cent to the defendant and 25 per cent to Shaw Savill. He continued:]

Should the English payments be deducted?

1. The principles to be applied in this regard were reviewed by Stein JA in James Hardie & Co Pty Ltd v Newton (1997) 42 NSWLR 729 at 734 where he said:

The issue of whether collateral benefits are deductible from common law damages is one which not infrequently causes difficulty. A convenient starting point for consideration is Redding v Lee (1983) 151 CLR 117. In Redding and Evans v Muller (1983) 151 CLR 117 (heard at the same time) the payments involved were invalid pension and unemployment benefits respectively. Referring back to what Dixon CJ and Windeyer J had said in National Insurance Co of New Zealand v Espagne (1961) 105 CLR 569, Gibbs CJ stated (at 125):

“The test suggested is a general one, and it requires the court to consider the nature of the benefit which the defendant seeks to set off against the damages, and to inquire whether the person or body supplying the benefit intended that the plaintiff should enjoy it in addition to whatever damage she might recover from the defendant.  In the case of a benefit provided under statutory authority, the intention of the legislature, in providing the benefit, must be gleaned from the statute itself as a matter of interpretation. If the statute expressly provides (as some statutes relating to workers compensation have done) that a plaintiff has recovered damages shall repay the amount of the benefit, the receipt of the benefit must be disregarded in the assessment. In many cases, however, the statute under which the benefit is provided will give no assistance of this kind. Then it will be necessary to consider closely the nature of the benefit itself.  The conclusion that the benefit is intended for the plaintiff personally and not in reduction of the damages may more readily be drawn when it is seen that the receipt of the benefit is not dependent on the loss of wages or earning capacity ... and is not intended to replace the lost wages or remedy the loss of earning capacity.”

Further in the judgment of Mason J and Dawson J (Redding at 137):

“The subsequent decisions in this Court apply the principles expressed by Dixon CJ and Windeyer J in Espagne. They make it clear that the issue turns on the character and purpose of the particular financial benefit which the plaintiff receives: Was the benefit conferred on him independently of any right or redress against others and so that he might enjoy the benefit even if he enforced the right?”

Later, their Honours stated (Redding at 138) that:

“... it has been acknowledged that it would be unjust and unreasonable to reduce damages on account of benefits received by the plaintiff resulting from benevolence. Benefits of this kind spring from a desire to assist the plaintiff, not from any wish to relieve against the tortfeasor’s liability (Espagne). A similar comment may be made about pensions and superannuation benefits whose purpose it is to ameliorate the plaintiff’s situation irrespective of his right to recover compensation against a tortfeasor”

The High Court revisited the issue in Manser v Spry in (1994) 181 CLR 428. Building on the judgments of Dixon CJ and Windeyer J, in National Insurance Company of New Zealand v Espagne, the Court stated (at 436) that to ascertain whether a statutory benefit possessed “the distinguishing characteristic”, that it be enjoyed independently and cumulatively upon, the right to damages, the task of the court is to discover the Legislative intention. The three possible indicia of such intention are:

(i) the financial source of the benefit;

(ii) a provision which requires repayment of the benefit out of damages; and

(iii) the nature of the benefit.

The Court observed that if all indicia of intent fail, then the “settled principle governing the assessment of compensatory damages” in Haines v Bendall (1991) 172 CLR 60 at 63 must be applied. That is, the injured party should receive compensation in a sum which will put that party in the same position he or she would have been but for the tort. Further, a plaintiff cannot recover more than he or she has lost: Parry v Cleaver [1970] AC 1 at 13.

1. The payments made to this plaintiff in England must therefore be deducted from his damages unless I am satisfied that the English legislative intention in providing the benefits was that he may retain the benefit even if he enforced his right to recover an award of damages against this defendant.

1. The search for legislative intention in this case, is a search for fiction. It is highly unlikely that the English Parliament even considered the present question let alone formed an intention. I have not been provided with copies of any Parliamentary speeches nor with complete copies of relevant statutes. I have not conducted my own researches and approach the question as a matter of fact to be determined by inference from those portions of the United Kingdom legislation tendered in evidence before me.

1. The real task is to determine the probable response had the question been formulated for consideration by Parliament. Properly posed, the question is this: “Where a worker becomes entitled to a benefit pursuant to this statute as a result of injuries arising in the course of English employment, should that benefit be enjoyed by him in addition to, and independently of, his right to claim damages from a foreign employer, who contributed to the disability?”.

1. The answer to this question may be different to the answer given if the legislature was asked should the worker retain both the benefit and damages against an English employer whose conduct was the only relevant cause of the entitlement and the sole cause of the whole of the plaintiff’s damage.

1. The plaintiff has received benefits pursuant to two Acts, and each must be considered separately.

Social Security Contributions and Benefits Act 1992 (UK)

1. Part V of this Act is entitled, “BENEFITS FOR INDUSTRIAL INJURIES” and relevantly provides as follows:

Section 94 Right to Industrial Injuries Benefit

(1)     Industrial Injuries Benefit shall be payable where an employed earner suffers personal injury caused after 4 July 1948, by accident arising out of and in the course of his employment being employed earners employment.

(2)     Industrial Injuries Benefit consists of the following benefits:

(a)Disablement benefit payable in accordance with section 103 to section 105 below, paragraphs 2 and 3 of Schedule 7 below and Parts II and III of that schedule;

(b)Reduced earnings allowance payable in accordance with Part IV;

…

(5)     Subject to section 117, section 119 and section 120 below, Industrial Injuries Benefits shall not be payable in respect of an accident happening while the earner is outside Great Britain.

Section 95 Relevant Employments

(4)     Any reference in the Industrial Injuries and Diseases Provisions to an “employed earner” or “employed earner’s employment”, is to be construed in relation to any time before 6 April 1975, as a reference respectively to an “insured person” or “insurable employment”, within the meaning of the provisions relating to industrial injuries and diseases which were in force at that time.

Section 103 Disablement Pension

(1)     Subject to the provisions of this section, an employed earner shall be entitled to disablement pension if he suffers, as a result of the relevant accident, from loss of physical or mental faculty such that the assessed extent of the resulting disablement amounts to not less than 14 per cent or on a claim made before 1 October 1986, at 20 per cent.

Section 108 Benefit in Respect of Prescribed Industrial Diseases, etc.

(1)     Industrial Injuries Benefit shall, in respect of a person who has been in employed earner’s employment, be payable in accordance with this section and section 109 and section 110 below in respect of —

(a)Any prescribed disease …

which is a disease or injury due to the nature of that employment and which developed after 4 July 1948.

Section 111 Workers Compensation, etc

Schedule 8 of this Act shall have effect —

(a)To continue workmen’s compensation;

(b)To enable schemes —

(i)to supplement workmen’s compensation; and

(ii)to provide for the payment of allowances or other benefits for industrial diseases in respect of employment before 5 July 1948.

1. Because s 94 (Injuries by Accident) and s 108 (Industrial Diseases) restrict the operation of the Act to injuries occurring after 4 July 1948, s 111 operates to continue previous legislative schemes or payment of workers compensation in respect of injuries occurring before that date.

1. I have been provided with extracts of the National Insurance (Industrial Injuries) Act 1946 (UK), entitled:

An Act to substitute for the Worker’s Compensation Acts 1925 to 1945, a system of insurance against personal injury, caused by accident, arising out of and in the course of a person’s employment, and against prescribed diseases and injuries due to the nature of a person’s employment, and for purposes connected therewith.

1. Relevant parts of this extract are as follows:

PART 1

INSURED PERSONS AND CONTRIBUTIONS

(1)     Subject to provisions of this Act, all persons employed in insurable employment shall be insured in a manner provided by this Act against personal injury caused on or after the appointed day by accident, rising out of and in the course of such employment.

(2)     For the purposes of this Act, every employment specified in Pt 1 of the first schedule to this Act is an insurable employment unless it is an accepted employment, that is to say an employment specified in Pt 2 of that schedule.

1. The first schedule to the Act is in these terms:

INSURABLE EMPLOYMENTS

(1)     Employment in Great Britain under any contract of service or apprenticeship, whether written or oral and whether expressed or implied (in this schedule referred to as a “Contract of Service”).

(2)     Employment under contract of service either as master or a member of a crew of any ship or vessel to which this paragraph applies or in any other capacity on board any such ship or vessel where— …

(b)The contract is entered into in the United Kingdom with a view to its performance (in whole or in part) while the ship or vessel is on her voyage.

1. The third schedule of the Act provided that weekly rates of contributions payable by insured persons and employers were to be four pence each. While no relevant statutory provisions are before me, it has been assumed by the parties that the industrial benefit scheme of the Social Security Contributions and Benefit Act 1992, makes similar provisions for the funding of benefits by levies on both workers and employers.

1. Also relevant to the question in hand, is the Social Security (Recovery of Benefits) Act 1997 (UK). This Act provides that payments to persons “in consequence of any accident injury or disease suffered by the person” [which must include damages awarded in the UK] are subject to a charge in respect of Social Security benefits received by the injured person. The amount of the charge, which is to be paid directly to the Secretary of State, is calculated in accordance with the schedule so that the deduction operates only against discrete heads of compensation.

Moneys paid pursuant to s 103 of the Social Security Contributions and Benefit Act 1992 (the payments here in question) may only be charged and deducted from that part of the injured person’s claim for compensation as is subsumed within the heading, “Compensation for earnings lost during the relevant period”.

1. From a consideration of all of these provisions, it appears to me that:

1.The financial source of the benefits arises, in part, from contributions made by the plaintiff described as “insurance” and the benefits are restricted to persons who have contributed financially. 

2.The Parliament, albeit at a later time, has considered whether repayment of the benefit should be required out of damages and has answered, “No”. Parliamentary intention, though expressed at different times in different Acts, can be presumed to be consistent.

3.The nature of the benefit was categorised by the Parliament in the 1997 legislation as compensation for lost earning capacity. The damages to which the plaintiff is entitled against the defendant include no amount for that category of loss.

1. I conclude that it is improbable that the English Parliament intended other than that disability benefits paid to the plaintiff pursuant to the Social Security Contributions and Benefits Act 1992 in respect of injuries suffered in the service of an English employer, payable from a fund to which he contributed, should be received by him independently and in addition to his right to recover damages for his pain and suffering from a foreign employer. I am fortified in this opinion by the circumstance that his entitlement to damages in this Tribunal is by apportionment identified as only that sum which compensates him for the damage done in the service of the foreign employer.

   Pneumoconiosis Etc (Workers Compensation) Act 1979 UK

1. This legislation provides relevantly as follows:

1      Lump Sum Payments

(1)     If on a claim by a person who is disabled by a disease to which this Act applies, the Secretary of State is satisfied that the conditions of entitlement mentioned in s 2(1) below are fulfilled, he shall in accordance with this Act, make to that person, a payment of such amount as may be prescribed by the regulations.

...

(3)     The diseases to which this Act applies are pneumoconiosis, byssinosis and diffuse mesothelioma [and any other disease which is specified by the Secretary of State for the purposes of this Act, by order made by statutory instrument].

(The Pneumoconiosis etc (Worker’s Compensation) (Specified Diseases) Order 1985 specified bilateral diffuse pleural thickening for the purposes of the Act).

2      Conditions of Entitlement

(1)     In the case of a person who is disabled by a disease to which this Act applies, the conditions of entitlement are:

(a) That disablement benefits is payable to him in respect of the disease...

(b) That every relevant employer of his has ceased to carry on business;

(c) That he has not brought any action, or compromised any claim, for damages in respect of the disablement.

…

(3)     In this section

“Relevant Employer”, in relation to a person disabled by a disease, to which this Act applies, means any person by whom he was employed at any time during the period during which he was developing the disease, and against whom he might have, or might have had a claim for damages in respect of the disablement.

(4)     For the purposes of this section, any action which has been dismissed otherwise than on the merits (as for example for want of prosecution or under any enactment relating to limitations of actions) shall be disregarded.

…

9      Financial Provisions

(1)     There shall be, paid out of moneys provided by Parliament -

(a) Any expenditure incurred by the Secretary of State in making payments under this Act; …

1. It is common ground that the plaintiff satisfied the conditions of entitlement in that a disablement benefit was payable to him in respect of his disease, Shaw Savill & Albion Co had ceased to carry on business, and at the time when the plaintiff brought his claim he had not brought any action or compromised any claim for damages.

1. It may be seen that:

1.The financial source of the lump sum benefit is moneys provided by the Parliament, and that

2.While the provisions do not require repayment of the benefit out of damages, the benefit is not payable unless the relevant employer has ceased to carry on business and the claimant has not brought or compromised any action for damages. If a claimant has lost his common law action on the merits he has no entitlement.

3.Because a precondition of entitlement is entitlement to a disablement pension, the nature of the benefit is not income substitution but compensation for pain and suffering, in substitution for general damages.

1. The English Parliament, funding the payment under the Act and disqualifying those persons who brought damages actions, even if they failed on the merits, clearly intended that the payments be not cumulative upon but in substitution for damages recovered “in respect of disablement”. Assuming that the English Parliament had been alerted to the possibility that the word “damages” may describe both damages claimed for injury suffered in the service of an English employer and damages claimed for injury suffered in the service of a foreign employer, which of those damages, claimed or received, were intended to disqualify a claimant from benefits? The answer must be either, provided only that the damages in question were “in respect of the disablement”.

1. In Workers’ Compensation Board (Qld) v Technical Products Pty Ltd (1988) 165 CLR 642 at 653 - 654 Deane, Dawson and Toohey JJ said:

Undoubtedly the words “in respect of” have a wide meaning, although it is going somewhat too far to say as did Mann J in Trustees Executors and Agency Co Ltd v Reilly that “they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer” the phrase gathers meaning from the context in which it appears and it is the context which determines the matters to which it extends.

1. The context in which the phrase “in respect of” appears in this legislation is that in which the plaintiff qualifies for a lump sum benefit by virtue of a disablement benefit paid pursuant to the Social Security Contributions and Benefits Act (1992) (UK) in respect of the whole of his disease of bilateral diffuse pleural thickening. The lump sum in question is not calculated by reference only to that part of the plaintiff’s disablement as resulted from his English employment. It follows that the word damages “in respect of” that disablement where used in the provision should be construed, consistently with the probable intention of the Parliament, as referring to any damages recovered in any jurisdiction for any part of the disablement.

1. In Commissioner of Taxation (Cth) v Scully (2000) 169 ALR 459 the High Court (Gaudron, McHugh, Gummow, and Callinan JJ), held that a payment from a trust fund to a brain damaged worker consequent upon the worker being retired as totally incapacitated was not “consideration ... for or in respect of personal injury” and was therefore an “eligible termination payment” subject to tax. Their Honours said at 472:

   …the fact that the payment is not calculated by reference to the nature and extent of the injury … [points] to the conclusion that the payment … was not “consideration … for or in respect of” his injury.

1. In the present case the lump sum is not calculated by reference only to the extent of the English injury. I conclude that the English Parliament did not intend that he receive his lump sum benefit independently and in addition to any sum recovered as damages in any jurisdiction. That benefit was intended to be in substitution for damages and not in addition to them. His lump sum must be deducted from his damages so that he is not overcompensated.

1. The plaintiff is entitled to a verdict calculated as follows:

Gross General Damages  $50,000.00
Past Hospital and Medical Expenses          $1,224.00
Past Services  $1,383.00
Future Services  $1,500.00
Subtotal  $54,107.00
Less: Lump Sum Benefit paid pursuant
to Pneumoconiosis Etc
(Workers Compensation) Act 1979 (UK)   $7,397.00
Subtotal  $46,710.00
By apportionment 75 per cent of this sum $35,032.50

1. Judgment for the plaintiff in the sum of $35,032.50.

1. I reserve the question of costs.

Judgment accordingly

Solicitors for the plaintiff: McClellands

Solicitors for the defendant: Allen Allen & Hemsley