State Insurance Office v CMT Construction of Metropolitan Tunnels

[1988] HCATrans 44

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M80 of 1987

B e t w e e n -

THE STATE INSURANCE OFFICE

Applicant

and

C.M.T. CONSTRUCTION OF

METROPOLITAN TUNNELS

First-named Respondent

and

NATIONAL EMPLOYERS' MUTUAL GENERAL

INSURANCE ASSOCIATION LIMITED

Second-named Respondent

Application for special

leave to appeal

t·::1T7 /1/PLC 1 18/3/88

"MASON CJ

WILSON J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 18 MARCH 1988, AT 12.43 AM

Copyright in the High Court of Australia

MR J. DWYER~ QC:  If the Court pleases, I appear with my learned

riend, MR D. CROSS, for the applicant. (instructed

by Pulling & Co)

MR B.D. BONGIORNOd ~C: If the Court pleases, I appear with my

learne riend, MR R.J. WILLIAMS, for the first

respondent. (instructed by A.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

respondent. (instructed by Coltmans)

MASON CJ: Mr Dwyer, we have read the papers. You might bend

your efforts towards persuading us that you have an

arguable case, if special leave is granted to you.

MR DWYER:	Yes. The point at issue in this case or the basic
point at issue is whether a workers compensation
insurer who has indenmified 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 the employer.
That is the key point at issue. That point turned
on the finding by the Full Court that once judgment in the common law proceedings were satisfied, the
employer's liability to pay workers compensation
was extinguished ab initio. That is the necessary
pre-condition of the Full Court determining that
those payments of workers compensation could be
recovered.

Now, the submission is that· finding that the

liability to pay workers compensation was extinguished

ab initio was not consistent with section 79 of the

WORKERS' COMPENSATION ACT as it then stood. In the

materials that have been handed up, section 79 can

be found under tab H - I am sorry, the materials are

here, if the Court please.	I had thought that they
had been handed to the Court.

WILSON J: It is in the appeal book at page 63, Mr Dwyer, but

perhaps you want to refer to other matters any way.

MR DWYER:  Yes, it sufficiently appears at page 63. I am

indebted to Your Honour. What section 79, as it is

there does, is, under subsection (lA), spell out

what is to happen when the judgment has been	satisfied, and it spells out two things, the
first of them being that:

the right of a worker to any further

weekly payments ..... shall thereupon cease - and secondly that:

the Board -

is given a discretion to -

MlT7/2/PLC 2 18/3/88

refuse to make any award in favour of

the worker for any damage caused by an

injury.

Now, as Mr Justice O'Bryan had found at first instance,

the section does not provide that the amount that is

deducted pursuant to the next subsection, that is

subsection (2), is to be returned to either the

defendant or its workers compensation insurer. That

is, the thing which the Full Court said was to happen

in this case is not something which is provided for
in section 79 as it is set out on page 63 and,

indeed, is submitted to be inconsistent with

section 79 because the finding that the workers

consistent with the very words of subsection (lA).	compensation liability ceases ab initio is just not
Indeed, subsection (lA) is really to the contrary of that position. If it were the case that the
workers compensation liability ceased ab initio, it
would not be appropriate to say that the right of
the worker to further weekly payments would thereupon
cease. Indeed, what would start to be in issue would
be the question of a liability in somebody to repay
those weekly payments.

As Mr Justice Gibbs noted in XPOLITOS' case

in the passage from His Honour's judgment at 428

of the report, when considering an equivalent

provision in the Act, the section does not provide

that a worker shall be required to make any repayment

of weekly payments already made. Now, if the

liability in the employer to make the payments has
ceased, logically, it would have to follow that
the employee would no longer have any right to retain

those payments because the liability has, on this

approach to the matter, been extinguished ab initio,

but that is not the. scheme which exists under

section 79 of the WORKERS' COMPENSATION ACT.

His Honour Mr Justice Gibbs, in the passage that

I have referred to, referred also to the discretion

that is given to the board as to the way in which

again, the existence of the discretion is itself	that discretion would have to be exercised. But,
inconsistent with the position that the liability has
been extinguished ab initio because if it had been
by a rule of law or by some other provision in the
Act extinguished ab initio, then no question of a
discretion in the. board to refuse an award could
arise and that, accordingly, is also inconsistent
with the way in which Mr Justice Gibbs dealt with the
equiv~lent provision.

Now, the notion which. was adopted in the Full

Court that the liability was extinguished ab initio

really depended upon the approach to the entire Act

taken by the Court that proceedings at workers

compensation and proceedings at common law were

MlT7/3/PLC 18/3/88

. 3

alternative proceedings as to which it was necessary

at some point of time, now spelled out by section 79,

for the worker to make a choice between the proceedings.

That used be the law when section 5(2) was part of-the

Act. Section 5(2) is set out under tab Hin the

materials. Section 5(2) spells out this alternative

remedies approach that used be in the WORKERS'

COMPENSATION ACT and that is an approach which had

been there for many years and which was the subject

of various decisions in this Court including, most

famously, DEY's case. But section 5(2) was repealed

in 1970 and the alternative nature of remedies which

was established by section 5(2) was not reintroduced

in any other legislation upon the repeal of section 5(2)

and, indeed, it can fairly be said that the Act ceased

from the repeal in 1970 of that subsection to provide

in any way that the remedies were alternative

remedies. What the Act did instead was to spell out,

in particular in section 79, the way in which the

relationship between the remedies would stand. And it

is not, it is submitted, a relationship of the kind

adopted by the Full Court.

MASON CJ: Well, it does not matter, does it,~that the notion of

alternative remedies is no longer with us.	They are
different remedies.

MR DWYER:  Yes.

MASON CJ: And the question, I suppose, in one sense, is in

what character are these moneys paid and ultimately

received and held?

MR DWYER: 

They are paid as workers compensation and they remain
payments of workers compensation, it is submitted.

They never lose that character,and so far as the

Victorian legislation is concerned it has always been

held that once paid they never lose that character.

They cannot lose it under the Victorian Act even by

repayment. Even if the workers compensation moneys

are repaid by the worker to the employer, they

continue to be stamped with that character of workers

compensation payments. That was established in

GONIS V ROOTES which was, in turn, approved by the

Full Court in RAMADAN. V MOUSSA.

Now, if one asks, "Well, if the workers

compensation payments remain. always workers compensation
payments, how do the remedies relate one to the

other?", the submission is that in a case of this

kind they are cumulative so far as remedies are

concerned with an adjustment, under section 79(2),

to prevent double recovery by the worker, but that

is as far as the matter goes, it is submitted.

WILSON J: Is it helpful, Mr Dwyer, to approach the problem

from the other direction? What do you insure the
employer against? Is the policy in the materials

at all?

MlT7/4/PLC 4 18/3/88

MR DWYER:	It is a statutory policy under section 46 of the
MOTOR CAR ACT and it is against his liability
to pay damages arising out of the - it is on page 5 of the materials. It is:

"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 a motor

car."

WILSON J:	Why was not the liability incurred in accordance with those words measured by the amount of the
verdict?
. MR DWYER:	Had it come to that, that is, depending on the
point of time at which one asks that question,
that may be the answer but that, of itself, cannot give rise to any right of repayment by the
employer to the workers compensation insurer.

WILSON J: But that is another question, is it not? Once it

be established that the employer is insured to

the amount of damages suffered by a person -

personal injury - through a motor car et cetera,

and the amount of that damage is measured by the

amount of the verdict, before section 79(2) is
applied to it then does not that really put the
employer in the position of having to return to
the workers compensation insurer .....

the moneys?

MR DWYER:	It is submitted not, Your Honour, because that
measure of liability is not the liability, in fact, incurred by the employer. The liability which the
employer, in fact, occurs is the liability for the
amount of the judgment that is entered. The employer
is not under any greater liability than that. So,
the question of any notional sense in which the
motor car insurer may be responsible for any
greater liability never arises.
MASON CJ:	Mr Dwyer, we may adjourn at this stage and we will
resume at 2.05 pm.

MR DWYER: If the Court pleases.

AT 12.55 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.07 PM:

MR DWYER:	If the Court please, Your Honour Mr Justice Wilson
had raised with me the question of whether liability

MlT7/S/PLC 5 18/3/88

could be equated with the verdict, and there is
a sense in which one can understand how one could

talk about liability in terms of the verdict but

it is submitted that one cannot equate the concepts
of liability and the verdict but, rather, that one's

starting point for the meaning of the nation of

And one can point to a number of instances which	liability must be the judgment, it is submitted.
must make that so, it is submitted. For example,
it may be that after the verdict counsel for the defendant moves for judgment despite the verdict
and successfully so that judgment is then entered
by the court for nothing, so far as the plaintiff
is concerned. Judgment is entered for the defendant.
In those circumstances, it is plain that it is the
judgment which establishes what the liability is.

Similarly, if it is apparent from the

circumstances of the trial that a jury's verdict

includes some clearly wrong figure - if it is

apparent from what has happened that the jury has

included an identifiable sum in their verdict,

then counsel for either side could move for judgment

for a corrected amount and, again, it must be
the amount for which judgment is entered which

fixes liability. Similarly, in circumstances

where there is a statutory limit on the amount

that could be recovered by a party as there used be in Victoria where there was a statutory limit

on the amount of damages which a passenger could

recover, then the jury might return a verdict for

a greater sum but judgment would be entered for

the amount fixed by that statutory limit and,
again, it would be the judgment that would establish

the liability. And in cases where the jurisdiction

of the court is limited in amount and the jury

returns a verdict in excess of that jurisdiction,	it was then commonly done that, in particular ·
circumstances, judgment could be entered for a
lesser amount within the jurisdiction of the court.
And, again, it would, in such a case be clear that
not the verdict. it was the judgment that established liability and Now, it is submitted that properly considered,
there is no difference when the amount
of the verdict is reduced by the operation of section 79(2) and any notion of liability in the amount of the verdict cannot stand in the face of
the judgment that is actually entered by the court because, it is submitted, once that judgment is entered,as in all of the examples, the defendant's
liability is crystallized by that judgment and it
can no longer be properly said that there is any
liability for any greater sum.

Now, in saying that, I am conscious that the

Full Court of the Western Australian Supreme Court

MlT7/6/PLC 6 18/3/88

reached a contrary view in MOTOR VEHICLE INSURANCE

TRUST V FORBES which was referred to in the judgments

to the Full Court and which is in the materials under

tab D. But the critical thing to note, it is submitted,

in relation to that case was that the statute was

different and was held to operate differently because,

as His Honour the Chief Justice Burt in that case

noted, and one sees it clearly at the foot of page 53

of the report:

The amount payable 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.

That last sentence is the very last line on page 53,

continuing on to the top of page 54.

Now, what His Honour there says makes it plain that the Western Australian case operated under

legislation which was different from the Victorian
legislation, legislation under which indeed the

judgment entered by the Court was for the full amount

assessed and the deduction of workers compensation

payments took place after judgment was entered and

took place in terms of the amount recoverable under
thejudgment. And it is submitted that accordingly
because of that difference in the statute between

Western Australia and Victoria the Western Australian

case can have no application under the Victorian Act

and it is submitted also to be the case that although

Mr Justice Wallace in the Westem Australian case

at page 55 says,again near the foot of the pag~ at

line 45:

It follows that all liability for negligence

forms the total damages assessed by His Honour

before taking into account any payments made

pursuant to the provisions of the workers

compensation legislation. The damages were the

measure of the second respondent's total

liability for negligence and in the circumstances

payment of workers compensation must be disregarded

in the assessment of damages for negligence.

Now, the very last proposition, that is, that one

disregards payments of workers compensation in the

assessment of damages is, with respect, correct and

there is no quarrel whatever with that. But the earlier

remarks about liability for damages being reflected

by the total amount assessed can be seen as turning

in Western Australia on the Act as His Honour the

Chief Justice had said it should operate. And so

the puzzle which may arise where there is a difference

between the verdict and the judgment does not arise

in Western Australia.

MIT7/7/JM 7 18/3/88

Now, the other Full Court decision from which the

Full Court below derived support was the New South

Wales decision of AUSTRALIAN IRON & STEEL PTY LIMITED

V GOVERNMENT INSURANCE OFFICE and that is under tab C

in the bundle of authorities. That case, it is

submitted, does not have application in Victoria

because the elements on which the decision was

built do not operate in Victoria. The first of those

is the fact that in New South Wales payments of

workers compensation were to the extent of their

amount a defence to proceedings at common law and

that is referred to by the court and is one of the

two elements upon which the decision is based. But

that is not the case in Victoria and the operation of

section 79 is quite different to that, as I will

explain in a moment.

The second element taken into account in the

New South Wales case was that where the plaintiff's damages were reduced for contributory negligence the

deduction of compensation was reduced pro rata. That

was not the case in Victoria under the legislation

prevailing inthe case for appeal. The section 79

reduction was not reduced if there was any
contributoDy negligence in the case.

Now, the easiest way to explain the Victorian operation of section 79 is by reference to what is

said by the Full Court of the Supreme Court of

Victoria in RAMADAN V MOUSSA,and that is under tab A

of the materials. At page 720 there is a statement which sums up how section 79 operates, in the middle

of the page in the paragraph which begins:

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

comnon law action. It is more likely than not

omission, or, as here, throu~h deliberate act that it will roughly correspond but if through	on the part of the plaintiffs 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 redµced" 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 comnon law claim.

And then there is reference to GONIS V ROOTES (AUSTRALIA)

LTD, MATERIA V ALBERT BOOTH ENGINEERING PTY LTD.

MIT7/8/JM 8 18/3/88

This, again, could not lessen the amount of

as Mr Justice Lush said in KAPOULITSA V NEWMAN,	the reduction to be made to the judgment, for
"Section 79(3) provides for the deduction of
the whole of the compensation received from an
award of damages." And the Full Court respectfully
agrees.
Now, from that passage it can be seen that it is

well established in Victoria that there is no

correspondence between the payments of workers

copensation to be deducted and the damages claimed in

the connnon law action. It can easily be the case that

the workers compensation to be deducted will include items
or amounts which have not formed part of the assessment

of damages, but section 79(2) applies all the same.

All that happens is that there is a statutory requirement

under section 79(2) that in every case where there have

been any payments of workers compensation, the whole

of the amount paid by way of workers compensation must

be deducted from the judgment and that is startlingly

different from the way in which matters operated in

New South Wales, as set out in the AUSTRALIAN IRON &

STEEL case.

The other way in which the AUSTRALIAN IRON & STEEL

case was different from the case on appeal is that

it was a claim by an employer against his motor car

insurer to recover the payments of workers compensation.

There was no insurer about who had already indemnified

the employer against that liability, But in the case

before the Court now if the employer had claimed against

the motor car insurer to recover the payments of

workers compensation the motor car insurer would have
had the defence that the employer had already been

indemnified by the workers compensation insurer and

that accordingly there was no liability outstanding

for which he could claim indemnity against the motor

car insurer. And that was established, it is submitted,

in the New South Wales case of SYDNEY TURF CLUB V CROWLEY,

which is at tab E.

MASON CJ: But that was a case of double insurance, was not it?
MR DWYER:	Yes, it was.

MASON CJ: This is not, is it?

MR DWYER:  Well, not in the strict sense in that the liabilities

are different, but the loss is the same. And the
propositions that were enunciated by the members of

the Court of Appeal of New South Wales in SYDNEY TURF

CLUB V CROWLEY speak in terms of the loss for which

the party has already been indemnified. If I could

refer to page 730 of the report, at about the fifth line

on the page:

MIT7/9/JM 9 18/3/88

If he has recovered the whole of the loss from one insurer then it is a defence at law to

another insurer so to allege.

And similarly, in Your Honour the Chief Justice's judgment at page 734, shortly before the marginal letter D:

As Justice of Appeal Jacobs has pointed out

it is a good defence to an action against an

insurer that the insured has recovered his loss

albeit from another insurer.

MASON CJ: But that sentence is preceded by a sentence in which

the emphasis is on double insurance.

'MR DWYER: That is so, Your Honour, yes, but the proposition

that His Honour Mr Justice Jacobs had enunciated

was in terms wider than that as is the proposition

from Your Honour. And it is submitted - - -

MASON CJ: I do not think that is a fair summation of what I

said. You have got to read the two sentences

together.

'MR DWYER:  Well, the only sense in which it was not double

insurance here is that the legal foundation of the

liability was different. Another way of putting

that would be that the risk insured against in terms

of its legal source was different, but the loss to
the employer was precisely the same. It was not

the case in the AUSTRALIAN IRON & STEEL case that

there was another insurer or any other party

from wh~m the .party had. already

recovered the loss. Sut if there had been a claim

made for indemnity in this case then that would

have been the case, it is submitted.'

WILSON J:  Mr Dwyer, do we get any help from considering

section 62 of the Act which deals with the question

where the tortfeasor is a person other than the

employer? And in that case the section provides

workers compensation has been paid, but it gives	for the reduction of the common law judgment where
the employer who paid the compensation a right of
indemnity against the third party.

'MR DWYER:  Yes.

WILSON J: Does not that suggest that the primary liability

contemplated by the Act is the tortfeasor's

liability?

'MR DWYER:  I would invite the Court to draw a different

inference.

WILSON J: Yes.

MIT7/10/JM 10 18/3/88

MR DWYER:  And the inference that I would invite the Court

to draw is this: in the case of section 62, that

is where you have a third party who is liable,

the Act provides for the recovery which in fact

has been allowed in this case. But the Act, having

provided for it in one instance and not having

provided for it in the other instance, the Court

ought not to have added something into the Act.

Now, it is true that both section 62 and

section 79 are in terms of parties rather than

insurers, but the Act does provide for instances

where there can be recovery by insurers, and that

under section 8(2), which is in the materials under tab H; it is about the fourth page of the statutory

materials that are there gathered together.	One
sees a long and elaborate code of provisions
beginning on what was page 28 of the reprint

and coming through on to the next page, page 2 9.

That is dealing with the instance of what are

called journey accidents, that is, accidents which

occur to a worker during a journey to and from work

and there is provision in certain circumstances in
relation to those accidents, and those accidents
alone, for the workers compensation insurer to
recover compensation paid from the Motor Accidents

Board. But the existence of that express set of

facts dealing with the situation and permitting

recovery by the insurer is a further reason why the

Full Court should not have added into the Act such

a recovery in the section 79 situation, where the
Act did not provide for it.

Those two express sets of provisions indicate that the prope:c way to approach section 79 was the

way in which His Honour Mr Justice O'Bryan approached

it at first instance and that was to say that section 79

made no provision for the recovery by anybody of the

payments which are deducted under subsection (2).

They are, if the Court please, the reasons why it is

submitted the decision of the Full Court of the Supreme

Court of Victoria was wrong and why the matter is
accordingly one against which an appeal ought	be
granted.	I have dealt with the matter in that way in

response to Your Honour the Chief Justice's invitation.

MASON CJ: Yes.

MR DWYER:  It would be submitted, if -

MASON CJ: No, that is sufficient. You have responded to my

question.

MR DWYER: If the Court please. For the reasons otherwise

set out in the affidavit, special leave is sought.

MIT7/ll/JM 11 18/3/88

MASON CJ: Thank you, Mr Dwyer. It may be convenient now

to dispose of the other case, the case that we

postponed. I notice counsel are here now.

AT 2. 30 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

MIT7/12/JM 12 18/3/88

UPON RESUMING AT 2.32 PM:

MASON CJ:	Yes, Mr Bongiorno?
MR BONGIORNO:	If the Court pleases. The position of the

first respondent to this application is an unusual

one in that it, in our submission, is in a position

where it must succeed either in respect of the

appellant's claim or if not in respect of the
applicant's claim then it must succeed in resisting

the claim of the second respondent. For that reason

our resistance to the application for special leave

can be brief.

Firstly, we say that there is no point of

general principle involved. This case involves

what might be called a "run-off" point in the

workers compensation system in this State. It
cannot affect any future case where injury occurred
after 1 September 1985 and although we cannot dispute
the factual material in the affidavit which goes

to the question of what might be in the pipeline

it certainly has no relevance so far as the future

in this State is concerned.

The second point we make is that there is

no difference of opinion demonstrated between the

Full Court of this State and the Court of Appeal

of New South Wales and the Full Court of Western

Australia, which are the other two appellate courts

which have dealt with the problem. And, allowing

for the differences in legislation that Mr Dwyer

has referred to, the approach of both of those

courts and the Full Court of this State has been

the same.and we say, accordingly, that there is

nothing special in this case which would warrant

a grant of special leave.

The next matter we submit, Your Honours, is that the decision as it stands is clearly in accordance
with common sense.	The situation of the State

Insurance Office in this case were this decision

to be otherwise than the way it presently is, would

be that it would attract to itself from time to

time windfalls dependent upon nothing other than

whether the victim of the negligence of one of

its insured drivers happened to be in the course

of his employment or otherwise at the time the

event occurred. As Mr Justice Wilson has observed

the provisions of section 62 of the Act, as they

were when they were applicable to this situation,

specifically took the windfall away from the Insurance the employer and there is no reason why the windfall should apply in one case and not apply in the other.

MIT8/l/SDL 13 18/3/88

So for the sake of consistency the decision of the

supreme court is clearly in accordance with what

might be said to be common sense.

The alternative proposition would mean that

the third party insurer, the insurance office in
this case or other insurers - that is insurers

outside the workers compensation system - who were

insuring employers for injuries in circumstances

other than under the Act, could be placed in a

position where if two people were injured with

identical quanta of damages on an assessment, the

liability of the insurer in respect of one would

by a windfall be considerably less than it was

in the other.

So that for the Court to adopt the proposition

that is ultimately contended for by the applicant

in this case would itself produce an anomaly which

is neither in accordance with the other provisions

of the Act nor in accordance with common sense.

The final matter that I would seek to draw

the Court's attention to, and this is a matter

which is directly relevant to the claim made by

the applicant against my client, and that is the

provision of section 46 of the MOTOR CAR ACT which

delineates the liability of the Insurance Office

with respect to my client, and that is to insure it against any liability including liability for costs which may be incurred in respect of bodily

injury to any person. I adopt, respectfully,

what has fallen from Mr Justice Wilson in respect

of the analysis of the jury's verdict, as it were,
or the verdict of the court, as being the measure

of that liability. Were it to be otherwise, the

same sort of problem would arise as that to which

I have already referred. Accordingly, it is our

submission that special leave ought not to be granted.

In the alternative, we say that if special

leave is granted then it should be granted only

on terms, of course, which permit the employer,

my client, to maintain its defence of the claim

brought against it by its own workers compensation

insurer so that it cannot be placed in a position

where it could fall between two stools, a position
which, we would submit, cannot occur but which

appears still to be open certainly on the contentions

of one or other of the insurers on my left and

right hand, both of whom seem to be intent on avoiding

paying or indemnifying my client in respect of

this liability. If the Court pleases.

MASON CJ:	Thank you, Mr Bongiorno.	Yes, Mr Barnard.
MITS/2/SDL	14	18/3/88
MR BARNARD:	May it please the Court.	We submit that special

leave should not be granted. We submit the issue
in this application is whether a compulsory third

party motor vehicle insurer, or it may be a public

liability insurer, of an employer which, on the

happening of an injury to a worker incurs a liability

to indemnify the employer can receive the benefit

of payments of compensation made by the employer

to the worker by having the amount of its liability

reduced by such payments. Of course, the

moreworkers compensation the employer pays, the

smaller becomes his right to be indemnified in

respect of the common law claim by the worker.

That is what is involved in the submission that

my learned friend, Mr Dwyer, puts and, of course, if there is considerable delay in the common law

proceedings comin~ on the employers' workers
compensation liability is increased and, in accordance

with my learned friend's submission, the employer

would not get that back and the motor vehicle insurer's

liability is reduced.

We submit that because of the injustice of the outcome of the proposition contended for the

question of law, if there is one, could not be

regarded as one of public importance regardless

of how much money is involved and we submit on

that ground the application should be refused.

My learned friend has referred to GONIS V

ROOTES and referred to that in suggesting that that confirms that workers compensation payments

always remain workers compensation payments.

GONIS V ROOTES was a case where the plaintiff did

not claim his loss of wages as special damages

and went to verdict without making the claim.

Regardless of that,application was made for the workers compensation payments to be deducted under

section 79(2) and it was merely held there that

the language of 79(2) had been satisfied and that the

court was obliged to make the deduction.

My learned friend has also referred to the

statement of Mr Justice Gibbs at page 428 of

XPOLITOS V SUTTON TOOLS where, in discussing

section 62, he said that:the section:

provides the right of the worker to further

weekly payments shall cease, but not that

a worker shall be required to make any

repayments of weekly payments already made. His Honour, two pages earlier, had gone extensively

through the provisions of 79(3) which, as

Your Honour Mr Justice Wilson has referred to,

provide for the amount to be deducted from the

judgment, or if it is not deducted from the judgment

gives rights of the employer to be indemnified

in respect of the workers compensation payments

MIT8/3/SDL 15 18/3/88

and gives the third party the right to sue in a

court of competent jurisdiction for the amounts.

We say that my learned friend gets no assistance from that decision.

We submit that it is settled law that these

remedies are alternative remedies and no contention

has been put to the contrary. My learned friend

has challenged the decisions in -

MASON CJ:  That is not right, Mr Barnard. Mr Dwyer submitted

that they are not alternative remedies on the

construction of the Victorian legislation.

MR BARNARD:	Yes, Your Honour.
MASON CJ:	He said that was the position but that the amendments

to the statute altered it.

MR BARNARD:  Yes, Your Honour. We submit that it is apparent

from the whole of the provisions of the Act and
that this was considered in XPOLITIS by His Honour

Mr Justice Gibbs where he sets out, on pages 425

and 426, the operation of the Act in relation to
the various ways in which adjustment is to be made
for workers compensation to be repaid. I think

it is possibly unnecessary for me to go through

all of that but he sets out in detail -

MASON CJ: There is no need to go through it all.

MR BARNARD:  If Your Honour pleases. My learned friend has

questioned the application of AUSTRALIAN IRON AND

STEEL and the MOTOR VEHICLE INSURANCE TRUST V FORBES

and the Court has been referred to the provisions

of section 46 of the MOTOR CAR ACT and we submit,
as Mr Justice Glass said in AUSTRALIAN IRON AND

STEEL, that it is not open to doubt that a defendant

incurs a liability in tort to pay damages

contemporaneously with the accrual to the plaintiff

of a cause of action. There is, in our submission,	and nothing in the MOTOR CAR ACT has been pointed
to to impart a different meaning to section 46 and the word ':'liability" in that section so that
it should be read as meaning "held liable".

My learned friend referred to a passage from

MOTOR VEHICLE INSURANCE TRUST V FORBES in the judgment

of the Chief Justice and we would draw the Court's

attention to the final sentence in the Chief Justice's

reasoning where he says:

Neither.· provision operates to reduce

the liability of the tortfeasor employer for

his "liability for negligence" -

and when he is referring to "neither provision"

he is referrin~ to one or other of the sections,

whichever applies -

MIT8/4/SDL 16 18/3/88

within the meaning of the appellant's

contract of insurance. The extent of that

liability if it goes to trial is the sum assessed

and for which judgment should be entered and

it remains that sum notwithstanding the fact,

if it be the fact, that the judgment has been

pro tanto satisfied by the payment of
compensation.

We would submit that it is a well-established principle that the liability is the liability incurred at

the time of the happening of the injury.

Finally, we submit that the defendant in this action, CMT - that is the defendant in the action

at the trial - did receive a benefit by having
the damages as assessed reduced by the amount of
compensation paid on its behalf by the second
respondent - it's employers' indemnity insurer.

Again, we say in respect of that that it is settled

law that where the insured receives a benefit,that

he should account for that benefit to his insurer.

and we adopt the passage of Mr Justice Murphy,

the learned presiding judge in the Full Court,

at page 100 where he referred to BRITISH TRADERS

INSURANCE CO LTD V MONSON and said:

The High Court in BANKERS TRADERS

INSURANCE CO LTD V MONSON (1964) 111 CLR 86,

94 pointed out that "CASTELLAIN V PRESTON

of course was not a case of subrogation in

respect of an outstanding right of action"

It was rather a case in which the insured was accountable to the insurer -

"Because the insurer's obligation had been

only to indemnify the insured against the

loss, and the payment originally made to the

insured had been made not because it was in

fact required for indemnification but because

of a mutual assumption which had turned out

to be erroneous, that it was required for

indemnification."

And here what we say is that the payments of workers

compensation are made and they are made on the

basis that if in fact damages are recovered at

a later stage the employer has a right to treat

those payments, or the defendant has a right to

treat those payments as damages and here they

were treated as damages at the trial by asking

for them to be deducted, and on settlement of the

appeal by agreeing that they be deducted from the

amount of the damages. In those circumstances,

a benefit having been received, in our submission,

the defendant or the employer had to account to

his insurer for the amount of those payments.

MIT8/5/SDL	17	18/3/88
MASON CJ:	Thank you, Mr Barnard.	Yes, Mr Dwyer?

MR DWYER: If the Court please. In terms of my learned friend's submission as to the justice of the case, the evidence before the Court is that, first of all, as His Honour

Mr Justice O'Brien found, and it remains unchallenged,

there was no established practice in Victoria whereby

the amount deducted under section 79(2) was returned

to either the defendant or its workers compensation

insurer. That appears at page 35 of the application

book and it is apparent from the affidavit in support

of the application that the result of this judgment,

if -it stands, is to reopen past transactions going

back for perhaps six years, if that is the appropriate

statute of limitation period to apply, cases which

have been settled and long since disposed of and

all in a background where the premiums of the respective

insurers will have been adjusted and fixed on the

basis of what the established practice was.

In those circumstances, if the premiums upon which all of these insurances have been granted

have been fixed on the basis that the section 79(2) deductions will not be recoverable then the justice

of the case is, in fact, the opposite of what my

learned friend submitted. The justice of the case

would require as between the insurers that that

established practice continue to operate so that

they, each of them, bear the losses which they

would have expected to bear when they fix their

premiums and, if there is any talk of windfalls

about, it is the workers compensation insurers

that will seek to derive windfalls from the operation

of this decision of the Full Court.

The second matter is this:

my learned friend, Mr Barnard, at the conclusion

of his submissions, referred to MONSON's case.

We, of course, do not quarrel with the passage

from MONSON's case which is referred to in the

judgment of the Full Court but that passage only

applies if one accepts that the workers compensation

liability has been extinguished ab initio. Once

one says, "No, that workers compensation liability
was there and it is only workers compensation liability

as to the future that is affected", then that passage from MONSON's case ceases to have any

operation.

MASON CJ:  Mr Dwyer, can we interrupt you and look at your

grounds of appeal?

MR DWYER: If the Court please, the point about liability

having been extinguished from the outset is taken

in grounds 4, 5 and 9, in substance.

MIT8/6/SDL 18 18/3/88

MASON CJ:	Yes, I must say that the grounds of appeal are so numerous in number as to divert the reader's
attention away from any significant point of law.
But you say 4, 5 and 9?
MR DWYER:	Yes, all relate to that question of whether the

workers compensation liability had been extinguished
from the outset as it is put in 4, ab initio as

it is put in 5, or came to an end, as it is put

in 9. 9 picks up the obligation of NEM to indemnify

CMT in respect of CMT's workers compensation liability.

Grounds 6, 7 and 8 relate to the question

whether the liability at workers compensation or

at common law are in the alternative or whether

they are cumulative.

WILSON J:	What do grounds 5 and 9 add to ground 4, Mr Dwyer?
MR DWYER:	Ground 5 adds nothing of substance to ground 4.
MASON CJ:	Why do we need it, then? Why does it not go?

WILSON J: It seems to be Victorian practice to make 20 grounds

where four or five would do.

MR DWYER:  I note what the Court says in that regard and

the substance of the matter will as well be served

if either of those grounds were to remain. I think

ground 9 does add something additional because

it ties that point into the question of NEM's liability

to indemnify.and that would seem to be effected

as a matter of logic by grounds 4 or 5 but ground 9

does express the point.

MASON CJ:  We do not want to engage in a blue pencilling exercise

here, but can we have your assurance that these grounds

do not raise anything beyond the matters that you

have put in support of the application for special

leave as going to the arguability of this appeal?

MR DWYER:  The only ground that may go beyond anything that

I have said - in terms of what I have said -

perhaps I should draw the Court's attention to

this: grounds 15 and 16 and 17 relate to what

could be loosely described as the subrogation question

which my learned friend, Mr Barnard, raised at

the conclusion of his submissions and ground 20

raises the additional question of whether if NEM

can recover from CMT the payments of workers
compensation, the motor car insurer is in turn bound to indemnify CMT against that liability.

MASON CJ:	That comes within the ambit of your appeal ..
MR DWYER:	Yes.

MIT8/7/SDL 19 18/3/88

MASON CJ:  I would have thought that 15 and 16 do, too, because

there is this question that is sought to be raised

whether or not there is this liability to reimburse in respect of an amount received that is a benefit.

MR DWYER:  Yes.

MASON CJ: Really, something ought to be done in relation

to the drafting of notices of appeal to ensure

that the grounds are not as numerous and

multifarious as the grounds that are set forth

in this draft notice of appeal.

MR DWYER:  Your Honour, by way of miti~ation can I simply

say, with respect, that the Judgments appealed

from are not of the simplest and straightforward

kind in their language themselves, particularly,

it is submitted, the judgment of Mr Justice Murphy,

and to make sure, as counsel, that you have covered

every point which appears to be contained in such

a judgment does lead to one having more grounds

rather than fewer.

MASON CJ:  Yes, but I am not sure that in drafting a notice

of appeal you have to pick up everything that a

judge says that you do not entirely agree with. that the grounds of appeal do not go beyond what

you have put in support of the argument that would

be advanced on the hearing of the appeal.

MR DWYER:	Yes, Your Honour. If the Court pleases.
MASON CJ:	Very well, we need not trouble you further. The

Court will grant special leave to appeal in this

matter.

AT 2.55 PM THE MATTER WAS ADJOURNED SINE DIE

MIT8/8/SDL 20 18/3/88