Esso Australia Ltd v Victorian WorkCover Authority & Anor [2000] VSCA 74

Esso Australia Ltd v Victorian WorkCover Authority & Anor [2000] VSCA 74 - VSCA 2000 case summary — Zoe

[31]

On the hearing of these appeals, the Court was informed by counsel that there has been little consideration given by appellate courts to the proper construction of s.138 of the Act, which was introduced into the legislation in its present form by Act No. 50 of 1994. The history of the section and, more particularly, its predecessors was traced by this Court in Scott v. Bowyer [1998] 1 V.R. 207 at 220. On its face, the section appears to contemplate a comparison between two discrete amounts and the determination of the entitlement to indemnity in accordance with the lesser of those amounts. Thus, sub-s.(3)(a) calls for a calculation of amounts "paid or payable" by the employer or insurer pursuant to the Act "in respect of the injury". Sub-s.(3)(b) calls for a calculation of a notional sum of damages payable by a negligent third party to the worker at common law in respect of pecuniary and non pecuniary loss and adjusted by reference to the third party's responsibility for that loss. Although the section states that it is the "lesser" of these two amounts which constitutes the indemnity "which a third party is required to pay", his Honour's orders appear to reflect a "hybrid" of the two calculations; his first order being made under sub.s.(3)(a) to provide an indemnity in respect of compensation payments made under the Act to the date of trial; and the second order being made to accommodate the calculation under sub-s.(3)(b) in order to provide a "ceiling" beyond which indemnity in respect of future payments of compensation could not go. This was the manner in which his Honour was invited to construe s.138 and it was also the manner in which counsel, on this appeal, have invited us to construe the section. It was said - and I think with some justification - that to give s.138 any other construction would make it, for practical purposes, unworkable. Thus, it is said that the words "the amount of compensation paid or payable under this Act", where appearing in sub-s.(3)(a), should be read as meaning "accrued and payable"; and that they cannot reasonably contemplate an amount produced by a calculation of all future payments which might be payable to the worker pursuant to the Act. Further, it is said that sub-s.(3)(b) is to be construed as providing a "ceiling" to the indemnity contemplated by the section - a "ceiling" produced, as I have said, by the third party's notional liability at common law for pecuniary and non pecuniary loss, and then reduced in accordance with the third party's share of responsibility for that loss. Construed in this way, it is said, the court can identify, once and for all, an entitlement to indemnity against a negligent third party which will not exceed that party's proportionate responsibility for the worker's notional damages at common law for pecuniary and non pecuniary loss. If the notional damages at common law, assessed in accordance with sub-s.(3)(b), are less than the amounts of compensation already paid or accrued and payable, then the entitlement to indemnity contemplated by the section remains the amount so assessed. Thus, the formula calculation in every case governs the indemnity entitlement in employer or insurer and the liability of the negligent third party.

[44]

In my opinion, the appellant's counsel is correct in contending that the judge, in calculating the amount of notional damages for pecuniary and non pecuniary loss in accordance with the formula in s.138(3)(b), was in error in allowing as part of that loss an amount for damages in the nature of interest. The respondents' counsel contended before us that such an amount was properly included as part of the worker's notional pecuniary loss because it is an amount of damages which the worker would have been entitled to recover had he been permitted to bring an action at common law against the negligent third party, Esso. However, the formula in s.138(3)(b) for calculating the notional common law damages for pecuniary loss is confined to an amount which the negligent third party "would have been liable to pay in respect of the injury" and, in my view, damages in the nature of interest are not "pecuniary loss damages" paid "in respect of the injury". Rather interest is awarded under the Supreme Court Act for an entirely different purpose; namely for the plaintiff being held out of his entitlement to damages between the date of commencement of the action and the date of judgment. If it been intended that such loss should be taken into account in the calculation required by the sub-s.(3)(b), then no doubt the legislature would have said so. However, in my opinion, the structure of sub-s.(3) and the purpose for which the calculations are to be made - namely, the calculation of amounts representing the scope of an indemnity against payments of compensation paid or payable - would suggest that the inclusion of an amount for interest on notional damages is otiose to that structure and purpose. Counsel for the respondents submitted, I thought somewhat faintly, that although the inclusion of a sum for interest cannot be seen to be directly accommodated within the words of the sub-section, nevertheless the notional award of such a sum could be justified upon the basis that it is pecuniary loss which derives from other pecuniary loss payable in respect of an injury and thus is to be seen as indirect pecuniary loss payable in respect of the injury. For the reasons already stated, I reject that submission. The introduction of an interest component into the formula stipulated in Sub-s.(3)(b) would, in my view, introduce speculative factors foreign to the intent of the legislature; factors such as when the injured worker would have brought his proceedings and the length of time between commencement of proceedings and the date of judgment and/or settlement. The ground of appeal, in my opinion, is accordingly made out. If the other members of the Court agree that this ground should succeed, paragraph 3 of the orders made by his Honour on 10 December 1998 will need to be altered to substitute a figure of $277,795.22 for the figure of $421,795.22 contained in that order.

[55]

It can be accepted that the authorities relied upon by the judge and by counsel for the respondents establish that the words in s.60 of the Supreme Court Act are, in appropriate cases, to be given a broad meaning and to comprehend claims for recovery of damages or compensation in a far wider field than actions to recover damages in tort or contract. But in each of those cases it could be seen with some clarity, in my opinion, that the proceeding was one for the recovery of debt or damages. Thus, in the Mario Piraino case, supra, interest was held to be payable pursuant to s.60(1) of the Supreme Court Act upon compensation claimed and awarded, pursuant to the Planning and Environment Act 1987, for loss suffered as a consequence of land being reserved for a public purpose. The judge rejected the argument that "damages" in s.60 should be confined to compensation for a wrong that is either a tort or breach of contract. In the B.P. Exploration Co. (Libya) case, supra, the House of Lords concluded that interest was payable, pursuant to the English equivalent of s.60, upon sums recovered by an injured party to a contract pursuant to the Law Reform (Frustrated Contracts) Act 1943. Each case was, and in my opinion can be seen to be, discretely different from a claim for the statutory indemnity conferred by s.138 of the Act. Likewise, the cases of Crisp & Gunn Co-operative Ltd. v. Hobart Corporation, supra, and Lumley Life Ltd v. I.O.O.F. Friendly Society, supra, upon which the respondents relied before us, do not support the contention that the claim for the statutory indemnity is a "proceeding for the recovery of debt or damages". Each was concerned with the question whether the action in question was an action to "recover debt or damages" sufficient to support a payment into court within the meaning of the relevant rules. In each case, the court was able, and in my view entitled, to conclude that the action in respect of which the "payment in" was made was one "to recover debt or damages". However, and for the reasons which I have given, a claim under s.138 of the Act to establish an entitlement to indemnity can, in no way, be distorted into such a proceeding. To award interest on sums ordered to be paid in partial satisfaction of an indemnity entitlement will simply, as it has in the Esso case, distort the nature and extent of the right conferred by s.138.

At a glance

Court

Decision date

Before

Source

Judgment (68 paragraphs)

Parties