Pagnon v WorkCover Queensland [2000] QCA 421

WORKERS' COMPENSATION - ENTITLEMENT TO AND LIABILITY FOR COMPENSATION - PERSONS LIABLE TO PAY COMPENSATION - LIABILITY FOR INDEMNITY - QUEENSLAND - plaintiff/respondent injured while working for corporation that was dissolved after the injury was incurred - whether plaintiff could now sue the Board in respect of that injury

CORPORATIONS - WINDING UP - CONDUCT AND INCIDENTS OF LIQUIDATION - DISSOLUTION - RESTORATION OF DEFUNCT COMPANY TO REGISTER - IN WHAT CIRCUMSTANCES ORDER MADE - whether court would have exercised its discretion to reinstate company

LIMITATION OF ACTIONS - APPLICATION OF STATUTES OF LIMITATION - OTHER MATTERS - whether time to bring action had expired - whether acting against the Board constituted a new action

Corporations Law (Cth), s 562, s 571(1), s 601AD(1), s 601AF, s 601AG, s 601AH

Limitation of Actions Act 1974 (Qld) s 11

Motor Vehicles Insurance Acts 1936-1979 (Qld), s 4A(1), s 4F, s 4G

Workers Compensation Act 1990 (Qld) s 44(1)(b), s 183(1), s 186

Brambles Construction Pty Ltd v Helmers [1966] HCA 3; (1966) 114 CLR 213, distinguished

Blandford v Fox [1944] NSWStRp 62; (1945) 45 SR (NSW) 241, mentioned

Deputy Commissioner of Taxation v Action Worker Pty Ltd (1996) 20 ASCR 712, mentioned

Deutsche Bank v Banque des Marchands du Moscou (1932) 158 LT 364, mentioned

Ellul v Active Home Improvements Pty Ltd (1993) 112 FLR 4, applied

Howell v Nominal Defendant [1962] HCA 4; (1962) 108 CLR 552, mentioned

Insurance Commissioner v Moss [1969] VicRp 82; [1969] VR 650, mentioned.

Little v Suncorp Insurance and Finance [1989] 1 Qd R 633, approved

Lloyd v The Nominal Defendant (Queensland) [1972] Qd R 120, approved

Motor Terms Co Pty Ltd v Liberty Insurance Ltd [1967] HCA 9; (1967) 116 CLR 177, mentioned

Re General Rolling Stock Co (1872) LR 7 Ch App 646, applied

Re Harule Pty Ltd (1994) 13 ACSR 500, mentioned

Re H R Cody Pty Ltd (1992) 8 ASCR 563, mentioned

Re Lindsay Bowman Ltd [1969] 1 WLR 1443, mentioned

Re Morton (1996) 21 ASCR 497, mentioned

Re Producers' Oilwell Supplies Ltd [1943] VicLawRp 28; [1943] VLR 141, mentioned

Re William Bros Ltd (1945) 62 WN (NSW) 226, mentioned

Re Workvale Ltd [1992] 1 WLR 416, mentioned

Solla v Scott [1982] 2 NSWLR 832, mentioned

Universal Forming & Construction [1977] ACLR 29-398, mentioned

Venn v Direct Line Freight Pty Ltd [1983] 1 ACLC 898, mentioned

[1] McPHERSON JA: In June 1996 the plaintiff Antonio Pagnon was employed by the company Croway Pty Ltd. At a time described in the written outlines simply as "before 19 June 1996", the plaintiff is alleged to have injured his back in the course of his employment with the company. On 11 December 1998 the company was deregistered. On 22 June 1999 notice pursuant to s 186 of the Workers Compensation Act 1990 was given to the defendant by providing an advance copy of the plaint in this action, which was filed in the District Court on the following day. There is a suggestion that an earlier notice had been given by letter from the plaintiff's solicitors; but nothing was made of it in the proceedings before this Court.

[2] The defendant's application is for leave to appeal against a decision in the District Court given on 4 July 2000, which answered a question of law submitted by the parties to the learned judge. It was whether s 11 of the Limitation of Actions Act 1974 imposing a three year limitation on the bringing of an action in negligence for damages for personal injury applied to the plaintiff's claim in the action instituted against the defendant on 23 June 1999. The learned judge held it did not. The parties have agreed that, if this Court considers the matter to be one in which leave to appeal should be granted, the application should be treated as the appeal.

[3] Section 186 of the Workers Compensation Act 1990 is in the following terms:

"186.(1) If a worker suffers injury in respect of which compensation under this Act is payable in circumstances conferring a right of action for damages in respect of the injury against the worker's employer who -

a person who might have obtained judgment for damages against the employer in respect of the injury may recover by action against the board, as if the board were the employer, the sum that would have been payable by way of damages to that person by the board under section 183(1) had judgment been given against the employer.

(2) The entitlement conferred by subsection (1) cannot be exercised by court proceedings unless the person seeking the damages proves that notice of the person's claim for damages and a short statement of the grounds thereof were given to the board -

(a) as soon as practicable after the person became aware of the fact giving rise to the entitlement; or

(b) at such time afterwards that the board would not be prejudiced by want of such notice and statement.

(3) Subsection (1) does not confer on a person any right or advantage that the person would not have had if action had been brought or pursued against the employer of the worker who has suffered injury."

The board referred to in s 186 is the Workers Compensation Board of Queensland, whose successor in title is the defendant in this action. The effect of s 186 is to substitute the defendant board in place of the employer for the purpose of an action for damages by the employee or "worker" who has been injured. There is a consistent line of authority in relation to statutory provisions like s 186 holding that they create a new cause of action that is not complete until all the requirements for bringing the action are complied with. Only then does the cause of action accrue. Those decisions were concerned with statutory provisions in the same general form as s 186 authorising actions against the Nominal Defendant or its equivalent in other States. They are or include Blandford v Fox [1944] NSWStRp 62; (1945) 45 SR (NSW) 241, 244-245; and Insurance Commissioner v Moss [1969] VicRp 82; [1969] VR 650, which were followed and applied in Queensland in Lloyd v The Nominal Defendant (Queensland) [1972] Qd R 120. See also Howell v Nominal Defendant [1962] HCA 4; (1962) 108 CLR 552, 560-561.

[4] Those decisions adopt the view that provisions of that character create a new statutory cause of action that is distinct from the common law action against the driver of the insured vehicle. In Insurance Commissioner v Moss [1969] VicRp 82; [1969] VR 650, 652, the Full Court held that the cause of action which the injured party had against the defendant Commissioner was "not the same cause of action as the plaintiff would have had, or did have, against" the driver of the vehicle which injured him, with the result that the statutory cause of action was not barred by the ordinary limitation provision governing actions for negligence for damages for personal injury, such as s 11 of the Limitation of Actions Act 1974. This interpretation of those provisions was followed by the Full Court of this State in Lloyd v Nominal Defendant (Queensland) [1972] Qd R 120, in relation to ss 4F to 4G of the Motor Vehicles Insurance Act 1939-1979 which created a right of action against the Nominal Defendant (Queensland). The same conclusion is warranted here. In declaring that s 186(1) of the Workers Compensation Act 1990 does not confer any rights or advantage that a person would not have had if an action had been brought or pursued against the employer, s 186(3) confirms that the action or "court proceedings" being brought against the board is not the same as the action that might have been brought against the employer at common law. It describes the legal position as it would be "if an action had been brought or pursued against the employer ...".

[5] Closer in form to the provisions of s 186 of the Workers Compensation Act are those of s 4A(1) of the Motor Vehicles Insurance Acts 1936-1979. That Act has since been repealed; but s 4A(1) provided:

"4A. Liability of insurers. (1) Where accidental bodily injury (fatal or non-fatal) to any person has been caused by, through, or in connection with a motor vehicle insured under this Act but the insured person against whom it is sought to establish liability is dead or cannot be served with process, any person who could have obtained a judgment in respect of such accidental bodily injury so caused against such insured person if he were alive or had been served with process may recover by action against the insurer (whether the Office or a licensed insurer) the amount of the judgment which he could have so recovered against such insured person.

Provided that he cannot so recover unless he proves that he gave to the insurer notice of the claim and a short statement of the grounds thereof as soon as possible after he knew that such insured person was dead or could not be served with process, or that such notice as given within such time as would prevent the possibility of the insurer being prejudiced by want of such notice."

In Little v Suncorp Insurance and Finance [1989] 1 Qd R 633, Ambrose J considered s 4A(1) in a matter in which the insured driver had died in the accident in which the plaintiff had sustained personal injury some eight or more years before. His Honour held, applying the decision in Lloyd v Nominal Defendant (Queensland) [1972] Qd R 120, that the statutory cause of action conferred by s 4A(1) of the Motor Vehicles Insurance Acts did not arise on the death of the insured driver but only on the giving of timely notice to the insurer under the proviso to s 4A(1). In the present matter, Trafford-Walker DCJ applied the reasoning in Little v Suncorp Insurance and Finance in deciding in favour of the plaintiff here. The defendant submits that his Honour was wrong in doing so. Essentially, two reasons are advanced in support of this submission. The first is that the provisions of s 186(1) and (2) are very different from s 4A(1) of the Motor Vehicles Insurance Acts considered in Little v Suncorp. The second is the presence of s 186(3), which had no parallel in s 4A(1) of those Acts.

[6] The first submission proceeds on the footing that s 186(1) confers an "entitlement", as it is described in s 186(2), that is predicated on the existence of a cause of action in the plaintiff; that, by s 186(2), the entitlement is one that "cannot be exercised by Court proceedings" unless notice is given under s 186(2); and that the effect of subsection (2) is to suspend those proceedings unless and until the notice requirement prescribed by that provision has been fulfilled. Some support for this approach was sought to be elicited from Brambles Construction Pty Ltd v Helmers [1966] HCA 3; (1966) 114 CLR 213, 219-221. With respect, however, I am unable to identify any similarity between the issues or the provisions considered in Brambles and the question to be decided here. Section 186(1) corresponds approximately to the first paragraph of s 4A(1), and s 186(2) to the proviso to that paragraph. Section 186(1) speaks of "the sum that would have been payable by way of damages" being recoverable by action against the board, whereas in s 4A(1) it is the amount of the judgment which could have been obtained that may be recovered by action against the insurer. The difference, if any, is, however, explained by the fact that, as a matter of legislative history in Queensland, both workers' compensation as such and damages recoverable at common law against an employer have been payable and receivable out of a statutory insurance fund regardless of the identity of the person against whom a judgment is given. See s 183(1)(d). It was therefore appropriate for s 186(1) to speak of the sum that would have been payable by way of damages. The same underlying conception is reflected in s 186(2), which refers to "the entitlement" conferred by s 186(1) being "exercised by court proceedings" rather than, as it is in s 4A(1) and the proviso, being "recover[ed] by action". The differences are matters of language rather than substance, and I am unable to see any material distinction in effect of the forms of expression used in the two sections.

[7] In my opinion, any differences between the provisions of s 186 and of s 4A(1) are not such as to displace the application of decisions such as Lloyd v Nominal Defendant (Queensland) or Little v Suncorp Insurance, or the interpretation placed upon similar provisions in other legislation. The right conferred is a new right or cause of action against the substituted defendant and not simply a continuation of the existing cause of action against the original wrongdoer subject to the unexpired duration of the limitation period fixed by s 11 of the Limitation of Actions Act 1974. The effect and function of s 186(3) of the Act of 1992 remain to be considered.

[8] The first impression derived from reading s 186(3) is that it may well have been primarily intended to ensure that dependants of a deceased worker who suffered injury are to be in no better position than they would have been if their action had been brought against the employer rather than the board. It is, however, plainly capable of a wider operation. The defendant contends that its effect is that a plaintiff who brings action against the board pursuant to s 186(1) is subject to the same limitation period as applied, or would have applied, to an action if brought against the employer. Otherwise, it is said, s 186(1) would "confer a right or advantage" that the plaintiff would not have had in the action against his employer. A difficulty with this interpretation is, however, that it is not self-evident that immunity from s 11 of the Limitation of Actions Act is a "right or advantage" that derived under s 186(1). A plaintiff who sues under s 186(1) may still be liable to be defeated by a defence under s 11 of the Limitation of Actions Act after the lapse of three years from the date on which the cause of action against the board accrued under s 186(1). It is true that, if only because of the need to give notice under s 186(2), the date of accrual of the statutory cause of action under s 186(1) would invariably be later than that of the common law action; but that is an inevitable incident of creating or characterising it as a new cause of action. It is a consequence of imposing the additional requirement of notice under s 186(1) rather than of anything in subsection (2) of s 186. It is, moreover, in my opinion a right or advantage which, quite apart from s 186, the plaintiff already enjoyed and enjoys in an action for damages against a corporate employee that has been dissolved. My reasons for reaching this conclusion are as follows.

[9] It is settled that winding up of a company stops the running of time under the Limitation Acts: Re General Rolling Stock Co (1872) LR 7 Ch App 646, as explained in Motor Terms Co Pty Ltd v Liberty Insurance Ltd [1967] HCA 9; (1967) 116 CLR 177. The reason is that on winding up all actions against the company are stayed, and replaced by a right of proof in the liquidation. By analogy, a corporation cannot be sued after its dissolution: Deutsche Bank v Banque des Marchands du Moscou (1932) 158 LT 364; Re Morton (1996) 21 ASCR 497; and any remaining corporate assets are held on an implied trust for creditors whose claims were not discharged before the dissolution: Re Producers' Oilwell Supplies Ltd [1943] VicLawRp 28; [1943] VLR 141; Re William Bros Ltd (1945) 62 WN (NSW) 226. Under the Corporations Law, a creditor may apply to the Australian Securities and Investments Commission (ASIC), in whom those assets are vested on dissolution, to exercise the power under s 601AF of the Corporations Law to pay the creditor in the same way as the company would have been bound to do if it still existed.

[10] There is nevertheless no direct authority that the dissolution of a corporation stops time from running against a creditor under a limitation statute. The point was, it seems, decided by the English Court of Appeal in Deutsche Bank in 1932; but on that point neither the reasoning nor the result is reproduced in the Law Times (158 LT 364, 365, 366, 367) or the Law Journal report (107 LJKB 386) of that case. Given that it is not legally possible to sue, or ordinarily to serve, a dissolved and therefore non-existent body corporate, it is not altogether surprising that there is no authority on the effect of dissolution on the running of time under limitation statutes. Other than perhaps in the Russian bank cases, the question was not likely to arise except in conjunction with an application to revive a dissolved company by restoring its corporate status. Power to do so by order of the Court was formerly conferred by s 571(1) (now repealed) of the Corporations Law enabling the dissolution to be declared void and authorising the Court, on making that order, to "give such directions and make such provisions ... as seem just for placing the company and all other persons in the same position as nearly as may be as if the corporation had not been dissolved".

[11] Applications and orders to resurrect a dissolved company in this fashion have often been made. Some have been refused where, for example, the application was made by a contributory or director seeking to avoid personal liability for insolvent trading, or by a creditor aiming to enforce liability both against the company and a former officer. Applications are, however, commonly granted where the applicant is a would-be plaintiff attempting to recover damages or compensation, in respect of which the company was insured, for personal injuries sustained before dissolution. Examples are Universal Forming & Construction [1977] ACLR 29-398; Venn v Direct Line Freight Pty Ltd [1983] 1 ACLC 898; Re H R Cody Pty Ltd (1992) 8 ASCR 563; and Ellul v Active Home Improvements Pty Ltd (1993) 112 FLR 4.

[12] An order reviving the company by restoring its corporate status would, however, be of little use to such a plaintiff if in the meantime the statute of limitations had run against him. In England, it became the practice to include in the order a direction that the time between dissolution and revival should not count for the purpose of the Limitation Act. This course was justified by reference to the concluding words, referred to above, of the section of the Companies Act corresponding to the now repealed s 571(1) of the Corporations Law. In Re Lindsay Bowman Ltd [1969] 1 WLR 1443, 1446, Megarry J explained the jurisdiction as follows:

"One example of the use of this limb is in inserting in the order a provision that, in the case of creditors who were not statute-barred at the date of dissolution, the period between the date of dissolution and the date of restoration to the register is not to be counted for the purposes of any Statutes of Limitation: see, for example, In re Donald Kenyon Ltd [1956] 1 WLR 1397. Such a direction seems to me to effectuate the general purpose of the concluding limb of the subsection. If a creditor had six years in which to sue the company, and his time ran out after the company had been defunct for five years, he would have had only one year in which he could effectually have sued the company. He may justly say that he ought not to have been deprived of five years. He cannot have the precise five years which he has lost, but he can be given five other years by way of replacement. This will put him 'in the same position as nearly as may be as if the name of the company had not been struck off'."

Striking off is a procedure which, like deregistration, results in dissolution of the company struck off.

[13] In Australia, the jurisdiction to follow this practice was questioned in Solla v Scott [1982] 2 NSWLR 832, 835; but, as Santow J pointed out in Re Harule Pty Ltd (1994) 13 ACSR 500, 501, the observation on that matter in Solla v Scott was obiter and no reason was given for it. See also Deputy Commissioner of Taxation v Action Worker Pty Ltd (1996) 20 ASCR 712, 724-725. The only reported Australian case I have been able to identify in which the impact of a limitation period has been considered in the context of an injured plaintiff applying for reinstatement of a company is Ellul v Active Home Improvements Pty Ltd (1993) 112 FLR 4, where, in exercising the discretion to declare a corporate dissolution void, Higgins J treated s 36 of the Limitation Act 1985 (ACT) as exemplifying a legal policy that, in such circumstances, time should be extended. See also Re Workvale Ltd [1992] 1 WLR 416 (CA), which may be thought to vindicate the approach adopted by his Honour in Ellul's case.

[14] The same policy is now manifest in the provisions of Part 5A of the Corporations Law, which took effect on or from 1 July 1998. On deregistration, as it is now called, a company ceases to exist: s 601AD(1). However, under s 601AH(1), ASIC may reinstate the registration of a company if satisfied that it ought not to have been deregistered. Section 601AH then proceeds:

"601AH(2) Restatement by Court. The Court may make an order that ASIC reinstate the registration of a company if:

(a) an application for reinstatement is made to the Court by:

(b) the Court is satisfied that it is just that the company's registration be reinstated.

601AH(3) [Powers of the court] If the Court makes an order under subsection (2), it may:

(a) validate anything done between the deregistration of the company and its reinstatement; and

(b) make any other order it considers appropriate."

When reinstated, the company is taken to have continued in existence as if it had not been deregistered: s 601AH(5).

[15] It will be seen that the Court's power to order reinstatement under s 601AH(2) is predicated only on the need to be satisfied that it would be "just" to do so. That is the criterion which the courts have applied in the past in cases of this kind: see, for example, Universal Forming & Construction [1977] ACLC 29, 398; Venn v Direct Line Freight Pty Ltd [1983] 1 ACLC 998. Furthermore, the power conferred by s 601AH(3)(b) is now very wide, and extends to making "any other order" that the Court "considers appropriate". I would have no doubt that under this provision the court could, and in a case like the present would if asked to do so, exercise the power under s 601AH(3)(b) to order that the time between dissolution of the company on 11 December 1998 and the expiration of the limitation period under s 11 of the Limitation of Actions Act 1974 should not be counted against the plaintiff here. There is every reason why it would be "just" to adopt that course.

[16] If there is any remaining doubt about the correctness of that conclusion, it is to my mind put to rest by s 601AG of the Corporations Law. It provides:

"601AG. A person may recover from the insurer of a company that is deregistered an amount that was payable to the company under the insurance contract if:

(b) the insurance contract covered that liability immediately before deregistration."

Under the Workers Compensation Act 1990, the obligation of an employer was to insure and remain insured with the board under a policy covering the employer's liability at common law to his employee: see s 44(1)(b). Under such a policy an employer is indemnified by the Board against legal liability for damages payable in respect of the injury suffered by the employee or worker: s 183(1). It appears to follow that, within the meaning of s 601AG, the company Croway Pty Ltd, which was formerly the plaintiff's employer, was, before it was deregistered, a company that "had a liability" to the plaintiff; and also that, immediately before deregistration, the insurance policy or contract with the defendant board "covered that liability". In these circumstances the only question would be whether the plaintiff could under s 601AG have recovered from the board as insurer of Croway Pty Ltd an amount that was payable to him from the statutory insurance fund. Section 601AG speaks of the "amount that was payable to the company under the insurance contract", which is not really apt to describe the statutory insurance regime in Queensland under which the amount is payable directly out of the insurance fund to the employee, and not to his corporate employer as envisaged by s 601AG.

[17] The legislative policy underlying s 601AG is, however, not open to doubt. It is to "short-cut" the need to reinstate the company, and to do so by enabling the ultimate recipient of the insurance proceeds to sue the insurer direct where the company has been dissolved, without imposing the additional trouble and expense of first applying to have it reinstated. The assets of the company divisible among its creditors are not diminished by adopting that procedure: Corporations Law, s 562. In a case like this where, so far as appears, the insurance policy covered the liability existing immediately before registration, there is to my mind no question but that the Court, if application were made to it by the plaintiff, would or would have exercised its discretion under s 601AH(2) to reinstate the company Conway Pty Ltd. See H R Cody Pty Ltd (1992) 8 ASCR 563, 567, where, on such an application, Murray J regarded it as material that in Western Australia the liability of an uninsured employer would be met by the Workers Compensation Commission out of the general fund maintained by the Commission for that very purpose. Nor in my opinion is there reason to doubt that, if asked to do so, the Court would, for reasons like those of Megarry J in Re Lindsay Bowman Ltd, be satisfied that it was "just" to make an order under s 601AH(2)(b) that the limitation period following deregistration of Croway Pty Ltd should not be counted against the plaintiff. Here the deregistration of the company was, as Higgins J said in Ellul's case, (112 FLR 4, 10), "entirely adventitious", and the board as insurer should not be entitled to take advantage of it as against the plaintiff, who had nothing whatever to do with that event. His claim for damages was, so far as appears, not statute-barred at the date the company was deregistered and ceased to exist. In circumstances like these, compliance with the requirements of s 186(2) affords adequate protection for the legitimate interests of the board.

[18] It follows in my view that s 186(1) cannot, within the meaning of s 186(3), be said to confer on the plaintiff in this case a right or advantage that he would not have had if he had brought or pursued an action against his employer Croway Pty Ltd. He could, if he had chosen to apply for it, have obtained an order for reinstatement of that company coupled with a further order of the kind described in Re Lindsay Bowman Ltd. He could then have sued his employer in the ordinary way without resorting to s 186(1) at all.

[19] In my opinion the application for leave to appeal should be granted but the appeal should be dismissed with costs.

[20] THOMAS JA: I agree with the reasons prepared by McPherson JA which I have had the advantage of reading, and with the orders that he proposes.

[21] MUIR J: I have had the advantage of reading the reasons for judgment of McPherson JA. I am unable to agree that the new cause of action arising under s 186 of the Workers' Compensation Act 1990 is not complete until there is compliance with all the requirements for bringing the action. Section 186(2) commences with "The entitlement conferred by subsection (1)", thus acknowledging that subsection (1) is the source of the injured worker's right and cause of action. Subsection (3) makes a like assumption. It commences with the words "Subsection (1) does not confer on a person any right or advantage that ...".

[22] The foregoing has no bearing on the outcome of the application. For the reasons given by McPherson JA, the effect of s 186(3) is not to make applicable to the respondent's new cause of action the limitation period applicable to this cause of action for damages in respect of personal injury. I agree with the orders proposed by McPherson JA.