Supreme Court of NSW|1996-09-26|Before: Sheller JA, Meagher JA

The application of these principles would lead to the result that s44 prevented Mr Flaviano claiming damages against the Commonwealth for the injury Mr Flaviano sustained and therefore prevented Mr King recovering any contribution from the Commonwealth for the damages payable by him in respect of that injury.

Mr King relied upon the High Court's decision in Brambles Constructions Pty Limited v Helmers [1966] HCA 3; (1966) 114 CLR 213. In that case the respondent suffered judgment at the hands of one of his employees for damages in respect of an injury to him caused by the respondent's negligence. During the course of the proceedings the respondent served a third party notice on the appellant claiming that the appellant by its tortious conduct had caused or contributed to the damage. At the date when the respondent was sued by his employee, less than six years had elapsed since the occurrence of the damage in respect of which the workman sued, but at the date when the respondent gave his third party notice to the appellant, more than six years had elapsed. Thus, had the workman sued the appellant at the date the third party notice was given or any time subsequent thereto, and the appellant had pleaded the appropriate statute of limitations in that action, the appellant would not have had judgment against it in respect of the workman's claim; see 217. The Court held that s5 (1) (c) of the LR Act did not make available to the defendant tortfeasor in an action for contribution any time limitation which would have been available to him in an action for tort brought against him by the injured party; 220. A tortfeasor who had come under an enforceable obligation to pay money for the damage caused by his tortious act was entitled to recover contribution from any other tortfeasor who, had he been sued , would have been liable for the same damage. At 225 Owen J said:

"The result is then that if there was any time after the injured plaintiff's cause of action accrued when the third party, if he had been sued by that plaintiff, would have been held liable, he is a tortfeasor who may be required to make contribution to another tortfeasor against whom judgment has been given."

The Commonwealth argued that by contrast in the present case there was no time at which, if sued, it would have been liable for the same damage. However Mr King relied upon the principles expounded in Brambles v Helmers and in particular upon the terms of s45 of the SRC Act. Section 44 (1) is expressed to be subject to s45. Section 45 provides:

(a) compensation is payable under section 24, 25 or 27 in respect of an injury to an employee; and

(b) the Commonwealth, a Commonwealth authority, a licensed corporation or another employee would, but for subsection 44 (1), be liable for damages for any non-economic loss suffered by the employee as a result of the injury;

the employee may, at any time before an amount of compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against the Commonwealth, the Commonwealth authority, the licensed corporation or other employee for damages for that non-economic loss.

(a) subsection 44 (1) does not apply in relation to an action or other proceeding subsequently instituted by the employee against the Commonwealth, the Commonwealth authority, the licensed corporation or the other employee for damages for the non-economic loss to which the election relates; and

(b) compensation is not payable after the date of the election under section 24, 25 or 27 in respect of the injury.

(4) In any action or proceeding instituted as a result of an election made by an employee, the court shall not award the employee damages of an amount exceeding $110,000 for any non-economic loss suffered by the employee."

Mr Flaviano never elected in writing to institute an action or proceeding against the Commonwealth for damages for non-economic loss. He did elect to receive compensation under the Act for permanent impairment and non-economic loss.

A question was raised by the Bench as to whether if Mr Flaviano had, without making any previous election in writing, sued the Commonwealth to recover damages for non-economic loss suffered by him as a result of the injury, he would have thereby elected in writing in accordance with s45 (1). The parties provided further submissions on this point and referred to decisions of Judge Villeneuve-Smith in the County Court of Victoria, O'Reilly v Reserve Bank of Australia (unreported) 18 August 1989, and of Judge McMurdo in the District Court of Queensland, Grogan v The Commonwealth (unreported) 5 June 1996. In the first it was held that the commencement of proceedings was not an election in writing for the purposes of the section and in the second it was held that it was. The Commonwealth has appealed from the second decision.

An election is a choice of alternative rights or claims. It may be made expressly or implied from conduct; see Meagher, Gummow and Lehane, Equity Doctrine and Remedies, 3rd ed, at para 3915. While in some circumstances the institution of proceedings may be treated as an act of election, strictly speaking it is conduct from which an election may be inferred. Section 45 speaks of the employee electing in writing. I would infer that the employee is required so to express his or her election so that there can be no doubt about the matter. The requirements of the subsection are not met by conduct from which an election could be implied, such as the institution of proceedings to recover damages. That this is so finds support in the language of s45. Subsection (2) provides that when an election is made, subs (1) does not apply in relation to an action or other proceedings subsequently instituted by the employee against the Commonwealth (my emphasis). Subsection (4) speaks of any action or proceeding instituted as a result of an election (my emphasis). With the greatest respect to the opinion of her Honour Judge McMurdo in Grogan v The Commonwealth, I do not think Mr Flaviano made an election in writing to institute an action or proceeding within the meaning of s45 (1) by instituting the action or proceeding.

Mr Bartlett, who appeared for Mr King, submitted with some force that by the interaction of s44 and s45, the Commonwealth was a tortfeasor within the meaning of s5 (1) (c) of the LR Act which would, if sued, have been liable in respect of the damage claimed by Mr Flaviano against Mr King for so long as Mr Flaviano's right to make an election under s45 (1) remained open. This argument has force, particularly when it is remembered that if the Commonwealth, although a joint tortfeasor, is not liable to make contribution to another joint tortfeasor, the whole of the liability is thrown onto that other joint tortfeasor, although the extent of its responsibility for the damage may be considerably less. However I do not think the argument should prevail.

If one ignores s45, s44 provides that an action for damages does not lie against the Commonwealth in respect of an injury sustained by an employee in the course of his or her employment. The application of the principle stated in Unsworth leads in that situation to the conclusion that the Commonwealth could not be required pursuant to s5 (1) (c) to make any contribution to another tortfeasor liable for the same damage. Section 44 (1) is subject to s45, subs (2) of which provides that, "(w)here an employee makes an election", s44 (1) does not apply in relation to an action subsequently instituted by the employee against the Commonwealth for damages for the non-economic loss to which the election relates. This language, in my opinion, forces the conclusion that unless and until an employee makes an election s44 (1) applies and no action lies. Put another way, until Mr Flaviano made an election in writing to institute an action, s44 (1) prevented him from suing the Commonwealth in respect of the injury sustained by him.

We were referred to a number of cases. Only one deals with the problem that arises here. In Pearce v Crown Equipment Pty Limited (unreported), Supreme Court of the Australian Capital Territory, 26 May 1995, Gallop J held that a plaintiff had no cause of action against the Commonwealth in the absence of his election to institute an action or proceeding against it instead of claiming compensation. It was not to the point that if the plaintiff had made such an election pursuant to s45 (1), s44 (1) would not apply. His Honour said that the important words of s45 (2) (a) were that s44 (1) did not apply in relation to an action or other proceeding subsequently instituted by the employee against the third party, ie subsequent to the election (his Honour's emphasis). On relevantly similar third party contribution legislation his Honour reached the same conclusion as I have.

2. Set aside the decision of his Honour Judge McLachlan of 26 April 1995 refusing leave to the appellant to file an amended defence to the third party notice;

3. In lieu thereof order that leave be granted to the appellant to file an amended defence to the third party notice pleading the effect of s44 of the Safety, Rehabilitation and Compensation Act 1988;

4. The costs of the application before Judge McLachlan to be costs of the cause;

5. The second respondent to pay the costs of the appellant and of the first respondent of the appeal but to have a certificate under the Suitors' Fund Act 1951, if so qualified.

Rehabilitation and Compensation Act 1988

Reform (Miscellaneous Provisions) Act 1946

Rehabilitation and Compensation Act 1988

Reform (Miscellaneous Provisions) Act 1946

Commonwealth of Australia v Flaviano and Anor [1996] NSWSC 451 (26 September 1996)

Section 44 (1) of the SRC Act provides, relevantly, that subject to s45, an action or other proceeding for damages does not lie against the Commonwealth in respect of an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth would, but for the subsection, be liable (whether vicariously or otherwise) for damages. It was common ground that Mr Flaviano was at the time of his injury an employee of the Commonwealth and that the injury was sustained in the course of his employment. In its proposed defence to the third party notice the Commonwealth relied upon s44 (1) of the SRC Act to contend that either Mr Flaviano had no cause of action against it (Georgiadis v Australian and Overseas Telecommunications Corporation [1994] HCA 6; (1994) 179 CLR 297) or it had a complete defence to such a cause of action and hence that Mr King could not recover against it under the third party notice.

Section 5 (1) (c) of the Law Reform (Miscellaneous Provisions) Act 1946 (the LR Act), so far as material, provides that where damage is suffered by any person as a result of a tort, any tortfeasor liable in respect of that damage may recover contribution from any tortfeasor who is, or would if sued, have been liable in respect of the same damage. The appellant submitted that the subsection enabled Mr King to recover contribution from it only if it was liable, that is to say responsible in law, for the same damage, that is the damage claimed by Mr Flaviano against Mr King, and that, by force of s44 (1) of the SRC Act, the Commonwealth was not liable for that damage, or any part of it, and would not have been so liable if sued by Mr Flaviano. In Nickels v Parks [1948] NSWStRp 61; (1948) 49 SR (NSW) 124 at 129, Jordan CJ characterised the action to recover a contribution or indemnity, not as one against the third party corporation for negligence in the performance of its statutory duty to the claimant but as one to recover a contribution provided for by statute because the third party had injured, not the claimant, but somebody else, in the negligent performance of its statutory duty. Thus a provision that no action should be commenced against the third party for breach of duty until after a notice of such intended action had been delivered had no application to the third party proceedings. In Unsworth v Commissioner for Railways [1958] HCA 41; (1958) 101 CLR 73 at 91, Taylor J said that the cause of action given by an equivalent section in a Queensland Act to claim for a partial indemnity was in no sense an action to recover damages in respect of personal injury; see also per Fullagar J at 86. However it was implicit in the section that the amount of the liability to pay contribution could not be greater than the amount of the primary liability. At 87 Fullagar J said:

Commonwealth of Australia v Flaviano and Anor [1996] NSWSC 451

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Commonwealth of Australia v Flaviano and Anor [1996] NSWSC 451 (26 September 1996)