WorkCover Queensland v Amaca Pty Ltd & Anor

[2010] HCATrans 48

[2010] HCATrans 048

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane     No B12 of 2009

B e t w e e n -

WORKCOVER QUEENSLAND

Applicant

and

AMACA PTY LTD (ACN 000 035 512)

First Respondent

SELTSAM PTY LTD (ACN 000 003 734)

Second Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 12 MARCH 2010, AT 11.24 AM

Copyright in the High Court of Australia

MR W. SOFRONOFF, QC:   May it please the Court, I appear with my learned friend, MR K.F. HOLYOAK, for the applicant.  (instructed by Bruce Thomas Lawyers)

MR D.F. JACKSON, QC:   May it please the Court, I appear with my learned friend, MR R.C. MORTON, for the respondent.  (instructed by Holman Webb Lawyers)

FRENCH CJ:   Yes, Mr Sofronoff.

MR SOFRONOFF:   Your Honours, pursuant to section 207B(7) of the Workers Compensation and Rehabilitation Act 2003 (Qld), when an insurer pays workers compensation to an injured worker, provided that the worker has not yet sued the tortfeasor, upon the receipt of that payment by the worker the insurer gains a right of statutory indemnity against the tortfeasor which would permit the insurer to recover the amount of the compensation paid up to the limit of the damages recoverable. Section 66 of the Succession Act 1981, on the other hand, abolished the common law rule that provided that a cause of action shall not survive the death of the injured person and provides that the cause of action shall survive for the benefit of the estate of the deceased person. However, it limits the amount of damages that the estate can recover in relevant respects and it excludes the recoverability of damages for pain and suffering and loss of earning capacity.

The question for the High Court, if your Honours were to grant leave, would be whether section 66 limits the sum recoverable in an action by an insurer to enforce the statutory indemnity. Could I take your Honours first to section 207B to notice some features of it and then take your Honours to the reasons of the Court of Appeal. Your Honours, section 207B gives a variety of rights to an insurer depending upon whether a worker has sued or not sued, whether damages have been recovered, whether a settlement has been achieved or whether settlement is about to be achieved. Relevantly, however, subsection (7) provides that in cases where compensation has been paid, a right of indemnity arises in the insurer provided the worker has not yet brought action.

Your Honours will notice that subsection (7) speaks about the “person who has received compensation” and speaks about “damages for the injury” – the definite article “the” – and then in subclause (a) speaks about an indemnity limited to the extent of “that person’s liability for the damages”.  “The injury” and “the damages” appear to refer back to subsection (1)(a)(ii).  The section applies to an injury by a worker in circumstances creating subclause (ii):

a legal liability in the worker’s employer, or other person, to pay damages for the injury –

What one notices therefore about those two subsections (1) and (7) is that there must be a legal liability, an injury sustained in circumstances creating a legal liability in someone and that legal liability must give rise to an obligation to pay damages for “the injury” and there must be an entitlement to compensation.  Your Honours would be aware that the entitlement to compensation might be on the part of the injured worker, but it might be on the part of the injured worker’s dependants.  Equally, the legal liability might be a legal liability owed to the worker or it might be a legal liability under a statute to a worker’s dependants and consequently, compensation might be payable, for example, to a dependant and there might be a legal liability to pay damages for the injury, that is, the death of the worker, to those dependants and subsection (7) would then apply in that case as well.

The second thing to notice, in our respectful submission, is that when the insurer sues to recover the amount of the compensation, the insurer is not suing to recover damages for negligence but is suing pursuant to a statutory right to recover an amount measured by two things; the amount of compensation paid, on the one hand, and the tortfeasor’s liability for the damages so far as the amount of damages payable for the injury by that person extends.  This section says nothing about what is to happen if the worker dies and, understandably, because it is concerned about the continuation of the insurer’s right of indemnity and not the continuation of the worker’s or dependant’s right of action against the tortfeasor. 

Could I, against that background, take your Honours to the reasons of the Chief Justice in the application book at page 10 of the reasons, paragraphs [31] and [32].  In those paragraphs his Honour recognises that the existence of the indemnity and the calculation of damages are two separate matters and then says in paragraph [32]:

the damages to be calculated are those recoverable by the worker, or his estate in the event of death, as at judgment in the indemnity proceeding.

In our respectful submission, that is the question that is raised by the case and his Honour in stating the proposition in that form is, we respectfully submit, begging the question that is sought to be answered and, as a consequence, one cannot find in his Honour’s reasons any treatment of why it should be that the right of action of an insurer pursuant to a statutory indemnity should in any respect be affected by the rights of the estate of the injured worker pursuant to section 66 of the Succession Act.

KIEFEL J: The respondents appear to say that section 66 is brought into play because the question it deals with is the quantum of the damages. The substantive action is not altered, but it provides the measure or quantum of the damage.

MR SOFRONOFF: Your Honour, as to that could I say this. If your Honours would look again at section 207B(7)(b), it provides that:

to that end, the insurer is subrogated to the rights of the person for the injury.

In this case, subrogated to the rights of the worker for the injury.  That subrogation occurs in terms of subsection (7) when the person has received the compensation on payment and receipt.  A right of indemnity immediately accrues to the insurer provided no action has yet been brought.  We know from the decision of the High Court in Tickle v Hann that if the worker dies and the cause of action does not survive because there is no statute like section 66, that does not extinguish the right of the insurer to pursue the indemnity.

KIEFEL J:   Do you say that the question of quantum is resolved by reference to the construction of subsection (7)(a) and the indemnities being equivalent to the amount of compensation?

MR SOFRONOFF:   And the indemnity being limited to the amount of the compensation and the indemnity being a right to have recourse to the amount of damages payable to the worker notwithstanding that a worker has died because the two statutes, in our respectful submission, are directed at two entirely different things.  One is the survival of a cause of action for the benefit of the estate and the limitation of the right of the estate to recover for pain and suffering suffered by the dead worker and the limitation upon the right of the estate to recover for economic loss which had been suffered by the worker.

In each case one can understand the policy behind that.  The worker is dead and the pain and suffering is now immaterial and the economic loss is now immaterial and to the extent that it is not immaterial, the dependants have their own right of action under the relevant statute.  The Workers’ Compensation Act is concerned with an entirely different subject, namely, the recovery to the extent of the damages that would otherwise have been recoverable, the recovery of the amount of workers compensation paid from the person who is morally responsible for that payment, namely, the tortfeasor.

One has to give subclause (b) some work to do.  Subclause (b) speaks of the right of subrogation and it has been said in other cases that when a statute uses the term “subrogation”, that term, unless the contrary intention appears, should be given its normal equitable meaning.  Its normal equitable meaning is the assignment of the rights of the person to whom the right of subrogation applies.  Here it is the worker.

KIEFEL J:   The distinction you draw is between the rights of the person to bring that hypothetical action and the rights of the estate, which would not include matters such as pain and suffering relevant only personally to the worker.

MR SOFRONOFF:   Exactly.  That is right.  Could I take your Honours to Tickle v Hann (1974) 130 CLR 321. While that is being obtained, your Honours, could I briefly summarise what the case was about. A man called Harriman died in a motor accident in the course of his employment and the appellant was liable to pay compensation to him. It paid the compensation. It can be taken that Harriman did not die instantly and so for a short time he had a cause of action against the wrongdoer. But then Harriman died and in the state of the law then, his cause of action did not survive his death. There was a statutory right in the widow to sue as a dependant, but that had to be brought within 12 months. She did not do so and that cause of action also lapsed and as a consequence, nobody could sue – at common law nobody could sue, or under dependency legislation, nobody could sue the wrongdoer.

The question for the High Court was whether that meant that the insurer, who had a similar right of indemnity to that which obtains under our Act, could recover pursuant to that indemnity or whether there was nothing that could be done.  If your Honours would go to page 323.  The section that the Court was concerned with there was of course different but the stance of the matter is the same.  At the foot of page 323 subclause (d) contains the relevant indemnity.  Relevantly in the third line:

the person liable to pay the damages shall indemnify the employer against so much of the compensation paid to the workman as does not exceed the damages for which that person is liable ‑

Of course, upon the death of the worker and also the extinguishment of the right of the widow to claim, there were no damages for which that person was liable strictly to the worker or to the estate.             His Honour then, at the foot of page 327 after looking at the English cases upon a similar provision at the very foot, observed:

Two things are apparent from this treatment of the English provision:  first, that the right of the employer is regarded as independent of the action or inaction of the employee; it is a right given to the employer who has paid compensation for an injury to his employee which has been caused by the neglect or default of another: second, that the right of the employer is a right against the wrong-doer.  As Atkin LJ pointed out, that is not an action of negligence against the wrongdoer but for a cause of action created by the statute against the wrongdoer.

If your Honours then go, against the background of those observations, to page 330, his Honour then found, in the text of the provision that he was concerned with, the answer to the question.  Could I invite your Honours to read the second paragraph beginning with the words “In identifying the person” down to the words “reality disappears.”

FRENCH CJ:   Yes.

MR SOFRONOFF:   Your Honours will see that what his Honour was concerned to do was to construe the word “liable” and to consider whether the liability that was referred to in the workers compensation statute, whether that word referred to the liability that existed against the worker or the liability as at the date of trial that actually existed, if any, affected as it would have been by his death.  If your Honours would go to page 334, could I invite your Honours to read the paragraph at the beginning of that page.

FRENCH CJ:   Yes.

MR SOFRONOFF:   Our submission upon an appeal, your Honours, would be that 207B(1) defines the kind of injury to which the section applies in terms that require there to be an injury sustained in circumstances creating a legal liability to pay damages.  That will occur at the date of the injury.  Subsection (7) then gives rise to a right of indemnity upon payment of the sum of compensation which, of course, must occur, relevantly, when the recipient is alive, and that if, as Tickle v Hann holds, the death of the injured person extinguishing the cause of action does not extinguish the statutory right of indemnity, in our respectful submission, a fortiori, the death of that person reducing the amount of damages ought not.  Of course, we apprehend that there is another view that is available but, in our respectful submission, that is an important issue which ought to attract the attention of this Court.

Your Honours have seen – I hope your Honours have seen – that in the affidavit of Bruce Thomas, my instructing solicitor, which begins at page 42 of the application book, he explains how many of these cases arise and how substantial, paragraph 6, some of the payments that are made and that injured workers may not in particular cases bring actions, often because death follows very quickly after the payment.  So it is an extremely serious

matter, insofar as WorkCover is concerned, to have answered the question that we would wish to pose for the Court.

FRENCH CJ:   Thank you, Mr Sofronoff.

MR SOFRONOFF:   Thank you, your Honours.

FRENCH CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, may I say, first, if one goes to the terms of section 207B(7), your Honours will see that it is speaking of a liability to damages to be assessed in proceedings which have either not been brought or not completed. The quantum of the liability to damages, in our submission, will depend on the law applicable at the time the indemnity is sought to be enforced. If the worker is still alive, the person’s liability will be that fixed by the statute and the general law and if the worker has died, the liability will be for those damages which the estate might recover.

Your Honours, if one goes to the terms of the provision itself, we would submit they strongly support the conclusion arrived at by the Court of Appeal.  Could I just say this, your Honours, the provision operates on the assumption that damages have not been recovered from the person liable.  It gives the insurer a statutory entitlement to an indemnity.  It then speaks of the ambit of the indemnity and that ambit is to the extent of that person’s liability for the damages and that limitation, your Honours, is further emphasised by the words

so far as the amount of damages payable for the injury by that person extends –

Then, your Honours, there is the reference in section 207B(7)(b) to subrogation to the rights of the person who has received compensation. As we were submitting earlier, your Honours, the provision is speaking of a right to damages but damages that have to be assessed in proceedings which have not yet been started or completed. Your Honours, could we just say, if one goes to the circumstances where the worker has died, the way in which any damages that might be recoverable have to be assessed is in accordance with section 66 of the Succession Act. 

Your Honours, could we just say about the decision to which our learned friend has referred, Tickle v Hann really does not deal with this issue at all.  It simply held there was an entitlement in the indemnified body to recover even though the person had died and proceedings could not be brought by the estate.  It does not work out how those damages are to be quantified.

KIEFEL J: But is not section 66 referable really only to actions brought by the estate? That is the point made by Mr Sofronoff.

MR JACKSON:   It is in the sense that section 66 is the provision, as your Honours will have seen I think, that enables a cause of action to proceed following death and, your Honours, it is speaking of a cause of action surviving for the benefit of the estate of a deceased person, but it is a provision that has two sides. One side is that it determines the quantum recoverable. The other is that it determines the amount that has to be paid and it fits, your Honours, entirely, in our submission, into the concept of the extent of that person’s liability for damages. It determines the amount of the liability for damages of the person referred to in section 207B(7) who is the subject of the indemnity.

KIEFEL J:   But in any event, Mr Jackson, why is the question dealt with by the Court of Appeal not sufficiently important to warrant leave?

MR JACKSON:   Your Honour, I do not know that we have said it is not sufficiently important.  I think what we have said is that the decision is right and that the Court does no need to deal with the matter.  We would also say this, your Honours, that the decisions that are otherwise referred to all seem to suggest that there is, as the Court of Appeal said, a distinction to be drawn between, on the one hand, the existence of the right to indemnity and, on the other hand, the quantification of its ambit.  Your Honours, I do not think I need to take your Honours to the various passages in them, but your Honours, that is what we would submit and really there are not decisions, if one looks at them, which really support the contention the other way.

FRENCH CJ:   Does it turn critically on the notion of the rights of the person in 207B(7)(b), the rights of a person while still living or the rights of a person and their successors?

MR JACKSON:   Your Honour, one should not forget, of course, the opening words of (b) “to that end”.  When one is looking to what end is meant by that, your Honour, one would think, in our submission, it is referring to what is in (a) because otherwise it is a little difficult to give it meaning, so that the right of subrogation is right to that end.  The end is to recover what is set out in (7)(a) and, your Honours, it does not grow beyond (7)(a).  Your Honours, those are our submissions.

FRENCH CJ:   Yes, thank you.  There will be a grant of special leave in this matter.  Would it be likely to take more than a day, Mr Sofronoff?

MR SOFRONOFF:   No, I would not think so, your Honour.

MR JACKSON:   No, your Honour.

FRENCH CJ:   Yes all right.  Thank you.

AT 11.48 AM THE MATTER WAS CONCLUDED