Worth v Loongana Lime Pty Ltd
[2005] WASC 126
WORTH -v- LOONGANA LIME PTY LTD [2005] WASC 126
| Link to Appeal : | [2006] WASCA 183 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 126 | |
| Case No: | CIV:2181/2004 | 30 MARCH 2005 | |
| Coram: | BLAXELL J | 15/06/05 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Declaration that employer not entitled to indemnity | ||
| B | |||
| PDF Version |
| Parties: | BRETT NORMAN WORTH LOONGANA LIME PTY LTD (079 943 196) |
Catchwords: | Workers' compensation Employer's right of indemnity Workers' compensation paid to worker for injuries received in aircraft accident No negligence by employer Damages recovered by worker from carrier pursuant to Civil Aviation (Carriers' Liability) Act 1961 (WA) by way of settlement out of court Whether carrier required to indemnify employer for workers' compensation payments Statutory interpretation Workers' Compensation and Rehabilitation Act 1981 (WA), s 93 Whether employer entitled to be indemnified from damages recovered under a noncommon law claim |
Legislation: | Civil Aviation (Carriers' Liability) Act 1959 (Cth), s 28, s 31, s 36, s 37 Civil Aviation (Carriers' Liability) Act 1961 (WA), s 5, s 6, s 8 Interpretation Act 1984 (WA), s 18, s 19 Rules of the Supreme Court, O 58 r 11 Workers' Compensation and Rehabilitation Act 1981 (WA), s 91, s 92, s 93 |
Case References: | Sidhu & Adnett v British Airways plc (1997) AC 431 South Pacific Air Motive Pty Ltd v Magnus (1998) 157 ALR 443 Westralian Caterers Pty Ltd v Eastment Ltd (1992) 8 WAR 139 Ackbar v CF Green & Co Ltd [1975] QB 582 Ardeshirian v Robe River Iron Associates (1993) 43 FCR 475 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Bradburn v Great Western Railway (1874) LR10Exch 1 Butler v Johnston, Guild & Somes (1984) 4 FCR 83 Clever Management Pty Ltd & Ors v Bergh & Anor, unreported; SCt of WA; Library No 960593; 11 October 1996 Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 Cork & Brandon Railway Co v Goode (1853) 13 CB 826 Dossett v TKJ Nominees Pty Ltd [2993] HCA 69; (2003) 202 ALR 428 Hewitt v Benale Pty Ltd; WMC Resources Ltd v Koljibabic (2002) 27 WAR 91 Hope v Bathurst City Council (1980) 144 CLR 1 Jones v Bartlett (2000) 205 CLR 166 Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 Lightbody v Fluor Australia Pty Ltd (1988) Aust Torts Rep 80-204 Manners v Transfield Pty Ltd (1992) 8 WAR 111 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 Maunsell v Olins (1975) AC 373 McGahie v Union of Shop Distributive & Allied Workers [1966] SLT 74 Muller v Dalgety & Co Ltd (1909) 9 CLR 693 National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569 Nikolaou v Papasavas Phillips & Co (1988) VR 682 Nottingham v BHB Engineering Pty Ltd (1984) WAR 25 Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 R v Kerney; Ex parte Jurlama (1984) 158 CLR 426 R v Rigby (1956) 100 CLR 146 Redding v Lee; Evans v Muller (1983) 151 CLR 117 Social Security, Department of v Knight (1996) 44 ALD 283 State Government Insurance Commission v Teal (1990) 2 WAR 105 Tickle Industries Pty Ltd v Hann & Richardson (1974) 130 CLR 321 Tooth & Co Ltd v Tillyer (1956) 95 CLR 605 Tooth & Co Ltd, In re (1977) 31 FLR 314 Transport Accident Commission v CMT Construction of Metropolitan Tunnels (1988) 165 CLR 436 Victorian WorkCover Authority v Anderson [2000] VSC 461 Zangzinchai v Millanta (1994) 53 FCR 35 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
LOONGANA LIME PTY LTD (079 943 196)
Defendant
Catchwords:
Workers' compensation - Employer's right of indemnity - Workers' compensation paid to worker for injuries received in aircraft accident - No negligence by employer - Damages recovered by worker from carrier pursuant to Civil Aviation (Carriers' Liability) Act 1961 (WA) by way of settlement out of court - Whether carrier required to indemnify employer for workers' compensation payments
Statutory interpretation - Workers' Compensation and Rehabilitation Act 1981 (WA), s 93 - Whether employer entitled to be indemnified from damages recovered under a noncommon law claim
(Page 2)
Legislation:
Civil Aviation (Carriers' Liability) Act 1959 (Cth), s 28, s 31, s 36, s 37
Civil Aviation (Carriers' Liability) Act 1961 (WA), s 5, s 6, s 8
Interpretation Act 1984 (WA), s 18, s 19
Rules of the Supreme Court, O 58 r 11
Workers' Compensation and Rehabilitation Act 1981 (WA), s 91, s 92, s 93
Result:
Declaration that employer not entitled to indemnity
Category: B
Representation:
Counsel:
Plaintiff : Mr R J L McCormack
Defendant : Mr P V Lansell
Solicitors:
Plaintiff : Donna Percy & Co
Defendant : Jackson McDonald
Case(s) referred to in judgment(s):
Sidhu & Adnett v British Airways plc (1997) AC 431
South Pacific Air Motive Pty Ltd v Magnus (1998) 87 FCR 301
Westralian Caterers Pty Ltd v Eastment Ltd (1992) 8 WAR 139
Case(s) also cited:
Ackbar v CF Green & Co Ltd [1975] QB 582
Ardeshirian v Robe River Iron Associates (1993) 43 FCR 475
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Bradburn v Great Western Railway (1874) LR10Exch 1
Butler v Johnston, Guild & Somes (1984) 4 FCR 83
(Page 3)
Clever Management Pty Ltd & Ors v Bergh & Anor, unreported; SCt of WA; Library No 960593; 11 October 1996
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389
Cork & Brandon Railway Co v Goode (1853) 13 CB 826
Dossett v TKJ Nominees Pty Ltd [2993] HCA 69; (2003) 202 ALR 428
Hewitt v Benale Pty Ltd; WMC Resources Ltd v Koljibabic (2002) 27 WAR 91
Hope v Bathurst City Council (1980) 144 CLR 1
Jones v Bartlett (2000) 205 CLR 166
Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622
Lightbody v Fluor Australia Pty Ltd (1988) Aust Torts Rep 80-204
Manners v Transfield Pty Ltd (1992) 8 WAR 111
March v E & MH Stramare Pty Ltd (1991) 171 CLR 506
Maunsell v Olins (1975) AC 373
McGahie v Union of Shop Distributive & Allied Workers [1966] SLT 74
Muller v Dalgety & Co Ltd (1909) 9 CLR 693
National Insurance Co of New Zealand Ltd v Espagne (1961) 105 CLR 569
Nikolaou v Papasavas Phillips & Co (1988) VR 682
Nottingham v BHB Engineering Pty Ltd (1984) WAR 25
Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336
R v Kerney; Ex parte Jurlama (1984) 158 CLR 426
R v Rigby (1956) 100 CLR 146
Redding v Lee; Evans v Muller (1983) 151 CLR 117
Social Security, Department of v Knight (1996) 44 ALD 283
State Government Insurance Commission v Teal (1990) 2 WAR 105
Tickle Industries Pty Ltd v Hann & Richardson (1974) 130 CLR 321
Tooth & Co Ltd v Tillyer (1956) 95 CLR 605
Tooth & Co Ltd, In re (1977) 31 FLR 314
Transport Accident Commission v CMT Construction of Metropolitan Tunnels (1988) 165 CLR 436
Victorian WorkCover Authority v Anderson [2000] VSC 461
Zangzinchai v Millanta (1994) 53 FCR 35
(Page 4)
1 BLAXELL J: This is an application pursuant to O 58 r 11 of the Rules of the Supreme Court for the determination of questions of construction arising from particular State and Commonwealth statutes, and for declarations as to the consequential rights of the parties.
2 The essential issue concerns the operation of s 93 of the Workers' Compensation and Rehabilitation Act 1981 (WA) ("the WCR Act") which provides an employer who has paid workers' compensation with a right of indemnity if the injured worker subsequently recovers damages from a third party. Almost invariably, the worker recovers such damages in an action for negligence against the third party. However, in the present instance, the damages were recovered by reason of injuries suffered in an aircraft accident, a claim for which the carrier was strictly liable pursuant to the Civil Aviation (Carriers' Liability) Act 1969-1971 (WA) and the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ("the CA Act").
3 The question of construction that needs to be determined is whether an employer has a right of indemnity under s 93 of the WCR Act when the damages are recovered on a non-common law basis and without any finding of negligence against the person liable for the same.
4 It should be noted that the carrier, Trevlyn Pty Ltd (trading as "Goldfield Air Services") was initially a defendant to the present application, but obtained leave to withdraw upon undertaking to abide by the decision of the Court.
Statement of agreed facts
5 For the purpose of the present application all parties (including the carrier) have agreed upon the following statement:
"The Parties
1. On the material date;
a) the worker was employed by the employer and was a passenger in the aircraft being operated by the carrier;
b) the carrier was the owner of the aircraft and operated an aircraft charter business in Western Australia trading as 'Goldfields Air Services';
c) the carriage of the plaintiff in the aircraft was a carriage to which the CA Act applied;
(Page 5)
- The Event
2. On the material date the aircraft made a forced landing near Kalgoorlie/Boulder, as a result of which the worker suffered personal injuries ('The Event').
The Worker's Claim Against The Employer
3. As at the date and time of the Event, the worker was engaged in the course of his employment with the employer.
4. Subsequent to the Event;
a) the worker made a claim against the employer for statutory benefits pursuant to the WCR Act on the ground that he suffered a disability for the purposes of the WCR Act by reason of the injuries he suffered in the Event;
b) the employer accepted liability for the worker's claim; and
c) consequent upon the worker's claim against it, the employer paid statutory benefits of $191,738.41 to or on behalf of the worker ('the Workers' Compensation Sum') pursuant to the WCR Act.
The Worker's Claim Against The Carrier
5. The worker commenced the District Court Action against the carrier, alleging, inter alia, that his sustaining of personal injuries, as referred to in paragraph 2 above, was a consequence of the Event which was caused by the carrier's negligence, alternatively claiming damages for personal injury pursuant to the CA Act.
6. The carrier admits that it has a legal liability pursuant to the CA Act to pay the statutory compensation sum and has paid the statutory compensation sum.
7. There is a dispute between the employer and the worker as to which party is entitled to be paid the Workers' Compensation Sum which sum forms part of the statutory compensation sum paid by the carrier.
(Page 6)
- The Employer's Claim Against The Carrier
- 8.
(a) By a letter dated 1 November 2002, Jackson McDonald, solicitors for SGIO Insurance Limited ('SGIO'), the employers' indemnity insurer for the employer, and in the exercise of the right of subrogation, made a claim against the carrier for indemnity in respect of statutory benefits paid to or on behalf of the worker pursuant to the WCR Act, the total of such monies being the Worker's Compensation Sum, on the ground that the carrier was under a statutory liability to indemnify the employer.
(b) The claim for indemnity in respect of the Workers' Compensation Sum was made, relevantly, pursuant to ss.92 and 93 of the WCR Act, and s.37(a) of the CA Act.
- 9. The worker;
(a) denies that he has any obligations, directly or indirectly, to repay to the employer or the carrier the or any part of the Worker's Compensation Sum;
(b) says that the Workers' Compensation Sum should not be deducted from the statutory compensation sum and paid to the employer;
(c) says that the Workers' Compensation Sum should be paid to the worker as part of the statutory compensation sum.
These Proceedings
10. The purpose of the within proceedings seeking declaratory relief from this Honourable Court, is intended by the worker to raise questions of law for determination by the court, in support of
(a) the plaintiff's denial as to his having any obligation, directly or indirectly, to repay the or
(Page 7)
- any part of the Workers' Compensation Sum to the employer, or the carrier; and
- (b) the employer's claim that by reason of;
(i) the carrier's legal liability to pay damages in respect of the Event pursuant to the CA Act; and
(ii) sections 92 and 93 of the WCR Act, all of the Workers' Compensation Sum should be repaid to the employer."
7 It is also agreed that the above statement should be read in conjunction with a bundle of agreed documents which has been tendered by the parties.
Application to amend the agreed facts
8 During the hearing the plaintiff applied to amend pars 7 and 9(c) of the statement of agreed facts in order to state the basis on which "the statutory compensation sum" was purportedly apportioned. The defendant objected to this amendment and I reserved my decision as to whether it should be allowed.
9 Having considered the matter, it is my view that the amendment cannot be allowed because of the very nature of an application under O 58 r 11. Obviously, it would not be reasonable to determine the questions of construction and to declare the consequential rights of the parties if some of the underlying facts are in issue.
10 The plaintiff has indicated that in the event of, and notwithstanding this adverse ruling, he wishes to proceed with the substantive application.
Further facts arising from the agreed documents
11 At the time of the forced landing of the aircraft on 14 November 2001 the plaintiff was as single plant operator and was aged 30 years. He
(Page 8)
- received very severe injuries as a result of the accident, including a closed head injury with brain contusions and subarachnoid bleeding, complex facial fractures, lumbar fractures, and fractures of the right talus and left femur. He required extensive treatment and rehabilitation, and ultimately was left with significant permanent disabilities. By reason of these disabilities he has been unable to work since the date of the accident.
12 In the District Court action against the carrier, the plaintiff initially claimed damages for negligence, and the statement of claim alleged inter alia a failure to ensure that there was sufficient fuel in the aircraft. However, following a change of solicitors, the indorsement of claim was amended to substitute a claim for damages pursuant to the CA Act. No further steps were taken in the proceedings and the action was ultimately discontinued by the plaintiff.
13 Prior to the plaintiff discontinuing the action, the parties (including the carrier) executed a deed of release and settlement. Pursuant to that deed the carrier made payments totalling $500,000 plus costs and was released from all claims by the plaintiff and the defendant.
The nature of the plaintiff's claim against the carrier
14 The accident occurred during a flight which was entirely within State boundaries, and accordingly the carriage of the plaintiff was a carriage to which the Civil Aviation (Carriers' Liability) Act1961 (WA) applies. Section 6 of that Act in turn applies the provisions of Pt IV of the CA Act to such a "carriage". Accordingly, the carrier was liable for the damage sustained by the plaintiff pursuant to s 28, s 31 and s 36 of the CA Act. Section 28 provides that:
" … the carrier is liable for damage sustained by reason of the death of the passenger or any personal injury suffered by the passenger resulting from an accident which took place on board the aircraft …"
15 Section 31 relevantly provides that:
"The liability of a domestic carrier under this Part in respect of each passenger, by reason of his injury or death resulting from an accident is limited to … $500,000".
16 The exclusively statutory nature of a carrier's liability is shown by s 36 which provides that:
(Page 9)
- " … the liability of a carrier under this Part in respect of personal injury suffered by a passenger is in substitution for any civil liability of the carrier under any other law in respect of the injury."
17 Pursuant to s 37, the above provisions cannot exclude any liability of a carrier:
" … to indemnify an employer of a passenger or any other person in respect of any liability of, or payments made by, that employer or other person under a law of the Commonwealth or of a State or Territory providing for compensation, however described, in the nature of workers' compensation."
18 It is important to note the legislative history of these provisions. Prior to 1959, the liability of air carriers was governed by the Carriage By Air Act 1935 (Cth). That Act implemented the Warsaw Convention and imposed statutory liability for death or personal injury suffered by passengers on international flights. There was no such statutory liability in respect of passengers on purely domestic flights, and it was common practice for carriers to contract out of any potential liability by way of conditions printed on the back of flight tickets (see generally the article "The Liability of Air Carriers for Death and Personal Injury to Passengers" by L R Edwards at (1982) 56 ALJ 108).
19 In 1959 the Commonwealth Parliament enacted the CA Act. To the extent that was constitutionally possible, Pt IV of the Act extended Warsaw Convention type provisions to passengers on certain categories of domestic flights. Ultimately, those benefits were extended to all domestic passengers as a result of complementary legislation enacted in each of the States (including the Civil Aviation (Carriers Liability) Act 1961 in this State). Accordingly, the law which presently governs the liability of carriers for injuries sustained by domestic airline passengers, has its origins in the Warsaw Convention.
20 As to the underlying rationale of the statutory scheme set up by the CA Act, I respectfully agree with the following comments by Prof J G Fleming in his textbook: "The Law of Torts" (9th Ed) at 372-3:
"Passengers are voluntary participants in the venture and arguably should be given the option of deciding themselves whether to incur the extra cost of insurance. Private insurance is readily available at airports (though at very high overhead costs) and the travelling public is well informed concerning the
(Page 10)
- risks. Instead, the imposition of strict liability on the carrier amounts to compulsory insurance for passengers, since the extra expense will be passed on to them in the price of their ticket. This "benefit" was conceived as the quid pro quo for limiting a carrier's liability to ($500,000), on the model of the Warsaw Convention. In the upshot, passengers are thus automatically insured for a minimum amount, but may voluntarily increase their cover by private insurance. All this, of course, is a long way from the rationale of common law liability for abnormally dangerous activities, but it is symptomatic of a complementary trend towards strict liability based on consumer protection and loss distribution."
21 In the United Kingdom, the Warsaw Convention has force of law as a result of being included as a schedule to the relevant Act. There, the House of Lords has held (in Sidhu & Adnett v British Airways plc (1997) AC 431) that to the extent that a plaintiff has a claim under the Convention, there is no concurrent common law remedy. In that regard, Lord Hope stated (at 453):
" … what was sought to be achieved was a uniform international code, which could be applied by the courts of all the high contracting parties without reference to the rules of their own domestic law. The Convention does not purport to deal with all matters relating to contracts of international carriage by air. But in those areas with which it deals – and the liability of the carrier is one of them – the code is intended to be uniform and to be exclusive also of any resort to the rules of domestic law."
22 After noting that carriers were previously free to contract out of liability, Lord Hope observed that the Convention:
" … was not designed to provide remedies against the carrier to enable all losses to be compensated. It was designed instead to define those situations in which compensation was to be available. So it set out the limits of liability and the conditions under which claims to establish that liability, if disputed, were to be made. A balance was struck, in the interests of certainty and uniformity." (ibid at 453)
23 Accordingly, Lord Hope was of the view that:
(Page 11)
- "The domestic courts are not free to provide a remedy according to their own law, because to do this would be to undermine the Convention. It would lead to the setting alongside the Convention of an entirely different set of rules which would distort the operation of the whole scheme." (ibid at 454)
24 In Australia, there is authority that Pt IV of the CA Act is of similar effect. In South Pacific Air Motive Pty Ltd v Magnus (1998) 87 FCR 301, the Full Federal Court held that the respondent passengers who could have brought statutory claims for injuries sustained in an aircraft accident were unable to bring concurrent claims in negligence after the limitation period for the statutory claims had expired. Beaumont J (at 457) found that the reasoning of Lord Hope in Sidhu was "convincing" and held that any construction of the CA Act which allowed for a concurrent common law claim would give it a "capricious and extraordinary operation". Hill J (at 459), and Sackville J (at 483) expressed similar views.
25 Consistent with the above authorities, it is clear that the liability of the carrier in the present case arose entirely under the CA Act, and that (notwithstanding the statement of claim in the District Court action) the plaintiff never had any entitlement to bring a claim in negligence. Pursuant to s 28 of the Act, the carrier was strictly liable simply because the plaintiff suffered personal injury in an accident which took place on board the aircraft.
The relevant provisions of the WCR Act
26 The injuries suffered by the plaintiff were also a "disability" within the meaning of the WCR Act, and the defendant accordingly made payments of workers' compensation and other statutory benefits totalling $191,738.41. Pt IV of the WCR Act deals with "Civil proceedings in addition to or independent of this Act" and sets out the circumstances in which an employer who has paid or is liable for workers' compensation may be reimbursed or indemnified when the worker either obtains or is entitled to claim damages.
27 Section 91 provides that if the worker brings an action "to recover damages independently of this Act" (viz, presumably against the employer) and the employer is not liable in the action but is liable for compensation, then the worker is entitled to judgment for that compensation.
28 Section 92 deals with the situation where the worker is entitled to recover damages independently of the Act. It provides (inter alia):
(Page 12)
- "92. Both damages and compensation not recoverable
Where in respect of a disability an action is brought by a worker for damages independently of this Act against his employer or against some other person (referred to in this section as 'the defendant' ) or against both of them —
- (a) if the court decides the action should succeed, then after damages have been ascertained but before judgment is entered for the worker in the action, the worker shall be given a reasonable opportunity to elect whether to have judgment or to discontinue the action;
(b) if the action proceeds to judgment, including the acceptance of an offer to consent to judgment, against the employer only or against the employer and the defendant, there shall be deducted from the amount of the judgment and be paid to the employer a sum representing the amount (after apportionment in respect of any contributory negligence of the worker) actually recoverable by the worker by way of weekly or lump sum compensation, medical and other expenses paid pursuant to this Act, but where liability is apportioned between the employer and the defendant the defendant’s liability to pay to the worker shall be reduced accordingly;
(c) if the action proceeds to judgment, including the acceptance of an offer to consent to judgment, against the defendant only or is settled by the acceptance of money paid into court by the defendant, the payments and expenses referred to in paragraph (b) shall be a first charge on the judgment or the amount of money paid into court and the defendant shall be bound to pay the amount of the compensation, and medical and other expenses to the employer and the judgment shall be pro tanto discharged by such payment, or the amount due under the charge shall be paid out of court to the employer or his authorised agent, as the case may be;
(Page 13)
- (d) if the action is discontinued the worker shall pay the costs of the employer or of the defendant or of each of them or such part of those costs as the court thinks fit;
(e) if the action proceeds to judgment, including the acceptance of an offer to consent to judgment, against the employer or the defendant or both or is settled by the acceptance of money paid into court by the employer or the defendant or by both of them, the worker shall not commence or continue proceedings for, or in relation to, compensation under this Act in respect of the same disability."
29 As can be seen, the employer's right of indemnity under s 92 will only arise if "an action is brought by a worker" and damages are recovered by way of judgment or acceptance of money paid into court. In circumstances where a worker recovers or is entitled to damages but does not commence any action, s 93 is of wider effect. That section provides (inter alia):
"93. Remedies against stranger
(1) Where the disability for which compensation is payable under this Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof but neither the employer nor any person for whose negligence the employer is legally responsible was negligent —
(a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for such compensation, but shall not be entitled to recover both damages and compensation and shall bring to account in reduction of his entitlement to compensation the amount recovered by way of damages;
(b) the employer is entitled to be indemnified by the person whose negligence caused the disability to the worker (in this section called 'the defendant') to the full extent of the employer's liability to pay compensation under this Act, whether or not the
(Page 14)
- defendant has discharged his liability to pay damages to the worker by judgment or by settlement or otherwise.
- (2) If there were —
(a) negligence by the employer or by some person for whose negligence the employer is legally responsible which caused or contributed to the worker’s disability, the extent of the indemnity of the employer by the defendant is reduced by the proportion that the employer’s negligence and that of any person for whose negligence the employer is responsible bears to 100%; or
(b) negligence by the worker which caused or contributed to the worker’s disability, the extent of the indemnity of the employer by the defendant is reduced by the proportion that the worker’s negligence bears to 100%."
30 Although the plaintiff in the present matter commenced an action against the carrier, damages were ultimately recovered by way of a settlement out of court and without any judgment or acceptance of payment into court. Accordingly, s 92 does not apply, and the defendant can only claim an indemnity under s 93 of the WCR Act.
31 If a literal construction is given to the opening words of s 93(1), they are wide enough to encompass the plaintiff's claim against the carrier. This is because the disability for which compensation was paid "was caused under circumstances creating a legal liability in some person other than the employer to pay damages", but neither the employer nor any person for whose negligence the employer was legally responsible was negligent.
32 However, when one looks at the right of indemnity created by par (1)(b) there is an obvious problem in construction. The employer's entitlement to an indemnity is against the person whose "negligence" caused the disability, which suggests that it can only arise in respect of a person who is liable under common law. In the particular circumstances
(Page 15)
- of the present matter there was no finding, nor can there be any assumption, that there was negligence by the carrier.
33 A very similar issue as to the proper construction of s 93 was touched on by the Full Supreme Court in Westralian Caterers Pty Ltd v Eastment Ltd (1992) 8 WAR 139. There it was held that a breach of the duty of care imposed by the Occupiers Liability Act constituted "negligence" for the purposes of s 93. The reason for this was that the Occupiers Liability Act did not create a new cause of action but merely consolidated the pre-existing common law rules as to the standard of care owed by occupiers towards entrants upon premises. Relevant to the issue in the present matter, Malcolm CJ stated (at 146-147):
"It is not necessary in the present case to decide whether the phrase "circumstances creating liability in some person other than the employer to pay damages" in respect of the disability caused to the worker in s 93(1) is limited to circumstances creating a liability in negligence. The question whether the phrase would encompass circumstances creating a liability in damages for breach of statutory duty, nuisance or assault must remain for another day. There is, however, much to be said for the view that the phrase extends to any tortious liability and that the references to "negligence" deal only with particular situations contemplated by the statute."
34 Quite obviously, the starting point in determining the present question of construction is to look for the fundamental purpose or object underlying the provisions in order to arrive at the meaning that best promotes that purpose or object (Interpretation Act 1984, s 18). In my view, this exercise requires an examination of the relevant legislative history and of any extrinsic materials that are capable of providing assistance (Interpretation Act 1984, s 19).
35 Sections 91, 92 and 93 formed part of the WCR Act at its commencement, and have not been amended since then in any way that is significant. Previously, the roughly equivalent provisions were to be found in s 7(5) and (13), and s 18 of the Workers' Compensation Act 1912-1981 ("the old Act").
36 In 1978 the State government commissioned a "judicial enquiry" into the old Act which was conducted by the Hon B J Dunn, a former Justice of the Supreme Court of Victoria. The terms of reference for the enquiry included a requirement to report on the following:
(Page 16)
- "5. Where a worker settles his claim for damages in respect of an injury by accident at any time prior to judgment, whether the right to compensation in respect of that injury should be lost as though there had been a judgment of damages on that claim as is now provided in s 7(13)(a).
…
8. The adequacy or otherwise of the employer's right of indemnity against the person liable in damages."
37 In relation to the first of these terms of reference, the subsequent Dunn Report recommended legislative amendments substantially in the form of what was later to become s 92 of the WCR Act. These recommendations were based upon the propositions that:
"(a) The worker should be free to sue for damages his employer or any other person whose negligence caused his injury or both of them;
(b) The worker cannot have the benefit of both damages and workers compensation, but should be able to choose whichever will be more financially beneficial to him when the amount of his common law damages is ascertained."
38 The Report went on to state that:
"It is fundamental that the worker should not be paid twice for the consequence of the same injury. This principle needs no justification beyond common sense …" (Dunn Report, pages 75-76).
39 In relation to the second of the above terms of reference, the Dunn Report made recommendations for legislative change which found their way into s 93 of the WCR Act. The reasons for these recommendations (as set out in the Dunn Report at pages 80-81) were as follows:
"The present provisions of the Act giving the employer a right of indemnity are quite inadequate. It has been held that under the present provisions of the Act, the employer has no right of indemnity if the defendant's liability to the worker for damages has been finalised by judgment or has been discharged by some
(Page 17)
- form of settlement – see Watson v Newcastle Corporation (1962) 106 CLR 426.
There is no logical reason why the employer should lose his right of indemnity in such circumstances. The defendant was the cause, or one of them of the employer having to pay compensation and his right to indemnity should only be lost by repayment of what he has had to pay the worker.
In Xpolitos v Sutton Pools Pty Ltd (1977) 136 CLR 413 it was held that the employer's right of indemnity was limited to the amount of damages the defendant had to pay the worker. The defendant's right of indemnity is independent of any right of the worker. The employer should be entitled to receive the whole of his loss."
40 It is clear from the second reading speeches at the time of enactment of the WCR Act that Parliament was largely guided by the Dunn Report in formulating the provisions in s 91, 92 and 93. For this reason it is also clear that there are two fundamental purposes or objects underlying s 93, namely:
(1) that a worker should not be paid twice for the consequences of the same injury (which object has found expression in s 93(1)(a)).
(2) that the employer should have a right of indemnity, independent of any right of the worker, against the person who was "the cause or one of them" of the employer having to pay compensation.
41 The present defendant understandably lays emphasis on the first of these objects, and contends that any denial of the right of indemnity will result in the plaintiff "double dipping". However, in the particular circumstances of the present matter this is probably not a fair characterisation of the plaintiff's situation. If the plaintiff had been able to bring a common law claim and prove negligence against the carrier it is highly likely that he would have recovered damages well in excess of the $500,000 that he in fact received. Furthermore, it is likely that those damages would have exceeded the combined total of the workers compensation and the $500,000. Accordingly, and irrespective of the outcome of this application, the plaintiff will not have been compensated to the full extent of his true loss.
(Page 18)
42 Nevertheless, the defendant's contention would be perfectly valid if the plaintiff's true loss had been equal to or less than the $500,000 cap on the carrier's liability. Obviously there can be a wide variety of successful claims under the CA Act, and the proper construction of s 93 has to be arrived at irrespective of whether or not in any particular instance a plaintiff worker is "double dipping".
43 In my opinion, it is the second of the underlying objects referred to above which has greater significance to the present issue of construction. Section 93 must be construed in light of the employer's right of indemnity being independent of the worker's right to damages, and entitling recovery from the person who was "the cause" (or a cause) of the compensation having been paid.
44 Self-evidently, the use of the word "negligence" in s 93(1)(b) is consistent with this second object, and suggests that there must be a causative link between the defendant's actions and the payment of compensation if the employer is to be entitled to indemnity. In this regard, it is also significant that the opening words of s 93 refer to a disability which "was caused" (and not, for example, "occurred") under the circumstances stated.
45 In the end there are two competing reasonable constructions of s 93, neither of which provides a totally satisfactory outcome. The first possible construction is that the employer can recover on the indemnity against the carrier even though in some circumstances this will result in the plaintiff worker being deprived of full compensation for his true loss. The second possible construction is that the employer has no right of indemnity against the carrier, notwithstanding that this will sometimes result in a plaintiff "double dipping". Unfortunately, there is no reasonable construction which would overcome both these problems.
46 Having considered the matter carefully, I have come to the conclusion that it is the second construction that should prevail. This provides a more reasonable overall outcome and also accords with commonly understood principles of causative liability. Furthermore, there is no great violence to the first of the underlying objects if the scheme under the CA Act is understood as providing limited statutory compensation or "compulsory insurance" (as characterised by Professor Fleming) rather than damages in the true common law sense. In my view, this second construction should reasonably be regarded as what Parliament intended should happen in the present circumstances.
(Page 19)
Conclusion
47 For all of these reasons I have come to the view that the opening words in s 93(1) are to be construed as referring to a disability which was caused under circumstances creating a legal liability in negligence in some person other than the employer to pay damages. It follows that in the particular circumstances of the present matter, the defendant has no right of indemnity against the carrier in respect of the compensation it has paid to the plaintiff.
48 I will hear submissions as to the appropriate declarations that should now be made in light of this determination.
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