Victorian WorkCover Authority & Anor v Orienstar Shipping Corporation [2004] VSCA 237

2. The appellants have together brought a proceeding, endorsed for service out of the jurisdiction under r.7.01(1)(j) of the Supreme Court Rules, against the respondent Orientstar Shipping Corporation ("Orientstar"), a corporation incorporated and carrying on business in the Republic of the Philippines. The claims made by each of the appellants differ but both arise out of liabilities incurred to an employee of the second-named appellant A.C.N. 007 724 834 Pty. Ltd. ("007 724 834"), David Bone, who on or about 19 November 1996 fell and was injured as a result of an allegedly defective ladder rail giving way on board the ship MV Aspen Trader, said to have been owned by the respondent, while the ship was loading phosphate rock in the Port of Geelong. Mr Bone first made claims for compensation pursuant to the Accident Compensation Act 1986 ("the Act") which are said to have resulted in payments to him of some $58,653 to the date the writ was issued. It appears that all the relevant rights with respect to those payments are now vested in the Victorian WorkCover Authority ("VWA"). Some time later in 1998 Mr Bone brought an action in negligence for damages against the stevedoring company which was his employer, namely 007 724 834, and that action was ultimately settled for $310,000 together with costs, or so it is alleged.

5. The present proceeding combines the two claims, the first being by VWA to recover pursuant to s.138 of the Act an indemnity from Orientstar in respect of payments made, or deemed to have been made, by VWA which were said to have been incurred in circumstances leading to a tortious liability on the part of Orientstar. The other claim by 007 724 834, the unsuccessful defendant to Mr Bone's suit in negligence, is based on its right under Part IV of the Wrongs Act 1958 ("the Wrongs Act") to claim contribution pursuant to s.23B thereof from any other person liable in respect of the same damage.

8. The appellants sought to serve the proceeding out of the jurisdiction in the Philippines by serving on 28 January 2003 a copy of the writ endorsed in conformity with r.7.01, as well as a copy translated into Spanish, upon a person described as the general manager of Orientstar. Service was not sought to be effectuated through diplomatic channels (it seems there is no relevant convention with the Philippines), nor under r.7.03 in accordance with Philippines law (which requires service by a court official), but in accordance with rules of this Court relating to personal service, and in particular r.6.04(a), permitting personal service on a corporation to be effected by service on the "... clerk, treasurer, manager, secretary or other similar officer" of a corporation.

11. Orientstar entered a conditional appearance on 11 March 2003 and on 25 March 2003 it took out a summons seeking to set aside service of the writ and to stay the proceeding on a number of grounds. One ground was common to both appellants' claims in the proceeding, namely, that service was not properly effected so that this Court did not have jurisdiction to hear the proceedings. The learned judge rejected that ground and, as it is not the subject of the appeal, it need not be considered further.[1]

14. The other grounds variously apply to each of the appellants' claims, albeit that each depends upon the proper construction of r.7.01(1)(j). Each of those grounds was upheld by the learned judge[2], so that her Honour held that service out was ineffective. Since 1987 originating process may be served out of the jurisdiction beyond the Commonwealth of Australia without the need for any order of the Court where (inter alia) "(j) the proceeding is brought in respect of damage suffered wholly or partly in Victoria and caused by a tortious act or omission wherever occurring; ...". In construing that rule her Honour concluded[3] that "neither plaintiff brings its proceeding in respect of damage caused by a tortious act or omission; both are statutory claims, for indemnification and contribution respectively". It is not entirely clear how the judge reached that conclusion but it would seem, as best one may discern from the cryptic few paragraphs which precede that observation, that she thought that the "damage" itself must be the very damage which is an essential constituent part of proof in a claim in negligence. Seemingly she was not prepared to accept that damage merely flowing from a tort was caused by it, so that it could not be the subject of a claim comprehended by sub-para.7.01(1)(j). Reference was made by her Honour to three decisions relied on in the course of argument namely Brambles Constructions Pty. Ltd. v. Helners[4], Van Win Pty. Ltd. v. Eleventh Mirontron Pty. Ltd.[5] and Australian Mutual Providence Society v. G.E.C. Diesels Australia Ltd.[6]. The latter case, she conceded, permitted a defendant to bring a third party contribution claim within the sub-paragraph on the basis that it was for "damage caused by a tortious act or omission", but she distinguished that decision by saying that "in the present case the second [appellant], as plaintiff under the Wrongs Act, is not claiming in respect of damage, so the position is not the same as in G.E.C. Diesels".[7]

17. As the respondent presented its case to this Court, an argument along those lines was advanced only with respect to VWA's claim for a statutory indemnity pursuant to s.138 of the Act. As I understood the argument, it was not contended before this Court that a Wrongs Act contribution claim arising out of the same damage resulting from the acts or omissions of two tortfeasors was not comprehended by sub-para.7.01(1)(j). Rather it was contended that the damage in respect of which 007 724 834 sued was not proven to have been suffered by that company at the time proceedings were commenced.

20. It is preferable then to consider first VWA's claim and the respondent's argument that the damage said to have been suffered by it was not of a kind permitting use of sub-paragraph (j) in a claim on a writ to be served out of the jurisdiction. One may accept that VWA's claim was not in tort in the sense that it did not seek to claim the relevant damage as, in effect, the final element in a claim made by it against an alleged tortfeasor. As the learned judge held and as the respondent maintained, the right which VWA sought to enforce in the proceeding was a "statutory right of indemnity conferred by [the Act] upon the person who has paid the compensation" and it "is not to be equated to the cause of action which the worker would, but for [the Act] have had against the person liable to pay damages to him", as Winneke, P. held (with Tadgell and Chernov, JJ.A. concurring) in Esso Australia Ltd. v. Victorian WorkCover Authority[8] and which the majority of the High Court[9] held to be correct on appeal in Victorian WorkCover Authority v. Esso Australia Ltd.[10] Such an analysis does not, however, lead to the conclusion that a claim for such an indemnity is not "in respect of damage", if that damage can be shown to have been caused by a tortious act or omission. Clearly, as the sub-paragraph is intended to give jurisdiction in respect of torts committed out of Australia (see also the opening words of r.7.01(1)), it must comprehend the various kinds of damage which may be incurred or suffered by victims of the whole range of torts, so that it cannot be confined to the kind of damage suffered by persons founding their tort claims on personal injury and must be wide enough to comprehend the physical and financial harm which may result from a wide variety of other torts.

23. These considerations suggest that "damage" comprehends the widest range of loss and harm which may fairly be contemplated, at least of the kind which may result from a tort and be compensable in an action in tort. In his judgment in Flaherty

v. Girgis[11] McHugh, J.A. said, in relation to a rule which was then very little different from the Victorian rule, that damage "includes all the detriment, physical, financial and social, which the plaintiff suffers as a result of the tortious conduct of the defendant". That passage together with a number of other authorities both within and outside Australia were examined with care by Carruthers, J. in Darrell Lea Chocolate Shops Pty. Ltd. v. Spanish-Polish Shipping Co. Inc.[12] to produce the conclusion that "concisely stated, `damage' is used in the rule to encompass the disadvantage or detriment suffered by the plaintiff as a result of the tortious act or omission of the putative defendant" and that accordingly it had a "much wider meaning" than "injury".[13] If the words "disadvantage or detriment" be perceived to be narrower than "loss or harm", then I would not agree with any such restriction, but I do not believe that his Honour was doing more than pointing out how wide the concept of "damage" was in the equivalent New South Wales rule of court.[14]

27. As to VWA's claim the respondent contends that the payments in fact made were payments not of "damages" but of no-fault compensation of the kind commonly awarded under workers' compensation legislation and the like. So the claim should be seen as one for the recovery of the moneys so paid pursuant to a "quasi-contractual" cause of action by way of statutory indemnity: see Transport Accident Commission v. Sweedman[15]. Moreover VWA's obligation, so it was contended, was not a liability in tort or caused by any tortious act or omission, in that it arose independently by virtue of the Act's imposing an obligation to pay accident compensation in specified circumstances. I cannot accept this analysis. The enquiry is not as to what "damages" had been paid but whether the proceeding is "in respect of damage". There is no need to examine why "damage" is different conceptually from "damages", as obviously it is, and I have already said why I consider "damage" is a word of general connotation extending beyond the final element in a cause of action in negligence, such as to comprehend any relevant loss or harm, including any disadvantage or detriment, so long as the claim satisfies the rest of the terms of sub-para.7.01(1)(j).

30. There being no dispute that the claimed loss, i.e. the "damage" was suffered in Victoria, it remains only to determine whether it was "caused by a tortious act or omission". Now it must be conceded that the right of indemnity is not one given directly in terms of recoupment of that which is payable by reason of the commission of a tort. It is, however, necessary to look further. VWA's right is conditional upon the payment of compensation to an employee or upon such compensation becoming payable: see s.138(3)(a). Sub-section (1) of s.138 of the Act at the relevant time read:

"Where an injury or a death for which compensation has been paid, or is or may be payable, by the Authority, an authorised insurer, a self-insurer or an employer was caused under circumstances creating a legal liability in a third party to pay damages in respect of the injury or death, the Authority, authorised insurer, self-insurer or employer is entitled to be indemnified by the third party in accordance with this section."

The quantum of the indemnity was to be found in sub-s.(3) which required it to be calculated by ascertaining the difference between "the amount of compensation paid or payable" (see para.(a)) and an amount calculated in accordance with a complex formula which is unnecessary to set out here and which appears in para.(b). In substance it reduces that amount referred to in para.(a) by a proportion equivalent to the proportion of responsibility for the injury which would otherwise have been borne by a person or persons other than the tortfeasor and it seeks also to deduct sums payable which are the responsibility of the Transport Accident Commission and the like.[16] What is critical, nevertheless, to a proper understanding of the section is that the right to an indemnity in VWA is conditional upon the existence of circumstances which have created a legal (normally tortious) liability in a third party to pay damages for the relevant injury.

35. There can be no doubt in my mind that the legal liability to which Parliament was referring was one arising in tort or some similar liability. There could be no other proper basis for giving a right over to the VWA or to any of the other persons named in the section. In other words, the Act imposes a more general liability on VWA and others to pay no-fault compensation but its (or their) right to claim indemnity was limited to claims where it can be shown that a third party was or would have been liable in tort (or the like) to the employee. In consequence an indemnity was granted in general terms but limited (as described in the definition of factor "X" in sub-s.(3)(b)) to the "extent ... whereby the third party's [i.e. the tortfeasor's] act, default or negligence caused or contributed to the injury ...".

38. If one then returns to sub-para.(j) in r.7.01(1), then it is necessary to see the connection, if it can be established, between a tortious act or omission and the damage suffered. Here the "damage" claimed is the loss suffered by VWA in having to pay and bear the liability for compensation under the Act. It says that its claim is "in respect of" that loss or damage because that is the nature of the claim which it brings. The arguably potential difficulties raised by the expression "in respect of"[17] are here not relevant because it could not fairly be argued[18] that the claim is brought in respect of any loss or damage suffered by Mr Bone himself and caused by the alleged tort of Orientstar.

41. Finally, but critically, there is the issue whether VWA's loss and damage was in fact caused by a tortious act or omission alleged against Orientstar. Causation is a broad concept, though one should be cautious not to construe the word "caused" in this sub-paragraph of the rule so as to comprehend some act which merely has an historical connection with the damage which is the subject of the plaintiff's claim. That contention, however, cannot here fairly be raised because there is a direct relationship between the alleged tortious act or omission of Orientstar and with the obligation to pay compensation imposed on VWA and its right to claim an indemnity in respect of that obligation or at least in respect of part of it. As I have said, the right under s.138 is predicated upon the causing of the relevant injury to the employee under circumstances which created what can properly be described as a tortious liability in a third party. It is not merely that a tortious act gives rise to an injury which in general terms has led to the payment of compensation to the employee, but the section specifically seeks to grant an indemnity effectively only in respect of that part of the obligation of VWA which is related to the tortious right which an employee would otherwise seek to enforce.

44. It was argued that the "injury" to Mr Bone was in fact "caused under circumstances creating a legal liability" in Orientstar and that the proceeding was brought "in respect" of that damage which was constituted by the injury to Mr Bone, so that it was brought in respect of the injury caused by a tort. For myself I would not be prepared to read the sub-paragraph so widely as to treat "in respect of" as equivalent to "arising out of". The claim for an indemnity was not in respect of that injury and its consequential damage but in respect of the loss or harm which flowed from VWA's obligation to pay compensation. However, if one has regard to the language of s.138, that obligation to pay compensation is said to have been caused "under circumstances creating a legal liability" in tort on the part of a "third party", namely Orientstar. Many circumstances can give rise to a no-fault obligation on the part of VWA to pay compensation, but the right under the section is confined to those which are caused in effect by a tort or some other liability "to pay damages in respect of the [relevant] injury". Here that tortious liability rested in Orientstar, as it is alleged. The obligation to pay compensation, as a result of which the s.138 right to claim indemnity came into existence, was therefore one caused by a tortious act or omission. VWA's obligation to pay compensation in those particular circumstances gave rise to damage consisting in the loss or harm which it suffered by virtue of that obligation and "in respect of" which it has sued in this proceeding.

47. In my opinion, therefore, the liability was of a kind covered by r.7.01(1)(j) and there was little argument that, in respect of VWA's claim, there was not sufficient evidence of the payment of the kind of compensation which would in turn give rise to a right to an indemnity, upon the assumption that a strong and arguable claim in tort against Orientstar had been made out. In my opinion on the facts that test as to what VWA could prove was satisfied, so that the judge was wrong to have ordered that the first appellant's claim in the proceeding should be forever stayed.[19] Consequently the respondent's application insofar as it was brought against VWA should have been dismissed and directions given for the further continuance of the proceedings upon the basis that the conditional appearance had become unconditional: see r.8.08.

50. The issues in relation to the claim by 007 724 834 are simpler to resolve. No serious argument was put to the Court that the relevant damage in respect of which that plaintiff sought contribution pursuant to s.23B of the Wrongs Act was not damage caused by a tortious act or omission. Clearly the second appellant did not sue for the damage suffered by Mr Bone as plaintiff but it sues in respect of its liability to pay damages to Mr Bone which was pleaded entirely in tort. It is in respect of that obligation of 007 724 834 that that company by this writ has sought contribution from Orientstar. The G.E.C. Diesels case is entirely apt to describe the kind of liability and the relevant loss and harm amounting to "damage" in respect of which the second appellant is entitled to sue and to rely on sub-para.(j).

53. What was said, however, was that that plaintiff, 007 724 834 had not proved sufficient to amount to a good and arguable case of the kind which will allow a plaintiff to proceed on a writ served out of the jurisdiction in a foreign country. There seemed to be no dispute that the second appellant had settled the action with Mr Bone but argument was raised that there was insufficient proof that it had paid any moneys to Mr Bone. Various computer print outs were produced in the obscure terms which are not unusual for that kind of document, which arguably pointed to some inconsistencies in the figures. But that is of no consequence for the damage suffered by 007 724 834 does not have to be proved by evidence of actual payment; it is sufficient that it shows that it has suffered loss or harm of the kind previously described. Once it settled the action, then there was an independent liability to pay the agreed sum of $310,000 (and costs) which cannot be described otherwise than in terms of loss or harm to that plaintiff, so that at least by that stage it had suffered "damage" of the relevant kind caused by a tortious act or omission. It is of no consequence, as G.E.C. Diesels demonstrates, that the tortious liability giving rise to its present claim arose out of 007 724 834's own tortious behaviour, for in this case the right under s.24 of the Wrongs Act is to make a claim in respect of "the same damage" which it is said has given rise also to a liability in tort in Orientstar. There is therefore more than sufficient evidence, in the form of its agreement to pay damages to Mr Bone, that it had suffered damage in the relevant sense such as to found a claim within sub-para.(j). The order staying the proceeding against the second appellant was likewise not justified, there being sufficient evidence of a strong and probable case against Orientstar. The order, insofar as it affected the second appellant, should likewise be set aside.

56. Consequently neither of the grounds presently in issue and which found favour with the judge in the Trial Division can now be supported. In respect of the claims of each of the appellants a case has been made out to found causes of action which may properly be made the subject of a writ to be served out of Australia under r.7.01(1)(j). The result is that the respondent Orientstar's application insofar as it affects each appellant should be dismissed. Pursuant to para.(3) of r.8.08 that will have the effect, upon the setting aside of the order staying the proceeding, that the appearance by the respondent becomes unconditional and the action will proceed in the ordinary way.

59. The appeal, therefore, on behalf of each appellant should be allowed and orders made accordingly.

64. In my opinion the appeals should be allowed for the reasons stated by Ormiston, J.A.

69. I have had the opportunity of reading in draft the reasons of Ormiston, J.A. and I agree with his reasons. In my opinion, the appeal should be allowed.

[1] Although technically that service satisfied the relevant Victorian rules for service out in that it complied with the extended meaning of personal service under the Rules permitting simple delivery to specified officers of corporations, it does not follow that it is always wise to follow that procedure. If any judgment is to be enforced in the Philippines (presumably by action on such judgment), it will have to satisfy that jurisdiction's private international law rules as to what judgments it will recognise and in particular will have to satisfy a Philippines court that the Victorian mode of service was appropriate to bring it to the respondent's attention or whatever is otherwise required there to justify enforcement. As this question was not argued, it is not necessary to examine it further but it seems from expert evidence tendered below that service in that country is ordinarily effectuated by a court official, not by a practitioner or other private individual.

[2] See [2003] VSC 311.

[4] [1966] HCA 3; (1966) 114 C.L.R. 213 at 218.

[5] [1986] VicRp 49; [1986] V.R. 484 at 490.

[6] [1989] VicRp 38; [1989] V.R. 407 at 410.

[8] [2000] VSCA 74; [2000] 1 V.R. 246 at 257.

[9] Gleeson, C.J., Gummow, Hayne and Callinan, JJ.

[10] (2001) 207 C.L.R. 520 at 527.

[11] [1985] 4 N.S.W.L.R. 248 at 266. McHugh, J.A. dissented on other issues which were raised on an unsuccessful appeal to the High Court: see Flaherty v. Girgis [1987] HCA 17; (1987) 162 C.L.R. 574, see esp. at 579 (as to the issues not in dispute in the High Court).

[12] [1990] 25 N.S.W.L.R. 568.

[14] By 1990 the New South Wales rule on the issue considered by Carruthers, J. had again changed slightly, but not relevantly so far as this issue is concerned.

[15] [2004] VSCA 162 at para.[28] per Nettle, J.A. with whom the President agreed.

[16] The operation of the formula in the section under consideration and in the section as later amended was discussed by this Court in VWA v. Kenman Kandy Aust. Pty. Ltd. [2002] VSCA 190; (2002) 6 V.R. 666.

[17] See the views expressed in Alexander v. Perpetual Trustees W.A. Ltd. [2004] H.C.A. 7; 78 A.L.J.R. 411 at 416-417 para.[27] and at 427 para.[91], and the cases there cited.

[18] The contrary was only faintly suggested.

[19] The judge also ordered that the defendant's notice of conditional appearance be set aside and that the plaintiffs pay the defendant's costs of and incidental to the application, in part on an indemnity basis.