Supreme Court of the NT|1989-12-06|Before: Kearney J

Johnson v Territory Insurance Office [1989] NTSC 48; 69 NTR 9; 99 FLR 464; 11 MVR 268 (6 December 1989)

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA Kearney J.(1) CWDS Appeal - Local Court - motor vehicle accident

recovery by Territory Insurance Office of medical expenses paid in respect of injuries arising - person from whom expenses paid can be recovered - whether TIO's right to recover extinguished by payment by tort feasor of judgment debt. Statutory Interpretation
meaning of "...(person) who is, or but for section 5 or 40A would be, liable to pay damages ..." - whether phrase has temporal significance or is merely descriptive of person liable at some time to pay damages - Motor Accidents (Compensation) Act, s.38(1)(b). Cases followed: Brambles Constructions Pty Ltd v Helmers [1966] HCA 3; (1965-66) 114 CLR 213 Canberra Formwork Pty Ltd v Civil and Civic Ltd Dalywater v Dalywater (in part) Tickle Industries Pty Ltd v Hann ; Cases distinguished: Watson v The Council of the City of Newcastle ; Cases referred to: Smith's Dock Company v John Readhead and Sons Tickle Pty Ltd v Hann and another HRNG DARWIN #DATE 6:12:1989 Counsel for the appellant : A. Wyvill Solicitor for the appellant : Ward Keller Counsel for the respondent : D.W.E. Trigg Solicitor for the respondent : Cridlands ORDER The appeal is dismissed and the learned Chief Stipendiary Magistrate's judgment of 23 June 1989 is affirmed. The TIO must have its costs both here and below. JUDGE1 This is an appeal under s.54 of the Local Courts Act from a decision of 23 June 1989 of the Local Court sitting at Darwin in proceedings instituted by the respondent (herein the TIO) by Summons on 17 August 1987. The Court ordered that the the TIO recover judgment against the appellant in the sum of $4,760. The appeal involves only the proper construction of of the (herein the Act) and in particular the meaning and effect of the words "... who is, or but for or 40A would be, liable to pay damages ...".

Northern Territory, who was a resident of the Northern Territory within the meaning of the Act, was a passenger in the motor vehicle when it collided with a tree on the Stuart Highway approximately 60 kilometres north of Elliott in the Northern Territory. 5. As a result of the collision Ms Tilmouth suffered injuries to her left arm, left knee cap and groin and was hospitalised in both the Tennant Creek Hospital and the Alice Springs Hospital. 6. The TIO paid certain medical expenses in respect of the injuries to Ms Tilmouth, namely $30.00 to the Northern Territory Department of Health on 3 January 1984 and $4,760.00 to the Northern Territory Department of Health in October 1984. 7. The injuries to Ms Tilmouth were caused solely by the negligence of the appellant. 8. By Writ issued in this Court on 3 April 1984 in proceedings No 182 of 1984 Ms Tilmouth sued the appellant for damages. (These were damages for pain, suffering and loss of amenities of life, the heads of damage to which the plaintiff was restricted under s.5(2) of the Act as it then stood.) 9. On 5 May 1987 His Honour Mr Justice Muirhead gave judgment for Ms Tilmouth in the said proceedings, for $20,006.00. 10. The amount of the aforesaid judgment was paid to Ms Tilmouth on 12 June 1987. Some two months later, on 17 August 1987, the TIO instituted proceedings under s.38(1)(b) of the Act in the Local Court to recover from the appellant the sums set out in item 6 above. The learned Chief Stipendiary Magistrate gave her decision on 23 June 1989. The appeal was lodged on 20 July and argued on 4 December; I rule on it today. The case in the Local Court 3. The TIO claimed the sum of $4,790 from the appellant as a debt, pursuant to s.38(1)(b) of the Act which provides:- (1) Subject to this section, the (TIO) may, from time to time, sue for and recover as a

debt from - ... (b) the owner or driver (other than a resident of the Territory), of a motor vehicle that was not, at the time of the accident, a Territory motor vehicle ... who is, or but for section 5 or 40A would be, liable to pay damages in respect of the death or injury of a person in or as a result of an accident, so much of the amount that the TIO has paid in respect of that death or injury as the court before which the recovery action is brought thinks reasonable having regard to the ability or likely ability of the person to pay." (emphasis mine) 4. No transcript is available. It appears that one question before the Court was: when did the TIO's cause of action under s.38(1)(b) of the Act first accrue? Also in issue was the meaning of the words "who is ... liable to pay", in that provision. 5. The TIO argued that the appellant became "liable to pay damages" either when the TIO paid items of Ms Tilmouth's expenses in January and October 1984, respectively, or on 5 May 1987 when Ms Tilmouth recovered judgment in proceedings No. 182 of 1984. 6. The appellant argued several points, only two of which need be mentioned. He submitted that if he first became "liable to pay damages" on the date of the accident 27 August 1983, TIO's cause of action under s.38(1)(b) of the Act accrued on that date, and the TIO's proceedings initiated by Summons on 17 August 1987 were accordingly not maintainable, because the three year limitation period in s.12 of the Limitation Act had by then well expired. It was no longer suggested on appeal that TIO's cause of action under s.38(1)(b) accrued on 27 August 1983. Second, the appellant submitted that since the amount of the victim's judgment against him of $20,006.00 of 5 May 1987 had been paid in full on 12 June, thereafter the TIO had no cause of action against him under s.38(1)(b), since after 12 June he was no longer a person "who is ... liable to pay damages" in respect of Ms Tilmouth's injuries. This remained his major submission, on the appeal. 7. Her Worship noted that under the Act Ms Tilmouth could not seek to recover in proceedings No. 182 of 1984, and the judgment of 5 May 1987 could not include, the amount of $4,790 as special damages. Her Worship considered that TIO's cause of action under s.38(1)(b) in relation to its payment of $4,760 first arose in October 1984 when it paid that sum; and that under s.12(1)(d) of the Limitation Act it had three years thereafter (that is, until October 1987) to institute an action to recover that sum. It followed that the TIO's Summons of 17 August 1987 was within time, in relation to the recovery of that sum. However, on 17 August 1987 the TIO was over 7 months out of time under the Limitation Act to sue for the $30 of victim's expenses it had paid on 3 January 1984. Her Worship then awarded judgment in favour of the TIO, in the sum of $4,760. Her Worship does not appear to have dealt specifically with the second submission mentioned above. The submissions on appeal 8. Mr Wyvill of counsel for the appellant submitted that the sole question was: at what time must the appellant be a person "who is ... liable to pay damages", so that the TIO is entitled to recover under s.38(1)(b) of the Act? I note that framing the question in this way presupposes that somehow time is relevant to liability. Mr Trigg of counsel for the TIO submitted the following as the sole question for resolution: was the party against whom contribution is sought under s.38 of the Act, liable at some time to pay damages? Mr Wyvill saw the issue in terms of time, Mr Trigg in terms of identity. These questions reflect the differing views about the meaning of the phrase "who is ... liable to pay damages". 9. Mr Wyvill's submissions were as follows. There were only three possible times at which the appellant's liability to pay damages had to be shown to exist, for an action to lie under s.38(1)(b), viz:-

the date of the accident, 27 August 1983;
the date the TIO paid the expenses it now sought to recover under s.38(1)(b) of the Act, October 1984; or
the date on which the TIO instituted proceedings in the Local Court for the recovery of the debt, 17 August 1987. Of these, No. 3 was the only relevant date: that is, for the TIO's proceedings under s.38(1)(b) of the Act to be competent, it had to show that the appellant was "liable to pay damages" as at 17 August 1987. This was because the words "who is ... liable" in s.38(1)(b) required that the person sued under that provision be under a liability to pay damages at the date of the issue of the Summons. The wording was such that it was wrong to ask the question in the form posed by the usual employer's indemnity provision in workers' compensation legislation: "Was the tortfeasor at any time liable?". On the facts of this case, the appellant ceased to be "liable to pay damages" on 12 June when the judgment against him of 5 May was satisfied. Since the Summons under s.38(1)(b) did not issue until two months later, on 17 August, when the appellant was no longer a person "who is ... liable to pay", it followed that the TIO could not recover from him under s.38(1)(b), the appeal must succeed, and there must be judgment for the appellant.
In support of this submission Mr Wyvill pointed to the different tenses used in s.38(1)(b) of the Act, viz:- "... may, from time to time, sue ..." "... was not, at the time of the accident, a Territory motor vehicle..." "... has ... caused the death ..." "... was, at the time of the accident ..." "... who is liable to pay damages ..." "... the (TIO) has paid in respect of ..." "action is brought ...". Mr Wyvill submitted that the use of the present tense in the expression "who is ... liable" meant that for TIO to recover in its action under s.38(1)(b) of the Act, the appellant must be shown to be liable to pay damages as at the time TIO instituted its recovery proceedings on 17 August 1987.
Turning to the authorities in which the meaning of the word "liable" in provisions of the same general type as s.38(1)(b) was discussed, Mr Wyvill submitted that the observations of O'Leary J. (as he then was) in Dalywater v Dalywater were made in quite a different context. That case involved the right of the TIO to take over the conduct of proceedings for a defendant, under of the Act. Under of the Act the TIO is required to indemnify persons "liable to pay damages in respect of the death of or injury to any person in or as a result of an accident", the phrase which reappears in It was argued that the TIO had no right to take over the conduct of the proceedings until the liability of the defendant to pay damages had "crystallized", as, for example, by his admission of liability. O'Leary J. considered that the TIO had a statutory right to take over the conduct of the proceedings, which involved the enforcement of a claim for damages, the defendant's liability at that time being "no more than the subject of a claim", the legal situation being that the TIO would have to indemnify him "if he ultimately be found liable to pay damages". His Honour observed in relation to at p 17:- "It is well recognized that the word 'liable' is used in a variety of senses, and its construction often causes difficulty on that account. But, as Barwick C.J. pointed out in Tickle Industries Pty Ltd v Hann ; at 288; ; at 330: 'The word takes its particular significance ... from the context in which it appears and the subject matter and evident policy of the legislation in which it is found'." I respectfully agree with these observations. I accept that in other respects Dalywater (supra) is distinguishable.

"The question which the case raises is whether the right of an employer to be indemnified by a tortfeasor pursuant to s.64(b) continues to exist notwithstanding the discharge by the latter of his obligation to pay damages to the worker." Mr Wyvill submitted that this question was very similar to the question he said was in issue in this case: is the appellant a person "who is (still) liable" even though the judgment against him has been satisfied? It is a very superficial similarity. The respective provisions are very different. Section 64 of the NSW Act is directed against "double dipping"; it provides that the worker "shall not be entitled to retain both damages and compensation". As McTiernan J. put it at p 432:- "The policy which is evident on the face of s.64 is that compensation should not, as a benefit for the worker, or a burden for the tortfeasor, be cumulative on damages ...". Section 38 of the Act is not concerned with "double dipping"; the damages adjudged against the appellant on 5 May 1987 were for pain, suffering and loss of amenities, while s.38 is directed to indemnifying the TIO for amounts it has paid under Part IV of the Act in respect of the victim's injuries, or part of those amounts. Those amounts do not relate to pain and suffering. (I note that under s.6(1)(a) of the Act the TIO was required to indemnify the appellant against his liability to pay damages under s.5(2); the effect of this, if any, was not explored in the submissions.) 13. Taylor J. also said at p 438:- "Moreover, since only one action could be brought against the (tortfeasor) under the Compensation to Relatives Act, the liability of the (tortfeasor) to pay damages ceased after that judgment had been obtained and satisfied." Mr Wyvill drew support from this observation for his submission that in this case the appellant's liability to pay damages also ceased once the judgment of 5 May 1987 had been satisfied on 12 June 1987. It is of course correct that the appellant ceased on 12 June to be liable to pay damages, because payment discharged his only statutory liability; on a temporal reading of the words "who is ... liable", Mr Wyvill's submission must succeed in that on 17 August 1987 the appellant was no longer liable, and the TIO cannot recover. The question is of course whether construing the phrase as having temporal significance is correct. 14. At pp 441-2 Taylor J. said:- "... it is of some importance to observe that the right to an indemnity (in s.64(b)) is given against 'the person so liable to pay damages as aforesaid'. Prima facie, at least, this phrase is indicative of a person presently liable to pay damages and not of a person who is no longer liable. Ferguson J. (in the Full Court of the Supreme Court of New South Wales, the decision being reported at (1961) 78 WN (NSW) 893 at p 897) adverted to this phrase but he was inclined to discount the prima facie view which I have expressed, thinking that it 'might well be construed as being descriptive only of the person liable to indemnify, that is to say the tortfeasor referred to in the opening words of the section'. (which referred to injury 'caused under circumstances creating a legal liability in some person other than the employer to pay damages'.) No doubt the phrase does require a reference back to the earlier words of the section but consideration of the phrase in the light of the opening words of the section does not result in any weakening of the view that it is indicative of a person presently liable. Indeed the opening words of the section contemplate the existence of a person presently liable to pay damages and the prima facie view which I have expressed is, I think, strengthened rather than weakened by such a reference back. To my mind this is the true meaning of the words in question and upon the proper construction of sub-s.(b) it affords a right of indemnity to an employer only when the tortfeasor is one from whom damages have not already been recovered by the worker and who is therefore, 'so liable to pay damages as aforesaid'." (emphasis mine) Mr Wyvill rightly places considerable weight on this interpretation as supporting his submission that the TIO's right to recover under s.38(1)(b) of the Act is only against a tortfeasor, who at the time the recovery action is instituted, is still liable to pay damages. I have already noted that the language and purpose of s.64 of the Workers' Compensation Act (NSW) is quite different from that of s.38(1)(b) of the Act. There, the employer was entitled to be indemnified for compensation he had paid, out of damages payable by the tortfeasor; that is not the case under the Act, where the amounts paid by the TIO are not related in any way to the statutorily-restricted damages for which the appellant was liable. 15. Tickle Industries Pty Ltd v Hann and Richardson [1974] HCA 5; (1973-74) 2 ALR 281 was a Territory workers' compensation case. The legislative provision was similar to that discussed in Watson (supra). No action had been brought by the victim within the limitation period against the respondent-tortfeasor, but the employer who had paid compensation sought to recover from the respondent on the basis that the legislation provided that "the person liable to pay the damages shall indemnify the employer ...". The majority in the High Court considered that the words "the person liable to pay the damages" meant the person legally responsible for the compensable injury. 16. Submissions akin to those of Mr Wyvill had been put before Blackburn J. in the Court below - see Tickle Pty Ltd v Hann and Another (1969) 15 FLR 131, at pp 136-8. His Honour discussed Smith's Dock Company v John Readhead and Sons (1912) 2 KB 323, at length. His Honour was "not convinced" merely by the submission that "is" in the phrase "is liable" should be interpreted literally, so that it could not mean "was once liable even though he is not now liable"; however, he considered that various points of time were contemplated by the indemnity provision, and this "fortifies the conclusion that the references to liability (in the indemnity provision) are more than merely descriptive of the defendant" (p 138). He considered that since the damages could not be assessed it was impossible to state the sum against which there had to be an indemnity, and so the "indemnity does not arise", and the action must fail. 17. On appeal, Barwick C.J. took a different approach. His Honour considered that the policy of the Act was clear. After discussing the effect of the indemnity provision, his Honour said at pp 288-289:- "In identifying the person against whom the employer's right of indemnity is given, the draftsman has described him as 'the person liable to pay the damages'. The use of the word ' liable' can cause difficulty in construction because of the various senses in which the word is or has been from time to time employed. The word takes its particular significance, however, from the context in which it appears and the subject matter and evident policy of the legislation in which it is found. No doubt on occasions difficulty has been experienced in assigning its meaning. But, in my opinion, if the evident policy of the present legislation is appreciated and allowed to take its proper place in the process of interpretation, much of the difficulty, caused so often by undue literalism, can be avoided and in reality disappears. (His Honour then discussed what the legislation provided for and continued:) In that context, the description 'the person liable to pay the damages' cannot be confined to a person liable by judgment, or after assessment of the damages. (His Honour then considered the effect on the indemnity of the worker giving a release to the tortfeasor, concluding:) ... by the very language of the paragraph, (the tortfeasor) remains subject to the compensating employer's claim to an indemnity. 'Liable' must therefore be given a meaning consistent with the evident purpose of the legislation and cannot be confined to meaning liable to be sued by the workman or his dependants. In other words, both in the expression 'the person liable to pay the damages' and in the expression 'for which that person is liable' the reference is to the tortfeasor, the person who, in the circumstances of the occurrence out of which the compensable injuries arose, appeared at that time to be the person responsible therefor and thus liable to pay damages. 'Liable' is used in the description, in my opinion, as meaning legally responsible, that is to say, it describes the person who by his act or omission caused the compensable injury and thus was legally responsible for it and for the payment of damages appropriate to it." (emphasis mine) 18. Mr Wyvill submitted that this approach to the words in question came about largely because the relevant legislative provision had referred to the circumstances of the accident "which appear to create a legal liability" in the tortfeasor, whereas no such provision appears in s.38, and so his Honour's approach is distinguishable as far as concerns the interpretation of s.38. I respectfully agree with his Honour's view as emphasised above that the words there in question serve purely to identify the tortfeasor required to indemnify. 19. In broad terms, it is necessary to choose between the approach of Taylor J. in Watson (supra) and Barwick C.J. in Tickle Industries Pty Ltd (supra). 20. Mr Wyvill then dealt with the meaning and effect of the phrase ",or but for s.5 or 40A would be, liable", in s.38(1)(b); he submitted it was intended simply to enlarge the categories of persons who were liable to pay damages. He relied on the views of Blackburn C.J. in Canberra Formwork Pty Ltd v Civil and Civic Ltd (1982) 41 ACTR 1, on the meaning of "or would if sued have been, liable" in the usual statutory provision for contribution between joint tortfeasors. I accept this submission. In his submission the phrase had no impact on the meaning to be attributed to "liable". I note that it is clear from Brambles Constructions Pty Ltd v Helmers [1966] HCA 3; (1965-66) 114 CLR 213 that the phrase "would if sued have been liable" is to be read in the sense "would if sued at any time have been liable". This militates against the construction which Mr Wyvill submitted should be placed upon "who is ... liable" in s.38(1(b); it appears from Brambles (supra) that the phrase does not import a temporal element. 21. Mr Wyvill submitted that the approach he contended for did not defeat the purposes of s.38 of the Act. That is, it did not mean that the TIO could not sue the appellant; it had a finite period within which to sue him, but it had to sue before his liability was extinguished - in this case, before the judgment was satisfied on 12 June. It would seem on this approach that once the tortfeasor's liability was extinguished, the TIO could not recover from him amounts which it may have to continue to pay out in respect of the injury, perhaps for a very long time, under Part IV of the Act. Mr Wyvill submitted that part of the policy of the Act was to ensure that the liability of a tortfeasor would be ascertainable, and that this was furthered by having a cut-off date for recovery under s.38. 22. Mr Trigg of counsel for the TIO relied on what was said by the majority of the High Court in Tickle Industries Pty Ltd (supra), particularly the words in the passage from the judgment of Barwick C.J. at pp 289-9, cited earlier. He submitted that the phrase "who is ... liable to pay damages" serves to identify the person liable to pay as a result of the accident and does not import a requirement that that liability be in existence at the time the TIO institutes recovery proceedings under s.38(1)(b). He relied on Brambles Constructions Pty Ltd (supra) where it was held that similar words did not import a temporal element. As Windeyer J. put it at p 221:- "It is enough that there was a time, before the liability of the defendant tort-feasor was actually ascertained, at which the plaintiff (the victim of the cost) could have successfully brought an action ..." In his submission, time commenced to run against the TIO under the Limitation Act from the time it paid the expenses it now seeks to recover. The date of payment of the damages by the appellant was irrelevant. 23. Mr Trigg also submitted that the words "from time to time" in s.38 contemplated that there could be more than one action for recovery by the TIO of amounts it has paid. I accept that submission. Conclusions 24. The general purpose of s.38 of the Act is, I think, clear enough. The legislature intended to expose persons who fell within any of the categories (a) to (g) in s.38(1), who were also tortfeasors in relation to the accident in question, to being sued by the TIO to recover such part of the amount which it had paid from time to time in respect of the death or injury caused by the accident, as the Court thought reasonable. 25. Bearing in mind the policy of s.38 of the Act, I consider that what Barwick C.J. said at pp 288-289 in Tickle Industries Pty Ltd (supra) also accurately describes the purpose and meaning of the phrase "who is ... liable to pay damages" in s.38(1)(b) of the Act. 26. I consider that his Honour's observations at p 290 apply mutatis mutandis to s.38(1)(b) of the Act, viz:- "The section supposes a legal responsibility in another person for the compensable injury or death. Given the existence of that legal responsibility at the time of the occurrence of the compensable injury or death, the wrongdoer is 'that person' in par (a) and 'the person liable to pay the damages' in par (d). ... as I read the passage cited ... the section does not require the continuance or persistence of the liability. Granted initial responsibility at the time of the receipt of the injury or death, the section provides its own remedy to the employer by the creation of a right of indemnity by the person responsible for the injury or death." (emphasis mine) 27. McTiernan J. agreed with Barwick C.J. Menzies J., dissenting, considered that "the person liable" meant the person presently liable, and that the present liability of the tortfeasor was a condition of the indemnity. I do not accept that that interpretation, which accords with that of Taylor J. in Watson (supra), applies to s.38. 28. I do not consider that the argument founded on the use of different tenses in s.38 supports the argument that "is" in the phrase "is liable" connotes that liability must be current at the time of the institution of the recovery proceedings. I consider that the words "who is ... liable to pay damages" in s.38(1)(b) of the Act are intended to delineate the person from whom the TIO is thereby permitted to recover; the approach of Barwick C.J. in Tickle Industries Pty Ltd (supra) and of Ferguson J. (cited in Watson (supra) by Taylor J.), and of Menzies J. in dissent in Watson (supra) at p 444, appear to me to carry persuasive weight in relation to the interpretation of s.38 of the Act. That is to say, the words "who is, ... liable" are properly construed as descriptive of the person from whom the TIO can recover; they identify that person, and the word "is" carries no temporal significance. 29. It follows from the foregoing that Mr Trigg's submissions must be upheld. Accordingly, the appeal is dismissed and the learned Chief Stipendiary Magistrate's judgment of 23 June 1989 is affirmed. The TIO must have its costs both here and below.

Johnson v Territory Insurance Office [1989] NTSC 48; 69 NTR 9; 99 FLR 464; 11 MVR 268

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Court

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Before

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Judgment (5 paragraphs)

Johnson v Territory Insurance Office [1989] NTSC 48; 69 NTR 9; 99 FLR 464; 11 MVR 268 (6 December 1989)

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Cases Cited (2)