Thurlow v Arndette Pty Ltd (in liq)

[1996] QCA 271

IN THE COURT OF APPEAL	[1996] QCA 271
SUPREME COURT OF QUEENSLAND	Appeal No. 274 of 1995
Brisbane
Before	Fitzgerald P. Derrington J. Mackenzie J.

[Arndette P/L (In Liq.) v. Thurlow]

BETWEEN:

ARNDETTE PTY LTD (IN LIQUIDATION)

(Defendant) Appellant

AND:

GREGORY JAMES THURLOW

(Plaintiff) Respondent

REASONS FOR JUDGMENT - THE COURT

Judgment delivered 20/08/1996

This is an appeal from a judgment in the Trial Division on 30 November 1995 awarding the respondent

$165,567.39, with costs to be taxed on the appropriate District Court scale. There is only one point

in the appeal, which was not seriously contested.

The respondent sued the appellant, his employer, for damages for personal injuries suffered through its

negligence, and the award included $40,000 for past economic loss. Payments of $31,404.79 had

been made by the Workers’ Compensation Board (“the Board”), all of which was paid to the

respondent except for an amount of $3,834 in respect of income tax on the compensation payments

which the Board paid to the Commissioner of Taxation. As the trial judge recognised, the respondent must repay the entire $31,404.79 to the Board from his award. In accordance with the usual practice,

the amount awarded to the respondent was increased by the amount of $3,834 income tax which the

compensation payments received by the respondent had attracted.

Before the trial judge, the appellant argued that that amount, $3,834, should not have been included in

the award, because it was demonstrated by taxation ruling IT2623 of 13 December 1990 and

correspondence which had been exchanged with the Australian Taxation Office, Townsville, that the

respondent would be entitled to a refund of that amount from the Commissioner of Taxation when the

compensation which the Board had paid was refunded to it. The trial judge was not persuaded that

the respondent would obtain such a refund, and hence concluded that he should apply the decision of

the High Court of Australia in Fox v. Wood (1981) 148 C.L.R. 438 and include the amount of tax paid

in respect of the compensation payments, i.e., $3,834, in the amount awarded to the respondent.

Before this Court, it was agreed by the parties that not only was it probable that the respondent would

receive a refund of that amount from the Commissioner of Taxation but that such a refund had already

been received.

In the circumstances of this case, therefore, the assumption upon which the judgment of Gibbs C.J., with

whom Aickin and Wilson JJ. agreed, proceeded in Fox v. Wood (see p. 442) was displaced. The

addition of the sum of $3,834 which the Board had paid to the Commissioner of Taxation to the amount

awarded to the respondent had the effect of reimbursing him for a loss which he did not sustain. It

follows that his award should be reduced by that amount: see British Transport Commission v. Gourley
[1956] A.C. 185 at p. 187, which was approved in Fox.

Accordingly, the appeal should be allowed and the judgment below in favour of the respondent reduced

by $3,834. The parties are agreed that the costs of and incidental to the appeal are to be paid by the

appellant.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND	Appeal No 274 of 1995
Brisbane
[Arndette P/L (In Liq.) v. Thurlow]
BETWEEN:

ARNDETTE PTY LTD (IN LIQUIDATION)

(Defendant) Appellant

AND:

GREGORY JAMES THURLOW

(Plaintiff)	Respondent
FITZGERALD P. DERRINGTON J. MACKENZIE J.

Judgment delivered 20/8/1996

REASONS FOR JUDGMENT - THE COURT

1.          Appeal allowed. Judgment below in favour of the respondent reduced by $3,834.00.

2.          Costs of and incidental to the appeal are to be paid by the appellant, as agreed between

the parties.

CATCHWORDS:	TAXATION - respondent suffered personal injuries through the negligence of his employer - income tax on workers’ compensation payment - Taxation Ruling IT2623 - Fox v. Wood
British Transport Commission v. Gourley [1956] A.C. 185 Fox v. Wood (1981) 148 C.L.R. 438
Counsel:	J.A. Griffin Q.C. with him Dr C.G.S.L. Jensen for the Appellant K.T. McCreanor for the Respondent
Solicitors:	MacGillivrays as t/a for Murray Lyons & Co. Gilshenan & Luton as t/a for Gayler Cleland Towne
Date(s) of Hearing:	13 August 1996