Single v Workers Compensation Nominal Insurer

Solicitors: Maurice Blackburn (Plaintiff) Rankin Ellison (Second Defendant) File Number(s): DDT 391/17

Judgment

1. The sole issue in this case is whether a lump sum payment made by the Accident Compensation Corporation of New Zealand (the ACC), pursuant to the Accident Compensation Act 2001 (NZ) (the Act) should be deducted from damages assessed by this Tribunal for the disease of mesothelioma.
2. The parties tendered a Statement of Agreed Facts (PX 3) which is summarised below.

Agreed Facts

1. The plaintiff is the daughter and executrix of the estate of the late Mr Bruce Albert Single (the deceased).
2. For the purposes of these proceedings, the second defendant the Workers Compensation Nominal Insurer is responsible for the liabilities of Omar Constructions Pty Limited (Omar), which was sued as the first defendant. Omar is deregistered.=
3. The deceased was born on 29 September 1935 in New Zealand.
4. From about 1950 until about 1987, the deceased worked as an apprentice carpenter, carpenter, builder and labourer in New Zealand.
5. During his employment in New Zealand from about 1950 until about 1982, the deceased worked with and around asbestos cement building products, and was exposed to and inhaled asbestos dust and fibre.
6. In about 1987, the deceased migrated to Australia.
7. From about 1989 until about March 1992, the deceased was employed by Omar as a carpenter and labourer in New South Wales.
8. During his employment by Omar from about 1989 until about March 1992, the deceased worked with and around asbestos cement building products, and was exposed to and inhaled asbestos dust and fibre.
9. In breach of the duty of care owed by Omar to the deceased, Omar negligently exposed the deceased to asbestos dust and fibre, which he inhaled.
10. In about December 2017, the deceased was diagnosed as suffering from mesothelioma.
11. The deceased's exposure to and inhalation of asbestos dust and fibre while employed by Omar made a material contribution to the contraction of mesothelioma.
12. In about December 2017, the deceased made an application for compensation to the ACC pursuant to the Act.
13. On 28 December 2017, the deceased's application to the ACC was approved, as a result of which the deceased received a lump sum payment of NZD $136,705.79, in respect of his mesothelioma.
14. The deceased commenced these proceedings by Statement of Claim filed on 22 December 2017.
15. The deceased's mesothelioma caused his death on 7 February 2018.
16. The plaintiff is entitled to a judgment against the second defendant.
17. The heads of damage claimed by the plaintiff are agreed in the sum of $415,000.
18. The plaintiff's heads of damage consist of: 1. General damages; 2. Damages for loss of expectation of life; 3. Damages for gratuitous care; and 4. Interest on damages for gratuitous care.

The Act

1. No expert evidence was tendered in relation to the interpretation of New Zealand legislation. The plaintiff submitted, and the defendant did not dispute, that the legislation was to be interpreted in accordance with Australian canons of construction - Neilson v Overseas Projects Corporation of Victoria Ltd [2005] HCA 54; (2005) 223 CLR 331.
2. The purpose of the Act is set out in s 3 as follows: "The purpose of this Act is to enhance the public good and reinforce the social contract represented by the first accident compensation scheme by providing for a fair and sustainable scheme for managing personal injury that has, as its overriding goals, minimising both the overall incidents of injury in the community, and the impact of injury on the community (including economic, social, and personal costs), through - … (d) ensuring that, during their rehabilitation, claimants received fair compensation for loss from injury, including fair determination of weekly compensation and, where appropriate, lump sums for permanent impairment…"
3. Section 67 of the Act provides: "A claimant who has suffered a personal injury is entitled to one or more entitlements if he or she - (a) has cover for the personal injury; and (b) is eligible under this Act for the entitlement or entitlements in respect of the personal injury."
4. By s 69(1)(d) of the Act, one entitlement provided under the Act is "lump sum compensation for permanent impairment".
5. The deceased was paid an entitlement under the Act for personal injury caused by a work-related gradual process, disease, or infection suffered by him, within the meaning of s 20(2)(e).
6. Section 26 of the Act defines personal injury to mean, inter alia, physical injuries suffered by a person - s 26(1)(b).
7. Section 30 deals with personal injury caused by work-related gradual process, disease or infection. This is defined by s 30(1) to mean personal injury suffered by a person; and caused by a gradual process, disease or infection; and caused in the circumstances described in sub-section (2).
8. It was common ground that the deceased, through exposure to asbestos dust in his employment in New Zealand as a carpenter, fell within the circumstances described in sub-section (2).
9. Finally, personal injury within the meaning of s 30 had to be of a type described in Schedule 2 of the Act. One of the diseases specified in Schedule 2 is mesothelioma.

Manser v Spry

1. The leading High Court authority in relation to whether payments made to an injured plaintiff should be deducted from damages payable by a defendant is the case of Manser v Spry 181 CLR 428 (Manser). Ms Spry was injured in a motor vehicle accident caused by the negligence of Mr Manser. Ms Spry sustained an aggravation or exacerbation of those injuries in a subsequent work accident and received payments of workers compensation under South Australian legislation. The High Court was asked to determine what impact, if any, those payments of workers compensation should have on the assessment of the plaintiff's damages in the action against the negligent defendant in the motor vehicle proceedings.
2. The High Court noted the general principle of compensation in Haines v Bendall 172 CLR 60 at 63 (Bendall) where the majority judgment said: "The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed. Compensation is the cardinal concept."
3. In National Insurance Co. of New Zealand Limited v Espagne 105 CLR 569 (Espagne), the High Court said that the decision whether a statutory benefit is to be enjoyed independently of, and cumulatively upon, the right to damages, requires the court to endeavour to discover the intention of the legislature - Manser at 436.2. The key passage in Manser is: "There are three possible indicia of a relevant legislative intention: the financial source of the benefit, the presence of a provision which requires a repayment of a statutory benefit out of the damages awarded or paid and the nature of the benefit. If a scheme for provision of a benefit be funded by contributions made by employers and employee-beneficiaries as a kind of insurance against misfortune, the principle in Bradburn v. Great Western Railway Co. indicates that the benefit is to be enjoyed by a beneficiary who encounters the misfortune without reduction of the damages to which he or she is otherwise entitled. That view has been taken of benefits paid under contributory pension schemes created under statute. If statute provides that a particular benefit is to be repaid out of damages, there is a clear indication that that benefit is not to go in reduction of the tortfeasor's liability. When such a provision relates only to one or some of the benefits provided under the statute, the non-repayable character of the other benefits may imply, according to the context, either that the legislature intended that the receipt and retention of the benefit should not be taken into account in the assessment of damages or that it had no such intention. Whether an implication of such a legislative intention should be drawn depends largely on the nature of the benefit. Gibbs CJ said in Redding v. Lee: 'If the statute expressly provides (as some statutes relating to workers' compensation have done) that a plaintiff who has recovered damages shall repay the amount of the benefit it will be clear that the receipt of the benefit must be disregarded in the assessment. In many cases, however, the statute under which the benefit is provided will give no assistance of this kind. Then it will be necessary to consider closely the nature of the benefit itself. The conclusion that the benefit is intended for the plaintiff personally and not in reduction of the damages may more readily be drawn when it is seen that the receipt of the benefit is not dependent on the loss of wages or earning capacity ... for which the plaintiff claims damages (cf. Parry v. Cleaver, per Lord Wilberforce) and is not intended to replace the lost wages or remedy the loss of earning capacity.' Finally, if all indicia of intent fail, the 'settled principle governing the assessment of compensatory damages' which the majority stated in Haines v. Bendall must be applied."

The financial source of the benefit

1. The deceased made no direct contribution to the fund from which his benefit was paid. However, it is possible to argue that he has made two indirect contributions to the source of the benefit. Firstly, as a taxpayer, he is contributing to the general revenue. Secondly, he, together with every other New Zealand citizen, has given up his rights to claim common law damages in exchange for a right to entitlement under the Act. However, this was not a voluntary action on the part of the deceased or anyone else who lived in New Zealand at the relevant time. It was imposed upon the citizens as part of the "social contract".
2. Funding for payment of entitlements under the Act comes from levies payable under ss 168, 168A, 168B and 211 by employers, private domestic workers and self-employed persons - s 167(2)(a) of the Act. There is no evidence as to whether such contributions fully fund the entitlements provided by the Act. If such levies are insufficient to cover entitlements paid at any one time, then one would assume that consolidated revenue of the government funds the balance of claims.
3. The radical nature of the New Zealand scheme (when compared to common law fault-based damages awarded in Australia) makes it almost impossible for the first indicium to be satisfied. It is meaningless to speak of a benefit "to be enjoyed by a beneficiary who encounters the misfortune without reduction of the damages to which he or she is otherwise entitled", when the beneficiary under the Act has no entitlement to bring proceedings for common law damages in the first place.
4. Further, the underlined passages in paragraphs [35] and [37] in McGougan referred to above, indicate that the funding for payment of entitlements under the Act cannot be seen as coming from the recipient of an entitlement.
5. I therefore come to the conclusion that the financial source of the benefit for payment of entitlements under the Act gives no indication of a legislative intention that the payment under the Act should be retained in addition to full damages. This factor points away from the plaintiff being entitled to full damages in the Tribunal without deduction of the New Zealand entitlement.

Provision for repayment of a statutory benefit out of damages awarded

1. Section 321 of the Act deals with powers of the Corporation when a person has a right to bring proceedings for personal injury - s 321(1).
2. By s 321(2) the Corporation may require a person to take all reasonable steps to enforce the right or to assign the right to the Corporation.
3. Section 321(3) provides that sub-section (4) applies when an entitlement is provided under the Act for personal injury to a person, and the person has received a sum of money by way of damages for "any claim in New Zealand or elsewhere for the personal injury" (emphasis added). When sub-section (3)(b) refers to "the personal injury", this can only be a reference to the personal injury suffered by the deceased as a result of his exposure to a gradual work-related process during the course of his New Zealand employment. The proceedings brought in the Tribunal arise entirely out of Australian exposure to asbestos dust. While this exposure has caused or made a material contribution to the development of mesothelioma, the entitlement under the Act was paid because of the personal injury suffered through a work-related gradual process which occurred in New Zealand, not in Australia.
4. Section 321(4) does provide for possible repayment of an entitlement from damages. The sub-section reads: "When this sub-section applies, the Corporation may, as the case requires, - (a) deduct, from the cost of the entitlement required to be provided to a person, a sum equivalent to the nett amount received by way of damages, compensation, or settlement; or (b) recover from the person, as a debt due, the entitlement provided."
5. While the Act has abolished most rights of action for damages at common law, there are still some rights which subsist in New Zealand. For example: the right to seek exemplary damages under s 319 of the Act; the right to complete proceedings commenced before 1 April 1993, under s 318(3) of the Act; the right to bring proceedings for damage to property, an express term of a contract, or unjustifiable dismissal, under s 318(4) of the Act; the right to bring proceedings under the Health and Disability Commissioner Act 1994, under s 317(4)(a) of the Act; the right to bring proceedings under the Human Rights Act 1993, pursuant to s.317(4)(b) of the Act and the right to bring proceedings for damages under any international convention relating to the carriage of passengers, pursuant to s 317(5) of the Act.

The nature of the benefit

1. In Manser, the workers compensation paid to Ms Spry fell into three categories. The first was hospital and medical expenses. The second was weekly payments as a result of incapacity for work. The third was a lump sum for non-economic loss for a permanent and compensable disability. This payment was in substitution for the worker's entitlement to damages for non-economic loss.
2. The High Court said at 438.7: "All of these payments are made in respect of the same matters as are taken into account in assessing damages in tort and for which the plaintiff has claimed in her action. …The Act is not designed to confer benefits to be added to the damages to which the worker might otherwise be entitled at common law for a loss caused by an event that is not work-related. The compensation benefits paid or payable under the Act are ordinary incidents of a worker's employment which must be taken into account in assessing the damages of a plaintiff-employee for loss and damage for which a tortfeasor is liable at common law."
3. The High Court therefore determined that payments received under the South Australian workers compensation legislation, which did not have to be repaid to the WorkCover Corporation, "should be taken into account in the assessment of the plaintiff's award of damages in a way that ensures that the plaintiff does not receive and retain double compensation for the same loss or expense".
4. In the present case the only entitlement paid by the Corporation is a lump sum for whole person impairment. As can be discerned from the ACC Impairment Assessment, referred to above, such impairment is assessed using "the chapter of AMA 4 relating to the respiratory system and current ACC policy on mesothelioma cases". It appears to have resulted in an automatic 80% whole person impairment assessment. This assessment entitled the plaintiff to the payment made by the Corporation.
5. A right to be paid a lump sum for whole person impairment is a lesser right than a claim for general damages at common law. Such whole person impairment assessments depend upon the claimant satisfying objective medical criteria, and take little or no account of pain, suffering and loss of enjoyment of life. In the Australian system of law, such whole person impairments almost invariably result in a lesser figure being paid to the claimant than a general damages award. However, a lump sum payment for whole person impairment, in accordance with the decision in Manser, is "a statutory substitute for that component of common law damages which reflects non-economic loss for a tortiously inflicted injury" - at 438.6.

Harris v Commercial Minerals Limited

1. Shortly after the decision of the High Court in Manser, the issue came up for decision again in Harris v Commercial Minerals Limited [1996] HCA 49; (1996) 186 CLR 1. A worker brought a claim for damages in the Dust Diseases Tribunal for damages for silicosis. The worker had already received benefits payable under the Workers' Compensation (Dust Diseases) Act 1942 (the 1942 Act). The question was whether those payments were to be taken into account when awarding damages for future economic loss at common law.
2. The High Court, applying Manser, found that: 1. The legislative scheme for payment of workers compensation was one funded through contributions by employers and by the government. The scheme was different from a pension scheme where the employee also contributed. The financial source of the benefits indicated that the benefits should be deductible from awards of damages in respect of injuries giving rise to the benefits. 2. The nature of the benefits conferred by the workers compensation legislation was compensation for economic loss suffered as a result of work injuries. The purpose of the payments was to remedy the loss of earning capacity of the injured worker, and the nature of the benefit did not point to a legislative intention that the benefits should not be deductible from awards of damages in respect of injuries giving rise to those benefits.
3. The High Court held that benefits received under the 1942 Act were therefore deductible from any common law damages otherwise payable by an employer for injuries compensable under that Act.
4. Shortly after this decision, the Dust Diseases Tribunal Act 1999 was amended to insert s 12D, which provides that damages for non-economic loss are not to be reduced by any amount of compensation paid or payable under the 1942 Act.

Prior consideration by the Tribunal of the issue

1. Counsel referred me to the decision of Judge Curtis of this Tribunal in Davis v Cockatoo Dockyard Pty Ltd [2000] NSWDDT 6; (2000) 19 NSWCCR 594. The plaintiff in that case contracted asbestos-related pleural disease (ARPD) as a result of exposure in the course of employment in Australia between 1948 and 1950, and exposure in the United Kingdom between 1951 and 1959.
2. In 1995 a medical authority established pursuant to the Social Security Contributions and Benefits Act 1992 (UK) certified that the plaintiff was suffering from his disease and assessed his disablement at 20%. Pursuant to that legislation the plaintiff then received an industrial injuries benefit by way of a weekly payment.
3. In 1996 the plaintiff was also paid a lump sum pursuant to an entitlement created by the Pneumoconiosis (Workers Compensation) Act 1979 (UK) in respect of his asbestos-related disease.
4. It was common ground in the case that all asbestos exposure contributed to the plaintiff's pulmonary disease - at [5].
5. I pause to note that all non-trivial asbestos exposure makes a material contribution to the indivisible disease of mesothelioma - see cases in the Tribunal such as White v Amaca Pty Limited [2011] NSWDDT 6.
6. The questions to be decided by Judge Curtis were whether the weekly payment figure should be deducted from damages, and whether the lump sum payment should be deducted. His Honour referred to the decision of the High Court in Manser and to the decisions therein cited.
7. At [45] his Honour posed the question for decision in a similar fashion to that put before the Tribunal in this case. His Honour said: "The payments made to this plaintiff in England must therefore be deducted from his damages unless I am satisfied that the English legislative intention in providing the benefits was that he may retain the benefit even if he enforced his right to recover an award of damages against this defendant."
8. His Honour approached the search for intention in accordance with Manser, by examining the financial source of the benefit; whether there was a provision which required repayment of the benefit out of damages; and the nature of the benefit.
9. He considered the provisions of the UK legislation. In relation to the UK weekly payments, his Honour reached a conclusion at paragraph [57] as follows: "From a consideration of all these provisions, it appears to me that: (1) The financial source of the benefits arises, in part, from contributions made by the plaintiff described as 'insurance' and the benefits are restricted to persons who have contributed financially. (2) The Parliament, albeit at a later time, has considered whether repayment of the benefit should be required out of damages and has answered 'No'. Parliamentary intention though expressed at different times in different Acts, can be presumed to be consistent. (3) The nature of the benefit was categorised by the Parliament in the 1997 legislation as compensation for lost earning capacity. The damages to which the plaintiff is entitled against the defendant include no amount for that category of loss."

Conclusion and Orders

1. From a consideration of the provisions in the Act, I find that: 1. The financial source of the entitlement paid to the deceased was contributions levied upon employers, private domestic workers and self-employed persons, as well as general revenue. Further, the deceased made no direct contribution to the fund from which entitlements are paid, but nevertheless had an entitlement to be paid under the Act; and 2. The provisions of the Act did not require repayment of the entitlement out of damages to be awarded by this Tribunal for the Australian tort upon which these proceedings are based; and 3. The nature of the entitlement paid to the deceased is in substitution for general damages.
2. Those three indicia demonstrate that the relative legislative intention expressed in the Act is that the benefits provided are not to be enjoyed independently of, and cumulatively upon, the right to damages. I find that the entitlement of NZD 136,705.79 should be deducted from the agreed damages of $A415,000. Otherwise there would be double compensation.
3. I will leave it to the parties to make the appropriate calculation having regard to the exchange rate selected.
4. I was asked by the parties to reserve the question of costs, and I will make directions for the further determination of that issue.
5. My orders are: 1. The plaintiff is entitled to a judgment against the defendant in an amount to be agreed between the parties, to be calculated by deducting the amount of NZD 136,705.79 from agreed damages of $A415,000. 2. I direct the parties to bring in a form of order to reflect this finding. 3. Costs reserved.

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. Decision last updated: 05 December 2018