Victorian WorkCover Authority v Manildra Pty Ltd [1999] VSC 220

Supreme Court of Victoria|1999-06-18|Before: O'Bryan J

Victorian WorkCover Authority & Anor v. Manildra Pty Ltd & Ors

Action to recover a sum by virtue of enactment (s.5(1)(d) Limitation of Actions Act 1958 - Whether indemnity claim pursuant to s.138 Accident Compensation Act 1985 must be commenced within 6 years after the cause of action accrued

This proceeding was listed with priority of hearing on 7 June 1999. When the proceeding was called on Mr Kendall one of Her Majesty's counsel who appeared with Mr Grainger for the plaintiffs applied for an adjournment on the ground that the plaintiffs were presently unable to prove the amounts of compensation paid to an injured worker since 11 November 1985 to date. The plaintiffs became liable to pay compensation to the worker pursuant to the provisions of the Accident Compensation Act 1985 and in the proceeding claim an indemnity in respect of payments made up to the present time against three alleged tort-feasors, who are the defendants, pursuant to s.138 of the Accident Compensation Act.

The legal advisers to the plaintiff had believed that proof of the payments was facilitated by s.239A of the Act and certificates setting out the amounts of compensation paid by the Victorian WorkCover Authority in the period 1 November 1985 to 30 November 1992 and in the period 1 December 1992 to 30 June 1993 and by the first plaintiff's authorised insurer in the period 1 July 1993 to 28 October 1998 were attached to the Writ.

On the eve of trial counsel formed the view that oral evidence of payments made to the worker would be required and then discovered that witnesses may be difficult to locate. Hence the application for an adjournment.

It needs to be said that this court should not tolerate the adjournment of cases at the last minute unless very sound reasons for the adjournment are offered to the court. The best practice case management of the court lists requires that judges time in court is utilised by litigants and practitioners must understand that courts are not for the convenience of lawyers and litigants.

Most regrettably the case could not commence on time and must be re-fixed some time in the future. There is considerable uncertainty as to whether the plaintiff will locate all its necessary witnesses. I propose to order that within 30 days of this judgment the plaintiffs must file and serve an affidavit as to the progress being made to locate witnesses, the likely delay period before the case can again be fixed and any other matters relevant to the future hearing of the proceeding. The Listing Master will be seized of the situation and will not list the case again until satisfied that the plaintiffs are indeed ready for trial. Should there be undue delay the defendants are at liberty to apply to the court to dismiss the proceeding for want of prosecution. The accident to the worker occurred 13.5 years ago and the defendants are already prejudiced in a general way should there be delay. The quality of justice is always diminished by inordinate delay.

During discussion it became apparent that a limitation of action defence needed to be resolved. Each of the three defendants pleaded that the action to recover payments of compensation has a limitation period of six years from the date on which the cause of action accrued, pursuant to s.5(1)(d) of the Limitation of Actions Act 1958 ("the Act"). Accordingly, the limitation defence was argued on 8 June. Section 5 provides:

"(1) The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued - (d) actions to recover any sum recoverable by virtue of enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture."

An action to recover any penalty or forfeiture or sum by way of penalty or forfeiture recoverable by virtue of any enactment shall not be brought after the expiration of two years from the date on which the cause of action accrued (s.5(5)(a) of the Act).

The action brought by the plaintiffs is a claim for indemnity for compensation which has been paid or is or may be payable by the plaintiffs for in respect to the injuries suffered by a worker in the course of his employment on or about 11 November 1985 pursuant to s.138 of the Accident Compensation Act 1985. Section 138 relevantly provides:

"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 or that would, but for s.134A, create such a liability 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 Authority referred to in s.138 is the Victorian WorkCover Authority created by the Accident Compensation Act 1985(s.18). Sub-section (3) of s.138A provides a formula by which the amount which a third party is required to pay as indemnity is calculated.

The s.239A certificates indicate that the Victorian WorkCover Authority paid compensation to or on behalf of the worker

(i) Between 11/11/85 to 30/11/92; and

(ii) Between 1/12/92 to 30/6/93; and

the authorised insurer (the second named plaintiff) paid compensation to or on behalf of the worker between 1/7/93 and 28/10/98.

The argument presented on behalf of the defendants is that payments of compensation made more than six years prior to the date upon which the Writ was issued are barred by s.5(1)(d) of the Act. The defendants do not contend that the plaintiffs' cause of action is statute barred because the Writ was issued more than six years after the date upon which the worker was injured, only that payments of compensation made earlier than six years after the Writ was issued are barred. As the Writ was issued on 18 January 1996, it was argued that no indemnity can be required in respect of payments made before 18 January 1990.

The Act makes no provision for extension of the limitation period prescribed by s.5(1)(d). Part II of the Act does not apply to an action to recover any sum recoverable by enactment.

Mr McTaggart of counsel who appeared for the first defendant submitted that the plaintiffs' cause of action accrued on the date on which each individual payment of compensation was made. The second plaintiff became liable to make compensation payments only after 30 June 1993 when the Accident Compensation (WorkCover Insurance) Act 1993 came into force. Consequently its claim will be unaffected by the limitation defence taken by the defendants. On 1 December 1992 the first plaintiff became liable to make payments of compensation to the worker and it now seeks to recover the payments made by its predecessor, the Accident Compensation Commission, prior to that date.

Mr McTaggart submitted that the action brought by the plaintiffs is a statutory action, founded on s.138 of the Accident Compensation Act 1985 and is, therefore, an action to recover a sum recoverable by virtue of enactment.

The statutory right to indemnity from third parties was part of earlier Workers Compensation legislation in this State, s.62(2) in 1965 and s.67 since 1981 until 1985. Although the original provision has changed, the substance of the right to indemnity against third parties under s.138 has not changed, Mr McTaggart submitted. In Scott v. Bowyer (1998) 1 VR 207 the Court of Appeal considered the history and scope of the employer's statutory right of indemnity provided by s.67 of the Workers Compensation Act at 220-221. The court recognised that s.67 created a statutory right of indemnity against a third party.

The nature of the action created by a provision like s.138 or, 2.67 of the Workers Compensation Act was considered by the Full Court in Borg Warner (Aust) Ltd v. Zupan [1982] VicRp 44; (1982) VR 437. The court was concerned with the right of action by way of indemnity given by s.64(1)(b) of the Workers Compensation Act 1926 (NSW), a section similar to s.67 of the Victorian Workers Compensation Act. Murphy J held that the right of indemnity against a third party is not an action in negligence, but a cause of action created by statute for an indemnity against the person liable to pay damages (at 441). His Honour also held that the action for an indemnity has none of the essential elements of an action in tort, nor is it an action in contract (at 442).

The action in the Writ is to recover a sum recoverable by virtue of enactment, namely, the Accident Compensation Act, and must be brought before the expiration of six years from the date on which the cause of action accrued, Mr McTaggart submitted.

In Borg Warner, supra, Murphy J said: "The statutory cause of action arises as often as the person liable to pay compensation is called upon to pay compensation and in fact does so" (at 4541). Cf Attorney-General v. Ryan Automobiles Ltd (1938) 2 KB 16.

Upon this basis, Mr McTaggart sought a declaration that the sum recoverable by the plaintiffs is limited by s.5(1)(d) of the Act to payments made on and after 18 January 1990 because the cause of action accrued when compensation was paid by a person liable to pay compensation.

Mr R. Gorton QC and Mr M. Gorton adopted the argument presented by Mr McTaggart.

Mr Kendall, one of Her Majesty's counsel who appeared with Mr Grainger submitted that s.138 is unaffected by the Act. He submitted that Division 9 of the Accident Compensation Act, in which s.138 lies, constitutes a code which creates a scheme whereby the WorkCover Authority or an authorised insurer can obtain indemnity from a third party against their liability to make payments of compensation to a worker pursuant to the Accident Compensation Act. Further, that the legislature did not intend to impose a limitation period in relation to recovery of indemnity from a third party.

I do not know how such an assertion could be upheld without reference to Parliamentary debates and papers. Parliament enacted s.5(1)(d) of the Act in 1958, if not earlier, and may be presumed to have been aware of its existence when a right of action by way of indemnity was enacted in 1985. Had Parliament intended not to impose a limitation period in relation to recovery of indemnity against a third party, it could have done so, but it did not.

Mr Kendall relied upon s.138A, the last section in Division 9 of the Accident Compensation Act. This section provides: "For the avoidance of doubt, it is hereby declared that all the provisions of this Division contain matters that are substantive law and are not procedural in nature". He contrasted that provision with the Limitation of Actions Act which is procedural law.

This cannot be denied. But substantive law may be amendable to procedural law. This action having been commenced in the Supreme Court is amenable to the procedural rules of practice and procedure of this court (Rules of Procedure in Civil Proceedings 1996). In the absence of express enactment to the contrary I consider the cause of action commenced by the plaintiffs is amendable to the Act.

The procedural machinery provided by the Rules of Court and the Act gives a right to a party defending an indemnity claim to raise any defence available, including a limitation of action defence.

This particular form of action comes within the language of s.5(1)(d) of the Act, reading the language in its ordinary sense. Sub-paragraph (d) does not in any way depend upon contract or tort, it is purely and simply directed to "actions to recover any sum recoverable by virtue of enactment."

It is neither obnoxious nor unfair that an action of this kind should be subject to a limitation period. In Brisbane South Regional Health Authority v. Taylor [1996] HCA 25; (1996) 186 CLR 541 at 553 and 555 McHugh J commented in strong terms upon the rationale for limitation periods. He said: "The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible" (553). His Honour referred to "presumptive prejudice" when delay occurs (555).

If a party is guilty of delay not regulated by the Act the chance of an unfair trial occurring after the limitation period has expired is increased alarmingly. As it is, in the present proceeding at trial the defendants will be disputing liability arising out of a workplace accident which occurred in 1985. Justice delayed is justice denied. The WorkCover authority should not be encouraged to be dilatory in pursuing a claim for indemnity founded on s.138.

After the court adjourned Mr Kendall provided a memorandum referring to two authorities. The first, Ex parte Workers' Compensation Board of Queensland (1984) 1 Qd R 450 concerned a question whether recovery proceedings brought by the Workers' Compensation Board was affected by a three year or a six year limitation period, the period prescribed by a Statute of Limitations for an action to recover a sum recoverable by virtue of any enactment.

Williams J held that s.10(1)(d) applied and the limitation period was six years. Section 10(1)(d) in the Queensland act is the equivalent to s.5(1)(d) in the Act. However, both parties conceded that a limitation period applied to the action and the issue was the period of years.

The second, Deputy Commissioner of Taxation v. Moorebank [1988] HCA 29; (1988) 165 CLR 55 can be distinguished. The Deputy Commissioner brought an action to recover unpaid tax pursuant to Federal legislation. The point at issue was whether the proceeding was subject to Queensland limitation of actions legislation. The High Court held it was not. The High Court also held that "an exhaustive and conclusive" scheme may oust, the application of the limitations provisions".

I am of the opinion that s.138 of the Accident Compensation Act is subject to a limitation period. Parliament did not exclude the Act, as it could have done, and s.5(1)(d) read in its ordinary sense applies to a statutory indemnity action of the kind brought by the plaintiffs.

I uphold the defendant's right to rely upon s.5(1)(d) of the Act.

A declaration will be made in the following terms: That the sum recoverable by the plaintiffs is limited by S.5(1)(d) of the Limitation of Actions Act 1958 to payments made by them on and after 18 January 19990.

The defendants did not apply to stay the proceeding pursuant to the rules or the inherent jurisdiction of the court on account of the plaintiff's application to adjourn the proceeding on 8 June.

Instead, the defendants proposed that within 30 days the plaintiffs shall make, serve and file an affidavit detailing the steps they (or their lawyers) have taken to locate the witnesses necessary to prove the amount of the claim, the availability of the witnesses, the unavailability of witnesses and when the case can again be fixed for trial with an assurance that it will not be adjourned again.

Mr Kendall did not resist an order being made along those lines. The Listing Master's attention will need to be brought to the affidavit to assist her in fixing another hearing date.

An order in the following terms will be made: "Within 30 days of the date hereof the plaintiffs shall make, file and serve upon the defendants an affidavit detailing the steps they have initiated or taken to identify all necessary witnesses, the availability or unavailability of such witnesses and the date when the case may again be listed for hearing without the risk of further adjournment.

Costs of the hearing on 8 June have been dealt with. Costs of the hearing on 9 June are reserved for argument by counsel.

Workers Compensation Act 1926(NSW)

Compensation Act 1985

Accident Compensation Act 1985

Compensation (WorkCover Insurance) Act 1993

At a glance

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Judgment (45 paragraphs)

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Legislation Cited (5)

Cases Cited (4)