District Court New South Wales Medium Neutral Citation: Aboriginal Health & Medical Research Council v The Coast Golf and Recreational Club Limited [2012] NSWDC 121 Hearing dates: 21/08/2012 Decision date: 23 August 2012 Jurisdiction: Civil Before: Elkaim SC DCJ Decision: Judgment for plaintiff for $13,185.37 Catchwords: Entitlement to interest on compensation payments. Section 151Z(1)(d). Legislation Cited: Civil Procedure Act 2005 Uniform Civil Procedure Rules 2005 Workers Compensation Act 1987 Cases Cited: Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270 Screenco Pty Ltd v R L Dew Pty Ltd (2003) 58 NSWLR 720 Category: Principal judgment Parties: Aboriginal Health & Medical Research Council (Plaintiff) The Coast Golf and Recreational Club Limited (Defendant) Representation: P Rickard (Plaintiff) J Sexton SC (Defendant) Stiles Lawyers Pty Ltd (Plaintiff) Thompson Cooper Lawyers (Defendant) File Number(s): 2012/00145805 Publication restriction: No Judgment 1This is an argument about $13,185.37. This amount is the interest on workers compensation payments that were paid by an employer (via its insurer) to a worker (Ms Peggy Carter) who was injured on her way to work on 2 October 2009. 2The plaintiff's claim is made under Section 151Z(1)(d) of the Workers Compensation Act 1987 (the "WCA"). This section, in very broad summary, entitles an employer who has paid workers compensation to an injured worker to recover those payments from a third party who caused the injury to the worker and is accordingly liable for damages to the worker. 3In the present case the employer (the plaintiff) has recovered the workers compensation payments it made but also, as already stated, seeks interest. 4There is no doubt, as a general statement, that where Section 151Z(1)(d) is applicable, interest may be recovered on the amount paid under Section 100 of the Civil Procedure Act 2005 (the "CPA"). 5The defendant denies the plaintiff's entitlement to interest for two reasons both of which may be categorised as a failure on the part of the plaintiff to prove the necessary ingredients of the claim. 6I think the starting point is to set out Section 151Z(1)(d): "(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: (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)." 7The next introductory step is to add two important facts to the chronology, Exhibit A. It can be seen from the chronology that on 14 May 2012 Ms Carter's proceedings settled in the District Court sittings in Nowra. The first point is that a Consent Judgment was handed up and orders were made accordingly. (The Consent Judgment is included in Exhibit C.) The second addition to the chronology is that on 30 July 2012 an Amended Consent Judgment was filed in the District Court at Nowra and apparently sealed by the Registrar. The only difference between the Consent Judgment and the Amended Consent Judgment (also in Exhibit C) is the addition of the words "By Consent and without admission of liability". 8I think it fair to say that the defendant accepts that if the plaintiff established the applicability of Section 151Z(1)(d) then, putting aside the rate of interest, there would be a prima facie entitlement to interest. 9The defendant, however, says that there should be no award of interest in the present case for either or both of the following two reasons: A Section 151Z(1)(d) is predicated on the third party having a "liability" to the worker to pay the damages. The defendant says that because the matter was 'settled' the plaintiff has not established any such liability. The plaintiff has not tendered or called any evidence to show that the defendant was liable to Ms Carter for damages. B The entitlement to damages under Section 100 of the CPA is discretionary. The intent is to compensate a party that has been kept out of its money for a period of time for the loss consequently suffered. Because this action is effectively between two insurers, and is therefore a commercial dispute, it is incumbent upon the plaintiff to lead evidence of the cost to it of being deprived of the moneys that were paid by way of workers compensation payments. To award interest at the court rates, as has been claimed by the plaintiff, would be to give the plaintiff a windfall because, submitted the defendant, these rates are unquestionably higher than rates that the workers compensation insurer might have achieved on a commercial basis. It was therefore incumbent upon the insurer to provide evidence of the actual cost of being out of pocket in order for the discretion to be exercised in its favour. 10I will deal with each argument in turn. A Failure to establish the liability required by Section 151Z(1) 11The plaintiff submitted that the present case fell precisely within the judgment of the Court of Appeal in Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270. Kwanchi also involved a matter being settled and the compensation payments being repaid under the Terms of Settlement. At page 281 Handley JA said the following: "In my judgment therefore the appellant, having had a cause of action when it commenced these proceedings which it lost when its compensation payments were repaid, is entitled to an order under s83A(1A) for the payment of interest on its compensation payments for the periods between payment and recoupment." 12The plaintiff next submitted that the Consent Judgment entered by Neilson DCJ on 14 May 2012 created a liability emanating from the judgment itself. Having been entered it could be enforced and there could be little doubt that the defendant was liable to pay the judgment sum, less any agreed deductions, to Ms Carter. 13The plaintiff further submitted that the agreement (the Consent Judgment) inferred an admission of liability on the defendant's part to Ms Carter. Why else would the defendant agree to pay the judgment sum to her? 14In relation to the liability arising from the entry of judgment itself, the defendant said that this liability was a different liability to that envisaged by Section 151Z(1). The liability required by the WCA was one that arose from the circumstances of the injury, not one that was created by the entry of judgment. 15As to liability being derived by inference, the defendant submitted that the inference was not available because: (a)The amount paid was not necessarily the value of Ms Carter's case. It may have been a product of a compromise reflecting the insurer's buying out of a risk notwithstanding that it was of the view that it was not liable to Ms Carter. (b)The Consent Judgment as handed up to the Court on 14 May 2012 had been replaced with the Amended Consent Judgment which included the words "without admission of liability" thereby reserving any issue of liability said to arise from the entry of judgment. 16As to the last point made by the defendant, the plaintiff responded that when the moneys were paid to the plaintiff by the defendant's solicitors, on 22 May 2012, it was only the initial Consent Judgment that had been filed. The amended document came later and was therefore irrelevant. 17In my view, the defendant is correct in submitting that the liability required by the WCA was a different liability to that which might be derived from the mere entry of judgment. 18I also think the defendant is correct in submitting that the settlement of a case, including a judgment, could not of itself establish liability because, without more, the agreement might have been the product of a compromise which took into account a liability argument. 19I do, however, think an inference can be drawn from the terms of the Consent Judgment (and the Amended Consent Judgment) that establishes the liability required by the WCA. This inference is derived from clause 5 of the Consent Judgment (and the amended document), which is as follows: "The Defendant or its insurer is authorised to deduct and/or pay from the said sum any moneys repayable in respect of this action by the Plaintiff to any person or body whether in respect of workers' compensation, social services, sick leave payments, make-up pay, accident pay, or any amount payable to the Commonwealth under the Health and Other Services (Compensation) Act 1995 (Cth) or the Health and Other Services (Compensation) Care Charges Act 1995 (Cth) or otherwise and whether in respect of any statute, regulation, award or agreement or otherwise concerning which any demand or notice has been served on or given to the Defendant or its solicitor or insurer either before, on or after the date hereof." 20The payment by the defendant to the plaintiff, made on 22 May 2012, was made pursuant to the above clause. In order for moneys to be "repayable in respect of this action by the plaintiff ... in respect of workers' compensation ..." there must have been a liability creating the obligation to repay. That liability can only be the liability of the defendant to Ms Carter which is precisely the liability envisaged by Section 151Z(1). The payment by the defendant under clause 5 confirms this interpretation. 21Accordingly, I am of the view that the defendant's argument that no liability has been established must fail. 22I should deal with another point that arose in discussion. The plaintiff submitted that if the defendant's argument was correct there would be a separate hearing on liability in circumstances such as the present when only a claim for interest was being pursued, the compensation payments having been repaid under the settlement. This would amount to an effective doubling up of proceedings, remembering that the plaintiff (workers compensation insurer) in pursuit of its rights under Section 151Z(1)(d) would need to effectively run the worker's case. This, however, had already taken place even if resolved by settlement. The defendant submitted that this might eventuate but was a product of the WCA requiring the workers compensation insurer to establish liability on the part of the third party. 23The plaintiff further reminded me that the judgment in Kwanchi involved the same circumstances as the present case. Therefore to give credence to the defendant's argument would be contrary to this decision. I cannot see any distinction between the present case and Kwanchi, but if I am wrong it does seem to me that there would be a fundamental inconsistency in running a full hearing on liability to recover interest when there has been no dispute about the return of the workers compensation payments. B The discretion to award interest 24The defendant relied on these paragraphs from the judgment of Handley JA in Screenco Pty Ltd v R L Dew Pty Ltd (2003) 58 NSWLR 720 at 740: "[89] Nevertheless, the above passage is pertinent in that it emphasises the need, particularly where commercial transactions are involved, to consider whether, as a matter of practical reality, the appellant did in fact sustain loss or detriment by virtue of being kept out of its judgment money. Further, as Clarke JA pointed out in Star v O'Brien (1996) 40 NSWLR 695 at 701G (albeit dissenting in the result), all the circumstances must be considered in order to ensure that an award of interest is substantially just for both parties. As his Honour observed, the general rule is not to be regarded as an inflexible maxim to be applied in all circumstances. [90] In my opinion, it follows from the foregoing considerations that pre-judgment interest is only to be awarded to a plaintiff where, as a consequence of being deprived of the use of the judgment money during the relevant period, it has suffered a real and practical loss or detriment for which it should be compensated in order to ensure that it is restored fully to the position in which it would have been but for the defendant's wrongdoing." 25The defendant submitted that the present case was a commercial dispute. It was an argument between two insurance companies. There was no evidence of "a real and practical loss or detriment" which had been suffered by the plaintiff. Accordingly, in the exercise of my discretion, I should not award interest. The defendant added that to apply the generous interest rates prescribed by the Uniform Civil Procedure Rules 2005 (Schedule 5) would be to endow a windfall upon the plaintiff. 26The plaintiff countered with two arguments. Firstly it was said that if I were to award no interest then the windfall would be to the defendant notwithstanding that it was the plaintiff that had been deprived of its money for a period of time. Further, again in my discretion, I could take into account that besides being deprived of the use of the money the plaintiff had also incurred various administrative costs, which although not recoverable under Section 151Z, could be taken into account in the discretion concerning interest. 27The plaintiff also pointed out that in Kwanchi the Court had, apparently, applied the court rates. The defendant observed that the interest rate point had not been taken in the Court of Appeal. 28My initial inclination was that neither side should have the benefit of a windfall so that the amount claimed by the plaintiff should be reduced by say 50% to achieve a fair result. Upon reflection, however, I have come to the view that in the exercise of my discretion I should allow the whole of the amount claimed. Although there is no specific evidence of the cost to the plaintiff of being deprived of its money, there is no doubt that it has been so deprived and that it could have made use of the money. 29I do not know that the court rates are necessarily different to commercial rates and secondly the setting of the rates by the court (even though specifically designed for interest after judgment) is nevertheless an indication that the rates reflect, at least in broad terms, the general market. 30I therefore allow the full amount claimed. 31I make the following orders: (a)Judgment for the plaintiff in the sum of $13,185.37. (b)The defendant is to pay the plaintiff's costs. 32The above costs order is subject to any application for a different costs order as sought by either party. ********** 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. Decision last updated: 23 August 2012