CATCHWORDS " Assessment of damages -.Professional negligence of solicitors - Failure to institute proceedings in respect of the death of an employee within time - Whether compensation repayment provisions, ss.99 and 102 of Compensation (Commonwealth Government Employees) Act 1971, apply. RITA MARJORIE BUTLER on behalf of herself and her children CAROLYN ANNE BUTLER, TREVOR JOHN BUTLER and JANINE LINDA BUTLER ve KENNETH JOSEPH JOHNSTON, PETER NOBLE GUILD and MICHAEL ANTHONY SOMES A.C.T. No. G.67 of 1983 Coram: Blackburn, Gallop and Neaves Date: 3 May 1984 Canberra. Re ee ere mene oe re ie te re rr erm tn eee IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION a ' ) ) ) . ) No. ACT G67 of 1983 ) ) ) ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: AND: JUDGES MAKING ORDER DATE OF ORDER WHERE MADE THE COURT ORDERS: RITA MARJORIE BUTLER on behalf of herself and her children CAROLYN ANN BUTLER, TREVOR JOHN BUTLER and JANINE LINDA BUTLER Appellant KENNETH JOSEPH JOHNSTON, PETER NOBLE GUILD and MICHAEL ANTHONY SOMES Respondents ORDER Blackburn, Gallop and Neaves JJ. 3 May 1984 Canberra. (1) that the appeal be dismissed. (2) that the appellant pay the respondent's costs of this appeal. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G67 of 1983 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: RITA MARJORIE BUTLER on behalf of herself and her children CAROLYN ANN BUTLER, TREVOR JOHN BUTLER and JANINE LINDA BUTLER Appellant AND: KENNETH JOSEPH JOHNSTON, PETER NOBLE GUILD and MICHAEL ANTHONY SOMES Respondents CORAM: Blackburn, Gallop and Neaves JJ. REASONS FOR JUDGMENT THE COURT 3 May 1984 On 12 June 1974 the appellant's husband was killed at work whilst in the employ of the Commonwealth of Australia. The appellant engaged the respondent solicitors for the purpose of instituting proceedings against the Commonwealth on behalf of herself and her children pursuant to the Compensation (Fatal Injuries) Ordinance 1968 (the Ordinance). The solicitors failed to institute such proceedings within the 3 year period specified by s.9 of the Ordinance and the action became statute barred. An action was brought in the Supreme Court of the Australian Capital Territory against the solicitors for negligence. The appellant was successful in that action and recovered judgment against the solicitors in the sum of $63,241.00. She has appealed to this Court on the question of damages. The learned trial judge applied the principles governing the measure of damages where a solicitor has negligently failed to institute proceedings in time as set out in Kitchen v. Royal Air Force Association [1958] 1 WLR 563 per Lord Evershed M.R. (at pp.574-6); Tutunkoff v. Thiele (1975) 11 SASR 148; Appo v. Baker (1981) 50 FLR 298 per Forster C.J. (at p.303). Those authorities require the Court to look at the prospects of success of the aborted action and at the damages which would have been recovered therefrom, but these are simply essential steps in the determination of the extent of the plaintiff's loss. The real question remains - to what extent 1s the plaintiff worse off as a result of the action not being brought?. The proper quantum of damages recoverable from the solicitors 1s that sum of money which will restore the plaintiff to the position she would have been in had the action been brought. It was not submitted on the appeal that his Honour erred in his adoption of those principles. It was common ground before the learned trial judge that the maximum damages which the appellant and those on whose behalf the action was brought could have recovered was $85,631.00, comprised of various heads of damage which do not concern us here. It was also common ground that the appellant had received a total of $18,090.00 from the Commonwealth, being $14,500 in respect of her husband's death pursuant to s.43(3) of the Compensation (Commonwealth Government Employees) Act 1971 (the Act), and dependant children allowances totalling $3,590.00 pursuant to s.43(5) of the Act. The appellant conceded at the trial that, 1f£ ss.99 or 102 of the Act did not apply to the damages recovered from the solicitors, the figure agreed to as the maximum recoverable in the statute barred action would have to be reduced by $18.090.00, the amount received as compensation pursuant to the Act. The basis for this concession was as follows. If the appellant had brought the action against the Commonwealth, the maximum award she could have hoped for was $85,631.00. Out of this award she would have been liable to repay to the Commonwealth under s.99 of the Act the $18,090.00 already received pursuant to ss.45(3) and 45(5). The maximum net gain from a successful action against the Commonwealth would therefore have been $67,541.00. The learned trial judge accepted this analysis of the situation and, concluding that neither s.99 nor s.102 could apply to any damages awarded in the action, proceeded to reduce the damages assessed by the sum agreed. It is clear however that the parties were mistaken in their agreement that the whole of the amount of $18,090.00 received from the Commonwealth pursuant to the Act would have had to be repaid. Section 99(9) of the Act excludes payments of dependant children's allowance under s.43(5) from the operation of s.99(3) and the liability of a third party to make direct repayment under s.102(1) 1s conditioned upon the existence of a similar liability on the part of the dependants under s.99 or s.100. The true position is therefore that only the amount of $14,500.00 received pursuant to s.43(3) of the Act would have had to be deducted from the damages recovered. Nevertheless the figure having been agreed at the trial it is now too late to re-open the issue and counsel for the appellant has not attempted to do so. The only ground upon which the appellant relies before this court is that the learned trial judge was wrong in determining that neither s.99 nor s.102 could apply to any damages awarded against the respondent solicitors and that the amount deducted in respect of compensation under the Act should therefore be restored. Both parties agree that the application of s.99 or s.102 depends upon whether the damages recoverable in the action against the solicitors come within the words "damages ... in respect of the death of the employee" as they appear in those two sections. The relevant parts of s.99 and s.102 of the Act are in the following terms: "99. (1) If - (A) wenwcee (b) damages are recovered by, or for the benefit of, a dependant of a deceased employee from the Commonwealth or from any other person in respect of the death of the employee, the succeeding provisions of this section have effect. (2) wwancee (3) Subject to this section, if, before the recovery of the damages by or for the benefit of the employee or dependant, any compensation under this Act was paid to the employee in respect of the injury, loss or damage or for the benefit of the dependant in respect of the injury that resulted in the death, as eee eee ae ee eee —— ere evernremn sm e e Le | AE WL 5. the case may be, the employee or dependant is liable to pay to the Commonwealth the amount of the compensation paid to him for his benefit or, if the amount of the damages recovered by him or for'his benefit is less than the amount of that compensation, the amount of those damages." "102. (1) Where a person other than the Commonwealth appears to be liable - (A) wecccee (b) to pay damages to a dependant of a deceased employee in respect of the death of the employee, being death that resulted from an injury in respect of which an amount of compensation has been paid under this Act, the Commonwealth may, by notice in writing to the person, require the person, in the event of the person agreeing to pay damages to the employee in respect of the injury, loss or damage or to the dependant in respect of the death or in the event of damages against the person being awarded to the employee in proceedings instituted in respect of the injury, loss or damage or to the dependant in proceedings instituted in respect of the death, to pay to the Commonwealth so much of the amount of the damages as does not exceed the amount that would be payable by the employee or dependant to the Commonwealth under section 99 or 100 if the damages had been paid to or in respect of the employee or dependant, and the person shall comply with the notice." The difference between these two sections 1s that s.99 1s directed to the dependants of the deceased employee; it imposes a liability on them to repay the compensation received from the Commonwealth pursuant to the Act out of judgment moneys recovered. Section 102 1s directed to the situation where a third party 1s liable to pay damages to the dependants of the employee in respect of the death of the employee, but has not yet done so. In this Situation it allows the Commonwealth to recover the compensation due for repayment directly from the third party. rn er ee emer oct ee te ne ee ne i The two sections complement one another. Where damages have been recovered the Commonwealth, relying on s.99, can look to repayment from the dependants. Where damages appear to be payable but have not yet been recovered by the dependants, the Commonwealth can- look to the persons liable to the dependants for repayment. In the present case counsel have advised the court that since damages have in fact been paid, s.99 1S the relevant section, but in our view whether this section or s.102 applies makes no difference. The meaning of the words "damages ... in respect of the death of the employee" 1s the same in both. The court was urged by the appellant to interpret the words "in respect of" as having a wide meaning. It was claimed that these words were satisfied if there be some connection or relation between the two subject matters to which the words refer. In support of this contention the appellant relied upon the dictum of Mann CJ in Trustee's Executors & Agency Co Ltd v. Reilly [1941] VLR 110. At p.111, his Honour said "the words 'in respect of' are difficult of definition, but they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer". This dictum has been followed 1n England in Paterson v. Chadwick [1974] 2 All E.R. 772, though not in Ackbar v. C.F. Green & Co Ltd [1975] 1 Q.B. 582. There is ample authority for the proposition that the words "in respect of" are words of wide import. We would add to the above authorities cited by counsel the dicta of Menzies J. in Genders v. GIO of NSW (1960) 102 CLR a ee me ce TE ne ef mene OL 2 meee enn CCE ar 7. 363 at p.387; Theiss Bros Pty Ltd v. N.Z. Insurance Co Ltd (1968) 13 FLR 3 at p.6; and Strang v. Sargent (1968) 13 FLR 29 at p.39, confirmed on appeal as Club Motor Insurance Agency Pty Ltd v. Sargent (1969) 118 CLR 658 by Taylor J. at p-661 and Owen J. at p.664, The respondents on, the other hand contended that the relationship between the two subject matters needs to be one of law, not merely of fact, before the term "in respect of" becomes appropriate. They relied upon Burger v. Indemnity Mutual Marine Assurance Co Ltd [1900] 2 QB 348 and R. v. Barnet (and Area) Rent Tribunal; Ex parte Millman [1950] 2 KB 506. In the Barnet Rent Tribunal case it was held that a payment did not constitute a premium "in respect of" the grant of a tenancy prohibited under s.18 of the Landlord and Tenant (Rent Control) Act 1949 merely because 1t could be said that no tenancy would have been granted but for the payment. This was so even though the Court of Appeal recognised that, read in their widest sense, the words could bear this interpretation. It 1S clear that the words "in respect of" can convey a meaning of wide import, but their exact width will depend upon the context in which they appear. Reference to individual cases on different statutes is of little assistance in determining their particular meaning. The court has to construe the meaning of the words with reference to the purpose or object underlying the legislation in which they appear. (S.15AA of the Acts Interpretation Act 1901). a Re . We proceed therefore to examine the purpose and 'object of the Act 1n general and the repayment provisions in particular. The history and rationale of the workers' compensation legislation, and its relationship to common law tort liability is conveniently set out in Fleming, The Law of Torts, 5th ed., pp. 491-494 and in Sykes & Yerbury Labour Law Vol.1 at pp.310-340. We refer also to the history and operation of the Workers" Compensation Act 1916 (Q1d) in the judgments of Gibbs J. (as he then was) and Aickin J. in McDowell v. Baker (1979) 144 CLR 413; 26 ALR 277. It may be noted that what 1s said there concerning the relationship between workers' compensation and common law tort liability is equally germane to its relationship to a claim under the Compensation to Relatives legislation, in this case the Compensation (Fatal Injuries) Ordinance 1968. : The Workers" Compensation Acts were introduced to protect the worker against the inevitable toll of injuries resulting from industrial production. The right to workers' compensation does not depend upon proof of fault on the part of the employer. It 1s not designed to deter negligent disregard for workers' safety, but to spread the cost of those unavoidable injuries over the industry as a whole rather than leave them to fall upon the hapless individual victims. Unlike the practice in the United States, Canada, Germany and France, English and Australian practice has been to leave the common law remedies in respect of a tortious industrial injury intact. This raises the possibilty of double compensation. The original English legislation and the varlations thereon enacted in the different Australian jurisdictions sought to circumvent this contingency by preventing an injured worker pursuing both compensation under the statute (compensation) and any other perceived right of action, either against his employer or some third party (damages). This was effected by two types of provision, an "election" provision and an "anti-double recovery" provision. An election provision required a worker to make a conscious decision as to which remedy he would pursue. The receipt of compensation was evidence of such an election but not conclusive evidence. An anti-double recovery provision created, quite independently of any conscious decision, a statutory bar to recovery under any other law where compensation payments had been received. Examination of the original form of the Commonwealth Employees' Compensation Act 1930, the forerunner to the present Act, reveals both types of provision. Sections 9(9) and 17(a) were "anti-double recovery" provisions, s.9(a) relating to a claim against the Commonwealth, s.17(a) to a claim against a third party. Section 9(d) was an election provision reguiring an employee to undertake not to claim compensation under any other law, either from the Commonwealth or any other person, before the Commonwealth became liable to pay compensation under the statute. This type of system proved unsatisfactory 1n a number of respects. First, the uncertainties of litigation were such that an injured worker who wrongly chose to forego 10. compensation under the statute in favour of his rights at law could end up with no compensation at all. Thus the non-fault system could be defeated. Secondly, a worker who accepted compensation payments under the statute in ignorance of his common law rights would lose those rights and the more ample remedy which they afforded. Thirdly, the delay between the injury and the determination of the action would often leave the injured worker and/or his family in severe financial hardship for a substantial period. The Commonwealth Employees' Compensation amending Act No. 61 of 1948 sought to overcome this unsatisfactory situation. Sections 9 and 17 were repealed and replaced by provisions which allowed an employee to pursue and recover both compensation under the statute and whatever damages were available under any other law. At the same time certain conditions were imposed which were designed to safeguard against over compensation. Where a third party appeared liable to pay damages, the employee was not entitled to retain both compensation under the statute and those damages (s.71(a), but wasS obliged to repay the compensation to the Commonwealth out of the damages recovered (s.17(c)). Where the Commonwealth itself was otherwise liable, the claim in respect of that other liability had to be brought within 12 months of the first receipt of compensation under the statute (s.17A(3)}) and the amount already received as compensation was deducted from the amount of damages recoverable (sS.17A(4)). This scheme has been retained 1n the present Act, though not in identical form, and the court should construe 11. the words "damages ... in respect of the death of the employee" as they appear in ss.99 and 102 as part of that scheme. It is convenient to note at this point that in one sense 1t really makes no difference, as far as the appellant in this case is concerned, whether these words are given the wide meaning for which she has contended or the more narrow one suggested by the respondents. In the long run what the court has to decide is whether the Commonwealth (the negligent employer) or the defendants (the negligent solicitors) should bear the cost of the $18,090.00 paid to the appellant by way of compensation under the Act. It is therefore relevant to determine the underlying purposes of the scheme of the Act vis-a-vis the employer rather than vis-a-vis the employee. The first and most basic purpose of the Act, which 1s evident from the fact that fault 1s not a necessary pre-requisite to payment of compensation, is to ensure that the Commonwealth bears the cost of work related personal injuries sustained by its employees rather than those employees themselves. The second purpose, which applies where the Commonwealth is legally at fault, 1S to ensure that the Commonwealth 1s not required to pay twice for the same injury. It 1s to ensure, subject to certain exceptions connected with the payment of dependent children's allowances, that the Commonwealth does not have to pay the full amount of damages at law on top of what it has paid by way of compensation: this is reflected in the provision for 12. repayment of compensation where damages are recovered against the Commonwealth (s.99). The third purpose 1s to ensure that, notwithstanding the liability of the Commonwealth to pay compensation under the Act, the cost of compensating the injured employee for his injuries should fall where possible on the person otherwise legally responsible for them. This purpose is reflected in the provisions for repayment of compensation where damages are recovered against a third party "in respect of" the injuries or death of an employee (s.99); the provision allowing the Commonwealth to request that an action be brought against a person who appears to be under a legal liability to pay damages in respect of the death of or injury to an employee and where that 1s not done bring such an action itself (s.101); and in the provision which allows the Commonwealth to direct that part or all of the damages recovered be paid directly to 1t in satisfaction of its claim for repayment of compensation (s.102). These provisions are the successors to provisions in the earlier Act which served a similar purpose or object. Section 17 as it originally stood in the Commonwealth Employees' Compensation Act provided that where the injury 1n respect of which compensation had been paid pursuant to the statute "was caused under circumstances creating a legal liability in some person other than the Commonwealth to pay damages in respect thereof", the Commonwealth was "entitled to be indemnified by the person so liable". After the amending Act of 1948, s.17 provided for the repayment of compensation either by the employee or 13. the third party, and for the bringing of an action at the request and expense of the Commonwealth where the injury in respect of which the compensation had been paid was "caused in circumstances which appear(ed) to create a legal liability 1n some person other than the Commonwealth to pay damages in respect of the injury". It 1s noteworthy that in each case, the Commonwealth was relieved of the burden of compensating the employee where some third party was liable because of the circumstances in which the injury to the employee was sustained. This, in our view, is also the purpose or object of the present Act and the provisions of ss.99, 101 and 102. "Damages ... recovered ... from any other person in respect of the death of the employee" in s.99, and damages which another person appears liable to pay and has agreed to pay or which have been awarded against that person "1n respect of the death of the employee" in s.102(1){(b) are therefore to be construed as equivalent to and co-extensive with the damages seen in prospect in s.101(1)(a)(11). They are damages recoverable where the liability to pay arises on account of the circumstances of the employee's death. In the present case 1t could not be said that the liability of the solicitors to pay damages occurred in circumstances that appeared to create a legal liability in the solicitors to pay damages in respect of the death of the employee. The Commonwealth could not have requested the appellant to commence proceedings against the solicitors under s.101 of the Act and cannot, in our view, recover compensation already paid out of the damages recovered now 14. that the action against the solicitors has in fact been brought and liability determined. We are fortified in our conclusion on this point by consideration of the overall result. Had the appellant never seen any solicitors with a view to bringing an action under the Ordinance, the Commonwealth would be in exactly the same position as it 1s 'in now, namely, 1t would have paid out under the Act compensation in the sum of $18,090.00 which it could not recover. Had the action been brought in time, 1t would have been substantially worse off, having to pay out a net amount of damages and compensation totalling in excess of $80,000.00. Through the negligence of the solicitors 1t has been fortuitously relieved of a liability in excess of $60,000. The policy of the Ordinance in placing a time limitation on the bringing of an action is to ' provide a defence to the prosecution of stale claims. We can see no reason, either on the grounds of policy or elementary justice, to construe the Act as allowing the Commonwealth in the present circumstances to escape even further the burden of compensating the dependants of a worker for whose death it was legally responsible. On the hearing of the action it was agreed that the figure referred to earlier in this judgment as the maximum recoverable in the statute barred action should be reduced by the sum of $300.00, representing the contribution by the Commonwealth towards the deceased's funeral expenses. The learned trial judge also concluded that a discount of $4,000.00 would have been allowed in respect of 15. various contingencies, and this figure has not been challenged. In our view the trial judge was correct in holding that ss.99 and 102 did not apply. We therefore dismiss the appeal with costs. I certify that this and the FourTEtn prececing pea-'es are a true copy of the Reasons for Judgment herein of?hev Honours Mr. Justice BUCKHURN, Mh Jatt. GAUEP tM Justice NEAWVES oc Jonctz tovenae-h * Associate Dated: 3.5.84 te Caco F