Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd

[1975] HCA 28

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Gibbs, Mason and Jacobs JJ.

PUBLIC TRANSPORT COMMISSION (N.S.W.) v. J. MURRAY-MORE (N.S.W.) PTY. LTD.

(1975) 132 CLR 336

11 August 1975

Workers' Compensation (N.S.W.)

Workers' Compensation (N.S.W.)—Employer's right of indemnity where injury caused under circumstances creating legal liability to pay damages in person other than employer—Injury caused by negligence of employer and third party—Whether employer entitled to indemnity from third party—Workers' Compensation Act 1926-1967 (N.S.W.), s. 64 (1) (b).

Decisions

August 11.
The following written judgments were delivered:-
BARWICK C.J. J. Murray-More (N.S.W.) Pty. Ltd., the respondent in this appeal, became liable to pay to one of its employees compensation under the Workers' Compensation Act, 1926-1967 (the Act). The workman received his compensable injury by reason of negligent acts of both his employer and the Commissioner for Railways. The respondent paid its employee the appropriate amount of compensation, and sued the Commissioner of Railways for an indemnity under s. 64 of the Act in respect of that compensation. (at p338)

2. The Supreme Court at first instance found for the respondent, holding it to be entitled to an indemnity notwithstanding that it had by its negligence contributed to the injury by reason of which the liability to pay workers' compensation arose. On appeal, the Supreme Court, Court of Appeal Division, by majority, affirmed the judgment in favour of the respondent (1974) 1 NSWLR 412 . The appellant has appealed to this Court. The question turns exclusively on the proper construction of s. 64, and particularly s. 64 (1) (b), of the Act. Section 64 is in the following terms:

"(1) Where the injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof - (a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for such compensation, but shall not be entitled to retain both damages and compensation. If the worker recovers firstly compensation and secondly such damages he shall be liable to repay to his employer out of such damages the amount of compensation which the employer has paid in respect of the worker's injury under this Act, and the worker shall not be entitled to any further compensation. If the worker firstly recovers such damages he shall not be entitled to recover compensation under this Act; (b) if the worker has recovered compensation under this Act, the person by whom the compensation was paid shall be entitled to be indemnified by the person so liable to pay damages as aforesaid; (c) if the worker subsequently obtains judgment for damages against the person who has paid under such indemnity, such payment under the indemnity shall be, to the extent of the amount of such payment a satisfaction of the judgment for damages; (d) all questions relating to matters arising under this section shall, in default of agreement, be settled by action, or, with the consent of the parties, by the Commission. (2) In this section 'damages' does not include any sum ordered or directed pursuant to any provisions of the Crimes
Act, 1900, as amended by subsequent Acts, to be paid by way of compensation for an injury, but any such sum so paid to a worker shall be deducted from the compensation payable to him under this Act in respect of the injury." (at p339)

3. The expression "caused under circumstances creating a legal liability in some person other than the employer" has appeared in workers' compensation legislation for a considerable time. Section 6 of the Workmen's Compensation Act, 1906 (U.K.) was in the precise terms of the opening paragraph of s. 64 (1). Section 6 was the subject of decision in the case of Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (Cory's Case) (1911) 1 KB 114 . (at p339)

4. A section containing the precise terms of the opening paragraph of s. 64 (1) made its first appearance in New South Wales as s. 17 of the Workmen's Compensation Act, 1910. The language was reproduced in s. 10 of the Workmen's Compensation Act, 1916 and again in the Workers' Compensation Act of 1926. Though the terms of the opening paragraph of the section have remained unchanged throughout, amendments have been made from time to time to the subparagraphs of the section. But, in my opinion, none of these changes has altered the meaning of those words. Each of the Acts to which I have referred, including those in the legislation of the United Kingdom, have provided for an indemnity, substantially in the terms of s. 64 (1) (b). (at p339)

5. The decision in Cory's Case (1911) 1 KB 114 in construing s. 6 of the Act of 1906 has been accepted in other States of Australia in connexion with workers' compensation legislation: James S. Adams &Co. Pty. Ltd. v. State Rivers and Water Supply Commission (1960) VR 542 ; Price v. Commissioner of Highways (1968) SASR 329 ; Foster v. A.T. Brine &Sons Pty. Ltd. (1972) WALR 157 ; though on one occasion the acceptability of its reasoning was doubted by the Supreme Court of New South Wales: see Stacey v. Yallaroi Shire Council (1957) 58 SR (NSW) 386 . The propriety of the decision in Cory's Case (1911) 1 KB 114 has been raised in the judgments of the Supreme Court both at first instance and on appeal, and in the argument of this appeal. I shall return a little later to discuss that case, but first I would express my own view as to the construction of s. 64 apart from the decision of Cory's Case (1911) 1 KB 114 . (at p340)

6. Section 64 is part of a scheme of compensation: it is not part of any scheme to adjust rights between tortfeasors. Indeed, when legislation to the effect of s. 64 first appeared in workers' compensation legislation there was no contribution between tortfeasors, nor any ability for tortfeasors liable for the same damage to be sued in the one action. The part of the Act, Pt VIII, which contains s. 64 begins at s. 63. Its heading is "Remedies at Common Law". This part of the Act sets out, first to indicate that the Act does not intend to take away common law rights, secondly, to provide against the possibility of the workman obtaining both compensation and damages, and, thirdly, to provide an indemnity for the employer who has paid compensation by the person who is responsible in law for the occurrence which has caused him, the employer, to be liable to pay compensation. Section 63 provides for the case where the employee sues the employer at common law. It provides in s. 64, in my opinion, for the case where the employee sues a person or persons other than the employer. In my opinion, it intends to cover the case where the only liability of the employer to the worker is the statutory liability to pay compensation. It seems to me that it sufficiently expresses this by the expression "a legal liability in some person other than the employer", appearing as it does after the provisions of s. 63. These words, in the evident scheme of Pt VIII, are adequate to indicate that the employer for whom s. 64 is making provision is not one of the persons who has produced the circumstances out of which the liability to pay compensation has arisen. The language contemplates, and on its proper construction provides for, the case where a stranger, or strangers, so far as employer and workman are concerned has or have caused the compensable injury. The person who is to indemnify the employer under s. 64 (1) (b) is that person, that is to say, a person other than the employer, who in the circumstances caused the injury in respect of which the compensation has been paid. (at p340)

7. The Act imposes a statutory liability upon the employer irrespective of fault. It allows of the possibility of proceedings against the employer at common law. For the damages for which he may thus be called upon to pay, it provides neither indemnity nor contribution. Indeed the Act, as I have said, whilst not displacing common law remedies, is itself concerned only with workers' compensation. But when the possibility of the statutory liability to pay compensation having been caused by a person who could have been sued by the worker at common law is contemplated, a remedy by way of indemnity by that person is provided to relieve the employer of the whole amount of the compensation which that person has caused him to pay. The indemnity is of the full amount paid as compensation up to the extent of the liability of the tortfeasor sued. I see no room whatever for a construction of the section which would provide the employer with complete or partial relief from the damages which he may become liable to pay because of his own breach of duty to his employee. The contradistinction in par. (a) of the sub-section supports the view I have expressed. The concession of that paragraph is that the worker may sue "that person", i.e. the person other than the employer who has caused the injury for damages and the employer for compensation. There is no room for including the employer in the description of "that person". I am unable to read the expression "other than" as the equivalent of "as well as". (at p341)

8. There are no considerations of justice which would require any other construction if the language were ambiguous which, in my opinion, it is not. An employer who is a tortfeasor in respect of the compensable injury - who, as I have already mentioned, could not have had any contribution at the time the language under discussion was first used - may now, if sued as s. 63 allows, exercise his right to contribution elsewhere provided. Likewise, the person who has contributed to the injury, if sued, as s. 64 (1) (a) allows, can recover contribution from the employer as also a tortfeasor in relation to the injury. As I have already pointed out, the indemnity under s. 64 (1) (b) is of the full amount paid as compensation. If an employer who was a tortfeasor in relation to the compensable injury could recover the compensation paid by him under s. 64 (1) (b), perhaps after contribution proceedings between the tortfeasors which involved an apportionment of responsibility, that apportionment would be distorted. (at p341)

9. In my opinion, the proper construction of s. 64 (1) would preclude the respondent, as an employer whose negligence has contributed to the occurrence out of which the right of compensation arose, from recovering an indemnity under par. (b) of the sub-section. The right to an indemnity under s. 64 (1) (b) is only given to an employer who has no other liability to the worker in relation to the compensable injury than the statutory liability to pay workers' compensation. (at p341)

10. I would now wish to say something of Cory's Case (1911) 1 KB 114 . In the first place the Supreme Court at first instance, where there is no relevant decision of this Court, should as a general rule follow the decisions of the English Court of Appeal. Further in the same circumstances the Supreme Court on appeal would be well advised as a general rule to do likewise. However, in this case the Supreme Court thought the decision in Cory's Case was wrong and not to be followed. (at p341)

11. The actual decision in Cory's Case was that the judgment of a commissioner of Assize that an employer, the negligence of whose servants contributed to the compensable injury, could not recover by way of indemnity the compensation he had paid to his employee from a person whose negligence had also contributed to that injury, was correct. The reasons of the members of the Court are diverse. But Buckley L.J. (1911) 1 KB, at p 125 places a construction of the opening words of the section which I would respectfully adopt. It seems to me that Kennedy L.J. accepted the same construction. I do not identify the reasoning to which Owen J. referred in Stacey v. Yallaroi Shire Council (1957) 58 SR (NSW) 386, at p 388 : nor did the learned judge indicate it himself. But, for my own part, I do not think that the reason given by the Commissioner of Assize and accepted by Vaughan Williams L.J. and Buckley L.J. as an alternative basis of decision is acceptable. But non-acceptance of that reasoning does not impair acceptance of the construction of the statute by Buckley L.J. and Kennedy L.J. In my opinion, Cory's Case (1911) 1 KB 114 was well decided and supports the conclusion to which I have come. (at p342)

12. I would allow the appeal in terms which would secure a verdict for the defendant in the action. (at p342)

McTIERNAN J. This is an appeal from the judgment of the Court of Appeal of the Supreme Court of New South Wales dismissing an appeal from the decision of Sheppard J. in an action in which J. Murray-More (N.S.W.) Pty. Ltd., the respondent, was the plaintiff and the Public Transport Commission of New South Wales (formerly the Commissioner for Railways), the appellant, was the defendant. The Court of Appeal was constituted by Hardie, Reynolds and Bowen JJ.A., Hardie J.A. dissenting (1974) 1 NSWLR 412 . (at p342)

2. The action is a claim for indemnity under s. 64 of the Workers' Compensation Act (N.S.W.) 1926, as amended. (at p342)

3. This section provides as follows:

"(1) Where the injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof - (a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for such compensation, but shall not be entitled to retain both damages and compensation. If the worker recovers firstly compensation and secondly such damages he shall be liable to repay to his employer out of such damages the amount of compensation which the employer has paid in respect of the worker's injury under this Act, and the worker shall not be entitled to any further compensation. If the worker firstly recovers such damages he shall not be entitled to recover compensation under this Act; (b) if the worker has recovered compensation under this Act, the person by whom the compensation was paid shall be entitled to be indemnified by the person so liable to pay damages as aforesaid; (c) where any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment shall, to the extent of its amount, be a defence to proceedings by the worker against that person for damages; (d) all questions relating to matters arising under this section shall, in default or agreement, be settled by action, or, with the consent of the parties, by the Commission."

The word "Commission" means in the Act, the Workers' Compensation Commission of New South Wales. (at p343)

4. Section 6 (2) of the Act should be noted. It provides as follows:

"(2) Any reference to a worker who has been injured shall, where the worker is dead, include a reference to his legal personal representative or to his dependants, or other person to whom or for whose benefit compensation is payable." (at p343)

5. The claim is made by way of an action, no doubt, in purported pursuance of s. 64 (1) (a). The action was tried by Sheppard J. At the hearing the parties agreed to a trial by the judge without a jury. (at p343)

6. The amount of indemnity claimed was $8,600. The learned judge gave a verdict and judgment for that amount in favour of the plaintiff. (at p343)

7. The plaintiff alleged in its declaration substantially that: The plaintiff had in its employ a Mr. Oulton, a "worker" within the meaning of the Act; he received an injury, answering the definition of a compensable injury under the Act; he died in consequence of the injury; the widow made an application to the Workers' Compensation Commission for compensation in respect of the injury; the Commission made an award of compensation of $8,600; the plaintiff satisfied its obligation under the award by paying a sum equal to this amount to the widow. (at p343)

8. The allegation in the declaration which the defendant contested at the trial reads as follows:

". . . the said injury was received by the said Carl Hickman Oulton when he was crushed between a motor lorry at the premises of his employer and a railway wagon which said railway wagon was under the care control maintenance and management of the defendant its servants and agents and the plaintiff alleges that the defendant by himself his said servants and agents so carelessly negligently and unskilfully conducted himself in and about his care control management maintenance and supervision of the said railway truck that the same crushed the said Carl Hickman Oulton against the said motor lorry and by reason of the circumstances aforesaid there was created a legal liability in the defendant to pay damages to the said Carl Hickman Oulton and the said Helena Daphne Oulton in respect of the said injury and death." (at p344)

9. The defendant's third plea to the declaration put in issue that the injury was caused under circumstances creating a legal liability in the defendant to pay damages in respect of the injury. The defendant by its fourth plea said:

". . . the alleged injury received by the said Carl Hickman Oulton by reason whereof the said Carl Hickman Oulton died was caused under circumstances creating a legal liability in the plaintiff to pay damages to the said Carl Hickman Oulton and his widow Helena Daphne Oulton in respect of the said injury and death." (at p344)

10. There are five pleas, but it is not necessary to refer to any of them except the third and fourth. (at p344)

11. The learned judge made a careful summing-up of the evidence and arrived at these conclusions.
1. The defendant was guilty of negligence, as claimed by the plaintiff and that Mr. Oulton's personal representative or widow would have been entitled to succeed in an action against the defendant, based either upon the Law Reform (Miscellaneous Provisions) Act (N.S.W.) or the Compensation to Relatives Act (N.S.W.) and the defendant's negligence.
2. The plaintiff was guilty of negligence (the particulars of the negligence as found by him are set out in his judgment). (at p344)

12. The learned judge's ultimate conclusion is stated thus: "The personal representative or the widow of Mr. Oulton would therefore have good cause of action based on negligence against the plaintiff as well as against the defendant." (at p344)

13. As stated above verdict and judgment in the sum of $8,600 passed for the plaintiff. (at p344)

14. Counsel for the defendant in argument at the trial cited Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 . (at p344)

15. The plaintiffs in that case had been found liable under the Workmen's Compensation Act, 1906 (6 Edw. 7, c. 58) to pay compensation to workmen employed by them in respect of an accident. The plaintiffs brought an action against the defendants for indemnity under sub-s. (2) of s. 6 of the Act. A Commissioner of Assize by whom the action was tried found that both the plaintiffs and the defendants had been negligent and their combined negligence caused the accident. Upon these findings the Commissioner held that the plaintiff, through their servants having been guilty of negligence which contributed to the accident could not maintain the action. (The Commissioner was Scrutton K.C., Scrutton J. at the time the appeal was heard.) (at p345)

16. The plaintiffs appealed. The appeal was heard by Vaughan Williams, Buckley and Kennedy L.JJ. They dismissed the appeal. (at p345)

17. Section 6 of the Workmen's Compensation Act, 1906, provides as follows:

"Where the injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof - (1) the workman may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for such compensation, but shall not be entitled to recover both damages and compensation; and (2) if the workman has recovered compensation under this Act, the person by whom the compensation was paid, and any

person who has been called on to pay an indemnity under the section of this Act relating to sub-contracting, shall be entitled to be indemnified by the person so liable to pay damages as aforesaid, and all questions as to the right to and amount of any such indemnity shall, in default of agreement, be settled by action, or, by consent of the parties, by arbitration under this Act." (at p345)

(at p345)

18. The words of the preliminary part of s. 64 (1) are the same as the words of the preliminary part of s. 6 of the English Act. The right given by the first part of par. (a) of s. 64 (1) to "the worker" is similar to that given by s. 6 (1) to "the workman". The second and third parts of par. (a) are not a repetition of anything in s. 6. Under s. 64 (1) (b) and s. 6 (2) "the person by whom the compensation was paid shall be entitled to be indemnified by the person so liable to pay damages as aforesaid". Such a person is some person other than the employer referred to in the preliminary part of s. 64 (1) and s. 6 respectively. (at p345)

19. The person described as the person by whom the compensation is paid is clearly applicable to the employer of the injured "worker" or "workman". The condition on which indemnity arises under s. 64 (1) (b) is similar to the condition on which indemnity arises under s. 6 (2). (at p345)

20. The trial judge, Sheppard J., in his judgment said in effect that he would decide the case in accordance with the construction of s. 6 of the English Act, explained in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 but for the criticism of the decision in Stacey v. Yallaroi Shire Council (1957) 58 SR (NSW) 386 , a decision of the Full Court of the Supreme Court of New South Wales. (at p346)

21. As I understand the reasons for judgment of the trial judge he considered that in view of such criticism he should construe s. 64 (1) uninfluenced by Cory's Case (1911) 1 KB 114 . His Honour considered that upon his finding that the defendant was guilty of the negligence which caused the accident in which Mr. Oulton sustained the injury in question, the case comes within the preliminary words of s. 64 (1) and consequently the plaintiff is entitled to be indemnified under par. (b). (at p346)

22. The grounds of appeal to the Court of Appeal to which it seems necessary to refer are as follows:

"(2) His Honour, having found that the plaintiff was guilty of negligence creating a legal liability in it as employer to pay damages to the personal representative or the widow of the deceased, should have returned a verdict for the defendant. (3) On the proper construction of s. 64 of the Worker's

Compensation Act, 1926, as amended, and on his Honour's findings

of fact, a verdict should have been found for the defendant."

(at p346)

23. Hardie J.A. referred to ss. 63 and 64. These sections are in Pt VIII of the Act. The heading of the Part is "Remedies at Common Law". (at p346)

24. Section 63 provides as follows:

"(1) Nothing in this Act shall affect any civil liability of the employer where the injury was caused by the personal negligence or wilful act of the employer or of some person for whose act or default the employer is responsible. (2) In such case the worker may proceed both under this Act and independently of this Act but where in proceedings
independently of this Act he accepts money brought into court by his employer or he obtains judgment against his employer he shall not be entitled to any compensation under this Act other than compensation paid to him before such acceptance or judgment. . . . (5) Where any payment by way of compensation under this Act has been made, the payment shall, to the extent of its
amount, be a defence to proceedings against the employer independently of this Act in respect of the injury." (at p346)

25. Sub-section (1) preserves the civil liability of the employer. It is not concerned with liability of a person other than the employer. Sub-section (2) applies only to proceedings independently of the Act, by the worker against his employer. Section 64 (1) is concerned with the civil liability of a person other than the employer to the worker. Paragraph (a) provides that the worker may take proceedings against a person other than the employer to recover damages and against any person liable to pay compensation under the Act. (at p346)

26. Hardie J.A. was of the opinion that the trial judge erroneously rejected the submission on behalf of the defendant that the finding of joint liability for damages on the part of the plaintiff and the defendant deprived the plaintiff of any right to the statutory indemnity provided by s. 64(1)(b). (at p347)

27. Kennedy L.J. in his judgment in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. said: (1911) 1 KB, at pp 135-136

"Now, accepting the findings of the learned commissioner as against both Mitchell and those in charge of the ship, there remains a difficult question with regard to the law. Upon the whole, I think that the defendants are right on the question of law. It seems to me, in dealing with a section which, as regards this case, is one giving a right to indemnity, that, if I can adopt any reasonable construction which will prevent the result of a man getting an indemnity in respect of damage to the production of which he has himself materially contributed, I ought to adopt that construction. The plaintiffs have been found by the learned commissioner to have been one effective cause, as Mitchell was another, of this accident. They claim to be indemnified for what they have paid by way of compensation under the Workmen's Compensation Act, 1906, in respect of the accident. It seems to me that nobody who helped to pass this Act of Parliament, which makes an employer liable apart from all questions of negligence to make compensation in respect of an accident to a workman arising out of and in the course of his employment, could have intended by this section that, though the employer could have been sued, if not at common law, at any rate under the Employers' Liability Act, 1880, as being through his servants to blame for the accident, he should be able to go to another person whose servant has been guilty of negligence which in common with that of his own servants caused the accident, and demand an indemnity. There is nothing in the Act, as it appears to me, to prevent my taking this view. If necessary for this purpose, I think I should say that it is not unreasonable, having regard to the consequences of any other interpretation, to read the words 'creating a legal liability in some person other than the employer' as meaning a legal liability which, as between the employer and the third person, is the sole legal liability. It has, I think, been pointed out by both the other members of the Court that a fair inference from the provisions of sub-s.2 with regard to the determination of any question as to the right to and amount of the indemnity is that it includes the consideration of the question whether a party claiming indemnity is not disentitled to claim indemnity by reason of his being equally liable for the accident, just as in the case put by the learned commissioner of a contract by which the right to indemnity is excluded. I think on the whole that the section should be treated as applying only to cases in which the employer is liable only for compensation under the Act, and not as applying to cases where the employer himself is, through his own or his servants' negligence, responsible outside the Act jointly with the person from whom he claims indemnity, as having to some extent contributed to the injury to the workman who has been compensated."

Part of this passage is quoted in the judgment of Hardie J.A. (1974) 1 NSWLR, at p 417 . (at p348)

28. His Honour stressed in his judgment that the legislature omitted to provide for the rights of the worker where that worker received a compensable injury in the circumstances creating a legal liability (outside the Act) in his employer, and some person not standing in the relationship of employer to that worker. The Act does not say that the worker may proceed under the Act against the employer and independently of the Act against such other person. In my view if the legislature contemplated that such a case is covered by the provisions of ss. 63 or 64(1) it is difficult to suppose that the legislature would have been content with the provision for indemnity in s. 64(1)(b) as it stands. I do not think that s. 64(1)(d) provides for the settlement of questions other than those arising between the employer and another person in cases which come within the words of s.64(1)(a). These are cases in which the employer has paid workers' compensation and the worker has recovered compensation against another person found liable to pay damages in respect of the injury. (at p348)

29. Reynolds J.A. said in his judgment (1974) 1 NSWLR, at p 419 : ". . . for reasons which I shall endeavour to express, I am of the opinion that Cory's Case was clearly wrong." With respect, I am unable to attain to that degree of satisfaction about the imperfection of the reasons of the learned judges who decided Cory's Case (1911) 1 KB 114 . Bowen J.A. considered, as I understand his judgment, that the present case comes precisely within the words of s.64(1). That view is analogous to the argument for the plaintiffs in Cory's Case - their argument was rejected by the Court. As I have said that case was decided in the first instance by a Commissioner of Assize, Scrutton K.C., as he then was. The circumstances of the case are stated by Vaughan Williams L.J. (1911) 1 KB, at p 120 . (at p348)

30. I have carefully read the reasons of the Court of Appeal for affirming the interpretation of s.6 on which the learned Commissioner based his decision dismissing the action. I am not prepared to dissent from that interpretation. The conclusion to which the interpretation should lead in the present case is that the decision of the trial judge must be reversed and this appeal allowed. (at p348)

GIBBS J. The question for decision on this appeal is whether an employer from whom a worker has recovered compensation under the Workers' Compensation Act, 1926 (N.S.W.) as amended ("the Act"), is entitled to be indemnified by a third person whose negligence was a cause of the worker's injuries (the "stranger") when the employer himself was also guilty of negligence which was a cause of those injuries. (at p349)

2. The answer to that question depends on the proper construction of s. 64(1)(b) of the Act. When s. 64 was originally enacted, its words were in all material respects the same as those of s.6 of the Workmen's Compensation Act, 1906 (U.K.) whose effect was considered by the Court of Appeal in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 . It was held in that case that the right of indemnity given to an employer by s. 6(2) (which corresponded to s. 64(b) of the Act as it stood in 1926) was not available to an employer who had himself been guilty of negligence. That decision stood unchallenged in England until the Workmen's Compensation Acts were eventually repealed, and it has been followed in Australia, although in obiter dicta in one case Stacey v. Yallaroi Shire Council (1957) 58 SR (NSW) 386 , its correctness was doubted. The Act has since 1926 undergone some amendment. The original s. 64(a) and s. 64(b) are now numbered s. 64(1)(a) and s. 64(1)(b) respectively, and the provisions of s. 64(1)(a) are now different from those of s. 6(1) of the English Act of 1906; however, the opening words of s. 64, and the words of par. (b) of s. 64(1), remain unaltered except that some of the provisions of that paragraph have been placed in par. (d). In my opinion the amendments made since 1926 have not affected the meaning of s. 64(1)(b). However, in the present case the Court of Appeal of the Supreme Court of New South Wales, affirming, by a majority, the judgment of the learned trial judge, reached the conclusion that the decision in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 was erroneous and declined to follow it (1974) 1 NSWLR 412 . They held that the employer was, despite his own negligence, entitled to recover from the stranger the full amount of the compensation paid to the worker. In my judgment, the learned judges in the Supreme Court should have treated Cory &Son Ltd. v. France, Fenwick &Co. Ltd. as an authority binding upon them. This Court, however, is not bound by decisions of the Court of Appeal and I accordingly turn, unfettered by authority, to consider the meaning of s. 64(1)(b). (at p349)

3. The provisions of s. 64 apply, as the opening words of the section state, "Where the injury for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof". Those words, considered alone, are in my opinion ambiguous; they may be intended to be an exhaustive statement and to refer to circumstances which create a legal liability in a stranger but not in the employer, or they may be intended to refer to circumstances which create a legal liability in a stranger whether or not the employer is also legally liable. However, the case where the injury was caused by the negligence of the employer is dealt with by the immediately preceding section, s. 63. This suggests that it was intended that s. 64 should apply to cases where the injury was not caused by the negligence of the employer. This conclusion is strongly supported by a consideration of the provisions of s. 64(1)(b) themselves. If s. 64 applied where the employer had been guilty of negligence causing the injury, the result would be to give to the negligent employer a right to a complete indemnity from the stranger. This would be so even if in fact the employer's share in the responsibility for the injury was much greater than that of the stranger. That is, of course, the result which was reached in the Supreme Court and for which the respondent contends, but it is one most unlikely to have been intended by the legislature: the employer is the person primarily liable to pay the compensation and it would have seemed irrational and unjust to give him a right of complete indemnity against a stranger whose degree of fault and responsibility for the worker's injury was no greater than his own. Such a result would have seemed particularly surprising in 1906, for at that time (and still in 1926) the law did not permit one tortfeasor to recover contribution from another who had been responsible for the same damage. These considerations might not have been of importance if the words of the statute were plain and unambiguous, but where two meanings are open, as is the case with the opening words of s. 64(1), it is proper to adopt that meaning that will avoid consequences that appear irrational and unjust. The view that I have expressed is in substance that which was taken in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. by Buckley L.J. (1911) 1 KB, at pp 125-127 , and by Kennedy L.J. (1911) 1 KB, at pp 135-136 . I respectfully agree with their observations on this point, although the other reasons given in support of their conclusion are rather less persuasive. (at p350)

4. Counsel for the respondent in endeavouring to support the decision of the Supreme Court placed much reliance on the provisions of s. 64(1)(a) of the Act. It was submitted that the opening words of s. 64(1) must have the same meaning in their application to all the paragraphs of that subsection and that if par. (a) did not apply to cases where the employer as well as the stranger was liable to the worker for damages apart from the Act, the worker would be able to receive and retain a double benefit of damages and compensation contrary to what, it was said, was the manifest policy of the Act. A similar argument was advanced unsuccessfully in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB, at p 119 . On the other hand, if s. 64(1) does apply where both the employer and the stranger are liable to the worker in tort, par. (a) will still create difficulties. On that assumption it might have been expected that the section would have expressly enabled the worker to take proceedings against the employer as well as against the stranger, as Buckley L.J. pointed out in Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB, at pp 125-126 . On either view s. 64(1)(a) presents problems of interpretation, and in my opinion it is not possible to regard par. (a) as revealing an intention that s. 64(1) should apply to cases where the employer as well as the stranger is liable for damages independently of the Act - it certainly does not contain an indication of intention clear enough to prevail over the other considerations already mentioned. (at p351)

5. For these reasons I consider that s. 64(1)(b) does not give to an employer a right of indemnity against a stranger when the injury of the worker was caused by the negligence of both parties. (at p351)

6. No submission was made to us that the position had been altered by the enactment of the legislation that provides for the apportionment of liability in the case of contributory negligence - in New South Wales, s. 10 of the Law Reform (Miscellaneous Provisions) Act, 1965. It was held in Price v. Commissioner of Highways (1968) SASR 329 , that Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 should be regarded as assimilating the right of the employer against the stranger under the indemnity to the right which the employer would have had against the stranger under the general law at the relevant time in an action brought by the worker against both; accordingly, it was held, since the enactment of the apportionment legislation the employer can recover from the stranger an appropriate proportion of the amount of compensation paid to the worker. A different view was taken in Foster v. A.T. Brine &Sons Pty. Ltd. (1972) WAR 157, at pp 160-161 , where it was held, agreeing with dicta in James S. Adams &Co. Pty. Ltd. v. State Rivers and Water Supply Commission (1960) VR 542, at p 545 , that notwithstanding the enactment of the apportionment legislation the negligence of the employer is still a complete defence to an action against a stranger for indemnity. This latter view is in my opinion correct. The words "where any person suffers damage" in s. 10 are inapt to refer to the case of an employer who has been called upon to pay compensation, and the words "the damages recoverable in respect thereof" do not appropriately describe an indemnity in respect of the compensation paid. Moreover, s. 10 makes a number of references to payments made under the Act, including repayments of compensation under s. 64(1)(a), and this provides an additional reason for thinking that s. 64(1)(b), which is not mentioned in s. 10, was not intended to be affected by its provisions. (at p351)

7. For these reasons I consider that the respondent employer, whose negligence was a cause of the worker's injury, was not entitled to be indemnified by the appellant, whose negligence was also a cause. I would allow the appeal. (at p352)

MASON J. The majority in the Court of Appeal accepted as its premise that the words "a legal liability in some person other than the employer" in s. 64(1) of the Workers' Compensation Act, 1926 (N.S.W.), as amended, plainly and unambiguously signify a legal liability in a stranger, even if that legal liability is not the sole legal liability, and is a liability which arises because the stranger and the employer are together liable as joint tortfeasors for the injury done to the worker. This is not a view of the section to which I subscribe - the reasons expressed in the judgment of the Chief Justice, with which I agree, make it clear that the words are susceptible of referring to a legal liability in a stranger exclusive of any legal liability in the employer and that in their context they should be so understood. (at p352)

2. For my part, I would merely add that the Court of Appeal was mistaken in thinking that the decision in Heywood &Bryett Ltd. v. A. Heywood &Son (1940) 2 KB 145 was inconsistent with Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 , or that it suggested in some undefined way that the latter case was wrongly decided. In the Heywood Case (1940) 2 KB 145 the earlier case was distinguished, and in my opinion correctly distinguished, on the substantial ground that the legislation under consideration in the latter case dealt with an entirely different subject matter, namely, the imposition of an obligation on a head contractor or principal to pay compensation to an injured worker employed not by him but by his sub-contractor and the recovery by the principal from the actual employer (the sub-contractor) of the compensation so paid. As Scott L.J. observed in the Heywood Case (1940) 2 KB, at pp 154-155 , the statute gave the worker a right to claim compensation from his "quasi-employer" and the latter a right to recover indemnity from the actual employer. Thus his Lordship was able to say: "The subject matter with which that section deals is the liability to pay compensation created by s. 1 of the Act and there is no underlying subject matter except that. The section is not dealing with liability at common law either in tort or in contract." (at p352)

3. Accordingly, I would allow the appeal. (at p352)

JACOBS J. In my opinion Cory &Son Ltd. v. France, Fenwick &Co. Ltd. (1911) 1 KB 114 was correctly decided and therefore ought to be followed. I do not find the words of s. 64 of the Workers' Compensation Act plain and unambiguous. On the contrary, there is an ambiguity in the description "person other than the employer". These words do not necessarily exclude the employer but whether or not the words exclude the case where the employer is one of those legally liable to pay damages must be ascertained from the context and from a consideration of the operation of the section. (at p353)

2. Section 63 of the Act deals with the case where there is a liability in the employer to pay damages to his worker at common law in respect of the injury for which compensation is payable. Section 64 deals with the case where there is a liability in some person other than the employer to pay damages in respect of such an injury. In this context the words "person other than the employer" are apt to exclude the employer and in my opinion do so. (at p353)

3. It is useful to consider how the section would operate if it were construed so that it contemplated legal liability in the employer, as well as some person other than the employer, to pay damages. The first question which would arise is whether par. (a) by its specific enunciation of the course which the worker might take did not wholly take away the right of the worker to take proceedings against the employer to recover the damages in such circumstances. Paragraph (a) provides for recovery of damages against the third person but for recovery of compensation only against an employer. Even if this difficulty be surmounted the section could hardly be applied if the worker obtained judgments for damages against the third person and the employer. What would the position then be if the worker had already received compensation from the employer? Before there existed the statutory right to contribution between joint tortfeasors the employer would nevertheless have been entitled to an indemnity for the compensation paid by him and at the same time would have been entitled under s. 63 as against the worker to have the amount of compensation treated as part satisfaction of the damages awarded. Now that there is a right to contribution the operation of the section would be even more obscure. An employer would still be able to treat the compensation paid as a part satisfaction of the damages awarded, but could claim not merely such contribution to the damages as was just and equitable having regard to responsibility for the damage, but indemnity up to the amount of compensation paid by him unrelated to responsibility for the damage. (at p353)

4. It is no answer to these difficulties to say that if the compensation is treated as part satisfaction of the damages the right to indemnity would disappear. The section does not say so and if this were implied it would mean that quite different legal consequences would follow depending on whether or not the worker actually sued the employer. If he did, the right to indemnity would disappear. If he did not, the right to indemnity would remain though, in fact, by accepting the compensation, the worker had elected to treat the compensation as satisfaction of his claim for damages against the employer. (at p354)

5. It is the impossibility of applying the section coherently to a case where both the employer and the third person are sued to judgment and the irrationality of applying it only to a case where the employer, though legally liable, is not sued by the worker for damages which lead me to conclude that the ambiguity of the words "person other than the employer" should be resolved by excluding from the operation of the section the case where there is a legal liability in a number of persons, including the employer, to pay damages to a worker. (at p354)

6. I would therefore allow the appeal. (at p354)

Orders

Appeal allowed.

Order of the Supreme Court of New South Wales, Court of Appeal Division, set aside, and in lieu thereof order that the appeal to that Court be allowed, that the verdict for the respondent in the sum of $8,600.00 be set aside, and that judgment be entered for the appellant.

Costs of this appeal, of the appeal to the Court of Appeal Division, and of the trial to be paid by the respondent.