Goodman Fielder Ltd v Hickson [2008] NSWCA 69 (24 April 2008)

Last Updated: 29 April 2008

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Goodman Fielder Ltd v Hickson [2008] NSWCA 69


FILE NUMBER(S):
40646/2006

HEARING DATE(S):
16 October 2007

JUDGMENT DATE:
24 April 2008

PARTIES:
Goodman Fielder Ltd (Appellant)
Glenn Andrew Joseph Hickson (Respondent)

JUDGMENT OF:
Giles JA Hodgson JA Hislop J

LOWER COURT JURISDICTION:
District Court

LOWER COURT FILE NUMBER(S):
2502/2006

LOWER COURT JUDICIAL OFFICER:
Kearns DCJ

LOWER COURT DATE OF DECISION:
20 September 2006


COUNSEL:
L. King SC/G.J. Parker (Appellant)
A.S. Bell SC/D.J. Hooke (Respondent)

SOLICITORS:
Eakin McCaffery Cox (Appellant)
Beilby Poulden Costello (Respondent)

CATCHWORDS:
STATUTORY CONSTRUCTION
workers compensation
reduction for contributory negligence of workers compensation repayment to employer by worker
Workers Compensation Act s 151Z(1)(b)
Law Reform (Miscellaneous Provisions) Act 1965 Pt 3
per majority s 10(2) Law Reform (Miscellaneous Provisions) Act 1965 requires court determination of reduction in action between worker and third party
Hodgson JA contra.

LEGISLATION CITED:
Law Reform (Miscellaneous Provisions) Act 1965
Workers Compensation Act 1926
Workers Compensation Act 1987
Compensation to Relatives Act 1897
Law Reform (Miscellaneous Provisions) Amendment Act 2000
Interpretation Act 1987 (NSW)


CASES CITED:
Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638
Sellers v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297
Astley v AusTrust Ltd [1999] HCA 6; (1999) 197 CLR 1
Beecroft Bakeries Pty Ltd v Allen (1971) 3 DCR 34

TEXTS CITED:


DECISION:
By majority, Hodgson JA dissenting: (1) Appeal allowed; (2) Set aside the answers to the questions, and in lieu thereof answer the questions - Q1(a) No, Q1(b) Does not arise, Q3 Does not arise; (3) Set aside any order as to costs of deciding the separate questions made by the trial judge and order that the defendant pay the plaintiff's costs of deciding the separate questions; (4) Respondent to pay appellant's costs of the appeal and have a certificate under the Suitors Fund Act.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40646/2006

DC 2502/2006

GILES JA

HODGSON JA

HISLOP J

Thursday 24 April 2008

GOODMAN FIELDER LIMITED
v
GLENN ANDREW JOSEPH HICKSON

Judgment

1 GILES JA: When an injured worker receives workers compensation benefits from the employer and then common law damages from the wrongdoer, there is adjustment to prevent over-compensation. Generally speaking, the workers compensation legislation provides that an employer wrongdoer is credited (in the manner later better explained) with the amount of the workers compensation benefits, and if the wrongdoer was a third party that the employer can recover the amount of the workers compensation benefits from the worker out of the worker’s damages.

2 Prior to the enactment of the Law Reform (Miscellaneous Provisions) Act 1965 (“the LR Act”), there was in New South Wales no question of reduction of the worker’s damages for contributory negligence. Contributory negligence defeated the worker’s claim entirely. The LR Act provides that it should not do so, but the damages should be reduced “to such extent as the court thinks just and equitable having regard to [the worker’s] share in the responsibility for the damage”. There is consequential change in the adjustment to prevent over-compensation. Again generally speaking, the credit to the employer or the employer’s recovery is to be reduced “to the same extent as the damages recoverable by [the worker]”.

3 This appeal raises for decision the employer’s recovery where the worker’s damages were agreed in a settlement of the worker’s claim. The court has not been called upon to determine the extent of a reduction in the damages. Does the worker have to repay the full amount of the worker’s compensation benefits out of the damages, without any reduction? If there can be a reduction, how is it to be ascertained – by seeking to ascertain the reduction in fact made in the settlement, or by a trial of the worker’s claim to damages sufficiently to find what reduction would have been made if the court had been called upon to determine it?

4 The reasons of Hislop J, which I have had the advantage of reading in draft, explain more fully how these questions arose and outline the respective submissions. For the reasons which follow, in my opinion the worker must repay the full amount of the workers compensation benefits.

The workers compensation legislation

5 When the LR Act was enacted, the Workers Compensation Act 1926 (“the 1926 Act”) provided -

(a) by s 63(5), that workers compensation payments were “to the extent of such payments, a satisfaction of” a judgment for damages obtained against the employer; and

(b) by s 64(a), that the worker “shall be liable to repay to his employer out of such damages the amount of compensation which the employer has paid in respect of the worker’s injury under the Act”.

6 These provisions were later amended. Section 63(5) changed so that the payments to the extent of their amounts were “a defence to proceedings against the employer independently of this Act”. Section 64(a) became s 64(1)(a), but to the same effect. Then the 1926 Act was replaced by the Workers Compensation Act 1987 (“the 1987 Act”). For a time common law damages could not be obtained from the employer, and then provision was made for the so-called modified common law damages.

7 The current equivalents to the original provisions are in ss 151A and 151Z of the 1987 Act.

8 Section 151A relevantly provides -

“151A Effect of recovery of damages on compensation

(1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act then (except to the extent that subsection (2), (3) or (4) covers the case):

(a) the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned (including compensation claimed but not yet paid), and

(b) the amount of any weekly payments of compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation, and

(c) ... “

9 The exceptions to s 151A(1) are concerned with damages recoverable by the estate of a deceased worker, with damages under the Compensation to Relatives Act 1897 in respect of the death of a worker and with motor accident damages. These refinements need not be explored. The deduction is only of weekly compensation, not of permanent impairment compensation or pain and suffering compensation.

10 Section 151Z relevantly provides -

“151Z Recovery against both employer and stranger

(1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker’s employer to pay damages in respect of the injury, the following provisions have effect:

(a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation,

(b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker’s injury under this Act, and the worker is not entitled to any further compensation,

(c) if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act,

(d) ...

(5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement.”

The original LR Act

11 As enacted in 1965, the LR Act relevantly provided -

“9. In this Part, unless the context or subject matter otherwise indicates or requires -

‘Court’ means in relation to any claim the court by or before whom the claim falls to be determined.

‘Damage’ includes loss of life and personal injury.

‘Fault’ means negligence, or other act or omission which gives rise to a liability in tort or would, apart from this Part, give rise to the defence of contributory negligence but does not mean or include a breach of statutory duty.”

“10(1) Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage:

Provided that -

...

(c) Where any payments made to the claimant by way of compensation take effect pursuant to section 63(5) of the Workers’ Compensation Act, 1926-1965, as a satisfaction of the judgment obtained by him against his employer, such payments shall be reduced to the same extent as the damages recoverable by him and shall be a satisfaction of the judgment to such reduced extent only;

(d) where the claimant is liable to repay compensation to his employer pursuant to section 64(a) of the Workers’ Compensation Act, 1926-1965, the amount of compensation so repayable shall be reduced to the same extent as the damages recoverable by him;

(e) ...

(2) Where damages are recoverable by any person by virtue of the foregoing subsection subject to such reduction as is therein mentioned, the court shall find and record the total damages which would have been recoverable if the claimant had not been at fault.

...

(6) Where any case to which subsection one of this section applies is tried –

(a) by a judge sitting without a jury the judge shall make the apportionment under subsection one of this section; or

(b) by a judge sitting with a jury, the jury shall determine the total damages which would have been recoverable if the claimant had not been at fault and the extent to which those damages are to be reduced.”

12 The LR Act was also amended from time to time, particularly by the Law Reform (Miscellaneous Provisions) Amendment Act 2000. That amending Act replaced “fault” with “wrong”, and extended “wrong” to breach of a contractual duty of care concurrent and coextensive with a duty of care in tort. It recast the previous s 10 into a number of separate sections. The LR Act now relevantly provides -

“8 Definitions

In this Part:

claimant—see section 9 (1).

contributory negligence—see section 9 (1).

court, in relation to any claim, means the court by or before which the claim falls to be determined.

damage includes loss of life and personal injury.

wrong means an act or omission that:

(a) gives rise to a liability in tort in respect of which a defence of contributory negligence is available at common law, or

(b) amounts to a breach of a contractual duty of care that is concurrent and co-extensive with a duty of care in tort.”

“9 Apportionment of liability in cases of contributory negligence

(1) If a person (the claimant) suffers damage as the result partly of the claimant’s failure to take reasonable care (contributory negligence) and partly of the wrong of any other person:

(a) a claim in respect of the damage is not defeated by reason of the contributory negligence of the claimant, and

(b) the damages recoverable in respect of the wrong are to be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage.

...”

“10 Workers compensation and contributory negligence

(1) If any payments made to the claimant by way of compensation take effect under section 63 (5) of the Workers’ Compensation Act 1926 to any extent as a defence to the proceedings by the claimant against his or her employer, those payments are to be reduced to the same extent as the damages recoverable by the claimant are reduced under section 9, and are a defence to the reduced extent only.

(2) If the claimant is liable to repay compensation to his or her employer under section 64 (1) (a) of the Workers’ Compensation Act 1926 or under section 151Z of the Workers Compensation Act 1987, the amount of compensation so repayable is to be reduced to the same extent as the damages recoverable by the claimant are reduced under section 9.

...”.

“11 Total damages to be recorded

If the damages recoverable by a claimant are subject to any reduction under this Part, the court is to find and record the total damages that would have been recoverable had there been no contributory negligence by the claimant.”

“15 Apportionment by judge or jury

(1) If proceedings to which section 9 applies are tried by a judge sitting without a jury, the judge is to make the apportionment under section 9.

(2) If proceedings to which section 9 applies are tried by a judge sitting with a jury, the jury is to determine the total damages that would have been recoverable had there been no contributory negligence by the claimant, and the extent to which those damages are to be reduced.”

13 A note to s 10 points out that, although the 1926 Act has been repealed, it is given ongoing effect by the transitional provisions in the 1987 Act; hence the continued reference to the sections of the 1926 Act. But it will be observed that there is no reference in s 10(1) to the current equivalent to s 63(5) of the 1926 Act in s 151A of the 1987 Act.

Consideration

14 The LR Act was enacted following a report of the New South Wales Law Reform Committee. In addressing consequences of the proposed reform as to contributory negligence, the Committee was of the view that it was “just and equitable” that the repayment by the worker to the employer under s 64(a) of the 1926 Act should be reduced in proportion to the diminution of the worker’s damages by reason of contributory negligence, and that a worker suing an employer should not be in a different position from a worker injured by a third party on the way home from work and the compensation to be taken in satisfaction of the damages under s 63(5) should also be proportionately reduced. It is evident that the legislature adopted these views.

15 Although in recommending the reform the Committee considered that it would facilitate settlements, the report did not go into whether or how the consequences should apply in the case of a settlement.

16 The words of the original LR Act, however, were against proportionate reduction where there was a settlement. The reductions in provisos (c) and (d) to s 10(1) were “to the same extent as the damages recoverable by him”. The measure chosen was directly referable to the reduction in the body of s 10(1), that “the damages recoverable ... should be reduced to such extent as the court thinks just and equitable ... “. This required a determination by the court, which the definition in s 9 said meant the court by or before whom the claim fell to be determined; the claim was plainly enough the worker’s claim in respect of the worker’s damage. That is, the consequential reductions were tied to the objective fact of the court-determined reduction. Section 10(2) ensured that the fact was ascertainable, by requiring that the total damages which would otherwise have been recoverable be recorded.

17 The words of the current LR Act are a little different, but to the same effect. The reductions are now “to the same extent as the damages recoverable by the claimant are reduced under s 9”. It is difficult to read “under section 9” as meaning “by reason of the existence of s 9” rather than “in accordance with s 9”, as the respondent submitted, when s 9(1)(b) prescribes not just what shall happen (reduction to a just and equitable extent) but who determines what shall happen (reduction to such extent as the court thinks just and equitable). It remains that the consequential reductions are tied to the objective fact of the court-determined reduction, ascertainable through the recording required by s 11.

18 If this is not the correct construction of the LR Act, it must be asked how else a measure of the consequential reductions can be found where there is a settlement.

19 A settlement is ordinarily a compromise between the parties according to their assessments of the likely outcome of the worker’s claim. In the assessments, perceived factual and legal difficulties for one or the other of the parties, or for both, play a part, although with differing perceptions. The perceived difficulties will commonly go beyond any question of contributory negligence, to core questions of liability and the extent of damages recoverable; a compromise will not often turn on contributory negligence, but will involve other considerations also, and there will be a compromise because the parties come to divergent global assessments of all the considerations.

20 It will as a rule not be possible to ascertain the reduction for contributory negligence in fact made in the settlement. First, contributory negligence will be one amongst a number of undifferentiated considerations. Secondly, there will not be common ground as to the significance of that consideration, perhaps even that it is a consideration. In the nature of a settlement, the actual reduction in the worker’s damages by reason of s 9 of the LR Act will seldom be articulated; at best, there will be competing assertions and a final compromised amount.

21 A purported agreement upon the extent of a just and equitable reduction, as part of the settlement, would bring its own difficulties. In coming to a compromise with the wrongdoer, the worker will be concerned to deny or minimise contributory negligence. The amount of the credit to an employer wrongdoer in the assessment of damages will no doubt be part of the compromise, but for repayment to the employer out of damages recovered from a third party wrongdoer the worker will be concerned to admit and maximise contributory negligence. A purported agreement could be viewed by the third party with some suspicion; it would not readily be imposed on the third party.

22 For these reasons, the reduction in fact made in the settlement could not be a satisfactory measure of the consequential reductions. The alternative is finding what reduction would have been made if the court had been called upon to determine it.

23 How will that arise? Under the 1926 Act, reduction in the credit to the employer would arise in a dispute over satisfaction of the judgment or later in a dispute over the defence to the proceedings. The current LR Act makes no provision for consequential reduction, so it will not arise. Recovery by the employer under s 64(a) of the 1926 Act was, and under s 151Z(1)(b) of the 1987 Act will be, by proceedings brought against the worker to enforce the statutory liability to repay, and reduction in the recovery will arise in that satellite litigation.

24 A trial within a trial could be held in the satellite litigation – indeed, s 151Z(2) requires a trial within a trial of the damages which the worker could have recovered from the employer, in order to arrive at a reduction in the worker’s damages. But such a trial may come to be held long after the occurrence of the wrong, and when it comes to be held the worker’s concern will have changed to admission and maximisation of contributory negligence. The realities of litigation can not be ignored, and this is not a satisfactory situation.

25 Of more importance in the construction of the LR Act, it does not fit within its terms. Even if “under section 9” in s 10(2) be taken as meaning “by reason of the existence of section 9”, the reduction found in the later trial is not to such extent as the court hearing the worker’s claim thought just and equitable. It is to such extent as the court hearing the later trial finds that court hearing the worker’s claim might have thought just and equitable, or at most would probably have thought just and equitable. To borrow from another legal domain, what the court hearing the worker’s claim would have done is a past hypothetical, in the assessment of damages found according to the degree of probabilities or possibilities: Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638; Sellers v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332. The past hypothetical extent is not “the same extent of reduction as the damages recoverable by the claimed are reduced under section 9” (emphasis added).

26 I accept that the legislature should be taken to have been aware that most worker’s claims, including those in which there is a question of contributory negligence, are resolved by settlement rather than by court decision. Section 151Z(5) is a recognition of settlements. That gives particular point to the respondent’s submission that, where there is a question of contributory negligence, the worker who settles should not be disadvantaged by greater recovery to the employer from the worker’s damages. The respondent submitted that the means of resolution should not matter, and that settlement should be encouraged rather than discouraged.

27 Too much, however, should not be made of the disadvantage to the worker who settles, or of encouraging settlement.

28 When contributory negligence defeated the worker’s claim, if contributory negligence was alleged the prospect of it being established came into the assessments of the likely outcome of the worker’s claim. The worker’s damages as arrived at in the settlement might for that reason have been less than those recoverable if the worker had successfully litigated the claim, but less damages or any particular lessening of damages was but part of the overall assessments. That the worker had to repay the full amount of the workers compensation benefits out of the damages had to be taken into account in the worker’s decision to accept the amount of the settlement.

29 So also in a settlement now that contributory negligence brings reduction in the worker’s damages. If contributory negligence was alleged, the prospect of it being established and the extent of the reduction in damages came into the assessments of the likely outcome of the worker’s claim, typically together with other considerations. Reduction or any particular reduction was but part of the overall assessments. It is incorrect to start from the proposition that there was contributory negligence and so there should be reduced repayment of the workers compensation benefits, or any particular extent of reduction, on account of contributory negligence. In the absence of such a starting-point, full recovery to the employer must be factored into the settlement, according to each party’s perception.

30 No doubt in some cases contributory negligence will be apparent, the dispute being over its extent. Accepting that full recovery to the employer where there is a settlement may be a disincentive to settlement, there must be weighed against the good of more settlements the bad of more litigation when it is later necessary to find what reduction for contributory negligence would have been made if the court had been called upon to determine it. It is by no means clear that the balance favours the respondent’s submission.

31 The legislative will must be found in construction of the LR Act. I respectfully do not see in “recoverable” in ss 9(1)(b) and 10(2) of the LR Act the importance found by Hodgson JA, whose reasons I have also benefited from reading in draft. It is not just a matter of reduction of recoverable damages, but also of the measure of the reduction. The measure is the court’s determination, which I have no difficulty in extending to redetermination on appeal, the redetermination being substituted as the court’s determination. The legislation favours certainty: there is either full credit or recovery, or a reduction in the credit or recovery ascertained from the court-determined (and recorded) reduction.

Orders

32 The appeal papers did not disclose what order for costs was made by the trial judge. If an order was made, it would presumably have provided for the plaintiff to pay the defendant’s costs of deciding the separate questions. Any such order should be set aside, and it should be ordered that the defendant pay the plaintiff’s costs of deciding the separate questions.

33 I propose the orders -

1. Appeal allowed.

2. Set aside the answers to the questions, and in lieu thereof answer the questions –

Q1(a) No

Q1(b) Does not arise

Q3 Does not arise

3. Set aside any order as to the costs of deciding the separate questions made by the trial judge and order that the defendant pay the plaintiff’s costs of deciding the separate questions.

4. Respondent to pay appellant’s costs of the appeal and have a certificate under the Suitors Fund Act.

34 HODGSON JA: The background to this appeal, the issues it raises, and the rival contentions of the parties are set out in the judgment of Hislop J.

35 In my opinion, it is important that s 9(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1965 (LRA) refers to “damages recoverable” not “damages recovered”. The effect of s 9 of the LRA is that where a person is (as a matter of fact, not of court decision) injured by another’s wrong but is guilty of contributory negligence, damages are recoverable by that person, but the amount of damages recoverable is reduced to the extent provided by the section. If one asks, in relation to such a person before there has been any court hearing, are damages recoverable by that person, the answer must be yes; and if one also asks whether the damages recoverable are reduced by s 9 by reason of contributory negligence, again the answer must be yes.

36 Of course, the precise quantum of any reduction is “the extent to which the court thinks just and equitable”, where the court is that “by or before which the claim falls to be determined”; and so this quantum is not determined in this way prior to a court hearing. But this provision in s 9(1)(b) cannot be taken absolutely literally: if an appeal court thinks the court by or before which the claim fell to be determined made a clear error in apportioning responsibility, the appeal court can substitute a different reduction.

37 It might be argued that in such a case the appeal court itself would then be the court by or before which the claim falls to be determined. However, the appeal court cannot intervene unless it is first satisfied that the apportionment by the first-instance court was wrong; and that means that the criterion specified by s 9(1)(b) cannot be a subjective one (it cannot be, literally, what “the court thinks”) but must be an objective one, requiring that what the court thinks must be reasonable. It is only if this is so that an appeal court could be satisfied that the first-instance court was wrong, by deciding that its apportionment was outside what could properly be regarded as reasonable.

38 If it is the case that the damages “recoverable” (that is, that can be recovered) are reduced by s 9 prior to any hearing, then this must still be the case if a claim for damages is settled. The extent of the reduction is still to some extent indeterminate; but just as an appeal court can make a determination of an appropriate reduction if it thinks the court by or before which the claim fell to be determined made an error, in my opinion a court hearing a s 151Z application can similarly make such a determination, in circumstances where there was no determination by a court by or before which the claim itself fell to be determined.

39 If a s 151Z application is brought where there has been a determination under s 9(1)(b) by a court as between a claimant and a tortfeasor, then that determination will be a determination of the reduction both of damages recoverable and of damages actually recovered. An employer’s recovery under s 151Z could not of course exceed the amount of damages actually recovered; but the reduction required by s 10(2) is conditioned on reduction in damages “recoverable”, not damages “recovered”. Although such a determination as between two parties would not normally bind a third person who was not a party to these proceedings, it would seem that s 10(2) does contemplate that the employer would be bound by that determination.

40 If the case between the claimant and the tortfeasor was settled, the question under s 10(2) is not to what extent were the damages “recovered” by the claimant reduced, but to what extent were the damages “recoverable” by the claimant reduced. At one stage in my consideration of this matter, I had thought that this question was concerned with the factors influencing the settlement; but that would be so only if the question was the extent to which the damages actually recovered were reduced. Since the question is to what extent were the damages recoverable by the claimant reduced, the question becomes, in my opinion, very similar to a question as to the situation before there has been a court hearing, or the question facing an appeal court considering whether there has been error by the court by or before which the claim fell to be determined. That is, if there is a dispute between a claimant and an employer as to the amount recoverable by the employer under s 151Z when the claimant has settled the case against the tortfeasor, in my opinion the court hearing the s 151Z dispute has to come to its own view as to what a court hearing the case between the claimant and the tortfeasor would reasonably have thought to be a just and equitable reduction.

41 There is force in the submissions for each side set out by Hislop J in his judgment; but in my opinion, having regard to my analysis set out above, the submissions advanced by the respondent should prevail over those advanced by the appellant, and a reduction thus determined in the s 151Z application is appropriately considered to be a reduction “under” s 9.

42 Since the matter to be determined in the s 151Z proceedings concerns what a court would reasonably have thought to be a just and equitable reduction, the primary judge’s affirmative answer to Question 3 was correct. As regards Question 1(b), evidence to establish the extent to which damages recovered were in fact reduced would be admissible only to the extent that it was relevant to the issue I have identified, as such evidence could be if it amounted to admissions by the worker or admissible hearsay. On that basis, the primary judge’s answer to this question should also stand.

43 For those reasons, in my opinion, the appeal should be dismissed with costs.

44 HISLOP J:

Introduction

On 12 March 2003 the respondent was riding his pushbike in Gardeners Road, Mascot when he was struck by a motor vehicle travelling in the same direction. He sustained significant injuries in the collision.

45 The respondent commenced proceedings in the District Court to recover damages for his injuries from the driver of the motor vehicle. The driver, in his notice of grounds of defence, pleaded and particularised contributory negligence on the part of the respondent. It was common ground that contributory negligence was a live issue in those proceedings.

46 Those proceedings were settled by the respondent’s acceptance of an offer of compromise in a significant sum and costs. On 20 March 2006 a consent judgment was entered by the trial judge. No findings were made in respect of contributory negligence, the damages were not the subject of court approval and there was no evidence of any agreement as to any apportionment for contributory negligence.

47 The collision occurred when the respondent was in the course of a journey from his place of employment. He was entitled to the benefit of the provisions of the Workers Compensation Act 1987 (“WCA”) in respect of his injuries. His employer, the appellant, paid $607,315.43 compensation under the WCA in respect of his injuries.

48 On 7 June 2006 the appellant commenced proceedings in the District Court to recover that sum from the respondent pursuant to the provisions of s 151Z(1)(b) of the WCA. The appellant contended the whole sum was recoverable. The respondent contended the sum recoverable was the sum claimed reduced on account of his contributory negligence. He relied on s 10(2) of the Law Reform (Miscellaneous Provisions) Act 1965 (“LRA”).

49 The trial judge was requested by the parties to determine three questions. Those questions, and his Honour’s answers thereto, were as follows:

“Q1.a. Can s 10(2) of the Law Reform (Miscellaneous Provisions) Act 1965 operate in reduction of the amount of workers compensation benefits repayable to the Plaintiff from damages recovered as a result of a settlement of the Defendant’s action against a third party tortfeasor when no determination was made by a Court in the settled proceedings concerning contributory negligence and the quantum of damages?

A. Yes.

Q1.b. If the answer to Question (a) is in the affirmative, is evidence admissible in these proceedings to establish the extent to which the damages recovered by the Defendant as a result of the settlement of his action against the third party tortfeasor were in fact reduced on account of his contributory negligence?

A. Yes, subject to appropriate rules as to admissibility of evidence at trial; and

Q.3. In the alternative to Question (b), if the answer to Question (a) is in the affirmative, is evidence admissible in these proceedings to establish the degree of the Defendant’s contributory negligence and the quantum of the damages to which the Defendant would have been entitled without reduction for contributory negligence?

A. Yes.”

50 The appellant appealed from his Honour’s decision. The principal issue on appeal was whether his Honour erred in his construction of Pt 3 of the LRA and thus in his answers to the questions. The appellant submitted the first question should have been answered in the negative, with the result that the other two questions did not arise.

The submissions

51 It was common ground that the respondent was liable, by reason of s 151Z(1)(b) of the WCA, to repay to the appellant the whole of the compensation paid by it, save to the extent the LRA Pt 3 otherwise provided.

52 The relevant provisions of the LRA, following amendment by the Law Reform (Miscellaneous Provisions) Amendment Act 2000, were as follows:

“8. court, in relation to any claim, means the court by or before which the claim falls to be determined.

9. (1) If a person (the claimant) suffers damage as the result partly of the claimant’s failure to take reasonable care (contributory negligence) and partly of the wrong of any other person:

(a) a claim in respect of the damage is not defeated by reason of the contributory negligence of the claimant, and

(b) the damages recoverable in respect of the wrong are to be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage.

10. (2) If the claimant is liable to repay compensation to his or her employer under section 64(1)(a) of the Workers’ Compensation Act 1926 or under section 151Z of the Workers Compensation Act 1987, the amount of compensation so repayable is to be reduced to the same extent as the damages recoverable by the claimant are reduced under section 9.

11. If the damages recoverable by a claimant are subject to any reduction under this Part, the court is to find and record the total damages that would have been recoverable had there been no contributory negligence by the claimant.

15. (1) If proceedings to which section 9 applies are tried by a judge sitting without a jury, the judge is to make the apportionment under section 9.

(2) If proceedings to which section 9 applies are tried by a judge sitting with a jury, the jury is to determine the total damages that would have been recoverable had there been no contributory negligence by the claimant, and the extent to which those damages are to be reduced.”

53 The appellant submitted s 10(2) is not ambiguous. The word “under” is used three times in s 10(2). It should be given its ordinary meaning. Thus, on the true construction of Pt 3 of the LRA, in the absence of a determination by the court of the apportionment for contributory negligence made in the proceedings on the claim for damages against the wrongdoer (and in the absence of a tripartite agreement between the injured worker, the tortfeasor and the employer), Pt 3 of the LRA has no application and the total amount of compensation paid by the appellant is repayable to him by the respondent pursuant to s 151Z(1)(b) of the WCA.

54 Senior counsel for the appellant, appropriately, did not, in his oral submissions, press an estoppel argument that had been debated in the court below.

55 The respondent submitted, essentially, that the meaning of “under section 9” in s 10(2) is ambiguous. Accordingly, the construction which would promote the purpose and object underlying the Act is to be preferred (Interpretation Act 1987 (NSW), s 33). The purpose and object of the Act would be achieved if “under section 9” was construed to mean “by reason of” [the existence of s 9] with the result that s 10(2) did not require a judicial determination of the apportionment for contributory negligence on the hearing of the damages claim as a prerequisite to the reduction of the repayment of workers’ compensation. The just and equitable reduction for contributory negligence was to be made from the workers’ compensation payback irrespective of whether or not the apportionment for contributory negligence was determined by the court in the proceedings against the tortfeasor.

56 In support of that construction, the respondent submitted, inter alia:

(a) The majority of personal injury actions are settled, many involving a compromise reflecting contributory negligence. The legislature must be taken to have been aware of that fact - Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 304-5. If the appellant’s construction is adopted, an injured worker, by settling his claim against the tortfeasor, would lose the reduction to his repayment that he would have been entitled to if the matter proceeded to a hearing and an apportionment for contributory negligence was made. The worker may be forced to conduct his case against the tortfeasor to a concluded hearing notwithstanding a fair offer of settlement has been made by the tortfeasor simply in order to protect his s 10(2) LRA rights. This could create significant problems if a notice of offer of compromise or Calderbank letter had been served. Parliament could not have so intended.

(b) It would be an odd result if the amount of the repayment was to be determined, not by the extent of the contributory negligence, but according to whether the injured worker ran or settled his claim against the tortfeasor. Similarly it would be unlikely that the intent of the legislature was only to permit reduction of the payback in the small number of cases which did not settle, particularly where such legislation has been said to be beneficial legislation (see Cooper Brookes) and was to be construed liberally in favour of the worker in the event of ambiguity. It is improbable the legislature would wish to add a windfall for employers in the event the action against the tortfeasor settled.

(c) There was no obligation upon an employer or tortfeasor to enter into a tripartite agreement to resolve claims and there would be no incentive for an employer to do so if the appellant’s construction was accepted.

(d) It was clear from the Second Reading Speech for the 2000 Amendment Bill that the purpose of those amendments was to deal with the High Court decision in Astley v AusTrust Ltd [1999] HCA 6; (1999) 197 CLR 1 and to enable damages awards in actions for breach of contract to be reduced for contributory negligence and to “[rewrite] the apportionment provisions in plainer language.” It is clear there was no intention on the part of the legislature when amending the LRA in 2000 to alter the effect of such of the existing provisions as are relevant in this case. The pre-2000 provisions did not make a determination of contributory negligence in proceedings against the tortfeasor a prerequisite to deducting an amount for contributory negligence from the payback figure.

57 In support of its contentions, the appellant submitted, inter alia:

(a) The appellant’s proposed construction leads to certainty and the elimination of further proceedings in that the apportionment for contributory negligence is either determined by the court in the damages proceedings (and binding on the employer although he was not a party to those proceedings) or settled by tripartite agreement.

(b) The appellant’s construction would not prevent settlement of a claim against the tortfeasor with agreement as to the deduction for contributory negligence from the payback figure. Tripartite agreements between the injured worker, the tortfeasor and the employer are common place and appropriate. If the employer was not a party to a settlement between the worker and the tortfeasor, the worker would take into account in settling his claim the position in relation to the repayment required under s 151Z(1)(b).

(c) If the respondent’s construction is adopted this would lead, in cases where the apportionment had not been determined in the trial of the damages claim, to the incurring of the cost of additional litigation, problems of principle as to the issues to be determined, the calculation of apportionment, the admissibility of evidence and the obtaining of that evidence. These practical matters further militate against the construction advanced by the respondent.

(d) Part 3 of the LRA prior to the 2000 amendments provided:

“10. (1) ...the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in responsibility for the damages: provided that -

.......

(d) where the claimant is liable to repay compensation to his employer...the amount of compensation so payable shall be reduced to the same extent as the damages recoverable by him.”

The definition of court and the current provisions of ss 11 and 15 of the Act are replicated in the earlier provision. The proper construction of Pt 3 of the LRA does not produce a different result than the provisions in the form which they took prior to the 2000 amendments. Those provisions required, by reason of the reference to “as the court thinks just and equitable”, that the court should determine the extent of the apportionment for contributory negligence and such determination was a prerequisite to the operation of s 10(1)(d).

(e) The appellant’s construction finds some limited support in the decision of Henchman DCJ in Beecroft Bakeries Pty Ltd v Allen (1971) 3 DCR 34 at 40.

Conclusion

58 There is force in the contentions of each party. However, in my opinion, the appellant’s contention should prevail for the reasons set out in the judgment of Giles JA, with whose judgment and proposed orders I agree.

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LAST UPDATED:
24 April 2008