Workers Compensation - Alternative rights against employer and/or third parties and consequences thereof - Actions for damages against employer - Statutory constraint on actions for damages - Generally - Labour hire worker - Claim for damages against principal that engaged labour hire company - Whether principal was an "employer" - No claim for compensation against principal.

Workers Rehabilitation and Compensation Act 1988 (Tas), ss29(1), 132, 138AB.

Workers Compensation - Alternative rights against employer and/or third parties and consequences thereof - Rights of and against third parties - Right of employer to indemnity or contribution from third party - Indemnity from "person liable to pay damages" - Labour hire worker - Liability of principal to indemnify employer - Determination of worker's impairment of not less than 30% - Election to claim damages not made by worker when required.

Workers Rehabilitation and Compensation Act 1988 (Tas), ss134(1), 138AB.

Workers Rehabilitation and Compensation Amendment Act 2007 (Tas), s34.

Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261; Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd [2005] TASSC 86; (2005) 15 Tas R 88, followed.

Judgment Number: [2012] TASSC 80

DAMIEN SCOTT FISHPOOL v INCAT TASMANIA PTY LTD and

THE TESA GROUP PTY LTD v INCAT TASMANIA PTY LTD

1 On 6 April 2005 a worker named Damien Fishpool ("the worker") was injured in the course of his work. His employer was a labour hire company named The TESA Group Pty Ltd ("TESA"). He was working at the premises of Incat Tasmania Pty Ltd at Derwent Park. Incat had an agreement with TESA to supply his labour, for him to work at Incat's premises.

2 The worker made a claim for compensation against TESA under the Workers Rehabilitation and Compensation Act 1988 ("the Act") with respect to his injury. TESA did not dispute liability. It made some payments of compensation.

3 Subsequently, two actions were commenced in this Court in respect of his injury. In the first action, the worker sued three defendants - Incat, Skilled Group Ltd, and TESA - for damages for negligence. He has subsequently discontinued that action as against Skilled Group Ltd. In the second action, TESA sued Incat seeking reimbursement of the compensation paid by it, relying on s134(1) of the Act.

4 As at the date of the worker's injury, the Act contained provisions that placed restrictions on the institution of proceedings for damages. Under s138AB(1), a worker was required, before commencing proceedings in court, to lodge an election to claim damages with the Workers Rehabilitation and Compensation Tribunal ("the tribunal"). By virtue of s138AB(2), a worker was required not to make such an election unless the degree of his or her permanent impairment was "agreed by the worker and the employer, or determined by the Tribunal, to be a percentage of the whole person of not less than 30%".

5 The worker did not lodge an election with the tribunal in accordance with s138AB(1) before commencing his action for damages. Incat contends that, as a result, neither the worker's action nor TESA's action can succeed against it. In each of those actions, it has pleaded defences based on the worker's failure to comply with s138AB. On 18 October 2011 Holt AsJ made orders requiring the issues raised by the relevant paragraphs in Incat's pleadings to be determined before the other issues in the two actions. I am therefore now determining those issues. Counsel for all parties have made submissions to me on the basis of agreed facts.

6 The provisions in the Act restricting the availability of common law damages are contained in Div2 of PtX. That division was inserted by the Workers Rehabilitation and Compensation Amendment Act 2000, s70, which commenced on 1 July 2001. Some amendments to the relevant provisions were made by the Workers Rehabilitation and Compensation Amendment Act 2007, ss35 and 36. By virtue of s2(3) of the 2007 Act, those amendments applied with retrospective effect, as from 1 July 2001. Under s138ABA of the Act, the retrospective amendments did not apply to proceedings that were pending on 31 October 2007. However that exception is of no present relevance since the worker's action was instituted on 31 March 2008. Section 138AB was further amended by the Workers Rehabilitation and Compensation Amendment Act 2009 but, by virtue of s164A of the Act, the 2009 amendments do not apply in respect of an injury suffered before they came into effect. The result of all this is that the issues as to Incat's liability to the worker have to be determined by reference to the Act as in force on 6 April 2005, subject to the 2007 retrospective amendments.

7 After those amendments, s138AB(1) and (2) provided as follows:

"138AB ¾ (1) Before commencing proceedings in court for an award of damages, a worker who intends to seek damages against an employer must lodge with the Tribunal an election to claim damages

(2) A worker is not to make an election unless the degree of his or her permanent impairment is agreed by the worker and the employer, or determined by the Tribunal, to be a percentage of the whole person of not less than 30%."

8 Incat contends that it was "an employer" for the purposes of s138AB; that the worker did not lodge an election under that section with the tribunal before commencing proceedings; and that his action against it must therefore fail. It relies on the definition of "employer" in s132, which has always read as follows:

"132 ¾ In this Part, unless the contrary intention appears ¾

'employer', used in relation to an injury suffered by a worker, includes any person who, in respect of that injury, is liable, under section 29, to pay compensation or to indemnify any other person for any compensation paid by that other person."

9 Incat contends that, for the purposes of that definition, it is a person who, in respect of the worker's injury, was liable under s29 to pay compensation. It relies on s29(1), which at all material times has read as follows:

"(1) Where a person (in this section referred to as 'the principal') in the course of, or for the purposes of, his trade or business contracts with any other person (in this section referred to as 'the contractor') for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal is liable to pay to a worker employed in the execution of the work any compensation under this Act that he would have been liable to pay if that worker had been immediately employed by him."

10 The facts agreed upon by the parties for the purposes of these actions include the following:

• At all material times Incat had an agreement with TESA to supply the labour of the worker to work at Incat's premises at Derwent Park.
• The work was undertaken by the worker for the purposes of Incat's trade or business, and was part of work undertaken by Incat.
• Pursuant to Incat's agreement with TESA, on 6 April 2005 the worker performed work at Incat's premises.
• Whilst undertaking that work, the worker suffered an injury to his right foot.
• At the time of the injury, the worker was under the control or management of Incat.
• The injury arose out of and in the course of the worker's employment with TESA.

11 On the basis of those agreed facts, Incat contends that s29(1) made it liable as a principal to pay compensation to the worker. Incat contends that in the course of, or for the purposes of, its trade or business, it contracted with TESA for the execution by or under TESA of part of the work undertaken by Incat; that the worker was employed in the execution of that work; and that s29 therefore made Incat liable as a principal to pay to the worker any compensation under the Act that Incat would have been liable to pay if the worker had been directly or immediately employed by Incat.

12 Counsel for the worker argued that Incat did not fall within the definition of "employer" in s132. He relied on s32(1) of the Act, which provided as follows:

"(1) Subject to this Act, a person shall not be entitled to compensation under this Act for an injury to a worker unless -

(a) notice of the injury has, as soon as practicable after the occurrence of the injury and before the worker has voluntarily left the employment in which he suffered the injury, been given to the employer of the worker or a person referred to in section 33(1)(b); and

(b) a claim for compensation with respect to the injury has been made within 6 months after the date of the occurrence of the injury, or where the injury results in the death of the worker, within 6 months after the date of the death."

13 Counsel for the worker argued that Incat was not liable under s29 to pay compensation in respect of the worker's injury because the worker had never claimed compensation from Incat. However s32(1) is concerned with entitlement, not liability. The word "liable" is used in the Act to refer to the sort of liability that an employer incurs from the time a worker suffers an injury arising out of, or in the course of, his or her employment. The fundamental provision imposing liability on employers to pay compensation is s25(1). That subsection reads as follows:

(a) a worker suffers an injury, not being a disease, arising out of or in the course of his employment; or

(b) a worker suffers an injury, which is a disease and to which his employment contributed to a substantial degree, within the meaning of section 3(2A) -

his employer is, except as is otherwise provided by this Act, liable to pay compensation in accordance with this Act -

(d) if the injury results in the death of the worker, to the persons who are the worker's dependants at the date of his death or who would, but for any incapacity due to the injury, have been his dependants."

14 Of course an employer who is liable to pay compensation does not actually have to pay any money unless and until death, incapacity or expense results from the worker's injury. Those consequences are the subject of ss67, 69 and 75 respectively. In an uncontroversial passage in his dissenting judgment in State of Tasmania v Parsons [2002] TASSC 59; (2002) 11 Tas R 26 at par[20], Underwood J (as he then was) said the following:

"20 Although the workers compensation law in this State has undergone some substantial changes since the enactment of the Workers' Compensation Act 1927, the fundamental principle that has underpinned the law of workers compensation for many years remains unaltered. That principle is that upon the happening of an event prescribed by the Act, s25, the employer incurs liability 'to pay compensation in accordance with [the] Act'. This liability is inchoate until the occurrence of one or more of the events prescribed by the Act, eg, ss67, 69 and 75. In addition, the Act, s32 et seq, prescribe certain conditions precedent that must be fulfilled prior to the employer's liability arising."

15 When s29 makes a principal liable to pay compensation, it imposes the same liability that s25 imposes on an employer. When the definition of "employer" in s132 uses the word "liable", it refers to the same liability that is imposed by ss25 and 29. I think it is quite clear that those sections are not concerned with the sorts of obligations that arise when compensable expenditure is incurred following an injury, nor with the sort of situation that arises when an injured worker makes a claim for compensation pursuant to s32(1)(b). Those sections are concerned with the sort of inchoate liability that arises immediately at the time of a worker's injury - a liability to pay compensation if and when death or incapacity for work results, or compensable expenditure is incurred, and subject to compliance with s32.

16 The 2001 amendments to the Act were designed to reduce the rights of workers to damages, to the benefit of insurers and employers, with a view to making insurance premiums lower than they otherwise would have been. However the question I have to decide does not concern the meaning of any of the provisions introduced in 2001, but the meaning of the definition of "employer" in s132, which has existed unchanged since 1988. The task of statutory construction must begin with a consideration of the text itself: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at par[47]. Because of the structure of the Act and the way in which the word "liable" is used in it, particularly in ss25 and 29, that word, when used in the definition of "employer" in s132, should be regarded as applying to a principal who has incurred a liability to pay compensation under one or more of the provisions of the Act, even if that liability is inchoate, and even if that liability is subject to a claim being made in the future under s32(1). There is no reason to adopt a narrower interpretation.

17 It follows that Incat was an "employer" for the purposes of s138AB. The worker did not comply with s138AB(1) by lodging an election to claim damages prior to commencing his action. It must follow that s138AB(1) bars him from maintaining his action, and that I must make a determination in favour of Incat accordingly.

18 As I have said, TESA's claim is for an indemnity pursuant to s134(1) of the Act. At the time of the injury in 2005, that subsection read as follows:

"(1) Subject to this section, where an injury for which compensation is payable to a worker is caused under circumstances creating a liability in some person other than the employer to pay damages in respect of that injury to that worker, the employer may recover indemnity against that person in respect of the compensation paid by the employer to the worker in respect of that injury."

19 Questions as to the interpretation of that subsection were considered by the Full Court in Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd [2005] TASSC 86; (2005) 15 Tas R 88. That case also concerned a claim under s134(1) by a worker's actual employer against a company that was a principal for the purposes of s29. That claim failed, solely because there had not been an agreement or determination as to the worker having a 30% impairment, as required by s138AB(2). Evans J, with whom Tennent J and Hill AJ agreed, reached the following conclusions:

• The claim for indemnity under s134(1) was not outside the scope of that subsection simply because the respondent was a principal within the meaning of s29: par[11].
• The fact that the worker in that case had not lodged an election to claim damages in accordance with s138AB(1) did not result in the respondent having no liability to pay damages: par[21]. The procedural requirement for the lodging of an election barred the worker's remedy, but did not preclude the accrual to the worker of a cause of action.
• The requirement of s138AB(2) that there be either an agreement or a determination as to the worker having a whole person impairment of not less than 30% was a substantive requirement of such a nature that, if it was not satisfied, it could not be said that the worker's injury was caused in circumstances creating a liability in the respondent: par[21].

20 Incat has pleaded that the requirements of s134(1) have not been satisfied. The relevant paragraph in its defence is par8(A), which reads as follows:

"(i) At all material times the Defendant had, for the purpose of its trade or business contracted with the Plaintiff to undertake part of the work undertaken by the Defendant.

(ii) By reason of the matters pleaded in paragraph 8(A)(i) hereof and the operation of s132 and s29 of the Workers Rehabilitation and Compensation Act 1988 ('the Act') the Defendant was the employer of the worker for the purposes of Part 10 [sic] of the Act.

(iii) The worker contrary to s138AB of the Act did not lodge an election with the Workers Rehabilitation and Compensation Tribunal against the Defendant.

(iv) By virtue of s134(1) of the Act the Plaintiff is only able to maintain an action against the Defendant where the Defendant would be liable to pay damages to the worker.

(v) In consequence thereof the Plaintiff is not able to maintain an action against the Defendant."

21 Section 134(1) was amended by s34 of the 2007 Act to enable an indemnity to be recovered from someone who would, but for s138AB, be liable to pay damages. Since 31 October 2007, the subsection has read as follows:

"(1) Subject to this section, where an injury for which compensation is payable to a worker is caused under circumstances which, but for section 138AB, would create a liability in some person other than the employer to pay damages in respect of that injury to that worker, the employer may recover indemnity against that person in respect of the compensation paid by the employer to the worker in respect of that injury." [My emphasis.]

22 The following events have occurred since the commencement of that amendment:

• On 12 March 2010 in proceedings between the worker and TESA, the tribunal determined that the degree of the impairment suffered by the worker in respect of the injury was not less than 30% of the whole person.
• On 19 March 2010 the worker lodged with the tribunal an election to claim damages naming TESA as the employer.
• On 14 January 2011 TESA commenced its action against Incat.

23 TESA accepts that, prior to the amendment of s134(1) taking effect on 31 October 2007, it had no right of action against Incat. There had been no agreement or determination that satisfied s138AB(2). Therefore no liability had been created in Incat to pay damages to the worker in respect of his injury. The facts were indistinguishable from those in Skilled Engineering.

24 However TESA contends that, as from 31 October 2007, it became entitled to an indemnity from Incat pursuant to the amended s134(1).

25 The 2007 Act did not contain any transitional provisions applicable to the amendment to s134(1). The question whether the amended subsection applies to TESA's claim must therefore be determined in accordance with the common law. The relevant common law rule was stated by Dixon CJ in Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261 at 267 as follows:

"The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occurred in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events."

26 However, prior to the 2007 amendment, s134(1) had not created any rights of TESA or liabilities of Incat by reference to past events. No rights or liabilities as between TESA and Incat had been created in relation to the worker's injury in 2005 because there had not been an agreement or a determination that satisfied s138AB(2).

27 The scope of the relevant common law rule was considered by the High Court in Fisher v Hebburn Ltd [1960] HCA 80; (1960) 105 CLR 188. That case concerned a worker in the coal industry who ceased work in 1949, having become totally incapacitated by reason of a non-compensable disease. In 1951, the applicable workers compensation statute was amended by the introduction of a subsection which provided that compensation was payable in respect of an injury which, but for existing incapacity, would have resulted in the total or partial incapacity of the worker. In 1955, a determination was made to the effect that the worker, in addition to being totally incapacitated by reason of his non-compensable disease, was also totally incapacitated by reason of a compensable industrial disease contracted by a gradual process. No rights or liabilities had been created before the amendment took effect in 1951. The compensable disease had incapacitated the worker after the amendment took effect. The High Court held that the worker was entitled to compensation in accordance with the subsection introduced by the amendment.

28 At 194, Fullagar J explained the operation of the rule expounded by Dixon CJ in Maxwell v Murphy, as follows:

"There can be no doubt that the general rule is that an amending enactment - or, for that matter, any enactment - is prima facie to be construed as having a prospective operation only. That is to say, it is prima facie to be construed as not attaching new legal consequences to facts or events which occurred before its commencement. The rule has been frequently applied to amending statutes relating to workers' compensation, and it has often been held that such amendments apply only in respect of 'accidents' or 'injuries' occurring after their coming into force ... But there is no rule of law that such statutes must be so construed, and it would not be true to say that a retrospective effect can only be avoided by confining the operation of such a statute to subsequently occurring 'accidents' or 'injuries'. It may truly be said to operate prospectively only, although its prospect begins, so to speak, with some other event than accident or injury.

This is, I think, the case here. I think the prospect of sub-s(2A) begins with incapacity and not with injury. It applies, in my opinion, on its true construction, to all cases in which incapacity occurs after its commencement, whether the 'injury', from which the incapacity resulted, occurred before or after its commencement. It is true that it begins with a reference to compensation 'payable in respect of an injury'. But compensation is not payable until incapacity results from an injury. The whole subject matter of the sub-section is incapacity."

29 Counsel for TESA argued to the effect that no relevant rights or liabilities existed before the amendment to s134(1); that the rule in Maxwell v Murphy therefore did not apply; and that the amended s134(1) therefore applied to proceedings instituted after the amendment, including TESA's action. I do not think it is as simple as that. I think Fisher v Hebburn Ltd should be distinguished on the basis that it concerned the consequences of an event that occurred after the 1951 amendment, namely the worker becoming incapacitated by the compensable disease. In this case, there is no suggestion that an event occurred, after the commencement of the 2007 amendment, that engaged the operation of the amended subsection. The amendment was not one of such a nature as to cause new rights and liabilities to arise other than upon the happening of future accidents or injuries. It follows that TESA's claim must be determined in accordance with s134(1) as it read before the 2007 amendment.

30 However I think that result benefits TESA because of the determination made by the tribunal on 12 March 2010. Before the making of that determination, the old s134(1) was not satisfied. Skilled Engineering is authority for that. But, once the tribunal made its determination on that day as to the worker having the requisite degree of impairment, there were, within the meaning of the old s134(1), circumstances creating a liability in Incat to pay damages in respect of the relevant injury to the worker. It is true that the worker had not lodged the election required by s138AB(1) before commencing his action in 2008, and that he had not made such an election since the tribunal's determination as required by s138AB(2). (He managed to lodge his election after instituting the action and before the tribunal's determination.) However, as Evans J pointed out in Skilled Engineering at par[21], the failure to comply with such procedural requirements can only bar a worker's remedy, and does not preclude the accrual to a worker of a cause of action.

31 It follows that Incat cannot have a defence to TESA's action that is based on s138AB. Paragraph 8(A) of its defence must fail.

32 In the worker's action, Incat's defence contains two paragraphs numbered 9. The defence in question was pleaded in the second par9. In that action, I determine that the plaintiff is barred from maintaining his action against the first named defendant by reason of the matters pleaded in par9 (second occurring) of its defence.

33 In TESA's action, I determine that the plaintiff is not precluded from maintaining an action against the defendant by reason of any of the matters pleaded in par8(A) of the defence.