Employers whose own negligence contributed to a worker's compensable injury cannot recover an indemnity under s 64(1)(b) from a third party tortfeasor; the indemnity right is confined to employers whose sole liability is the statutory obligation to pay compensation.
Later decisions that cite Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd
Decisions cited by Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd
PUBLIC TRANSPORT COMMISSION (N.S.W.) v. J. MURRAY-MORE (N.S.W.) PTY. LTD.
[1975] HCA 28; (1975) 132 CLR 336
Workers' Compensation (N.S.W.)
High Court of Australia
Barwick C.J.(1), McTiernan(2), Gibbs(3), Mason(4) and Jacobs(5) JJ.
CATCHWORDS
Workers' Compensation (N.S.W.) - Employer's right of indemnity where injury caused under circumstances creating legal liability to pay damages in person other than employer - Injury caused by negligence of employer and third party - Whether employer entitled to indemnity from third party - Workers' Compensation Act 1926-1967 (N.S.W.), s. 64 (1) (b).
HEARING
Sydney, 1975, April 21; August 11. 11:8:1975DECISION
August 11.
2. The Supreme Court at first instance found for the respondent, holding it
to be entitled to an indemnity notwithstanding that
it had by its negligence
contributed to the injury by reason of which the liability to pay workers'
compensation arose. On appeal,
the Supreme Court, Court of Appeal Division, by
majority, affirmed the judgment in favour of the respondent (1974) 1 NSWLR 412
.
The appellant has appealed to this Court. The question turns exclusively on
the proper construction of s. 64, and particularly s.
64 (1) (b), of the Act.
Section 64 is in the following terms:
"(1) Where the injury for which compensation is payable
under this Act was caused under circumstances creating a legal
liability in some person other than the employer to pay damages
in respect thereof -
(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 such compensation, but
shall not be entitled to retain both damages and
compensation.
If the worker recovers firstly compensation and secondly
such damages he shall be liable to repay to his employer out
of such damages the amount of compensation which the
employer has paid in respect of the worker's injury under
this Act, and the worker shall not be entitled to any further
compensation.
If the worker firstly recovers such damages he shall not be
entitled to recover compensation under this Act;
(b) if the worker has recovered compensation under this Act,
the person by whom the compensation was paid shall be
entitled to be indemnified by the person so liable to pay
damages as aforesaid;
(c) if the worker subsequently obtains judgment for damages
against the person who has paid under such indemnity, such
payment under the indemnity shall be, to the extent of the
amount of such payment a satisfaction of the judgment for
damages;
(d) all questions relating to matters arising under this section
shall, in default of agreement, be settled by action, or, with
the consent of the parties, by the Commission.
(2) In this section 'damages' does not include any sum
ordered or directed pursuant to any provisions of the Crimes
Act, 1900, as amended by subsequent Acts, to be paid by way of
compensation for an injury, but any such sum so paid to a
worker shall be deducted from the compensation payable to him
under this Act in respect of the injury." (at p339)
3. The expression "caused under circumstances creating a legal liability in
some person other than the employer" has appeared in
workers' compensation
legislation for a considerable time. Section 6 of the Workmen's Compensation
Act, 1906 (U.K.) was in the precise
terms of the opening paragraph of s. 64
(1). Section 6 was the subject of decision in the case of Cory & Son Ltd. v.
France,
Fenwick
& Co. Ltd. (Cory's Case) (1911) 1 KB 114 . (at p339)
4. A section containing the precise terms of the opening paragraph of s. 64
(1) made its first appearance in New South Wales as
s. 17 of the Workmen's
Compensation Act, 1910. The language was reproduced in s. 10 of the Workmen's
Compensation Act, 1916 and again
in the Workers' Compensation Act of 1926.
Though the terms of the opening paragraph of the section have remained
unchanged throughout,
amendments have been made from time to time to the
subparagraphs of the section. But, in my opinion, none of these changes has
altered
the meaning of those words. Each of the Acts to which I have referred,
including those in the legislation of the United Kingdom,
have provided for an
indemnity, substantially in the terms of s. 64 (1) (b). (at p339)
5. The decision in Cory's Case (1911) 1 KB 114 in construing s. 6 of the Act
of 1906 has been accepted in other States of Australia
in connexion with
workers' compensation legislation: James S. Adams & Co. Pty. Ltd. v. State
Rivers and Water Supply Commission
[1960] VicRp 86; (1960)
VR 542 ; Price v. Commissioner of
Highways (1968) SASR 329 ; Foster v. A.T. Brine & Sons Pty. Ltd. (1972) WALR
157
; though on
one occasion the acceptability of its reasoning was doubted
by the Supreme Court of New South Wales: see Stacey v. Yallaroi
Shire
Council
(1957) 58 SR (NSW) 386 . The propriety of the decision in Cory's Case (1911) 1
KB 114 has been raised in the judgments
of
the Supreme Court both at first
instance and on appeal, and in the argument of this appeal. I shall return a
little later to discuss
that case, but first I would express my own view as to
the construction of s. 64 apart from the decision of Cory's Case (1911) 1
KB
114 . (at p340)
6. Section 64 is part of a scheme of compensation: it is not part of any
scheme to adjust rights between tortfeasors. Indeed, when
legislation to the
effect of s. 64 first appeared in workers' compensation legislation there was
no contribution between tortfeasors,
nor any ability for tortfeasors liable
for the same damage to be sued in the one action. The part of the Act, Pt
VIII, which contains
s. 64 begins at s. 63. Its heading is "Remedies at Common
Law". This part of the Act sets out, first to indicate that the Act does
not
intend to take away common law rights, secondly, to provide against the
possibility of the workman obtaining both compensation
and damages, and,
thirdly, to provide an indemnity for the employer who has paid compensation by
the person who is responsible in
law for the occurrence which has caused him,
the employer, to be liable to pay compensation. Section 63 provides for the
case where
the employee sues the employer at common law. It provides in s. 64,
in my opinion, for the case where the employee sues a person
or persons other
than the employer. In my opinion, it intends to cover the case where the only
liability of the employer to the worker
is the statutory liability to pay
compensation. It seems to me that it sufficiently expresses this by the
expression "a legal liability
in some person other than the employer",
appearing as it does after the provisions of s. 63. These words, in the
evident scheme of
Pt VIII, are adequate to indicate that the employer for whom
s. 64 is making provision is not one of the persons who has produced
the
circumstances out of which the liability to pay compensation has arisen. The
language contemplates, and on its proper construction
provides for, the case
where a stranger, or strangers, so far as employer and workman are concerned
has or have caused the compensable
injury. The person who is to indemnify the
employer under s. 64 (1) (b) is that person, that is to say, a person other
than the employer,
who in the circumstances caused the injury in respect of
which the compensation has been paid. (at p340)
7. The Act imposes a statutory liability upon the employer irrespective of
fault. It allows of the possibility of proceedings against
the employer at
common law. For the damages for which he may thus be called upon to pay, it
provides neither indemnity nor contribution.
Indeed the Act, as I have said,
whilst not displacing common law remedies, is itself concerned only with
workers' compensation. But
when the possibility of the statutory liability to
pay compensation having been caused by a person who could have been sued by
the
worker at common law is contemplated, a remedy by way of indemnity by that
person is provided to relieve the employer of the whole
amount of the
compensation which that person has caused him to pay. The indemnity is of the
full amount paid as compensation up to
the extent of the liability of the
tortfeasor sued. I see no room whatever for a construction of the section
which would provide
the employer with complete or partial relief from the
damages which he may become liable to pay because of his own breach of duty
to
his employee. The contradistinction in par. (a) of the sub-section supports
the view I have expressed. The concession of that
paragraph is that the worker
may sue "that person", i.e. the person other than the employer who has caused
the injury for damages
and the employer for compensation. There is no room for
including the employer in the description of "that person". I am unable to
read the expression "other than" as the equivalent of "as well as". (at p341)
8. There are no considerations of justice which would require any other
construction if the language were ambiguous which, in my
opinion, it is not.
An employer who is a tortfeasor in respect of the compensable injury - who, as
I have already mentioned, could
not have had any contribution at the time the
language under discussion was first used - may now, if sued as s. 63 allows,
exercise
his right to contribution elsewhere provided. Likewise, the person
who has contributed to the injury, if sued, as s. 64 (1) (a) allows,
can
recover contribution from the employer as also a tortfeasor in relation to the
injury. As I have already pointed out, the indemnity
under s. 64 (1) (b) is of
the full amount paid as compensation. If an employer who was a tortfeasor in
relation to the compensable
injury could recover the compensation paid by him
under s. 64 (1) (b), perhaps after contribution proceedings between the
tortfeasors
which involved an apportionment of responsibility, that
apportionment would be distorted. (at p341)
9. In my opinion, the proper construction of s. 64 (1) would preclude the
respondent, as an employer whose negligence has contributed
to the occurrence
out of which the right of compensation arose, from recovering an indemnity
under par. (b) of the sub-section. The
right to an indemnity under s. 64 (1)
(b) is only given to an employer who has no other liability to the worker in
relation to the
compensable injury than the statutory liability to pay
workers' compensation. (at p341)
10. I would now wish to say something of Cory's Case (1911) 1 KB 114 . In the
first place the Supreme Court at first instance, where
there is no relevant
decision of this Court, should as a general rule follow the decisions of the
English Court of Appeal. Further
in the same circumstances the Supreme Court
on appeal would be well advised as a general rule to do likewise. However, in
this case
the Supreme Court thought the decision in Cory's Case was wrong and
not to be followed. (at p341)
11. The actual decision in Cory's Case was that the judgment of a
commissioner of Assize that an employer, the negligence of whose
servants
contributed to the compensable injury, could not recover by way of indemnity
the compensation he had paid to his employee
from a person whose negligence
had also contributed to that injury, was correct. The reasons of the members
of the Court are diverse.
But Buckley L.J. (1911) 1 KB, at p 125 places a
construction of the opening words of the section which I would respectfully
adopt.
It seems to me that Kennedy L.J. accepted the same construction. I do
not identify the reasoning to which Owen J. referred in Stacey
v. Yallaroi
Shire Council (1957) 58 SR (NSW) 386, at p 388 : nor did the learned judge
indicate it himself. But, for my own part,
I do not think that the reason
given by the Commissioner of Assize and accepted by Vaughan Williams L.J. and
Buckley L.J. as an alternative
basis of decision is acceptable. But
non-acceptance of that reasoning does not impair acceptance of the
construction of the statute
by Buckley L.J. and Kennedy L.J. In my opinion,
Cory's Case (1911) 1 KB 114 was well decided and supports the conclusion to
which
I have come. (at p342)
12. I would allow the appeal in terms which would secure a verdict for the
defendant in the action. (at p342)
McTIERNAN J. This is an appeal from the judgment of the Court of Appeal of
the Supreme Court of New South Wales dismissing an appeal
from the decision of
Sheppard J. in an action in which J. Murray-More (N.S.W.) Pty. Ltd., the
respondent, was the plaintiff and the
Public Transport Commission of New South
Wales (formerly the Commissioner for Railways), the appellant, was the
defendant. The Court
of Appeal was constituted by Hardie, Reynolds and Bowen
JJ.A., Hardie J.A. dissenting (1974) 1 NSWLR 412 . (at p342)
2. The action is a claim for indemnity under s. 64 of the Workers'
Compensation Act (N.S.W.) 1926, as amended. (at p342)
3. This section provides as follows:
"(1) Where the injury for which compensation is payableThe word "Commission" means in the Act, the Workers' Compensation Commission of New South Wales. (at p343)
under this Act was caused under circumstances creating a legal
liability in some person other than the employer to pay damages
in respect thereof -
(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 such compensation, but
shall not be entitled to retain both damages and
compensation.
If the worker recovers firstly compensation and secondly
such damages he shall be liable to repay to his employer out
of such damages the amount of compensation which the
employer has paid in respect of the worker's injury under
this Act, and the worker shall not be entitled to any further
compensation.
If the worker firstly recovers such damages he shall not be
entitled to recover compensation under this Act;
(b) if the worker has recovered compensation under this Act,
the person by whom the compensation was paid shall be
entitled to be indemnified by the person so liable to pay
damages as aforesaid;
(c) where 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 shall, to the extent of its amount, be a defence
to proceedings by the worker against that person for
damages;
(d) all questions relating to matters arising under this section
shall, in default or agreement, be settled by action, or, with
the consent of the parties, by the Commission."
4. Section 6 (2) of the Act should be noted. It provides as follows:
"(2) Any reference to a worker who has been injured shall,
where the worker is dead, include a reference to his legal
personal representative or to his dependants, or other person to
whom or for whose benefit compensation is payable." (at p343)
5. The claim is made by way of an action, no doubt, in purported pursuance of
s. 64 (1) (a). The action was tried by Sheppard J.
At the hearing the parties
agreed to a trial by the judge without a jury. (at p343)
6. The amount of indemnity claimed was $8,600. The learned judge gave a
verdict and judgment for that amount in favour of the plaintiff.
(at p343)
7. The plaintiff alleged in its declaration substantially that: The plaintiff
had in its employ a Mr. Oulton, a "worker" within
the meaning of the Act; he
received an injury, answering the definition of a compensable injury under the
Act; he died in consequence
of the injury; the widow made an application to
the Workers' Compensation Commission for compensation in respect of the
injury; the
Commission made an award of compensation of $8,600; the plaintiff
satisfied its obligation under the award by paying a sum equal
to this amount
to the widow. (at p343)
8. The allegation in the declaration which the defendant contested at the
trial reads as follows:
". . . the said injury was received by the said Carl Hickman
Oulton when he was crushed between a motor lorry at the
premises of his employer and a railway wagon which said
railway wagon was under the care control maintenance and
management of the defendant its servants and agents and the
plaintiff alleges that the defendant by himself his said servants
and agents so carelessly negligently and unskilfully conducted
himself in and about his care control management maintenance
and supervision of the said railway truck that the same crushed
the said Carl Hickman Oulton against the said motor lorry and
by reason of the circumstances aforesaid there was created a
legal liability in the defendant to pay damages to the said Carl
Hickman Oulton and the said Helena Daphne Oulton in respect
of the said injury and death." (at p344)
9. The defendant's third plea to the declaration put in issue that the injury
was caused under circumstances creating a legal liability
in the defendant to
pay damages in respect of the injury. The defendant by its fourth plea said:
". . . the alleged injury received by the said Carl Hickman
Oulton by reason whereof the said Carl Hickman Oulton died
was caused under circumstances creating a legal liability in the
plaintiff to pay damages to the said Carl Hickman Oulton and
his widow Helena Daphne Oulton in respect of the said injury
and death." (at p344)
10. There are five pleas, but it is not necessary to refer to any of them
except the third and fourth. (at p344)
11. The learned judge made a careful summing-up of the evidence and arrived
at these conclusions.
1. The defendant was guilty of negligence, as claimed by the plaintiff and
that Mr. Oulton's personal representative or widow would
have been entitled to
succeed in an action against the defendant, based either upon the Law Reform
(Miscellaneous Provisions) Act
(N.S.W.) or the Compensation to Relatives Act
(N.S.W.) and the defendant's negligence.
2. The plaintiff was guilty of negligence (the particulars of the negligence
as found by him are set out in his judgment). (at
p344)
12. The learned judge's ultimate conclusion is stated thus: "The personal
representative or the widow of Mr. Oulton would therefore
have good cause of
action based on negligence against the plaintiff as well as against the
defendant." (at p344)
13. As stated above verdict and judgment in the sum of $8,600 passed for the
plaintiff. (at p344)
14. Counsel for the defendant in argument at the trial cited Cory & Son Ltd.
v. France, Fenwick & Co. Ltd. (1911) 1 KB 114
. (at
p344)
15. The plaintiffs in that case had been found liable under the Workmen's
Compensation Act, 1906 (6 Edw. 7, c. 58) to pay compensation
to workmen
employed by them in respect of an accident. The plaintiffs brought an action
against the defendants for indemnity under
sub-s. (2) of s. 6 of the Act. A
Commissioner of Assize by whom the action was tried found that both the
plaintiffs and the defendants
had been negligent and their combined negligence
caused the accident. Upon these findings the Commissioner held that the
plaintiff,
through their servants having been guilty of negligence which
contributed to the accident could not maintain the action. (The Commissioner
was Scrutton K.C., Scrutton J. at the time the appeal was heard.) (at p345)
16. The plaintiffs appealed. The appeal was heard by Vaughan Williams,
Buckley and Kennedy L.JJ. They dismissed the appeal. (at
p345)
17. Section 6 of the Workmen's Compensation Act, 1906, provides as follows:
"Where the injury for which compensation is payable under(at p345)
this Act was caused under circumstances creating a legal
liability in some person other than the employer to pay damages in
respect thereof -
(1) the workman may take proceedings both against that
person to recover damages and against any person liable to pay
compensation under this Act for such compensation, but shall
not be entitled to recover both damages and compensation; and
(2) if the workman has recovered compensation under this
Act, the person by whom the compensation was paid, and any
person who has been called on to pay an indemnity under the
section of this Act relating to sub-contracting, shall be entitled
to be indemnified by the person so liable to pay damages as
aforesaid, and all questions as to the right to and amount of any
such indemnity shall, in default of agreement, be settled by
action, or, by consent of the parties, by arbitration under this
Act." (at p345)
18. The words of the preliminary part of s. 64 (1) are the same as the words
of the preliminary part of s. 6 of the English Act.
The right given by the
first part of par. (a) of s. 64 (1) to "the worker" is similar to that given
by s. 6 (1) to "the workman".
The second and third parts of par. (a) are not a
repetition of anything in s. 6. Under s. 64 (1) (b) and s. 6 (2) "the person
by
whom the compensation was paid shall be entitled to be indemnified by the
person so liable to pay damages as aforesaid". Such a person
is some person
other than the employer referred to in the preliminary part of s. 64 (1) and
s. 6 respectively. (at p345)
19. The person described as the person by whom the compensation is paid is
clearly applicable to the employer of the injured "worker"
or "workman". The
condition on which indemnity arises under s. 64 (1) (b) is similar to the
condition on which indemnity arises under
s. 6 (2). (at p345)
20. The trial judge, Sheppard J., in his judgment said in effect that he
would decide the case in accordance with the construction
of s. 6 of the
English Act, explained in Cory & Son Ltd. v. France, Fenwick & Co. Ltd. (1911)
1 KB 114 but for the criticism
of
the decision in Stacey v. Yallaroi Shire
Council (1957) 58 SR (NSW) 386 , a decision of the Full Court of the Supreme
Court of
New
South Wales. (at p346)
21. As I understand the reasons for judgment of the trial judge he considered
that in view of such criticism he should construe
s. 64 (1) uninfluenced by
Cory's Case (1911) 1 KB 114 . His Honour considered that upon his finding that
the defendant was guilty
of the negligence which caused the accident in which
Mr. Oulton sustained the injury in question, the case comes within the
preliminary
words of s. 64 (1) and consequently the plaintiff is entitled to
be indemnified under par. (b). (at p346)
22. The grounds of appeal to the Court of Appeal to which it seems necessary
to refer are as follows:
"(2) His Honour, having found that the plaintiff was guilty ofCompensation Act, 1926, as amended, and on his Honour's findings
negligence creating a legal liability in it as employer to pay
damages to the personal representative or the widow of the
deceased, should have returned a verdict for the defendant.
(3) On the proper construction of s. 64 of the Worker's
of fact, a verdict should have been found for the defendant."(at p346)
23. Hardie J.A. referred to ss. 63 and 64. These sections are in Pt VIII of
the Act. The heading of the Part is "Remedies at Common
Law". (at p346)
24. Section 63 provides as follows:
"(1) Nothing in this Act shall affect any civil liability of the
employer where the injury was caused by the personal
negligence or wilful act of the employer or of some person for
whose act or default the employer is responsible.
(2) In such case the worker may proceed both under this Act
and independently of this Act but where in proceedings
independently of this Act he accepts money brought into court by his
employer or he obtains judgment against his employer he shall
not be entitled to any compensation under this Act other than
compensation paid to him before such acceptance or judgment.
. . .
(5) Where any payment by way of compensation under this
Act has been made, the payment shall, to the extent of its
amount, be a defence to proceedings against the employer
independently of this Act in respect of the injury." (at p346)
25. Sub-section (1) preserves the civil liability of the employer. It is not
concerned with liability of a person other than the
employer. Sub-section (2)
applies only to proceedings independently of the Act, by the worker against
his employer. Section 64 (1)
is concerned with the civil liability of a person
other than the employer to the worker. Paragraph (a) provides that the worker
may
take proceedings against a person other than the employer to recover
damages and against any person liable to pay compensation under
the Act. (at
p346)
26. Hardie J.A. was of the opinion that the trial judge erroneously rejected
the submission on behalf of the defendant that the
finding of joint liability
for damages on the part of the plaintiff and the defendant deprived the
plaintiff of any right to the
statutory indemnity provided by s. 64(1)(b). (at
p347)
27. Kennedy L.J. in his judgment in Cory & Son Ltd. v. France, Fenwick & Co.
Ltd. said: (1911) 1 KB, at pp 135-136
"Now, accepting the findings of the learned commissioner asPart of this passage is quoted in the judgment of Hardie J.A. (1974) 1 NSWLR, at p 417 . (at p348)
against both Mitchell and those in charge of the ship, there
remains a difficult question with regard to the law. Upon the
whole, I think that the defendants are right on the question of
law. It seems to me, in dealing with a section which, as regards
this case, is one giving a right to indemnity, that, if I can adopt
any reasonable construction which will prevent the result of a
man getting an indemnity in respect of damage to the
production of which he has himself materially contributed, I ought to
adopt that construction. The plaintiffs have been found by the
learned commissioner to have been one effective cause, as
Mitchell was another, of this accident. They claim to be
indemnified for what they have paid by way of compensation under
the Workmen's Compensation Act, 1906, in respect of the
accident. It seems to me that nobody who helped to pass this
Act of Parliament, which makes an employer liable apart from
all questions of negligence to make compensation in respect of
an accident to a workman arising out of and in the course of his
employment, could have intended by this section that, though
the employer could have been sued, if not at common law, at
any rate under the Employers' Liability Act, 1880, as being
through his servants to blame for the accident, he should be able
to go to another person whose servant has been guilty of
negligence which in common with that of his own servants
caused the accident, and demand an indemnity. There is nothing
in the Act, as it appears to me, to prevent my taking this view. If
necessary for this purpose, I think I should say that it is not
unreasonable, having regard to the consequences of any other
interpretation, to read the words 'creating a legal liability in
some person other than the employer' as meaning a legal
liability which, as between the employer and the third person, is the
sole legal liability. It has, I think, been pointed out by both the
other members of the Court that a fair inference from the
provisions of sub-s.2 with regard to the determination of any
question as to the right to and amount of the indemnity is that it
includes the consideration of the question whether a party
claiming indemnity is not disentitled to claim indemnity by
reason of his being equally liable for the accident, just as in the
case put by the learned commissioner of a contract by which the
right to indemnity is excluded. I think on the whole that the
section should be treated as applying only to cases in which the
employer is liable only for compensation under the Act, and not
as applying to cases where the employer himself is, through his
own or his servants' negligence, responsible outside the Act
jointly with the person from whom he claims indemnity, as
having to some extent contributed to the injury to the workman
who has been compensated."
28. His Honour stressed in his judgment that the legislature omitted to
provide for the rights of the worker where that worker received
a compensable
injury in the circumstances creating a legal liability (outside the Act) in
his employer, and some person not standing
in the relationship of employer to
that worker. The Act does not say that the worker may proceed under the Act
against the employer
and independently of the Act against such other person.
In my view if the legislature contemplated that such a case is covered by
the
provisions of ss. 63 or 64(1) it is difficult to suppose that the legislature
would have been content with the provision for
indemnity in s. 64(1)(b) as it
stands. I do not think that s. 64(1)(d) provides for the settlement of
questions other than those
arising between the employer and another person in
cases which come within the words of s.64(1)(a). These are cases in which the
employer has paid workers' compensation and the worker has recovered
compensation against another person found liable to pay damages
in respect of
the injury. (at p348)
29. Reynolds J.A. said in his judgment (1974) 1 NSWLR, at p 419 : ". . . for
reasons which I shall endeavour to express, I am of
the opinion that Cory's
Case was clearly wrong." With respect, I am unable to attain to that degree of
satisfaction about the imperfection
of the reasons of the learned judges who
decided Cory's Case (1911) 1 KB 114 . Bowen J.A. considered, as I understand
his judgment,
that the present case comes precisely within the words of
s.64(1). That view is analogous to the argument for the plaintiffs in Cory's
Case - their argument was rejected by the Court. As I have said that case was
decided in the first instance by a Commissioner of
Assize, Scrutton K.C., as
he then was. The circumstances of the case are stated by Vaughan Williams L.J.
(1911) 1 KB, at p 120 .
(at p348)
30. I have carefully read the reasons of the Court of Appeal for affirming
the interpretation of s.6 on which the learned Commissioner
based his decision
dismissing the action. I am not prepared to dissent from that interpretation.
The conclusion to which the interpretation
should lead in the present case is
that the decision of the trial judge must be reversed and this appeal allowed.
(at p348)
GIBBS J. The question for decision on this appeal is whether an employer
from whom a worker has recovered compensation under the
Workers' Compensation
Act, 1926 (N.S.W.) as amended ("the Act"), is entitled to be indemnified by a
third person whose negligence
was a cause of the worker's injuries (the
"stranger") when the employer himself was also guilty of negligence which was
a cause of
those injuries. (at p349)
2. The answer to that question depends on the proper construction of s.
64(1)(b) of the Act. When s. 64 was originally enacted,
its words were in all
material respects the same as those of s.6 of the Workmen's Compensation Act,
1906 (U.K.) whose effect was
considered by the Court of Appeal in Cory & Son
Ltd. v. France, Fenwick & Co. Ltd. (1911) 1 KB 114 . It was held in that
case
that
the right of indemnity given to an employer by s. 6(2) (which
corresponded to s. 64(b) of the Act as it stood in 1926)
was not available
to
an employer who had himself been guilty of negligence. That decision stood
unchallenged in England until the
Workmen's Compensation
Acts were eventually
repealed, and it has been followed in Australia, although in obiter dicta in
one case
Stacey v. Yallaroi Shire
Council (1957) 58 SR (NSW) 386 , its
correctness was doubted. The Act has since 1926 undergone some amendment.
The
original s. 64(a)
and s. 64(b) are now numbered s. 64(1)(a) and s. 64(1)(b)
respectively, and the provisions of s. 64(1)(a) are
now different from
those
of s. 6(1) of the English Act of 1906; however, the opening words of s. 64,
and the words of par. (b) of
s. 64(1), remain unaltered
except that some of
the provisions of that paragraph have been placed in par. (d). In my opinion
the amendments
made since 1926 have
not affected the meaning of s. 64(1)(b).
However, in the present case the Court of Appeal of the Supreme Court
of New
South Wales,
affirming, by a majority, the judgment of the learned trial
judge, reached the conclusion that the decision in
Cory & Son Ltd. v.
France,
Fenwick & Co. Ltd. (1911) 1 KB 114 was erroneous and declined to follow it
(1974) 1 NSWLR 412
. They held that the employer
was, despite his own
negligence, entitled to recover from the stranger the full amount of the
compensation
paid to the worker. In
my judgment, the learned judges in the
Supreme Court should have treated Cory & Son Ltd. v. France, Fenwick
& Co.
Ltd. as an authority
binding upon them. This Court, however, is not bound by
decisions of the Court of Appeal and I accordingly
turn, unfettered by
authority,
to consider the meaning of s. 64(1)(b). (at p349)
3. The provisions of s. 64 apply, as the opening words of the section state,
"Where the injury for which compensation is payable
under this Act was caused
under circumstances creating a legal liability in some person other than the
employer to pay damages in
respect thereof". Those words, considered alone,
are in my opinion ambiguous; they may be intended to be an exhaustive
statement
and to refer to circumstances which create a legal liability in a
stranger but not in the employer, or they may be intended to refer
to
circumstances which create a legal liability in a stranger whether or not the
employer is also legally liable. However, the case
where the injury was caused
by the negligence of the employer is dealt with by the immediately preceding
section, s. 63. This suggests
that it was intended that s. 64 should apply to
cases where the injury was not caused by the negligence of the employer. This
conclusion
is strongly supported by a consideration of the provisions of s.
64(1)(b) themselves. If s. 64 applied where the employer had been
guilty of
negligence causing the injury, the result would be to give to the negligent
employer a right to a complete indemnity from
the stranger. This would be so
even if in fact the employer's share in the responsibility for the injury was
much greater than that
of the stranger. That is, of course, the result which
was reached in the Supreme Court and for which the respondent contends, but
it
is one most unlikely to have been intended by the legislature: the employer is
the person primarily liable to pay the compensation
and it would have seemed
irrational and unjust to give him a right of complete indemnity against a
stranger whose degree of fault
and responsibility for the worker's injury was
no greater than his own. Such a result would have seemed particularly
surprising in
1906, for at that time (and still in 1926) the law did not
permit one tortfeasor to recover contribution from another who had been
responsible for the same damage. These considerations might not have been of
importance if the words of the statute were plain and
unambiguous, but where
two meanings are open, as is the case with the opening words of s. 64(1), it
is proper to adopt that meaning
that will avoid consequences that appear
irrational and unjust. The view that I have expressed is in substance that
which was taken
in Cory & Son Ltd. v. France, Fenwick & Co. Ltd. by Buckley
L.J. (1911) 1 KB, at pp 125-127 , and by Kennedy L.J. (1911)
1 KB, at
pp
135-136 . I respectfully agree with their observations on this point, although
the other reasons given in support of
their conclusion
are rather less
persuasive. (at p350)
4. Counsel for the respondent in endeavouring to support the decision of the
Supreme Court placed much reliance on the provisions
of s. 64(1)(a) of the
Act. It was submitted that the opening words of s. 64(1) must have the same
meaning in their application to
all the paragraphs of that subsection and that
if par. (a) did not apply to cases where the employer as well as the stranger
was
liable to the worker for damages apart from the Act, the worker would be
able to receive and retain a double benefit of damages and
compensation
contrary to what, it was said, was the manifest policy of the Act. A similar
argument was advanced unsuccessfully in
Cory & Son Ltd. v. France, Fenwick &
Co. Ltd. (1911) 1 KB, at p 119 . On the other hand, if s. 64(1) does apply
where both
the employer
and the stranger are liable to the worker in tort,
par. (a) will still create difficulties. On that assumption it might
have been
expected that the section would have expressly enabled the worker to take
proceedings against the employer as well as against
the
stranger, as Buckley
L.J. pointed out in Cory & Son Ltd. v. France, Fenwick & Co. Ltd. (1911) 1 KB,
at pp 125-126 . On
either view
s. 64(1)(a) presents problems of
interpretation, and in my opinion it is not possible to regard par. (a) as
revealing
an intention
that s. 64(1) should apply to cases where the employer
as well as the stranger is liable for damages independently of
the Act - it
certainly does not contain an indication of intention clear enough to prevail
over the other considerations already
mentioned. (at
p351)
5. For these reasons I consider that s. 64(1)(b) does not give to an employer
a right of indemnity against a stranger when the injury
of the worker was
caused by the negligence of both parties. (at p351)
6. No submission was made to us that the position had been altered by the
enactment of the legislation that provides for the apportionment
of liability
in the case of contributory negligence - in New South Wales, s. 10 of the Law
Reform (Miscellaneous Provisions) Act,
1965. It was held in Price v.
Commissioner of Highways (1968) SASR 329 , that Cory & Son Ltd. v. France,
Fenwick & Co. Ltd.
(1911)
1 KB 114 should be regarded as assimilating the
right of the employer against the stranger under the indemnity to the right
which
the employer would have had against the stranger under the general law
at the relevant time in an action brought by the worker
against
both;
accordingly, it was held, since the enactment of the apportionment legislation
the employer can recover from the stranger
an
appropriate proportion of the
amount of compensation paid to the worker. A different view was taken in
Foster v. A.T. Brine &
Sons
Pty. Ltd. (1972) WAR 157, at pp 160-161 , where it
was held, agreeing with dicta in James S. Adams & Co. Pty. Ltd. v. State
Rivers
and Water Supply Commission [1960] VicRp 86; (1960) VR 542, at p 545 , that
notwithstanding the enactment of the apportionment legislation
the negligence
of the employer is
still a complete defence to an action against a stranger
for indemnity. This latter view is in
my opinion correct.
The words "where
any
person suffers damage" in s. 10 are inapt to refer to the case of an employer
who has been
called upon to pay
compensation, and the words "the damages
recoverable
in respect thereof" do not appropriately describe an indemnity
in
respect of
the compensation paid. Moreover, s. 10 makes a number of references
to payments made under the Act, including repayments
of compensation
under s.
64(1)(a), and this provides
an additional reason for thinking that s.
64(1)(b), which is not mentioned in
s. 10, was not
intended to be affected by
its provisions.
(at p351)
7. For these reasons I consider that the respondent employer, whose
negligence was a cause of the worker's injury, was not entitled
to be
indemnified by the appellant, whose negligence was also a cause. I would allow
the appeal. (at p352)
MASON J. The majority in the Court of Appeal accepted as its premise that
the words "a legal liability in some person other than
the employer" in s.
64(1) of the Workers' Compensation Act, 1926 (N.S.W.), as amended, plainly and
unambiguously signify a legal
liability in a stranger, even if that legal
liability is not the sole legal liability, and is a liability which arises
because the
stranger and the employer are together liable as joint tortfeasors
for the injury done to the worker. This is not a view of the section
to which
I subscribe - the reasons expressed in the judgment of the Chief Justice, with
which I agree, make it clear that the words
are susceptible of referring to a
legal liability in a stranger exclusive of any legal liability in the employer
and that in their
context they should be so understood. (at p352)
2. For my part, I would merely add that the Court of Appeal was mistaken in
thinking that the decision in Heywood & Bryett Ltd.
v. A. Heywood & Son (1940)
2 KB 145 was inconsistent with Cory & Son Ltd. v. France, Fenwick & Co. Ltd.
(1911) 1 KB
114 , or that
it suggested in some undefined way that the latter
case was wrongly decided. In the Heywood Case (1940) 2 KB 145 the
earlier
case
was distinguished, and in my opinion correctly distinguished, on the
substantial ground that the legislation under consideration
in the latter case
dealt with an entirely different subject matter, namely, the imposition of an
obligation on a head contractor
or principal to pay compensation to an injured
worker employed not by him but by his sub-contractor and the recovery by the
principal
from the actual employer (the sub-contractor) of the compensation so
paid. As Scott L.J. observed in the Heywood Case (1940) 2 KB,
at pp 154-155 ,
the statute gave the worker a right to claim compensation from his
"quasi-employer" and the latter a right to recover
indemnity from the actual
employer. Thus his Lordship was able to say: "The subject matter with which
that section deals is the liability
to pay compensation created by s. 1 of the
Act and there is no underlying subject matter except that. The section is not
dealing
with liability at common law either in tort or in contract." (at
p352)
3. Accordingly, I would allow the appeal. (at p352)
JACOBS J. In my opinion Cory & Son Ltd. v. France, Fenwick & Co. Ltd. (1911)
1 KB 114 was correctly decided and therefore
ought
to be followed. I do not
find the words of s. 64 of the Workers' Compensation Act plain and
unambiguous. On the contrary, there
is
an ambiguity in the description "person
other than the employer". These words do not necessarily exclude the employer
but whether
or not the words exclude the case where the employer is one of
those legally liable to pay damages must be ascertained from the context
and
from a consideration of the operation of the section. (at p353)
2. Section 63 of the Act deals with the case where there is a liability in
the employer to pay damages to his worker at common law
in respect of the
injury for which compensation is payable. Section 64 deals with the case where
there is a liability in some person
other than the employer to pay damages in
respect of such an injury. In this context the words "person other than the
employer" are
apt to exclude the employer and in my opinion do so. (at p353)
3. It is useful to consider how the section would operate if it were
construed so that it contemplated legal liability in the employer,
as well as
some person other than the employer, to pay damages. The first question which
would arise is whether par. (a) by its specific
enunciation of the course
which the worker might take did not wholly take away the right of the worker
to take proceedings against
the employer to recover the damages in such
circumstances. Paragraph (a) provides for recovery of damages against the
third person
but for recovery of compensation only against an employer. Even
if this difficulty be surmounted the section could hardly be applied
if the
worker obtained judgments for damages against the third person and the
employer. What would the position then be if the worker
had already received
compensation from the employer? Before there existed the statutory right to
contribution between joint tortfeasors
the employer would nevertheless have
been entitled to an indemnity for the compensation paid by him and at the same
time would have
been entitled under s. 63 as against the worker to have the
amount of compensation treated as part satisfaction of the damages awarded.
Now that there is a right to contribution the operation of the section would
be even more obscure. An employer would still be able
to treat the
compensation paid as a part satisfaction of the damages awarded, but could
claim not merely such contribution to the
damages as was just and equitable
having regard to responsibility for the damage, but indemnity up to the amount
of compensation
paid by him unrelated to responsibility for the damage. (at
p353)
4. It is no answer to these difficulties to say that if the compensation is
treated as part satisfaction of the damages the right
to indemnity would
disappear. The section does not say so and if this were implied it would mean
that quite different legal consequences
would follow depending on whether or
not the worker actually sued the employer. If he did, the right to indemnity
would disappear.
If he did not, the right to indemnity would remain though, in
fact, by accepting the compensation, the worker had elected to treat
the
compensation as satisfaction of his claim for damages against the employer.
(at p354)
5. It is the impossibility of applying the section coherently to a case where
both the employer and the third person are sued to
judgment and the
irrationality of applying it only to a case where the employer, though legally
liable, is not sued by the worker
for damages which lead me to conclude that
the ambiguity of the words "person other than the employer" should be resolved
by excluding
from the operation of the section the case where there is a legal
liability in a number of persons, including the employer, to pay
damages to a
worker. (at p354)
6. I would therefore allow the appeal. (at p354)
ORDER
Appeal allowed.
Order of the Supreme Court of New South Wales, Court of Appeal Division, set aside, and in lieu thereof order that the appeal to that Court be allowed, that the verdict for the respondent in the sum of $8,600.00 be set aside, and that judgment be entered for the appellant.
Costs of this appeal, of the appeal to the Court of Appeal Division, and of the trial to be paid by the respondent.