These proceedings were commenced by Statement of Claim filed on 19 March 2018 claiming the statutory indemnity created by s 151Z(1)(d) Workers Compensation Act 1987 (NSW) ("WCA"). The amount claimed was $3,422,909.04, being the total of the payments made to, for or on behalf of Mr Taek Gyu Kim ("the worker") under the provisions of WCA. The plaintiff, Workers Compensation Nominal Insurer ("WCNI") claims interest under s 100 Civil Procedure Act 2005 (NSW) ("CPA") and costs in addition to the claimed indemnity
The worker received catastrophic injuries on 10 March 2014 in the course of his employment as a boilermaker. His services had been lent by his direct employer to the defendant, Allmen Engineering Projects Pty Ltd (Allmen), for him to work at Allmen's premises at St Marys.
In circumstances which are the subject of an agreed Statement of Facts (Exhibit A) set out below (at [11]), the plaintiff agreed with the worker's tutor to accept the reduced sum of $2,965,562.76 in full satisfaction of its statutory rights to recover the total amount of compensation paid.
It is an agreed fact (agreed fact 20, [11] below) that on 14 June 2018, Allmen paid that reduced sum of $2,965,562.76 to the WCNI "on behalf of Mr Kim".
The amount of interest claimed is $382,565.25. Allmen accepts that this is the maximum amount to which WCNI may be entitled for interest at the maximum rate prescribed by Rule 6.2(8) Uniform Civil Procedure Rules 2005 (NSW), calculated between the date of the first payment of compensation and Allmen's reimbursement payment on 14 June 2018. That is to say, it accepts the accuracy of the arithematic. However, it strongly disputes that WCNI has any entitlement to interest as claimed at all (21.50 - 22.5T).
In addition to the agreed facts other evidence was given by affidavit on which the deponents were not cross-examined. WCNI read two affidavits of its solicitor, Dominic Daniel Maait sworn on 21 September 2018 and 5 December 2018 respectively. Allmen read the affidavit of its solicitor Brian George Moroney, affirmed on 7 September 2018. There was no objection to any of this evidence.
[3]
Issues
Exhibit A also sets out the questions, or issues, for determination as agreed by the parties. I will set them out now, rewording them slightly having regard to their refinement during the course of oral argument. As I explain below no real argument was directed to issues 2 and 3:
1. Whether the proceeding:
1. discloses a reasonable cause of action against Allmen; or
2. amounts to an abuse of process.
1. Whether the payment of $2,965,562.76 by Allmen to the WCNI is an admission of its liability to indemnify WCNI pursuant to s 151Z(1)(d) WCA;
2. Whether the said payment by Allmen "on behalf of the worker" (see agreed facts 19 and 20, [11] below) satisfies all entitlements (including for interest and costs) claimed by WCNI, and discharges all liability in Allmen, in the proceedings;
3. Whether WCNI is entitled to interest pursuant to s 100 CPA as claimed.
4. Whether WCNI is entitled to the costs of the proceedings.
[4]
Relevant legislation
It is necessary to set out the terms of the legislation central to the resolution of the issues in the case. Section 151Z WCA is in the following terms:
(1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury, the following provisions have effect -
(a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation,
(b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker's injury under this Act, and the worker is not entitled to any further compensation,
Note.
See also section 151N of this Act and section 10 of the Law Reform (Miscellaneous Provisions) Act 1965 in relation to the application of other laws concerning contributory negligence.
(c) if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act,
(d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),
(e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages,
(e1) if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment,
(f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission.
(1A) In the application of subsection (1) (b) in relation to a worker who recovers motor accident damages to which Part 4 of the Motor Accident Injuries Act 2017 applies in respect of an injury -
(a) the liability of the worker to repay the amount of compensation already paid does not include any amount of compensation already paid under Division 3 (Compensation for medical, hospital and rehabilitation expenses etc) of Part 3 of this Act in respect of the injury concerned, and
(b) the liability of the worker to repay the amount of any permanent impairment compensation and pain and suffering compensation already paid is limited to the amount of any damages recovered for non-economic loss.
(1B) Any amount that is excluded under subsection (1A) from the amount that a worker is liable to repay out of damages is excluded from the indemnity to which a person is entitled under subsection (1) (d).
(2) If, in respect of an injury to a worker for which compensation is payable under this Act -
(a) the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker's employer, and
(b) the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer,
the following provisions have effect -
(c) the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable,
(d) the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages,
(e) if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that -
(i) if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise - the indemnity referred to in subsection (1) (d) is for the amount of the excess only, and
(ii) if the compensation paid by that employer does not exceed the amount of that contribution - subsection (1) (d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution.
(3) This section applies to proceedings taken independently of this Act by a person to whom compensation is payable under this Act in respect of the death of a worker as a result of an injury.
(4) If a worker is liable under subsection (1) (b) to repay any money out of damages recovered by the worker, the worker is not liable to repay the money out of any damages payable after the date of recovery by way of periodic or other payments for loss of future earnings or earning capacity or for future expenses.
(5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement.
(My emphasis.)
The relevant provisions of the Civil Procedure Act are the definition of "judgment" in s 3 CPA, and the terms of s 100 CPA. They are:
Definitions 3(1) In this Act:
…
judgment includes any order for the payment of money, including any order for the payment of costs.
…
Interest up to judgment
(cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A)
100(1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect.
(2) In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money paid, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid.
(3) This section:
(a) does not authorise the giving of interest on any interest awarded under this section, and
(b) does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise, and
(c) does not authorise the giving of interest in any proceedings for the recovery of money in which the amount claimed is less than such amount as may be prescribed by the uniform rules, and
(d) does not affect the damages recoverable for the dishonour of a bill of exchange.
(4) In any proceedings for damages, the court may not order the payment of interest under this section in respect of the period from when an appropriate settlement sum was offered (or first offered) by the defendant unless the special circumstances of the case warrant the making of such an order.
(5) For the purposes of subsection (4), appropriate settlement sum means a sum offered in settlement of proceedings in which the amount for which judgment is given (including interest accrued up to and including the date of the offer) does not exceed the sum offered by more than 10 per cent.
(My emphasis.)
Rule 6.12 UCPR makes the following provision:
Relief claimed
(cf SCR Part 7, rule 1; DCR Part 5, rules 6 and 6A; LCR Part 5, rules 1 and 2)
(1) A statement of claim or summons must specifically state the relief claimed by the plaintiff.
(2) If the relief claimed requires the determination or direction of the court on any question, the statement of claim or summons must state the question.
(3) Costs referred to in section 59 (1) (d) of the Legal Profession Uniform Law Application Act 2014 (costs payable for the enforcement of a lump sum debt or liquidated sum for damages) must be specifically claimed.
(4) Costs, other than those referred to in section 59 (1) (d) of the Legal Profession Uniform Law Application Act 2014, need not be specifically claimed.
(5) Exemplary damages and aggravated compensatory damages must be specifically claimed.
(6) An order for interest up to judgment must be specifically claimed.
(7) In the case of a liquidated claim, a claim for an order for interest up to judgment:
(a) must specify the period or periods for which interest is claimed, and
(b) may specify the rate or rates at which interest is claimed.
(8) If no rate of interest is specified under subrule (7) (b), the rate at which interest is claimed is taken to be:
(a) in respect of the period from 1 January to 30 June in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced, and
(b) in respect of the period from 1 July to 31 December in any year - the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
[5]
The agreed facts
The facts agreed by the parties are as follows:
The plaintiff, the Workers Compensation Nominal Insurer (WCNI) is a legal entity created by s 154A of the Workers Compensation Act 1987 (NSW) (WCA) and is entitled to sue and be sued.
The defendant, Allmen Engineering Projects Pty Ltd (Allmen) is a legal entity entitled to sue and be sued.
Mr Taek Gyu Kim (DOB: 22 May 1955) was a boilermaker and as at 10 March 2014 was employed by DKPL Eng Pty Ltd formerly known as Desk Engineering Pty Ltd (Desk Engineering).
Desk Engineering is deregistered.
Pursuant to a labour hire agreement between Desk Engineering and Allmen, Mr Kim was placed by Desk Engineering to work as a boilermaker at Allmen's premises located at 25 - 27 Bent Street, St Marys NSW (Allmen's Premises)
On 10 March 2014, in the course of his employment with Desk Engineering at Allmen's Premises, Mr Kim sustained injuries including a traumatic brain injury whilst he was attempting to turn a steel beam weighing in excess of 500 kg.
As at 10 March 2014:
(a) Desk Engineering held a statutory form of workers' compensation insurance; and
(b) The appointed scheme agent for the WCNI responsible pursuant to s 154G WCA for the management of Desk Engineering's policy of workers compensation insurance was CGU Workers' Compensation (NSW) Ltd (CGU).
A claim for workers compensation benefits was made on behalf of Mr Kim against Desk Engineering and the claim was accepted by CGU who thereafter commenced making payments to, for and on behalf of Mr Kim pursuant to WCA liabilities of Desk Engineering.
The subsequent claims management of the workers' compensation claim was transferred from CGU to, and remains managed by, Employers Mutual Limited (EML) as the scheme agent for the WCNI pursuant to section 154G, WCA.
By way of statement of claim filed 19 October 2015 in proceedings numbered 2015/305871, a claim for personal injury damages was commenced on behalf of Mr Kim against Allmen alleging an entitlement to damages as a result of Allmen's negligence (the Worker's Damages Proceedings).
As at 19 March 2018 the WCNI had paid to, for and on behalf of Mr Kim a total of $3,422,909.04 in respect of Desk Engineering's WCA liabilities.
By way of statement of claim filed 19 March 2018 in these proceedings, the WCNI has sought recovery [by way of statutory indemnity] of the workers' compensation payments made by the WCNI to, for and on behalf of Mr Kim pursuant to section 151Z(1)(d), WCA (the recovery proceedings).
As at 21 March 2018, the WCNI had paid to, for and on behalf of Mr Kim a total of $3,465,562.76 in respect of Desk Engineering's WCA liabilities (the WCNI Compensation Payments).
On or about 21 March 2018, an agreement between Mr Kim and the WCNI (which was subject to the condition that the Worker's Damages Proceedings be resolved on a compromised basis as between Mr Kim and Allmen), included terms that:
(a) Mr Kim repay the sum of $2,965,562.76 to the WCNI, being an agreed reduction of the WCNI Compensation payments;
(b) the repayment of $2,965,562.76 to the WCNI would satisfy Mr Kim's obligation to repay the WCNI Compensation Payments pursuant to section 151Z(1)(b), WCA; and
(c) Mr Kim direct Allmen to repay the sum of $2,965,562.76 on his behalf to the WCNI out of any settlement between the Worker and Allmen in the Worker's Damages Proceedings. (The Recovery Agreement.)
On and from 21 March 2018, Allmen was aware of the Recovery Agreement including the calculation of the amount payable to the WCNI pursuant to the Recovery Agreement.
The WCNI and Mr Kim calculated the Recovery Agreement, based on the following calculations:
(a) The WCNI Compensation payments in the sum of $3,465,562.76 had been paid to, for and on behalf of Mr Kim by the WCNI;
(b) The WCNI agreed to reduce the total of the payments made by the sum of $160,000, representing a 25% contribution to an assessed entitlement by Mr Kim towards work injury damages agreed in the sum of $640,000.00 (I interpolate, see sub-pars 151Z(2)(c) & (d)); and
(c) The WCNI further agreed with Mr Kim to reduce the payments made by an additional $340,000, approximately representing an allowance of 10% for the contributory negligence of the Worker. (I interpolate, see s 10(2) Law Reform (Miscellaneous Provisions) Act 1965 (NSW).)
On 23 March 2018, the Worker's Damages Proceedings were settled by agreement between Mr Kim and Allmen for the agreed sum of $13,524,000.00 subject to the approval of the Court (the Worker's Damages Settlement).
The Worker's Damages Settlement was approved by Garling J on 28 March 2018 (the Worker's Damages Judgment)
Pursuant to the Worker's Damages Judgment, Allmen was ordered and directed to pay the following amounts, less any authorised statutory deductions:
(a) To pay into court for the benefit of Mr Kim the sum of $10,558,437.24; and
(b) To pay to the WCNI on behalf of Mr Kim the sum of $2,965,562.76 pursuant to the Recovery Agreement.
On 14 June 2018, Allmen paid $2,965,562.76 to the WCNI on behalf of Mr Kim.
Allmen agrees that Mr Kim's injuries occurred in circumstances creating a liability in Allmen to pay damages (I interpolate, see the chapeau to s 151Z(1)).
[6]
Other evidence and factual findings
From the correspondence annexed to the affidavit of Mr Maait of 21 September 2018, it is apparent that his legal practice, acting on behalf of the then scheme agent wrote to Allmen on 3 February 2015 enclosing a list of compensation payments and claiming a statutory indemnity under s 151Z(1)(d) WCA. The author suggested that the letter be forwarded to Allmen's "Public Liability Insurer for response within 21 days or failing this, my client may commence recovery proceedings without further notice". No response this demand being forthcoming, a further demand was made on 28 July 2015.
On 17 March 2016, a partner in Mr Maait's legal firm wrote to Mr Moroney's legal practice stating he acted for the scheme agent who had paid compensation "the subject of a right of recovery". He requested a copy of the pleadings from the worker's damages proceedings. There was apparently a follow-up email of 1 August 2016. Mr Moroney responded to that communication on 3 August 2016 providing a copy of relevant pleadings and particulars and advising of the date when the matter was next before the Court for directions. On 10 October 2016, the partner sent the following email:
Dear Brian
I attach a list of payments made by CGU to 5/10/16 totalling $1,566,168.96.
I am instructed to request indemnity in respect of the compensation paid pursuant to s 151Z of the Workers' Compensation Act 1987 and would be pleased if you could advise your client's response as soon as possible.
Regards
On 7 April 2017, Mr Maait's legal practice wrote to Mr Moroney's legal practice seeking a copy of expert evidence exchanged and promising to provide a requested up-to-date list of payments. The expert evidence was sought in a follow-up email of 28 August 2017 and provided the same day. None of the correspondence from Mr Moroney's legal practice acknowledged the demand for the statutory indemnity, nor did it indicate their client's attitude to the demand.
As the agreed facts state, these (recovery) proceedings were commenced on 19 March 2018. Mr Maait's legal practice had evidently received notice that the worker's damages proceedings were listed for hearing commencing on 3 April 2018. In a letter to Mr Moroney on 20 March 2018, Mr Maait explained that the proceedings had been commenced urgently because his client had "only become aware on Friday 19 March 2018" that a mediation was taking place in the worker's damages proceedings. Mr Moroney had apparently, by email not in evidence, suggested that the 151Z proceedings could be heard together with the worker's damages proceedings. To facilitate that Mr Maait sought copies of any up to date evidence and other material exchanged between the parties to the latter proceedings. An alternative suggestion about the conduct of the recovery proceedings was made by Mr Maait, but apparently not taken up by Mr Moroney.
The matter was before Fagan J in his capacity as the civil list judge on 22 March 2018 when directions were made for the provision of evidence from the worker's damages proceedings to WCNI. By letter dated 23 March 2018, an updated list of workers' compensation payments was provided, although payments were continuing. A schedule providing a calculation of interest on the compensation payments up to 14 March 2018 was also provided and the agreement of Allmen was formally sought to the recovery proceedings and worker's damages proceedings being heard together, commencing on 3 April 2018 with evidence in one, standing as evidence in the other.
As the agreed facts indicate a settlement between the defendant and the worker's tutor was approved by Garling J on 28 March 2018. By consent, his Honour ordered that the sum of $2,965,562.76 be paid to the relevant scheme agent. In his letter of 12 April 2018 to Mr Maait's legal practice, Mr Moroney stated:
… we have been directed by the Supreme Court of New South Wales to pay the sum …… in satisfaction of [the worker's] liability to repay the agreed compensation pursuant to s 151Z(1)(b) of the Workers' Compensation Act 1987. There is nothing ambiguous in the Court's orders in this regard.
Once the statutory clearances have been obtained in relation to (the worker's proceedings), we will request a cheque from our client payable to (the Scheme Agent) … in satisfaction of [the worker's] liability to your client.
In his letter of 14 June 2018 to Mr Maait's legal practice forwarding the cheque, Mr Moroney stated, inter alia:
The cheque is payment made in accordance with the judgment and orders made by Garling J on 28 March 2018.
The payment sum of $2,965,562.76 is in full and final discharge of our client's liability pursuant to s 151Z of the Workers' Compensation Act 1987 (my emphasis).
On 15 June 2018, Mr Maait wrote to Mr Moroney's legal practice, inter alia, in the following terms:
It is noted that you have made the payment in accordance with the judgment and orders in the workers' proceedings made by Garling J on 28 March 2018. That order, which was agreed between yourself and (the worker), and presumably noted in the Consent Judgment (which my client was not a party to) was for the payment to be made pursuant to s 151Z(1)(b).
Your assertion in … your letter that the payment was made in "full and satisfaction of our client's liability pursuant to s 151Z of the Workers' Compensation Act 1987" is simply incorrect.
My client's s 151Z(1)(d) proceedings are yet to be determined, in particular in respect of the questions of interest and costs. Any suggestion that my client agreed to dispose of the s 151Z(1)(d) proceedings by communicating with the worker a reduced payback is nonsensical.
On 22 August 2018, Mr Moroney wrote to Mr Maait's legal firm including the following:
Pursuant to discussions with our counsel, we confirm that Allmen … will not submit in these proceedings that the worker's damages settlement and/or the worker's judgment (as defined in the proposed agreed facts and questions) resolve the claim for interest in the recovery proceedings.
In return for this concession, a concession was sought from WCNI that "to be entitled to any interest pursuant to s 100 (CPA) you must obtain a judgment in the recovery proceedings". Mr Maait responded by letter to Mr Moroney's legal practice in the following terms:
Further to your letter I confirm that in order for s 100 [CPA] to be relevant to the dispute my client must have an entitlement to a judgment.
Although from earlier correspondence, it may have appeared that the recovery agreement between WCNI and the worker's representatives, and the consent orders between Allmen and the worker's representatives were made under s 151Z(1)(b), rather than s 151Z(1)(d), the parties, by the correspondence extracted at [21] above, agreed that this was not the case. One may safely infer that this is because there could be no liability in the worker to repay WCNI under s 151Z(1)(b) until he had actually recovered the damages. The liability of the worker to make a repayment is a liability to repay compensation already received "out of those damages": s 151Z(1)(b) (at [9] above). When Allmen paid the agreed recovery amount to WCNI by cheque dated 9 June 2018, the worker had obtained judgment, approved by the Court, in his damages proceedings but he had not recovered the damages. It may be inferred that the cheque for the net proceeds of the worker's judgment of $10,557,074.79 was drawn at about the same time as the cheque reimbursing WCNI. As I have said, that cheque was forwarded to Mr Maait's legal practice on 12 June 2018. The net amount due to the worker was paid into Court on 14 June 2018 (Exhibit D: Protective List Short Minutes of Order 21 June 2018) but it could not be said to have been received by the worker, or recovered by him, until the money was paid out to the appointed manager of the worker's estate under order 16 made in the protective list on 21 June 2018. Accordingly, the payment made to WCNI on 12 June 2018 could not have been made under s 151Z(1)(b).
At the same time, clearly, those representing the worker, including his tutor had an interest in agreeing, and if possible, as here, reducing, the amount to be deducted from the damages under the provisions of s 151Z(1). Only then could there be certainty about the net proceeds of any settlement of the worker's damages proceedings. As I have emphasised at [9] above, and as Mr MJ Walsh SC for WCNI submitted, where s 151Z is set out, that by dint of s 151Z(1)(e(1), any payment made towards the s 151Z(1)(d) indemnity when, at the time of the payment, the worker has obtained judgment for damages from the person paying under the indemnity but judgment has not been satisfied, the payment, to the extent of its amount, "satisfies the judgment". It seems to me that this is the most apposite provision to apply in determining what in substance, quite apart from the form of the arrangements the parties sought to employ, happened when their various agreements including the consent orders were given effect to by performance in June 2018.
I find that Allmen's payment to WCNI on 12 June 2018 was made under s 151Z(1)(d) WCA, WCNI having agreed to accept a reduced amount. Section 151Z(1)(e1), and not s 151Z(1)(b), governed the payment.
[7]
The arguments at the trial
Although expressed as 5 issues (see [8] above). At the hearing the five issues were telescoped into 3. Issue 2 seems to have been subsumed in the agreement formed by the exchange of correspondence summarised at [21] above. Issue 5, the costs question, depends upon the outcome of the remaining issues.
Those remaining issues were refined by Mr R Perla of Counsel, who appeared for Allmen, in his written submissions as follows:
1. Issue 1 resolved itself into the question of whether WCNI's entry into the recovery agreement with the worker's representatives, and the subsequent payment "on behalf" of the worker, entitled Allmen to a plea of accord and satisfaction barring WCNI's remaining claims for interest and costs;
2. Alternatively, was WCNI entitled to a judgment for interest only, given the language of s 100 CPA which was said to be different from s 83A District Court Act, 1973 (NSW) (repealed); and
3. Whether the Court's discretion governing the award of interest should be exercised so as to refuse WCNI's claim.
[8]
The first issue
Mr Walsh argued that given WCNI's unanswered demands and the imminent date for the hearing of the worker's damages proceedings, WCNI was justified in commencing proceedings to enforce its statutory right to indemnity under s 151Z(1)(d). Mr Perla's point of demurrer was his reliance upon the plea of accord and satisfaction. So far as any broader question of abuse of process may arise, I am satisfied that there is no suggestion of any collateral purpose for the commencement of the proceedings by WCNI. In my judgment the proceedings were commenced for the purpose of pursuing and protecting WCNI's statutory rights and were properly commenced on 19 March 2018. As I have said, and I emphasise, that previous demands have gone unanswered, or had been overlooked or ignored. WCNI's forbearance from suit previously did not of itself disentitle it from taking legal action to protect, as I have said, its statutory rights.
Turning then to the plea of accord and satisfaction. Mr Perla referred to the judgment of Pembroke J in Stroud v O'Connor [2016] NSWSC 629 and the authorities referred to therein. Mr Walsh referred in particular El-Mir & 1 Or v Risk [2005] NSWCA 260 at [48] and [54] and the authorities referred. Amongst the authorities referred to in those more recent cases is the judgment of Dixon J (as the Chief Justice then was) in McDermitt v Black (1940) 63 CLR 161; [1940] HCA 4 at pp 183 - 184. In that passage, his Honour said:
The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted, the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. (My emphasis.)
Mr Perla argued that the recovery agreement with the worker's representatives was a contract to accept a reduced amount from Allmen for the plaintiff's cause of action pursuant to s 151Z(1)(d). The satisfaction provided by Allmen means that the Statement of Claim, according to Mr Perla's argument, does not disclose a reasonable cause of action or amounts to an abuse of process. With respect, this is not correct. The contract was not made with Allmen and the doctrine of privity of contract precludes Allmen from setting up the recovery agreement in answer to WCNI's claim.
In any event, the recovery agreement was entered into after the proper commencement of the proceedings. At the time of their commencement there had been "no promise or contract", or any "act or thing promised", by Allmen, or the worker for that matter. In my judgment the plea does not run to defeat WCNI's proceedings.
[9]
The second issue
Mr Perla acknowledges that in previous cases, courts have awarded interest in proceedings brought to enforce the statutory indemnity where the defendant has after the commencement of the proceedings either paid the amount due under the indemnity or has discharged its liability under s 151Z(1)(d), or its predecessor s 64(1)(b) Workers' Compensation Act 1926, by satisfying the worker's judgment for damages: Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498 at 501E; State of New South Wales (Government Cleaning Services) v Cooper (2000) 49 NSWLR 221; [2000] NSWCA 148 at [14] - [23]; Kwanchi Pty Ltd v Kocisis (1986) 40 NSWLR 270. Mr Perla submits however that those decisions depend upon the express language of s 83A District Court Act, which language is materially different from s 100 CPA.
Section 83A(1A) was in the following terms before the enactment of the CPA:
Where:
(a) Proceedings have been commenced for the recovery of a debt or liquidator demand, and
(b) Payment of the whole or part of the debt of demand is made during the currency of the proceedings and prior to or without judgment being given in respect of the debt or demand, the Court may order that interest be paid at such rate as it thinks fit on the whole or any part of the money paid for the whole or any part of the period between the date when the cause of action arose and the date at payment. (My emphasis.)
The language of s 100(2), set out in full at [9] above, is different. Subsection (2) provides, which I will repeat for convenience:
In proceedings for the recovery of a debt or damages in which payment of the whole or a part of the debt or damages has been made after the proceedings commenced but before, or without, judgment being given, the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit:
(a) on the whole or any part of the money paid, and
(b) for the whole or any part of the period from the time the cause of action arose until the time the money was paid. (My emphasis.)
Mr Perla argued decisions of authority demonstrate that the express terms of s 83A were important to the reasoning that supported the decisions referred to above at [31]. He referred, in particular, to the judgment of Clarke JA in Kwanchi Pty Ltd v Kocisis at 276F. His Honour said:
S 83A(1A) of the District Court Act expressly provides that interest may be awarded whether whole or part of the debt or demand is paid within the currency of the proceedings. It follows that the power to award interest does not depend upon the debt becoming the subject of a judgment. Where an employer sues a tortfeasor to enforce its indemnity pursuant to s 151Z(1)(d) (which is not relevantly different from s 64(1)(b) of the 1926 Act), and where the tortfeasor does not pay the amount claimed prior to judgment, the District Court is, in the event it finds for the employer, empowered under s 83A of the District Court Act to make an award of interest in favour of the employer.
Mr Perla acknowledged that while interest may be awarded on monies paid after proceedings are commenced but before judgment under s 100(2), "a judgment is still required to enliven the power." (Written Submissions, [29]). This was made plain, counsel submitted, from the expression "the court may include interest in the amount for which judgment is given" (counsel's emphasis). Learned Counsel also acknowledged that a number of decisions had been made since the commencement of s 100 CPA applying the reasoning in the previous cases which turned on s 83A: see for example Grima v RFI (Aust.) Pty Ltd [2014] NSWSC 14 per Harrison J. However his point had not been argued in those cases.
Mr Walsh emphasised that s 100(2) CPA provides for interest where even the whole of the debt or damages has been paid after the commencement of proceedings but without judgment being given. Mr Walsh submitted that notwithstanding the change in the statutory language, there is no relevant difference in substance or principle. Learned Senior Counsel relied upon the decision of James J in Advertising Marketing Group Pty Ltd v Roads and Traffic Authority of NSW (unreported, Supreme court of New South Wales 31 March 2008, at [24] - [25]) applying the reasoning of Clarke JA Kwanchi to s 100 CPA. He also referred to the judgment of Hammerschlag J in Nine Network Australia Pty Ltd v Birketu Pty Ltd [2016] NSWSC 694.
In Nine Network Australia Pty Ltd v Birketu a debtor paid the amount of a large debt one week after the commencement of proceedings and two days before the summons was returnable in the Commercial List. Hammerschlag J characterised the payment as a capitulation (at [8]). His Honour referred to s 100(2) CPA (at [10]) and said (at [12] ff):
Birketu resists paying interest because there is no contractual provision entitling Nine to it. There was no judgment, or any need for judgment, on which an interest order may be based, and the Court should decline to award interest because Nine hastily and unreasonably commenced proceedings in a precipitate fashion putting Birketu to unnecessary expense.
….
In my opinion, it may safely be inferred that Birketu's capitulation was because it had no defence. There was a contractually fixed time for payment, which Birketu deliberately, and in anticipation, chose not to meet. Nine then demanded payment, and Birketu ignored the demand. The suggestion that it is relevant that officers of Birketu were otherwise engaged in the [related litigation] rings hollow.
Nine was fully entitled to commence proceedings for what is a substantial sum of money, and there is no reason why it should not be awarded interest to compensate it for the loss it has suffered as a consequence of Birketu's breach.
The judgment entered was for the amount of interest only with an order for costs.
Mr Walsh also submits that, in alternative, if Allmen's contentions as to the interpretation of s 100(2) CPA are correct, it is within the power of the Court to enter judgment for the plaintiff for the amount of $2,965,562.76 together with interest and costs, noting that the principal judgment has been satisfied.
I am not satisfied that it's necessary to accede to Mr Walsh's alternative submission. Although the expression "may include interest in the amount for which judgment is given" may be read as meaning that interest is only allowable in the circumstances to which the sub-section applies as some lesser portion of a larger amount for which judgment is given, the language of subsection (2) read as whole makes clear that judgment may be given for interest without judgment being given for the whole or any part of the debt or damages which has been paid after the commencement of proceedings, but before judgment. Taking the text, context and purpose of the statute together, I am satisfied that the Court's power is not restricted to including interest in a larger judgment which deals with the debt or damages for the recovery of which the proceedings were commenced. As the Advertising Marketing Group and Grima decisions demonstrate the reasoning of the Court of Appeal authorities in relation to s 83A(1A) continue to apply to s 100(2) CPA. And Hammerschlag J's decision in Birketu is direct authority for the proposition that s 100(2) CPA supports a judgment for interest only.
It should not be overlooked that CPA defines "judgment" as including any order for the payment of money.
[10]
The third issue
Mr Perla submits that the Court should exercise its discretion to refuse an award of interest, or alternatively to award interest during reduced period only. The factors said to enliven the discretion were: the absence of the need to commence proceedings because the worker would be liable to repay the workers' compensation received under s 151Z(1)(b) WCA upon recovery of damages; the sole purpose for the commencement of the proceedings was to enliven a claim for interest and costs; the delay in commencing proceedings weighs against the award as the worker's proceedings were listed for hearing commencing 3 April 2018 only two weeks after the commencement of these proceedings; despite making demands as early as February 2015, WCNI had failed to commence proceedings which delay was "lacksadaisical"; and WCNI's lawyers had been provided with all the material they required to make an assessment of Allmen's liability by August 2017 at the latest.
Mr Walsh argued that an award of pre-judgment interest is compensatory; that is to say to compensate the successful plaintiff for the practical loss it has suffered. Mr Walsh argued that the plaintiff's forbearance from taking proceedings ought not be a factor which defeats its prima facie entitlement to an award of interest for this purpose. Allmen knew that WCNI was seeking to exercise its right to statutory indemnity. It had been provided with regular updates by way of the provision of schedules of payments, but had failed to answer or ignored WCNI's demands. As Clarke JA put it in Kwanchi (at 276):
The claim for interest is a statutory claim to reimburse the employer who has paid compensation for being deprived of its money pending payment of that compensation by the tortfeasor.
I am not persuaded that the arguments put forward by Mr Perla are such as to justify depriving WCNI of its presumptive entitlement to compensatory interest under s 100 CPA. As I have said, I am persuaded that the proceedings were properly commenced in circumstances where Allmen had failed to respond to WCNI's demands. There is nothing unjust in providing compensatory interest for the statutory workers' compensation scheme being deprived of its money pending repayment of compensation paid to the worker by the tortfeasor as required by the statute (s 151Z(1)(d) WCA). For the same reasons I decline to exercise my discretion to reduce the period during which the interest runs.
There is no reason to depart from the general rule that costs follow the event.
My orders are:
1. Judgment for the plaintiff against the defendant in the sum of $382,565.25 in respect of interest;
2. The defendant to pay the plaintiff's costs of the proceedings.
[11]
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Decision last updated: 15 November 2019