Transport Accident Commission v Murray [2005] VSCA 174

"(1) If an injury arising out of a transport accident in respect of which the Commission has made payments under this Act arose under circumstances which, regardless of section 93, would have created a legal liability in a person (other than a person who is entitled to indemnified under section 94) to pay damages in respect of pecuniary loss suffered by reason of the injury, the Commission is entitled to be indemnified by the first-mentioned person for such proportion of the amount of the liability of the Commission to make payments under this Act in respect of the injury as is appropriate to the degree to which the injury was attributable to the act, default or negligence of the first-mentioned person.

(2) The liability of a person under sub-section (1) shall not exceed the amount of damages referred to in sub-section (1) which, but for this Act, the person would be liable to pay to the injured person in respect of the injury.

(3) Judgment against or settlement by a third party in an action in respect to an injury or death referred to in sub-section (1) does not eliminate or diminish the right of indemnity given by this section, except to the extent provided in this section."

4 In his defence the respondent pleaded that any liability he may have had to indemnify the appellant pursuant to s.104 was extinguished by the judgment entered in his favour in the action brought by Martin. The issue raised by this plea was tried separately as a preliminary question.

5 The issue was determined in favour of the respondent. The trial judge held that the judgment in favour of the respondent had the effect of taking him out of the class of persons against whom an order for indemnity pursuant to s.104(1) could be made. His Honour applied the decision of the High Court in James Hardie & Coy Pty Ltd v Seltsam Pty Ltd[1], in which it was held that Seltsam, in whose favour an order was made after it had been sued by an injured person, was not liable to contribute to James Hardie, another tortfeasor liable in respect of the same damage, pursuant to s.5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (N.S.W.). The section permitted a tortfeasor liable in respect of damage to recover contribution from another "who is or would if sued had been liable in respect of the same damage." The Court held that the order in favour of Seltsam established that it was not liable to the plaintiff and thereby absolved it from liability to James Hardie.

6 At the hearing of this appeal the respondent disavowed reliance upon the decision in James Hardie. In my view that approach was correct. In order to recover contribution pursuant to s.5(1)(c) of the New South Wales contribution legislation a tortfeasor was required to establish that another tortfeasor either "is liable" or "if sued would have been liable". The order in favour of Seltsam meant that it was not liable and, as it had been sued, the alternative basis for recovery of contribution could not be satisfied. The High Court's analysis is of no assistance in interpreting s.104(1) of the Act.

7 The principal contention of the respondent was that the word "circumstances" in s.104(1) included events, such as the verdict in favour of the respondent, which succeeded the occurrence of the injury. In my view the circumstances contemplated by the sub-section are limited to those attending the injury or death which would have created legal liability at the time of the injury or death regardless of the provision of s.93.

8 The verdict returned for the respondent in the present case was in a proceeding which was governed by the provisions of s.93 of the Act. Section 104(1), on the other hand, is based upon legal liability regardless of s.93. The regime established by s.93 is substantially different from the common law regime which it replaced. Liability depends upon meeting the requirements of the section. At the outset there are the requirements that the Commission has determined the degree of impairment and that the injury is a serious injury as that term is defined in s.93(17). The section extinguished a field of potential rights and liabilities, although the extinguishment was defeasible. In Wilson v. Nattrass[2] Ashley, J. said that the effect of s.93 was that, "subject to a condition or contingency being established, the common law right of action previously enjoyed by persons injured in transport accidents in this state is extinguished."[3] The condition or contingency was satisfaction of the requirements of a determination by the Commission of a degree of impairment and the sustaining of a serious injury within the meaning of the Act.

9 Once instituted, the subject matter and the scope of the action is governed by the section. Damages for pecuniary loss are recoverable only if the assessment of damages before any reduction in respect of the person's responsibility for the injury is more than $30,520 (sub.-s.(7)(a)). No damages for pecuniary loss suffered within 18 months of the accident are recoverable (sub.-s.10). Damages for pecuniary loss are reduced by the amount of statutory compensation paid under s.s.49, 50 and 51 of the Act (sub.-s.(11)(a)). Damages for pain and suffering are recoverable only if the assessment of damages before any reduction in respect of the person's responsibility for the injury is more than $30,520 (sub.-s.(7)(b)). Damages for pain and suffering are reduced by the amount of statutory compensation paid under s.s.47 and 54 of the Act (sub.-s.(11)(b)). The section also reduces the common law discount rate to make appropriate allowance for inflation in assessing damages for future loss (sub.-s.(13)), and limits interest on awards of damages (sub.-s.(15)).

10 Martin's action against the respondent was regulated by the provisions of s.93. It was not concerned with the hypothetical question posed by s.104, namely, the respondent's liability to Martin regardless of s.93. Accordingly, in my opinion the result of that proceeding could not determine the question of the respondent's liability for the purposes of s.104. The verdict entered for the respondent illuminated only the question of the respondent's liability under s.93; it said nothing as to his liability regardless of s.93.

11 The respondent contended that, by reason of the provisions of s.104(2), the verdict in favour of the respondent reduced his liability to the appellant to nil. In my view the words in the sub-section, "but for this Act", perform the same work as the words "regardless of section 93" in s.104(1). The sub-section ensures that, irrespective of the sums which might be paid or payable by the appellant as a result of a transport accident, the tortfeasor is under no greater liability than he would have incurred at common law.

12 It is common for workers' compensation legislation to provide for the recovery of compensation paid to a worker or his or her dependants by an employer from a tortfeasor responsible for the injury to or death of the worker. In a number of cases it has been held that the statutory right of indemnity is not to be equated to the cause of action of the worker or his dependants against the person liable to pay damages to the worker or his dependants. Thus in Tickle Industries Pty Ltd v. Hann[4] an employer sought to recover compensation paid to the dependants of a deceased worker pursuant to legislation which permitted recovery where there were "circumstances which appear to create a legal liability" in some other person. It was held that the employer was entitled to indemnity from a tortfeasor although the dependants' cause of action was barred by the expiry of a limitation period. Barwick, C.J., delivering the majority judgment, said:

"The section supposes a legal responsibility in another person for the compensable injury or death. Given the existence of that legal responsibility at the time of the occurrence of a compensable injury or death .... the section does not require a continuance or persistence of the liability. Granted initial responsibility at the time of the receipt of the injury or death, the section provides its own remedy to the employer by the creation of a right of indemnity by the person responsible for the injury or death."[5]

Similar decisions have been made in respect of kindred legislation[6]. In my view s.104 of the Act is to be construed in like fashion. The verdict to which Martin and the respondent consented did not affect the rights and obligations of the appellant and the respondent. The addition of the words in s.104, "regardless of section 93", reinforce this conclusion.

13 The respondent relied upon s.104(3). His counsel said that if the appellant's submissions were accepted, s.104(3) would have no work to do, for a "judgment against or settlement by" a tortfeasor would not have any effect upon a proceeding for indemnity under s.104. The answer to this contention is that when s.104(3) was introduced, the position was that the right to be indemnified by the person liable to pay damages, which was given to an employer who had paid compensation by the workers' compensation legislation, ceased to be available to the employer when the injured worker had either obtained damages or a judgment for damages from the person liable to pay damages.[7]

14 For the foregoing reasons I would allow the appeal, set aside the orders made by the trial judge and remit the proceeding to the County Court.

[1] [1998] HCA 78; (1998) 196 C.L.R. 53.

[2] (1995) 21 N.B.R. 41.

[3] Above at 54. Hedigan, J. expressed similar views at 59. See also Swannell v. Farmer [1998] VSCA 104; [1999] 1 V.R. 299.

[4] [1974] HCA 5; (1974) 130 C.L.R. 321. See also Xpolitos v. Sutton Tools Pty. Ltd. [1977] HCA 25; (1977) 136 C.L.R. 418.

[5] At 333.

[6] See, for example, Smith's Dock. Co. v. John Redhead & Sons [1912] 2 K.B. 232; Tooth v. Tillyer [1956] HCA 49; (1956) 95 C.L.R. 605; Borg Warner (Aust.) Ltd. v. Zupan [1982] VicRp 44; [1982] V.R. 437 at 441 - 442 per Murphy, J.; QBE Workers' Compensation (N.S.W.) Ltd. v. Dolan [2004] NSWCA 458; Accident Compensation Commission v. Haynes [1992] VicRp 50; [1992] 1 V.R. 691.

[7] Watson v. Council of the City of Newcastle [1962] HCA 6; (1962) 106 C.L.R. 426.