Kang v Coles Supermarkets Australia Pty Ltd (Ruling)

[2024] VCC 1410

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMON LAW DIVISION

 Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No. CI-22-03540

GURPREET KANG	Plaintiff
v
COLES SUPERMARKETS AUSTRALIA PTY LTD (ACN 004 189 708)	Defendant
v
LINFOX AUSTRALIA PTY LTD	Third Party

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JUDGE:	HIS HONOUR JUDGE FRAATZ
WHERE HELD:	Melbourne
DATE OF HEARING:	14 August 2024
DATE OF JUDGMENT:	16 September 2024
CASE MAY BE CITED AS:	Kang v Coles Supermarkets Australia Pty Ltd (Ruling)
MEDIUM NEUTRAL CITATION:	[2024] VCC 1410

RULING
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Subject:PRACTICE AND PROCEDURE

Catchwords: Application to strike out third party notice statement of claim – where plaintiff did not make an election in writing under s 45 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) to institute a proceeding against the Third Party for damages for non-economic loss – application for summary dismissal of contribution proceedings where third party not liable in respect of same damage

Legislation Cited:      Safety, Rehabilitation and Compensation Act 1988 (Cth); Wrongs Act1958; Civil Procedure Act2010

Cases Cited:Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297; Austral Pacific Group Ltd v Airservices Australia (2000) 203 CLR 136; Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction v Blanalko Pty Ltd (2013) 42 VR 27

Judgment:                  Limited leave granted to Coles to file and serve an amended third party notice statement of claim

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	No appearance
For the Defendant	Mr D Bongiorno	Gilchrist Connell
For the Third Party	Mr M Hooper SC with Mr T Storey	HWL Ebsworth

HIS HONOUR:

1In August 2015, the defendant, Coles Supermarkets Australia Pty Ltd and the third party, Linfox Australia Pty Ltd, entered into an agreement for Linfox to provide transportation services for deliveries to Coles stores located in Victoria (“Agreement”). 

2On 13 December 2018, the plaintiff, Mr Gurpreet Kang, injured his lower back in a fall in the course of his employment as a truck driver with Linfox (“incident”).  The incident occurred at the loading dock of Coles’ Ocean Grove store.

3Following his injury, Mr Kang lodged a no-fault benefits claim for worker’s compensation with Linfox, and was paid benefits under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“SRC Act”).

4On 21 April 2021, Linfox reached agreement with Mr Kang to finalise his employment, and settle all of his employment entitlements (with the exception of any entitlements under the SRC Act).[1]

[1]        Exhibit NJN-3 to the affidavit of Nicole Joanne Norris sworn 13 August 2024

5Mr Kang issued this proceeding against Coles on 29 August 2022, alleging that the incident was caused by the negligence or breach of statutory duty of Coles.

6On 7 August 2023, Coles issued a third party notice seeking:

(a)   an indemnity in respect of any amount which Mr Kang may recover against Coles; or

(b) contribution pursuant to s23B of the Wrongs Act 1958.

7By Summons filed 10 July 2024, Linfox, seeks the following order:

“The statement of claim of the defendant filed 7 August 2023 be struck out pursuant to rule 23.02, or alternatively, that it be summarily dismissed pursuant to rule 22.24(2) or s29 [sic] of the Civil Procedure Act 2010 (Vic), or the inherent jurisdiction of the Court, on the ground that the claim has no real prospect of success.”[2]

[2]Paragraph [1]

8Linfox relies on the affidavit of Dylan Michael Younane, solicitor for Linfox, sworn 11 July 2024 and its exhibits.  At paragraph 7, Mr Younane deposed on instructions that:

“… The plaintiff did not make an election in writing under s 45 of the SRC Act to institute a proceeding against the Third Party for damages for non-economic loss.”

9Coles relies on the affidavits of Nicole Joanne Norris, solicitor for Coles, sworn 6 and 13 August 2024. Ms Norris deposed that Coles is unable to say whether any election has or has not been made under s 45 of the SRC Act.

Background

10It is convenient to set out in summary form Coles’ allegations in its third party notice:

(a)   by reason of the express terms of the Agreement and Linfox’s obligations to ensure compliance with work health and safety laws, Linfox, as Mr Kang’s employer, owed to him:

(i)a duty of care to take reasonable care to ensure his safety while he was acting in the course of his employment; and

(ii)a statutory duty to comply with the provisions of the Occupational Health and Safety Act 2004 (Vic) and the Occupational Health and Safety Regulations 2017;

(b)   If Mr Kang suffered injury, loss or damage as a result of the incident, and if such loss and damage was caused by the negligence and/or breach of duty of Coles, as alleged in his statement of claim, then the loss and damage was caused by:

(i)the negligence of Linfox; and/or

(ii)Linfox’s breach of the Agreement; and/or

(iii)Linfox’s breach of statutory duty.

11Linfox seeks summary dismissal of the claims against it on the basis that:

(a) the elements of a cause of action by Coles against Linfox for breach of contract are not properly pleaded; and any claim for a contractual indemnity would have no prospect of success by reason of s 24AAA of the Wrongs Act; and

(b) by operation of s44 of the SRC Act, Mr Kang has no cause of action against Linfox, and as a result Linfox cannot be a “person liable in respect of the same damage” under s 23B(1) of the Wrongs Act.  Accordingly, Coles is not entitled to recover contribution from it.

12During the course of the hearing Linfox agreed it was appropriate that Coles be granted leave to file an amended statement of claim addressing issues with its current pleadings in relation to the claim for breach of contract, and that the question of the proper interpretation of s 24AAA of the Wrongs Act is a matter for trial. 

13The issue for determination is Linfox’s plea in relation to the SRC Act. In substance, Linfox submitted that the failure of Mr Kang to elect in writing to pursue Linfox for common law damages under s 45 of the SRC Act means that:

(a)   he has no cause of action against Linfox;

(b) accordingly, the third party is not “liable in respect of the same damage” within the meaning of s 23B of the Wrongs Act; and

(c)   the claim for contribution should be summarily dismissed.

The statutory framework

14Section 23B of the Wrongs Act states:

“(1)Subject to the following provisions of this section, a person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage (whether jointly with the first-mentioned person or otherwise).”

15It is not in dispute that the SRC Act applies to Mr Kang’s employment.

16The “election” is pursuant to s 45 of the SRC Act.

17Sections 44 and 45 of the SRC Act relevantly state:

44(1) Subject to section 45, an action or other proceeding for damages does not lie against the Commonwealth, a Commonwealth authority, a licensed corporation or an employee [here, Linfox] in respect of:

(a)an injury sustained by an employee in the course of his or her employment, being an injury in respect of which [Linfox] would, but for this subsection, be liable (whether vicariously or otherwise) for damages;…

…

45(1) Where:

(a) compensation is payable under section 24, 25 or 27 in respect of an injury to an employee; and

(b) [Linfox] would, but for subsection 44(1), be liable for damages for any non - economic loss suffered by the employee as a result of the injury;

the employee may, at any time before an amount of compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against [Linfox] for damages for that non - economic loss.

(2) Where an employee makes an election:

(a) subsection 44(1) does not apply in relation to an action or other proceeding subsequently instituted by the employee against [Linfox] for damages for the non - economic loss to which the election relates; and

(b) compensation is not payable after the date of the election under section 24, 25 or 27 in respect of the injury.

(3) An election is irrevocable.

(4) In any action or proceeding instituted as a result of an election made by an employee, the court shall not award the employee damages of an amount exceeding $110,000 for any non-economic loss suffered by the employee.”

(emphasis added)

18I respectfully adopt Toohey J’s explanation of the effect of the relevant provisions of the SRC Act in Georgiadis v Australian and Overseas Telecommunications Corporation:[3]

“In lieu of an action for damages, the Act introduced a scheme of compensation providing weekly payments for incapacity (s. 19) and, in relation to permanent impairment, lump sums (s. 24), interim payments (s. 25) and certain additional sums for non-economic loss (s. 27). 

Where compensation is payable for permanent impairment and but for s. 44(1) there would be liability for non-economic loss, an employee may elect to institute an action against the Commonwealth for damages for that non-economic loss rather than be compensated pursuant to the statutory scheme. The election is irrevocable. Section 44(1) does not then apply in relation to that action;… .”[4]

[3] (1994) 179 CLR 297

[4] (Ibid) at 317

19In Austral Pacific Group Ltd v Airservices Australia,[5] the worker commenced a proceeding for damages against the appellant, Austral Pacific, in respect of injuries he sustained on 26 February 1994 at Cairns airport while operating certain equipment manufactured by it.  Austral Pacific filed a third party notice against the employer-respondent, Airservices, seeking contribution from it.  The High Court confirmed the strike out of the third party notice by the Queensland Court of Appeal on the basis that Airservices at no time has been a tortfeasor who would, if sued by the worker, have been liable as a joint tortfeasor in respect of the same damage as Austral Pacific.

[5] (2000) 203 CLR 136 (“Austral”)

20Gleeson CJ, Gummow and Hayne JJ held that s 44 of the SRC Act “den[ies] from the outset the existence of a cause of action” subject to the operation of s 45(2).[6] The effect of s 45(2) of the SRC Act is that a plaintiff’s cause of action against a Commonwealth employer in relation to injuries sustained in his employment is extinguished and remains so until he makes the election to institute an action against the Commonwealth or a Commonwealth authority:

“… Until the employee makes the election and subsequently institutes the action against the Commonwealth or the Commonwealth authority, however, there is not and has never been a time when the Commonwealth or the Commonwealth authority could be sued for damages in respect of the injury sustained by the employee… .”[7]

[6]        (Ibid) at 145, paragraph [21]

[7]        (Ibid) at 160, paragraph [68]

21Accordingly, no claim lies against Linfox where Mr Kang has not made an election to sue his employer and subsequently instituted an action.

22The application falls for determination by reference to whether Mr Kang:

(a) made an election in writing under s 45 of the SRC Act; and

(b)   has issued a claim against Linfox

in order to overcome the effect of ss 44 and 45(2).

Principles

23In an application of this type under rule 23.01 or s 62 of the Civil Procedure Act 2010, the principles are well known and not in dispute.

24In Lysaght BuildingBuilding Solutions Pty Ltd v Blanalko Pty Ltd,[8] the Court of Appeal stated:

“Upon the present state of authority:

(a)the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;

(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;

(c)it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;

(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.”[9]

[8] (2013) 42 VR 27

[9] (Ibid) at 40, paragraph [35]

25Coles must show its claim for contribution has a ‘real’ as opposed to a ‘fanciful’ chance of success.  Although the power to terminate proceedings summarily should be exercised with caution, it may be exercised where the pleadings fail to disclose a reasonable cause of action.

Findings

26The evidence discloses there was no election in writing under the SRC Act and proceedings were not issued by Mr Kang against Linfox.

27The High Court authority of Austral is clear, including its application in the context of a contribution notice.

28The uncontested evidence of Linfox’s solicitor is that Mr Kang did not make a formal election in writing under s 45.

29In substance, Coles’ submissions extended to the following propositions:

(a)   by signing the settlement agreement dated 21 April 2021,[10] Mr Kang elected in writing by implication to make a common law claim against Linfox;

(b) because there was a liability to pay damages, and damages were in fact paid by Linfox under the settlement agreement in respect of the incident, s 23B of the Wrongs Act is engaged.

[10]        Exhibit NJN-3

30I reject these submissions. There is no clear and explicit election in writing. The terms of the settlement agreement do not refer to s 45 of the SRC Act. Further, the terms are inconsistent with any implied election: any election in writing under s 45 has the necessary consequence that compensation under ss 24, 25 or 27 in respect of the injury is not payable after the date of the election,[11] but the settlement agreement purports not to resolve entitlements under the SRC Act.[12] 

[11]Section 45(2)(b) of the SRC Act.

[12]See recital “D” and clauses 1.2 and 7

31It is by no means clear whether the payment of $285,000 under the settlement agreement is in respect of a common law damages claim against Linfox. The reference to a “non-economic loss payment” in clause 1.1(a), and the release in clauses 1.2 (b) and 7, appear to support Coles’ submission that this might be so, at least in part. Some doubt, however, attends the proposition that the settlement is evidence of a “liability” within the contemplation of s 23B of the Wrongs Act. Recital C and clause 9 are to the effect that Linfox denies liability, and that nothing in the settlement agreement constitutes an admission of liability. 

32It is not necessary to make a finding either way, because I accept Linfox’s submission that the settlement agreement does not affect the operation of s44 of the SRC Act.

33I find that for the purposes of s 23B of the Wrongs Act, Linfox is not a “person liable in respect of the same damage”. 

34All members of the High Court[13] in Austral held that no contribution claim could succeed against the respondent employer, Airservices, where no election had been made and the worker had not sued the employer.  Austral is on all fours with the present proceeding.

[13]Gleeson CJ, Gummow and Hayne JJ at146 at 148-9, paragraphs [24], [32], [33]; McHugh J at 160-1 paragraphs [67]-[69]; Callinan J at 170, paragraphs [109]-[111]

35As Callinan J put it:

“In this case an event essential to the creation of a liability in the respondent Commonwealth Authority has simply not happened. … .

The circumstances alone of the plaintiff's injuries in February 1994 did not give rise to a right of action against the respondent. It is only those circumstances together with the making of an election in compliance with s 45 of the Act that would do so. In Georgiadis v Australian and Overseas Telecommunications Corporation Mason CJ, Deane and Gaudron JJ said that s 44 puts an end to a cause of action against the Commonwealth, or its agencies, and that it is inaccurate to describe s 44 as a provision which modifies the action of Commonwealth employees against Commonwealth employers. Earlier, I contrasted other introductory language which might have been used such as "an employee may either claim compensation or sue for damages" with the unequivocal words of s 44, ‘an action … does not lie’.

The result is somewhat anomalous and perhaps unintended. It seems unjust that although the Commonwealth or one of its Authorities may have been negligent and responsible in some measure for an employee's injuries, it may escape liability for such damages simply because an employee has chosen to sue a joint tortfeasor only.”[14]

(Footnote omitted.)

[14]Austral at 170

36Mr Kang has not issued a proceeding or claim for damages against Linfox.  Applying Austral, this alone is sufficient to dispose of the application in favour of the third party.

37Section 45(2) of the SRC Act means that the cause of action remains extinguished until Mr Kang institutes an action after having made an election. Section 45(2) states that, where an election is made, s 44(1) “does not apply in relation to an action or other proceeding subsequently instituted by the employee” against the employer. I accept Linfox’s submission that even a written election is insufficient, as the extinguishment effected by s 44(1) applies until Mr Kang subsequently institutes his action.

38Mr Kang’s claim for common law damages against Linfox has been “annihilated”.[15] Accordingly, I find that Linfox is not liable in respect of the same damage the subject of this proceeding, and s 23B is not engaged.

[15]        Austral at 146

39The claim for contribution has no real prospect of success.  The pleadings fail to disclose a reasonable cause of action, which cannot be cured by amendment. 

40Accordingly, the statement of claim cannot stand. Leave is granted to Coles to file and serve an amended third party notice statement of claim in relation to the contractual claim against Linfox pursuant to the Agreement; and refused in relation to the plea seeking to invoke a claim for contribution under s 23B of the Wrongs Act.

41I will hear the parties as to the form of final orders, and as to costs.

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