VWA v Crestwood Developments Pty Ltd (No. 2)

IN THE SUPREME COURT OF VICTORIA

AT MELBOURNE

Not Restricted

PRACTICE COURT
No. S CI 2012 4644

VICTORIAN WORKCOVER AUTHORITY	Plaintiff
v
CRESTWOOD DEVELOPMENTS PTY LTD	First Defendant

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JUDGE:	DIXON, J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 October 2014
DATE OF RULING:	3 October 2014 (Revised 10 October 2014)
CASE MAY BE CITED AS:	VWA v Crestwood Developments Pty Ltd (No. 2)
MEDIUM NEUTRAL CITATION:	[2014] VSC 513

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ACCIDENT COMPENSATION – Recovery proceeding under s 138 Accident Compensation Act 1985 – Claim against a third party settled on ‘all in’ basis– Whether that settlement is to be brought to account in calculating statutory liability of another third party.
INTEREST – Whether delay by plaintiff in prosecuting case – Whether delay contributed to by defendant – Whether defendant has had use of the money represented by damages award during period of delay – Whether good cause shown to the contrary to limit period of statutory interest – Supreme Court Act 1986, s 60; Penalty Interest Rates Act 1983, s 2.
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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Middleton	Hall & Wilcox Lawyers
For the Defendant	Mr S Carson	Norris Coates Lawyers

HIS HONOUR:

I delivered judgment in this proceeding on 14 August 2014.[1] The parties have returned to exercise liberty to apply to seek further clarification of the plaintiff’s entitlements in the proceeding.
[1]Victorian WorkCover Authority v Crestwood Developments Pty Ltd [2014] VSC 372.
Two issues in particular were raised. The first is the claim by the plaintiff for interest on the sum calculated pursuant to the formula under s 138 of the Accident Compensation Act 1985 following my declaration of the value of factor X. The second issue concerned the relevance of the amount received by the plaintiff from another party, Sheer Construction Pty Ltd, in settlement of the plaintiff’s claim under s 138 for indemnity against it.
I deal first with the question of interest. At the date of issue of the writ on 6 September 2011, the plaintiff had paid $218,148.93 to the injured worker for weekly benefits, medical, rehabilitation and like expenses. By 1 July 2013, the amount paid to the injured worker by the plaintiff totalled $245,907.08. The plaintiff invited me to assume that no further payments had been made to the worker and the defendant takes no issue with that assumption.
The plaintiff calculated interest by taking the average amount paid by it over the period since the issue of the writ in its recovery action, the figure of $232,208, and applying a penalty interest calculation pursuant to s 60 of the Supreme Court Act at the rate under s 2 of the Penalty Interest Rates Act1983. This calculation is $69,706 accruing at the daily rate of $66.75. The defendant did not take issue with either the basis of the calculation (by reference to an averaged amount) or the calculation itself.
The defendant submitted that the plaintiff had delayed in prosecuting the recovery proceeding and for that reason a credit should be allowed by a general percentage deduction in the interest that the plaintiff should recover.
The defendant contended that the plaintiff did not act promptly or attempt to minimise delay and that it was in breach of s 25 of the Civil Procedure Act2010, which provides that for the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply, must use reasonable endeavours in connection with the civil proceedings to act promptly and minimise delay.
By reference to a chronology of events, the defendant points firstly to a period of four months between the issue of the writ in the recovery proceeding, and the issue by the worker of his writ in the worker’s proceeding. That was a period from 27 December 2011 to 6 March 2012. The defendant contended that this period was one of premature action on the part of the plaintiff, and that interest should not commence to run until the worker’s proceeding commenced.
I did not follow how the prompt issue of the recovery proceeding in advance of the worker’s proceeding demonstrates delay on the part of the plaintiff. What I understood the defendant to be suggesting was that that period was a time when interest effectively ran against the plaintiff without any opportunity being provided to the defendant to advance the proceeding to judgment. This is truly an alternative submission to its first submission.
Once the worker’s proceeding was issued, it was listed for trial on 4 March 2013, a period of one year from the issue of the writ. That period is unexceptional and does not in any way speak of unacceptable delay or any breach of the obligation under s 25 of the Act.
The trial date was vacated when the worker joined an additional party (Sheer Construction) to his proceeding, but the plaintiff also joined that party to the recovery proceeding. It would be 14 months before both proceedings came on for trial on 19 May 2014. It was ordered that the recovery proceeding follow the worker’s proceeding (a jury trial), with evidence in the worker’s proceeding being evidence in the recovery proceeding.
The defendant contended that it was not necessary for the plaintiff to have awaited the outcome of the worker's action before proceeding with the recovery action. However, the usual procedure in this court for conduct of these types of actions is that the recovery proceeding is listed for trial following on the worker's proceeding in order that the evidence tendered at the worker's proceeding is evidence at the trial of the recovery proceeding. This has several advantages, including saving court time and costs and expenses for the parties involved in each proceeding.
I am not persuaded that adopting this procedure in the recovery proceeding involved a breach of s 25 of the Act, or that there was delay that ought to affect the calculation of interest.
Apart from the reservation by the defendant of its rights in respect of any claim for interest in February 2013, the defendant did not press for an earlier determination of the recovery proceeding. Nor did the defendant oppose the orders for the trial of the recovery proceeding after the worker’s action. When the first trial date was vacated, the plaintiff also joined Sheer Construction to the recovery proceeding and it remained a party until after the commencement of the worker’s action. In this way, the defendant has contributed to any delay between the issue of the proceeding and its resolution.
Further, during the period between the issue of the writ and the date of judgment, the defendant has had the use of the funds that it must now pay to the plaintiff pursuant to the court’s decision. As a general rule, delay does not deprive a successful plaintiff of interest. The starting point is the requirement that interest ‘must’ be awarded for the whole of the period after issue of the writ unless ‘good cause is shown to the contrary’. Hargrave J reviewed the relevant case law in Kalenik v Apostolidis (No 2)[2]. In summary, delay may be a relevant discretionary factor in determining whether good cause has been shown to the contrary, but that will rarely be the case ‘because of the self-evident observation that the defendants have had the use of the money since the commencement of the proceeding’.
[2][2009] VSC 410, [12]-[23], see also Robert Deutsch v Erwin Deutsch (No 3) [2014] VSC 494.
Balancing these considerations, I will not make a broad based reduction in the amount of interest to be awarded pursuant to s 60 of the Supreme Court Act and I will declare that the sum to which the plaintiff is entitled by way of interest on the payment calculated pursuant to s 138, to the date of judgment, is $69,439.94.
The second issue raised was that the defendant now contended that the plaintiff ought to bring to account the sum of $75,000 recovered by it from Sheer Construction pursuant to settlement of the recovery proceeding against Sheer. There was no evidence about that settlement before the court. I was informed from the Bar Table that that payment was an ‘all in’ payment, that is inclusive of all liability and of costs. The defendant contended that if the amount was not taken into account, the plaintiff would be unjustly enriched and/or would double dip.
It should be said in the first place that this was an issue that ought to have been dealt with at trial. No satisfactory explanation was forthcoming as to why that issue was not raised at trial. To raise it at this late stage the defendant would need to reopen its case.
Whether the fact of the settlement would have made any difference if raised at trial is open to doubt. Any amount received as an ‘all in’ settlement from another third party against whom a recovery action might be brought is not a matter to be taken into account under the statutory formula, and the amount that the plaintiff is entitled to was calculated pursuant to that statutory formula. Ultimately, the formula calculates a portion of the total liability for which the indemnified party is liable that may be recovered as an indemnity.
The question of double dipping in circumstances that bear some similarity with the present circumstances was considered by the Court of Appeal in Morris v Riverwild Management Pty Ltd.[3] In that decision, Nettle and Redlich JJA stated what I consider to be an appropriate principle to apply on this application. They said:
Fourthly, where several defendants are severally liable for parts of a plaintiff's claim, the general principle is that one such defendant is not entitled to credit in respect of payments made by other defendants unless and until the total of payments made by the other defendants exceeds the difference between the plaintiff's claim and that part of the claim for which the defendant seeking credit is liable.[4]
[3][2011] VSCA 283, [52].
[4]Ibid, [56].
In that proceeding, as here, the amount which the defendant contends should be taken into account, is an amount that is inclusive of costs whereas the amounts that has been calculated pursuant to the formula are exclusive of costs. There is no evidence before me about the amount of costs incurred by the plaintiff in this proceeding that would permit a sensible comparison.
It is feasible that the sum of $75,000 that Sheer Construction agreed to pay does no more than pay costs. I am unable to make any finding in that respect. There is no acceptable basis on which to apportion the $75,000 payment between damages and costs. The like situation faced the Court of Appeal in Morris v Riverwild, and the court concluded that, in that circumstance, the only appropriate way to treat each payment is as one paid on account of an undissected liability for damages and costs.
The only circumstance in which the defendant could be entitled to any credit in respect of payments made to the plaintiff by any other party, such as Sheer Construction, would be where the total of the payments for damages and costs that the defendant was obliged to make exceeded the difference between the plaintiff's total loss, including costs, and the amount recovered in respect of that total loss. There is no evidence that enabled that calculation to be made and it would appear likely that were that calculation to be made, there would not be a credit to which the defendant was entitled.
In any event, it seems to me that the issue raised concerns execution of judgments rather than liability and I am not concerned with any issues about recovery of judgment or settlement sums in this proceeding. Any question of unjust enrichment or double dipping, to which the defendant refers, could only arise in that circumstance.
Bearing all of these considerations in mind, it was not appropriate to grant the defendant leave to reopen its case in order to further agitate this particular issue and I refused leave for that to occur.
There will be judgment for the plaintiff against the first defendant for $245,907.08 with an indemnity for future payments of $50,092.92. I will also give judgment in favour of the plaintiff to recover damages by way of interest in the sum of $69,706 and thereafter at the daily rate of $66.75 until the judgment is satisfied. I will order that the first defendant pay the plaintiff's costs of the application more particularly defined by the submissions from each of the parties dated 29 September 2014.

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[2014] VSC 513

3 October 2014 (Revised 10 October 2014)