Plaintiff v Defendants

1 On 10 May 2001, Mr Christopher Papadopoulos, the plaintiff, sustained an injury to his low back in the course of his employment. The injury involved a disc prolapse at the L5-S1 level. At the time he was injured, the plaintiff was employed by MC Labour Hire Service Pty Ltd, the first defendant. The first defendant is a labour hire company. At the time of the accident, the plaintiff was performing work for Concept Hire Limited, the second defendant, pursuant to an agreement between the first and second defendants.

2 The plaintiff commenced proceedings against the defendants claiming damages for the injuries he sustained as a result of the accident. He claimed that his injuries were caused by the negligence and breaches of statutory duty of the defendants. On 8 May 2009, after a jury trial lasting 13 days, the jury returned a verdict against both defendants. The jury assessed the plaintiff's pain and suffering damages[1] in the sum of $250,000. They assessed the plaintiff's pecuniary loss damages[2] in the sum of $776,000.

(a) the amount of the plaintiff's entitlement (if any) to interest; and

(b) whether the second defendant has any liability to the plaintiff in respect of costs.

4 Section 134AB(34) of the Accident Compensation Act 1985 provides:

"A court must not, in relation to an award of damages in accordance with this section, order the payment of interest, and no interest shall be payable, on any amount of damages, other than damages referable to loss actually suffered before the date of the award, in respect of the period from the date of the death of or injury to the person in respect of whom the award is made to date of the award."[3]

5 Senior Counsel for the plaintiff conceded (correctly in my view[4]) that the plaintiff was only entitled to interest on the amount of past pecuniary loss damages. It was agreed between the parties that $250,000 of the $776,000 awarded for pecuniary loss was past loss (that is, referable to loss actually suffered before the date of the award).

6 The issue between the parties relates to the fact that the plaintiff has, over the years, received weekly payments of compensation pursuant to the Accident Compensation Act. The gross amount of the payments made totals a little over $260,000.[5] Of this amount, the plaintiff has received, after tax, approximately $210,000. It was the difference between these sums which formed the Fox v Wood[6] component of the plaintiff's claim (Fox v Wood is the High Court decision which permitted a plaintiff to recover damages representing the additional loss occasioned by having to repay the gross amount of workers compensation payments when such a plaintiff had only had the benefit of the net amount after tax). The first defendant contends that no interest is payable pursuant to s 60 of the Supreme Court Act 1986 because, during the period between the accident and the verdict, the plaintiff received amounts totalling more than his past pecuniary loss. The plaintiff contends that the amount he received was less than his past pecuniary loss. He contends that it is the sum of $210,000 which should be taken into account when assessing interest - not the sum of $260,000.

7 There has, for many years, been no controversy concerning the fact that weekly payments of compensation fall to be taken into account in calculating interest on past pecuniary loss. (See, for example, De Nitis v Seekts[7] and Vrybergen v Sides & Son Pty Ltd[8]). In these cases, it appears to have been assumed that it was the gross amount of the weekly payments that should be taken into account when calculating interest. This is not surprising as such authorities as there are on this topic pre-date the High Court's decision in Fox v Wood.[9]

8 While Fox v Wood did not deal with the question of interest, the reasoning of the Court is relevant to the issue at hand. In Fox v Wood, Gibbs CJ (with whom Aickin and Wilson JJ agreed) held that the receipt of workers compensation payments was a natural and foreseeable consequence of the injuries sustained by the plaintiff and that the receipt and repayment of the compensation increased the plaintiff's loss. His Honour then concluded that this increased loss was caused by the defendant's negligence and was not too remote to be taken into account. Similarly, Murphy J said:[10]

"To ignore the fact that workers' compensation payments must, on recovery of common law damages, be repaid in full, although the worker is liable to include the payments in his taxable income, would undermine one of the benefits of the Workers Compensation Act 1971 - 1974 and offend the elementary principle of restitution. The injured person should not suffer the loss of income tax paid on compensation repayable in accordance with the Act."

9 By the same processes of reasoning, there is no basis upon which the plaintiff should be deprived of interest in respect of a past loss of which he has not had the benefit. As in Fox v Wood, it is no argument for the first defendant here to assert that the plaintiff has had the benefit of the gross amount of weekly payments because those amounts were paid to him with "the tax man [taking] some out before he got it".[11] That argument cannot sit with either the reasons or the outcome in Fox v Wood. Just as the plaintiff is entitled to recover the Fox v Wood component of his claim (the amount of the tax, for which he has not received any relevant benefit), so can he recover interest pursuant to s 60 on this amount. To hold otherwise would be to deny the full force of the reasoning in Fox v Wood and the proper operation of s 60 of the Supreme Court Act.

10 Accordingly, the plaintiff is entitled to interest in respect of the sum of $40,000.

11 Section 134AB(28) of the Accident Compensation Act provides:

"In proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under subsection (12)-

(a) if no liability to pay damages is established, the worker must pay the party and party costs of the employer, Authority or self-insurer and the worker's own costs;

(b) if judgment is obtained or a settlement or compromise is made in an amount not less than 90 per cent of the worker's statutory counter offer under subsection (12) and more than the statutory offer of the Authority or self-insurer, the Authority or self-insurer must pay the worker's party and party costs and its own costs;

(c) if judgment is obtained or a settlement or compromise is made in an amount not more than the statutory offer of the Authority or self-insurer under subsection (12), the worker must pay the party and party costs of the Authority or self-insurer and the worker's own costs;

(d) if judgment is obtained or a settlement or compromise is made in an amount that is more than the statutory offer of the Authority or self-insurer under subsection (12) but less than 90 per cent of the worker's statutory counter offer under that subsection, each party bears its own costs-

and the court must not otherwise make an order as to costs."

12 There is no argument that this proceeding is a proceeding for the recovery of damages commenced in accordance with s 134AB after a statutory offer was made, or deemed to have been made, under sub-s (12). In this case, it is apparent that the judgment obtained by the plaintiff was more than the statutory offer and more than 90% of the plaintiff's statutory counter-offer.[12] The second defendant submits that paragraph (b) of s 134AB(28) applies and therefore the Victorian WorkCover Authority[13] (or the first defendant if it is a self-insurer) must pay the plaintiff's party and party costs and its own costs and (to use the words of s 134AB(28)) "the court must not otherwise make an order as to costs". The first defendant submits that these words at the end of s 134AB(28) preclude the Court from making any order other than those specified in paragraphs (a) to (d) of s 134AB(28).

13 However, as Cavanough J showed in O'Neill v TD Williamson (No. 2),[14] construed in their context, the words "and the court must not otherwise make an order as to costs" means that the Court must not make an order for costs "in another way, or in other ways; in a different manner, or by other means; differently".[15] I agree with Cavanough J when his Honour said:[16]

"I do not accept that s 134AB(28) covers the relevant field. The natural reading of s 134AB(28) is that it applies only when the final outcome of the proceeding is known. It applies 'if no liability to pay damages is established', or 'if judgment is obtained or a settlement or compromise is made'. It supplies particular rules to deal with each of the four situations specified in it. In going on to provide that 'the court must not otherwise make an order as to costs', the subsection, in my opinion, merely emphasises that each rule is mandatory where it applies. In other words the court is not permitted to make any order that would be contrary to or inconsistent with the relevant rule."

14 Paragraph (b) of s 134AB(28) purports only to regulate the issue of costs between the plaintiff and the VWA (or self-insurer). It has nothing to say about the issue of the costs of other parties.[17]

15 The rule supplied by s 134AB(28)(b) does not deal with (nor does it purport to deal with) a party in the position of the second defendant (contrast the position in s 134AB(28)(d) which refers to "each party" having to bear its own costs in the circumstances of that rule). Because s 134AB(28)(b) does not purport to deal with a party other than the worker or the VWA/self-insurer, it is not necessary in this case to consider the wider question of whether s 134AB(28) has any application to parties other than the worker or the VWA/self-insurer. It is sufficient to say that on the construction posited by Cavanough J in O'Neill No. 2 (with which I agree), s 134AB(28) does not preclude the Court from making an order that the second defendant pay the plaintiff's costs (if that is the appropriate order). Put another way, making an order for costs against the second defendant in this case would not be making an order contrary to or inconsistent with paragraph (b) (or indeed any of paragraphs (a) to (d)) of s 134AB(28).

16 The plaintiff succeeded against the second defendant. The only reason advanced by the second defendant as to why no order for costs should be made against it was the existence of s 134AB(28). As I have rejected that submission, there is no reason why costs should not follow the event. The first defendant did not resist the plaintiff's application for costs against it.[18] Accordingly, there will be an order that the defendants pay the plaintiff's costs of and incidental to this proceeding.

[1] See s 134AB(37) of the Accident Compensation Act 1985.

[2] Again, see s 134AB(37) of the Accident Compensation Act 1985.

[3] Section 134AB(35) provides:

"Except as provided by subsection (34), nothing in that subsection affects any other law relating to the payment of interest on any amount of damages, other than special damages."

[4] See generally Williams v Oataway [2005] VSCA 137; (2005) 11 VR 529.

[6] [1981] HCA 41; (1981) 148 CLR 438.

[7] [1962] VicRp 60; [1962] VR 417.

[8] [1963] VicRp 58; [1963] VR 415.

[9] Whilst there are authorities that post-date Fox v Wood which appear to show interest having been calculated by taking into account the gross amount of weekly payments (see for example Casey City Council v Kohn [2006] VSCA 82, to which I was referred by Senior Counsel for the plaintiff this morning), the issue of whether the amount should be net or gross does not appear to have been argued previously.

[11] See counsel for the first defendant's submission at T1353.9.

[12] See s 134AB(12).

[13] Referred to in the Accident Compensation Act as "the Authority".

[14] [2008] VSC 430.

[15] See O'Neill (No. 2) at paragraph [7].

[17] Cf paragraph (d) - which was the subject of the ruling of Judge Howie in Herbath on 26 May 2008.