New South Wales Fire Brigades v Newman

Motor Accidents Compensation Act 1999 (NSW) LEGISLATION CITED: Workers Compensation Act 1987 (NSW) Workers Compensation Act 1926 Workplace Injury Management and Workers Compensation Act 1998 (NSW)

Australian National Railways Commission v Collector of Customs (SA) (1985) 69 ALR 367 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1 Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 Hoover (Australia) Pty Limited v Combatti (1989) 18 NSWLR 235 Johnson v Johnson [1952] P 47 CASES CITED: Koppen v Commissioner for Community Relations (1986) 67 ALR 215 at 220 McCann v Switzerland Insurance Australian Limited (2000) 203 CLR 579 Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225 Sanders v Nadow Training Program Ltd (1995) NSWCCR 394 Schon v Axbond Pty Ltd (1997) 15 NSWCCR 122 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 Watson v Newcastle City Council (1962) 106 CLR 426

TEXTS CITED: Damages for Personal Injury and Death (Aust: Butterworths, 2002, 4th ed) Statutory Interpretation in Australia (Sydney: Butterworths, 2001, 5th ed)

PARTIES: New South Wales Fire Brigades (Appellant) Kathleen Newman (Respondent)

COUNSEL: Mr DS Weinberger (Appellant) Mr L King SC / Mr J Harris (Respondent)

SOLICITORS: Hicksons Lawyers (Appellant) Adams & Partners (Respondent)

LOWER COURT JURISDICTION: Workers Compensation Commission

LOWER COURT JUDICIAL OFFICER: Roche, Deputy President

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40457/07 WWC 16005/06

BASTEN JA BELL JA HANDLEY AJA

Tuesday 6 May 2008 New South Wales Fire Brigades v Kathleen Newman Judgment 1 BASTEN JA: The short question which arose on this appeal was whether the Deputy President of the Workers Compensation Commission erred in point of law in concluding that Ms Newman was entitled to make a new claim under the Workers Compensation Act 1987 (NSW) ("the 1987 Act"). The only basis upon which her entitlement was challenged was that she had previously recovered damages in relation to an injury for which compensation was sought. Accordingly, it was said that she was not entitled to recover compensation under the 1987 Act, by virtue of s 151Z(1)(c) of that Act. If she were not entitled to recover compensation, her claim should properly have been summarily dismissed, without entering upon the merits. 2 The relevant statutory provisions and the background circumstances have been fully set out by Bell JA and need not be repeated. The uncontested facts were that Ms Newman had agreed to settle an earlier damages claim on the basis of payment by the appellant's insurer of an amount which was intended to cover her solicitor's costs in relation to the claim. The Deputy President made a finding to that effect: see Newman v NSW Fire Brigades [2007] NSWWCCPD 142 at [36], set out by Bell JA at [24] below. 3 The definition of "damages" in s 149 of the 1987 Act expressly excludes any amount paid "in respect of costs incurred in connection with legal proceedings" (s 149(1)(h)). I would accept, for the reasons given by Bell JA, that the payment of $1,500 was in respect of costs and those costs were costs incurred in connection with proposed legal proceedings and were therefore within s 149(1)(h), unless the agreement achieved a different result. 4 The primary basis upon which the appellant sought to argue that this conclusion was infected by legal error was that the agreement pursuant to which payment was made characterised the payment as on account of damages. The appellant needed to establish that this characterisation was not merely a factor which should be taken into account in assessing the character of the payment, but was one which necessarily led to the conclusion that the payment was by way of damages and not costs. 5 The agreement was in the form of a release and indemnity, but it is not the effect of the agreement as a release or as the grant of an indemnity upon which reliance is presently placed. The only relevance of the agreement is if it characterises the payment made as being a payment on account of damages and if that characterisation governs for the purpose of determining whether the prohibition in s 151Z(1)(c) is engaged. 6 The first problem faced by the appellant in relying on the agreement is that nowhere in the agreement is the payment characterised as being on account of "damages". It may no doubt be inferred that the "claim" under the Motor Accidents Compensation Act 1999 (NSW) to which the agreement referred was a claim for damages; the agreement stated that an amount was offered "in full and final settlement of all claims which you may have under the Act". Further, cl 2 stated that the insurer was entitled to deduct from the payment amounts which could be deducted from a payment of damages pursuant to s 151Z of the 1987 Act. Nevertheless, no deductions were made and no complaint is made in that regard. The fact found by the Deputy President was that the payment was neither intended by the insurer to be a payment on account of damages, nor understood by Ms Newman to be such, when she authorised payment to her solicitors of the full amount. The agreement does not establish a different common intention. Accordingly, the appellant fails at the first hurdle. It is not necessary to consider what effect the agreement might have had if it had in terms declared that the payment was a payment of damages for the purposes of the 1987 Act. 7 So far as the other grounds of appeal are concerned, they are properly rejected for the reasons given by Bell JA with which I agree. I further agree with the orders her Honour proposes, namely that the appeal be dismissed with costs. 8 BELL JA: The respondent, Mrs Newman, was injured in a motor vehicle accident on 28 January 2000. The appellant, the New South Wales Fire Brigades, was her employer at the time and the accident occurred in the course of Mrs Newman's employment. She was a passenger in a vehicle that was struck from behind by a semi-trailer, which was driven by a man named Simpson. Allianz Australia Limited (Allianz CTP) (at the time MMI General Insurance Limited) was the compulsory third party insurer of the vehicle driven by Mr Simpson. 9 Mrs Newman suffered bodily injury in the collision. Shortly thereafter she commenced receiving weekly workers' compensation benefits. 10 On 16 February 2000 her solicitor, Mr Burt, wrote to Allianz CTP enclosing an accident notification form under the Motor Accidents Compensation Act 1999 (NSW) (the MAC Act). 11 Allianz CTP admitted liability and, in a letter dated 16 February 2001 addressed to Mr Burt, observed that Mrs Newman was in receipt of workers' compensation benefits and inquired whether she intended to pursue her MAC Act claim.

12 Mrs Newman did not pursue her claim under the MAC Act. She commenced proceedings in the Workers Compensation Commission claiming compensation for permanent impairment and for pain and suffering under ss 66 and 67 of the Workers Compensation Act 1987 (NSW) (the 1987 Act). In September 2001 the Brigades' workers' compensation insurer, Allianz Australia Insurance Limited Treasury Managed Fund No 1 (Allianz), settled Mrs Newman's claim for $40,000.00. She continued to receive payment of weekly workers' compensation benefits. 13 In or about March 2002 a claims officer at Allianz CTP telephoned Mr Burt and offered to settle the MAC Act claim on the basis that Allianz would pay Mr Burt's professional costs in the sum of $1,500. 14 Following this telephone conversation, on 22 March 2002, Mr Burt wrote to Allianz as follows: " KATHLEEN NEWMAN - CTP CLAIM Further to our telephone conversation we confirm that this matter has been settled by way of a Workers Compensation Commutation and there is no further claim outstanding. We note agreement of our Professional Costs of $1,500.00 and look forward to receiving payment thereof in due course." 15 On 26 March 2002 Mr Burt wrote to Mrs Newman as follows: "As you are aware in order to protect all of your rights when you instructed us in respect of your Workers Compensation Journey Claim we also lodged a claim under the Motor Accidents Compensation Act to protect all of your interests. As we explained your rights under the Workers Compensation Act were more valuable however we lodged the other claim for the sake of caution. Finally, the Motor Accidents Act insurer Allianz has agreed to pay our costs in respect of the work involved in lodging the claim and answering certain particulars etc. Accordingly they have forwarded to us a Deed of Release which they request that you sign and return to our office in order that we can be paid our costs in respect of that work and they can close their file. Accordingly we would be pleased if you could sign the agreement where indicated and return it to our office for our further attention." 16 Mrs Newman signed the release, which provided: " AGREEMENT FOR RELEASE AND INDEMNITY THIS AGREEMENT is made BETWEEN Kathleen Newman of 60 Farm Road, Marsden Park, NSW, 2765 AND of 2 Market Street, Sydney in the State of New South Wales (hereinafter referred to the Insurer).

A. You have lodged a claim under the Motor Accidents Compensation Act 1999 ("the Act") for injuries sustained as a result of a motor accident at Kiama on or about 28th January, 2000 , involving a motor vehicle with registration number UKD-900 , owned and driven at the time of the accident by Robert Simpson . B. The owner and the driver are insured by the Insurer in respect of the claim. C. Pursuant to Section 78 of the Act the Insurer has the power to settle and compromise claims on behalf of the owner and the driver. THE AGREEMENT: 1. The Insurer will pay you $1,500, One Thousand Five Hundred Dollars , in full and final settlement of all claims which you may have under the Act against: * the owner, driver or their respective successors, executors, administrators, heirs and assigns and * the Insurer in respect of the accident. 2. The Insurer is entitled to deduct from the payment: a) all amounts paid or payable by the Insurer for Social Security benefits, and b) any amounts paid or payable to your employer or the employer's Workers Compensation Insurer in respect of payments to you or on your behalf by way of Workers Compensation, and c) any amounts paid or payable due to the Health and Other Services (Compensation) Legislation Amendment Act 2001 and related Acts and d) any amounts previously paid to you by the Insurer, and e) any other amounts paid or payable by the Insurer on your behalf including all medical and other expenses payable under the Act, and including such amounts that are paid or become payable after the date of this Agreement but before making the payment to you, and f) any fees incurred in respect of non attendance at medical examinations. 3. In consideration of the payment, you agree: a) not to commence or proceed with any action, suit or proceeding in respect of injuries sustained in the accident. b) to pay to any parties entitled all amounts that are payable but have not been deducted by the Insurer pursuant to paragraph 2, and also to pay to any parties entitled all outstanding medical, hospital, air ambulance and other out of pocket expenses. c) to acknowledge where settlement sum exceeds $5,000.00, you will advise the HIC of settlement of the claim within 28 days of the date of this Agreement. d) to indemnify and keep indemnified: * the owner, the driver or their respective successors, executors, administrators, heirs and assigns and * the Insurer against any claims, losses, damages, actions, suits or proceedings in respect of injuries sustained by you in the accident. 4. a) You warrant, and acknowledge that it is the basis of this settlement that you have suffered no other injury likely to give rise to a Compulsory Third Party claim the Insurer or any of its Insured prior to the date hereof except as previously disclosed the Insurer or its legal representative. b) You acknowledge that this settlement includes settlement of all claims so notified and agree that without further payment you will if called on to do so sign a Deed of Release in favour of and its Insured in respect of any such claim. 5. This Agreement is not an admission by the owner, the driver or the Insurer of any liability for your claim. Dated at ………………….. on this ………………… day of …200… 17 Mrs Newman also signed an authority to pay the monies, the subject of the release: AUTHORITY TO RECEIVE I, Kathleen Newman , hereby authorise you to pay any monies awarded to be paid to me by way of verdict or award or agreed to be paid to me by way of settlement to my Solicitors ………………." 18 On 23 August 2003 Allianz CTP forwarded to Mrs Newman's solicitors a cheque drawn in the sum of $1,500. 19 On 18 August 2004 Mrs Newman made a further claim for compensation under the 1987 Act, stating both that her injury had deteriorated and that she had developed a new injury (the 2004 claim). Allianz denied liability on the ground that Mrs Newman had recovered damages in respect of her injury from a person other than her employer and that she was not entitled to the payment of further compensation: s 151Z(1)(b) and/or (c) of the 1987 Act.

20 Section 149 of the 1987 Act contains a definition of "damages" for the purposes of Part 5, which includes s 151Z. It provides: " 149 Definitions

(1) In this Part: damages includes:

(a) any form of monetary compensation, and (b) without limiting paragraph (a), any amount paid under a compromise or settlement of a claim for damages (whether or not legal proceedings have been instituted), but does not include: (c) compensation under this Act, or (d) additional or alternative compensation to which Division 8 of Part 3 applies, or (e) an award of compensation or direction for compensation under Part 2 or Part 4 of the Victims Compensation Act 1996 , or (f) a sum required or authorised to be paid under a State industrial instrument, or (g) any sum payable under a superannuation scheme or any life or other insurance policy, or (h) any amount paid in respect of costs incurred in connection with legal proceedings, or (i) damages of a class which is excluded by the regulations from this definition. 21 Section 151Z of the 1987 Act provides, relevantly: "151Z Recovery against both employer and stranger

(1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury, the following provisions have effect: (a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation, (b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker's injury under this Act, and the worker is not entitled to any further compensation, (c) if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act, (d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages), (e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages, (e1) if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment, (f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission. … (5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement." 22 Mrs Newman filed an application to resolve a dispute in the Workers Compensation Commission, which was heard by an Arbitrator. On 2 March 2007 the Arbitrator held that Mrs Newman was precluded by s 151Z(1)(c) from bringing the 2004 claim. 23 On 27 March 2007 Mrs Newman sought leave to appeal from the Arbitrator's determination under s 352 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the 1998 Act). The leave application and the appeal were determined by Deputy President Roche at a hearing, which was conducted on the papers. The Deputy President's reasons 24 The Deputy President considered that the matter turned on the construction of the release and in this respect he referred to the principles stated by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at 179, [40]: "This Court, in Pacific Carriers Ltd v BNP Paribas ((2004) 78 ALJR 1045; 208 ALR 213), has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction." The Deputy President took into account evidence of the surrounding circumstances known to the parties at the date of the release. He found that Mr Burt's letters of 22 and 26 March 2002 made clear that the agreement between Mrs Newman and Allianz CTP involved Mrs Newman giving up her right to pursue her claim for damages in return for Allianz CTP paying her costs in the amount of $1,500 (Red 285.K-P). He said this: "[36] … The objective evidence from the surrounding circumstances leading up to the execution of the Release establishes that that document was intended to provide the insurer with a release from its potential liability to Ms Newman in return for the payment of her legal fees. To suggest that by the payment of the $1,500.00 Ms Newman had recovered damages is contrary to the reality of the situation as evidenced by the letters of 22 and 26 March 2002, Mr Burt's statement, the modest sum involved and the fact that the whole of that sum was paid to Burt & Allen for costs. Ms Newman recovered nothing." 25 Next, the Deputy President referred to the judgment of Neilson J in Schon v Axbond Pty Ltd (1997) 15 NSWCCR 122. In that case, a worker who was injured in a motor vehicle accident and who executed a deed of release accepting $1700 in full settlement of all claims against the driver of the vehicle was held to have recovered damages and to be precluded from claiming compensation under the 1987 Act. The Deputy President distinguished Schon, observing that there was no evidence in that case that the payment was not of damages. (Red 285.Y - 286.A) 26 The Deputy President considered the fact that clause 2(b) of the release entitled the insurer to deduct amounts paid or payable by Allianz in respect of payments to Mrs Newman of workers' compensation benefits and that no deductions had been made was a circumstance which supported the conclusion that the payment under the release was not of damages. (Red 286.C-F)

27 Next the Deputy President considered what amounted to the recovery of damages in s 151Z(1)(c). He referred to the judgment of Windeyer J in Watson v Newcastle City Council (1962) 106 CLR 426 at 445-446 (which concerned s 64 of the Workers Compensation Act 1926, a provision that was in similar terms to s 151Z(1)(c)): "Moreover, throughout s 64 the word 'recover' must, it seems, mean not the recovery of a judgment for damages or of an award of compensation, but the actual receipt of monies, whether as the result of satisfaction of a judgment or award or by the settlement of a claim. The scheme of sub-s (a) seems to require this meaning. The word 'retain' demands it: and the provision for payment to the employer 'out of such damages' assumes a judgment satisfied, not a judgment that has proved fruitless. There is nothing surprising in this; for it is the meaning that the word 'recover' commonly has in workers' compensation law … ."

The Deputy President also referred to the decision of this Court in Hoover (Australia) Pty Limited v Combatti (1989) 18 NSWLR 235. In that case, an injured worker, who had received compensation benefits in excess of the judgment obtained against a negligent driver in a motor accident claim, declined to accept the judgment sum. The defendant paid the sum to the Registrar of the District Court. Kirby P (Samuels and Meagher JJA agreeing) held that payment to the Registrar was, in effect, payment to the worker, since the District Court Rules required that the Registrar "pay out the money to which suitors are entitled". Accordingly, the worker had recovered damages and was no longer entitled to receive workers' compensation benefits. 28 The Deputy President continued: "[41] The conclusion I have reached is consistent with the principles stated in Watson and Combatti . A worker has not 'recovered damages' unless he or she has actually received money as damages, whether as a result of satisfaction of a judgment or the settlement of a claim. The surrounding circumstances in the present matter make it clear that it was never intended that the settlement would result in 'the actual receipt' of money by Ms Newman and she did not in fact receive any money. [42] The money paid to Burt & Allen was always intended to be for costs and was applied for that purpose. Section 149 makes it clear that 'costs' are not 'damages'. It follows that Ms Newman did not 'recover damages' under section 151Z and her entitlement to claim compensation benefits under the 1987 Act remains intact." (Red 286.S-X)

29 The Brigades' appeal is brought under s 353(1) of the 1998 Act and is against the determination of the Deputy President as wrong in point of law. 30 Mr Weinberger, who appeared on the Brigades' behalf, submitted that the Deputy President's determination was attended by errors in point of law in the following five respects: (i) In taking into account the surrounding circumstances in construing the release; (ii) In distinguishing this case from Schon v Axbond Pty Ltd (1997) 15 NSWCCR 122 on the basis that in the present case there was evidence that the payment, the subject of the release, was for costs (Red 285.Y); (iii) In taking into account that the agreement acknowledged the entitlement of Allianz CTP to deduct amounts from the payment, including amounts paid or payable to the Brigade's workers' compensation insurer in respect of payments made to Mrs Newman, or on her behalf, by way of workers compensation; (iv) In finding that "recovery of damages" in s 151Z(1)(c) requires the physical receipt of the monies by the worker and that this had not happened in this case; (v) In concluding that damages as defined in Part 5 of the 1987 Act does not include an amount paid by way of legal costs under a settlement of a claim for damages in a case in which legal proceedings have not been instituted. 31 The first asserted error was the principal ground of challenge. In Mr Weinberger's submission the evident purpose and object of the release was to settle Mrs Newman's claim for damages under the MAC Act, which was done by the payment of $1,500. In his submission, the terms of the release are unambiguous and it was an error for the Deputy President to go outside it in order to determine the character of the payment: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 per Mason J at 352: "The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed." 32 In Gardiner v Agricultural and Rural Finance Pty Ltd [2007] NSWCA 235 Spigelman CJ discussed the approach to the interpretation of commercial contracts at [7]-[13]. After citing the passage in Alphapharm on which the Deputy President relied (and the judgment of Gleeson CJ in McCann v Switzerland Insurance Australian Limited (2000) 203 CLR 579 at [22]), his Honour went on to say this: "[11] In a number of joint judgments the High Court has adopted an approach to statutory interpretation which requires attention to the broader context of the words in issue in the first instance, not only after some kind of 'ambiguity' has been identified. (See, e.g. CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 335 at [69] and Network Ten Pty Limited v TCN Channel Nine Pty Limited (2004) 218 CLR 273 at 280 - 281.) There is nothing new about this approach. (See e.g. R v Wilson; Ex parte Kisch (1934) 52 CLR 234 at 244.) However, its application in recent cases was based on a judgment of Mason J in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309 at 315. [12] It has been suggested that Mason J adopted a different approach to the task of contractual interpretation by requiring the identification of ambiguity in the first instance. (See Codelfa Constructions Pty Limited v State Rail Authority of NSW (1982) 149 CLR 337 at 348.) I have, however, expressed the view that his Honour did not intend to confine the approach to contractual interpretation in that way but that his reference in Codelfa at 348 to the proposition that language may not only be 'ambiguous' but also 'susceptible of more than one meaning' invoked a concept of 'ambiguity' extending to any situation in which the scope and applicability of the formulation was, for whatever reason, doubtful. (See South Sydney Council v Royal Botanic Gardens [1999] NSWCA 478 at [35].) [13] This approach is consistent with the subsequent authority in the High Court, particularly the passages to which I have referred in Pacific Carriers [ Pacific Carriers Limited v BNP Paribas (2004) 218 CLR 451 at 461-462] and in Alphapharm . In this respect I agree with the reasoning in the Federal Court at first instance in Lion Nathan Australia Pty Limited v Coopers Brewery Limited (2005) 223 ALR 560 at [78]-[79] and on appeal in Lion Nathan Australia Pty Limited v Coopers Brewery Limited (2006) 156 FCR 1 at [45]-[52], [98], [101] and [254]. In this respect also, contractual interpretation has been brought into alignment with statutory interpretation. (See Bowtell v Goldsborough Mort & Co Limited (1905) 3 CLR 444 at 456-457; Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 at 287-288; Repatriation Commission v Vietnam Veterans' Association of NSW Branch Inc (2000) 48 NSWLR 548 at [116].) 33 The question for the Deputy President to determine was whether the payment of $1500 was of damages in respect of the injury suffered by Mrs Newman in the motor vehicle accident. If the payment was of damages Mrs Newman was precluded from claiming workers' compensation. If it was not, her entitlement to workers' compensation remained. The parties could not overcome the operation of s 151Z(1) by the manner in which they expressed their agreement. The Deputy President approached the determination by examining the evidence of the circumstances surrounding the execution of the release. This was consistent with the principles of construction set out in Alphapharm. For the reasons explained by Spigelman CJ in Gardiner, it was not inconsistent with the judgment of Mason J in Codelfa. The first ground of challenge should be rejected. 34 I turn to the fifth of the asserted errors. In Mr Weinberger's submission, accepting for present purposes that the payment was of Mrs Newman's costs, it remained the recovery of damages within s 151Z(1)(c) because the payment was, in the words of s 149(1)(a) and (b), monetary compensation paid under a compromise or settlement of a claim for damages. He submitted that the payment was not a payment of costs within sub-paragraph (h), which excludes from the definition of "damages" any amount paid in respect of costs incurred in connection with legal proceedings. This is because legal proceedings were merely anticipated and none had been instituted.

35 In almost every case costs will be incurred before the commencement of legal proceedings. It is difficult to see a reason why the legislature would have chosen to draw a distinction, for the purposes of s 151Z, between the costs incurred before and after the institution of proceedings. If the construction for which Mr Weinberger contended were accepted, the statutory scheme would provide a disincentive to a worker to settle a claim for damages against a stranger prior to the institution of legal proceedings. This is a result that is contrary to one evident purpose of the 1987 and 1998 Acts, which is the early settlement of claims. A construction that does not produce such an arbitrary result is to be preferred. "Connection" is defined to include "association; relationship; contextual relation in the Macquarie Dictionary (Australia: the Macquarie Library Pty Ltd, 2005 4th ed). In Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1, the Full Court of the Federal Court (Neaves, French and Cooper JJ) considered that the words "in connection with" are capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote. Their Honours approved the joint judgment of Sheppard and Burchett JJ in Australian National Railways Commission v Collector of Customs (SA) (1985) 69 ALR 367, that the word "connection" is wide and imprecise, one of its common meanings being the "relation between things one of which is bound up with, or involved in another": Shorter Oxford English Dictionary. In Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 Wilcox J at 479-80 referred to a number of decisions in which the expression "in connection with" has been used to describe a relationship with a contemplated future event: Koppen v Commissioner for Community Relations (1986) 67 ALR 215 at 220, Johnson v Johnson [1952] P 47 at 50-1, Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225. His Honour concluded that the words do not import any particular temporal relationship and cover the relationship between some present event and a contemplated sequel of that event. 36 In my opinion, the words "in connection with" in subparagraph (1)(h) are sufficiently wide to encompass costs which are incurred in relation to a contemplated action for damages arising out of an injury. If subparagraph (1)(h) is confined in the way Mr Weinberger contended, in my view the payment of $1500 on the Deputy President's finding of fact would still not constitute the recovery of damages for the purposes of s 151Z(1)(c). Section 151Z is concerned with the avoidance of double compensation. Subsection (1)(c) speaks of "those damages", a reference to the introductory words of the section which speaks of "damages in respect of the injury": see Sanders v Nadow Training Program Ltd (1995) NSWCCR 394. The definition of "damages" in s 149(1) is an inclusive one. The ordinary meaning of "damages" is a sum of money paid to compensate a successful plaintiff in an action in tort or contract: Luntz, The Assessment of Damages for Personal Injury and Death (Aust: Butterworths, 2002, 4th ed) at [1.1.1]. The statutory definition enlarges the ordinary meaning of the term by including a payment under a compromise or settlement of a claim in which no proceedings have been instituted. This does not mean that the ordinary meaning of damages is ignored in construing s 151Z: see Pearce and Geddes, Statutory Interpretation in Australia (Sydney: Butterworths, 2001, 5th ed) pp 192 ­-196; [6.56] - [6.60]. The payment of costs was not monetary compensation in respect of Mrs Newman's injury.

37 Having decided that the payment of $1500 was of costs, the Deputy President did not err in holding that Mrs Newman had not recovered damages within s 151Z(1)(c).

38 The second challenge to the Deputy President's reasons (his basis for distinguishing Schon) disappears in light of the conclusion that he did not err in taking into account evidence of the surrounding circumstances, which established that the payment was of costs. 39 The third basis of challenge is summarised at paragraph [26] above. No submissions were addressed to it on the hearing. It, too, falls away in light of the rejection of the first ground of challenge.

40 The fourth asserted error arises from the final sentence of paragraph [41] of the Deputy President's reasons (set out at [28] above). Mr Weinberger submitted that the Deputy President found that because Mrs Newman did not physically receive the $1500 she did not "recover" damages for the purposes of s 151Z(1)(c). The payment of $1500 was a payment to Mrs Newman. The monies were paid to Mr Burt at Mrs Newman's direction. It would be an error to have held that monies paid at Mrs Newman's direction to a third party were not monies received by her. It is not clear that the Deputy President did err in this respect. In the second sentence of paragraph [41] the Deputy President says that a worker has not recovered damages "unless he or she has actually received money as damages" (emphasis added). I read the Deputy President as making the point that the payment was not of damages and the fact that it was paid to Mr Burt to have been consistent with this finding. If the Deputy President did, wrongly, decide that Mrs Newman had not recovered the payment because she did not physically receive it, the error did not affect his determination that the payment was not damages in respect of Mrs Newman's injury but the payment of her legal fees. (Red 285.S) For the reasons earlier given, in my opinion there was no error in the Deputy President's conclusion in this respect. 41 I propose the following orders: ORDERS 1. Appeal dismissed with costs. 42 HANDLEY AJA: I agree with Basten JA and Bell JA.

02/06/2008 - reference in para [14] to "March 2001" should have read "March 2002" - Paragraph(s) [14]

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.