Storey's Maintenance Services Pty Ltd v Johnson
[2012] TASSC 23
•14 May 2012
[2012] TASSC 23
COURT: SUPREME COURT OF TASMANIA
CITATION: Storey's Maintenance Services Pty Ltd v Johnson [2012] TASSC 23
PARTIES: STOREY'S MAINTENANCE SERVICES PTY LTD
v
JOHNSON, Damien
CADBURY PTY LTD (Third Party)
FILE NO/S: 283/2009
DELIVERED ON: 14 May 2012
DELIVERED AT: Hobart
HEARING DATES: 14 March, 4 May 2012
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Workers Compensation – Alternative rights against employer and/or third parties and consequences thereof – Rights of and against third parties – Rights of employer to indemnity or contribution from third party – Generally – Employer may obtain indemnity from negligent third party.
Workers Rehabilitation and Compensation Act1988 (Tas), s134.
Aust Dig Workers Compensation [279]
Limitation of Actions – Extension or postponement of limitation periods – Generally – Power of Court to extend limitation period.
Wrongs Act 1954 (Tas), s3.
Aust Dig Limitation of Actions [1061]
REPRESENTATION:
Counsel:
Plaintiff: No Appearance
Defendant: P Harris
Third Party: No Appearance
Propose Third Party: A R Mills
Solicitors:
Plaintiff: Page Seager
Defendant: Wallace Wilkinson & Webster
Third Party: Dobson Mitchell & Allport
Proposed Third Party: Dobson Mitchell & Allport
Judgment Number: [2012] TASSC 23
Number of paragraphs: 22
Serial No 23/2012
File No 283/2009
STOREY'S MAINTENANCE SERVICES PTY LTD (ABN 81 112 251 948)
v DAMIEN JOHNSON, CADBURY PTY LTD (ABN 78 004 551 473)
REASONS FOR JUDGMENT HOLT AsJ
14 May 2012
The defendant has applied for an extension of time to bring third party proceedings under the Wrongs Act 1954, and has also applied for leave to file and serve the proposed third party notice under the Supreme Court Rules 2000.
The background, according to the allegations in the proceedings to date and the affidavit of the defendant, is as follows. Storey's Maintenance Services Pty Ltd, a labour hire company, employed Michael Parke. Pursuant to a labour hire services agreement, Cadbury Pty Ltd engaged Mr Parke to work at its premises at Claremont. In March 2006, whilst working at Cadbury's premises, Mr Parke, in the course of his work, fell through a suspended ceiling and suffered injury. At the time Mr Parke was under the supervision of the defendant, Mr Johnson, an independent contractor. David Bond, an employee of Cadbury, was the project manager, and aware of the risk which eventuated and which resulted in Mr Parke's injury. Storey's, as Mr Parke's employer, is liable to make, and has made, workers compensation payments to, and for the benefit of, Mr Parke.
Storey's has sued Mr Johnson for an indemnity in respect of the workers compensation payments, claiming that Mr Parke's injury was the result of Mr Johnson's negligence. The writ was served in April 2009. Mr Johnson promptly joined Cadbury as a third party, rather than Cadbury's employee Mr Bond. There is a problem with this. The success of the third party proceedings against Cadbury under the Wrongs Act is dependent upon the employer, Storey's, having a cause of action against Cadbury. But absent the injured worker having the necessary statutory degree of permanent impairment to allow him to sue his employer for damages, Storey's could not recover its workers compensation payments from a principal contractor. See Skilled Engineering Ltd v Glaxo Welllcome Australia Pty Ltd (2005) 15 Tas R 88. The provision dealing with the recovery by an employer of workers compensation payments against the wrongdoer whose act or omission caused the worker's injury, namely the Workers Rehabilitation and Compensation Act 1988, s134, was amended, effective 31 October 2007, to remove the degree of permanent impairment requirement. But the amendment is not stated in the amending statute to have retrospective effect and such an intention does not appear in the statute. Accordingly, the amended provision cannot be relied upon to create a cause of action against Cadbury which did not exist at the time the circumstances giving rise to Storey's liability to make workers compensation payments arose. See Maxwell v Murphy (1957) 96 CLR 261 at 267. Mr Johnson's solicitors did not recognise the problem until almost two years after the defendant had been served with the plaintiff's writ, and hence the need for an extension of time under the Wrongs Act and leave to issue third party proceedings under the Rules.
The proposed third party claim against Mr Bond is under the Wrongs Act. The limitation period for the commencement of such a claim is 12 months from the date of service of the plaintiff's writ. There is a discretion to grant an extension if the person from whom contribution is sought to be recovered will not be prejudiced in his defence by reason of the extension. There is also a discretion to grant leave to issue the third party proceedings under the Rules, such proceedings only being available as of right if issued within 30 days of the filing of the defence. Leave under the Rules will generally be granted if it appears that there is a question proper to be tried as to the liability of the proposed third party. See Dwyer v Goldamere Pty Ltd [2004] TASSC 78 at [2].
There was no submission that if time was extended for the institution of the proceedings under the Wrongs Act that, nonetheless, leave under the Rules should be withheld. Conversely, if an extension of time is not granted under the Wrongs Act, it is not suggested that any useful purpose would be served by a grant of leave. Accordingly I confine myself to a consideration of the application under the Wrongs Act and if an extension of time is granted, leave under the Rules will also be given. If an extension of time is not granted, leave under the Rules will not be given.
The Wrongs Act, s3(5) and (6) relevantly provides:
"(5) … proceedings for contribution under this section may … be commenced at any time within the period of twelve months (or within such extended period as may be allowed pursuant to subsection (6) of this section) after the writ in the original action was served …
(6) A judge … on the application of a person seeking to recover contribution under this section, may … extend the period within which proceedings for recovery of contribution shall be commenced, notwithstanding that the period prescribed in subsection (5) of this section may have expired, if he is satisfied that the person from whom contribution is sought to be recovered will not be prejudiced in his defence by reason of the extension."
Subsection (6) provides that the discretion is only enlivened if the court is satisfied "that the person from whom contribution is sought to be recovered will not be prejudiced in his defence by reason of the extension". There being no submission on behalf of the proposed third party that he would be prejudiced by reason of the extension, I infer that there is no such prejudice and find accordingly.
Subsection (6) does not contain any statutory fetters on the exercise of the discretion once enlivened. In this respect the discretion is indistinguishable from a discretion to extend time under the Limitation Act 1974, considered by the Full Court in Hill v Iluka Corporation Ltd [2002] TASSC 113. The court said at [23]:
"In any event, it is clear that although the issue of whether the defendant will be able to get a fair trial is a significant, if not decisive, factor, it is certainly not the only relevant factor in the exercise of the discretion. The Limitation Act, s5(3), requires that consideration be given to all the circumstances of the case. In most cases this means that regard must be paid to whether there is an arguable case, the length of the delay, the explanation for it and the degree of prejudice the delay has caused and/or will cause the defendant. All of these matters require weighing to determine whether it is just in the circumstances of the case, to extend the time within which proceedings may be commenced. See Knight v Smith [1975] Tas R 83; Klein v Domus (1963) 109 CLR 467; Parsons v Doukas (2001) 52 NSWLR 163; Marr v Green (1994) Aust Torts Reports ¶81-277."
There being no relevant prejudice, what remains to be considered is whether there is an arguable case, the length of the delay and the explanation for it.
If the case to be pursued is obviously hopeless, the justice of the situation could never lie with the grant of the extension sought. See Williams v The Minister Aboriginal Land Rights Act 1983 (1994) 35 NSWLR 497 at 508. Counsel for the proposed third party, Mr Bond, submits that this is such a case. I will set out counsel's argument shortly, but first, it is necessary to go to the statutory provision on which Mr Johnson relies for his cause of action against the proposed third party.
The prospective claim is under the Wrongs Act, s3(1)(c), which relevantly provides:
"(1) Where damage is suffered by a person as the result of a wrongful act —
(c)a person who is liable in respect of that damage may recover contribution from any other person who … would, if sued by the person by whom the damage was suffered at the time when the cause of action arose, have been, liable in respect of the same damage …;."
It is to be noted that "damage" is defined in the Wrongs Act, s2, as including "economic loss and loss of any other kind".
Here, Storey's has suffered economic loss in the form of its obligation to make workers compensation payments. In the primary proceedings, Storey's claims that that loss was as a result of the wrongful act of Mr Johnson. Mr Johnson's prospective claim under the Wrongs Act, s3(1)(c), is that Cadbury employee, Mr Bond, would have been liable in respect of the same loss had he been sued by Storey's. Counsel for Mr Bond contends that Storey's could not possibly have succeeded against Mr Bond if it had sued him. In brief form, the argument is as follows:
· Mr Parke's injury giving rise to Storey's liability to make workers compensation payments occurred in March 2006.
· Since the insertion of PtX, Div2 into the Workers Rehabilitation and Compensation Act, effective 1 July 2001, a worker has had no cause of action for damages against his employer, unless he has suffered the degree of permanent impairment specified by the statute.
· Mr Parke did not suffer the required degree of permanent impairment.
· The insertion of PtX, Div2, did not affect the ability of an injured worker to recover damages against a co-worker, even if the protected employer would have been vicariously liable for the wrongful acts or omissions of the co-worker. Cook v Miley [2007] TASSC 70.
· Effective from 31 October 2007 the Workers Rehabilitation and Compensation Act was further amended so that an injured worker, lacking the required degree of permanent impairment, had no cause of action against a co-worker for whose acts or omissions an employer is vicariously liable. The amendments were expressed to have retrospective effect from 1 July 2001. Workers Rehabilitation and Compensation Amendment Act 2007, ss2, 35 and 36.
· If Mr Bond's acts or omissions were wrongful and resulted in the liability of Storey's to make workers compensation payments, they were acts or omissions for which Cadbury is vicariously liable.
· Cadbury is an employer for the purposes of the application of the degree of permanent impairment requirement as Cadbury was a principal contractor and a principal contractor is treated as an employer for the purpose of the application of the degree of permanent impairment requirement for the institution of a damages claim by an injured worker. Workers Rehabilitation and Compensation Act, ss29 and 132.
· Accordingly, Mr Parke, having no cause of action against Cadbury, which is vicariously liable for Mr Bond's acts or omissions, consequently, now has no cause of action against Mr Bond.
· Mr Parke having no cause of action against Mr Bond, it follows that Storey's has no cause of action enabling it to recover from Mr Bond an indemnity for workers compensation payments. Skilled Engineering v Glaxo Wellcome Australia Pty Ltd (supra).
· Storey's having no ability to recover workers compensation payments from Mr Bond, Mr Johnson cannot recover contribution from Mr Bond under the Wrongs Act, s3(1)(c).
The contention that the proposed third party claim is not viable for the reasons submitted must fail. It overlooks the fact that the hypothetical action by Storey's against Mr Bond referred to in the Wrongs Act, s3(1)(c), is an action commenced "at the time when the cause of action arose". It is agreed that Storey's suffered damage prior to the 31 October 2007 amendments to the Workers Rehabilitation and Compensation Act. Despite the retrospective operation of the amendments, the amending Act, by s37, specified that the retrospective amendments "do not apply in respect of proceedings for an award of damages that were commenced, but not completed, before the day on which [the amending Act] received the Royal Assent". The date upon which the third party proceedings might commence, or the date upon which such proceedings might be tried, is irrelevant for the purpose of the existence of a cause of action under the Wrongs Act. The relevant date is the date upon which Storey's acquired a cause of action against the proposed third party and the claim under the Wrongs Act is mandated to be assessed on the presumption that Storey's had issued its writ on that day. Accordingly the hypothetical action presumed to have been brought by Storey's against Mr Bond is at least arguably, if not certainly, immune from the retrospective amendments by the operation of s37. The submission that the proposed claim against Mr Bond lacks viability, for the reason submitted, is rejected.
There was no submission, other than the one which I have just rejected, that the prospective claim lacks viability. Nonetheless I need to consider whether on the facts disclosed Mr Johnson has an arguable case against Mr Bond for contribution. There is evidence that at the time Mr Parke was injured the proposed third party, Mr Bond, was the project manager for the work Mr Parke was performing. There is evidence that Mr Bond recognised the risk of somebody falling through the false ceiling and being injured. There is evidence that all that was done to protect against the risk was to string up hazard tape vertically from the ceiling a short distance from the margin of the hazard. The evidence is that Mr Bond inspected this precaution and considered it to be adequate. This evidence is sufficient to demonstrate, in the appropriately preliminary way required, that Mr Johnson has an arguable claim against Mr Bond for contribution.
Finally, it was submitted on behalf of Mr Bond that Mr Johnson's delay in commencing third party proceedings had not been satisfactorily explained.
The explanation for the delay appears in the affidavits of Mr Johnson's solicitor. The explanation is as follows. Third party proceedings were promptly commenced against Mr Bond's employer, Cadbury, on advice which the solicitor obtained from counsel. Mr Johnson was not advised to join Mr Bond. No further consideration was given to the matter until February 2011. It was then that the solicitor first appreciated the problem with the claim against the existing third party, Cadbury, which I identified earlier in these reasons. Advice to Mr Johnson to join Mr Bond promptly followed, and in March 2011, Mr Johnson issued his instructions to bring the claim. The application for an extension of time was filed in April 2011. Thereafter there were discussions between Mr Johnson's solicitor and the solicitor for Mr Bond. In September the solicitor for Mr Bond advised that the extension of time application would be opposed. An affidavit in support of the application was sworn on 18 October 2011 and on 18 November the application was listed for hearing for February 2012. There was a consent adjournment and the hearing commenced in March 2012.
Counsel for Mr Bond referred to the fact that in proceedings commenced by the injured worker Mr Parke against Mr Johnson for damages for personal injury, Mr Johnson joined Mr Bond as third party in October 2007. The reasoning behind Mr Johnson joining Mr Bond as a third party to the claim by the injured worker, and then joining Cadbury, rather than Mr Bond, as the third party in the claim by Storey's, has not been disclosed.
I do not think that this omission renders the explanation for the delay unsatisfactory. Mr Johnson originally joined Cadbury because that is what counsel advised. The circumstances are not such that Mr Johnson needed to disclose privileged communications between his solicitor and counsel.
Mr Johnson has demonstrated that he has a viable claim for contribution against Mr Bond. The delay in taking action to have Mr Bond joined as a third party is lengthy but it has been satisfactorily explained. Even if the explanation should have been regarded as incomplete or unsatisfactory, I would have attached little weight to this feature as the delay has not prejudiced Mr Bond's prospects of obtaining a fair trial. The same issues as to liability arise and need to be dealt with by Mr Bond in the claim for damages commenced by Mr Parke, in respect of which Mr Bond had been a third party since October 2007. As I have said, there was no claim by counsel for Mr Bond that the delay has caused or will cause prejudice or oppression.
I am, accordingly, persuaded that the justice of the case lies with extending time for the institution of the claim under the Wrongs Act, and the issue of a grant of leave under the Rules, to bring the claim by way of third party proceedings.
I will hear counsel as to the time necessary for the filing and service of the third party notice and then make orders for an extension of time and for leave.
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