Quito Pty Ltd t/as Benara Nurseries v Insurance Commission of Western Australia - [2001] WADC 58

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: QUITO PTY LTD t/as BENARA NURSERIES -v- INSURANCE COMMISSION OF WESTERN AUSTRALIA [2001] WADC 58

CORAM: NISBET DCJ

HEARD: 5 FEBRUARY 2001

DELIVERED : 15 MARCH 2001

FILE NO/S: CIVO 75 of 2000

BETWEEN: QUITO PTY LTD t/as BENARA NURSERIES
Plaintiff
AND
INSURANCE COMMISSION OF WESTERN AUSTRALIA
Defendant

Catchwords:

Insurance - Employer's indemnity - Workers' Compensation & Rehabilitation Act 1981 s 92(b) - Employer's right to indemnity in respect of worker's compensation payments paid to injured employee recovering damages from statutory insurer pursuant to policy of third party motor vehicle insurance

Legislation:

Workers' Compensation & Rehabilitation Act 1981

Result:

Action fails

Representation:

Counsel:

Plaintiff: Mr M L Greenland
Defendant: Mr J G Staude

Solicitors:

Plaintiff: Greenland Brooksby
Defendant: John G Staude

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

Co-operative Bulk Handling Limited v The State Government Insurance Commission (1990) 3 WAR 145
Hacai Pty Ltd v Rigil Kent Pty Ltd & Ors; unreported; SCt of WA; Library No 960450; 16 August 1996
Leigh v Quito Pty Ltd t/as Benara Nurseries [2000] WADC 38
State Electricity Commission of Western Australia v Morrison (1950) 52 WALR 25
Xpolitos and Another v Sutton Tools Pty Ltd (1977) 13 ALR 575

Case(s) also cited:

Nil

NISBET DCJ: This is the return of an originating summons whereby the plaintiff seeks an order that the defendant, as the plaintiff's insurer, pay it $31,218.04 by way of part indemnity against the liability of the plaintiff to Gavin Dean Leigh pursuant to a judgment in this Court delivered 11 February 2000. The judgment referred to is that of Leigh v Quito Pty Ltdt/as Benara Nurseries [2000] WADC 38.
The parties brought in a minute of agreed facts which states as follows:
"1.Mr Leigh, whilst an employee of the plaintiff, was injured in the course of his employment on 20 March 1990 and has suffered a disability.
2.In respect of the disability workers' compensation weekly payments and statutory allowances were paid to and on behalf of Mr Leigh by the plaintiff, reimbursed by the plaintiff's insurer, Mercantile Mutual Insurance (Workers' Compensation) Limited ("Mercantile Mutual"), to a total sum of $31,218.04 ("the workers' compensation sum").
2A.The only entity with any liability to make payments of workers' compensation to or for Mr Leigh, under the Workers' Compensation & Rehabilitation Act 1982 (sic, 1981) (as amended) was the plaintiff.
3.Mr Leigh brought an action for damages against the plaintiff in this Court. The defendant and Mercantile Mutual were joined as third parties to indemnify the plaintiff.
4.In the course of that action the plaintiff agreed to an order dismissing the third party proceedings against Mercantile Mutual with no order for costs in consideration of Mercantile Mutual agreeing, inter alia, not to seek recovery of the workers' compensation sum.
5.Following the trial of the action Mr Leigh obtained judgment against the plaintiff for $345,994.71 and the defendant was ordered to indemnify the plaintiff in respect of the judgment.
6.The amount of the judgment less the workers' compensation sum of $31,218.04 has been paid by the defendant to Mr Leigh.
7.The wording other than the proposal and the policy schedule of the workers' compensation policy, under which the plaintiff was indemnified by Mercantile Mutual, is attached hereto."
The wording of the policy was not in fact attached. It was provided after the hearing. The relevant wording is as follows:
" … if [during the period of insurance] a disability of any worker of the Employer occurs in the business described in the Schedule and the Employer is legally liable to make any payment in respect of such disability under the Workers' Compensation and Assistance Act 1981 ("the Act"), the Insurer will indemnify the Employer against the payments for which the Employer is so liable and in addition will pay all reasonable costs and expenses incurred with the written consent of the Insurer."
Basically what this case is about is whether or not the defendant is obliged to pay to the plaintiff money paid out by its insurer to Mr Leigh by way of workers' compensation entitlements when the plaintiff will not have to repay that money to its workers' compensation insurer because of a private arrangement made between the plaintiff and its workers' compensation insurer. The defendant says that the plaintiff will thereby pick up a windfall profit out of this litigation of $31,218.04.
The plaintiff argues that upon the occurrence of Mr Leigh's injury on 20 March 1990, during the course of his employment with the plaintiff, the plaintiff incurred a statutory liability to pay him payments of workers' compensation pursuant to the provisions of the Workers' Compensation & Rehabilitation Act 1981. As there was only one employer no entity other than the plaintiff incurred that liability. The plaintiff then argues that by reason of its contract of insurance with its workers' compensation insurer, Mercantile Mutual, then Mercantile Mutual was bound to indemnify the plaintiff against its statutory liability to make payments of workers' compensation to Mr Leigh. The plaintiff then argues, relying upon Hacai Pty Ltd v Rigil Kent Pty Ltd & Ors; unreported; SCt of WA; Library No 960450; 16 August 1996, that when the defendant in this action was ordered to indemnify the plaintiff in respect of Mr Leigh's claim, the defendant was not entitled to relieve itself of its obligation to indemnify simply by reason of the plaintiff's workers' compensation insurance arrangements with its insurer Mercantile Mutual.
Next, the plaintiff submits, the defendant could have taken advantage of the plaintiff's workers' compensation insurance arrangements if there had been a double insurance of the same risk as that covered by the workers' compensation insurer, Mercantile Mutual, but in the circumstances of this case there was no double insurance, citing Co-operative Bulk Handling Limited v The State Government Insurance Commission (1990) 3 WAR 145 at 152 and 160.
Then, relying upon s 92(b) of the Workers' Compensation & Rehabilitation Act 1981, the plaintiff says that the judgment debtor is bound to pay it the amount of workers' compensation payments it in turn paid Mr Leigh. Section 92(b) of the Workers' Compensation & Rehabilitation Act 1981 is in these terms:
"92. Both damages and compensation not recoverable
Where in respect of a disability an action is brought by a worker for damages independently of this Act against his employer or against some other person (referred to in this section as 'the defendant') or against both of them –
(b)if the action proceeds to judgment, including the acceptance of an offer to consent to judgment, against the employer only or against the employer and the defendant, there shall be deducted from the amount of the judgment and be paid to the employer a sum representing the amount (after apportionment in respect of any contributory negligence of the worker) actually recoverable by the worker by way of weekly or lump sum compensation, medical and other expenses paid pursuant to this Act, but where liability is apportioned between the employer and the defendant the defendant's liability to pay to the worker shall be reduced accordingly;"
The plaintiff argues that this provision in effect takes no cognisance of, and is not concerned with what the employer does with the money.
This argument has superficial attraction. Section 92(b) is after all couched in imperative terms as the use of the word "shall" undoubtedly indicates, and workers' compensation entitlements have to be deducted from the judgment sum and paid to the employer. But to say that the provision takes no cognisance of and is not interested in or concerned with what the employer has to do with the money understates the significance of the whole of the legislative scheme wrought by the Workers' Compensation & Rehabilitation Act 1981. Section 160 of the Act obliges every employer to obtain from an approved insurance office and keep current a policy of insurance for the full amount of liability to pay compensation under the Act to any worker employed, and accordingly wherever in the Act "the employer" is referred to, then the employer is assumed to be an insured employer. Other provisions of the Act make this plain too: s 57A, s 57B, s 74, s 170, s 171, s 172, s 172A and s 173.
Accordingly, it seems to me that to argue as the plaintiff does that s 92(b) of the Act demands that deduction be made regardless of the plaintiff's insurance arrangements and regardless of whether indeed the plaintiff was insured at all, somewhat overstates the position.
Whilst there are no authorities directly on point, Co-operative Bulk Handling Limited v The State Government Insurance Commission (supra) did involve a consideration of the problem I am here faced with but from a different perspective. In that case, as here, a worker injured both in the course of his employment and arising out of the use of a motor vehicle such that the employer was insured for workers' compensation payments with Wesfarmers Insurance Limited and its vehicle was insured pursuant to a statutory scheme of motor vehicle third party insurance by the defendant in this case by its former name, the State Government Insurance Commission. The Commission had refused to indemnify the employer in respect of the payments of workers' compensation it had made, claiming in effect that there was double insurance. The Full Court held that it was not a case of double insurance and that the resolution of the dispute depended upon an examination of the relevant terms of each of the policies of insurance. It determined that the respondent was bound to indemnify the appellant. During the course of the argument before it and in their judgments the Full Court examined the interplay between the provisions of the Motor Vehicle (Third Party Insurance) Act 1943 and the Workers' Compensation & Rehabilitation Act 1981 and in particular s 92(b) of the latter Act which was then in the same terms as it relevantly was at the time the dispute in the case arose. During the course of his judgment Rowland J had this to say (at 161):
"In all of these cases the employer recovers, or is indemnified from the common law damages, amounts to reimburse the workers' compensation paid. If he paid it from his own pocket, he keeps it. If he was indemnified by a workers' compensation insurer, he repays it to that insurer."
What this makes plain in my opinion is that the scheme of s 92(b) of the Act is firstly that a worker injured during the course of employment bringing an action for damages at common law is not entitled to be twice compensated for the one event first by payment of workers' compensation entitlements and secondly by way of an award of damages at common law. Next, acknowledging that there will be many circumstances in which a judgment debtor may well be a different person or entity from the employer, then in situations where the judgment debt exceeds the amount of workers' compensation payments paid there is first deducted from the award of damages such sum as is necessary to reimburse the employer the amount of those workers' compensation payments already paid. Where however workers' compensation payments have been paid but the employer has not paid them they having been paid by another in circumstances in which the employer escaped or avoided liability to make payments of workers' compensation, there is nothing in s 92(b) of the Act which requires the employer to be paid money which the employer has not paid out and which would then result in a windfall benefit to the employer.
In my opinion it is not to the point for the plaintiff to argue as it does here that in not requiring the defendant to pay the full amount of the judgment it has reaped a windfall benefit because the nature of the defendant's liability was to indemnify the employer in respect of sums for which it was actually due and liable to pay "from its own pocket", to use the expression of Rowland J.
I shall mention for the sake of completeness that I have looked at a number of other authorities to see if there is any support for the view that the position is one of true indemnity. Whilst the Act under consideration was different it does seem to me that this principle was accepted by the High Court in Xpolitos and Another v Sutton Tools Pty Ltd (1977) 13 ALR 575 implicitly not following, I suggest, State Electricity Commission of Western Australia v Morrison (1950) 52 WALR 25.
The plaintiff's claim will be dismissed.