Counsel for appellant: Mr S Walsh QC with him

JUDGE1 DOYLE CJ

1. This is an appeal against an assessment of damages made by a judge of this Court. The judge assessed damages for personal injuries received in a motor vehicle accident.

2. The complaint on appeal is that the damages awarded are excessive. First, because the amount awarded in respect of loss of earning capacity is said to be excessive. Secondly, because the judge assessed the damages on the basis that payments of workers compensation made to the respondent were recoverable by the Workcover Corporation of South Australia ("the Corporation") and so were not to be taken into account in the assessment of the respondent�s award of damages. The appellant argues on appeal that the judge erred in law in holding that the workers compensation payments, or at least all of them, were recoverable and further argues that the damages should have been taken in account in a way which would ensure that the respondent did not receive and retain double compensation for the same loss or expense. As will be seen , this raises an important issue under the Workers Rehabilitation and Compensation Act 1986 ("the Act").

The Assessment of Damages 3. The respondent sustained his injuries in a motor vehicle accident which happened on 14 July 1989. He was then 22 years of age. The accident occurred while the respondent was returning home from work, and accordingly the respondent claimed benefits under the Act and his claim was accepted. His medical expenses were paid and he received weekly payments in respect of the disability which he suffered as a consequence of the accident. I do not consider that the details of the compensation which he received need to be explored.

In the accident the respondent suffered various injuries. The main injuries were a crush fracture in the upper back, which was not particularly serious, a closed head injury, an injury to the right arm and hand, and a significant injury to the left knee with damage to the medial collateral ligament and to the anterior cruciate ligament. The damage to the medial collateral ligament was repaired, but the damage to the anterior cruciate ligament was not . The result of all that was that the respondent was left with an instability of the left knee which had a propensity to collapse. It should also be recorded that his Honour specifically declined to find that the respondent suffered an injury to his lower back in the motor vehicle accident. The finding was made in the face of claims by the respondent to have suffered low back pain from about the time of the motor vehicle accident. The finding was based in part upon the absence of recorded complaints of low back pain for quite some time after the accident. It follows that his Honour must have found that, if the respondent experienced low back pain, it did not occur for quite some time after the accident..

At the time of the accident the respondent worked as a machinist. The judge found that but for the injury he would have qualified as a fitter and turner by the end of 1992. The judge found that the respondent was keen to better himself and keen to work. His ambition was to become a tradesman, and as I have already said his Honour found that he would have become a tradesman by the end of 1992. His Honour found that the respondent would have obtained employment as a sales representative selling engineering tools towards the end of 1994. The tenor of his judgment is that that would have provided better remuneration than the respondent could have earned as a tradesman.

The respondent had recovered sufficiently to return to his employment by November 1989. The judge found that the respondent returned to work although he was "continuing to suffer from a very significant disability". He took the view that the failure of the respondent to complain of his injuries when he returned to work was not due to the absence of disability but due to the respondent�s "determined motivation to resume work". That employment was terminated in March 1990. At that time the judge found the respondent�s knee was "in a state of unrepair". There was laxity of the ligaments of the knee. The judge made a finding that the injury to the knee had, at that time, "interfered substantially with the plaintiff�s earning capacity and rendered him liable to further medical treatment with or without any further injury to the knee, and moreover, rendered him liable to further injury and consequent increased disability".

The respondent quickly found other employment with a company which provided casual labour to engineering firms. I will refer to that employer as "Rexco". In his employment with Rexco the respondent�s weekly remuneration was almost twice what it was in his previous employment, but the employment with Rexco was casual employment.

While employed by Rexco the respondent suffered an injury on 29 March 1990. The injury was sustained in a fall while at work. The judge was not prepared to find that the respondent fell because his knee gave way. The judge found that he slipped on a slippery surface. But the judge made a finding that "the fall caused the respondent further injury to his left knee". The judge made a further finding which is significant for the purposes of the issues in this case. He found:"The plaintiff had a pre-existing and continuing serious disability in that left knee by reason of the motor vehicle accident. This fall aggravated and exacerbated the extent of that injury and thereby increased the disability which the plaintiff suffered. It was the continuing disability which made this plaintiff susceptible to further injury in circumstances such as this."

The judge�s findings about the extent of the injury suffered in the fall are not completely clear. He refers to complaints by the respondent of pain in the back and in the neck. But it seems to me, having read and re-read his judgment, that the only significant injury attributable to the fall was the further damage done to the knee. He did later find that the respondent suffered from an adjustment disorder due to the difficulty the respondent experienced in coming to terms with his physical injuries. But that adjustment disorder appears to be attributable to the difficulties which the respondent was having with his knee, or at least substantially attributable to that.

In the course of finding that the respondent�s knee disability was not as bad as he claimed, and having just referred to complaints of back pain by the respondent, the judge said that he had "already made a finding rejecting the proposition that back pain is a consequence of his injuries". Despite the argument to the contrary by counsel for the appellant, I conclude from this that his Honour found that neither the motor vehicle accident nor the fall caused the respondent to experience significant lower back pain. I am likewise satisfied, because of the absence of any reference by his Honour to any other significant disabilities, that the only significant disability attributable to the fall was an aggravation or exacerbation of the existing injury to the left knee. These matters will assume significance in relation to the second matter argued on appeal.

I should add here that after the fall the respondent claimed workers� compensation, on the basis of an injury sustained while working for Rexco, and that claim was accepted. Once again payments of compensation were made.

The respondent underwent further operations to his knee after the fall. The operations were not particularly successful. In May 1993 he underwent a reconstruction of the left knee.

The judge found that but for a short interlude of work, the respondent was unable to work until May 1994. The judge said:"I find that the motor vehicle accident was the direct cause of the plaintiff�s inability to work over that period by reason of the injury suffered to the knee in that accident and that the incident of 29 March 1990, which operated on a knee which was susceptible to further injury and disability, aggravated the knee injury."In so finding he clearly found, in relation to the damages claim, that the respondent�s disability was attributable to the motor vehicle accident.

His Honour found that from May 1994 the respondent�s earning capacity gradually returned, and that by the time of trial (July and August 1995) he had recovered 50% of his earning capacity. That recovery was gradual. He also found that the respondent had sustained a permanent loss of 50% of his earning capacity.

The position at trial was that the respondent was left with a left knee in which there was laxity of the ligaments. The respondent was likely to experience further degeneration of his knee, and was likely to require "further and more radical surgical procedures". A knee replacement was possible, but that was likely to be at least 15 years away if it did occur. There was also the chronic adjustment disorder, to which I have already referred. There was no doubt that the respondent had experienced a significant amount of pain and suffering, and would continue to do so.

The judge also found that, despite the significance of the injury to the left knee, the respondent was quite an active man who had done a lot of handyman work and minor renovation work to his own home and some houses which he had bought for investment purposes. He had carried out relatively heavy work at times.

I turn now to the assessment of damages for loss of earning capacity.

The judge awarded $125,000 for loss of earnings to the date of the judgment, a period of five and one half years. Because the judge decided that weekly payments of compensation received by the respondent were recoverable by the Corporation, that award was based on before tax earnings. The judge said that if the respondent had worked as a machinist to the date of trial he would have earned $112,000. But the judge noted that, as the respondent had demonstrated when working at Rexco, he had the capacity to earn almost twice as much as the wages of a machinist by taking casual employment. The judge further recorded that had the respondent become a fitter and turner, as the judge found he would have, he would have been earning about $1,000 a year more from the end of 1992. He also found that he would have earned yet more again as a salesman of engineering tools from late 1994. On the other hand it was necessary to offset earnings which the respondent had made of about $7,000 and the fact that from May 1994 the respondent�s earning capacity gradually returned, although by trial the respondent had not obtained any employment. Nevertheless, it is clear that on the judge�s findings the respondent had carried out work on his investment properties which demonstrated that he had, in the period preceding the trial, a not insignificant capacity to earn remuneration.

Counsel for the appellant attacked the award for loss of earnings to date of trial. He said that the judge had made insignificant allowance for the regained earning capacity after May 1994. It was also argued that the judge had made insufficient allowance for the fact that the respondent�s earning capacity was also compromised by low back pain of which the respondent complained. If that low back pain was not attributable to the motor vehicle accident, as the judge had found, then it was an independent factor limiting the respondent�s earning capacity. It is true that in his evidence the respondent said that he suffered from a significant level of low back pain, and that this affected his ability to do a number of tasks. However, the judge made it clear that he did not in all respects accept the evidence of the respondent in relation to his injuries, and he specifically rejected the evidence of the respondent that he suffered from low back pain after the motor vehicle accident. Although the judge�s finding on the matter is not as clear as it might be, I do not consider that he was, by implication, accepting that the respondent suffered significant low back pain at the time of trial. I do not think that the judge would have overlooked the significance of that fact if it was the fact. I have already referred to the judge�s finding in relation to back pain, and have already said that I consider that he must have been rejecting altogether the complaints of significant back pain. For that reason, in my opinion, the complaint about his award based upon limitation attributable to back pain must be rejected.

I would also reject the other criticisms of the award for loss of earning capacity to the date of trial. To my mind the award is a generous one, but I am unable to say that it is excessive. I consider that the judge approached the matter on the basis that there was every reason to think that the respondent would have bettered himself, and would have earned substantially more than a tradesman but for the injuries which he sustained in the motor vehicle accident. On that basis, in my opinion, the amount awarded cannot be said to be erroneous.

For loss of earning capacity in the future the judge awarded the respondent $195,000. He adopted an approach which, I must say, I would not myself have adopted. The judge found that the respondent had lost 50% of his earning capacity, and that but for the accident he would have had the capacity to earn at the rate of $450.00 per week after tax or about $22,500 per annum.

The judge took one half of that figure, namely $225.00 per week, and relying upon an actuarial calculation, calculated the loss of earning capacity in the future at $193,950 which he rounded out at $195,000. That was based on a calculation to age 65.

The appellant complains that the approach was artificial and unduly conceptual. Once again the appellant makes the point that the figure is excessive bearing in mind the ability of the respondent to work as a salesman, and bearing in mind the judge�s findings that the respondent�s handyman work showed that he was able to perform moderately heavy work over not insignificant periods of time.

As I have already said, the approach of the judge was one which I would not have adopted. I consider that the better approach is to consider what should be awarded to a man of 28 years of age, who has lost the ability to work in his chosen field as a tradesman, who retains, probably, the ability to work as a salesman of engineering tools and to perform, at least on a casual basis, moderately heavy home handyman work. It is also necessary to recognise the real risk that in the future the respondent will have periods of total incapacity for employment because of minor injuries or strains to the knees, and because of the need for further treatment to the knee. It is also necessary to recognise the impact of degenerative changes in the future. In short, the respondent is a man who at trial was able to find remunerative employment, although there is no specific finding as to its nature and as to the likely rate of earnings.

When I put all those matters into the scales, I am once again of the opinion that the award is a generous one, but not one which can be said to be manifestly excessive. The truth of the matter is that the respondent has sustained a significant loss of earning capacity, because he now cannot fall back on employment as a tradesman or on employment which involves sustained periods of relatively heavy work. At the time of trial he did have the capacity to do moderately heavy work for short periods, and to do work such as the work of a salesman, but even as to those kinds of work there was the risk that in the future there would be interruptions due to further problems with the knee, and there was the possibility of a deterioration in the condition of the knee which might further limit the respondent�s earning capacity. For a man of 28 years of age this was a significant loss.

For those reasons, while I regard the overall award for loss of earning capacity (to trial and after trial) as a generous one, I am unable to say that it is so far beyond what is appropriate as to be manifestly excessive. Nor do I consider that the judge�s approach betrays an error of principle which requires the court to assess the loss of earning capacity in the future for itself. For all those reasons I would dismiss the appeal in so far as it relates to the assessment of damages.Recoverability of Workers Compensation Payments

I have already referred to the fact that his Honour found, for the purposes of assessing damages, that all of the respondent�s loss of earning capacity was attributable to the motor vehicle accident. The appellant was found liable for the aggravation of the knee injury sustained in the fall on 29 March 1990. I have also referred to the fact that the respondent claimed and received payment of compensation from his then employer for the disability sustained in the motor vehicle accident. I have also referred to the fact that the respondent claimed and received payments of compensation in respect of the aggravation of that disability which he suffered as a result of the fall while employed by Rexco. And, as I have noted, his Honour found that that fall was not due to the injury to the knee sustained in the motor vehicle accident, although that fall worsened that injury.

It follows that the injuries sustained in the motor vehicle accident were, as a matter of law, the cause of the incapacity for which damages were awarded.

I have already referred to his Honour�s findings in relation to the aggravation of the knee injury in the fall. In my opinion those findings indicate that his Honour concluded that, but for the existing disability at the time of the fall, the respondent would not have sustained the further injury to his knee which he did sustain in the fall. That is, even though the existing injury did not cause the fall, the fall would not have resulted in injury had it not been for the pre-existing injury. In my opinion his Honour�s findings mean that this was not a case of a second injury which simply added to an existing disability. In my opinion his findings mean that the fall at work is to be regarded as an injury which, because the left knee was in a weakened condition, caused an injury which either would not have occurred but for the existing weakness or would have been significantly less serious. While there is no doubt that incapacity was caused by the fall, because the respondent�s incapacity was greater after the fall than before the fall, the judge�s findings make it clear that the total incapacity is, as a matter of law, to be regarded as also attributable to the injury sustained in the motor vehicle accident. This is, of course, a conclusion of law which rests upon a finding of fact about the respondent�s condition. Although the trial judge did not deal with the point in quite as much detail as I have, I think it is reasonably clear taking his judgment as a whole, that although the injuries sustained in the motor vehicle accident did not cause the fall, the injury which was sustained in the fall was, as the judge himself said, "� a result of the pre-disposition of the injured knee to suffer injury".

Before I pass on from the facts, it is convenient here to deal with one other point. The conclusion which I have reached in relation to the respondent�s complaints about low back pain mean that it follows that the fall did not cause a new and distinct injury being the injury to the lower back. I am by no means certain that it would make a significant difference if it did, but that is not a matter which I have to decide.

As I have already said, the judge assessed damages on the basis that the workers� compensation payments which the respondent had received, and which he was still entitled to claim (the Act does not prevent a person who has recovered damages from later claiming compensation) were recoverable by the Corporation from the respondent. This conclusion was clearly correct in relation to payments received up to the time of the fall. But, it was argued by the appellant, it was incorrect in relation to payments of compensation received after the fall and, although not dealt with explicitly in the argument, in relation to payments of compensation to be received in the future. Accordingly, it was argued, the assessment of damages should have been reduced to take account of the receipt of non recoverable payments of compensation. It is clear that if the payments of compensation were not recoverable, they should have been taken into account in reduction of the assessment of damages to ensure that the respondent did not receive and retain double compensation for the same loss: Manser v Spry [1994] HCA 50; (1994) 181 CLR 428.

The recoverability of compensation payments from a worker who suffers a compensable disability and who has a claim for damages other than the employer for damages in respect of the same disability is regulated by the Act. Section 54(5) provides as follows: "(5) Where - (a) compensation is paid or payable under this Act in respect of a compensable disability; (b) a right of action exists against a person other than the employer for damages in respect of the disability, the person by whom the compensation is paid or payable is entitled to recover from that other person the amount of the compensation in accordance with subsection (7).

And s54(7) provides as follows: "(7) Where - (a) compensation is paid or payable to a person ("the injured party") under this Act; (b) the injured party has received, or is entitled to, damages from another person ("the wrongdoer") in pursuance of rights arising from the same trauma as gave rise to the rights to compensation under this Act; (c) the person by whom the compensation is paid or payable under this Act ("the claimant") is entitled to recover the

compensation by virtue of subsection (5) or (6), then the following provisions apply: (d) the claimant is entitled to recover the amount of compensation paid or payable under this Act from the wrongdoer or the injured party but subject to the following qualifications: (i) no amount may be recovered from the wrongdoer in excess of the wrongdoer�s unsatisfied liability to the injured party; and (ii) the claimant must exhaust its rights against the wrongdoer before recovering against the injured party; and (iii) no amount may be recovered from the injured party in excess of the amount of the damages received by the injured party; (e) the claimant shall, on giving notice to a wrongdoer of an entitlement to recover compensation under this section, have a first charge, to the extent of the entitlement, on damages payable by the wrongdoer to the injured party; (f) any amount recovered by the claimant against a wrongdoer under this subsection shall be deemed to be an amount paid in or towards satisfaction of the wrongdoer�s liability to the injured party; (g) an action for the recovery of compensation under this subsection - (i) may be heard and determined by the Tribunal (constituted of a presidential member); and (ii) must be commenced within 3 years after the date of the trauma referred to in paragraph (b).

The meaning of these provisions was considered by the High Court in Manser v Spry [1994] HCA 50; (1994) 181 CLR 428. In the course of the court�s judgment in that case the court said (at 433-434): "Thus sub-s(7) operates only when the rights in pursuance of which the damages are received arise from the event, or series of events, out of which the right to compensation under the Act arises. If damages are received pursuant to rights which arose from the tortious infliction of the original injury and the right to compensation arose out of a subsequent event which exacerbates the original injury, sub -s(7) does not operate. It operates only when the tortious infliction of an injury is the event out of which the right to compensation arises. That being so, the only right of action referred to in sub-s(5)(b) is a right of action for damages arising when the infliction of an injury by the tortfeasor gives rise to a right to compensation under the Act."

The High Court was there dealing with a case in which the worker sustained an injury under circumstances which gave the worker a right to claim damages for personal injury against Mr Manser. Later the worker suffered an aggravation or exacerbation of those same injuries in a work accident which gave rise to a compensable disability under the Act. The case was dealt with on the basis that Mr Manser, as a tortfeasor, was liable in damages for the consequences of the aggravation or exacerbation of the injury which he caused, unless Ms Spry�s right to compensation under the Act (as a result of the second incident) meant that the damages which she would recover from Mr Manser should be reduced. In that way, as a preliminary to the assessment of damages, their recoverability by the Corporation of the compensation paid to Ms Spry had to be decided. It can be seen that Manser v Spry [1994] HCA 50; (1994) 181 CLR 428 was a different case from the present case. The injury upon which the cause of action in tort was founded did not give rise to a compensable disability. In the present case it did. But, while appropriate allowance must be made for the circumstances of the case being considered by the High Court, I can find no reason to treat what the High Court said as inapplicable to the present case. I therefore propose to apply it. The question therefore becomes, in the present case, whether the compensation payments received by the respondent after the fall at work are recoverable from the appellant. The argument for the appellant was as follows. The motor vehicle accident gave the respondent a right to damages for the injuries sustained in that accident, and a right to compensation because the disability suffered was a compensable disability. Therefore, it was conceded, the tortious infliction of the injury was the event out of which the right to compensation arose. But, it was argued, the position altered after the fall. The judge had found that the damages to be awarded to the respondent included damages for the aggravation or exacerbation of the original injury which resulted from the fall. The injury sustained in the motor vehicle accident was therefore the event out of which the right to those damages arose. But, it was argued, the right to compensation thereafter arose from the fall, and therefore it was no longer the case that the right to damages and the right to compensation arose from one and the same event. Underlying that argument is the premise or assumption that compensation for the incapacity, as it was after the fall, was not paid in respect of the compensable disability sustained in the motor vehicle accident but in respect of, and solely in respect of, the compensable disability sustained in the fall. Underlying that argument was the further premise or assumption that under the Act, in a case such as this, it is necessary to assign an entitlement to weekly payments to an identified single compensable disability, and that under the Act that compensable disability was the compensable disability sustained in the fall. It was argued, and in my opinion correctly, that the respondent did sustain a compensable disability in the fall. It was further argued, and this is a matter for decision, that the incapacity for work for which compensation was paid could no longer be attributed to the compensable disability sustained in the motor vehicle accident. Expressed in the language of the Act, taking into account what was said in Manser v Spry, it was argued that the respondent�s entitlement to damages was in pursuance of rights arising from the motor vehicle accident but that compensation had been paid and was now payable to the respondent in pursuance of rights arising from the fall while employed by Rexco. I mention, to clear it out of the way, the fact that evidence before the trial judge showed that the Corporation, as the person liable to make the payments of compensation, had at one time treated the entitlement to compensation as attributable to the fall and at another time as attributable to the injury sustained in the motor vehicle accident. It was argued that the manner in which the Corporation acted was not decisive, and in my opinion that is correct. It likewise follows, in my opinion, that the manner in which the worker, the respondent, made his claim is likewise not decisive.

In considering the argument advanced by Mr Walsh QC for the appellant, it is necessary to bear in mind the terms of s30 of the Act. Relevantly, s30 provides: 30.(1) Subject to this Act, a disability is compensable if it arises from employment.

(2) Subject to this section, a disability arises from employment if - (a) in the case of a disability that is not a secondary disability or a disease - it arises out of or in the course of employment; or

(b) in the case of a disability that is a secondary disability or a disease - (i) the disability arises out of employment; or (ii) the disability arises in the course of employment and the employment contributed to the disability."

The Act by s3 defines a "secondary disability" as "a disability that is, or results from, the aggravation, acceleration, exacerbation, deterioration or recurrence of a prior disability". It is clear, in the light of his Honour�s findings that the respondent sustained a secondary disability in the fall at work and that, unless the disability could be said to be attributed to the injury sustained in the motor vehicle accident, the claim for compensation fell to be treated under s30(2)(b). It was Mr Walsh�s argument that that was how it fell to be treated, and that the respondent was not entitled to treat his disability as attributable to the injury sustained in the motor vehicle accident and therefore to the original disability. It is appropriate to note that Mr Walsh QC acknowledged that the position would be different if, without any further incident or injury occurring, the respondent had simply experienced a recurrence of the disability sustained in the motor vehicle accident.

It follows that it is fundamental to the appellant�s argument that under the Act, in the case of successive injuries, the Act requires the whole of the resulting disability to be attributed to the latest incident or injury when that resulting disability includes an aggravation (for convenience I use that term only of the various terms used in the definition of "secondary disability") of a pre-existing compensable disability.

In considering this argument it is relevant to note that this was not the position under the Workmen�s Compensation Act (SA) 1971 ("the 1971 Act"). The appellant�s argument acknowledged as much, but argued that the structure of the Act now indicates that the position has changed. To assess that argument it is convenient to consider the position as it was under the 1971 Act.

In Australian Eagle Insurance Company Ltd v Federation Insurance Ltd (1976) 15 SASR 282 King J (as he then was) had before him a case in which a worker in the course of employment with the one employer suffered injury and then later suffered another injury which aggravated the disability caused by the first injury. The employer was insured by different insurers at the time of each injury. The issue was whether the second insurer, who indemnified the employer against the amounts paid for compensation in respect of the second injury, was entitled to contribution from the insurer at the time of the first injury. That in turn depended upon whether the employer could have claimed indemnity from either insurer, which in turn depended upon the question of whether the incapacity in respect of which the compensation was paid resulted from the injury sustained in the first accident. That gave rise to a question of law and to a question of fact. King J referred to previous authority in this court on that point, and in particular to remarks made by Bray CJ in Bratovich v Rheem (Aust) Pty Ltd (1971) 2SASR 33 and in Floreani Bros Pty Ltd v Woolscourers (SA) Pty Ltd (1976) 13 SASR 313. Having referred to those remarks of Bray CJ, King J said (at 287): "The reasoning of the Chief Justice in the above paragraph seems to be compelling and I would reach the conclusion that the incapacity must as a matter of law be treated as resulting from the second accident only if compelled by authority to do so."

King J decided that remarks in Nodens v Galloways Ltd (1912) 1 KB 46, to the effect that when there are two causes which produce a incapacity the second occurring cause must be regarded as the cause of the incapacity, were not applicable to the 1971 Act. He made two points in particular. First, that in the 1971 Act the definition of "injury" to include "aggravation" was inserted to give a worker the ability to have recourse to a subsequent employer in the case of successive injuries productive of incapacity, and not to deprive a worker of rights against the employer at the time of the first injury.

He also made the point that if that were not so, and if the second employer was responsible for the total amount of compensation even though an accident sustained in the employment of the first employer might have contributed to the final incapacity, a worker "might be left with a remedy against a second employer who is impecunious and uninsured"(at 288-289). His conclusion was as follows (at 289):"If the incapacity results in a true sense from more than one accident, a workman must be entitled to claim compensation in respect of all or any of the relevant accidents. If the accidents occur in the employment of different employers, he must be entitled to claim compensation against each employer. If the accidents occur in the employment of the same employer, he is nevertheless entitled to base his claim upon all or any of the accidents. This could be important for the workman in a situation in which the second accident is an aggravation, deterioration or recurrence of the injuries sustained in the first accident and the workman can not recover in respect of the second accident for some technical reason, such as failure to give notice."

In relation to the factual question which then arose, the question of law having been decided in that manner, he treated the approach taken in the assessment of damages at common law as providing the guide. He then said (at 292): "If, at the time of the second accident, the physical consequences of the first accident have stabilised to the degree that they can fairly be regarded as spent and as leaving only a vulnerability to injury from future trauma, the incapacity flowing from the second accident can not be regarded as the result of the first accident but must be regarded as the result of the second accident only � If, however, the workman�s condition is still unhealed or unstable and the incapacity would not have occurred but for that unhealed or unstable condition, the incapacity must be regarded as resulting from the first accident as well as from the second accident. Moreover, where the second accident is a mere aggravation or recurrence of the injury sustained in the first accident and is brought about by ordinary and reasonable conduct on the part of the workman, the consequent incapacity must, in my opinion, be regarded as the result of the first accident as well as the result of the second accident."

To the extent that it is relevant to do so, I remark that I find his reasoning persuasive and I can see no reason to depart from it in relation to the construction of the 1971 Act. The first of the two passages referred to was referred to with apparent approval by Brennan J, giving a judgment in which the other members of the High Court agreed, in Accident Compensation Commission v C E Heath Underwriting and Insurance (Aust) Pty Ltd [1994] HCA 68; (1994) 68 ALJR 525 at 526-527. The High Court there applied that approach to the provisions of the Workers Compensation Act 1958 (Vic).

It is also relevant to note that in Bushby v Morris (1980) 1 NSWLR 81 the Privy Council had cause to consider the same issue in relation to the Workers Compensation Act 1926 of New South Wales. The Privy Council there had cause to consider the issue of liability for an injury which was an aggravation and exacerbation of a pre-existing injury, both injuries being sustained in the course of employment. Their Lordships rejected the view that Nodens v Galloways Limited (1912) 1 KB 46 was to be regarded as laying down any rule of law. It is clear that their Lordships, although not apparently referred to the judgment of King J, preferred the approach which he took. They said (at 87): "It is well established in common law contexts that an

injury or incapacity may be attributable to more than one cause, in the legal sense, operating concurrently. If any authority be required for that proposition, it is sufficient to refer to Baker v Willoughby [1969] UKHL 8; (1970) AC 467, particularly the speech of Lord Reid (at 492), where it is to be observed also that he equiparated the legal view of causation in tort to that in the field of workmen�s compensation. Their Lordships are of the clear opinion that there is indeed no difference between the two, subject to the qualification that in a claim for workers� compensation it is unnecessary

to prove that the incapacity was the natural and probable consequence of the injury. �There is no room for an artificial rule of law, that in such a situation (successive injuries) one or other accident must necessarily be selected as the cause of the incapacity, apparently on an entirely arbitrary or capricious basis."

I therefore approach the matter that the approach which King J took under the 1971 Act is sound and adequately supported by authority. Is there any reason why a different approach should be taken under the Act? Under the Act the Corporation will usually be the person liable to make payments of compensation, but there are two exceptions. The first, which is not of great practical significance, is that in the case of incapacity for work the employer of a worker is liable to pay compensation by way of income maintenance for the first two weeks of a period of incapacity: s46(3). The next exception, which is much more significant, is that in the case of an exempt employer, and there may be many workers employed by such employers, it is the exempt employer who is liable to make all payments of compensation: s46(2). It should also be noted that if an employer fails to make a payment of compensation that the employer is liable to make, the Corporation must make the payment on behalf of the employer: s48(1). It should also be noted that the Corporation has a discretion to undertake the liabilities incurred by an exempt employer during the period of exemption if the exempt employer has ceased to be exempt: s50(1). And it should also be noted that the Corporation must undertake the liabilities of a formally exempt employer if the employer becomes insolvent: s50(2).

So it is true to say that the Corporation will often, perhaps usually, be the person liable to pay compensation, and that the risk of a worker having to pursue entitlements against an employer at the time of a second injury who has become insolvent, is materially diminished. But the fact remains that the issue of contribution may arise under the Act, and will arise in a case like the present if the employer at the time of the first injury is not an exempt employer and the employer at the time of the second injury is an exempt employer. In my opinion this aspect of the Act provides no significant support for an argument that under the Act it is now necessary to attribute the disability to a single event when the disability is the result of a series of injuries.

Nor have I found anything else in the Act which suggests that it was the intention of Parliament in enacting the 1986 Act to displace the approach enunciated by King J, an approach which is well supported by authority in relation to the 1971 Act. Although there are many differences between the 1971 Act and the 1986 Act, it is my opinion that in the relevant respects the two Acts are essentially the same. The relevant definitions are substantially the same. The 1971 Act bases the entitlement to weekly payments on the suffering of incapacity for work. The 1986 Act bases the entitlement to compensation upon the sustaining of a compensable disability. But, subject to that, the underlying approach appears to me to be the same in each Act. I have found nothing in the Act which is clearly inconsistent with the ability of a worker to attribute a compensable disability to more than one incident.

It is true that the Act is drawn in a manner which would cause one to expect a worker who sustains an aggravation to make a new claim for compensation as a result of that aggravation, rather than base the claim for compensation on an earlier incident which first caused the relevant incapacity. But in that respect I do not consider that there is any significant difference between the 1986 Act and the 1971 Act. It is obviously correct to say that Parliament has made it easy for a worker to ignore the complexities which arise in the case of successive injuries, and to address the claim for compensation in respect of aggravation to the employer at the time of the aggravation. But there is every reason why, in interests of workers, Parliament should have done that. There is no obvious reason why, in doing so, Parliament should be taken to have intended to deny to a worker the right to attribute an incapacity to an earlier incident if in fact, as distinct from in law, the disability is attributable to both an earlier incident and a recent incident. And, in my opinion, there are reasons of common sense and justice why Parliament might have contemplated that a worker should be able to attribute a disability to an earlier incident, and why there should be a right to contribution as between the Corporation and an exempt employer when incidents in the course of employment by an exempt employer and a non-exempt employer give rise to the one disability.

I do not consider that the failure of Parliament to legislate to provide for contribution as between successive employers is an obstacle to this conclusion. No such provision was made in the 1971 Act. In my opinion such a situation is adequately covered by equitable principles relating to contribution.

Nor, in my opinion, is it an obstacle to the conclusion which I have reached that Parliament has failed to legislate to prevent a worker from claiming compensation from two employers or twice from the Corporation in respect of a single disability attributable to successive incidents. In s55 of the Act Parliament has provided a prohibition against double recovery under the Act and under a corresponding law, but that prohibition does not apply to double recovery under the Act. I consider that any such difficulties can be dealt with by a common sense approach to the interpretation of the Act, and by a common sense and if necessary robust adoption of the approach which commended itself to the Privy Council in Bushby v Morris (1980) 1 NSWLR 81 at 88: "It is clear enough that a worker who obtains awards against two or more employers in respect of a single incapacity cannot legally enforce both or all of them to the effect of obtaining multiple payment of compensation. Satisfaction of one award will pro tanto release the employers against whom the other awards have been obtained: D�Angola v Rio Pioneer

Gravel Co Pty Ltd (1979) 1 NSWLR 495."

I add that as far as I am aware there was no provision in the 1971 Act prohibiting double recovery of compensation, and apparently that was not seen as an obstacle to the conclusion reached by King J.

I should refer to some other specific provisions of the Act, which might be thought to cause difficulties if the approach which I favour is adopted. The operation of these provisions was not fully canvassed in argument, and I do not express a concluded view on them I merely seek to show that the view which I have expressed appears to fit in with those provisions. Only time will tell if there are problems.

By s35 of the Act weekly payments are paid at a lower rate if the period of incapacity resulting from a compensable disability exceeds one year. In the sort of case under consideration, does the year run from the final injury or from the second injury? The answer is, I consider, provided by s35(7) which provides: "(7) In this section - (a) a reference to a period of incapacity for work is, where the disability results in separate periods of incapacity for work, a reference to the aggregate period of incapacity; (b) a reference to weekly earnings is a reference to weekly earnings of prescribed allowances."

If the incapacity is in fact attributed to an earlier injury, the person liable to pay compensation is entitled to calculate the year from the date of the first injury.

The problem of double compensation for non-economic loss appears to be addressed by s43(6) which provides: "(6) Where - (a) a compensable disability consists of the aggravation, acceleration, exacerbation, deterioration or recurrence of a prior compensable disability;and (b) compensation by way of lump sum has been previously paid under this section, or a corresponding previous enactment; there shall be a proportionate reduction in the amount of the lump sum payable under subsection (2) in respect of the

I consider that the notice provisions, s51 and s52, operate on the basis of the worker�s approach. If the worker treats a second injury as a new compensable disability, notice will be given to the then employer. If the worker asserts that a period of incapacity is attributable to an injury sustained with a previous employer, the making of a claim for compensation appears to be governed by s52(6).

Section 54(7)(g) is set out above. I consider that the 3 year period runs from the date of the injury which is tortiously inflicted. A later aggravation may increase the amount of the compensation payable and recoverable, but does not cause a new 3 year period to run.

I consider that s58A (dealing with reports of return towork by an incapacitated worker) and s58B (dealing with an employer�s duty to provide work to an incapacitated worker) sit comfortably with the approach which I favour.

It is sufficient for me to say that I have not found in these provisions any clear obstacle to the adoption of the approach which I favour on broader grounds dealt with above. For all those reasons it is my opinion, as a matter of law, that the proper construction of the Act does not require that in the case of a disability attributable to successive injuries, one of which is a secondary disability, or where a later incident is an aggravation of an existing disability, that the final or resulting disability be attributed exclusively to the later incident so as to attach the liability to pay compensation wholly and exclusively to the person liable to pay compensation in respect of the later incident.

That being my approach to the question of law, it is now necessary to return to the issue of fact. As to that, in my opinion the answer is clear. In my opinion the effect of the judge�s findings in this case is that in the fall at work the worker�s existing disability was increased or aggravated (to use the statutory term) because the then condition of the worker�s left knee was such that the condition was likely to worsen should the worker fall and put stress or strain upon his knee. Or, to put it a little differently, the condition of the worker�s knee immediately prior to the fall was such that the worker was predisposed to suffer an aggravation of the condition in the event of a fall such as occurred. It is not a case in which one can say that there would have been, as a result of the fall, a disability caused even if the worker was not suffering from a disability of the knee immediately prior to the fall. It follows that the worker�s right to compensation under the Act arises from the injury sustained in the motor vehicle accident, which is the event out of which the right to claim damages arises. It therefore follows that the judge was right to conclude that payments of compensation already made and yet to be made by the Corporation were recoverable from the worker under the Act, and that the amount of such payment should not be taken into account in assessing the damages payable to the respondent.

JUDGE2 BOLLEN J 63. I agree with the reasoning of the Chief Justice on each issue. I would dismiss the appeal.

JUDGE3 NYLAND J 64. I agree that the appeal should be dismissed for the reasons expressed by the Chief Justice. I have nothing to add.