Xpolitos v Sutton Tools Pty Ltd

[1977] HCA 25

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Jacobs and Aickin JJ.

XPOLITOS v. SUTTON TOOLS PTY. LTD.

(1977) 136 CLR 418

10 May 1977

Workers' Compensation (Vict.)

Workers' Compensation (Vict.)—Compensation paid—Death of employee—Payment of compensation to dependant—Employer's right to indemnity from tortfeasor who caused death—Whether indemnity for amount of compensation paid or amount recoverable by dependant from tortfeasor—Workers Compensation Act 1958 (Vict.), ss. 62 (1) (b)*, 79. * Section 62 (1) of the Workers Compensation Act 1958 (Vict.) provides, so far as is material, as follows: "Where the injury 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—... (b) if compensation has been paid under this Act ... the person by whom the compensation was paid shall be entitled to be indemnified by the person so liable to pay damages as aforesaid, and all questions as to the right to and amount of any such indemnity shall in default of agreement be settled by action or if the parties consent by the Board."

Decisions

May 10.
The following written judgments were delivered: -
BARWICK C.J. An employee of the plaintiff-respondent was killed in a collision between motor vehicles on a public road in circumstances in which the defendants-appellants became liable to pay damages to an infant son of the deceased under the Wrongs Act 1958 (Vict.), as amended ("the Wrongs Act"). The plaintiff was required to pay and paid a total sum of $13,109.96, under the Workers Compensation Act 1958 (Vict.), as amended ("the Act"), as workers' compensation and certain costs and expenses to or for the benefit of the son of the deceased employee. (at p419)

2. The plaintiff sued the defendants in the Supreme Court of Victoria for the idemnity for which s. 62 of the Act provides, claiming to recover the full sum paid as compensation under the Act. That section is in the following terms, so far as presently relevant:

"62. (1) Where the injury 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 - ... (b) if compensation has been paid under this Act ... the person by whom the compensation was paid ... shall be entitled to be indemnified by the person so liable to pay damages as aforesaid, and all questions as to the right to and amount of any such indemnity shall in default of agreement be settled by action or if the parties consent by the Board."

and s. 79 of the Act provides:

"(1) Nothing in this Act shall affect the right of any person to take and prosecute any proceedings for damages against an employer or any other person whether he has accepted payment of compensation under this Act or not. (1A) Where a judgment or order for damages in favour of a worker and against his employer has been satisfied in whole or in part for an injury for which compensation would have been payable under this Act or under any scheme - (a) the right of a worker to any further weekly payments under this Act or the scheme shall thereupon cease and determine; and

(b) the Board may refuse to make any award in favour of the worker for any damage caused by an injury if it is satisfied that the judgment for damages was in respect of the damage caused by such injury.

(2) Where a judgment or order for damages in favour of a worker is to be entered or made in any court in respect of the injury of the worker in proceedings independent of this Act against an employer by whom payments of compensation have already been made in respect of that injury under this Act, the amount of the judgment or order shall be reduced by the amount of the payments already made. (3) Where a judgment or order for damages in favour of a worker is to be entered or made in any court in respect of the injury of the worker in proceedings independent of this Act against a person for whose acts or defaults the worker's employer is not responsible and payments of compensation have already been made in respect of that injury by the employer under this Act, then - (a) (if pursuant to any rules of the court made in that behalf the employer has joined in the proceedings) a judgment or order in favour of the employer may be entered or made in respect of an amount equivalent to the payments so made as aforesaid and the amount of the judgment or order in favour of the worker may be reduced by the corresponding amount accordingly;

(b) (if the employer has not joined in the proceedings aforesaid but it is made to appear to the court that payments as aforesaid have been made) the amount of the judgment or order shall be reduced by the amount of the payments so made, and in any such case the employer shall be entitled to be indemnified for the payments so made pursuant to section sixty-two of this Act -

but where the amount of the judgment or order in favour of the worker is not so reduced as aforesaid, the employer shall be entitled to be indemnified for the payments so made pursuant to the said section sixty-two, and the person by whom the judgment or order is to be paid or has been paid shall, if he has so indemnified the employer, be entitled to retain or (as the case requires) to recover from the worker in any court of competent jurisdiction as a civil debt recoverable summarily an amount equivalent to the amount of payments so made, and where any amount is retained in accordance with the provisions of this paragraph the judgment or order, to the extent of that amount, be deemed to have been satisfied. (4) Where a claim by a worker independent of this Act for damages in respect of the injury of the worker against a person for whose acts or defaults the employer of the worker is not responsible has been settled or compromised without regard to the fact that payments of compensation had been made by the employer under this Act, then the person by whom payment was made upon the settlement or compromise of the claim as aforesaid shall, if he is subsequently required pursuant to section sixty-two of this Act to indemnify the employer for the payments so made, be entitled to recover from the worker in any court of competent jurisdiction as a civil debt recoverable summarily an amount equivalent to the amount of payments so made." (at p421)

3. It was admitted between the parties in the action that the damages recoverable by the infant from the defendants under the Wrongs Act would have been the sum of $5,000. The defendants claimed that therefore the indemnity for which s. 62 provides did not extend beyond the amount of damages for which they would have been liable to the infant dependant of the deceased worker, i.e. the sum of $5,000. (at p421)

4. The Supreme Court (Starke J.) held that the plaintiff was entitled to an indemnity for the whole amount which it had paid under the Act by reason of the death of its employee. The learned judge reached his conclusion in reliance in part on the dissenting judgment of Menzies J. in Watson v. Newcastle Corporation (1962) 106 CLR 426 , and in part on the reasons for the judgment of Burbury C.J. in Yellow Cabs (Tas.) Pty. Ltd. v. Abel (1965) Tas SR 247 . He properly treated remarks made by myself in Tickle Industries Pty. Ltd. v. Hann (1974) 130 CLR 321 on the question of the extent of the indemnity given under statutory provisions identical with s. 62, as obiter dicta. (at p422)

5. It is not without significance that the statute, the subject of decision in Yellow Cabs (Tas.) Pty. Ltd. v. Abel (1965) Tas SR 247 was not in the same terms as the presently relevant parts of the Act. (at p422)

6. In Yellow Cabs (Tas.) Pty. Ltd. v. Abel, it was decided that the employer's right to indemnity given by s. 10 of the Workers' Compensation Act, 1927 (Tas.) was an independent cause of action, a view which this Court in Tickle Industries Pty. Ltd. v. Hann (1974) 130 CLR 321 took of the indemnity given by s. 22 (1) of the Workers' Compensation Ordinance 1949-1968 (N.T.). Whether or not it was rightly concluded in that case, if indeed it was concluded, that the indemnity under the Tasmanian Act extended beyond the amount of the tortfeasor's liability for damages need not be considered. The differences between the statutory provisions dealt with in Watson v. Newcastle Corporation (1962) 106 CLR 426 and Tickle Industries Pty. Ltd. v. Hann (1974) 130 CLR 321 , and those the subject of decision in Yellow Cabs (Tas.) Pty. Ltd. v. Abel (1965) Tas SR 247 , are apparent on the face of the report of the latter decision and may indeed be critical to that decision. (at p422)

7. In Watson v. Newcastle Corporation (1962) 106 CLR 426 , this Court decided that the right of indemnity given by s. 64 of the Workers' Compensation Act, 1926 (N.S.W.), as amended, a counterpart of s. 62 of the Act, was not available to an employer once the worker had obtained a judgment for damages from the tortfeasor who caused or contributed to his compensable injury. (at p422)

8. McTiernan J., said (1962) 106 CLR, at p 432 :

"The Policy which is evident on the face of s. 64 is that compensation should not, as a benefit for the worker, or a burden for the tortfeasor, be cumulative on damages, that damages should, if recovered by the worker, as far as they can, be the fund out of which compensation is paid, and that, as between the employer and the alleged tortfeasor, the burden of compensation recovered from the employer should be finally cast upon the tortfeasor, but should not be a burden ultra the damages for which the worker has obtained judgment against the tortfeasor."

and later (1962) 106 CLR, at p 433 :

"It is clearly not the intention of s. 64 to make the tortfeasor liable for any amount in addition to damages for which he is liable on a cause of action arising independently of the Act." (at p423)

9. Taylor J. said (1962) 106 CLR, at p 442 :

"The rights of the employer against the tortfeasor and the worker, as I see them, are complementary and not alternative; in one event his right is against the tortfeasor, whilst in the other it is against the worker." (at p423)

10. Kitto J. decided that the net amount of the compensation after recovery by way of indemnity from the tortfeasor of the amount of damages payable by the tortfeasor must ultimately be borne by the employer, this conclusion deriving from the meaning which should be given to the word "indemnified" in the context of the Act (1962) 106 CLR, at p 436 . (at p423)

11. It seems to me that the logical consequence of the Court's decision in that case, quite apart from the reasons to which I have called attention, is that the indemnity given by s. 62 is only for the amount which the tortfeasor was legally liable to pay the injured worker or, in the case of death, his dependants. In general, I should think that it is only in the case of a dependant that a smaller sum is likely to be paid or payable in damages than the amount of worker's compensation. But where, as in this case, the damages are less than the compensation, the interpretation of s. 62 and the extent of the indemnity for which it provides become critical. (at p423)

12. I have reconsidered what I wrote in Tickle Industries Pty. Ltd. v. Hann (1974) 130 CLR 321 , the reasons of the Court in Watson v. Newcastle Corporation (1962) 106 CLR 426 , and I have considered the relevant provisions of the Act. All that I wrote in Tickle Industries Pty. Ltd. v Hann (1974) 130 CLR 321 , in analysis of the relevant sections of the Workers' Compensation Ordinance 1949-1968 (N.T.) is applicable, in my opinion, to the counterpart provisions of the Act. I have no need to repeat that analysis. Having reconsidered the matter, I reaffirm the conclusions I formerly expressed. (at p423)

13. However, I should add that the terms of s. 79 of the Act confirm, in my opinion, the conclusions which I formerly drew from that analysis. That section makes it quite plain, in my opinion, that the indemnity which the employer may claim against the tortfeasor is limited to the amount of the damages payable by the tortfeasor to the injured worker or his dependants. The section takes the following steps: 1. Compensation is to cease on payment of damages by the tortfeasor.
2. If the employer is also a tortfeasor in relation to the compensable injury, the amount of damages payable shall be reduced by the amount of the compensation already paid. Thus the recovery of the compensation by the worker is limited to the amount of the damages.
3. If judgment is obtained against a tortfeasor, judgment may be given for the employer up to the amount of the damages for the amount of compensation already paid, or the judgment for damages shall be reduced by the amount of the compensation paid, the tortfeasor being liable to pay that amount to the employer by way of indemnity. Here again, the amount of the damages sets the upward limit of the employer's recovery of compensation paid.
4. Where the claim for damages has been compromised and paid without regard to the amount of compensation paid, the tortfeasor may recover from the worker the amount of the compensation paid. This latter obligation on the worker must be limited to the amount of the damages for which the claim was settled or compromised. (at p424)

14. It is, in my opinion, inescapable that, in enacting s. 62, the legislature did not intend to give the employer a right to recover from the tortfeasor the whole amount paid by the employer by way of workers' compensation irrespective of the amount of damages which the tortfeasor was liable to pay in respect of the tort committed by him. In my opinion, the indemnity given by s. 62 extends only to the amount of those damages. Consequently, in my opinion, the learned trial judge was in error in this case in giving judgment for the plaintiff for $13,109.96. The proper amount of that judgment should have been the sum of $5,000. (at p424)

15. Accordingly, I would allow this appeal. (at p424)

GIBBS J. The question for decision on this appeal is whether the respondent, an employer who has paid compensation under the Workers Compensation Act 1958 (Vict.), as amended ("the Act") to the Workers Compensation Board for the benefit of an infant child, the dependant of a deceased worker, and who is entitled under the Act to be indemnified by the appellants, whose negligence caused the death of the worker, is entitled to recover from the appellants the full amount of compensation paid, when that amount is greater than that which the infant would have recovered had proceedings been commenced on his behalf against the appellants pursuant to the Wrongs Act 1958 (Vict.) for damages which he suffered as a result of the death of the worker. The Supreme Court of Victoria (Starke J.), from which this appeal is brought, held that the whole of the compensation paid is recoverable. (at p425)

2. Where the injury for which compensation is payable under the Act was caused "under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof", if compensation has been paid the person by whom it was paid is "entitled to be indemnified by the person so liable to pay damages as aforesaid" (s. 62 (1) (b)). Where the injury for which compensation has been paid under the Act was caused under circumstances creating a legal liability in the employer and also in a third person to pay damages in respect thereof, the person by whom the compensation was paid is entitled to be indemnified by the third person "for such proportion of the amount of the compensation paid as is appropriate to the degree to which the injury was attributable to the act default or negligence of the third party ..." (s. 62 (2) ). This sub-section, which was inserted by amendment in 1965, in effect rendered inapplicable the decision in Cory and Son Ltd. v. France, Fenwick and Co. Ltd. (1911) 1 KB 114 which was followed in Public Transport Commission (N.S.W.) v. J. Murray-More (N.S.W.) Pty. Ltd. (1975) 132 CLR 336 . If the words of par. (b) of s. 62 (1) were read literally and in their widest sense they might suggest that the employer is entitled to be indemnified against all loss resulting from the payment of compensation, or in other words is entitled to recover the whole amount paid even though it exceeded the amount which the "person so liable" would have been liable to pay by way of damages had he been sued apart from the Act. The words of s. 62 (2) similarly suggest, and perhaps more strongly, that the indemnity is not limited by the amount of the damages which would have been payable. However in my opinion other provisions of the Act provide a context in which it is necessary to give a more limited meaning to the words of s. 62 (1) (b). Since s. 62 (2) has no application to the present case it is unnecessary to decide whether its provisions are similarly limited. (at p425)

3. The Act in its present form permits a "worker" (a term which when the worker is dead includes a reference to his dependants (s. 3 (2) )) whose injury was caused under circumstances creating a legal liability in a person other than the employer ("the tortfeasor") to take proceedings both against that person to recover damages and under the Act for compensation (s. 62 (1) (a)). Acceptance of compensation does not affect the right to take and prosecute proceedings for damages against the tortfeasors (s. 79 (1) ). However when the time comes to give judgment in such proceedings against a person for whose acts or defaults the employer is not responsible the court is required by s. 79 (3) to take account of the fact that payments of compensation have already been made. If the employer has been joined in the proceedings, a judgment may be entered in his favour for an amount equivalent to the payments made and the amount of the judgment in favour of the worker may be "reduced" by a corresponding amount. If the employer has not been joined, the amount of the judgment in favour of the worker shall be "reduced" by the amount of the payments made, and the employer is then "entitled to be indemnified for the payments so made pursuant to section sixty-two of this Act". So much is provided by the operative provisions of s. 79 (3), but a proviso to that sub-section goes on to state that where the amount of the judgment in favour of the worker is not so reduced, "the employer shall be entitled to be indemnified for the payments so made pursuant to the said section sixty-two", and the person by whom the judgment is to be, or has been, paid shall, if he has indemnified the employer, be entitled to retain or (as the case requires) to recover from the worker as a civil debt an amount equivalent to the amount of payments so made; where any amount is so retained, the judgment is pro tanto deemed to have been satisfied. It is further provided by s. 79 (4) that where the worker's claim for damages has been settled without regard to the fact that payments of compensation had been made by the employer, the person by whom payment was made upon the settlement shall, if he is subsequently required pursuant to s. 62 to indemnify the employer for the payments so made, be entitled to recover from the worker as a civil debt an amount equivalent to the amount of payments so made. (at p426)

4. The references to "reduced" in pars (a) and (b) of s. 79 (3) appear to indicate that the legislature has proceeded on the assumption that the amount of damages will be greater than the amount of compensation. However the provisions of the proviso to s. 79 (3) and of s. 79 (4) in my opinion make it clear that the indemnity payable by a tortfeasor to the employer under s. 62 (1) (b), in the cases to which those provisions refer, is not intended to exceed the amount of the damages. (at p426)

5. If the words of the proviso to s. 79 (3) were read in the widest sense of which they are capable, they would have a two-fold effect. First, they would entitle the employer to be indemnified under s. 62 for the payments of compensation made, even if they exceeded the amount of the judgment against the tortfeasor. Secondly, they would entitle the tortfeasor, if he had indemnified the employer, to recover from the worker an amount equivalent to the amount of the payments of compensation made. This would mean that if a larger sum had been paid as compensation than was awarded as damages, the tortfeasor could recover from the worker more than he received under the judgment. The provisions of s. 79 (4) are rather different in form; they do not expressly give the employer a right to indemnity but, assuming that one exists under s. 62 and that the tortfeasor has been required to make payment under it, entitle the tortfeasor to recover from the worker an amount equivalent to the payment of compensation. Again, if that provision is read without restriction, the tortfeasor could recover from the worker more than he paid under the settlement. So construed, the effect of the provisions would be to reduce the total benefit which the worker receives in respect of his injuries to the level of the damages which he is awarded or receives under a settlement, and to exonerate the employer entirely from paying compensation, although the damages which the worker received were less than the amount of compensation payable under the Act. This would appear quite irrational. The statutory right to compensation given by the Act is not based on fault. It was conferred because it was thought just that an employer should compensate a worker for injuries sustained in the course of his employment, or, as in the present case, while travelling between the place of his employment and his home. It would be quite opposed to the beneficent purposes of the Act that the total net benefit received by the worker should be reduced if his injuries were caused by the fault of a third person. And it would be a capricious result if such reduction were effected only if the tortfeasor suffered judgment or made payment under a settlement. In my opinion it is impossible to understand the provisions of s. 79 (3) and (4) as having such an effect. (at p427)

6. The provisions of s. 62 (1) (aa) are not inconsistent with the view that a worker is not required to make a refund of compensation larger in amount than the damages he has received. That paragraph provides as follows:

"if a judgment for damages has been satisfied in whole or in part - (i) the right to compensation under this Act ... shall be reduced by an amount equal to the amount recovered under the judgment;

(ii) the right of a worker to any further weekly payments under this Act ... shall thereupon cease and determine; and

(iii) the Board may refuse to make any award in favour of the worker for any damage caused by an injury if it is satisfied that the judgment for damages was in respect of the damage caused by such injury."

Subparagraph (i) includes not only the case where the compensation exceeds the damages, but also that in which the damages are larger than the compensation; in the latter case the reduction is to nil. Subparagraph (ii) provides that the right of a worker to further weekly payments shall cease, but not that a worker shall be required to make any repayment of weekly payments already made, even if they exceed the amount of damages recovered. Subparagraph (iii) in terms allows the Board a discretion to refuse to make an award where damages have been recovered, but that discretion must of course be exercised in the light of the provisions of sub-par. (i); in other words if the amount of damages equalled or exceeded the amount of compensation to which the worker was entitled the Board would be bound to refuse to make an award, but an award might be made if the right to compensation exceeded the damages. (at p428)

7. For the reasons I have given I conclude that upon the proper construction of s. 79 (3) and (4) the amount which an employer may receive by way of indemnity when judgment has been given in favour of the worker for damages, or a claim by the worker for damages has been settled, cannot exceed the amount of the judgment or the amount paid under the settlement. However the indemnity referred to in s. 79 (3) and (4) is the indemnity conferred by s. 62. It cannot have been intended that a more limited right of indemnity is conferred by s. 62 in cases where a judgment was given or a settlement was effected than in other cases. The provisions of s. 79 therefore provide a clear indication that the indemnity to which s. 62 refers is not intended in any case to exceed the damages which the tortfeasor is liable to pay. If s. 62 is given this effect the result seems to me to be perfectly reasonable. It would be unjust if a tortfeasor could escape from the consequences which the law provides for his wrong by reason of the fact that the employer of the injured worker is required by statute to pay compensation, but it is not unjust that the tortfeasor should not be required to bear an additional burden because compensation is payable or that the additional burden created by the statute should ultimately be borne by the employer, since the right to compensation is conferred because the injury occured in circumstances connected with the relationship of employer and employee. (at p428)

8. In the present case the dependant is the "worker" with whom we are concerned. Upon the proper construction of the Act, viewed apart from authority, the employer is not entitled to be indemnified for any greater amount than would have been recovered by or on behalf of the dependant had proceedings been commenced by him or on his behalf against the tortfeasor pursuant to the provisions of the Wrongs Act 1958. However it was submitted on behalf of the respondent that the authorities favour a differend construction. It becomes necessary then to consider those decided cases which may throw light upon the proper construction of the section. (at p429)

9. The very question that now arises fell for decision in relation to the Workers' Compensation Act, 1912-1948 (W.A.) in State Electricity Commission of Western Australia v. Morrison (1950) 52 WALR 25 . In that case Wolff J. held that an employer was entitled to be indemnified by a tortfeasor in respect of the amount paid to the widow of a deceased worker notwithstanding that the amount of the indemnity was greater than that which the widow would have obtained in an action brought by her claiming damages as a result of the death. The provisions of the section conferring a right to indemnity were the same as those of s. 62 (1) (b) of the Act, but in other respects the Western Australian statute was different from that now under consideration. In any case the decision is of course not binding upon us. (at p429)

10. The respondent, in seeking to support the decision of the Supreme Court, placed considerable reliance on the decision of this court in Tooth and Co. Ltd. v. Tillyer (1956) 95 CLR 605 . In that case it was held that under s. 64 (b) of the Workers' Compensation Act, 1926 (N.S.W.), as amended (which corresponded to s. 62 (1) (b) of the Act) a husband is not liable to indemnify an employer who has paid compensation to a wife in respect of injuries sustained by her as a result of her husband's negligence. The argument submitted on behalf of the employer in that case was that the words "under circumstances creating a legal liability" should be interpreted as descriptive only, and as referring to the kind of circumstances which must exist but not as requiring that there should be an actual liability. It was accordingly submitted that although the husband could not have been sued by his wife in respect of the injury there was a "liability" within the meaning of the section. The Court rejected this submission. The majority, in a joint judgment, held that s. 64 (b) depended for its application on the incurring by a person other than the employer of an actual legal liability in respect of the injury. In the course of discussing the question, they considered the effect of the decision in Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 . In that case a workman was injured by the negligence of the defendants and died a few days later. His employers, having paid compensation to his dependant, an illegitimate daughter, sued the defendants for an idemnity. It was held that the employer was entitled to succeed notwithstanding that no action could have been maintained under Lord Campbell's Act for the benefit of the illegitimate daughter. Bray J. held that the injury was caused under circumstances creating a legal liability in the defendants, in that they were liable to pay damages to the workman whose injury was caused by their negligence, and that the liability was not the less created because it subsequently came to an end by reason of the workman's death. Of this case the majority of the Court in Tooth and Co. Ltd. v. Tillyer said (1956) 95 CLR, at p 610 :

"All that it established is that if a cause of action once arises in the deceased workman the critical words of the provision are satisfied although the liability soon afterwards comes to an end by his death."

Later their Honours said (1956) 95 CLR, at p 612 :

"But it is the existence of a liability which s. 64 (b) postulates, not a remedy, nor as already has appeared, the continuance or persistence of the liability." (at p430)

11. These two cases afford considerable assistance to the argument of the respondent. It is necessarily involved in the decision of Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 that an employer is entitled to recover from a tortfeasor the amount of compensation paid to the dependant of a deceased worker, although that amount exceeds the damages that would have been recovered by or on behalf of that dependant in an action under Lord Campbell's Act. It was no doubt possible that the damages which might have been awarded to the worker himself had he lived might have exceeded the amount of compensation paid to the dependant - that question was not discussed. The actual decision in Tooth and Co. Ltd. v. Tillyer (1956) 95 CLR 605 does not directly bear on the present question. However the majority of the Court in that case went on to discuss whether it was right to say that the husband was under a real liability for the injury done to his wife notwithstanding that there was no remedy by which the alleged liability might have been enforced. This question was answered in the negative, but the submission advanced on behalf of the respondent in the present case was that it would have been unnecessary to consider this question at all if the action for indemnity was bound to fail if the amount sought to be recovered exceeded the damages which the husband could have been required to pay. In answer to this submission it is enough to point out that the Court there dealt with the argument that was in fact put to it, and that it does not appear to have been argued that upon the proper construction of the section the tortfeasor could not be required to pay more by way of indemnity than he was liable to pay by way of damages. It should be added that although the provisions of the sub-sections giving the employer a right to indemnity were in the same terms as s. 62 (1) (b) of the Act, the other relevant provisions of the Workmen's Compensation Act, 1906 (U.K.) considered in Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 , and of the Workers' Compensation Act, 1926 (N.S.W.), as amended, considered in Tooth and Co. Ltd. v. Tillyer (1956) 95 CLR 605 , were different from those of the Victorian Act and neither contained provisions corresponding to those of s. 79. (at p431)

12. The effect of s. 64 of the Workers' Compensation Act, 1926 (N.S.W.), as amended, was again considered in Watson v. Newcastle Corporation (1962) 106 CLR 426 . It was there held that the right to be indemnified ceases to be available to the employer when the injured worker has either obtained damages or a judgment for damages from the tortfeasor. The actual decision would of course not be applicable to the Victorian Act in view of the express provisions of s. 79. However Menzies J. in his dissenting judgment indicated that in his opinion s. 64 (b) should be understood as giving the employer a right to indemnity for the full amount of compensation paid notwithstanding that the worker had obtained judgment for damages for a smaller sum (1962) 106 CLR, at p 443 . However his remarks on this point formed an essential link in a chain of reasoning which was not accepted by the majority of the Court. The reasons expressed by McTiernan J. in particular support the view that the words of s. 64 (b) of the New South Wales Act were not intended to impose on a tortfeasor a burden greater than that which arose from his liability for damages independently of the Act (1962) 106 CLR, at p 433 . Taylor J. said that in his opinion the phrase "the person so liable to pay damages as aforesaid" refers to a person presently liable to pay damages and not to a person who is no longer liable (1962) 106 CLR, at p 441 . This view is of course directly opposed to that which was taken in Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 , but Taylor J. did not refer either to that case or to Tooth and Co. Ltd. v. Tillyer (1956) 95 CLR 605 ; apparently neither case was cited in argument. (at p431)

13. In Yellow Cabs (Tas.) Pty. Ltd. v. Abel (1965) Tas SR 247 it was held that under the provisions of the Workers' Compensation Act 1927 (Tas.) an employer was entitled to indemnity against a tortfeasor notwithstanding that the worker had recovered judgment against him. Watson v. Newcastle Corporation (1962) 106 CLR 426 was distinguished because of differences between the Tasmanian and the New South Wales legislation, and particularly because the Tasmanian statute did not include any provision obliging a worker who recovers damages to repay to the employer out of such damages the amount of compensation which the employer has paid. In the course of his judgment Burbury C.J. said (1965) Tas SR, at p 250 that contributory negligence, although available partly to defeat the worker's claim against the tortfeasor, would not be open as a defence to an action for indemnity by the employer against the tortfeasor, and added that he found support for his views in the judgment of Wolff J. in State Electricity Commission of Western Australia v. Morrison (1950) 52 WALR 25 . If this is so it appears anomalous, for when contributory negligence was a complete defence the tortfeasor was not under a legal liability to the worker, and the employer would have had no right to indemnity. (at p432)

14. Finally in Tickle Industries Pty. Ltd. v. Hann (1974) 130 CLR 321, at p 326 Barwick C.J., speaking obiter, said that he considered that in the words of a section corresponding to s. 62 (1) (b) of the Act it was implicit that the obligation to indemnify was limited to the amount of the damage caused by the tortfeasor. The actual decision in the case was that a tortfeasor was liable to indemnify the employer, notwithstanding that an action by the dependants of the deceased employee would have been statute barred. The reasoning on which the decision is based is consistent with Tooth and Co. Ltd. v. Tillyer (1956) 95 CLR 605 but inconsistent with the remarks of Taylor J. in Watson v. Newcastle Corporation (1962) 106 CLR, at p 441 . Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 was cited with approval (1974) 130 CLR, at pp 332-334 . (at p432)

15. There is no decision of this Court governing the present question. The balance of opinion, as expressed in dicta, favours the view that under a provision in the terms of s. 62 (1) (b) a tortfeasor is not to be required to pay more by way of indemnity than he would have been required to pay by way of damages if an action had been brought against him by the worker to whom the compensation was paid. However Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 is an obstacle to the acceptance of that view. It seems to me that if effect is given to the reasoning upon which that decision is based it cannot be held that an employer who has paid compensation to the dependant of a deceased worker is not entitled to recover by way of indemnity an amount greater than the damages which the tortfeasor would, if sued, have been liable to pay to or on behalf of that particular dependant. No doubt it would not be inconsistent with Smith's Dock Co. v. John Readhead &Sons to treat the compensation paid to all dependants of a deceased worker (if more than one) as a lump sum and to hold that the employer is entitled to be indemnified in respect of that sum, provided that it does not exceed the total amount which the tortfeasor would have been liable to pay by way of damages in respect of the injury to all persons who could have sued in respect of it. However, that construction presents practical difficulties and is not the construction suggested by s. 79. Of course Smith's Dock Co. v. John Readhead &Sons was the decision only of a single judge, but it has been said that it has been frequently acted on (see Tooth and Co. Ltd. v. Tillyer (1956) 95 CLR, at p 610 ), and it has been twice mentioned in this Court with acceptance or approval. For those reasons I have hesitated before reaching a conclusion that I cannot reconcile with that decision, although the present question was not there discussed. (at p433)

16. However I have already pointed out that there were material differences between the provisions of the statute considered in Smith's Dock Co. v. John Readhead &Sons (1912) 2 KB 323 and the Act now under consideration. In particular nothing corresponding to s. 79 appeared in the English statute. For that reason I cannot treat Smith's Dock Co. v. John Readhead &Sons as an authority governing the present question when it arises under provisions such as those of the Act in its present form. I therefore feel free to adhere to the conclusion which I have reached upon the construction of the Act apart from authority. I hold therefore that the respondent was not entitled to recover from the appellants an amount greater than that which the infant would have recovered from them by way of damages. I need not consider whether the actual decision in Smith's Dock Co. v. John Readhead &Sons would be applicable in Victoria. Equally, I need not consider whether State Electricity Commission of Western Australia v. Morrison (1950) 52 WALR 25 was rightly decided, for that case also was decided on a statute distinguishable from the Act. (at p433)

17. I would allow the appeal. (at p434)

STEPHEN J. I have read and agree with the reasons for judgment of the Chief Justice and would accordingly allow this appeal. (at p433)

JACOBS J. I have had the opportunity of reading the reasons for judgment prepared by the Chief Justice and I agree with them. What s. 62 (1) (b) says is that where the injury for which compensation is payable under the Act was caused under circumstances creating a legal liability in some person other than the employer to pay damages in respect thereof and if compensation has been paid then the payer of the compensation shall be entitled to be indemnified by the person so liable to pay damages as aforesaid. The key to the construction of the provision is in these last words "the person so liable to pay damages as aforesaid". It is implicit in the view taken by the trial judge that these words merely identify the person on whom an obligation is imposed under a cause of action created by s. 62 (1) (b). But in my opinion they do more than that. They describe the character in which the obligation is imposed and thereby prescribe the limits of the obligation. That limit is the extent of the liability to pay damages. (at p434)

2. I would therefore allow the appeal. (at p434)

AICKIN J. This appeal concerns the proper application of certain provisions of the Workers Compensation Act 1958 (Vict.), as amended, ("the Act") to circumstances in which an employee of the respondent was killed while in the course of his employment in circumstances in which by reason of their negligence the appellants became liable under the Wrongs Act 1958 (Vict.), as amended, to pay damages to an infant son of the deceased worker. It was agreed that the amount which that infant son would have received in an action under the Wrongs Act was $5,000. No such action was however brought by or on behalf of that infant son but in a claim by him under the Act he was awarded the sum of $12,097 and the respondent was ordered to pay various outgoings and costs totalling $1,013. That constituted in effect the maximum amount payable to all dependants under that Act in respect of the death of a worker and that amount was paid by the respondent. The respondent then claimed to be indemnified by the appellants in respect of that payment by reason of the provisions of the Act. It was however contended by the appellants that their liability to indemnify was limited to the amount of their liability to the infant son of the deceased. (at p434)

2. It was common ground that there was no decision in this Court directly governing the matter, though there are decisions on somewhat similar legislation in this Court and in State courts. In the circumstances, I shall deal first with the construction of the Act without reference to the cases. (at p435)

3. The argument presented for the appellants depended upon three provisions of the Workers Compensation Act, namely s. 6 (4) , s. 62 and s. 79, though the reliance originally placed on s. 6 (4) was subsequently transferred to s. 79. Section 6 is nonetheless important in relation to the general scheme of the Act. Each of these provisions deals in some way with the existence of alternative or cumulative rights of action or rights to compensation available to a worker or his "dependants" in respect of injury or death arising in the course of employment as defined, and with rights of employers to be indemnified in respect of their liability under the Act. (at p435)

4. In all these sections the expression "worker" is used when speaking of entitlements under the Act but s. 3 (2) provides that "Any reference to a worker who has been injured shall, where the worker is dead, include a reference to his legal personal representative or to his dependants or other person to whom or for whose benefit compensation is payable". (at p435)

5. It was said for the appellants that those provisions disclosed a consistent policy that the worker or dependant is entitled to receive or retain the maximum to which he might be entitled under any of the possible remedies and that the employer's liability and rights to indemnity could not depend in any way upon a choice made by the worker, and that an implied limitation on the employer's right to indemnity flowed from those considerations. This scheme depended not merely upon the actual words but upon the implications to be made in some of the provisions. Section 6 is as follows:

"(1) If it is proved that the injury to a worker is attributable to his serious and wilful misconduct (including being under the influence of intoxicating liquor) any compensation claimed in respect of that injury shall unless the injury results in death or serious and permanent disablement be disallowed and if it is proved that injury to a worker was deliberately self-inflicted no compensation shall be payable under this Act. (2) Compensation shall not be payable in respect of any injury under any provision of this Act or any scheme which was certified under the Workers' Compensation Act 1928 if compensation or damages has already been paid or recovered or an award of compensation or judgment for damages has already been made given or entered in respect of the injury under any law of the United Kingdom or of the Commonwealth of Australia or any State (other than the State of Victoria) or territory thereof or any other part of the Queen's dominions. (3) Where any person has a right to claim compensation or a right of action in respect of any injury under any such law he shall not be entitled to claim compensation in respect of the injury under this Act or any such scheme unless he makes a statutory declaration that he has not claimed compensation or brought action for damages under any such law and covenants with his employer not to claim compensation nor to bring any action for damages under any such law. (4) If a person receives compensation under any provision of this Act or any such scheme in respect of any injury and subsequently compensation or damages are obtained by him or an award of compensation or judgment for damages in his favour is made given or entered in respect of the injury under any law of the United Kingdom or the Commonwealth of Australia or any State or territory thereof or any other part of the Queen's dominions, then the employer shall be entitled to recover from that person the amount of the compensation paid by the employer pursuant to this Act or such scheme. (5) Compensation shall not be payable pursuant to this or the last preceding section if compensation has already been paid or is payable under any such scheme." (at p436)

6. It was argued for the appellants that s. 6 (4) was a source of the right of the respondent to an indemnity but that it should be read as if it included the words "to the extent of the damages so received". I am of opinion that such an implication is not warranted by the words of the sub-section or by the context provided by the section as a whole. (at p436)

7. Section 6 (1) provides that no compensation will be payable if the injury is attributable to the serious and wilful misconduct of the worker unless it results in death or serious or permanent disablement, and that if it is proved that the injury was deliberately self-inflicted no compensation shall be payable at all. Sub-section (2) provides that compensation shall not be payable in respect of any injury under any provision of the Act if compensation or damages has already been paid or an award or judgment has already been given in respect of that injury "under any law of the United Kingdom or of the Commonwealth of Australia or any State (other than the State of Victoria) or territory thereof or any other part of the Queen's dominions". That provision operates to deprive a worker of what would otherwise be payable under the Act as compensation, if compensation or damages has already been paid or recovered or judgment given in respect of the same injury under the law of any of the other jurisdictions specified. Thus the liability of the employer will be destroyed if the worker chooses first to pursue a remedy elsewhere and obtains compensation or damages, whether he receives more or less than what his entitlement would otherwise have been under the Act. Again under sub-s. (3) the employer's liability under the Act depends on the choice of the worker not to pursue his claim elsewhere. (at p437)

8. Two questions arise under sub-s. (4), the first whether it applies at all to the recovery of damages in Victoria, and second whether the indemnity is to be limited by implication. It was argued for the appellants that the omission from sub-s. (4) of the words "other than the State of Victoria" which are found in sub-s. (2), showed that it covered the case of a subsequent judgment for damages in Victoria. The context points very strongly against this construction because the sub-section is dealing with subsequently obtaining "compensation or damages", and ex hypothesi it cannot be speaking of the subsequent obtaining of compensation in Victoria. In my opinion it cannot bear the construction intended. However if it does apply to cases of receipt of compensation under the Act and to a subsequent action for damages in Victoria there is no basis for implying any limitation upon the employer's right to recover the compensation paid. (at p437)

9. Such an implication would in my opinion be plainly contrary to the scheme of s. 6. Under sub-s. (2) it is plain that if the worker obtains compensation or damages elsewhere he has no entitlement to compensation under the Act, irrespective of the amount of compensation or damages he may have received elsewhere. Consistently with this, if, having received compensation under the Act, he subsequently obtains compensation or damages elsewhere then he loses the right to retain the compensation received under the Act, just as if he had made his election initially to proceed abroad. It would destroy the whole scheme of these provisions to impose some limitation upon the amount which might be recovered from the worker under subs. (4). In this respect it is true that the order of events does not affect the ultimate position, i.e. if a claim is made in both jurisdictions, then whichever claim is first to succeed the worker can retain only the amount of the "foreign" compensation or damages, not the greater of the two. The ultimate result however is affected by the worker's choice as to proceedings in that if he first claims compensation under the Act he may retain his full entitlement, unless he thereafter claims compensation or damages elsewhere, in which case he may ultimately be entitled to retain only the smaller of the two amounts. (at p437)

10. Section 62 (1) deals with the situation where the injury for which compensation is payable under the Act was caused in circumstances creating a legal liability in some person other than the employer to pay damages. Paragraph (a) provides that proceedings may be taken both against the third party to recover damages and against any person liable to pay compensation under the Act. Paragraph (aa) (inserted in 1970) provides that, if judgment for damages has been satisfied in whole or in part, then, (i) the right of compensation under the Act is to be reduced by an amount equal to the amount recovered under the judgment; (ii) the right of a worker to any further weekly payments shall cease; and (iii) the Board may refuse to make any award in favour of a worker for any damage caused by an injury if satisfied that the judgment for damages was in respect of the damage caused by the injury. Paragraph (b) provides that where compensation has been paid under the Act the person paying such compensation "shall be entitled to be indemnified by the person so liable to pay damages as aforesaid". The first comment to be made is that it appears at least to be within the power, if not the duty, of the Board to refuse to make an award in favour of the worker if it is satisfied that the judgment for damages which has been satisfied was "in respect of the damage caused by such injury". There is no reference to comparison between the quantum of damage and the quantum of compensation and a substantial implication would have to be made to place a duty on the Board to award compensation for the difference between the right to compensation and the smaller amount of damages received. There is no express restriction on the extent of the indemnity against the third party and on the language of the section there is no apparent basis for any implication of a restriction. (at p438)

11. Section 62 (2) (inserted in 1965) provides that, where compensation has been paid and the injury was caused under circumstances creating a legal liability both in the employer and a third party to pay damages, the employer "shall be entitled to be indemnified by the third party for such proportion of the amount of the compensation paid as is appropriate to the degree to which the injury was attributable to the act, default or negligence of the third party". Here again there is no express reference to any limitation upon the liability of the third party to indemnify the employer. What the section does is simply to require that the burden of the compensation be borne by the third party proportionately to the degree to which the injury was attributable to his "act, default or negligence", leaving the employer to bear the balance of the compensation. There is in this scheme nothing to suggest that the third party will have his liability to indemnify the employer restricted by reference to the total, or the proportion of the total, which might have been recovered at common law. No doubt if there are actual proceedings at common law the relative degrees of responsibility will be then ascertained, but the section provides a means for doing so without separate action. (at p439)

12. Section 79 (1) provides that a worker may take and prosecute any proceedings for damages against an employer or any other person whether he has accepted payment of compensation under the Act or not. Sub-section (1A) (inserted in 1970) provides that, where a judgment for damages in favour of the worker against his employer has been satisfied in whole or in part for an injury for which compensation would have been payable, then (a) the right of a worker to any further weekly payments shall cease; and (b) the Board may refuse to make any award in favour of the worker for any damage caused by an injury if it is satisfied that the judgment for damages was in respect of the damage caused by such injury. This is in identical terms with s. 62 (1) (aa) (ii) and (iii). If the Board has a discretion, there is nothing in the words or the context to limit its exercise to cases where the award would be higher than the damages. (at p439)

13. Sub-section (2) provides that where a judgment is to be entered for damages in favour of a worker in respect of an injury in proceedings independent of the Act against an employer by whom payments of compensation have already been made in respect of that injury, then the amount of the judgment is to be reduced by the amount of the payments already made. There is an implicit limitation in the amount of recovery in that all that is authorized is the reduction of the amount of the judgment by the amount of the payments already made and the sub-section cannot produce the result that the worker is entitled to recover in effect the higher of the two amounts, and of course any further right to weekly payments would be destroyed under sub-s. (1A) (a). (at p439)

14. Section 79 (3) provides that, where judgment is to be entered in favour of the worker for damages against a third party and payments of compensation have already been made by the employer, then (a) if the rules of Court so provide, a judgment or order in favour of the employer may be entered "in respect of an amount equivalent to the payments so made as aforesaid and the amount of the judgment or order in favour of the worker may be reduced by the corresponding amount"; and (b) if the employer has not been joined in the action, the amount of the judgment shall be reduced by the amount of the payments so made and the employer shall be entitled to be indemnified "for the payments so made pursuant to section sixty-two of this Act". (at p440)

15. Section 79 (3) then concludes by providing that, where the amount of the judgment in favour of the worker has not been reduced, under pars (a) or (b), the employer shall be entitled to be indemnified for the payments so made pursuant to s. 62 and that the third party shall be entitled to retain or to recover from the worker "an amount equivalent to the amount of payments so made". (at p440)

16. Section 79 (4) deals with the case where proceedings between the worker and a third party are settled, without reference to the fact that payments of compensation had been made, and provides that, if the third party is subsequently required under s.62 to indemnify the employer for the payments so made, he shall be entitled to recover from the worker "an amount equivalent to the amount of payments so made", which may of course be either greater or smaller than the sum agreed upon in the settlement. There is no provision pursuant to which the worker shall be entitled to retain whichever is the larger. (at p440)

17. Thus s. 79 (1), (1A) and (2) make similar provision in respect of actions for damages against the employer as s. 62 (1) (a) and (aa) make in respect of actions for damages against third parties, save that in s. 79 (2) the damages are to be reduced by the amount of compensation paid and in s. 62 (1) (aa) (i) the compensation is to be reduced by the amount of damages. (at p440)

18. Section 79 (3) then includes a provision for the employer to obtain an indemnity from the third party in similar terms to s. 62 (1) (b) which likewise deals with third parties. Section 79 (3) adds that the third party may retain or recover from the worker an amount equivalent to the amount of the compensation paid but does not, save for procedural matters, appear otherwise to add to what is already in s. 62 (1) (b). (at p440)

19. Section 79 (3) (a) might warrant an implication that the judgment in favour of the employer against the third party should be limited to the amount of the judgment in favour of the worker against the third party, because of the use of the word "reduced" but the words "corresponding amount" refer expressly to the actual amount of compensation paid. These two indications point in opposite directions. They may however be reconciled by regarding the third party's right of recoupment out of the amount recoverable by the worker as limited to the amount of that judgment, but nonetheless entitling the employers to judgment against the third party "in respect of an amount equivalent to the payments so made". This is a result which seems to me to do no violence to any of the words of the paragraph, whereas an implication limiting the employer's right against the third party is I think contrary to the express words. This does not seem an unlikely policy for the Act to adopt because it is the actions of the third party which have brought about the loss to the employer, even though there is no breach of any common law duty owed by the third party to the employer. To give the employer an indemnity in respect of the whole amount of his loss is in no way inconsistent with the policy of the Act so far as one may be discerned. (at p441)

20. There is in my opinion nothing in s. 79 itself which could give rise to an implication limiting the indemnity for which it provides by cross-reference to s. 62. It was argued however that it was the general policy of the Act that a worker should be entitled to retain the greater of the two sums where he pursues two remedies and that, to give effect to that policy, there must be an implication limiting the third party's liability to indemnify the employer to the amount recoverable by the worker against the third party. In my opinion nothing in these sections read together in the general context of the Act warrants either of these implications. As I have said above s. 6 and s. 79 both point against the first alleged implication by providing that where a worker pursues his remedy against his employer under the Act and also an alternative remedy against a third party, then he is limited to the amount he can recover from the third party. Where the worker claims compensation from his employer and also sues his employer for damages, s. 79 (1) may produce the effect that he can retain the higher figure, but does not warrant transposing that notion to the case where the claim for damages is against a third party. (at p441)

21. I am unable from these sections viewed either individually or in combination to discover any such consistent and general scheme as was contended for, nor am I able to regard the words of any of the relevant provisions as ambiguous so as to warrant reading them in a manner in accordance with some supposed general policy deducible from the Act as a whole. The Act is in truth a set of substantially independent provisions, with some overlapping but with no single discernible policy in any relevant respect. The ordinary meaning of the word indemnity is that it entitles the person concerned to receive the full amount necessary to ensure that he suffers no pecuniary loss by reason of the happening of the relevant event or the making of the relevant payment. It involves a complete recoupment. I can see no reason why it should not bear that meaning in s. 62 (1) (b) and (2) , and in s. 79 (3) and (4) . (at p442)

22. The authorities have been examined in other judgments and there is nothing which I would wish to add to the analysis made by Gibbs J. There are some differences in the legislation dealt with in the various cases which may or may not, upon analysis, demonstrate that a different result would be required under such legislation from that appropriate to the present state of the Victorian Act, but that can await another day. (at p442)

23. One further matter was referred to in argument for the respondent to which I should refer. It was said that since the decision in Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 it has been a common practice, where the death of a worker was caused by the negligence of a third party, for one of several dependants to claim and obtain the maximum payable to all dependants under s.9 (2) cl. 1 of the Act, and for the remaining dependants to sue under the Wrongs Act 1958 and thus obtain between all of them the maximum possible total amount. Indeed it was said that this was such a case though the pleadings do not raise the point and it cannot therefore affect the result in any event. (at p442)

24. None of the cases referred has considered the manner in which these provisions operate in the case of dependants. Section 3 (2) requires that the word "worker" is to include "his dependants" but not just one of his dependants. It would appear that it is insufficient in considering questions of indemnity, whether it be a restricted or unlimited indemnity, to examine the position in relation to the third party's liability to one only of the dependants. The dependants together stand in the place of the worker and the total payable to all of them under the Act must be compared with the total recoverable by all under the Wrongs Act. (at p442)

25. The Act has been amended many times since 1949 when Dey v. Victorian Railways Commissioners (1949) 78 CLR 62 was decided and since the decision of Wolff J. in State Electricity Commission of Western Australia v. Morrison (1950) 52 WALR 25 which decided the very point which here arises. However no amendment has been made which expressly touches on these points, though it may be observed that s. 62 (1) (b) took its present form in 1965, a form identical with the section in the Western Australian Act dealt with by Wolff J., although the remaining provisions are not identical. (at p442)

26. The present case falls within the terms of s. 62 (1) (b) and no question of recovery from any of the dependants arises, but in my opinion there is no implied limit on the indemnity thereby given. (at p443)

27. For those reasons I would dismiss the appeal. (at p443)

Orders

Appeal allowed with costs.

Order that the amount of the judgment entered for the respondent by the Supreme Court of Victoria be varied by the substitution of the sum of $5,000 for the sum of $13,109.96.