Hi-Tech Demolition Co Pty Ltd v Mainline Demolitions

[2000] WASCA 342

HI-TECH DEMOLITION CO PTY LTD -v- MAINLINE DEMOLITIONS [2000] WASCA 342

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASCA 342
Court:	THE FULL COURT (WA)	Published:	07/11/2000
Case No:	FUL:118/1999	Heard:	10 MAY 2000
Coram:	KENNEDY J WALLWORK J HEENAN J	Delivered:	3/11/00
No of pages:	10	Judgment Part:	1 of 1
Result:	Appeal allowed Matter remitted to Compensation Magistrate
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Parties:	HI-TECH DEMOLITION CO PTY LTD MAINLINE DEMOLITIONS
Catchwords:	Workers' compensation Disability of worker Whether fresh disability or recurrence of old disability occurring in course of previous employment Dispute between successive employers Payment of compensation to worker by subsequent employer Judgment for damages in favour of worker against previous employer Amount of compensation paid by subsequent employer credited to previous employer in arriving at the amount of damages awarded against it Appeal from dismissal by Compensation Magistrate of application by subsequent employer for recovery of compensation from former employer
Legislation:	Workers' Compensation and Rehabilitation Act 1981, s 73, s 92
Case References:	Co-operative Bulk Handling Limited v The State Government Insurance Commission (1990) 3 WAR 145 EMS Holdings Pty Ltd v International Shipyards Pty Ltd, unreported, FCt SCt of WA; Library No 980655; 12 November 1998 EMS Holdings Pty Ltd v International Shipyards Pty Ltd, unreported; FCt SCt of WA; Library No 980655; 12 November 1998 Howard v Bodington (1877) 2 PD 203 Miranda v H B Brady & Co Pty Ltd, unreported; FCt SCt of WA; Library No 940679; 1 September 1994 Motor Vehicle Insurance Trust v Forbes [1985] WAR 50 Redding v Lee (1983) 151 CLR 117 Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : HI-TECH DEMOLITION CO PTY LTD -v- MAINLINE DEMOLITIONS [2000] WASCA 342 CORAM : KENNEDY J

WALLWORK J
HEENAN J

HEARD : 10 MAY 2000 DELIVERED : 3 NOVEMBER 2000 PUBLISHED : 7 NOVEMBER 2000 FILE NO/S : FUL 118 of 1999 BETWEEN : HI-TECH DEMOLITION CO PTY LTD

Appellant

AND

MAINLINE DEMOLITIONS
Respondent

Catchwords:

Workers' compensation - Disability of worker - Whether fresh disability or recurrence of old disability occurring in course of previous employment - Dispute between successive employers - Payment of compensation to worker by subsequent employer - Judgment for damages in favour of worker against previous employer - Amount of compensation paid by subsequent employer credited to previous employer in arriving at the amount of damages awarded against it - Appeal from dismissal by Compensation Magistrate of application by subsequent employer for recovery of compensation from former employer

(Page 2)

Legislation:

Workers' Compensation and Rehabilitation Act 1981, s 73, s 92

Result:

Appeal allowed

Matter remitted to Compensation Magistrate

Representation:

Counsel:

Appellant : Mr P D Martino
Respondent : Mr G R Hancy

Solicitors:

Appellant : McAuliffe Schwikkard
Respondent : Blake Dawson Waldron

Case(s) referred to in judgment(s):

Co-operative Bulk Handling Limited v The State Government Insurance Commission (1990) 3 WAR 145
EMS Holdings Pty Ltd v International Shipyards Pty Ltd, unreported; FCt SCt of WA; Library No 980655; 12 November 1998
Howard v Bodington (1877) 2 PD 203
Miranda v H B Brady & Co Pty Ltd, unreported; FCt SCt of WA; Library No 940679; 1 September 1994
Motor Vehicle Insurance Trust v Forbes [1985] WAR 50
Redding v Lee (1983) 151 CLR 117

Case(s) also cited:

Nil

(Page 3)

1 KENNEDY J: In 1992, Peter Symonds was employed by the respondent as a demolition worker. He claimed that, on 7 November 1992, he sustained an injury to his lower back as a result of an accident arising out of or in the course of his employment. Subsequently, Mr Symonds obtained employment with the appellant. On 23 November 1993, he sustained a further injury to his lower back, which he claimed arose out of or in the course of his employment with the appellant.

2 On 15 February 1994, the Workers' Compensation Board made an order against the appellant for the payment of compensation to Mr Symonds. The initiating application is not before us, but no doubt the order was made pursuant to a formal application by Mr Symonds for compensation. The appellant did not join the respondent as a party to the application as required by s 73(3) of the Workers' Compensation and Rehabilitation Act 1981 ("the Act"). In accordance with the order, the appellant paid to Mr Symonds weekly payments of compensation from 23 November 1993 until the prescribed amount was reached. In addition, the appellant paid the required statutory allowances.

3 In 1994, Mr Symonds instituted proceedings in the District Court against the respondent in which he sought damages for negligence in respect of the injury which he claimed to have suffered on 7 November 1992. On 25 January 1995, the appellant made an application to the Conciliation and Review Directorate seeking to recover from the respondent the amount of compensation paid by it to Mr Symonds, on the basis that the injury on 23 November 1993 had constituted a recurrence, and not a fresh disability.

4 On 21 May 1999, judgment was given in favour of Mr Symonds in his District Court action in the sum of $349,837.00. The amount of the judgment was arrived at after allowing the respondent credit for the sum of $106,537.56, being the weekly compensation paid to Mr Symonds by the appellant, thereby reducing the assessment under the heading of past loss of economic capacity to the sum of $56,408.00, and, it would seem, after allowing a further credit of $33,707.01 for the special damages which appear to have comprised the statutory allowances also paid by the appellant. This was a surprising windfall for the respondent, resulting, in my view, from the failure of the parties to the action to observe the provisions of s 92(c) of the Act.

5 Section 92(c) relevantly provides that where, in respect of a disability, an action is brought by a worker against his employer or another person (referred to in the section as "the defendant"), if the action

(Page 4)

proceeds to judgment against the defendant only, the amount recoverable by the worker by way of weekly compensation, medical and other expenses paid pursuant to the Act shall be a first charge on the judgment, and the defendant shall be bound to pay the amount of the compensation, and medical and other expenses to the employer - in this case, the appellant - and the judgment shall be pro tanto discharged by such payment. Section 92(e) then goes on to provide that, if the action proceeds to judgment, the worker shall not commence or continue proceedings for, or in respect of, the same disability. In my view, the respondent was "the defendant" for the purposes of s 92(c).

6 This Court has held on a number of occasions that under s 92(b) of the Act, which is concerned with actions for damages against the employer, judgment is to be entered for the full amount of the damages, without regard to the compensation paid to the worker - see Motor Vehicle Insurance Trust v Forbes [1985] WAR 50, at 54; Co-operative Bulk Handling Limited v The State Government Insurance Commission (1990) 3 WAR 145; Miranda v H B Brady & Co Pty Ltd, unreported; FCt SCt of WA; Library No 940679; 1 September 1994; and EMS Holdings Pty Ltd v International Shipyards Pty Ltd, unreported; FCt SCt of WA; Library No 980655; 12 November 1998; and see also Redding v Lee (1983) 151 CLR 117, at 125. The position is clearly the same in relation to a judgment in an action falling within the terms of s 92(c).

7 The difficulties in this case have been created by the manner in which the judgment sum in the action brought by Mr Symonds against the respondent was arrived at, the respondent erroneously being given credit in the assessment of damages for the sum of $106,537.56, representing the weekly compensation and, it would seem, in addition, the statutory allowances paid to Mr Symonds which had been paid by the appellant and not by the respondent. The sum of all the compensation payments should have been included in the judgment sum. Pursuant to s 92(c), there would then have arisen a first charge on the judgment for the compensation payments, the amount of which should have been paid by the respondent to the appellant, thereby discharging pro tanto the judgment.

8 After judgment had been delivered in the District Court proceedings, the appellant's application against the respondent came before a review officer, who referred the whole of the matter to the Compensation Magistrate. The Compensation Magistrate considered that he was bound by the decision of this Court in EMS Holdings Pty Ltd v International Shipyards Pty Ltd (supra). That was, however, a different case from the present. In that case, it was the subsequent employer who had been sued

(Page 5)

by the worker for damages for negligence. The claim was settled, and a consent judgment entered in the District Court proceedings for the sum of $20,000.00, exclusive of the sum of $43,745.47 already paid by way of workers' compensation. The subsequent employer then sought reimbursement of workers' compensation payments from the former employer on the basis that the injury suffered was a recurrence of an old disability. By the time that the matter came before a review officer, the subsequent employer had been credited in the damages action with the amount of all payments of workers' compensation made by it against the damages for which it accepted it was liable. The subsequent employer was then, in effect, seeking to recover from the former manager part of the damages for which it was liable under the consent judgment, it already having been credited with the workers' compensation payments. This contrasts with the present claim in which the former employer has received the benefit of the payments made under the Act to Mr Symond by the appellant. It is to be noted that, in the EMS Holdings case, the subsequent employer was credited with the full amount of the workers' compensation paid by it in arriving at the amount of the judgment, once again ignoring the provisions of s 92(b) of the Act.

9 The next issue which arises is as to whether the appellant has a remedy open to it.

10 Section 73(1) of the Act provides as follows:

"73(1) Where there is a dispute between employers as to liability but no dispute that the worker is entitled to compensation from some employer for a fresh disability or the recurrence of an old disability the employer of the worker at the time of the latest disability or recurrence is liable to pay compensation under this Act until the question of which employer is liable or how liability is to be apportioned between employers has been resolved."

11 For the present purposes, as already indicated, Mr Symonds having filed an application for compensation for the enforcement of s 73(1), the requirement under s 73(3) of the Act was that the appellant "shall join as a party any other employer whom he alleges is wholly or partially liable to pay the compensation". In fact, the appellant did not join the respondent as a party. It does not follow, however, that, as a result, the appellant has lost its right to make a claim against the respondent. In my view, the
(Page 6)

word "shall" in s 73(3) is used in a directory and not in a mandatory sense. As Lord Penzance said in Howard v Bodington (1877) 2 PD 203, at 211:

"I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subject matter; consider the importance of the provision that has been disregarded, and the relation of that provision to the general object intended to be secured by the Act; and upon a review of the case in that aspect decide whether the matter is what is called imperative or only directory."

12 It could not, in my view, have been the intention to bar the rights of the former employer for a procedural failure to observe the provisions of s 73(3). In some instances, no doubt, the subsequent employer may not even be aware of the prior injury until it is too late to join the other employer as a party to the application. There was nothing before us in this case to indicate when the appellant first had knowledge of the prior injury sustained by Mr Symonds in the course of his employment with the respondent.

13 Section 73(1) of the Act refers to the determination of the question of which employer is liable or how liability is to be determined between employers. Section 73(3) obviously contemplates that the dispute between employers should be determined at the same time as the worker's claim for compensation against one of the employers; but it does not follow that the appellant cannot institute separate proceedings against the respondent, although they must be brought under Pt 111A of the Act. By s 84B, proceedings "for the resolution of a dispute" are not capable of being brought other than under Pt IIIA, which deals with dispute resolution. The expression "dispute" is defined in s84A to mean, inter alia, a dispute between employers as to liability. In my opinion, the expression "liability" should be given a wide meaning so as to encompass a claim by the appellant against the respondent for the recovery of workers' compensation paid by the appellant, of which the respondent has received the benefit.

14 I would allow the appeal and remit the matter to the Compensation Magistrate for the determination of the dispute between the appellant and the respondent.

15 WALLWORK J: I agree with the reasons for judgment of Heenan J.

(Page 7)

16 HEENAN J: This is an appeal by leave, pursuant to s 84ZW of the Workers' Compensation and Rehabilitation Act 1981, from a decision of a compensation magistrate in which he dismissed an application for the recovery of workers' compensation and statutory allowances by one employer from an earlier employer of the same worker.

17 On 7 November 1992 Mr Peter Symons sustained a back injury in the course of his employment as a labourer by the respondent. In the early part of the following year he resumed work and later gained employment, again as a labourer, with the appellant. He had further trouble with his back and on 23 November 1993 he ceased work. Pursuant to an order of the Workers' Compensation Board made on 15 February 1994 the appellant made weekly payments of compensation to him in respect of the period from 23 November 1993 onwards and paid him statutory allowances until the amount prescribed by the Acthad been paid. Also in 1994 Mr Symons brought an action against the respondent in the District Court for damages at common law in respect of the injury which he had sustained on 7 November 1992.

18 On 25 January 1995 the appellant applied to the Conciliation and Review Directorate pursuant to s 73 of the Act for recovery from the respondent of the compensation which it had paid to Mr Symons, claiming that in November 1993 the latter had suffered a recurrence of the disability which he had suffered in November 1992 and not a fresh disability. The application was held in abeyance pending the conclusion of Mr Symons' claim for damages.

19 On 7 May 1999 after trial the District Court awarded damages in favour of Mr Symons against the respondent for $349,837 including $56,408 for past economic loss. The latter amount represented his loss of earnings during the period from 23 November 1993 until judgment less approximately $106,000 comprising the weekly payments of compensation and the statutory allowances which the appellant had paid to him and which at the trial his counsel had conceded were not refundable to the appellant.

20 The appellant's application to the Directorate was referred to the magistrate. In the reasons for his decision, which was delivered on 30 June 1999, his Worship recited the relevant facts and then summarised the situation in this way:

"The applicant was not a party to the common law action. The applicant paid compensation to the worker and although that

(Page 8)

compensation was taken into account in the District Court proceedings, the benefit of that accounting has gone to the respondent, who did not pay the compensation, and not to the applicant. In this matter the applicant is not seeking to recover compensation payments from the respondent which the applicant has already recovered from the worker in common law proceedings."

Nevertheless, because he felt compelled to do so by the decision of this Court in EMS Holdings Pty Ltd v International Shipyards Pty Ltd, unreported; FCt SCt of WA; Library No 980655; 12 November 1998, his Worship dismissed the application.

21 This appeal turns on the construction of s 73 and s 92 of the Act.

22 The relevant provisions of s 73 read as follows:

"(1) Where there is a dispute between employers as to liability but no dispute that the worker is entitled to compensation from some employer for a fresh disability or the recurrence of an old disability the employer of the worker at the time of the latest disability or recurrence is liable to pay compensation under this Act until the question of which employer is liable or how liability is to be apportioned between employers has been resolved.

(2) …

(3) If the worker has filed an application for compensation, the respondent employer shall join as a party any other employer whom he alleges is wholly or partially liable to pay compensation.

(4) …

(5) If a dispute resolution body finds that it was a recurrence and not a fresh disability or partly a recurrence and partly a fresh disability, it may order that other employer to pay to the applicant employer the whole or a part of the amount of compensation paid to the worker and to pay any further compensation to which the worker is entitled.

(6) …"

(Page 9)

Clearly, the above provisions are intended to ensure that a worker who is entitled to compensation should not be disadvantaged by a dispute between employers as to whether the disability for which compensation is payable is a fresh disability or the recurrence of an old disability. In order to carry out that intention subsection (1) provides that the later employer is liable to pay compensation until the dispute has been resolved. Then, if a dispute resolution body finds that the injury was a recurrence of an old disability and not a fresh disability, or partly a recurrence and partly a fresh disability, that body may order the earlier employer to pay to the later employer the whole or part of the compensation paid to the worker.

23 In order to ensure that the dispute between the employers is resolved at an appropriate time subsection (3) provides that when the worker has filed an application for compensation the respondent employer "shall join as a party" any other employer whom he alleges is wholly or partly liable to pay the compensation. In this case, it seems, the appellant did not join the respondent as a party when Mr Symons filed his application for compensation, but it fulfilled the purpose of subsection (3) by making its own application to the Directorate on 25 January 1995. In my opinion, its failure to comply strictly with the provisions of the subsection is of no consequence.

24 Section 92 of the Act, where relevant, reads as follows:

"Where in respect of a disability an action is brought by a worker for damages independently of this Act against his employer … -

(a) …

(b) if the action proceeds to judgment … against the employer … there shall be deducted from the amount of the judgment and be paid to the employer a sum representing the amount … actually recoverable by the worker by way of weekly or lump sum compensation, medical and other expenses paid pursuant to this Act …;

(c) …

(d) …

(e) if the action proceeds to judgment … against the employer … the worker shall not commence or continue proceedings for, or in relation to, compensation under this Act in respect of the same disability;

(Page 10)

…"

In this case, because the amount of compensation already had been deducted the judgment in favour of Mr Symons did not conform with s 92(b). However, because it was not a party to the judgment, the appellant should not be prejudiced by its incorrect form (see the observations of Kennedy J in EMS Holdings Pty Ltd v International Shipyards Pty Ltd) and the respondent should not thereby be relieved of any liability to the appellant.

25 In EMS Holdings Pty Ltd v International Shipyards Pty Ltd judgment had been entered against an employer seeking to recover the compensation which it had paid to a worker. The Court held that, because the compensation had already been paid to the employer out of the judgment debt pursuant to s 92(b), it could no longer claim a contribution from the earlier employer of the worker. That is not the case here. No judgment has been entered against the appellant. No compensation which the appellant has paid has been repaid to it. Although, by reason of s 92(e), Mr Symons is prohibited from commencing or continuing proceedings for compensation in respect of the same disability, the question of which employer is liable or how liability is to be apportioned between the employers has not been resolved. It is appropriate therefore that the dispute resolution body proceed now to resolve the matter pursuant to s 73(5).

26 I would allow the appeal.