The State of New South Wales (Government Cleaning Service) v Les Cooper

COUNSEL : L King SC/M J Jenkins (Appellant) J Poulos QC/M A Barko (Respondent) SOLICITORS : Rankin & Nathan Solicitors (Appellant) Henry Davis York Lawyers (Respondent) CATCHWORDS : WORKERS COMPENSATION - statutory right of indemnity - entitlement to statutory interest - D District Court Act 1973, s 83A(1) LEGISLATION CITED : Motor Accidents Act 1988, s 73(1) Workers Compensation Act 1926, s 64(1)(b) Workers Compensation Act 1987, s 151Z(1)(d) Grant v Royal Rehabilitation Centre Sydney (1999) 47 NSWLR 263 CASES CITED: Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498 Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 Westpac v Tomassian (1993) 32 NSWLR 207 DECISION : 1. Appeal allowed; 2. Respondent to pay the appellant's costs of the appeal but have a certificate under the Suitors' Fund Act 1951 if qualified; 3. In lieu of the parties agreeing within 21 days as to the amount of interest, remit the matter to the trial judge to determine the award of interest according to law

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40003/99 DC 100230/96 MEAGHER JA POWELL JA STEIN JA Thursday, 22 June 2000 THE STATE OF NEW SOUTH WALES (GOVERNMENT CLEANING SERVICE) v Les COOPER

In the District Court Judge Armitage found that the appellant, the State of New South Wales (Government Cleaning Service), was not entitled to an award of interest upon the recovery of compensation paid to a worker pursuant to the indemnity provided by the Workers Compensation Act 1987. The employer's right to indemnity arises under s 151Z(1)(d). In assessing the damages the worker could have obtained had he sued the respondent, the Motor Accidents Act 1988 has application since the worker's injuries were received in a motor vehicle accident. The entitlement to interest is limited by the Motor Accidents Act . The appeal:

The appellant submits that s 73 Motor Accidents Act does not deny it any entitlement to interest under s 83A District Court Act 1973 because the relevance of s 73 is exhausted once it is applied to the ascertainment of 'the amount of those damages' referred to in s 151Z(1)(d) of the Workers Compensation Act . Section 73 does not control or restrict interest on the amount of the debt so ascertained. Held (Stein JA, Meagher and Powell JJA agreeing):

Section 73 Motor Accidents Act is applied at the stage of ascertaining the amount of damages payable pursuant to the indemnity. It does not remain relevant after the assessment of those damages. Section 73 does not prevent an award of interest under s 83A of the District Court Act . The appeal is allowed. OoO

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40003/99 DC 100230/96 MEAGHER JA POWELL JA STEIN JA Thursday, 22 June 2000 THE STATE OF NEW SOUTH WALES (GOVERNMENT CLEANING SERVICE) v Les COOPER JUDGMENT

1 MEAGHER JA: I agree with Stein JA. 2 POWELL JA: I agree with Stein JA. 3 STEIN JA: Introduction 4 This appeal raises a short but important point. Is the appellant, the State of New South Wales (Government Cleaning Service), entitled to an award of interest upon the recovery of compensation paid pursuant to the indemnity provided by s 151Z(1) of the Workers Compensation Act 1987 (the WCA)? His Honour Judge Armitage decided in the District Court that interest was not payable.

The relevant legislation 5 The employer's right to indemnity arises under s 151Z(1)(d) of the WCA. This provides: (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: …

(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).

6 Because the worker's claim was one against the tortfeasor (the respondent) under the Motor Accidents Act 1988 (the MAA) the entitlement to interest is limited by that legislation. 7 Section 73(1) of the MAA provides: A plaintiff has only such right to interest on damages payable in relation to a motor accident as is conferred by this section.

8 It is agreed between the parties that, for the purposes of the appeal, the worker had no right under the MAA to interest on damages payable in relation to injuries sustained by reason of his motor vehicle accident caused by the respondent's negligence. 9 The appellant contends that s 73 of the MAA does not deny it any entitlement to interest under s 83A of the District Court Act 1973. 10 Section 83A(1) of the District Court Act provides: In any proceedings for the recovery of any money (including any debt or damages or the value of any goods) the Court may order that there shall be included, in the amount for which judgment is given, interest at such rate as it thinks fit on the whole or on any part of that amount for the whole or any part of the period between the date when the cause of action arose and the date when judgment takes effect. Consideration 11 '[T]hose damages' in s 151Z(1)(d) of the WCA refers to damages payable at common law as restricted by statute, Grant v Royal Rehabilitation Centre Sydney (1999) 47 NSWLR 263. Cole AJA said that to determine whether the sum that has been paid as compensation is recoverable from the tortfeasor, two steps are necessary. The first is to determine the quantum of damages which would have been recoverable had they been sued for. The second is to determine the amount of compensation paid. The indemnity is limited by the former determination. In assessing the damages that the worker could have obtained had he sued the respondent, the MAA has application since his injuries were received in a motor vehicle accident. 12 Accordingly, in making the assessment of the worker's damages under the MAA, s 73 is relevant. It imposes a limitation on interest in respect of various heads of damages. In this case, it is agreed that the worker had no claim to interest pursuant to s 73. 13 The appellant submits that once s 73 of the MAA is applied to the ascertainment of 'the amount of those damages', its relevance is exhausted. In determining the damages the worker could have recovered from the respondent at $82,227 his Honour correctly allowed no interest in accordance with s 73. Accordingly, the workers compensation which is recoverable by the appellant, pursuant to the indemnity in s 151Z(1)(d) of the WCA, was fixed at $82,227. This fixes the amount recoverable as a liquidated sum. The appellant argues that s 83A of the District Court Act applies to 'proceedings for the recovery of any money' such as an indemnity in s 151Z(1)(d) of the WCA. 14 In Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498, a case concerned with s 64(1) of the Workers' Compensation Act 1926 (the precursor of s 151Z(1) of the WCA), Hope JA said that the right of indemnity arises when the employer makes the payment of compensation. He added 'prima facie, his right to interest is a right to interest from that time', (at 501B). Hope JA noted that the liability of the tortfeasor under s 64(1)(b) was limited to the amount of damages assessed not in the action by the worker against the tortfeasor but in an action by the employer against the tortfeasor. That circumstance however did not limit 'the right of the employer to recover interest if he was otherwise entitled to it'.

15 Importantly for the present appeal, Hope JA said that the interest paid pursuant to an order for interest made by the District Court in proceedings under s 64(1)(b) would not be a payment made under the indemnity. His Honour stated that '[T]he amount of interest is not the subject of the indemnity; the amount of interest is the subject of and arises from an order made … pursuant to the District Court Act s 83A' (at 501E). 16 Hope JA was of the opinion that the statutory indemnity called into play the ordinary rule with respect to indemnities. That is, that where the promisee has paid the third persons' claim, the amount so paid constitutes a debt due to him from the promisor, which he may recover with interest, (Halsbury's Laws of England, 4th Ed. Vol 20 par 315 at 173). 17 In Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 the Court applied Howard. Kwanchi involved a claim seeking indemnity pursuant to s 151Z(1)(d) of the WCA in respect of compensation paid to a worker, together with interest and costs. The worker had sued the tortfeasor for damages arising out of injuries received in a motor vehicle accident. His claim was settled. The District Court refused the employers' claim for costs and interest. Clarke JA (with whom Priestley and Handley JJA concurred) held that the scheme of s 151Z(1) made it clear that the indemnity did not include costs. 18 However, as to the employer's claim for interest, Clarke JA accepted what Hope JA had said in Howard as to the nature of the indemnity and the entitlement to interest under s 83A of the District Court Act. His Honour said: Section 83A(1A) of the District Court Act expressly provides that interest may be awarded where the whole or part of the debt or demand is paid within the currency of the proceedings. It follows that the power to award interest does not depend upon the debt becoming the subject of a judgment. Where an employer sues a tortfeasor to enforce its indemnity pursuant to s 151Z(1)(d) (which is not relevantly different from s 64(1)(b) of the 1926 Act), and where the tortfeasor does not pay the amount claimed prior to judgment, the District Court is, in the event it finds for the employer, empowered under s 83A of the District Court Act to make an award of interest in favour of the employer. (at 276F)

19 Clarke JA continued that the award of interest under s 83A was 'not, strictly speaking, an amount ordered to be paid under the indemnity'. The payment of interest was not made under s 151Z(1)(d) or pursuant to it. Rather, 'it is a statutory claim to reimburse the employer who has paid compensation for being deprived of its money pending payment of that compensation by the tortfeasor' (at 276G). In a separate judgment, Handley JA concluded to like effect, see 279C. 20 I do not see that s 73 of the MAA limits the appellant's entitlement to interest under the District Court Act. The appellant's cause of action is a claim for the indemnity, it is not a claim for damages (Westpac v Tomassian (1993) 32 NSWLR 207 at 215). While s 73 of the MAA is relevant to ascertaining 'the amount of those damages', it does not control or restrict interest on the amount of the debt so ascertained. 21 In arguing to the contrary, the respondent highlighted anomalies which may arise. For example, it would be anomalous that a claimant is precluded from obtaining interest on most heads of damage by virtue of s 73 of the MAA, but an employer could obtain interest on the same sum by virtue of s 83A of the District Court Act. 22 Such a situation would, so it is submitted, clearly defeat the intention and objectives of the MAA. Counsel for the respondent suggests other anomalies which could arise. I make no comment on these except to say that if the Legislature is concerned to overcome any anomalies which might be thought to arise, the remedy is in its hands. The task of the Court is one of statutory construction. Given the decision in Howard (applied in Kwanchi) and the nature of the indemnity, I am unable to see that once the amount of the indemnity is ascertained, an award of interest under s 83A may not be attracted. Section 73 of MAA does not prevent this. 23 That section is applied at stage one of the process, in ascertaining the amount of the damages payable pursuant to the indemnity. Contrary to the respondent's submission, s 73 does not remain relevant after the assessment of 'those damages'.

Remitter? 24 While it is my opinion that the appellant is entitled to bring a claim for interest pursuant to s 83A of the District Court Act, the award of interest is discretionary. Accordingly, the respondent submits that the appropriate course would be a remitter. I would urge the parties to agree on the amount of interest and bring in Short Minutes of Order giving effect to that agreement. In lieu of such agreement, the matter has to be remitted to the trial judge since this Court is unaware of what discretionary factors might arise for consideration on the application.

2. Respondent to pay the appellant's costs of the appeal but have a certificate under the Suitors' Fund Act 1951 if qualified.

3. In lieu of the parties agreeing within 21 days as to the amount of interest, remit the matter to the trial judge to determine the award of interest according to law. OoO

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