Mansour Taouk v Maroun Taouk & Anor

Court of Appeal (NSW)|2010-12-06|Before: Giles JA, Mr P

CITATION: Mansour Taouk v Maroun Taouk & Anor (Trading as E & MT Plumbing) ABN 51 021 843 766 [2010] NSWCA 372

JUDGMENT OF: Giles JA at 1; Handley AJA at 2; Sackville AJA at 3

Leave to appeal granted. DECISION: 2. Appeal dismissed. 3. Applicant to pay the respondents' costs of the application for leave to appeal and of the appeal. [The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

CATCHWORDS: WORKERS COMPENSATION - claim by injured worker against his former employer seeking damages for injuries sustained in a work accident - time limitation - leave of the court required for proceedings brought more than three years after the date the injury was received - inability of respondents to pursue a cross-claim for contribution against third party because the limitation period had expired - whether primary judge was correct to find that the respondent had been prejudiced, given that respondent had made no claim for indemnity against third party under s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW)

Law Reform (Miscellaneous Provisions) Act 1946 (NSW) LEGISLATION CITED: Limitation Act 1969 (NSW) Workers Compensation Act 1987 (NSW) Workplace Injury Management and Workers Compensation Act 1988 (NSW)

Creevey v Barrois [2005] NSWCA 264 I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 CASES CITED: J Blackwood & Sons Ltd v Skilled Engineering Ltd [2008] NSWCA 142 South Sydney Area Health Service v Gadiry [2002] NSWCA 161; 54 NSWLR 495 Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418

PARTIES: Mansour Taouk - Applicant/Appellant Maroun Taouk & Elias Taouk t/as E & MT Plumbing ABN 51 021 843 766 - Respondent

COUNSEL: Mr K Andrews for the Applicant/Appellant Mr P Morris SC for the Respondent

SOLICITORS: Keddies Solicitors for the Applicant/Appellant Moray & Agnew Solicitors for the Respondent

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

GILES JA HANDLEY AJA SACKVILLE AJA

22 December 2010 MANSOUR TAOUK v MAROUN TAOUK & ANOR (TRADING AS E & MT PLUMBING) ABN 51 021 843 766 Judgment 1 GILES JA: I agree with Sackville AJA. 2 HANDLEY AJA: I agree with Sackville AJA 3 SACKVILLE AJA: This is an application for leave to appeal from a decision of a District Court Judge (Ashford DCJ) dismissing an application under s 151D(2) of the Workers Compensation Act 1987 (NSW) ("Workers Compensation Act") for leave to bring proceedings against the respondents out of time. The application for leave to appeal and the appeal were heard concurrently. 4 The applicant requires leave in order to commence proceedings against the respondents, his former employers. His claim is for damages for injuries sustained by him in a work accident. 5 The applicant, then a 20 year old trainee plumber, was injured on 31 May 2001, in the course of his employment with the respondents on a work site at Church Street, Lidcombe. The respondents, at the time of the accident, provided commercial and domestic plumbing services. They employed a total of five people. 6 The work site at which the applicant was injured was under the care and control of a third party, Firedam Civil Engineering Pty Ltd ("Firedam") which was a contractor to the Water Board. The applicant was injured while carrying PVC pipes at the direction of an employee of Firedam. It appears that the Firedam employee failed to retain control of one end of a six metre length of PVC pipe and that, in consequence, the pipe struck the applicant. He claims to have suffered injuries to his mouth, teeth, jaw and upper torso. 7 Section 151D(2) of the Workers Compensation Act provides that an employee is not entitled to commence proceedings claiming damages against an employer more than three years after the date the injury was received, except with the leave of the court. The three year period in the present case expired on 31 May 2004. 8 The applicant served the pre-filing statement required by s 315 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("WIM Act") as a precondition to commencing court proceedings for the recovery of work injury damages, on 25 September 2008. The applicant's summons seeking leave to bring the proceedings against the respondents was filed on 8 April 2009. 9 The principal basis on which the respondents resisted the application was that they would suffer irremediable prejudice if leave was granted. They argued in the District Court that they would be unable to pursue a cross-claim for contribution against Firedam pursuant to s 5(1) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ("1946 Act"), because the limitation period for bringing such a cross claim had expired seven years after the date of the injury. The respondents contended that this was the effect of ss 26(1)(b) and 26(3) of the Limitation Act 1969 (NSW), when read with s 151D(2) of the Workers Compensation Act. (Sections 26(1)(b) and 26(3) of the Limitation Act impose a limitation period of four years for an action seeking contribution under s 5(1) of the 1946 Act, running from the date of expiration of the limitation period for the principal cause of action). 10 The applicant contended before the primary Judge that, for reasons there advanced, the limitation period for a contribution claim under the 1946 Act did not expire until November 2008, after the applicant had served his pre-filing statement. Since time does not run for the purposes of s 151D(2) of the Workers Compensation Act while a pre-filing statement served under s 315 of the WIM Act remains current (Workers Compensation Act, s 151DA(1)(b)), it followed, according to the applicant, that the respondents had the opportunity to institute proceedings seeking contribution from Firedam, after they had received notice of the applicant's damages claim. 11 The primary Judge accepted (at [31]) the respondents' submission that the limitation period for any cross-claim by them for contribution against Firedam under the 1946 Act expired on 31 May 2008, before the pre-filing statement was served. This conclusion formed an important element in her Honour's finding that the applicant's delay in instituting proceedings caused material prejudice to the respondents. 12 Mr Andrews, who appeared for the applicant on the application for leave to appeal, did not challenge the primary Judge's conclusion on the expiration of the limitation period for a cross-claim against Firedam. The application for leave to appeal was therefore conducted on the basis that any claim by the respondents against Firedam for contribution had been barred on 31 May 2008. The absence of a challenge to the conclusion on the limitation period applicable to a claim for contribution led Mr Andrews to advance some submissions that were not put to the primary Judge.

COURSE OF EVENTS 13 On 12 July 2001, the respondents' workers compensation insurer received a report from an investigator relating to the circumstances in which the applicant was injured. The report noted that it was "possible" that recovery could be sought from Firedam. 14 In late 2001, the applicant consulted solicitors. He gave evidence in the current proceedings that his solicitor advised him of his entitlement to claim compensation under the Workers Compensation Act, but not of his entitlement to claim common law damages. 15 On 21 December 2001, the applicant's then solicitors wrote to the respondents claiming compensation under the Workers Compensation Act for permanent impairment (s 66) and compensation for pain and suffering (s 67). 16 On 12 April 2002, the applicant's former solicitors served on the respondents' insurers a sealed copy of an application for determination in the Compensation Court of New South Wales. The applicant claimed a lump sum of $58,500 under s 66 of the Workers Compensation Act for permanent impairment to his neck, back and elbow and a lump sum of $15,000 under s 67 for pain and suffering. 17 The proceedings in the Compensation Court were settled on 29 May 2003. 18 On 31 May 2004, the limitation period prescribed by s 151D(2) of the Workers Compensation Act expired. 19 On 5 November 2005, the applicant consulted his current solicitors, who requested the file from the previous solicitors. The file was received on about 14 March 2006. 20 On 7 June 2006, the applicant's solicitors advised the respondents' insurer that they were investigating the applicant's "work injury damages entitlements". They enclosed a medical report from Dr Peter Conrad and asked whether the insurer was prepared to concede that the applicant's injuries exceeded the 15% threshold. This was a reference to s 151H of the Workers Compensation Act, which states that no common law damages can be awarded in respect of an injury to a worker caused by the negligence of the worker's employer unless the degree of permanent impairment is at least 15%. 21 On 3 August 2006, the insurer refused to make the requested concession. 22 On 7 September 2006, the applicant's solicitors applied to the Workers Compensation Commission for the applicant to be assessed by an approved medical specialist. 23 On 1 December 2006, the applicant's solicitors wrote to the respondents' insurer putting the insurer on notice, pursuant to s 281 of the WIM Act, that the applicant intended to claim work injury damages. The solicitors asked the insurer to determine liability within two months, as required by s 281(2) of the WIM Act. 24 On 18 January 2007, the respondents' insurer denied liability to pay common law damages to the applicant. 25 On 20 April 2007, a Medical Assessment Certificate was issued by Dr James Bodel, assessing the applicant's degree of permanent impairment. The Certificate stated, pursuant to s 325 of the WIM Act, that the applicant had a Whole Person Impairment of 15%. 26 On 27 April 2007, the solicitors for the insurer sent a letter to the applicant's solicitors, as follows: "Now that your client has established that the subject injury results in a WPI of 15%, please advise if you will be pursuing the previously foreshadowed work injury damages claim." 27 The insurer's solicitors, apparently having received no reply to this letter, repeated their request on 7 May 2007, 30 August 2007 and 2 October 2007. 28 On 29 May 2007, the applicant had an "initial conference" with his solicitors to discuss possible future action against his former solicitors and against the respondents. He was advised of the need to obtain counsel's advice. 29 On 15 August 2007, the applicant had a conference with counsel. The applicant was advised of his options, including bringing a claim against his former solicitors and instituting proceedings for common law damages against the respondents. 30 On 10 October 2007, the applicant's solicitors finally responded to the request for information first made by the insurers' solicitors on 27 April 2007. The response merely stated that a different solicitor had taken over the file. 31 On 20 February 2008, the applicant's solicitors instituted professional negligence proceedings against his former solicitors. He apparently alleged in those proceedings that the solicitors had failed to advise him to claim damages in respect of his injuries from Firedam. Any such claim for damages would not have been subject to the procedural limitations imposed on a worker seeking common law damages against his or her employer. Those limitations are imposed principally by the Workers Compensation Act, Part 5, Divs 3 and 5. 32 On 31 May 2008 (as the applicant's counsel accepts), the time expired for the respondents to commence proceedings against Firedam claiming contribution under the 1946 Act. 33 On 23 June 2008, the insurers' solicitors noted that the applicant's solicitors had advised in a telephone conversation on 22 May 2008 that they were awaiting some "final evidence" before serving a pre-filing statement. The letter asked the applicant's solicitors to advise whether they intended to pursue the previously foreshadowed work injury damages claim. 34 On 25 September 2008, the applicant's solicitors served his pre-filing statement on the respondents. The statement identified the applicant's claim as one for work injury damages by reason of the respondents' negligence in failing to ensure that the worksite was safe or that the applicant received appropriate instructions and supervision. 35 The pre-filing statement gave particulars of the economic loss that the applicant intended to claim. The particulars stated that he would claim future economic loss based on comparable wage figures for plumbers employed in New South Wales or, in the alternative, based on the diminution of his earning capacity in the open market. The claim was limited to economic loss because the modified common law damages regime created by Part 5, Div 3 of the Workers Compensation Act provides (s 151G) that the only damages that may be awarded in a work injury claim against an allegedly negligent employee 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". 36 On 2 October 2008, the respondents served a pre-filing defence. The respondents said that the proceedings were not maintainable because they had been commenced in contravention of s 151D(2) of the Workers Compensation Act. 37 On 24 February 2009, the applicant's professional negligence action against his former solicitors was settled. The evidence before the primary Judge did not reveal the terms of the settlement. 38 On 12 March 2009, the applicant's solicitors served an application under s 318A of the WIM Act for mediation of his work injury damages claim. (A claimant, subject to certain exceptions, must refer a claim to mediation before commencing court proceedings: s 318A(1).) On 18 March 2009, the respondents' insurer declined to participate in mediation. 39 On 24 March 2009, the applicant's solicitors inquired whether the insurer's solicitors had instructions to accept service of a statement of claim. The insurers' solicitor's response of 31 March 2009 confirmed that they had such instructions. However, the response referred to s 151D(2) of the Workers Compensation Act and stated as follows: "Quite apart from the significant prejudice which would result from the delay since the injury on 31 May 2001 if such leave were to be granted, we respectfully draw your attention to s26 of the Limitation Act 1969 which would now preclude a cross-claim by our client against Firedam … which must, without any possible doubt, give rise to sufficient prejudice to preclude leave being granted." 40 On 8 April 2009, the applicant filed his application seeking leave to commence the proceedings out of time.

THE PRIMARY JUDGMENT 41 The primary Judge accepted (at [25]) that the applicant's former solicitors had not given him advice about his entitlement to claim modified common law damages against the respondents. Her Honour also observed that, as the applicant was related to the respondents, it could be assumed that each of the respondents would be available to give evidence in any proceedings brought against them by the applicant. 42 The primary Judge noted (at [28]) that, although employees of Firedam may have been interviewed, there was no evidence as to their statements or as to their availability to give evidence in any proceedings. Nonetheless, her Honour considered that the investigation report provided a basis for pleading facts which, if proved, would give rise to a "sustainable claim for contribution as against Firedam". As I have noted, her Honour held that the respondents were now unable to bring any cross-claim against Firedam, as the limitation period for such a cross-claim had expired on 31 May 2008. 43 The primary Judge quoted (at [40]) the following comment by Basten JA in Creevey v Barrois [2005] NSWCA 264, at [56]: "… an assumed loss of a right to cross-claim against a joint tortfeasor will give rise to significant prejudice sufficient to render it unjust to allow a claimant to proceed out of time, but only where the possible claim for contribution has been shown to be viable and realistic, rather than a fanciful or theoretical possibility." 44 The primary Judge continued as follows: "41. It seems to me that the contention in this claim that the [respondents] suffer material prejudice through loss of a possible claim against a cross defendant is not merely fanciful or theoretical but one which needs to be considered. 42. The delay in the present case covered not only the three year limitation period but a further four years and while the [applicant] enforced his compensation rights and I accept he was not advised or aware of his common law rights until well after that time, it appears no regard was made to the [respondents'] solicitors repeated correspondence regarding any cross claim. On the material before me it seems such a claim appears viable and realistic. 43. In the interim the [applicant] claimed against his former solicitors for negligence but his solicitors also were aware of a possible further claim of which they seem to have taken little notice. The respondents clearly [have] suffered prejudice caused by the loss of potential evidence that may have been available within the limitation period particularly in relation to records of the cross claimant and the ability to claim contribution. 44. The [respondents] submit there was a lack of diligence by the [applicant] in pursuing any claim against [them] and that had the [applicant] brought his claim prior to 31 May 2008 the prejudice that will now be occasioned to the [respondents] if leave to bring the proceedings is given would not have arisen. 45. It is clear that instructions were given to the [applicant's] present solicitors well within the limitation period. Clearly the [applicant] was not well served by his former solicitors and upon instructing his present solicitors an available claim for professional negligence was prosecuted. However, well prior to the expiration of the limitation period in May 2008 the [respondents'] solicitors were making enquiries as to whether any further claim would be pursued for work injury damages. Indeed there appears to be no explanation as to why the [applicant's] solicitors did not pursue any claim following receipt of advice in conference with counsel in August 2007 and yet nothing occurred for some considerable period of time even though in December 2007 the [applicant's] solicitors advised they would be "shortly" serving a pre-filing statement. This of course did not occur until September 2008 which was outside the limitation period. No explanation has been advanced for these delays. Thus it seems to me the loss of rights of the [respondents] against a third party does cause real prejudice to the [respondents]. 46. In short, there is unexplained delay on the part of the [applicant's] solicitors in furthering the [applicant's] claim and no proper explanation has been given. The file was received in March 2006. An advice was not obtained until August 2007; the WPI was completed in April 2007. The pre-filing statement was not served until September 2008. 47. Accordingly, I am not satisfied that under the circumstances it would be just and equitable to extend the limitation period. 48. I therefore dismiss the [applicant's] application and order the [applicant] to pay the [respondents'] costs of the motion." APPLICANT'S SUBMISSIONS 45 Mr Andrews did not contend on behalf of the applicant that the primary Judge had erroneously stated or misapprehended any of the legal principles applicable to an application for an extension of time under s 151D(2) of the Workers Compensation Act. He made the following submissions:

(1) The primary Judge was incorrect in finding that the applicant had provided no explanation for the delay between the date the file was received by his current solicitors (August 2006) and the service of the pre-filing statement (September 2008).

(2) There was no evidence to support the primary Judge's finding (at [43]) that the respondents had been prejudiced by the loss of potential evidence that may have been available in relation to their claim for contribution against Firedam.

(3) The finding as to prejudice by reason of the respondents' inability to claim contribution was incorrect because:

(a) the respondents' entitlement to seek an indemnity from Firedam under s 151Z(1)(d) of the Workers Compensation Act was similar to their entitlement to claim contribution from a tortfeasor and their failure to claim the indemnity within the limitation period demonstrated that any prejudice flowing from their inability to make a claim for contribution under the 1946 Act was their own responsibility; and

(b) the respondents' failure to seek an indemnity under s 151Z(1)(d) demonstrated that they would not have pursued a claim for contribution in respect of their liability for modified common law damages against Firedam under the 1946 Act in any event.

REASONING 46 I shall deal with the applicant's arguments in a slightly different order from that in which they were presented.

Delay 47 Mr Andrews contended that the primary Judge had paid insufficient attention to the statutory requirements that had to be satisfied before a workplace injury damages claim could be commenced. He also submitted that the apparent delay between August 2007 (when the applicant's conference with counsel took place) and September 2008 (when the pre-filing statement was finally served) was explained by the need to obtain further evidence to be included in that statement. 48 The first criticism of the primary Judge's reasoning is unfounded. Her Honour noted that the medical assessment certificate, establishing that the applicant satisfied the 15% permanent injury threshold imposed by s 151H of the Workers Compensation Act, had been obtained by the applicant on 20 April 2007. She referred to the fact that there had been a dispute between the parties on that issue. The delay she characterised as unexplained related to the period after April 2007 and, more particularly, to the period between August 2007 and September 2008 (at [45]). It was during this period that the respondents' entitlement to claim contribution from Firedam became statute barred. 49 The primary Judge correctly pointed out that in December 2007, the applicant's solicitors had said that they would be "shortly" serving a pre-filing statement (as required by s 315 of the WIM Act), yet they did not do so for a further period of nine months. Her Honour also pointed out that repeated requests to the applicant's solicitors between 27 April 2007 and 2 October 2007, seeking information as to whether a claim for work injury damages would be commenced, simply went unanswered, except for an unhelpful response on 10 October 2007. Subject to what is said below, Mr Andrews did not identify any evidence explaining the apparent inaction on behalf of the applicant's representatives. 50 Mr Andrews submitted that an explanation, at least in part, for the delay in serving the pre-filing statement was the statutory provision preventing a party relying on any report or other evidence not disclosed in the pre-filing statement (WIM Act, s 318(1)(d); Workers Compensation Commission Rules, r 17.4). Mr Andrews said that the compilation of evidence to support the applicant's professional negligence claim against his former solicitors, which occurred from about October 2007 onwards, served the concurrent purpose of supporting the applicant's work injury damages claim. 51 These submissions were not supported by the evidence. It is true that during the period from October 2007 until September 2008, the applicant's solicitors obtained further medical reports. However, none of these reports was included in the pre-filing statement ultimately served in September 2008. The obvious inference is that they were obtained only for the purpose of the professional negligence proceedings against the applicant's former solicitors. 52 In my opinion, the evidence fully supports the primary Judge's observation (at [26]) that from February 2008 the professional negligence claim "appears to have occupied most of the [applicant's] solicitor's attendances". If anything, this is an understatement. The preoccupation with the professional negligence claim seems to have predated February 2008. The evidence does not reveal any systematic effort to advance the applicant's work injury damages claim from mid-2007 until shortly before the pre-filing statement was served. 53 The applicant has not shown that the primary Judge was in error in concluding that the applicant had failed to provide a satisfactory explanation for the delay in serving the pre-filing statement. On the contrary, on the material before her Honour I would have reached the same conclusion.

The Legislative Background 54 The statutory regime governing the entitlement of an employer to claim indemnity from a third party for compensation payable under the Workers Compensation Act is extraordinarily complex: see J Blackwood & Son Ltd v Skilled Engineering Ltd [2008] NSWCA 142, for an account of the complexities. The Court was not taken to the legislation or to the authorities interpreting it in any detail. Nonetheless, in order to understand the applicant's submission on prejudice, it is necessary to refer to s 151Z(1) of the Workers Compensation Act, which governs an employer's right to an indemnity from a third party and to the provisions of the 1946 Act which govern claims for contribution between tortfeasors.

Workers Compensation Act, s 151Z 55 Section 151Z(1) of the Workers Compensation Act relevantly provides as follows: " 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) …". (Emphasis added.) 56 In Blackwood v Skilled Engineering, Campbell JA described (at [44]) the "prima facie effect" of s 151Z(1)(d) to be that: "an employer who has paid compensation to a worker is entitled to recover the amount of that compensation from any non-employer wrongdoer whose wrong has caused the injury that led to the payment of the compensation, provided only that the non-employer wrongdoer does not end up paying more than the amount of the damages which the non-employer wrongdoer would have had to pay if sued for that wrong. Further, that prima facie right of the employer under section 151Z(1)(d) is one that the employer has whether or not the employer is itself a tortfeasor who has caused the injury to the worker with respect to which the compensation has been paid."

The prima facie effect is modified by other provisions of s 151Z, but the description is helpful to an understanding of the operation of the section in relation to an indemnity. 57 The expression "compensation" is defined in s 4(1) of the WIM Act to mean "compensation under the Workers Compensation Acts and includes any monetary benefit under those Acts". 58 The limitation period applicable to a claim for indemnity under s 151Z(1)(d) of the Workers Compensation Act is six years from the time the cause of action accrued: Limitation Act, s 14(1)(d). It has been held that the limitation period applicable to the right to claim an indemnity commences on the making of each compensation payment, on the basis that each payment gives rise to a separate and distinct right to indemnification: South Sydney Area Health Service v Gadiry [2002] NSWCA 161; 54 NSWLR 495. 59 As the extract from Blackwood v Skilled Engineering ([56**] above) implies, it has been held that the effect of s 151Z of the Workers Compensation Act (specifically s 151Z(2)(e), which it is not necessary to reproduce) is that a negligent employer may be entitled to a partial indemnity under s 151Z(1)(d) from a third party liable in damages to the injured worker: I & J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486. The calculation of the partial indemnity in these circumstances is a complex process explained in detail by Campbell JA in Blackwood v Skilled Engineering.

1946 Act 60 Section 5 of the 1946 Act relevantly provides as follows: " Proceedings against and contribution between joint and several fort-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, … (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."

The Failure to Seek Indemnity 61 Mr Andrews submitted that had the respondents sought an indemnity from Firedam under s 151Z(1)(d) of the Workers Compensation Act, they would have recovered as much as they were likely to recover in a claim for contribution against Firedam under the 1946 Act. He further submitted that any prejudice by reason of the expiration on 31 May 2008 of the limitation period applicable to a claim for contribution was a consequence of the respondents' own failure to seek an indemnity pursuant to the statutory cause of action created by s 151Z(1)(d) of the Workers Compensation Act. 62 This submission was not supported by reference to any evidence or to calculations that would demonstrate that a claim for contribution by the respondents under the 1946 Act could not have yielded significantly greater benefits than a claim for indemnity (or partial indemnity) under s 151Z(1)(d) of the Workers Compensation Act. (The absence of a reference to such material presumably reflects the fact that the submission was not put to the primary Judge.) In particular, this Court was not taken in any detail to evidence of the amount of compensation paid to or in respect of the applicant pursuant to the Workers Compensation Act. Nor was any explanation given as to the likely outcome of an application for indemnity under s 151Z(1)(d) of the Workers Compensation Act, having regard to the quantum of compensation payable under the Act. 63 It must be remembered that the subject matter of a claim for indemnity under s 151Z(1)(d) (that is, compensation payable under the Workers Compensation Act) is different from the subject matter of a claim for contribution from a joint tortfeasor (that is, the employer's liability to pay modified common law damages to an injured worker). Presumably the applicant would have no interest in pursuing his common law claim, even though it is limited to economic loss, unless he or his advisors thought that he could recover substantially more than the amounts already paid to him under the Workers Compensation Act and for which he would have to account if he succeeded in his common law claim: see Workers Compensation Act, s 151A(1). Thus the respondents' liability to pay compensation under the Workers Compensation Act and their liability to pay common law damages may produce quite different dollar figures, the latter possibly being significantly higher than the former. 64 It is possible that the maximum amount that could have been recovered from Firedam would have been the same, whether the respondents' claim was for indemnity or for contribution (assuming the same apportionment of responsibility). But without detailed reference to the amounts for which the respondents are or might be liable under the Workers Compensation Act or at common law (as modified), no conclusion can be drawn that the results of each claim would be identical or not materially different. Thus the loss of the entitlement to claim contribution from Firedam under the 1946 Act must be taken to have constituted a significant detriment to the respondents. 65 There is a second difficulty in the applicant's path. The respondents' entitlement to claim indemnity from Firedam under s 151Z(1)(d) of the Workers Compensation Act was barred, in relation at least to some compensation payments, well before their entitlement to claim contribution from Firedam under the 1946 Act was barred. Although the Court was not taken to the relevant evidence, it is clear that some compensation payments were made as early as July 2001. The respondents' entitlement to indemnity in respect of those payments would have been lost six years later, that is, by July 2007. 66 The respondents' entitlement to claim contribution in respect of its common law liability in damages was not barred (as was common ground) until 31 May 2008. The applicant did not dispute that the respondents had a substantial basis for making a claim for contribution against Firedam as a joint tortfeasor. 67 The primary Judge found that the applicant's delay in serving a pre-filing statement was unexplained from at least August 2007. Had the pre-filing statement been served in or shortly after August 2007, the respondents would have had the opportunity to institute a claim for contribution from Firedam at any time before 31 May 2008. Such a claim could have included a contribution from Firedam, effectively providing an indemnity in respect of payments that could no longer be the subject of a claim for indemnity against Firedam under s 151Z(1)(d) of the Workers Compensation Act because the limitation period had expired. 68 It follows that the delay by the applicant in serving a pre-filing statement denied the respondents an opportunity to make a claim for contribution against Firedam. Had such a claim been made, the respondents may well have recovered moneys that otherwise they would not have been able to recover from Firedam. Accordingly, the primary Judge correctly concluded that the loss of the entitlement to claim contribution caused the respondents to suffer significant prejudice.

Would the Respondents Have Sought Contribution? 69 Mr Andrew's submission to this Court, that the respondents suffered no prejudice because they would not have sought contribution from Firedam in any event, was not made to the primary Judge. Nor was the respondents' solicitor, who gave affidavit evidence in the District Court proceedings, required for cross-examination. The applicant therefore never put to the solicitor the proposition that the respondents would never have sought contribution from Firedam, even if they had the opportunity to do so. 70 In my opinion, the applicant should not be permitted to raise the contention for the first time in this Court. Had the argument been foreshadowed or put to the primary Judge, the respondents might have adduced evidence explaining their apparent failure to seek an indemnity from Firedam. They also could have been expected to address the steps they would have taken to claim contribution from Firedam, had the applicant's claim against them been instituted earlier. On well-established principles, it would be unfair to allow the applicant to raise the issue now: Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418. 71 In any event, I would not be prepared to infer that, because the respondents made no claim against Firedam for indemnity under s 151Z(2)(d) of the Workers Compensation Act, they would not have brought a claim for contribution against Firedam under the 1946 Act if the applicant had served his pre-filing statement well before 31 May 2008 (that is, before the limitation period for the contribution proceedings had expired). 72 In the absence of evidence it is a matter of speculation as to the reasons why the respondents did not seek an indemnity under s 151Z(1)(d) of the Workers Compensation Act. The applicant could have elicited the reasons from the solicitor for the respondents, but did not do so. Since the applicant did not indicate to the primary Judge that they would rely on the respondents' failure to seek indemnity against Firedam, there is no proper basis for drawing an inference adverse to the respondents on the issue of whether they would have sought contribution from Firedam under the 1946 Act if they had the opportunity to do so.

Conclusion on Prejudice 73 It follows from what I have said that the primary Judge correctly concluded that the applicant's delay in commencing proceedings against the respondents earned them significant prejudice.

Loss of Evidence 74 It was not in dispute that there was no affirmative evidence before the primary Judge that evidence relating to a possible cross-claim against Firedam had been lost. However, I do not understand the primary Judge to be asserting (at [45]) that there was such evidence. Her Honour referred to (at [43]) "prejudice caused by the loss of potential evidence that may have been available during the limitation period". 75 Earlier in the judgment (at [28]) her Honour noted that there was no evidence as to any statements that may have been made by the managers of Firedam, who might have been interviewed about the accident. Her Hounour also noted that there was no evidence as to whether those managers were available to give evidence or, indeed, had actually made any statements at a time proximate to the accident causing the applicant's injury. 76 In my opinion, if the judgment is read as a whole, I do not think that the primary Judge was intending to assert that the evidence established that relevant material had been lost in the eight years intervening between the date of the accident and the application to extend time. I think that she was saying no more than the lapse of time since the accident inevitably would have an effect on the recollections of potential witnesses, particularly if they had not been asked to make statements at about the time of the accident. 77 In any event, even if her Honour wrongly assumed that there was affirmative evidence of prejudice, that does not affect her finding that the time barring of the respondent's contribution claim occasioned them significant prejudice. Any error did not materially affect the conclusion reached by the primary Judge.

CONCLUSION 78 The challenge to the findings and conclusions reached by the primary Judge fails. In particular, no basis has been shown for overturning her Honour's conclusion that she was not satisfied that it would be just and equitable to grant leave to the applicant to bring proceedings out of time to claim modified common law damage against the respondents. 79 The application for leave to appeal should be granted. However, the appeal should be dismissed. The applicant should pay the respondents' costs of the application for leave to appeal and of the appeal.

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.

Workplace Injury Management and Workers Compensation Act 1988(NSW)

(1997) 14 NSWCCR 486

At a glance

Court

Decision date

Before

Source

Judgment (31 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (5)

Cited By (4)