Could CSR be liable under s 151Z(1)(d) as a person "other than the worker's employer"?
24In its current form, s 151Z relevantly provides:
"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:
(a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation,
(b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker's injury under this Act, and the worker is not entitled to any further compensation,
(c) if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act,
(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),
(e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages,
...
(2) If, in respect of an injury to a worker for which compensation is payable under this Act:
(a) the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker's employer, and
(b) the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer,
the following provisions have effect:
(c) the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable,
(d) the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages,
(e) if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that:
(i) if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise - the indemnity referred to in subsection (1)(d) is for the amount of the excess only, and
(ii) if the compensation paid by that employer does not exceed the amount of that contribution - subsection (1)(d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution.
..."
25CSR submits that in relation to the worker's injury, it is within the expression "the worker's employer" in the chapeau to s 151Z(1). Therefore, it is not within the description "some person other than the worker's employer" and accordingly cannot be within the description "the person so liable to pay those damages" within s 151Z(1)(d). It argues that the expression "the worker's employer", in relation to a disease of gradual onset, includes any employer who employed the worker in the employment to the nature of which the relevant injury was due. It also argues that as a "former employer" of the worker in that employment it is within the definition of "employer" and, for that reason, included in the expression "the worker's employer". CSR refers to s 15 of the 1987 Act which provides in relation to diseases of gradual onset, that employers other than the employer "who last employed the worker in employment to the nature of which the disease was due" may be liable to make contributions to that last employer in respect of the compensation which is payable. It submits that s 151Z(1) should not be construed in a way which may result in the burden for payment of that compensation being borne as between it and Weathertex other than in accordance with s 15(2A).
26CSR also submits that s 151Z(1) only applies if the "circumstances" under which the relevant injury was caused also create a liability in "some person other than the worker's employer". It argues that this description could not apply to it because the circumstances under which the injury was caused extend beyond the period of the worker's employment by it and also include his employment by Weathertex. In support of this argument, it refers to Kornjaca v Steel Mains Pty Ltd [1974] 1 NSWLR 343 and Kempsey District Hospital v Thackham (1995) 36 NSWLR 492.
27Weathertex contends that the primary judge was correct to conclude that the expression "the worker's employer" refers to the employer liable to pay compensation. It alleges that the worker's carcinoma was caused by his employment by CSR (as distinct from his employment by Weathertex or his employment by both of them). If that allegation is made out, Weathertex says that because it is under no liability to the worker independently of the Act, it is entitled to an indemnity under s 151Z(1)(d).
28I do not understand Weathertex to allege that it is entitled to a more limited indemnity under s 151Z(1)(d) on the basis that the worker was entitled independently of the Act to take proceedings against it and CSR to recover damages so that the provisions of s 151Z(2) might apply. Weathertex and CSR would each be liable to the worker if both negligently exposed him to conditions which materially contributed to the carcinoma. In those circumstances each would be liable for the worker's loss subject to the application to one or both of them of the modified damages regime in Division 3 in Part 5 of the 1987 Act: Grant v Sun Shipping Co Ltd [1948] AC 549 at 563; Dingle v Associated Newspapers Ltd [1961] 2 QB 162 at 188-189; Thompson v Australian Capital Television Pty Ltd [1996] HCA 38; 186 CLR 574 at 600; Elayoubi bhnf Kolled v Zipser [2008] NSWCA 335 at [57]; Gett v Tabet [2009] NSWCA 76; 254 ALR 504 at [367]; Sienkiewicz v Greif (UK) Ltd [2011] 2 WLR 523 at [90]; Amaca Pty Ltd v Booth [2011] HCA 53; 86 ALJR 172 at [70]; Strong v Woolworths [2012] HCA 5; 86 ALJR 267 at [26]; Allianz Australia Ltd v Sim [2012] NSWCA 68 at [41]-[43], [49]. The carcinoma contracted by the worker is an "indivisible" disease as that expression is used in this context, because once contracted its severity is not affected by the quantity of wood dust that has been or continues to be inhaled or ingested.
29The task of construing a statute must begin with the text and have regard to the words used in their legal and historical context. That context includes the existing state of the law and the mischief or object to which the statute was directed: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; 187 CLR 384 at 408. Other relevant authorities are referred to in Wilson v State Rail Authority of New South Wales [2010] NSWCA 198; 78 NSWLR 704 at [12]-[14]; and Griffiths v The Trustees of the Parliamentary Contributory Superannuation Fund [2012] NSWCA 231 at [10].
30Similar provisions to those in s 151Z(1) have been contained in workers compensation legislation since 1897. Those provisions recognised that the worker may have a claim against a third party liable to pay damages independently of the relevant Act as well as a claim under that Act against the person liable to pay compensation. Section 6 of the Workmen's Compensation Act 1897 (UK) provided that the worker could "at his option, proceed, either at law against that person to recover damages, or against his employer for compensation under this Act, but not against both". If compensation under the Act was paid, the "employer [was] entitled to be indemnified" by that other person: see Oliver v Nautilus Steam Shipping Company Ltd [1903] 2 KB 639; Page v Burtwell [1908] 2 KB 758.
31Unlike that earlier provision, s 6 of the Workmen's Compensation Act, 1906 (UK) allowed the worker to take proceedings against the person liable to pay damages and the employer liable to pay compensation but provided that if the worker recovered damages and compensation he was not entitled to retain both. It also provided that if the worker only recovered compensation, the employer was entitled to be indemnified by the third party liable to pay damages. Section 17 of the Workmen's Compensation Act 1910 (Act No 10 of 1910) and s 10 of the Workmen's Compensation Act 1916 (Act No 71 of 1916) were in the same terms as s 6 of the 1906 UK Act. Section 64(b) of the Workers' Compensation Act 1926 (Act No 15 of 1926), which later became s 64(1)(b), was in substantially the same terms as those earlier provisions. The successors of these provisions are ss 150(1) of the 1987 Act, as originally enacted, and s 151Z(1).
32The 1987 Act as originally enacted abolished the worker's entitlement to damages at common law. Section 149(1)(a) provided that a worker was not entitled to recover damages from "the worker's employer" in respect of an injury to the worker for which compensation was payable under the Act "by that employer". In 1989, the Workers Compensation (Benefits) Amendment Act 1989 reinstated the right of the worker to sue the employer at common law but provided for modified common law remedies.
33Section 151Z(1), as did these earlier provisions, regulates the enforcement by a worker of remedies under the common law and under the Act in respect of an injury for which compensation is payable. It is critical to an understanding of the scheme of s 151Z to appreciate that if s 151Z(1) is considered alone, it does not apply where the employer is liable to the worker for damages at common law. That is because its application depends on the injury for which compensation is payable being caused under circumstances creating liability in "some person other than the worker's employer" to pay damages in respect of that injury: see, in relation to s 64(1) of the 1926 Act, Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd [1975] HCA 28; 132 CLR 336 at 341, 348, 351, 352, 354; and, in relation to s 151Z(1) of the 1987 Act; I&J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 at 492-496.
34In Murray-More, the High Court followed the decision of the English Court of Appeal in Cory & Son Ltd v France Fenwick & Co Ltd [1911] 1 KB 114. It held that the right to an indemnity under s 64(1)(b) was given only to an employer who had no liability to the worker independently of the Act. Barwick CJ considered (at 340) that the indemnity was intended to cover the case where "the only liability of the employer to the worker is the statutory liability to pay compensation". Gibbs J described (at 350) the reference to the employer entitled to the indemnity as being to "the person primarily liable to pay compensation". McTiernan J referred (at 348) to the cases to which the indemnity applied as ones "in which the employer has paid workers compensation".
35The third parties against whom the employer has rights independently of the Act are described in s 151Z(1) as persons "other than the worker's employer". Section 151Z(1)(a) permits the worker to take proceedings both against a third party liable for damages at common law and against the employer for compensation. In that event, the worker cannot have double recovery and as between the employer and the third party, the primary burden to compensate the worker is on the third party (s 151Z(1)(b)). The indemnity in s 151Z(1)(d) gives effect to that scheme by entitling the employer who has paid compensation to be indemnified by any third party liable under the common law to pay damages to the worker: see generally per Giles AJA in I&J Foods Pty Ltd v Bergzam Pty Ltd at 492.
36The predecessors of s 151Z(2) are s 150(2) and s 64A of the 1926 Act. Section 64A(2) was enacted in 1980 to regulate the position, not covered by s 64, where the worker was entitled to recover damages independently of the Act, both from "his employer and from another person". As Barwick CJ noted in Murray-More (at 340), at the time s 64 and its predecessors first appeared in workers compensation legislation, there was no contribution between tortfeasors nor any ability for tortfeasors liable for the same damage to be sued in the one action. Section 64A(2) provided that s 64 applied "as if the worker had not been entitled to recover the damages from the employer" and where the worker recovered damages from the third party and not the employer or obtained judgment against both but did not accept satisfaction of the judgment against the employer. In those circumstances, the indemnity in s 64(1)(b) applied subject to three qualifications. They were described in paragraphs (c), (d) and (e) of s 64A(2). Which of those paragraphs applied depended upon the amount of the "compensation paid by the employer" and whether it exceeded or was equal to or less than the amount of the contribution which could be recovered by the third party from that employer. Each of paragraphs (c), (d) and (e) made clear that the "employer" to which s 64A(2) and s 64 referred and applied was the employer liable under the Act to pay compensation to the worker. The same observation may be made concerning subparagraphs (e)(i) and (ii) of s 151Z(2).
37Compensation is payable under s 9(1) of the 1987 Act by the "the worker's employer" in accordance with the terms of the Act. The same expression is used in the chapeau to s 151Z(1). There the context makes clear that the reference is not to the or any "former employer" of the worker at the time of the injury. It is to an employer with respect to a particular injury for which compensation is payable. That employer may or may not also answer the description "former employer" at the time the application of s 151Z(1) is to be addressed. However, that it does so is irrelevant to whether it is the employer liable to pay compensation. The identity of that employer is determined by reference to the injury in respect of which the compensation is payable.
38The definition of "employer" in the 1926 Act did not include a "former employer". That definition was included in s 3(1) of the 1987 Act as first enacted. It is now in s 4(1) of the WIM Act and applies to the 1987 Act unless it "provides otherwise": s 3(1AA); and, except in so far as the context or subject matter otherwise indicates or requires: s 6, Interpretation Act 1987. Neither the Second Reading Speech to the Workers Compensation Bill in 1987, nor the Explanatory Note relating to that Bill, explain why this definition was amended: New South Wales Legislative Assembly, Parliamentary Debates, (Hansard), 14 May 1987, 12205-12213 (Mr Hills). The Explanatory Note does, however, record that Part 5 "continues the substance (with necessary adjustments because of the operation of proposed section 149) of the provisions of sections 64, 64A and 65 of the former Act relating to remedies against an employer and a third person, where both are liable". It is likely, as the primary judge observed, that the definition was amended to make clear that s 149 (which abolished the right to damages at common law) was capable of applying to former employers, as well as to any current employer of the worker.
39Except in the case of injuries consisting of diseases of gradual onset (s 15), or diseases involving the aggravation or exacerbation of a disease (s 16) or being a loss of hearing or further loss of hearing caused by a gradual process (s 17), the employer liable to pay compensation is the employer who employed the worker in the employment which was a substantial contributing factor to the injury received. In relation to those injuries, the employer liable to pay compensation is the employer who last employed the worker in employment to the nature of which the disease was due or who employed the worker in such employment at the time notice of the injury was given: ss 15(1)(b), 16(1)(b) and 17(1)(c). However, the position remains that in all cases there will only be one "worker's employer" liable to pay compensation under s 9. In the case of injuries which are the subject of ss 15, 16 or 17, that employer may have a statutory entitlement to recover contribution in respect of that compensation from earlier employers: ss 15(2), 16(2), 17(1)(d). However, none of those earlier or former employers is liable to pay compensation to the worker under s 9. In the earlier legislation on which these provisions are based there were similar provisions which made one employer liable to pay compensation and provided for the recovery of contribution from other employers of the worker in employment of the same nature: see s 8(1) of the 1906 Act (UK); s 12(1) of the 1916 Act; and s 7(4) of the 1926 Act.
40A construction of "worker's employer" as referring, with respect to an injury, to the employer liable to pay compensation for that injury under s 9(1) of the 1987 Act gives effect to the object of s 151Z, does not lead to unreasonable results, is consistent with the provisions of s 151Z(2)(e) and is not inconsistent with the operation of ss 15(2), 16(2) and 17(1)(d) which provide the statutory right to contribution.
41The Act does not take away the worker's right at common law to sue a previous employer in the position of CSR for a disease caused solely by its employment of the worker. Section 151Z(1) should be construed consistently with that being the position and as allowing, by paragraph (a), the worker to take proceedings against the employer liable to pay compensation and any third party liable independently of the Act, even if that third party is a former employer. Paragraphs (b) and (c) of s 151Z(1) prevent the worker from having double recovery and provide that the primary burden for the compensation falls on any third party so liable. Paragraph (d) produces the same outcome as between such a third party and the employer liable to pay compensation as would be produced if the worker recovered damages from the third party and had to refund to the employer any compensation received.
42If the references to a person "other than" the worker's employer were not capable of applying to a previous employer in the position in which CSR is alleged to be, s 151Z(1) would not regulate the exercise of all of the worker's common law rights of recovery in respect of the compensable injury or provide the employer liable to pay compensation with rights of recovery as against all persons liable independently of the Act to the worker. Furthermore, if paragraph (a) is construed as permitting the worker to take proceedings against an earlier employer such as CSR but the indemnity in paragraph (d) is not construed as extending to such an employer, whether the employer who has paid compensation ultimately bears the burden of that payment will depend on whether the worker chooses to recover damages from all persons liable independently of the Act before seeking to recover any compensation from the employer liable to pay compensation under the Act.
43These provisions operate in the same way if the compensable injury is a disease of gradual onset and the employer liable to pay compensation as the last employer has recovered contribution in respect of that compensation from earlier employers under s 15(2) of the 1987 Act. Assume, as Weathertex alleges, the worker's carcinoma was caused solely by his employment by CSR. In that event, the worker could take proceedings for damages against CSR and also recover compensation under the Act from Weathertex. Weathertex may then be entitled to contribution in respect of its liability for compensation from an earlier employer under s 15(2). That subsection would not apply to CSR in this case because it was not an employer during the twelve months before the date of the claim. If the worker recovered first compensation from Weathertex and then common law damages from CSR, he would have to repay the compensation to Weathertex which in turn would have to refund any contributions received from earlier employers. As between CSR and Weathertex, the ultimate burden of the liability for compensation would be borne by CSR as the party liable to the worker independently of the Act. If the worker recovered compensation from Weathertex, but did not take proceedings against CSR, Weathertex could enforce the indemnity under s 151Z(1)(d). Provided it established that CSR was solely liable as alleged, it would recover that compensation (net of any contribution it may have recovered under s 15(2)). The result is the same as it would have been had the worker recovered first compensation from Weathertex and then damages from CSR. In either scenario, CSR would bear the ultimate burden of the compensation payments.
44For these reasons, the expression "the worker's employer" in s 151Z refers to the employer liable to pay compensation under s 9(1) of the Act.
45Finally, it is necessary to consider CSR's argument that the circumstances under which the injury was caused were not capable of creating a liability in CSR. That argument must also be rejected. Those circumstances were that the worker was exposed to wood dust in the course of his employment at the Raymond Terrace factory over the period from 1965 to February 2004. They are capable of creating a liability in CSR for negligence as the worker's employer during part of that period on the basis either that the carcinoma was solely caused by his employment with CSR or that its development was materially contributed to by the employment of CSR and Weathertex.
46The facts of the present case are different from those in Kornjaca v Steel Mains Pty Ltd and Kempsey District Hospital v Thackham. Here there is only one injury and it occurred in circumstances which are alleged to give rise also to CSR's liability. Kornjaca involved successive injuries to a worker's back which were unrelated both as to the occasion when they occurred and cause and each involved a separate employer/tortfeasor. The second employer sought an indemnity from the first under s 64(1)(b). It failed because the second injury did not occur under circumstances which created a liability in the first employer. The liability of the first employer existed before the circumstances involving the second employer occurred. Thackham also involved successive injuries to a worker's back in the course of different employments. This Court, applying Kornjaca, held that the second employer who had not been negligent, was not entitled to an indemnity under s 151Z(1)(d) because the circumstances of the second accident did not create any tortious liability in the first employer.
47The primary judge correctly answered this second question in the affirmative.