New South Wales Court of Appeal CITATION: Brighton Ceiling Pty Ltd v Pocrnja & Ors [2005] NSWCA 175 HEARING DATE(S): 18 May 2005 JUDGMENT DATE: 18 May 2005 JUDGMENT OF: Giles JA at 1 & 21; Santow J at 19 & 22; McClellan AJA at 20 & 23 DECISION: Leave to appeal granted. Claimant directed to file a notice of appeal within fourteen days. Appeal allowed. In lieu of the order, if any made by Hughes DCJ, the award of the arbitrator be reinstated without modification. Costs order made by Hughes DCJ set aside. No orders for costs either before Hughes DCJ or at the appellate level, to the intent that each side will pay its and their own costs at both stages. CATCHWORDS: Employer's claim for indemnity for worker's compensation benefits paid to worker injured by negligence of third party - s151Z Workers Compensation Act - ceiling of amount of damages worker could have recovered from third party - claim to $104,000 - arbitrator found damages $240,000 - component of non-economic loss of $46,000 - order for limited rehearing in District Court as to that component - could not affect result in employer's claim - hypothetical question - judge should have declined to entertain it. Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334; CASES CITED: Grant v Royal Rehabilitation Centre Sydney (1999) 47 NSWLR 263; Sanderson Computers Pty Ltd v Urica Library Systems BV (1998) 44 NSWLR 73. Brighton Ceiling Pty Ltd - Claimant/Appellant Mikan Pocrnja - First Opponent/First Respondent PARTIES: Alan Ghialis - Second Opponent/Second Respondent State Transit Authority of NSW - Third Opponent/Third Respondent FILE NUMBER(S): CA 40525/04 L King SC & M Jenkins - Claimant/Appellant COUNSEL: L Morris QC & A Black - First to Third Opponents/Respondents Turks Legal - Claimant/Appellant SOLICITORS: Holman Webb - First to Third Opponents/Respondents LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): DC 947/03 LOWER COURT JUDICIAL OFFICER: HughesDCJ IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40525/04 DC 947/03 GILES JA SANTOW JA McCLELLAN AJA Wednesday 18 May 2005 BRIGHTON CEILING PTY LTD v POCRNJA & ORS Judgment 1 GILES JA: This is an application for leave to appeal from a decision of Hughes DCJ given on 18 June 2004. It has been listed for hearing as a so-called wrapped-up hearing, with full submissions so that if leave be granted, the appeal can be determined without further delay. For reasons which will appear, however, the application and the appeal should be disposed of in a manner not turning upon the substantive question posed for decision. 2 The circumstances were as follows. 3 Mr Goran Pocrnja was injured in a motor accident. He was the passenger in a vehicle driven by his brother, Mr Mikan Pocrnja, when it was struck from behind by a vehicle owned by the State Transit Authority of New South Wales and driven by Mr Allan Ghialis. Mr Goran Pocrnja was employed by Brighton Ceiling Pty Limited, and the accident occurred on his way to work. He became entitled as against that company to benefits pursuant to the Workers Compensation Act 1987. Benefits were duly paid. 4 By an ordinary statement of claim filed on 5 March 2003 Brighton Ceiling Pty Limited claimed from Mr Mikan Pocrnja, Mr Ghialis and the State Transit Authority of New South Wales indemnity pursuant to s 151Z of the Workers Compensation Act in respect of the payments of workers compensation benefits. Brighton Ceiling Pty Limited is the present claimant and the other persons and company whom and which I have mentioned are the present opponents. 5 In the statement of claim the claimant claimed a little over $70,000 plus any further amounts paid as workers compensation benefits to the date of hearing. It was common ground that the total amount paid was approximately $104,000. Under s 151Z the claimant could not recover from the opponents an amount greater than the damages which Mr Goran Pocrnja could have recovered from the opponents. Under the two-stage process described in Grant v Royal Rehabilitation Centre Sydney (1999) 47 NSWLR 263, it was necessary that the amount of those damages be assessed in order that the ceiling of the claimant's recovery could be fixed. The claim went to arbitration pursuant to the Arbitration (Civil Actions) Act 1983. The arbitrator assessed the notional damages at a sum in the vicinity of $240,000. One component of that sum was damages for non-economic loss of approximately $46,000. 6 The issue between the parties, which was then taken to the District Court, was whether the damages notionally recoverable by Mr Goran Pocrnja included that amount of $46,000. The opponents applied for and obtained an order for limited re-hearing under s 18(2) of the Arbitration (Civil Actions) Act, for hearing of the issue "whether the plaintiff was entitled to the benefit of an allowance for non-economic loss in determining the extent of its indemnity, and if so, the quantum of such amount." 7 The hearing of that issue came before Hughes DCJ. There was some dispute before his Honour concerning evidence on which a determination of quantum could be made, but it is not necessary to go into that. On the question of entitlement, the respective stances were in summary as follows. For the opponents, the parties dissatisfied with the arbitrator's award in the relevant respect, it was contended that damages for non-economic loss could not be included in the assessment of damages in the absence of a certificate concerning the degree of impairment of Mr Goran Pocrnja as referred to in the scheme in ss 131-133 of the Motor Accidents Compensation Act 1999. It was common ground that there was no such certificate. For the claimant it was contended that the issue of a certificate was unnecessary, and that it was sufficient that the tribunal engaged in assessing the notional damages was satisfied that a certificate would have issued in the notional claim by Mr Pocrnja against the opponents. 8 Hughes DCJ favoured the opponents' position, and concluded his reasons by saying that he found "that the claim in the statement of claim fails in respect to the non-economic loss part ... ". That was perhaps not an accurate statement of a resolution of the issue, but in context it can be understood. His Honour did not go on to do that which should have been done under s 18B(2) of the Arbitration (Civil Actions) Act, that is, make an order reinstating the award with the modification appropriate in the light of his decision. So far as appears, no order was made other than as to costs. 9 Had some regard been given to the order to be made as a result of the limited hearing, it would have been appreciated that there would have been no change to the arbitrator's award. That is because even if the $46,000 were taken out of the notional damages assessed by the arbitrator, the damages would still have been very much in excess of the $104,000 claimed by the claimant. This does not seem to have been appreciated before the judge, or indeed until recently in the proceedings in the Court of Appeal, but it was properly drawn to our attention by Mr King SC appearing for the claimant. 10 In the light of that information, attention was directed to whether the subject matter of the application for leave to appeal and the appeal was a hypothetical or academic question, and thus not one which should be entertained. If it was, then equally it was a hypothetical or academic question before Hughes DCJ and, although not appreciated by his Honour or those appearing before him, should not have been entertained. Submissions were received on that matter, and in my opinion the question is not one which should be entertained. 11 The nature of a hypothetical or academic question, and the well-established position that such a question should not be entertained, are discussed in Bass v Permanent Trustee Company Limited (1999) 198 CLR 334 at [45]-[56]. The facts in that case were different from those of the present case, because the difficulty there was that the facts on which the judicial determination was to be made had not been properly established. Their Honours' discussion nonetheless makes clear that the purpose of a judicial determination is to quell a controversy, and that if for whatever reason it will not do so - for example because the question under consideration is not a real question or is one which depends upon facts which are as yet unknown - it is not appropriate for the determination to be made. It is recognised in [47], that it may be declared that conduct which has not yet taken place will not be in breach of a contract or a law, and that such a declaration will not be hypothetical in the sense presently under consideration. But as Sanderson Computers Pty Limited v Urica Library Systems BV (1998) 44 NSWLR 73 shows, there is a difference between declaring the contractual rights of parties and declaring them contingently on one of the parties to the contract electing to take a course which the party has not taken, is not bound to take, and may not take. The same must apply to declarations of a position in law. 12 In my opinion, the principles in the cases to which I have referred apply in the present case in the following manner. The original controversy was the claimant's entitlement to recover $104,000 by way of indemnity pursuant to s 151Z. Once the arbitrator had given his award and the order for limited re-hearing had been made, the question was more limited. As described in the order for limited re-hearing, it came down to whether the claimant was entitled to the benefit of an allowance for the $46,000. But that question had no effect at all on the outcome of the original controversy, the recovery of the $104,000. Nor, if it matters, was there some further controversy waiting in the wings, because it was properly acknowledged before us that the $104,000 was the extent of the payment of workers compensation benefits, that the payment of those benefits had ceased and that any possibility of Mr Goran Pocrnja being paid further workers compensation benefits in consequence of the accident was itself hypothetical. 13 That means, in my opinion, that Hughes DCJ should have declined to entertain the limited re-hearing, and that we should decline to entertain the substantive question which the parties sought to raise by way of appeal from his Honour's decision (meaning thereby the determination his Honour made as distinct from any order which his Honour did not make). 14 There are two ways of dealing with this. 15 One is to take the view that, his Honour not having reinstated the arbitrator's award with the modification appropriate in the light of his decision, the award made by the arbitrator remains, although in the state described in s 18B(2)(a) of the Arbitration (Civil Actions) Act as "suspended". The result before the arbitrator continues to be the operative result. On that view, it would be sufficient to refuse leave to appeal. 16 The other is to grant leave to appeal and, whilst recognising that Hughes DCJ did not make an order reinstating the award, make the order which his Honour should have made in the light of the hypothetical nature of the limited re-hearing, which was reinstating the award without modification. This course has the benefit that it avoids argument over the suspension of the award, and it is, I think, within our power under s 75A of the Supreme Court Act 1970. 17 Accordingly, I propose the orders that leave to appeal be granted, that the claimant be directed to file a notice of appeal within fourteen days, that the appeal be allowed and that it be ordered that in lieu of the order, if any, made by Hughes DCJ, the award of the arbitrator be reinstated without modification. 18 The question of costs is one on which I would wish to hear the parties further. 19 SANTOW JA: I agree. 20 McCLELLAN AJA: I agree. (Counsel addressed on costs.) 21 GILES JA: The present unfortunate situation has come about in circumstances where the opponents were under a misconception in applying for the limited re-hearing, the claimant was under a misconception in applying for leave to appeal, and the opposite party at each stage was obviously enough under a misconception. In my opinion, the correct order for costs is that the order made by Hughes DCJ, which was that the claimant should pay the opponents' costs, should be set aside, and that there should be no orders for costs either before Hughes DCJ or at the appellate level, to the intent that each side will pay its and their own costs at both stages. 22 SANTOW JA: I agree. 23 McCLELLAN AJA: I agree. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.