Ausgrid v Settree Pty Ltd t/as LJ Hooker Budgewoi

Factual background

1. The genesis of the present dispute is an accident that occurred in August 2002 when Ms McLeod, a real estate agent, stumbled and fell on a nature strip in Gwandalan. At the time of the accident, Ms McLeod was employed by Settree. The accident occurred in the course of that employment. Ms McLeod suffered injuries to her back and right leg and hip, as a consequence of which she was entitled to (and was paid) worker's compensation from Settree.
2. Four years after Ms McLeod's fall, Settree sued both Ausgrid (then EnergyAustralia) and Telstra Corporation Ltd in the Local Court of New South Wales to recover the compensation payments that it had made to Ms McLeod. In its statement of claim Settree alleged (at [16]) that either or both of the defendants was in breach of a duty of care owed to Ms McLeod by reason of its negligence in and about the removal of a power pole in about January 1995. It was alleged that Ms McLeod's fall resulted from the manner in which the power pole had been removed, which left or created a hole under soil covering which constituted a danger and a trap ([11], [12], [13]).
3. Relevantly, in the Local Court proceedings, the principal relief claimed (as set out at the commencement of the statement of claim under the heading "Relief claimed") was: 1. Pursuant to s151Z(1)(d) of the Workers Compensation Act 1987, the payment of the amount of Workers Compensation of $10,464.49 by the first defendant [Ausgrid] or the second defendant [Telstra] or both of the first defendant and the second defendant.
4. Settree pleaded that: 20. The plaintiff [Settree] has made Workers Compensation payments to or for the benefit of the worker [Ms McLeod] in respect of her injuries pursuant to the Act [Workers Compensation Act 1987] in the total sum of $10,646.49. 21. In the premises the first defendant [Ausgrid] is liable to indemnify the plaintiff in respect of the Workers Compensation paid pursuant to s 151Z(1)(d) of the Act.
5. Further or in the alternative, a similar claim was made for liability on the part of Telstra to indemnify Settree in respect of the workers compensation paid pursuant to s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW) (the Act).
6. In the prayers for relief at the conclusion of the pleading, what was claimed, in addition to interest and costs, was: (a) The payment of the amount of Workers Compensation in satisfaction of the indemnity pursuant to s151Z(1)(d) of the Workers Compensation Act 1997 [sic] by the first defendant or the second defendant or both the first defendant and the second defendant.
7. On 19 March 2007, an agreement as to judgment was filed in the Local Court. It provided, relevantly, that: The plaintiff and the defendants agree, without admission of liability, that judgment is to be entered in the following terms: 1. Judgment for the plaintiff against the first defendant [Ausgrid] in the sum of $14,000 inclusive of costs and interest. 2. Verdict for the second defendant [Telstra] against the plaintiff with no order as to costs. 3. No interest is payable on the Judgment sum if it is paid within 28 days of the date of service of a sealed copy of the Agreement as to Judgment on the solicitors for the first defendant. …
8. On 7 July 2014, Settree filed a statement of claim in the District Court of New South Wales against Ausgrid claiming an entitlement to be indemnified by Ausgrid in respect of all payments made to, for and on behalf of Ms McLeod pursuant to s 151Z of the Act ([15]) and an order for an indemnity for past and future payments made, or to be made, to, for and on behalf of Ms McLeod pursuant to s 151Z of the Act ([16(a)]).
9. The particulars to [15] of the pleading included that Settree had made payments to, for and on behalf of Ms McLeod pursuant to the Act which totalled $60,987.85 as at 24 January 2013 and that Ausgrid had made an "interim payment" in the amount of $10,646.49, exclusive of interest and costs.
10. It was against that background that Ausgrid then applied for orders that the proceedings be dismissed pursuant to r 13.4(1) of the UCPR or alternatively that the statement of claim be struck out pursuant to r 14.28(1) UCPR.

Primary judgment

1. As indicated earlier, before the primary judge Ausgrid argued that it was entitled to summary judgment on three bases: that the cause of action upon which Settree sued was extinguished as it had merged in the earlier judgment of the Local Court; second and in the alternative, that the original judgment gave rise to an issue estoppel; and third, also as an alternative, that the action could not continue having regard to the principles relating to an Anshun estoppel.
2. Ausgrid's application was heard by Curtis SC DCJ on 20 March 2015. His Honour gave brief ex tempore reasons in which he declined to grant the relief sought.
3. In those reasons, his Honour noted the explanation of issue estoppel found in Blair v Curran (1939) 62 CLR 464 (per Dixon J, as his Honour then was, at 531-532). His Honour concluded that it was not a legally indispensable question of fact determined by the consent judgment that the amount of common law damages could not exceed $14,000. His Honour accepted Settree's submission that the only legally indispensable elements of the initial consent judgment were that: Settree employed Ms McLeod; Ms McLeod suffered injury in the course of her employment with Settree on 27 August 2002; Settree made payments of worker's compensation to Ms McLeod in respect of the injury; the injury was caused in circumstances creating liability in Ausgrid to pay damages in respect of the injuries; and that the damages were equal to or greater than $14,000.
4. His Honour next addressed the reliance placed by Ausgrid on an Anshun estoppel and concluded that it was not unreasonable for a plaintiff to accept full payment of its claim rather than to proceed with the costs of the litigation and said that the legislature could not have intended a result by which it was not possible for a plaintiff employer to accept payment for the full amount of the claim without forfeiting a claim for any subsequent payments.
5. His Honour did not in terms address the question whether the Local Court judgment gave rise to a res judicata in respect of the cause of action now sought to be prosecuted in the District Court.

Statutory Indemnity

1. Settree's claim against Ausgrid in the District Court proceedings (as it was in the Local Court proceedings) was a claim under the statutory indemnity provided for in s 151Z(1)(d) of the Act, which sub-section provides that: 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).
2. Its entitlement under s 151Z(1)(d) is thus an entitlement to a statutory indemnity (Westpac Banking Corporation v Tomassian (1993) 32 NSWLR 207), though it depended on it being established that Ms McLeod's injury was caused in circumstances creating a liability in Ausgrid to pay damages in respect of the injury.
3. In Marks v Roads & Traffic Authority of New South Wales [2004] NSWCA 43; (2004) Aust Torts Reports 81-732, Handley JA (with whose remarks Stein AJA agreed) observed (at [3]) that a new cause of action accrues each time a payment of compensation is made (citing Attorney General v Arthur Ryan Automobiles Ltd [1938] 2 KB 16 CA).

Submissions

1. Ausgrid places weight on what was said by Cole AJA (with whom Mason P and Sheller JA agreed) in Grant v Royal Rehabilitation Centre Sydney [1999] NSWCA 250; (1999) 47 NSWLR 263 (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. The amount of the indemnity provided by s 151Z(1)(d) is limited by the former determination. 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.
2. In essence, Ausgrid's contention is that the settlement of the Local Court proceedings (which occurred after Grant had been decided) must be taken to have determined that the extent of the common law damages which would have been recoverable had they been sued for such was $14,000 and that entry of the consent judgment caused Settree's claim to an indemnity made in the Local Court (not being limited in the prayers for relief to an indemnity in respect of the amounts that had been paid to that date) to merge in the judgment, thus creating a res judicata such that Settree cannot now claim a statutory entitlement to be indemnified for the further worker's compensation payments that it has made.
3. Ausgrid points to the fact that there was no reservation of rights to further recovery in the consent judgment and no explanation as to how the judgment sum of $14,000 was calculated or what it comprised.
4. Insofar as the issue in Grant (that the primary judge had not determined the amount the limit of the statutory indemnity but had merely found that the indemnity claimed was less than the amount which would have been recovered had the worker sued at common law - see [9]) was one that arose because the limit of the indemnity had been put in issue in the proceedings (but not determined by the primary judge), Ausgrid submits that as between the parties in the present case the limit of the indemnity was put in issue by Ausgrid 'engaging' in the settlement agreement that led to the entry of the consent judgment.
5. Ausgrid made clear that it did not suggest that the commencement of the District Court proceedings was an abuse of process on the part of Settree.
6. Settree's response to the reliance placed by Ausgrid on Grant was that the significance of that decision is that the assessment of a notional pool of damages fixes the outer limit of the fund from which indemnity might be had. Settree submitted that while the quantum of the notional pool of damages (and other component parts of the claim for indemnity under s 151Z) are not open to challenge once determined, this is of no relevance to whether a cause of action exists in respect of compensation payments not yet made (citing OCS Australia Pty Ltd t/as Overseas Courier Services v Cho [2010] NSWCA 85 at [8]-[9]).
7. Reference was also made by Settree to what was said in South Eastern Area Health Service v Gadiry [2002] NSWCA161; (2002) 54 NSWLR 495 (by Stein JA at [40]), namely that: … Paragraph (d) of 151Z(1) refers to the "compensation … paid" to the worker, not to "compensation paid or payable". Common sense dictates that compensation payments may begin, cease, change in amount etc, depending on the course of the worker's injuries and treatment, and on decisions made by the insurer or employer. Payments may continue for many years. The nature of an indemnity is that the right to indemnification does not arise until a payment is actually made. This is inconsistent with the respondents' submission that at the moment of the first payment of compensation, the cause of action for that and all future payments of compensation accrues and time starts to run for the single cause of action. (emphasis as per original)

Determination

1. Recently, in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 89 ALJR 750, in the course of its observations as to the place of issue estoppel in Australian law, the plurality in the High Court (French CJ, Bell, Gageler and Keane JJ) confirmed that the merger in a final judgment of rights and obligations in controversy in litigation between parties equates to "'res judicata' in the strict sense" (at [20]), those rights and obligations having ceased to have an independent existence.
2. In the present case, the claim made by Settree in the Local Court proceedings was a claim to be indemnified for payments that it had by then already made to its employee by way of workers' compensation. That is clear from the parts of the pleading extracted earlier. There was no claim by it for an indemnity for worker's compensation payments that it might be required to make in the future. Any cause of action for a statutory indemnity for such payments was not complete as at the time of the judgment entered in the Local Court proceedings. The prayer for relief at the conclusion of the pleading (at (a)) must be read in the context of the relief identified earlier (at [1]) and the pleaded cause of action.
3. The fact that the judgment was for an amount slightly in excess of the amount that had been paid to date by way of workers' compensation does not assist Ausgrid. It cannot be assumed that there was any finding "subsumed" or implicit in the entry of judgment for $14,000 that this was the quantum of any common law damages that would have been recoverable.
4. No cause of action for indemnity in respect of the later worker's compensation payments became merged in the consent judgment that was entered in the Local Court proceedings.
5. Thus, while it may be accepted that the primary judge did not in his reasons address the question whether the res judicata defence was made out, and erred in not dealing with that question, nothing flows from that error. Had his Honour separately approached the summary dismissal application with reference to that issue the application must necessarily still have been dismissed.
6. In determining whether leave to appeal should be granted from an interlocutory decision, what is ordinarily required to be demonstrated is that the matter involves a question of principle or of public importance or an injustice which is reasonably clear in the sense of going beyond what is merely arguable. Something more is required than that the decision is arguably wrong. (See Clarke v State of New South Wales [2015] NSWCA 27; Carolan v AMF Bowling Pty Ltd t/as Bennetts Green Bowl [1995] NSWCA 69; Jaycar Pty Limited v Lombardo [2011] NSWCA 284; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164.)
7. In the present case, it was not suggested that any issue of principle or public importance was involved. Rather, Ausgrid based its application for leave to appeal on the unfairness of it being shut out of an appeal on the res judicata issue in circumstances where it complains that it did not have a proper hearing on that defence. No such unfairness has been established in circumstances where the defence was doomed to failure.
8. Leave to appeal was refused on that basis.

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