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KURNELL PASSENGER & TRANSPORT SERVICE PTY LTD v RANDWICK CITY COUNCIL [2009] NSWCA 59 (20 March 2009)

Last Updated: 23 March 2009

NEW SOUTH WALES COURT OF APPEAL

CITATION:
KURNELL PASSENGER & TRANSPORT SERVICE PTY LTD v RANDWICK CITY COUNCIL [2009] NSWCA 59

FILE NUMBER(S):
40192/08

HEARING DATE(S):
6 February 2009

JUDGMENT DATE:
20 March 2009

PARTIES:
Kurnell Passenger & Transport Service Pty Ltd (Appellant)
Randwick City Council (Respondent)
Attorney-General (NSW) (Intervenor)

JUDGMENT OF:
Giles JA McColl JA Basten JA

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 20423/06

LOWER COURT JUDICIAL OFFICER:
Simpson J

LOWER COURT DATE OF DECISION:
4 April 2008

LOWER COURT MEDIUM NEUTRAL CITATION:
[Randwick City Council v Kurnell Passenger & Transport Service Pty Ltd] [2008] NSWSC 296

COUNSEL:
B Walker SC/T Clarke (Appellant)
L King SC/P Rickard (Respondent)
M G Sexton SC (Intervenor)

SOLICITORS:
Vardanega Roberts (Appellant)
Goldbergs Lawyers (Respondent)
I V Knight, Crown Solicitor's Office (Intervenor)

CATCHWORDS:
CONSTITUTIONAL LAW – judicial power – Chapter III of the Constitution – whether conferral of jurisdiction with respect to s 151Z(1)(d) indemnification proceedings invalid – limits on parties’ ability to assess non-party – effect on court’s ability to adjudicate matter – imbalance – institutional integrity – [Kable] principles
PROCEDURE – stays – whether appropriate to order – whether s 119 of the [Workplace Injury Management and Workers Compensation Act 1998] (NSW) provides vehicle for order – requirement under Pt 23 of Uniform Civil Procedure Rules 2005 (NSW) for party to submit to medical examination in certain circumstances – common law power to stay proceedings unless plaintiff submits to medical examination
STATUTORY INTERPRETATION – purposive interpretation – whether use of s 119 in s 151Z(1)(d) indemnity proceedings extraneous to statutory purpose of s 119 – whether capricious or unjust – legislative history of s 119 – interpretation of [Workers Compensation Act 1987] (NSW) and [Workplace Injury Management and Workers Compensation Act 1998] (NSW) together – [Workers Compensation Act 1987] (NSW), ss 2A(2), 4, 151Z(1)(d) – [Workplace Injury Management and Workers Compensation Act 1998] (NSW), ss 60, 119, Ch 4
STATUTORY INTERPRETATION – WorkCover Guidelines on Independent Medical Examinations and Reports (2006) – whether s 119(4) defines or controls operation of s 119(2) – whether Guidelines restrict operation of s 119 – whether Guidelines prevent use of s 119 in s 151Z(1)(d) proceedings
WORKERS COMPENSATION – indemnification proceedings – rights and liabilities created by s 151Z(1)(d) – extent of indemnity – preconditions to s 151Z(1)(d) – purpose of s 151Z – legislative history of s 151Z – [Workers Compensation Act 1987] (NSW), s 151Z(1)(d)
WORKERS’ COMPENSATION – indemnification proceedings – whether employer and putative tortfeasor can use s 119 of the [Workers Compensation Act 1987] (NSW) to obtain medical assessment of worker for purposes of s 151Z proceedings – purpose of ss 119 and 151Z – legislative history of s 119 – scope of s 119 – s 119 relates to claims for compensation – [Workers Compensation Act 1987] (NSW), s 151Z(1)(d), Ch 4 – [Workmen’s Compensation Act 1897] (UK), s 6, Sch 1(11) – [Workman’s Compensation Act 1906] (UK), s 6, Sch 1(14) – [Workman’s Compensation Act 1910] (NSW), s 17(2), Sch 2(9) – [Workers’ Compensation Act 1926] (NSW), ss 51(1), 64(b) – [Workplace Injury Management and Workers Compensation Act 1998] (NSW), s 119
WORDS & PHRASES – “under this section”

LEGISLATION CITED:
[Accident Compensation Act 1985] (Vic), s 138
Federal Rules of Civil Procedure 1938 (US), r 35
[Judiciary Act 1903] (Cth), s 78B
Uniform Civil Procedure Rules 2005 (NSW), rr 15.12, 23.1, 23.7, 23.9
[Workman’s Compensation Act 1910] (NSW), s 17, Sch 2
[Workers’ Compensation Act 1926] (NSW), ss 51, 64
[Workers Compensation Act 1987] (NSW), ss 2A, 129, 150, 151Z, Pt 3, Div 2
[Workmen's Compensation Act 1897] (UK), s 6. Sch 1
[Workmen’s Compensation Act 1906] (UK), s 6, Sch 1
[Workplace Injury Management and Worker’s Compensation Act 1998] (NSW), ss 4, 60, 61, 70, 119, 120, 125, 267, 274, 376, Ch 4, Ch 7, Pt 6

CATEGORY:
Principal judgment

CASES CITED:
[Allianz Australia Insurance Ltd v Newcastle Formwork Constructions Pty Ltd] [2007] NSWCA 144
[Attorney General v Arthur Ryan Automobiles Ltd] [1938] 2 KB 16 (CA)
[Bain v Frank G O'Brien Ltd] [1976] HCA 29; 135 CLR 158
[Baker v R] [2004] HCA 45; 223 CLR 513
[Baugh v Delta Water Fittings Ltd] [1971] 1 WLR 1295
[Dickson v Commissioner of Police] [1999] NSWSC 1100; 48 NSWLR 156
[Edmeades v Thames Board Mills Ltd] [1969] 2 QB 67
[Esso Australia Ltd v Victorian WorkCover Authority] [2000] VSCA 74; 1 VR 246
[Fardon v Attorney-General (Qld)] [2004] HCA 46; 223 CLR 575
[Fernando v Commissioner of Police] (1995) 36 NSWLR 567
[Forge v Australian Securities and Investments Commission] [2006] HCA 44; 228 CLR 45
[Frank G O'Brien Ltd v Bain] [1975] 1 NSWLR 373
[Franklins Self Service Pty Limited v Wyber] [1999] NSWCA 390; 48 NSWLR 249
[Fuller v K & J Trucks Coffs Harbour Pty Ltd] [2006] NSWCA 88; 67 NSWLR 516
[Goodwin v Phillips] [1908] HCA 55; 7 CLR 1
[Government Insurance Office (NSW) v C E McDonald (NSW) Pty Ltd] (1991) 25 NSWLR 492
[Grant v Royal Rehabilitation Centre Sydney] [1999] NSWCA 250; 47 NSWLR 263
[Gypsy Jokers Motorcycle Club Inc v Commissioner of Police] [2008] HCA 4; 234 CLR 532
[Harman v Home Department State Secretary] [1983] 1 AC 280
[Hearne v Street] [2008] HCA 36; 82 ALJR 1259
[Hickson v Goodman Fielder Limited] [2009] HCA 11
[Howard Rotavator Pty Ltd v Wilson] (1987) 8 NSWLR 498
[K-Generation Pty Ltd v Liquor Licensing Court] [2009] HCA 4; 252 ALR 471
[Kable v Director of Public Prosecutions (NSW)] [1996] HCA 24; 189 CLR 51
[Kavanagh v Sutherland Shire Council] [2000] NSWCC 57; (2000) 21 NSWCCR 1
[Kempsey District Hospital v Thackham] (1995) 36 NSWLR 492
[Kornjaca v Steel Mains Pty Ltd] [1974] 1 NSWLR 343
[Kwanchi Pty Ltd v Kocsis] (1996) 40 NSWLR 270
[Marks v Roads and Traffic Authority of New South Wales] [2004] NSWCA 43; Aust Torts Reports 81-732
[Nicholas v The Queen] [1998] HCA 9; 193 CLR 173
[QBE Workers Compensation (NSW) Limited v Dolan] [2004] NSWCA 458; 62 NSWLR 42
[Rooty Hill Medical Centre v Gunther] [2002] NSWCA 60
[Sibbach v Wilson & Co Inc] [1941] USSC 16; 312 US 1 (1941)
[South Eastern Sydney Area Health Service v Gadiry and Anor] [2002] NSWCA 161; 54 NSWLR 495
[Thompson & Son v North Eastern Marine Engineering Co Ltd] [1903] 1 KB 428
[Tickle Industries Pty Ltd v Hann & Richardson] [1974] HCA 5; 130 CLR 321
[Teuma & Anor v C P & P K Judd Pty Ltd] [2007] NSWCA 166
[Tooth & Co Ltd v Tillyer] [1956] HCA 49; 95 CLR 605
[Transfield Pty Limited v Mastrioanni] (1998) 20 NSWCCR 193 (CA)
[Turner v George Weston Foods Ltd] [2007] NSWCA 67; 4 DDCR 571
[Victorian WorkCover Authority v Esso Australia Ltd] [2001] HCA 53; 207 CLR 520
[Watson v Council of the City of Newcastle] [1962] HCA 6; 106 CLR 426
[Westpac Banking Corporation v Tomassian] (1993) 32 NSWLR 207

TEXTS CITED:

DECISION:
(1) Grant leave to appeal.[ ][ ](2) Direct the applicant to file its amended notice of appeal within seven days.[ ][ ](3) Dismiss the appeal.[ ][ ](4) Order the applicant to pay the respondent’s costs in this Court.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40192/08

SC 20423/06

GILES JA

McCOLL JA

BASTEN JA

20 February 2009

KURNELL PASSENGER & TRANSPORT SERVICE PTY LTD v RANDWICK CITY COUNCIL

Headnote

On 7 July 1994, a bus, which was owned by Kurnell Passenger & Transport Service Pty (“Kurnell Transport”), struck Mr Paul Castillo on his way to work. At that time, Mr Castillo was employed by Randwick City Council (“the Council”). He was entitled to workers’ compensation payments from the Council under the Workers Compensation Act 1987 (NSW) (“the 1987 Act”). In 2006, the Council brought proceedings against Kurnell Transport, seeking to be indemnified by it, pursuant to s 151Z(1)(d) of the 1987 Act.

Kurnell Transport wanted to undertake its own medical assessment of Mr Castillo’s injuries. It had no express power to do so, but argued that the Council had such a power, under s 119 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“the 1998 Act”). On a notice of motion filed on 25 October 2007, Kurnell Transport sought a stay of the indemnification proceedings until the Council exercised this statutory power. Simpson J in the Common Law Division dismissed the motion. Kurnell Transport sought leave to appeal in respect of this interlocutory judgment. The Court of Appeal granted leave.

The issues for determination on appeal were:

(i) whether s 119 provides a mechanism by which an employer can require a worker to submit to a medical examination by a putative tortfeasor’s medical practitioner, for the purpose of s 151Z(1)(d) proceedings;

(ii) whether the WorkCover Guidelines on Independent Medical Examinations and Reports (2006) restrict the operation of s 119;

(iii) if the putative tortfeasor cannot use s 119(2) in the manner proposed, whether the conferral of jurisdiction, with respect to s 151Z(1)(d) indemnification proceedings, on a court capable of exercising judicial power under Chapter III of the Constitution is invalid.

The majority held, dismissing the appeal:

In relation to (i)
(per Basten JA, Giles JA agreeing)

1. Read in context, and in their own terms, the various provisions within s 119 expressly relate to claims for compensation. A putative tortfeasor’s desire to have a worker medically examined in s 151Z proceedings for the purposes of establishing the limit of its indemnity is extraneous to the statutory purpose of s 119: [1], [101]–[103].

2. Section 119 does not permit an employer or putative tortfeasor to require an injured worker to undergo a medical examination for the purposes of s 151Z(1)(d) indemnification proceedings. The legislative scheme is coherent and neither capricious nor unjust. The trial judge’s conclusion was correct: [98], [116].

(per McColl JA dissenting)

3. A construction of s 119(2) which means the employer cannot use the provision to have a worker to whom it is paying compensation under the 1987 Act medically examined for the purpose of establishing the quantum of the fund against which it can exercise its s 151Z(1)(d) statutory indemnity would be capricious and unjust. It fails to have regard to the place s 119 takes in the scheme comprised by the 1987 Act and 1998 Act: [45], [51]–[52].

Goodwin v Phillips [1908] HCA 55; 7 CLR 1; Tickle Industries Pty Ltd v Hann [1974] HCA 4; 130 CLR 321; Frank G O’Brien Ltd v Bain [1975] 1 NSWLR 373, applied.

Hearne v Street [2008] HCA 36; 82 ALJR 1259; Harman v Home Department State Secretary [1983] 1 AC 280, referred to.

4. The legislature intended the s 119(2) power to form part of the bundle of rights and obligations which arose once the employer became liable to pay compensation for injuries for which the worker could not recover damages against the putative tortfeasor. These rights and obligations include the rights and liabilities created by s 151Z(1)(d). The language of s 119(2) is not so intractable as to exclude its use in s 151Z(1)(d) proceedings: [48]–[49], [53], [55].

5. The putative tortfeasor can avail itself of the employer’s right to require the worker to submit to medical examinations: [58].

Bain v Frank G O’Brien Ltd [1976] HCA 29; 135 CLR 158; Frank G O’Brien Ltd v Bain [1975] 1 NSWLR 373; Thompson & Son v North Eastern Marine Engineering Co Ltd [1903] 1 KB 428, applied.

Victorian WorkCover Authority v Esso Australia Ltd [2001] HCA 53; 207 CLR 520; Franklins Self Service Pty Limited v Wyber [1999] NSWCA 390; 48 NSWLR 249, considered.

In relation to (ii)
(per Basten JA, McColl JA agreeing)

6. Since s 119(4) refers to that which is done “under this section”, it controls the manner of operation in sub-s (2). The Guidelines cannot impose on s 119 a restriction to which it is not otherwise subject: [27], [104].

(per Giles JA dissenting)

7. Section 119(4) confines the scope of the employer’s power so that the employer cannot require the worker to submit himself or herself for medical examination “otherwise than in accordance with” the Guidelines: [3].

8. The Guidelines and s 119(4) are not consistent with referral to the tortfeasor’s medical practitioner for the purposes of indemnity proceedings: [4].

In relation to (iii)
(per Basten JA, Giles JA agreeing)

9. The legislative scheme did not operate in an unbalanced way because both sides were denied any entitlement to rely upon the powers conferred by s 119(2) in relation to indemnity proceedings: [1], [112].

10. Courts are required daily to assess matters on the basis of a paucity of evidence or material from one party. These limitations do not necessarily lead to imbalance and to the extent they do, the imbalance is by no means inherently prejudicial to one side: [1], [113].

11. The conferral of jurisdiction to bring indemnity proceedings, absent a power to compel the injured worker to undergo medical examinations at the behest of at least one of the parties, does not contravene the implied limitation on State legislative power: [1], [115].

Baker v The Queen [2004] HCA 45; 223 CLR 513; Fardon v Attorney-General (Qld) [2004] HCA 46; 223 CLR 575; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2008] HCA 4; 234 CLR 532; K-Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4; 252 ALR 471; Nicholas v The Queen [1998] HCA 9; 193 CLR 173, applied.

Kable v Director of Public Prosecutions (NSW) [1996] HCA 24; 189 CLR 51, distinguished.

Forge v Australian Securities and Investments Commission [2006] HCA 44; 228 CLR 45; Sibbach v Wilson & Co [1941] USSC 16; 312 US 1 (1941), referred to.

(per McColl JA)

12. If the trial judge’s interpretation of s 119 was correct, neither party to the s 151Z(1)(d) proceedings could use s 119(2), either directly or indirectly. That outcome would not offend the principle of institutional integrity: [70].

Baker v The Queen [2004] HCA 45; 223 CLR 513; K-Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4; 252 ALR 471, applied.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40192/08

SC 20423/06

GILES JA

McCOLL JA

BASTEN JA

20 February 2009

KURNELL PASSENGER & TRANSPORT SERVICE PTY LTD v RANDWICK CITY COUNCIL

Judgment

1 GILES JA: I agree with the orders proposed by Basten JA and, subject to what follows, with his Honour’s reasons.

2 His Honour deals at [104] with the significance of the Guidelines to the available use of the power under s 119(2).

3 Subsections 119(1) and (2) are not cast in the terms of a power in the employer; rather, they are cast in the terms of an obligation of the worker, inherent in which is a power in the employer. Section 119(4) then expresses a limitation on the employer’s power. In my opinion the subsections are to be read together to find the extent of the employer’s power, and I respectfully prefer the view that s 119(4) confines the scope of the employer’s power so that the employer can not require the worker to submit himself or herself for medical examination “otherwise than in accordance with” the Guidelines. The subsections deal within the one section with the topic of required submission to medical examination, the words “under this section” in s 119(4) seem to me to point to reading all the subsections together, and there is a degree of contrast with s 119(5); it is not provided that the regulations may make provision for or with respect to the prescribed submissions to medical examination.

4 The Guidelines include “the mandatory obligations (pursuant to s 119(4) of the 1998 Act) for employers/insurers when they require a worker to attend an independent medical examination”. Referral to an independent medical examination is only appropriate when information from the treating medical practitioner is inadequate, unavailable or inconsistent and where the referrer has been unable to resolve the issues relating to the problem directly with those practitioners. Referrals are only to be made when answers to one or more of certain questions cannot be obtained from the treating medical practitioners. These provisions, and the nature of the questions, are not consistent with referral to the tortfeasor’s medical practitioner for the purposes of the indemnity proceedings.

5 In my opinion, this stands against use of the power under s 119(2) in the manner for which Kurnell Transport contended. The conclusion is fortified that s 119 does not permit the employer to require examination by the tortfeasor’s medical practitioner for the purposes of the indemnity proceedings.

6 McCOLL JA: Section 151Z(1)(d) of the Workers Compensation Act 1987 (the “1987 Act”) permits an employer which is paying compensation to a worker under the 1987 Act, where the injury for which the compensation is payable was caused under circumstances creating a liability in some person other than the employer to pay damages in respect of the injury, to be indemnified by the person so liable to pay those damages (the “tortfeasor”). The extent of the indemnity is limited to the amount of those damages.

7 This application for leave to appeal raises the issue of the right of the tortfeasor against which an employer brings a s 151Z(1)(d) claim to have the worker medically examined in order to adduce evidence in those proceedings as to the quantum of damages it would have been liable to pay the worker, had the latter sued it. The tortfeasor sought to achieve that end by asking the employer to require the worker to attend those medical examinations in exercise of its power under s 119 of the Workplace Injury Management and Worker’s Compensation Act 1998 (the “1998 Act”). Simpson J held that s 119 did not entitle the employer to require the worker to be medically examined for the purpose of s 151Z(1)(d) proceedings and, consequently, could not avail the tortfeasor either: Randwick City Council v Kurnell Passenger & Transport Service Pty Ltd [2008] NSWSC 296.

8 The applicant seeks to challenge Simpson J’s decision. This is an important issue which, despite provisions conferring substantially the same rights and liabilities as s 151Z(1)(d) having been present in workers compensation legislation since the Workmen's Compensation Act 1897 (UK), has not hitherto been the subject of judicial consideration. It is appropriate in that light to grant leave to appeal.

9 In my view, for the following reasons, s 119(2) of the 1998 Act empowers the employer to require a worker in receipt of weekly compensation under the 1987 Act to attend medical examinations to obtain reports to be used in s 151Z(1)(d) proceedings. Further, the tortfeasor (a term I will use for convenience, while recognising that at the stage of the s 151Z(1)(d) inquiry the present issue addresses, that person’s liability in tort has not been established), as a potential indemnifier of the employer in respect of its liability to the worker, can call on the employer to require the worker to attend medical examinations arranged by the tortfeasor for the purpose of adducing evidence on the tortfeasor’s behalf in the s 151Z(1)(d) proceedings.

Statement of the case

10 Paul Castillo was seriously injured in July 1994 when struck by a bus owned by Kurnell Passenger & Transport Service Pty Ltd (“Kurnell Transport”), the applicant. At that time he was an employee of the respondent, Randwick City Council, and was on his way to his place of employment. On 23 May 1997 Judge Bishop, sitting in the Compensation Court of New South Wales, made an award of compensation in Mr Castillo’s favour.

11 Randwick Council has paid Mr Castillo substantial amounts, in excess of $3 million as at April 2008, in compliance with the award. It has a continuing liability to make weekly payments of compensation to him and also to make payments in relation to his medical and other expenses.

12 Mr Castillo has never brought legal proceedings against Kurnell Transport. On 25 October 2006 Randwick Council commenced proceedings in the Supreme Court of New South Wales against Kurnell Transport asserting the latter was liable pursuant to s 151Z(1)(d) of the 1987 Act to pay it the compensation paid to Mr Castillo.

13 Kurnell Transport filed a defence on 5 December 2006 putting in issue the question whether it, its servants or agents were guilty of negligence as alleged and alleging contributory negligence by Mr Castillo. It also put in issue the injuries and disabilities the Statement of Claim asserted Mr Castillo had suffered, as well as the question of his loss of earning capacity and need for continuing treatment.

14 On 13 March 2007 Messrs Vardanega Roberts, Kurnell Transport’s solicitors, wrote to Messrs Goldbergs, Randwick Council’s solicitors, advising that Kurnell Transport required Mr Castillo to be medically examined, informing the latter firm of the names and addresses of doctors with whom appointments had been made to that end, and asking Messrs Goldbergs to ensure Mr Castillo’s “prompt attendance”. On 23 March 2007 Goldbergs responded, advising that Mr Castillo’s solicitors had informed them “that their client is not obliged to attend such examinations and can not be compelled to do so.”

15 On 25 October 2007 Kurnell Transport filed a motion in the Supreme Court proceedings seeking orders that the proceedings be stayed generally, alternatively that Randwick Council have leave to arrange medical reports for Mr Castillo and that the proceedings be stayed until such time as Mr Castillo attended such medical examinations as Randwick Council reasonably arranged. Another order was sought which is not germane to the present proceedings.

16 Simpson J heard the motion. Kurnell Transport argued that Randwick Council could use its powers under s 119 of the 1998 Act to require Mr Castillo to submit himself to medical examination by practitioners nominated by Kurnell Transport and that in the event he refused to do so, Randwick Council could, pursuant to s 119(3), suspend his compensation payments. Randwick Council argued that it had no control over Mr Castillo and no mechanism to compel or enforce his attendance at the medical examinations. It contended that it would be unfair and unjust to deprive it of its claim against Kurnell Transport in such circumstances by acceding to the latter’s application for a stay.

17 Simpson J dismissed the motion with costs. Her Honour held:

“24 It seems reasonably plain to me that s 119 is a section the focus of which is upon the determination of a claim made by an injured worker against his or her employer. It is designed to facilitate the resolution of that claim. The legislators did not envisage its use for any extraneous purpose. The question for present determination is whether, notwithstanding that it was not intended to achieve that purpose, the powers thereby conferred upon an employer for that purpose, can be used for the purposes of a claim under s 151Z; and, further, whether refusal by an employer to use them for that purpose can result in the stay of that claim.

25 I am satisfied that s 119(2) is not available either to an employer or to an alleged third-party tortfeasor for the purpose of a claim under s 151Z. For an employer to require an injured worker’s attendance at medical examinations in order to prepare itself for such a claim would be to use the power conferred by s 119(2) for an extraneous and improper purpose. It follows that an employer cannot be manipulated into using that power for the purpose of facilitating the alleged third-party tortfeasor’s defence to that claim. That is because, as I have said, the power is conferred for a clear purpose – the resolution of a claim by an injured worker, and the continuing supervision and management of the award of compensation, and not otherwise.

26 Two other points might be made: the words at the end of the subsection – ‘provided and paid by the employer’ – cannot, by any reasonable approach to construction, be read as meaning ‘at the request of, or for the purposes of, a third party’. Senior counsel for Kurnell Transport recognised that a certain amount of contortion would be necessary to permit such a construction, but argued that the principle of statutory construction which holds that legislation is not to be interpreted in such a way as to create an unfairness permits a little tweaking of the language. I do not accept that proposition.

27 Sub-s (4) is of some significance. It makes it clear that limits are to be imposed upon the demands of medical examination made of injured workers. In a nutshell, they are not to be harassed, or subjected to arduous requirements of medical examination.

28 In this case, Mr Castillo has made his election, an election imposed upon him by s 151A; he has pursued his claim against Randwick Council, and succeeded; he has not pursued a claim he might have had against Kurnell Transport; he has no interest in assisting either of these parties in its fight against the other. Attendance at medical examinations for Kurnell Transport – and Kurnell Transport seeks four such examinations – would inevitably require further examinations on behalf of Randwick Council. Such a regime is potentially oppressive, and outside the statutory intent of sub-s (4).

29 I recognise that the effect of this decision is that Kurnell Transport will have to depend upon medical examinations and reports that were prepared and made available for the purposes of the Workers Compensation proceedings. Those proceedings took place in 1997, a decade ago. I understand that Kurnell Transport would like to have available to it updated reports. In this case, having regard to the gravity of Mr Castillo’s injuries, the denial to Kurnell Transport of updated medical information may not be of great moment. In a less serious case, the inability of an alleged third-party tortfeasor to conduct its own medical examination might be of considerably greater significance. But statutory construction does not depend upon the hardship of a particular case. And, in any event, given the conclusion I have reached about the availability of s 119(2) to neither party, for the purposes of the s 151Z proceedings, there is no inequity created: each party will be limited in its claim or defence to medical material that was available at the time of the Workers Compensation proceedings”. (emphasis added)

Legislative Framework

18 Section 2A(2) of the 1987 Act (also referred to in s 60(2) of the 1998 Act) directs that the 1987 Act is to be construed with, and as if it formed part of, the 1998 Act. In the event of an inconsistency between the 1987 and 1998 Acts, the latter Act prevails to the extent of the inconsistency: s 2A, 1987 Act. The 1987 and 1998 Acts are collectively referred to as the “Workers Compensation Acts”: s 4, 1998 Act. The 1987 and 1998 Acts are, accordingly, part of a single legislative scheme.
19 The 1987 Act provides, inter alia, for the circumstances in which an employer’s obligation to pay compensation to a worker arises: Pt 2. Once liability for those payments is established, Pt 3, Div 2 explains the benefits to which the worker is entitled, including weekly compensation by way of income support.

20 Part 5 of the 1987 Act deals with “Common Law Remedies”. Divisions 2 – 4 deal with common law remedies as between the worker and the employer. Division 5 (in which s 151Z appears) is headed “Miscellaneous Provisions”. Section 151Z(1) reads:

“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) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

(e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages,

(e1) if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment,

(f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission.”

21 Chapter 4 of the 1998 Act deals with “Workers Compensation”. At the outset it is explained that “[p]rovisions relating to a worker’s entitlement to compensation, the benefits payable, common law remedies and other matters are contained in the 1987 Act”: s 60(1). I have already referred to s 60(2) which reminds the reader that the 1987 Act is, by the operation of s 2A of that Act, to be construed as if it formed part of this Act. It is some, albeit perhaps slight, significance that s 60 appears in Ch 4 in which s 119 is also found.

22 Part 2 of Ch 4 deals with “Compensation – Claims and Proceedings”. Section 61 (Div 1) requires notice of injury to be given to the employer as soon as possible after the injury happened. Division 2 deals with the administration by insurers of claims for compensation or damages. “Claim” is defined in s 70 to mean both “a claim for compensation under [the 1998 Act] or any claim for damages to which a policy of insurance applies ...”.

23 Division 7, Pt 2, Ch 4 deals with “Medical examinations and disputes”. Section 119, which appears in that Division provides:

“119 Medical examination of workers at direction of employer
(cf former s 129)

(1) A worker who has given notice of an injury must, if so required by the employer, submit himself or herself for examination by a medical practitioner, provided and paid by the employer.

(2) A worker receiving weekly payments of compensation under this Act must, if so required by the employer, from time to time submit himself or herself for examination by a medical practitioner, provided and paid by the employer.

(3) If a worker refuses to submit himself or herself for any examination under this section or in any way obstructs the examination:

(a) the worker’s right to recover compensation under this Act with respect to the injury, or

(b) the worker’s right to the weekly payments,

is suspended until the examination has taken place.

(4) A worker must not be required to submit himself or herself for examination by a medical practitioner under this section otherwise than in accordance with the WorkCover Guidelines or at more frequent intervals than may be prescribed by the WorkCover Guidelines.

(5) The regulations may make provision for or with respect to requiring an employer or insurer to provide a worker, a worker’s legal representative or any other person, within the period required by the regulations, with a copy of any medical opinion or report furnished to the employer or insurer by a medical practitioner in connection with an examination of the worker pursuant to a requirement under this section.

(6) If an employer or insurer fails to provide a copy of an opinion or report as required by the regulations under subsection (5):

(a) the employer or insurer cannot use the opinion or report to dispute liability to pay or continue to pay compensation or to reduce the amount of compensation to be paid and cannot use the opinion or report for any other purpose prescribed by the regulations for the purposes of this section, and

(b) the opinion or report is not admissible in proceedings on such a dispute before the Commission, and

(c) the opinion or report may not be disclosed to an approved medical specialist or an Appeal Panel in connection with the assessment of a medical dispute under Part 7 of Chapter 7.”

24 Section 120, which also appears in Div 7 of the 1998 Act, also provides for the medical examination of a worker who claims compensation under the 1998 Act, or is in receipt of weekly payments of compensation under the Act, in this instance at the direction of the Workers Compensation Commission or the WorkCover Authority.

25 Section 4 of the 1998 Act defines “ ‘weekly payment’, in relation to compensation” to mean “a weekly payment of compensation under Division 2 of Part 3 of the 1987 Act in respect of a period of total or partial incapacity for work”. Thus despite the textual clumsiness in the reference in both s 119(2) and s 120 to “weekly payments of compensation under this Act”, it is apparent that the reference is to weekly compensation under the 1987 Act. The same conclusion can be reached by the application of s 2A of the 1987 Act. Thus while Pt 3 of the 1998 Act makes provision for weekly payments of compensation, provisionally within 7 days after notification of injury (s 267, s 274(2)) and within 21 days where liability is not disputed (s 274(1)(a)), it is apparent that the weekly compensation being paid is that referred to in the 1987 Act.
26 If a worker is required to submit himself or herself for examination pursuant to Div 7, the worker is entitled to recover from the worker’s employer, in addition to any compensation otherwise provided, the amount of any wages the worker lost by reason of attending the examination and, in substance, expenses incurred in so attending: s 125(1). Those fares can, in certain circumstances, include the costs incurred because of the need for an escort: s 125(3).

27 Section 376 of the 1998 Act permits the WorkCover Authority to issue guidelines with respect to, inter alia, matters for which a provision of the Workers Compensation Act provides may be the subject of WorkCover Guidelines: s 376(1)(c). On 25 October 2006 WorkCover issued guidelines entitled “WorkCover Guidelines on Independent Medical Examinations and Reports” said to be issued under s 119 and s 376. Kurnell Transport sought to gain some assistance from those Guidelines in the interpretation of s 119. I agree with Basten JA (at [104]) that the Guidelines cannot impose a restriction on s 119 to which it was not otherwise subject.

Section 151Z(1)
28 Section 151Z(1) addresses the situation of an injured worker entitled both to compensation under the 1987 Act from an employer and to damages at common law from a tortfeasor. It regulates first the worker’s rights against the employer and the tortfeasor and secondly, the ultimate burden for the worker’s compensation as between the employer and the tortfeasor.

29 In the first sphere of operation, s 151Z reflects the overriding intention of Parliament that a worker’s damages must be reduced so that a worker should not receive double compensation: Hickson v Goodman Fielder Limited [2009] HCA 11 (at [9]) per Bell J (Gummow, Hayne, Heydon and Kiefel JJ agreeing); see also Kempsey District Hospital v Thackham (1995) 36 NSWLR 492; Transfield Pty Limited v Mastrioanni (1998) 20 NSWCCR 193 (CA); Franklins Self Service Pty Limited v Wyber [1999] NSWCA 390; (1999) 48 NSWLR 249 per Mason P (Sheller JA and Cole AJA agreeing); Rooty Hill Medical Centre v Gunther [2002] NSWCA 60 (at [15]) per Handley JA (Mason P and Hodgson JA agreeing); Turner v George Weston Foods Ltd [2007] NSWCA 67; (2007) 4 DDCR 571 (at [37]) per Campbell JA (with whom Beazley and Hodgson JJA agreed).

30 In the second sphere of operation, the policy of s 151Z is to ensure that:

“[A]n employer who paid the statutory compensation to an injured employee or, in the case of his death, to his dependants, where the injury or death, though occurring in the course of employment, was caused by the wrongful act or omission of another person was to be entitled to be indemnified against the payment of that compensation by that other person.”

Tickle Industries Pty Ltd v Hann & Richardson [1974] HCA 5; (1974) 130 CLR 321 (at 326) per Barwick CJ (McTiernan J agreeing); referred to with approval in Victorian WorkCover Authority v Esso Australia Ltd [2001] HCA 53; (2001) 207 CLR 520 (at [13]) per Gleeson CJ, Gummow, Hayne and Callinan JJ.

31 To that end, s 151Z creates a “detailed legislative scheme designed to reimburse the party liable to pay compensation out of the fund provided by the party liable to pay damages” but it applies only where the “circumstances creating” liability for the compensable injury also create a liability in the tortfeasor to pay damages: Franklins Self Serve Pty Ltd v Wyber (at [52], [53], [99]).

32 The right which is given to the employer who has paid compensation rests on the existence for however brief a time of a true liability to pay damages to some person or persons in respect of the injury for which compensation was payable and has been paid and, in that sense, has been described as “derivative”: Tooth & Co Ltd v Tillyer [1956] HCA 49; (1956) 95 CLR 605 (at 612) per Dixon CJ, Williams, Webb and Fullagar JJ; QBE Workers Compensation (NSW) Limited v Dolan [2004] NSWCA 458; (2004) 62 NSWLR 42 (at [43]) per Beazley JA (Mason P and Tobias JA agreeing).

33 However, as Winneke P, said in Esso Australia Ltd v Victorian WorkCover Authority [2000] VSCA 74; (2000) 1 VR 246 (at [28]) speaking of s 138 of the Accident Compensation Act 1985 (Vic), which for relevant purposes is in substantially the same terms as s 151Z(1)(d), in a passage approved in the joint judgment in the High Court (Victorian WorkCover Authority (at [14], footnote added):

“...the statutory right of indemnity conferred by the [Compensation] Act upon the person who has paid the compensation is not to be equated to the cause of action which the worker would, but for the [Compensation] Act, have had against the person liable to pay damages to him. This is so notwithstanding the fact that it is an ingredient of the statutory right, sought to be enforced, that the person from whom the indemnity is sought was liable to pay damages to the worker. The claim to enforce the entitlement to indemnity is not a claim in tort. It is a cause of action created by statute for an indemnity against a person liable to pay damages to another: Tuckwood v Rotherham Corp [1921] 1 KB 526 at 540 per Atkin LJ.” (emphasis added)

34 Thus, as was explained in Westpac Banking Corporation v Tomassian (1993) 32 NSWLR 207 (at 215-216) per Mahoney JA (Kirby A-CJ agreeing); (at 220) per Meagher JA, the employer’s right to pursue the statutory indemnity is not, in form or substance, a claim for damages. Section 151Z(1)(d) passes the employer’s liability for compensation payments to the tortfeasor, not any liability for the damages.

35 The liability of the tortfeasor to indemnify the employer also arises under the statute and is limited to the damages for which the former would, if sued, have been liable to the worker: see generally Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498 (at 500) per Hope JA, speaking of s 64(1)(b) of the Workers’ Compensation Act 1926 (the “1926 Act”) (the precursor of s 151Z(1)(d)); Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 (at 276) per Clarke JA (Priestley and Handley JJA agreeing).

36 The joint judgment in Victorian Workcover Authority (at [15] – [16]) explained that although “the use in the Compensation Act of the term ‘indemnity’ invoked an institution of the general law ... the obligation imposed by contract or by the relation of the parties to save and keep harmless from loss ... the statute created incidents of the obligation which differed from those found in the general law”. Thus, the joint judgment explained (at [16]) (footnotes omitted):

“At common law, the party asserting a legal right to indemnity has first to discharge the liability the subject of the indemnity and, having done so, may recover from the indemnifier under the common indebitatus count for money paid by the plaintiff for the defendant at the defendant's request. It is here that the statutory entitlement to indemnity necessarily departs from the requirement of the common money count that the payments made by the plaintiff have exonerated the defendant from liability. This is because the statutory obligation, in respect of which the entitlement to indemnity is conferred by the section, may be a continuing one to pay compensation to the worker. That continuing obligation may not have been spent at the time action is brought on the entitlement to indemnity. (emphasis added)”

37 Consistently with that passage, and subject to the limitation created by the determination of the damages the tortfeasor would have been liable to pay the worker, it is accepted that a new cause of action accrues each time the employer makes a payment of compensation: Attorney General v Arthur Ryan Automobiles Ltd [1938] 2 KB 16 (CA); Marks v Roads and Traffic Authority of New South Wales [2004] NSWCA 43; (2004) Aust Torts Reports ¶81-732 (at [3]) per Handley JA (Stein AJA agreeing); South Eastern Sydney Area Health Service v Gadiry and Anor [2002] NSWCA 161; (2002) 54 NSWLR 495 (at [16], [48]) per Stein JA (Giles JA and Pearlman AJA agreeing); see also Victorian WorkCover Authority v Esso Australia Ltd (at [18]) per Gleeson CJ, Gummow, Hayne and Callinan JJ.

38 Thus, if the amount claimed by way of indemnity is less than the amount of damages so determined, the employer or insurer making continuing payments of compensation can further claim under the indemnity at a later point in time up to the limit of the sum determined as the amount of damages which the injured worker would have recovered at common law: Grant v Royal Rehabilitation Centre Sydney [1999] NSWCA 250; (1999) 47 NSWLR 263 (at [8]) per Cole A-JA, (Mason P, Sheller JA agreeing); see also Teuma & Anor v C P & P K Judd Pty Ltd [2007] NSWCA 166 (at [102]) per Basten JA (Hodgson JA agreeing).

What is in issue in s 151Z(1)(d) proceedings?

39 Determining the compensation the employer can recover from the tortfeasor pursuant to s 151Z(1)(d) involves a “trial within a trial”: Hickson (at [44]). The employer must establish five separate constituent elements: (a) that a worker was injured; (b) that the injury was one for which compensation is payable under the 1987 Act; (c) that it was caused under circumstances creating legal liability in the tortfeasor; (d) that the worker has recovered compensation under the 1987 Act for that injury from the employer; (e) that the employer has paid the compensation so recovered: Frank G O'Brien Ltd v Bain [1975] 1 NSWLR 373 (at 381) per Glass JA (with whom Reynolds and Hutley JJA agreed); see also Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343 (at 347) per Glass JA; Kempsey District Hospital v Thackham (at 507) per Handley JA; Fuller v K & J Trucks Coffs Harbour Pty Ltd [2006] NSWCA 88; (2006) 67 NSWLR 516 (at [10]) per Bryson JA (Handley JA agreeing).

40 As to the damages element, the employer must establish the amount of damages properly assessable in respect of the injury caused to the worker by the tortfeasor: Tickle Industries Pty Ltd (at 334). That involves a determination of all of the constituent elements in such a damages claim including general damages, and all forms of economic loss including loss of past and future income earning capacity: Grant (at [9] – [10]); Turner v George Weston Foods Ltd (at [20]) per Campbell JA (Beazley and Hodgson JJA agreeing).

41 At common law, damages are assessed once and for all: Franklins Self Serve (at [45]). Accordingly, there is only one determination of the quantum of common law damages the worker would have recovered, which binds the employer paying compensation to the worker, and the tortfeasor: Grant (at [9]). That figure establishes the “fund” to which the employer can have recourse to recoup compensation paid to the worker. As I have explained, if the fund is not exhausted in the first s 151Z(1)(d) suit, the employer can bring further proceedings to recoup subsequently paid compensation in respect of the cause of action which arises every time a compensation payment is made.
42 Because the s 151Z(1)(d) proceedings are not a claim for damages, court rules such as Uniform Civil Procedure Rules 2005, r 15.12, which makes specific provision for particulars in a claim for damages “in respect of personal injuries arising from any event”, do not apply. Nevertheless the employer is obliged to give particulars enabling the tortfeasor to know the case it has to meet in relation to, amongst other things, the damages the worker would have obtained in proceedings against the tortfeasor: Allianz Australia Insurance Ltd v Newcastle Formwork Constructions Pty Ltd [2007] NSWCA 144 (at [21] - [25]) per Giles JA (Mason P and Santow JA agreeing).

The ambit of s 119

43 The primary judge dismissed the motion primarily because she concluded that the employer could not compel the worker to submit to medical examinations for the purpose of the s 151Z(1)(d) proceedings and, it followed, that the appellant was not at any disadvantage in the proceedings such as may attract the discretionary remedy of a stay. It is necessary to determine whether her Honour’s primary conclusion was correct.

44 The worker’s absence of an interest in assisting either party in the s 151Z(1)(d) proceedings was one of the matters which the primary judge took into consideration (at [28]). However, as Mason P observed with customary acuity, the “legal system ... virtually guarantees that the separate interests of victims, employers, tortfeasors and insurers are not individually represented at each stage of litigation flowing from a work injury” (emphasis in original): Franklins Self Serve (at [49]). The particular tension which emerges in this case is that the worker, whose attendance at medical examinations is sought, is not a party to the s 151Z(1)(d) proceedings and may be perceived to have no immediate interest in their outcome. I say no “immediate interest” because it is conceivable that amounts the tortfeasor pays the employer after successful s 151Z(1)(d) proceedings can be brought to bear in proceedings by a worker against the tortfeasor: s 151Z(1)(e) and (e1). It is unnecessary to elaborate on this prospect.
45 While for present purposes the worker may have no immediate interest in the s 151Z(1)(d) proceedings, the worker’s conduct (in the sense of the circumstances which may give rise to the tortfeasor’s liability), injuries and disabilities (for quantifying the damages) are the focus of the “notional” trial those proceedings entail. The worker can be subpoenaed to give evidence on the liability issue in the proceedings. But the worker cannot be examined by medical practitioners in court. Is it a sensible construction of s 119, in the context in which it appears in the legislative scheme, to conclude that the employer has no power to compel the worker to submit to medical examinations to enable the determination of the damages “properly assessable” (Tickle Industries Pty Ltd (at 334)) in respect of the injury the tortfeasor caused to the worker? In my view it is not.

46 The Workers Compensation Acts should be construed in a “manner ... most calculated to reflect the presumed intention of the legislators and to serve their interest in producing a practical working code”: Frank G O'Brien (at 384) per Glass JA. Unless the statutory language is intractable, a court should not attribute to the legislature an intention to produce by its legislation an unjust or capricious result: Tickle Industries Pty Ltd v Hann & Richardson (at 331) per Barwick CJ (McTiernan J agreeing).

47 The Workers Compensation Acts address the same question of the financial consequences of an injury which has been the subject of a successful claim for workers compensation. I have already drawn attention to the inter-relationship between the provisions in the two Acts which emerges from the direction in s 2A of the 1987 Act, repeated at the commencement of Ch 4 (in which s 119 appears) to construe the 1987 Act as if it formed part of the 1998 Act. The effect of that direction is that “so far as possible the Acts are to be read together and as forming one document”: Goodwin v Phillips [1908] HCA 55; (1908) 7 CLR 1 (at 7) per Griffith CJ. So construed, the connection between the statutory indemnity created by s 151Z(1)(d), which depends on the payment of compensation under the 1987 Act, and the mechanism s 119 creates for medical examination of the worker receiving weekly compensation can readily be discerned.

48 Section 119 is the only provision of the Workers Compensation Acts which permits the employer to have the worker medically examined. Sub-section (1) deals with the position after notice of injury has been given and before an award is made. Sub-section (2) deals with the employer’s ability to have the worker medically examined once an obligation to pay the worker weekly payments of compensation has arisen. Once the latter obligation commences, so too does the employer’s cause of action under s151Z(1)(d) against the tortfeasor. The rights and liabilities created by s 151Z(1)(d) have their fons et origo in the employer’s statutory obligation to pay compensation to the worker. To take the analogy with the concept of indemnity a step further, s 151Z(1)(d) in substance, works as a form of statutory subrogation. The employer stands in the worker’s shoes to recover the compensation the employer has paid to the worker, by establishing the cause of action, if any, the worker had against the tortfeasor. If the worker had sued the tortfeasor successfully, the worker would have been liable to repay from the damages awarded the compensation: s 151Z(1)(b).

49 Section 119(2) does not refer expressly to s 151Z proceedings. But nor does it expressly proscribe the employer from requiring the worker to submit to medical examinations for the purpose of those proceedings. The precondition for its operation is that the worker is receiving weekly payments of compensation. That condition is satisfied in this case.

50 The primary judge concluded (at [24]) that s 119 was “designed to facilitate the resolution of [the worker’s] claim [for compensation]” and that “[t]he legislators did not envisage its use for any extraneous purpose”. Notwithstanding her conclusion (at [25]) that s 119(2) was not available to assist an employer in a s 151Z claim because to employ it to that end would be to use the power “for an extraneous and improper purpose”, her Honour was of the view (at [29]) that the employer could use in its s 151Z proceedings the medical examinations and reports obtained for the purposes of the workers compensation proceedings. Her Honour no doubt contemplated that in this case, there having been Compensation Court proceedings, the reports would have been obtained under court rules for medical examinations.

51 But not all cases would be of that nature. It is conceivable that an employer might accept its liability to pay compensation to the worker under the 1987 Act from medical reports obtained pursuant to s 119(1). The employer may also have monitored the worker’s medical condition, from time to time, by obtaining s 119(2) reports. The logical consequence of the primary judge’s conclusion that s 119 could not be used to obtain reports for use in s 151Z proceedings because that would involve using it for an extraneous and improper purpose, appears to be that the employer could not use any reports obtained pursuant to either s 119(1) or s 119(2) for the purpose of determining the worker’s compensation entitlements in the s 151Z proceedings. This may be either because to use them thus would engage the extraneous and improper purpose the primary judge identified or, where the reports were obtained for Commission proceedings, would breach the implied undertaking not to use documents obtained by compulsory court process for a purpose other than use in the proceedings for which they were obtained: Harman v Home Department State Secretary [1983] 1 AC 280; Hearne v Street [2008] HCA 36; (2008) 82 ALJR 1259. The s 151Z(1)(d) proceedings would, on that interpretation, be entirely frustrated.

52 A construction of s 119(2) which means the employer cannot use that provision to have a worker to whom it is paying compensation under the 1987 Act medically examined for the purpose of establishing the quantum of the fund against which it can exercise its s 151Z(1)(d) statutory indemnity would, in my view, be “capricious” and “unjust”. It fails to have regard to the place s 119 takes in the scheme comprised by the Workers Compensation Acts.
53 I would not attribute to the legislature an intention to create a scheme requiring the employer to prove the damages the worker was entitled to recover from the tortfeasor without also equipping the employer with an ability to prove what those damages were at the time of trial. In my view, the legislature intended the s 119(2) power to form part of the bundle of rights and obligations which arose once the employer became liable to pay compensation for injuries for which the worker could recover damages against the tortfeasor. The language of s 119(2) is not so intractable as to exclude that outcome. It should be adopted to avoid the unjust alternative.

54 The conclusion that the worker can be required to submit to medical examination for the purpose of the s 151Z(1)(d) proceedings does not, in my view, subject the worker to harassment or arduous examinations: primary judgment (at [27]). He or she is already subject to a continuing obligation to be medically examined: ss 119(2), 120. The power could not be used unreasonably. The worker’s costs of attending have to be reimbursed.
55 Reading s 119(2) to enable an employer to require the worker to submit to medical examination for the s 151Z proceedings gives that provision a meaning consistent with the purpose manifested by the creation of the s 151Z scheme. The primary judge, with respect, erred in reaching the opposite conclusion.

56 This conclusion leads to the question of what, if any, relief is available to the appellant.

57 It is curious that the legislature has not created an express power in the tortfeasor to require the worker to submit him or herself for medical examination for the purposes of defending the s 151Z proceedings. It seems to be a casus omissus (a matter which should have been, but has not been, provided for in a statute or in statutory rules).

58 However that does not mean the tortfeasor is without remedy. In my view the tortfeasor can, as the appellant has here, avail itself of the employer’s right to require the worker to submit to medical examinations.

59 Such an approach was recognised in Thompson & Son v North Eastern Marine Engineering Co Ltd [1903] 1 KB 428. Thompson considered the question whether an employer could claim indemnity from a tortfeasor pursuant to s 6 of the Workmen's Compensation Act 1897 (UK) (the “1897 Act”) (in substance, the precursor of s 151Z(1)(d)) (see Hickson (at [16])) where compensation had been paid pursuant to an agreement between the injured worker and the employer rather than a court order. Kennedy J held that the employer could seek indemnity in those circumstances, but (at 437) that it was open to the tortfeasor to put in issue in the s 6 proceedings, inter alia, the quantum of the compensation and whether it was “an amount which it was reasonable for the employer to agree to pay, having regard to the nature of the injury and the condition and circumstances of the workman”. He added (at 437):

“One other consideration, to which the defendants' counsel has called my attention, has to be noticed. Happily, in some cases the workman recovers from the accident, and the Act in contemplation of that provides for a right of review of the amount of compensation; but while giving to the person entitled to the indemnity the right of having the man examined, it has not, so far as I can see, given to the person liable to pay the indemnity - except only in the case of insurers - the right to have the amount payable for compensation reviewed. It has been contended, therefore, that such a person might be liable on his indemnity, even after the workman was quite well, if the employer chose to go on paying him compensation under his agreement. The answer, I think, is that, according to the general law of indemnity, the person indemnifying could in such a case compel the employer to let him use his name in any proceedings to enforce a review.” (emphasis added)

60 At the time Thompson was decided, Schedule 1(11) of the 1897 Act provided:

“Any workman receiving weekly payments under this Act shall, if so required by the employer, or by any person by whom the employer is entitled under this Act to be indemnified, from time to time submit himself for examination by a duly qualified medical practitioner provided and paid for by the employer, or such other person...” (emphasis added)

If the worker refused to submit to medical examination the right to weekly payments was suspended until the examination took place.

61 The 1897 Act was repealed by the Workmen’s Compensation Act 1906 (UK) (the “1906 Act”). Section 6(2) of the 1906 Act conferred substantially the same right of indemnity in respect of compensation being paid to a worker as between employer and tortfeasor as had s 6 of the 1897 Act (Hickson (at [17])). However the phrase emphasised in Schedule 1(11) of the 1897 Act above no longer appeared in Schedule 1(14), the comparable provision of the 1906 scheme. The reason for its demise is not readily apparent from Hansard or contemporary texts.

62 It seems Kennedy J took the view that Schedule 1(11) did not operate in favour of the tortfeasor until the latter’s liability to the worker had been established. If that is not the correct understanding his conclusion is curious. However for present purposes the significance of his Honour’s remarks lies in his acceptance that, independently of a statutory power conferring a right on the tortfeasor to have the worker medically examined, remedies available to guarantors could be invoked to achieve that end.

63 In Frank G O'Brien, Hutley JA (with whom Reynolds JA agreed) referred with approval to Kennedy J’s statement in Thompson (at 437). Frank G O'Brien concerned, in part, the question whether in proceedings pursuant to s 64(1)(b) of the 1926 Act, where the employer was paying compensation to the worker pursuant to an award of compensation, the employer had to prove its liability to pay compensation independently of that award. The Court unanimously held it did not.
64 Glass JA held (at 384) that tender of the award was one way of proving “that compensation is payable, and proof that compensation has been paid pursuant to it is sufficient to satisfy the s. 64 (1) (b), without proof that it was properly payable.” On that basis the question of fact which the trial judge had decided, “viz. that the worker was not incapacitated during the period in question, was irrelevant to the issues before him.”

65 Glass JA distinguished the situation where there was an award from that where there had been no proceedings before the Commission, saying:

“If there have been no proceedings in the Commission, the employer will, of course, have to prove independently those facts from which a conclusion of liability to pay compensation flows. The tortfeasor will be able to put in issue both the question of initial liability and the quantum of compensation paid under the agreement between worker and employer: Thompson & Sons v. North Eastern Marine Engineering Co. Ltd. ([1903] 1 K.B. 428, at p. 437.).” (emphasis added)

66 Hutley JA (with whom Reynolds JA also agreed) (at 377) remarked “the indemnifier is not so bereft of rights as his counsel suggested to the Court” saying the point had been dealt with by Kennedy J in Thompson in the passage I have quoted. He added (at 377 – 378):

“The respondent [indemnifier] could, therefore, have himself taken proceedings in the name of the [employer] to terminate the appellant's [employer’s] liability to pay workers' compensation to [the worker] once he had accepted liability to indemnify. He was also entitled at any time to take proceedings to obtain a declaration as to his liability or non-liability to indemnify. In other words, it lay in his power to clarify his own position and to set about terminating the [employer’s] liability to [the worker] to pay workers' compensation.” (emphasis added)

67 Bain appealed to the High Court which, by majority (Barwick CJ, Stephen, Mason and Jacobs JJ; Gibbs J dissenting) dismissed the appeal: Bain v Frank G O'Brien Ltd [1976] HCA 29; (1976) 135 CLR 158. Barwick CJ who delivered the lead judgment, said (at 164 – 165), in dicta:

“Some play has been made in the argument of the case of the position of the tortfeasor. He, upon the hypothesis of s 64(1)(b), is the author of the liability to which the employer becomes subject under the Act. ... Having caused the employer to come under such a liability, the Act places the tortfeasor in the position of one who indemnifies. He must be taken from the time of inflicting the injury to know of his liability. He is well able, in my opinion, to protect himself by suitable action as a person in a comparable position to a guarantor. I would agree with the conclusion expressed by Kennedy J in Thompson & Sons v North Eastern Marine Engineering Co Ltd [1903] 1 KB 428 at 437. But, in any case, the Act has made the tortfeasor liable for all that is ordered to be paid by the employer. The obligations of s 64(1)(b) cannot be reduced by any arguments as to inconveniences or disadvantage suffered by the tortfeasor.” (emphasis added)

68 These cases endorse the course the appellant has sought to take in these proceedings, of compelling the employer to use its s 119(2) power to require the worker to submit to examinations by the medical practitioners it has nominated.
69 Permitting the tortfeasor, absent express statutory provision, to have recourse to the employer’s rights by analogy with rights available to guarantors is not a novel approach. The joint judgment in Victorian WorkCover Authority (at [17]) touched upon the possibility of adapting quia timet relief to the statutory indemnity regime. And in Franklins Self Serve, Mason P undertook a detailed examination of cases where s 151Z did not address every respect in which the worker might receive damages in a manner which would offend the common law rule against double compensation. That examination revealed that absent legislative means to avoid offending that rule, the Court would consider “common law and equitable principles designed to achieve the same goal”: Franklins Self Serve (at [50]).

Constitutional issue

70 Having regard to the conclusion I have reached, the constitutional issue does not arise. As to this issue, I would merely observe that if I am wrong in my interpretation of s 119, I would be of the view that the primary judge’s construction of that provision did not lead to a conclusion that s 151Z(1)(d) was invalid. The High Court unanimously concluded in K-Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4; (2009) 252 ALR 471 that a legislative provision which enabled a court to consider evidence to which one party could have no access did not operate to deny to that Court the constitutional character of an independent and impartial tribunal and was not unconstitutional. The primary judge’s construction meant neither party to the s 151Z(1)(d) proceedings could use s 119(2), either directly or indirectly. In my view, and applying the reasoning in K-Generation, that outcome would not offend the principle of institutional integrity which underlies the principle the appellant sought, albeit somewhat faintly, to invoke: see Baker v R [2004] HCA 45; (2004) 223 CLR 513 (at [5]) per Gleeson CJ.

Law reform
71 It seems extraordinary that the issue which arises in this case has not been expressly addressed by legislation, nor been the subject of any previous consideration, apart from the dicta to which I have referred. It is clearly highly desirable that the legislature make specific provision to afford the tortfeasor a direct right to require the worker to submit to medical examinations for the purpose of the s 151Z(1)(d) proceedings.

72 It would be hoped that this recommendation for law reform is heeded. It would also be appropriate to attend to Giles JA’s recommendation in Allianz Australia (at [30]) that “[c]onsideration should be given to rules which prescribe particulars and documents in relation to damages in claims for indemnity under s 151Z(1)(d), in similar manner to r 15.12 but with such modification as is thought appropriate because the plaintiff is not the worker and may require the worker’s co-operation”, a recommendation which appears to have escaped the attention of those who drafted the Uniform Civil Procedure Rules.

Orders

73 The respondent did not submit there were any discretionary reasons why the Court would not grant a stay in the event the appellant succeeded in its substantive argument.

74 Accordingly, I propose the following orders:

(1) Grant leave to appeal.

(2) Notice of appeal to be filed within seven (7) days.

(3) Appeal allowed.

(4) That the proceedings be stayed until such time as the worker attends upon such medical examinations as the appellant reasonably arranges.

(5) Respondent to pay the appellant’s cost.

75 BASTEN JA: In July 1994 Mr Paul Castillo, then an employee with the respondent Council, was struck by a bus owned by Kurnell Passenger & Transport Service Pty Ltd (“Kurnell Transport”). Because Mr Castillo was on his way to work at the time of the accident, subject to a dispute resolved in the Compensation Court in May 1997, he was entitled to payment of compensation under the Workers Compensation Act 1987 (NSW) (“the 1987 Act”). An award made by the Compensation Court provided for various payments under the 1987 Act, including a weekly payment based on an assessment of total incapacity.

76 Mr Castillo did not bring proceedings for damages against Kurnell Transport, but in 2006 the Council brought proceedings against it seeking to be indemnified by Kurnell Transport, as a person liable to pay damages to Mr Castillo, with respect to the compensation payments made by the Council to Mr Castillo. The entitlement to be indemnified arose pursuant to s 151Z(1)(d) of the 1987 Act. The present proceedings, which come to this Court by way of application for leave to appeal in respect of an interlocutory judgment, relate to an attempt by Kurnell Transport to undertake its own medical assessment of the injuries suffered by Mr Castillo. The question is whether there is a mechanism available under the workers’ compensation legislation which allows for such an assessment to be undertaken.

77 Kurnell Transport recognised that there is no express power available upon which it can rely in order to obtain an order that Mr Castillo undergo medical assessment by practitioners nominated by it. Rather, it says that such a power is available to the Council, as his former employer, and that the Council’s proceedings for indemnity should be stayed until the Council exercises its statutory powers to obtain medical examinations of Mr Castillo by doctors nominated by Kurnell Transport.

78 The application for a stay came before Simpson J in the Common Law Division on a notice of motion filed by Kurnell Transport on 25 October 2007. Her Honour dismissed the motion: Randwick City Council v Kurnell Passenger & Transport Service Pty Ltd [2008] NSWSC 296. The application for leave to appeal was heard by this Court concurrently with the proposed appeal.

Leave application
79 Where a plaintiff sues for damages for personal injuries, it is usual for the defendant to require that the plaintiff be examined by its medical practitioners. Rules of court now provide that where the physical or mental condition of a party is relevant to a matter in issue, another party may seek to have the first party examined by its medical practitioners and, where the first party fails to comply with such a reasonable request, the court may dismiss the proceedings: Uniform Civil Procedure Rules 2005 (NSW) (“the UCPR”), Pt 23, rr 23.1 and 23.9. Before such rules were promulgated, the court had no power to order anyone to submit to a medical examination, but could direct that an action be stayed unless the plaintiff submitted to examination by doctors nominated by the defendant: see Baugh v Delta Water Fittings Ltd [1971] 1 WLR 1295; Edmeades v Thames Board Mills Ltd [1969] 2 QB 67 at 71 (Lord Denning MR). The court retains such a power.

80 Court rules do not, however, extend to examinations of persons who are not party to proceedings, with one exception, being a person for whose benefit a claim is made under the Compensation to Relatives Act 1897 (NSW); UCPR, r 23.1(1)(b)(ii). No express power is conferred on a party (or the court) to require a person not a party to proceedings to undergo a medical examination. Nor is the indirect mechanism of ordering a stay available against a plaintiff, unless the plaintiff has some means to require the worker to undergo examination for the benefit of the defendant in the proceedings brought by it.

81 In the present case, the defendant in the indemnification proceedings, Kurnell Transport, contends that the power given to an employer to have a worker in receipt of weekly compensation payments examined by a medical practitioner from time to time provides a vehicle for such an order: see Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“the 1998 Act”), s 119.

82 Whether s 119 can be invoked in this way is a matter of general importance with respect to the administration of workers’ compensation legislation. It is a point on which the parties assured the Court there was no case-law.

83 Because the right of indemnification has been available against a third party tortfeasor since the first Workman’s Compensation Act 1906 (UK) (“the 1906 UK Act”), s 6(2), it might be thought surprising that the issue has not arisen previously. The issue being of significance, it is a matter appropriate for a grant of leave to appeal from the interlocutory judgment of Simpson J. Although the applicant’s argument should not succeed, its significance is in part reflected in the applicant’s contention that the conferral on a court capable of exercising jurisdiction under Chapter III of the Constitution of a power to determine the extent of the right of indemnification absent such a procedure renders the conferral of power invalid.

84 Although the constitutional point was not raised before the primary judge, no objection was taken as to its consideration by this Court. Notices were served under s 78B of the Judiciary Act 1903 (Cth), but no Attorney-General, other than the Attorney-General for NSW sought to intervene.

Statutory framework
85 It is not necessary to refer to the sections of the legislation which provide for an employer to make payments of compensation to an injured employee: it is sufficient to note that an entitlement to weekly compensation for incapacity arises under Pt 3, Div 2 of the 1987 Act. On the other hand, it is convenient to set out the relevant terms of s 151Z(1), paragraph (d) of which creates the entitlement to indemnification in the person who has paid compensation.

“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:

...

(d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

(e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages,

...

(f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission.”

86 As noted above, a provision in substantially similar terms to s 151Z(1)(d) has existed in workers’ compensation legislation since it appeared in s 6 of the 1906 UK Act. In this State, predecessors to the current provision appeared in the Workman’s Compensation Act 1910 (NSW) (“the 1910 Act”), s 17(2), the Workers’ Compensation Act 1926 (NSW) (“the 1926 Act”), s 64(b) and the 1987 Act, as enacted, s 150(1)(d). In relation to proceedings under the 1926 Act, s 64, McTiernan J noted in Watson v Council of the City of Newcastle [1962] HCA 6; 106 CLR 426 at 432-433:

“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.
...

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. ... It would be repugnant to the section to give it an interpretation resulting in the tortfeasor having to bear a financial burden outside his liability for damages arising independently of the Act.”

87 Nor is it in doubt that reference to a person “liable to pay ... damages” is to a “liability arising out of circumstances giving a cause of action”, and not a judgment debt: Watson at 445 (Windeyer J). The liability must exist at the time of the act or omission causing a compensable injury, regardless of whether the injured worker had taken proceedings against the putative tortfeasor, or had settled those proceedings, or had failed to take proceedings and allowed any statutory limitation period to expire: see Tickle Industries Pty Ltd v Hann [1974] HCA 4; 130 CLR 321, 330-331 (Barwick CJ, McTiernan J agreeing); Government Insurance Office (NSW) v C E McDonald (NSW) Pty Ltd (1991) 25 NSWLR 492 at 493 (Priestley JA) and 496-497 (Handley JA, Hope AJA agreeing).

88 This Court has said on more than one occasion that the right conferred on the employer (or its workers’ compensation insurer), under s 151Z(1)(d) “is a statutory right to indemnity, not itself a claim for damages”: see Turner v George Weston Foods Ltd [2007] NSWCA 67; 4 DDCR 571 at [33] (Campbell JA, Beazley and Hodgson JJA agreeing), referring to Westpac Banking Corporation v Tomassian (1993) 32 NSWLR 207 at 209 (Kirby ACJ), 215-216 (Mahoney JA) and 220 (Meagher JA); Fuller v K & J Trucks Coffs Harbour Pty Ltd [2006] NSWCA 88; 67 NSWLR 516 at [9] (Bryson JA, Handley and Ipp JJA agreeing).

89 In order to succeed on a claim for indemnity, the employer must prove that the plaintiff tortfeasor is indeed a person who was liable to pay damages in respect of the injury. Once that precondition is established, the amount recoverable is the amount paid by way of compensation, but limited to the liability of the tortfeasor in damages. As explained by Cole AJA (Mason P and Sheller JA agreeing), the phrase “those damages” in s 151Z(1)(d) “refers to the damages payable at common law, as restricted by statute, in respect of the injury”: Grant v Royal Rehabilitation Centre Sydney [1999] NSWCA 250; 47 NSWLR 263 at [7]. Cole AJA continued at [8]:

“Accordingly, to determine whether the sum which has been paid as compensation is recoverable from the tortfeasor, two steps are necessary. The first is to determine the quantum of common law damages which would have been recoverable had they been sued for. The second is to determine the amount of compensation which has been paid.”

90 More completely, there will be three steps, the first being to establish the liability of the putative tortfeasor to the worker. In accordance with the procedure laid down in Grant, the indemnity proceedings should determine the quantum of damages payable by the tortfeasor and not merely the fact that the damages will exceed the amount of compensation for which indemnity is currently claimed. Although each payment of compensation gives rise to a cause of action for indemnification, it was not intended that the liability to pay damages should be reassessed in a multiplicity of actions, but rather that the first proceedings should establish the extent of the indemnity, so that each party may know the limit of its right or liability in respect of existing and future compensation payments.

91 As explained by McTiernan J in Watson, s 151Z(1)(d) provides that the liability of the tortfeasor under the indemnity will not exceed its liability for damages independently of the workers’ compensation legislation: at 433. Indeed, to the extent that its liability to damages will be limited under the 1987 Act, the matter is stated more accurately by Cole AJA in Grant that damages which form the limit of the indemnity will be assessed under the general law, as restricted by any relevant statutory provision. Such a provision is found in s 151Z(2), but also in motor accident legislation, currently the Motor Accidents Compensation Act 1999 (NSW). The machinery provisions to be found in such legislation may not be applicable in circumstances where the claim is not brought by the injured person, nevertheless the assessment to be made by the Court in the indemnity proceedings must seek to achieve the same result as that intended under the statutory scheme: see Fuller at [46]. Although the liability is that created at the time the compensable injury occurred, the assessment of damages should be undertaken at the time of trial: Turner at [34] and [63].

Scope of s 119
92 The provision relied upon by Kurnell Transport is s 119 of the 1998 Act, which reads as follows:

“119 Medical examination of workers at direction of employer

(1) A worker who has given notice of an injury must, if so required by the employer, submit himself or herself for examination by a medical practitioner, provided and paid by the employer.

(2) A worker receiving weekly payments of compensation under this Act must, if so required by the employer, from time to time submit himself or herself for examination by a medical practitioner, provided and paid by the employer.

(3) If a worker refuses to submit himself or herself for any examination under this section or in any way obstructs the examination:

(a) the worker’s right to recover compensation under this Act with respect to the injury, or

(b) the worker’s right to the weekly payments,

is suspended until the examination has taken place.

(4) A worker must not be required to submit himself or herself for examination by a medical practitioner under this section otherwise than in accordance with the WorkCover Guidelines or at more frequent intervals than may be prescribed by the WorkCover Guidelines.

(5) The regulations may make provision for or with respect to requiring an employer or insurer to provide a worker, a worker’s legal representative or any other person, within the period required by the regulations, with a copy of any medical opinion or report furnished to the employer or insurer by a medical practitioner in connection with an examination of the worker pursuant to a requirement under this section.

(6) If an employer or insurer fails to provide a copy of an opinion or report as required by the regulations under subsection (5):

(a) the employer or insurer cannot use the opinion or report to dispute liability to pay or continue to pay compensation or to reduce the amount of compensation to be paid and cannot use the opinion or report for any other purpose prescribed by the regulations for the purposes of this section, and

(b) the opinion or report is not admissible in proceedings on such a dispute before the Commission, and

(c) the opinion or report may not be disclosed to an approved medical specialist or an Appeal Panel in connection with the assessment of a medical dispute under Part 7 of Chapter 7.”

93 In this State, the earliest precursor to s 119 appears to be found in paragraphs 8, 9 and 10 of Schedule 2 to the 1910 Act. The equivalent to sub-ss 119(2) and (3) was paragraph 9, which was in the following terms:

“9. Any workman receiving weekly payments under this Act shall, if so required by the employer, from time to time submit himself for examination by a duly qualified medical practitioner provided and paid by the employer. If the workman refuses to submit himself to such examination, or in anyway obstructs the same, his right to such weekly payment shall be suspended until such examination has taken place.”

94 A similar provision was found in Schedule 1(14) to the 1906 UK Act; it was continued in Schedule 1(14) of the 1916 Act. The form of the provision, combining the obligation to undergo medical examination with the right to continue to receive weekly payments, demonstrates the purpose of the obligation perhaps more clearly than the present form of s 119 which divorces the obligation – in sub-s (2) – from the sanction – in sub-s (3). The combined obligation and sanction continued in the 1926 Act (s 51(1)), but they parted into separate subsections in the 1987 Act in s 129, as originally enacted. Separating the obligation and attendant sanction did not have any consequential effect in broadening the scope of the obligation.

95 The operation of s 119 must be considered in the context of proceedings for indemnification of the kind discussed above. Kurnell Transport accepted that s 119 does not in terms provide any power to the putative tortfeasor in an indemnification proceeding to seek medical examination of the injured worker. Nevertheless, it contended, the provision was not expressly inconsistent with the proposed use. The section provides, Kurnell Transport contended, a mechanism by which the employer can require the injured worker to submit to an examination for the purpose of such proceedings or, as will commonly be the case, a further examination. It would be unfair, it argued, if the employer were able to have the worker examined by its doctors, but the putative tortfeasor could not. Any such lack of mutuality was unlikely to have been intended. The imbalance which might exist could be resolved in one of two ways. Either the fact of imbalance could militate against a construction which made the provision available to the employer only or, in the alternative, it might provide support for Kurnell Transport’s claim that a court should stay proceedings until the employer used its power to require an examination by the defendant’s doctors in the indemnification proceedings.

96 The primary judge sought to identify the purpose of the provision and then to consider whether the proposed use involved a purpose which was extraneous or foreign to that which had been identified. Her Honour stated:

“[3] The purpose of s 119 is, in my opinion, clear. It permits an employer who is under an obligation to make payments of compensation to monitor the medical condition of the injured worker, so that the obligation to make the payments may be terminated if and when the medical reason therefor comes to an end. Sub-s (4) is designed to ensure that the power to require medical examination is not used oppressively. The section attempts to strike an appropriate balance between the rights of the employer and the rights of the injured worker.

...

[25] I am satisfied that s 119(2) is not available either to an employer or to an alleged third-party tortfeasor for the purpose of a claim under s 151Z. For an employer to require an injured worker’s attendance at medical examinations in order to prepare itself for such a claim would be to use the power conferred by s 119(2) for an extraneous and improper purpose. It follows that an employer cannot be manipulated into using that power for the purpose of facilitating the alleged third-party tortfeasor’s defence to that claim. That is because, as I have said, the power is conferred for a clear purpose – the resolution of a claim by an injured worker, and the continuing supervision and management of the award of compensation, and not otherwise.”

97 Support for this conclusion was sought in the language of other parts of s 119 and the WorkCover Guidelines on Independent Medical Examinations and Reports (2006) (“the Guidelines”) which were intended to restrict the power to require submission to a medical examination under s 119(4), the Guidelines themselves being authorised by a combination of that provision and s 376(1)(c) of the 1998 Act.

Statutory power not available
98 The argument in this Court and, it appears, below was said to reveal an inexplicable omission in the procedural scheme for determining a claim such as that brought by the employer against a putative tortfeasor. In fact, the legislative scheme is coherent and neither capricious nor unjust.

99 The proceedings for statutory indemnity rely upon s 151Z(1)(d) of the 1987 Act. That provision operates where the following preconditions are satisfied:

(a) the defendant is a person liable to pay damages in respect of the injury;

(b) the worker has recovered compensation;

(c) the plaintiff is the person by whom the compensation “was paid”, and
(d) amounts previously paid (if any) do not exceed the amount of the damages for which the defendant is or was liable.

100 There is no dispute in this case that the plaintiff has made payments by way of compensation to the worker, nor that those payments have been made pursuant to an award. According to authority in this Court, that is sufficient to make good the precondition to recovery on the indemnity: see Frank G O’Brien Ltd v Bain [1975] 1 NSWLR 373 at 384 (Glass J, Reynolds and Hutley JJA agreeing). No amount has yet been paid by the defendant.

101 As McColl JA explains, once the putative tortfeasor has accepted its liability to indemnify the employer, it may be able to take steps in an appropriate forum to challenge the ongoing liability of the employer to pay compensation: see Bain v Frank G O’Brien Ltd [1976] HCA 29; 135 CLR 158 at 164-165 (Barwick CJ). These are not such proceedings, not being proceedings brought by the tortfeasor, nor indeed proceedings in which the tortfeasor has accepted its obligation to indemnify the employer. Such proceedings would be brought, no doubt in the name of the employer, in the Workers Compensation Commission, seeking a variation of the award. There is no reason to suppose that, assuming such a course is open to the tortfeasor, it would not have available to it all the procedural rights of the employer in such proceedings. It may also be presumed that these rights would include the right to have the worker undergo medical examination in accordance with, and subject to the limitations imposed by, s 119 and the Guidelines. None of that bears on the present debate.

102 Section 119 comes within Ch 4 of the 1998 Act, under the heading “Workers compensation”. That Chapter deals generally with claims and proceedings for compensation; it does not deal with what are now described as “work injury damages”: cf Ch 7, Pt 6. Read in context, and in their own terms, the various provisions within s 119 expressly relate to claims for compensation.

103 The difficulty for Kurnell Transport is to explain how such procedures are engaged in the present matter. As noted above, questions of entitlement to compensation are not raised in these proceedings. Rather, the reason why Kurnell Transport wishes to have the worker medically examined is for the purposes of establishing the limit of its indemnity, namely the damages which would have been payable by it in the event of proceedings brought by the worker against it. The attempt by Kurnell Transport to call in aid a provision designed for an entirely different purpose is the misconception underlying the application. The proposed purpose was, as the primary judge correctly identified, “extraneous” to the statutory purpose of s 119.

104 Reference to the terms of the Guidelines demonstrates that, like s 119 itself, the drafter had in mind the need to balance the interests of the employer and the injured worker for the purposes identified by the primary judge in the passage set out above. The interrelationship between sub-ss (2) and (4) of s 119 is not beyond doubt. Subsection (4) could be seen as defining the scope of the power conferred by sub-s (2), or as controlling the manner of its operation. Because sub-s (4) refers to that which is done “under this section”, the latter alternative is to be preferred. In that case, if the drafter of the Guidelines adopted too limited an understanding of the scope of the statutory provision, such language in the Guidelines could not impose on the statutory provision a restriction to which it was not otherwise subject. Thus, if s 119(2) did permit referral to the tortfeasor’s medical practitioner, a circumstance not envisaged by the Guidelines, the constraints imposed by the Guidelines would either be applied by analogy or would be inapplicable in their terms. If they impliedly or expressly precluded examination entirely in a class of cases falling within s 119(2), there would be an issue as to their validity. As they do not expressly have such an effect, no such intention would be implied if it led to possible invalidity. (If the role of sub-s (4) is to define the scope of sub-s (2), the fact that the Guidelines do not expressly permit an exercise of the kind proposed by Kurnell Transport would be fatal to its application.)

105 It is the availability of the power to stay the employer’s proceedings, analogous to the power to stay proceedings brought by an injured plaintiff, which must provide both the mechanism and the occasion for accommodating the request of the putative tortfeasor. The analogy is, however, incomplete in a material respect: it is one thing to impose an obligation under threat of a stay on a plaintiff seeking to recover damages for his or her injuries, in circumstances where the plaintiff is declining to allow the defendant to test the extent of those injuries, but another thing to impose a stay on a plaintiff (the employer seeking indemnification) as a means to obtain an examination of a third party (the injured worker) who has no direct interest in the indemnity proceedings. In any event, the grounds of appeal in the present matter were contingent upon the availability of s 119 as a mechanism by which the employer could have required Mr Castillo to undergo medical examination for the purposes of assessing the liability of Kurnell Transport in damages. Absent that mechanism, the grounds of appeal did not envisage the availability of a stay.

106 Furthermore, the power to require submission to a “medical examination” does not include submitting to a test to assess the degree of impairment of earning capacity: UCPR, rr 23.1(2) and 23.7. It is not necessary to determine the precise scope of the examination which may be undertaken pursuant to s 119(2) in order to accept that it may fall well short of the kind of testing which would be necessary for a comprehensive assessment of a person’s disabilities and their effect on earning capacity in particular circumstances: see discussion in Fernando v Commissioner of Police (1995) 36 NSWLR 567; Dickson v Commissioner of Police [1999] NSWSC 1100; 48 NSWLR 156 (Bell J); Kavanagh v Sutherland Shire Council [2000] NSWCC 57; (2000) 21 NSWCCR 1 (Curtis J), referred to with apparent approval by Bryson JA in Fuller at [27]. This limitation is another indication that the section was not intended to apply with respect to assessment of damages.

The constitutional argument
107 Before reaching a final conclusion as to the proper construction of s 119(2), it is desirable to refer to the applicant’s argument that, if it were not able to utilise s 119(2) in the manner it proposed, the conferral of jurisdiction with respect to an indemnification proceeding under s 151Z(1)(d) on a court capable of exercising judicial power under Chapter III of the Constitution would be invalid. This argument was not in terms run before the primary judge, but no objection was taken to the applicant raising the argument in this Court.

108 In order to understand and assess the applicant’s contention, it is necessary to consider the precise nature of the principle relied upon. As the Solicitor-General noted, this was not an exercise to which the applicant devoted much energy. However, as will be seen, the attempt to invoke the principle established in Kable v Director of Public Prosecutions (NSW) [1996] HCA 24; 189 CLR 51, and its progeny, has an air of implausibility.

109 The limitation on State legislative power identified in Kable arose in the context of novel legislation conferring on this Court jurisdiction to order preventative detention in respect of one person (Mr Kable) in circumstances which were said substantially to impair the institutional integrity of the Court: see Baker v The Queen [2004] HCA 45; 223 CLR 513 at [5] (Gleeson CJ). By contrast, the jurisdiction presently in question (providing for recovery of an indemnity to a person paying workers’ compensation) has existed in this State for more than 100 years, and for a similar period in other jurisdictions, including the UK. It predated modern court rules permitting, in specified circumstances, a defendant to require an injured plaintiff to undergo medical examination. It is impossible to describe this jurisdiction as either extraordinary or virtually unique: cf Kable at 98 (Toohey J). It cannot be seen as the conferral on the Court of a power purportedly judicial but in fact merely colourably so. As explained by Callinan and Heydon JJ in Fardon v Attorney-General (Qld) [2004] HCA 46; 223 CLR 575 at [219] “so long as [the State court] is to undertake a genuine adjudicative process and so long as its integrity and independence as a court are not compromised, then the legislation in question will not infringe Ch III of the Constitution”.

110 Considering such provisions more generally, it is clear that the general law survived for a long time without conferring on the defendant to a claim in which the physical or mental condition of the plaintiff was relevant any entitlement to require the plaintiff to undergo an examination at the hands of the defendant’s doctors. In the USA, a provision of general operation, in similar terms to the current provisions in the UCPR, was found in the Federal Rules of Civil Procedure 1938 (US), r 35. There were initially doubts as to its validity, resolved in favour of validity in Sibbach v Wilson & Co Inc [1941] USSC 16; 312 US 1 (1941). The absence of such a rule was not then seen as a fatal flaw in the exercise of judicial power.

111 In part, the applicant’s argument was directed to demonstrating one of two related propositions. The first was that the legislative scheme operated in an unbalanced way, to the detriment of the putative tortfeasor. The second was that the Court was required in an indemnity proceeding to assess damages in circumstances where the parties had no means of access to critical information concerning the condition of the person whose loss was to be assessed.

112 With respect to the first argument, the approach adopted by the primary judge was not unbalanced in a formal sense. She denied to both parties any entitlement to rely upon the powers conferred by s 119(2) in relation to indemnity proceedings. Her Honour did not suggest that material obtained under s 119 was necessarily inadmissible, but rather that no fresh material could be obtained in circumstances where there was no legitimate purpose in seeking to review current weekly payments. As her Honour noted, there was a change in the interests of the employer when bringing indemnity proceedings. At [14] her Honour wrote:

“Ordinarily, it is in the interests of an employer against whom a claim is made to minimise the injury to the worker, the extent of the disability and the need for past or future care, medical attention, and other consequences of the injury. That, indeed, was what Randwick Council sought to do in the Workers Compensation proceedings. Now, however, its position is reversed. Randwick Council’s obligations have crystallised, although, being open-ended, they cannot be definitively quantified. Its entitlement (if it can establish liability in Kurnell Transport) to indemnity – up to the level of what Mr Castillo would, had he sued Kurnell Transport, have recovered, means that it is now in its (Randwick Council’s) interest to maximise his injury, disability and past and future needs. In doing that, it will maximise the extent of the indemnity that Kurnell Transport will owe it, should it succeed in establishing liability.”

113 With respect to the second proposition, It is possible to speculate that the injured worker may co-operate with the employer for the purpose of indemnity proceedings, although he may not. It is possible to speculate that his condition may have improved since the last s 119 material was obtained, or it may have worsened. On any view, unless the worker co-operates with the putative tortfeasor, it will not have the benefit of its own assessment of his medical condition. However, as already noted, that assessment may be incomplete, given the potential inherent limitations of s 119(2). Further, courts are required daily to assess matters on the basis of a paucity of evidence or a paucity of material from one party. These limitations do not necessarily lead to imbalance and to the extent that they do, the imbalance is by no means inherently prejudicial to on one side rather than the other.

114 Kurnell Transport accepted that statutes may justifiably and constitutionally impose limitations which disadvantage one side specifically. However, it contended that such limitations, referred to in the authorities, were themselves justifiable on the basis of specific public interests and therefore did not constitute improper constraints on the exercise of judicial power by the courts or improperly impair the character of the courts as “independent and impartial tribunals”: Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2008] HCA 4; 234 CLR 532 at [39] (Gummow, Hayne, Heydon and Kiefel JJ). The present case must be distinguished, Kurnell Transport said, from those in which legislation has varied rules of evidence so as to limit the exclusion of illegally obtained evidence (Nicholas v The Queen [1998] HCA 9; 193 CLR 173), interference with private property in the interests of law enforcement (Gypsy Jokers) or the maintenance of confidentiality in criminal intelligence (K-Generation Pty Ltd v Liquor Licensing Court [2009] HCA 4; 252 ALR 471).

115 In K-Generation, the presentation of confidential information to the Licensing Court had the potential to infringe upon the principle of open justice and procedural fairness, in circumstances where the information was not revealed to the applicant. Those principles were undoubtedly part of “the relevant minimum characteristics of an independent and impartial Licensing Court”: at [112]. As noted by French CJ, identification of the relevant characteristics is analogous to identification of a body as exercising judicial power: at [90], referring to Forge v Australian Securities and Investments Commission [2006] HCA 44; 228 CLR 45 at [63] (Gummow, Hayne and Crennan JJ). However, the point of distinction between such cases and the present tends to demonstrate that the present case involves a far lower level of intrusion on fundamental characteristics of a court than those authorities which nevertheless involved no inconsistency with the minimum requirements of a judicial tribunal capable of exercising federal judicial power. The nature of the justification for the intrusion has not constituted part of a balancing exercise: the focus is rather on the consequences for the exercise of judicial power. In any event, there is no absence of public interest justification in the present case: rather there is a continuation of the usual immunity of a person with no interest in proceedings from subjection to compulsory medical examination. Accordingly, it has not been shown that the conferral of jurisdiction to bring indemnity proceedings, absent a power to compel the injured worker to undergo medical examinations at the behest of at least one of the parties, contravened the implied limitation on State legislative power.

Conclusions
116 Once the constitutional argument is rejected, the construction of s 119 must be considered according to its terms, its statutory context and its legislative history. For the reasons noted above, s 119 did not permit either party to require an injured worker to undergo a medical examination for the purposes of assessing damages as the limit of Kurnell Transport’s liability in indemnification proceedings under s 151Z(1)(d) of the 1987 Act. If the employer had no power to require such an examination, it followed that a stay was not an appropriate remedy at the instigation of the putative tortfeasor, as a mechanism for compelling the employer to require the worker to undergo such an examination. In this Court, Kurnell Transport abandoned any contention that a stay should otherwise have been ordered.

117 The further challenge, based on the constitutional limitations imposed on a State legislature with respect to procedures available in a State court capable of exercising federal judicial power, though not raised before her Honour, requires no different conclusion.

118 The following orders should be made:

(1) Grant leave to appeal.

(2) Direct the applicant to file its amended notice of appeal within seven days.

(3) Dismiss the appeal.

(4) Order the applicant to pay the respondent’s costs in this Court.

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LAST UPDATED:
20 March 2009

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