Jeana Anna Spry v Gram Manser and the Workers Rehabilitation and Compensation Corporation (WorkCover) (Intervener) No. SCGRG 93/593 Judgment No. 4077 Number of Pages 8 Workers' Compensation (1993) 60 Sasr 586

[1993] SASC 4077

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA COX(1), DUGGAN(2) AND DEBELLE(3) JJ

CWDS
Workers' compensation - Workers' Rehabilitation and Compensation Act 5.54 - plaintiff injured in road accident in 1988, and paid compensation by Corporation for aggravation or exacerbation of her accident injuries in a work accident in 1991 - whether Corporation entitled to recover from Plaintiff or defendant in road accident proceedings, to the extent of the plaintiff's damages or to some lesser extent, some or all of the compensation payments it has made or may make to the plaintiff by reason of the aggravation or exacerbation. Workers' Rehabilitation and Compensation Act s.54.

HRNG ADELAIDE, 1 June 1993 #DATE 27:8:1993
Counsel for appellant:     Mr P A Heywood-Smith
Solicitors for appellant:    Moloney and Partners
Counsel for respondent:     Mr S Walsh QC
   with Mr S P Micallef
Solicitors for respondent: Ward and Partners
Counsel for intervener:     Mr J R Mansfield QC
   with Ms A Carabelas
Solicitors for intervener: Gun and Davey

ORDER
Questions answered as follows: Q1 - None; Q2 - No.

JUDGE1 COX J Case stated about the interpretation of s.54 of the WorkersRehabilitation and Compensation Act. 2. The plaintiff in a District Court action sued the defendant for damages for injuries sustained in a motor vehicle accident on 25 November 1988. She alleged that certain neck and back injuries were caused by the defendant's negligent driving. She said that she had still not recovered from her physical and emotional disabilities by the time she issued her ordinary summons in August 1990. The defendant denied liability. One of the pleas put forward in the amended defence, delivered in November 1992, was that, if the plaintiff had suffered any injury or loss or damage, it was not caused by the accident in November 1988 but by a new and intervening act, namely, a fall at a shopping centre on 22 July 1991 which injured the plaintiff's spine. 3. On 14 January 1993, before the action came on for trial, the Workers Rehabilitation and Compensation Corporation, calling itself WorkCover Corporation, served a notice on the defendant's solicitors under s.54(7) of the Workers Rehabilitation and Compensation Act 1986 ("the Act") in the following terms -
    "Re: Claim No 5549/06617026/01/R
    Employer Tempo Services Worker Jeanna Spry
    We hereby wish to provide our amended notices to include our
    total paid to date plus anticipated future/and recoverable costs in
this matter. Pursuant to Section 54(7) of the Workers
    Rehabilitation and Compensation Act 1986 ("the Act"), we hereby
    give notice to you of our intention to recover all compensation
    either paid by this Corporation to date or any compensation which
    may become payable by the Corporation in the future, arising out of
    the claim brought by the abovenamed worker in respect to the work
    related disability on 22nd July 1991 and a previous incident which
    took place on 25th November 1988. We advise that to date, the
    following payments of compensation have been made:- Hospital
    $ 6,533.66 Income Maintenance 31,850.62 Medical 10,704.84 Total
$49,089.12 Pursuant to Section 54(7) of the Act, the Corporation
    will be seeking not only to recover the amount referred to under
    the heading "Total" above, but also any future payment which may
    arise. At this time we calculate our potential liability in
    respect of future payments as follows: Estimated Future Payments
    Medical $5,500.00 Hospital 5,000.00 Weekly Payments 146,360.82 Lump
    Sum 14,192.00 Total $171,052.82 These estimated amounts are not
    to be construed as an admission of liability. The total of
    compensation paid and estimated future payments for which we seek
    recovery at this time is therefore $220,141.94. The Corporation
    will hold you responsible for the said repayment, this letter being
formal notice of our statutory right to do so." 4. On 20 January 1993 the Corporation was granted leave to intervene in the action. On 2 April 1993 Judge Lee stated a case in the District Court at the request of all parties for determination by the Full Court pursuant to s.44 of the District Court Act. The case stated notes that the parties have agreed the following facts:-
    (a) In the motor vehicle accident on 25 November 1988 the
    plaintiff sustained injuries to her neck and back.
    (b) The plaintiff sustained an aggravation and/or exacerbation
    of the aforesaid injuries in a subsequent work accident on 22
    July 1991 which gave rise to a "compensable disability" for the
    purposes of the Workers Rehabilitation and Compensation Act,
    1986 (the Workcover Act).
    (c) The plaintiff has been unable to resume employment
    following the work accident and has been in receipt of
    continuing medical treatment.
    (d) By reason of the work accident the plaintiff has been paid
    income maintenance and has had her medical expenses paid
    pursuant to the Workcover Act.
    (e) By Notice dated 14 January 1993 the intervenor seeks to
recover pursuant to Section 54 (7) of the Workcover Act certain
    sums paid to or on behalf of the plaintiff...
    (f) In the action the plaintiff claims from the defendant,
    damages for past and future non- economic losses, damages for
    past and future economic losses, impairment of past and future
    earning capacity, medical expenses incurred and an allowance
    for medical treatment that she may require in the future. 5. The case stated also records that the plaintiff and the defendant dispute the validity of the claim made in the intervener's notice of 14 January 1993. The questions reserved for determination by this Court are -
    (1) With respect to the sums paid or to be paid to or on
    behalf of the plaintiff pursuant to the Workcover Act, what
    impact, if any, should those sums have on the assessment of the
    plaintiff's damages in the action?
    (2) Does any and what liability attach to the defendant with
respect to the Notice dated 14 January 1993? Section 54 of the
    Act was amended in 1992 but it is agreed that the amendments do
    not apply to the present dispute. The relevant parts of the
    section that are applicable to these proceedings are -
    "(1) Subject to subsection (2), no liability attaches to an
    employer in respect of a compensable disability arising from
    employment by that employer except -
    (a) a liability under this Act; or
    ***
    (2) Subsection (1) does not affect a liability arising out of
    the use of a motor vehicle, being a liability against which the
    employer was or ought to have been insured under the law of
    compulsory third-party motor vehicle insurance.
    (3) A court before which an action is brought against an
    employer for non-economic loss arising from a compensable
    disability (being a disability that arises out of the use of a
    motor vehicle and gives rise to a liability of a kind referred
    to in subsection (2)) shall make due allowance for any lump sum
    paid or payable under Division V or VI to the person by or on
    whose behalf the action is brought.
    ... (5) Where -
    (a) compensation is paid or payable under this Act in respect
    of a compensable disability;
    (b) a right of action exists against a person other than the
    employer for damages in respect of the disability, the person
    by whom the compensation is paid or payable is entitled to
    recover from that other person the amount of the compensation
    in accordance with subsection (7).
    (6) Where -
    (a) a compensable disability arises out of the use of a motor
    vehicle;
    (b) the employer was or ought to have been insured against
    liability for the disability under the law of compulsory
    third-party motor vehicle insurance;
    (c) compensation is paid or payable by the Corporation under
    this Act in respect of the disability, the Corporation is
    entitled to recover the amount of the compensation in
    accordance with subsection (7).
    (7) Where -
    (a) compensation is paid or payable to a person ("the injured
    party") under this Act;
    (b) the injured party has received, or is entitled to, damages
    from another person ("the wrongdoer") in pursuance of rights
    arising from the same trauma as gave rise to the rights to
    compensation under this Act;
    (c) the person by whom the compensation is paid or payable
    under this Act ("the claimant") is entitled to recover the
    amount of the compensation by virtue of subsection (5) or (6).
    then the following provisions apply:
    (d) the claimant is entitled to recover the amount of
    compensation paid or payable under this Act from the wrongdoer
    or the injured party but subject to the following
    qualifications:
    (i) no amount may be recovered from the wrongdoer in excess of
    the wrongdoer's unsatisfied liability to the injured party;
    (ii) the claimant must exhaust its rights against the wrongdoer
    before recovering against the injured party;
    and
    (iii) no amount may be recovered from the injured party in
    excess of the amount of the damages received by the injured
    party;
    (e) the claimant shall, on giving notice to a wrongdoer of an
    entitlement to recover compensation under this section, have a
    first charge, to the extent of the entitlement, on damages
    payable by the wrongdoer to the injured party;
    (f) any amount recovered by the claimant against a wrongdoer
    under this subsection shall be deemed to be an amount paid or
    in towards satisfaction of the wrongdoer's liability to the
    injured party;
    (g) an action for the recovery of compensation under this
    subsection -
    (i) may be heard and determined by the Industrial Court; and
    (ii) must be commenced within 3 years after the date of the
trauma referred to in paragraph (b)." 6. The first question in the case stated would appear to ask, in effect, whether the plaintiff's award of damages in the action should be reduced by setting off wholly or in part the compensation that the plaintiff has or may receive by reason of the work accident on 22 July 1991 that (according to the agreed facts) amounted to an aggravation or exacerbation of her original injuries and also gave rise to a compensable disability within the meaning of s.30 of the Act. The plaintiff's action has yet to be tried and it is only possible to answer the question in quite general terms. 7. There has been a series of cases in the High Court and other courts of this country dealing with the effect on the assessment of a plaintiff's damages in a personal injury action of invalid pensions or insurance payments or unemployment or sickness benefits and so on that the plaintiff has received as a result, directly or indirectly, of his injury. See, for example, National Insurance Co. of New Zealand Ltd v. Espagne (1961) 106 CLR 596 and Redding v. Lee (1983) 151 CLR 117. However, there is no need to consider what effect the relevant common law principles would have in the case of worker's compensation payments in this State - cf. Farmer and Co Ltd v. Griffiths
(1990) 63 CLR 603, at 613-4, and the other cases cited in Luntz, Assessment of Damages (3rd ed.), pars.8.8.1, 8.8.2 - because the answer is foreclosed by the legislation under which such payments are made. For instance, s.84 of the Workers Compensation Act 1971 expressly contemplated the case of a worker receiving compensation under that Act for a particular injury and also recovering damages from a third party who was liable to him, usually in negligence, for that injury. The section provided that in the typical case the worker should repay to the employer out of the damages the compensation that he had received from the third party. It is plain that the section envisaged that the court assessing the damages of a worker in such a case would not reduce the damages payable by the third party by an amount equivalent to that compensation, for to do so would in view of the repayment requirements have produced a quite unfair result. (Certainly, when the worker was suing not a third party but his employer, the court would deduct any compensation payments from the damages award that would otherwise have been made before entering judgement in the plaintiff's favour (Kassos v. South Australia (1981) 29 SASR 375), but that is another matter.) There is no reason to think that s.54 of the 1986 Act, which broadly speaking deals with the same subject though in a different way, is intended to have any different effect upon the assessment of a plaintiff's damages. If the Corporation (or exempt employer) pays compensation in the circumstances under consideration, it is given certain rights of recovery pursuant to s.54 which may be enforced, as the case requires, against either the wrongdoer (as the 1971 Act's third party is now called) or the successful "injured party" (alias worker). It is clear, as with s.84 of the 1971 Act, that the scheme propounded by s.54 assumes that the injured party's damages will not be reduced by reason of the compensation payments he has received. 8. Of course, in assessing the plaintiff's damages in this case the trial judge, in light of the agreed facts, will no doubt have regard to the significance of the 1991 aggravation or exacerbation and its effect upon the plaintiff. Questions of causation or remoteness may arise, as they often do in the case of a second accident or incident that is said to have aggravated or exacerbated a plaintiff's injuries. Such issues will fall to be determined in accordance with the usual common law principles and are not directly affected by the provisions of s.54. 9. The fact that a successful plaintiff has already received compensation under the Act by reason of the same cause of action (to use a neutral term) may well have a bearing upon the interest to be included in the judgement pursuant to s.30c of the Supreme Court Act (Batchelor v. Burke (1981) 148 CLR
448), but it will not usually make any difference to the assessment of the damages themselves. 10. I would answer the first question - None. 11. The answer to the second question also turns upon the proper interpretation of s.54. 12. In Paglia v. Trice (1991) 56 SASR 62 the Full Court interpreted the recovery scheme created by s.54 and applied it to the case of a worker, one Paglia, who while travelling to work was injured in an accident involving a motor vehicle driven by Trice. Paglia received payments of compensation from the Corporation under the 1986 Act in respect of disability caused by the accident, and it was possible that he was also entitled to compensation by way of lump sum payment for non-economic loss under s.43 of the Act. Paglia sued Trice for damages and obtained a judgement for $23,511. The Corporation gave notice to both Paglia and Trice claiming a charge on the judgement sum pursuant to s.54(7)(e). The parties could not agree upon the implications of the notice and the matter came before the Full Court on a case stated by the District Court judge. The dispute related to the extent of the Corporation's entitlement. It was held that the wrongdoer (Trice) was liable to indemnify the Corporation to the extent of the Corporation's present and future liability to pay compensation to the injured party (Paglia), subject only to the limit of the wrongdoer's liability under the judgement. This was the effect of the use of the expression "paid or payable" in sub-ss.(5) and (7) of s.54. The Court recognized that estimating the amount of the Corporation's entitlement would sometimes be difficult. It might involve reckoning the present value of any likely future payments of compensation. The difficult situation in which this could place a wrongdoer who needed to satisfy a judgement promptly or who wanted to settle out of court was acknowledged. He might have to institute interpleader proceedings to safeguard his position. 13. Paglia v. Trice was concerned with a single accident or incident that at one stroke, as it were, established the worker's right to compensation against the Corporation and his right to damages against the offending motorist. The present case is more complicated. The accident in 1988 established, if the plaintiff's case is accepted, her right of action for damages against the defendant but it was not work related and it did not of itself entitle her to compensation under the Act. However, her accident injuries were aggravated or exacerbated in 1991 in circumstances that are not described in the statement of agreed facts but which evidently entitled the plaintiff to compensation by reason of a work related compensable disability. The Corporation claims to recover from the defendant all present and future compensation payments made to the plaintiff in those circumstances. 14. Section 30 of the Act provides that a disability is compensable if it arises from employment. A disability is -
    "(a) any physical or mental injury including -
    (i) loss, deterioration or impairment of a limb, organ or part
    of the body, or of a physical, mental or sensory faculty;
    (ii) a disease or
    (iii) disfigurement; ... and includes a secondary disability."
    (s.3) 15. It will be enough, in the case of a secondary disability, if the disability arises out of employment or if the disability arises in the course of employment and the employment contributed to the disability. A secondary disability is defined in s.3 to mean "a disability that is, or results from, the aggravation, acceleration, exacerbation, deterioration or recurrence of a prior disability." 16. Mr Mansfield, for the Corporation, submitted that the Corporation's right of recovery under s.54 in an aggravation case such as the present extends to the whole of the injured party's damages. Without for the moment stopping to analyse the argument, I just observe that, if this is what s.54 means, it could produce some very harsh results. A plaintiff in one of these cases could be getting most of his damages for past economic loss and past pain and suffering and yet find that, by reason of an unexpected future aggravation for which the trial Judge made no allowance at all, he stands to sacrifice the whole of his damages in reimbursing the Corporation in respect of its post-judgement compensation payments. It would be very surprising if the legislature intended to produce such an unfair result. Mr Mansfield's alternative, and in the end preferred, interpretation was that the Corporation is entitled in such a case to recover its compensation payments to the extent to which the injured party's damages were awarded in respect of the period for which the Corporation paid him compensation. The damages thus chargeable could be for economic or non- economic loss or both. 17. I do not think that the language of s.54 can support either of those submissions. Arguably they can be reconciled with the terms of sub-s.(5). Mr Mansfield contrasted the headwords of s.84 of the the 1971 Act ("Where the injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer... to pay damages in respect thereof...") with the possibly less specific or causal condition in par.(b) of sub-s.(5) ("a right of action exists"). The only relationship that the sub-section requires is that any actual or potential damages should be "in respect of" the disability for which compensation is paid. A right of action for damages in respect of the compensable disability exists, it is said, if the disability takes the form of an aggravation of an injury that was the subject of the right of action in question. Be that as it may, sub-s.(5) is qualified by sub-s.(7) and the latter does not give any support to the Corporation's submission. The words "in pursuance of rights arising from the same trauma as gave rise to the rights to compensation under this Act" are words of definition or limitation, qualifying the "damages" the receipt of which, or entitlement to which, by the injured party is made a condition of the claimant's recovery rights under par.(d). This seems to be expressing, though perhaps not as clearly, the circumstances that conditioned the recovery provisions of the 1971 Act - that the one situation gave rise uno ictu to the employer's liability to pay the worker compensation and someone else's liability to pay the worker damages. In this Act "trauma" is not simply a fashionable synonym for "injury" but is defined to mean "an event, or series of events, out of which a compensable disability arises" (s.3). I conclude that the notion that the expression "the same trauma" in sub-s.(7) is conveying is that it will be one and the same event, or series or events, that has given rise to both the right to damages and the right to compensation. Mr Mansfield submitted that it would be enough if one event in a series founded the right to damages and another event in the same series the right to compensation. Notwithstanding the duplex form of the "trauma" definition, I do not think that the respective rights could be said in such a case to arise from the same trauma. 18. Mr Mansfield acknowledged the difficulties that his argument faced if confined to the terms of s.54 itself. However, he sought strong support from the transitional provisions of the First Schedule of the Act which was said to make it quite clear that, so far as what the Schedule called a "transitional disability" was concerned, the legislature has recognized that there can be two successive causes of a compensable disability, one cause entitling the worker to damages and the other entitling him to compensation, and that in those circumstances the claimant's right of subrogation or recovery is to be determined having regard to the amount of compensation payable in respect of the transitional disability and the extent to which the transitional disability is attributable to a trauma that occurred before the 1986 Act came into force. It was put to us that the First Schedule is thus indicative of a general legislative intention with respect to this vexed subject of multiple causes and that s.54 should be interpreted in a way that harmonizes with the Schedule's more explicit terms. 19. Mr Heywood-Smith, for the plaintiff, countered this argument by saying that the Schedule is designed to meet a particular temporary situation, involving both the Corporation and the insurance companies covering employers under the old Act, and that whatever Parliament might have intended by way of a division of financial responsibility in those transitional cases cannot be regarded as useful guidance to the proper interpretation of s.54. I do not think that we are required to explore these competing arguments or to attempt a close comparative analysis of s.54 and the First Schedule. If (as appears to be the case) the legislature dealt in the Schedule with separate events contributing to a particular worker's injuries, such as by aggravating them, and provided for an apportionment of liability among those responsible, then nothing would have been easier than for the legislature to create a similar scheme, using much the same language, in the main body of the Act. The fact that it did not do so, but instead used in s.54 quite different and certainly far from explicit terminology, is a good reason for concluding that it had a different scheme in mind for the permanent provisions of the legislation. In my opinion, comparing s.54 with the First Schedule does not assist the Corporation's case. 20. It is true that, if s.54 is not interpreted in the way for which the Corporation contends, some workers will get a double benefit. The remedy is in Parliament's hands. 21. I would answer the second question - No.

JUDGE2 DUGGAN J I agree that the questions asked in the case stated should be answered in the manner suggested by Cox J. I also agree with the supporting reasons given by Cox J.

JUDGE3 DEBELLE J I agree with the reasons of Cox J and the answers he proposes to the questions in the case stated.