Milich v The Council of the City of Canterbury (No. 2)
[2012] NSWSC 450
•31 July 2012
Supreme Court
New South Wales
Medium Neutral Citation: Milich v The Council of the City of Canterbury (No. 2) [2012] NSWSC 450 Hearing dates: 30 May 2012 Decision date: 31 July 2012 Jurisdiction: Common Law Before: Davies J Decision: The parties should bring in Short Minutes.
Catchwords: TORTS - negligence - work injury - worker takes proceedings against employer and another person - both defendants found liable - whether employer entitled to indemnity under s 151Z - whether principle in Public Transport Commission v J Murray-More applicable - Plaintiff with compensable and non-compensable injuries - extent of indemnity - employer paid compensation believing all injuries compensable - whether compensation paid should be apportioned between compensable and non-compensable injuries for purposes of indemnity Legislation Cited: Workers Compensation Act 1987 Cases Cited: Cobcroft v Aggcon Pty Ltd [2011] NSWSC 1287
Fox v Wood (1981) 148 CLR 438
Franklins Self Serve Pty Ltd v Wyber [1999] NSWCA 390
I&J Foods Pty Ltd v Bergzam Pty Ltd (Court of Appeal - unreported - 9 April 1997; (1997) 14 NSWCCR 486
J Blackwood & Son v Skilled Engineering [2008] NSWCA 142
Milich v The Council of the City of Canterbury [2012] NSWSC 59
Public Transport Commission of NSW v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336
Williams v Twynam Agricultural Group Pty Ltd [2011] NSWSC 1098Category: Separate question Parties: Branislav (Bill) Milich (Plaintiff)
The Council of the City of Canterbury (First Defendant)
Ready Workforce Pty Ltd (Second Defendant)Representation: M Boulton (Plaintiff)
R Sheldon SC (First Defendant)
P O'Connor (Second Defendant)
Watkins Tapsell (Plaintiff)
DLA Phillips Fox (First Defendant)
Holman Webb Lawyers (Second Defendant)
File Number(s): 2008/315064
Judgment
I published my reasons in this matter on 23 April 2012: Milich v The Council of the City of Canterbury [2012] NSWSC 59.
By reason of my findings that it was only the injuries to the neck/shoulders and upper back area (which I will refer to compendiously as the upper back area) that were attributable to the negligence of the Defendants, it was not possible to reach a final figure for damages to be awarded to the Plaintiff. In particular, it was not possible to come to a final view about the out of pocket expenses or on the component for Fox v Wood (1981) 148 CLR 438.
Further, I noted the indemnity provided by s 151Z(1)(d) Workers Compensation Act 1987 and said that in the circumstances it was not possible to calculate the amount of that indemnity because no attempt had been made to calculate what compensation had been paid in respect of the injuries to the upper back area. I directed that the parties prepare Short Minutes to deal with these matters. However, agreement was not possible and the matter was re-listed for further argument.
At that further hearing I was informed that agreement had been reached that there should be added to the out of pocket expenses the sum of $40,000 and that the amount of the Fox v Wood component was $2,856. The parties were not agreed on whether an indemnity should be ordered although there was agreement on some but not all of the components of such an indemnity, should it be granted.
Two matters associated with the indemnity under s 151Z were argued. First, in circumstances where the worker had taken proceedings against both his employer and a third party, and it had been determined that both were negligent, was an indemnity available to the employer under s 151Z?
Secondly, if an indemnity was available, what amounts were to be included in that indemnity? In dealing with the second matter the parties asked only that I should determine matters of principle and not descend into arithmetic. The parties agreed that they would perform the calculations based on my determinations of the matters of principle.
Is the employer entitled to an indemnity?
The Plaintiff submitted that what was said in Public Transport Commission of NSW v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 341 applied here to deny an indemnity to the employer. This was because, where an employer was also negligent, the only circumstances where an indemnity was provided to the employer were those found in s 151Z(2)(e): I&J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 and J Blackwood & Son v Skilled Engineering [2008] NSWCA 142 at [143]. The employer here could not bring itself within subs (2)(e) because the worker had taken proceedings against the employer. I&J Foods and J Blackwood & Son were both cases where the worker had not taken proceedings against the employer. What was said in those cases concerning J Murray-More, namely "that the limitation declared in [that case] should be deemed out of existence so as to permit partial indemnity", was confined to such a situation: I&J Foods at 496.
The employer submitted that both Hoeben J (as his Honour then was) in Williams v Twynam Agricultural Group Pty Ltd [2011] NSWSC 1098 and Fullerton J in Cobcroft v Aggcon Pty Ltd [2011] NSWSC 1287 held that an indemnity was available in a situation where the employer had been sued and found liable. The employer also pointed to the scheme established by s 151Z, and to sub-s (1)(a) in particular, and submitted that an indemnity was available.regardless of whether the employer was sued by the worker.
In my opinion an indemnity is available to the employer notwithstanding that it has been sued and found to be negligent. A number of matters suggest that this is the correct understanding of s 151Z and of both I&J Foods and J Blackwood & Son.
First, one can discern a number of indications in Pt 5 of the Workers Compensation Act (dealing with common law remedies) that the worker is not entitled to double dip - s 151A(1), s 151Z(1)(a), (b), (c), (e) and (e)(i).
Secondly, in balancing matters between the employer and the non-employer wrongdoer Campbell JA (with whom Beazley JA and seemingly Giles JA agreed) said this about s 151Z in J Blackwood & Son:
[33] Section 151Z(2) deals with the consequences of an employer tortfeasor never ending up paying, by way of damages, more than its proportionate share of the responsibility for the worker's injuries, multiplied by the total damages that the worker is entitled to receive under the modified damages regime established by the Act. The consequences with which it is concerned are on the liability of a non-employer wrongdoer to pay damages to an injured worker, and on the employer's right under section 151Z(1)(d) to obtain indemnity for workers compensation payments it has made to the worker.
Thirdly, when discussing s 151Z(1)(d) before considering how s 151Z(2)(e) modified that prima facie situation Campbell JA said this:
[44] It is the prima facie effect of section 151Z(1)(d) that an employer who has paid compensation to a worker is entitled to recover the amount of that compensation from any non-employer wrongdoer whose wrong has caused the injury that led to the payment of the compensation, provided only that the non-employer wrongdoer does not end up paying more than the amount of the damages which the non-employer wrongdoer would have had to pay if sued for that wrong. Further, that prima facie right of the employer under section 151Z(1)(d) is one that the employer has whether or not the employer is itself a tortfeasor who has caused the injury to the worker with respect to which the compensation has been paid. (emphasis added)
This is a strong indication that, contrary to the Plaintiff's submission, the decision in J Blackwood & Son was not directed only to the situation where a worker had not taken proceedings against the employer.
Fourthly, the decisions in Williams v Twynam and Cobcroft v Aggcon are clear indications that the reasoning in I&J Foods was not confined to the position where a worker has not taken proceedings against the employer. I consider that I ought to follow those decisions unless I consider them to be plainly wrong. I do not consider those decisions to be plainly wrong and, further, they seem to me to accord with the analysis provided by Campbell JA in J Blackwood & Son although that decision does not appear to have been cited to either Hoeben J or Fullerton J.
Accordingly, notwithstanding that the Plaintiff sued the employer and I found a breach of duty on the part of the employer, the employer is entitled to the indemnity referred to in s 151Z(1)(d).
What in principle is recoverable under the indemnity?
It is necessary to summarise the findings I made in my principal judgment:
(a) the injuries to the Plaintiff's lumbar spine were not caused by his employment nor his hiring by the Council (para [92]);
(b) the injuries to the upper back area were caused by the work the Plaintiff undertook for the Council, for which both Defendants were liable (paras [102], [106] and [129]);
(c) the Plaintiff's degree of permanent impairment occasioned by his employment with the Second Defendant was 11% (5% to the cervical spine, 4% for the right upper extremity and 2% for the left upper extremity) (para [133]) - I note a typographical error in my earlier judgment where 6% appears in respect of the cervical spine, and an error in the date of the certificate which should read 4 June 2007;
(d) the Plaintiff was incapacitated for work by reason of work related (ie upper back area) injuries to 30 June 2006 (para [152]);
(e) it was not the Plaintiff's work related injuries that prevented him continuing with the milk run (paras [151]-[152]).
The parties agree that if an indemnity is to be ordered $14,000 of the lump sum of $20,000 ordered pursuant to s 66 of the Act should be included. That is derived from 11% of the whole person impairment assessed by Dr Bye relating to the upper back area. Each 1% up to and including 10% is worth $1250 and each 1% above that is worthy $1500.
The parties agree that the relevant figure for pain and suffering pursuant to s 67 is $12,500 (being 25% of $50,000) but do not agree on whether, and if so how much of, that figure should form part of the indemnity. The employer submits that the appropriate figure is $9,166.67 (11/15 x $12,500). The Plaintiff submits that it cannot be apportioned because it relates to both compensable and non-compensable injuries and should not, therefore, be included in any indemnity.
In my opinion the employer's submissions should be accepted. Dr Bye's assessment can be used analogously in relation to the pain and suffering component. The impairment he assessed would also reflect itself in the pain and suffering for which the Plaintiff was compensated under s 67. The amount of $9,166.67 should be included in the indemnity.
Weekly payments of compensation were made for two periods. The first was 21 April 2005 to 2 July 2006. The parties are agreed that those payments should be included in any indemnity. The second period was from 1 September 2007 to 7 April 2012. The Plaintiff says this period should not be included. The employer says the payments for this period should be apportioned between the upper back area and the lower back.
The Plaintiff relies upon my finding in paragraph 14(e) above to argue that the only economic loss shown to have resulted from the work related injuries ceased on 30 June 2006. The Plaintiff says that payments made after that time should not be allowed because they cannot be solely related to the injuries to the upper back area.
The employer submits that an apportionment should be made of the second period of compensation payments based on the relative incapacity caused on the one hand by the upper back area and on the other by the lower back area. The employer says that if this were not done it would offend the general principle against double compensation which is applied in the workers compensation/damages field - see Mason P in Franklins Self Serve Pty Ltd v Wyber [1999] NSWCA 390 at [29]. The employer points also to matters during this period that relate only to the upper back area such as the operations the Plaintiff underwent on his shoulders.
In my opinion, and except for some specific periods, the weekly compensation payments for the second period should not be included in the indemnity. In my earlier judgment I said this at [151]:
The fact that the Plaintiff was able to work on the milk run doing moderately heavy bending and lifting work on a repetitive basis, and the fact that he only ceased that work for reasons associated with his lumbar spine, strongly points to the fact that the Plaintiff has been fit for work at least of that intensity since he began it in the middle of 2006. Further support is derived for this proposition from the fact that until 3 or 4 weeks before the Plaintiff ceased that work he was intending to buy the milk run in one form or another.
In addition I held that the Plaintiff should receive a cushion only in respect of future wage loss - see at [155].
The second joint report of Dr Bodel and Dr Machart of 5 April 2011 regarded him as being fit for modified duties "purely from the point of view of his shoulder injuries".
The payment of weekly compensation is in respect of the inability to work. Where the reason for the inability to work is not the compensable injury but some other injury, as I have found, it is not appropriate to apportion the weekly compensation payments simply because the Plaintiff has some ongoing problems from the compensable injuries. Those ongoing problems from the compensable injuries are reflected in the apportionment of s 66 and s 67 payments which are assessed largely independently of working capacity. To apportion the weekly payments would be inconsistent with my findings of the cause of the Plaintiff's inability to work.
Nevertheless, the medical history shows that, regardless of the lower back injury, there were some periods where the Plaintiff was unable to work because of the upper back injuries. These periods relate to the operations the Plaintiff underwent on his shoulders on 14 April 2009 and 16 June 2009. There were some reports in evidence from Professor George Murrell who performed the operations. The reports provide very little assistance in determining how long after each operation the Plaintiff might have been unable to work as a result of the operation. A report of 6 July 2009 referred to the Plaintiff having physiotherapy three times per week and hydrotherapy. Other reports (eg Dr Vasic, Pain Management Specialist, 30 September 2009) identify the hydrotherapy as being in respect of the lower back and sciatic problems. The three sessions of physiotherapy per week point to some extent to an incapacity for work which flowed from the operations.
Bearing in mind the closeness in time of the two operations I consider that the Plaintiff would have been unfit for work by reason of the shoulder problems in the period between the operations and probably for about six weeks after the second operation. Accordingly, weekly compensation payments for the period 13 April 2009 to 28 July 2009 should form part of the indemnity.
In relation to treatment expenses, the Plaintiff submits that only those expenses that are clearly referable to the upper back area should be included in the indemnity. If those treatments include matters for the lower back they should not form part of the indemnity. The employer has tendered a colour coded chart identifying in yellow treatments that relate to the upper back area only, in red, treatments that relate to the lower back and leg area only, and in blue, treatments that relate to both areas. The employer submits that for the blue items they should be apportioned 50% to each of the two areas. The Plaintiff disputes the accuracy of the colour-coded chart. However, the parties confirmed when discussing this aspect that I am only to make findings in principle. Accordingly, the chart's accuracy is not relevant to my consideration.
In my opinion the employer's submission should be accepted. It is appropriate to apportion the treatments coded blue. Treatment expenses must be considered differently from weekly payments and more analogously with the pain and suffering lump sum award, although in relation to that lump sum there was a logical arithmetical basis for the apportionment, namely, 11/15ths of the whole sum based on Dr Bye's assessment. The issue with weekly payments was the cause of the incapacity for work. I made specific findings in that regard. By comparison, if the Plaintiff consults a doctor or a paramedic with regard to both areas of his back it cannot be said that the cause or occasion for the consultation is one or the other. Applying 50% may be a broad-brush approach but it is impossible, at this remove, to ascertain how much time was taken by the service provider in respect of each injury.
Conclusion
The parties should bring in Short Minutes to give effect to my reasons in this judgment and my earlier one. I will hear the parties on costs if that issue cannot be resolved.
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Decision last updated: 31 July 2012
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