Comcare v Fyfe

REASONS FOR JUDGMENT 1 In this proceeding, Comcare seeks to recover certain sums paid by way of compensation for a work-related injury suffered by the respondent, Paul Gregory Fyfe, Mr Fyfe having settled favourably to himself a common law damages claim he brought against the third party on account of that injury. The proceeding itself is brought under s 48 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act"). The compensation payments sought to be recovered were made under s 19 (compensation for incapacity); s 16 (compensation for medical expenses etc); and s 29 (compensation for household services etc) of the Act. Recovery has been resisted by Mr Fyfe on two grounds - both somewhat arresting - that (i) some part of the compensation paid was, unbeknown to Comcare, paid in respect of a separate injury that was not part of his common law damages claim and was, in consequence, not recoverable under s 48; and (ii) certain compensation paid by way of medical and other expenses was paid directly to third-party service providers and hence was compensation not paid "to" Mr Fyfe for s 48 purposes, notwithstanding that Mr Fyfe's settled common law action claimed these very expenses. 2 While distinctly unattractive in the results they produce - the defence in relation to the medical expenses results in a manifest case of unjust enrichment - Mr Fyfe contends that the structure and language of the Act favour his contention. The Factual Setting 3 This can be stated briefly: 4 (1) On 15 December 1992, Mr Fyfe, then an Australian Federal Police Officer lodged a claim under the SRC Act for injuries suffered in a motor vehicle accident while on duty. 5 (2) On 24 December 1992, Comcare accepted liability in relation to upper back and neck pain caused by the accident. This later was extended to his lower back. 6 (3) Compensation was paid until 13 July 1995 in respect of these injuries but was then terminated, Comcare having determined that Mr Fyfe's ongoing symptoms related to a degenerative process rather than the effect of the 1992 accident. 7 (4) That termination decision was later revoked after an appeal to the Administrative Appeals Tribunal had been lodged contesting it. 8 (5) In 1996, Mr Fyfe, now working for the Department of Defence, sought additional incapacity payments under s 19. This was accepted and compensation was calculated on his earning figure as a police officer prior to the 1992 accident. 9 (6) In late 1995, Mr Fyfe commenced the common law proceedings in the Supreme Court of the Australian Capital Territory and Comcare was notified of this. Mr Fyfe's solicitors were notified of Mr Fyfe's obligation to Comcare under s 48 of the SRC Act in the event of his recovering damages in that action. 10 (7) On 17 April 1998, Mr Fyfe's solicitors wrote to Comcare advising it that the damages claim had been resolved, with judgment entered in Mr Fyfe's favour. Though colourable steps were taken to keep confidential the actual sum awarded - and Mr Fyfe clearly was in breach of his obligation to Comcare under s 48(2) of the SRC Act - the judgment was in the sum of $250,000. This sum was considerably in excess of the compensation paid to him. It was then claimed to be $93,586.42. It has since been revised downwards to $87,987.47, $62,392.45 being attributable to s 19 compensation, the balance to s 16 and s 29 compensation. 11 (8) To date, Mr Fyfe has paid only $9,813.36 of the sum claimed by Comcare. 12 (9) Mr Fyfe indicated in cross-examination that his current employment requires him to administer the provisions of the SRC Act and that he was familiar with the legislation. 13 (10) In October 1995, Mr Fyfe claims he suffered a work-related injury that aggravated and accelerated the injuries arising from the 1992 accident. No application for compensation in respect of this injury was lodged until 17 July 1998. Comcare rejected the application on the ground that the common law damages related to that injury. This decision is being reconsidered by Comcare. The Statutory Setting 14 It is necessary to set out the provisions of some number of the sections of the SRC Act before turning to the parties' submissions. "Compensation for injuries 14.(1) Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment. Compensation in respect of medical expenses etc 16.(1) Where an employee suffers an injury, Comcare is liable to pay, in respect of the cost of medical treatment obtained in relation to the injury (being treatment that it was reasonable for the employee to obtain in the circumstances), compensation of such amount as Comcare determines is appropriate to that medical treatment. … (4) An amount of compensation payable by Comcare under subsection (1) is payable: (a) to, or in accordance with the directions of, the employee; (b) if the employee dies before the compensation is paid and without having paid the cost referred to in subsection (1) and another person, not being the legal personal representative of the employee, has paid that cost - to that other person; or (c) if that cost has not been paid and the employee, or the legal personal representative of the employee, does not make a claim for the compensation - to the person to whom that cost is payable. (5) Where a person is liable to pay any cost referred to in subsection (1), any amount paid under subsection (4) to the person to whom that cost is payable is, to the extent of the payment, a discharge of the liability of the first-mentioned person. … (9) Where: (a) an employee suffers an injury; (b) a person has reasonably incurred expenditure in connection with the transportation of the employee, or, if the employee has died, of his or her body, from the place where the injury was sustained to a hospital or similar place, or to a mortuary; and (c) the employee, or the legal personal representative of the employee, does not make a claim for compensation in respect of that expenditure; Comcare is liable to pay compensation to the person who incurred the expenditure of an amount equal to the amount of that expenditure. Compensation for injuries resulting in incapacity 19.(1) This section applies to an employee who is incapacitated for work as a result of an injury, other than an employee to whom section 20, 21, 21A or 22 applies. (2) Subject to this Part, Comcare is liable to pay compensation to the employee in respect of the injury, for each of the first 45 weeks (whether consecutive or otherwise) during which the employee is incapacitated, of an amount calculated under the formula: NWE - AE Where: NWE is the amount of the employee's normal weekly earnings; and AE is the amount per week (if any) that the employee is able to earn in suitable employment. Compensation for household services and attendant care services 29.(1) Subject to subsection (5), where, as a result of an injury to an employee, the employee obtains household services that he or she reasonably requires, Comcare is liable to pay compensation of such amount per week as Comcare considers reasonable in the circumstances, being not less than 50% of the amount per week paid or payable by the employee for those services nor more than $200. … (5) Comcare is not liable to pay compensation under subsection (1) in respect of any week within the period of 28 days beginning on the date of the injury unless Comcare determines otherwise in a particular case on the ground of financial hardship or the need to provide for adequate supervision of dependent children. (6) An amount of compensation payable by Comcare under subsection (1) or (3) is payable: (a) where the employee has paid for the household services or attendant care services, as the case may be - to the employee; or (b) in any other case - to the person who provided those services. Compensation not payable where damages recovered 48.(1) This section applies where: (a) an employee recovers damages in respect of an injury to the employee or in respect of the loss of, or damage to, property used by the employee, being an injury, loss or damage in respect of which compensation is payable under this Act; or (b) damages are recovered by, or for the benefit of, a dependant of a deceased employee in respect of the death of the employee and compensation is payable under this Act in respect of the injury that resulted in that death. (2) The employee or dependant shall, not later than 28 days after the day on which the damages were recovered, notify Comcare in writing of the recovery of the damages and the amount of the damages. Penalty: $1,000 (3) If, before the recovery of the damages by, or for the benefit of, the employee or dependant, any compensation under this Act was paid to the employee in respect of the injury, loss or damage, or to, or for the benefit of, the dependant in respect of the injury that resulted in the death of the employee, as the case may be, the employee or dependant is liable to pay to Comcare an amount equal to: (a) the amount of that compensation; or (b) the amount of the damages; whichever is less. (4) Compensation is not payable under this Act to the employee in respect of the injury, loss or damage, or to, or for the benefit of, the dependant in respect of the injury that resulted in the death of the employee, after the date on which the damages were recovered by the employee or by, or for the benefit of, the dependant, as the case may be. … (7) Where an employee, or a dependant of an employee, establishes to the satisfaction of Comcare that a part of the damages referred to in subsection (1) did not relate to an injury, loss or damage in respect of which compensation is payable under this Act, subsection (3) applies in relation to that employee or dependant as if the amount of the damages were an amount equal to so much of the amount of the damages as did relate to an injury, loss or damage in respect of which compensation is payable under this Act. Proceedings against third parties 50.(1) Where: (a) an amount of compensation under this Act: (i) is paid to an employee in respect of an injury to the employee or in respect of the loss of, or damage to, property used by the employee; or (ii) is paid for the benefit of a dependant of a deceased employee in respect of an injury that resulted in the death of the employee; (b) the injury, loss, damage or death occurred in circumstances that appear to create a legal liability in a person to pay damages in respect of the injury, loss, damage or death; and (c) proceedings against that person for the purpose of recovering such damages have not been instituted by the employee or by or for the benefit of the dependant, or have been so instituted but have been discontinued or have not been properly prosecuted; Comcare may institute proceedings or fresh proceedings against the person in the name of the employee or dependant for the recovery of damages in respect of the injury, loss, damage or death or may take over the conduct of the proceedings, as the case requires. … (7) Any damages awarded under a judgment obtained in proceedings referred to in this section, or payable as a result of the settlement of such proceedings, shall be paid to Comcare and Comcare shall deduct from the amount of those damages: (a) an amount equal to the total of all amounts of compensation paid to the employee or dependant under this Act in respect of the injury, loss, damage or death to which the proceedings relate; and (b) the amount of any costs of or incidental to those proceedings paid by Comcare; and shall pay the balance (if any) to the employee or dependant. Claims for compensation 54.(1) Compensation is not payable to a person under this Act unless a claim for compensation is made by or on behalf of the person under this section. (2) A claim shall be made by giving the relevant authority: (a) a written claim in accordance with the form approved by Comcare for the purposes of this paragraph; and (b) except where the claim is for compensation under section 16 or 17 - a certificate by a legally qualified medical practitioner in accordance with the form approved by Comcare for the purposes of this paragraph." Submissions and Conclusions The Injury Claim 15 Comcare's case, put shortly, is that the injuries and the only injuries in respect of which compensation was paid between 1992 and 1998 were those suffered in the 1992 accident. No claim was advised to, or made on, Comcare in respect of the 1995 injury until 1998. The incapacity payments made were calculated by reference to Mr Fyfe's 1992 earnings, not his 1995 earnings. 16 Remarkably in my view, the respondent nonetheless submits that because the 1995 accident caused an injury as defined by s 4(1) of the SRC Act, the compensation paid has not been shown to have been received for the first injury. This submission entirely misconceives the scheme of the Act. 17 Section 54 of the SRC Act makes the right to receive compensation for the 1995 injury dependant upon the making of a claim in respect of that injury: see also Lees v Comcare [1999] FCA 753 at para 29. No such claim was made until October 1998 and, in consequence, no payment lawfully could be made in respect of that injury (assuming liability was accepted and the appropriate calculations made for a particular compensation claim, for example, under s 19) until that date. 18 Insofar as Comcare was concerned, it could and did only make payment in respect of the 1992 injury. If, perchance, the medical expenses compensation it provided related, unknowingly, to treatment of an aggravation of the original injuries, that at least was an uncontemplated benefit to Mr Fyfe that Comcare had no obligation to provide. It provided no basis at all for his resisting payment, given the obligation Comcare was actually discharging in respect of the 1992 injury when it made that payment. The 1995 injury is, in the circumstances, quite irrelevant to Comcare's s 48 claim. The Construction of "to" in Section 48 19 To reiterate, s 48(3) refers to payment to Comcare from the damages recovered the amount of compensation "paid to the employee in respect of the injury … or to, or for the benefit of, the dependant in respect of the injury" (emphasis added) that resulted in the employee's death. 20 The respondent invites a quite narrow interpretation to be given to the word "to": it excludes payments made to third parties, whether at the employee's direction or otherwise; it relates only to payments to the employee as such. This construction is said to follow (a) from the internal wording of s 48(3) that refers "to the employee" and "to, or for the benefit of, the dependant", the latter formula showing, it is said, that when a third party payment was intended, Parliament referred to that possibility in express terms; (b) like differentiation is to be found in provisions such as s 16 and s 29; and (c) the SRC Act being an Act which should be given a beneficial construction, the construction of "to" should be one that is favourable to the employee. The remarkable consequence of this construction - not shied away from by Mr Fyfe - is that he can, in effect, "double dip" in respect to payments made to third parties directly if, as is the case here, he is entitled to recover the amount of those payments from the wrongdoer in his common law damages claim. It is to be taken, for present purposes, that the judgment in the damages claim embodied a sum in respect of third party payments (these having been claimed in that proceeding). 21 The applicant contends that: (i) "to" in s 48(3) should be given an interpretation that accords with the purpose of Part IV of the SRC Act, which is to prevent, amongst other things, double recovery by an employee where common law proceedings are brought, either by the employee or, for that matter, by Comcare - it is not a Part of the Act inviting beneficial construction favourable to the employee; (ii) the differentiating language used in provision such as s 16 and 29 of the Act is used in a different part of the Act, having a different - and vis-a-vis the employee a beneficial - policy; (iii) it is used so as to cater directly for contingencies that might otherwise not be considered as falling within the compensatory scheme and language of the Act - for example, s 16(4)(a) would allow by direction for a payment to be made to a third party who had previously paid the employee's costs of medical treatment, a person not naturally to be expected to be in receipt of compensation; (iv) the word "to" in any event is apt to include third party payments and especially ones that relate to the discharge of obligations the employee has to third parties - Comcare contends, by way of example, that the phrase "salary paid to an employee" would comprehend all payments by way of salary made by the employer whether they were paid to the employee, the employee's bank account, the employee's mortgage provider or by direct debit to the employee's union or health fund; and (v) Comcare relies upon the injunction of s 15AA of the Acts Interpretation Act 1901 (Cth) to give a purposive construction to the provision. 22 In my view, the construction propounded by Comcare is to be preferred. First, Part IV has a quite distinct policy and purpose from that of Parts II and III in which sections such as s 16 and s 29 are to be found. It is a purpose designed, inter alia, to prevent "double benefit" to employees in respect of the same injury in the event of a successful damages claim relating to that injury. 23 Secondly, the internal language of s 48(3) provides little assistance in the construction of the word "to". The "for the benefit of" formula has its own provenance in the distinctive provisions of s 17 relating to compensation for injury resulting in death. Moreover, when one contrasts s 48(3) and s 51(7), the latter not including the "for the benefit of" formula, it seems unlikely that Parliament intended payments for the benefit of a dependant were or were not to be recoverable depending upon whether it is a dependant or Comcare that brings the common law claim. This tells against Mr Corr's construction. 24 Thirdly, the construction advanced by Comcare avoids a manifest unjust enrichment, and Parliament is hardly likely either to have intended such an enrichment to be given an employee or else to have intended that in respect of third-party claims Comcare was to have resort to such common law restitutionary claims as may be available to it against an employee apart from the Act. 25 Both defences being without substance and Comcare having made out its claim, I give judgment to Comcare. I will allow the parties seven days to confer as to the sum to be awarded when the matter will be again relisted for formal orders. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.