Reported Decision : 53 NSWLR 518 New South Wales Court of Appeal CITATION : WorkCover Queensland v Seltsam Pty Limited [2001] NSWCA 457 FILE NUMBER(S) : CA 40376/01 HEARING DATE(S) : 22/11/01 JUDGMENT DATE : 22 November 2001 PARTIES : WorkCover Queensland (Appellant) Seltsam Pty Limited (Opponent) JUDGMENT OF : Priestley JA at 34-38, 51; Young CJ in Eq at 1-33; Ipp AJA at 39 LOWER COURT JURISDICTION : District Court LOWER COURT 201/01 FILE NUMBER(S) : LOWER COURT Gibb DCJ JUDICIAL OFFICER : COUNSEL : P A Keane QC and A L McSpedden (Appellant) T G R Parker (Opponent) SOLICITORS : Turner Freeman (Appellant) Windeyer Dibbs (Opponent) CATCHWORDS : Workers' compensation- Queensland legislation- WorkCover entitled to statutory indemnity from tortfeasor- Act declares that to that end WorkCover subrogated- Whether WorkCover must sue in worker's name- District Court Judge held it must do so- Reversed. (D) Acts Interpretation Act 1954 (Qld), s14A Interpretation Act 1987 (NSW) s 33 Law Reform (Miscellaneous Provisions) Act 1944 (NSW), s 2(2) Limitation of Actions Act 1974 (Qld) LEGISLATION CITED : Motor Accident Insurance Act 1994 (Qld), Part 4, ss 34, 37, 52 Succession Act 1981 (Qld), s 66(2) WorkCover Queensland Act 1996, ss 278 & 526(2) Workers Compensation Act 1916 (Qld) Workers Compensation Act 1990 (Qld) Adamson v Melbourne & Metropolitan Board of Works [1929] AC 142 Austral Pacific Group Pty Ltd v Air Services Australia (2000) 74 ALJR 1184 Bonser v Melnacis [2000] QCA 13 Esso Petroleum Co Ltd v Hall Russell & Co Ltd [1989] 1 AC 643 Ex parte Workers' Compensation Board of Queensland [1983] 1 QdR 450 Fackler v Berry 25 SE 887 (1896) (Virginia) Gill v Registrar General (1991) 5 BPR 11587 King v Phoenix Assurance Co [1910] 2 KB 666 CASES CITED: Manners v Transfield Pty Ltd (1992) 110 ALR 70 Metal Manufacturer Ltd v Lewis (1988) 13 NSWLR 315 State of New South Wales v Commonwealth Bank of Australia [2001] NSWSC 1067 Tickle Industries Pty Ltd v Hann (1974) 130 CLR 32l Tuckerwood v Rotherham Corp [1921] 1 KB 526 Victorian WorkCover Authority v Esso Australia Ltd (2001) 75 ALJR 1513 Webber v Bryant 37 NE 203 (1894) (Mass) Westpac Banking Corporation v Tomassian (1992) 32 NSWLR 207 Workers' Compensation Board of Queensland v The Nominal Defendant (Queensland) [1989] 1 QdR 356 DECISION : 1. Leave to appeal granted; 2. Appeal allowed ; 3. Order of District Court set aside and in lieu thereof order that the notice of motion be dismissed without prejudice to reactivating part not dealt with below and on appeal; 4. Opponent to pay majority of appellant's costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40376 of 2001 PRIESTLEY JA YOUNG CJ in EQ IPP AJA Thursday 22 November 2001 WORKCOVER QUEENSLAND v SELTSAM PTY LIMITED Judgment 1 YOUNG CJ in EQ: The Court is considering whether leave to appeal should be given in respect of a judgment of her Honour Gibb DCJ on 4 May 2001. 2 The motion has been argued on the basis that the leave application and the appeal would be considered concurrently. The applicant also needs an extension of time for the filing of a summons for leave to appeal as it erroneously assumed until after the time expired that an appeal lay as of right and filed a holding appeal. Nothing was said in argument about any prejudice because of this time factor and I will, accordingly, ignore it. On 12 January 2001, the appellant lodged the statement of liquidated claim in the District Court, claiming $235,640 from the opponent, allegedly being the amount of workers' compensation payments made by the appellant, to one Ronald James Smith pursuant to s 278 of the WorkCover Queensland Act 1996 of the State of Queensland. On 1 March 2001 the present opponent filed a notice of motion seeking to dismiss the claim with a back up application that the matter should have been commenced by ordinary statement of claim. 3 The notice of motion stated the grounds for seeking those orders as follows: 1. The plaintiff claims it has, by virtue of s 278 of the WorkCover Queensland Act 1996 (Queensland), been subrogated to such rights as Ronald James Smith had to commence proceedings against the defendant. Any such claim must be made in the name of Mr Smith and not the plaintiff. 2. In the alternative, the claim to which the plaintiff claims to be subrogated is a claim for damages to be assessed by the Court and not a claim for a liquidated amount. 4 Section 278(7)(8) and (9) of the Queensland Act is as follows: "(7) If a person who has received compensation has not recovered, or taken proceedings to recover, damages for the injury from another person, other than the worker's employer- (a) WorkCover is entitled to be indemnified for the amount of the compensation by the other person to the extent of that person's liability for the damages, so far as the amount of damages payable for the injury by that person extends; and (b) to that end, WorkCover is subrogated to the rights of the person for the injury. (8) Payment made as indemnity under subsection (7), to the extent of the payment, satisfies the person's liability on a judgment for damages for the injury. (9) In addition to all rights of action had by WorkCover to give effect to its right to indemnity under this section, all questions about the right and the amount of the indemnity may, in default of agreement, be decided by an industrial magistrate if all persons affected by the indemnity consent." 5 The facts that were assumed by consent by the District Court Judge were that Mr Smith was at one stage employed as a truck driver in Queensland. In the course of that work Mr Smith handled asbestos cement fibro products manufactured by the defendant and in so doing was exposed to dust disease and fibre. Mr Smith had been paid compensation by the appellant but had died before the proceedings were commenced. No action against the defendant in respect of Mr Smith's injury (which was an injury within the meaning of s 278) had been commenced previously. 6 It would appear that because Mr Smith has died, any action that might now be brought in his name would not only have problems with the Limitation Act of either New South Wales or Queensland but, even if it surmounted that barrier, it would be for a reduced amount in view of s 66(2)(a) of the Succession Act 1981 (Qld) which roughly accords with s 2(2) of the Law Reform (Miscellaneous Provisions) Act 1944 of New South Wales. 7 The learned Judge considered that the first ground of the opponent's notice of motion was made out and dismissed the proceedings with costs. The learned Judge's reasons occupy only four pages of transcript and may be briefly summarised thus. She noted that, prior to 1990 (when the then version of s 278(7) was introduced) there was no doubt that the workers' compensation authority could sue in its own name in the present type of action and referred to Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321. However, the word "subrogated" was introduced by the 1990 amendments. The cases showed that the word subrogation had an accepted meaning. The present appellant's arguments that the 1990 amendments intended no fundamental change were difficult to accept. It was said that this was reinforced by the fact that in Bonser v Melnacis [2000] QCA 13, the Queensland Court of Appeal had said at para [46] that the object of the 1990 amendments was to confer additional and enhanced powers upon WorkCover to pursue co-tortfeasors for recovery of both damages and compensation. Notwithstanding this, she held the wording of the statue was not ambiguous and must have the meaning contended for by the present opponent. 8 Counsel for the appellant strongly submit that her Honour reached the wrong conclusion. The basal submission of the appellant's argument in its counsels' written argument was that the 1990 amendments added a right of subrogation to the then existing recovery rights of WorkCover. However there are obviously great difficulties in making out that argument and it was much refined during the oral argument as will, I hope, hereafter appear. 9 Appellant's counsel submit that prior to 1990 it had been authoritatively laid down that WorkCover or its predecessor had a statutory right of indemnity independent of any action by the worker to recover against the alleged tortfeasor. This was decided in connection with similar Northern Territory legislation in Tickle's case which was followed in Queensland in Ex parte Workers' Compensation Board of Queensland [1983] 1 QdR 450 and Workers' Compensation Board of Queensland v The Nominal Defendant (Queensland) [1989] 1 QdR 356, 358 (Full Court). 10 It is necessary in my view to set out the brief history of the present s 278. Prior to the Workers' Compensation Act 1990 the corresponding provision, clause 24A of the schedule to the 1916 Act provided for simple right of indemnity for the workers' compensation authority. When the statute was overhauled in 1990 the present form of 278(7) and (8) became s 10.8(3) subsequently renumbered as s 190(5) and (6). The word "overhaul" was actually used in the second reading speech. Mr T G R Parker for the opponent in a statement with which Mr Keane QC who appeared with Mr McSpedden for the appellant concurred said that is was difficult to classify the 1990 Act as a mere consolidation of what went before. So that there is perhaps some significance in that word, "overhaul". 11 There was an explanatory note to the 1990 Act referring to clause 10.8 which reads: "Clause 10.8 specifies that: any compensation paid to a worker shall become first charge against any damages settlements; if a claimant does not exercise the right to claim damages, then the Board is entitled to rights of subrogation; a worker shall not settle a claim for damages for less than the amount paid in compensation, without the consent of the Board." 12 The explanatory notes to the present Act say that the current section is a re-enactment of s 190 of the 1990 Act updated in accordance with modern drafting practice. The note speaks in terms of indemnity: The word "subrogation" does not appear. 13 To my mind, the section does create an ambiguity. Mr Parker says that there are only two possible constructions of the Act: (a) that there is now only one cause of action, namely, subrogation; or (b) that there are two inconsistent causes of action. Although his submissions were more complex than that, to simplify them, he says that (b) is absurd therefore (a) is right. However, the major problem with that argument is that when one looks at the concepts of indemnity and subrogation (a) is equally absurd. 14 The appellant says and I think, with reservations, the opponent agrees, that we should give the section a purposive construction and relies in part on s 14A of the Acts Interpretation Act 1954 (Qld) which is similar but not in identical terms to s 33 of the Interpretation Act 1987 (NSW). I am not at all sure whether this section can be employed to deal with the 1990 Act, however, in any event, a purposive approach to the statutes is a commonplace method of approach in this twenty-first century and thus we should view the statute in that light. 15 Mr Parker says that in all legislation of this nature the legislature is involved in a balancing exercise and that the 1990 amendments altered the balance from what was before. He says that, accordingly the Court should not approach the construction of s 278 with any preconceptions. He submits that what went before 1990 is really irrelevant to what the Queensland Parliament did in that year and that the Court may only proceed on the basis of the words used. He further says that it is again dangerous to introduce concepts of policy into the construction exercise and points to what Mahoney JA said in this Court in Metal Manufacturer Ltd v Lewis (1988) 13 NSWLR 315, 325-6 as to the dangers of so doing. 16 However once we had dealt with the general principles of construction and came down to considering the construction of this particular Act, Mr Parker was really forced into the situation of saying that whilst the indemnity was still in effect the only mechanism provided to enforce the right of indemnity was subrogation and accordingly there is now only an indirect action in the worker's name. However when one analyses that submission it really plays with semantics and really there is no escape by that route from saying that the right of indemnity has really disappeared and been replaced with a lesser right of subrogation. That sort of construction would be very strange indeed. 17 However, the word "subrogation" was deliberately inserted in the 1990 Act and one must presume that the legislator did what it did thoughtfully and there must be some reason for doing so. 18 It is difficult at first blush to see the reason. Moreover when the legislature introduces a word with an accepted technical meaning into an Act the Court usually assumes that it did so with the intent of using the word in its usual technical sense; see for instance Adamson v Melbourne and Metropolitan Board of Works [1929] AC 142, 148. 19 I recently considered the word "subrogation" in Gill v Registrar General (1991) 5 BPR 11587 and again in State of New South Wales v Commonwealth Bank of Australia [2001] NSWSC 1067. I will not repeat the full discussion but it is a matter to the core of the right of subrogation that a person exercising that right must sue in the name of the insured or as the case may be; see for instance Esso Petroleum Co Ltd v Hall Russell and Co Ltd [1989] 1 AC 643. 20 There are cases such as King v Phoenix Assurance Co [1910] 2 KB 666 where the term "subrogation" is employed in a sense of transfer of rights from one person to another. It is also true that a dictionary definition of "subrogation" is simply "put in the place of another". This is the prime definition in the Oxford English Dictionary. However this is a relatively rare use of the term in law. 21 The word "subrogation" in this statute is a peculiar one in any event. The authorities such as Ex parte Workers' Compensation Board of Queensland and Workers' Compensation Board of Queensland v The Nominal Defendant (Qld) to which I have earlier referred, made it quite clear that the right given under the Queensland legislation up to 1990 was a right for the appropriate authority to sue on a statutory indemnity in its own name. Indeed this has been the consistent construction of this sort of legislation; see eg Tuckerwood v Rotherham Corp [1921] 1 KB 526, 540 and most recently Victorian WorkCover Authority v Esso Australia Ltd (2001) 75 ALJR 1513, 1516-7. 22 Furthermore the Limitation of Actions Act 1974 (Qld) apply to WorkCover in respect of the time it actually made its payments and not when the worker's claim originally arose. In the present case we are told that is the year 2000. So that for most purposes the statutory claim for indemnity is a completely different claim than the claim of the worker though there are some quirks in it such as those exposed by the Western Australian Full Supreme Court in Manners v Transfield Pty Ltd (1992) 110 ALR 70. 23 Normally with subrogation, one has the situation of a person such as an insurer paying out an insured in a situation where the insured has a right against the third party. When that occurs the insurer is subrogated to the rights possessed by the insured. That is the usual case of subrogation. However in the instant case, we have a situation where the word "subrogation" is used in connection, not with the right of the worker but with a completely independent right, the right of the authority and that seems very strange. 24 So it is necessary to turn to the phrase with which para (b) of subs (7) commences, "to that end". It is a strange phrase and one that I have not found in the mainstream judicial dictionaries, though the American Words and Phrases Volume 41A (West Publishing Co, St Paul, Minn, 1965) cites two cases involving the phrase or the similar phrase "to the end that", namely Webber v Bryant 37 NE 203 (1894) (Mass) and Fackler v Berry 25 SE 887 (1896) (Virginia). Both of these were will construction cases which throw little light on the present problem. 25 Counsel for the appellant put the words "to that end" indicate that the subrogation is ancillary to the statutory right of indemnity. However it is a little hard to see how a right of subrogation could ever be ancillary to an indemnity. The right of subrogation requires suing in the name of someone else and thus it is a lesser right in many respects than an indemnity. Of course it is also hard to see why the drafter thought it necessary to even mention subrogation in view of the construction adopted by the Queensland courts of the previous decade. 26 And that is the situation in which the Court would be left wondering were it not for the solution put up by Mr Keane QC and Mr McSpedden which, although it is not a panacea to all the problems which could arise, shows that the use of the term subrogation does go a certain way to relieve them. 27 The expression "to that end" is said by Mr Parker to have a meaning such as "which may be exercised by". That is, that there is a right of indemnity but it is only to be exercised by pursuing subrogation and suing in the worker's name. That, really when one thinks about it, is something that is almost impossible to implement. 28 The argument for the appellant is that the purpose was to permit WorkCover to give any notices prior to action which may have to be given in the worker's name. Although the statute considered in Workers' Compensation Board v The Nominal Defendant (Queensland) to which I have already referred meant that WorkCover succeeded in that particular case, it is clear that depending on the terms of some other statute which provided for or limited liability, that result would not necessarily always follow. The recent High Court decision in Austral Pacific Group Pty Ltd v Air Services Australia (2000) 74 ALJR 1184, 1192 at para [32] shows how this can well be so. 29 Counsel for the appellant took us to the Queensland Motor Accident Insurance Act 1994, particularly Part 4 and ss 34 and 37 which contain provisions that claims not notified in a certain way and within a certain time are to be barred. See also s 52. The purpose of a provision involving subrogation is to deal with that sort of problem. 30 Thus Mr Keane QC says that "to that end" discloses the handmaiden status of (7)(b) whose purpose is to aid the indemnity right given in (7)(a). The phrase suggests that the right of indemnity exists but to assist the indemnity WorkCover is given rights of subrogation. Furthermore the phrase "to that end" shows that the subrogation is only a limited subrogation. It is not subrogation to the worker's action, but rather subrogation to the rights of the worker to the extent that it is necessary to aid the WorkCover's indemnity as, for instance, by entitling WorkCover to give notices of action to the appropriate people so that the rights under s 278 will not be lost. That, to my mind, gives the answer or a good answer to the question as to why the concept of subrogation was introduced in 1990 which otherwise would be a great problem. As I have said it is clear that even on this construction it is not a panacea for all problems but it does go a certain way to relieve them. 31 When one then takes into account subsections (8) and (9) the construction for which the appellant contends is reinforced. These subsections assume that there is still a right of indemnity. Indeed subsection (9) speaks of WorkCover's right of indemnity and this to my mind puts an end to assertions that the 1990 and 1996 Acts put an end to the right. This is the only logical conclusion if one adopts the construction put on the legislation by the learned judge and supported by the opponent. 32 Accordingly in my view leave to appeal should be given and the appeal allowed. This means that the second part of the notice of motion would need to be considered. 33 In view of s 526(2)(b) of the 1996 WorkCover Queensland Act and the decision of this Court in Westpac Banking Corporation v Tomassian (1992) 32 NSWLR 207, 220 (see also Victorian WorkCover Authority v Esso Australia Limited (supra)), the second part of the motion is unlikely to succeed. However the opponent should be given the opportunity to argue it fully if need be. I believe the tidiest way of proceeding is to give leave to appeal, allow the appeal, order that the orders of the learned District Court Judge be set aside and in lieu order that the notice of motion of 1 March 2001 should be dismissed with costs without prejudice to the opponent should it be so advised, to file a fresh notice of motion seeking the orders sought on the second ground of the notice of motion. 34 PRIESTLEY JA: I agree generally with what Young J has said. The question before the Court today required the Court to decide between two starkly different interpretations of s 278(7) of The WorkCover Queensland Act 1996 and in particular of para (b) of that subsection. 35 The construction arrived at by the trial judge and which Mr Parker sought to uphold before us amounted in my opinion to saying that the introduction of para (b) in 1990 in the predecessor Act to the 1996 Act had brought about the virtual repeal of what is now para (a) of s 278, subs (7). That construction, with that result, serves no particular purpose that I can see. 36 The construction on the other hand proposed by Mr Keane QC has three features which incline me to accept it. The first is that it leaves para (a) to work in accordance with its terms. Second it gives the words "to that end" in paragraph (b) their ordinary meaning. Third, if Mr Keane's construction is accepted the introduction of para (b) with its reference to subrogation serves a useful purpose. The various ways in which an improvement of the pre-existing situation in Queensland might be seen to have been effected by the amendment were explained to us by Mr Keane in his submissions and summarised in the reasons just given by Young J. 37 My opinion therefore is that the construction proposed by Mr Keane should be adopted. I would add one other matter. There was reference in the course of argument by Mr Keane to the impact of s 66 subs (2) of The Queensland Succession Act (1981) upon the WorkCover legislation. That impact was not immediately apparent to someone not familiar with the Queensland WorkCover Act and its Succession Act. However Mr Keane explained to the Court how the section or the provision in the Succession Act came to do its work in regard to certain aspects of the WorkCover Act. This explanation took us to definition sections in the WorkCover Act and then to chapter 5 of that Act and the explanation seemed, to me at any rate, to justify the use Mr Keane had made of the provision in the Succession Act in his argument. 38 I agree with the orders proposed by Young J. 39 IPP AJA: I agree with Young J and Priestley JA. 40 PARKER: I don't know whether your Honours dealt with the costs of this appeal itself but I'd be arguing that the claimant of course should have other costs but shouldn't have the costs of the extension of time. The application for an extension of time. I think there were affidavits and so forth filed in support of that. 41 PRIESTLEY JA: What was the basic reason for the matter not being in time as disclosed by the affidavits? 42 PARKER: The failure by the claimant's side to appreciate that this was not a final judgment. 43 PRIESTLEY JA: A lack of appreciation with which I sympathise. 44 PARKER: Understandable but we did draw it to their attention. 45 PRIESTLEY JA: How long was the delay? 46 PARKER: I'm not too sure. 47 PRIESTLEY JA: Was there a notice of appeal filed on the basis of the misapprehension? 48 PARKER: Yes. So I'd ask that the costs associated with that process not be part of the costs of these proceedings. 49 PRIESTLEY JA: What do you say Mr Keane? We're minded to say you should have all the costs except any costs associated with the preparation and filing of the affidavit in support of the application for extension of time. 50 KEANE: We wouldn't wish to say anything about that order. 51 PRIESTLEY JA: There has been brief argument about the appropriate costs order in the circumstances where WorkCover had not appreciated that an application for leave to appeal was necessary. The Court takes the view as a result of the argument that all the costs of the proceedings before us should be borne by Seltsam Pty Limited with the exception of the costs of WorkCover of preparation and filing the affidavit in support of extension for time. In regard to those costs we make no order, thus leaving WorkCover to bear its own costs in that respect. ******************** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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