Supreme Court of Victoria|1998-12-10|Before: Cummins, J.

This case involved two workers' compensation insurers (WorkCover and F.A.I.) suing Esso Australia for indemnity under the Accident Compensation Act for payments made to an injured worker. After winning the main case, the insurers sought interest on the amounts they had paid out. Esso argued this would be 'interest on interest' which is not allowed, and that penalty interest shouldn't apply anyway. The court rejected both arguments, ruling that the interest components were legally distinct (not interest on interest) and that penalty interest was available because the indemnity claim was a 'debt or damage' under the Supreme Court Act. The court ordered Esso to pay the principal amounts plus significant interest, and to cover future compensation payments up to a cap.

The Victorian Workcover Authority v Esso Australia Ltd [1998] VSC 198 (10 December 1998)

ACCIDENT COMPENSATION - indemnity - s.138 Accident Compensation Act 1985 - penalty interest - s.60 Supreme Court Act 1986.

On 23 November 1998 I gave judgment in this matter and published my reasons. At the conclusion thereof I afforded counsel the later opportunity of making submissions as to the form of final orders. On 27 November 1998 I had the benefit of those submissions. I now deal with the relevant matters in turn.

As a consequence of the assessment of damages I made (paragraph 14 of the primary judgment) and apportionment of liability (paragraph 10 of the primary judgment) and upon the basis of the amounts certified pursuant to s. 249A Accident Compensation Act 1985 to have been paid (exhibit N before me), putting aside for the moment the matter of interest I order that the defendant pay to the firstnamed plaintiff the sum of $116,226.22 and that the defendant pay to the secondnamed plaintiff the sum of $219,000.00 to indemnify the plaintiffs for amounts paid by them to or on behalf of the worker Mr Kazimer Wsol.

In paragraph 14(d) of the primary judgment, I had not differentiated between the period before and the period after which a proceeding reasonably would have been expected to have been brought by the worker if plaintiff (and which in fact was brought) namely May 1992. Mr Stanley at the resumed hearing very properly brought that matter to my attention and I now correct it: see paragraph 10 below.

Mr Stanley of Her Majesty's Counsel for the plaintiffs submitted that the proper approach as to interest is to award penalty interest on amounts paid prior to the issuance of the proceeding and at half that rate thereafter and into the future. Upon that basis the first plaintiff would be awarded interest of $7206.66 and the second plaintiff would be awarded interest of $80,600.22 to date.

Mr Lewis who appeared at the resumed hearing for the defendant submitted that there were two errors in Mr Stanley's submission: first, that it involved the awarding of interest upon interest contrary to s.60(2)(a) Supreme Court Act 1986; and second, that it involved unjustifiably high rates of interest - and rather should reflect (lower) commercial rates (say 10 percent). Mr Lewis' submission was elegant and economical but I am unpersuaded by it.

The respective items of interest sought by the plaintiffs do not constitute interest upon interest. Rather, they conform to the scheme and requirements of the Accident Compensation Act 1985. The matter of interest is to be determined first as a function of the assessment that is called for by the provisions of s.138(3)(b) Accident Compensation Act 1985. The matter of interest then is also to be determined as a function of my primary judgment, namely as an incident of the amounts in fact paid out by the respective plaintiffs to the worker Mr Wsol to date. The two items are conceptually and historically distinct and derive from different legal sources. The amounts are not interest upon interest as contemplated by s. 60(2)(a) Supreme Court Act 1986.

Next, I consider that penalty interest is here payable. Counsel informed me that following the handing down of the judgment of His Honour Judge Stott in Victorian WorkCover Authority & Ors v Coates Patons Pty Ltd (No. 9507964 delivered on 18 November 1998 and being a s.138 Accident Compensation Act 1985 case) His Honour declined to award interest, His Honour it would appear following Pobezin v Insurance Commissioner of the State Motor Car Insurance Office [1969] VicRp 87; (1969) VR 682 at 694 per Menhennit J. (more on that authority below). However in my view the damages I have awarded herein clearly fall within the meaning of the words "debt or damages" in s.60(1) Supreme Court Act 1986. Those words are of conspicuous breadth. The policy served by that provision is not to be readily deflected nor the provisions pared down in a restrictive fashion: see Mario Piraino Pty Ltd v Roads Corporation [1991] VicRp 90; (1991) 2 VR 534 (a claim for compensation under the Planning and Environment Act 1987) wherein it was held that the word "damages" in s.60 was not confined to a wrong which is either a tort or a breach of contract. Gobbo J. at 536 referred to the Minister's second reading speech and at 537 stated:

"In my opinion, the history of the legislation assists rather than detracts from the argument that `damages' in s.60 was always intended to have a wide meaning and there are many considerations of justice as to why an award of compensation for loss and damage should qualify for interest under that section".

I am guided by the reasoning of Lord Brandon in B.P. Exploration Co (Libya) Ltd v Hunt (No.2) (1983) 2 AC 352 and (as Brandon J.) in The Aldora (1975) QB 748.

In B.P. Exploration His Lordship stated as to the words "debt or damages" in s.3(1) Law Reform (Miscellaneous Provisions) Act 1934:

"In my opinion the words `any debt or damages', in the context in which they occur, are very wide, so that they cover any sum of money which is recoverable by one party from another, either at common law or in equity or under a statute of the kind here concerned".

(That was the Law Reform (Frustrated Contracts) Act 1943). His Lordship expressed like reasoning in The Aldora at 751 where he said of the words "any debt" in s.3(1) Law Reform (Miscellaneous Provisions) Act 1934 were "apt to cover sums whether liquidated or unliquidated, which a person is obliged to pay either under a contract, express or implied, or under a statute." In Pobezin v Insurance Commissioner of the State Motor Car Insurance Office [1969] VicRp 87; (1969) VR 682 Menhennit J at 694 held that the claims under Part III Wrongs Act 1958 were not for "debts or sums certain" within s. 78(1) and (2) Supreme Court Act 1958 (substantially the current s.58). However the present s.60 is cast in much wider terms that those statutory provisions which confined the reasoning of Menhennit J. The terms of s. 60 are, according both to principle and authority I have cited, to be given their full meaning. They comprehend the present claims.

Accordingly the proper quantum of interest to be awarded is to the first plaintiff (upon the sum of $116,226.22) the amount of $7,206.66 and to the second plaintiff (upon the sum of $219,000.00) the amount of $80,600.22 (being $74,251.15 to issuance of the proceeding and $6,349.07 thereafter and to date).

(a) that the defendant pay to the first plaintiff the sum of $116,226.22 together with interest of $7,206.66; and

(b) that the defendant pay to the second plaintiff the sum of $219,000.00 together with interest of $80,600.22.

By reason of the consideration referred to in paragraph 4 above the component parts of the holistic assessment of $1,000,000 damages (paragraph 14 of the primary judgment) are reduced marginally. In the primary judgment the amounts if rigidly calculated would have come to some $4,000 above the assessment; now they would come to some $10,000 below it. But the practice of the courts, for sensible reason, is not to pretend to undue mathematical precision (whilst always being prudent) in holistic assessment. I do not consider the marginal change in this element of damages warrants any variation in the holistic assessment I made in the primary judgment. That remains at $1,000,000.

Accordingly I declare that the second plaintiff shall be entitled to be indemnified by the defendant -

(a) for all further payments of compensation made under the Accident Compensation Act 1985 by the second defendant to the worker Mr Kazimer Wsol in respect of the injury caused to Mr Kazimer Wsol on 10 January 1989; and

(b) in an amount not exceeding the further sum of $421,795.22 (in other words, up to a total limit of $760,000).

Finally, I order that the defendant pay the costs of the proceeding of each of the plaintiffs.

Law Reform (Miscellaneous Provisions) Act 1934

Law Reform (Frustrated Contracts) Act 1943

Outcomedefendant

Disposition:

The defendant was ordered to pay the first plaintiff $116,226.22 together with interest of $7,206.66, and to pay the second plaintiff $219,000.00 together with interest of $80,600.22. The second plaintiff was declared entitled to be indemnified for all further payments of compensation to Mr Wsol up to a total limit of $760,000. The defendant was ordered to pay the costs of the proceeding of each of the plaintiffs.

The Victorian Workcover Authority v Esso Australia Ltd [1998] VSC 198

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The Victorian Workcover Authority v Esso Australia Ltd [1998] VSC 198 (10 December 1998)

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