This matter comes back before me for the finalisation of the judgments.
On 3 November 2023, I entered judgment for the plaintiff against each of the first, second and third defendants in amounts to be agreed or assessed. I directed the parties endeavour to reach agreement on the judgment sums.
The difficulties that arise relate to the interplay between the provisions of the Workers Compensation Act 1987 (NSW) and the Civil Liability Act 2002 (NSW), as well as the common law.
The plaintiff obtained judgments against the first defendant, as occupier, and the second and third defendants, who I will call together the employer.
The problem that arises in finalising the judgments is that there are different statutory regimes for assessing damages as against an employer and as against a third party tortfeasor.
The statutory modifications to the common law were put in place many years ago for the purposes of restricting both damages payable by an employer to an employee and damages payable by a third party tortfeasor.
However, the restrictions on damages payable by an employer to an employee are much more significant than the restrictions contained in the Civil Liability Act. As is well known, that means that the plaintiff recovers judgments against an employer and a third party tortfeasor for differing amounts.
The result of that is that when a third party tortfeasor is seeking contribution from an employer pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW), the amount that the third party tortfeasor can recover from the employer is necessarily less than the full percentage contribution that it would otherwise be able to recover at common law.
The determination of the final judgments is further complicated in this matter because the plaintiff has already received workers compensation from or on behalf of the employer and must repay that workers compensation to the employer.
The employer and the plaintiff agree on the calculation of the judgments. The first defendant does not.
The reason the first defendant disagrees is that, based on the employer's calculations, the first defendant will end up having to pay more than 50 per cent of the damages assessed against it.
The first defendant submits that, whatever way the calculation is undertaken the intention of the statutory schemes was that it, as the third party tortfeasor, would pay no more than the amount that it would have had to pay at common law, that is 50 per cent of the total damages assessed against it.
The employer and the plaintiff do not accept that the end result of all the calculations must be that the first defendant should have to pay no more than 50 per cent of the damages assessed against it.
The first defendant's response to both the employer's and the plaintiff's emphasis on the provisions of the Workers Compensation Act is to point to the principle of joint and several liability and the provisions of the Law Reform (Miscellaneous Provisions) Act 1946. That is, the first defendant submits that, as the judgments are joint and several, it must be that the net effect of any judgment entered against it will be that it cannot be liable to pay more than 50 per cent.
The first defendant puts forward two alternative forms of consent orders. One has a judgment against it for a certain amount, and then a judgment against in its favour on its cross-claim against the employer for an amount that would leave it in a net position of only paying 50 per cent.
The alternative judgment proposed by the first defendant is that the judgment entered against it only be for 50 per cent of the total damages assessed against it, thereby ensuring that it can never be liable to pay more than 50 per cent.
[2]
Judgment against the first defendant
These issues have been the subject of some consideration by the New South Wales Court of Appeal, going back to cases such as Grljak v Trivan Pty Ltd (In Liq) (1994) 35 NSWLR 82. Most recently, the Court of Appeal has considered the methodology which should be applied in calculating the amount of the judgments in similar circumstances in Synergy Scaffolding Services Pty Ltd v Alelaimat [2023] NSWCA 213 ("Synergy").
In Synergy, Simpson AJA set out a formula which explains the methodology in determining the judgment which should be entered against the third party tortfeasor in a case such as this. This was stated as follows at [139]-[140]:
"Expressed as an equation, the effect of s 151Z(2)(c)-(d) [of the Workers Compensation Act] is that, where the conditions in s 151Z(2)(a) and s 151Z(2)(b) are engaged (that is the worker (plaintiff) has a cause of action for damages against both the employer tortfeasor and the third party tortfeasor), the sum of damages (D) ultimately recoverable by the plaintiff worker from the third party tortfeasor is equal to the total damages which would be recoverable from the third party tortfeasor but for the operation of s 151Z(2) (T), minus the difference between the sum that the third party tortfeasor would be entitled to recover from the employer tortfeasor as contribution under s 5 of the 1946 Miscellaneous Provisions Act but for the operation of s 151Z(2)(d) (C), and the amount of contribution that is actually recoverable under s 5 once s 151Z(2)(d) is taken into account (X).
That is, D = T - (C - X), where:
D = the sum of damages ultimately recoverable by the plaintiff worker from the third party tortfeasor;
T = the sum of damages which would be recoverable by the plaintiff worker from the third party tortfeasor but for the operation of s 151Z(2);
C = the sum that the third party tortfeasor would be entitled to recover from the employer tortfeasor as contribution under s 5 of the 1946 Miscellaneous Provisions Act but for the operation of s 151Z(2)(d); and
X = the amount of contribution that is actually recoverable under s 5 of the 1946 Miscellaneous Provisions Act once s 151Z(2)(d) is taken into account."
As I understand it, all parties agree that the Synergy formula applies to the calculation of the judgment entered against the first defendant.
Applying the Synergy formula to this matter leads to the following result:
1. The amount of the damages assessed as against the first defendant is $993,200.
2. The amount of the damages as against the employer is $619,925.
3. The amount of contribution that would have been recovered from the employer (if not for the provisions of the Workers Compensation Act) by the first defendant is $496,600.
4. The amount of the damages that can be recovered by the first defendant against the employer is $309,962.50.
Because of the provisions of the Workers Compensation Act the first defendant thus cannot recover the full 50 per cent from the employer and suffers a shortfall of $186,637.50.
The amount of the judgment which is to be entered against the first defendant is reduced by that amount (that is, the plaintiff suffers a shortfall and not the first defendant) such that the amount of the judgment against the first defendant in favour of the plaintiff is $806,562.50.
Subject to what happens with the first defendant's right to contribution from the employer, the parties generally agree on those calculations.
[3]
Judgment against the employer and on the cross claim
The issue between the parties relates to the amount recoverable by the first defendant from the employer. This brings into play the application of s 151Z(2)(d). The amount of the contribution that the first defendant is entitled to recover from the employer is to be determined as if the whole of the damages were assessed in accordance with the provisions of Div 3 of the Workers Compensation Act.
The employer and the plaintiff submit that s 151Z(2)(c) only determines or regulates the amount of the judgment to be entered between the plaintiff and the first defendant. It is s 151Z(2)(d), coupled with s 151A, which regulates the amount of the judgment to be entered against the employer.
Section 151A is as follows:
(1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act then (except to the extent that subsection (2), (3), (4) or (5) covers the case) -
(a) the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned (including compensation claimed but not yet paid), and
(b) the amount of any weekly payments of compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation, and
(c) the person ceases to be entitled to participate in any injury management program provided for under this Act or the 1998 Act. …
Notably, s 151A(1) commences with the words, "If a person recovers damages...from the employer". It follows that this section applies to the damages which are recovered by the plaintiff from the employer.
There is nothing in the section which tends to suggest that it applies to damages assessed between the plaintiff and the third party tortfeasor.
As set out in s 151A(1)(b), the amount of any weekly payments of compensation already received in respect of the injury is to be deducted from the damages awarded.
It follows that the amount of the workers compensation payments which the plaintiff has received from the employer is to be deducted from any judgment entered against the employer.
In this matter the amount of workers compensation payments received ($179,060.71) must be deducted from the total damages assessed against the employer. In other words, the judgment against the employer is $619,925 less $179,060.71. This amounts to $440,864.29. That is the amount of the judgment. It will be entered in favour of the plaintiff as against the second and third defendants.
The remaining question is then by what mechanism the first defendant can obtain full satisfaction of 50 per cent of its liability by way of contribution from the second and third defendants.
It has already received some satisfaction by means of the reduction in the judgment from the damages assessed of $993,200 down to the reduced figure of $806,560.50.
The first defendant submits that it should be entitled to recover the balance, that is, the balance (to bring it up to the 50 per cent of its total liability) from the employer or, alternatively, that there should be a judgment against it in favour of the plaintiff in the total amount of 50 per cent of its liability.
There is some merit in the first defendant's approach in the sense that contribution is supposed to be fair and equitable having regard to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. However, I must enter judgment in accordance with the legislative provisions.
In my view, having regard to s 151A(1)(b), a judgment can only be entered against the employer for the amount of its liability less the workers compensation payments it has paid.
Finally, in circumstances in which I have assessed contribution equally, the employer cannot be liable to pay more than 50 per cent of the judgment against it by way of contribution.
In the circumstances, any judgment on the cross-claim brought by the first defendant against the second and third defendants is limited to 50 per cent of the judgment against the second and third defendants. As such, the first defendant is entitled to contribution from the second and third defendants in the amount of $220,432.14. I acknowledge that that leaves the first defendant being able to recover less than 50 per cent of the judgment against it from the employer but, in my view, that is the effect of the Workers Compensation Act.
[4]
Slip rule
I note that in my judgment of 3 November 2023, I omitted to include damages for Fox v Wood (1981) 148 CLR 438, and there was a slight mathematical error in the calculations. The parties have agreed that Fox v Wood damages must be included, and that the slight mathematical error be corrected.
[5]
Costs
I will deal with the question of costs.
The plaintiff seeks an order for indemnity costs against the first defendant on two bases.
Firstly, on two occasions the plaintiff made an offer amounting to $750,000 clear of workers compensation payments plus costs. These offers were made on 23 December 2022 and again on 28 February 2023, although the offer on 28 February 2023 was said to be $900,000 inclusive of costs clear of workers compensation payments.
The plaintiff did not avail himself of the Offer of Compromise procedures. The offers were Calderbank offers (Calderbank v Calderbank [1975] 3 WLR 586). At least generally the same principles apply to an assessment of a Calderbank offer as apply to the offer of compromise except that offers of compromise have the benefit of the statutory protection and are generally expressed precisely.
The judgment entered against the first defendant is for $806,562.50. The plaintiff says that he did better than that offer because his offer was $750,000. However, his offer was $750,000 clear of workers compensation payments. The first defendant could not have accepted that offer without either paying the workers compensation payments or getting the second and third defendants to waive their right to recover.
There is no evidence that the second and third defendants would have been prepared to waive their right to recover at that moment, that is, when the offers were made. As such, the first defendant could only have accepted the plaintiff's offer by paying the full amount, an amount which is higher than the judgment sum.
It is a matter for the parties how they go about making offers of settlement. In my view, an offer of an amount clear of workers compensation payments put to a non-employer tortfeasor must be viewed as an offer seeking payment of the total amount, unless of course accompanying that offer is a statement by the employer that it will waive the right to repay to claim workers compensation payments.
In the circumstances, I am not satisfied that the plaintiff ever made an offer higher than the amount that the first defendant has been ordered to pay.
In the circumstances, the first basis on which the plaintiff seeks indemnity costs fails.
The second basis is a little more nuanced. The plaintiff says that this was a case involving dishonesty on the part of the principal of the first defendant, Mr Mourad, and that the first defendant complicated the case in such a way as to increase the costs incurred by the first defendant. This is in circumstances in which the plaintiff succeeded on liability and, as is clear from the judgment, I rejected the arguments put by the first defendant on the question of liability. Indeed, I noted in the judgment that almost everything was put in issue.
It is unfortunate when cases are conducted in such a way that everything is put in issue and it must be that in those cases the plaintiff ends up having to incur more costs than would otherwise be the case.
It may also be that the plaintiff is entitled to feel aggrieved at the defendant's attitude to settlement such as suggesting that a settlement conference should take place by telephone and then making no real offers. However, those representing the first defendant were acting on instructions of Mr Mourad and their insurer client.
Rightly or wrongly - in this case wrongly (in my view) - they must have formed the view that they had a good defence. They must have formed the view that their defence was so good that they would not offer any money to the plaintiff. They decided that they would fight every issue both on liability and damages.
Whilst I made findings adverse to Mr Mourad, this is not a fraud case in the sense that the defendant did not plead fraud and the plaintiff never objected to the defendant cross-examining the plaintiff on the grounds that his version of events was incorrect. The plaintiff never objected to the defendant cross-examining the plaintiff in the way that he did in terms of the medical issues. The case was a hard-fought case but that is often the situation in these sorts of matters.
It turned out that many of the issues pursued by the first defendant were unsuccessful but that does not result in an order for indemnity costs against it. There would need to be much more than merely a defendant conducting a case arguing all issues and refusing to make an offer of settlement for there to be an order for indemnity costs in a case such as this. I might say, that that is why we have the Offers of Compromise process.
In the circumstances, I reject the plaintiff's application for indemnity costs.
The first defendant says that the appropriate orders should be that it pay 50 per cent of the costs to ensure it does not have to pay more costs than it would do because of the provisions of the Workers Compensation Act.
I reject that submission. The plaintiff succeeded against the first defendant. He is entitled to have an order for costs against the first defendant. I am unaware of any law which entitles the first defendant to obtain the benefit of the costs protection afforded by the Workers Compensation Act.
The parties have taken a practical approach to the question of costs on the cross-claim. Either they both get costs on the cross-claim or neither get costs.
In the circumstances where the second and third defendants have taken a practical approach and simply agreed its cross-claim can be dismissed with no order as to costs, the appropriate order is no order as to costs.
[6]
Interlocutory Order
The plaintiff also seeks a variation of the interlocutory order.
Orders were made by Sweeney J, who heard that application. I am not satisfied there is any reason why I should vary those orders.
[7]
Orders
I make the following orders under the slip rule:
1. The judgment at [252] of my earlier judgment of 3 November 2023 to include a Fox v Wood component of $26,850. The total damages assessed as against the first defendant to include that amount, bringing the total damages to $993,200.
2. The judgment at [254], which states total economic loss at $591,975, to be corrected to $619,925.
3. The judgment at [258] is corrected from $187,188 to $186,637.50.
I make the following final orders:
1. Judgment for the plaintiff against the first defendant in the sum of $806,562.50.
2. Judgment for the plaintiff against the second and third defendants in the amount of $440,864.29.
3. Judgment for the first defendant on its cross-claim against the second and third defendants in the amount of $220,432.14.
4. The cross-claim brought by the second and third defendants against the first defendant is dismissed with no order as to costs.
5. The first defendant to pay the plaintiff's costs on the ordinary basis.
1. The second and third defendants to pay the plaintiff's costs in accordance with sch 7 of the Workers Compensation Regulation 2016 (NSW).
[8]
Amendments
12 February 2024 - Coversheet - changed case title.
12 February 2024 - total damages figure at [62] subheading (1).
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 12 February 2024