Statutes - Interpretation - Workers' Compensation - Relationship between certain provisions of Workers' Compensation and Rehabilitation Act 1981, Motor Vehicle (Third Party Insurance) Act 1943 and Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947

Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA), s 7(1)(c)

Motor Vehicle (Third Party Insurance) Act 1943 (WA), s 3A, s 3B, s 3C, s 3D, s 16, s 29, s 29A

Motor Vehicle (Third Party Insurance) Act Amendment Act 1972 (WA)

Motor Vehicle (Third Party Insurance) Act Amendment Act 1994 (WA)

Workers' Compensation and Rehabilitation Act 1981 (WA), s 85, s 86, s 92, s 93B, s 93C, s 93D, s 93E, s 93F

Workers' Compensation and Rehabilitation Amendment Act 1993 (WA)

Workers' Compensation and Rehabilitation Amendment Act 1999 (WA)

Austral Pacific Group Ltd (In liq) v Airservices Australia (2000) CLR 203 CLR 136

Campbell v RGC Mineral Sands Ltd [2001] WASCA 395; (2001) 25 WAR 322

Hewitt v Benale Pty Ltd [2002] WASCA 163

State Government Insurance Commission v CSR Ltd [1999] WASCA 36; (1999) 29 MVR 29

State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR 434

Toolan v Metropolitan (Perth) Passenger Transport Trust [2001] WASCA 131

1 The facts out of which this appeal arises are either common cause, or it is assumed for the purposes of the appeal that they are the facts which may be found. The appeal involves the relationship between the Workers' Compensation and Rehabilitation Act 1981 ("the Compensation Act"), the Motor Vehicle (Third Party Insurance) Act 1943 ("the Insurance Act") and the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 ("the Contribution Act").

2 The relevant facts are these. In December 2000 the second respondent (plaintiff), Mr Smith, issued a writ of summons out of the District Court against the first respondent (defendant) claiming damages for personal injury suffered by Mr Smith in an accident on 5 September 1997. The accident occurred in the course of Mr Smith's employment with the appellant (third party) while on the first respondent's (defendant's - hereafter called "the respondent") premises. It is alleged that the accident occurred while Mr Smith was unloading a motor vehicle. The allegation of Mr Smith is that the motor vehicle was owned and operated by the respondent (defendant), although the respondent suggests that it was not. In any event, it was accepted for the purpose of the hearing out of which this appeal arises that the appellant (third party) was not the owner or operator of that vehicle. Mr Smith had at that stage made no common law claim against the appellant (third party) as his employer, although he has subsequently received leave to join the appellant as second defendant in the action.

3 The respondent (defendant) issued a third party notice against the appellant (third party). The appellant applied to Martino DCJ to set aside the third party notice or to dismiss the proceeding on the grounds that the third party notice disclosed no cause of action. The findings of Martino DCJ, and the contentions of the appellant on this appeal are set out in the grounds of appeal, which are as follows:

"1 The learned judge erred in law in finding s 93B(3)(a) of the Workers Compensation and Rehabilitation Act 1981 as amended applicable to the Plaintiff's claim and ought to have found that, irrespective of whether or not the injuries suffered by the Plaintiff may be directly caused by or by the driving of a motor vehicle within the meaning of s 4(1) of the Motor Vehicle (Third Party Insurance) Act 1943, Division 2 of Part IV of the Workers Compensation and Rehabilitation Act 1981 applied, for the following reasons:

1.1 Division 2 of Part IV of the Workers Compensation and Rehabilitation Act 1981 applies to the awarding of damages against an employer, in this case the Appellant (Third Party).

1.2 On the pleadings the motor vehicle the subject of the claim by the Plaintiff against the First Respondent (Defendant) was owned and operated by the First Respondent (Defendant) and not the Appellant (Third Party) and accordingly:

1.2.1 the Plaintiff has no claim in respect of the motor vehicle against the Appellant (Third Party):

1.2.2 the Appellant (Third Party) is not an insured person within the meaning of the Motor Vehicle (Third Party Insurance) Act 1943 s 3(1), s 3(7) and s 4(1).

1.3 On a true construction of s 93B and Division 2 of the Workers Compensation and Rehabilitation Act 1981, s 93B(3)(a) cannot apply where the employer is not the owner or driver of a motor vehicle and therefore not insured under the provisions of the Motor Vehicle (Third Party Insurance) Act 1943, since in those circumstances there could be no award of damages against the employer to which the Motor Vehicle (Third Party Insurance) Act 1943 applies, within the meaning of s 93B(3)(a).

2 The learned judge erred in law in finding that, notwithstanding that there had been no determination of the Plaintiff's level of disability pursuant to s 93D for the purpose of s 93E(3) of the Act, s 93F(4) of the Workers Compensation and Rehabilitation Act 1981 did not prohibit the Respondent (Defendant) from issuing third party proceedings against the Appellant (Third Party), because if the Plaintiff were (at some future time) to obtain an agreement or determination pursuant to s 93(3)(a) then the prohibition on the Respondent (Defendant) obtaining contribution contained in s 93F(4) would not apply.

3 The learned judge ought to have found that s 93F(4) of the Workers Compensation and Rehabilitation Act 1981 prohibited the Respondent (Defendant) from issuing third party proceedings against the Appellant (Third Party) for the following reasons:

3.1 On its true construction, s 93F(4) prohibited the bringing of a claim for contribution against the Appellant (Third Party) because the Plaintiff had not followed the procedures for determining his relevant level of disability for the purpose of s 93E(3) and no agreement had been reached between the Plaintiff and the Appellant (Third Party) concerning the plaintiff's relevant degree of disability for the purposes of s 93E(3).

3.2 Accordingly, as the employer the Appellant (Third Party) is not liable to make any contribution under the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (the "Contribution Act").

4 The learned judge erred in law in failing to find, in any event, that because of the provisions of the Workers Compensation & Rehabilitation Act and the restrictions and limitations on the ability of an employee to obtain an award of damages at common law against an employer the Appellant (Third Party) is not a tortfeasor who 'is or would if sued be liable in respect of the same damage', within the meaning of s 7 of the Contribution Act."

4 It can be seen that there are essentially two questions. The first is whether the damages which are claimed or could be claimed by the plaintiff Mr Smith are damages to which the Insurance Act applies so as to render inapplicable the constraints on awards of common law damages, and the inability to claim contribution from employers, which are to be found in Pt IV Div 2 of the Compensation Act. The second question is whether, in circumstances where the worker has had no agreement with the employer, and no determination of a degree of disability exceeding the minima prescribed by s 93D of the Compensation Act, it is open to any party to claim contribution from the worker's employer; the issue here is essentially whether the restriction on the power of the court in s 93C of the Compensation Act has effect so as to prevent the bringing of an action, unless the relevant agreement or determination is in existence. A further issue arises in relation to the latter question concerning the proper construction of s 93F(4) of the Compensation Act. We turn now to consider the first of those issues.

5 The Insurance Act establishes a compulsory third party liability insurance scheme that operates in conjunction with the common law. It covers the liability of the owner or driver of a motor vehicle in respect of the death or bodily injury to a person directly caused by or by the driving of, a motor vehicle. It is a fault based scheme with a statutory insurer, the Insurance Commission of Western Australia (Commission).

6 Prior to 1972, claims for damages against insured persons were dealt with by the Third Party Claims Tribunal. That Tribunal was abolished in 1972 by the Motor Vehicle (Third Party Insurance) Act Amendment Act 1972 (WA). Thereafter, the courts (Supreme, District and Local) were given jurisdiction to hear and determine an "action or proceedings", defined in s 16(1) to mean "action or proceedings making a claim for damages, in respect of the death of or bodily injury to a person directly caused by, or by the driving of, a motor vehicle, against the owner or driver of the vehicle or against the Commission". The courts were also given additional powers to award by way of general damages a lump sum or periodical payments and to review any periodical payments: s 16(4).

7 Section 29 requires that a notice of a claim must be given by a person where the claim "may, under the provisions of this Act, give rise to an action or proceeding for damages against either an insured person [owner or driver] or the Commission". Leave to proceed may be given notwithstanding the failure to give notice within the prescribed period (s 29A).

8 Sections 3A-3E were inserted in the Insurance Act by the Motor Vehicle (Third Party Insurance) Act Amendment Act 1994 (WA) (1994 Insurance Amendment Act) which came into operation on 3 May 1994. However, the amendments apply retrospectively to causes of action arising after 1 July 1993. The amendments were foreshadowed in an announcement made by the relevant Minister on 29 June 1993. Sections 3A and 3B provide:

"3A. Application of sections 3C and 3D

Sections 3C and 3D apply to the awarding of damages in respect of bodily injury to a person directly caused by, or by the driving of, a motor vehicle.

3B. Limit on powers of courts

If sections 3C and 3D apply a court is not to award damages to a person contrary to those sections."

9 Section 3C imposes restrictions on damages for non-pecuniary loss (including pain and suffering and loss of amenities or enjoyment of life). In particular, s 3C provides a statutory maximum amount of damages that can be awarded, a statutory minimum amount below which no damages can be awarded and a statutory formula where the amount of damage is more than the minimum and less than the maximum. Section 3D imposes restrictions on damages for gratuitous provision of homecare services of a domestic or nursing nature. That section provides that no gratuitous care damages are to be awarded if the services would be provided notwithstanding the injury or if they are valued at less than a specified amount. In other circumstances there are statutory formulae for the calculation of the value of the damages that can be awarded.

10 According to the second reading speech for the 1994 Insurance Amendment Act, its purpose and object was to maintain and reduce the cost of compulsory third party insurance premiums to Western Australian motorists.

11 The Compensation Act also establishes a compulsory third party liability insurance scheme. It covers the liability of an employer to its employees in respect of disabilities relevantly connected with their employment.

12 Part IV of the Compensation Act deals with civil proceedings in addition to or independent of the Act. Nothing in that Part affects the operation of s 29 and s 29A (the notice of claim provisions) of the Insurance Act and Pt IV has to be read subject to those sections (s 85).

13 Except as expressly provided to the contrary, nothing in the Compensation Act affects any liability that exists independently of that Act (s 86). However, damages awarded in relation to a liability that exists independently of the Compensation Act and compensation under the Compensation Act are not both recoverable. By s 92, when an action is brought by a worker for damages independently of the Compensation Act, the amount paid and payable under the Compensation Act is to be deducted from the amount of the judgment: s 92(b) and (c). If the action proceeds to judgment the worker cannot commence or continue proceedings for compensation under the Compensation Act in respect of the same disability: s 92(e).

14 Part IV Div 2, comprising ss 93A to 93G, deals with constraints on awards of common law damages. The heading to Div 2 expressly so provides.

"93B. Application of this Division

(1) This Division applies to the awarding of damages against a worker's employer independently of this Act in respect of a disability suffered by a worker if -

(a) the disability was caused by the negligence or other tort of the worker's employer; and

(b) compensation has been paid or is payable in respect of the disability under this Act, or would have been paid or be payable but for section 22.

(2) This Division applies even if the damages resulting from the negligence or other tort of the worker's employer are sought to be recovered in an action for breach of contract or other action.

(3) This Division does not apply to the awarding of -

(a) damages to which the [Insurance Act] applies;

(b) exemplary or punitive damages; or

(c) damages of a class that is excluded by the regulations from the application of this Division."

16 Regulations have not been made under s 93B(3)(c). If Pt IV Div 2 applies, a court is not to award damages to a person contrary to Div 2 (s 93C).

17 Section 93B(3) in its current form was inserted by the Workers' Compensation and Rehabilitation Amendment Act 1993 (WA) (1993 Compensation Amendment Act) and came into effect on 24 December 1993. Thus, s 93B(3)(a) pre-dates the 1994 Insurance Amendment Act. Before the 1994 Insurance Amendment Act amendments came into effect, the reference in s 93B(3)(a) could only be a reference to the awarding of damages against (relevantly) the owner or driver of a motor vehicle to which ss 16 and 29 of the Insurance Act refer. Thus, the exclusion in sub-paragraph (a) did not relate to a particular head of damage but rather to common law damages generally against particular persons.

18 The policy basis for this exclusion is clear. The 1993 Compensation Amendment Act introduced constraints on awards of common law damages in situations where compensation was also payable under the Insurance Act. The constraints were introduced in order to reduce pressures on workers' compensation insurance premiums payable by employers. Premiums for compulsory insurance under the Insurance Act are paid by vehicle owners as a component of the annual vehicle registration fee. Thus, where workers' compensation liability and motor vehicle accident liability under the respective compulsory insurance schemes overlapped, the workers' compensation common law damages restriction was unnecessary. In effect, claims by employees against employers which attracted compulsory insurance under the Insurance Act were treated in the same way as other claims against insured persons under the Insurance Act.

19 The 1993 Compensation Amendment Act also placed restrictions on damages for non-pecuniary loss (s 93E) in relation to damages for the gratuitous provision of homecare services (s 93F) for common law claims then permitted under the Compensation Act. The restrictions in the Compensation Act were, subject to modifications to reflect the limits to common law damages claims in that Act, substantially the same as those in ss 3C and 3D of the Insurance Act. These were deleted and replaced with the current provisions by the Workers' Compensation and Rehabilitation Amendment Act 1999.

20 The current scheme is as follows. Section 93E sets out the restrictions on awarding of damages. Under s 93E(3) damages can only be awarded if:

(a) it is agreed or determined that the worker's degree of disability is not less than 30 per cent; or

(b) if it is agreed or determined that the worker has a disability of not less than 16 per cent and the worker elects to retain the right to seek damages.

21 Section 93F deals with, inter alia, restrictions on awarding damages if the worker's disability is less than 30 per cent. In such circumstances, the Compensation Act fixes a maximum lump sum amount that can be awarded without reference to any particular head of damage (s 93F(1)). The maximum amount is subject to any other law that prevents or limits the awarding of damages (s 93F(3)). There is no restriction in the Compensation Act on the amount of damages that can be awarded if the disability is not less than 30 per cent.

22 Pt IV Div 2 of the Compensation Act is confined to constraints on awards of common law damages.

23 Having regard to the legislative history of the Compensation Act and the Insurance Act we consider that the exclusion in s 93B(3)(a) covers (at least) common law damages against an insured person to which the Insurance Act applies, being the claim for damages to which ss 16 and 29 refer.

24 There is a further question about the scope of the exclusion. The respondents submitted that by virtue of ss 3A-3E of the Insurance Act, Pt IV Div 2 of the Compensation Act did not apply to the plaintiff's damages claim generally. The alternative and narrower view is that Pt IV Div 2 of the Compensation Act does not apply to any claim by the plaintiff for damages for non-pecuniary loss and gratuitous services, but is applicable to other heads of damage the subject of the claim. On this construction, the Compensation Act would permit compensation under that Act as well as damages under ss 3C and 3D of the Insurance Act. Prima facie, the payment of compensation under the Compensation Act and receipt of damages, whether confined to specific heads or not, is inconsistent with s 92 of the Compensation Act. However, it is unnecessary to consider that matter further having regard to what follows.

25 In our view, the answer to the question of statutory construction of s 93B(3)(a) of the Compensation Act is determined by the characterisation of ss 3A-3E of the Insurance Act. They are statutory provisions for limiting, and in some cases preventing, the award of common law damages of the types specified. They operate with and on the common law to create a hybrid that does not fall within the notion of common law damages. Part IV Div 2 of the Compensation Act is only concerned with constraints on awards of common law damages. Accordingly, s 93B(3) in its expanded form should read:

"This Division does not apply to the awarding of -

(a) common law damages to which the [Insurance Act] applies." (Emphasis supplied)

26 They are the damages referred to in s 29 of the Insurance Act as being the damages payable "under" the Insurance Act, being the common law damages referred to in s 16 dealing with the jurisdiction of courts. The awarding of damages in accordance with ss 3C and 3D does not constitute "the awarding of" common law damages. At best, ss 3C and 3D "relate to" the awarding of common law damages. This construction does not result in a conflict between the Insurance Act and the Compensation Act. If common law damages are payable under the Compensation Act, the limitation in ss 3A-3E of the Insurance Act will in appropriate circumstances apply to limit or restrict those damages. Further, this construction is consistent with considerations of legislative history, policy and purpose.

27 For these reasons we conclude that the claim against the third party/second defendant does not involve the awarding of common law damages to which the Insurance Act applies. Accordingly, Pt IV Div 2 of the Compensation Act applies. In these circumstances it is unnecessary to decide whether, on their proper construction, ss 3A-3E of the Insurance Act apply only to the awarding of damages against an insured person as defined in that Act.

28 The second principal issue raised by the appellant is a question of interpretation in relation to which there is no authority. So far as the researches of counsel have been able to discover, there is no equivalent elsewhere to the provision in s 93C of the Compensation Act, which provides that if the division applies, a court "is not to award damages" contrary to the division. The appellant submits that the effect of s 93C is to preclude the bringing of an action by an employee in circumstances where the Act does not permit the award of damages.

29 We do not think that s 93C can be read so widely. The institution of proceedings has been forbidden or restricted in clear terms in other legislation; eg the Crown Suits Act s 6. The former s 93D(4) of the Compensation Act (inserted by Act No 48 of 1993) provided:

"Proceedings in which damages are sought are not to be commenced without the leave of the District Court."

30 Given that the Compensation Act has been amended to remove the express prohibition on commencing an action, it must be assumed that Parliament has now deliberately chosen not to prevent the bringing of an action. There may be good reasons of policy for directing the prohibition to the stage of the award of damages, rather than that of institution of the action. For example, as Nisbet DCJ pointed out in Thomas v Arimco Mining Pty Ltd (2000) 24 SR (WA) 142, it may be that a limitation period might be about to expire and a worker might need to institute proceedings at a time at which it was not clear whether or not the worker had a relevant level of disability. In this context, it should be noted that where the degree of disability is between 16 and 29 per cent, the statutory scheme is that an election by the worker must be made at an early stage, but that there is not such a time limit in relation to a degree of disability of not less than 30 per cent.

31 Of course, it would plainly be vexatious to institute proceedings where there was no possibility that it could ever be established that a relevant degree of disability existed, and in an appropriate case such a proceeding might be struck out. Further, it would generally be oppressive to require a defendant to incur expense in defending proceedings where it was not clear whether or not damages could be awarded, and one would usually expect the court to order a stay of proceedings until the provisions of s 93E(3) had been complied with.

32 Finally, the appellant raises the question of the effect of s 93F(4) and asserts that, since there has been no determination of a relevant level of disability, s 93E(3) does not allow damages to be awarded in respect of that disability and therefore the appellant "is not liable" to make any contribution pursuant to the Contribution Act. Since the appellant is not liable to make contribution, it follows, it is said, that no action against the appellant for contribution is competent.

33 In relation to the Contribution Act, the following principles appear to be common ground. Section 7(1)(c) of the Contribution Act provides that a tortfeasor who is liable to a plaintiff may recover contribution from a second tortfeasor who "is liable" or "would if sued be liable" to the plaintiff for the same damage. The second tortfeasor "is liable" if it has been sued to judgment by the plaintiff. That is not the case here although, as we have noted, the plaintiff has now joined the appellant as a party to these proceedings. It may therefore be that liability will be able to be established under this limb. The second tortfeasor "would if sued be liable", if it was a tortfeasor who would have been held liable in tort had it been sued in a competent court, by proper process, on evidence properly presented, at any time before judgment is entered against the tortfeasor that is claiming contribution: Brambles Constructions Pty Ltd v Helmers [1966] HCA 3; (1966) 114 CLR 213 at 221, per Windeyer J. The question of whether the appellant could fall within that category depends upon whether the plaintiff at any time before judgment against the respondent, establishes a relevant level of disability pursuant to s 93E(3). So far as the level of disability of not less than 30 per cent is concerned, there is no evidence to suggest whether or not the plaintiff may successfully establish that such a level of disability exists. It is simply not possible to ascertain at present whether s 93E(3) will or will not allow damages to be awarded in respect of the disability. It is clear that they could not be awarded at present, there being no relevant agreement or determination. However, such an agreement or determination appears to remain a possibility.

34 It appears that in using the words "is not liable", s 93F(4) is not intended to indicate whether or not an action may be brought. Rather, like s 93C, it looks to the time at which the award would normally be made. The cause of action in contribution does not arise until judgment in the main action. In our view s 93F looks to the time at which liability to make contribution would arise, and provides that if at that time s 93E(3) does not permit damages to be awarded, or if at that time damages have been awarded in accordance with s 93F(1), then there is no liability for contribution.