Government Insurance Office of New South Wales v Ce McDonald (NSW) Pty Ltd

[1992] HCATrans 213

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S8 of 1992

B e t w e e n -

NEW SOUTH WALEMRANCE OFFICE OF GOVERNMENT INS

Applicant

and

C.E. McDONALD (NSW) PTY LIMITED

Respondent

Application for special leave

to appeal

MASON CJ
BRENNAN J:.

MCHUGH J

GIO 1 3/8/92

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY. 3 AUGUST 1992. AT 11.43 AM

Copyright in the High Court of Australia

MR p.F, JACKSON, OC:  If the Court pleases, I appear with my

learned friend, MR A.L, McSPEDDEN, for the

applicant. (instructed by G.M. Meadows)

MR M,H. TOBIAS, QC:  I appear with my learned friend,

MR J.A, McINTYRE, for the respondent. (instructed

by Vandervords) .

MASON CJ: Yes, Mr Jackson.

MR JACKSON:  Your Honours, the case, in our submission,

gives rise to two issues, each of which, we would

submit, merits the grant of special leave. The

issues, Your Honours, both concern the operation of

section 64(l)(b) of the workers' Compensation Act 1926, and their importance is made apparent by

of the application which Your Honours will see at	paragraph S(d) of Mrs Gray's affidavit in support
page 57.
May I turn then to the issues and to the question whether the decision of the Court of
Appeal on each is sufficiently attended by doubt.
The first issue concerns the dependence, or perhaps I should say interdependence, of the right of the
worker against a tortfeasor, on the one hand, and, on the other hand, the right of the employer to an indemnity under the statute.
May I give Your Honours a book which is by no means as daunting as it would appear. It contains
the relevant provisions of the statutes extracted, together with the four decisions of the Court which
have touched upon the issue, and which I will go to
briefly to indicate that in our submission the
first issue is one meriting special leave.
. Your Honours will see that the provision of the statute is, I think - I do not know if
You: HQnoura have an indexed copy, but it follows
very shortly after the first few pages.
Your Honours will see section 64 set out commencing
at page numbered 212. Your Honours will see in
section 64(1) that it provides,

Where the injury for which compensation is	payable under this Act was caused under
circumstances creating a legal liability in
some person other than the employer to pay
damagea in respect thereof -

paragraph (a) then allows the worker to take
proceedings both to recover damages and for

compensation but is not entitled to retain both.

Then the second paragraph of paragraph (a) says:

GIO 2 3/8/92

If the worker recovers firstly compensation

and secondly such damages he shall be liable

to repay to his employer out of such damages
the amount of compensation which the employer

has paid.

I will pass over the third paragraph of (a). Then

the right to indemnity in the employer is provided

for in section 64(l)(b). It says:

(b) if the worker has recovered compensation

under this Act, the person by whom the
compensation was paid shall be entitled to be

indemnified by the person -

described as being the person -

so liable to pay damages as aforesaid -

"as aforesaid" appears to be a reference back to

the liability in the opening words of 64(1) and

also to the ability to recover damages and the

liability in 64(l)(a).

Your Honours, the basic factual situation of the case may be stated very shortly. The worker

and the tortfeasor had compromised the worker's

action against the tortfeasor in the sense that

after some evidence had been given at the trial of

that action the worker agreed to there being a

verdict for the defendant, and the defendant paid

his costs which w~re assessed at some $15,000.

Later, the employer claimed indemnity against the

tortfeasor and the worker's cause of action against

the tortfeasor at that point no longer existed.

McHUGH J: But that judgment between the worker and the

tortfeasor is res alios acta so far as the action

,brought by the employer is concerned.

MR JACKSON: Well, Your Honour, that is the issue, with

respect, in a sense.

McHUGH J: Well, do you concede that the employer has an

independent right of action?

MR JACKSON:  Your Honour, the employer is given a right of

action but I would not accept, if I could say so,

the proposition that it is independent in the sense

in which I think Your Honour is putting it to me.

That really is the question in the case as distinct

from the answer, with respect.

McHUGH J:  Have you read Scala v Mammolitti?

MR JACKSON: Well, Your Honour, I would have to say, "No",

immediately.

GIO 3 3/8/92

McHUGH J: Well, it is a nervous shock case where the

identical situation arose where a statutory right

of action was given for nervous shock to a family

relative and the word "liability" was involved

there and this Court unanimously held that the fact

that the person injured had lost the action did not

affect the right of the family relatives to bring

the action for nervous shock.

MR JACKSON:  Your Honour, may I inquire, was that under

section 64(l)(b)? Your Honour, was that a caswe

under section 64(l)(b)?

McHUGH J:  No, it is under a statutory provision which

provided where the liability of any person in

respect of injury caused by an act, et cetera,
et cetera, shall extend to include liability for

injury arising wholly or partly from nervous or

mental shock, and the parent or husband could bring

an action. The wife brought an action, failed,

then the husband brought an action under the

statute.

MR JACKSON: Well, Your Honour, the point I am seeking to

make about it really - and I am somewhat relieved

if I may say, with some respect, to find it does

not arise under this provision - is this, that it

must depend, of course, on the particular statute

in the particular case. And, Your Honour, some

causes of action can be entirely independent.	Some
can be entirely derivative, and some can be
somewhere in between.	The present case is one

falling really into the third category because it

is clear, of course, that section 64(l)(b) does

give a right of action. It does so in terms but it

is a question of the nature of the right so

conferred and, Your Honour, if one arrives at a

situation where the indemnity expressed to be a

.right to be indemnified by the person so liable to

pay damages as aforesaid, is one which is to be

exercised in circumstances where there is no longer

a person who is liable to pay damages as aforesaid,	then, Your Honour, the right of action may exist,
but the recovery from it will be nil.

BRENNAN J: Your argument means this, does it not, that the

statutory cause of action conferred by 64(l)(b) is

capable of being extinguished by the action of

persons other than the repository of the right?

MR JACKSON:  Indeed, Your Honour.

BRENNAN J: That seems to be a remarkable conclusion, does

it not?

MR JACKSON: Well, with respect, Your Honour, no. What one

is looking at is a situation where several rights

GIO 4 3/8/92

are given and there is no particular reason, for

example, why a view one way or the other should be

taken. Inevitably, the nature of the action which

the injured worker has against the tortfeasor is

one the resolution of which is dependent upon the

decisions made either by a third party, the court,

or by the parties themselves. That is the very

nature of the thing.

Now, one might assume that in the ordinary

course of events persons are not going to arrive at
decisions, normally speaking, advise decisions,
which are entirely contrary to their interests.

What I mean by that is they are likely to arrive at

decisions which represent on the material known to

them and on the prospects of success of the case,

decisions which are, in effect, mature and informed
decisions. So, Your Honour, it is not very

surprising in a sense that that result should

follow. If it were that some other decision is

sought to be arrived at, then one tends to find statutory provisions, as in one of the cases to

which I will come in just a moment, which provide

specifically for the fact that the manner of

resolution of the case as between worker and

tortfeasor not to be binding on the employer.

Your Honours, one equally has a somewhat

curious situation if one does it the other way,
because the other way is a situation where one

potentially arrives at entirely different decisions

as in the present case being arrived at as between

the worker and tortfeasor, on the one hand, and the

employer and tortfeasor, on the other. And they

are dependent entirely on the view of the case
taken by the parties.

Your Honours, could I say that the issue has been touched on by the Court on four occasions.

The first two decisions have been directly on the

New South Wales provision. The later decisions

have been on provisions in other jurisdictions

where the enactments contain additional provisions

dealing directly, or perhaps marginally, with the

issue.

Your Honours, may I go to those decisions, and

I will do so very briefly, to indicate that the

issue is not as clear, in our submission, as the

judgment in the Court of Appeal would suggest.

Your Honours, could I make particularly one comment

at this point, and that is that the view taken by

the Court of Appeal at page 44 line 25 through to

page 45 line 21, represents with respect, too

narrow a view of what was decided by the Court in

Watson v Newcastle Corporation, and by whom and, in

particular, what we would seek to indicate to the

GIO 3/8/92

Court is that it is not just Justice Taylor whose

judgment was to the effect there referred to and in

our favour but the majority of the Court on the

particular underlying construction of the

provisions.

Your Honours, the first decision is Tooth &

Co Ltd v Tillyer, (1956) 95 CLR 605. That was a

case where the critical question derived from the

fact that spouses could not sue each other in

tortand what was held by the Court was that in

terms of section 64(1)(a) a legal liability had

never arisen, that is, in terms of the opening part

of section 64(l)(a). Could I take Your Honours to

page 610, and Your Honours will see in the joint

judgment at about point 5 a reference to Smith's

Dock Co v John Readhead & Sons, and at about

point 6 what was said was:

All that it -

that case -

established is that if a cause of action once

raises in the deceased workman the critical
words of the provision are satisfied although

the liability soon afterwards comes to an end

by his death.

Then, Your Honours, at page 611 at about point 8 and where it said -

it seems impossible to treats 64(b) -

that was the then numbering -

as not depending for its application on the
incurring by a person other than the employer

of an actual legal liability in respect of the

injury.

Then, Your Honours, the passage commencing on the

last line on that page going through to the end of

that paragraph on the next page. So a real

liability was what was in contemplation.

McHUGH J:  Mr Jackson, what I do not understand is this:

take the ordinary running of this indemnity action.

You would seek to tender the judgment that it would

be objected to. On what ground could you say that

the judgment was evidence that there was no legal

liability?

MR JACKSON: Well, Your Honour, because the liability of the

two parties, namely, the worker and the tortfeasor,
had been brought to an end by a compromise.

Your Honour, I would accept entirely that it might

GIO 6 3/8/92

be possible to prove, if one were looking at the

matter in the abstract in a sense, as between

employer and tortfeasor on the evidence in a case

between them, that there had been a legal liability

in a third party, namely - - -

McHUGH J: But the judgment would only be evidence as

between those two parties. It would not be evidence

against the employer, would it?

MR JACKSON: Well, with respect, Your Honour, it depends

what one is seeking to prove, and what one would

be seeking to prove in that case would be - if one
looked at it from the point of view of the

employer, the employer would be seeking to prove

what is set out in section 64(l)(b) that there was

an entitlement -

to be indemnified by the person so liable to

pay damages as aforesaid.

To identify whether there was such a person one

needs to go to the opening words of the subsection

which says that there has been an injury -

caused under circumstances creating a legal

liability in some person other than the

employer.

Now, Your Honour, the issue whether there is a

person so liable to pay damages is an issue

which - - -

BRENNAN J: "Is a person" or "was a person"?

MR JACKSON:  I am sorry, Your Honour, I do not mean to

answer that with a conundrum, as it were. That is

the question in the case. Our answer to it is that

there must remain a person liable to pay damages.

BRENNAN J:  It is not a question of using the judgment to

show that there never was a person?

MR JACKSON: Well, Your Honour, it might show two things.

It might show that, but the ultimately critical
issue is whether there is a person liable to pay

damages.

BRENNAN J: Well, if one looks at the top of page 612 of

Tooth & Co, one sees that the condition is:

the existence for however brief a time of a

true liability.

MR JACKSON:  Yes, Your Honour, I would accept, if that

proposition was taken in the abstract and away from

the particular case, it is a proposition which

GIO 3/8/92

would be against the case which we are putting. However, Your Honour, if one goes to the second

case, Watson v Newcastle Corporation, that view

does not seem to be quite the view that was adopted

by the majority in that case. Nor does that case

appear to have been treated as governing the issue

at all.	It does not seem to have been referred to,
in fact.

Your Honours, may I go immediately to the

second case, and that is the second of the New

South Wales cases. In that case the Court, with

Justice Menzies dissenting, held that the

employer's right to be indemnified by the

tortfeasor ceased when the worker had either

obtained damages or a judgment for damages against

the tortfeasor. Now, might I pause before going to

the actual text of the case to say this: that it

seems difficult, with respect, to arrive at the

conclusion that the employer's right to be

indemnified ceased when the worker obtained damages

or a judgment for damages, unless the reasoning

underlying that conclusion is that the right to

indemnity is dependent on the continuance of a

right to obtain damages. And, Your Honours, that

is what, in our submission, three members of the

Court, only one of whom was Justice Taylor, held in

that case.

Could I go first to Justice McTiernan,

Your Honours, at page 432 about point 5. I am

going to refer to three passages in His Honour's

reasons for judgment. His Honour goes into

considerable detail about the construction of the

provisions and the interrelationship of them.	The
discussion commences relevantly half-way down
page 432, and Your Honours will see the passage

which goes from there to about three-quarters of

the way down the page - - -

McHUGH J: Could you just summarize it because my copy is

missing the relevant passages.

BRENNAN J:	So is mine.
MASON CJ:	So is mine.

McHUGH J: Your junior must not have had much faith in these

pages, Mr Jackson.

MR JACKSON:  Your Honour, essentially what His Honour is

saying in that passage - Your Honour, could I just

ask if you have page 434?

MCHUGH J: Yes.

GIO 8 3/8/92

MR JACKSON:  Well now, the conclusion - Your Honour, I shall

not go into the detail of it because it is

difficult to precis rather than paraphrase - but

what His Honour says in his conclusions at the top

of page 434 is this:

In my view, it goes effect to the language of

the section and the intention evident

therefrom to hold that where the indemnity

cannot be enforced without imposing a

financial burden on the tortfeasor in excess

of his liability for damages, an action for
the indemnity does not lie.

Now, Your Honours, if the true situation is, as the judgments and the reasoning underlying the notion

on the other side of the case would seem to

suggest, that there is an independent cause of
action for arising under section 64(l)(b), then
subject to the fact that it is a right to recover

the amount of compensation paid, it is difficult to

see why there should be any particular relationship

between the amount of damages for which the

tortfeasor is held to be liable in another action

on the one hand, and the amount to be claimed under

the indemnity on the other.

Your Honours, could I move then to

Justice Taylor. His Honour's reasons for judgment

commence at page 437. Your Honours will see, if I

might observe in passing, at the end of the first

paragraph of his reasons for judgment - it was a

case where damages had been agreed in the

action - and His Honour, at page 437 about point 8,

said:

The question which the case raises is whether the right of an employer to be indemnified by

a tortfeasor pursuant to s 64(b) continues to

exist notwithstanding the discharge by the

latter of his obligation to pay damages to the

worker.

Now, at page 438 about point 2, Your Honours will

see the paragraph commencing, "It should also be

said", he refers to the fact of waiver, and then

about half-way down that paragraph, says:

the liability of the appellant to pay damages

ceased after that judgment had been obtained

and satisfied.

And then, Your Honours, three-quarters of the way

down the page, he says:

GIO 3/8/92

Pursuant to the Act the recovery of compensation by a worker produced two

results -

which he states. And then, Your Honours, if I could go to the paragraph when he comes to the

language of the section in more detail, he says at

page 441 about point 6, "Turning to the language of

subsection (b)", and Your Honours will see in the

second sentence of that paragraph:

Prima facie, at least, this phrase is

indicative of a person presently liable to pay

damages and not of a person who is no longer

liable.

And then His Honour elaborates upon that

proposition throughout that page and to the top of

the next page. Finally, Your Honours, at page 445,

two passages, the first about half-way down the

page in Justice Windeyer's reasons for judgment,

where he is speaking of subsection (b), he says:

Its words, as well as its history, show that

it has no application where a judgment has

been recovered against the third party by the

injured worker.

His Honour elaborates upon that through the remainder of that paragraph. And his conclusion appears at the next page, page 446, commencing at about point 2 and going to the end of that

paragraph, but may I refer particularly to about

half-way through the paragraph where he says:

For the reasons I have given, I agree in the conclusion of Brereton J -

the dissenting judge -

in the Supreme Court that that provision only

applies when compensation has been paid by the

employer and the worker has not obtained

damages or a judgment for damages against a

third party.

Your Honours, underlying those notions in the

decisions of the majority of the Court may be seen,
in our submission, a concept of interdependence of

the two causes of action.

Then follow the two decisions which are based

upon different legislation in other jurisdictions,

but I should say, Your Honours, immediately that in

the reasons in those cases, particularly in the

reasons of Chief Justice Barwick, it is said that

the decisions are of more general application, and

GIO 10 3/8/92

it is really essentially that proposition which we

would wish to challenge. The first of those two

cases is Tickle Industries Pty Ltd v Hann,

(1974) 130 CLR 321. Your Honours will see the

relevant provision set out at page 323, and the
provision for indemnity is paragraph (d), the

penultimate paragraph on page 323. Your Honours

will see the words:

(d) where the workman has received

compensation under this Ordinance, but no

damages or less than the full amount of the damages to which he is entitled, the person

liable to pay the damages shall indemnify -

and so on, and so a specific provision was made.

Now, Your Honours, the issue in the case was

whether the expiration of the limitation provision

prevented their bringing in the cause of action,

and if I could just go for a moment to the

essential reasoning of the Chief Justice. That

appears at page 328 point 6. It is a long passage and goes through to page 331 point 5, and the most

important parts for present purposes seem to be

commencing at about page 329 point 5 through the

remainder of the reasons.

Now, Your Honours will see that the whole of

page 330 and the relevant part of page 331 are
based on paragraph (d) and the reference to no

damages or inadequate damages, in effect, but the

sting in the case so far as we are concerned
appears a little earlier at page 325 at about

point 4, where in a passage going to the end of

the first paragraph on the next page His Honour

assimilated the position under the Northern

Territory Act to that which obtained under the New

South Wales Act.

In that case, Mr Justice Menzies, who had

taken a view contrary to that for which we would

contend in Watson v Newcastle Corporation, in fact
took a view which was in favour of the view which
we would seek to advance. That appears at page 337
about point 1 going to half-way down the page, and

at page 339 about point 3.

McHUGH J: Well, that is consistent with what

Mr Justice Menzies also said in that case of

Scala v Mammolitti. He said in that case that if

the cause of action had been a derivative action,

then the judgment in his view would have defeated

the claim. But he took the view in the nervous

shock case it was not a derivative cause of

action.

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MR JACKSON:	Your Honour, the curious thing in the present case is that he took the opposite view in Watson v
Newcastle Corporation as one of the dissenting
members of the Court.

The last case concerns the Victorian

provisions. They were discussed in Xpolitos v Sutton Tools Pty Ltd, (1977) 136 CLR 418. The Court there again held that the amount recoverable

in the indemnity action was limited to the amount

which would have been recoverable against the

tortfeasor. That appears at page 421 about

point 7. Your Honours will see that there was an

admission that the amount would have been

recoverable in the common law action would have

been a particular sum. The principal judgment was

that of Justice Barwick and he appeared to accept

both Watson v Newcastle Corporation and Tickle

Industries v Hann. That appears at page 422 at

about point 5, going through to page 423, again at
about point 5.

Now, Your Honours, in our submission there are

considerable difficulties in accepting both
propositions. If the cause of action is one which
is an entirely separate cause of action, then one
would expect the cause of action to be dependent

upon the results of the evidence in it and limited

only by the amount of compensation that was

payable.

McHUGH J:	I must say I have always had problems with the reasoning in Watson, although not with the result.
I would have thought that the result _in Watson
could have been arrived at by a process of
statutory construction, particularly by relying on
the requirement that the worker pay out of his
damages the compensation that he has received, and
it has to go back to the employer.
MR JACKSON:	Your Honour, no doubt that is one indicator,

but if I could just go back to something that was

put to me earlier, one says "from his damages", but

from his damages how assessed? Damages actually

assessed in the litigation to which he was a party,

or damages notionally assessed in litigation

between the employer and the tortfeasor? Because

one could arrive at quite different results in the

two proceedings simply, for example, by the passage

of time and the injuries of a worker perhaps

becoming worse. So, Your Honour, I do not suggest

it is by any means a simple question, but it is one

where we would submit there is an underlying

conflict in the notions that have been developed in

the two cases, and it is an appropriate one for the

Court to resolve.

GIO 12 3/8/92

Might I go to the way in which the

matter -

BRENNAN J: These cases that you have been taking us to all

turn upon questions of double recovery, do they

not?

MR JACKSON: Well, Your Honour, it depends on what one means

by that, I suppose.

BRENNAN J: Well, by that I mean that there is a

liability which is met to the injured party, and

then another liability which is sought to be

enforced to the person paying compensation.

MR JACKSON:  Well, Your Honour, rather like this case. We

have met a liability to the injured person.	We
paid $15,000 for his costs.	The case is going on.

A discussion is had between the parties or their legal representatives. In the end, the plaintiff

accepts a verdict; we pay his costs. No doubt it

may be he has the provisions of the Act in mind

when that happens, but that is one recovery. This

is the other.

BRENNAN J:  But you see, if there had been any recovery of

damages by the plaintiff, then (l)(a) would have

come into operation, would it not?

MR JACKSON:	Yes.
BRENNAN J:	And then one can see that (l)(b) comes in, as it

were, after (l)(a). But if - - -

MR JACKSON:  Watson's case would not have (l)(b) coming in,

Your Honour.

BRENNAN J: Would not come in, yes. Once there had been

,liability met under (l)(a), then you would not be

liable twice under (l)(b). The tortfeasor would

not be liable twice under (l)(b), and once we

understand that, that if the tortfeasor has not

been liable under (l)(a), is there any reason why

he should not be liable under (l)(b)?

MR JACKSON: Well, he may have won the first action,

Your Honour.

BRENNAN J: Quite, and therefore not come under (l)(a).

MR JACKSON: Yes, Your Honour, but if one is looking for

underlying reasons it would seem a strange

situation that there is no liability under (l)(b)

in circumstances where the tortfeasor is held to

blame in the action, held to blame and liability

for damages, say, to the tune of ten per cent. But

on the other hand, if he succeeds completely, then

GIO 13 3/8/92

there is an entirely new	liability or an additional
liability under (l)(b).	Your Honour, that seems,
with respect, a possible	but a strange result of
the provisions.

BRENNAN J: Well, no doubt it is, but these are perhaps not

going to do otherwise than produce anomalies from

time to time. But if one sees that the recovery of

the person paying compensation of the employer is

either under (l)(b) from the successful plaintiff,

or under (l)(b) from the person who has not paid

any compensation to a plaintiff, then one can

understand it as a very logical proposition.

MR JACKSON: Well, Your Honour, with respect, that is not

quite so in the sense that it does have the

consequence that if one has a case where the

tortfeasor is sued, a case entirely properly

handled, competently handled and all the available

evidence called on all sides in an action by the

worker against him, but the decision of the court

is that the worker's action fails, Your Honour, it

seems a strange consequence then that in another

action which perhaps the tortfeasor or alleged

tortfeasor loses simply because a witness dies or

something along those lines, that the tortfeasor is

then liable to pay the employer even though in the

first action more fully and better litigated, he

won entirely.

Now, Your Honours, it would also seem a

strange consequence if the circumstances had been

such that in the first action there was a

liability, though limited, that had the result of

bringing to an end the liability under

section 64(l)(b) in circumstances where the

employer, of course, had no control over the way in

which the first action was conducted. I cannot

.take it beyond that, but that is the point we would

seek to make about it.

Your Honours, I was going to go to what was

said by the Court of Appeal on this point. The

court deals with the various cases to which I have

referred and, Your Honours, I referred earlier to a

passage which appears at page 44. I wanted to

refer Your Honours to page 44 line 25 and through to the next page about line 21. The way in which

the Court of Appeal has gone about arriving at its

conclusion is one that involves the assumption that

Watson's case does not have what, in our

submission, is the effect which it does have. But,

Your Honours, subject to that, the issue is one in

which, in our submission, two views are open as is demonstrated by the decisions in the Court and the

issue is one which is appropriate for the Court to

resolve.

GIO 14 3/8/92

Your Honours, may I move from that to the

second issue in the case, and that concerns the

quantum of the liability to indemnify assuming its

existence. The issue arises in circumstances

where, in the proceedings to which employer and

tortfeasor are parties, it is held that the injured

worker had been contributorily negligent.

Your Honours, the issue arises because of the presence of section l0(l)(d) of the Law Reform

(Miscellaneous Provisions) Act, 1965, which

Your Honours will see immediately following the

extract from the Workers' Compensation Act.

Your Honours will see that section 10(1) is

the provision allowing for reduction for
contributory negligence. Section 10 is then a

proviso which includes section l0(l)(d):

(d) where the claimant is liable to repay

compensation to his employer pursuant to

paragraph (a) of subsection (1) of

section 64 ..... the amount of compensation so

repayable shall be reduced to the same extent

as the damages recoverable by him.

Now, Your Honours, the essence of the case which we

wish to submit in relation to that provision is

that section 64(l)(b) gives to an employer a right

to an indemnity, but it is the ambit of the

indemnity which is material. Our submission is

that the ambit of the indemnity is the amount which

the employer would be able to recover from the

worker and that is, in effect, a notion which

underlies the decision in Watson v Newcastle

Corporation. Your Honours, true it is that

section 10 does not in terms refer to the specific

case, but it is unnecessary to do so, in our

submission, because it is talking about indemnity.

Your Honours, the reasons adopted by the Court

of Appeal for not accepting that proposition appear

Mr Justice Handley commencing at page 48 at line 17 principally in the reasons for judgment of	going through to the end of His Honour's reasons
for judgment. Your Honours will see that he
refers to the absence of specific reference to a
case of this kind in section 10(1), but he refers also to potentially, in effect, capricious results if we are correct. Your Honours will see that he does not touch upon in the result of his reasonings the question of the ambit of the indemnity but,
Your Honours, could we just say in relation to the
issue that the results coming from the method of construction adopted by the court militate equally against the notion that the amount recoverable from the worker should vary from that recoverable from the tortfeasor.

GIO 15 3/8/92

Could I take Your Honours to two examples

which are set out in the book, and they appear as, after a notice of appeal which had been omitted

from the record.

BRENNAN J: But even if there be an anomaly, what is the

statutory path which leads you to abolish the

anomaly in your argument?

MR JACKSON:  Your Honour, "anomaly" is the wrong word.

"Anomaly" carries with it the inherent notion that

it is wrong, but if I could just say this, that the

statutory part is this, Your Honour: that under

section 64 the entitlement is to an indemnity. One

has to look to see what is the ambit in money terms

of the- indemnity. The indemnity from the

tortfeasor is what the employer might otherwise

have recovered back from the employee.

BRENNAN J:  Why?

MR JACKSON: Well, Your Honour, because it seems to be a

curious result if Watson's case correctly says that

the indemnity is not available after a judgment has

been obtained by the worker, and if Xpolitis is

correct in saying that the amount of the indemnity

is limited, in broad terms, to the amount of any
judgment - but that case does not touch the
contributory negligence aspect of it - that is the
underlying notion, Your Honour, then the operation

of section 10, with the relevant provision of

section 10(1) is to reduce that quantum.

Now, Your Honour, one has a situation where

the employer recovers back	from one or the other
and recovers from one what	might have been
recovered from the other.	Your Honour, that is the
argument.

McHUGH J: But your illustration and the anomalous result

takes a finding of 90 per cent contributory

negligence. Reduce the figure to 70 per cent and

there is no anomaly.

MR JACKSON:  Well,_ there will not always be one,

Your Honour. There are two - - -

McHUGH J:  You have got to take an extreme illustration to

get an anomaly, have you not?

MR JACKSON: Well, I do not know if Your Honour saw the

second example. There are two examples that are

given. One works for the employer; one works

against the employee.

GIO 16 3/8/92

BRENNAN J:  If your first argument fails it would mean that

if there was one per cent against the tortfeasor,

the tortfeasor would have to indemnify the employer

only to one per cent, but if the tortfeasor

succeeded altogether in the action against the

plaintiff, it would have to pay the lot.

MR JACKSON:  If our first argument succeeded, Your Honour?

BRENNAN J: If your first argument did not succeed.

MR JACKSON:  I am sorry, Your Honour. Perhaps I

misunderstood what Your Honour was putting to me.

BRENNAN J:  I can understand completely the argument that

you are now putting, based upon percentage, so long

as one adopts the line of argument that you first

advanced; in other words, in the sense it is

contingent upon the situation of the present

relationship between the plaintiff and the tortfeasor. But if you do not accept that proposition, then your second argument now seems to

me quite untenable.

MR JACKSON: Well, Your Honour, with respect, no. What you

have is simply a situation where one assumes that

there is an independent cause of action in the

employer. It is a question of what the employer

can recover.	Now, Your Honour, that is expressed
to be by way of indemnity.	The indemnity can be

looked at from two points of view. First of all, it can be looked at, contrary to our submissions, as being an entitlement to recover all that has

been paid out to the employee, or the worker.	On
the other hand it can be looked at as being the
amount which the employer would otherwise be
entitled to recover from the employee. Now,

Your Honour, neither of those, with respect, turns

on the success of the first argument.	I am
assuming it fails, really.

BRENNAN J: Yes. I was really pointing out to you, that the

anomaly that would be inherent in accepting your

second argument and rejecting your first is so

gross as to be almost ludicrous, because if you had

a one per cent liability, so that the damages were

reduced by 99 per cent, then the employer could

recover only that minute fraction under
paragraph (b). If, however, the tortfeasor

succeeded completely in the action the employer

could recover the lot.

MR JACKSON: Well, as between the employer and the

tortfeasor in the proceedings between the employer

and tortfeasor one is engaging in the exercise. If

in those proceedings the determination was that the

tortfeasor, the worker, had been 99 per cent to

GIO 17 3/8/92

blame, then in those proceedings all that the

employer could recover is the reduced sum.

Your Honour, I am not seeking in the second

argument, which is an alternative to overlap the

two proceedings, but simply saying on the evidence

in the indemnity proceeding, one would have to look

at that situation. Your Honour, one does see,

however, in a sense, that the fact that there are

two proceedings of that kind rather suggests that

perhaps the true answer is that the first

submission is likely to be correct and the two are

interdependent.	Your Honours, those are our
submissions.

MASON CJ:  Thank you, Mr Jackson. The Court need not

trouble you, Mr Tobias.

The Court is not persuaded that the decision of the Court of Appeal is attended with sufficient

doubt to justify the grant of special leave to

appeal. The application is therefore refused.

MR TOBIAS: With costs, Your Honour.

MASON CJ:	You do not oppose costs, Mr Jackson?
MR JACKSON:	No objection, Your Honour.

MASON CJ: The application is refused with costs.

AT 12.32 PM THE MATTER WAS ADJOURNED SINE DIE

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