Youth Off the Streets Incorporated v Wingecarribee Shire Council

[2002] NSWSC 549

CITATION:	Youth Off the Streets Incorporated v Wingecarribee Shire Council [2002] NSWSC 549
FILE NUMBER(S):	SC 20115/02
HEARING DATE(S):	11/06/02, 17/06/02
JUDGMENT DATE:	24 June 2002
PARTIES :	Plaintiff: Youth Off the Streets Incorporated Defendant: Wingecarribee Shire Council
JUDGMENT OF:	Cripps AJ at 1

COUNSEL :	Plaintiff: M Jenkins Defendant: s Gascott
SOLICITORS:	Plaintiff: PW Turk & Associates Defendant: Phillips Fox
CATCHWORDS:	Workers Compensation Act 1987 (NSW) - s151Z(d) - workers compensation payments - interest
LEGISLATION CITED:	Workers Compensation Act 1987 (NSW) District Court Act (1983) NSW Supreme Court Act (1970) NSW
CASES CITED:	Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498 Watson v Newcastle City Council (1962) 10 CLR 426
DECISION:	I award the plaintiff the sum of $6,715.50 interest and enter judgment accordingly. I order the defendant to pay the plaintiff's costs of these proceedings.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

Cripps AJ

24 June 2002

20115/02 Youth off the Streets Incorporated v Wingecarribee Shire Council

JUDGMENT

1 His Honour: The plaintiff, Youth off the Streets Incorporated, was the employer of Lisa Marie Haynes who, on 26 April 1999 suffered personal injury in the course of her employment by reason of the negligent conduct of the Wingecarribee Shire Council, the defendant.

2 Pursuant to it’s obligations under the Workers Compensation Act 1987 (NSW) (“the Act”) the plaintiff made weekly payments to Ms Haynes together with certain medical expenses.

3 In 1999 Ms Haynes commenced common law proceedings in the District Court against the defendant alleging negligence by it and claiming common law damages. Later the proceedings were transferred from the District Court to the Supreme Court.

4 On 27 March 2001 the plaintiff commenced proceedings in the Supreme Court pursuant to s 151Z(d) of the Act claiming an entitlement to be indemnified by the defendant for payments it made to or on behalf of the plaintiff.

5 On 11 June 2002 the action between Ms Haynes and the defendant was settled and terms of settlement filed. The terms were tendered in these proceedings. The terms provide, inter alia, that the plaintiff was entitled to the sum of $42,638.00 being payments made to or on behalf of Ms Haynes by it pursuant to the Act.

6 The single issue before me is whether, in the events that have happened, the plaintiff is entitled to the sum of $6,715.50 being interest (calculated as set out below) on monies paid by it to or on behalf of Ms Haynes pursuant to the Act.

7 It is agreed that interest, if it is payable, should be calculated by reference to the average of the last four yearly rates and halving that figure in recognition of the circumstance that Ms Haynes received weekly and other intermittent payments made on her behalf.

8 The defendant does not dispute that an employer is entitled to interest under s 83(A)(1A) of the District Court Act (1983) NSW but appears to dispute that the same conclusion follows if a claim is made under s 94(1A) of the Supreme Court Act (1970) NSW.

9 It submits that in the present case the repayment of workers compensation payments is to be on the authority of Ms Haynes under the terms of settlement and that therefore the refund obligation is to be discharged pursuant to s151Z(1)(b).

10 It submits that because the plaintiff can no longer seek an indemnity pursuant to 151(Z)(d), s94(1A) of the Supreme Court Act cannot be used to authorise an award of interest on the amounts that have been paid. In short, it submits that the defendant’s obligation is discharged because I should accept that Ms Haynes has relevantly “recovered” damages from the defendant.

11 S94(1A) of the Supreme Court Act provides

“where
(a) proceedings have been commenced for the recovery of a debt or liquidated damages; and
(b) the whole or part of the debt or damages is made during the currency of the proceedings and prior to or without judgment being given in respect of the debt or damages,
the Court may order that interest be paid at such rate as it thinks fit on the whole or any part of the money paid for the whole or any part of the period between the date when the cause of action arose and the date of payment.”

12 As I have said, it has been submitted that whatever might be the position under s 83A(1A) of the District Court Act the same result would not follow if a claim were made pursuant to s94(1A) Supreme Court Act. This is because the words “debt or liquidated damages” in the Supreme Court Act do not have the same application to the present circumstances as do the words, “debt or liquidated demand” in the District Court Act. In my opinion, both expressions encompass a claim by an employer against a tortfeasor pursuant to s151Z(d) of the Act.

13 Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 is authority for the proposition that an employer entitled to recover compensation payments is also entitled to obtain interest on those payments for the periods between the payment and the recoupment pursuant to s83A (1A) of the District Court Act.

14 In Kwanchi (supra), Handley JA referred to what might be thought to be the circumstances in this case and said at p 280:

“in this case the tortfeasor with the authority of the worker repaid the compensation to the employer direct and hence in law the payment was probably made by the worker. It is not clear at first sight that subsection (1A) applies where the payment, which destroys the plaintiff’s cause of action, is received from a third party and not from the defendant. However, the subsection is expressed in general terms, and any restriction appears to require words to be read into it. The matter was not fully argued, but I see no reason for denying the application of the power in this case even if the payment was made by a third party.”

15 In Kwanchi (supra) Clarke JA referred with approval to the observation of Hope JA in Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498 at 500 where His Honour said:

“In my opinion a different position arises under s 64(1)(b) [the equivalent of s151Z(1)(d)]. The liability of the tortfeasor is again a statutory one. It does not arise independently of the statute, but the employer is given, by this paragraph, a statutory indemnity in respect of the compensation which he has paid. The ordinary rule in respect of indemnities is, as I would understand it, correctly set out in Halsbury’s Laws of England 4th ed, vol 20 para 315 at 173:
“ In law an action on a contract of indemnity does not normally lie until the promisee has paid the third persons claim. Where he has paid, the amount so constitutes a debt due to him from the promisor which, save in exceptional circumstances, he may recover with interest in an action…”
I see no reason why the rule should not be applied to the liability which arises by virtue of the statute under s 64(1)(b). The employer, assuming that the circumstances described in the paragraph are satisfied, has the right of action in respect of each payment…and, prima facie, his right to interest is a right to interest from that time, that is the time of payment.”

16 His Honour continued (at p 501):

”..in particular, although it may not be necessary to decide for the purpose of the present case, I would conclude that the interest paid pursuant to an order for interest made by the District Court Judge in proceedings under s 64(1)(b) would not be a payment made under the indemnity for the purpose of s64(1)(c) [the now equivalent being s151Z(1)(e)] . The amount of interest is not the subject of the indemnity; the amount of interest is the subject of and arises from an order made by the judge of the District Court pursuant to the District Court Act s 83A”.

17 I have been asked not to follow the observations of Handley JA in Kwanchi (supra) and it has been submitted that the decision of the Court of Appeal in Howard Rotavator (which was followed by Clarke JA in Kwanchi) was wrong and should not be followed.

18 It is submitted that in the present case the repayment of workers compensation payments is being made on the authority of Ms Haynes under the terms of settlement and therefore made pursuant to s151Z(1)(b). It is submitted that because the plaintiff can no longer seek indemnity pursuant to s151Z(b) s 94(1A) of the Supreme Court Act does not authorise an award of interest.

19 Mr Jenkins on behalf of the plaintiff has submitted that at the relevant time Ms Haynes had not relevantly recovered “compensation” (See Watson v Newcastle City Council (1962) 10 CLR 426 and Howard Rotavator). He also refers to the circumstances that in oral submissions the indebtedness of the defendant to the plaintiff was admitted.

20 I am, of course, bound by the decision in Howard Rotavator. Moreover, in my opinion and with respect, the obiter observation of Handley JA in Kwanchi referred to above is correct and I propose to follow it.

21 Mr Jenkins has also submitted that even if the terms of settlement could be construed as meaning that Ms Haynes had “recovered” damages, the payment was made “during the currency of the (present) proceedings” between the plaintiff and the defendant.

22 In my opinion, the plaintiff’s claim for interest should succeed. With respect to people who may have other views it seems to me highly artificial to construe s151Z and s91(1A) as having the consequence that if a worker has not sued the tortfeasor the plaintiff can recover payments made together with interest (calculated to reflect weekly obligations) but cannot do so if the worker has sued. Moreover my view would not change even if (as is rarely done) the whole amount were paid to the worker with a reminder that the worker is liable to repay money to the employer provided, of course, that proceedings for recovery have been instituted by the employer against the tortfeasor.

23 Although not determinative of this matter I will refer briefly to a submission by the defendant that it would be unfair and inequitable that it should be required to pay interest on moneys that were paid to the employee by the plaintiff. First, it must be remembered that the plaintiff has been out of pocket (by reason of payments made to Ms Haynes) because of the tortious conduct of the defendant and secondly, that when calculating interest on past economic loss credit must be given by an employee in respect of weekly payments received from an employer in reduction of interest on the total economic loss awarded.

24 But however that may be I am of the opinion that in the circumstances of this case the plaintiff is entitled to interest as claimed (accepting, as I do, that the workers compensation payments will be paid by the defendant to the plaintiff) accordingly I award the plaintiff the sum of $6,715.50 interest and I order the defendant to pay the plaintiff’s costs of these proceedings.

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Last Modified: 07/02/2002