Haines v Bendall

(1991) 172 CLR 60

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(Judgment by: Deane J.)

Haines
v Bendall

Court:

Judges: Mason CJ; Dawson J; Toohey J; Gaudron J.
Brennan J

Deane JMcHugh J

Hearing date: February 6, 7; May 1 1991
Judgment date: 1 May 1991

SYDNEY

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Judgment by:
Deane J.

I agree with the reasons given by Priestley J.A. in his judgment in the New South Wales Court of Appeal and by McHugh J. in his judgment in this Court for the conclusion that, in the circumstances of this case, the learned trial judge (Carruthers J.) was correct in disregarding the lump sum payment under s.16 of the Workers' Compensation Act 1926 (N.S.W.) ("the Act") in determining the amount of interest to be paid by the defendant in respect of damages for non-economic loss to the date of trial. I add some supplementary comments to what is said in those judgments.

2. In a case where a defendant tortfeasor is also the "employer" of the injured plaintiff for the purposes of the Act, s.63(5) of the Act ensures that an appropriate adjustment is made to take account of the benefit and burden of a payment by the defendant of lump sum compensation under s.16 for loss of (or for loss of the use of) a bodily part. In such a case, the amount of the lump sum payment is credited to the employer and, "to the extent of its amount, (is) a defence to proceedings against the employer independently of (the) Act in respect of the injury" (s.63(5)). The result is that any award of damages will be reduced by the amount of the lump sum payment and that interest will not be payable on the equivalent of that lump sum from the time when it was paid.

3. The position is, however, quite different where the defendant tortfeasor is not an "employer" but is a third party. In such a case, the Act seems to me to manifest a legislative intent that the third party tortfeasor is not entitled to any benefit by reason of the payment of compensation by the employer. To the contrary, if the worker has not recovered common law damages, the third party tortfeasor is liable to indemnify the employer in respect of the payment (s.64(1)(b)). If the third party tortfeasor has not already indemnified the employer in respect of compensation payments, the plaintiff is entitled to an unreduced verdict for economic and non-economic loss but is "liable to repay to his employer (out of the damages recovered) the amount of compensation which the employer has paid in respect of the ... injury under (the) Act" (s.64(1)(a)). In that context, consistency of legislative policy and considerations of what is fair and equitable would support the approach that the worker should also account to the employer for that part of any award of interest which can be appropriated to the lump sum payment during the period from the time when it was received by the worker. The Act does not, however, make any provision in that regard and the question whether the employer would be entitled to recover an appropriate share of any award of interest on restitution or unjust enrichment principles was not explored in argument.

4. Regardless of the entitlement of the employer to benefit pro tanto from any award of interest made in the worker's favour against the third party tortfeasor, it does not seem to me that authority, principle or considerations of policy support a conclusion that the third party tortfeasor should be entitled to avoid interest on part of the damages by reason of the fact that a payment of an amount of lump sum compensation was made by the employer. In so far as authority is concerned, the decision of this Court in Batchelor v. Burke (1981) 148 CLR 448 is distinguishable for the reason that weekly compensation under the Act can be equated with lost earnings in a way that a statutory lump sum for loss of a bodily part cannot be equated with any part of an award of damages for compensation for economic or non-economic loss in a negligence action. In so far as principle is concerned, the fact that the statutory amount of lump sum compensation cannot be equated with any component of the damages awarded against the tortfeasor means that there is no acceptable basis in principle for excluding a corresponding amount from the damages in respect of which an award of interest should be made. In so far as considerations of public policy are concerned, it is arguable that the ultimate burden of both negligence and workers' compensation payments, in the common case where both employer and tortfeasor are insured, falls upon the public generally and that, for that reason, the general insurer (against liability for negligence) should, for the purposes of the ascertainment of interest, be given the benefit of a payment of lump sum compensation made by the workers' compensation insurer from the time when it was made. On the other hand, not all tortfeasors are insured. More important, the general policy to be discerned in the Act and ordinary notions of fairness seem to me to militate against a third party obtaining a benefit by reason of the combined effect of a payment of lump sum compensation made by an employer to a worker injured by the negligence of that third party and that third party's own delay in discharging his own liability to the injured worker. In that regard, considerations of public policy do not favour a situation in which the third party tortfeasor (or his insurer) has a positive incentive to delay settlement or verdict by reason of the fact that so much of the damages as can be treated as having been received by the insured worker at the time of the lump sum payment can be withheld without penalty.

5. I would dismiss the appeal.