Randwick City Council v Kurnell Passenger & Transport Service Pty Ltd

Supreme Court of NSW|2008-03-12|Before: Simpson J

Background 6 In 1994 Randwick Council was the employer of Paul Castillo. On 7 July 1994 Mr Castillo was very severely injured when, while cycling on or near a pedestrian crossing, he was struck by a bus owned by Kurnell Transport. At the time he was en route from his home to his place of work. He accordingly made a claim for compensation against Randwick Council under the provisions of the Workers Compensation Act 1987. His claim was contested by Randwick Council, and fully litigated in the Compensation Court of NSW. On 23 May 1997 Judge Bishop found in favour of Mr Castillo and made an award of compensation. 7 At no time did Mr Castillo make any claim against Kurnell Transport. 8 Pursuant to the award of compensation, Randwick Council's insurer has paid Mr Castillo in excess of $3 million. Its liability to make weekly payments of compensation, together with medical and other expenses, continues. (For present purposes it is unnecessary to make any distinction between Randwick Council and its insurer. The two can be treated, for these purposes, as a single entity.) 9 By the statement of claim that commenced the substantive proceedings, Randwick Council now claims, against Kurnell Transport, indemnity in respect of its past and future liability. It makes its claim under s 151Z of the Workers Compensation Act. Relevantly, s 151Z provides: " 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) … (b) … (c) … (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) … (e1) … (f) … (2) … (3) … (4) … (5) …" 10 In the Workers Compensation Act a distinction is drawn between "compensation" and "damages". It is sufficient here to note that "compensation" means compensation for injury for which specific provision is made by the Workers Compensation Act; "damages" means damages awarded under the common law although the entitlement to and the quantification of those damages has been significantly modified by Pt 5 of the Workers Compensation Act. "Compensation" is a continuing entitlement, not converted into a lump sum, continuing throughout the life or disability of the injured worker. "Damages", on the other hand, are awarded in a lump sum, calculated on the assessment of the seriousness of the injury and disability, and of medical and other needs, both past and, by an educated prediction, future. 11 Since s 151A of the Workers Compensation Act precludes any entitlement to continuing compensation where damages have been recovered (in any amount); that section operates as a disincentive to an injured worker to commence proceedings for damages in circumstances where there is a risk that any damages recovered will be less than the projected amount of compensation to which that person is entitled. Thus, for example, where an injured worker perceives a risk of a substantial finding of contributory negligence that would reduce the lump sum award of damages, he or she may well elect to forego a claim for damages, preferring (on the dog and the bone principle) the safety and security of an award of compensation. One consequence of such a decision by the injured worker is to saddle an employer with the entire liability for compensation, including in circumstances where the injury has been caused by the tort of a third party, and in respect of which the employer is entirely blameless. It is that circumstance to which s 151Z is directed; that section entitles the compensation-paying employer to an indemnity from the tortfeasor in respect of the compensation payments (to the limit of the tortfeasor's hypothetical liability to the injured worker in damages). A claim under the section requires a notional or hypothetical quantification of the damages to which an injured worker would have been entitled had he or she taken proceedings against the alleged tortfeasor: Grant v Royal Rehabilitation Centre Sydney [1999] NSWCA 250; 47 NSWLR 263. In appropriate cases, this will involve an assessment of the amount (if any) by which such a hypothetical award of damages ought to be reduced by reason of the injured worker's contributory negligence. 12 Randwick Council's claim is that the injury to Mr Castillo, in respect of which compensation is undoubtedly payable, was caused under circumstances creating a liability in "some other person" - Kurnell Transport - to pay damages in respect of the injury; that, Mr Castillo having recovered compensation under the Workers Compensation Act, and Randwick Council being the person by whom the compensation has been paid and will be paid, it (Randwick Council) is now entitled to be indemnified by Kurnell Transport (to the limit either of the amount which Randwick Council has paid and will be liable to pay, or the total amount of damages to which Mr Castillo would have been entitled had he brought proceedings for damages against Kurnell Transport).

13 Having regard to the various heads under which damages at common law (even as modified) may be awarded to an injured person, the quantification of notional damages demands an assessment of, inter alia, Mr Castillo's past, present and anticipated future medical condition, his past, present and anticipated future medical and other needs, his life expectancy, and his past, present and anticipated need for care. 14 Section 151Z, when invoked in circumstances such as the present, has a curious consequence. Ordinarily, it is in the interests of an employer against whom a claim is made to minimise the injury to the worker, the extent of the disability and the need for past or future care, medical attention, and other consequences of the injury. That, indeed, was what Randwick Council sought to do in the Workers Compensation proceedings. Now, however, its position is reversed. Randwick Council's obligations have crystallised, although, being open-ended, they cannot be definitively quantified. Its entitlement (if it can establish liability in Kurnell Transport) to indemnity - up to the level of what Mr Castillo would, had he sued Kurnell Transport, have recovered, means that it is now in its (Randwick Council's) interest to maximise his injury, disability and past and future needs. In doing that, it will maximise the extent of the indemnity that Kurnell Transport will owe it, should it succeed in establishing liability. 15 Assessments of the kind in contemplation are made on a daily basis in the courts of NSW. Where the injured person, as plaintiff, sues the alleged tortfeasor as defendant the assessments depend substantially upon expert medical evidence. Invariably, both the plaintiff and the defendant present expert medical evidence to the Court, following submission by the plaintiff to medical examination. Defendants are entitled to arrange their own medical examinations, independent of those arranged by the legal representatives of the plaintiff. 16 A plaintiff who declines to present himself or herself for medical examination on behalf of the defendant will find that the proceedings will be stayed, or not allocated a hearing date, until the defendant has, by medical examination of the plaintiff, had an adequate opportunity to prepare itself and its defence. 17 The present defendant contends that it is here in an analogous position. In order to present its case in defence of the claim by Randwick Council (the aim of which is to minimise the notional award of damages and, therefore, its obligation to indemnify Randwick Council) Kurnell Transport wishes to have Mr Castillo medically examined. It wishes to be accorded what it says is the usual opportunity of having the injured person medically examined by medical practitioners of its own choosing. That is hardly a surprising or unreasonable aspiration. But, since the injured person here is not a party to the proceedings, the mechanism by which it may be achieved is not so simple or clear. There is no sanction, such as impeding the progress of the claim by the injured person, that can be applied. Mr Castillo is entitled to be paid his compensation by Randwick Council; his entitlement does not depend upon, and will not vary according to, the outcome of the proceedings brought by Randwick Council against Kurnell Transport. Although there was no direct evidence to that effect I was told that he has (apparently acting on the advice of his own lawyers) refused to attend medical examinations arranged on behalf of Kurnell Transport. In these circumstances Kurnell Transport seeks to enlist the aid of Randwick Council in securing Mr Castillo's attendance; it seeks to prevent the hearing of Randwick Council's claim under s 151Z unless and until Kurnell Transport has been able to prepare itself by obtaining appropriate expert medical opinion as to the matters in issue - that is, by medical examination of Mr Castillo. That is what I meant when I said, above, that the stay of proceedings sought on behalf of Kurnell Transport is limited. Kurnell Transport does not suggest that a permanent stay is appropriate: merely that the proceedings be stayed until Mr Castillo has submitted himself to medical examination. Kurnell Transport contends that Randwick Council can use its power under s 119(1) to require Mr Castillo to submit himself to medical examination by practitioners nominated by Kurnell Transport; in the event that Mr Castillo refused to attend, Randwick Council could, pursuant to s 119(3), suspend payment of compensation. 18 The position of Randwick Council is simple; it is that it has no control over Mr Castillo and no mechanism to compel or enforce his attendance at the medical examination. It would therefore be unfair and unjust to deprive it of its claim against Kurnell Transport. 19 This is the area of dispute. Kurnell Transport maintains that s 119 of the Workplace Injury Management Act provides adequate scope for Randwick Council to ensure Mr Castillo's attendance, should Randwick Council choose to use its rights under that section. 20 Sub-s (2) is the operative subsection. For convenience, I will repeat it: "119(2) A worker receiving weekly payments of compensation under this Act must, if so required by the employer, from time to time submit himself or herself for examination by a medical practitioner, provided and paid by the employer." 21 Mr Castillo is "a worker receiving weekly payments of compensation under" the Workplace Injury Management Act; accordingly, it was argued on behalf of Kurnell Transport, it is open to Randwick Council to require him to submit himself for examination by a medical practitioner. On behalf of Randwick Council it was argued that to exercise the right or power conferred by s 119 in that way and for that purpose would be an improper use of the right or power. The right or power was not conferred for such a purpose, which is extraneous to the limited focus of s 119. By contrast, it was argued (on behalf of Kurnell Transport), it would be quite unfair if Randwick Council were able to use its right or power under s 119 to require Mr Castillo to submit to further examination by medical practitioners selected by it, but to deny that opportunity to Kurnell Transport. Bearing in mind that the issue is one of statutory construction, the point made is that an interpretation that does not create unfairness (or potential unfairness) is to be preferred to one that (even potentially) has that effect. Exposition of that principle may be found inter alia, in, Pearce and Geddes, Statutory Interpretation in Australia, 6th ed (2006) in Chapter 5 22 But, the scope of the unfairness argument depends upon there being one approach only to Randwick Council's rights under s 119 - that being that Randwick Council might seize the opportunity given to it by s 119 to require Mr Castillo to submit to medical examination on its own behalf for the purposes of its s 151Z claim, but decline to take any steps to require him to attend for examination, by medical practitioners retained by Kurnell Transport. If that were the case, it would, undoubtedly, give Randwick Council an unfair advantage in the litigation. 23 Senior counsel who appeared for Kurnell Transport proposed three potential scenarios emerging from the construction of s 119(2). They are:

(1) that s 119(2) is not available either to an employer or to an alleged third-party tortfeasor for the purposes of the claim under s 151Z;

(2) that s 119(2) is available to an employer for the purpose of pursuing its claim against an alleged third-party tortfeasor, but not to the alleged third-party tortfeasor for the purpose of defending that claim;

(3) that s 119(2) is available to either party for that purpose. (This construction would require that the employer exercise its power under the subsection at the behest of and for the purposes of the alleged third-party tortfeasor.) 24 It seems reasonably plain to me that s 119 is a section the focus of which is upon the determination of a claim made by an injured worker against his or her employer. It is designed to facilitate the resolution of that claim. The legislators did not envisage its use for any extraneous purpose. The question for present determination is whether, notwithstanding that it was not intended to achieve that purpose, the powers thereby conferred upon an employer for that purpose, can be used for the purposes of a claim under s 151Z; and, further, whether refusal by an employer to use them for that purpose can result in the stay of that claim. 25 I am satisfied that s 119(2) is not available either to an employer or to an alleged third-party tortfeasor for the purpose of a claim under s 151Z. For an employer to require an injured worker's attendance at medical examinations in order to prepare itself for such a claim would be to use the power conferred by s 119(2) for an extraneous and improper purpose. It follows that an employer cannot be manipulated into using that power for the purpose of facilitating the alleged third-party tortfeasor's defence to that claim. That is because, as I have said, the power is conferred for a clear purpose - the resolution of a claim by an injured worker, and the continuing supervision and management of the award of compensation, and not otherwise. 26 Two other points might be made: the words at the end of the subsection - "provided and paid by the employer" - cannot, by any reasonable approach to construction, be read as meaning "at the request of, or for the purposes of, a third party". Senior counsel for Kurnell Transport recognised that a certain amount of contortion would be necessary to permit such a construction, but argued that the principle of statutory construction which holds that legislation is not to be interpreted in such a way as to create an unfairness permits a little tweaking of the language. I do not accept that proposition. 27 Sub-s (4) is of some significance. It makes it clear that limits are to be imposed upon the demands of medical examination made of injured workers. In a nutshell, they are not to be harassed, or subjected to arduous requirements of medical examination. 28 In this case, Mr Castillo has made his election, an election imposed upon him by s 151A; he has pursued his claim against Randwick Council, and succeeded; he has not pursued a claim he might have had against Kurnell Transport; he has no interest in assisting either of these parties in its fight against the other. Attendance at medical examinations for Kurnell Transport - and Kurnell Transport seeks four such examinations - would inevitably require further examinations on behalf of Randwick Council. Such a regime is potentially oppressive, and outside the statutory intent of sub-s (4). 29 I recognise that the effect of this decision is that Kurnell Transport will have to depend upon medical examinations and reports that were prepared and made available for the purposes of the Workers Compensation proceedings. Those proceedings took place in 1997, a decade ago. I understand that Kurnell Transport would like to have available to it updated reports. In this case, having regard to the gravity of Mr Castillo's injuries, the denial to Kurnell Transport of updated medical information may not be of great moment. In a less serious case, the inability of an alleged third-party tortfeasor to conduct its own medical examination might be of considerably greater significance. But statutory construction does not depend upon the hardship of a particular case. And, in any event, given the conclusion I have reached about the availability of s 119(2) to neither party, for the purposes of the s 151Z proceedings, there is no inequity created: each party will be limited in its claim or defence to medical material that was available at the time of the Workers Compensation proceedings. 30 The notice of motion is dismissed with costs. **********

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CITATION : Randwick City Council v Kurnell Passenger & Transport Service Pty Ltd [2008] NSWSC 296

CASES CITED : Grant v Royal Rehabilitation Centre Sydney [1999] NSWCA 250; 47 NSWLR 263

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