Murrell v Brosna Construction Pty Ltd (in liq) - [2022] WADC 68 (S)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION:   PERTH
CITATION:   MURRELL -v- BROSNA CONSTRUCTION PTY LTD (in liq) [2022] WADC 68 (S)
CORAM:   BOWDEN DCJ
HEARD:   8 SEPTEMBER 2022
DELIVERED          :   21 OCTOBER 2022
FILE NO/S:   CIV 4357 of 2019
BETWEEN:   DWAYNE JOHN MURRELL
Plaintiff

AND

BROSNA CONSTRUCTION PTY LTD (in liq)
Defendant

Catchwords:

Fox v Wood assessment for weekly payments of compensation received - Order 24A offer made 'exclusive of compensation'

Legislation:

Workers' Compensation and Injury Management Act 1981 (WA)

Result:

Judgment for the plaintiff in sum of $557,009.18
Defendant pay the plaintiff's costs agreed or taxed until 21 January 2021
Plaintiff pay the defendant's costs to be agreed or taxed from 21 January 2021

Representation:

Counsel:

Plaintiff	:	Mr P Jarman
Defendant	:	Mr J R Criddle

Solicitors:

Plaintiff	:	Jarman Legal
Defendant	:	SRB Legal

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

Alvarez Cabrera v Piv's Engineering Pty Ltd [2012] WADC 62
Batchelor v Burke (1981) 148 CLR 448
British Transport Commission v Gourley [1956] AC 185
Brown v Churchill [2006] WASCA 17
Fox v Wood (1981) 148 CLR 438
Gosper v Christopherson [1986] HCA 28; (1986) 160 CLR 423
Haines v Bendall (1991) 172 CLR 60
Murrell v Brosna Constructions Pty Ltd (in liq) [2022] WADC 68
Smith v MMG Golden Grove Pty Ltd [2020] WADC 103

BOWDEN DCJ:

On the 4 August 2022 I delivered judgment in this matter following a nine-day civil trial: Murrell v Brosna Constructions Pty Ltd (in liq) [2022] WADC 68 (Murrell) [442].
As requested by the parties I calculated past economic loss without taking into account the wages component of worker's compensation payments as both counsel wished to make submissions in this respect post judgment: Murrell [442].
I assessed the damages awarded to Mr Murrell as follows: Murrell [468]:

General damages

$60,500.00

Past loss of earnings

$144,419.00

Loss of future earning capacity

$272,283.00

Loss of future superannuation

$34,052.00

Special damages

$2,799.79

Future medical expenses

$7,000.00

Past travelling expenses

$1,500.00

Medical expenses, travel, vocational expenses

$19,001.00

Interest on past loss of earnings

$24,696.00

$505,750.79

(Excluding general damages)

less 5% contributory negligence on $505,750.79 (as 5% already deducted on general damages) $480,463.25 + $60,500 = $540,963.25.

The parties have now made submissions in relation to the wages component of past economic loss and the effect of Fox v Wood (1981) 148 CLR 438. The parties also made submissions in respect of interest on special damages and past travelling expenses, interest on past economic loss and an O 24A offer.

Fox v Wood component of past economic loss

The plaintiff's position is that pursuant to Fox v Wood the plaintiff is entitled to have included in damages the amount of income tax to be paid on weekly compensation payments as pursuant to s 92 of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act) the plaintiff is obliged to repay to the insurer the gross amount paid in respect of weekly payments, but damages were assessed on a net basis. The plaintiff calculates the Fox v Wood component is $38,346.60.
The plaintiff accepts that the facts of Fox v Wood were that the plaintiff in that case had paid income tax on the weekly payments he had received but say the rationale of the decision is that a plaintiff should be in no worse position than he would be but for the accident and the fact that the plaintiff has not paid all the tax on the weekly payments he has received is not a bar to Fox v Wood component of damages being awarded because he is legally liable to pay tax on the gross amount of the weekly payments component of damages he received.
The defendant says that the only tax that has been paid in relation to weekly compensation payments included in the damages calculation which has already been paid by Mr Murrell was the $6,150 shown in Mr Murrell's 2018 taxation return.
The defendant says that no further tax has been paid in respect of weekly compensation payments paid to Mr Murrell and there is no basis for any further Fox v Wood claim. The defendant accepts that $6,150 for a Fox v Wood component should be allowed.
Fox v Wood clearly establishes the fundamental principle 'that the tribunal should award the injured party such a sum of money as will put him in the same position as he would have been in if he had not sustained the injuries': British Transport Commission v Gourley [1956] AC 185, 197. It is therefore necessary to award a Fox v Wood component to ensure that this occurs, and I reject the defendant's submission that a Fox v Wood component should be calculated only in respect of the tax that has been paid.
Mr Murrell is liable to the tax department to pay tax on the full amount of the worker's compensation payments that he has received, and accordingly I shall award a Fox v Wood component.
I calculate that component on the basis that Mr Murrell received $135,975 in weekly payments, excluding the redemption sum, calculated at the $131,721 referred to in the memorandum of agreement which was registered (whilst the defendant was not a party to that agreement it seems to me to be the most accurate guide to weekly payments made) plus the $4,250 paid after that agreement was registered (those sums being obtained from the defendant's submissions) making a total of $135,975. $31,000 was paid at $2,500 gross for 12.40 weeks ($738 tax per week equalling $9,151.20). 49.4 weeks at $2,150.00 per week ($591 tax per week equalling $29,195.40) making a combined amount of $38,340.60 for the Fox v Wood component which I allow and that amount should be added to my previous assessment.

Interest on special damages and past travelling expenses

The plaintiff also says that interest should be awarded on the sums awarded for special damages ($2,799.79) and past travelling expenses ($1,500) being $4,299.79 at 3% for 5.77 years equalling $744.29.
The defendant says this is not a matter that counsel was given leave to make submissions on.
Whilst interest was not claimed on those amounts in the plaintiff's amended particulars of damages filed on 16 May 2022, I would allow the sum now claimed by the plaintiff of $528.87.

Interest on past economic loss

The plaintiff says that interest can and should be awarded for that component of past economic loss which includes worker's compensation already paid and says there are there are numerous decisions that support this proposition. The plaintiff refers to Brown v Churchill [2006] WASCA 17 in which McLure JA referred to the period when the applicant was receiving worker's compensation payment and in recalculating the amount of interest awarded interest of 3% for a period which included the period appellant had received worker's compensation payments.
In Alvarez Cabrera v Piv's Engineering Pty Ltd [2012] WADC 62 his Honour Judge Gething acknowledged that from the date of the accident the plaintiff was in receipt of worker's compensation weekly payments and awarded interest on the past economic loss including the period where worker's compensation payment had been received.
Whilst I accept that in those cases interest was paid on the worker's compensation portion of past economic loss it is not apparent from the judgments that the issue of whether interest should be awarded for that component of past economic loss which includes worker's compensation already paid was specifically raised.
The defendant's position is that the decision of Batchelor v Burke (1981) 148 CLR 448 approved in Haines v Bendall (1991) 172 CLR 60 means that interest on past economic loss is not to be awarded to a plaintiff where weekly payments of compensation have been made. These decisions have been followed in this court: Smith v MMG Golden Grove Pty Ltd [2020] WADC 103.
I find the cases referred to by the plaintiff are distinguishable on the basis that the question of interest on the worker's compensation already paid does not seem to have been squarely raised before the court. It has been raised in this case and the authority referred to by the defendant make it clear, and I find, that interest should not be awarded on that portion of past economic loss were weekly payments of compensation have been made.
The plaintiff submits that if I find that interest is not to be awarded on that portion of the weekly payments of compensation that have been made then the amount of interest to be awarded should be calculated on the period that the plaintiff was not paid weekly payments ie: 21 May 2018 to 4 October 2018 (19.4 weeks at $1,367 net being $24,606) and from 4 October 2018 to 4 August 2022 (199 ½ weeks at $435 net being $86,782 net) and the total amount for past economic loss for a period the plaintiff was not paid weekly compensation is they say calculated at $113,301.8 ([sic] the correct figure being $111,388) by 3% by 2.68 years making $9,109.46.
To award interest in this manner fails to recognise that of past economic loss of $144,419, Mr Murrell had been paid $135,975 in weekly payments and to award interest on that amount being money already paid to the plaintiff would involve an element of 'double dipping' by the plaintiff.
The defendant says that interest should be only payable on the net difference between the amount awarded for past loss ($144,419) and the worker's compensation payments ($142,350) being $2,069 plus tax paid on those payments. ($6,150) totalling $8,219 multiplied by 3% for 5.7 years which equates to $1,405.
I accept that the defendant's method of calculating the interest on past economic loss is the appropriate method of calculating such loss.
I therefore calculate interest on past economic loss as follows. Amount awarded in judgment $144,419 less weekly compensation which the plaintiff accepts was paid of $135,975 equals $8,444 plus $6,150 (tax paid) equals $14,594 multiplied by 3% for 5.7 years equals $2,495.57.
Therefore, taking into account the Fox v Wood component and the recalculation of interest on past economic loss would mean I assess the damages awarded to Mr Murrell as follows:

General damages

$60,500.00

Past loss of earnings

$144,419.00

Loss of future earning capacity

$272,283.00

Loss of future superannuation

$34,052.00

Special damages

$2,799.79

Future medical expenses

$7,000.00

Past travelling expenses

$1,500.00

Medical expenses, travel, vocational expenses

$19,001.00

Interest on past loss of earnings

$2,495.57

Fox v Wood component

$38,346.60

Interest on special damages and travel expenses

$744.29

$583,141.25

Excluding general damages

$522,641.25

Less 5% contributory negligence:

$522,641.25 ‑ $26,132.06 =

$496,509.18

Plus general damages

$60,500.00

$557,009.18

Accordingly, the judgment for the plaintiff in the sum of $557,009.18.

Order 24A offer

It is not in dispute that the defendant served an O 24A notice on the plaintiff on 21 January 2021 offering to settle the claim for $400,000 'exclusive of compensation'.
The plaintiff accepts that the relevant question is whether the plaintiff obtained judgment on the claim in an amount not more favourable to him than the terms of the offer so as to entitle the defendant to costs on a party and party basis from the date of the offer.
The plaintiff says that the phrase 'exclusive of compensation' is so ambiguous that it should be construed against the defendant.
They say that the word 'exclusive' could be construed in the following ways:
(a)the O 24A sum should be subject to a deduction of the worker's compensation recovery; and
(b)the O 24A sum would be in addition to the worker's compensation recovery.
Further they say that there is uncertainty as to the value of the worker's compensation payments because it is not clear whether the worker's compensation recovery sum was $172,690.79 (as referred to in an agreement between the insurers Zurich and Alliance), the actual sum of weekly compensation payments made of $166,299.38 or the weekly compensation payments made and further sums that were paid to the plaintiff pursuant to the Act ($166,299.38 plus $32,193.26 plus $5,000).
The plaintiff says that this uncertainty of the value of the offer renders the offer ineffectual.
In any event they say that even if there is certainty about the offer in that 'exclusive of' means in addition to worker's compensation payments then the worker's compensation payments should be added to the sum of $400,000 to calculate the sum offered by the O 24A notice and that $129,325.14 was paid by way of weekly payments and in addition expenses of $16,767.64 were paid and sch II entitlements of $17,806.74 were paid making a total of $163,899.52.
For the purposes of this decision 1 will take the weekly payments figure at its most favourable for the plaintiff of $129,325.14 as referred to in their submissions of 8 September 2022.
The plaintiff says that further sums that have been paid in relation to the worker's compensation claim being a redemption of future weekly payments of $32,193.26 and future medical expenses of $5,000 are not to be taken into account as they are not worker's compensation payments.
In this regard the plaintiff relies on Gosper v Christopherson [1986] HCA 28; (1986) 160 CLR 423 whereby the High Court held that a lump sum redemption could only be paid if there was an agreement between the employer and the employees and a determination by the court. The court held that even if there was a determination by the court of the amount of the redemption an employer was not obliged to make a lump sum payment by way of redemption as the actual making of the payment was at the option of the employer. As there was no liability on an employer to redeem either future medical expenses or weekly payments any redemption amounts could not be considered worker's compensation payments within the scheme of the Workers' Compensation Act 1926 (NSW) (the NSW Act).
The plaintiff says the same reasoning applies in Mr Murrell's case. Therefore, the O 24A offer was $400,000 plus $163,899.52 equalling $563,899.52.
The defendant says that the words 'exclusive of compensation' clearly means exclusive of all worker's compensation payments whether they are weekly payments, lump sum redemptions of any type, expenses paid and sch II entitlements.
The defendant say that the total worker's compensation payments made were $216,351 made up of redemption of future weekly payments of $32,193.26, redemption of future medical expenses $5,000, sch II entitlements $17,806.74, weekly payments made of $142,350, medical expenses of $19,001, less 5% contributory negligence means that the total O 24A offer was $205,533 plus $400,000 being $605,533.
The defendant says as the plaintiff obtained judgement of $557,009.18 the defendant should be ordered to pay costs from the date of the offer.
An O 24A offer is made in the context of settling a common law claim and not a worker's compensation claim. I find there is no ambiguity about the word's 'exclusive of compensation'. The plain meaning of compensation when used in the context of an O 24A offer objectively considered encompasses all monies paid to or for the benefit of the plaintiff pursuant to the worker's compensation claim. That would include weekly payments, medical expenses, sch II entitlements and redemption of future weekly payments and future medical expenses. That means that the amount offered in the O 24A offer is over and above those amounts paid pursuant to the worker's compensation claim. The O 24A offer, I find, is not ambiguous. It has the required certainty about it.
Gosper v Christopherson was dealing with statutory interpretation of the NSW Act. The conclusion that as there was no liability to an employer to redeem either future medical expenses or weekly payments any redemption amount could not be considered worker's compensation payments was reached in the context of the statutory scheme being considered and upon the true construction of s 15(1) of the NSW Act.
Either way, on the plaintiff's calculations or the defendant's calculations, the O 24A offer is more than the amount recovered in the judgment.
The issue of whether redemptions of the weekly payments and medical expenses are worker's compensation payments for the purpose of the Act does not need to be considered because we are dealing with an offer made in the context of a common law claim and not a question of establishing whether payments paid are compensation within the statutory scheme laid down by the Act.
The judgment for the plaintiff is in the sum of $557,009.18 which is below both the defendant's calculation of the O 24A offer ($605,533) and the plaintiff's calculation of ($563,899.52).
The issue of whether redemptions of liability for future weekly payments of $32,193.26 and the redemption of future medical expenses of $5,000 are worker's compensation payments for the purpose of the Act does not need to be considered because even when those amounts are excluded from the calculation of compensation payments, the O 24A offer is still above the judgment sum.
It is not necessary to determine the issue however in deference to the amount of time the parties spent arguing on this particular point I observe that s 67 of the Act provides that with the consent of the worker and the employer, an order can be made under pt XI of the Act that liability for the incapacity is to be redeemed by the payment of a lump sum (s 67(1)(a)) or the worker and employer can agree to the redemption and register a memorandum of that agreement (s 67(1)(b)).
If such an order is made or a memorandum of that agreement registered, there does become a liability on the employer to pay the redemption amount (s 67(7)). In Gosper v Christopherson the court specifically found that the actual making of the lump sum payment by way of a redemption in the amount determined by the court was at the option of the employer. This is fundamentally different from the position under the Act in this State. Therefore, my view would be that monies paid by way of redemptions are payments within the Act. However, as I have said, it is not necessary for me to determine that point.
In accordance with the reasons for this judgment and subject to any further submissions by the parties the orders are as follows:
1.Judgment for the plaintiff against the defendant in the sum of $557,009.18.
2.The defendant pay the plaintiff costs agreed or taxed until 21 January 2021.
3.The plaintiff pay the defendant's costs to be agreed or taxed from 21 January 2021.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

KH
Associate

21 OCTOBER 2022