Northern Sydney Local Health District v Amaca Pty Ltd (under NSW administered winding up)

Case •

[2017] NSWCA 251

•

10 October 2017

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

  • Summary available
Medium Neutral Citation: Northern Sydney Local Health District v Amaca Pty Ltd (under NSW administered winding up) [2017] NSWCA 251
Hearing dates:22 September 2017
Date of orders: 22 September 2017
Decision date: 10 October 2017
Before: McColl JA at [1];
Basten JA at [41];
Sackville AJA at [84]
Decision:

(1)   Appeal dismissed.

 

(2)   Order that the Appellants pay the costs of the first respondent.

 (3)   No order as to the costs of the second respondent.
Catchwords:

DUST DISEASES – damages – apportionment between joint tortfeasors – Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5 – injured worker previously received statutory workers’ compensation payment – insurer entitled to first charge on recovered damages under Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 207B – whether primary tortfeasor entitled to recover contributions from joint tortfeasors in circumstances where insurer entered into agreement with injured worker to pay worker 20% of amount recovered from primary tortfeasor

 

WORDS AND PHRASES – “double compensation” – whether agreement between injured worker and insurer whereby insurer pays worker 20% of damages recovered from tortfeasor constitutes double compensation in circumstances where worker had received statutory compensation payment

WORKERS COMPENSATION – whether agreement that insurer pay worker 20% of recovered damages valid in circumstances where worker had received statutory compensation payment – whether insurer permitted to waive its right to enforce statutory charge on recovered damages under Workers’ Compensation and Rehabilitation Act 2003 (Qld), s 207B
Legislation Cited: Dust Diseases Tribunal Act 1989 (NSW), s 32
Dust Diseases Tribunal Regulation 2013 (NSW), Pt 4, Div 5
Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5
Workers Compensation Act 1926 (NSW), s 16
Workers’ Compensation and Rehabilitation Act 2003 (Qld), ss 128E, 207A, 207B; Ch 3A
Cases Cited: Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120
Batchelor v Burke (1981) 148 CLR 448; [1981] HCA 30
Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66
Bitumen & Oil Refineries (Australia) Ltd v Commissioner for Government Transport (1955) 92 CLR 200; [1955] HCA 1
Boncristiano v Lohmann [1998] 4 VR 82
Dionisatos v Acrow Formwork & Scaffolding Pty Ltd (2015) 91 NSWLR 34; [2015] NSWCA 281
Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15
Jameson v Central Electricity Generating Board [1998] QB 323
Jameson v Central Electricity Generating Board [2000] 1 AC 455
Manser v Spry (1994) 181 CLR 428; [1994] HCA 50
National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569; [1961] HCA 15
Parry v Cleaver [1970] AC 1
Redding v Lee (1983) 151 CLR 117; [1983] HCA 16
SAS Trustee Corp v Budd [2005] NSWCA 366; (2005) 3 DDCR 382
Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357
United Airlines Inc v Sercel Australia Pty Ltd [2012] NSWCA 24; 260 FLR 37
WorkCover Queensland v Amaca Pty Ltd (2010) 241 CLR 420; [2010] HCA 34
WorkCover Queensland v Seltsam Pty Ltd (2001) 53 NSWLR 518; [2001] NSWCA 457
Category:Principal judgment
Parties: Northern Sydney Local Health District (First Appellant)
Hunter and New England Local Health District (Second Appellant)
Amaca Pty Ltd (First Respondent)
WorkCover Queensland (Second Respondent)
Representation:

Counsel:
D Miller SC with M J Smith (Appellants)
J Sheller (First Respondent)
R Cavanagh SC (Second Respondent)

  Solicitors:
Moray & Agnew Lawyers (Appellants)
Holman Webb Lawyers (First Respondent)
BT Lawyers (Second Respondent)
File Number(s):2017/146501
 Decision under appeal 
Court or tribunal:
Dust Diseases Tribunal of New South Wales
Jurisdiction:
Civil
Citation:
[2017] NSWDDT 1
Date of Decision:
16 March 2017
Before:
Kearns J
File Number(s):
DDT232/2014/CC1

Judgment

  1. McCOLL JA: This is an appeal from a decision of Kearns J of the Dust Diseases Tribunal of New South Wales (Tribunal) in which his Honour found the appellants, Northern Sydney Local Health District (Northern Health) and Hunter New England Local Health District (Hunter Health), liable to contribute $100,350.00 to an amount paid by the first respondent, Amaca Pty Limited (formerly James Hardie & Co Pty Ltd) (Amaca), to the plaintiff, Ronald Dargan, in respect of Amaca’s liability for him contracting mesothelioma by reason of his exposure to asbestos in the course of his employment. [1]

    1. (re Dargan) Amaca Pty Limited v Northern Sydney Area Health Service & Ors [2017] NSWDDT 1.

  2. On 22 September 2017 the Court made orders dismissing the appeal, ordering Northern Health and Hunter Health to pay Amaca’s costs and making no order as to the costs of the second respondent, WorkCover Queensland (WorkCover).

  3. These are my reasons for joining in those orders. I also agree with the reasons of Basten JA and Sackville AJA.

Factual background

  1. Mr Dargan was exposed to asbestos in the course of his employment at Royal North Shore Hospital (RNS), Hornsby Hospital, Newcastle Mater Hospital (NMH), and Princess Alexandra Hospital. Each exposure caused or materially contributed to his contraction of mesothelioma, with which he was diagnosed in April 2014.

  2. The Princess Alexandra Hospital is in Queensland, whilst the other three hospitals are in New South Wales. WorkCover is responsible for the liability of Princess Alexandra Hospital. Northern Health was responsible for the liabilities of RNS and Hornsby Hospital, and Hunter Health was responsible for the liabilities of NMH. [2]

    2.    Primary judgment (at [1], [8]).

  3. The asbestos to which Mr Dargan was exposed was an Amaca product.

  4. In May 2014, Mr Dargan applied for statutory benefits under the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (WCR Act) in respect of his injury. In June 2014, WorkCover accepted the claim and paid Mr Dargan $627,407. Section 207B of the WCR Act applied to those benefits.

  5. Mr Dargan and WorkCover reached an agreement (Agreement), which included the following terms (as set out in the parties’ Statement of Agreed Facts (SOAF)):

“5 Prior to commencing the proceedings the Deceased and WorkCover agreed (the ‘Agreement’) that:

(a) The Deceased would commence proceedings against Amaca Pty Limited (‘Amaca’) in the Dust Diseases Tribunal (the ‘DDT Proceedings’) naming only Amaca as a defendant;

(b) Regardless of the provisions of s 207B of the 2003 Act, WorkCover Queensland would permit the Deceased to retain:

(i) all of the statutory benefits already paid to the Deceased (being $627,407.00), and

(ii) 20% of the proceeds of the DDT Proceedings, if that sum was equal to or less than $627,407.00 (being the quantum of the statutory benefits payment); and, in addition to that amount,

(iii) The full amount of the proceeds of the DDT Proceedings in excess of $627,407.00;

(c) WorkCover Queensland would indemnify the Deceased in respect of any adverse costs orders made in the DDT Proceedings.” [Emphasis in original.]

  1. The precise provenance of the rendition of the Agreement which appeared in the SOAF is not apparent. However it appears to emerge from the following correspondence which formed part of the appellants’ tender bundle below.

  2. On 30 June 2014 Mr Dargan’s solicitors wrote to WorkCover’s solicitors advising that his application to WorkCover in relation to his mesothelioma had been accepted and that he had been awarded $627,407. They also advised that he was interested in pursuing common law proceedings against Amaca “in accordance with WorkCover’s usual approach to reduce its statutory refund to 80% in respect of the damages he may recover”. The letter asked whether WorkCover “agrees to proceed in the usual way in terms of WorkCover granting Mr Dargan an indemnity in respect of the proceedings … and allowing him to retain 20% of the damages if the recovery is less than $627,407.00, as we expect will be the case.”

  3. In response, by letter dated 2 July 2014, WorkCover’s solicitors wrote to Mr Dargan’s solicitors, agreeing to Mr Dargan pursuing his common law claim against Amaca on terms which included:

“If our client approves a settlement of the claim, our client will reduce its statutory refund under Section 207B to a figure representing 80% of the agreed settlement sum, exclusive of any express allowance for costs.”

  1. On 23 July 2014 Mr Dargan commenced proceedings in the Tribunal against Amaca (DDT proceedings), asserting that Amaca negligently manufactured and supplied the products which were used or handled/removed during the course of his employment at the various hospitals between 1962 and 2005.

  2. On 15 September 2014 Amaca filed cross-claims against Northern Health, Hunter Health and the State of Queensland (the State) seeking contribution or indemnity in respect of any amount Amaca was required to pay to Mr Dargan pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (1946 Act). The appellants admitted in the SOAF that the exposure to asbestos dust and fibre arising from Mr Dargan’s work for them caused or materially contributed to Mr Dargan’s mesothelioma.

  3. Amaca’s cross-claim triggered the application of the administrative scheme contained in Pt 4 of the Dust Diseases Tribunal Regulation 2013 (NSW) (2013 Regulation). On 29 October 2014, a contributions assessment determination (CAD) was made pursuant to Div 5 (Apportionment) of Pt 4, apportioning liability as to Amaca, 70.2%, Northern Health, 15.25%, Hunter Health, 7.05% and the State, 7.5%.

  4. A contribution apportionment pursuant to Div 5 does not displace any law relating to the joint and several liability of the defendants, nor prevent the subsequent taking, or determination by the Tribunal, of a dispute between defendants as to apportionment in separate proceedings. [3]

    3.    2013 Regulation, cl 53(9).

  5. However, the appellants did not dispute in the DDT proceedings that liability between the parties was properly apportioned by the CAD. [4]

    4.    Primary judgment (at [10]).

  6. Mr Dargan passed away on 31 January 2016. The DDT proceedings were reconstituted by his son, Brett William Dargan, as his legal personal representative. [5] He maintained the Agreement with WorkCover. I shall refer to Brett Dargan in his capacity as Mr Dargan’s legal personal representative as the plaintiff.

    5.    See Amended Statement of Claim filed 10 November 2016.

  7. On 30 January 2017, with WorkCover’s concurrence, the plaintiff and Amaca settled the proceedings for $410,000 plus $40,000 for costs (Payment). The proceedings between Amaca and the State were also settled on the basis that the State contribute 7.5% towards the Payment.

  8. By reason of s 207B(2) of the WCR Act the Payment was subject to a first charge to the benefit of WorkCover. By reason of s 207B(3), Amaca and the State were obliged to pay the full amount of the Payment to WorkCover, albeit that, by reason of the Agreement, the plaintiff was entitled to retain 20% of the Payment.

  9. Amaca sought contribution from Northern Health and Hunter Health in respect of the Payment. As I have said, the primary judge found the appellants liable to contribute. The appellants appeal from this decision. WorkCover sought to be, and was, joined to the appeal in the light of the second ground of appeal. However, as Basten JA has explained (at [54]) ground two was abandoned at the commencement of the appeal.

  10. WorkCover was joined on the basis that it would not seek an order for costs, hence the third order made on 22 September 2017.

Legislative framework

  1. Pursuant to s 207B of the WCR Act set out in Basten JA’s reasons (at [55]), either WorkCover or Mr Dargan was entitled to sue Amaca in respect of its negligence, the former claim involving a subrogation of rights. [6]

    6. WCR Act, s 207B(7).

  2. Pursuant to s 5(1)(c) of the 1946 Act, and subject to the arguments the appellants advanced, Amaca was entitled as a matter of law, to recover contribution from any other tortfeasor who was, or would if sued have been, liable in respect of the same damage. Prima facie, therefore, having regard to the appellants’ admission in the SOAF (see [13] above), Amaca was so entitled as a matter of fact.

Primary judgment

  1. Northern Health and Hunter Health resisted Amaca’s application for contribution on the basis that they were not tortfeasors who would if sued have been liable to the plaintiff. Their essential argument was that once the Agreement was made, it provided the plaintiff with double compensation or provided a process the result of which would be double compensation. This was notwithstanding that, pursuant to the Agreement, the plaintiff was entitled to retain only 20% of the proceeds of the Tribunal proceedings in addition to the statutory benefits already received. On the appellants’ case, once the position was set by the Agreement, the whole Payment, not just to the extent of 20%, ceased to be an amount of damages or compensation for which any of the tortfeasors (Amaca, Northern Health and Hunter Health), would be liable. [7]

    7.    Primary judgment (at [18]).

  2. Accordingly, the appellants contended whatever sum resulted from the plaintiff’s proceedings against Amaca, whether by way of settlement or verdict, could not be damages or compensation in respect of Mr Dargan’s injury. If that was correct, Amaca could not be liable in respect of “that damage” and nor could the appellants be liable in respect of “the same damage” within the meaning of s 5(1)(c) of the 1946 Act. [8]

    8.    Ibid, see also (at [19] – [22]).

  3. The primary judge rejected the appellants’ argument, which, in his view, suffered from two flaws: that the plaintiff would necessarily be doubly compensated and that, in fact, he was doubly compensated. [9] In his Honour’s view, the plaintiff’s ability to retain 20% of the amount that Amaca would otherwise be required to remit to WorkCover was “properly to be seen as a payment to the plaintiff pursuant to [a] contract between WorkCover Qld and the plaintiff.” [10]

    9.    Ibid (at [23]).

    10.    Ibid (at [34]).

  4. His Honour also held that the Agreement was authorised by s 207B of the WCR Act and that it amounted to nothing more than a grant of consent by WorkCover (on conditions) to the plaintiff authorising the bringing of proceedings.

  5. The primary judge also held that WorkCover was not compelled to pursue its statutory charge. Rather, the “benefit that the plaintiff received under the contract is one that was intended to be conferred on him by WorkCover Qld in addition to other amounts he was entitled to”, which indicated his entitlement to retain it and did not operate to relieve Amaca of its liability to the plaintiff. [11]

    11.    Ibid (at [38] – [39]).

  6. Further, the primary judge held that “[w]hat the plaintiff obtained was a benefit from WorkCover Qld [which] clearly intended that the plaintiff obtain and retain that benefit. That was a matter to which Amaca was not privy and which did not affect its liability to the plaintiff”. [12]

    12.    Ibid (at [41]).

  7. Accordingly, the primary judge concluded that the plaintiff’s benefit, as a result of the Agreement, of $82,000 was not double compensation. Amaca was liable to pay WorkCover $410,000 (plus $40,000 for costs) but was entitled to contribution from Northern Health in the sum of $68,625 and Hunter Health in the sum of $31,725. The appellants paid those amounts and sought their recovery in the event the appeal was upheld.

Issues on appeal

  1. The appellants relied on two errors of law on the part of the primary judge, rephrased in their written submissions as follows:

  1. Should the appellants be required to pay contribution pursuant to s 5(1)(c) of the 1946 Act to Amaca in circumstances where payment of that settlement sum resulted in double compensation, or over compensation, to the plaintiff?

  2. Does s 207B of the WCR Act permit an injured worker to be given all or some of the common law damages in circumstances where the damages awarded do not exceed the amount of statutory compensation already received?

Consideration

  1. The basis of the defence of satisfaction is that a claimant should not receive more than is necessary to compensate him or her for the wrong or wrongs done to him or her, or in respect of the liability or liabilities owed to him or her. Its application frequently arises where a claimant settles with only one of two concurrent tortfeasors, in which case the tortfeasor facing a claim will have a defence if the plaintiff’s settlement with the other has fully compensated the plaintiff for the separate wrongs done to him. [13]

    13. Cf Jameson v Central Electricity Generating Board [1998] QB 323 (at 338) per Auld LJ, app in Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 (Baxter) (at [56]) per Gummow and Hayne JJ; see also Jameson v Central Electricity Generating Board [2000] 1 AC 455 (at 466) per Lord Lloyd of Berwick, also app in Baxter (at [56]); Haines v Bendall (1991) 172 CLR 60 (at 63) (Haines) per Mason CJ, Dawson, Toohey and Gaudron JJ; [1991] HCA 15.

  2. The principles respecting “double satisfaction” are a particular application of the “universal” rule that a plaintiff cannot recover more than he or she has lost, involving the unconscientious exercise of legal rights. [14] Thus, as Amaca emphasised, the “‘rule against double compensation’… will not permit a plaintiff, whatever procedural device is used, to recover more than the damages which have been suffered, no matter what the cause of action upon which he proceeds against the various defendants.”[15]

    14.    Baxter (at [57]), referring to Haines (at 63).

    15. Boncristiano v Lohmann [1998] 4 VR 82 (at 89) per Winneke P (Charles and Batt JJA agreeing).

  3. However, “the settled principle [governing the assessment of compensatory damages] does not solve the problem whether a benefit to which a plaintiff is entitled is relevant to — that is, whether it goes in reduction of — the damages which a tortfeasor is to pay for the loss or damage caused by the tort.”[16]

    16. Manser v Spry (1994) 181 CLR 428 (at 435) per curiam (Mason CJ, Brennan, Dawson, Toohey and McHugh JJ); [1994] HCA 50, referring to Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120 (at 134) per Walsh JA.

  4. Thus, as Windeyer J explained in National Insurance Company of New Zealand Ltd v Espagne, [17] in assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating the plaintiff’s loss, relevantly if they were given or promised to the plaintiff by way of bounty, to the intent that the plaintiff should enjoy them in addition to, and not in diminution of, any claim for damages. The decisive consideration in determining how such a payment is to be treated is not whether the benefit was received in consequence of, or as a result of, the injury, but what was its character. That is determined by the intent of the person conferring the benefit. The test is by purpose rather than by cause. [18]

    17. (1961) 105 CLR 569 (Espagne) (at 599 – 600) (Dixon CJ and Fullagar JJ agreeing); [1961] HCA 15.

    18. Ibid, see also (at 573) per Dixon CJ.

  5. In Redding v Lee,[19] after referring to this principle, Gibbs CJ identified one of its rationales as being that “[t]he common law has treated this matter as one depending on justice, reasonableness and public policy”, referring to Parry v Cleaver. [20] After seeking to “discover the principle according to which the cases have been decided”, including discussing Espagne, his Honour concluded, “it is difficult to suggest a more exact criterion [than that set out in Espagne] once it is accepted, as it must be, that justice requires that certain benefits must be disregarded in the assessment of damages notwithstanding that they would not have been received but for the injuries for which the plaintiff sues and notwithstanding that in fact they have mitigated the plaintiff's loss.” [21]

    19. (1983) 151 CLR 117 (122 – 123), see also Mason and Dawson JJ (at 138); [1983] HCA 16.

    20. [1970] AC 1 (at 13).

    21.    Redding v Lee (at 123, 125).

  1. As Mason P explained in SAS Trustee Corp v Budd,[22] the cases dealing with the rule against double compensation, hold that where the person invoking the rule (usually the defendant) establishes that money was paid to the other party in circumstances capable of attracting the rule, it is for the recipient to show that the money was not received by way of compensation for the loss. However, as his Honour also explained, those cases involve an evidentiary onus being cast upon the other party having access to the relevant information rather than a free-standing principle forming part of the rule against double compensation. In this case, the plaintiff, the recipient of the monies the appellants sought to characterise as double compensation, was not a party to the cross-claim proceedings. The evidentiary burden of establishing the monies the plaintiff was to receive constituted receipt of double compensation, in my view, remained with the appellants who sought to discharge it only by reference to such inference as may arise from the Agreement as set out in the SOAF.

    22. [2005] NSWCA 366; (2005) 3 DDCR 382 (at [49] – [50]) (Handley and McColl JJA agreeing).

  2. The appellants’ submissions proceeded from the premise that by reason of the Agreement, the plaintiff was given a portion of the common law damages Amaca would be required to pay to WorkCover under the WCR Act. However, the mere fact that by reason of the Agreement, the plaintiff was permitted to retain an amount calculated by reference to the proceeds of the DDT proceedings, does not affix those monies with the character of common law damages in the plaintiff’s hands. The question is resolved by seeking to discern WorkCover’s intent. [23]

    23.    Espagne (at 600).

  3. In my view, it is apparent from the Agreement as set out in cl 5(b)(ii) of the SOAF, that WorkCover intended the plaintiff should receive an amount calculated as 20% of the proceeds of the DDT proceedings (to the extent those proceeds were less than the amount of compensation paid) in addition to and not instead of, or on account of, his entitlement to damages. The Court should not, however, be limited to the Agreement as set out in the SOAF, when the original documents cast light on WorkCover’s intention. Thus, the intention I have identified in the Agreement also, and somewhat more clearly, emerges from WorkCover’s letter of 2 July 2014, from which it is apparent that WorkCover’s intention was to reduce its statutory refund to a figure representing 80% of the “agreed settlement sum”. Thus, as the chapeau to cl 5(b) of the SOAF indicated, WorkCover was waiving reliance on s 207B.

  4. As Amaca submitted, there is no suggestion the 20% retention sum (SOAF) or reduction (WorkCover, 2 July 2014 letter) was in any way dependent on the loss of wages or earning capacity for which the plaintiff claimed damages. Rather, as the plaintiff was entitled to retain that sum regardless of s 207B of the WCR Act, the inference is available that WorkCover intended he should receive that amount by way of bounty, and not on account of his entitlement to damages against either Amaca or any other tortfeasor responsible for the damage he had suffered by reason of his exposure to asbestos. This was a function of the contract between WorkCover and the plaintiff, not a statutory benefit, although, even if the 20% Mr Dargan received had the latter character, as Espagne demonstrates, that would not have answered the question whether there was double compensation.

  5. BASTEN JA: In April 2014 Ronald James Dargan was diagnosed with mesothelioma. In May 2014 he applied for a payment of certain benefits under the Workers’ Compensation and Rehabilitation Act 2003 (Qld) (“Queensland Act”). It is accepted that Mr Dargan was exposed to asbestos when working at four hospitals, three in New South Wales and one in Queensland. The asbestos to which he was exposed was a product of Amaca Pty Ltd, then known as James Hardie & Coy Pty Ltd.

  6. On 29 October 2014 a contributions assessment determination was made by the Dust Diseases Tribunal, pursuant to the Dust Diseases Tribunal Regulation 2013 (NSW). Broadly speaking, liability was apportioned as to 70% to Amaca and approximately 7.5% to each of the four hospitals. Northern Sydney Local Health District was responsible for the liabilities of Royal North Shore Hospital and Hornsby Hospital; Hunter and New England Local Health District was responsible for the liabilities of Newcastle Mater Hospital. The State of Queensland was responsible for the liabilities of Princess Alexandra Hospital in Brisbane.

  7. On 30 June 2014, the insurer of the liabilities of Princess Alexandra Hospital made a payment of some $627,000 by way of lump sum compensation under the Queensland Act, s 128B. As a result, the insurer, WorkCover Queensland, obtained certain entitlements under s 207B of the Queensland Act as against both Mr Dargan and any person who may have been liable to him in damages for the injury in respect of which the compensation had been paid. (The parties, and the Tribunal, treated this as the date on which s 207B was engaged and addressed the provisions as then in force. An inconsequential amendment has since changed the numbering of the subsections; however, it is convenient to refer below to the current provision.)

  8. If Mr Dargan sued and recovered damages, WorkCover Queensland had a first charge on the amount of any damages recovered to the extent of the compensation paid. [24] Further, the tortfeasor was required to pay the insurer the amount of the charge, up to but not exceeding the whole of the damages. Such a payment satisfied the obligation of the tortfeasor to the injured plaintiff.

    24. Queensland Act, s 207B(2).

  9. There may be many cases, particularly where death follows within a reasonably short period of diagnosis, in which there is little incentive for the injured worker to sue. That may be for a number of reasons, including the possibility that the damages recovered are unlikely to exceed the amount of the compensation payment. If the worker does not seek or recover damages from a tortfeasor, the insurer is subrogated to the worker’s rights and may proceed against the tortfeasor. [25] There is a potential further disincentive to an injured worker bringing proceedings for damages. That lies in the requirement that the person not settle such a claim for any amount less than the compensation payment without the insurer’s written consent. [26]

    25. Section 207B(8).

    26. Section 207B(6).

  10. It is foreseeable in these circumstances that it may be in the interests of the insurer to provide a financial incentive to an injured worker to take proceedings against potential tortfeasors, in circumstances where it may not be clear that the worker would succeed, or if he or she succeeded, obtain an amount in excess of the compensation payment. There is no legislation or other legal impediment to which this Court was taken which would preclude the insurer and the prospective plaintiff coming to an arrangement which might be mutually beneficial.

  11. That is precisely what WorkCover Queensland and Mr Dargan did in the present case. Before Mr Dargan commenced proceedings, they entered into an agreement pursuant to which Mr Dargan would commence proceedings against Amaca Pty Ltd in the NSW Dust Diseases Tribunal, and, to the extent that damages were recovered in an amount equal to or less than the compensation payment, the insurer would “reduce its statutory refund under s 207B to a figure representing 80% of the agreed settlement sum”; by inference the plaintiff was to receive the balance. The insurer also agreed to indemnify Mr Dargan in respect of any adverse costs order.

  12. On 23 July 2014, Mr Dargan commenced proceedings in the Tribunal. On 15 September 2014 Amaca filed a cross-claim against the three parties responsible for the hospitals at which Mr Dargan had been employed and at which it was said that he had been exposed to asbestos dust and fibre. As noted above, on 29 October 2014 an apportionment determination was made in the Tribunal. On 31 January 2016 Mr Dargan died and his legal personal representative, Brett William Dargan, replaced him as the plaintiff. The agreed facts state that the agreement between the insurer and Mr Dargan was “maintained” following Mr Dargan’s death.

  13. On 30 January 2017 Amaca and the plaintiff settled the claim in an agreed amount of $410,000 plus costs, which were agreed at $40,000. In accordance with the requirements of s 207B(6) of the Queensland Act and its contract with the plaintiff, the insurer consented to the settlement. The State of Queensland has paid an amount reflecting its apportioned liability of 7.5% to Amaca.

  14. The appellant Health Districts resisted payment of their proportionate contributions to Amaca on the basis that, if sued, they would not have been found liable to Mr Dargan, that being a precondition to their liability to pay contribution pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (“1946 Act”). The reason given was not that they did not owe Mr Dargan a duty of care, nor that they did not breach that duty. Rather, it was asserted that Mr Dargan had been fully compensated for his loss and indeed had been overcompensated by the amount of 20% of the sum agreed to by Amaca. They submitted that any payment of damages to the plaintiff, in circumstances where the damages did not exceed the compensation payment already made, would amount to double recovery, which the law did not permit.

  15. On 16 March 2017 the Dust Diseases Tribunal (Judge Kearns) rejected these submissions and gave judgment in favour of Amaca against the Health Districts for amounts of $68,625 (Northern Sydney) and $31,725 (Hunter Health District). [27] The Health Districts now seek to appeal against one or more decisions of the Tribunal in point of law, pursuant to s 32 of the Dust Diseases Tribunal Act 1989 (NSW).

    27.    As in the formal order; a different figure for Hunter Health District was given in the judgment.

Issues on appeal

  1. Without staying to consider the reasoning of the Tribunal, it is convenient to set out the alleged errors in point of law, and address them in their terms. As set out in the notice of appeal they were as follows:

“1   The primary judge erred in point of law in concluding, in the face of the agreement between the Injured Worker and WorkCover Queensland (the Agreement), that the respondent (Amaca) was entitled to recover contribution from the appellants (the Health Districts) pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (the 1946 Act) in respect of Amaca’s liability to Ronald Dargan (the Injured Worker).

2 The primary judge erred in point of law in holding that by s 207B of the [Queensland Act], WorkCover Queensland was permitted:

(a)   to enter into, and give effect to, the Agreement that conferred benefits on the Injured Worker; and

(b) waive the statutory charge given to it under s 207B(2).

3 The primary judge erred in law in finding, if that be the case (it, with respect, being unclear) that s 207B of the [Queensland Act] by its terms conferred on the Injured Worker a right to retain all or part of the statutory compensation payments in addition to full common law damages obtained by judgment, order or settlement, or conferred on WorkCover Queensland any discretion to permit the Injured Worker to so retain those cumulative sums.”

  1. The appellants wavered as to the significance and implications of ground 2. Having pleaded it, they said in written submissions that it was unnecessary to address the issues it raised; nevertheless, arguments were set out which were said to relate to grounds 2 and 3. Understandably, the respondents treated these statements as something less than an abandonment of the ground and responded to it. In their written submissions in reply, the appellants reiterated that it was not, in their view, necessary to deal with the ground, but nevertheless addressed the submissions made by the respondents.

  2. At the commencement of the hearing of the appeal, senior counsel for the appellants abandoned ground 2. That step may have been taken in recognition of the fact that success on ground 2 may not have resulted in the appeal being upheld, but could have seriously weakened the appellants’ case with respect to their primary “double recovery” complaint. Nevertheless, it is convenient to note in this context the terms of s 207B of the Queensland Act and the inferences sought to be drawn from it under ground 2. These matters are important for the proper characterisation of the payment by the insurer to the plaintiff, which is itself a critical factor in the assertion that the plaintiff is obtaining double recovery for his losses.

  3. Section 207B of the Queensland Act appears in Ch 3A, “Compensation claim costs”. Section 207A provides that if an insurer incurs costs in obtaining reports (such as medical reports) while managing a claim for compensation, it is entitled to be indemnified by a person liable to pay damages to the injured worker, for a reasonable proportion of those costs. Section 207B provides:

207B   Insurer’s charge on damages for compensation paid

(1)   This section applies to—

(a)   an injury sustained by a worker in circumstances creating—

(i)   an entitlement to compensation; and

(ii)   a legal liability in the worker’s employer, or other person, to pay damages for the injury, independently of this Act; and

(b)   damages that an employer is not indemnified against under this Act.

(2)   An amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or another person, is a first charge on any amount of damages recovered by the person to the extent of the amount paid as compensation to the person.

…

(4)   An employer or other person from whom the damages are recoverable must pay the insurer the amount of the first charge or, if the damages are not more than the amount of the first charge, the whole of the damages.

(5)   Payment to the insurer under subsection (4), to the extent of the payment, satisfies the liability of the employer or other person for payment of the damages.

(6)   A person cannot settle, for a sum less than the amount that is a first charge on damages under subsection (2), a claim for damages had by the person independently of this Act for an injury to which there is an entitlement to payment of damages without the insurer’s written consent.

(7)   If, without the insurer’s consent, a settlement mentioned in subsection (5) is made, then to the extent that the damages recovered are insufficient to meet all payments due to the insurer under this section—

(a)   the insurer is entitled to be indemnified by the employer or other person who is required by the settlement to pay the damages; and

(b)   to that end, the insurer is subrogated to the rights of the person who has sought the damages, as if the settlement had not been made.

(8)   If a person who has received compensation has not recovered, or taken proceedings to recover, damages for the injury from another person, other than the worker’s employer—

(a)   the insurer is entitled to be indemnified for the amount of the compensation by the other person to the extent of that person’s liability for the damages, so far as the amount of damages payable for the injury by that person extends; and

(b)   to that end, the insurer is subrogated to the rights of the person for the injury.

(9)   Payment made as indemnity under subsection (8), to the extent of the payment, satisfies the person’s liability on a judgment for damages for the injury.

…

(11)   In this section—

damages includes damages under a legal liability existing independently of this Act, whether or not within the meaning of section 10.

(Nothing turns on the definition in s 10.)

  1. Ground 2 implied that the primary judge found that s 207B was the source of the authority for the insurer to enter into the agreement with the injured worker, and waive the statutory charge. The primary judge made no such finding. There is no reason to suppose that the agreement required authority under s 207B. The insurer had ample powers under the general law to enter into agreements with respect to proceedings under which it would obtain a potential benefit, if the proceedings were successful. Absent some statutory prohibition, it was entitled to waive, or not enforce, statutory charges or other debts owed to it.

A ground based on the “just and equitable” test

  1. The primary basis of the appeal rested on the proposition that the payment to which the plaintiff was entitled under the contract with the insurer would result in the plaintiff obtaining double recovery of his loss. The appellants contended that, because, whatever amount was payable by Amaca, 20% of it would be paid to the plaintiff, no amount was properly recoverable by the plaintiff in proceedings against any tortfeasor, including the appellants who were joined by Amaca. That submission depends on the characterisation of the payment to the plaintiff, which will be discussed below.

  2. In the course of the appeal, the appellants relied upon an alternative basis for that contention, namely that the settlement agreement by Amaca was “improvident” in the sense identified in Bitumen & Oil Refineries (Australia) Ltd v Commissioner for Government Transport [28] and hence open to challenge by the appellants. That challenge was available under s 5(2) of the 1946 Act, on the basis that it would not be “just and equitable” for the appellants to be required to provide more by way of contribution than their proportionate responsibility for a loss reasonably assessed.

    28. (1955) 92 CLR 200 at 213; [1955] HCA 1.

  3. There are two difficulties with this proposition. First, although there was reference to the terms of s 5(2) of the 1946 Act before the Tribunal, the submission derived from it was far from clear; a reading of the transcript suggests that it was seen to provide a statutory basis for the double recovery defence. To that extent, it was addressed by the trial judge and will be considered further below. If it were also presented as a basis for a judgment against the appellants in a reduced amount, that is not apparent from the transcript; it was not dealt with by the Tribunal in those terms. Had it been, it would have given rise to factual issues which cannot be challenged on appeal. Indeed a precondition to the consideration of that issue would be knowledge of the basis on which the settlement was calculated, so as to demonstrate that there had in fact been no reduction on account of any payment which might flow through to the plaintiff. That evidence was not before the Court, nor, so far as the record shows, before the Tribunal. These considerations, combined with the fact that the argument was not expressly raised in the notice of appeal as a decision of the Tribunal in point of law, means that it must be rejected.

  4. Before leaving the submissions based on s 207B, it is convenient to turn next to ground 3, dealing with allegations as to the retention of the compensation payment. In the written submissions the appellants dealt with it in the same passage as the now abandoned ground 2.

Retention of compensation payment

  1. The third ground involved a number of propositions. First, it proposed that the plaintiff retained the full amount of the compensation payment, either pursuant to a right conferred on him under s 207B, or because that provision conferred on the insurer a discretion to permit him to retain the payment and damages. (There is no doubt that the plaintiff retained the full amount of the compensation payment.) To the extent that this proposition suggested that there may be a power to recoup part or all of the compensation payment from the injured worker (without which it would make no sense to talk about “a right to retain all or part of the … compensation payments”) it is necessary to identify a provision which had that effect. No such provision was identified. That aspect of the ground may be put aside as unsubstantiated.

  1. The second proposition was an implied possibility that s 207B conferred on the plaintiff a right to retain common law damages in addition to the compensation payments. It is true that there is no such right conferred by s 207B; but that is beside the point. The worker never had the payment to “retain”; further, there is no prohibition on the worker being paid an amount on account of damages.

  2. The third proposition was that the insurer is obliged to enforce its charge. It is true that the insurer is given a first charge on any damages recovered by the plaintiff (s 207B(2)), but there is no statutory obligation to pursue moneys which might become the subject of the charge. Nor should such a statutory obligation be implied; the implication of such an obligation is but another way of saying that the agreement between the insurer and the plaintiff was invalid, a case which was abandoned.

  3. For these reasons, ground 3 must be rejected. It should be noted, that the ground was expressed in terms which cast doubt on whether the primary judge had made any finding in the terms sought to be challenged. In fact he did not, for the good reason that the assumptions as to the operation of s 207B were misconceived.

Primary ground – prohibition on double recovery

  1. The entitlement to payment of statutory compensation under workers’ compensation legislation does not depend upon the employer being liable in tort to the worker, nor is the quantum of the entitlement calculated in accordance with principles governing damages payable in tort. Further, in so far as a statutory entitlement may provide benefits on a basis which overlaps with the basis for a common law claim for damages, one would expect any issue of double recovery to be addressed within the statutory scheme under which the compensation is provided. [29] One’s expectation in that regard is not disappointed; s 207B of the Queensland Act expressly addresses that issue. Importantly, it does so in circumstances where compensation payments have been made, not by denying liability in any tortfeasor, but rather in permitting the insurer who made the compensation payments to recover the compensation (to the limit of any damages awarded) from the tortfeasor or the plaintiff. Damages are not to be reduced by the amount of the compensation payments.

    29. Compare Dionisatos v Acrow Formwork & Scaffolding Pty Ltd (2015) 91 NSWLR 34; [2015] NSWCA 281 at [7].

  2. So much was common ground. The success of ground 1 depended on the proper characterisation of the payment to the plaintiff.

  3. Pursuant to the statutory scheme, Amaca was required to pay the damages to the insurer; pursuant to the contract with the plaintiff, the insurer was bound to make a payment to him equivalent to 20% of the amount received from Amaca. It was (correctly) not submitted that that payment by the insurer to the plaintiff was a payment of damages, as such.

  4. The distinction between the cause of action created by s 207B(8) of the Queensland Act, giving rise to an action for indemnity, and the action for damages which was vested in the plaintiff, was addressed by this Court in WorkCover Queensland v Seltsam Pty Ltd, [30] in a passage approved by the High Court in WorkCover Queensland v Amaca Pty Ltd. [31] The right of indemnity thus conferred requires an hypothetical assessment of damages that would have been payable to the person to whom compensation has been paid, dependent on the liability of the tortfeasor to the person who has received compensation. [32] (The focus on the liability of the third party wrongdoer is designed to avoid a claim that it is not liable to the plaintiff because of a limitation provision which has expired. [33] )

    30. (2001) 53 NSWLR 518; [2001] NSWCA 457.

    31. (2010) 241 CLR 420; [2010] HCA 34 at [14]-[24] (French CJ, Gummow, Crennan, Kiefel and Bell JJ).

    32. WorkCover Queensland v Amaca at [26].

    33. WorkCover Queensland v Amaca at [31].

  5. The amount received by the insurer from the wrongdoer to meet its obligation under s 207B(4) should be characterised in the same way as if the insurer had exercised its power to sue under s 207B(8), namely as an indemnity and not a payment of damages. (The same approach has been adopted in relation to the scheme under the Workers Compensation Act 1987 (NSW) as, for example, in United Airlines Inc v Sercel Australia Pty Ltd. [34] )

    34. [2012] NSWCA 24; 260 FLR 37 at [21] and [67] (Allsop P, Macfarlan JA and Handley AJA agreeing).

  6. The critical question was how the payment to the plaintiff should be characterised. The Tribunal referred to a number of cases, to which attention had been drawn by the parties. It will be appropriate to refer to them below. However, the appellants contended that those authorities in the High Court all dealt with statutory benefits and not with payments made between parties unaffected by a statutory scheme. Rather, the issue should properly have been dealt with, the appellants submitted, in accordance with the principles stated in Silverbrook Research Pty Ltd v Lindley. [35]

    35. [2010] NSWCA 357 at [11]-[14], [67]-[74].

  7. Despite the insistence of the appellants, Silverbrook itself was of limited relevance. The case involved a claim for damages for breach of an employment agreement. The issue relevant to the present case was a payment made by the appellant employer to the respondent within a month of her ceasing to work for the appellant. The Court held that the amount should be set off against the damages to which she was entitled for the appellant’s breach of the agreement. Hammerschlag J (with whom Allsop P and Beazley JA agreed in this regard) noted that there was “no evidence of any contemporaneous designation or appropriation” with respect to the money, but that it was “the subject of an admission that it was ‘an ex gratia payment of an additional three months remuneration’.”[36] Allsop P noted “the temporal and purposive connection, the absence of any contractual or social reason for the payment other than towards compensation or a surrogate for it without admissions”,[37] and concluded that the sums paid were “quite unlike moneys gratuitously conferred from private sources as a mark of sympathy or assistance.”[38]

    36. Silverbrook at [71].

    37. Silverbrook at [12].

    38. Silverbrook at [13].

  8. This reasoning is consistent with looking at the surrounding circumstances and context in which a payment was made, the nature of the payment itself and the intention, whether express or imputed, of the party making the payment.

  9. The parties referred the Court to a number of authorities which were said to bear upon the issues in dispute. In Hainesv Bendall,[39] the High Court held that an injured plaintiff who recovered both compensation under the Workers Compensation Act 1926 (NSW), and damages from a tortfeasor, was not entitled to pre-judgment interest on damages for non-economic loss in circumstances where a payment had been received under s 16 of the Act, which was held to serve “the same purpose as the award of damages at common law.” [40]

    39. (1991) 172 CLR 60; [1991] HCA 15.

    40.    Haines v Bendall at 72.

  10. That determination was consistent with the ruling in Batchelor v Burke [41] that it was not appropriate to award interest in respect of so much of the damages as represented lost earnings before trial, “which had been replaced by payment of workers’ compensation.” These cases merely held that the injured plaintiff was not entitled to damages for a loss which had not been incurred. They were based on the assumption that the plaintiff was entitled to damages for the same heads of loss as those which had been met, at least in part, by compensation payments.

    41. (1981) 148 CLR 448 at 455; [1981] HCA 30.

  11. In Redding v Lee,[42] Gibbs CJ stated “[i]f the statute expressly provides (as some statutes relating to workers’ compensation have done) that a plaintiff who has recovered damages shall repay the amount of the benefit it will be clear that the receipt of the benefit must be disregarded in the assessment.” Manser v Spry [43] addressed a question which assumed the correctness of the established principle set out, for example, in Redding v Lee, but in relation to a claim by an employer to recover compensation payments from damages payable with respect to a “trauma” other than the event which gave rise to the claim for workers’ compensation. The South Australian workers’ compensation legislation provided for recoupment of compensation payments, but only from awards of damages arising out of the same event. The Court held that, to the extent that the compensation payments covered the loss arising from a subsequent event, they were not recoverable, but must be taken into account in reduction of the damages suffered by the plaintiff arising from the later event.

    42. (1983) 151 CLR 117 at 125; [1983] HCA 16.

    43. (1994) 181 CLR 428; [1994] HCA 50.

  12. Despite the focus of these cases on statutory intention, there are dicta dealing with other forms of payment. In National Insurance Co of New Zealand Ltd v Espagne,[44] Windeyer J stated: [45]

“In assessing damages for personal injuries, benefits that a plaintiff has received or is to receive from any source other than the defendant are not to be regarded as mitigating his loss, if: (a) they were received or are to be received by him as a result of a contract he had made before the loss occurred and by the express or implied terms of that contract they were to be provided notwithstanding any rights of action he might have; or (b) they were given or promised to him by way of bounty, to the intent that he should enjoy them in addition to and not in diminution of any claim for damages. The first description covers accident insurances and also many forms of pensions and similar benefits provided by employers: in those cases it is immaterial that, by subrogation or otherwise, the contract may require a refund of moneys paid, or an adjustment of future benefits, to be made after the recovery of damages. The second description covers a variety of public charitable aid and some forms of relief given by the State as well as the produce of private benevolence. In both cases the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined, in the one case by what under his contract the plaintiff had paid for, and in the other by the intent of the person conferring the benefit. The test is by purpose rather than by cause.”

44. (1961) 105 CLR 569; [1961] HCA 15.

45.    Espagne at 599-600.

  1. This passage was quoted with approval by Gibbs CJ in Redding v Lee. In the same case, Mason and Dawson JJ compared benefits which “spring from a desire to assist the plaintiff, not from any wish to relieve against the tortfeasor’s liability”, referring to an earlier passage in the judgment of Windeyer J in Espagne. [46] There is, understandably, nothing inconsistent with these statements in Silverbrook.

    46.    Redding v Lee at 138.

  2. The underlying purpose of the payment in the present case has already been described. As was put to counsel for the appellants in the course of argument, it was not dissimilar to the contingent payment required from any amount recovered which forms a common element in litigation funding. The purpose of the payment was to provide an incentive to the plaintiff to litigate in circumstances where both parties recognised that he might not recover more than the compensation payments, but that any amount he did recover would provide a benefit to the insurer. The insurer, in turn, was saved the expense and inconvenience of bringing its own proceedings pursuant to its right of subrogation. Neither party viewed the payment to the plaintiff as recovery from a tortfeasor for some particular loss or head of damage. Nor was there any intention to relieve the tortfeasor of part of its liability; rather the common intention was to ensure that the tortfeasor paid the full damages which could reasonably be extracted from it.

  3. While the payment by Amaca was in response to a claim by the plaintiff for damages, the money in the hands of the insurer was an indemnity for past payments of compensation. How the insurer used the amount recovered by way of indemnity could not affect the legal nature of the claim by the plaintiff against Amaca, nor the payment made by Amaca on account of that claim. Similarly, it could not affect the claim for contribution made by Amaca against the appellants.

  4. In these circumstances the Tribunal was correct to dismiss the “double recovery” defence.

Conclusions

  1. The grounds of appeal revealed a deep ambivalence as to the nature of the appellants’ resistance to the claims against them. Grounds 2 and 3 challenged the validity of the agreement between the insurer and the plaintiff. They sought to do so in proceedings in which neither the plaintiff nor the insurer was a party. The appellants were not parties to the agreement and had no legal interest in challenging its validity. Indeed, if the agreement were invalid the basis of their resistance to liability would disappear. For these reasons, ground 3 must be rejected.

  2. Ground 1 was based on the agreement. The agreement constitutes a waiver of the insurer’s entitlement to keep the whole of the award of damages in repayment by the wrongdoer of its compensation payment. It is noteworthy that the insurer would have no entitlement to any payment were there not a third party wrongdoer. Whether the insurer in fact exercises its charge over any, all or none of the damages is entirely irrelevant to the liability of the wrongdoer. It follows that it is irrelevant to the liability of all the wrongdoers, if there be more than one. Ground 1 was without substance and should be rejected.

  3. The Court made orders on 22 September dismissing the appeal and ordering that the appellants should pay Amaca’s costs.

  4. SACKVILLE AJA: I agree with Basten JA’s reasons for the orders made by the Court at the conclusion of the hearing of the appeal. I add the following observations.

  5. The appellants’ principal contention was that they were not liable to contribute to the sum the first respondent (Amaca) agreed to pay in settlement of the claim by the worker (or his legal personal representative) because the consequence would be to overcompensate the worker. The worker would be overcompensated (so it was argued) because in addition to the sum of $627,407 paid to him by WorkCover Queensland, he would receive 20 per cent of the settlement sum.

  6. The fundamental (but not the only) difficulty with the appellants’ contention is that the worker’s entitlement to a payment arose pursuant to his agreement with WorkCover Queensland. That entitlement is not properly characterised as an award of common law damages.

  7. WorkCover Queensland had a charge over the amount of any damages recovered by the worker by reason of s 207B(2) of the Workers’ Compensation and Rehabilitation Act 2003 (Qld). WorkCover Queensland agreed that it would “reduce its statutory refund under Section 207B to a figure representing 80 per cent of the agreed settlement sum, exclusive of any express allowance for costs”. The worker’s entitlement under the agreement was to a sum payable in consideration for his promise to institute and prosecute the common law negligence claim against Amaca. This is properly characterised as a contractual entitlement to an agreed amount. The fact that the parties happen to have calculated the amount by reference to a percentage of the settlement sum agreed between Amaca and the worker does not alter the proper characterisation of the worker’s entitlement.

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Endnotes

Decision last updated: 10 October 2017

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Cases Cited

14

Statutory Material Cited

5

(re Dargan) Amaca Pty Limited v Northern Sydney Area Health Service [2017] NSWDDT 1
Baxter v Obacelo Pty Ltd [2001] HCA 66
Haines v Bendall [1991] HCA 15