Gallagher Bassett Services NSW Pty Limited v Murdock

Court of Appeal (NSW)|2013-10-25|Before: Barrett JA, Gleeson JA, Leeming JA

The application determined by the primary judge 5On 3 August 2012, McCallum J heard two applications brought by Mr Murdock. Provisions of several statutes arose for consideration. It will be convenient to refer to those statutes by abbreviations, as follows: Workers Compensation Act 1987 - "WC Act" Law Reform (Miscellaneous Provisions) Act 1946 - "LRMP Act" Limitation Act 1969 - "Limitation Act". 6The first application heard by the primary judge was an application under the Limitation Act for an extension of the limitation period for the bringing of Mr Murdock's common law actions against Lipman and Australis. The second was an application for leave under s 151D(2) of the WC Act in respect of proposed proceedings for damages against Mr Murdock's employer. 7The primary judge determined both applications favourably to Mr Murdock. She made orders as follows: "I order that the limitation period for the plaintiff's cause of action against the first and second defendants [Lipman and Australis] be extended to 8 June 2010." "That Deno's Hire Pty Limited be joined as third defendant in the proceedings." "That Gallagher Bassett Services NSW Pty Limited be substituted for Deno's Hire Pty Limited as third defendant in the proceedings." "That the plaintiff have leave under s 151D of the Workers Compensation Act 1987 to commence the proceedings against the third defendant out of time." 8The first of these orders was made on 24 August 2012: Murdock v Lipman Pty Ltd [2012] NSWSC 983. The remaining orders were made on 25 January 2013 after receipt of further submissions: Murdock v Lipman Pty Ltd (No 2) [2013] NSWSC 11. 9The proceedings in this Court concern the order granting leave under s 151D(2) of the WC Act, that is, the fourth order set out above.

Some matters concerning parties and timing 10Before referring to the rationale for the judge's decision and the grounds on which GBS seeks to challenge it, something should be said about sources of potential liability in consequence of Mr Murdock's injury. 11Deno, the company mentioned in the second and third orders made by the judge, was, as I have said, Mr Murdock's employer at the time of his injury. Workers compensation insurance cover was, at that time, maintained through CGU. In April 2006, CGU was replaced by GBS. Each of CGU and GBS was an agent of the Workers Compensation Nominal Insurer. 12Section 9(1) of the WC Act states that a worker who has received an "injury" (within the meaning of s 4) "shall receive compensation from the worker's employer in accordance with this Act". Under s 33, compensation may include a weekly payment during incapacity. Section 155 requires an employer (other than a self-insurer) to obtain and maintain in force a policy of insurance for the full amount of the employer's liability under the WC Act in respect of all workers employed by the employer. The content of such policies is regulated by s 159. Division 1A of Part 7 creates the Workers Compensation Nominal Insurer and assigns to it the functions of an insurer, with provision also for the appointment of "scheme agents" to act as agents of the Nominal Insurer in connection with any functions of the Workers Compensation Nominal Insurer. 13When the orders of 25 January 2013 were made, Deno did not exist. It had been deregistered in August 2006. At that point, its existence ended (Corporations Act 2001 (Cth), s 601AD(1)) and all debts and other liabilities owed by it were extinguished: Re Higginson & Dean; Ex parte Attorney-General [1899] 1 QB 325; Russian & English Bank v Baring Bros & Co Ltd [1936] AC 405; Taylor v Sanders [1937] VLR 62; Re Austral Family Homes Pty Ltd (1992) 28 NSWLR 247; Re Silverline Technologies Pty Ltd [2005] NSWSC 620; (2005) 192 FLR 261. Although no party seems to have taken the point, it was anomalous for the court to order on 25 January 2013 that the non-existent Deno be joined as a defendant and that GBS be substituted for Deno. The effect of those orders can only have been to join GBS as a defendant. 14Although GBS was never Mr Murdock's employer and played no relevant role until April 2006 (almost four years after he was injured), the parties are apparently content to proceed on the basis that GBS should be regarded as having been: (a) subject, at any given time, to such liabilities for workers compensation and tort damages as Deno then owed to Mr Murdock or would have owed to him if it had not ceased to exist; and (b) entitled, at any given time, to such rights of reimbursement, indemnity and contribution in respect of workers compensation and tort damages as were then available to Deno or would have been available to it had it not ceased to exist. 15Central to these propositions is s 601AG of the Corporations Act, as interpreted by this Court in Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; (2005) 62 NSWLR 148. Section 601AG is as follows: "A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if: (a) the company had a liability to the person; and (b) the insurance contract covered that liability immediately before deregistration." 16Having regard to the propositions the parties accept, it is, I think, common ground that the Court should adopt an approach to the present proceedings under which: (a) GBS (or, more accurately, the Workers Compensation Nominal Insurer, as its principal) is regarded as the continuing alter ego of the non-existent employer; (b) all payments of workers compensation to Mr Murdock - whenever made - are treated as if they had been made by Mr Murdock's employer or its alter ego; (c) liability to Mr Murdock for damages for the negligence of his employer is treated as if it were a liability covered by an insurance contract binding on the Workers Compensation Nominal Insurer; and (d) the Workers Compensation Nominal Insurer, through the agency of GBS, has the right and ability to pursue such claims flowing from the injury to Mr Murdock (and its consequences for Deno) as Deno itself might have pursued at any time, disregarding its dissolution.

Approach to the proceedings in this Court 17There is no need to express any opinion on the correctness of the analysis accepted by the parties. The appropriate course is to approach these proceedings without further reference to the deregistration of Deno and its consequences and to assume that, at every material point in time after 26 June 2002, some person had a liability to pay workers compensation to Mr Murdock and damages for any tortious conduct of Deno towards Mr Murdock; and that that same person enjoyed whatever rights of reimbursement, indemnity and contribution accrued to Deno by reason of negligence of any other person causative of Mr Murdock's injury. 18It is therefore desirable to consider the issues before this Court at a level of abstraction. It is convenient to refer to the person bearing the liabilities and enjoying the rights referred to in the immediately preceding paragraph as "the Murdock Employer" and to designate the assumed other person guilty of negligence causative of Mr Murdock's injury as "the Non-Employer Tortfeasor".

The issues in this Court 19The proceedings in this Court are an appeal by GBS against the making of the fourth order set out at [7] above and an antecedent application for leave to appeal. The appeal and the application for leave were heard together. It may be said at once that, since the matters in issue have the potential to cause Mr Murdock's tort claims against the Murdock Employer to be disposed of without any hearing on the merits, leave to appeal should be granted. 20The questions requiring attention concern a number of statutory provisions, particularly: s 151A, s 151D, s 151G and s 151Z of the WC Act s 5 of the LRMP Act s 14(1)(d) and s 26 of the Limitation Act. 21The relevant parts of these provisions are set out at the end of these reasons (see [80] below). 22The order challenged by GBS (the fourth order set out at [7] above) was made under s 151D(2) of the WC Act. GBS maintains that that order should not have been made. It acknowledges that, in making the order, the primary judge exercised a discretion but says that her Honour erred in the exercise of that discretion by (a) making a wrong finding of fact that the Murdock Employer was not actually prejudiced; (b) acting on a wrong principle by putting the onus on GBS to justify the circumstances under which the Murdock Employer became prejudiced rather than putting the onus on Mr Murdock to demonstrate how the prejudice could be overcome; and (c) failing to take into account the material consideration that employers and/or insurers should be able to arrange their affairs on the assumption that injured workers will not normally be able to bring claims for damages that are so late that employers and/or insurers cannot assert their full rights. 23The formulation thus adopted by GBS entails clear (and correct) acknowledgment that the appeal is governed by the principles enunciated by the High Court in House v The King [1936] HCA 40; (1936) 55 CLR 499.

The judge's findings on prejudice 24A matter that received close attention by the primary judge is whether the Murdock Employer would be actually prejudiced by the grant of leave under s 151D(2) of the WC Act. 25The primary judge proceeded on the basis that, because of the passage of time, the Murdock Employer, if sued by Mr Murdock for damages for negligence, would not be able to bring any cross-claim for contribution by any Non-Employer Tortfeasor under s 5 of the LRMP Act. That was seen to be the effect of s 26 of the Limitation Act. But the primary judge took the view (at [5] of the second judgment) that "the apportionment of contribution required to be undertaken under s 151Z(2)" of the WC Act "would produce the same result", although "not in respect of any compensation payments made earlier than six years ago". That exception or reservation was seen to be a product of s 14(1)(d) of the Limitation Act. The judge held that, notwithstanding the exception or reservation, the Murdock Employer was not relevantly prejudiced.

The relevant concept of prejudice 26In cases of this kind, it is for the person seeking to be freed from the constraint imposed by the limitation statute to show that the relevant delay is not likely to make the proceedings unfair or to cause real prejudice to the proposed defendant, that is, the person having the benefit of the time bar. 27The decision of the High Court in Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 is pertinent. The principle to be extracted from that case was stated by Sheller JA (with the concurrence of Meagher JA, Handley JA and Brownie AJA) in Holt v Wynter [2000] NSWCA 143; (2000) 49 NSWLR 128, as follows (at [119]-[120]): "In my opinion, the effect of the decision of the High Court in Brisbane South Regional Health Authority is that an application for an extension of time under limitation legislation should be refused if the effect of granting the extension would result in significant prejudice to the potential defendant. Accordingly, in my opinion, if Judge Cantrill correctly concluded that the respondent in this case would have suffered significant prejudice as a result of the extension applied for, the application was rightly refused. However, for the reasons Priestley JA has given, I am of the opinion that there was no sufficient basis for that conclusion." 28It is therefore necessary to examine what disadvantage, if any, will accrue to the Murdock Employer if Mr Murdock is allowed to bring an action for damages against the Murdock Employer. The question is whether there will be "significant" prejudice. Two important issues arise: first, whether rights against third parties will be lost to the Murdock Employer if Mr Murdock proceeds against the Murdock Employer for damages; and, second, whether any such rights are "viable and realistic, and not merely fanciful or theoretical": Creevey v Barrois [2005] NSWCA 264 at [56] per Basten JA; GIO General Ltd v Love [2009] NSWCA 269 at [40].

The positions taken by the parties on prejudice 29Mr Cranitch SC, who appeared for GBS, pointed to two sources of alleged prejudice to the Murdock Employer. First, he said that the the Murdock Employer will be constrained by s 14(1)(d) of the Limitation Act in such a way that recovery under s 151Z(1)(d) of the WC Act will not extend to amounts of workers compensation paid more than six years ago. Second, he said that the Murdock Employer will be precluded by s 26 of the Limitation Act from recovering contribution from the Non-Employer Tortfeasor under s 5 of the LRMP Act. 30Mr J E Sexton SC, who appeared for Mr Murdock, accepted that s 151Z(1)(d) of the WC Act will have the effect for which Mr Cranitch contends. He submitted, however, that that will not be productive of the alleged prejudice. In addition, Mr Sexton challenged the proposition that, because of the passage of time, it will not be open to the Murdock Employer, if successfully sued for damages by Mr Murdock, to bring cross-claims for contribution by a Non-Employer Tortfeasor under s 5 of the LRMP Act. He made the additional submission that, even if a time bar applies to such cross-claims for contribution, the economic reality is such that no relevant prejudice will be suffered.

The effect of the statutory provisions 31It is necessary, at this point, to summarise the effect of the relevant statutory provisions. It is convenient to do by reference to a hypothetical case in which an employer is liable to pay workers compensation to a worker, the employer is liable to the worker for damages for negligence and a third party tortfeasor is also liable to the worker for damages for negligence. 32On that hypothesis, the position is, in general terms, as follows:

The employer must pay workers compensation to the worker (unless damages have already been recovered by the worker against the third party tortfeasor, in which event s 151Z(1)(c) of the WC Act removes the worker's right to recover workers compensation).
The employer must pay damages to the worker (with the damages assessed on the modified basis provided for in Division 3 of Part 5 of the WC Act) subject, however, to reduction of or deduction from the damages under s 151A of the WC Act on account of workers compensation paid.
The third party tortfeasor must pay damages to the worker but the employer is, by s 151Z(1)(d), entitled to be indemnified by the third party tortfeasor out of those damages for workers compensation paid by the employer.
If the worker recovers damages from the third party tortfeasor, the worker is, under s 151Z(1)(b), liable to the employer to repay all workers compensation to the employer out of those damages (but, if the damages include future periodic or other payments for loss of future earnings or future expenses, that element is, by s 151Z(4), excepted from the damages out of which repayment is to be made).
Rights of contribution exist, as between the employer (as a tortfeasor) and the third party tortfeasor (as a tortfeasor), under s 5(1)(c) of the LRMP Act but, as regards contribution by the employer, only to the extent of damages assessed on the modified basis provided for in Division 3 of Part 5 of the WC Act (this is the effect of s 151Z(2)(d)).
The worker's right to recover damages against the employer is, as to time, subject to s 151D(2) of the WC Act.
The employer's right to recover against the third party tortfeasor under the indemnity created by s 151Z(1)(d) or against the employee under s 151Z(1)(b) is, as to time, subject to s 14(1)(d) of the Limitation Act.
The rights of contribution of the employer and the third party tortfeasor against each other under s 5(1)(c) of the LRMP Act are, as to time, subject to s 26 of the Limitation Act.

Limitation provisions 33Section 151D(2) of the WC Act (referred to at (6) of [32] above) provides that proceedings for damages for an injury compensable under the Act cannot be commenced by an employee against the employer "more than three years from the date on which the injury was received, except with the leave of the court". By reason of s 151D(3), the Limitation Act does not apply "to or in respect of" such court proceedings. 34Section 14(1)(d) of the Limitation Act (see (7) of [32] above) has the effect that an action on "a cause of action to recover money recoverable by virtue" s 151Z(1)(b) or s 151Z(1)(d) of the WC Act is not maintainable if brought after six years from the date on which the cause of action "first accrues" to the plaintiff. 35Section 26 of the Limitation Act (see (8) of [32] above) fixes the limitation period for an action "on a cause of action for contribution under subsection (1) of section 5 of the Law Reform (Miscellaneous Provisions) Act 1946". Such an action is not maintainable if brought after the first of two periods to expire: the period of four years from "the date of expiration of the limitation period for the principal cause of action" (s 26(1)(b)); and the period of two years from the date on which the cause of action for contribution first accrues to the plaintiff or a person through whom the plaintiff claims (s 26(1)(a)).

Interpreting s 26 of the Limitation Act 36For the purposes of s 26(1)(b) of the Limitation Act, the "limitation period for the principal cause of action" is the limitation period "fixed by or under" the Limitation Act or any other enactment "for the cause of action for the liability in respect of which contribution is sought": s 26(3). The "liability in respect of which contribution is sought" is the liability that the person claiming contribution owes to the plaintiff who alleges liability of both that person and the person against whom the claim for contribution is made: Workers' Compensation Board of Queensland v Seltsam Pty Ltd (1998) QCA 410; [1999] 2 Qd R 679; Gordon v NSW Insurance Ministerial Corporation [2006] NSWSC 350; Zraika v Walsh [2011] NSWSC 1569; (2011) 60 MVR 17. In the present context, therefore, the "liability in respect of which contribution is sought" by the Murdock Employer will be such liability in damages as the Murdock Employer is found to owe to Mr Murdock. 37For the purposes of s 26(1)(a), the date on which a cause of action for contribution "first accrues" to the plaintiff or a person through whom the plaintiff claims is ascertained by reference to s 26(2). That section deals with two possibilities: first, that the claimant for contribution (or a person through whom that claimant claims) "is liable in respect of the damage for which contribution is claimed by judgment in a civil action or arbitral award" (s 26(2)(a)); and, second, that such liability by judgment or arbitral award does not arise but the apportionment of damage is agreed (s 26(2)(b)). In the first case, the cause of action for contribution is regarded as having first accrued on the date on which the judgment was given or the award was made. In the second case, the date of first accrual is the date on which the agreement was made. 38It follows that, unless and until a judgment, arbitral award or agreement of a kind relevant to s 26(2) has eventuated, no limitation period for the cause of action for contribution commences to run pursuant to s 26(1)(a) but a limitation period of four years for that cause of action commences to run pursuant to s 26(1)(b) once the limitation period for the principal cause of action has expired. 39The impact of s 26 in this case is discussed at [62] and following below.

Interaction of ss 151Z(1)(b) and 151Z(1)(d) of the WC Act 40In relation to ss 151Z(1)(b) and 151Z(1)(d) of the WC Act, it is pertinent to note what was said by Meagher JA (Bathurst CJ and Hoeben JA concurring) in CSR Timber Products Pty Ltd v Weathertex Pty Ltd [2013] NSWCA 49; (2013) 83 NSWLR 433 at [35]: "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." 41It is thus made clear that s 151Z(1)(b) and s 151Z(1)(d) are both directed to ensuring that, if a third party is liable in damages to an employee, the workers compensation that the employer has paid is recouped out of those damages. If the worker recovers damages from the third party, s 151Z(1)(b) requires the employee to repay to the employer "out of those damages" the workers compensation that the employer has paid. The requirement for "repayment" by the employee "out of" the damages obviously proceeds on the basis that no right to repayment is enjoyed by the employer unless and until the employee has received damages: Abdulle v QBE Insurance (Australia) Ltd [2010] NSWCA 60 at [10]-[15] referring to Smith v Commonwealth Oil Refineries Ltd [1938] HCA 33; (1938) 60 CLR 141 and Watson v Newcastle Corporation [1962] HCA 6; (1962) 106 CLR 426. 42Section 151Z(1)(d) operates at a different level, but to the same end. The right of indemnity it creates belongs to "the person by whom the compensation was paid". It follows that, on each occasion on which workers compensation is paid, a cause of action upon the indemnity accrues, assuming that there exists, in terms of the opening words of s 151Z(1), "a liability in some person other than the worker's employer to pay damages in respect of the injury": South Eastern Sydney Area Health Service v Gadiry [2002] NSWCA 161; (2002) 54 NSWLR 495. The right that s 151Z(1)(d) confers on the person by whom workers compensation was paid is a right of indemnity against the person (other than the employer) liable to pay damages. This means that once that liability to pay damages exists (and regardless of whether it has become the subject of proceedings), the liability under the indemnity also exists. 43The employer's right to obtain repayment from the employee under s 151Z(1)(b) is, clearly enough, in terms of s 14(1)(d) of the Limitation Act, "a cause of action to recover money recoverable by virtue of an enactment". So too is the employer's right to obtain payment by the third party pursuant to the s 151Z(1)(d) indemnity. 44In each case, therefore, s 14(1)(d) fixes a limitation period of six years from "the date on which the cause of action first accrues to the plaintiff". Because no action is maintainable under s 151Z(1)(b) unless and until the employee has received the relevant damages, the cause of action for repayment under that section accrues at the point of such receipt. Under s 151Z(1)(d), however, the right to be indemnified for workers compensation exists as against "the person so liable to pay" damages, being the person referred to in the opening words of s 151Z(1) which refers to "circumstances creating a liability in some person ... to pay damages ...". The liability with which s 151Z(1)(d) is concerned is thus the liability flowing from the circumstances in which the injury was sustained, with the result that the cause of action under the indemnity the section creates accrues upon the occurrence of the circumstances making up the tort - in practical terms, the date of the injury. 45Where, as in this case, periodic payments of workers compensation are made over a long period, the effect of s 151Z(1)(d) is that, when the period of six years from the injury elapses, the s 14(1)(d) bar begins to apply progressively to the s 151Z(1)(d) right of indemnity as it relates to the earliest of the periodic payments. As was recognised in Taouk v Taouk [2010] NSWCA 372 at [65], this process of progressive barring may begin before an employer's right to claim contribution against a third party tortfeasor is barred. 46In the case of s 151Z(1)(b), however, there is no progressive barring. Because the employer's right under that section is a right to recover all past workers compensation (that is, workers compensation "firstly" recovered by the employee) out of the damages the employee "secondly" recovers from the third party and the employer's cause of action accrues when the employee receives those damages (see [41] above), the s 14(1)(d) limitation period in respect of the employer's action against the employee to recover the past compensation payments begins to run when the employee receives the damages.

Availability of indemnity under s 151Z(1)(d) of the WC Act - analysis 47A point to be made at once in relation to s 151Z(1)(d) (the provision to which the judge gave particular attention) is one emphasised by Mr Sexton, namely, that the initiation of proceedings under that section by an employer against a third party tortfeasor with a view to recoupment of workers compensation paid is a course that is open to the employer from the very moment that the liability to pay workers compensation arises. It is not necessary for the employer to wait until some other proceeding is commenced or foreshadowed. 48Once an employee in receipt of workers compensation sues an alleged third party tortfeasor, a party potentially liable to indemnify the employer under s 151Z(1)(d) is, at a practical level, identified. Such a party may, of course, be identified at an earlier time. It may be that, as a matter of choice, the employer will not trouble to seek indemnity from such a party if it is not itself sued for damages by the injured worker. But that does not mean that the availability of the particular avenue to the employer is somehow enhanced by the bringing of an action for damages against the employer. The s 151Z(1)(d) right of indemnity accrues to the employer whether the employee brings a damages action against the employer, the third party, both of them or neither of them. 49In the present case and as the primary judge noted, the WorkCover Authority formally investigated the circumstances in which Mr Murdock suffered injury. Prosecutions ensued and guilty verdicts were entered. The Murdock Employer was made aware of these matters at the time. Her Honour made a finding as follows (at [19] of her second judgment): "By reason of the WorkCover investigation, completed within the time for making any claim under s 151Z(1)(d), the employer in the present case had detailed information as to the potential liability of others laid out for it on a platter." 50The judge had referred to this matter in her first judgment. She made it clear (at [120]-[121]) that the "detailed information" to which she later made reference had been available in 2005 or 2006: "In the present case, the employer appears to have had every reason to consider claiming indemnity under s 151Z(1)(d) against the first and second defendants before the limitation period for doing so expired. The liability of those parties should have been brought to mind by the WorkCover prosecution, which was heard in 2005 and determined in 2006. That could well be an answer to the employer's submissions in the present case. However, it is an issue that occurred to me only after the hearing and as to which Gallagher Bassett has not been heard. Accordingly, before entering orders against Gallagher Bassett on that basis, I consider I should afford the parties an opportunity to address that point, should such an opportunity be sought." 51As this passage shows, it was the need to allow the parties to address the significance of the results of the WorkCover investigation that caused the judge to invite further submissions after she had reserved judgment. Nothing in the second judgment suggests that there was any dispute about the facts that enabled her Honour to make the finding at [19] of the second judgment. 52Mr Cranitch submitted, in effect, that an employer and its insurer are entitled to think that they do not need to worry about cross-claims unless and until an action for damages against the employer is commenced or, at least, foreshadowed. That submission, to my mind, does not recognise the point that the s 151Z(1)(d) right of indemnity concerns only workers compensation paid and is therefore potentially of value to the employer whether or not that employer is sued in negligence. There is, in principle, no difference between an employer who is sued for damages and one who is not, when it comes to enforcement of the s 151Z(1)(d) indemnity against a third party tortfeasor. Such enforcement operates to mitigate the burden of workers compensation upon the employer (or, in a practical sense, its insurer) and that burden exists whether or not the employer is sued in negligence. 53Also in relation to the s 151Z(1)(d) aspect, Mr Sexton made the point that an employee either has a good cause of action against one or more third party tortfeasors or does not; and: (a) if the employee does not have such a cause of action, no prejudice accrues to the employer in relation to s 151Z(1)(d) because the indemnity the section creates will be unproductive in any event; and (b) if the employee does have such a cause of action and recovers damages, s 151Z(1)(b) will operate in relation to those damages in a way that benefits the employer; and this will be so without regard to any adverse limitation period. 54The second of these matters has regard to the way in which s 14(1)(d) of the Limitation Act operates in relation to the right of recovery under s 151Z(1)(b) as outlined at [44]-[46] above. Because it is the receipt of the damages "secondly" recovered by the employee from the third party tortfeasor that gives rise to the employer's right under s 151Z(1)(b) to recover from the employee the workers compensation "firstly" recovered by the employee (that is, all workers compensation already paid), the employer's cause of action for such repayment accrues at the point at which the employee receives the damages; and it is at that point that the limitation period of six years under s 14(1)(d) begins to run. Until there has been such receipt, no limitation period under s 14(1)(d) commences to run in respect of recovery under s 151Z(1)(b). 55For the reasons Mr Sexton advanced in both branches of his submissions on this aspect, the bringing of proceedings for damages by Mr Murdock against the Murdock Employer will not occasion to the Murdock Employer the prejudice based on s 151Z(1)(d) that Mr Cranitch postulated. It has been open to the Murdock Employer for some 11 years to resort to s 151Z(1)(d). It obtained in 2005 or 2006 information that would have assisted it to do so. No such attempt was made and, while the passage of time will now remove the ability of the Murdock Employer to recover under s 151Z(1)(d) in respect of the earliest of the weekly payments of workers compensation, that inability will not attend the ability of the Murdock Employer to resort to s 151Z(1)(b) to recoup such compensation payments out of any damages that Mr Murdock actually receives from the Non-Employer Tortfeasor.

Availability of contribution under s 5 of the LRMP Act - analysis 56I turn now to the question whether, because of the passage of time, the Murdock Employer will be precluded by s 26 of the Limitation Act from recovering contribution from any Non-Employer Tortfeasor under s 5 of the LRMP Act. 57Section 5 creates a statutory cause of action to recover contribution from "any other tortfeasor who is, or would if sued have been, liable in respect of the same damage". The section contemplates "proceedings for contribution" against the other tortfeasor. 58In relation to any postulated inability of the Murdock Employer, if sued by Mr Murdock, to cross-claim under s 5 for contribution by a Non-Employer Tortfeasor, Mr Sexton pointed out that such a cross-claim would succeed only if Mr Murdock had a good cause of action against both the Murdock Employer and the third party tortfeasor but, in that event: (a) damages recoverable by Mr Murdock from the Murdock Employer would be limited by s 151G of the WC Act to, in effect, damages for loss of earnings (past and present); and (b) those damages would be less than those recoverable by Mr Murdock from the Non-Employer Tortfeasor in relation to whom the s 151G curtailment does not apply. 59That being so, the worker would recover a judgment for the full loss against the Non-Employer Tortfeasor and leave that party to recover contribution by the Murdock Employer, with the result that a cross-claim by the Murdock Employer against the Non-Employer Tortfeasor would be of no practical relevance or value. 60There is clear merit in that submission at a practical level. The economic and financial realities are such that any loss of the ability to cross-claim for contribution under s 5 of the LRMP Act is most unlikely to entail for the Murdock Employer loss of an opportunity that is, in economic terms, viable and realistic as distinct from merely fanciful and theoretical. 61Mr Sexton made a second and important submission. It concerns the proper construction of the limitation provision affecting s 5 cross-claims for contribution. 62Any such cross-claim brought by the Murdock Employer will be regulated by s 26(1) of the Limitation Act, the operation and effect of which are discussed at [36]-[38] above. Attention must be given, in the first instance, to s 26(1)(b). Under that provision, the applicable limitation period will be the period of 4 years "running from the date of expiration of the limitation period for the principal cause of action". As outlined at [36] above, the "principal cause of action" in the present case is Mr Murdock's cause of action in tort against the Murdock Employer. The limitation provision applying to that action is s 151D(2) of the WC Act. 63It is therefore necessary to decide whether, if there has been a grant of leave under s 151D(2), there is then, in terms of s 26(1)(b), any "limitation period fixed by or under ... any other enactment ... for the cause of action" that Mr Murdock has against the Murdock Employer. 64Two possible constructions are open. They were identified by two members of this Court (Handley JA and Basten JA) in Creevey v Barrois (above), a case concerning a provision of the Motor Accidents Compensation Act 1999 which, like s 151D(2) of the WC Act, prescribes a fixed limitation period for the bringing of proceedings but, by means of the words "except with the leave of the court", enables the court to displace the time bar. There, as under s 151D(2), a grant of leave allows proceedings to be brought after the expiration of the period specified in the legislation but does not cause some longer limitation period to be substituted for the specified period. 65Basten JA (at [41]-[55]) inclined to the view that, when leave to commence proceedings out of time has been granted under a provision of this kind, there is no longer any limitation period "fixed by or under" any legislation in respect of those proceedings. Handley JA (at [3]) was of the opinion that, since a grant of leave disapplies the stated limitation period and does not "fix" any longer limitation period, the applicable period continues to be that "fixed" by (that is, stated in) the legislation. Because the question of construction had not been argued, the court did not seek to determine it. McColl JA preferred not to express any view. 66In my respectful opinion, the conclusion suggested by Basten JA is correct in relation to s 151D(2) of the WC Act. Section 26(3) of the Limitation Act directs attention to the limitation period "fixed by or under" an enactment "for the cause of action for the liability in respect of which contribution is sought". The focus is not upon a cause of action of a particular type or class. It is upon an identified cause of action in damages asserted by one identified person (the employee to whom workers compensation is payable) against another identified person (the employer liable to pay compensation). The question concerns the limitation period that is fixed "for" that cause of action. An order granting leave under s 151D(2) is made by reference to the circumstances in which the relevant employer and employee are placed. Once the order is made, the freedom of the employee to sue the employer is unconstrained as to time; and the cause of action he or she asserts in that respect is not affected by any time bar. There is therefore, at that point, no period "fixed by or under" any enactment "for" the particular and specific cause of action maintainable by the particular employee against the particular employer, even though the three-year period continues to be fixed "for" all causes of action in respect of which such leave has not been granted. The grant of leave distinguishes the particularly identified cause of action from the generality of causes of action that have not been the subject of any such grant. 67This construction is supported by the reasoning of the Court of Appeal of Victoria in Robins v Downes (1996) 24 MVR 180 and the Court of Appeal of Queensland in both Workers' Compensation Board of Queensland v Seltsam Pty Ltd (above) and Mulpha Hotel Pty Ltd v Goff [2011] QCA 204; [2012] 1 Qd R 226. All three cases concerned the Queensland provision analogous to s 26 of the Limitation Act of this State, being s 40 of the Limitation of Actions Act 1974 (Qld). The wording of the Queensland counterpart of s 26 does not quite match that of the New South Wales provision. Whereas the New South Wales Act refers in s 26(3) to "the limitation period fixed by or under this Act or by or under any other enactment ... for the cause of action for the liability in respect of which contribution is sought", the words in s 40 of the Queensland enactment are "the period of limitation prescribed by this Act or by any other enactment ... for the action for the liability in respect of which contribution is sought" (emphasis added). 68All three cases concerned the operation of s 40 of the Queensland Act in circumstances where there had been an extension of the limitation period applicable to "the cause of action for the liability in respect of which contribution is sought" - which may conveniently be referred to as "the principal action". In each case, the limitation statute governing the principal action specified a limitation period but allowed the court to enlarge it by the addition of further time up to a stated maximum. The question for determination concerned the interpretation of the quoted words of s 40 in circumstances where a court had made an order enlarging the relevant limitation period in relation to the principal action so that it was a period longer than that which would have applied in the absence of the order. The court had to decide whether the extended period was "prescribed by" the relevant limitation enactment "for" the principal action. 69That question was answered in the affirmative by the Victorian and Queensland courts; and this was so despite the absence of the words "or under" after "prescribed by" in the Queensland legislation. The decision was, in essence, that, once the court's order caused an extended limitation period to apply to the particular action, it was that extended period that was "prescribed by" the enactment in accordance with which the extending order was made. 70The leading judgment in Robins v Downes was delivered by Hayne JA (as he then was). He said (at 189): "Section 31 [the limitation provision governing the principal action] contemplates the making of an order extending the period of limitation. True it is, that period is extended for the purposes of a particular action but it is, nevertheless, an extension of the period of limitation and is an extension that is provided for by the Act. That is, it is a limitation period that is prescribed by the Act for the purposes of the particular action concerned." 71In Workers' Compensation Board of Queensland v Seltsam Pty Ltd and Mulpha Hotel Pty Ltd v Goff, the Queensland court agreed that "the period of limitation prescribed by this Act or by any other enactment . . . for" the principal action was the extended period applicable to that action as a result of the court order. The relevant limitation statute was regarded as "prescribing" (or, to use the New South Wales terminology, "fixing"), in relation to "the particular action concerned", the period that its own terms caused to be substituted for the period that, in the absence of an extending order, applied to the generality of actions. The effect of the statute, in consequence of the making of the order, was thus that the period applying to the generality of actions did not apply to the particular action but the period specified in the order did apply to it. 72An order made under s 151D of the WC Act likewise causes the limitation period applying to the generality of actions not to apply to the particular action. But such an order, in contradistinction to an order of the kind considered in the three cases mentioned, does not cause some extended limitation period to apply to the action in question. One finite period is not substituted for another. In a s 151D(2) case, the time bar is simply abolished. It follows that, with the period of general application displaced and no substituted period applicable, there is no limitation period "fixed by or under" any Act "for" the particular action. 73I am therefore of the opinion that the grant of leave to Mr Murdock under s 151D(2) of the WC Act in respect of proceedings against the Murdock Employer not only freed Mr Murdock from the time bar that would otherwise have precluded the bringing of those proceedings by him but also freed the Murdock Employer from the time bar that s 26(1)(b) of the Limitation Act would otherwise have placed in the way of the bringing of any cross-claim by it against any Non-Employer Tortfeasor under s 5(1)(c) of the LRMP Act. 74It does not follow that no time bar will apply to any such cross-claim. Rather, it is s 26(1)(a), as distinct from s 26(1)(b), that will apply. The limitation period will be the period of two years from the date (necessarily in the future) on which a judgment or arbitral award eventuates as contemplated by s 26(2)(a) or an agreement is made as contemplated by s 26(2)(b): see [37] above. 75Again, both aspects of the submissions made by Mr Sexton should be accepted. Both likely economic realities and statutory interpretation lead to the conclusion that release of Mr Murdock from the time bar otherwise applicable under s 151D(2) of the WC Act will not occasion prejudice to the Murdock Employer because of some preclusion from recovery of contribution from any Non-Employer Tortfeasor under s 5 of the LRMP Act.

Conclusion on prejudice 76GBS has not shown that the decision of the primary judge proceeded according to some erroneous assessment of the prejudice that it will suffer by reason of Mr Murdock's ability to commence an action for damages against the Murdock Employer despite the expiration of the period of three years referred to in s 151D(2) of the WC Act. 77The asserted elements of prejudice are confined to issues concerning availability of avenues by which indemnity, contribution and recovery might be achieved under s 151Z(1) of the WC Act and s 5 of the LRMP Act. For the reasons stated, I am satisfied that no viable and realistic, and not merely fanciful or theoretical, avenue of recovery will be rendered unavailable to the Murdock Employer by displacement of the s 151D(2) time bar. The judge was right to proceed on that basis. 78In the result, therefore, there is no room for a conclusion that the primary judge's discretion miscarried. There was a sound basis for the grant of leave under s 151D(2).

Disposition 79I propose orders as follows:

Grant leave to appeal.
Direct that a notice of appeal in the form of the draft in the white folder be filed within seven days.
Dismiss the appeal.
Order that the appellant pay the respondent's costs of the proceedings in this Court.

Statutory provisions 80As contemplated at [21] above, the relevant parts of the statutory provisions there mentioned are now set out: Workers Compensation Act 1987: "151A Effect of recovery of damages on compensation (1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act then (except to the extent that subsection (2), (3) or (4) covers the case): (a) the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned (including compensation claimed but not yet paid), and (b) the amount of any weekly payments of compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation, and (c) the person ceases to be entitled to participate in any injury management program provided for under this Act or the 1998 Act. (2) If damages in respect of an injury are recovered from the employer liable to pay compensation under this Act, pursuant to a cause of action that survives for the benefit of the estate of a deceased worker under the Law Reform (Miscellaneous Provisions) Act 1944, the following amounts of compensation are to be repaid out of the estate of the deceased worker to the person who paid the compensation: (a) the amount of any weekly payments of compensation already paid in respect of the injury concerned, (b) the amount of any permanent impairment compensation and pain and suffering compensation already paid in respect of the injury concerned. (3) If damages are recovered in an action under the Compensation to Relatives Act 1897 in respect of the death of a worker from the employer liable to pay compensation under this Act in respect of the death: (a) the amount of any compensation under Division 1 of Part 3 paid in respect of the death is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation, and (b) a person recovering those damages ceases to be entitled to any further compensation under this Act in respect of the death of the worker. (4) If a person recovers motor accident damages in respect of an injury from the employer liable to pay compensation under this Act: (a) the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned (including compensation claimed but not yet paid), and (b) the amount of any compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation." "151D Time limit for commencement of court proceedings against employer for damages (1) (Repealed) (2) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation more than 3 years after the date on which the injury was received, except with the leave of the court in which the proceedings are to be taken. (3) The Limitation Act 1969 does not apply to or in respect of court proceedings to which this section applies. (4) This section does not apply to the commencement of court proceedings in respect of a claim within the meaning of Part 5 of the Motor Accidents Act 1988 or Chapter 5 of the Motor Accidents Compensation Act 1999." "151G Only damages for past and future loss of earnings may be awarded (1) The only damages that may be awarded are: (a) damages for past economic loss due to loss of earnings, and (b) damages for future economic loss due to the deprivation or impairment of earning capacity. (2) This section does not apply to an award of damages in an action under the Compensation to Relatives Act 1897." "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, (e1) if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment, (f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission. (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. (3) This section applies to proceedings taken independently of this Act by a person to whom compensation is payable under this Act in respect of the death of a worker as a result of an injury. (4) If a worker is liable under subsection (1) (b) to repay any money out of damages recovered by the worker, the worker is not liable to repay the money out of any damages payable after the date of recovery by way of periodic or other payments for loss of future earnings or earning capacity or for future expenses. (5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement." Law Reform (Miscellaneous Provisions) Act 1946 "5 Proceedings against and contribution between joint and several tort-feasors (1) Where damage is suffered by any person as a result of a tort (whether a crime or not): (a) judgment recovered against any tort-feasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tort-feasor in respect of the same damage, (b) if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, or for the benefit of the estate, or of the spouse, brother, sister, half-brother, half-sister, parent or child, of that person, against tort-feasors liable in respect of the damage (whether as joint tort-feasors or otherwise) the sums recoverable under the judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing the action, (c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought. (2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity. (3) . . . (3A) . . . (4) . . . (5) . . ." Limitation Act 1969 "14 General (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on contract (including quasi contract) not being a cause of action founded on a deed, (b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty, (c) a cause of action to enforce a recognizance, (d) a cause of action to recover money recoverable by virtue of an enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture. (2) This section does not apply to: (a) a cause of action to which section 19 applies, or (b) a cause of action for contribution to which section 26 applies. (3) . . ." "26 Contribution between tort-feasors (1) An action on a cause of action for contribution under subsection (1) of section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 is not maintainable if brought after the first to expire of: (a) a limitation period of two years running from the date on which the cause of action for contribution first accrues to the plaintiff or to a person through whom the plaintiff claims, and (b) a limitation period of four years running from the date of the expiration of the limitation period for the principal cause of action. (2) For the purposes of paragraph (a) of subsection (1), the date on which a cause of action for contribution first accrues is: (a) if the plaintiff in the action for contribution or a person through whom the plaintiff claims is liable in respect of the damage for which contribution is claimed by judgment in a civil action or by arbitral award--the date on which the judgment is given or the award is made, whether or not, in the case of a judgment, the judgment is afterwards varied as to quantum of damages, or (b) if, in a case to which paragraph (a) does not apply, the plaintiff in the action for contribution or a person through whom the plaintiff claims makes an agreement with a person having a cause of action for the damage for which the cause of action for contribution arises, which agreement fixes, as between the parties to the agreement, the amount of the liability in respect of that damage of the plaintiff in the action for contribution or a person through whom the plaintiff claims--the date on which the agreement is made. (3) In paragraph (b) of subsection (1), the expression "the limitation period for the principal cause of action" means the limitation period fixed by or under this Act or by or under any other enactment (including an enactment repealed or omitted by this Act) for the cause of action for the liability in respect of which contribution is sought. (4) Nothing in this section affects the construction of section 5 of the Law Reform (Miscellaneous Provisions) Act 1946." 81GLEESON JA: I agree with Barrett JA. 82LEEMING JA: I agree with Barrett JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 November 2013

(Corporations Act 2001(Cth)

Smith v Commonwealth Oil Refineries Ltd [1938] HCA 33; (1938) 60 CLR 141 South Eastern Sydney Area Health Service v Gadiry [2002] NSWCA 161; (2002) 54 NSWLR 495 Taouk v Taouk [2010] NSWCA 372 Category: Principal judgment Parties: Gallagher Bassett Services NSW Pty Limited (Applicant) Harold Murdock (Respondent) Representation: Counsel: M J Cranitch SC/S L Flett (Applicant) J E Sexton SC/D S Stanton (Respondent) Solicitors: Sparke Helmore Lawyers (Applicant) Slater & Gordon Limited (Respondent) File Number(s): 2013/54376 Decision under appeal Citation: Murdock v Lipman Pty Ltd (No 2) [2013] NSWSC 11 Date of Decision: 2013-01-25 00:00:00 Before: McCallum J File Number(s): 2010/143429

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