Franklins Self Serve Pty Ltd v Wyber

[1999] NSWCA 390

Reported Decision: 48 NSWLR 249

New South Wales

Court of Appeal

CITATION:	FRANKLINS SELF SERVE PTY LTD v WYBER [1999] NSWCA 390 revised - 08/12/99
FILE NUMBER(S):	CA 40698/98
HEARING DATE(S):	22 July 1999
JUDGMENT DATE:	5 November 1999
PARTIES :	FRANKLINS SELF SERVE PTY LTD BEVERLEY FAY WYBER
JUDGMENT OF:	Mason P at 1; Sheller JA at 121; Cole AJA at 125

LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S) :	DC 6473/97
LOWER COURT JUDICIAL OFFICER:	Boyd-Boland ADCJ

COUNSEL:	A: J Poulos QC/ M L Williams/ C Pinkerton R: D A Wheelahan QC/ J Singh
SOLICITORS:	A: Glover & Glover R: Cawoods
CATCHWORDS:	DAMAGES - Personal injuries - Whether the injuries for which damages were awarded stemmed from the original tort - Impact of later non-tortious injuries - Offsetting of workers compensation payments - Double compensation; WORKERS COMPENSATION - Relationship of damages claim to workers compensation award previously made against employer at time of tort and against later employer - Rule against double compensation - Application of s151Z of the Workers Compensation Act 1987 - Discussion of legislative scheme and common law principles
ACTS CITED:	Workers Compensation Act 1987 s151Z Compensation Court Act 1984 Workers Compensation Act 1926
DECISION:	Appeal dismissed. See also par 120.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40698/98

DC 6473/97

MASON P
SHELLER JA
COLE AJA
Friday 5 November 1999


FRANKLINS SELF SERVE PTY LTD
v Beverley WYBER

The respondent suffered a series of back injuries, beginning with an injury on 8 May 1989 as a result of the appellant’s negligence when she slipped and fell while descending a stairway at the appellant’s Lane Cove premises. She was there in the course of her employment with the NSW Egg Corporation. Subsequent incidents while working for George Weston Foods Pty Ltd, which were not the result of negligence, caused her to suffer severe back pain.

In 1994 a workers compensation award for lump sum and weekly payments was made by consent in the respondent’s favour against the two employers, NSW Egg Corporation and George Weston. These employers agreed to bear the burden equally.

Boyd-Boland ADCJ found the appellant to be negligent in relation to the 1989 accident at Lane Cove and entered a verdict in the sum of $528,844.54. The primary judge accepted the evidence of the respondent and her treating doctor that all of her pain and disability was caused by the 1989 tort and that the 1991 and 1992 incidents which had also occurred while at work were merely exacerbations of her basic condition.

The appellant challenged the trial judge’s findings about the causal impact of the tortious injury. It also submitted that the trial judge had erred in not taking into account all of the compensation rights of the respondent, past and in the future, and in failing to deduct from the relevant heads of damages all amounts received and likely to be received from both employers. Reliance was placed upon the rule against double compensation as applied in several decisions of this Court.

HELD by Mason P (Cole AJA concurring) and by Sheller JA, dismissing the appeal with costs:

The trial judge was entitled to conclude that the injuries for which damages were awarded stemmed from the 1989 tort, and his reasoning betrays no error.

The appellant had the persuasive burden of untangling the impact of the later non-tortious injuries.
Watts v Rake (1960) 108 CLR 158, Purkess v Crittendon (1965) 114 CLR 164 (applied)

The compensation paid by the NSW Egg Corporation should not have been deducted, and should have been left to be repaid by the worker to that corporation out of a higher award of damages. To the extent that s151Z of the Workers Compensation Act 1987 is applicable and deals with circumstances creating a liability in some person other than the worker’s employer, it should be applied. This gives effect to a detailed legislative scheme designed to reimburse the party liable to pay compensation out of the fund provided by the party liable to pay damages.
Watson v Newcastle Corporation (1962) 106 CLR 426 at 432 (followed)

The compensation payments made by George Weston, which fell outside the scheme of s151Z, were correctly and fully deducted from the damages payable to the respondent.

In the light of the trial judge’s findings as to the significance of the 1989 injury, no further deduction to offset the value of compensation payments receivable in the future from George Weston in the future was warranted.

Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343, Hood Constructions Pty Ltd v Nicholas (1987) 9 NSWLR 60, Dudley v Condell Park Carrying Co Pty Ltd (1988) 4 NSWCCR 58, Kempsey District Hospital v Thackham (1995) 36 NSWLR 492, Smithson v Baines [1999] NSWCA 48 (discussed and distinguished)

Discussion of the rule against double compensation and how to fairly give effect to this policy.
Boncristiano v Lohmann [1998] 4 VR 82, Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159, Farrow Finance Company Ltd (in Liq) v ANZ Executors and Trustee Company Ltd [1998] 1 VR 50, Re Wakim; Ex parte McNally [1999] HCA 27, CSR Ltd v D’Arcy [1999] NSWCA 216 (referred)

Discussion of the application and limitations of s151Z where a worker has alternative rights against employers and strangers.
I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 (referred); Adams v Ascot Iron Foundery Pty Ltd (1968) 72 SR(NSW) 120, Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343, Hood Constructions Pty Ltd v Nicholas (1987) 9 NSWLR 60, Dudley v Condell Park Carrying Co Pty Ltd (1988) 4 NSWCCR 58, Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 (considered)

ORDERS
1. Subject to order 2, appeal dismissed with costs.
2. Direct the parties to consider the issue raised in pars 116-119 and to comply with the directions in par 119.

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40698/98

DC 6473/97

MASON P
SHELLER JA
COLE AJA
Friday 5 November 1999


FRANKLINS SELF SERVE PTY LTD
v Beverley WYBER
JUDGMENT

1    MASON P: This is a defendant’s appeal limited to quantum of damages.

A series of back injuries

2    On 8 May 1989 the respondent was injured as the result of the appellant’s negligence when she slipped and fell while descending a stairway at the appellant’s Lane Cove premises. She fell down three steps landing on her buttocks. She was at the premises in the course of her employment with the NSW Egg Corporation. 3    The respondent was picking up leaflets from the ground two days later when she experienced severe back pain which led to her admission that day to Ryde Hospital. She consulted Dr Graham Marnie and he became her treating doctor. She was treated by traction, transferred to Poplars Hospital, fitted with a lumbar corset and ultimately discharged on 26 May 1989. She remained off work until 15 July 1989, returning on light duties. Over the ensuing months there were periods of light employment with episodes of absence due to back pain, until resumption of normal duties on 11 October 1989. Nevertheless, pain and discomfort continued. 4    On 6 April 1990 the respondent took voluntary redundancy from the NSW Egg Corporation. A few days later she resumed employment as a sales representative with another employer. 5    In the course of her later employment with George Weston Foods Ltd (George Weston), two further accidents or incidents occurred on 11 June 1991 and 3 February 1992. 6    On 11 June 1991 the respondent was standing on a stool in the Franklins store at Mosman moving cakes from a box one at a time and placing them on a display stand. She slipped from the stool and experienced severe lower back pain as her foot touched the ground. She went back to Ryde Hospital, remaining there until 25 June 1991. She was treated with bed rest and traction. It is not suggested that this accident stemmed from anyone’s negligence. 7    The respondent resumed light duties on 15 July 1991 and full time work activities in August. 8    On 3 February 1992 there was a third incident, again occurring in the course of the respondent’s employment with George Weston. As she alighted from her car the respondent experienced acute back pain, radiating into her right leg. Once again she was admitted to Ryde Hospital and then transferred to Poplars Hospital under the care of Dr Marnie. 9    On 1 April 1992 the respondent underwent a laminectomy. There were post-operative complications. 10    The respondent ceased her employment on 20 July 1992. In August 1992 she was referred to a specialist (Dr Joffe) for treatment of persisting pain in the outside thigh, with burning sensations. She underwent further surgery in October and November 1993. There was resultant improvement but only partial relief. Injections and other treatment were continuing at date of trial.

The verdict against Franklins at trial

11    The trial of the respondent’s claim against the appellant was heard by Boyd-Boland ADCJ in the District Court in July 1998 and decided on 14 August 1998. Negligence was found in relation to the 1989 accident at Franklins, Lane Cove. 12    There was a verdict in the sum of $528,844.54. 13    The parties had differed as to the impact of the June 1991 and February 1992 incidents. 14    The respondent claimed that all of her pain and disability was caused by the 1989 tort. She was supported by the evidence of her treating doctor, Dr Marnie, who was emphatic in the view that the respondent’s disabilities and treatment were directly referable to that accident. He considered that the 1991 and 1992 incidents were merely minor exacerbations or aggravations of the basic condition created by and stemming from the 1989 accident. 15    This case was accepted. The primary judge relied upon a favourable credibility assessment of the respondent and her husband who gave evidence of ongoing disability between May 1989 and June 1991. The judge also accepted the views of Dr Marnie as treating doctor.

Did the injuries for which damages were awarded stem from the tort?

16    It is convenient first to address the appellant’s challenges to the trial judge’s findings about the causal impact of the tortious injury. They were faintly pressed. 17    Ground 2 in the notice of appeal asserts error in the failure to make findings as to the extent of incapacity stemming from the June 1991 and February 1992 incidents. As developed in the written submissions, the ground was expanded. The basic contention was that the incidents in 1991 and 1992 contributed to the respondent’s subsequent disability and loss. 18    In substance, the appellant relied upon (a) the respondent’s ability to remain in continuous employment as a sales representative between late 1989 and June 1991; (b) medical histories about absence of back trouble in the 12 months prior to the June 1991 incident; and (c) the admission implicit in the making and settlement of the respondent’s workers compensation claims against George Weston relating to the 1991 and 1992 incidents. 19    Leaving aside for the moment the workers compensation issues, the trial judge was in my view entitled to reach the conclusion that he did. His reasoning is sufficiently expressed and betrays no error. 20    Dr Marnie’s opinion was firmly in support of the respondent and he maintained it under cross-examination. The final question and answer in his evidence was as follows (BB65):

Q: And doctor the second two incidents, that’s the ’91 incident and the ’92 incident, could they be fairly described as manifestations of the underlying damage which she has suffered in the fall of May ’89.
A: Yes.

21    The trial judge accepted Dr Marnie, believing that his long term regular examinations and assessments placed him in a unique position to assess the causation factor. The different and differing views of those of the appellant’s doctors whose evidence was tendered are recorded at RB 40-42. The trial judge was not bound to accept them as to the impact of the later incidents. 22    The evidence of the respondent and of her husband, which was accepted, demonstrated continuing pain and disability despite return to full employment in October 1989. 23    Nothing in the description of the 1991 or 1992 incidents suggests any self-evident independent major impact: they were minor incidents that would not normally have caused trauma. In the light of Dr Marnie’s opinion, the partial concessions of the appellant’s doctors and the evidence of the respondent and her husband, the trial judge was fully entitled to conclude, as he did, that the 1991 and 1992 incidents stemmed from the event of 8 May 1989. 24    It is to be remembered that the well-known principle discussed by Dixon CJ in Watts v Rake (1960) 108 CLR 158 at 160 and in Purkess v Crittendon (1965) 114 CLR 164 at 171 applied, casting upon the appellant the persuasive burden of untangling the impact of the later (non-tortious) injuries. 25 Ground 3 in the notice of appeal asserts error in the trial judge’s failure to take account of the fact that the respondent was, for a significant period, incapacitated due to independent matters. 26 In 1996 the respondent suffered tendonitis unrelated to her back injury. To relieve the pain in her tendo-achilles she was placed in short leg plaster. Around the same time she also had a fall, injuring her left ankle and foot. The appellant submits that these events would have precluded the respondent from working, or at least greatly diminished any work capacity. It complains that the trial judge does not refer to this evidence, or take it into account in reduction of the amount awarded for past economic loss. 27 There is no substance to this ground of appeal. This is because the trial judge clearly recognised that there were periods, between the 1989 accident and the date of trial, for which it would be inappropriate to call upon the defendant to meet the economic loss claim in full. While no specific reference was made to the problems with the ankle and the tendo-achilles, it is clear that his Honour had these incidents in mind in his remarks at RB 43. The deduction of $25,000 from the past economic loss claim made adequate allowance for this matter.

Impact of workers compensation

28    The remaining issues concern the impact of a workers compensation award made by consent in 1994 in the respondent’s favour against the NSW Egg Corporation and George Weston. It is not contended that the award creates an issue estoppel as between the parties to this appeal. Nevertheless the award, and the payments made in anticipation of it and in consequence of it, are said to impact upon the respondent’s rights against the appellant. 29    In Boncristiano v Lohmann [1998] 4 VR 82 at 89, Winneke P referred to the “rule against double compensation” which he summarised in the following terms:

The law, which now embraces equity, will not permit a plaintiff, whatever procedural device is used, to recover more than the damages which have been suffered, no matter what the cause of action upon which he proceeds against the various defendants.


See also Castellan v Electric Power Transmission Pty Ltd (1967) 69 SR(NSW) 159 at 176, 187-8; Farrow Finance Company Ltd (in Liq) v ANZ Executors and Trustee Company Ltd [1998] 1 VR 50 at 79; Re Wakim; Ex parte McNally [1999] HCA 27 at [147]; CSR Ltd v D’Arcy [1999] NSWCA 216. This principle has been applied in the workers compensation/damages field (see below).

30    The respondent commenced receiving weekly compensation benefits in 1992. These payments were continuing at date of trial. 31    In 1993 the respondent commenced proceedings in the Compensation Court seeking compensation against the NSW Egg Corporation and George Weston. The claim against NSW Egg Corporation stemmed from the injury at Franklins Lane Cove on 18 May 1989; and the claim against George Weston stemmed from the injuries of 11 June 1991 and 3 February 1992 (see BB 176). The application propounded the claims in the alternative. It also stated that NSW Egg Corporation’s insurer was FAI Workers Compensation (NSW) Ltd and that George Weston’s insurers were FAI Workers Compensation Ltd and Switzerland Workers Compensation (NSW) Ltd. 32    On 13 May 1994 the Compensation Court made a consent award that was expressed to be without admission of liability by the two employers (BB 185). The present respondent Mrs Wyber was awarded continuing weekly compensation, lump sum compensation under s66 and 67, s60 expenses and costs. The Court noted that payment of the award moneys was to be made as to one-third by NSW Egg Corporation and as to two-thirds by George Weston. 33    It is to be noted that each employer was ordered to pay the full sums stipulated. Nevertheless, it was not contemplated that the respondent would be paid twice over. The rule against double compensation that is referred to above (par 29) would have precluded this. The employers agreed to make payments in the proportions stated and the respondent agreed, in effect, to receive the respective payments from each in satisfaction of the obligations of both. 34    When the application for determination of compensation and the consent award were tendered at trial the documents were admitted without objection. However counsel for the defendant disputed their probative effect because the award was made by consent. He stated that it was at the request of the common insurer (presumably FAI Workers Compensation (NSW) Ltd) that the award was divided between the two employers in the way that it was. Counsel for the plaintiff indicated that he was not in a position to agree with this. He submitted that the award reflected a recognition that at least two-thirds of any incapacity flowed from the 1991 incident. This prompted another statement from the Bar table by counsel for the defendant, but he declined to go into evidence about the matter (see BB 75-78).

Appellant’s challenge relating to compensation payments

35    The trial judge held that it was not necessary to have regard to what the plaintiff may have received by way of workers compensation payments (RB 43X). He also held that he was in no way bound by the terms of the consent award in the Compensation Court (RB 44). 36    Nevertheless, significant allowance was in fact made with respect to past compensation payments, because the plaintiff in her submissions to the trial judge conceded the deduction of workers compensation payments “to date” (ie 29 July 1998). These totalled $177,574.03. 37    According to an affidavit of Ms S Armstrong which was read in the appeal, the compensation offsets ultimately allowed in the damages calculation were as follows:

George Weston NSW Egg Total
Foods Ltd Corporation

Weekly compensation 51,903.10 17,255.53 69,158.63
Lump sum compensation 36,666.66 18,333.33 55,000.00
Out of pocket expenses 47,579.61 7,167.09 54,746.70

$136,149.37 $42,755.95 $178,905.33

38    The total is slightly above the figure of $177,574.03 (par 36), because weekly payments continued for a period beyond 29 July 1998 . There is also a small difference in the past out of pocket expenses met by the employers and the sum included in the verdict. 39    The appellant’s primary submission is that the trial judge erred in not taking into account all of the compensation rights of the respondent, past and in future, and failing to deduct from the relevant heads of damages all amounts received and likely to be received from both employers. Reliance is placed upon the rule against double compensation as applied in several decisions of this Court, namely Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR(NSW) 120; Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343; Hood Constructions Pty Ltd v Nicholas (1987) 9 NSWLR 60; Dudley v Condell Park Carrying Co Pty Ltd (1988) 4 NSWCCR 58; Government Insurance Office of NSW v Warwick Court of Appeal, unreported 23 November 1993; Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 and Transfield Pty Ltd v Mastroianni (24 June 1998, Court of Appeal, unreported). 40 The appellant submits that none of the compensation benefits received or receivable by the respondent were brought to account by s151Z of the Workers Compensation Act 1987 (“the 1987 Act”), with the result that this line of cases requires that the compensation payments should have been set off against the damages otherwise payable to the respondent. 41 The respondent submits that s151Z rules and that no further sums are to be deducted from the damages on account of workers compensation. She submits that the present case is distinguishable from the Thackham line of decisions. She relies upon Smithson v Baines [1999] NSWCA 48. 42 The appellant contends that Smithson is not distinguishable from Thackham. It submits that the Court that decided Smithson erred in so deciding. If necessary, the appellant seeks leave to reargue the correctness of Smithson. 43    The sums awarded, the appellant’s proposed figures and the reasons therefore are as follows:

Verdict Appellant’s Reasons
Figure Note

Past economic loss $144,853.80 144,853.80 (1)
Interest on past economic loss: $69,839.51
@ 7.5% on 9.22 years 48,294.02 48,294.02 (1)
General damages 90,000.00 35,000.00 (2)
Interest on general damages 8,298.00 3,227.00 (2)
Fox v Wood 6,835.66 2,278.56 (3)
Past out of pocket expenses 54,395.41 6,815.80 (4)
Future out of pocket expenses 15,000.00 Nil (5)
Future economic loss 161,167.65 118,190.00 (6)

$528,844.54

Notes:

(1) The trial judge fully deducted all past weekly compensation payments. The appellant submits that the respondent is required by s151Z(1)(b) to refund to the NSW Egg Corporation the sum of $17,255.33, being that portion of the weekly benefits in fact paid by the NSW Egg Corporation (see par 37). Neither the appellant nor the respondent are concerned in these proceedings about the respondent’s duty (if any) to refund the $51,903.10 received from George Weston Foods Ltd for pre-verdict weekly compensation payments.

(2) The reduction from $90,000 to $35,000 for general damages would bring to account the sums totalling $55,000.00 received from the two employers by way of lump sum compensation pursuant to ss66 and 67 of the Workers Compensation Act (see par 37). The appellant submits that the respondent is required by s151Z(1)(b) to refund to the NSW Egg Corporation the sum of $18,333.33 (being one-third of $55,000.00) that was paid by that employer. The interest calculation is a corresponding adjustment. Once again, neither party to these proceedings is concerned about the position of George Weston.

(3) The appellant’s figure reduces the sum by two-thirds, to reflect the tax paid on compensation paid by George Weston.

(4) Expenses totalling $54,746.70 were paid before verdict, with $7,167.09 of this total being paid by the NSW Egg Corporation (par 37 above). Consistent with its earlier submissions, the appellant contends that the respondent is required by s151Z(1)(b) to refund to the NSW Egg Corporation the sum of $7,167.09 that was paid by that employer.

(5) According to the appellant, the respondent retains an entitlement for payment of s60 expenses against Gartrell White (ie George Weston). By implication, the appellant treats the respondent’s entitlement under the award as continuing unabated and enforceable in full against George Weston, to the exclusion of the appellant.

(6) The trial judge’s findings were based on a weekly loss of $300. The Compensation Court awarded $120 per week which was apportioned by agreement as to $80 payable by George Weston and as to $40 by the NSW Egg Corporation. The appellant’s primary submission is that allowance should be made for the power of the Compensation Court to review awards to have regard to earning rates ( Compensation Court Act 1984 , s17(4); Thackham at 505F). If, however, the award of $120 per week is relevant, then the appellant contends that that one-third/two-thirds agreed division means that $40 is referable to the 1989 injury. Accordingly, future economic loss is calculated on the basis of $80 per week being brought into account in the following manner:
$300 - $80 =$220
$220 per week x 632.03 (multiplier3%) 139,046.60
Less 15% for vicissitudes 20,856.9 9
$118,189.61

44 The respondent submits that there should be no reduction in her verdict. She accepts and maintains that she is bound by s151Z to repay all compensation payments already made to her by both employers, ie sums totalling $178,905.33 (par 37, above).

The rule against double compensation and workers compensation

45    It frequently happens that a person suffers injury in the course of employment in circumstances giving rise to a tortious claim against an employer and/or a third party. Successive “injuries” involving additional employers and/or tortfeasors add complexities, especially if their causal impact is problematical. Add to this a legal regime that vests compensation matters in a specialist Compensation Court and “common law” cases in other courts; and which permits litigants to choose when, where and against whom they will litigate, and whether they will do so in one proceeding or several proceedings. A further potential complication stems from the common law principle that damages are awarded once and for all, which is to be contrasted with the system of periodical payments (subject to a power of review) which applies to some types of compensation benefits. If one of the torts is a motor vehicle accident covered by the Motor Accidents Act 1988 there is a further complication. 46 In par 29 I referred to general statements about the rule against double compensation. 47 Adams involved the application of the general principle against double compensation. There, the Court of Appeal held that compensation received and to be received by a worker under the Workers’ Compensation (Silicosis) Act 1942 should have been taken into account in the assessment of damages for negligence against an employer. The Workers’ Compensation Act 1926 (“the 1926 Act”) required this to be done with respect to ordinary workers compensation payments, but was silent as to compensation relating to silicosis. It was the application of common law principle (as expounded in National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569) which brought about a similar result with respect to silicosis compensation. 48 In Adams, Walsh JA held (at 137-8) that if the award was in part attributable to the consequences of the defendant’s actionable wrong and in part attributable to other causes, then a deduction could be made only in respect of such part of the value of the benefits received as was obtained in respect of the consequences of the defendant’s actionable wrong. The majority (Sugerman JA at 129, 133, Asprey JA at 141-2) held that the whole of the payments should have been taken into account, because it was impossible in the particular case to apportion them as between different periods of deterioration or aggravation of the plaintiff’s condition. Their Honours did not however dispute the principle stated by Walsh JA. In the later decision of Hood, the application of Walsh JA’s approach led to an apportionment of the compensation, with only part of it being treated as referable to the tortious injury (see also Dudley at 66). 49 It is one thing to discern that legal policy sets its face against double compensation. It is another to give effect to this policy in a fair and rational way in a legal system that (for good reasons) virtually guarantees that the separate interests of victims, employers, tortfeasors and insurers are not individually represented at each stage of litigation flowing from a work injury. Options include:

• awarding “full” compensation or damages, leaving the plaintiff to reimburse the employer or the employer’s insurer;

• deducting the value of compensation from damages awarded;

• awarding judgment or compensation against two or more defendants, and treating moneys received by the plaintiff from one of them as discharging the obligation of the other(s).

The end result may be the same for the plaintiff, but the procedural and substantive consequences may differ for the employers, tortfeasors and insurers (see Hood at 64-5).

50    The court’s first task is to follow the legislative signposts. If they fully achieve the discerned object of avoiding double compensation then their methodology is to be followed. If they do not apply or fully apply, the court will grapple with common law and equitable principles designed to achieve the same goal. The outcome for the plaintiff may by the same in the long run, but the consequences for employers, tortfeasors and insurers may differ or at least be problematical. 51    Legislative intervention has seen different policies adopted in different jurisdictions and at different periods (see Luntz, Assessment of Damages 3rd ed [8.8.1]-[8.8.9]). The current scheme permits the injured victim to seek first compensation and then damages. Section 151Z of the Workers Compensation Act (the successor of s64 of the 1926 Act) permits a worker to commence proceedings for both damages and compensation, but provides both generally and in specific ways that the worker is not entitled to retain both. Where the worker recovers firstly compensation and secondly damages, the worker’s damages are not reduced, but the worker is liable to repay the employer out of the damages the amount of compensation previously paid in respect of the worker’s injury under the Act; and the worker is not entitled to any further compensation (s151Z(1)(b)). Where the worker recovers damages first, the worker is thereafter barred from seeking any workers compensation benefits in respect of the same injury (s151Z(1)(c)). 52 Section 151Z addresses the situation of an injured worker entitled both to compensation under the Act from an employer and to damages at common law from a third party. It regulates the worker’s rights against the employer and the third party and the ultimate burden as between the employer and the third party. The history of the provision is traced by Giles AJA in I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486. In its full current form, it provides:

151Z Recovery against both employer and stranger

(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 Compensation Court.

(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.


(3) This section applies to proceedings taken independently of this Act by a person to whom compensation is payable under this Act in respect of the death of a worker as a result of an injury.

(4) If a worker is liable under subsection (1) (b) to repay any money out of damages recovered by the worker, the worker is not liable to repay the money out of any damages payable after the date of recovery by way of periodic or other payments for loss of future earnings or earning capacity or for future expenses.

(5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement.

53    The section attempts to deal comprehensively with several contingencies. But its sphere of application is restricted. It applies only where rights accrue against the employer and a stranger. And subs(1) requires that “circumstances creating” liability for the compensable injury themselves also created a liability in the stranger to pay damages. The words “damages in respect of the injury” in that subsection have received a restricted interpretation, because of the necessary implication that the injury giving rise to the liability to damages is the injury which created a liability to pay compensation. Successive decisions of this Court have applied these limitations in a variety of factual situations. 54 The limitations just noted mean that s151Z does not cover every possible eventuality where a worker has alternative rights against employers and strangers. A series of cases in this Court (Adams, Kornjaca, Hood, Dudley, Thackham) have recognised situations that are not covered by the section, because its opening words confine its field to that operating:

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. …

55    An analogous situation applies with respect to cases falling outside the direct application of s151B (which deals with the effect of recovery of damages from an employer on payment of compensation). Its predecessor was s63 of the 1926 Act. See Vanramer Pty Ltd v Higgins (1991) 24 NSWLR 661. 56 The response in such cases has been to apply the common law principle in the gap; and, in computing the plaintiff’s damages, to deduct a sum representing the value of benefits received and receivable as compensation.

(a) Kornjaca v Steel Mains Pty Ltd

57    In Kornjaca the worker suffered successive injuries to his back, allegedly due to the negligence of successive employers. When the second employer was sued, it sought indemnity inter alia under s64(1)(b) of the 1926 Act (the equivalent of s151Z(1)(d) of the 1987 Act). Indemnity was refused because, in the words of Glass JA (at 347):

It is necessary for the employer to prove against the party from whom the indemnity is sought 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 injury, as one which was then created.

58    Kornjaca involved separate torts in which the later incident allegedly involved a deterioration to the back that was contributed to by the second employer/tortfeasor (see at 345E). There were successive injuries, unrelated both in occasion and cause, caused by separate tortfeasors (see also Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd (1975) 132 CLR 323, in which Kornjaca was reversed on appeal on an issue unrelated to s64 of the 1926 Act).

(b) Hood Constructions Pty Ltd v Nicholas

59    The worker (Nicholas) suffered a back injury in the course of his employment with Hood Constructions Pty Ltd. He received compensation for this injury under the 1926 Act. The worker submitted to surgery, but the negligence of a Dr Stratton caused additional injury. In the course of proceedings for damages against the doctor, the worker sought a declaration that any damages recoverable were not repayable to Hood under s64(1)(a) of the 1926 Act. The declaration was made. However, the worker’s damages were reduced by the amount of compensation paid in respect of the loss stemming from the incapacity. 60    The injury caused by the medical treatment was held not to be an “injury for which compensation is payable” within the meaning of s64 even though the surgery was reasonably undertaken to remedy or alleviate disabilities suffered as a result of the earlier employment injury. As Hope JA expressed it (at 71):

… on the construction I have given to s64, the Act does not deal with the present situation, where the injury for which compensation is payable under the Act was not the injury creating a legal liability in another person to pay damages, but the compensation is, in whole or in part, paid or payable in respect of the same incapacity expenses or disability for which damages are to be assessed.

61    Compensation was payable in respect of the consequences of the medical injury because they were consequences of the low back injury for which the compensation was payable (see at 68A). But s64 was not engaged, because the later event giving rise to the doctor’s liability was not itself “the injury for which compensation is payable”. As Hope JA observed (at 68):

No compensation was payable in respect of the Stratton injury taken, as it were, in isolation.

62    Mahoney JA expressed it thus (at 76):

The plaintiff suffered two personal injuries: that to his back and that resulting from Dr Stratton’s treatment of him. Hood, as his employer, was, it is accepted, liable to pay compensation in respect of the incapacity (s9), and the medical and similar treatment (s10), which resulted from the Stratton injury. But Hood’s liability arises not because the Stratton injury is, in any relevant sense, part of the previous injury.

63    Having decided that s64 had no application, the Court held that the worker’s damages against Dr Stratton were to be reduced to take account of the compensation payments received. The reasoning in Adams was applied, because the provisions of the 1926 Act showed, in Hope JA’s words (at 72):

clearly enough a policy against duplication. It does not appear why the present case is not covered; it is probably a casus omissus.

64    The Court then considered whether all or merely a proportion of the compensation payments were to be deducted from the damages. The principle stated by Walsh JA in Adams (at 137-8) was applied, and the compensation payments made by the employer were deducted in so far as they were to be attributed to the Stratton injury. On the facts, the trial judge’s equal apportionment between the low back injury and the Stratton injury was adopted (Hood at 73-4). 65 It is important to note that the injury caused by the doctor was not merely an aggravation or exacerbation of the low back injury. It was a separate injury, albeit one that comprised the deleterious consequences of treatment reasonably undertaken to alleviate the disabilities stemming from the first (see at 67G. See also Dudley at 65-6 per Clarke JA). This is illustrated by the apportionment exercise that took place with respect to the compensation off-set.

(c) Dudley v Condell Park Carrying Co Pty Ltd

66 In 1983 the worker received multiple injuries in a non-work-related motor vehicle accident. These included injury to his left femur. In 1984, while employed by the respondent as a truck driver, he was injured unloading goods. He suffered a spontaneous fracture of the left femur through one of the screw holes remaining from the earlier treatment. The worker claimed damages from the persons who caused the 1983 injury (the McKenzies), settling the proceedings in 1986. He also sought compensation from his employer in respect of incapacity flowing from the 1984 injury. In the Compensation Court his claim was rejected on the basis that the second fracture had been “caused by” the motor vehicle accident. Since he had recovered damages in respect of the injuries resulting from the 1983 accident, his claim for compensation was said to be barred by s64(1)(a) of the 1926 Act. 67 The worker’s appeal was allowed. The prefatory words to s64(1) were held to be inapplicable to the 1984 injury because it was not caused under circumstances which created a legal liability in the McKenzies, or anyone else, to pay the worker damages in respect of that injury. It was irrelevant that the damages awarded in respect of the earlier injury included compensation for the later one. 68 Clarke JA delivered a judgment with which Samuels JA and McHugh JA agreed. He pointed out (at 63) that s64(1) only applied if “the circumstances” under which “the injury” (ie the injury arising out of or in the course of the employment) “created” a legal liability in a third person to pay damages in respect of that injury. He continued (at 63-5):

… the relevant inquiry is whether the circumstances under which the employment injury was suffered, and for which the employer incurred, subject to s64, a liability under the Act to pay compensation, created that liability.
In this case the actual inquiry can be refined somewhat. Assuming that “the circumstances” under which the work injury was caused included, but were not limited to, the causal nexus between that injury and an earlier one, did those circumstances create the liability to pay damages in respect of the subject injury?
In my opinion this question should be answered with an emphatic “No”. My reasons are as follows: the McKenzies became legally liable to pay damages to the appellant for the injuries, and all their consequences, which he received in the motor vehicle accident in 1983. The circumstances of that accident created the legal liability to pay the appellant damages in respect of all its consequences.
…
[The McKenzies’] liability to pay those damages in respect of the 1983 accident was complete long before the occurrence of the fracture in 1984. Its occurrence did not alter their legal liability to the appellant. It simply meant that, in the assessment of one area of the damages payable, a fact (ie the fracture) replaced a possibility or risk. Their legal liability was confined at all times to the consequences of the accident in 1983. They never came under a legal liability to the appellant to pay damages in respect of the employment injury that occurred in 1984.

Clarke JA pointed out that Dudley was the reverse of the factual situation considered in Hood . He explained that in Hood there were separate injuries, but the work injury was not caused in circumstances creating a legal liability in any other person to pay damages. That liability only arose later, when the medical negligence occurred.

(d) Kempsey District Hospital v Thackham ( “Thackham” )

69    Thackham represents the culmination of this line of cases. There the Court of Appeal held that the sum to be deducted in the computation of damages in circumstances falling outside s151Z had to include the value of compensation received and receivable in the future. See also Transfield Pty Ltd v Mastroianni (24 June 1998, Court of Appeal, unreported); Lightfoot v Riley [1999] NSWCA 155; Grant v Royal Rehabilitation Centre Sydney [1999] NSWCA 250. 70 In Thackham, application to reargue the correctness of the earlier line of cases was refused in the light of the unbroken stream of authority construing s151Z and its predecessor and continued legislative non-intervention. Section 151Z was held inapplicable to the facts, with the consequence that the damages payable to the tortiously injured worker by his first employer were to be reduced to allow for the compensation paid and payable with reference to the subsequent non-tortious injury. 71 A worker had suffered a work-related injury to his back in 1981. There was negligence by a fellow employee with the result that the worker had a right to claim damages at common law against his 1981 employer, Kempsey District Hospital. The 1981 injury rendered the worker predisposed to the sort of injury he later suffered (see at 504D). In 1988 there was a second injury that arose (without negligence) in the course of employment with another employer, Hastings District Hospital. The worker sued the first employer at common law and recovered damages in respect of both injuries. The trial judge deducted from the assessment of damages awarded against the first employer amounts paid by both employers in respect of workers compensation. (This, at least is what the headnote states. It is obvious that in some way or other the first employer was given the benefit of any compensation it had paid.) This Court held that the compensation both paid and payable should have been deducted. Because double compensation of the worker could not be avoided by applying the section and requiring the worker to recoup the second employer, the Court applied the common law rules as to damages and reduced the damages verdict in respect of the worker’s continuing compensation rights against the second employer. 72 The worker’s cross appeal, arguing that s151Z(1) applied, was dismissed. The Court applied the restricted construction of the section and declined to reopen the earlier cases. 73 Why did s151Z not apply? The 1981 employer was responsible for the later damage by the principles of the common law because the events of 1988 at the Hastings District Hospital were found not to constitute a new intervening event so as to absolve the former employer of responsibility for the worker’s condition at the time of trial (see at 496B). 74 However, the 1988 employer was not within s151Z and was found by the common law judge (Newman J) to be solely responsible to pay the worker compensation for the second injury (496B-C, 504D). It is not entirely clear to me why this was so (cf Hood at 65, 77 discussing Migge v Wormald Bros Industries Ltd [1972] 2 NSWLR 29 at 43ff, reversed (1973) 47 ALJR 236; Morris v George [1977] 2 NSWLR 552 esp at 580-1). Nevertheless, this finding was not challenged on appeal. 75 In Thackham, the first employer’s liability to pay compensation and damages arose in 1981. The second employer’s liability to pay compensation arose in 1988 and was necessarily based upon circumstances different to those giving rise (in 1981) to the first employer’s liabilities. The causal link between the tortfeasor’s negligence and the second injury allowed the damages to include the whole consequences of the 1981 tort, including those stemming from the 1988 incident. But that was not enough for s151Z. 76 Meagher JA expressed his reason for not applying s151Z in the following terms (at 505-6):

The expression “creating a liability … to pay damages” in that section denotes, and denotes only, a liability to pay damages for that injury if that were the sole injury in question. In the present case, the second accident did not create any tortious liability in the appellant.

77    Handley JA pointed out (at 506) that the first injury gave rise to a cause of action independently of the 1987 Act; the second did not, but increased the damages for the first. He referred to Kornjaca, Hood and Dudley, noting that the facts in Dudley were indistinguishable from Thackham. 78 Kirby P agreed (at 503) with Meagher JA and Handley JA on this point. 79 In Thackham it was common ground that, if s151Z did not apply, compensation paid to the worker by the second employer was deductible. This Court held that the deduction should extend to compensation payable in the future. The facts as recorded in the judgments deal only with compensation paid and payable since 1988 (ie after the second work injury, for which Hastings District Hospital was responsible under the 1987 Act). Although this liability was exclusively that of the 1988 employer, the causal link between the 1981 tortious injury and the 1988 injury appears to have been the basis upon which the totality of the second employer’s compensation liabilities were brought into account in determining the damages payable by the earlier employer. 80 The judgment of Kirby P in Thackham states forcefully (at 501-2) the problems inherent in a scheme that leads to the conclusion that, for certain cases, the value of compensation rights paid and payable is to be off set against damages awarded. In that case, Handley JA suggested (at 509) that:

The practical difficulties adverted to by Mr Deakin which have been recognised by this Court can be overcome in most but not all cases if a plaintiff crystallises his or her compensation rights prior to the trial of common law proceedings by obtaining awards for any weekly or lump sum compensation. The legal advisers for a plaintiff faced with a situation such as the present should be alert to the problems, and to the solution which is readily available if the appropriate steps are taken in time.
( cf Kirby P at 502E.)

81    The type of crystallising of right to which Handley JA adverts would appear to relate solely to the quantum of compensation payable. His Honour infers that such crystallisation would or may be accepted by the common law court as a fact upon which the assessment of damages is based. Whether the court would be bound may depend upon the principles of res judicata with their requirement of identity of parties. Furthermore, the “crystallisation” would, in my view, be subject to an allowance in a proper case for the likelihood (discerned by the common law court) that a later application to review weekly payments might be acceded to, generally or in the particular fact situation (cf Workers Compensation Act 1987, s55; Compensation Court Act 1984, s17(4)). 82 I share Kirby P’s concerns about the difficulties inherent in a statutory scheme that is not comprehensive and which fails to address commonly recurring situations. A fortiori if there are cases where s151Z applies, but only in part (as I conclude to be the present case). General law principles may well be capable of providing answers as to the consequential rights of parties where s151Z is not engaged (see Mason & Carter, Restitution Law in Australia, Chapter 6 “Contribution and Recoupment”). Legislation may be fairer and more efficient. 83    Thackham has similarities to the present case in that (1) the second work-related injury was an aggravation of the first; (2) it was held to be compensable under the 1987 Act and not tortious; and (3) the disability stemming from the later injury was (for the law of tort) caused by the negligence of the person responsible for the first injury. Unlike Thackham, the tortfeasor in the present case (Franklins) is a stranger to the first of the employers held liable to pay compensation, but the cases are similar in that s151Z does not apply (at least in part in this case), albeit for different reasons. (I shall return to the application Thackham to this appeal, after describing a further twist in the road.) 84    Thus stood the law before this Court’s decision in Smithson v Baines [1999] NSWCA 48. Is Smithson distinguishable from the line that culminated in Thackham? Is the present case similar to Smithson? Or did the Court that decided Smithson overlook these principles (as the appellant submitted in the final resort)?

(e) Smithson v Baines

85    In 1989 Baines (the worker) was injured in a motor vehicle accident, due to the negligence of Smithson. He was at the time travelling on a journey in the course of his employment with Glenrelle Services Pty Ltd (Glenrelle). In 1990 there was a further injury at work which aggravated the shoulder injury stemming from the first accident. 86    There were proceedings in the Compensation Court involving the worker and Glenrelle. Smithson was not party to them and, accordingly, no issue estoppel arose (see at [37]). Nor was this Court able to discern the basis upon which the Compensation Commissioner made her findings about compensation, with the upshot that the compensation award could not be used as a kind of admission on the part of the worker (ibid). (The same can be said about the consent award in the present case, made without admissions and as between parties other than the appellant Franklins.) 87    In Smithson, the Court of Appeal held that the trial judge had erred in using gross instead of net figures in calculating economic loss. This is not of present relevance. 88    The appellant in Smithson also contended that the judge had erred in failing to make allowance for compensable disability suffered by the worker as a consequence of the second injury. It was submitted that Thackham required the court assessing damages to deduct the amount of workers compensation to which the worker would have been entitled had he made a claim for workers compensation in respect of the second (non-tortious) injury. 89 Sheppard AJA (with whose reasons Beazley JA and Fitzgerald JA concurred on this point) drew attention (at [70]) to the finding of the trial judge in relation to the effect of the second injury upon the worker’s loss of earning capacity. He had concluded that there was no additional loss occasioned by the second accident. The worker’s earning capacity was not further diminished in the second accident (see at [46], [70]-[71]). Because of this, Sheppard AJA found it unnecessary to consider whether Thackham was necessarily applicable to the circumstances of the appeal. The trial judge had not approached the case as a Thackham case. This Court held that he was entitled to follow that course (see at [77]). 90 Before us, the respondent submitted that Smithson was in point and that the trial judge in the present case had been correct in finding that it was unnecessary to take into account what the respondent had received by way of workers compensation payments, nor who had made such payments (RB 43-44). 91    The medical basis for this conclusion (principally the evidence of Dr Marnie) has been referred to. As I have sought to demonstrate, the trial judge was entitled to conclude that the tortfeasor (Franklins) caused the totality of the respondent’s injuries and ensuing loss. This, of course, is not enough to distinguish Thackham. 92    The respondent submitted that the trial judge was entitled (indeed bound) to conduct a trial-within-a-trial and that his findings should be read as a determination that no compensation rights arose out of the incidents in 1991 and 1992. Relying upon Smithson, the respondent submitted that Thackham did not apply where the court found that there was no additional loss occasioned by the second injury. 93    There are difficulties with this reasoning. Unlike Smithson, this was a case where the later work-related incidents (ie the accidents of 1991 and 1992) caused disability that was additional to that stemming from the 1989 injury. Nevertheless, as Glass JA pointed out in Morris (at 581):

A worker may suffer from an incapacity which has been made worse by a second injury causally connected with the original injury. The employer responsible for the first injury is liable for the full extent of the incapacity. The most common illustration of this principle is where the second injury assumes the form of medical or surgical treatment reasonably undertaken because of the first: Lindeman Ltd v Colvin (1946) 74 CLR 313 at 317, 321; Shirt v Calico Printers’ Association [1909] KB 51; Migge v Wormald Bros Industries Ltd [1972] 2 NSWLR 29.

94    Here, the trial judge found that the cause of the ultimate disability was the 1989 accident and the continuing impact it had upon the vulnerable worker. All of the disability stemming from the later incidents could be laid at the door of the earlier tortious injury, in the common law court. But, as with Thackham, the later work injuries generated incapacity and ensuing wage loss which (on the findings of the trial judge) would have justified an award of workers compensation against the employer in 1991 and 1992 (George Weston), leaving that employer to seek contribution or recoupment from the earlier employer under the 1987 Act. 95 If one looked at the 1991 and 1992 injuries in isolation, they fell outside s151Z, as exegeted in the case law, because, while those injuries gave rise to a liability (in George Weston) to pay compensation, those injuries were not caused under circumstances creating a liability in some person other than George Weston to pay damages in respect of the injuries. Franklins’ common law liability to pay damages which arose in 1989 did not itself give rise to George Weston’s statutory liability to pay compensation which arose in 1991 and 1992. 96 Does this mean that s151Z has no application, and that avoidance of double compensation with respect to George Weston’s contribution payments has to be achieved by reducing the respondent’s damages by a sum that reflects the proportion of the compensation paid and payable that is found referable to the 1991 and 1992 injuries? If so, is the common law court bound by the Compensation Court’s apportionment? If not, what apportionment flows from the findings of the trial judge? 97 The present case has a feature not found discussed in any of the earlier decisions. Section 151Z is capable of application, but only in part (as between Franklins and the NSW Egg Corporation). 98 Here compensation was payable in relation to the very injury creating Franklins’ liability. Or, to express the matter in the language of the opening words of s151Z(1), the (1989) injury for which compensation was payable (by NSW Egg Corporation) was caused under circumstances creating a liability in some person (Franklins) other than the worker’s employer (NSW Egg Corporation) to pay damages in respect of the injury. It must also be borne in mind that the opening words of s151Z(1) look to liability to pay compensation, not who has in fact paid it. 99 I see no reason in policy why the respondent should be precluded from relying upon the events of 1989 as the relevant events giving rise concurrently to the Egg Corporation’s liability to pay compensation and Franklins’ liability to pay damages. Faced with an available choice between applying the legislative scheme of s151Z or reducing the damages payable to the worker, I prefer the former course for several reasons. First, it gives effect to a detailed legislative scheme designed to reimburse the party liable to pay compensation out of the fund provided by the party liable to pay damages. This is the policy ascribed to s64 of the 1926 Act in the following terms by McTiernan J in Watson v Newcastle Corporation (1962) 106 CLR 426 at 432:

The policy which is evident on the face of s64 is that compensation should not, as a benefit for the worker, or a burden for the tortfeasor, be cumulative on damages, that damages should, if recovered by the worker, as far as they can, be the fund out of which compensation is paid, and that, as between the employer and the alleged tortfeasor, the burden of compensation recovered from the employer should be finally cast upon the tortfeasor, but should not be a burden ultra the damages for which the worker has obtained judgment against the tortfeasor.

100    Secondly, this approach minimises the evils so graphically depicted by Kirby P in Thackham. 101    None of the earlier decisions in this Court preclude this result. 102    Kornjaca involved a claim for indemnity by the later employer against the earlier employer/tortfeasor. It did not concern the damages payable to the worker. Nor did it concern the worker’s position stemming from compensation paid by the former employer. Rather, it was the later employer’s liability to pay compensation that was apparently relied upon as the trigger for the claim to indemnity based upon s64 (see at 347D). 103 In Hood, the doctor’s liability arose later than and out of different circumstances to the liability of the employer. 104    In Dudley, the earlier tortious injury was not work-related. 105    Thackham is the closest to the present case. But it is distinguishable for the reasons stated above (par 83 above). 106    In Thackham the Court had necessarily to consider the question of s151Z’s application by reference to the position of the second employer, Hastings District Hospital. Looking down that end of the telescope, it was self-evident that the circumstances occasioning the second employer’s liability to repay compensation were different from those giving rise to the first employer’s tortious liability. No one suggested looking at it from the point of view of the first employer’s liability to pay compensation. There were obvious reasons. The first employer in Thackham and the person liable at common law were one and the same person (Kempsey District Hospital). Section 151Z deals only with circumstances creating a liability in some person other than the worker’s employer (ie a “stranger” in the language of the side-note). The second employer had been held to have been solely liable to pay compensation. Here, Franklins was a stranger vis-a-vis the Egg Corporation. 107 Since therefore s151Z(1) applies (at least in part), par (b) thereof stipulated that the respondent could sue for damages despite having received compensation. However, the recovery of damages by the respondent (worker) meant that she became liable to repay (to the NSW Egg Corporation) out of those damages the amount of compensation paid in respect of the 1989 injury which the NSW Egg Corporation has paid her in respect of that injury. And since s151Z(1)(b) also provides that she is not entitled to any further compensation in respect of that injury, there is no need to do the offsetting exercise stemming from Thackham with regard to any future stream of such compensation payments. 108    Where does this leave the compensation paid and payable by George Weston under the consent award? This money was received by the respondent as of right in reduction of her loss as it manifested itself after 1991. However, (in contrast to the finding of Newman J in Thackham) the trial judge’s finding in the present case represents a conclusion binding the parties to this appeal that (even though the worker suffered compensable injuries in 1991 and 1992) liability to make the compensation payments should have been apportioned entirely to the NSW Egg Corporation. 109 Nevertheless, it remains clear that the respondent did not receive the money from George Weston as a gift. It was received in mitigation of her loss accruing from 1991 onwards, albeit that the two employers had agreed between themselves to share the (compensation) burden of that loss. The compensation payments made by George Weston fall outside the scheme of s151Z(1). Accordingly, they should be offset against the respondent’s damages in order to avoid double satisfaction. The trial judge did this, but only as to the past payments (see pars 35-43 above). 110 What in fact happened was that all pre-verdict payments by George Weston on account of weekly compensation, lump sum compensation and out of pocket expenses were brought into account in relation to the plaintiff’s damages under the verdict. These totalled $136,149.37 (par 37). As regards this employer, this offset was a correct application of the rule against double compensation. However, there is a slight arithmetical adjustment to be made (see pars 36-8). 111 Nothing was allowed having regard to the future stream of compensation payments from George Weston under the award. In view of the agreement between the employers embodied in the award (pars 32-3 above), that stream represents two-thirds of the continuing award payments. Presumably these payments have continued after the verdict. But I see no reason why the trial judge’s reasons should not have led to the conclusion that the stream of payments was likely to stop as soon as a verdict was awarded. 112 Thackham did not require the trial judge to deduct from the appellant’s damages a sum representing his Honour’s estimate of future compensation payments from George Weston. That is because, on the reasoning of the trial judge, the Compensation Court would have exercised its power to rescind continuing weekly payments under the joint award by reducing them to nil in the light of the verdict and the reasons for it. 113    This would not have involved inferring that the Compensation Court might set aside the agreement between the two employers noted in the consent award of 13 May 1994 (par 32 above). It simply meant that such agreement would have nothing to operate upon in the event that the award against the two employers was treated as coming to an end when, after a contested hearing in the District Court, the full extent of the respondent’s incapacities were seen to stem from the 1989 injury. 114    In one sense this means that (in the light of the verdict below, which I would uphold) George Weston has made significant payments for the benefit of the present appellant. Some of them stem from the agreement made between the two employers and embodied in the Compensation Court’s order. The payments that preceded the verdict were taken into account except to the extent that the slight difference in the figures allowed and the figures paid pre-verdict (see pars 36-38 above) represent money paid by George Weston. If, as seems likely, George Weston paid further sums to the respondent after judgment in the court below, its rights of recovery against the respondent are not matters in issue in this appeal. 115    This Court is not concerned in these proceedings with what may be the respective rights of the appellant and George Weston inter se or the rights of the respondent and George Weston inter se. The adjustment of any ultimate overpayments is a matter for other proceedings if any entitlement exists. It is noted that the respondent has submitted to the Court that she is obliged to recoup each employer (par 44 above). 116 The upshot is that the compensation paid by George Weston was (except for a minor adjustment) correctly and fully deducted from the damages payable to the respondent. The compensation paid by the NSW Egg Corporation should not have been deducted, and should have been left to be repaid by the worker to that corporation out of a higher award of damages. 117 As indicated (par 107), the worker acknowledges that she is required to repay to the NSW Egg Corporation out of her damages the moneys received from that body on account of her injuries. These total $42,755.95 (see par 37). This will put her out of pocket to that extent. It is unclear to me that the worker and her legal advisers have recognised this outcome if the worker adheres to her stated intention or is obliged by force of s151Z to do it anyway. 118 With considerable hesitation, I am disposed to allow the respondent the opportunity to consider her position in the light of these reasons. I do so because of the complexity of the case and because, as presently advised, I cannot see how the appellant might have conducted its case differently here or below had it perceived that the proper disposition of its appeal (being an appeal by way of rehearing and subject to s75A(10) of the Supreme Court Act) might be that the verdict could be increased, subject of course to the dictates of procedural fairness (see Bremner v Sinclair (No 2) [1999] NSWCA 407). 119 If the parties are content with dismissal of the appeal with costs or can agree on alternative orders within 7 days then they should prepare and file short minutes with the Registrar. If they cannot, they should be directed to file and exchange further written submissions directed to the matter raised in the concluding paragraphs of this judgment. 120 I propose the following orders:

1. Subject to order 2, appeal dismissed with costs.
2. Direct the parties to consider the issue raised in pars 116-119 and to comply with the directions in par 119.

121 SHELLER JA: I have had the benefit of reading the judgment prepared by the President. His Honour has reviewed the authorities in which the limited operation of s151Z of the Workers Compensation Act 1987 and its predecessor, s64 of the Workers Compensation Act 1926, has been recognised and discussed. I agree that s151Z means that the respondent is liable to repay to the NSW Egg Corporation out of the damages recovered by her the amount of compensation which that Corporation has paid her in respect of the 1989 injury, but that since no further compensation is recoverable (s151Z (1) (b)), no off-set is required for any future compensation payments. Accordingly, the rule against double compensation does not require any reduction of damages on that account. 122 As to the amounts paid by George Weston Foods Limited by way of compensation for the 1991 and 1992 injuries I agree that these are not repayable per force of s151Z for reasons succinctly explained by Glass JA in Kornjaca v Steel Mains Pty Limited [1974] 1 NSWLR 343 at 347, Clarke JA in Dudley v Condell Park Carrying Co Pty Limited (1988) 4 NSWCCR 58 at 63-5 and Meagher JA in Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 at 505-6. The President has quoted the relevant passages from these judgments and observed, in my opinion correctly, that the 1991 and 1992 injuries were not “caused under circumstances creating a liability in some person other than the worker’s employer (George Weston) to pay damages in respect of” the injuries. It follows that such compensation payments remain to be deducted from the respondent’s damages to avoid double compensation. As the President has pointed out, the respondent’s claim in these proceedings was adjusted by deduction of the compensation payments received from George Weston. 123 There remains only the question of whether a further deduction should have been made in accordance with what this Court said in Thackham to off-set the value of compensation payments receivable in the future from George Weston. I agree that such a deduction was not called for consistent with the trial Judge’s conclusion that the cause of the ultimate disability was the 1989 accident and the continuing impact it had upon the respondent. According to this reasoning the respondent was not entitled to any further compensation payments from George Weston. Any adjustment of further payments received after judgment is not something with which the Court, on this appeal, can be concerned. 124    I agree with the orders the President proposes. 125    COLE AJA: I agree with Mason P.

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