High Court of Australia|1994-10-26|Before: Mason CJ, Hugh JJ

Manser v Spry [1994] HCA 50; (1994) 181 CLR 428; (1994) 124 ALR 539 (26 October 1994)

MANSER v SPRY AND ANOTHER [1994] HCA 50; (1994) 181 CLR 428

Damages - Personal injuries - Matters to be considered in reduction of damages - Statutory compensation from third party - whether to be deducted.

Set aside the answer of the Full Court of the Supreme Court of South Australia to Question (1) and in lieu thereof answer it as follows:

In so far as the plaintiff has received or is entitled to receive compensation under the Workers Rehabilitation and Compensation Act 1986 (S.A.) which does not have to be repaid to the WorkCover Corporation of South Australia and which is compensation for a loss or expense for which the defendant would be liable but for the receipt or entitlement, the receipt or entitlement should be taken into account in the assessment of the plaintiff's award of damages in a way which ensures that the plaintiff does not receive and retain double compensation for the same loss or expense.

The appellant to pay the costs of the respondents in this appeal.

MASON CJ, BRENNAN, DAWSON, TOOHEY AND McHUGH JJ On 25 November

1988, a motor vehicle which the first respondent, Jeana Anna Spry,

was driving and a truck which the appellant, Graham Manser, was

driving came into collision. She sustained injuries to her neck and

back. She issued a summons out of the District Court of South

Australia claiming damages for personal injuries allegedly occasioned

by the negligence of Mr Manser. Subsequently, on 22 July 1991,

Ms Spry suffered an aggravation or exacerbation of the injuries to her

neck and back in a work accident which gave rise to a "compensable

disability" for which she was entitled to receive and has received

(S.A.) ("the Act"). She has been unable to resume employment

following the work accident and has been receiving medical treatment.

2. The corporation which administers the Act ("Workcover") gave a

notice dated 14 January 1993 in purported pursuance of s.54(7) of the

Act claiming payment out of the damages in the common law action for

all compensation which had been paid and which might become payable

thereafter by Workcover to Ms Spry under the Act. These payments

consist of weekly payments, hospital and medical expenses and a lump

sum for non-economic loss. Workcover intervened in the District Court

proceedings to pursue its claim. The question whether Workcover

would be entitled to repayment of compensation out of Ms Spry's (the

plaintiff's) damages raised a question as to the assessment of those

damages in the common law action. Judge C. R. Lee stated a case

raising two questions for determination by the Full Court of the

"(1) With respect to the sums paid or to be paid to or on

behalf of the plaintiff pursuant to the Workcover Act,

assessment of the plaintiff's damages in the action?

(2) Does any and what liability attach to the defendant

answer to Question (2). The Full Court answered Question (2) "No"

and the second respondent, Workcover, accepting that answer, did not

appear on this appeal. The other parties to the appeal in this

Court - the plaintiff and defendant - also accepted the answer to

3. Question (1) concerns the assessment of damages in the common law

action and the answer to that question does not affect Workcover.

That question was framed on the assumption that Mr Manser would be

liable in damages for the consequences of Ms Spry's work accident

unless the Workcover payments and entitlements preclude or diminish

her common law right to recover damages for those consequences.

Regrettably, the stated case omitted to state facts which supported

the assumption and the omission led to some confusion as to the issues

to be determined on this appeal. However, the parties were willing

to have this Court answer Question (1) on the footing that the issue

between the parties was whether damages should be assessed by taking

account of the compensation which the plaintiff had received and would

receive under the Act without any obligation to repay Workcover.

Although that question can arise only on the assumption that the

defendant would otherwise be liable in damages for the consequences

of the work injury, this Court was invited to determine the answer

to Question (1) on that assumption. The question for determination

is whether the plaintiff is entitled both to receive and retain

compensation by way of weekly payments payable during incapacity,

medical and hospital expenses and a lump sum payable for non-economic

loss under s.43 of the Act and to recover damages in the common law

action assessed without reduction on account of compensation received

or to be received. The effect of the answer given to Question (1) by

the Full Court ("None") was to hold that the plaintiff is entitled

both to compensation and to damages assessed without taking

compensation into account. The defendant submits that that answer,

taken together with the answer to Question (2), allows the plaintiff

to recover twice for the same loss or damage: once from Workcover and

again from the defendant. To determine what the plaintiff should

recover from the defendant, it is desirable first to note what she is

4. In the Full Court, Workcover relied on s.54 of the Act to support

a right to repayment of the amounts paid out or to be paid out by it

to or on behalf of the plaintiff. A liability to repay is created by

"(5) Where -

(a) compensation is paid or payable under this Act in

respect of a compensable disability;

(b) a right of action exists against a person other than

the employer for damages in respect of the disability,

the person by whom the compensation is paid or payable is

entitled to recover from that other person the amount of

the compensation in accordance with subsection (7).

(7) Where -

(a) compensation is paid or payable to a person ('the

injured party') under this Act;

(b) the injured party has received, or is entitled to,

damages from another person ('the wrongdoer') in

pursuance of rights arising from the same trauma as

gave rise to the rights to compensation under this

Act;

(c) the person by whom the compensation is paid or payable

under this Act ('the claimant') is entitled to recover

the amount of the compensation by virtue of subsection

(5) or (6),

then the following provisions apply:

(d) the claimant is entitled to recover the amount of

compensation paid or payable under this Act from the

wrongdoer or the injured party but subject to the

following qualifications:

(i) no amount may be recovered from the wrongdoer in

excess of the wrongdoer's unsatisfied liability

to the injured party; and

(ii) the claimant must exhaust its rights against the

wrongdoer before recovering against the injured

party; and

(iii) no amount may be recovered from the injured party

in excess of the amount of the damages received

by the injured party;

(e) the claimant shall, on giving notice to a wrongdoer

of an entitlement to recover compensation under this

section, have a first charge, to the extent of the

entitlement, on damages payable by the wrongdoer to

the injured party;

(f) any amount recovered by the claimant against a

wrongdoer under this subsection shall be deemed to

be an amount paid in or towards satisfaction of the

wrongdoer's liability to the injured party;

(g) an action for the recovery of compensation under this

subsection -

(i) may be heard and determined by the Industrial

Court; and

(ii) must be commenced within 3 years after the date

of the trauma referred to in paragraph (b)."

5. A plaintiff upon whom a defendant has tortiously inflicted an

injury has a "right of action ... for damages" within the meaning of

those words in sub-s.(5)(b) and the damages awarded must include some

damages "in respect of" a subsequent exacerbation of the injury that

is not too remote. Thus, on one reading of sub-s.(5)(b), it could be

said that a plaintiff who has a "compensable disability" as the result

of an exacerbation of an injury tortiously inflicted has "a right

of action ... against a (tortfeasor) for damages in respect of the

disability" within the meaning of those words in that sub-section.

But there is a preferable construction. The phrase "for damages in

respect of the disability" is descriptive of the nature of the right

of action against the tortfeasor when it accrues, that is, when the

plaintiff first suffers any loss or damage as a result of the

defendant's tortious conduct. On this construction, sub-s.(5)(b) does

not comprehend the case where damages are enlarged because a further

6. The language of sub-s.(7)(b) assists in choosing the latter

construction. The event to which that provision refers is the receipt

by a plaintiff of damages from "the wrongdoer" in pursuance of those

rights which arise from the same trauma as gave rise to the rights to

compensation under the Act. The term "trauma" is defined by s.3 to

mean "an event, or series of events, out of which a compensable

disability arises". Thus sub-s.(7) operates only when the rights in

pursuance of which the damages are received arise from the event, or

series of events, out of which the right to compensation under the Act

arises. If damages are received pursuant to rights which arose from

the tortious infliction of the original injury and the right to

compensation arose out of a subsequent event which exacerbates the

original injury, sub-s.(7) does not operate. It operates only when

the tortious infliction of an injury is the event out of which the

right to compensation arises. That being so, the only right of action

referred to in sub-s.(5)(b) is a right of action for damages arising

when the infliction of an injury by the tortfeasor gives rise to a

right to compensation under the Act. So construed, sub-ss.(5) and (7)

have no application to a case where the right to compensation arises

from an event subsequent to the tort in which the original injury was

7. This was the construction attributed to s.54 by the Full Court

and accepted by the parties to this appeal. It means that if the

plaintiff recovers damages quantified by reference, inter alia, to an

exacerbation of her original injury caused by the subsequent work

accident, the plaintiff will be entitled to retain both the damages

and the payments made and to be made under the Act. The defendant

submits that, unless the damages are reduced by taking compensation

under the Act into account, the plaintiff will recover more than the

amount which is just compensation for the loss and damage inflicted by

the defendant's negligence. That submission is directed, of course,

8. In Haines v. Bendall ((1) [1991] HCA 15; (1991) 172 CLR 60 at 63 per Mason CJ,

" The settled principle governing the assessment of

compensatory damages, whether in actions of tort or

contract, is that the injured party should receive

compensation in a sum which, so far as money can do, will

put that party in the same position as he or she would have

been in if the contract had been performed or the tort had

not been committed: Butler v. Egg and Egg Pulp Marketing

Board ((2) [1966] HCA 38; (1966) 114 CLR 185 at 191.); Todorovic v. Waller

((3) [1981] HCA 72; (1981) 150 CLR 402 at 412.); Redding v. Lee ((4) (1983) 151

CLR 117 at 133.) ; Johnson v. Perez ((5) [1988] HCA 64; (1988) 166 CLR 351 at

355, 386.) ; M.B.P (S.A.) Pty. Ltd. v. Gogic ((6) [1991] HCA 3; (1991) 171

CLR 657.); Livingstone v. Rawyards Coal Co. ((7) (1880) 5 App Cas

25 at 39.) ; British Transport Commission v. Gourley ((8)

[1955] UKHL 4; (1956) AC 185 at 197, 212.) . Compensation is the cardinal

concept. It is the 'one principle that is absolutely firm, and

which must control all else': Skelton v. Collins ((9) [1966] HCA 14; (1966)

115 CLR 94 at 128.) , per Windeyer J Cognate with this concept

is the rule, described by Lord Reid in Parry v. Cleaver ((10)

[1969] UKHL 2; (1970) AC 1 at 13.) , as universal, that a plaintiff cannot

recover more than he or she has lost."

9. However, as Walsh JA. pointed out in Adams v. Ascot Iron

Foundry Pty. Ltd. ((11) (1968) 72 SR(NSW) 120 at 134.), the settled

principle does not solve the problem whether a benefit to which a

plaintiff is entitled is relevant to - that is, whether it goes in

reduction of - the damages which a tortfeasor is to pay for the loss or

damage caused by the tort. That problem was addressed by Dixon CJ in

a well-known passage of his judgment in The National Insurance Co. of

New Zealand Ltd. v. Espagne ((12) [1961] HCA 15; (1961) 105 CLR 569 at 573.):

"There are certain special services, aids, benefits,

subventions and the like which in most communities are

available to injured people. Simple examples are hospital

and pharmaceutical benefits which lighten the monetary

burden of illness. If the injured plaintiff has availed

himself of these, he cannot establish or calculate his

damages on the footing that he did not do so. On the other

hand there may be advantages which accrue to the injured

plaintiff, whether as a result of legislation or of

contract or of benevolence, which have an additional

characteristic. It may be true that they are conferred

because he is intended to enjoy them in the events which

have happened. Yet they have this distinguishing

characteristic, namely they are conferred on him not only

independently of the existence in him of a right of redress

against others but so that they may be enjoyed by him

although he may enforce that right: they are the product

of a disposition in his favour intended for his enjoyment

and not provided in relief of any liability in others fully

to compensate him. This is readily seen in the case of

benevolence."

In the same case, Windeyer J said ((13) ibid. at 598.):

" The most satisfying of the reasons that have been given

for refusing to diminish damages because of voluntary gifts

is that they are given for the benefit of the sufferer and

not for the benefit of the wrongdoer. That, it may be

said, cuts across the principle that damages for negligence

are compensatory and not punitive. ... But I do not think

the two propositions necessarily come into collision. A

donor can say who is to benefit by his generosity."

"it is not, I think possible, to enunciate an exhaustive

rule for all parts of this vexed topic. And the questions

that arise can never be determined in the abstract. Each

must depend on the terms of the particular contract,

pension scheme, charitable benefaction or statute governing

the benefit conferred."

To ascertain whether a statutory benefit possesses the "distinguishing

characteristic" that it is to be enjoyed independently of, and

cumulatively upon, the right to damages, the court must endeavour to

discover the intention of the legislature ((15) ibid. at 573, 599-600;

Redding v. Lee [1983] HCA 16; (1983) 151 CLR 117 at 125, 142, 163; Haines v. Bendall

10. There are three possible indicia of a relevant legislative

intention: the financial source of the benefit, the presence of a

provision which requires a repayment of a statutory benefit out of

the damages awarded or paid and the nature of the benefit. If a

scheme for provision of a benefit be funded by contributions made by

employers and employee-beneficiaries as a kind of insurance against

misfortune, the principle in Bradburn v. Great Western Railway

Co. ((16) (1874) LR 10 Ex 1.) indicates that the benefit is to be

enjoyed by a beneficiary who encounters the misfortune without

reduction of the damages to which he or she is otherwise entitled.

That view has been taken of benefits paid under contributory pension

schemes created under statute ((17) Parry v. Cleaver [1969] UKHL 2; (1970) AC 1;

Smoker v. London Fire Authority (1991) 2 AC 502; and see Redding v. Lee

(1983) 151 CLR at 138.). If statute provides that a particular

benefit is to be repaid out of damages, there is a clear indication

that that benefit is not to go in reduction of the tortfeasor's

liability. When such a provision relates only to one or some of the

benefits provided under the statute, the non-repayable character of the

other benefits may imply, according to the context, either that the

legislature intended that the receipt and retention of the benefit

should not be taken into account in the assessment of damages or that

it had no such intention ((18) See Hood Construction Pty. Ltd. v.

Nicholas (1987) 9 NSWLR 60 at 72.). Whether an implication of such a

legislative intention should be drawn depends largely on the nature of

the benefit. Gibbs CJ said in Redding v. Lee ((19) (1983) 151 CLR

"If the statute expressly provides (as some statutes

relating to workers' compensation have done) that a

plaintiff who has recovered damages shall repay the amount

of the benefit it will be clear that the receipt of the

benefit must be disregarded in the assessment. In many

cases, however, the statute under which the benefit is

provided will give no assistance of this kind. Then it

will be necessary to consider closely the nature of the

benefit itself. The conclusion that the benefit is

intended for the plaintiff personally and not in reduction

of the damages may more readily be drawn when it is seen

that the receipt of the benefit is not dependent on the

loss of wages or earning capacity ... for which the

plaintiff claims damages (cf. Parry v. Cleaver ((20) (1970) AC

at 42.) , per Lord Wilberforce) and is not intended to replace

the lost wages or remedy the loss of earning capacity."

Finally, if all indicia of intent fail, the "settled principle

governing the assessment of compensatory damages" which the majority

stated in Haines v. Bendall must be applied. In Adams v. Ascot Iron

Foundry Pty. Ltd., Walsh JA., who described that principle as the

"dominant rule", said ((21) (1968) 72 SR(NSW) at 135.):

" The difficulty lies in ascertaining the relevant

intention from an Act, which does not expressly declare any

intention one way or the other. The difficulty ... is in

attempting to extract from the Act an actual meaning or

intention with reference to the question which has to be

resolved. The question may be one to which the Parliament

or the draftsman of the Act did not in fact advert at all.

Nevertheless, if it is possible to do so, it is necessary

to extract from the Act indications of what was intended.

If one cannot find any real indications pointing one way or

the other, or if one finds indications both ways which are

evenly balanced, it may be that the question must then be

resolved by taking the view that the dominant rule ...

should operate."

The character and incidents of compensation payments under the Act

11. Section 54 of the Act requires repayment to Workcover of

compensation benefits paid to or on behalf of a worker under the Act

if the rights to compensation arise from the same trauma as gave rise

to the right to damages. And if the worker sues a third party for

damages in tort arising from the "same trauma", s.54(4b) precludes the

third party from recovering contribution against the employer except

where the trauma is inflicted in a motor vehicle accident and the

employer was or ought to have been insured against that liability. It

can be inferred from these provisions that a purpose of the Act is to

ensure that Workcover is recouped when its liability arises from an

event for which another source of compensation is also liable. For

this reason, repayment by the plaintiff to Workcover of compensation

is made to depend on whether the "same trauma" test is satisfied. But

Div.9 of the Act (which includes s.54) contains no indication of

intention as to whether the plaintiff is to enjoy both the statutory

benefits and unreduced damages in cases other than the "same trauma"

cases. It is necessary, therefore, to examine the character of the

12. Compensation under the Act is payable in respect of a disability

which "arises from employment" within the meaning of that term as

expanded by s.30 of the Act. The compensation paid and to be paid to

the plaintiff in this case falls into three categories. The first

category consists of medical and hospital expenses payable under s.32.

The purpose of these payments, which may be paid either to the worker

or to the provider of the relevant service (s.32(3)), is to indemnify

the worker, wholly or in part, against health care expenses incurred

as the result of the compensable disability (s.32(1)). The second

category consists of weekly payments which, pro tanto, make up for

weekly earnings lost by reason of incapacity for work produced by the

compensable disability: s.35. Or, in the place of the weekly

payments, an actuarially calculated lump sum can be paid when the

Manser v Spry [1994] HCA 50;

At a glance

Court

Decision date

Before

Source

Judgment (231 paragraphs)

Manser v Spry [1994] HCA 50; (1994) 181 CLR 428; (1994) 124 ALR 539 (26 October 1994)

Parties

Legislation Cited (2)

Cases Cited (9)