Williams v Usher

Williams v Usher - [1955] HCA 60 - HCA 1955 case summary — Zoe

[9]

Most workers' compensation schemes contain special provision for the not uncommon case where a worker, or a dependent of a deceased worker, has a claim for compensation under the statute and has also a cause of action at common law against a third party in respect of the injury or death. The general policy of such provisions is to throw the ultimate responsibility for compensating the injured worker on the culpable third party, the employer being, in effect, indemnified out of the proceeds of any action to the extent of his liability to pay compensation under the statute. A provision of this nature is contained in s. 29 of the Workmen's Compensation Law of New York. The effect of s. 29 (1), so far as it relates to such a case as the present, may be stated thus: - If an employee is killed by the negligence of another person not in the same employ in such circumstances that his dependants are entitled to compensation, his dependants need not elect whether to take compensation or to pursue their remedy in damages, but may take compensation and at any time prior thereto or within six months thereafter pursue their remedy in damages. An action for damages must be commenced within six months after the awarding of compensation and in any event within one year from the time when the cause of action arose. If such an action is brought, the person liable to pay compensation has a lien on the amount received in any such action, whether obtained by judgment settlement or otherwise, to the extent of the total amount of compensation awarded, and to such extent such recovery is to be deemed to be for the benefit of the person liable to pay compensation. Section 29 (2) provides that, if the dependants have taken workmen's compensation but have failed to commence an action against such other person within the time limited, such failure shall operate as an assignment of the cause of action against such other person to the person liable to pay compensation. Section 29 (4) provides that, if the dependants do proceed against such other person, the person liable to pay compensation shall contribute only the deficiency, if any, between the amount of the recovery against such other person actually collected and the workmen's compensation provided or estimated. It is convenient at this stage to refer also to ss. 33 and 123 of the New York law, since each of these sections was referred to in argument. Section 33 provides that compensation or benefits due under the law shall not be assigned, released or commuted, except as provided by that law. Section 123 gives to the Workmen's Compensation Board power from time to time to make such modification or change with respect to former awards, decisions or orders, as may be just.

[11]

The plaintiff appealed from the decision of the official referee to the Workmen's Compensation Board of the State of New York. The appeal was allowed, and an award was made in favour of the plaintiff and each of her three children. This award, which was made on 4th June 1952, gave to her $15.75 per week during widowhood with two years' compensation at that rate in a lump sum in the event of her remarriage. It also gave to each of the children $6.416 per week until the attainment of eighteen years of age: as each child attained the age of eighteen, the children or child still under eighteen became entitled to an increment. Against this award the Hoffman Co. and the insurance carrier appealed to the Supreme Court of the State of New York. On 11th July 1952 the plaintiff gave an undertaking to recognize the lien given by the New York Workmen's Compensation Law on the proceeds of the action in Western Australia. The circumstances attending the giving of this undertaking are not made as clear as they might be, but it seems plain that it was given after notice of appeal had been filed by the employer and the insurance carrier and while that appeal was pending. On 29th January 1953 the appeal was withdrawn. Wolff J. said: - "The plaintiff compromised the appeal by agreeing that she would make a refund from any damages recovered in the action to the extent required to recoup any sums paid by the insurance carrier under the award of workmen's compensation." As has been seen, the undertaking was given long before the appeal was withdrawn, but there is no difficulty in inferring that the appeal was withdrawn on the faith of the undertaking. The plaintiff's undertaking was embodied in an affidavit, and was in the following terms: - "That if I am successful in obtaining damages in the said third party action I agree to recognize the compensation lien of United States Hoffman Machinery Corporation, the employer, and of the State Insurance Fund, the compensation (sic) carrier, arising under and by virtue of the Workmen's Compensation Law of the State of New York. That I further agree to refund to the said State Insurance Fund out of the proceeds (if any) of such third party action the full amount of such proceeds or the sum covered by the said lien whichever shall be the lesser amount."

[18]

Mr. Gowans' argument divided itself, we think, into two main branches, the first of which was concerned with showing that the plaintiff was entitled, as a matter of law, to the full benefit of the award without any restrictions or conditions. He said that s. 29 of the Workmen's Compensation Law of New York was not applicable to cases in which the "negligence or wrong" of the third party occurred outside the State of New York. It followed, he said, that the rights of the plaintiff under the award were absolute and were not subject to the provisions of s. 29. He cited the case of Royal Indemnity Co. v. Atchison Topeka & Santa Fe Railway Co. [1] . We doubt if that case (in which no reasons were given by the Court of Appeals) has any real bearing on the question of construction raised, and in any case we do not think it is necessary for this Court to determine that question of construction. Even if s. 29 be, on its true construction, inapplicable to such a case as the present, the validity of the plaintiff's undertaking seems to us to be in no way affected. Mr. Gowans maintained that, if the construction for which he contended were accepted, it would follow that the undertaking was void, because it would amount to a "release" or "commuting" of compensation, and any such release or commuting is prohibited by s. 33 of the New York law. But no such consequence, in our opinion, follows. The evidence regarding the giving of the undertaking is, as we have said, not entirely satisfactory, but we think it clear that what happened in the end was, as Wolff J. said, that the appeal of the employer and the insurance carrier was compromised. Mr. Hamer, the plaintiff's solicitor in Melbourne, said in evidence: - "I was told that an appeal had been lodged in order to protect the lien. I had that information before I sent forward her affidavit" (i.e. the affidavit containing the undertaking). It cannot be doubted that, when the appeal was withdrawn, it was withdrawn on the faith of the undertaking. The plaintiff had failed on her original application for compensation. On appeal to the board she had obtained an unqualified and unconditional award. An appeal had been lodged against this award. In the background were very real questions of law. The appeal might or might not have succeeded. The undertaking was without force or effect if the appeal were wholly successful. The undertaking seems to us to have been an offer to accept a qualified or conditional award, and the withdrawal of the appeal, although it took place some six months later, must, as it seems to us, be regarded as an acceptance of that offer. The undertaking might have been embodied in the award, and the position created appears to us to have been precisely the same as if it had been embodied in the award. A compromise so effected was not, in our opinion, a release or commuting within the meaning of s. 33 of the New York law. We can see no reason for saying that the undertaking was not enforceable. So far as it affected sums payable by way of compensation after recovery of judgment in the action, effect could have been given to it by way of set off, and, so far as it affected sums paid by way of compensation before recovery of judgment, the plaintiff could have been sued for repayment in any jurisdiction in which she might be found.

[22]

The remaining grounds on which the assessment of damages was challenged may be dealt with very shortly. The first attack was directed at the manner in which the learned trial judge arrived at his "primary figure". He began by taking the earnings of the deceased at the time of his death, and considered that those represented a benefit to the family of £1,500 per annum. He increased this sum to £1,750 per annum because of the prospects of the deceased, and he then estimated that this benefit would continue for a period of thirty years. It was said that, so far as the children were concerned, any benefit to them should be regarded as terminating about half way through that period, because one after another they would cease to be dependants, and that there was no justification for assuming that, as the children ceased to be dependent, what had been applied for their benefit would be applied for the benefit of the widow. He might, it was said, when freed from the burden of maintaining and educating his children, have spent much more money than before on himself. There is nothing, we think, in this argument to justify this Court in interfering with his Honour's assessment. It would be wrong to regard it as based on any such assumption as that which is suggested. Usher might, of course, have done all sorts of things. He might, among other things, have saved and invested substantial sums and left his family well provided for at his death. The figure of £1,750 was doubtless taken by the learned judge as a figure which represented a fair estimate of the average benefit which the family might be expected to derive over the years if Usher had lived. It is impossible to say that it was wrong to do this, or that the figure of £1,750 was too high. Usher was a comparatively young man, he was occupying a responsible position with a prosperous company, and his prospects may fairly be said to have been excellent. We are disposed to think ourselves that his Honour took about the right figure. We are quite unable to say that he proceeded on a wrong basis, or that the basic figure which he adopted was unreasonably high.

[26]

The deceased at the time of his death was thirty-six years of age with a normal expectation of life of thirty-five years. The widow was twenty-nine with a normal expectation of life of forty-four years. The children were aged six and half, four and half and one and half years. The deceased was a citizen of New York State employed in Australia by a New York company. Under the Workmen's Compensation Law of New York State his widow and each of the children applied for and received weekly payments of compensation in respect of the deceased's death. These payments were awarded in June 1952 by the New York Workmen's Compensation Board and were to be made to the widow during widowhood and to each of the children while under eighteen. These Workers' Compensation payments had a capital value of £13,438, the widow's share amounting to £8,453. Wolff J. did not take these payments into account as a gain resulting from deceased's death when assessing the damages. Had he done so the widow would not have been awarded any damages, as the compensation payments capitalized exceeded the damages awarded to her for herself; and the share of each child in the damages would have been considerably reduced. His Honour declined to take the compensation payments into account because the widow had undertaken in the proceedings in New York to repay the compensation received out of any damages awarded in the action in Western Australia, although this undertaking was given after the award was made and, the defendants claimed, before any appeal against the award had been instituted, but apparently in anticipation of such an appeal to the New York Supreme Court. In so doing the widow appears to have acted on advice given by her solicitors in New York and in Perth. However the defendants, the appellants here, contended that she was under no obligation to give the undertaking and was entitled to receive and retain the compensation payments without carrying out the undertaking. They denied that the undertaking was in the nature of a compromise having legal effect, and even that it was entered into as such. They claimed that the widow's and children's rights under the New York law were clear and that a compromise in the true sense was neither called for nor in fact made; that her Melbourne solicitor, Mr. Hamer, had so advised her, and that both he and she had admitted, that the undertaking was not to secure workmen's compensation but merely to expedite the payment of it which was already assured. If that had been the true position I think the compensation should have been treated by Wolff J. as a gain in assessing the damages. The gains to be allowed for in such an action are to be estimated as at the date of the deceased's death, and, although events occurring thereafter are commonly regarded in making such estimate, still the mere giving up of the compensation or of a claim to it, or the giving of an undertaking to repay the whole or part of the compensation out of any damages awarded in the action, without any justification for so doing, would not deprive the tortfeasor of the right to have the compensation regarded as a gain in assessing damages against him. But I am not satisfied that there was no justification for this undertaking. The widow's and children's claims to the compensation were rejected in the first instance by the official referees appointed under the New York law, but on appeal the New York Workmen's Compensation Board allowed the claims. However there was under the New York law a right of appeal to the Supreme Court of New York against the board's decision, but on questions of law only, and an appeal was instituted by the employer and its insurer. But before it was instituted, and apparently in anticipation of its institution, the widow gave the undertaking and eventually the appeal was withdrawn. I should say here that, although it was said that the undertaking was given before the appeal was instituted, there is a note in the appeal book which indicates that there were two notices of appeal to the Supreme Court, one dated 9th June 1952, i.e. two days before the date of the undertaking, and another dated 4th September 1952.

[27]

It was, I think, open to Wolff J. to conclude that the withdrawal of the appeal to the Supreme Court was the result of the undertaking given by the widow and the decision of the employer and insurer to accept that undertaking. The appellants here, the defendants, contended that the purpose of the appeal to the New York Supreme Court was merely to delay the weekly payments pending the conclusion of the action in Western Australia and not to defeat the claim for such payments which, they contended, were inevitable, having regard to the facts of the case and the provisions of the New York law. However, I think there was a sufficient doubt as to whether the claims for compensation would be successful to warrant the undertaking being regarded, as Wolff J. regarded it, as a reasonable compromise having legal effect and reducing the apparent gain to vanishing point, in the case of both widow and children, for the purposes of the assessment of damages. At this point a brief reference may be made to the provisions of the New York law. By s. 10 every employer must pay compensation for the death of an employee arising out of and in the course of his employment. By s. 14 the average weekly wages are to be taken as the basis on which to compute the death benefits. By s. 16 the widow receives during widowhood thirty per centum of the average wages and each child twenty per centum until it reaches eighteen years. On the death or re-marriage of the widow each child receives thirty per centum, but the total is not to exceed sixty-six and two-thirds per centum. When payments to all the children terminate the widow gets forty per centum. On her re-marriage she gets two years' compensation in one sum. By ss. 20 and 23 the Workmen's Compensation Board has power to decide all questions of fact arising on claims but questions of law are subject to appeal to the New York Supreme Court. By s. 22 the board may review its award and terminate, diminish or increase compensation payments. By s. 29 if an employee is killed by the negligence or wrong of another not in the same employ his dependants need not elect whether to take compensation or to pursue their remedy against the wrongdoer but may take compensation and prior thereto or within a specified time thereafter pursue such remedy. In that case the person liable to pay the compensation shall have a lien on any proceeds recovered by judgment or otherwise to the extent of compensation and to that extent the recovery shall be deemed to be for the benefit of the person liable to pay compensation. If compensation is taken but the action has not been commenced within the time specified such failure to take action operates as an assignment of the cause of action to the person so liable. If the dependants proceed in the action the person liable for the compensation is to pay only the deficiency between the amount recovered and the compensation. If the employer or insurer brings the action against the tortfeasor and recovers damages in excess of the compensation paid two-thirds of this excess is to be for the benefit of the dependants. By s. 33 compensation is not to be assigned. By s. 123 the board's jurisdiction is continuing and the board may from time to time make modifications of and changes with respect to awards as in its opinion may be just.

[28]

Had the appeal been heard by the New York Supreme Court it might well have been established that the widow's and children's rights were absolute and that payments of compensation to them could not have been reviewed and ended or diminished by the board in the circumstances of this case. But I hesitate to hold that there was no room for such a doubt as warranted the making of a legally enforceable compromise. One thing is clear in this New York law, i.e. that the legislature intended that the tortfeasor would not be freed from liability to any extent by the payment of compensation; and so it provided for the assignment to the employer and insurer of the cause of action against the tortfeasor or for a lien of damages recovered by the dependants to the extent of the compensation payments. It may be that, while the New York law operated for the benefit of non-residents of New York State, as s. 17 of the law indicated, it applied only to actions against the tortfeasor where the cause of action was justiciable in New York State, and that the provisions for the assignment of the cause of action or for the lien of damages recovered in the action were limited to such a cause of action. Some of the provisions suggest such a limitation. But even if there were no limitation and the widow and children retained full liberty to sue the tortfeasor and to retain all the damages recovered without accounting to the employer or its insurer for any part of the damages, still the New York law contained a provision for review which the board might see fit to exercise for the relief of an employer or insurer not entitled to an assignment of the cause of action or to a lien on the proceeds recovered from the tortfeasor. The board might well think that it was just to prevent the dependants from receiving a double benefit in respect of the deceased's death, from being twice compensated for the same injury. In any event it might well seem to the board that non-residents of New York State being dependents of workmen killed abroad should not be permitted to remain in a more favourable position than residents of that State, being dependants of those killed in that State. That would have been against the spirit if not against the letter of the New York law. At all events if the board did end or reduce compensation payments in these circumstances I would not venture to say that an appeal to the Supreme Court of New York against their action would necessarily succeed. Its success would be at least doubtful.

[29]

I think then that Wolff J. was right in treating the undertaking as a legally enforceable compromise, which prevented the workmen's compensation payments from being taken into account as a gain from the deceased's death in assessing the damages, provided that the evidence as to the reason for giving the undertaking did not prevent it from being regarded as a compromise based on a genuine doubt as to whether the claim for compensation would succeed. As to this the evidence may be summarized as follows: The claim for workmen's compensation was made in December 1950. After the official referee had in March 1952 rejected the claim, presumably on the ground that a lien on the proceeds recovered from the tortfeasor could not be enforced, the board on appeal in June 1952 allowed it. The employer and insurer then appealed to the Supreme Court of New York. This appeal was withdrawn in January 1953. Before applying in New York for compensation the widow on 24th October 1950 had issued the writ in Western Australia under Lord Campbell's Act. She disclosed this in the New York proceedings. Defendants in the action brought the New York proceedings to the notice of Wolff J. in November 1952 and sought a stay of proceedings pending the determination of the appeal to the New York Supreme Court. Meanwhile on 11th July 1952, two days after notice of appeal to the Supreme Court of New York, the widow stated in an affidavit made in the New York proceedings that if she were successful in obtaining damages in the action in Western Australia she agreed to recognize the compensation lien and to refund out of the proceeds of the action the full amount of the compensation or the sum covered by the lien, whichever was the lesser amount. Explanations of this affidavit were given by the widow and her solicitor, Mr. Hamer, before Wolff J. She said she was committed to bring the action because of the lien; that she understood that if she did not bring the action it was possible for the insurers to do so; that if she had not given the undertaking she would not have taken action on her own account but that she wanted to do so for the children. Mr. Hamer said he advised her to make the affidavit because in his opinion the board in New York would not make an award until it had some assurance that the lien under the New York law could be enforced; he had advice from New York that the insurance carrier objected to any award being made immediately effective because it considered the lien would not be effectively enforced; he was told an appeal had been lodged in order to protect the lien; the defendants informed the widow that unless she continued on with the New York proceedings her failure to do so would be raised as a defence in the action; he was convinced that she had a right under the New York law and she desperately needed the money; the widow's New York attorney, Mr. Soley, told Mr. Hamer he thought the insurance carrier would go on appealing until it had some assurance that the lien would be enforced; that the carrier was intent on delaying the final decision until the action had been heard; he, Mr. Hamer, advised the widow to sign the affidavit to end the delay and get some money; Mr. Soley suggested it as a means of removing the obstacle raised by the carrier.

[36]

Then applying that method the widow's share would be assessed separately. It is fair to assume that from the beginning her share of the £1,750 would have extended to at least one-half, but it may have been reduced as the children grew older and their demands increased and have been increased again as the children secured occupations, or married in the case of the girls, even after making allowance for the likelihood that the husband would have kept more for himself as the dependency of the children diminished. It would I think be fair to take £900 as the average amount that the widow would have received during the thirty years that his Honour estimated would be the period for which the deceased would have lived had he not been killed. On the four per cent tables the value of one pound payable for thirty years is £17.29203. Applying that to £900 a year the primary figure arrived at in the widow's case is £15,628. Then deducting from this the gains as estimated by his Honour, but allowing £750 instead of £600 as the estimated value of the accelerated receipt of the deceased's estate, i.e. a total deduction of £6,685, the remainder is £8,943. But his Honour allowed a further deduction of £2,000 "for other incidents of uncertain estimate". What these were he did not say but they did not include the possibility of re-marriage. The only other possibility that I can suggest is that the wife might have pre-deceased the husband had he not been killed. But that was a somewhat remote possibility as she was seven years younger and had forty-four years expectation of life as against the deceased's thirty-six years. As to the possibility of her re-marriage, as the Privy Council said in Nance's Case [1] the possibility that the widow might re-marry in circumstances that might improve her financial position is in most cases incapable of evaluation. This case is not an exception, having regard to the widow's financial position and the fact that she had three children. The allowance then for both these possibilities could not reasonably be fixed at more than £1,000. Taking £1,000 as the correct figure the damages arrived at in the widow's case are £7,943, as against £7,926 fixed by his Honour.

At a glance

Court

Decision date

Before

Source

Judgment (37 paragraphs)

Parties

Cited By (1)