(re Dargan) Amaca Pty Limited v Northern Sydney Area Health Service

[2017] NSWDDT 1

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:	(re Dargan) Amaca Pty Limited v Northern Sydney Area Health Service & Ors [2017] NSWDDT 1
Hearing dates:	28 February 2017
Decision date:	16 March 2017
Before:	Kearns J
Decision:	There will be a verdict and judgment for Amaca against Northern Health in the sum of $68,625 and against Hunter Health in the sum of $33,750.
Catchwords:	Dust Diseases – cross claim – mesothelioma – statutory compensation paid to plaintiff by WorkCover Queensland – agreement between WorkCover Queensland and plaintiff that in proceedings against Amaca Pty Limited, plaintiff may retain 20% of proceeds if proceeds less than compensation received – proceedings by plaintiff against Amaca Pty Limited – plaintiff’s proceedings settled for less than compensation received – whether the agreement resulted in plaintiff receiving double compensation – if so, whether Amaca Pty Limited and cross defendants were not “liable in respect of (the) damage” suffered by the plaintiff within the meaning of s 5 Law Reform (Miscellaneous Provisions) Act 1946 (NSW) such that Amaca Pty Limited could not claim contribution from the cross defendants
Legislation Cited:	Workers’ Compensation Act 2003 (Qld); Law Reform (Miscellaneous Provisions) Act 1946 (NSW); Workers’ Compensation and Rehabilitation Act 2003 (Qld)
Cases Cited:	Redding v Lee (1982-3) 151 CLR 117; Manser v Spry (1994) 181 CLR 428; Harris v Commercial Minerals Ltd (1995-6) 181 CLR 1; The National Insurance Company of New Zealand Ltd v Espagne (1961) 105 CLR 569
Category:	Principal judgment
Parties:	Amaca Pty Limited (Cross-Claimant); Northern Sydney Area Health Service (First Cross-Defendant); Hunter and New England Area Health Service (Second Defendant); State of Queensland (Third Cross-Defendant)
Representation:	Counsel: Mr J Sheller appeared for the Cross-Claimant; Mr D Miller SC with Mr M Smith appeared for the first and second Cross-Defendants)     Solicitors: Holman Webb Lawyers Brisbane (Cross-Claimant); Moray & Agnew (first and second Cross-Defendants)
File Number(s):	DDT232/2014/CC1

Judgment

Outline

1. Mr Dargan contracted mesothelioma. He did so from exposure to asbestos. The exposure was in the course of his employment at Royal North Shore Hospital, Hornsby Hospital, Newcastle Mater Hospital and Princess Alexandra Hospital. The last of these hospitals is in Queensland and the others are in New South Wales.

2. The asbestos to which Mr Dargan was exposed at these hospitals was product of the cross-claimant, formerly James Hardie & Coy Pty Limited.

3. Mr Dargan was diagnosed with mesothelioma in April 2014.

4. In May, 2014, Mr Dargan made application for statutory benefits under the Workers’ Compensation Act 2003 (Qld) in respect of his injury. In June 2014, WorkCover Qld accepted the claim. WorkCover Qld was responsible for the liabilities of Princess Alexandra Hospital. On 30 June 2014, WorkCover Qld paid Mr Dargan $627,407 pursuant to the Act.

5. In July 2014, Mr Dargan and WorkCover Qld agreed to Mr Dargan pursuing a claim against Amaca. The terms of that agreement included that:

1. Mr Dargan would retain in full the statutory benefit received from WorkCover Qld;

2. in the event that the proceeds of the proceedings against Amaca were less than the statutory benefit paid to Mr Dargan, Mr Dargan would be entitled to retain 20% of those proceeds with the balance being paid to WorkCover Qld;

3. in the event that the proceeds of the proceedings against Amaca were in excess of the statutory benefits paid to Mr Dargan, the whole of the amount of the statutory benefit would be paid to WorkCover Qld with Mr Dargan entitled to the excess.

6. Later in July, on 23 July 2014, Mr Dargan commenced proceedings in the Tribunal against Amaca for damages in respect of his injury.

7. On 15 September 2014, Amaca filed cross-claims against Northern Sydney Local Health District (Northern Health) and Hunter & New England Local Health District (Hunter Health) and the State of Queensland seeking contribution or indemnity in respect of any amount Amaca was required to pay to Mr Dargan.

8. Northern Health was responsible for the liabilities of Royal North Shore Hospital and Hornsby Hospital. Hunter Health was responsible for the liabilities of Newcastle Mater Hospital.

9. Mr Dargan was exposed to asbestos in each of the employments mentioned and each exposure caused or materially contributed to his contraction of mesothelioma.

10. On 29 October 2014, a contributions assessment determination was made in accordance with the Dust Diseases Tribunal Regulation 2013 (NSW). Liability was apportioned as follows:

1. Amaca      -   70.2%

2. Northern Health   -   15.25%

3. Hunter Health   -   7.05%

4. The State of Qld   -   7.5%.

The parties agree these apportionments are appropriate.

11. Mr Dargan died on 31 January 2016. Mr Dargan’s proceedings against Amaca were reconstituted with his legal personal representative, Brett William Dargan, being substituted as plaintiff. The agreement referred to earlier in [5] was maintained following Mr Dargan’s death. As nothing turns on this, it is convenient simply to refer to the plaintiff throughout these reasons, though the reference could be to Mr Dargan or to his legal personal representative.

12. On 30 January 2017, with the concurrence of WorkCover Qld, the plaintiff and Amaca resolved the proceedings with Amaca to pay the plaintiff $410,000 plus $40,000 for costs.

13. Amaca now seeks contribution from Northern Health and Hunter Health in respect of the payment.

The issues

14. Northern Health and Hunter Health resist the application for contribution on the following bases:

1. they are not tort-feasors who, if sued by the plaintiff, would have been liable to him;

2. by reason of the agreement referred to above, the plaintiff was doubly compensated.

The legislation

15. Resolution of the issues involves a consideration of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and s 207B of the Workers’ Compensation and Rehabilitation Act 2003 (Qld).

16. Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) relevantly provides:

(1)   Where damage is suffered by any person as a result of a tort (whether a crime or not):

(a)   …

(b)   …

(c)   any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.

(2)   In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.

17. Section 207B relevantly provided:

(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.

(3)   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.

(4)   Payment to the insurer under subsection (3), to the extent of the payment, satisfies the liability of the employer or other person for payment of the damages.

(5)   A person can not 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.

(6)   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.

(7)   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.

(8)   Payment made as indemnity under subsection (7), to the extent of the payment, satisfies the person’s liability on a judgment for damages for the injury.

Analysis

18. Critical to the case of Northern Health and Hunter Health is the agreement between the plaintiff and Amaca. Their case is that once that agreement was struck it provided the plaintiff with double compensation or provided a process whereby the result was that there would be a receipt of double compensation. The argument proceeds that once that position was set by the agreement, the whole of the amount, not just the amount of the double compensation, ceases to be an amount of damages or compensation for which any of the tort-feasors, Amaca, Northern Health and Hunter Health, would be liable. Accordingly, whatever sum resulted from the plaintiff’s proceedings against Amaca, whether by way of settlement or verdict, that sum could not be damages or compensation in respect of Mr Dargan’s injury. Accordingly, Amaca could not be liable in respect of “that damage” within the meaning of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) and nor could Northern Health or Hunter Health be liable in respect of “the same damage”.

19. The argument proceeded further that 20% of the settlement figure of $410,000 could not be identified as the amount of double compensation with the balance being the amount in respect of which Amaca could claim contribution. This is because once the agreement set the amount the plaintiff could retain at 20%, there must necessarily be an amount of double compensation in the judgment against Amaca. There is no way of knowing how much that figure would be. There was no way of framing a judgment in the plaintiff’s case against Amaca that would allow the amount of double compensation to be excluded or even determined. This may be illustrated by assuming the plaintiff’s damages are properly assessed at $410,000. Twenty per cent (20%) of that figure is $82,000. Judgment could not be entered for the plaintiff for the balance, namely $328,000, because that then becomes the figure on which the 20% operates and so 20% needs to be excised from $328,000 and on it goes.

20. I pause here to note that the argument in the previous paragraph is not an argument that supports the proposition that the plaintiff must necessarily be doubly compensated. This argument really assumes that he has been or will be doubly compensated and points out an anomaly that arises in seeking to formulate a judgment sum.

21. I do not think the argument of Northern Health and Hunter Health should be accepted.

22. Fundamental to the argument of Northern Health and Hunter Health are the following propositions:

1. at the time of the making of the agreement with WorkCover Qld, if the plaintiff were to recover anything in his proceedings against Amaca, he would necessarily be doubly compensated;

2. at the time Amaca commenced its cross claims and at all times thereafter, the amount of double compensation could not be known;

3. because there was double compensation, and/or because the amount of double compensation could not be known,

1. Amaca was not liable in respect of “damage … suffered by (the plaintiff) as a result of a tort” and

2. Northern Health and Hunter Health are not tort-feasors who would be liable in respect of the same damage, being the “damage … suffered by (the plaintiff) as a result of a tort”.

23. I think there are two flaws in the argument. They are that the plaintiff would necessarily be doubly compensated and that, in fact, he was doubly compensated.

24. At the time the plaintiff commenced his proceedings against Amaca, he was suing for damages for injury suffered by him as a result of his exposure to asbestos, the product of James Hardie. If that proposition is correct, it so undermines the argument of Northern Health and Hunter Health that their argument must fail.

25. The proposition in the previous paragraph is correct as can be demonstrated by looking at one scenario. That scenario is that the plaintiff recover against Amaca more than he had obtained by way of statutory compensation. It cannot be said that that scenario was not available in law. Had that occurred, the plaintiff would have been entitled to retain the whole of the statutory compensation he had received plus the excess over that compensation he would recover in the case against Amaca.

26. This being the case, the situation must be that the plaintiff was suing Amaca for damages for his injury suffered by exposure to its product. That being the case, the argument of Northern Health and Hunter Health must fail.

27. Northern Health and Hunter Health argue that the plaintiff was unlikely in his proceedings against Amaca to recover more than the statutory amount he had received. That cannot be the test. The test, even on the argument presented, must be that the plaintiff could not, in law, recover more in the case against Amaca than the statutory amount received. Otherwise it is not necessarily the case that the plaintiff would be doubly compensated if he proceeded against Amaca.

28. There are two matters to add at this point. One is that the plaintiff’s agreement with WorkCover Qld acknowledged the possibility of the plaintiff recovering more than the statutory amount from Amaca and the agreement dealt with that with clearly no double compensation to the plaintiff. The other is in his Particulars filed with his statement of claim, the plaintiff claimed close to $700,000. That is not to say he would have recovered that amount had the case proceeded to a verdict. Probably, he would not have succeeded on some heads of claim to the full extent claimed. On the other hand, it is common enough for amounts claimed on some heads of damage to increase between the time of supplying particulars and the time of hearing.

29. When the plaintiff commenced his proceedings against Amaca, he was not claiming in the alternative damages for his injury if he exceeded the statutory amount and some other form of damages if he did not. He was claiming simply damages for his injury and that it what the Tribunal was to be called on to assess.

30. For these reasons, I do not think the argument is made out that, by reason of the agreement struck between the plaintiff and WorkCover Qld, the plaintiff must necessarily have been doubly compensated had he recovered anything in the proceedings against Amaca.

31. Further, in the result I do not think there has been double compensation.

32. The plaintiff sued Amaca for damages for his injury.

33. If the result exceeded the compensation paid then clearly the amount recovered could not be double compensation. It would be compensation to which the plaintiff would be legitimately entitled. The law, however, would prevent the plaintiff holding on to the compensation and recovering the whole of the common law damages. The plaintiff could retain the whole of the compensation and recover the damages to the extent that they exceeded the statutory compensation. This is the effect of s 207B. The effect of s 207B is not to deny the plaintiff his claim against Amaca. It is a claim for damages for his injury. It remains such, the agreement with WorkCover Qld notwithstanding.

34. The agreement does not change the nature of the plaintiff’s claim against Amaca. By virtue of s 207B (2) and (3) the amount recovered by the plaintiff ($410,000) against Amaca was an amount that, as between Amaca and WorkCover Qld, WorkCover Qld became entitled to. What happened to it was a matter for WorkCover Qld. It had chosen, by agreement with the plaintiff, to allow the plaintiff 20% of the figure. It is properly to be seen as a payment to the plaintiff pursuant to contract between WorkCover Qld and the plaintiff.

35. Northern Health and Hunter Health argue that the agreement between the plaintiff and WorkCover Qld was contrary to s 207B. I do not think this is so. There is nothing in the section prohibiting agreements. More to the point may be whether the agreement was authorised by the section and, if it was not, whether it matters.

36. I think the agreement is authorised by the section. It provides, in effect, that an injured person cannot settle a claim for damages for less than the statutory compensation paid without the written consent of WorkCover Qld – s207B(5). This provision is in the context of statutory compensation having been paid by WorkCover Qld to an injured person, the injured person suing a third party for damages and recovery rights in WorkCover Qld in respect of its payment of compensation. In considering whether or not to provide written consent, WorkCover Qld, no doubt, would consider matters such as the amount it has paid, its prospects of recovery, the amount likely recoverable, the risks inherent in the third party litigation, the benefits of a ready resolution of the third party litigation as opposed to a full contest, those benefits including the certainty, timeliness and finality of the result and the benefits of that process as opposed to applying its own resources and expending its own costs in seeking recovery. Immediately before the giving of consent, there remains the option that a plaintiff may conduct his third party claim to a conclusion with, potentially, an adverse result. To give proper consideration and effect to all these things, it is appropriate that WorkCover Qld be able to give its written consent on appropriate conditions. A condition that WorkCover Qld be entitled to 80% of the proceeds of the third party litigation, I think, is an appropriate condition.

37. If the agreement was not authorised by the section, a question arises as to whether that matters. If the result is that the plaintiff has received double compensation, that has not been at the cost of Amaca. It is a matter that lies exclusively between the plaintiff and WorkCover Qld. The double compensation is the amount WorkCover Qld has paid to the plaintiff that it did not have to or should not have. However, it is an amount that has not increased the liability of Amaca. If the amount of $410,000 had been awarded to the plaintiff at the conclusion of a contested hearing, it remains the argument of Northern Health and Hunter Health that the plaintiff will have been doubly compensated. This is so, it is submitted, even though Amaca’s liability to the plaintiff is properly assessed at $410,000. What WorkCover Qld and the plaintiff agreed is not something that should operate in reduction of the liability Amaca had to the plaintiff.

23. Northern Health and Hunter Health submitted that WorkCover Qld was not permitted to exercise a discretion to waive the statutory charge. I do not think that submission advances the matter. WorkCover Qld is not compelled to pursue its statutory charge. In a case where an injured person who has been paid statutory compensation does not pursue any common law rights, WorkCover Qld may pursue recovery – s 207B(7) - but it is not compelled to do so. Full enforcement of recovery rights is a remedy, not a requirement under the section.

24. 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. This is an indication that he is entitled to retain it and that it does not operate in relief of Amaca’s liability.

25. In this context, the parties referred me to a number of authorities. They were:

Redding v Lee (1982-3) 151 CLR 117;

Manser v Spry (1994) 181 CLR 428;

Harris v Commercial Minerals Ltd (1995-6) 181 CLR 1.

41. The plaintiff obtained statutory benefits of $627,000. He then brought proceedings against Amaca. For reasons given, those proceedings were for damages for his injury. In the result, the plaintiff recovered less than the compensation he had already received. The plaintiff could not, therefore, execute so as to recover from Amaca. What the plaintiff obtained was a benefit from WorkCover Qld. WorkCover Qld 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 – see also The National Insurance Company of New Zealand Ltd v Espagne (1961) 105 CLR 569.

42. In the absence of the agreement referred to in [5], the plaintiff clearly would have been entitled to sue Amaca for damages for his injury. It is also clear that in that suit, Amaca would not have been entitled to claim a deduction of the damages to be awarded against it by reason of the payment of the statutory compensation. In the result, the plaintiff having obtained $410,000 would not have been able to recover anything from Amaca. That would not relieve Amaca of liability for the $410,000. It would be required to pay it to WorkCover Qld. It could then bring its cross claims against Northern Health and Hunter Health. In my view, the agreement does not change this.

43. Amaca is liable to pay WorkCover Qld $410,000 and the plaintiff, as a result of the agreement, instead of finishing up at the end of his litigation with Amaca with no net benefit finishes up with a net benefit of $82,000. That does not make it double compensation. That result is derived by reason of the arrangement between the plaintiff and WorkCover Qld. It is not something that operates in relief of Amaca’s liability to the plaintiff.

44. In light of these reasons, Amaca is entitled to the contribution that it seeks from Northern Health and Hunter Health.

45. There will be a verdict and judgment for Amaca against Northern Health in the sum of $68,625 and against Hunter Health in the sum of $33,750.

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Decision last updated: 16 March 2017