Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd

[2005] TASSC 86

[2005] TASSC 86

CITATION:Skilled Engineering Limited v Glaxo Wellcome Australia Pty Ltd  [2005] TASSC 86

PARTIES:  SKILLED ENGINEERING LIMITED
  (ACN 005 585 811)
  v
  GLAXO WELLCOME AUSTRALIA PTY LTD
  (ACN 004 148 065)

TITLE OF COURT:  SUPREME COURT OF TASMANIA (FULL COURT)
JURISDICTION:  APPELLATE
FILE NO/S:  154/2004
DELIVERED ON:  16 September 2005
DELIVERED AT:  Hobart
HEARING DATE:  24 August 2005
JUDGMENT OF:  Evans and Tennent JJ, Hill AJ

CATCHWORDS:

Workers Compensation – Alternative rights against employer and/or third parties and consequences thereof – Rights of and against third parties – Right of employer to indemnity or contribution from third party – Generally – Employer may obtain indemnity from principal liable to pay damages.

Workers Rehabilitation and Compensation Act1988 (Tas), s134.
Aust Dig Workers Compensation [279]

Workers Compensation – Alternative rights against employer and/or third parties and consequences thereof – Actions for damages against employer – Statutory constraint on actions for damages – Generally – Whether statutory conditions on bringing an action against an employer preclude the accrual of a cause of action.

Workers Rehabilitation and Compensation Act 1988 (Tas), ss138AA, 138AB.
Johnson v Hill [2002] 2 Qd R 486; Hanrahan v Davis [1997] 1 VR 285; Western Metals Zinc NL v Wesfarmers Transport Ltd [2003] WASCA 152, considered.
Aust Dig Workers Compensation [237]

REPRESENTATION:

Counsel:

Appellant:  D J Porter QC
             Respondent:  K E Read
Solicitors:
             Appellant:  Jackson & Tremayne
             Respondent:  Hunt & Hunt

Judgment  Number:  [2005] TASSC 86
Number of paragraphs:  30

Serial No 86/2005
File No 154/2004

SKILLED ENGINEERING LIMITED v
GLAXO WELLCOME AUSTRALIA PTY LTD

REASONS FOR JUDGMENT  FULL COURT

EVANS J
TENNENT J
HILL AJ
16 September 2005

Orders of the Court:

Appeal dismissed.

Serial No 86/2005
File No 154/2004

SKILLED ENGINEERING LIMITED v
GLAXO WELLCOME AUSTRALIA PTY LTD

REASONS FOR JUDGMENT  FULL COURT

EVANS J
16 September 2005

1. This is an appeal against a decision rejecting a claim by Skilled Engineering Limited ("Skilled"), the employer, for indemnification from Glaxo Wellcome Australia Pty Ltd ("Glaxo"), the principal, pursuant to the Workers Rehabilitation and Compensation Act 1988, s134, in respect of compensation paid by Skilled under the Act to Steven Keeley, a worker injured in the course of his employment with Skilled on 9 March 2002.

1. Section 134 provides:

   "(1)   Subject to this section, where an injury for which compensation is payable to a worker is caused under circumstances creating a liability in some person other than the employer to pay damages in respect of that injury to that worker, the employer may recover indemnity against that person in respect of the compensation paid by the employer to the worker in respect of that injury.

   (2)     Subject to subsection (3), where the circumstances referred to in subsection (1) create the liability to pay damages both in the employer and some other person, whether arising as a result of a tort or otherwise, the employer has the like right of indemnity or contribution against that other person in respect of the compensation paid by the employer as if that compensation were part of those damages.

   (3)     Where an injury to a worker arises partly by his or her own fault and partly by the fault of another person, the amount recoverable by the employer under this section by way of contribution or indemnity is reduced to such extent as the Supreme Court thinks just and equitable having regard to the degree of the worker's responsibility for the injury."

   Section 134 is contained in the Act, PtX, as to which s132 provides:

   "In this Part, unless the contrary intention appears –

   'compensation', used in relation to an injury, means any compensation or any such expenses as are referred to in section 75 payable in respect of that injury under this Act;

   'damages' means damages recoverable (whether by virtue of an enactment or otherwise) in respect of any civil liability in the employer, however arising;

   'employer', used in relation to an injury suffered by a worker, includes any person who, in respect of that injury, is liable, under section 29, to pay compensation or to indemnify any other person for any compensation paid by that other person."

1. Section 29 renders a principal within the meaning of that provision liable to pay compensation.  It is agreed that at the time of Steven Keeley's injury, Skilled was his employer and in consequence of the relationship between Glaxo and Skilled, Glaxo was the principal within s29.  That section provides:

   "(1)   Where a person (in this section referred to as 'the principal') in the course of, or for the purposes of, his trade or business contracts with any other person (in this section referred to as 'the contractor') for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal is liable to pay to a worker employed in the execution of the work any compensation under this Act that he would have been liable to pay if that worker had been immediately employed by him.

   (2)     Where compensation is claimed from, or proceedings are taken against, the principal, then, in the application of this Act, a reference to the principal shall be substituted for a reference to the employer, and the amount of compensation shall be calculated with reference to the earnings of the worker under the employer by whom he is immediately employed.

   (3)     In the construction of the provisions of this section, the expression 'the principal' includes a contractor who enters into a sub-contract with any other person for the whole or any part of the work undertaken by him, and the expression 'the contractor' includes a person who takes such a sub-contract.

   (4)     Where the principal is liable to pay compensation under this section, he is entitled to be indemnified by any person, other than the Nominal Insurer, who would have been liable to pay compensation to the worker independently of this section, and the right to that indemnity is available against every contractor standing between the principal and the worker.

   (5)     Nothing in this section shall be construed as preventing a worker recovering compensation under this Act from the contractor instead of the principal.

   (6)     This section does not apply in any case where the injury occurs elsewhere than on, in, or about the place on which the principal has undertaken to execute the work or that is otherwise under his control or management."

2. As Skilled is the employer not the principal, it cannot derive any assistance from s29 in pursing its claim for indemnification against Glaxo.  Section 29, like its predecessors, the Workers' Compensation Act 1927, s6, the Workers' Compensation Act 1918, s18 and the Workers' Compensation Act 1910, s9, recognises that as between a principal and an employer, the liability of the principal to pay compensation to a worker is secondary to that of the employer. This recognition is derived from s29(4) which entitles a principal liable to pay compensation to be indemnified by any person liable to pay the compensation to the worker independent of the section, that is, an employer. In result, at least in a no fault situation, as between the employer and the principal, the employer bears the primary liability to pay compensation to the worker. The qualification "at least in a no fault situation" depends upon the interpretation given to s134(1). That section is substantially in the same terms as the Workers Compensation Act 1927, ss8F and 8H.  Those sections were added to that Act in 1974 by the Workers' Compensation (Alternative Remedies) Act 1973.

1. On one reading of s134(1), where the injury to the worker is caused by the fault of a person other than the payer of the compensation, that is, the injury is caused under circumstances creating a liability in some person to pay damages in respect of the injury to the worker, the payer of the compensation can obtain indemnification from the liable person. On this reading, s134(1) would enable an employer who has paid compensation to obtain an indemnity from a principal liable to pay damages in respect of the injury to the worker.

1. Glaxo, the principal, contends that Skilled cannot obtain indemnification from it pursuant to s134(1) as that provision only confers rights against "some person other than the employer" and the employer, pursuant to s132, includes the principal. Before this Court, counsel for Glaxo reiterated the argument on this issue that had been advanced before the learned trial judge. That argument was summarised by his Honour as follows:

"·    Proceedings have been taken against [Glaxo], within the meaning of s29(2), in that this action has been brought against it.

·Therefore, by operation of s29(2), 'in the application of this Act, a reference to the principal shall be substituted for a reference to the employer'.

·Therefore, in s134(1) and (2), the references to 'the employer' must be read as references to 'the principal'.

·By virtue of s132 as well, the references in s134(1) and (2) to 'the employer' must be read as referring to 'the principal'.

·Section 134 only confers a right to claim an indemnity or contribution against a 'person other than the employer'. 

·It follows that, when s29 is applicable, s134 only confers rights against a person other than the employer and the principal, and does not confer on the employer any right against the principal."

1. Skilled, the employer, contended before this Court, as it did before the learned trial judge, that the reference to "the employer" in s134(1) should be construed as referring only to the employer or the principal who had actually paid compensation.

1. On this issue, the learned trial judge found in favour of Glaxo, the principal.  His Honour said, at pars17 - 19:

   "Because of the definition of 'employer' in s132, I think it is clear that the references to 'the employer' in s134 should be interpreted as also referring to any principal or person liable under s29 to pay compensation, or to indemnify another person for any compensation paid by that person. Thus, when compensation has been paid by a principal, the ultimate burden of the payment of compensation can be placed upon a tortfeasor. That interpretation would promote the purpose or object of s134, and should therefore be adopted in accordance with the Acts Interpretation Act 1931, s8A.

   Because of the introductory words of s132, the extended definition of 'employer' in that section applies throughout PtX of the Act 'unless the contrary intention appears'.  In my view it cannot be said that any relevant contrary intention appears in relation to s134.  Obviously it was intended that a principal who has paid compensation under s29 would have the right to recover an indemnity or contribution from a tortfeasor under s134.  The argument that 'employer' in s134 should be given a limited meaning, confined to those who have paid compensation, thus cannot be based on the 'contrary intention' proviso at the beginning of s132.  That argument is really an argument that the word 'employer', which is extended by s132 to include a deemed employer, should then be limited as if the words 'who has paid compensation' are added.  In my view, such an interpretation places too great a strain upon the language of s134, and should therefore be rejected.  Parliament obviously did not contemplate the possibility of an employer in the strict sense wanting to recover an indemnity or contribution from a negligent principal.  Otherwise some provision would have been made as to whether the right of indemnity conferred by s134 was intended to prevail over the right of indemnity conferred by s29(4) on a principal who has paid compensation, whereby the amount paid may be recovered from the employer, or whether s29(4) was to prevail over s134.  In the circumstances I think the only appropriate course is to interpret s134 in accordance with the express provisions of s132.

   It follows that, for the purposes of s134, the defendant is not 'a person other than the employer'; that the plaintiff cannot recover an indemnity or contribution from the defendant in this action; and that I should make a determination in the defendant's favour to that effect."

2. With respect, I take a different view. Pursuant to s134(1), the right to receive indemnification is given:

·to "the employer";

·against a "person other than the employer", in which person has been created a liability to pay damages in respect of injury to the worker;

·"in respect of the compensation paid by the employer".

1. An essential pre-condition to the employer claiming indemnification is the payment of compensation by that employer. So, whilst the term "the employer" includes both a principal and an employer, to my mind that term as used in s134(1) refers interchangeably to the employer or the principal who has paid the compensation that is the subject of the claim for indemnification. When the claimant is the employer, that term should be applied throughout s134(1) in assessing whether the employer's claim is substantiated. Similarly, when the claimant is the principal, that term should be applied throughout the provision. To allow that for the purposes of s134(1), the term employer includes principal in the sense that the employer comprises or encompasses the principal as part of a whole, could give rise to a claim by an employer for indemnification in respect of compensation paid not by the employer but by the principal. I do not consider that such an outcome is intended. The objective I discern in s134(1) is to enable the payer of compensation to recover that compensation from the person liable for the worker's injury. The ultimate responsibility for the payment of compensation is placed on that person. It would be inconsistent with that objective to construe s134(1) in a way that enabled a principal who was liable for the worker's injury to avoid that ultimate responsibility. I do not consider that there is any unresolvable tension between this interpretation of s134(1) and the indemnity conferred on a principal by s29(4). The latter is a no fault entitlement as between the principal and the employer and should give way where the principal is in fact liable for the worker's injury. The ultimate responsibility for the payment of compensation should be borne by the person liable for the worker's injury.

1. I accordingly conclude that Skilled's claim for indemnification from Glaxo pursuant to s134(1) is not outside that section simply because Glaxo is a principal.

1. Accepting that an employer can claim indemnification from a principal, the next issue raised on this appeal is whether the worker's injury in this case "is caused under circumstances creating a liability in" Glaxo, the principal to pay damages in respect of that injury to the worker within the meaning of s134(1).

1. Central to this issue are ss138AA and 138AB, which sections were added to the Act, PtX, with effect from 1 July 2001 by the Workers Rehabilitation and Compensation Amendment Act 2000. At the relevant time, those provisions read as follows:

"138AA     (1)  This Division applies to the awarding of damages against an employer independently of this Act in respect of an injury suffered by a worker if –

(a)     the injury was caused by the negligence or other tort of, or a breach of contract by, the worker's employer; and

(b)     compensation has been paid or is payable in respect of the injury under this Act or would have been paid or be payable but for section 25(2).

(2)     This Division applies even if the damages resulting from the negligence or other tort of the worker's employer are sought to be recovered in an action for breach of contract or other action.

(3)     A reference in this section to the worker's employer includes a reference to a person for whose acts the employer is vicariously liable.

138AB      (1)  Before commencing proceedings in court for an award of damages, a worker who intends to seek damages against his or her employer must lodge with the Tribunal an election to claim damages.

(2)     A worker is not to make an election unless the degree of his or her permanent impairment is agreed by the worker and the employer, or determined by the Tribunal, to be a percentage of the whole person of not less than 30%.

(3)     An assessment of the degree of the worker's impairment is to be carried out in accordance with section 72 or 73.

(4)     An election is to be in a form approved by the Tribunal.

(5)     An election is to be lodged within 2 years after the date on which weekly payments first became payable under this Act.

(6)     The Tribunal may extend the period within which an election is to be made if –

(a)     there is a dispute as to the level of the worker's impairment; or

(b)     the injury is not stable and stationary.

(7)     If there is a dispute as to the degree of impairment, the worker may apply to the Tribunal for a determination of the degree of impairment.

(8)     An application under subsection (7) is to be –

(a)     accompanied by evidence from a medical practitioner that he or she is of the opinion that the degree of impairment is not less than 30% of the whole person; and

(b)     made not less than 21 days before the expiration of the period referred to in subsection (5).

(9)     If the Tribunal determines the degree of impairment to be not less than 30% of the whole person, the worker is to lodge his or her election within 21 days after the determination.

(10)   The Tribunal may refer the question of the degree of impairment to a medical panel in accordance with Part V.

(11)   An election to claim damages does not preclude a worker from receiving compensation under this Act.

(12)   This section does not apply to proceedings taken by a personal representative or dependant of a worker who has died as a result of an injury for which compensation is payable under this Act."

1. Before this Court, counsel for Glaxo repeated the argument on this issue that had been put to the learned trial judge.  That argument was summarised by his Honour as follows:

"·    The worker's injury has not produced a whole person permanent impairment of not less than 30 per cent.

·The worker has not lodged an election to claim damages.

·Because of those facts, s138AB(1) prevents the worker from commencing proceedings in court for an award of damages against his 'employer'.

·The definition of 'employer' in s132 applies to s138AB.  The word 'employer' in s138AB(1) therefore refers both to the employer in the strict sense and to a s29 principal.

·Therefore the worker is not entitled to commence proceedings for damages against [Glaxo], never has been, and has never had a cause of action against [Glaxo].

·Therefore, for the purposes of s134(1), the worker's injury was not 'caused under circumstances creating a liability in some person [Glaxo] other than the employer [Skilled] to pay damages in respect of that injury to that worker'.

·Therefore the employer/[Skilled] is not entitled to recover indemnity or contribution from [Glaxo] under s134."

1. The hearing before the learned trial judge proceeded on the basis that by reason of s138AB the worker was precluded from commencing proceedings for an award of damages against either the employer or the principal and his Honour so held in pars24 and 25 of his reasons for decision.  That finding is not the subject of this appeal.  However, after considering a number of submissions advanced on behalf of Skilled, his Honour went on to conclude, in par46 of his reasons for decision, that so long as a worker is precluded by s138AB(1) from commencing proceedings for an award of damages, the worker does not have a cause of action against the employer or principal whom the worker could otherwise have sued and accordingly, in this case, the worker's injury was not caused under circumstances creating a liability in Glaxo to pay damages in respect of that injury to the worker.  This conclusion is appealed on the grounds that:

(i)s138AB merely operates as a bar to remedy and does not preclude the accrual of a worker's cause of action; and

(ii)even if s138AB operates to preclude the accrual of a cause of action, it does not follow that any indemnity action under s134(1) cannot be brought.

1. The question whether s138AB merely operates as a bar to remedy, as distinct from precluding the accrual of a cause of action, is significant because the operation of s134(1) is contingent upon the injury to the worker having been caused in circumstances "creating a liability". It is the existence of a liability which s134(1) postulates, not a remedy; nor the continuance or persistence of that liability. The law draws a distinction between right and remedy which makes it possible to say that there may be a liability sufficient to satisfy the opening words of s134(1) although there is a defect of remedy: Tooth & Co Ltd v Tillyer (1956) 95 CLR 605, Dixon CJ, Williams, Webb and Fullagar JJ at 612 and Tickle Industries Pty Ltd v Hann & Anor (1973 - 1974) 130 CLR 321. The question is accordingly whether, notwithstanding the failure to satisfy s138AB, there is a liability sufficient to answer the opening words of s134(1), although there be a defect of remedy. The answer to this question depends upon the wording of the legislation. Had it not been for ss138AA and 138AB, there is no question that it would have been open to establish for the purposes of s134(1) that the worker's injury was caused in circumstances creating a liability in Glaxo to pay damages on the basis that the injury was caused by the negligence or other tort of, or breach of contract by, Glaxo. However, by reason of s138AA(1)(a), the provisions of s138AB now apply to such a claim with the result that:

"(1)     Before commencing proceedings in court for an award of damages, a worker who intends to seek damages against his or her employer must lodge with the Tribunal an election to claim damages.

(2)       A worker is not to make an election unless the degree of his or her permanent impairment is agreed by the worker and the employer, or determined by the Tribunal, to be a percentage of the whole person of not less than 30%."

Counsel for Skilled contends that these conditions are preliminary procedural conditions that do not affect the validity of the worker's title to enforce liability.  This contention reflects a passage from the judgment of Dixon J in Harding v Lithgow Corporation (1937) 57 CLR 186. That case involved a statutory requirement to the effect that before a council could be sued for damages for injuries to a person, the person must have served notice of claim on the council. The injured person in question died before serving the requisite notice. His wife sued under legislation that authorised her to do so if her husband's injuries had been:

"… caused by a wrongful act, neglect, or default, and the act, neglect, or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect thereof …".

The council met the widow's claim with a plea that as no notice of claim had been served, her husband was not at the time of his death entitled to maintain an action against the council.  That defence was rejected.  Dixon J, at 195, said:

"But the imposition in favour of a particular defendant of a condition of suit, such as giving notice, is a procedural matter not going to the validity of the title to enforce the liability, but only to the mode of enforcing it, or the fulfilment of a preliminary procedural condition."

1. Counsel for Skilled contends that the conditions imposed by s138AB are no more than preliminary procedural conditions and do not affect the validity of the worker's entitlement to enforce liability against Glaxo.  Authorities relied upon by counsel include Johnson v Hill [2002] 2 Qd R 486, Hanrahan v Davis [1997] 1 VR 285 and Western Metals Zinc NL v Wesfarmers Transport Ltd [2003] WASCA 152.

1. Hanrahan v Davis (supra) involved legislation which made a worker's recovery of damages dependent upon whether the worker had suffered a serious injury.  Whilst the legislation gave recognition to a determination about whether a worker had suffered such an injury, it did not impose any prohibition on a worker pursuing proceedings if no such determination had been made.  Accordingly, where such a determination had not been made, the Court held that a worker was not barred from instituting proceedings.

1. Western Metals Zinc NL v Wesfarmers Transport Ltd (supra) involved legislation that at the date of the injury in question had included a provision that proceedings were not to be commenced without leave.  That provision had been repealed but a provision remained to the effect that when the division which covered the claim applied, a court was "not to award damages" contrary to the division.  It was held that this provision did not preclude the bringing of an action in circumstances where the division might not be satisfied and that the prohibition was directed to the stage of the award of damages, rather than the institution of the action.

1. Johnson v Hill (supra) involved legislation that provided that a claimant must give written notice before bringing an action.  It was held that the notice requirement related to the mode of enforcing the cause of action or to the fulfilment of a preliminary procedural condition, rather than an element of that cause of action.

1. I am not able to derive anything from these decisions that warrants construing the provisions in question in the manner contended for by Skilled. The decisions relate to legislative provisions that are significantly different from ss134(1), 138AA and 138AB. The construction to be given to these provisions is, of course, governed by their words. What then is the situation were the requirements of s138AB(1) and (2) have not been satisfied? Can it be said that there exists a liability sufficient to satisfy the opening words of s134(1) although there is a defect in remedy? The liability referred to is "a liability in some person … to pay damages in respect of that injury". To my mind the liability referred to is one that goes beyond a contingent remedy and refers to a true liability to pay damages. There is a significant difference between requirements that before proceedings are commenced, an election must be made or leave to proceed must be obtained and one of the requirements to be derived from s138AB(1) and (2) which is that before the commencement of proceedings, the degree of the claimant's permanent impairment must be agreed or determined to be not less than 30 per cent. The former are procedural requirements which, in the case of a notice is wholly within the power of the claimant, and in the case of leave is partly within the control of the claimant. The latter is akin to a substantive requirement, the satisfaction of which involves far more than a choice on the claimant's part. It requires an agreement or a favourable determination by the Tribunal. In the absence of the satisfaction of this requirement, in my view, it cannot be said that the worker's injury was caused in circumstances creating a liability in Glaxo. The conclusion I have reached accords with that reached by the learned trial judge who, in concluding as he did, placed reliance upon Wilson v Nattrass (1995) 21 MVR 41, Swannell v Farmer [1999] 1 VR 299 and Bonser v Melnacis [2002] 1 Qd R 1. Counsel for Glaxo relies upon these decisions before this Court. The first two of these decisions relate to the Transport Accident Act 1986 (Vic), s93, the first subsection of which provided:

"A person shall not recover any damages in any proceedings in respect of the injury or death of a person as a result of a transport accident … except in accordance with this section."

Subsection (2) allowed a person to recover damages if the injury was a serious injury (a defined term) and the Transport Accident Commission had determined a degree of impairment of the person at 30 per cent or more.  The effect of subs(4) was that where the Commission had determined the person's degree of impairment to be less than 30 per cent the person may not bring proceedings for the recovery of damages unless the Commission was satisfied that the person's injury was serious and consented, or the court was satisfied that the person's injury was serious and granted leave.  In Wilson v Nattrass (supra) at 55, Ashley J said with reference to these provisions:

"… in my opinion, s 93(1), (2) or (4) should be considered contingently to extinguish such rights of action for damages at common law as were hitherto enjoyed by persons injured in transport accidents in this state, and to be part of the substantive law of this state."

At 59, Hedigan J said:

"… the effect of s 93(1) is contingently to extinguish the right to recover common law damages for personal injuries in Victoria in respect of a transport accident … . The attainment or fulfilment of any one of the contingencies – conditions set out in s 93(2), (3) and (4) will enable the bringing of a proceeding for the recovery of common law damages."

1. In Swannell v Farmer (supra), Batt and Buchanan JJA, agreed with by Callaway JA, said of s93 at 307:

"The section is substantive.  It does not assume that an action may be brought and merely bar the remedy."

and at 308:

"Unlike a time bar, which upon the effluxion of the prescribed period of time terminates an existing ability to recover damages, s 93 requires events to occur before damages can be recovered for injuries sustained in a transport accident and, until these events occur, prevents causes of action coming into existence."

1. I derive some support for the conclusion that I have reached from these decisions, although to my mind the strength of that support is diminished by the presence of an express provision in s93 as to it being substantive not procedural. Section 93(20) provided:

"For the avoidance of doubt it is hereby declared that all the provisions of this section contain matters that are substantive law and are not procedural in nature."

1. Bonser v Melnacis (supra) involves the WorkCover Queensland Act 1996 which included provisions to the effect that a claimant worker may only start proceedings in the court for damages if the worker has complied with various requirements that include obtaining a notice of assessment or a conditional certificate from WorkCover. The worker in question had not obtained either of these. The Queensland Court of Appeal, having referred to Swannell v Farmer (supra) and Wilson v Nattrass (supra) said at 10 - 11:

   "If the Victorian decisions are correct, it is difficult to think that the language of the WorkCover Act is any less destructive of a plaintiff's cause of action than the words of the Transport Accident Act (Vic). For our part however, with respect, we find the reasoning in these decisions less than compelling. Were the matter free from recent authority such as these decisions and the line of authority which now proceeds from Commonwealth of Australia v Flaviano (1996) 40 NSWLR 199 concerning the Comcare Act, we should have been inclined to hold that an injured worker obtains a right of action when injured through the fault of the employer and that only the remedy is precluded unless and until various steps are taken."

   After reviewing a number of other decisions, the court, at 13, accepted that the relevant provision effectively abolished any entitlement on the part of an injured worker to commence proceedings against the employer and that such a right comes into existence only upon compliance with the prescribed steps.

1. Notwithstanding the reservations expressed in Bonser v Melnacis and the differences between the legislation I am considering and the legislation under consideration in that case and in Wilson v Nattrass and Swannell v Farmer, I draw some comfort from those decisions for the conclusion I have expressed.

1. Counsel for Skilled contends that even if s138AB operates to preclude the accrual of a cause of action, it does not follow that an indemnity action under s134(1) cannot be brought as the focus of that provision is on whether the injury "is caused under circumstances creating a liability" whilst the focus of s138AB is only the consequences of the injury. It is submitted that because of the different focus of each of s134 and s138AB, the latter does not affect the operation of the former. In developing this submission in his written submissions, counsel for Skilled submitted that:

"Because of the operation of s138AB, in any given case a worker may not be able to commence proceedings for an award of damages, with the result that ultimately no consequences may flow from an apparent liability.  Such liability for damage thus becomes a contingent liability.  Putting it another way, the addition of s138AB to the scheme of the Act requires reading the word 'liability' in s134 accordingly."

This submission is reminiscent of a submission that was dealt with in Tooth & Co Ltd v Tillyer (supra), a case which dealt with the Workers Compensation Act 1926 – 1954 (NSW), s64, which relevantly provided:

"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 – (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."

The claimant, the employer, sought indemnification from the husband of the worker who suffered injuries on the basis that her injuries had been caused by the husband's negligence.  The claim was resisted on the ground that at that time a wife could not sue a husband in tort and accordingly her injury was not caused under circumstances creating a legal liability in her husband.  In an effort to circumvent this defence, it was submitted on behalf of the claimant that the words "under circumstances creating a legal liability" should be interpreted as descriptive only, that is to say, as referring to the kind of circumstances which must exist and not as requiring there should be an actual liability.  On this basis, it was put that it was enough if the circumstances were such as would spell legal liability if considered apart from any particular privilege, exemption, immunity or bar attaching in any given case, attaching, that is to say, in consequence of special matter which did not touch the cause of the injury or its legal quality.  In rejecting this submission, Dixon CJ, Williams, Webb and Fullagar JJ said at 611 – 612:

"[I]t seems impossible to treat s. 64 (b) as not depending for its application on the incurring by a person other than the employer of an actual legal liability in respect of the injury. The introductory words of s. 64 do not define or describe the person who has the right corresponding to the liability of which they speak. That no doubt is because it may be a right vested in an injured worker or in the executor or the relatives of a deceased worker under Lord Campbell's Act (Compensation to Relatives Act 1897-1953 (NSW)). But the right which is given to the employer who has paid compensation rests on the existence for however brief a time of a true liability to pay damages to some person or persons in respect of the injury for which compensation was payable and has been paid. In that sense it is derivative. The policy of the provision is to adjust the responsibilities arising from the co-existence of two liabilities as alternatives either of which might be pursued by the worker or, in case of his death, by some or all of the persons prejudiced by his death. It would be inconsistent with this evident policy to construe s. 64 (b) as depending not on a real liability in the employer but on no more than the existence of facts of a kind which, apart from some special matter, would ordinarily imply liability in an employer. What is even more decisive, it would be inconsistent with the terms of the provision itself."

1. In my view, for similar reasons to those above and for those which I have already expressed, the submission advanced by counsel for Skilled must fail.  The right of indemnity given by s134 rests on the existence for however brief a time of a true liability to pay damages for the injuries in a person other than the employer.  To hold otherwise would ignore the plain wording of s134.

1. I would dismiss the appeal.

   File No 154/2004

SKILLED ENGINEERING LIMITED v
GLAXO WELLCOME AUSTRALIA PTY LTD

REASONS FOR JUDGMENT  FULL COURT

TENNENT J
16 September 2005

1. I have had the opportunity of reading the judgment of Evans J.  I agree with his conclusions and have nothing useful to add.

   File No 154/2004

SKILLED ENGINEERING LIMITED v
GLAXO WELLCOME AUSTRALIA PTY LTD

REASONS FOR JUDGMENT  FULL COURT

HILL AJ
16 September 2005

1. I agree with the reasons for judgment of Evans J and the order he proposes.