the Australian National University v Dwit Suharso [1995] ACTSC 2 (19 January 1995)

SUPREME COURT OF THE ACT

THE AUSTRALIAN NATIONAL UNIVERSITY v. DWIT SUHARSO
No. SC743 of 1993
Number of pages - 7
Worker's Compensation - Practice And Procedure

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Worker's Compensation - persons liable to pay compensation - the effect of a judgment resulting in no damages being paid to worker upon the question of indemnity - plaintiff's right to indemnity - indemnity by persons liable to pay damages - extent of indemnity.

Practice And Procedure - application for proceedings to be stayed or dismissed - abuse of process - issue estoppel - res judicata - effect of consent judgment upon ability to litigate liability issues - prior judgments ought to, in subsequent proceedings, be impugned or otherwise called into question - determination of whether prior consent judgment had been impugned - relevant factors.

Workers Compensation Act 1951 (ACT), s22(1)

Compensation (Fatal Injuries) Ordinance 1938 (NT)
Compensation (Fatal Injuries) Ordinance 1968

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112

CLR 125

Reichel v McGrath (1889) 14 AC 665
R v Balfour; ex parte Parkes Rural Distributions Pty Ltd (1987) 76 ALR 256
Palmer v Durnford Ford (1992) 1 QB 483
Tickle Industries Pty Ltd v Hann [1974] HCA 5; (1973-74) 130 CLR 321
Government insurance Office of New South Wales v C E McDonald (NSW) Pty Ltd

(1991) 25 NSWLR 492

Gleeson v J Wippell and Co Ltd (1977) 3 All ER 54
Stekovic v Suharso unreported, Supreme Court, Australian Capital Territory,

Gallop J, 8 November 1993

Manners v Transfield Pty Ltd (1992) 110 ALR 70
Effem Food Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 115 ALR

377

Department of Aviation v Ansett Transport Industries (1987) 72 ALR 188
Zotovic v Dobel Boat Hire Pty Ltd (1985) 62 ACTR 29
Finn v Lemmer (1991) 55 SASR 455
Walton v Gardiner (1993) 177 CLR 278

HEARING

CANBERRA, 25 November 1994
19:1:1995

Counsel for the Plaintiff: Mr I Morris QC with Mr Macdoyer

Instructing Solicitors: Abbott Tout Russell Kennedy

Counsel for the Defendant: Mr L King SC with Mr C Behrens

Instructing Solicitors: Mallesons Stephen Jacques

ORDER

The Court declares that the plaintiff is not precluded by the consent judgment procured by the defendant from seeking in these proceedings to litigate the issues as to the liability of the defendant to the worker and the extent of that liability.

DECISION

HIGGINS J This is an application by the defendant to dismiss or stay the proceedings commenced by the plaintiff. The defendant contends that they are an abuse of process.

2. The plaintiff's claim arises out of the settlement of an action by Ms Maria Stekovic against the defendant. Ms Stekovic was an employee of the plaintiff at the time her alleged cause of action for damages for negligently caused personal injury arose. On 8 November 1993 that action was, by consent, dismissed by Gallop J with judgment being entered for the defendant.

3. In that action, Ms Stekovic had alleged that she had suffered personal injury on 4 July 1986 as a result of the negligence of the defendant in the control and management of a motor vehicle of which the latter was then the driver. The defendant, by her pleadings, denied negligence and alleged contributory negligence on the part of Ms Stekovic.

4. The plaintiff in these proceedings seeks to recover the losses occasioned to it by that same injury to Ms Stekovic. The defendant makes the same answer by her pleadings to that claim as she made when sued by Ms Stekovic.

5. The defendant contends that the plaintiff's entitlement to indemnity from her, being a claim to recover sums paid by it or on its behalf by its insurer pursuant to the Workers Compensation Act 1951 (ACT) (WC Act), only arises under s22(1) of that Act. That depends on there being a person liable to pay damages to the worker. The indemnity cannot exceed the amount of those damages.

6. In this case, so the argument runs, there was a verdict in favour of the defendant and, in any event, there were no damages awarded out of which any such indemnity could be satisfied.

7. As the plaintiff's claim is, if that contention is accepted, untenable, the defendant says that it should be struck out: see General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125.

8. Additionally, the defendant claims that the plaintiff's claim is, in substance, an attempt to re-litigate the worker's claim against the defendant. The issues raised are the same as those determined by verdict in that claim. That is, whether or not the worker is entitled to any and, if so, what damages against the defendant. Judgment for the plaintiff, the defendant argues, would be inconsistent with the judgment entered for the defendant in the previous proceedings commenced by the worker and, therefore, an abuse of process.

9. The defendant relies on Reichel v McGrath (1889) 14 AC 665. R v Balfour; ex parte Parkes Rural Distributions Pty Ltd (1987) 76 ALR 256 and Palmer v Durnford Ford (1992) 1 QB 483 in support of that proposition.

10. The plaintiff submits that the defendant's first contention overlooks the effect of Tickle Industries Pty Ltd v Hann [1974] HCA 5; (1973-74) 130 CLR 321 and Government insurance Office of New South Wales v C E McDonald (NSW) Pty Ltd (1991) 25 NSWLR 492.

11. The second contention is that neither issue estoppel nor res judicata prevents the plaintiff's action. The parties are different and the cause of action is different. There is no privity of interest between the plaintiff and the worker, particularly once the latter consented to her claim being dismissed; the case of Gleeson v J Wippell and Co Ltd (1977) 3 All ER 54 per Megarry V-C at 60 was relied on.

12. It is to be noted, however, that the defendant's application was not based upon issue estoppel or res judicata but upon a contention that a prior judgment ought not, in subsequent proceedings, be impugned or otherwise called into question, even if entered by consent. That amounts to a contention that the present action is an abuse of process.

No damages payable to worker
13. The High Court of Australia considered whether the discontinuance of a claim under the Compensation (Fatal Injuries) Ordinance 1938 (NT) affected the right of an employer to recover compensation payments from the alleged tortfeasor. In the proceedings appealed from in Tickle (supra), the Supreme Court of the Northern Territory (Blackburn J) had held that it did. The indemnity from the tortfeasor was expressly limited by the Ordinance to the damages assessed in favour of the deceased or his dependents. Barwick CJ, - McTiernan J concurring, Menzies J dissenting - disagreed.

14. Barwick CJ noted at 326-7:

There is obvious and necessary justice in giving the employer, who
has been involved in the payment of compensation by the wrongful
act of another, a right of recovery against the other but only up
to the amount of damage which that other has caused and for which
he was legally responsible. It is also necessarily just that the
employee shall not be able to defeat that right of recovery.

15. His Honour recognised that, for whatever reason, a worker who has received compensation may choose not to sue or, having sued, compromise with the tortfeasor for less than might otherwise have been assessed as the liability of the tortfeasor.

16. Section 21(d) of the Northern Territory legislation was in the following terms:

... where the workman has received compensation under this
Ordinance, but no damages or less than the full amount of the
damages to which he is entitled, the person liable to pay the
damages shall indemnify the employer against so much of the
compensation payable to the workman as does not exceed the
damages for which that person is liable.

17. In his Honour's view, the right of indemnity so conferred was not conditioned upon an assessment of damages having been made at the instance of the worker or his or her personal representatives. The "person liable to pay damages" simply identifies as the source of indemnity the tortfeasor or tortfeasors responsible for the compensable injury. The reference to "the damages for which that person is responsible" is to be construed as a reference to the amount of damages properly assessable in respect of the injury so caused.

18. Section 22(1)(d) of the WC Act is materially in identical terms to the Northern Territory provision so construed by the High Court.

19. There has been no subsequent revision by the High Court of the principles underlying that decision. Accordingly, I regard myself as bound to follow it. In any event, I would respectfully agree with the reasons enunciated by Barwick CJ even had I not been obliged to apply them.

20. It follows that the fact that the worker has no present entitlement to damages does not affect the plaintiff's right to indemnity.

Does the plaintiff's action seek to impugn or call into question a final judgment of a court of competent jurisdiction?
21. In Tickle, of course, no judgment was given or entered in relation to the worker's right of action against the third party tortfeasor. Action had been commenced but discontinued.

22. Manners v Transfield Pty Ltd (1992) 110 ALR 70 was a case in which compensation had been paid to the worker who then sued the third party tortfeasor. The action was tried in the District Court of Western Australia. O'Dea DCJ found the tortfeasor liable to pay damages to the worker but held that there had been no compensable injury and so dismissed his claim. The employer claimed to be entitled to litigate the issue of the extent of the tortfeasor's liability as the proceedings before O'Dea DCJ involved both a different cause of action and had been between different parties. The tortfeasor contended that the issue was determined by the findings of O'Dea DCJ.

23. Rowland and Murray JJ (Malcolm CJ dissenting) considered that the employer's right to indemnity and the extent of it was a derivative from the right of the worker to recover damages from the tortfeasor in respect of his injury. Consequently, the finding made by a court of competent jurisdiction was binding not only upon the worker but also upon the employer.

24. That decision was approved by a Full Court of the Federal Court of Australia (Northrop, Burchett and Lee JJ) in Effem Food Pty Ltd v Trawl Industries of Australia Pty Ltd (1993) 115 ALR 377.

25. In Government Insurance Office of New South Wales v C E McDonald (NSW) Pty Ltd (supra), the facts were similar to the present case. The worker, having received compensation, sued for common law damages. He completed his evidence on the hearing before Nash DCJ in the District Court. The action was then settled upon terms not dissimilar to those in the matter of Stekovic v Suharso unreported, Supreme Court, Australian Capital Territory, Gallop J, 8 November 1993. It was submitted that the judgment so entered in favour of the defendant prevented the plaintiff employer from recovering any of the compensation payments made to the worker.

26. Handley JA noted that no previous decision was directly in point. His Honour, with whom Priestley JA and Hope A-JA agreed, noted that the liability of the third party tortfeasor arose at the occurrence of the injury. It was no answer, therefore, to the employer's claim that the liability of the tortfeasor to the worker was thereafter extinguished.

27. In GIO (NSW) v C E McDonald (NSW) Pty Ltd no argument was addressed to the question whether the judgment, albeit by consent, was inconsistent with the employer's claim. The third party tortfeasor here contends that the issue as to the quantum of the notional fund available for indemnity has been settled by the consent judgment as effectively as if the Court had so found after hearing.

28. That is certainly the case as between the parties to the consent judgment. The question is whether that is also the case as between the employer and the tortfeasor.

29. Certainly, in Department of Aviation v Ansett Transport Industries (1987) 72 ALR 188, a Full Court of the Federal Court, applying the principles of issue estoppel to administrative decisions pointed out (per Fisher J, Ryan J concurring, Northrop J dissenting) that an issue estoppel only arises as between parties in controversy in the relevant proceedings.

30. In Zotovic v Dobel Boat Hire Pty Ltd (1985) 62 ACTR 29, Blackburn CJ declined to apply issue estoppel to bar the re-litigation of an issue as to whether a party found to be a tortfeasor was indeed liable to the estate of the deceased having been found to be liable to the relatives of the deceased under the Compensation (Fatal Injuries) Ordinance 1968. His Honour regarded the plaintiff, although the same person, as suing in different legal capacities. No consideration was, however, given as to whether it was an abuse of process for the defendant to seek to have the issue as to its liability for the death of the deceased re-litigated. However, in that case, it had not been the defendant pressing a claim but rather seeking to defend a claim brought against it.

31. A similar result followed in Finn v Lemmer (1991) 55 SASR 455 (per Legoe J). Relatives of a deceased motor accident victim obtained judgment against the defendant for damages for negligently causing the death of the deceased. The defendant sued the insurer of the deceased denying contributory negligence. He was held entitled to maintain the plea.

32. As I have noted, in this case the defendant does not rely on issue estoppel or res judicata. Each is excluded by reason of there having been no hearing on the merits so as to raise such a barrier to the present proceedings.

33. As to the abuse of process issue, Reichel v McGrath (supra) is authority for the view that proceedings may be struck out as an abuse of process on the basis that the subsequent proceedings seek to re-litigate issues already determined in other proceedings. The case of R v Balfour (supra) is a more recent example of that situation.

34. The prosecutor had challenged the validity of a certificate relating to overpayments under a statutory subsidy scheme. That challenge had been dismissed. Relying on different grounds, the prosecutor sought to challenge that certificate in the Federal Court. The challenge dismissed had been raised in the Supreme Court of New South Wales.

35. Wilcox J, whilst accepting that the prosecutor was not precluded in the proceedings before him by issue estoppel or res judicata from raising the issue it sought to re-litigate, held that it would be an abuse of process to permit it so to do. Further, it would have been open to the prosecutor to have raised, in those previous proceedings, the new grounds referred to.

36. In the present proceedings, it is not the employee who seeks to challenge the consent judgment.

37. Palmer v Durnford Ford (supra) was also referred to. In that case, the plaintiffs, relying on an expert report, sued in respect of defects which had appeared in a lorry they had purchased. Before the hearing, the expert resiled somewhat from his previously expressed opinion. His evidence at the hearing led the plaintiffs to seek a compromise. They agreed to judgment against them. They then took action against the expert and the solicitors who acted for them in the unsuccessful proceedings.

38. Mr Simon Tuckey QC, acting deputy High Court judge, agreed that the plaintiffs' statement of claim should be struck out, inter alia, as an abuse of process. He regarded the action as one seeking to impugn the consent judgment.

39. In Palmer v Durnford Ford, parties who had consented to the judgment were seeking to raise the question apparently resolved by it. In any event, it seems to me, with respect, that Mr Tuckey QC put the issue too broadly. The judgment could not be impugned. However, it was not sought, in reality, so to do. It was sought to assert that the plaintiffs had to abandon their claim because of the expert's conduct which, they asserted, was negligent. Their loss was the chance of successfully pursuing their original action.

40. Had that chance been judicially determined, it might well have been an abuse of process to seek to re-litigate it. I do not see that it was an abuse of process to seek to recover damages for the lost chance of a successful outcome, when the issue had not, because of the defendant's alleged negligence, been so determined.

41. So far as abuse of process is concerned, the relevant principles to be applied are those referred to in Walton v Gardiner (1993) 177 CLR 278. A ground for exercising the jurisdiction to stay proceedings includes a situation where the current proceedings would be substantially repetitive of previous litigation.

42. In the present case, the judgment for the tortfeasor cannot be impugned as between the worker and the defendant tortfeasor. However, it was by consent and without determination of the merits of any particular issue. In my view, it prevents the litigation of no issue relevant to the present proceedings. The consent judgment is not necessarily inconsistent with a proposition that, whilst the defendant tortfeasor could have been found liable in the proceedings, the quantum of damages would not exceed, or greatly exceed, the compensation paid by the employer and/or its insurer so that the expense of further litigation by Ms Stekovic was not warranted. In no relevant sense therefore is the force or effect of the consent judgment impugned. No repetition of issues already properly litigated is involved.

43. It would, in any event, be contrary to the public interest to infer more from such a judgment. To do otherwise would enable a plaintiff worker and a third party tortfeasor to extinguish the rights of an employer to a statutory indemnity without any opportunity for the employer to be heard on the issue.

44. In my view, the plaintiff is not precluded by the consent judgment procured by the defendant from seeking in these proceedings to litigate the issues as to the liability of the defendant to the worker and the extent of that liability.

45. I make a declaration accordingly. I will hear the parties as to any consequential orders and costs.