State Insurance Office v CMT Construction of Metropolitan Tunnels

[1988] HCATrans 88

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No Ml? of 1988

B e t w e e n -

THE STATE INSURANCE OFFICE

Appellant

and

CMT CONSTRUCTION OF METROPOLITAN

TUNNELS

First-named Respondent

and

NATIONAL EMPLOYERS' MUTUAL GENERAL

INSURANCE ASSOCIATION LIMITED

Second-named Respondent

CMT(2)

WILSON J

BRENNAN J
DAWSON J
TOOHEY J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 10 MAY 1988, AT 10.16 AM

Copyright in the High Court of Australia

C2Tl/l/PLC 1 10/5/88

MR J.L. DWYER, QC: If the Court pleases, I appear with

my learned friend, MR D. CROSS, for the appellant.

(instructed by Pulling & Co)

MR B.D. BONGIORNO, QC: If the Court pleases, I appear with

my learned friend, MR R. WILLIAMS, for the first

respondent. (instructed by Alfred L. Abrahams & Co.)

MR J.E. BARNARD, QC:  May it please the Court, I appear with

my learned friend, MR C. KEON-COHEN, for the

second-named respondent. (instructed by Coltmans)

WILSON J:  Yes, Mr Dwyer.

MR DWYER: If the Court please, I have an outline of argument

to hand up to the Court and may I also mention

one matter - I will hand a document up with it,

Your Honour. By the TRANSPORT ACCIDENT ACT, the

State Insurance Office has had substituted for

it the Transport Accident Commission and it may

be appropriate that the Transport Accident Commission

become the appellant rather than the State Insurance

Office and we have had a document signed by each

of the parties consenting to that being done,

Your Honour.

WILSON J:  Yes, thank you.

BRENNAN J: Is there only one corporation now?

MR DWYER:  Yes, there is. The statute says that the Commission:

is substituted as a party to any proceedings

under Part V of the MOTOR CAR ACT pending

in any court to which the authorized insurer

was a party immediately before that commencement. And the part of the MOTOR CAR ACT that established

the State Insurance Office has been repealed - Part V of the MOTOR CAR ACT has been repealed.

(Continued on page 3)

C2Tl/2/AC	2	10/5/88
CMT(2)

BRENNAN J: I take it you are acting for both the Insurance

Office and the Commission.

MR DWYER:  Yes.

BRENNAN J: Well, that is all right.

MR DWYER:  I think I am authorized to do that. It is simply

a matter that we thought ought be	brought to the
Court's attention.	I do not think anything, in fact,
turns on it at all.

WILSON J:  Yes, well, if it is necessary, the Court makes the

order appropriately.

MR DWYER:  Yes, if Your Honour pleases. The point at issue

in this case is whether a workers compensation

insurer who has indemnified an employer for payments

of workers compensation can recover back from the

employer the payments made after the worker recovers

damages in a common law claim against that employer.

It may assist the Court if I were to very briefly outline

the circumstances in which this matter arose. There

was an accident on 8 January 1981 wherein the

plaintiff, John Lucas, was injured in the course of

his employment with CMT; that is, CMT Construction

of Metropolitan Tunnells.

The plaintiff's injuries were caused by or arose out of the use of a motor vehicle, within the meaning

of section 46 of the MOTOR CAR ACT. The plaintiff was

paid workers compensation under the WORKERS COMPENSATION

ACT totalling $31,609.62, being weekly payments and

medical and like expenses.	The employer, CMT, was
liable to make those payments. NEM,	or

National Employers'Mutual General Insurance Association

Ltd was the workers compensation insurer of the

employer, and NEM made the payments to the plaintiff

or on his behalf at the request of CMT. The plaintiff

sued CMT in the supreme court for damages for

negligence.

At trial, the jury returned a verdict in favour

of the plaintiff against CMT in the amount of $257,000.

Subsequent to the verdict and in accordance with

section 79 of the WORKERS COMPENSATION ACT the amount

of the judgment was reduced by the sum of $31,609.62

and interest of $50,000 was added, so that a judgment

was entered for the balance, that is, the $257,000

less the $31,000- $225,390.38 together with interest

of $50,000. There was subsequently an appeal by the

defendant and that appeal was, in the end, settled by

the interest component being reduced form $50,000

to $34,609.

C2T2/l/VH	10/5/88
CMT(2)

MR DWYER (continuing): There had been a dispute about who

was the appropriate insurer in respect of that

common law liability and CMT had joined both

State Insurance Office and NEM as third parties

in the common law proceedings. CMT had sought

an indemnity against both of them in respect of the plaintiff's claim and costs. In the end it

was agreed that SIO was the authorized insurer

and liable to indemnify the employer CMT under

the MOTOR CAR ACT.

After judgment was entered for the plaintiff

in the common law proceedings, NEM amended its counter-claim against CMT by adding a claim to

recover the payments of workers compensation and

that can all be seen in the order of

Mr Justice Hampel which is at pages 24 to 27 of

the appeal book - the relevant parts of the order

at pages 24 to 27. His Honour follows through

the sequence of giving the third party leave to

amend its counter-claim and then there are a lot

of consequential amendments on the succeeding pages

setting up the issue which remained to be litigated;

that is the NEM's counter-claim to recover the

payments of workers compensation, CMT's claims

for an indemnity against State Insurance Office.

The appeal book in fact contains each of the

amended pleadings, although they are not in a form

which is very readily to be comprehended. One

needs to, in fact, re-arrange the sequence of them

from the way that they appear · in the appeal book

but if one follows through the sequence in

Mr Justice Hampel's order I think the matter is

perfectly plain.

The result of all that is that there were two

claims on foot in these proceedings and that is,

first of all, NEM's counter-claim and, secondly,

the defendants' claim against SIO for idemnity

in respect of that counter-claim. (Continued on page 5)

C2T3/l/ND	10/5/88
CMT(2)

MR DWYER (continuing):  Mr Justice O'Bryan heard those claims

and dismissed NEM's counter-claim and made

consequential orders, and His Honour's reasons appear

at page 30 to page 44 in the appeal book. NEM appealed

to the Full Court of the Supreme Court of Victoria

who allowed the appeal and the Full Court did so on

the basis that where a worker obtains a judgment

against his employer for damages at common law,

arising from an injury at work, which judgment is

satisfied, the employer's liability to pay workers

compensation is extinguished ab initio, or eliminated,

and, accordingly, the Full Court held that the liability

of NEM to indemnify the employer for workers

compensation payments was extinguished because the loss

aEainst which it had agreed to indemnify CMT had not,

in the end, occurred, and the Full Court said that NEM

was entitled to obtain from CMT a return of the moneys
which it had paid by way of indemnity of that assumed
workers compensation liability.

Now, the interrelationship between proceedings under the WORKERS COMPENSATION ACT and at common law

was, at the time relevant to this action, dealt with
in section 79 of the Act, amended up to June 1980, and
I will be taking the Court to some detail in relation
to that section, but the argument that is put on behalf
of the appellant is that the Full Court's finding that
the liability to pay workers compensation was
extinguished ab initio is not consistent with section 79.

The Full Court did something, it is submitted, which

is not provided for by section 79, and which was done

on a basis inconsistent with section 79.

Now it is relevant to look first at section 79(1A)

Does the Court have that available?	Section 79(1A)
provides that:

(Continued on page 6)

C2T4/l/HS 5 10/5/88

MR DWYER (continuing):

Where a judgment or order for damages in favour of a worker and against his employer

has been satisfied in whole or in part or a

payment into court -

well, that is not relevant -

has been accepted ..... -

(a) the right of a worker to any further

weekly payments under this Act shall thereupon

cease and determine; and

(b) the Board may refuse to make any award

in favour of the worker for any damage caused

by an injury if it is satisfied that the

judgment for damages or payment into court,

as the case may be, was in respect of the

damage caused by such injury.

Now, that provision does not say that the liability under the WORKERS COMPENSATION ACT is extinguished

upon satisfaction of the judgment for damages. It

deals only with the right to any further weekly

payments which it says "shall thereupon cease" and

it provides further for a discretion in the Workers

Compensation Board to refuse to make an award in

favour of the worker and, as Mr Justice O'Bryan

found, the section does not provide, in any way, for
the workers compensation which has been received by

the worker to be returned to the employer or the

workers compensation insurer.

What the section provides in that regard is

dealt with in subsection (2) which provides that:

Where a judgment or order for damages in favour of a worker is to be entered or made in any

court in respect of the injury of the worker

in proceedings independent of this Act against

an employer by whom payments of compensation

have already been made in respect of that

injury under this Act, the amount of the

judgment or order shall be reduced by the

amount of the payments already made.

(Continued on page 7)

C2T5/l/SH 6 10/5/88

MR DWYER (continuing): That was what was done in this case

and that is the provision which the Act makes.

Now, none of the other provisions of section 79 are

relevant to the present question. The whole of

section 79, I suppose, needs to be considered under

what is the opening remarks in (1), but I do not
think that anything in the end turns on them in
this case. Subs·ection (1) provides that subject

to the subsections referred to:

nothing in the Act shall affect the right

of any person to take and prosecute any

proceedings for damages against an employer -

that is, that right is preserved in tact, subject

only to those subsections which do not relate to

anything which occurred in this case.

Now the finding, it is submitted, that liability

ceased ab initio, which the Full Court made, is

inconsistent with those provisions. If it were

the case that the liability ceased ab initio it

would not be appropriate language to say that:

the right of a worker to any further weekly

payments under this Act shall thereupon cease

and determine.

The use of those words "further weekly payments"

indicates that the language of the Act is directed

to what happens prospectively from the time

of satisfaction of the judgment, and that is

inconsistent with a view that the slate is wiped

clean, as it were, so far as workers compensation

liability is concerned.

If it were the case that the workers compensation

liability had ceased ab initio, what would start to be

in issue would be the question of whether the worker

was liable to repay those weekly payments because

he would then have received m:::mey which he held on

a basis as to liability which had been removed, but

the Act does not make a provision of that kind.

(Continued on page 8)

C2T6/l/JM	7	10/5/88
CMT(2)

MR DWYER (continuing):  The fact that the Act makes no

such provision was noted by Mr Justice Gibbs

in XPOLITOS. The relevant passage in XPOLITOS,

(1977) 136 CLR 418, is at page 428 where -

I should preface my reference to XPOLITOS' case

by pointing out that, in fact, what was being

considered there was the different circumstance

where there was a negligent tortfeasor other than
the employer and the provision for recovery of workers compensation under section 62. There

is a discussion of section 79 by His Honour and

the relevant provision of section 79 that is referred

to is section 79(3) which is dealing with the section 62 cases, if I could put it that way.

The language of the sections is the same

and the remarks which are made in the section 79(3)

context apply to section 79(2) and that position

has been adopted by courts over and over again.

At page 428 His Honour, in the fourth line, refers

to the provision that:

the right of a worker to further weekly

payments shall cease -

but His Honour notes that the section does not

provide:

that a worker shall be required to make

any repayment of weekly payments already

made even if they exceed the amount of

damages recovered.

Then His Honour goes on to say something concerning

the discretion which the Workers Compensation

Board is given and His Honour says, of that discretion,

that:

(Continued on page 9)

C2T7/l/SDL	8	10/5/88
CMT(2)

MR DWYER (continuing):

Subparagraph (iii) in terms allows the Board

a discretion to refuse to make an award where

damages have been recovered, but that discretion

must of course be exercised in the light of
the provisions of sub-par. (i); in other words
if the amount of damages equalled or exceeded

the amount of compensation to which the worker

was entitled the Board would be bound to refuse

to make an award, but an award might be made

if the right to compensation exceeded the

damages.

Now, although it is in the other part of the Act,

the words used are identical and what His Honour

there says applies, it is submitted, to

subparagraph (l)(a) and what His Honour says is

inconsistent, it is submitted,with what the Full

Court did because if the effect of the satisfaction

of judgment is to extinguish the workers compensation

liability ab initio that must happen, on the Full

Court's approach, whether the amount of the compensation is greater or less than the amount recovered under

the judgment. But as His Honour notes, if the

amount of compensation to which the worker is entitled

is greater than the amount of damages recovered

the discretion which the Act preserves to the

Workers Compensation Board continues to operate.

The Board has still got a discretion to make an

award in favour of the worker taking into account,

no doubt, what had been recovered by the worker
in the common law proceedings. But, it certainly is
not the case that the worker's right to an award

under the WORKERS COMPENSATION ACT has been extinguished,

and the discretion which is given by the Act is

submitted to be inconsistent with the Full Court's

position.

Now, if one looks at the judgments in the

Full Court and asks:	"Well, what is the source
of the Full Court taking this approach to section 79?" -

what the Full Court did was to follow through the

history of the WORKERS COMPENSATION ACT going right

back to the beginning and to say:  "Well, proceedings

at workers compensation and proceedings at common

law have always been alternative proceedings.",

and they refer to many cases in which it is plain

enough that the courts are saying that the proceedings

are alternative proceedings. But those cases are

all cases decided when the WORKERS COMPENSATION ACT

included the provision that used be contained

in section 5(2) of the Act.

C2T8/l/AC	9	10/5/88
CMT(2)

MR DWYER (continuing):  And that provision spelt out

that where you had the circumstance of claims for

compensation against an employer independently

of the Act:

nothing in this Act or in any scheme .....

shall affect any civil liability of the

employer, but in any such case the worker

may at his option either claim compensation

under this Act or the said scheme (as the
case may be) or take proceedings independently

of this Act or the said scheme (as the case

may be) but the employer shall not be liable

to pay compensation for injury to a worker

by accident arising out of or in the course

of the employment both independently of and

also under this Act or the said scheme .....

and shall not be liable to any proceedings
independently of this Act or the said scheme

..... except in the cases aforesaid -

and then the Act used go on to set out the

proviso that is now contained in section 79(1A).

WILSON J:  When was section 5(2) repealed?

MR DWYER: In 1970, Your Honour.

WILSON J:	1970, that was Act 8084?
MR DWYER:	8084 which removed the proviso from section 5

and created section 79(1A), repealed section 5(2)
and from the time of that repeal it is submitted

that the alternative nature of the remedies which

was provided for by section 5(2) ceased to be the

case because when those words were taken out of
the Act, and from that subsection, nothing was

introduced into the legislation to continue that

alternative nature. What was done was rather that

section 79 was elaborated upon, various things

problems arising out of the interrelationship	continued to be added in to section 79 to deal in particular cases or to deal with particular	between proceedings at common law and proceedings
under the Act but we are left in the position,
it is submitted, where one either finds the answer
to a particular problem in section 79 or one says
"The Act does not provide an answer at all".

(Continued on page 11)

C2T9 /1 /ND	10	10/5/88
CMT(2)

MR DWYER (continuing): There is no longer left enshrined in

the Act a general principle to resolve these questions,

such as the one which used be contained in

section 5 ( 2). By going back to that approach i;..ihich had been

the subject of so many decisions when the Act was

differently constructed, the Full Court misled itself

as to what the relationship between the remedies was
after the repeal of section 5(2) and by following that
path the Full court was persuaded to add something in to

section 79(2) which was simply not there; that is, to add into it the finding that upon satisfaction of the

judgment, the liability ceases ab initio and by
reason of that liability ceasing ab initio the

workers compensation insurer was, the Full Court said,

able to recover the payments from the employer.

It is worth bearing in mind, I think, that

Mr Justice Murphy found that that was to happen whether

the employer had some other insurer or not; that is,

Mr Justice Murphy expressly said that the question

of insurance did not determine whether or not the

workers compensation insurer could recover those payments;

they were to be recoverable in any event. His Honour's

finding to that effect appears at the foot of page 109

and at the top of page 110 in the appeal book.	It is
the last paragraph on page 109:

I appreciate that this view would seem to

have the result that the workers compensation

insurer of the employer would be entitled

to receive from the employer repayment of the

amount of the assumed compensation payments
made, if once the plaintiff worker obtained

a judgment for common law damages which fell

outside the terms of the workers compensation
policy, and which was reduced as in the present
case, even if the employer was not entitled
for some reason to receive indemnity from

another insurer.

(Continued on page 12)

C2Tl0/l/VH	11	10/5/88
CMT(2)

MR DWYER (continuing):  Now, the question of the character

in which workers compensation payments were made

and whether or not those payments retained that

character has been the subject of a large number

of decisions in the Supreme Court of Victoria.

In approaching those decisions, it must be

acknowledged that many of them were given when

the Act was in a different form; that is, one

cannot go back to those decisions which go right

back to 1957, I think, when the remedies were

alternative remedies; when, first,workers could

be said to have exercised an election by taking

workers compensation payments. Then, when that

was modified, but subsection 5(2) remained in

the Act, the decisions - many of them - are back

in the time when the Act was in that form and so

one has to approach them with a certain caution

but what has happened over and over again is that

every time the Supreme Court of Victoria has

considered the matter, they have said that the

workers compensation payments have the character

of being workers compensation payments when they

are made and never lose that character. It is

perhaps sufficient to spell out the position as

arrived at by the Full Court in RAMADAN V MOUSSA,

(1984) VR 713 at page 720 where the eourt, after

referring to a decision of Mr Justice Lush in

KAPOULITSA V NEWMAN and an unreported decision

of the Full Court in VASICA V TOPPEN, summed up

the present state of the law in the paragraph in
the middle of that page:

The amount of the payments of workers

compensation to be deducted need not
correspond in its components '(weekly payments,

hospital, medical and like expenses) either

in description or in time with the special

damages claimed in the common law action. It

is more likely than not that it will roughly

correspond but if, through omission, or, as

here, through deliberate act on the part of	the plaintiff's legal advisers, an item of
special damage is not claimed, this cannot
mean that the amount of the payments of compensation by which any judgment to be
entered "shall be reduced" is to be correspondingly altered. Furthermore, the
amount of compensation payments made, for example, by way of weekly payments for
incapacity may extend beyond the bounds, in time, for which a loss of earning capacity is able to be claimed or proven in the cotmnon
law claim.

There is a reference to GONIS V ROOTES and MATERIA

V ALBERT BOOTH ENGINEERING.

C2Tll/l/SH 12 10/5/88

This, again, could not lessen the amount of the reduction to be made to the judgment, for

as Lush J. said in KAPOULITSA V NEWMAN, (1967)

VR at page 35, s. 79(3) provides "for the

deduction of the whole of the compensation

received ..... from an award of damages".	We
respectfully agree.

In KAPOULITSA V NEWMAN, Mr Justice Lush had

said very clearly that payments of compensation have

stamped on them that character and never lose it.

At line 44 on page 35, Mr Justice Lush says:

It follows, therefore, from the decision in SMITH V COMMONWEALTH OIL REFINERIES LTD.,

that for the purposes of s. 79 a "payment of

compensation" is an act which is complete and

final when it occurs, and that subsequent

repayment cannot obliterate it. In the words

of the judgment in that case, which I have

quoted above, when in the present case payments

of compensation were made to the plaintiff for her benefit she lost some part of her right to damages against the defendant, and she is not

restored to her original position by reason of

repayment.

(Continued on page 14)

C2Tll/2/SH	13	10/5/88
CMT(2)

MR DWYER (continuing):  What had been done in KAPOULITSA V NEWMAN

was this: in a case where the worker had received

$262 by way of payment of workers compensation the

jury returned a verdict for $3000 which precisely

equalled the amount that had been paid into court,

and so the $3000 had $80 added on to it for interest,

but what the plaintiff did was forthwith repay the

$262 to the employer and then move for judgment for

the $3080, but Mr Justice Lush held, and it has since

been approved by the Full Court that despite the

repayment of the $262 to the employer, the section 79

deduction still had to be made and when the section 79

deduction was made, the judgment was taken under the

payment in, and in this case that had the consequence

for costs which a payment in greater than the judgment

ordinarily carries, although that consequence has since

been departed from by the Court in particular cases,

but that is not a material consideration.

Now, the position which Mr Justice Lush there set

out and which, it is submitted, has been subsequently

approved by the Full Court, is acknowledged to have

been arrived at before the repeal of section 5(2), but

in RAMADAN V MOUSSA the court makes no reference to

that fact. It may assist the Court if I were

to simply indicate that the operation of section 79(2)

and of section 79(3) have been the subject of

repeated consideration by judges in the Supreme Court

of Victoria, and a consideration where they can all

be summed up, in a way, by saying that for one reason

or another there is a lack of fit between the

deduction to be made under the statute and the notion

of what had been actually received and claimed by the

plaintiff.

GONIS V ROOTES is a case where the deduction was made, even though the damages awarded in the connnon law

action were in respect of a different period of loss

of earnings. MATERIA V ALBERT BOOTH is a case

concerned with what medical expenses can be claimed

will happen under the workers compensation deduction.	in the connnon law proceedings, having regard to what
KAPOULITSA V NEWMAN I have taken the Court to. The
other cases, ALEVRAS V SIDNEY COOK FASTENERS and
VASICA V TOPPIN are all addressed to the same problem. The situation from all of those cases, it is submitted,
is that the payments which are required to be deducted
under section 79(2) cannot be regarded simply as
payments on account of damages.
Now, the position then arises as to how one should see workers compensation payments and connnon law damages
as relating one to the other, that is, what does one
say if one says, "The Full Court was wrong in regarding
these remedies as alternative remedies." The situation
now is, it is submitted, that the remedies are
cumulative remedies subject to the adjustment that is
made under section 79(2) which, in a very crude way,

C2Tl2/l/HS 14 10/5/88

could be said to prevent double recovery by the

worker, but may, in a particular case, do more than

prevent double recovery by the worker because it may,
in a particular cas~ result in a deduction of moneys

that have not, in any sense, been included in the

common law damages.

(Continued on page 16)

C2Tl2/2/HS 15 10/5/88

MR DWYER (continuing):  One is not permitted, as all these

cases have said, to make any further adjustment

beyond that. One simply follows through what

section 79(2) requires.

BRENNAN J:  How could it be that the amount which is to

be deducted under 79(2) would not otherwise be

included within common law damages?

MR DWYER:  Yes, the elements of the amount to be deducted

will ordinarily be included in the damages, but what

has been pointed out is that there may not be an

exact correspondence of any kind, that is, for

example, if the worker may have received weekly

payments for a whole year, but he may not

establish in the corrrrnon law proceedings that he was

entitled to receive damages for loss of wages for

that period. He may only recover in the corrrrnon

law action one month and so any notional inclusion

of weekly payments in his damages would then be for

a very much smaller amount than the amount that is

required to be deducted. But the statute has never

been permitted to take any notice of factors of that

kind. The deduction has always been said to be

required to be the full amount of compensation paid,

whether it was included in the award of damages or

not. And what those cases do is provide a whole

lot of particular instances in which for one reason

or another, as I have said, there is a lack of

correspondence between that deduction and the

relevant part of the damages.

BRENNAN J: That is because, I take it, there might be a

different finding of fact - - -

MR DWYER:  Yes.

BRENNAN J: - - - under the two systems. Is that the only

way in which it could happen?

MR DWYER: That perhaps is the only way. It is certainly	one way, that is, because, I suppose, weekly	payments are something which tend to be made
without any finding of fact being made at all,
that is, once the claim is made the weekly payments
tend to then proceed in an automatic way subject to
the employer taking some step to bring the payments to an end.

BRENNAN J:  Well, then the question would arise whether those

payments had been made in respect of that injury.

MR DWYER: Well, they have certainly, it is submitted,

been made in respect of the same injury in so far

as they have been made in respect of any injury

at all, but it is a fairly common occurrence that

C2Tl3/l/JM 16 10/5/88

the period in respect of which those payments
are made is a different period from the period which
turns out to be the appropriate one in the corrnnon
law proceedings. And that, I suppose, involves
a finding in the common law proceedings that the
period of incapacity is less than the period

for which payments of workers compensation had

been made.

BRENNAN J: Am I right in thinking that the legal test

of the amount of damages and the amount of
compensation paid is the same in so far as both
of them are connected to the injury by the words

"in repsect of"?

MR DWYER:  It is simply perhaps - I mean, the words "in respect

of" no doubt apply in each case. But there is a

different finding of fact if one pushes it through,

that is, the Court's finding of fact differs from

what in fact happened so far as the payments of

weekly payments are concerned. There may, or may

not, be another finding of fact by the Workers

Compensation Tribunal because commonly the payments

would be made without that tribunal having made

any finding of fact at all. So, one is talking

about a potential finding of fact by that tribunal,

I suppose.

There could be a variety of reasons why

that happens. The tribunal that is considering

the common law claim may have different evidence

before it for one reason or another. There is

a great variety of possibilities which could occur.

(Continued on page 18)

C2T13/2/JM	17	10/5/88
CMT(2)

MR DWYER (continuing):  GONIS V ROOTES was an example of

precisely that problem being before the Court.

In GONIS V ROOTES the plaintiff in his statement of claim claimed loss of wages in respect of a

period subsequent to his return to work and he

did not, in GONIS V ROOTES, make any claim in

respect of the earlier period so that that meant
that the only finding that was made in the common

law proceedings was in respect of the period for which he had claimed - that is subsequent to his

return to work. Yet the workers compensation

payments that he had had covered the earlier period

for which he had not bothered to claim. That

is another way in which the problem can arise

leading to a lack of correspondence between the

two.

WILSON J:	The argument is against you, is it not, Mr Dwyer,
on your principal submission? I mean, the fact
that the total paid as compensation must be deducted from the common law judgment suggests
an extinguishment of liability to pay workers
compensation ab initio regardless of the lack of - I mean, the comparability between the two.
MR DWYER:	With respect, I think I understand the move towards
adopting that position which Your Honour suggested but there is no need to ask, really, what the purpose of subsection (2) is. What one
has is simply a statutory provision which operates.
There is a statutorx commandment, "Thou shalt make this deduction', and one tends to say that
the broad purpose of it is to prevent double recovery
by the worker and it may be said that from that
some inference might or might not be able to be drawn about whether the liability is extinguished
from the time of satisfaction, as subsection (lA)
would, in fact, say, or whether it is extinguished
from the beginning. Subsection (2) does not say
that the liability is extinguished from the beginning
and if the liability were extinguished from the
beginning it would not be necessary to have
subsection (2) in the Act. That extinguishment
would itself lead to the law providing other ways
in which there was to be an adjustment made.
DAWSON J:	Are you suggesting we should not have regard to purpose in answering the question in this case? And the next question is: if we can have regard
to purpose, what other purpose can it have?
MR DWYER:	The purpose is to prevent double recovery,
Your Honour.
DAWSON J:	Yes.

C2Tl4/l/SDL	18	10/5/88
CMT(2)

MR DWYER:	But to take the further step and to say, "Well,
can one infer from that something about whether
or not the liability has been extinguished", is something which, it is submitted, does not follow
and  is not necessary. The purpose of the subsection
is sufficiently dealt with if one simply notes
that in a very crude way it is to prevent double
recovery and that there is no logical basis, it is submitted, to take any further step and to say that one can infer from it that the liability is extinguished ab initio.
WILSON J:	But it does carry the further step, does it not,
that the liability is fixed on the tortfeaser?
The total liability for the damages suffered from
the accident because it is from that figure that
any workers compensation paid must be deducted
leaving only the balance to be payable to the
worker.

(Continued on page 20)

C2Tl4/2/SDL	19	10/5/88
CMT(2)

MR DWYER:  But it is the same person in the subsection (2)

cases. The distinction between the employer and

the tortfeasor only arises in the section 62(3)

cases but in the subsection (2) cases they are

the same person. The employer is the tortfeasor.

WILSON J:	Why is not section 62 illustrative of the principle
that underlies the whole group of sections?

MR DYWER: All that one need say about that is that the fact

that section 62 is structured in the way it is

is simply something different to what is done in

relation to subsection (2) and the fact that there

is that machinery spelled out in the Act in the

other case cannot provide any basis for the Court
adding some sort of equivalent in the subsection (2)

cases.

WILSON J:	Yes.
MR DWYER:	But it really is submitted to be the case that

if liability was extinguished ab initio subsection (2)

would not be necessary. If there were different
words there; if it said, instead of what is there

in subsection (2), "upon the satisfaction of a

judgment for damages liability under this Act shall

cease ab initio", the law would then provide its

own remedies and machineries for adjusting positions

between the parties.

The worker who had received payments would

then be liable to repay them because the basis

on which he had received them had been taken away.

WILSON J:  Not nearly as convenient a procedure as that

expressed in subsection (2).

MR DWYER:  Perhaps so, but the fact that subsection (2) is

there and provides a convenient way of preventing

double recovery does not permit anything further

to be deduced from its existence, it is submitted.

It is, perhaps, appropriate to say something about

that notion of liability which is at the very heart

of that question and it is, perhaps, appropriate

to look first at what the MOTOR CAR ACT says about

that question of liability. The insurance that

is given is by the SIO as the authorized insurer

is an insurance of the defendant against any liability,

including liabil- y for costs - - -

WILSON J:	Where do we find this?
MR DWYER:	I beg Your Honours' pardon. It is in section 46(1)

of the MOTOR CAR ACT.

C2Tl5/l/AC	20	10/5/88
CMT(2)

WILSON J:  We have got the reprint as at 19 December 1984.

Is that a convenient place to find section 46?

MR DWYER:  I am not sure that it is, Your Honour - I am

indebted to my learned friend, I am told that

it is in the relevant form then and it is section 46(1).

Does the Court have that available, or my learned

friend has got copies that can be handed up?

WILSON J: Well, we have got the reprint as at 19 December 1984.

I suppose, strictly, we should have the Act as

it was in 1981.

(Continued on page 22)

C2Tl5/2/AC 21 10/5/88

MR DWYER: Well, perhaps these can be handed up to the Court

then it will be beyond doubt.

WILSON J:  Thank you. While these are being handed up,

Mr Dwyer, can I just take you back to the point you

made right at the beginning? You mentioned

a written consent, I thought you were going to pass it

in; did you do so?

MR DWYER:  Yes. I had thought that it was handed up together

with the outline of argument, Your Honours.

WILSON J:	What is the name of the appellant now, then?
MR DWYER:	Transport Accident Commission.
WILSON J:	Transport Accident CommissiotL thank you. Without the word, "t~he," at the beginn_:1g?
~R IMYER:	I believe so, Your Honour.
WILSON J:	I just thought we ought to get it right for the purposes of description of the action.
MR DWYER:	Well, the section is headed, "Transport Accident

Commission," but it is under Part II which says,

"the Transport Accident Commission," and it says:

There is established by this Act a Commission

by the name of the Transport Accident Commission. The words, "Transport Accident Commission," are each

in capital letters and the "the" is in lower case.

WILSON J:	So we take it, "Transport Accident Commission."
MR DWYER:	Yes.
WILSON J:	Thank you.
MR DWYER:	Now, the relevant words are contained in section 46(1)

of the MOTOR CAR ACT.	One has to skip over some
introductory words in the section and then one comes

to the provision of insurance against:

Any liability (including liability for costs)

which may be incurred ..... in respect of .....
bodily injury to any person caused by or arising

out of the use of such motor car.

Now, there was reference to this question of liability

in the New South Wales decision which was relied on by

the Full Court in AUSTRALIAN IRON AND STEEL, and in

that case the leading judgment, which is that of

the Judge of Appeal Glass, notes, at page 62, that
the liability of the insured to the plaintiff was

incurred - - -

C2Tl6/l/VH	22	10/5/88
CMT(2)

WILSON J:	Did you give us the reference to that case?
MR DWYER:	I beg Your Honours' pardon; (1978) 2 NSWLR 59 and

the relevant passage is at page 62 where His Honour

says, just above C:

In point of juristic analysis it is not

open to doubt that a defendant incurs a

liability in tort to damages contemporaneously
with the accrual to the plaintiff of a cause

of action.

And so one may say that the liability, which is the

subject of the insurance referred to in section 46,

was incurred _at the time of the acoident in the case,

at any rate, where personal injuries are involved.

But, if one then says, that liability incurred at

that time was subsequently ascertained, then the

ascertainment of that liability, it is submitted,

was not by the verdict in this case, but by the

judgment. Now, the distinction or the concept of

the ascertainment of liability has been considered

-by this Court in the context of the WRONGS ACT

provision in relation to third parties, and it is a

very troublesome provision and it is a provision

which has troubled the courts both in England and

Australia.

(Continued on page 24)

C2Tl6/2/VH	23	10/5/88
CMT(2)

MR DWYER (continuing):  But one sees~ in the decisions in

relation to that, the development of this notion

of liability being ascertained. If I could just

refer the Court to BITUMEN AND OIL REFINERIES

(AUSTRALIA) LTD V CO:t1MISSIONER FOR GOVERNMENT

TRANSPORT, (1954-55) 92 CLR 200. The Court refers,

on page 206, immediately after setting out in the

middle of the page the relevant words of the

statute, to:

Does the verdict and judgment establish

the liability of the now plaintiff? It is

a question which depends upon the meaning of

the words, not upon the general law. Does

the word "liable" in that phrase mean or
include "liable by judgment", "adjudged liable"

or "held liable"?

That is the question which the Court asks itself and

the answer which is adopted then follows in the

ensuing pages and it follows in the context of a

close consideration of what had been done in the Court of Appeal and in the House of Lords in the

case of GEORGE WIMPEY & CO V BOAC but there was
a contention that emerged in that case and which

was considered by the Court about liability being

ascertained by judgment and one sees that referred

to several times on page 210 and the Court's

statement of matters appears on page 211:

Now, whether the question when the "cause

of action for" or the right to claim contribution

arises in the first tortfeasor is put directly

on the construction of the word "liable" or

upon the more general consideration that only an

ascertained liability is regarded as the basis

of contribution, it seems to follow that

ascertainment by judgment is at least one,

and indeed the chief, example of what is

required to satisfy the condition expressed

by the words "any tort-feasor liable in

respect of that damage".

I am sorry; that is a quotation from what

Lord Justice Singleton said in the Court of Appeal and the court's statement follows at the end of that

paragraph:

It is, of course, true that Wimpey's

liability had been ascertained only by

judgment, and that the judgment had been

satisfied.

The court goes on to refer, at the end of that

paragraph:

C2Tl7/l/SH 24 10/5/88

It does not suggest that until judgment

or other ascertainment the liability could

be treated as giving an enforceable right

to contribution.

On the next page, in the middle of the page, the court refers again to the notion of:

The meaning of "liable'' where it first

occurs should be held at least to include

ascertainment by judgment.

Now, I refer to what is said in that case simply to

demonstrate that the notion of ascertainment by

judgment is an established and accepted notion

because it is submitted that the notion has

application in this case.

If one says, looking at the history of the case,

was the defendant's liability ascertained by the

jury's verdict or by the judgment which was entered

by the court, it is submitted that the answer must
be that that liability was ascertained by the
judgment because when a court enters a judgment in

a matter, it is that judgment which fixes the liability

of the parties.

(Continued on page 26)

C2Tl7/2/SH	25	10/5/88
CMT(2)

WILSON J:  But when you look at section 79(2) it does seem

to give primacy to the judgment that is about to

be entered and not - I mean, obviously, that would

be the amount of the verdict unless there was some other

consideration but do you face a difficulty there

in the words "the amount of the judgment or order"

and that is what fixes the liability of the

defendant and then "it shall be reduced"?

MR DWYER:  Yes, but the submission is that it cannot be a

potential judgment or order which fixes anybody's

liability. It has got to be the actual judgment

or order that is entered by the court and if one

simply refers to a number of considerations that

support that view: for example, if one considers

the doctrine of merger. If one says, "Well, there

is a well-established doctrine of merger whereby

a cause of action merges into a judgment", that

was referred to by various members of this Court,

for example in PORT OF MELBOURNE AUTHORITY V

ANSHUN, and reliance was there placed on what

Mr Justice Dixon had said in BLAIR V CURRAN. They

are very well-known matters to which I am referring

but if one considers that doctrine of merger, and
says, "Well, what is it that the cause of action

that was claimed in the suit merges into?", it

has got to be the judgment as entered by the court,

it is submitted.

Similarly, if one considers the question of

an appeal, the appeal has got to be from the judgment

that is actually entered by the court and after

judgment it ceases to be meaningful to talk about

liability apart from that judgment so that if one 11 In

s a y s , th i s very c a s e , once the c o u rt ha d en t e re d

judgment for the amount which it was entered, can

one continue to talk about the defendant, the

employer, being liable in negligence to the

plaintiff for any amount? Can one even contemplate

the existence of some amount over and about the

judgment ·for which the employer was liable in some

way?" and it is submitted that by well-established doctrines of the law one simply cannot.

And so the reference in subsection (2) to

judgment or order that was to be entered is - it

is a convenient way of telling the judge what he is to do but it means no more than that in terms of the ascertainment of liability.

BRENNAN J: What is the judge to do?

MR DWYER:  What the judge is directed to do is to take the

jury's verdict and to deduct from it the amount of payments of compensation that have been made

under the Act and what he then does, not under this

C2Tl8/l/ND	26	10/5/88
CMT(2)

section but under another provision of the

SUPREME COURT ACT , is th en turn h i s m ind t o th e

question of the assessment of damages by way of

interest and he adds them on and he then enters

judgment for the net result.

BRENNAN J: Now;. in that judgment,the cause of action merges.

MR DWYER:	Yes.
BRENNAN J:	.And is it your submission that that has

something to do with the quantification of the

liability of the defendant?

MR DWYER:  Yes, it is submitted that, using that expression,

"the ascertainment of liability", that that liability

has been ascertained by the judgment, that is,

actually entered by the court.

BRENNAN J:  How has that been ascertained by the judgment

when the judges have to go through those two steps

of deducting and adding?

MR DWYER:	They are merely steps along the way to the final position of ascertainment which the judge reaches
when he pronounces upon a motion what the judgment
of the court is in the matter.
BRENNAN J:	What was the liability which the jury was asked to assess?
MR DWYER:	The jury was being asked to assess the liability

for damages but the law intervenes between that jury's assessment and the entry of judgment and

it intervenes in part by section 79(2) but that

intervention cannot be said, it is submitted, to

leave on foot any sort of floating liability undealt
with or remaining at large to be argued about later

because that would be counter to the established

doctrine of merger.

Gould I refer the Court, before I develop

that a little bit further, to what was said in
the New South Wales case of CACCIOLA V FIRE AND

ALL RISK INSURANCE. It is a ·case. <ilistinguished

by the court in AUSTRALIAN IRON AND STEEL, as was

BITUMEN AND OIL REFINERIES, I should say.

(Continued on page 28)

C2Tl8/2/ND	27	10/5/88
CMT(2)

MR DWYER (continuing):  CACCIOLA is at (1971) 1 NSWLR 691.

The Court of Appeal in this case in New South Wales was considering the meaning of the expression in a

policy legally liable by way of damages, and there

<loins so in the context of when a cause of action

accrued, so it is a different context, but the

crucial passage to which I desire to refer is at

page 695, near the foot of the page, just above the

letter F:

In the circumstances of this case it

seems to me that nothing before the signing

of the judgment results in what could be

described as a legal liability by way of

damages within the meaning of the policy.

I would refer also to the language used and

which I have quoted in regard to the indemnity

for costs. There the indemnity is in

respect of law costs incurred in the settlement -

and so on.	That does not matter.	Then His Honour
goes on:

Next it was submitted that the important date

for the determination of legal liability in

the present case was the date when the verdict

was entered by consent. I do not think that

under our system of pleading at common law

this is correct. I do not think that the
verdict creates a legal liability. It is the
judgment which in my opinion creates the

legal liability.

His Honour then goes on to refer to the SUPREME COURT

PROCEDURE ACT, as to the entry of judgment, and says

at the top of the next page:

Until that happens no execution can issue, and

in my view there ~s nothing which can be

described as a legal liab.ility on the defendant

in the strict sense.

One could say, as well as not only can no execution

issue, but, of course, no appeal could be taken until

that judgment was entered. I should draw the Court's

attention to what Mr Acting Judge of Appeal Taylor

says, because he refers to what he had said in an

earlier case of UTAH CONSTRUCTION & ENGINEERING PTY LTD

AND BROWN & ROOT INTERNATIONAL LIMITED V NEW INDIA
ASSURANCE CO LTD where he had used language in terms

of "the cause of action accruing at the time the

verdict was entered", and His Honour points out that it

was of no moment, in that case, whether that was the

relevant point of time, or whether it was the point

of time when the judgment was signed, and goes on to say:

If it were important to determine, as it is

in this case, whether it is the verdict or

C2Tl9/l/HS 28 10/5/88

the entry of judgment that gives rise to
the insured's right to be indemnified in terms
of the the contract, then I think it is the

entry of judgment.

It is submitted that what is said there in the

Court of Appeal is correct. Of course, the

limitation problems which provided the context for

those decisions does not exist here and need not be

considered. I do not wish to add unnecessary authority,

but it may be appropriate if I do refer the Court to

exactly what Sir Owen Dixon said in BLAIR V CURRAN

on the question of merger, in a passage that has often

been cited, (1939) 62 CLR, the passage is at page 531

and page 532. It is near the foot of the page, the

last paragraph on page 531:

A judicial determination directly involving

an issue of fact or of law disposes once

for all of the issue, so that it cannot

afterwards be raised between the same

parties or their privies. The estoppel

covers only those matters which the prior
judgment, decree or order necessarily

established as the legal foundation or

justification of its conclusion, whether

that conclusion is that a money sum be

recovered or that the doing of an act be

commanded or be restrained or that rights

be declared. The distinction between

res judicata and issue-estoppel is that in

the first the very right or cause of action

claimed or put in suit has in the former

proceedings passed into judgment, so that

it is merged and has no longer an

independent existence, while in the second,

for the purpose of some other claim or
cause of action, a state of fact or law is

alleged or denied the existence of which is

a matter necessarily decided by the prior

judgment, decree or order. (Continued on page 30)

C2Tl9/2/HS 29 10/5/88

MR DWYER (continuing): Now, it is, of course, the merger

which is relevant here because it is submitted

that once judgment had been entered in this case

the plaintiff's right of action against his employer,

which constituted the relevant liability, had merged

in the judgment. So there cannot continue to

be, it is submitted, any liability on foot in
respect of which the motor car insurer could be

under any obligation. That Rassage from BLAIR

V CURRAN is referred to in PORT OF MELBOURNE AUTHORITY

V ANSHUN, both in the joint judgment of

Chief Justice Gibbs, and Justices Mason and Aickin

and in Your Honour Mr Justice Brennan's judgment.

The relevant passages are these and the case

is at (1981) 147 CLR 589. The passage in the

joint judgment is at page 597, the passage in

Your Honour Mr Justice Brennan's judgment is at

page 611. I do not think that ANSHUN's case adds

anything to the point and what happens at those

passages is that the doctrine of merger is referred

to.

That it is the judgment and not the verdict by

which the liaibility was ascertained is also demonstrated,

it is submitted, by the law in practice relating

to judgment non obstante veredicto which was considered

by this Court in PHILLIPS V ELLINSON BROS and

by the Full Court of the Victorian Supreme Court

in PRESTINENZE V STEEL TANK AND PIPE.

I did, on the leave application, refer to

the law in this area.	I do not claim to have
accurately stated it.	I must say I did not have

the opportunity when I referred to that matter

to refer to the authorities and those two cases

spell out exactly what the law in practice now

circumstances in which the Court will

is relating to judgment non obstante veredicto. precise

be permitted to enter a judgment which departs

from what the jury has brought in in its verdict.

The law is complicated and it is considered in

PHILLIPS V ELLINSON BROS, (1941) 65 CLR 221, and in PRESTINENZE V STEEL TANK AND PIPE CONSOLIDATED

PTY LTD, (1981) VR 421.

The point is unaffected by those complications

of practice, it is submitted. The fact that in

any circumstances a judgment may be entered which

departs from what the jury has returned in their

verdict, demonstrates that it is the judgment

and not the verdict that fixes the liabilitv.

The right to add interest to the judgment i; a

further demonstration of that fact.

C2T20/l/SDL	30	10/5/88
CMT(2)

BRENNAN J:  I suppose another way in which you put it, Mr Dwyer,

is to say that section 79(2) affects the measure

of the plain~iff's damages.

MR DWYER:	Yes, it does because the statutory commandment
requires that the judgment of the court that is
entered which determines rights as between the
parties, will be entered after there is deducted
from the verdict the compensation.
BRENNAN J:	Yes.
MR DWYER:	That consideration of the notion of liability
was an appropriate background against which to
consider the two Full Court decisions which were
relied upon by the Full Court of the Supreme Court
of Victoria.  The first of them that I desire
to refer to is MOTOR VEHICLE INSURANCE TRUST V
FORBES, (1985) WAR 50. That case is concerned
with the question of the extent of the liability
which was to be covered by the motor car insurance.
One sees clearly, from the report, that the
Western Australian statute is constructed differently
from the Victoria statute because what is held
in this case to be required under the Western Australian statute is that judgment was to be
entered for the full amount of damages as assessed by the jury and the question of deduction of workers compensation payments was only to take
place subsequently in terms of the satisfaction
of that judgment.

(Continued on page 32)

C2T20/2/SDL	31	10/5/88
CMT(2)

MR DWYER (continuing):  And that can be demonstrated on

page 53 of the report from the judgment of the

Chief Justice Burt - line 50:

The amount paid by way of compensation is

to be deducted from the "amount recoverable
... under a judgment for damages". It is not
to be deducted from the assessment so that

judgment is to be entered for the balance.

No doubt that has in the past been done by

consent and for purposes of convenience but

it is not what the subsection requires -

and then there is reference to a decision. Now,

the fact that the Western Australian statute was

constructed in that way means that there is, a~

it were, no problem in terms of the amount ent, ed

in the judgment differing from the amount of t1

verdict. The problem does not arise because the

statutory deduction is not required to be made

before judgment. But the general law about the

liability being fixed by the judgment must be the

same, it is submitted. It is just that that general

law about judgments and the effect of them and

the fixing of liability by them does not present

a problem unde~ the Western Australian statute,

of the kind which emerges under the Victorian statute

but the result of that should have been that the

Western Australian decision simply did not assist

in the resolution of the case that arose under the Victorian statute and the Full Court ought to have so regarded it.

There are passages in the case which refer

to the liability for negligence being the total

damages assessed before taking into account any

payments made pursuant to .the provisions of the

workers compensation legislation but those passages

cannot, it is submitted, be seen as in any way

overturning the operation of the ordinary law about

what judgments do and so they do not affect the

approach which should be adopted in this case.

The AUSTRALIAN IRON & STEEL PTY LIMITED V

GOVERNMENT INSURANCE OFFICE OF NEW SOUTH WALES

is, perhaps, a little more complicated and it is,

I think, necessary for me to go into that case

in a little more detail. The case is reported at

(1978) 2 NSWLR 59. It is a decision of the Court

of Appeal comprising the President, Mr Justice Moffitt

and Justices of Appeal, Reynolds and Glass. The

claim in that case was a claim by an employer against

his motor car insurer to recover payments of workers

compensation for which an allowance had been made,

by agreement, before judgment was entered for the

C2T21/l/AC	32	10/5/88
CMT(2)

employee in proceedings at common law. And it

was held in this case that the payments of compensation

had a dual character and that they were referable

to liability under the WORKERS COMPENSATION ACT

and were also payments on account of damages for
which credit would have to be given if damages

were later recovered.

Now I referred the Court already to what was

said on page 62. The conclusion, which I have

shortly described, appears on page 63 and perhaps

I should take the Court to what is said on page 63:

Upon the assumption that the plaintiff

incurred no liability to the worker until

The claim that is before the Court in this

case is a claim, as was set out in the outline of

argument at the beginning, purely and simply NEM's

counter-claim against the defendant for an order that the

defendant pay the $31,000 and the defendant's claim

against SIO for indemnity in respect of that. That
is the beginning and the end of what is before the

Court in this case.

C2T76/l/JM	110	10/5/88
CMT(2)

MR DWYER (continuing): That really means that what might have

been done in other cases is beside the point. Now,

it is perhaps convenient to move from that to the

second-last matter dealt with by my learned friend,

Mr Barnard, as to this point of subrogation, as he

called it. Now, our only liability to CMT, and any

consideration of a subrogation liability in CMT is not

something which has arisen in this case, it is something

which might conceivably have arisen in other circumstances.

But what the case on which my learned friend relied,

made plain, is this, that the question of whether the

workers compensation liability was extinguished

ab initio is central to what is described as the

subrogation claim, because unless that workers

compensation liability was extinguished ab initio,

the approach to the matter, which is referred to in

BRITISH TRADERS V MONSON simply does not arise.

The question of the insurance moneys being paid

on an assumed basis as to liability and that assumed

basis having been extinguished, as it were, that does

not arise if the moneys remain workers compensation m::meys.

What,,. on the question of subrogation, I would urge

upon the Court, is this, that if the Court looks at the way in which Mr Justice O'Bryan dealt with that

issue, it is submitted that Mr Justice O'Bryan got it

right. The matter emerges in His Honour's judgment

at page 42 of the appeal book, and His Honour's

consideration goes through to page 44. His Honour

says this at page 42:

The statement of Agreed Facts does not show

that S.I.O. failed to provide indenmity to

the defendant in respect of the judgment of

27 May 1986 whereby the plaintiff may recover.

against the defendant -

the $275,000. He then recites the orders that were

made and continues on page 43:

(Continued on page 112)

C2T77/l/VH	111	10/5/88
CMT(2)

MR DWYER (continuing):

I infer that S.1.0 has already indemnified

the defendant and made the payments in accordance
with the judgment of the court and the orders
as aforesaid. What loss,therefore, is the
defendant able to show it has sustained for

which it may now claim indemnity from S.1.0?

I believe that the defendant has no claim

in contract or otherwise for damages for which

N.E.M. is entitled to be put into the place

of the defendant. The amount recoverable

by N.E.M. by subrogation is limited to that

which the defendant would have recovered in

proceedings commenced by it against S.1.0. Had the WORKERS COMPENSATION ACT provided that the plaintiff must repay to the defendant

the compensation a different result may have

resulted.

And it is submitted that His Honour correctly deals

with the problem in that passage. Now, if I could

turn from that to resume matt~rs in the order in

which they were presented to the Court, first by

my learned friend Mr Bongiorno. Your Honour

Justice Gaudron,when Mr Bongiorno was presenting

his argumen½ raised the question of whether section 46

might extend to the workers compensation liability

and whether there might not, in those circumstances,

be a matter of double indemnity. Now, that is

a track down which I did not go with the Court -

GAUDRON J:  . I do not think it is necessary to for my

benefit either.

MR DWYER:  I do feel obliged to draw the Court's attention

to an amendment to the MOTOR CAR ACT by the

insertion of section 42(a) which was introduced

by the ACCIDENTS.COMPENSATION ACT in Victoria and

as to the operation of which the TRANSPORT ACCIDENT ACT

has something to say. Put briefly, what was done

was to import into the MOTOR CAR ACT provisions

an exclusion of workers comp~nsation liability

of the kind that existed in the New South Wales

Act under AUSTRALIAN IRON AND STEEL.

(Continued on page 113)

C2T78/l/AC	112	10/5/88
CMT(2)

MR DWYER (continuing): The thing that there is doubt about is

the point of time at which that amendment operates,

and I did not trouble the Court with that question,

but I felt I ought make the Court aware of the

existence of that amendment. The next matter, from

what Mr Bongiorno said that I desire to take up, is

this:  Mr Bongiorno referred to the result which is

achieved by the operation of section 79(2) and

pieces of legislation, in the end, produce the same

compared that result with the operation of the New South

result, that means that there is no significant

difference between them. That does not follow at all

because what is critical in this case is the method by

which the result is achieved, and the method that is

available under section 79 is simply different from

the method that is available in New South Wales.

It was urged by my learned friend,Mr Bongiorno,

that the references to decisions of the Court about

the ascertainment of liability were taken out of

context because he said they were in a context which

showed that they did not dare on the question of the

extent of liability, but the operation of judgments

and the question of the ascertainment of a liability

by a judgment is something which must operate in the	law generally and there is no basis on which one could
say that there is a different doctrine about the ascertainment of judgments in one part of the law
from another, and what is said in those cases about
the ascertainment of liability must apply in this case, it is submitted.
I think that is all from what Mr Bongiorno said that I desire to comment on. If I could pass now to
the beginning of my learned friend Mr Barnard's
argument.

(Continued on page 114)

C2T79/l/HS	113	10/5/88
CMT(2)

MR DWYER (continuing): In relation to what I would put

to the Court concerning the SYDNEY TURF CLUB V

CROWLEY and the principle that an insured who

has been fully indemnified by one insurer cannot

sue another insurer; it was submitted by my

learned friend that that did not arise under

the grounds stated in the notice of appeal but

it is submitted that it arises in a number of

ways not least because it provides a reason why

the AUSTRALIAN IRON & STEEL case cannot be applied

in the circumstances of this case and that has always been squarely before the Court, both in

the notice of appeal and in the argument.

The question of a right in the employer to seek

an indemnity from the SIO does not arise directly

in this case on the pleadings because no such

indemnity of the relevant kind has been sought.

The only indemnity that has been sought is an

indemnity against NEM's claim and that is not -

NEM's claim on the pleadings is not a claim built

on such a grant of indemnity. The matter must be

treated as if the point is considered in the light

of what might have happened if CMT had made a claim

against SIO for an indemnity against the workers

compensation payments but it does not bear any

more directly on the case than that.

What is, it is submitted, established is that

the principle that an insured who has been fully

indemnified cannot seek a further indemnity would

prevent the application of the AUSTRALIAN IRON &

STEEL case to this case.

Now, the next matter that I do wish to refer to

briefly is this:  my learned friend took the Court

through the history of the WORKERS COMPENSATION ACT.

(Continued on page 115)

C2T80/l/SH	114	10/5/88
CMT(2)

MR DWYER (continuing):  What that history demonstrates,

as does the passage from Hansard to which my learned

friend referred, is that although it was once the

case that remedies of workers compensation and
remedies at common law were alternative remedies, that

ceased to be the case when that 1970 amendment was

introduced.

BRENNAN J: Mr Dwyer, is it the fact that in the conduct of

a civil trial that no reference is made before the

jury to workers compensation?

MR DWYER:	Yes, that is the fact.
BRENNAN J:	Any payments under workers compensation are not

referred to?

MR DWYER:	That, as I understand it, is the fact, Your Honour.
BRENNAN J:	So that the amount of the judgment or order for

damages in favour of a worker which is to be entered

is the amount which is calculated without reference

to workers compensation payments?

MR DWYER:	Yes, Your Honour.
BRENNAN J :	Thank you.

MR DWYER:  Yes, that is so. The reason why, of course, the

plaintiff must claim the workers compensation

damages, if I could call it that for short, that is

the reason why the plaintiff must take pains to ensure

that his special damages include amounts which have

been paid, if they are hospital expenses, by the

employer, under the workers compensation liability,

and why he must claim loss of wages without regard

to the fact that he has receive~ weekly payments, is

precisely because of the existence and the application of

section 79(2), because py reason of section 79 ( 2) they

are going to be deducted whether he claims them or not.

Therefore, if he fails to claim them, he is simply

failing to minimize the extent by which his damages

are reduced by reference to those payments.

BRENNAN J: Yes, but the important point is this, is it not,

that if there is no reference to them, the liability

of the employer at common law is taken to include

all payments made by way of workers compensation?

(Continued on page 116)

C2T81/l/VH	115	10/5/88
CMT(2)

MR DWYER:  The liability of the employer at common law is

dealt with as a matter of evidence without regard

to the payment of workers compensation but the

reason for it - - -

BRENNAN J:	The assessment is made as the extent of the employer's common law liability?
MR DWYER:	Yes, but the reason why that is done is precisely

because of the existence of section 79(2).

BRENNAN J:  I do not know whether that would be entirely

accurate because 79(2) would not make into damages

that which was not damages.

MR DWYER:  No, it would not, but it does mean that the

practice has grown up of including items in special

damages even though they are not damages which

have been suffered by the worker, not suffered

by the plaintiff, and that was specifically

addressed as a problem by the court and the court

what happened was that at trial a ruling was sought

gave a direction that they should be included.

That was expressly done by the court in MATERIA

from the court as to whether or not the plaintiff

could include in his damages medical expenses even

though they had been covered by payments of workers

compensation and the ruling was given that such

expenses should be included in the plaintiff's

damages and the reason that was given was because

the deduction would be made whether they were

included in the damages or not.

BRENNAN J: That was before the 1970 amending Act?

MR DWYER:  Yes, it was, but the practice that was then

established was continued. If one seeks to

analyse the matter down strictly what happens here

is that the damages come to be assessed in the

common law trial on a conventional basis and that

ordinary established rules of the common law about

the assessment of damages get disregarded. (continued on page rl7)

C2T82/l/ND	116	10/5/88
CMT(2)

MR DWYER (continuing): The reason why they get disregarded

is because there would otherwise grow up,because

section 79(2) is there, some unfairness to the

plaintiff but what one cannot deduce from that

that the items would properly be included in the

special damages apart from that conventional basis.

That is why the submission is made that the matter,

really, is dealt with by the courts in the way that

it is because of the existence of section 79(2).

Now, what one needs to attend, if one is looking

at the 1970 amendments, not simply to the fact that

section 5(2) was removed from the Act, but the Act

was recast in other ways and one of the ways in which

it was recast is that references to the existence of

the option were otherwise removed. For example, in
the old form of section 79, before that 1970 amendment,

there was a reference to the option which was available

to a worker and that was taken out of section 79 so

that section 79(1) was cast into its present form

and, similarly, there were changes to section 62, I

think.

Now, the point of the matter is this: once that

reference to an option was taken out, the Act ceased

in any way to treat the remedies as being alternative

remedies. There is now, for the purposes of this case,

nothing in the WORKERS COMPENSATION ACT which says that

a workers compensation claim is in the alternative to

a common law claim. The situation simply is that a

worker has got rights to bring both proceedings and

section 79 will provide an adjustment if the worker

does that but there is no basis from any of that to

say that the workers compensation liability ceases

ab initio upon the satisfaction of judgment in the

common law action.

(Continued on page 118)

C2T83/l/SH	117	10/5/88
CMT(2)

MR DWYER (continuing):  Indeed, section 79(1A) prevents

that being said, it is submitted. So that a

consideration of that history, really properly

considered, supports our contention that section 79

does no more than require that deduction to be made

before judgment is entered for the plaintiff. It

is submitted that there is no basis for the implication

which my learned friend, Mr Barnard, invited the

the Court to make but that on the contrary what
we find in the legislation is that different cases
are dealt with differently. My learned friend,

Mr Bongiorno, sought to invoke the principle of

but it is part of that proposition that different	justice that like cases are to be treated alike,
cases are to be treated differently and what we find is that that is exactly what the WORKERS
COMPENSATION ACT now does.

It has a different regime. If the common law

rights are against the employer, then the regime

which it has if the common law rights are against

a stranger, and the fact that rights vary when

there are different parties involved is not
remarkable in the slightest, it is submitted, and

there is no basis for going beyond what the Act does

and says. The reference to the question of justice
does perhaps make it appropriate for me to conclude

my reply by saying this. As Mr Justice O'Bryan found

there is no established rule of the law or of practice
for the workers compensation insurer to get back the
payments of workers compensation in these

circumstances.

(Continued on page 119)

C2T84/l/HS	118	10/5/88
CMT(2)

MR DWYER (continuing):  What that means in terms of the

conduct of the workers compensation insurance

business is that the workers compensation insurer

has received its premiums on the basis that it

meets its liabilities to pay workers compensation,

and that is the end of it, just as the motor car

insurer has conducted its business of compulsory

motor car insurance on the basis that its premiums

meet its liabilities. Now, what this claim does is

to introduce a novel element into this situation.

It introduces a proposed change to what the

established practice is and it is submitted that

as a matter of justice, because all of the

insurances have been conducted on a different

footing it would in fact be a matter of injustice
for that change to be introduced. And that would

have, of course, to be faced if the Act provided

for it, but the Act does not and it can only be introduced by doing something additional to the regime which is provided for in the WORKERS COMPENSATION

ACT.

And for those reasons, it is submitted, the decision of the Full Court should be set aside and

the approach adopted by Mr Justice O'Bryan, at

first instance, should be seen as the correct approach.

If the Court pleases.

WILSON J:  Thank you, Mr Dwyer. The Court will consider

the matter.

AT 5.02 PM THE MATTER WAS ADJOURNED SINE DIE

C2T85/l/JM	119	10/5/88
CMT(2)