Workers' Compensation Board (Q) v Technical Products Pty Ltd

165 CLR 642
1988 - 0927C - HCA

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(Judgment by: Wilson and Gaudron JJ)

Workers' Compensation Board (Q)
v Technical Products Pty Ltd

Court:

Judges:
Wilson J and Gaudron J.Deane J, Dawson J and Toohey J.

Hearing date: Brisbane, 28 June 1988
Judgment date: 27 September 1988

Canberra

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Judgment by:
Wilson and Gaudron JJ

WILSON AND GAUDRON JJ. This is an appeal from a decision of the Full Court of the Supreme Court of Queensland which, by majority (Connolly and Shepherdson JJ, Vasta J dissenting), overruled a demurrer by the appellant to the respondent's statement of claim seeking a declaration that the respondent is entitled to be indemnified by the appellant ("the Board") against a claim for damages made against the respondent by one Patricia Hart.

On 13 August 1981 Mrs. Hart's husband was seriously injured in a fall in the course of his employment as a factory hand by the respondent. Thereafter she sued the respondent, claiming damages for nervous shock and psychiatric illness allegedly suffered in consequence of her husband's injuries. The respondent then made its claim on the appellant for indemnity, to which claim the appellant demurred. It is that demurrer which is the subject of the present appeal.

The respondent relied on the provisions of s. 8(1) of The Workers' Compensation Act 1916 (Q.) ("the Act"). At all material times that sub-section read as follows:

"Every employer shall be legally liable to pay the compensation which this Act prescribes a worker employed by him shall receive out of the Workers' Compensation Fund in accordance with this Act.

Every employer shall insure himself and keep himself insured with the Board against all sums for which, in respect of injury to any worker employed by him, he may become legally liable by way of -

(a)

compensation under this Act; and

(b)

in the case of injury as aforesaid suffered on or after the first day of July, one thousand nine hundred and sixty-three, (except such an injury in respect whereof the employer is required by some other Act to provide against such liability as prescribed by such other Act) damages arising under circumstances creating also, independently of this Act, a legal liability in the employer to pay damages in respect of that injury."

The respondent was insured in accordance with s. 8(1) of the Act and a policy of insurance in the form prescribed by the Act (Workers' Compensation Regulations 1917 (Q.), Schedule II, Form No 2) incorporating the material words of the sub-section was in force. It is common ground that the proper construction of the policy is to be determined in the light of the proper construction of par (b) of s. 8(1).

The majority in the Full Court concluded that, in terms, s. 8(1)(b) was wide enough to cover the liability alleged against the respondent by Mrs. Hart for the reason that the liability could be described as "a legal liability in the employer to pay damages in respect of that injury". The employer was therefore obliged to insure with the Board against such a liability. On the other hand, the essence of the case for the appellant was that the Full Court's literal reading of the paragraph is inconsistent both with its ordinary meaning and with the context provided by the Act read as a whole and in particular by s. 9A. That context, so it was argued, requires that s. 8(1) be construed so as to apply only to a liability in the employer to pay damages to a worker, or, in the event that the worker has died, to the legal personal representative or the dependants of the worker. It may be noted that this formulation gives effect to the extended meaning of the word "worker" prescribed by s. 3(4) of the Act. That sub-section provides that:

Any reference to a worker who has been injured, where the worker is dead, includes a reference to his legal personal representative or to his dependents or other person to whom or for whose benefit compensation is payable."

See the comment on the proper construction of this provision by Gibbs J in McDowell v Baker ^[F1] . It is clear that Mrs. Hart is not relevantly a "worker" in either the primary or extended meaning of that term.

The crux of the problem is the proper construction of the phrase "damages in respect of that injury" in s. 8(1) of the Act. The injury referred to is clearly the injury suffered by the worker himself. If Mrs. Hart succeeds in establishing her claim against the respondent she will be awarded damages. But her damages will not be quantified by reference to the injury suffered by the worker. Another injury is interposed, namely, the nervous shock and psychiatric illness which she has suffered. At first sight, it may seem strange that damages for the illness which she has suffered could be said to fall naturally within the description of "damages in respect of that [the worker's] injury". Certainly, the primary meaning of the phrase would describe the damages flowing directly to the worker or his dependants from the injury which he had suffered in the course of his employment. The conclusion of the Full Court can only be supported if the phrase yields a legislative intention to extend the protection of insurance with the Board to damages resulting from an injury other than that suffered by the worker. For that conclusion to follow the damages in respect of the injury would have to be so connected with the worker's injury for it to be said that they are "damages in respect of that injury" within the meaning of those words in s. 8(1)(b) of the Act. It has been said, perhaps somewhat extravagantly, that the words "in respect of" "have the widest possible meaning of any expression intended to convey some connexion or relation between the two subject-matters to which the words refer": Trustees Executors & Agency Co Ltd v Reilly ^[F2] , cited in State Government Insurance Office (Q.) v Crittenden ^[F3] .

The words were cited again by Gibbs J in McDowell ^[F4] , and by Mason J in State Government Insurance Office (Q.) v Rees ^[F5] , when his Honour added the comment: "But, as with other words and expressions, the meaning to be ascribed to 'in respect of' depends very much on the context in which it is found."

The first submission advanced for the appellant relied on the opening phrase to par (b) of s. 8(1) of the Act. It was said that the words "in the case of injury as aforesaid" clearly confined the operation of the paragraph to a case of legal liability in the employer to pay damages to the worker for that injury. Shepherdson J (with whom Connolly J agreed) was said to have failed to appreciate the significance of the phrase because his Honour did not include the words in his paraphrase of the sub-section. We must say we share his Honour's apparent belief that the phrase does not contribute materially to the construction of the provision for present purposes. In our opinion these words are present only to limit the operation of the paragraph to injuries suffered by the worker on or after 1 July 1963, the date on which important amendments to the Act enabling damages as well as compensation to be paid from the Workers' Compensation Fund ("the Fund") created by the Act came into force.

Next it was submitted that s. 9A of the Act provides the primary setting against which s. 8(1)(b) is to be construed. The section and the paragraph were inserted into the Act by amendment in 1962, to operate from 1 July 1963. It is clear that the purpose of the section was to protect the Fund against the risk of double indemnity to which the provisions of s. 8(1) may give rise. As may be seen from that sub-section, every employer is obliged to insure himself and keep himself insured with the Board against all sums for which, in respect of injury to any worker employed by him, he may become liable by way of compensation under the Act or damages independently of the Act. The material provisions of s. 9A are as follows:

"(1) Where an injury in respect whereof a worker is entitled under subsection (1) or (2) of section nine of this Act to receive compensation from the Workers' Compensation Fund was received by the worker under circumstances creating also, independently of this Act, a legal liability in the employer to pay damages in respect of that injury (except an injury in respect whereof the employer is required by some other Act of Queensland or any other State of the Commonwealth or the Commonwealth or any other country to provide against such liability as prescribed by such other Act) -

(a)

the amount of such damages which the employer is legally liable to pay shall, notwithstanding any other Act or law, be reduced by the total amount of the compensation (which shall include medical, hospital, travelling and other expenses) prescribed by this Act to be made from the Fund in respect of the injury in question; and

(b)

subject to this section, the worker or his dependents shall receive from the Workers' Compensation Fund such reduced amount.

The Court by which damages are awarded in respect of an injury to which this section applies, or out of which moneys paid into Court in an action brought in respect of any such injury are ordered to be paid, shall upon the application of the Board, worker or employer determine the total amount of compensation prescribed by this Act that is to be paid from the fund in respect of such injury and that determination shall be binding upon the Board and the worker.

(2) Where in respect of an injury to which subsection (1) of this section applies, a worker claims, by or in any action or other proceedings whatsoever in any Court, against his employer any sum for damages which the worker alleges the employer is legally liable to pay in respect of such injury, then the worker shall serve upon the Board not later than 28 days after service thereof by him on the employer or person referred to in section 8(8), a copy of the writ of summons, summons, statement of claim, notice, order, counter-claim or other process by which that claim is made and shall before any other step is taken by him in such action or other proceedings file in the Court concerned an affidavit as to such service.

The Board may at any time during the proceedings taken or had to enforce the claim elect to be joined with the employer by filing in the Court concerned a notice in writing to that effect.

This subsection does not apply -

(a)

where the action or other proceedings is or are taken outside Queensland; or

(b)

to any application for the leave of the Court concerned to issue any process a copy whereof is required by this subsection to be served upon the Board.

(2A) ...

(2B) ...

(3) If the Board files in the Court concerned the notice of election referred to in subsection (2) of this section in respect of a claim to which that subsection applies -

(a)

the Board shall be entitled to the conduct on behalf of the employer of all proceedings had or taken to enforce the claim, and for the settlement of any question arising with respect thereto, unless the Board, by writing, permits the employer to conduct such proceedings;

(b)

the employer shall immediately when required by the Board so to do sign and execute all such documents as the Board may from time to time consider necessary to enable the proceedings as aforesaid to be conducted by the Board:

Provided that if the employer is absent from Queensland, or cannot be found by the Board, or fails, by refusing or being unable so to do or by any reason otherwise soever, to sign or execute all or any documents so required to be signed or executed by him, all such documents as are required by the Board to be signed or executed and which are not signed or executed may be signed and executed on behalf of that employer by the Board.

(4) ...

(4A) In respect of a claim to which subsection (2) of this section applies, the Court concerned may, upon the application of any party to the action or proceedings by which the claim is made and upon such terms as the Court deems just, order the worker to submit himself to a personal medical examination by the duly qualified medical practitioner or practitioners named in the order.

The Court concerned may discharge or vary any such order.

The Court concerned may adjourn the action or proceedings as it deems necessary or expedient to enable compliance with the order.

If, in the opinion of the Court concerned, the worker has persistently and wilfully refused to comply with the order without reasonable excuse, the Court may enter judgment against the plaintiff in the action or proceedings upon such terms as it deems fit.

(5) The provisions, other than this section of the Act relating to the recovery by a worker from his employer of damages for which the employer is, independently of this Act, legally liable in respect of injury to such worker, shall apply subject to this section.

(6) Section sixteen and clause 24A of the Schedule to this Act do not apply to an injury in respect whereof the provisions of this section apply.

(7) ... "

It was argued for the appellant that in the light of these provisions it must have been the intention of the legislature that the legal liability to pay damages against which an employer was obliged to insure was confined to a liability owed to the injured worker or his dependants. If it were not so and s. 8(1) were given the wide construction preferred by the Full Court, it would mean that there was no protection to the Fund against the payment in respect of an injury to a worker of both compensation to the worker and the full amount of any damages awarded to a third party. It would mean also that there was no provision requiring the Board to be notified of the making of a claim by the third party and no statutory right in the Board to elect to be joined with the employer in the action and no statutory entitlement in the Board to assume the conduct of the proceedings: cf. s. 9A(2) and (3).

Reliance was also placed by counsel for the appellant upon other provisions of the Act where the phrase "in respect of" is used as a matter of course to describe the connexion between a claim for compensation or damages by a worker and the injury suffered by him without any possibility of a wider operation: ss. 14C(4), 16(2); Sched, cll. 23(1) and (2), 24, 24A(1), (2) and (4).

Counsel for the respondent sought to distance the construction of s. 8(1) from s. 9A by submitting that the two sections have two completely different purposes: the purpose of s. 8(1) is the protection of any person who has a claim for damages against the employer in respect of injury to a worker by ensuring that there is a fund in Queensland out of which those damages can be paid; by contrast, the purpose of s. 9A is to prevent a worker or his dependants from recovering both compensation and damages in respect of the one injury. But to draw such a distinction serves only to emphasize the difficulties to which the wider construction of s. 8(1) gives rise. There is no apparent reason why a workers' compensation statute should be concerned to protect a plaintiff who may not bear any relation whatever to a worker. Nor is there any ready explanation why such a statute should not only protect such a person by ensuring that there is a statutory fund out of which his damages may be paid, but also ensure the payment in full of such damages regardless of the amount of compensation and other damages the Fund has already been called upon to bear in respect of the injury to the worker.

We think these considerations strongly favour a narrower construction of s. 8(1)(b) of the Act consonant with the primary meaning of the words "damages in respect of that injury". Further support for that result comes from the fact that the Act fails to provide any protection to the Fund if it is required by the Act to indemnify employers against claims for damages by persons other than workers or their dependants. One would have expected the Act itself to impose an obligation on a claimant such as Mrs. Hart, or on the employer, to notify the Board of the making of a claim with a statutory right in the Board to elect to be joined with the employer in the action and an entitlement to assume control of the conduct of the action: cf. s. 9A(2) and (3). One would also have expected to find a provision preventing the compromise or settlement of a damages claim by a person other than a worker or his dependants without the prior consent of the Board: cf, e.g, Sched, cl. 24A(4). In the absence of provisions such as these, the Fund could be at the mercy of possibly exorbitant claims.

This Court had occasion to consider s. 9A of the Act in McDowell. The question was whether that section applied so as to require that the amount of damages awarded to the dependants of a deceased worker in an action against his employer under s. 12 of the Common Law Practice Act 1867 (Q.) (the equivalent of Lord Campbell's Act) must be reduced by the amount of compensation prescribed to be made from the Fund in respect of the injury that caused the death of the worker. The question was answered in the affirmative. Gibbs J, with whose reasons Barwick CJ agreed, reviewed the scheme of the Act and its history ^[F6] . His Honour said ^[F7] :

"Section 9A reveals an intention to protect the Fund, which is the source of the payment of both damages and compensation, and to ensure that all compensation payable in respect of an injury is fully deducted from any damages payable in respect of that injury, even where there are several claimants proceeding in different rights."

Aickin J, with whom Stephen and Mason JJ agreed, also explained that s. 9A was intended to cover all those in respect of whose claims the employer was insured with the Board in accordance with s. 8(1). His Honour said ^[F8] :

"The damages may be payable to the worker or to his dependants, depending on the circumstances, and I can see nothing in the language or the apparent policy of the section to suggest that it is confined to damages payable to the worker. Both those damages and damages payable to dependants under Lord Campbell's Act are properly described as 'in respect of that injury'."

Later in his reasons ^[F9] , his Honour said:

"The provisions of s. 9A(1)(a) are silent as to the persons to whom the employer is liable to pay damages and no doubt deliberately so. It is unlikely that the draftsman was unaware of the right of dependants to obtain damages under Lord Campbell's Act and that damage would, according to the circumstances, be payable to the worker or to his dependants. In such circumstances it would be natural enough not to elaborate on the expression 'such damages which the employer is legally liable to pay', for their operation would be clear to the informed reader, notwithstanding the reference to the two possibilities in par (b) which refers to 'the worker or his dependants' being entitled to receive from the Fund 'such reduced amount' of damages. Such damages are payable out of the Fund because by s. 8 the employer must insure with the Office against liability to workers arising independently of the Act."

In our opinion, the decision in McDowell supports the proposition advanced for the appellant. The material sections of the Act are concerned with the protection of workers and their dependants in respect of injury suffered by the worker in the course of his employment. It is to that end that s. 8(1) obliges every employer to insure and to keep himself insured with the Board against all sums for which he may become liable to pay to the worker or his dependants as compensation or damages. It would be alien to that purpose for an employer to be obliged to insure with the Board against liability to any person at all for negligence in respect of an injury suffered by a worker. Such an obligation would not necessarily serve to protect the worker or his dependants in any way at all. In these circumstances, the relevant phrase in s. 8(1) should bear its primary meaning.

We should add that we have not found the cases dealing with the scope of insurance policies prescribed by statutes dealing with motor vehicles - of which Crittenden ^[F10] is an example - to be of any assistance in the consideration of this matter. The same must also be said of the decision of the Court of Appeal of the Supreme Court of New South Wales in Rheem Australia Ltd v Manufacturers' Mutual Insurance Ltd. ^[F11] which was followed by Clarke J in Manufacturers' Mutual Insurance Ltd v Hooper ^[F12] . Rheem was concerned with a policy in the form required by the Workers' Compensation Act 1926 (NSW), a statute which in our view is materially different from the Queensland legislation.

We would allow the appeal.