Anderson v Ingram Shearing Pty Ltd and Third Parties [2001] NSWCC 188 (13 November 2001)

Last Updated: 12 June 2002

NEW SOUTH WALES COMPENSATION COURT

CITATION: Anderson v Ingram Shearing Pty Ltd and Third Parties [2001] NSWCC 188


PARTIES:
John Frederick Anderson
v
Ingram Shearnig Pty Ltd
and
Third Parties


CASE NUMBER: 39088 of 2000 of 2002.00


CATCH WORDS:


LEGISLATION CITED:


CORAM: Neilson J

DATES OF HEARING: 13/11/01

EX TEMPORE DATE: 13/11/2001


LEGAL REPRESENTATIVES

FOR APPLICANT:
FOR RESPONDENT:
Ms J S Champan instructed by McCulloch & Buggy appeared for the respondent.
Mr P L Perry instructed by Graham Goldberg Partners appeared for the 7th and 9th third parties.


JUDGMENT:

1. The worker, Mr John Frederick Anderson of Young was a shearer. He commenced proceeding in this Court by application for determination which passed under the seal of the Court on 17 May 2000. It would appear that the application for determination was received prior to that time as a wages schedule passed under the seal of the Court on 9 May 2000.

2. On 7 August 2000, Messrs McCulloch & Buggy filed an answer. The filing of the answer put the matter in the Court's pending list and the venue requested was Sydney, although the applicant lived at Young and clearly did not shear sheep in Sydney. The matter first came on for hearing before his Honour Judge Duck on 9 February 2001. His Honour marked the matter "not reached". However, his Honour made an order granting leave to the respondent to issue third party notices to those employers who employed the applicant prior to 29 November 1999.

3. Under the Compensation Court Rules Pt 17 r 1, third party notices are to be filed within 28 days of service of the initiating process upon the employer. That is, they are to be filed at the same time as an answer ought be filed under Pt 11 r 3. Third party notices ought have been filed on 7 August 2000, they were not. However, Judge Duck granted leave to the respondent to file third party notices on 9 February 2001 and that order is authorised by Pt 1 r 6(2).

4. The matter, as a "not reached" matter, was given priority and was listed before me in Sydney on 11 April 2001. At the time that the matter was listed for hearing before me, no appearances or answers had been filed in the third party proceedings. Nevertheless, I proceeded to hear and determine the applicant's claim against the respondent, but I was quite cognisant of the fact of the outstanding third party notices. I proceeded to hear and determine the applicant's claim against the respondent bearing in mind my powers under Pt 17. Pt 17 r 5(1) is in the following terms:

The Court may direct what part the third party shall take in the hearing of the proceedings and generally the extent to which the usual procedures of hearing shall be modified because of the joinder of the third party.

Of more moment is Pt 17 r 6, which has a heading "Separate Hearings". The rule is as follows:

The Court may, if the hearing in the one proceedings of the issues between the applicant and the respondent and the issues between the respondent and the third party would in its opinion embarrass or delay the hearing of the proceedings or be otherwise inconvenient, order separate hearings or make such other order as it thinks fit.

5. The decision to separate the hearing of the claim of the applicant against the respondent, and the respondent's claims against the third parties was made for a number of reasons. The first was that the worker had been claiming compensation since at least 17 May 2000, had this matter listed for hearing on one occasion before Judge Duck on 9 February 2001 when it was not reached and it was then given a priority listing before me on 11 April 2001. Accordingly, it would seem that the worker's claim was nearly 11 months old at the time I heard and determined it.

6. The other matter which was of concern was the late filing of the third party notices and the fact that none of the third parties had filed a notice of appearance or an answer. The tardiness of employers to file answers to third party notice is explicable by reason of the fact that third party notices do not require the nomination of the insurer of the third party and that mightily delays the filing of answers. For example, the first third party, L J Schaeffer & Co only filed a notice of appearance this day. The second third party, J L and B J Macrae only filed a notice of appearance on 15 October 2001. The third third party, W R S, J P and M Johnson only filed a notice of appearance this day.

7. Proceedings against the nominated fourth respondent were struck out by me on 6 August 2001 as an abuse of process as the fourth third party was in fact the respondent.

8. This morning I appointed pursuant to Pt 6 r 16(1) par (b), Commercial Union (Workers Compensation NSW) Ltd to represent the Estate of the late J W McLeod, who has been nominated as the fifth third party.

9. The sixth third party, Kimber Shearing Pty Ltd only filed a notice of appearance today.

10. The seventh third party, A A & L M Gooden, filed an answer on 7 June 2001 which answer bears date 18 May 2001.

11. The eighth third party, Qualshear Pty Ltd, wrongly sued as Ivan Letchford, filed a notice of appearance this day.

12. The ninth third party, K F & S K Croker, filed a notice of appearance this day.

13. The nominated tenth third party, Harry King, trading as Nangary Trading Company filed a notice of appearance on 17 May 2001, but proceedings against that third party have been discontinued because, I am told, that employer employed the applicant outside the one year period prior to the commencement of incapacity.

14. The 11th third party, S J & M G Nowlan, filed a notice of appearance this day.

15. The 12th third party, J K and J A Buckley, filed a notice of appearance on 15 October 2001.

16. It can be seen therefore, that it has taken the majority of the third parties nearly seven months in which to file an answer or an appearance.

17. At the hearing of the worker's claim against the respondent, both the applicant and respondent were represented by counsel and I was acutely aware in coming to making my findings of fact as to the issue as to whether the worker's back condition was within s 15 and/or s 16 of the Workers Compensation Act 1987.

18. I made an award for the worker for total incapacity between 30 November 1999 and 13 January 2000 and an ongoing award of $138 per week from 14 January 2000 pursuant to the provisions of s 40. I also ordered the respondent to pay lump sum compensation in respect of 4.8 per cent permanent impairment of the applicant's neck, 12 per cent loss of efficient use of the applicant's right arm at or above the elbow and 6 per cent permanent impairment of the applicant's back, and a lump sum under s 67 of $12,500 together with s 60 expenses. I directed on that day that the third party notices be listed for mention for directions before me on 30 May 2001. A directions hearing was held on that day and was continued on 22 June 2001, and was continued on 6 August 2001 when I fixed today's hearing date.

19. Mr Perry of counsel who appears for the seventh and ninth third parties, today has taken a preliminary point. His argument is that I cannot hear and determine the third party notices because of the provisions of s 18(3) of the Workers Compensation Act 1987. That provision is as follows:

In a case to which section 15, 16 or 17 applies, if each of the employers who is liable to pay the compensation or to make a contribution under the section concerned is insured in respect of that liability by an insurer who is an insurer within the meaning of Division 4 of Part 7 and the entitlement of the worker (or other claimant) to receive compensation is not disputed:

(a) a contribution that would otherwise be payable by an employer under section 15, 16 or 17 in respect of the claim is not payable, and

(b) for the purposes of calculating an insurance premium payable by any of those employers, their claims histories are to be determined on the assumption that any contribution that would have been payable but for paragraph (a) was payable.

20. There is no dispute that each of the remaining third parties was insured by an insurer within the meaning of Div 4 of Pt 7. Mr Perry's submission is that the entitlement of the worker to receive compensation is not now disputed, and therefore there can be no contribution ordered to be paid to the current respondent.

21. S 18(3) is not without judicial consideration. The first case to which I have been referred is Carver v Doolan [1999] NSWCC 22; (1998) 18 NSWCCR 1. That case concerned a dispute between two employers as to who was the last noisy employer and therefore liable to pay compensation to a worker for binaural hearing loss. The matter was heard and determined by his Honour Judge Bishop at Armidale. His Honour indicates in paragraph 1 of his reasons for judgment that:

The issue of contribution between the two employers was stood over for mention at a later date.

22. There is no suggestion in the report of Carver v Doolan that the employer who was found liable had at any time commenced third party proceedings against the successful employer seeking any contribution pursuant to s 17(1) par (d). When the matter came on for hearing before his Honour in Sydney, his Honour entertained a submission on behalf of the successful employer that because of s 18(3) no contribution could be payable. His Honour said at par (9):

There are two requirements to trigger the operation of s 18(3) and these should be considered separately.

(10) The first of these is that each of the employers concerned should be insured by an insurer within the meaning of Div 4 of Pt 7 of the Act. Reference to that division indicates that the insurers concerned are licensed insurers managing the statutory funds of the WorkCover Authority and specialised insurers and self-insurers are not caught by the Division. Such a licensed insurer has no beneficial interest or entitlement to the assets of its statutory fund (s 196(2)). In other words, the funds are all the funds of the Authority which points to a degree of logic in a scheme which obviates the necessity for a physical transfer of money from one statutory fund to another, but at the same time preserves a notional credit or debit to the claims experience of the relevant employer. Although it is not strictly necessary to turn to the explanatory note to s 18(3) when it was inserted by the Workers Compensation Legislation Amendment Act 1995 to arrive at a meaningful construction of the section, nevertheless, reference to that explanatory note supports the above analysis. The extension of the proposition, of course, is that if one of the employers is for example a self-insurer without a statutory fund, the physical payment of any contribution calculated pursuant to s 17(1) par (d) becomes clearly necessary.

(11) The second element to attract the operation of s 18(3) is that the entitlement of the worker to receive compensation should not be disputed. At the commencement of these proceedings it undoubtedly was. However, as a consequence of the award of 2 October 1997, the entitlement of the applicant to compensation became clear being the subject of an order of the Court. It is the issue of contribution that has come back to the Court. A dispute as to contribution is a discrete issue from the point of view of the Court - see s 17(1) par (g).

(12) It is not accurate to argue that if s 18(3) applies to litigated claims, then s 17(1) par (d) becomes redundant. The difference brought about by s 18(3) where it comes in is that the calculations provided for in s 17(1) are directed towards the adjustment of premium calculations of the relevant employers rather than to the physical payment of money from one arm of the Authority to another.

(13) The relief sought by the second respondent is effectively that the first respondent contribute to it 76.25 per cent of the award. For the reasons outlined above, the claim for that relief fails. Pursuant to s 18(3), the second respondent is entitled to a credit on its claims experience of a figure representing 76.25 per cent of the award and the claims experience of the first respondent should be debited by a similar figure.

23. In the current case, it has not yet been admitted or even submitted that any agreement has been reached as to any putative contribution to the awards made in favour of the worker by the various third parties nor any putative credit or debit to claims experience registers of the various third parties.

24. I have difficulty in following the decision of Judge Bishop. Pressed to its logical conclusion, it would appear that the only cases in which orders for contribution can be made under s 15, 16 or 17 would be where there were insurers of third parties involved who were not insurers within the meaning of Pt 7 Div 4. They would be insurers under the 1926 Act as self-insurers and specialised insurers and the Uninsured Liability and Indemnity Scheme. It must be remembered that in order to determine third party rights one must first determine the rights between the applicant worker and the respondent employer. Only if the respondent has a liability under s 15, 16 or 17 can one determine the liability of the third parties to the respondent.

25. Equally, it is necessary to determine all issues of quantum between the applicant and the respondent because, for example, although there might be a disease involved, the worker might recover nothing because of a lack of incapacity and if an award is made in favour of the employer because of a lack of incapacity or the lack of a relevant loss, et cetera, there can be no liability of a third party to the respondent which itself has no liability. In other words, in every case it is first necessary to determine the liability of the respondent to the applicant worker before one can determine the liability of the third parties to the respondent. Pressed to its logical conclusion, the rationale of Bishop J would prevent it occurring other than in very limited circumstances.

26. Furthermore, such was not the outcome in the case of McDermot & Another v Harvey (1999) 18 NSWCCR 533. That was a decision of the Court of Appeal upholding orders made by his Honour Judge Johns on 17 December 1998. Judge Johns distinguished the decision of his Honour Judge Bishop in Carver v Doolan. The decision of the Court of Appeal was given by Priestley J A with whom Beasley J A and Davies A J A concurred. Priestley J A said at paragraph 16:

(16) Putting the submission for the two employers in the present case in what seems to me to be its strongest form, involves the following steps:

(a) Bishop J was right in the way in which he handled the s 18(3) argument in Carver v Doolan;

(b) once Johns J had decided upon the awards to be made to the worker in the present case, the entitlement of the worker to receive compensation was not disputed;

(c) the purpose of the insertion of s 18(3) by the Workers Compensation Legislation Amendment Act 1995 (the 1995 Amendment Act) would be achieved by applying the reasoning of Bishop J in the present circumstances.

(17) The third step of the argument was elaborated in the following way. S 18(3) was inserted by in the Act by Sch 4 Item [8] of the 1995 Amendment Act. An explanatory note to Item [8] in Sch 4 said:

"Explanatory Note - Item [8] -

Item (8) with the proposed amendments provides a streamlined procedure for `statutory fund' insurers when dealing with a claim in which contribution is payable between them under s 15 (Diseases of Gradual Onset), 16 (Aggravation Disease) or 17 (loss of hearing) of the Act if there is not dispute as to the entitlement to compensation. Under the new procedure, there is to be no actual contribution between the insurers, but there is to be a `notional' contribution for the purpose of calculating the claims histories of the employers concerned."

(18) In further explanation of the explanatory note, it was submitted that the "streamlined procedure" it referred to was intended to overcome a situation that had become noticeable in some cases in the Compensation Court which was considered to be unnecessarily wasteful of time and costs, that is, the situation where as in the present case a number of employers in addition to the last employer, the actual respondent to the worker's application, took part in the proceedings, but, differently from the present case, in proceedings where there was no real dispute about compensation and thus no need for the third-party employers to attend the part of the proceedings involving decisions upon the worker's claim.

(19) The explanatory note and the further submission about it put before the Court show why Bishop J reached the conclusion he did in Carver v Doolan. However, it does not seem to me to be necessary in the present case to decide whether the first step in the argument for the employers is correct, that is, it seems to me the present case can be decided without deciding upon the correctness or otherwise of s 18(3) aspect of Carver v Doolan. This is because I do not see how it can be said that any time relevant to the operation of s 18 in the present case the entitlement of the worker was not disputed within the meaning of s 18(3).

(20) It may be that in a practical sense in the course of the hearing before Johns J it became clear to all parties that Johns J was going to order the compensation be paid to the worker. It does not seem to me to follow from that state of affairs that the entitlement of the worker was not disputed at any stage before Johns J made his orders. Even at that point, the records show that the worker's entitlement had been disputed and was open to Mr Harvey should he have been advised that he had grounds to do so, to lodge an appeal against the orders made against him. The appeal may have been hopeless, but even so, until disposed of, I would have thought that the entitlement of the worker to receive compensation remained in dispute. The result is that, assuming without deciding the correctness of Bishop J's s 18(3) opinion in Carver v Doolan on s 18(3), that the opinion does not help the employers in the present case. I do not think of the words (in this respect) of s 18(3) admitted any other result than that reached by Johns J.

27. Clearly, if I had heard the respondent's claims against the third parties on 11 April 2001 when I heard the applicant's claims against the respondent, this case would fall exactly within the ratio decidendi of McDermot v Harvey. Mr Perry seeks to distinguish that case from this by the fact that here the Court operating under Pt 17 for the expeditious hearing of the worker's case, separated the hearing of the worker's case against the respondent and the respondent's claims against the third parties, even though the respondent's claims against the third parties were still then outstanding and in dispute.

28. The practical result if Mr Perry's argument be correct, would be that a court would not separate a hearing of third party notices from the primary dispute between the worker and the respondent employer because to do so would deny the employer's right to seek contribution pursuant, in the current case, to s 16. In other words, it would merely cause the worker's claim against the respondent to come on much later than would otherwise be the case to the disadvantage of injured workers claiming, inter alia, income support.

29. The real issue under s 18(3) is of course as to when one ascertains when the "entitlement of the worker . . . to receive compensation is not disputed". Here, as in McDermot v Harvey, the worker's entitlement to compensation was hotly disputed on 11 April 2001, when I determined the employer's liability to the worker. At that stage, the third party notices had been issued and the hearing of those had been separated from the hearing of the primary dispute. As at 11 April when liability was hotly in issue and I determined that liability, there was also a dispute between the respondent and the third parties. In my view it is at that time that one should ascertain whether there be any dispute. Clearly, in McDermot v Harvey, Priestley J A referred to the position that it might become clear during the hearing that compensation was to be awarded to the worker and that the only real issue to continue to be litigated would be for example, quantum of the third parties' liability to the employer. Nevertheless, that not defeat the employer's claims for contribution under s 16 which was an issue in that case.

30. If I may be so bold, I will distinguish Carver v Doolan on a technical basis. There is nothing in Carver v Doolan to suggest that there were any third party proceedings brought by the unsuccessful employer against the successful employer prior to the determination of the dispute. In other words, when his Honour, Judge Bishop decided the primary issue at Armidale on 2 October 1997, he decided all the matters that were then in dispute. If the unsuccessful employer wanted contribution, it then had to commence fresh proceedings for that contribution. When it commenced those fresh proceedings, there was no dispute at that time.

31. In the same way, I can easily distinguish the decision of her Honour Judge Quirk in Bassan v Crowley & Others (Unreported) 11 August 2000 Matter No 32776 of 1998. In that case, the employer claiming contribution settled the worker's claim against it by way of terms of settlement providing for payments under s 66 and s 67. It then sought contribution from another employer which was the fourth respondent, the employer claiming contribution was in fact the fifth respondent. The worker has discontinued proceedings against the fourth respondent which is the employer from whom contribution was then sought.

32. Her Honour made it quite clear that at the time she entered a consent award in favour of the worker against the fifth respondent, she had not been asked by the parties to make an findings as to whether the applicant had suffered injury in the employ of any respondent nor as to the worker's entitlement to compensation, much less as to whether any such injuries were the aggravation, et cetera of a disease to which s 16 might apply.

33. After canvassing s 18 and s 16, her Honour then said of s 18(3):

(34) What situation does this refer to? I think it refers to any situation where the employer pays or undertakes to pay compensation to a worker by agreement rather than as a result of a finding and orders by a court following a contested hearing. The latter is not what occurred here. It matters not, to my mind, that Lynock, [the fifth respondent] initially disputed its liability to pay compensation, because before it sought the contribution in question, it consented to orders against it in the worker's favour for particular sums of compensation. At that point, in my view, from the standpoint of Lynock, the very party seeking contribution here, the worker's entitlement to compensation ceased to be in dispute within the meaning of s 18(3). Mr Perry relies on Carver's case, but this case to me seems to be distinguishable because there was a full contested hearing followed by findings and an award. Similarly, Ward v Harvey & Others is distinguishable, as Johns J found after a contested hearing that the elements of s 16 were established, and that dispute existed at all times up to the point that he delivered his judgment determining all issues between the parties.

(35) It would seem to me unjust Agribusiness [fourth respondent] with the quantification of the applicant's compensation arrived at by agreement between the applicant and Lynock, to which Agribusiness was not a party and then to order contribution to that agreed sum by Agribusiness, when it had no opportunity of disputing the applicant's entitlement to such award.

34. I completely concur with the result arrived at by Her Honour and with the reasons which she gave for her decision. However, again, I point out that one can distinguish that case from the present by the same procedural mechanism I use to distinguish Caver v Doolan. In Bassan's case, there was no contribution sought prior to the making of an award in the worker's favour. In Bassan an award was made by consent which would clearly indicate that no dispute existed at the time contribution was sought which was only after the award had been made. It appears to me that if the worker's entitlement is contested and proceeds to determination by the Court rather than by consent and that the third party relief has been claimed prior to the making of any award, then at the time that the contribution is claimed a dispute existed as to the worker's entitlement to receive compensation.

35. To put it in chronological order, if the dispute exists at the time that third party relief is claimed, it appears to me that it matters not that the Court does not hear the claim for third party relief at the same time as it hears the worker's claim for relief against the respondent. Such a separation of the hearings is authorised by the rules of this Court and is consonant with good practice, sound commonsense and proper dispute resolution mechanisms. To deny the employer his entitlement to third party contributions, if he be so entitled, because of the splitting of the hearing would be unjust and I must not construe the Act in any fashion that would do manifest injustice or interfere with proper resolution of disputes between workers and employers. It appears to me that when construing s 18(3), I should determine the existence of the dispute as at the time of the hearing of the worker's entitlement and ascertain whether at that time the third party relief is claimed. If a third party relief is claimed only after the entry of an award, then one can see that the entitlement was not disputed at the commencement of the third party procedure and that therefore such claims would be barred by s 18(3).

36. For those reasons, I reject the submission put to me by Mr Perry on behalf of the seventh and ninth third parties that the claims for contribution are barred by s 18(3).
Ms J S Chapman instructed by McCulloch & Buggy appeared for the respondent.
Mr P L Perry instructed by Graham Goldberg Partners appeared for 7th & 9th third parties.