Hickson v Goodman Fielder Limited

[2009] HCATrans 8

[2009] HCATrans 008

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S470 of 2008

B e t w e e n -

GLENN ANDREW JOSEPH HICKSON

Appellant

and

GOODMAN FIELDER LIMITED

Respondent

GUMMOW J
HAYNE J
HEYDON J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 6 FEBRUARY 2009, AT 10.02 AM

Copyright in the High Court of Australia

MR A.S. BELL, SC:  May it please the Court, I appear with my learned friend, MR D.J. HOOKE, for the appellant.  (instructed by Beilby Poulden Costello)

MR J.T. GLEESON, SC:  May it please the Court, I appear with my learned friend, MR P. KULEVSKI, for the respondent.  (instructed by Eakin McCaffrey Cox)

GUMMOW J:   The first question perhaps is this summons, is it not, which is Mr Gleeson’s?

MR BELL:   I think that is so.

GUMMOW J:   Is there any opposition, apart from the question of costs, which at the moment we are minded to reserve?

MR BELL:   Your Honour, there is this position.  We have obviously attempted to deal with the matter in writing, but there were four matters we would draw to the Court’s attention in opposing leave being granted.  They are these.  Firstly, the notice of contention has the accepted vice that it is a point not argued below.  That is, of course, not definitive.

GUMMOW J:   It does look like a pure point of construction though.

MR BELL:   Yes, we accept that.  Secondly though, of course, the Court does not have the benefit of judgments below.  But, thirdly, and perhaps more of a matter of concern, as our learned friends appear to concede in paragraph 33 of their submissions, a consequence of the acceptance of the notice of contention point would be that two unanimous decisions, or at least considered obiter in two unanimous decisions ‑ ‑ ‑

HEYDON J:   Considered dicta.

MR BELL:   Considered dicta in two unanimous decisions of the Court of Appeal which have stood for some time would be disturbed.  That is significant because those two decisions, though dealing with the same legislation, were not dealing either with precisely the same provisions or indeed factual scenarios.  The case of McDonald involved what is now 151Z(1)(d), question of an employer’s indemnity against a tortfeasor, and the case of Norris v Blake concerns really what is now 151Z(1)(e1) and the factual situations in both cases are different to those in the present case in McDonald.  There had been a settlement of the common law claim but for no damages and the consequences of that were worked through and there was a further different scenario in Blake.

The point I am making is this.  To consider fully this fresh argument would require necessarily the Court to work through the ramifications, not only in the legal and factual scenario or context of this case, but also two cognate but different cases, both legislative and factual, and the absence of decisions of the court below working through those consequences would be a matter which, in our submission, would favour the refusal of leave.  We have sought, as I have said, to ‑ ‑ ‑

HAYNE J:   But the argument seems to be we should decide the case in a blinkered fashion.  Is that what is really being put?

MR BELL:   A blinkered fashion in the sense that if there is an alternative true fashion available the Court should obviously bear that in mind.  We accept that, but the consequences are, of course, that in reasons which are not fully developed in our learned friend’s submissions, acceptance of their proposition will have wide ramifications beyond the precise facts of this case.

GUMMOW J:   That is often a consequence of our activities.

MR BELL:   I accept that, your Honour.  Finally, your Honours, we would make this point, with respect, that the position contended for appears to be inconsistent with a concession made at first instance, which is recorded in the primary judge’s judgment at page 45 of the appeal book, paragraph 50, in the last sentence.  “Mr Parker”, who then appeared for Mr Gleeson’s client:

frankly acknowledges that if there had been a contest between the worker and the tortfeasor and a finding of contributory negligence, section 10 would operate to reduce the amount of repayment of compensation.

That is not a position which seems to be consistent with the notice of contention point put, but we accept that that may bear in costs.  They are the submissions we would make on the summons for leave.

GUMMOW J:   Yes, Mr Gleeson.

MR GLEESON:   Your Honours, there are two courses.  One is to permit us to do, although it is late here.  We considered the point was sufficiently arguable and related to that question of construction the Court is dealing with to justify taking that course.  The alternative course is if your Honours refuse the summons and the appeal otherwise were successful, I must accept that because there is a further trial to be had in the matter.  The point could be raised in that further trial at first instance and work its way through the system.  That is all I can put.

GUMMOW J:   Yes.  On the summons filed on 4 February 2009 the Court makes orders 1 and 2 and reserves any special question of costs arising out of the making of those orders.

MR GLEESON:   May it please the Court.

MR BELL: Your Honours, the origin of these proceedings, the ultimate origin, if that is not tautologous of these proceedings, lies in the tragic but unremarkable facts which are shown at appeal book 22. That is the statement of claim in what I will describe as the Ala proceedings or the common law tortfeasor proceedings, the bare background facts, the plaintiff, my client, the plaintiff in those proceedings riding home from work, a motor vehicle accident resulting in injury, paraplegia and common ground that injury occurred in the course of a journey within the meaning of section 10 of the Workers Compensation Act 1987.

Your Honours, the defence to that claim is reproduced in the appeal book at pages 26 and 27 and, critically for the purposes of these proceedings, we draw the Court’s attention to the plea of contributory negligence in paragraph 4 and the particulars subscribed thereto of contributory negligence, matters such as a failure to keep a proper lookout, failure to give way, changing lanes without indicating, failure to wear a helmet, failure to have an appropriate lighting system, failure to wear appropriate fluorescent clothing.

In that context can the Court note that it was common ground in these proceedings – that is to say the subsequent proceedings between the employer and Mr Hickson, my client – common ground that contributory negligence was a live issue in the proceedings between Mr Hickson and Mr Ala – the Ala proceedings.  That agreed fact, as it were, is recorded in the primary judge’s judgment in appeal book 40, line 20, where his Honour recorded that:

It was common ground between the parties before me that contributory negligence was a live issue in the proceedings between Mr Hickson and Mr Ala.

Those proceedings were listed for hearing with a two‑week estimate.  The Court will see that at appeal book 17, paragraph 7 of an affidavit before the primary judge in these proceedings.  I allude to that fact really to make the observation that of course two weeks worth of costs, let it be said even two weeks worth of unrecoverable, that is to say on a taxation, costs are capable of substantially eating into any common law verdict.  All the more so, two weeks worth of costs where there has been an offer of compromise by the tortfeasor, which is not beaten, all the more so again, though not the facts of this case, where there may be two or more defendants to the tortfeasor proceedings.

The proceedings, having been set down, though were settled on 6 June 2006.  Your Honour, I am instructed that the judge, District Court Judge Charteris, delivered an oral order entering judgment for the plaintiff, Mr Hickson, in the sum of $2.8 million, plus costs.

GUMMOW J:   Do you have the actual order?

MR BELL:   But it appears to be – and I am instructed – common ground between the solicitors, at least, that no formal order was taken out.  His Honour simply pronounced the order orally.  Up until that date – that is to say, June 2006 – Mr Hickson had received payments under the Workers Compensation Act and under various provisions – the ultimate right to payments being section 10, of course – of approximately $600,000 from the respondent.

GUMMOW J: Section 10 of what?

MR BELL:   The Workers Compensation Act.  That is the journey provision which entitles workers compensation and then that $600,000 – this is not on the record but would be made up of various items.

HEYDON J:   This is Reprint 10, is it?

MR BELL:   Your Honour, our friends have identified Reprint 10.  We identified Reprint 8 on this footing ‑ ‑ ‑

HEYDON J:   The key date is the date of the accident.

MR BELL:   If the key date is the date of the accident, the appropriate reprint would be No 8, which is the one we have indicated.  If the key date, for the purposes of these proceedings, triggered as they are by the receipt of damages as defined under the Workers Compensation Act, the later reprint which was in force prior to 6 June 2006 may be the appropriate reprint, but can I indicate this.  In our submission, no relevant amendments were made touching on the questions before the Court on this occasion.

GUMMOW J:   For example, there is a definition in section 149 of damages, which is defined as including “any amount paid under a compromise or settlement”.

MR BELL:   Yes, I will be taking the Court to that.

GUMMOW J:   That has not changed?

MR BELL:   No, and, your Honour, 151Z(5), is also a provision we will take the Court to and it is mentioned in our written submissions.  Section 151Z(5) provides:

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.

We see that provision as reinforcing the definition of damages in section 149.  I can indicate, your Honour, that subsection (5) came into the legislation in 1994.

GUMMOW J:   At number?

HEYDON J:   Workers Compensation Legislation Amendment Act 1994 No 10.

MR BELL:   The Workers Compensation Legislation Amendment Act 1994 No 10.

GUMMOW J:   No 10 of 1994.  Thank you.

MR BELL:   Of course, I have made the point that up until the date of settlement Mr Hickson was in receipt of workers compensation payments and that receipt of that entitlement was, of course, wholly irrespective of or notwithstanding any fault on his part in the sustaining of the injury.  This in turn led to the proceedings in the District Court between the present parties.  Your Honours will find the relevant statement of claim at appeal book 2 and 3.  The Court would note that in paragraph 7 of the statement of claim what is sought to be recovered is 100 per cent – I am sorry.  On appeal book page 2 under the heading “RELIEF CLAIMED”, what is sought to be recovered in subparagraph (a) is 100 per cent of the payments made up to the date of the settlement and consent judgment by District Court Judge Charteris – 100 per cent.

GUMMOW J:   What is the source of this statutory action?

MR BELL:   Your Honour, the source of the statutory action is section 151Z(1)(b).

GUMMOW J:   The phrase “the worker is liable to repay” is it not, in paragraph (b)?

MR BELL:   Yes.

GUMMOW J:   That is treated as creating a new cause of action or a distinct cause of action?

MR BELL:   Yes.

GUMMOW J:   It is elliptical.  It is one of those elliptically created causes of action.

MR BELL: Yes, that is the source. That is, in a sense, the source of the cause of action – the statutory source of the cause of action. In answer to the fairly bare claim disclosed in the statement of claim, the defence is to be found at appeal book 7 and 8 and the critical paragraph for today’s proceedings is paragraph 4. Over the page on appeal book 8 subparagraph (c) picks up quite consciously the language of section 10(2) of the Law Reform (Miscellaneous Provisions) Act 1965 as amended.

HEYDON J:   Do not answer this if it is quite immaterial, but how do you determine how much the damages recoverable were reduced?  Do you call the people who negotiated the settlement?

MR BELL:   No, your Honour.  Part of our case and part of our argument – there were two possible views.  There was the view that one looks at the subjective circumstances relating to the negotiated settlement.  The alternate view is that in these proceedings, the 151Z(1)(b) proceedings, the Court engages, and my client would bear the onus, in a two‑stage consideration.  It first considers what the “damages recoverable”, that is to say, before any reduction for contributory negligence, and that emerges from the definition of section 9 which I will take the Court to.  The Court first engages in that assessment.  So it says, here is Mr Ala.  He has the following damages.  He has the following needs which as a matter of causation flowed from those damages.  The damages recoverable will be X.  Here is Mr Ala who failed to keep a lookout.

HEYDON J:   The plaintiff.

MR BELL:   Who failed to wear a helmet, et cetera.

HEYDON J:   Not Mr Ala.

MR BELL:   I am so sorry – Mr Hickson.  Here is Mr Hickson, who failed to do this, et cetera.  In our assessment, that is to say, the second court’s assessment, the damages recoverable should be regarded as being reduced by reference to that contributory negligence as determined by us.

HEYDON J:   What if the figure you end up with is less or more than 2.8 million?

MR BELL:   The consequences, your Honour – that is one of the examples given in our friend’s submissions. If the figure you end up with as the damages recoverable, that is to say, were less than 2.8 million; say were 2.7 million, then there would be no entitlement to reduce the compensation payments. If they were more than that for which the settlement occurred or notionally the settlement occurred taking into account the subsequent court’s assessment of the level of contributory negligence, then that would be the starting point and if, for example, damages recoverable were assessed at, say, 3.5 million, so there was a differential of 700,000, then in those circumstances, your Honour, either – and we give this example in paragraphs 18 and 19 of our submissions, either the obligation to repay would be eliminated because the 700,000 was greater than the 600,000 payments received or, alternatively, if one does it rateably, it would be reduced in part. I will come to that, if I might. I have given your Honours a reference to section 10(2) –

GUMMOW J:   We have to look at what the primary judge did, do we not?  The primary judge dealt with this case on some questions.

MR BELL:   Yes.

GUMMOW J:   So we have not yet had the opportunity to test the possibilities Justice Heydon was putting to you because of the way the case has been run so far.  That is just a fact.

MR BELL:   That is the fact, and it may be ‑ ‑ ‑

GUMMOW J:   But what did the primary judge say about this possibility of testing?

MR BELL:   Your Honour, the primary judge really gave answers that it could be done objectively, or subjectively, if there were answers to ‑ ‑ ‑

GUMMOW J:   Page 67.

MR BELL:   ‑ ‑ ‑ to 2 and 3. Justice Hodgson in the dissenting judgment said it would be done as an objective matter. Of course, the majority said it would not be done at all because it does not arise. Could I come back to that in the course of developing the argument? I had indicated that the defence invoked section 10(2) of the 1965 Law Reform (Miscellaneous Provisions) Act, as amended.  Now, if your Honour Justice Heydon were to ask me a similar question about the appropriate reprint, the answer would be this.  There is a Reprint No 2 of 1992.  However, the Act was amended in the year 2000 by Act No 111 of 2000 and the next reprint is Reprint No 3 in August 2003; that is to say after the underlying accident but of course prior to the settlement.

Can I indicate this.  There has been no material alteration to the key provisions with which we are concerned since the 2000 Amendment Act.  So one can use Reprint No 3 or, alternatively, and we put this on our list, one can use the Amendment Act and the schedule thereto which sets out the provisions which came to be inserted in Part 3 of the 1965 Act.

Your Honours, the statutory history, though, is of some importance, in our submission, in this case. The Amendment Act of 2000 repealed what had been sections 9 and 10 of the 1965 Act as originally enacted. One sees sections 9 and 10 in their original form set out by the primary judge at appeal book 42 and 43. Just staying with those original provisions for a moment, section 10(1), beginning on page 42, does a number of things. In the words before the proviso, in the opening words, one sees the historic reversal of the common law rule, that contributory negligence was a complete defence. That was the principal purpose of this section of the Act.

One sees then a proviso (d), over on page 43, and this is the proviso which has equivalent, not precise equivalent but equivalent and, in our submission, true substantive equivalent in what is now section 10(2). Section 10(1)(d) stated that:

where the claimant is liable to repay compensation –

under section 64(a) – and that is the provision under the earlier Workers Compensation Act, the 1926 Act, which is now reflected in 151Z(1)(b) of the 1987 Act – and the obligation was –

the amount of compensation so repayable shall be reduced to the same extent as the damages recoverable by him –

If your Honours were to keep that page open ‑ ‑ ‑

GUMMOW J:   Section 64 of the New South Wales 1926 Act itself has an ancestor in the English legislation.

MR BELL:   That is right, in the 1906 legislation, I think.  The statutory history is set out in any number of judgments.  One judgment to which we will refer is the judgment of the Court of Appeal in Government Insurance Office of New South Wales v CE McDonald (NSW) Pty Limited (1991) 25 NSWLR 492, the judgment of Justice Handley. I will be returning to that case shortly because in that case Justice Handley enunciated what he saw the purpose of section 10(1)(d) was and, in our submission, the amendments in 2000 whereby 10(1)(d), functionally at least, became section 10(2).

GUMMOW J:   The policy being?

MR BELL:   The policy being, your Honour ‑ ‑ ‑

GUMMOW J:   Just tell us.

MR BELL:   The policy being that a worker’s fault is not to result in under recovery.  In the words of Justice Handley at 499, letter B in that decision – and this is also set out in our submissions in reply:

Parliament has ensured that the worker’s own fault will not deprive him of the benefit of no fault compensation previously received.

May I illustrate it this way, your Honour.  Of course, prior to the statutory reversal in 1965 of the common law rule in relation to contributory negligence being a complete defence, a worker and, in a sense, the social safety net with which the legislation was concerned made this provision.  A worker could recover either compensation under the Act, which had an entitlement to ongoing payments of compensation, or a worker could seek to recover damages at common law.  By reason of the state of the common law the worker would only ever recover, if he recovered damages at all, 100 per cent of his or her damages.  He could never recover a fraction. 

There could not be double recovery, of course – Tickle’s Case and indeed the language of the Workers Compensation Act.  But the social policy was at the election of the worker there would be compensation, which I would call 100 per cent compensation; common law compensation, 100 per cent by definition because it could not be reduced; or 100 per cent statutory compensation.

With the fundamental change in 1965, by reference to which common law damages could be reduced for contributory negligence, a worker – and that was seen as a beneficial amendment.  Parliament was concerned that that beneficial amendment did not have one adverse by‑product, and the adverse by‑product would come, or could come, in circumstances where, by reference to the worker’s own fault, the common law damages were reduced.  To that extent the common law verdict would leave the worker undercompensated in terms of his damages and his ongoing social need.

The purpose of section 10(2), in our submission, as held by Justice Handley – and in our submission follows as a matter of logic and policy – is to ensure that the fault of a worker did not result in the worker being undercompensated, did not result in there being under‑recovery. So just as on the one hand 151Z is concerned to ensure that there is no double recovery, section 10(2), which qualifies the obligation under 151Z(1)(b), is designed to ensure that the worker’s fault does not leave him or her undercompensated.

HEYDON J:   Just one problem.  If you assume that full recovery would be just compensation, which is a question of assumption sometimes, it is inevitable that any reduction for any reason, including contributory negligence, leaves the plaintiff undercompensated.  That is just the consequence of the fault theory of tort law.

MR BELL:   That is so, but prior to 1965 a worker would never be undercompensated and have 100 per cent damages or 100 per cent statutory compensation ‑ ‑ ‑

HEYDON J:   Yes, except for those who were ‑ ‑ ‑

MR BELL:   ‑ ‑ ‑ which were ongoing, damages once and for all, and no doubt there was a strategic decision to be made by the lawyers as to which option would be more attractive.  The consequence of our friend’s argument, which was accepted at first instance and accepted by Justice Giles ‑ ‑ ‑

HEYDON J:   I understand your submission now.

MR BELL:   ‑ ‑ ‑ is that the purpose imminent, and we say plain, in section 10(2) will only be available in one circumstance, which is probably an atypical circumstance – that is, the circumstance where the common law personal injury claim is litigated through to a final determination in which an identification of the extent of contributory negligence is made.

Our submission is that Parliament could not have intended and would not have intended, firstly, the important purpose imminent in section 10(2) to be limited in such a way; secondly, would not have done so in a context where the policy of the law, including Parliament, is to encourage early settlement of claims. As we have put in our written submissions and I will come to, because of the mechanics of offers of compromise there is what we have described I think in our submissions as Hobson’s choice for a worker in a way which is difficult to understand the Parliament having intended, but they are the consequences of the Court of Appeal’s judgment and the consequences of our friend’s argument, although maybe not the consequences on the notice of contention argument.

Your Honours, could I return a little to the legislative history because it is necessary in aid of my ultimate submission. If the Court had open appeal book 43 which sets out the text of the predecessor provision, section 10(1)(d) and also if the Court were to open - and an extract is conveniently found annexed to our submissions in‑chief - section 10(2) of, shall I say, the post‑2000 Act, the Act as amended from 2000, can I make the following observations.

The first is that what was the trigger for the 2000 amendment was this Court’s decision in Astley v Austrust and one sees that by comparing the use of the word “fault” in the original section 10(1) at appeal book 42, line 2, the word “fault” there is replaced by the word “wrong” in – it is actually section 9 which is set out on the previous page of our submissions – section 9(1) the opening words in the second line, “partly of the wrong of any other person” and in 9(1)(b) one sees the word “wrong” there.

HAYNE J:   And “wrong” is defined in 8 as including breach of contract.

MR BELL:   That is.  So that explains the principal reason for the amendment and that emerges from the second reading speech to the amendment and we have provided the Court with that.  But, to the extent there were other amendments made, which there obviously were, the purpose of those other amendments were as the primary judge recorded in appeal book 49 at the end of paragraph 20:

The speech added “the bill also rewrites the apportionment provisions in plainer language”.

In other words, the intention – well, two things. The intention may not have succeeded, which may be Justice Hayne’s non‑verbal point, but, more particularly, your Honours, there was no intention to affect the substantive operation of what was originally section 10(1)(d). That is important because one of the matters introduced in section 10(2) and words which our friends pay particular regard to are the final words - or at least words which Justice Giles in the Court of Appeal paid particular regard to are the final words in section 10(2) under section 9. Those words did not appear in the original section 10(1)(d), rather section 10(1)(d) simply provided that:

the amount of compensation so repayable shall be reduced to the same extent as the damages recoverable by him -

Our ultimate submission is, where section 10(2) refers to a reduction of damages and refers one back to section 9, it is referring one back to the measure of the reduction, that is to the extent considered just and equitable. It is not referring back to the mechanism of reduction.

Our friend’s argument and the argument favoured by the majority is, because section 9 refers to reduction by the court, and “court” is defined as the court hearing the claim – that is to say, the Ala claim – the operation only applies to a court‑determined reduction.  In our submission, the proper construction is the reference back to section 9 is a reference back to the substantive rather than the mechanical aspect of section 9, namely, the measure of reduction by reference to considerations of what is just and equitable, having regard to the respective fault of the parties.

GUMMOW J:   There is some support for your construction, I think, perhaps from this consideration that section 10(2) in its new form refers to 151Z, and 151Z ‑ ‑ ‑

MR BELL:   Subsection (5) ‑ ‑ ‑

GUMMOW J:   Even before that, paragraph (b) talks about recovery of damages.  See that?

MR BELL:   Yes.

GUMMOW J:   And the reference to damages includes an amount paid under a compromise or settlement.

MR BELL:   Quite.  And it has really reinforced ‑ ‑ ‑

GUMMOW J:   So, in other words it would be odd if section 10(2) referred to part, but not all, of the operation of 151Z, even without 151Z(5).

MR BELL:   To those considerations, your Honour, we would add this, as indeed was accepted by Justice Giles in the Court of Appeal, at appeal book 88, paragraph 26, that the legislature should be taken to have been aware that most workers’ claims, including those on which there is a question of contributory negligence, are resolved by settlement rather than by court decision.  That is at 26.  A similar point was made by the primary judge, who probably had more experience than anyone in exposure to these sorts of claims, at appeal book 52, line 50. 

In other words, the submission is one has a very curious situation. Parliament passes section 10(2) and its predecessor, conscious of an unintended adverse consequence of the main amendment in 1965, but that same Parliament, which is aware that most matters settle and do not go through to final determination, introduced a protective provision, which 10(2) undoubtedly is, but gave it limited operation and – even more perverse – in circumstances where a consequence of that would be to encourage litigation rather than to encourage settlement.

GUMMOW J:   Just before you leave 151Z, it talks about “recover”.  There is a decision on the old section 64 of the 1926 Act, Watson v The City of Newcastle – is that on the list?

MR BELL:   Yes, I think it is, your Honour.

GUMMOW J:   106 CLR 426 - there is a statement by Justice Windeyer at 445 which may be important, I think. In the last paragraph:

Moreover, throughout s. 64 the word “recover” must, it seems, mean not the recovery of a judgment for damages or of an award of compensation, but the actual receipt of moneys, whether as the result of satisfaction of a judgment or award or by the settlement of a claim. 

It was within that one can assume that that understanding has been carried forward in later legislation.

MR BELL:   Yes, and confirmed by those two provisions:  the definition in 149 and 151Z.  Your Honours, that string of odd consequences that I have identified were usefully formulated by the primary judge in his judgment at the beginning of the foot of appeal book page 51.

GUMMOW J:   Going back to section 10(2), this phrase “the damages recoverable”, what meaning do you then give “recoverable”?

MR BELL:   Recoverable prior to a reduction for contributory negligence.  Your Honour, that was central to the reasoning or important to the reasoning of Justice Hodgson.  But that submission as to the meaning of “damages recoverable” and not “damages recovered” is important because, if one goes back to section 9(1)(b), “damages recoverable” must mean the damages recoverable prior to any reduction; in other words, the universe of damages, because of what follows in section 9(1)(b).

GUMMOW J:   The trouble is the introduction as a necessary integer of this apportionment system of an opinion of the court.

MR BELL:   That is, in a sense, where we see the ‑ ‑ ‑

GUMMOW J:   Which does not harmonise very well with an understanding of settlements.

MR BELL:   No. That is why we make the principal submission that the reference now in section 10(2) to under section 9, and section 9’s reference to a court, is a reference to mechanism rather than measure. What, in our submission, section 10(2) is doing by referring back to section 9 is referring to the words “just and equitable having regard to the claimant’s share in the responsibility for the damage”. That is, in a sense, the measure, the extent of, a reduction. The issue between us and the issue which divided the Court of Appeal was whether the words “to the court” meant that the benefit of section 10(2) could only apply where there had been full litigation.

GUMMOW J:   I suppose the question is, can the parties agree amongst themselves, as an integer in their settlement, as to what the court would be thinking to be just and equitable?

MR BELL:   Well, your Honour, in our submission, there are a number of answers to that.  One is that whatever, to take the facts of this case, Mr Ala and Mr Hickson agreed, would not bind the employer, who by definition is not party to those proceedings.  If an employer comes to the party, as it were, and adds its agreement, one does not have this problem.  But, of course, the consequence of the Court of Appeal’s decision is that no rational employer would do so because by agreeing to a measure of reduction, it would be agreeing to a reduction of the payback in the circumstances where the Court of Appeal judgment says it is entitled to 100 per cent.  So there is that difficulty.

Our friends put up, whether by way of support for the notice of contention or as an answer to the appeal, they say, look, there are a number of options.  This Hobson’s choice stuff the appellant goes on with is not really fair because, of course, one can always secure the agreement of the employer or one can seek a consent judgment.  A consent judgment does not bind the employer, no right of intervention by the employer in those common law proceedings and no rational incentive for the employer to make that agreement.

HAYNE J:   The difficulties to which you point lie ultimately in the fact that the chief temporal viewpoint of section 9 of the Law Reform Act is at the point of claim before judgment.  You marry that then in 10(2) with a provision that is looking to a different time, namely, the time when there has been recovery.  That is the temporal disjunction that has to be resolved one way or the other.

MR BELL:   Yes, and to take that temporal point up, your Honour, look at cases such as Haines v Bendall on interest.  Interest runs, of course, from the date of damages, not the date of judgment.  In other words, where there has been contributory negligence the damages recoverable, the damages suffered, are the damages suffered at the date of accident and the contributory negligence is in play as at that date.  The fact that a court for one or two or more years later does not determine the extent of contributory negligence, does not alter the fact that the plaintiff’s damages are reduced for contributory negligence and that reduction operates from the date of the accident.  This is the point Justice Hodgson made in fairly dense reasoning but by picking up the distinction between and the importance of the reference to “recoverable” rather than “recovered” in section 9(1)(b) and then as followed through ‑ ‑ ‑

KIEFEL J:   You say that, but contributory negligence is usually taken as a percentage of the whole award, which would include matters like future earnings, would it not?

MR BELL:   Yes, but the Court would take the view in interest cases that one does not have to wait until a determination by a court of the extent of contributory negligence before interest will run.  In other words, contributory negligence and its role in assessment of damages does not need court determination.  True it is there is a mechanism introduced by a 1965 Act for a court to determine it, but it operates in terms of common law principles, the law of interest, for example, from the date of the sustaining of damages.

GUMMOW J:   I think we have to look a little more closely at 9(1) actually and at the difference between paragraphs (a) and (b).  Paragraph (a) of 9(1) is, in effect, removing, as a matter of substantive law, the availability of a defence when it says a claim is not defeated.

MR BELL:   That is right.

GUMMOW J:   It is really saying you cannot plead any more to that effect.  That looks like a matter of substance.

MR BELL:   Yes.

GUMMOW J:   So there seems to have been a change in the substantive law.  Then (e) says, what then happens, and the answer is, the court thinks something.

MR BELL:   Yes.  Well, (b), we would say – (a) picks up the substantive change and (b), substantively identifies the measure of contribution but also has a procedural aspect because usually a court is a body which is being authorised, in a way reversing the common law to do something which the common law previously said it could not do.  It is, in a sense, consequential.

But, when one looks at section 10(2) and its purpose, one returns, in my submission – if one can, as we submit, discern the purpose quite clearly and then one takes into account section 33 of the Interpretation Act (NSW), the purposive construction and the common law of statutory construction and adds to those informing principles two other informing principles of statutory interpretation, and can I identify them, and we can do this conveniently by reference to our submissions in‑chief.  Your Honours, one is the principle of statutory construction which emerges from the final sentence of the passage extracted from CIC Insurance v Bankstown Football Club set out in paragraph 24 of our submissions in‑chief, namely:

inconvenience or improbability of result may assist the court in preferring to the literal meaning –

and that, of course, has resonance with what is said by the Court in Project Blue Sky –

an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent –

So that is an allied principle of statutory interpretation we would call in aid and that is the reason why I will come back to Judge Kearns’ enunciation of the unlikely consequences. The second principle, or the additional – the third, I suppose – the first principle is purposive, the second is construction which avoids improbable results and the third picks up the body of authorities which are collected in paragraph 22 that legislation of a “beneficial and remedial” kind which we submit section 10 is, 10(2), in particular is, because it qualifies explicitly the obligation under 151Z(1)(b), to use the language of Justice Isaacs:

“should be construed as to give the fullest relief which the fair meaning of its language will allow” -

That is, in a sense, the interpretative framework for our submissions.  Could I just finish a reference I began giving to aspects of the judgment of the primary judge?  I think I had just begun to take the Court to appeal book 51 – at the foot of 51.  At paragraph 25 his Honour begins:

It would be an odd result that the amount of the payback was not determined by the extent of the contributory negligence –

“extent” is a word used in 10(2) –

but by whether or not a plaintiff ran or settled his case.

Then his Honour works through the examples, including what I have characterised as the Hobson’s choice.  Of course, in Ala proceedings, if there was contributory negligence, a well‑advised defendant’s lawyer or defendant’s insurer would formulate an offer of compromise, or may formulate an offer of compromise which put the plaintiff at risk.

These personal injury cases - this one, for example, was going to run two weeks.  Many run much longer and the whole purpose of the offer of compromise of course being to encourage settlement but, of course, the tortfeasor’s insurer has no real interest in Mr Gleeson’s client.  The tortfeasor’s insurer wants to achieve an attractive settlement from its point of view and wants the worker to feel at risk as an inducement and no doubt will formulate an offer taking into account principally, in a case of this kind, its assessment by reference to experience and practice and decisions the degree of contributory negligence which it considers it can establish Mr Hickson was guilty of.

Now, Hobson’s choice arises because if Mr Hickson accepts it on the Court of Appeal’s decision he might say he was contributing 50 per cent. He will be undercompensated at common law to that extent but he will have to pay back, on the Court of Appeal’s decision, all of the compensation payments. Of course, if he does not accept it, he can be sure that if there is a reduction for contributory negligence the payback obligation under section 10(2) will be qualified, but by litigating through to obtain that result he might not better the offer of compromise, in which case his hard‑won damages as a practical matter will be significantly eroded. Parliament must have, in our submission – or the Court should proceed on assumption that Parliament would be aware of those consequences.

GUMMOW J: Can we just look again at section 10(2):

If the claimant is liable to repay compensation . . . under section 151Z –

and this expression “is liable to repay under 151Z” invokes the rule in Shepherd v Hills, I think, which we discussed in the Commonwealth v SCI (1998) 192 CLR 285 at page 313, namely, it is a liquidated claim that the statute is creating so an action in debt is treated as applicable – that is what we are talking about – and when it says, “the amount of compensation so repayable is to be reduced”, what it is really doing is diminishing the scope of the liquidated claim, is it not?

MR BELL:   Yes.

GUMMOW J:   But it is said it is only reducing it, or it is not reducing it where there has been a consensual dealing.

MR BELL:   That is a consequence of the majority and our friend’s argument.  What we see is terribly important, with respect, the point your Honour the presiding Judge made earlier, that bearing in mind one has to ‑ ‑ ‑

HAYNE J:   Just to pursue that a bit, that reduction then must cope with the apparent disconformity between “same extent as damages recoverable are reduced by”.  Again, you have this temporal ‑ ‑ ‑

MR BELL:   Prior to a court determination.  Your Honour, to the extent there is tension there, the principles of statutory interpretation to which we have pointed point all in one direction as to the manner in which that tension or inconsistency ought be reconciled or resolved.  The submission can be put as simply as that because, in our submission, it would effectuate the purpose, would not lead to what I described on the special leave application as a series of asymmetrical results having no obvious rational justification, and irrational asymmetrical results encouraging litigation, putting a worker for whom the social policy of the Act is designed to protect at risk and in an invidious position.  That points away from the majority’s interpretation.  How did Justice Giles, for example, deal with this in the Court of Appeal?  He did not deny that the asymmetrical adverse consequences would follow.

KIEFEL J:   Just before you turn to the Court of Appeal’s reasoning, where does section 11 of the Law Reform Act fit into your argument, both in the notion of damages recoverable and the question of in which proceedings the determination of contributory negligence is to be made for the purposes of the liability to repay?

MR BELL:   Your Honour, with respect, we do not see section 11 as inconsistent with our argument.  It is simply a direction to a court in circumstances where a matter is not settled and goes through to hearing, asking the court to record the difference or the extent in that context – perfectly sensible because with commonsense prevailing in subsequent litigation of the kind commenced by my friend in the District Court obviously with such a recorded finding that litigation is unlikely itself to run.  It has the benefit of the court’s assessment and, whilst not bound by that assessment, a sensible, prudent employer insurer would pick that up and the matter could be resolved thereafter.  But it does not follow, in our submission importantly, that, because provision was made with regard to that scenario, that that drives an interpretation of 10(2) which produces the asymmetry and frustrates the purpose, as I have submitted.

HAYNE J:   Section 11 I think has to be read in light of 15 – notably 15(2).  I know 15(2) now has I think almost no application, does it, in New South Wales?

MR BELL:   MrHooke would be the only person in the room who could tell you that, your Honour.

HAYNE J:   It derives from days where you were concerned to get the jury to return a verdict of an assessment and to record it, because the verdict ultimately recorded, presumably, was arguably as reduced, but you needed to have the steps spelled out for appellate review.

MR BELL:   Yes.  I am told that in rare circumstances a jury could still sit in these cases.

HAYNE J:   Still have a jury.

MR BELL:   Your Honour, I have highlighted, perhaps tediously, the asymmetry and the adverse consequence.  Justice Giles, at paragraph 27 of appeal book page 88 accepts that they exist but says, simply:

Too much, however, should not be made of the disadvantage to the worker who settles, or of encouraging settlement -

to which we asked, with respect, why on earth not, in light of the principles of statutory interpretation which we advance here, which we advanced below and which were advanced and accepted by the primary judge.  In a difficult case – and the Court of Appeal regarded this as a difficult case, a finely balanced case, they are precisely the sort of tests the court ought properly resort to to resolve the difficulty.

His Honour in paragraph 28 goes on, in our submission, to engage in some wrong reasoning, in that he compares the situation pre‑1965.  You say tactical decisions had to be made, strategic decisions, but the critical point is that pre‑1965 you either got 100 per cent common law damages or 100 per cent compensation.  There was no risk of under‑recovery.  Can I take your Honour back in Justice Giles’ judgment to paragraph 2 on page 78.  His Honour notes the situation prior to the reduction, then notes:

The LR Act provides that it should not do so, but the damages should be reduced . . . There is consequential change in the adjustment to prevent over-compensation.

His Honour has, with respect, inverted it.  The consequential change in the adjustment is to prevent under‑compensation, under‑recovery. 

GUMMOW J:   Can we just go back to section 10(2)?

MR BELL:   Yes – I should never have left it.

GUMMOW J:   Does it answer your case if the phrases “is to be reduced” and “are reduced under” are read as conveying a notion of liability or susceptibility to reduction by the operation of section 9, and if the word “under” means by reason of the existence of section 9 - we know the phrase “arising under” has all sorts of subtleties about it in the Constitution. Do any of those carry here?

MR BELL:   Your Honour, that is where the submission I made about the 2000 amendments not being intended to change the substantive operation of 10 (2) and its equivalent is significant, because, as your Honour might recall, and one sees this at appeal book 43, section 10(1)(d) did not use that language – did not use “under section 9”. Rather, its focus was on the extent, not the mechanism by which the extent was worked out.

So, your Honour, that is the first answer I would advance to your Honour’s question.  Under section 9 is a shorthand reference to “the measure”.  The fact that section 9 happens also to indicate or refer to a court falls away, or should be disregarded for the purpose of working out the operation of 10(2).  It is not, obviously, disregarded for the purpose of identifying that a court can do it in cases where the matter goes to court and is litigated.  Judge Kearns also ‑ ‑ ‑

GUMMOW J:   I am sorry, what meaning do you give to the phrase “under this section”?

MR BELL:   Your Honour, we sought carefully to put that in writing in our written submissions at page 10 and to which we would add that “under section 9” can be taken also as a reference to 9(a), that substantive part, only by reason of the abolition of the complete defence.

GUMMOW J:   That is what I am wondering, yes.

MR BELL:   That does not undermine the argument.  That, in our submission, strengthens the argument.  Your Honour, that point I have made as to “under section 9” not being intended to change the original intent of the section, its predecessor – and I have drawn attention to the text of the predecessor provision at appeal book page 43 – is taken up and discussed by the primary judge at appeal book page 53, paragraphs 28 and 29. 

One of the points his Honour is making is that if the effect was as the Court of Appeal has found, and as my friend has certainly contended for below, it would be very simple to limit 10(2) in express terms to those cases of fully litigated recovery of damages.  That, of course, is, as your Honour Justice Gummow pointed out, in real tension with the definition of damages, 151Z5 and 149.

Your Honours, one of the practical arguments put against us is that – and this seemed to be important to Justice Giles – well, in circumstances where you have not got a judgment where the court has identified the extent you have to have re‑litigation, and there a couple of answers to that, the notion of subsequent re‑litigation or parallel litigation is not at all foreign or unusual in this area.  Your Honours, one sees that, for example, as being recognised by Justice Giles at appeal book page 87 where his Honour notes, at the beginning of paragraph 24:

s 151Z(2) requires a trial within a trial of the damages which the worker could have recovered –

That is one example his Honour gives.  We give another example in our written submissions in‑chief in paragraph 33 by reference to section 151Z(1)(d), the indemnity action; an employer can sue the tortfeasor directly for indemnity, workers compensation, and in that litigation to which the worker would not be a party there could arise the question of the extent of the worker’s contribution.  To those two examples can I add the following example which we have not referred to in our oral submissions, and that is this.  Take a case under the 1946 Law Reform (Miscellaneous Provisions) Act 1946 (NSW) joint tortfeasor.

HEYDON J:   Contribution between joint tortfeasors.

MR BELL:   One can have this scenario.  A set of litigation, one, between say a worker and a tortfeasor.  In that litigation the defendant either fails to take a contributory negligence point or takes it but does not run it hard or does not run it efficiently, results in either way in a verdict, damages crystallised.  The defendant then brings, as he is entitled to do – he does not have to join the alleged joint tortfeasor in those proceedings but can take subsequent third party proceedings – well, subsequent proceedings – against another party who it alleges is a joint tortfeasor.

The defendant in that litigation is entitled to say, “The damages to which you seek that I contribute were too much.  You did not take, but you should have taken, the point that the plaintiff in those earlier proceedings was guilty of contributory negligence.  Or to the extent you did take it, you did not take that point well and effectively.  And I, whom am not bound by the determination of the first court, can say, in these proceedings that the plaintiff in those original proceedings had fault, that the relativity of that fault was such that the true damages recoverable were less than the damages in fact recovered”.  That scenario is precisely what the court was caught in in Bitumen and Oil Refineries v Commissioner for Government Transport.

GUMMOW J:   This is the case which Sir Owen Dixon has complained about law reform in itself needs reform, is it not?

MR BELL:   Yes.

GUMMOW J:   He was right, too.

MR BELL:   The passage I am going to cite was cited with approval by your Honour Justice Gummow in Thompson.  I will give your Honours the reference to that.  The reference in Bitumen and Oil is (1955) 92 CLR 200.

GUMMOW J:   The Court’s protest is at the bottom of page 211.

MR BELL:   Yes.  Your Honour, the passage I was going to take the Court to is at the very foot of 212 going over to 213.

GUMMOW J:   The same might be said of the legislation we have to consider today.

MR BELL:   In other words, just context but the Court there contemplating that in a 5(1)(c) proceeding everything is open.  In that case, of course ‑ ‑ ‑

GUMMOW J:   Would, if sued, have been liable is the great problem, is it not?

MR BELL:   Yes.  In that case, of course, a 5(1)(c) scenario, the defendant would have an interest in saying the plaintiff in the original proceedings was contributorily negligent, but the plaintiff in the 5(1)(c) proceedings, the defendant in the original proceedings, would have an interest in saying, “No, there was no contributory negligence at all.  My failure to take the point did not lead to a reduction of damages”.

This is not unknown at all in this sphere.  That is the point we make.  It is recognised in 151Z(2), it is recognised in 151Z(1)(d), and here is another example where one could have and does have satellite litigation.  This is really, to come back to Justice Heydon’s question to me earlier, how was this done practically, it is done in satellite litigation.

GUMMOW J:   What is said at page 210 is quite thoughtful, with respect, I think, with reference in the middle of the page to the quia timet position in a surety seeking contribution.  It is a similar sort of problem, in a way.

MR BELL:   The passage I have referred to, at 213, your Honour was picked up by ‑ ‑ ‑

GUMMOW J:   A similar sort of temporal problem, is it not?

MR BELL:   ‑ ‑ ‑ your Honour the presiding Judge in Thompson v Australian Capital Television (1996) 186 CLR 574 at 617. To the extent that this prospect of satellite litigation is raised against us as something described emotively by our friends as evil ‑ ‑ ‑

GUMMOW J:   The mischief is in the word ‘satellite”, perhaps.

MR BELL:   It is available. It is contemplated, in our submission, by section 10(2) and the creation in 151Z(1)(b) of the statutory cause of action. So it is contemplated, one. Two, it is not in truth unusual. Three, in reality one would expect as a practical matter that if it is true that most common law personal injury claims settle, most of these payback cases would settle, because by definition the amounts at issue all – or a percentage of the workers’ compensation will be less than the amount at play in personal injury matters.

HAYNE J:   The phrase “satellite litigation” suggests that the litigation is occurring between identical parties.  It is not. You have an action for damages for personal injury, you then have a right as between employer and employee which is a right which, if it is to be enforced, is enforced by action.  That action is either simple or it is complex and it contains this issue or that issue.  Describing it as “satellite” takes you nowhere, I suspect. 

MR BELL:   It was not our phrase.

HAYNE J:   I understand that.

MR BELL:   I said courageously.

HAYNE J:   I am just putting the card on the table, face up.

MR BELL:   My friend will no doubt defend it.  The other thing it has then said is that the employer is going to be in a difficult position finding out the true facts about all of this.  But take this case.  You only have a common law claim which - you have a situation where there was an accident.  The accident occurred in public.  There are, no doubt, eyewitness accounts or police reports, et cetera.

GUMMOW J:   There is no need to give us a jury address, Mr Bell, on this sort of ‑ ‑ ‑

MR BELL:   No, your Honour.

HEYDON J:   Are we moving with determined celerity through the material, Mr Bell?

MR BELL:   I think so, your Honour. 

GUMMOW J:   Have you been dealing with the notice of contention en passant, as it were?

MR BELL:   In part.  We have sought to deal with it in writing.  Can I just summarise our position.  If your Honour has our reply submissions, we summarise the response in paragraph 17 on page 7.

GUMMOW J:   Yes.

MR BELL:   Your Honour, we say that the interpretation which seems to have been inspired by the passing observation by Justice Windeyer in Watson to which our friend has referred but which was not the cause for the 1965 Act the cause for the 1965 Act was firstly it was the common law position - does not find support in the language. We have set out in paragraph 14 on the previous page the words which would have to be read into section 10(2) to give effect to our friend’s interpretation. With respect, the Court simply could not read those words into it.

The second point is that if it were truly intended to cover the circumstance contemplated by Justice Windeyer the matter could have been expressed simply in the way we have set out in paragraph 15 and tellingly it was not.  Thirdly, your Honour, and this is important, what underpins the contention is this notion that 10(2) had a very limited operation.  It is just designed to make sure that a worker is not wholly out of pocket, that everything goes, but that protection is already there, your Honours, in section 151Z(1)(b).  I take your Honours back to that and ask your Honours to open it up.  Under 151Z(1)(b) the worker’s obligation is to repay out of those damages.  It is not an obligation to repay, period, simpliciter.

GUMMOW J:   I was wondering about that.  Does that mean there is some sort of statutory charge?

MR BELL:   That may be.

GUMMOW J:   If that is right, what I was putting to you about Shepherd v Hills would not be accurate.  It would be a bit more than an action in debt.

MR BELL:   Yes.  Your Honour, I can give this example. 

HEYDON J:   It cannot literally mean that if he or she had put the damages into a bank account the worker was forced to take it out of the account.

MR BELL:   No, I am not putting that.  What I am saying is the purpose which my friend’s construction of 10(2) contends is already served by 151Z(1)(b) because, take this example:  assume receipt of compensation payments prior to judgment of $400,000.  Assume common law damages awarded of $200,000.  The obligation under 151Z(1)(b) is not to repay $400,000; it is to repay the compensation out of the damages.  So the obligation is to repay $200,000 because that is all you can repay out of the damages.  You cannot repay $400,000 out of damages of 200,000.  You can repay 200,000.  That has the effect that there is no statutory obligation, no statutory entitlement, to receive the full payment.  If that was what was intended the words “out of the damages” would not have been there.  “Out of the damages” do that important work.  They mean that the worker is not wholly out of pocket.

Our friends, inspired by Justice Windeyer’s scenario in Tickle, looked at section 10(2) to do the work. We say it is a huge stretch of 10(2) as a matter of language but, more importantly, what motivates their submission is already provided for in 151Z(1)(b) so that their submission would be otiose or there would be duplication.

Your Honour, then returning to page 7 of our submissions in reply, (d), there is no secondary support.  That is not fatal but there is no secondary material – second reading – supporting the construction our friends contend for.  We also put this in (e), importantly.  One reads our friend’s submissions.  They draw heavily on pre‑1965 cases.  They draw heavily on cases concerned with the purpose of 151Z and its predecessor, section 64.

There is no running away from the fact that a principal purpose of that provision is to prevent double recovery.  But what their submissions wholly, in our submission, fail to do, as they must, is to look at the purpose of 10(2) which qualifies 151Z, qualified section 64 and qualified the purpose just as, which we have said, 151Z is concerned to avoid double recovery, 10(2) is designed to prevent under recovery.

GUMMOW J:   On the special leave application we were referred to the comparable legislation in Western Australia, Victoria and Tasmania, I think.  Is there anything you get out of that, apart from it being better drafted?

MR BELL:   No, your Honour, we have not found cases which support those matters.  There are, your Honours, further specific criticisms of the aspects of the judgment of the Court of Appeal but I think I have dealt with them in passing, but they are in our written submissions in‑chief from paragraph 30 and following.  Your Honour, I have referred in passing to Justice Hodgson’s analysis of the importance of recoverable and not recovered and we adopt his Honour’s reasoning in that respect, but I do not need to add to what I have said in respect of it.  Those are our submissions.

GUMMOW J:   Yes, Mr Gleeson.

MR GLEESON:   Your Honours, I wish to present our submissions under four headings.  The first is to ascertain the legal effect of the settlement and the judgment under ordinary law.  It is not a controversial matter, but I wish to do that.  The second is to construe section 151Z as a whole in a case where no contributory negligence is in issue to make a submission that paragraph (b) operates as a simple action for recovery of a liquidated sum into which the integers are provided from the outcome of a separate proceeding and therefore not contemplating a hypothetical re‑running of a different action.  The third matter is then to consider the interaction with the Law Reform Act when there is contributory negligence and the final matter is the notice of contention. 

Your Honours, as to that first matter, the appellant brought action on a cause of action against the third party.  The live issues under that cause of action include, was the third party negligence, what was the amount of the damages and the questions under section 9 of the Law Reform Act including, critically, not only was there contributory negligence but the question under section 9(1)(b), what assessment did the court, being the court hearing the claim, make of the respective shares of the worker and the third party in the responsibility for the damages?

As your Honour Justice Kiefel said, conventionally that is done by assuming there is 100 per cent total share of responsibility and then that is apportioned in percentages between a claimant and negligent defendant.  Once that is done through the court’s evaluative judgment of what is just and equitable, a reduction in monetary terms can occur.  That was a live issue for a period of time on the cause of action.  What happened under the settlement was that the cause of action was extinguished by what was in law ‑ ‑ ‑

GUMMOW J:   That was done by the judge’s order, surely?

MR GLEESON:   I was going to put it as two stages, your Honour.  Certainly by the order.  The judgment involved a merger of the cause of action.  Immediately prior to judgment there was an executory accord.  Presumably satisfaction came after the judgment.  Taking the accord, but certainly the judgment, the position was, as your Honours said in James Hardie v Seltsam 196 CLR 53 at paragraph 40 that the:

cause of action against the respondent merged in the judgment, thereby destroying its independent existence.

To similar effect, I will just give the reference to Baxter v Obacelo 205 CLR 635 and paragraph 56 where the effect of accord and satisfaction is stated. That occurred, namely, that extinguishment of the cause of action, without the court hearing the claim being asked to perform the section 9 function.

In effect, the court entered judgment on an agreed debt because the parties had agreed that instead of having a negligence claim subject to the court performing a section 9 function, they were agreed that their rights and defences were replaced by the payment of a single sum and the court entered judgment on that sum.  The result is that from that date, certainly as between the worker and the third party, no question could ever again arise as to contributory negligence; it, like the cause of action, has gone.  The question then is whether, for the purpose of the section 151Z action, there is to be a litigation of the very questions which were extinguished by the judgment.

GUMMOW J:   Just stopping there for a minute.  There is no suggestion of privity, is there, privity and interest?

MR GLEESON:   In this case?

GUMMOW J:   Yes.  In the structure of the relationship, which gives rise to the problem that brings us here today, there is no suggestion of privity.

MR GLEESON:   I believe not.  I hesitate only because in one of the current New South Wales Court of Appeal authorities, QBE v Dolan, there was considerable discussion on whether privity applied under 151Z(d).

GUMMOW J:   Yes, there was.

MR GLEESON:   And there are real questions about that case which your Honours do not need to decide in this case.  In that case their Honours considered that ‑ ‑ ‑

GUMMOW J:   What is the citation of QBE?

MR GLEESON: It is 62 NSWLR 42.

GUMMOW J:   Do not stay to take us through it now.

MR GLEESON:   No.  Our submission is that the Dolan question is not relevant to the resolution of this case.  It is critical, though, in a case under paragraph (d).  Your Honours, the second topic involves section 151Z before any question of contributory negligence arises.  We make these submissions on construction.  Firstly, we fully accept the definition of damages in section 149 in its breadth and it needs to be factored into any overall analysis of the section when I come to contributory negligence.

Next, if your Honours go to section 151Z(1), the threshold for the section ever to apply is a double circumstance of compensation payable under the Act and liability in a third party under the same circumstances.  It is possible that in some section 151Z cases, perhaps rare, there could be a factual debate as to whether the two arise out of the same circumstances.  That is not an issue here but it is an illustration that that could be a possible threshold issue.  Subject to that, we consider and submit that paragraph (a) is critical in stating the broad rule to which the rest of the section gives more specific effect.  Unlike the position in New South Wales at other periods in time, the worker does have the ability to sue both for compensation and for damages.  The critical rider ‑ ‑ ‑

GUMMOW J:   It says “the following provisions have effect” and then we read from (a) onwards.  They are not linked conjunctively in any way.  It is as if there is series of separate sections

MR GLEESON:   Yes.  In Watson Justice Kitto read section 64 as what we see in the first couple of lines as stating what he described as a policy which was given effect to in the following more specific provisions.  We submit that that is a useful analogy still.  What we emphasise in the last line is that prohibition is upon the retention of both damages ‑ ‑ ‑

GUMMOW J:   It really is if (a) was read into the opening words of (1) and then what followed, (b) becomes (a) and so on.  It would make more sense, I think.

MR GLEESON:   The critical prohibition is upon not double recovery, as Dr Bell put it, but on double retention.  The critical element is, on a net basis the worker is not to retain the benefit of both the damages and the compensation.  That is given effect to in the following provisions.  When your Honours go to paragraphs (b) and following, they deal with three separate temporal sequences.

The first sequence under (b) is where the worker recovers compensation first and recovers damages second.  We accept that what Justice Windeyer said in Watson as to recovery is correct and applicable here and made clearer by the section your Honour has referred to.  It is absolutely critical for (b) to operate, that the employer must be able to identify not only a payment of compensation but that the worker has actually recovered damages.  It is not good enough if the worker has even got a judgment which is unpaid or a settlement unpaid.  There must be an actual recovery in the worker’s hands.

GUMMOW J:   What force do you give to the words “out of”?

MR GLEESON:   “Out of”.  Your Honours, we consider it in the first instance creates a liquidated debt claim and it certainly does that if nothing else, and what it does is create a limit.  Unless there are damages actually received of, say, $100 a compensation payment of $100 cannot be recouped.  So it is creating what at general law might be described as a recoupment remedy and it would be pursued in a debt or liquidated claim.  It is arguable that it might have the further effect of a statutory charge, not in the sense that the money has to come out of the same coins but in the sense that if the worker became insolvent between receipt and actual payment, this section has sufficiently indicated that that fund of money was to be appropriated to the repayment of the liquidated debt.  In some of the other interstate schemes an express statutory charge was of course included in a section like this.  That was not done in New South Wales.

GUMMOW J:   Are there any instances of that with the other States?

MR GLEESON:   I will give your Honour, in a few moments, a copy of the relevant interstate statute which does have an express charge.  What we submit is critical about (b) is it is what we describe in the submissions, perhaps crudely, as a debt recovery action.  It is a debt recovery action or, more strictly, an action for a liquidated sum, in which, as is seen from the present simple pleading, the elements are the employer paid compensation of an amount and the worker received damages of that amount or greater and I claim recoupment.  It is intended to be – and this is important in terms of statutory purpose – as simple, as mechanical, as straightforward an action as one could have.

GUMMOW J:   Why?  I know you say that, but why?

MR GLEESON:   In terms because it is a liquidated action but as to why, so that neither worker nor employer will be tied up in the complications of litigation of issues properly the subject of the third party claim.  We have given an example of how that works against the employer and we think it is correct.  If a worker settles the claim poorly and only recovers $100 when the true liability may have been $1,000, the employer has no ability under paragraph (b) to reopen the question of the true damages.  The employer, under (b), is stuck with whatever the worker has actually received, for whatever reason.  That is an example of the simplicity and the mechanical nature of the debt action.  The employer cannot be heard to say, “But the true damages were more”.  And that gives full effect to what Justice Windeyer said in Watson.

The consequence is that an employer who is troubled by the damages which the worker is likely to settle for in the third party action, if the employer wishes to protect itself, has to take one of two courses of action.  It cannot do it in the payback action, as we call it, in paragraph (b).  The only way the employer can protect itself there is, first of all, to pursue its indemnity under paragraph (d) directly against the third party, and I will come to (d) in a moment.  But that is one way to protect it.             The second way the employer could protect itself is by seeking to intervene in the third party action.

GUMMOW J:   Mr Gleeson, we will just go back to paragraph (a) for a minute and if you could look at your opponent’s paragraph 15 in reply.  Now, what I think we agreed was the legislative policy evident in (a) is contained in the words “but is not entitled to obtained both damages and compensation”.  You want to read that, I think, as if it went on to say “and no amount of compensation is repayable in excess of the amount of damages recoverable”.  You want the expression to do extra work, I think.

MR GLEESON:   Perhaps not, your Honour.  Can I show how are argument applies in the three situations?  I have not yet ‑ ‑ ‑

HAYNE J:   Just before you come to that exemplification, can the purpose of 10(2) be understood as being to preserve for the worker statutory compensation to the extent to which, by reason of the worker’s own fault, the worker is denied common law compensation?

MR GLEESON:   We submit not, but that accurately characterises the effect of Dr Bell’s argument.

HAYNE J:   That is as I understood the essence of it.

MR GLEESON: The difference between us is on section 10(2). His argument is, to the extent I have been negligent and therefore recovered less than I might have recovered in a full action ‑ ‑ ‑

HAYNE J:   I am not compensated for my own fault, but the workers compensation legislation is no fault compensation.  He says the two marry in the manner I have identified.

MR GLEESON:   The way they marry, according to him, is that whatever I have in my hand as compensation I will never, ultimately, retain less than that, whatever the outcome of the third party action.  We agree with that much.  He then says, “To the extent that I suffer in my third party action because of my fault, I will be able to also retain that part of the compensation”.  We submit that what it is concerned with is the proposition we identified in paragraph 22(1) of our submissions.  He will always retain on a net basis the greater of compensation actually paid and damages actually recovered.

Your Honour, I want to come to it on the fourth topic and not develop it now, if possible, but could I simply do this much on it.  If your Honours look at the three ways the actions can play out in paragraphs (b), (c) and (d), under paragraph (c), if the worker recovers the damages first, there is no entitlement to compensation so in that situation the worker can never shift on to the employer, under the compensation scheme, the effect of his fault.

Paragraph (d) is the second way it might play out. Paragraph (d) is the second statutory action created by this scheme. It is a statutory indemnity action which the employer can pursue against the tortfeasor. It is not impacted by section 10(2) of the LR Act. In accordance with binding New South Wales authority and correctly, under paragraph (d) the employer can recover from the tortfeasor the full amount of the compensation paid without deduction for contributory negligence.

The binding authority to that effect is Norris v Blake [No 2] (1997) 41 NSWLR 49 at 83. That is further worked out under paragraphs (e) and (e1). In my example, where the compensation is $100, the employer can recover, under paragraph (d), $100 from the tortfeasor provided that is less than the damages. Under paragraph (e), if the worker has not yet attained judgment, that payment of $100 is to the extent of that amount a defence to the worker’s proceedings. So it becomes a defence and therefore hurts the worker to the full extent of the $100 without any reference to contributory negligence.

Under paragraph (e1), which was added in 1994, it is even clearer because if the $100 is paid under the indemnity, even after the worker has obtained his judgment, the payment to that extent satisfies the judgment.  So, reading paragraphs (d), (e) and (e1) together, if the employer proceeds under the statutory indemnity, it recovers in full and the fault of the worker is not shifted onto the burden of the compensation payment.  That leaves the conundrum that if in those two situations the worker cannot shift the burden of his fault onto the compensation payments, is that really what paragraph (b) was intended to do or must (b) be read consistent with the other two situations as exemplifications of (a), achieving the purpose we have identified in paragraph 22(1) of our submissions?

If I could then just come back to the sequence of looking at the section.  When we are working out what happens under (b) in a case where there is no contributory negligence, if you assume an example of compensation of $600 and damages recovered by the worker of $900, the effect will be, the worker will be liable to repay $600, the net position of the worker will be $900, the employer will bear nothing on a net basis and the third party will bear it all.  A critical purpose of these provisions, as well as others that have been mentioned, is, to the extent possible, the ultimate incidence of the burden is placed on the negligent third party, not on the employer.

GUMMOW J:   You say that, but is there any legislative indication of that in the Parliament?

MR GLEESON:   I take that from statements of the court on the predecessor, section 64, which for these purposes was in sufficiently material terms.  Tickle’s Case 130 CLR 321 at 329 to 330, paragraph 13 of our submissions.

GUMMOW J:   It does not spring off the page.  It seems to be an explicit statutory provision.  One looks at the ordinance set out on page 321.

MR GLEESON:   Yes.  I wish to refer your Honours more directly to Watson which was on the New South Wales statute, 106 CLR 426.

GUMMOW J:   What year is that?

MR GLEESON:   1962.

GUMMOW J:   That is before the New South Wales contributory negligence amendment, is it not?

MR GLEESON:   Yes.  At page 432 in the judgment of Justice McTiernan at about point 7:

The policy which is evident on the face of s. 64 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 –

Perhaps also, your Honours, on page 435 at about point 8 Justice Kitto in the passage I referred to earlier of the first sentence of what was then section 64(a) states the policy which is then worked out in the following sentences.

HAYNE J:   But can this branch of your argument be identified as being the policy of the Act is either damages or compensation but not both – see 151Z(1)(a).  Is that right?  Is that the linchpin of this branch of the argument?

MR GLEESON:   Yes.

HAYNE J:   How does that then sit at all with 10(2) where there is to be a reduction of some sort and the perhaps clarity of either (a) or (b) is qualified?

MR GLEESON:   Your Honours, I need to keep marginally separate what I am attempting to do under the second topic, which is elucidate the section when there is no contributory negligence and then come to contributory negligence.  If your Honour would just permit me to do that.

HAYNE J:   Of course.

MR GLEESON:   What I was seeking to establish on the no contributory negligence situation is that the action under paragraph (b) contemplates a liquidated recovery where the critical element is simply a mathematical exercise, what damages did this worker actually recover with no ability to reopen the question of whether the worker should have recovered more damages.  That will ultimately lead me to a submission that it is unlikely that the LR Act was intended to radically alter the nature of that unliquidated action and make it one in which the whole of the third party action is open for re‑litigation, admittedly between different parties, for the purpose of ascertaining what you plug into a liquidated sum.

Now, your Honours, the other matter I mentioned in terms of (b) – and this is of some importance as the ultimate issues work out – is if the employer is unhappy about the damages which the worker is heading towards, if I can put it that way, the remedies for the employer, as I have said, is either to go under the statutory indemnity under (d) or to seek to intervene in the third party action and be heard as a person directly affected by that court’s decision on the damages.

Our proposition is that the employer could be heard in the third party action as a person directly so affected, and it becomes important later in our argument because it is one of the means by which the worker can achieve both the certainty of a settlement and bind the employer to a reduction which will be useful in the payback.  Dr Bell says that the employer could never intervene, never be heard in that third party action.

Could we simply give your Honours some materials – we have handed them to you – by which the employer if it wants to be heard could intervene in the third party action. We have provided your Honours with these matters. Firstly, the rule‑based approach would be to identify a Part 6 rule 24 of what is now the Uniform Civil Procedure Rules 2005 which govern the District Court. Rule 6.24 is in familiar form. In terms of authority, we have given your Honours News Ltd v Australian Rugby Football League Limited (1996) 64 FCR 410. We have just given you the relevant extract at 523 to 525. A useful decision of Needham J in Re Great Eastern Cleaning [1978] 2 NSWLR 278. The essence of that is that what ‑ ‑ ‑

HAYNE J:   This word “necessary” is pretty difficult, is it not?

MR GLEESON:   More particularly the second limb, a person who ‑ ‑ ‑

HAYNE J:   Or a proper party.

MR GLEESON:   ‑ ‑ ‑ who ought to have been joined as a party.  Can I be more precise?  Assume the worker here had done what should have been done, which was present the consent settlement to the court and ask the court to actually make the appropriate orders under section 9.  So if the worker and the third party had gone to the court and said, “We have reached a settlement.  We agree the damage would have been” – we do not know what the figure is, they claim, but let us say 3.5 million – “We assert that the appropriate damages after reduction are 2.8 million”, we submit that the court would not make that as a consent order knowing that its effect would be to determine the mathematical amount which will apply under paragraph 151Z(1)(b) without permitting the employer to be heard.

The simple solution to the whole of the Hobson’s choice and every other dilemma the worker wishes to put up is that if the worker wants to settle and not contest the full action, the worker presents that consent settlement to the court, it notifies the employer in advance sufficiently that that is what it proposes to do.  Following the Super League decision, it may join the employer, so the employer will be bound to the decision, and the court will then put the onus on the employer, have you got anything to say against the making of a consent order under section 9 which will actually ascertain the respective shares of responsibility and then do the reduction?

HAYNE J:   This has an air of some unreality, I would have thought, Mr Gleeson.  In much personal injury litigation parties settle for competing reasons.  They may have differing opinions about liability, contrib and damages and the three all meld together, usually in the form “You can have 2.8 and costs, what do you say?”

MR GLEESON:   We accept fully that is the reality.  What we have sought to indicate in our five options, which are dismissed as unrealistic, is that one option in an appropriate case is to do what I have just done, just indicated, and the employer can be joined as a party and be bound.  Another option, which Dr Bell dismisses as unrealistic but we submit is what happens all the time, is the worker would go to the employer with sufficient notice and say, “I’ve negotiated 2.8; 2.8 is a great price.  We have not gone into contributory negligence with the third party, we don’t even want to admit its existence, but 2.8 is a great price.  I claim that if this action were fought out the damages would be 3.5, reduced to 2.8.  Will you give me your agreement that I can go ahead and settle and you agree that when we come to the action under paragraph (b) you will accept the appropriate reduction?”  Now, that is what is likely to happen every day of the week because the employer usually, if it is ‑ ‑ ‑

KIEFEL J:   You mean the insurer.

MR GLEESON:   The insurer, yes – if that is a good amount of money – will say ‑ ‑ ‑

KIEFEL J:   This is an employee who is going to ruin a settlement while he goes and has a chat with the insurer.  It is just totally unrealistic, is it not?

MR GLEESON:   I believe not, your Honour, in the sense that the worker would keep the employer and the employer’s insurer fully involved in the preparation of the matter.

KIEFEL J:   But negotiations are quite intense and once one gets to a particular point – you have to have the insurer involved in the negotiations from the outset, really, to achieve what you are talking about.

MR GLEESON:   Yes, I accept that, your Honour.

HAYNE J:   It is hard enough negotiating two‑party agreements.

KIEFEL J:   Yes, it is so hard.

HAYNE J:   To negotiate three‑party agreements is a multiplier effect and so on.

KIEFEL J: Mr Gleeson, why could the employee not plead section 10(2) in the section 151Z(1) proceedings and, likewise, why is the worker not a proper party to any proceedings for indemnity under 151Z(1)(d)? Why is not the amount of contribution able to be assessed in those proceedings?

MR GLEESON:   I think I missed the effect of your Honour’s question, I am sorry.

KIEFEL J:   If there is a proceedings for recovery under section 151Z(1)(b) could the worker, as was done here, not plead the reduction in those proceedings?  As I understand your argument in relation to 151Z, there are provisions which entitle refund of compensation effectively out of the fund of damages directly without the worker being involved.  But is not the worker a proper party to proceedings brought against the third party tortfeasor by the employer under section 151Z(1)(d) because if 10(2) is operative it would affect the worker’s entitlement.  So they would have to be joined in those proceedings, would they not?

MR GLEESON:   In the reported cases I have seen they have not in fact been joined.  The reported cases have either been:  the worker has settled its own third party action first and then the employer has proceeded under (d) – that is McDonald – or, secondly, the reverse, which is Norris, where the employer brought the action against the third party, got the indemnity and then later the worker brought its action to judgment.  But, your Honour, I would have to accept on the logic I was putting earlier on about necessary parties the same logic would seem to apply, as in the worker could say that directly affects my right and I want to be heard in your action.

Where I would seek to go from it is that the clear division is that paragraph (b) is intended to be a simple liquidated debt action and all questions of the existence of negligence, of damages, of contributory negligence or reduction are the proper remit of the ‑ ‑ ‑

KIEFEL J:   But perhaps it is a liquidated debt action with section 10(2) in the background operating, so the parties are intended to know that the reduction is intended to operate. Could I also ask, you said that you were going to discuss section 151Z as a whole and I imagine leading up to what you make of subsection (5). How does subsection (2) operate, because it deals with contributions as between the employer and the third party tortfeasor but not the worker.

MR GLEESON:   It is a complex section.

KIEFEL J:   Yes.  It is hard to follow.

MR GLEESON:   I believe it is designed to achieve the result that where the common law damages which the worker can get against the employer are modified - they are not full common law damages, but they are modified under the provisions of this part - then the third party tortfeasor is not to be prejudiced by that modification and can recover its contribution back against the employer without prejudice from that modification.

It speaks of altering the contribution which would otherwise be recoverable to take account of the damages being altered.  So I believe where it says “(but for this Part)” in the fourth line, it is actually not speaking to the issue we are dealing with under (b) but dealing with the modification to common law damages which arises under the earlier provisions of Part 5.

KIEFEL J:   What do you make of subsection (5)?

MR GLEESON:   All subsection (5) does is put beyond doubt what Justice Windeyer had ‑ ‑ ‑

KIEFEL J:   You are recovering from a fund of damages, basically, that is ‑ ‑ ‑

MR GLEESON:   Yes, however achieved.

KIEFEL J:   And 151Z is really just concerned about recovery.  It is really not speaking at all about contributory negligence, is it?

MR GLEESON:   That is true, yes.  So (5) was inserted in 1994.  We have given your Honours the 1994 amendment which contains an explanatory note on two things, firstly, on subsection (5) which was the avoidance of doubt and that was also the Act which introduced (e1) in order to reverse a District Court decision.

GUMMOW J:   Which document are you referring to, the explanatory memorandum?

MR GLEESON:   The Workers Compensation Legislation (Amendment) Act 1994 No 10 at page 36. As an example of the simplicity of the statutory actions created under paragraphs (b) and (d) we have given your Honours a reference in our submissions to the Court’s decision in Bain (1976) 135 CLR 158. Bain established that when the action is brought under paragraph (d) the tortfeasor is not permitted to reopen the correctness of the award of compensation which was paid.  Provided there is an award and it is paid under the award that is the amount against which the indemnity then is claimed, another example of the simplicity of the debt action.  Your Honours, can I then come to the third topic, squarely.

GUMMOW J:   How are we going for time, Mr Gleeson?

MR GLEESON:   I would seek to have another half to three‑quarters of an hour, your Honour.  I now come to the interaction of the two Acts.  Under the current Law Reform Act your Honours have identified that under section 9 ‑ ‑ ‑

GUMMOW J:   You say the interaction between the two Acts, but 10(2) amends, without saying so, but its effect is to amend 151Z, is it not?

MR GLEESON:   Yes, your Honour.  So I come to what effect is achieved by that.

GUMMOW J:   We have to consider the composite.

MR GLEESON:   Yes.  Under section 9, your Honours have identified that paragraph (1)(a) removes the complete defence available at common law.  We differ from the appellant who has said that prior to this Act coming in the worker would always get the best of both worlds:  compensation and damages.  In the case we are now considering where contributory negligence was in existence, of course at common law the worker got nothing.  So the effect of this amendment has improved the position of the worker by providing for the possibility of a sum of common law damages, perhaps reduced, which otherwise ex hypothesi were not available.  The next matter is under paragraph (b).  As I have sought to put, that is an evaluative judgment which is entrusted to the court and it can only be the court ‑ ‑ ‑

GUMMOW J:   I am not sure about your first step actually.  What was your first step?  Before 1965 in New South Wales ‑ ‑ ‑

MR GLEESON:   Contributory negligence was a complete defence to that claim.

GUMMOW J:   So the worker had rights under the Compensation Act?

MR GLEESON:   Yes, but in the case we are postulating of ‑ ‑ ‑

GUMMOW J:   And no common law?

MR GLEESON:   And no common law, so by virtue of this Act - as was obviously in the intention – the worker’s position is improved because the worker now has against the tortfeasor a claim for some damages as opposed to no damages.  Under paragraph (b) that task is entrusted to the court, that is the section 8 court and that is the court hearing the claim between the worker and the third party and the court is required to engage in that evaluative task of determining shares of responsibility.  In a case, as I have identified at the outset, like the present, the court hearing the claim never engaged in that task.

GUMMOW J:   Say that again.

MR GLEESON:   In a case like the present, the court hearing the claim never engaged in the task under paragraph 9(1)(b) because the cause of action was extinguished and turned into a money sum.

When we come to section 10(2) we submit that the reduction of which it is speaking is a reduction by reference to the facts which have happened in circumstances where the damages recoverable are reduced. Whether those words under section 9 are there or not, the previous legislation achieved the same effect.

Where those damages are reduced and that reduction can only be by the court hearing the claim, then the worker is to have the benefit of that in the second action and that is confirmed, we submit, by section 11 which is that the court hearing the claimant’s action has the duty to find and record both the upper damages and then the reduced damages. So that the court having been asked to do the task under section 9 and having recorded the damages under section 11 through the method in section 15, then has produced facts to which section 10(2) can then operate and the reduction is then to the same extent as the damages have been reduced.

HEYDON J:   “Extent” is, if not an ambiguous word, a word of several possible meanings.  It can mean, as it were, a number of dollars; it can mean a proportion.

MR GLEESON:   That is the issue.  If your Honours entertain that issue as part of construction, we submit that proportion is what is meant – namely, the court, having identified shares in responsibility, which will be conventionally in proportions, applies those shares to effect the reduction.  In terms of authority in New South Wales, proportion is the position.  That is McDonald’s Case 25 NSWLR 492 at 498, letter E. The essence of our position is that the valuable benefit conferred upon ‑ ‑ ‑

GUMMOW J:   Page 498, letter E?  That is a submission by Mr Jackson.

MR GLEESON:   It is the paragraph just above that, your Honour:

for that proportion of the compensation paid which reflects its share of responsibility –

In the present case, Justice Giles also spoke of ‑ ‑ ‑

GUMMOW J:   It is reporting submissions by Mr Jackson, is it not?  That says there is considerable force.

MR GLEESON:   If I have misread that, your Honours, I apologise.

GUMMOW J:   No, I am just wondering how it ended up.

MR GLEESON:   Mr Jackson was putting that as part of a larger submission.  What Mr Jackson was seeking to put – and this was an element in his submission – was really he was trying to undercut what I have put about paragraph (d).  He was seeking to argue that if (b) means what the appellant says it does, why does (d) not work the same way, meaning that if you are the tortfeasor, you can get a double benefit out of the worker’s contributory negligence?  You can first have your damages reduced down to the lower level in the action and you can then say, “I want your compensation also proportionately reduced for the fault”.  That argument was rejected, which is why I say that in New South Wales ‑ ‑ ‑

HEYDON J:   The appeal was dismissed.  Mr Jackson was for the appellant.

MR GLEESON:   Yes.  What his appeal was dismissed on was his attempt to argue under paragraph (d) that the employer’s indemnity against tortfeasor gets a double hit because of the worker’s contributory negligence.  That was held not to be the case, which is why I say we have the conundrum that the notice of contention seeks to address that, in New South Wales at least, if the employer goes directly against the third party, he can recover in full without reduction for the worker’s contributory negligence.  Your Honours, in terms of useful analogues, could we invite your Honours to consider James Hardie v Seltsam 196 CLR 53.

HAYNE J:   In aid of what proposition, Mr Gleeson?

MR GLEESON: That the reduction which section 10(2) speaks of is, by reference to what has in fact occurred or not occurred in the court hearing, the claimant’s action. The parallel we would draw is this. In James Hardie v Seltsam the court held by a majority that if there is entry of judgment for one tortfeasor in its favour, that conclusively establishes that tortfeasor is not liable and therefore section 5 cannot bite. For instance, at paragraph 26 where two of the Court referred to Bitumen, it was noted that there are means of ascertaining the liability other than judgments.  It can also be settlements.  But, particularly, perhaps at paragraphs 40 to 41, which we submit is fairly close in point, in the judgment of Justices Gaudron and Gummow, once that order was made in the negligence action determining that the tortfeasor was not liable, the cause of action merged in the judgment destroying its existence.  The orders were effective, notwithstanding they were by consent:

It was for the appellant to have taken the necessary steps to oppose that entry of judgment and to have put itself in the procedural position whereby it was competent to appeal against that entry.

The parallel we seek is it was for the worker, if he wished to place himself in a position of obtaining a reduction, to take the appropriate steps in his own action.

HAYNE J:   Do you accept that the question in this appeal can be rendered as being whether the reduction in liability under section 151Z, for which section 10(2) provides, is a reduction to be made only where the claim against the third party is sue to judgment and the court has found the amount by which the damages otherwise recoverable are to be reduced on account of the worker’s contributory negligence? Is that the question in this case?

MR GLEESON:   On the appeal, not the notice of contention.  That is the question, subject only to one other rider, which is of course that if there has been an agreement between employer and worker as to an amount of reduction under the section, the agreement can also activate paragraph (b).

HAYNE J:   The parties may agree anything and the parties to the claim under 151Z may agree anything.  Why would one answer the question I have framed affirmatively having regard to the fact that 10(2) uses the expression “claimant” and “claimant” is identified, firstly in 8 but by reference then to 9(1), as a person who:

suffers damage as the result partly of the claimant’s failure to take reasonable care (contributory negligence) and partly of the wrong of another person. 

So if you blow out 10(2) by the insertion of the understanding of “claimant” provided by 9(1), why would you inject these notions of suit to judgment and finding?  You have to depend ultimately, have you not, on the construction of the words “are reduced”?

MR GLEESON:   Yes, “are reduced”, we depend on that.  As to the claimant the appellant was at one stage a claimant.  By the time he entered the consent judgment he was no longer a claimant, he had become a person with the benefit of a judgment for a money sum and he had chosen to do that without going through the procedure in section 9 which we submit is an important condition of the determination of the damages recoverable.  They are expressly linked to that evaluative judgment by that court.

Now, your Honour, in terms of that being a sensible construction, the whole of this part was tied to that court making that evaluation of the respective shares of responsibility and that being important as in it is the very court which is determining the question of negligence in the first place.  We would wish to insert some realities back into this, contrary to what Dr Bell has put, that is, the court is charged with determining is this person a wrongdoer?  If so, what is the damage” - question 2.  Question 3, is there contributory negligence?  Question 4, what are the respective shares?

That will be done between worker and the negligent tortfeasor.  The court will then make that judgment.  What is contemplated here?  We provide an example in paragraph 47 of our submissions where the worker settles for $2.8 million.  Is what is contemplated by the appellant’s argument that in the liquidated debt action under 151Z(1)(b), firstly, there has to be proof of whether the tortfeasor was negligent.  Who bears the onus of proof on that question?  Is that to be proved by one of the parties having to call all of the witnesses to prove negligence?  How does the employer get the tortfeasor before the court?  Is that done willingly?  Is that subpoena?

What interest – what possible interest does the negligent tortfeasor have in any way co‑operating or being involved in this action when it is saying, “I have freed myself of the claim.  The whole point of getting rid of the claim was so it was not vexed by litigation”.  That is the first step down.  The second step down is the measure of damage.  Does one need to re‑prove the whole of the damages case?  The third step is fault of the worker.  The matter which Justice Giles raised and we refer to in paragraphs 49 and following we submit is not fanciful.

The worker now has the interest, bizarrely, contrary to the interest in the main action to come along and allege or prove that he was as negligent as possible and then the court is supposed to assess the shares of responsibility. Now, the question of onus, I submit, is not an unimportant one. If your Honours go to our example at paragraph 47 we ask this question. If the court, having gone through the whole of that exercise decides that the damages were 2.7 million but would have been reduced to 2.4 million for contributory negligence, how does section 10(2) operate? What Dr Bell has said this morning is that in that situation there is no reduction.

So what has happened is that the relatively simple payback action in which the employer cannot contest the damages has now become this complex creature. We submit to your Honours it is very hard to reconcile the answer he gave you this morning with section 10(2) because you are not reducing the compensation at all.

So in my example in paragraph 47, the second court thinks the proportions were:  one is to eight.  Having gone through that exercise and come to those numbers, the appellant says “The compensation is not to be reduced”.  We submit it cannot be squared with the language.  Your Honours, I notice the time.

GUMMOW J:   How much longer will you need, Mr Gleeson?  I take it you have finished with the appeals in the strict sense.  Do you have to deal with the notice of contention some more, or what?

MR GLEESON:   Yes, I would need less than half an hour.

AT 12.44 PM LUNCHEON ADJOURNMENT  

UPON RESUMING AT 2.02 PM:

GUMMOW J:   Yes, Mr Gleeson.

MR GLEESON:   We have provided your Honours with a copy of the Workers’ Compensation and Injury Management Act 1981 (WA). Section 92(c) is an example of an express statutory charge. Your Honours, I would like to make one further and last conceptual attempt to offer the Court a distinction which might assist in unravelling the problem and deciding between the competing arguments.

The distinction is between legal rights which are contingent and indeterminate in advance, and the process or method by which they are made definite and determinate.  If your Honours have, for instance, 151Z(1)(b) open, as soon as the employer makes a payment of compensation to the worker it can be said that the employer has a contingent and indeterminate right of recoupment.  It will only become definite and determinate if, as we have seen, there is an actual recovery of damages.  However, it is there prior to that and then we are debating about the process by which it is made definite and determinate.

When one looks across at section 9 of the Law Reform Act, in one sense, from the moment a person has suffered damage where there is a potential tortfeasor that person is exposed to the contingency that the tortfeasor will invoke contributory negligence.  What section 9(1)(b) really does is create a defence for the benefit of the tortfeasor as an amelioration of the removal of the complete defence under (a).  So it is true in a sense that from the moment we have a payment of compensation on the one hand and we have a potential tortfeasor and a potential for contributory negligence, we have interlocking contingent and indeterminate rights.

The right of the worker could be expressed this way: contingent upon me succeeding in recovering damages and contingent upon those damages being reduced by my fault, section 10(2) then gives me a contingent benefit and ability to reduce that compensation that might otherwise be repayable. The reason I dwell on that is that the critical question then is what is the statutory process by which that which is contingent and indeterminate becomes definite and determinate. The essential difference between us is that we are contending that under section 10(2) the process is one that operates by reference to fact and the fact depends upon what happens in the third party action.

Can I give your Honours one example.  Assume the third party action goes to judgment and the tortfeasor either does not raise contributory negligence or raises it and does not run it very well, or raises it and gets a reduction.  On our argument, the fact as determined by that process, namely, what the Court does in a third party matter, has brought to an end that which is contingent and indeterminate.  If the third party court allows no reduction for contributory negligence, for whatever reason, then there is nothing the worker can apply against the pay‑back obligation.  If the Court allows 10 per cent, for whatever reason, that is the fact of which the worker can then gain a benefit in the reduction of compensation.

As we would see it, once that process has ascertained the fact, there is no ability in the 151Z(1)(b) action for either party to reopen it.  What the appellant has not grappled with is, assume in the judgment case the result for contributory negligence is zero, is the appellant arguing that in the action between it and employer it can reopen that and say the true reduction in law was 30 per cent?  We would submit not, because the process has led to a factual result, namely, the judgment of the court in the claimant’s action.  Similarly, if the party goes to a settlement, the fact of what has occurred is the present case, which is simply there is a settlement and a judgment for a sum of money.  That is the fact.  The process has come to an end and there has been no determination of an amount from which the worker can then benefit.

If your Honours could go to Justice Giles’ judgment, could I identify the separate strands in his reasoning.  On page 85 in paragraphs 16 to 17, his Honour put the construction I have just sought to put:

the consequential reductions were tied to the objective fact of the court‑determined reduction –

both under the previous Act and under the present Act.  His Honour comes back to that succinctly on the top of page 90 that the legislation so construed:

favours certainty:  there is either full credit or recovery, or a reduction in the credit or recovery ascertained from the court‑determined (and recorded) reduction.

That is the essence of the construction argument we put, that that is the process by which the indefinite becomes definite. 

The second strand of his Honour’s reasoning is between paragraphs 18 to 23.  As we understand the appellant’s argument, they do not urge upon you that what has in fact happened in the settlement is of any relevance.  His Honour disposed of such an argument in 18 to 23 and we understand no reliance is put on that.  What that highlights, though, is that the real asymmetry being created here is this.  Where, in fact, the party goes through settlement to a single sum of money thereby bringing its cause of action to an end, one departs from the facts of what has occurred and returns to a theoretical question, what might have been the correct answer in law contingently at the outset?  We submit that is not permissible.

The third strand in his Honour’s reasoning is paragraph 24.  We are not wedded to the term “satellite litigation”, but we do submit that what is occurring here has the extremely odd feature that contributory negligence, which under 9(1)(b) is a defence in favour of the wrongdoer, which is in its interest to assert and in the worker’s interest to deny, has by virtue of the appellant’s argument been reversed so that in the second piece of litigation the worker is now busy alleging, “I was very much at fault” and the employer is left taking the tortfeasor’s position.

Your Honours, the realities of the situation have not been proved in evidence so we are relying upon what we can postulate as reasonable to occur, but I do need to say this.  If you think practically about the result of the appellant’s argument, how does it work?  The worker has no incentive to tell the employer anything about the common law action.  He just goes off and does whatever settlement he or she thinks appropriate.  The worker then goes to the employer and says, “The damages I recovered are X, but I contend that they should be reduced by 50 per cent.  If you don’t like it you sue me for recoupment.”

This is the employer who, on this hypothesis, knows little or nothing about what has actually happened in this third party action and the employer is being put to the burden of knowing how to respond to that demand, not having the benefit of the objective court determined reduction.

HEYDON J:   Very often the tortfeasor will be the employer.  This is a journey case which is relatively unusual.  Workers compensation is compensation paid in respect of employment.

MR GLEESON:   Yes.  Your Honour, the 151Z is solely for the case of a third party tortfeasor.

HEYDON J:   Some person other than the worker’s employer, yes.

MR GLEESON:   The employer, as a negligent party, would be dealt with under 151N.

HEYDON J:   This is deemed employment, some sort of extended employment.

MR GLEESON:   The opening words, as we would read 151Z(1) are limited to the case where it is a liability in a person other than the employer, so the worker, on this theory, presents to the employer a settlement about which the employer knows nothing and says, “I claim 50 per cent reduction.  Accept that or sue me.”  Then, what exactly is the employer meant to do in respect of this so‑called true liability or true outcome between worker and tortfeasor of which it has not been a party, of which it has no knowledge and which to dispute the worker involves proving those elements that I had briefly mentioned this morning.

We submit that the more one thinks of that result there is a lot of force in what Justice Giles has put about certainty if one focuses on the objective fact of what happened in the third party action.  It gives the worker a real benefit.  The benefit to the worker is if you have had your damages reduced you will receive the appropriate benefit in the other action.

GUMMOW J:   In some circumstances where 151Z applies.

MR GLEESON:   Yes.

GUMMOW J:   So you read it down in some way.  You have to.

MR GLEESON:   Your Honour is correct, and it is in order to reflect ‑ ‑ ‑

GUMMOW J:   There is a choice to be made.  We can debate from here to kingdom come, I suppose.

MR GLEESON:   There is a choice, yes.  Your Honours have the essence of what I have sought to put, that it has consistently with the simplicity and liquidated damages nature of what we started with this morning under 151(1)(b), that has not been intended to be removed by this beneficial section.  It has been intended to provide the process through the third party court by which the worker can recover a benefit.

In paragraph 24 of Justice Giles we submit that his Honour has correctly identified the realities of the situation and it is a most unlikely intention that what was designed was that workers would or could settle and then force upon the employer the need to have rerun, in a hypothetical sense, the third party action.

The fourth strand in his Honour’s reasoning is paragraph 25.  His Honour there points to a further difficulty as to what exactly is the hypothetical that is being considered.  Finally, we submit that in paragraph 31 his Honour has sufficiently answered the matter raised by Justice Hodgson.  In terms of authority we have found only one decision which is ‑ ‑ ‑

GUMMOW J:   That is Judge Henchman’s decision, is it?

MR GLEESON:   Yes, Beecroft Bakeries Pty Ltd v Allen (1971) 3 DCR (NSW) 34.  It was on the former version of the Act.  His Honour ruled at the foot of page 39 that if there was a pure out‑of‑court settlement, there was no ability for reduction.  He left open what would be the position if a proceeding had started but terminated short of an actual hearing.  The reasoning of his Honour, briefly expressed at the foot of page 39, consistent with Justice Giles, we submit is correct.  We submit this much can be drawn from that decision, that in the knowledge that the only authority in the area says that if you take the benefit of a settlement, you do not get a reduction, that is part of the pluses and the minuses.  There has been no evidence of that causing the slightest bit of difficulty.  There has been no law reform report any party has been able to find indicating that this approach to settlements is troublesome, and the suggestion of Hobson’s choice causing a massive problem for workers of the state is not borne out by the slightest piece of evidence.

Your Honours, the final matter on the appeal, if your Honours could go to our written submissions, please, in paragraph 52.  This dealt in advance with an argument briefly put this morning that the re‑opening of the closed third party proceeding is not a radical concept because it happens elsewhere.  We have indicated these are the reasons why the situation under section 5 between two joint tortfeasors is very different to what is contemplated by the payback action.

Your Honours, in relation to the notice of contention, if I could go back in our submissions to page 6. We contend that the beneficial work of section 10(2) operates in what we have identified as “Example 1”, and the effect of it is to make sure that the reduction for contributory negligence has not left the worker worse off than the greater of the compensation and the recovery in the common law action. The issue we raise for consideration concerns Example 2, which is perhaps the present case or something like it. As we indicate in paragraph 26, Justice Windeyer in Watson had foreshadowed that there could be problems where one had an interaction of apportionment legislation and damages below the compensation payments, that is, Example 1.  That, we submit, is the issue which arises here. 

Paragraph 28 is along the lines of what I sought to put this morning, that under section 151Z(1) we have the conundrum that under

paragraph (c), if the worker recovers compensation first, the worker cannot shift the burden of his or her fault onto the employer.  That also appears to be the result of (d), (e) and (e1), subject only to the question raised by your Honour Justice Kiefel as to whether, if the worker intervened into the de‑action, the worker could somehow trump the employer and limit the indemnity. 

I recognise that as something that would have to be factored into this part of the argument but, on the face of the law as it stands with Norris v Blake, that case produced the outcome that the employer obtained the full indemnity from the tortfeasor and, because of paragraph (e), the worker’s damages against the tortfeasor were by that much reduced.  So in that situation the worker was unable to throw any of the consequences of the fault back onto the employer.  If that be correct, we suggest that it may be an indication that paragraph (b) is designed to ameliorate a particular problem, the one we have identified in Example 1.  Unless your Honour has questions, that is what we wish to put.

GUMMOW J:   Thank you, Mr Gleeson.

MR BELL:   Your Honour, there are eight relatively short points we would make in reply.  The first point is the longest of those eight points.  It relates to this, that one of the building blocks for my learned friend’s argument was to say, well, look, 151Z(1)(d), that is the indemnity – he made the suggestion that there was no scope in an action between an employer and the tortfeasor for considerations of the worker’s contributory negligence to be taken into account.  He cited Norris v Blake in support of that proposition. 

Norris v Blake does not support that precise proposition and we take issue with the proposition that there is no scope in 151Z(1)(d) for considerations of a worker’s contributory negligence. In fact, we would point to two authorities in the Court of Appeal suggesting to the contrary, so this is cognate with your Honour Justice Kiefel’s observation that there could be situations. If one looks at 151Z(1)(d), there are important words in parentheses at the end of the subsection:

being an indemnity limited to the amount of those damages –

In other words, there is a cap built in.  True it is there is a right to indemnity but it is capped by reference to the amount of the damages for which the tortfeasor would be liable.  Your Honour, there is nothing in the section, in the language of the section, and, in our submission, in any case law which would prevent a tortfeasor arguing in a pure indemnity action, which Blake was not, a pure indemnity action between employer and tortfeasor, nothing which would prevent the tortfeasor saying, “Look, my liability is as to 40 per cent because Mr Hickson did not look where he was going, did not have his lights on”, et cetera.  “I have the benefit of a cap” – the cap in the parenthesis.  “True it is you can get indemnity from me to the extent I was wrong, but only to the extent I was a wrongdoer”.

HAYNE J:   It seems a very complex way home.  Surely the way home lies in the identification of the liability to pay damages.

MR BELL:   Yes.

HAYNE J:   Judgment is ultimately entered for the sum net after contrib.

MR BELL:   Yes, quite – after contrib.  And of course the tortfeasor has an incentive in those indemnity proceedings to point to the worker’s contributory negligence because that will lower the cap.

GUMMOW J:   What do you say of Mr Gleeson’s point that - assume a situation whereby the action between the employee and the tortfeasor has been fought out and a case of contributory negligence has failed, but nevertheless, he complains that, on your construction, that failure could be subverted in the later “satellite” proceedings?

MR BELL:   The satellite proceedings your Honour is referring to in that question are 151Z(1)(d) proceedings.

GUMMOW J:   Or (b).

MR BELL:   Or (b).  Can I deal with one – in the (1)(d) proceedings – so presupposing first litigation between the employee, the worker, and the tortfeasor where it has been raised and resolved and lost, it may well be although an issue estoppel does not arise in the subsequent indemnity proceedings for the obvious lack of privity, it would be an abuse of process in the (1)(d) indemnity proceedings for the tortfeasor to contend for a different result in circumstances - that would be an extended Reichel v Magrath type of abuse of process.  Can I give the Court the reference to the two cases which support my submission that ‑ ‑ ‑

HAYNE J:   Before you get to that, 10(2) does not speak to 151Z91)(d), does it?

MR BELL:   No.

HAYNE J:   And pointing to a different result in respect of an indemnity claim against the tortfeasor from the result that obtains in a claim over against the worker simply says that 10(2) applies in one case but not t’other.

MR BELL:   Which is exactly what Justice Handley, with whom Justice Priestley and Justice Hope had to say in the GIO v McDonald Case.  That was precisely the argument – a similar argument to what Mr Gleeson is putting here – there was an argument to the effect that, well, in non‑(1)(b) proceedings there should be some affinity of result vis-à-vis the employer.

HAYNE J:   But to say that a tortfeasor is treated differently, even more harshly than a worker in working out the intersection between a no fault scheme under the Workers Compensation Act and common law damages fault based is to observe something that may owe much to the fact that you are dealing with a compensation scheme for workers which is not fault based.

MR BELL:   Your Honour has said probably more elegantly precisely what we have said in paragraph 7 of our submissions in reply, that is the ‑ ‑ ‑

HAYNE J:   I have never professed anything to be original, Dr Bell.

MR BELL:   No, your Honour, but that is precisely what we have put.  Our friends say…..makes the employer the insurer but it is not a surprising result to the extent it is partially true in the context of no fault workers compensation legislation.  Your Honours, the way Justice Hayne has put the point may be the shorter way home, but the two cases I wish to refer to in this context of 151Z(1)(d) are these, and I think we have provided them to the tipstaves.  I & J Foods Pty Ltd v Bergzam (1997) 14 NSWCCR 486, a decision of the Court of Appeal. The significance there is that 151Z(1)(d) in indemnity proceedings, in an exploration of what the cap is, the cap is capable of being reduced by reference to the employer’s own negligence. In other words, one could have a case – and this is perhaps what Justice Heydon was alluding to – where the employer is itself a tortfeasor.

In the facts of this case there was a third party tortfeasor and an employer tortfeasor, and to the extent that the employer’s tortious conduct contributed to the worker’s damages, that contribution reduced the liability of the third party tortfeasor which had the consequence of lowering the amount of indemnity available by the employer from the third party tortfeasor.  So there is an example which rather negatives my friend’s submission that there is this complete indemnity.  If that is so, if one is looking for the true liability of the third party tortfeasor, why does not one also look for the true liability of the third party tortfeasor by reference to the injured worker’s contributory negligence?

The other decision is a decision called Grant v Royal Rehabilitation Centre Sydney [1999] 47 NSWLR 263 at 265, paragraph 10. This was a case where there were indemnity proceedings but only one aspect of – the judge hearing the (1)(d) proceedings said, well – he only looked at one aspect of indemnity. Justice Cole said at paragraph 10:

it is incumbent upon the court hearing the first claim for indemnity pursuant to the section to determine the amount of “those damages” which would have been recoverable from the tortfeasor.  That involves a determination of all of the constituent elements in such a damages claim including general damages, and all forms of economic loss including loss of past and future income earning capacity.

The criticism in that case was that only part of that inquiry had happened, but the point is, in the indemnity inquiry one is looking for the true liability of the third party tortfeasor and there is no reason in principle and every reason in favour, as a matter of principle, of that involving the element to which that liability is reduced by reference to the worker’s contributory negligence.  One will get the same result on Justice Kiefel’s example if the worker, for whatever reason, intervened.

Your Honours, the other points in reply I can deal with much more briefly I hope.  The intervention point Mr Gleeson made – there are two answers.  As a matter of procedure it is by no means self‑evident that in a pure common law case, the Ala proceedings, that the employer was a necessary or proper party or ought to have been joined – absolutely unless in the case where the employer was somehow involved in the negligence, for example, providing Mr Hickson with a faulty motor vehicle or a faulty bike, putting aside that sort of example, no reason why the employer ought to have been joined.

Secondly, perhaps more significantly, absolutely no incentive after the Court of Appeal’s decision for the employer to become involved and to agree or subscribe to a level because what he is agreeing to would be a reduction in the payback in circumstances where the Court of Appeal says he is entitled to 100 per cent of it, so that example is impractical.

The third point is this. Justice Hayne raised with my learned friend the word “claimant” and the opening words in section 9 and your Honour put, why is not that a very powerful clue. We agree, with respect, your Honour. My friend’s answer was somehow that after settlement, the worker ceases to be a claimant. That cannot be right, your Honour, because section 10(2) refers to the claimant in circumstances after damages have been awarded, whether those are damages by way of settlement or by way of judgment. So one does not cease to become a claimant, cease to have that character and a claimant has the character of someone who is in – and then pick up the opening words of section 9, so we would embrace that argument.

The fourth point is this.  My friend referred to briefly the explanatory note in the 1994 amendment which introduced 151Z(5) and the key paragraph of the note handed up with the extract says the amendment makes it clear that the provisions of the section against double‑payment to injured workers if both workers compensation and Commonwealth damages are payable apply when payment is made voluntarily and not under a court order.  That reinforces the submissions I made about 151Z(5) and 149.

The fifth point, your Honours, is this.  Beecroft Bakeries, the decision of Judge Henchman, has at least the following points of distinction.  It was a decision obviously before there was any equivalent to section151Z(5), ie, prior to there being any statutory recognition, at least, of damages including settlement.  Secondly, in terms, as my friend fairly pointed out, his Honour was dealing with a case where there were no proceedings at all and simply did not address the question as his Honour said of a case where proceedings have been commenced but did not come through to a hearing.

The next point, your Honours, is this.  It is to pick up the observation made by Justice Heydon to which my friend responded about possible ambiguity in the words “to the extent”, the options being either amount or proportion.  Your Honours, in our submission, the resolution of that ambiguity in the way we favour, namely amount rather than portion, accords far more closely with the purposes of the Act.  If I am right then it is about preventing under‑compensation.  It is the amount which – and the deduction of the amount which achieves that result, not the proportion.  The proportion might go some way to doing it but the amount will do it precisely.

After lunch, when my friend was putting up the straw man of this satellite or subsequent litigation and all the difficulties involved, saying, well, the worker would have no incentive to contact the employer about the common law action, the worker has an incentive to try and secure the employer’s agreement.  If that were so, we would not be here.  If we had had agreement from the employer, one would not be involved in litigation at this level.  There is an incentive.

Secondly, it is not as though an employer, when a worker is injured and a worker ex hypothesi makes a claim for workers compensation, does not take an interest in the circumstances of the accident.  The employer wants to see what the circumstances were, (a) to know if the claim is a genuine one and what are the circumstances.  Because another reason it will want to find out that information is to assess whether it is worth taking the initiative, getting on the front foot and suing for indemnity from the tortfeasor from the outset.

The final matter, your Honours, is this.  To the extent that my friend’s written submissions on the notice of contention set out options, our submission is that the first and the fifth are the only two options, and that has the vice which found our principal submissions.  The middle three options are all illusory, either impractical or unrealistic and we have set out in our written reply the reasons why we say that is so.  If the Court pleases.

GUMMOW J:   Yes, Mr Gleeson?

MR GLEESON:   Your Honour, could I be permitted one matter of clarification in answer to something that passed between Justice Hayne and Mr Bell?  Your Honour, the matter we were adverting to was not just (d) of itself but it was (d) plus (e) and (e1), the consequence being that if the payment is made in full under (d) to the employer, the worker thereby cannot recover that amount under (d) and (e1).  May it please the Court.

GUMMOW J:   Do you want to say anything about that, Mr Bell?

MR BELL:   Only Norris v Blake, to that extent, is bound up in that argument is an (e1) case, if I can use that shorthand.

GUMMOW J:   The Court will consider its decision in this matter and will now adjourn to 10.15 am on Tuesday,10 February 2009.

AT 2.42 PM THE MATTER WAS ADJOURNED