LIBRERI v IRONIDOL PTY LTD & ORS

Court of Appeal (NSW)|2007-08-13|Before: Mason P, Beazley JA, Basten JA

CITATION: LIBRERI v IRONIDOL PTY LTD & ORS (No 2) [2007] NSWCA 198

JUDGMENT OF: Mason P at 1; Beazley JA at 1; Basten JA at 35

CATCHWORDS: DAMAGES - General principles - future economic loss - superannuation - whether award made in previous proceedings inclusive of superannuation - not inclusive of superannuation - TORTS - The law of torts - generally - joint or several - tortfeasors - contribution -liability in respect of the same damage - where proceedings against employer commenced prior to introduction of Civil Liability Act 2002 - where third party joined to proceedings after commencement of Civil Liability Act 2002 - applicability of Civil Liability Act - Workers Compensation Act 1987 NSW, s 151Z(2) - Civil Liability Act 2002, s 19(3) - WORKERS' COMPENSATION - Alternative rights against employer and/or third parties

Civil Liability Act 2002 LEGISLATION CITED: District Court Rules 1973 (NSW) Superannuation Guarantee (Administration) Act 1992 (Cth) Workers Compensation Act 1987

Amaca Pty Ltd v Cremer [2006] NSWCA 164 Glynn v Challenge Recruitment Australia Pty Ltd [2006] NSWCA 203 Gordian Runoff Ltd v Heyday Group Pty Ltd [2005] NSWCA 29 CASES CITED: Grljak v Trivan Pty Ltd (1994) 35 NSWLR 82 Leonard v Smith (1992) 27 NSWLR 5 Libreri v Ironidol Pty Ltd [2006] NSWCA 266 Zorom Enterprises Pty Ltd v Zabow [2007] NSWCA 106

PARTIES: Steven LIBRERI IRONIDOL PTY LTD & Ors

COUNSEL: Appellant: S Norton SC/E Walsh Respondent: L King SC/ M Robinson

SOLICITORS: Appellant: Brydens Law Office Respondent: Wootton & Kearney

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40693/2005

MASON P BEAZLEY JA BASTEN JA

Steven LIBRERI v IRONIDOL PTY LTD & Ors (No 2) JUDGMENT 1 MASON P and BEAZLEY JA: On 28 September 2006 the parties were directed to file draft orders to give effect to the reasons of the Court (Libreri v Ironidol Pty Ltd [2006] NSWCA 266 at [74]).

Superannuation loss with respect to future economic loss 2 Subsequently, disagreement emerged as to the intent of the Court referable to "future economic loss and attendant superannuation loss". 3 As recorded in the earlier reasons (at [39]), the trial judge had accepted that an allowance should be made for the fact that the appellant may not be able to work for the 31 years that would elapse before normal retirement age. The $75,000 awarded represented a future wage loss of approximately $100 per week for 31 years, with the usual 15% for vicissitudes, plus allowance for future superannuation entitlement. There were separate awards for "past wage loss" and "past super" and a composite award of $75,000 for "future cushion". However, the mathematics and the reasoning of the trial judge (who referred to "future economic loss, including loss of future superannuation entitlements": Red 52) confirm that superannuation was separately calculated before the rounded out figure of $75,000 was adopted. 4 The appellant challenged this award on various grounds, contending that he was in fact capable of earning more than $1,000 per week. In his written submissions (para 53) he submitted that the allowance for future economic loss was manifestly inadequate and that there should have been a separate calculation of the loss of superannuation. 5 On appeal, the Court agreed that the award of damages for future economic loss was inadequate. Mason P held that the weekly loss component should be increased beyond the ($100 per week) level adopted by the primary judge for past economic loss. It was proposed that this should be done "by calculating further economic loss and attendant superannuation by reference to a flat weekly figure of $350 per week representing loss of earning capacity" (at [70]). It was further proposed (at [71]) that the Court should "vary the judge's award for future economic loss and attendant superannuation loss by calculating the award in the conventional manner based on a loss of $350 per week instead of $100 per week chosen by the judge". Beazley JA agreed with Mason P. Basten JA favoured a calculation based on a figure of $250 per week, but otherwise agreed with the reasons and decision of the Court. 6 The respondent now suggests that $350 per week was intended to cover both components, ie future loss of earning capacity and future superannuation losses. 7 This was not the Court's intent. Nor does it accord with the manner of expression of the Court's reasons. Nor does it reflect the approach of the trial judge, albeit that the mathematics of the $75,000 award is not disclosed. 8 The parties agree that if there is an additional allowance for superannuation losses, it can conveniently be calculated at 11% of the net loss, ie $39 per week.

Section 19(1) of the Civil Liability Act 9 There is a second point of disagreement as to the implementation of the Court's reasons. It relates to the applicability of s19(1) of the Civil Liability Act 2002. 10 The three defendants in these proceedings were represented by the same solicitors and counsel both at trial and on appeal. At the commencement of the hearing in the District Court, the judge was informed that breach of duty of care was admitted by all three defendants and that they had agreed amongst themselves as to the proportion in which each bore responsibility, in terms of liability, for the injury and loss suffered by the plaintiff. 11 The damages payable by the first defendant, (Ironidol Pty Ltd, being the employer), had to be assessed in accordance with the Workers Compensation Act 1987. The damages payable by the second and third defendants had to be assessed in accordance with the Civil Liability Act 2002, because those parties were joined after Pt 2 of that Act had commenced. 12 When the trial judge proceeded to translate his reasons into formal orders he was informed that the parties agreed that 10% of liability should be apportioned to the first defendant (Ironidol Pty Ltd) and 90% to the second and third defendants. 13 His Honour was also informed that the parties had agreed that the damages to be awarded against the first defendant, calculated under the Workers Compensation Act, were in the amount of $273,875. The damages to be awarded against the second and third defendants, calculated under the Civil Liability Act, were $238,813. The only head of damage that differed in the overall calculations was in relation to non-economic loss (see Reasons for Judgment (No 2) at Red 55). 14 The trial judge then turned to the application of s151Z(2) of the Workers Compensation Act. He recorded that counsel for the defendants had submitted that s151Z(2) of the Workers Compensation Act meant that the plaintiff was entitled to a verdict against the first defendant for 10% of $273,875.00, ie $27,387.50. Further, it had been submitted that the plaintiff was entitled to a verdict against the second and third defendants for 90% of $238,813.00 ie $214,931.70. In written submissions, counsel for the defendant contended that "the total damages recoverable by the plaintiff against all three defendants is therefore $242,319.20". 15 It is obvious that the matter was debated further at a hearing on 10 August 2005 when counsel for the defendant submitted that there should be entered against all three defendants a verdict and judgment in favour of the plaintiff for $242,319.20, less the amount of $120,531.00 in respect of the workers' compensation "payback". In support of this submission counsel for the defendant relied on Leonard v Smith (1992) 27 NSWLR 5, Grljak v Trivan Pty Ltd (1994) 35 NSWLR 82 and other cases. 16 Counsel for the plaintiff submitted to the trial judge that the correct approach was for the court to enter two separate verdicts and judgments in favour of the plaintiff, one against the first defendant and the other against both the second and third defendants. He relied on certain comments made by Tobias JA in Gordian Runoff Ltd v Heyday Group Pty Ltd [2005] NSWCA 29. 17 The trial judge observed that the comments of Tobias JA were made subject to the impact of Division 3 of Pt 5 of the Workers Compensation Act. Moreover, the approach identified by Allen J in Leonard v Smith had been approved by the Court of Appeal in Grljak's case and other cases. 18 Rolfe DCJ ruled that the correct approach was that set out by Allen J in Leonard v Smith. 19 The trial judge was correct to take this approach to s151Z. As this Court pointed out in Glynn v Challenge Recruitment Australia Pty Ltd [2006] NSWCA 203 (at [32]): [The Workers Compensation Act ] did over-ride the principle that judgment is given in solidum against several concurrent tortfeasors, in that the judgments against an employer and a non-employer may be for different amounts. But that does not mean that a worker has rights against the individual tortfeasors only to the extent of the tortfeasors' proportionate responsibilities.

In other words, the principles established in Leonard and Grljak were reaffirmed. 20 Applying these principles, the trial judge calculated damages as follows:

As between the plaintiff and the first defendant, a. Damages assessed above: $273,875 b. Less Workers Compensation payments and paid out of pocket expenses: $120,531 $153,344 c. 10% Apportionment = $ 15,334

As between the plaintiff and the second and third defendants,

a. Damages assessed above: $238,813 b. Less Workers Compensation payments and paid out of pocket expenses $120,531 $118,282 c. 90% Apportionment = $106,454

In the result, the Court makes the following orders:

Verdict and Judgment for the plaintiff against the defendants in the amount of $121,788

21 In this Court the parties have agreed that s151Z does not apply because, on any of the recalculations, damages calculated in accordance with the Workers Compensation Act to be awarded against the first respondent (Ironidol Pty Ltd, the employer) will be higher than those to be awarded against the other respondents. 22 This then threw up the possibility that s19 of the Civil Liability Act 2002 might have some work to do in the circumstances. 23 The primary judge was not referred to s19. It provides: 19 Third party contributions (1) This section applies when a person ( the claimant ) is entitled to an award of damages in respect of death or injury against a person ( the defendant ) and also against another person ( the third party ), and the award against the defendant is an award to which this Part applies but the award against the third party is not an award to which this Part applies. (2) A court determining the amount of the contribution ( the defendant's contribution ) to be recovered by the third party from the defendant must: (a) determine the defendant's contribution as a percentage, being such percentage as the court thinks just and equitable (having regard to the extent of the responsibility of the defendant and the third party, respectively, for the claimant's damages), and (b) determine the amount of damages to which the claimant is, or would be, entitled in accordance with this Part (as if the award of damages against the third party were not excluded from the operation of this Part), and (c) fix the amount of the defendant's contribution by applying the percentage determined under paragraph (a) to the amount of damages determined under paragraph (b). (3) The amount of damages that may be recovered by the claimant from the third party is to be reduced by the difference between: (a) the amount of the contribution to which the third party would have been entitled (but for this section) from the defendant, and (b) the amount of the defendant's contribution calculated under subsection (2). (4) Subsection (3) does not limit any greater reduction (applicable under any other law) in the amount of damages that may be recovered by the claimant from the third party. 24 There is now a dispute as to the applicability of s19(3). 25 If and to the extent that s19(3) applies, it would require the plaintiff's damages recoverable from a "third party" not affected by the Civil Liability Act (ie Ironidol Pty Ltd, the employer) to be reduced by the difference between:

(a) the amount of the contribution to which the employer would have been entitled (but for s19) from the remaining defendants, and

(b) the amount of those defendants' contribution calculated under s19(2). 26 The appellant submits that s19(3) has no application to the relevant calculation, ie of damages to be awarded against the employer, the first defendant, because the proceedings as against that first defendant were commenced prior to 20 March 2002, the date on which the Civil Liability Act commenced. Schedule 1: Savings and transitional provisions, Part 2, cl 2 of the Civil Liability Act provides: (2) However, Part 2 of this Act does not apply to or in respect of: (a) an award of damages in proceedings commenced in a court before the commencement of this Act, or (b) an award of damages, or settlement or consent order in respect of damages, made before the date of assent to this Act.

27 Section 19 is in Part 2 of the Act. 28 The respondents do not concede this point, but have advanced no argument to suggest that it should be rejected. The fact that the proceedings were amended after 20 March 2002 to join the second and third defendants has no bearing on the damages recoverable against the first defendant. 29 We agree with the plaintiff on this matter. The terms of cl 2(2)(a) are clear. 30 Accordingly, the damages are to be recalculated without applying s19.

Disposition 31 The parties have agreed that, in the event of the Court resolving the two issues in the manner indicated, the orders of the Court would be:

[With the exception of the costs order made by the trial judge] judgments of the District Court set aside and in lieu thereof judgment for the appellant against the first respondent in the sum of $474,571 and against the second and third respondents in the sum of $439,509.

The judgments are to take effect from 12 August 2005.

Respondents to pay the appellant's costs of the appeal to this Court. 32 The words in parentheses in order 2 are not stated in the written submissions of the parties. We infer that this was an oversight. If we are wrong, the parties have liberty to apply on that matter exercisable within 21 days. 33 Naturally, the rights conferred under the judgments to be ordered are not cumulative. The principles relating to double compensation apply. 34 We would make the following orders:

Respondents to pay the appellant's costs of the appeal to this Court.

Respondents to have a certificate under Suitors' Fund Act 1951 , if qualified.

With the exception of the costs order made by the trial judge, judgment of the District Court set aside and in lieu thereof judgment for the appellant against the first respondent in the sum of $474,571 and against the second and third respondents in the sum of $439,509.

The judgments are to take effect from 12 August 2005.

Liberty to apply within 21 days with reference to the costs of the proceedings in the District Court. 35 BASTEN JA: As the joint judgment of the President and Beazley JA notes, there were two issues for consideration in relation to the appropriate orders to be made by the Court in this matter. In relation to the first, I agree with the joint judgment. Why the parties agreed that superannuation should be calculated at 11% of net wage loss, is obscure. The common practice is to include an amount to reflect the legal obligation of an employer under the Superannuation Guarantee (Administration) Act 1992 (Cth) to pay superannuation at the rate of 9% calculated on the employee's gross ordinary time earnings: see, eg, Zorom Enterprises Pty Ltd v Zabow [2007] NSWCA 106 at [72] (Campbell JA). The figure agreed upon was no doubt intended to allow for an element of overtime in the estimated loss, which would be off-set by the fact that a net figure was accepted. Without explanation, this figure may appear confusing, but, given the agreement of the parties, need not be considered further.

Civil Liability Act , s 19 36 The second issue concerns the application of s 19 of the Civil Liability Act 2002 (NSW). The terms of this section are set out in the joint judgment at [23]. The transitional provisions relating to the application of Part 2 of the Civil Liability Act, which includes s 19, are to be found in Schedule 1, cl 2, set out at [26] above. 37 The first issue with respect to the operation of the transitional provision is to identify the "proceedings" in which the award of damages is sought. If the proceedings are those commenced against the employer in relation to the injury suffered by the plaintiff, they were commenced prior to the commencement of the Civil Liability Act and hence Part 2 will not apply. However, if the proceedings are those which commenced when the second and third defendants were joined, which was after the commencement of the Civil Liability Act, Part 2 will apply to an award of damages in the proceedings against those defendants. The District Court Rules, as in force when the second and third defendants were joined, provided that the proceedings against those defendants were deemed to have commenced at the time of the amendment by which they were joined: District Court Rules 1973 (NSW) Pt 7, r11, and see Amaca Pty Ltd v Cremer [2006] NSWCA 164 at [149] (Brereton J). It follows that Part 2 of the Act does apply in respect of "an award of damages" in proceedings against the second and third defendants. 38 The question remains as to whether s 19, which appears in Part 2, falls within that transitional provision. Section 19 has a number of parts. Subsection (1) says that the section applies when a plaintiff is entitled to an award of damages (in relation to this case) against the second and third defendants and also against another person, namely the employer. There is a further condition, namely that the award against the second and third defendants be an award to which Part 2 of the Act applies, whereas the award against the employer is not one to which Part 2 of the Act applies. Each of these conditions is satisfied in the present case. Thus, on its face, the whole of the section will apply. 39 Subsection (2) provides a method for determining the contribution "to be recovered" by the employer from the second and third defendants. For the purpose of the present proceedings, there is, arguably, no requirement that the Court determine the amount of the relevant contribution, being a calculation which cannot be undertaken before one of the defendants pays more than its proportion of the judgment. However, for reasons which will appear, I do not think that is a material consideration. 40 Subsection (3), in its terms, says nothing about the award of damages payable by the second and third defendants; rather, it affects the award of damages which may be recovered by the plaintiff from the employer. It is therefore arguable that s 19(3) is not a provision which applies to or in respect of any award of damages other than the award made against the employer, in proceedings commenced before the commencement of the Act. That is, I understand, the approach adopted by the President and Beazley JA. 41 However, on one view, that gives rise to an anomaly. If the assessment of damages recoverable by the plaintiff from the third party is higher (say, $300,000) than that recovered from the defendant under the Act (say, $200,000) and each is required to contribute 50% to the other, the third party will only be able to recover $100,000 from the defendant if the plaintiff recovers from it the full amount of $300,000, because the defendant's contribution is assessed by reference to damages calculated in accordance with Part 2, namely $200,000. The defendant's contribution is thus $50,000 lower than it would be but for s 19(2), with the result that, pursuant to s 19(3), the amount of damages which the claimant may recover from the third party is reduced by $50,000 to $250,000. If the plaintiff could recover the higher figure (unreduced), that must result from one of two provisions not applying despite sub-s (1). If s 19(2) did not operate, the third party would recover $150,000 by way of contribution from the defendant, meaning that the defendant would pay $50,000 more than its share of its liability, quantified under the Act. On the other hand, if s 19(2) did apply to reduce the defendant's contribution, but s 19(3) did not apply, the third party would pay $300,000, recover only $100,000 from the defendant and thus have a residual liability for $200,000 or two-thirds of the damages for which it was responsible, rather than the 50% assessed by the Court. 42 The first of these alternatives is not available, because, on any view, calculation of the defendant's contribution involves an application of the Act to an award of damages in the proceedings concerning the defendant. If the second alternative were available, it would have the effect of nullifying the assessment by the Court of the defendant's just and equitable contribution to the plaintiff's loss. If that assessment of responsibility is to be given effect, the effect must follow from the operation of s 19(3). The effect follows because the Act applies in respect of the award of damages recoverable from the defendant, as assessed under the Act. Similarly, looked at from the perspective of the defendant, the result is not only an increase in the proportion of liability ascribed to the third party, but a diminution in the proportion of liability ascribed to the defendant. Thus, if s 19(3) did not apply in the circumstances described above, the defendant's contribution assessed as a percentage would not be 50%, as assessed by the Court, but 33.3%, of the damages recovered by the plaintiff. Accordingly, if s 19(2) applies, so must s 19(3): they form parts of an interlocking method of calculation. 43 The consequences for the present plaintiff are significant, because it was agreed that the proportionate contribution of the employer (the third party for the purposes of s 19) was only 10%. As a result, the difference between the second and third defendants' contribution calculated under the Act and as calculated otherwise than under the Act is $31,555.80. Accordingly, in my view the plaintiff's judgment as against the employer must be reduced to $443,016. 44 Otherwise I agree with the orders proposed by the President and Beazley JA. **********

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