Tanska v Transport Accident Commission [2000] VSC 56

6. The background to the proceeding is that by writ issued in the County Court on 21 July 1997 in proceeding No. 974720 ("the County Court proceeding") Juliana Fricot as plaintiff ("the plaintiff") claimed damages for injuries arising from a motor vehicle accident. The accident occurred on 28 December 1993 at Box Hill in Victoria when a vehicle driven by Pekka Ilmari Tanska ("the defendant") collided with a vehicle driven by the plaintiff.

9. As a result of injuries suffered by the plaintiff in the accident the Transport Accident Commission ("the Commission") paid benefits, including impairment benefits in the sum of $16,206.96 to the plaintiff pursuant to ss.47 and 48 of the Transport Accident Act 1986 ("the Act"). There were payments of other medical expenses by the Commission in the sum of $5,949.90 that are not relevant for present purposes. At the time of the accident the vehicle driven by the defendant was registered in the State of South Australia. Section 94 of the Transport Accident Act provided that the Commission was not obliged to provide indemnity with respect to vehicles registered interstate.

12. The State Government Insurance Commission of South Australia ("SGIC") was the compulsory third party insurer of the vehicle driven by the defendant in the collision. Independently of the County Court proceeding the Transport Accident Commission sought to recover the benefits from the plaintiff without success. Eventually, by summons dated 29 September 1998 (issued shortly before the trial date of the County Court proceeding), the Commission applied to be joined as a party to that proceeding. On 14 October 1998 the application by the Commission was dismissed by His Honour Judge F.B. Lewis on the ground that the Commission lacked standing as it did not have an interest in the County Court proceeding until damages were awarded against the defendant.

15. In November 1998 the plaintiff and defendant settled the County Court proceeding for the sum of $100,000 together with costs and a right of retention by the plaintiff of all benefits paid by the Commission up to the date of settlement. Terms of settlement were executed by the plaintiff, the defendant and SGIC. The County Court proceeding was struck out by consent on 20 November 1998.

18. It was a term of the settlement that SGIC agreed to be responsible for any liability that the plaintiff might be obliged to re-pay to the Transport Accident Commission in the sum of $16,206.96 or any other sum pursuant to the Transport Accident Act. On 8 December 1998 solicitors acting for the Commission demanded re-payment from the plaintiff of the sum of $16,206.96. The request was refused.

21. On 29 April 1999 the Transport Accident Commission filed a summons in the County Court seeking the reinstatement of the County Court proceeding, the joinder of the Commission as a party, judgment for the plaintiff against the defendant in accordance with the terms of settlement and an order in favour of the Commission pursuant to s.93(11) of the Transport Accident Act for the sum of $16,206.96.

24. On 28 July 1999 the summons issued by the Commission was heard by the County Court Master. There was no submission before the Master (or subsequently before me) that there was an issue estoppel arising from the orders made by his Honour Judge F.B. Lewis on 14 October 19998. On 13 August 1999 the Master ordered that the County Court proceeding be reinstated, the Commission be joined as a party to the proceeding, that the plaintiff and the defendant pay the sum of $16, 206.96 to the Commission pursuant to s.93(11) of the Transport Accident Act and that the defendant pay the costs of the Commission in the sum of $1,200.

27. The Master provided oral reasons for judgment. From an affidavit filed by the solicitors for the defendant the reasons are said to have been, as follows:

1. The County Court proceeding continued to exist notwithstanding its striking out and, therefore, could be reinstated.

2. The Commission had a legitimate interest in the proceeding and was entitled to be joined as a party.

3. It was appropriate to join the Commission as a party but unnecessary to nominate it as a plaintiff or defendant.

4. It was unnecessary to order judgment as sought rather than an order for payment of a specified sum by the plaintiff to the Commission.

5. Section 93(11) of the Transport Accident Act did not preclude the Commission from making its claim.

35. The defendant in the County Court proceeding seeks leave to appeal against the orders of the Master on the grounds that:

(1) The Master erred in the interpretation of s.93(11) of the Transport Accident Act (prior to its amendment in 1995).

(2) The Master erred in the interpretation of "damages" in s.3(5) of the Act.

(3) The Master erred in the construction of the words "damages awarded" in s.93(7) and (9) of the Act.

(4) The Master erred in permitting the proceeding to be reinstated notwithstanding that the proceeding had been struck out and that the plaintiff and the defendant opposed reinstatement.

(5) The Master was in error in allowing the Commission to be joined as a party notwithstanding that there was no remaining issue between the plaintiff and the defendant in the County Court proceeding.

42. Mr G.H. Garde QC appeared with Mr M. Corrigan nominally for the defendant/appellant. I was informed that in fact Mr Garde was retained for SGIO of South Australia and that the matter was a test case so far as SGIO and the Commission were concerned and that a judgment was sought as to the proper construction of s.93(11) of the Transport Accident Act in its form prior to amendment. Mr S.W. Kaye QC appeared with Mr D. Masel for the Transport Accident Commission, the respondent.

Transport Accident Act 1986 - section 93

46. The Transport Accident Act 1986 was amended by the Transport Accident Act (General Amendment) Act 1994. Payments were made by the Commission to the plaintiff pursuant to ss.47 and 48 of the Transport Accident Act. Prior to section 47 amendment of the Transport Accident Act prescribed the method of assessment by the Commission of a lump sum to be paid with respect to an impairment benefit. Section 48 of the Act prescribed the method of assessment by the Commission of an annuity with respect to an impairment benefit.

49. Prior to the amendment of the Transport Accident Act by the 1994 Act s.93 set out the relevant provisions whereby a person who is injured as a result of a transport accident could seek to recover damages. Section 93(1)-(10) set out various limitations on entitlement to damages which are not especially relevant for present purposes. Specifically, sub-s.(7) of s.93 imposed ceilings on the amounts of damages that a court may order with respect to pecuniary loss damages, pain and suffering damages and damages of any other kind. Sub-section(9) of s.93 imposed a ceiling on the amount of damages that a court may order in relation to damages under Part III of the Wrongs Act 1958.

52. Sub-section (11) of s.93 provided that if damages "are awarded" in accordance with sub-ss.(7) or (9) the court shall order the payment to the Commission of an amount equivalent to the amount paid by the Commission. Section 93(11) provided:

"(11) If damages are awarded in accordance with sub-section (7) or (9) in respect of the injury or death of a person, the court shall order the payment to the Commission- (a) in the case of damages awarded under sub-section (7) - (i) in respect of pain and suffering damages, of such part of the damages as is equal to the sum of payments by the Commission under sections 47 and 48 in respect of the injury; or (ii) in respect of pecuniary loss damages, of such part of the damages as is equal to the sum of payments by the Commission under sections 49, 50 and 51 in respect of the injury; or (b) in the case of damages awarded in accordance with sub-section (9), of such part of the damages as is equal to the sum of payments made by the Commission under this Act in respect of that death."

56. The Commission argued that it paid damages to the plaintiff under ss.47 and 48, and that as a consequence of the terms of settlement between the plaintiff, the defendant and SGIO the Commission was entitled to have the County Court proceeding reinstated and the Commission joined as a party, to have an order made in the terms of the terms of settlement and, on the basis that damages had been paid by the Commission under ss.47 or 48, to an order for re-payment of those moneys to the Commission in accordance with s.93(11).

Preliminary matters: Reinstatement of proceeding and joinder.

60. The first matter to be considered is whether a proceeding once struck out can be reinstated. The striking out of a proceeding is a different matter to that where, for example, a proceeding is dismissed or a judgment is ordered. In the latter examples the matter has usually been determined on the merits and a disposition has occurred. The general approach adopted by this court in considering the power to reinstate an action which has been struck out is to regard the power as part of the inherent jurisdiction of the court to be exercised where it thinks fit (see Mason v Ryan [1884] VicLawRp 115; (1884) 10 VLR (L) 335, 340; Miller v Hanson [1891] VicLawRp 135; (1891) 17 VLR 715, 716; Roberts v Gippsland Agricultural and Earthmoving Contracting Co Pty Ltd [1956] VicLawRp 86; (1956) VLR 555, 565). More recently Kaye J in R v McGowan & Anor [1984] VicRp 78; (1984) VR 1000 at 1004 adopted the approach that it is only possible to terminate an action by judgment or discontinuance but that an action which is struck out remains pending being a means convenient to the parties and the arrangements of court lists. On the basis of the authorities it was open, therefore, to the Master to order that the County Court proceeding be reinstated.

63. The second issue was whether the Commission should have been joined as a party. Order 9.6 of Chapter I of the Rules provides that:

"At any stage of a proceeding the Court may order that - (a) any person who is not a proper or necessary party, whether or not he was one originally, cease to be a party; (b) any of the following persons be added as a party, namely- (i) a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon; or (ii) a person between whom and any party to the proceeding there may exist a question arising out of or relating to or connected with any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding; (c) a person to whom paragraph (b) applies be substituted for one to whom paragraph (a) applies."

67. If the Commission had an interest in the County Court proceeding it derived that interest by virtue of s.93(11) of the Transport Accident Act. In my view the Commission would fall within the ambit of Order 9.6(b)(ii) being a person between whom and any party to the proceeding whereby there exists a question connected to the claim in the proceeding which it is just and equitable to determine. Order 1.13 defines a question to include an issue " ... raised by the pleadings or otherwise ... by any party or by any person not a party who has a sufficient interest". In light of the ramifications that flow from s.93(11) of the Transport Accident Act, the Commission had a sufficient interest if the Commission was entitled to repayment of moneys under the sub-section.

71. The pivotal issue, therefore, is whether the Transport Accident Commission had sufficient interest in the County Court proceeding arising from of s.93(11) of the Act. The key words in s.93(11) for present purposes are the words "if damages are awarded" together with the words "in the case of damages awarded" (twice occurring). In other words, did the entry by the plaintiff, the defendant and SGIO into the terms of settlement constitute "damages awarded".

74. In determining the meaning of the words "if damages are awarded" and "damages awarded" in s.93(11) of the Act it is appropriate to consider the definition of "damages" contained in s.3(5) of the Transport Accident Act. It provides, in part:

"(5) For the purposes of this Act - (a) a reference to damages includes a reference to an amount paid under a compromise or settlement of a claim for damages and, except in section 93, includes a reference to compensation and to an amount paid under a compromise or settlement of a claim for compensation, whether legal proceedings had been instituted or not but does not include a reference to an amount paid in respect of costs incurred in connexion with legal proceedings;

... "

78. The expression "damages are awarded" is not defined in the Act. "Damages" is defined on an inclusive basis in s.3(5)(a). The definition of "damages" includes an amount paid under a compromise or settlement and (with one exception) also includes compensation and an amount paid under a compromise or settlement whether legal proceedings have been instituted or not. The exception arises with respect to s.93. Section 3(5)(a) does not include in the definition of "damages", a reference to compensation and an amount paid under a compromise or settlement of a claim for compensation in s.93. Two observations can be made. Firstly, the definition of "damages" in s.3(5)(a) draws a distinction between a claim for damages and a claim for compensation. Secondly, the Act does not define "compensation".

81. The scheme of the Act 1986 is to pay compensation benefits to persons injured or killed as a result of transport accidents as defined by the Act. Part III of the Act entitled "Compensation" established a statutory compensation scheme and set out the circumstances of entitlement to compensation and the benefits to be paid to persons entitled. Part IV of the Act sets out the procedure for making a claim. Essentially the Act provides for the lodging with and assessment of a claim by the Commission. If a person is aggrieved by a decision of the Commission that person may seek a review by a tribunal. Part VI of the Act is entitled "Legal rights outside this Act". The effect of the Part is to preserve limited rights to certain persons to recover general damages in a court of competent jurisdiction in respect of injury or death resulting from a transport accident (the scheme was considered by Winneke P, with whom Brooking and Hayne JJA agreed in Edwards v Jepson (1998) 1 VR 197, 198-199). For the purposes of the scheme of the Act the dichotomy between compensation and damages is potentially significant. The scheme of the Act treats payments under the statutory compensation procedure as compensation. It treats payments made upon the exercise of legal rights outside the Act as damages.

84. In addition to the distinction drawn between the two terms "compromise" and "damages" under the Act, there is the application of the two expressions differently throughout the Act. Parts 3 and 4 of the Act repeatedly use the expression "compensation". The expression "damages" does not appear. By contrast, Part 6 of the Act uses the expression "damages" but not the expression "compensation". The dichotomy leads me to conclude that 93, being placed within Part 6 of the Act, is concerned with damages only and not compensation. Furthermore, the dichotomy between compensation and damages explains the appropriate exception of s.93 in the definition of damages in s.3(5)(a) of the Act. This occurs because s.93 is not concerned with compensation under the Act, rather, it is concerned with damages.

87. Whilst the Act does not define the expression "award of damages" there is a compelling argument that notwithstanding the definition of "damages" in s.3(5)(a) the use of that term in s.93(11) connotes the giving of damages by way of court order. In argument to the contrary Mr Kaye for the Commission submitted that s.3(5)(a) of the Act makes it plain that damages referred to in s.93(11) includes damages paid under a compromise or settlement of a claim for damages. He submitted that in order that damages be "awarded" for the purposes of s.93(11) it is not necessary that the relevant damages be the subject of adjudication or judicial decree as otherwise the defined meaning of damages in s.3(5)(a) could not be given effect. I do not accept this submission. If the intention of the legislature was to include in the expression "damages" those damages awarded by a court there would have been no reason to use the expressions "damages awarded" and "award of damages" in s.93(11). It would have been sufficient for the legislature to have limited the expression to "damages" without any reference to "award".

90. When analysed, the definition in s.3(5)(a) defines "damages" as including:

- a reference to an amount paid under a compromise or settlement of a claim for damages (i.e., a claim made under Part 6 of the Act). - a reference to compensation and an amount paid under a compromise or settlement of a claim for compensation whether legal proceedings have been instituted or not (i.e. a claim made under Part 4 of the Act).

94. The definition of "damages" in s.3(5)(a) when applied to s.93(11) gives rise to an ambiguity. On initial reflection "damages" as defined in s.3(5)(a) specifically includes a compromise or settlement as occurred in the present case. On further reflection such construction does not explain the placement of the word "awarded" immediately after the word "damages" in s.93(11). The ambiguity arising when s.3(5)(a) is applied to s.93(11) leads me to turn to consider the meaning that the courts have applied to the terms "damages" and "award".

97. The Act does not contain a definition of the term "award" or "awarded". Curiously, the expression has rarely been considered by the courts save in the context of arbitration and industrial cases (e.g. see Winter v White [1819] EngR 540; (1819) 1 Brod & Bing 350; Charles v Cardiff Collieries Limited 44 TLR 448; Young v Public Service Board (1982) 2 NSWLR 456). In the arbitration authorities the expression "award" has been construed as "a decree made by a Judge or Judges". In the industrial context an award has been regarded as an entitlement that has the imprimatur or force of authority of an empowered body be it a court, tribunal, board, commission or other body.

100. Whenever the distinction to be drawn between "damages" and "damage" has been considered by the courts, the courts appear to have equated "damages" and the awarding thereof as an act or step performed by a court. Examples of such approach are seen in the judgments of the High Court in Dillingham Constructions Pty Ltd v Steel Mains Pty Ltd [1975] HCA 23; (1975) 132 CLR 323, 326, also, Mahony v J. Kruschich (Demolitions) Pty Ltd [1985] HCA 37; (1985) 156 CLR 522, 527. Both cases were concerned with contribution between tortfeasors pursuant to the relation statute in New South Wales Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s.5(1)(c)). In Mahony (at 527) the High Court observed:

"Dillingham makes it clear that 'damage' in s.5(1)(c) is not to be equated to the 'damages' awarded by a court. In negligence, 'damage' is what the plaintiff suffers as the foreseeable consequence of the tortfeasor's act or omission. Where a tortfeasor's negligent act or omission causes personal injury, 'damage' includes both the injury itself and other foreseeable consequences suffered by the plaintiff. The distinction between 'damage' and 'damages' is significant. Damages are awarded as compensation for each item or aspect of the damage suffered by a plaintiff, so that a single sum is awarded in respect of all the foreseeable consequences of the defendant's tortious act or omission. But concurrent tortfeasors whose negligent acts or omissions occur successively rather than simultaneously may both be liable for the same damage, being a foreseeable consequence of both torts, although one is liable for some only of the damage for which the other is liable and an award of damage against the one would necessarily be less than an award of damages against the other." (Emphasis added.)

104. In Eccles v Taylor [1995] VicRp 68; (1995) 2 VR 482 Ashley J was concerned with the payment of interest on damages awarded for pain and suffering under s.93(15) of the Transport Accident Act 1986. Sub-section (15) of s.93 prevents a court from ordering the payment of interest on damages awarded under s.93 other than damages referrable to loss actually suffered before the date of the award. At p.485 of the judgment Ashley J expressed the view (in the context of the matter before him) that the damages awards contemplated by s.93(15) of the Transport Accident Act

" ... involve a consideration of elements by judge or jury".

107. In F & K Jabbour v Custodian of Israeli Absentee Property (1954) 1 WLR 139 the court was concerned with an insurance claim for unliquidated damages. At p.143, Pearson J observed:

"The usual meaning of the word 'damages' is as stated in Halsbury's Laws of England, 2nd ed., vol. 10, p.82, where it is said: 'Damages may be defined as the pecuniary compensation which the law awards to a person for the injury he has sustained by reason of the act or default of another, whether such act or default is a breach of contract or a tort; or, put more shortly, damages are the recompense given by process of law to a person for the wrong that another has done to him.'"

111. The fourth edition of Halsbury largely defines "damages" in similar terms. (See vol. 12, paras. 1102-1103). The texts on the subject of damages discuss the topic generally in the context of their being awarded by a court but the authors do not appear to consider specifically whether the expression "damages awarded" means that the damages have been assessed or adjudicated upon or been the subject of an order by a court (see McGregor on Damages, 15th ed., paras. 1794-1812; Assessment of Damages, H. Luntz, 3rd ed., pp.1-11). Consistent with the approach taken by the courts, namely, that a reference to the award of damages or awarding damages usually connotes an order by the court, s.38 of the Supreme Court Act 1986 vests jurisdiction in this court to "award damages" in addition to granting an injunction or specific performance.

114. The Oxford Dictionary (2nd ed.) relevantly defines "award" as: "a decision after examination, a judicial sentence, especially that of an arbitrator or umpire; that which is awarded or assigned as payment, penalty etcetera by the terms of the judge's sentence or arbitrator's decisions". In the context of to "award a thing" the same dictionary defines the expression as meaning: "to examine a matter and adjudicate upon its merits, to decide, determine, after consideration or deliberation; to determine and appoint by judicial sentences; to grant or assign (to a person) by judicial or deliberate decision; to adjudge; to sentence, appoint (to do something) to sentence, consign". The New Shorter Oxford Dictionary defines the noun "award" as "a judicial decision, a payment, penalty, etcetera, appointed by a judicial decision". The same dictionary defines the verb "award" as "consider, ordain, decide or determine after consideration or deliberation; decide judicially (a process)". The Macquarie Dictionary defines the verb "award" as "to adjudge to be due or merited; assign or bestow; to bestow by judicial decree; assign or appoint by deliberate judgment, as in arbitration".

117. The approach taken by the courts to the terms "damages" and "award" supported by the dictionary meaning of the terms warrant an interpretation of the expression "damages awarded" in s.93(11) as meaning damages ordered by a court.

120. Further support for the construction that the expressions "damages are awarded" and "damages awarded" in sub-s.(11) of s.93 connote an order of the court is borne out by a consideration of sub-ss.(7) and (9) of s.93 of the Transport Accident Act. It is to be recalled that sub-s.(11) of s.93 is concerned with circumstances where damages are awarded in accordance with sub-s.(7) or (9). Sub-section (7) of s.93 commences with the words "A court must not ... award to a person in respect of an injury ... "awards above specified amounts for pecuniary loss damages, pain and suffering damages or damages of any other kind. Sub-section (9) of s.93 provides that 'A court must not ... award certain damages'" in excess of $500,000. On the basis that sub-s.(11) of s.93 is concerned with awards of damage in accordance with sub-s.(7) or (9) I consider that sub-s.(11) is intended to be confined to circumstances where damages are awarded by a court. Mr Kaye emphasised that sub-ss.(7) and (9) of s.93 do not empower the court to award damages, rather, those damages are awarded at common law. In fact sub-ss.(7) and (9) do no more than impose restrictions and prohibitions on the court in awarding damages at common law. The situation does not change, namely, that it is the court that awards damages in the appropriate circumstances.

123. Furthermore, sub-s.(11) of s.93 was amended by the Transport Accident (General Amendment) Act 1994. Section 10 of the amending Act amended s.93 by, among other matters, deleting the expression "damages are awarded" or "award of damages" in sub-ss.(7) and (11) of s.93. The amending provisions substituted the term "damages" alone as distinct from "damages awarded". The observation can be made that the parliament recognised that s.93(11) required the amendment in order to dispose of any ambiguity arising from the application of s.3(5)(a) to the sub-section and, furthermore, to express the legislative intent that s.93(11) was thereafter to apply to compromises and settlements beyond awards of damages made by a court. However, I must construe s.93(11) prior to its amendment.

126. Mr Kaye for the Transport Accident Commission submitted that an award of damages is quite distinct from an assessment of damages by a court. He submitted that the distinction was evident from the provisions contained in s.93(7)(a)(ii), s.93(7)(b)(ii) and s.93(12)(b)(ii). However, such construction in my view misconstrues the function of a court in assessing damages and thereafter awarding damages. Before a court awards damages, where it has an obligation under the statute to conduct an assessment, the assessment necessarily precedes the award. Mr Kaye submitted, also, that an award is quite distinct from a judgment. He placed emphasis upon the drafting of s.94(3), s.95(b), s.96(1), s.97, s.98 and s.107(3) of the Transport Accident Act. Each of these sub-sections refers to judgment being entered. However, the analysis in my view does not assist the position of the Commission. A judgment is the formal process after an award of damages is made. I note also that s.3(1) of the Supreme Court Act defines "Judgment" as including order. Mr Kaye urged the construction, further, that there was no reason why s.93(11) should apply only to circumstances where parties, for example, consented to a judgment compared with those circumstances where parties were content to rely upon terms of settlement. He submitted that if this was the case the outcome would be a triumph of form over substance. Be that as it may, if I was to accept that the expressions "damages awarded" together with "award of damages" mean not only orders or judgments for damages but also circumstances where parties enter into terms of settlement it would involve imposing a construction on s.93(11) that is contrary to the commonsense meaning of the expressions as applied by the courts and as recognised in standard references.

129. On the basis of the analysis of the scheme of the Transport Accident Act, prior to its amendment by the 1995 amending Act, the approach taken by the courts to the expressions "award" and "damages" together with the dictionary meanings of those expressions I conclude that s.93(11) of the Transport Accident Act prior to its amendment did not encompass circumstances where parties entered into terms of settlement as distinct from circumstances where a court adjudicated upon and ordered damages. I am of the view, therefore, that the Master was in error in the construction he applied to s.93(11) of the Transport Accident Act and ought not have made orders as he did. It follows from my analysis that on the basis of the appropriate principles it is proper that leave to appeal be granted to the appellant (see Niemann v Electronic Industries [1978] VicRp 44; (1978) VR 431). It follows further from my reasons that the appeal should be allowed.