Friend v Comcare

Case [2021] FCA 837

FEDERAL COURT OF AUSTRALIA

Friend v Comcare [2021] FCA 837

File number(s): NSD 208 of 2021
Judgment of: RARES J
Date of judgment: 23 July 2021
Catchwords: WORKERS’ COMPENSATION – statutory interpretation – whether payment to settle claim constituted ‘damages’ or a ‘recovery of damages’ within the meaning of s 48(1)(a) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRCA) – where Comcare had accepted the employee’s claim for compensation in respect of physical and mental injuries sustained in the course of employment under the SRCA – where Comcare paid employee compensation for injuries – where employee complained under Australian Human Rights Commission Act 1986 (Cth) of unlawful discrimination by employer and other employees under s 15(2) of Disability Discrimination Act 1992 (Cth) and under s 14(2) of the Sex Discrimination Act 1984 (Cth) (SDA) on the basis of her disability or sex and about sexual harassment under s 28A of SDA – where employer, without admissions, and employee settled complaint by deed of release in consideration of lump sum payment and grant of releases – where Comcare claimed lump sum was recovery of damages in respect of injury to employee in respect of which compensation is payable under s 48(1)(a) of SRCA – where lump sum payment not referable to any specific head of damages or claim – whether lump sum payment and retention of workers’ compensation payments constituted double recovery – Held: no part of the lump sum payment constituted damages or a recovery of damages to which s 48(1)(a) of SRCA applied
Legislation:

Acts Interpretation Act 1901 (Cth) s 13

Anti‑Discrimination Act 1987 (NSW)

Australian Federal Police Act 1979 (Cth) ss 24, 32

Australian Human Rights Commission Act 1986 (Cth) ss 3, 46P, 46PE, 46PF, 46PH, 46PJ, 46PO

Competition and Consumer Act 2010 (Cth)

Disability Discrimination Act 1992 (Cth) ss 3, 4, 5, 6, 12, 15, 124

Fatal Accidents Act 1846 (UK)

Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 4, 5A, 7, 14, 24, 27, 44, 45, 46, 47, 48, 49, 50, 51, 52, 52A, 53, 54

Seafarers Rehabilitation and Compensation Act 1992 (Cth) ss 54, 55

Sex Discrimination Act 1984 (Cth) ss 3, 5, 9, 14, 28A, 108
Cases cited:

Accident Compensation Commissioner v CE Heath Underwriting of Insurance (Aust) Pty Ltd (1994) 121 ALR 417

Allsop v Federal Commissioner of Taxation (1965) 113 CLR 341

Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1

Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245

Department of Defence v West (1998) 85 FCR 491

Fox v Wood (1981) 148 CLR 438

Gardiner v Laing O’Rourke Australia Construction Pty Ltd (2020) 102 NSWLR 599

Hall v A & A Sheiban Pty Ltd (1989) 20 FCR 217

Henville v Walker (2001) 206 CLR 459

Hughes (t/as Beesley and Hughes Laywers) v Hill (2020) 277 FCR 511

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109

McLaurin v Federal Commissioner of Taxation (1961) 104…

Continue reading Friend v Comcare

Sign in free to access the full text

Details
AGLC
Friend v Comcare [2021] FCA 837
Case
[2021] FCA 837
Decision Date

CaseChat Overview and Summary

Friend v Comcare involved a dispute between Ms Friend, a former employee, and Comcare, the Commonwealth's workers' compensation insurer, over the interpretation of the Safety, Rehabilitation and Compensation Act 1988 (Cth). Ms Friend had settled her complaints of discrimination, sex discrimination, and sexual harassment with the Australian Federal Police (AFP) for a lump sum of $1.25 million. Comcare argued that part of this lump sum was a recovery of damages for injuries in respect of which compensation was payable under the Act, seeking to reduce its liability for workers' compensation accordingly. The court had to determine whether any part of the lump sum constituted damages or a recovery of damages under s 48(1)(a) of the Act.

The primary issue was whether the lump sum payment, which settled a variety of claims, constituted damages or a recovery of damages under s 48(1)(a) of the Act. The court examined Comcare's argument that a part of the lump sum was in respect of injuries for which compensation was payable under the Act, thus subject to s 48. The court found that Comcare's assertion was speculative and not supported by the evidence. It held that Comcare could not establish that the lump sum was a recovery of damages without direct proof that it was in respect of injuries for which compensation was payable. The court emphasised that the onus of proof lay with Comcare to show that the lump sum was a recovery of damages, and it could not rely on mere conjecture or speculation.

The court concluded that Comcare's interpretation of ss 48(1)(a) and (7) of the Act was incorrect. It ruled that the mere fact that a lump sum settled various claims did not allow for the inference that part of it related to injuries for which compensation was payable under the Act. The court found that Comcare had not provided sufficient evidence to establish that any part of the lump sum was a recovery of damages. Therefore, the court declared that no part of the $1.25 million lump sum constituted damages or a recovery of damages under s 48 of the Act.

The final orders declared that no part of the $1.25 million lump sum constituted damages or a recovery of damages under s 48 of the Act, dismissed Comcare's cross-claim, and set deadlines for the filing of evidence and submissions regarding the order for costs. The court's decision underscored the need for clear evidence to establish that a payment constitutes a recovery of damages under the Act.

Orders

Orders of the court

1. It be declared that no part of the lump sum of $1.25 million paid to the applicant by the Commonwealth of Australia, as represented by the Australian Federal Police, pursuant to the deed of release dated 22 September 2020 constituted damages or a recovery of damages within the meaning of s 48 of the Rehabilitation and Compensation Act 1988 (Cth).

2. The cross claim be dismissed.

3. On or before 30 July 2021, the applicant file and serve any evidence and written submissions limited to 2 pages in respect of the order for costs that she seeks.

4. On or before 6 August 2021, the respondent file and serve any evidence and written submissions limited to 2 pages in respect of costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Comcare’s assertion that some part of the lump sum must have been a recovery of damages within the meaning of s 48(1)(a) of the SRCA (see [54] above) is not an inference that can or should be drawn in the absence of proof that some of the lump sum fell within the statutory criterion in s 48(1)(a). Comcare relied on what Dixon, Williams, Webb, Fullagar and Kitto JJ said in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5 about the use of circumstantial evidence to meet the civil onus of proof. Their Honours said:The difference between the criminal standard of proof in its application to circumstancial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence while the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort where direct proof is not available it is enough in the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture (see per Lord Robson, Richard Evans & Co Ltd v Astley [1911] AC 674 at 687). But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then though the conclusion may fall short of certainty it is not to be regarded as a mere conjecture or surmise: cf per Lord Loreburn, above, at 678.(emphasis added) This is not a case about circumstantial evidence. Moreover, Comcare is seeking to convert its conjecture into “a reasonable and definite inference” that “at least part of the compensation” that Ms Friend recovered from the AFP was in respect of which compensation was paid or is payable under the SRCA. Comcare’s suggested construction of ss 48(1)(a) and (7) misunderstands the role of each provision. So long as s 48(1)(a) is satisfied in that some part of the damages (including any settlement) is “in respect of an injury… in respect of which compensation is payable under this Act”, on which Comcare has the onus of proof, s 48(7) then throws the onus on the employee to establish that a part of the recovery (and how much of it) did not relate to such an injury. But the mere fact that a tortfeasor employer settles a variety of an employee’s disputed claims for a lump sum, the components of which are not agreed or identifiable, does not entitle the drawing of any reasonable and definite inference about the character of the lump sum. It is wrong in fact and law to speculate that some part of it actually relates or inferentially must relate to what a third party, such as Comcare, the Commissioner of Taxation or the Official Receiver would wish it to be: McLarin 104 CLR at 392. Nor can Comcare’s argument be right that s 48(7) will apply so that Ms Friend can have an opportunity of satisfying Comcare that some of the $1.25 million did not relate to such an injury. The provision can only apply if s 48(1)(a) is satisfied because at least a part of the payment was, as a matter of fact, in respect of such an injury. Just as the Commissioner of Taxation could not establish that any part at all of each settlement sum in McLaurin 104 CLR 381 and Allsop 113 CLR 431 was assessable income, so too, here, Comcare cannot establish that the lump sum was a recovery of “damages in respect of an injury to [Ms Friend] being an injury in respect of which compensation is payable under the SRCA”.

Decision

Reasons for decision

On 14 July 2014, Comcare accepted Ms Friend’s claim for compensation, with effect from 13 July 2013, for acute gastritis, adjustment disorder with mixed emotional features and panic disorder as a psychological injury which was significantly contributed to by her employment (Comcare’s July 2014 decision).The complaint to the AHRC Ms Friend’s complaint form to the Commission repeated many of the allegations against her superior that she had made in the April 2014 statement. However, it added substantial new allegations that were not part of the previous statement, including that the superior, being the sergeant, continually rubbed himself against her in a sexual and inappropriate manner whenever he had the opportunity, making her feel uncomfortable and violated. She also made new allegations against two other more junior male officers in her team at the airport. She alleged that the first performed abusive or offensive acts in front or behind her, made fun of, practical jokes and spread malicious rumours about her, excluded her from work-related meetings, functions and events, isolated her and acted in a hostile manner towards her, including but not limited to making vindictive comments about her ability as a police officer. The second more junior officer refused to follow her directions or requests, made fun of her general duty experience and policing knowledge, played practical jokes and engaged in deliberate conduct causing her physical and social isolation, and made offensive comments about her in front of other members of the team, including refusing to acknowledge her seniority. Ms Friend alleged that she had made clear, expressly or by her behaviour, to the three officers on most, if not all, occasions when they engaged in the conduct complained of that the conduct was not welcome. Their conduct was largely sexual in nature in relation to her. She complained that she felt humiliated, intimidated and offended by that conduct and that it discriminated against her on the ground of sex because the three males did not treat men in same way. Ms Friend recounted that she had made several requests to the AFP management to be moved from the team that were rejected, including requests that she made after she realised that she was sick. She approached two other sergeants at the airport and the station sergeant and asked to be transferred from the team because its toxic environment was making her ill, and supplied them with medical and psychological documents to support her case. She said that several times over the following months her requests to be moved were rejected, even though her health was obviously deteriorating. Ms Friend was not transferred until January 2014, when she was posted to the AFP Sydney office. She complained that if AFP management had dealt with the situation properly at the time, she would not have suffered her mental and physical illnesses and would have been fit for duty. She said that the workplace incident, being the combination of her complaints, highlighted the need for AFP management to recognise its duty of care and deal responsibly with workplace bullying. She complained that some of the behaviours of the AFP amounted to a failure to make reasonable adjustments within the meaning of ss 5, 6 and 15 of the DDA.

Ratio Decidendi

Legal Principle Established

Comcare argued that there was a real and definite inference that some part of the lump sum that Ms Friend recovered from the AFP was in respect of an injury for which compensation had been paid or was payable under the SRCA. It contended that this inference arose from, first, Ms Friend’s claims that the deed resolved, including Fox v Wood (1981) 148 CLR 438 damages, a quantum of around $1.3 million for economic and non-economic loss after deducting workers’ compensation and, secondly, the improbability that her claims for an apology, a review by the AFP of its operations and that disciplinary action be taken could be worth the $1.25 million lump sum. Comcare submitted that the reasoning in cases such as McLaurin v Federal Commissioner of Taxation (1961) 104 CLR 381 and Allsop v Federal Commissioner of Taxation (1965) 113 CLR 341 was inapplicable to the issue under s 48 of the SRCA which specifically provides in s 48(7) for apportionment of a lump sum settlement. ConsiderationThe construction of Part IV of the SRCA Section 45 confers on the employee an election to pursue a cause of action against the Commonwealth or other employee where the injury suffered has resulted in a permanent impairment for which s 24 makes Comcare liable to pay him or her compensation. Section 27 extends the employee’s entitlement by creating a right to additional compensation, calculated in accordance with the formula in s 27(2), for any non-economic loss suffered by the employee in respect of the injury from which the permanent impairment resulted. The effect of s 45(4) is to limit the amount of non-economic loss that an employee may recover in an action he or she has elected to pursue against the Commonwealth or other employee under s 45 to a maximum of $110,000. The purpose of ss 46 and 47, as their headings suggest, is to require an employee or dependant who makes a claim against a third party (s 46) or the Commonwealth or other employee (s 47) in respect of an injury or death for which compensation is payable under the SRCA, to give Comcare notice of that claim within 7 days. Where a dependant recovers damages in respect of an injury that resulted in the death of an employee and compensation is payable under the SRCA in respect of that injury, s 49 requires the dependant to pay Comcare the lesser of the amount of the compensation paid or payable to that dependant or the damages recovered. As with ss 44(1)(a), 45(1)(a), 46(1)(a) and 47(1)(a), s 49(1)(a) establishes a criterion of an injury for which compensation is payable under the SRCA as a precondition of the section’s application to a set of facts. In contrast, s 50, headed “Common law claims against third parties”, gives Comcare rights analagous to an insurer’s right of subrogation to the rights of its insured whom it has indemnified or is liable to indemnify. Thus, s 50 operates where Comcare has paid an amount of compensation under the SRCA to an employee or dependant where the circumstances in which the injury or death occurred appear to create a legal liability in a third party to pay damages in respect of the injury or death and the employee or dependant has not either made or prosecuted a claim against the third party (s 50(1)(a), (b) and (c)). In that situation, s 50(1) gives Comcare a right to make its own claim against the third party in the name of the employee or dependant, or take over an existing claim for the recovery of damages in respect of the injury to, or death of, the employee. Once Comcare exercises that right, s 50 gives it substantive control over the conduct of any existing claim and the right to seek orders from a court that the employee or dependant sign any agreement to settle that action (s 50(4), (4A) and (4B)).