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[2021] QSC 332
The proper construction of s 207B(8) Workers’ Compensation and Rehabilitation Act 2003 was in issue in this matter. The main issue in contention was whether that provision was to be construed literally so that the mere commencement of a proceeding by a worker who had received workers’ compensation to recover damages even if the worker did not pursue those proceedings would preclude WorkCover seeking statutory indemnification under s 207B. The Court held that a purposive construction was to be adopted such that the right to indemnity is only suspended for as long as there is a proceeding on foot which retains its active purpose, that is, to recover damages. Where a proceeding has been abandoned then it will not operate to exclude the statutory indemnity.
Burns J
17 December 2021
The issue arose because the injured worker had commenced a proceeding in the District Court of Queensland seeking damages against the first and second defendants together with another party, shortly after lodging an application for compensation with the plaintiff in respect of his disease. [4]. The District Court action was never served and became stale ([6]) after the injured worker’s claim was promptly accepted by the plaintiff, which paid him $761,627 by way of compensation. [5].
The legislation
Section 207B of the Act confers a statutory right of indemnity upon the insurer who has paid the compensation, on the proviso that proof of neglect or default can be established. Subsection 8 is in these terms:
“If a person who has received compensation has not recovered, or taken proceedings to recover, damages for the injury from another person, other than the worker’s employer—
(a) the insurer is entitled to be indemnified for the amount of the compensation by the other person to the extent of that person’s liability for the damages, so far as the amount of damages payable for the injury by that person extends; and
(b) to that end, the insurer is subrogated to the rights of the person for the injury.”
Prior judicial consideration of s 207B(8)
In State of Queensland v Seltsam Pty Ltd (2019) 2 QR 495 the Court of Appeal considered s 207B(8) and clarified that:
- the cause of action under it does not accrue until the payment of compensation is made, but then accrues on each occasion that a payment of compensation is made; and
- a claim under the section is a sui generis cause of action for a statutory indemnity, inhering in the plaintiff and to be pursued in its name, in which the common law liability of the person to the worker is a statutory element, but it is not in respect of the acts or omissions in that liability.
The competing construction arguments
Here, the parties differed as to the meaning to be assigned to the words “has not recovered, or taken proceedings to recover, damages”. The defendants, adopting an “entirely literal” construction ([29]) sought to argue that according to the natural meaning of the words used in the statute the injured worker had commenced the District Court proceeding and as such the plaintiff had no right to statutory indemnification under s 207B(8). [16]. Conversely the plaintiff argued that upon the proper construction of subsection (8), it was entitled to be indemnified by the defendants for the amount paid to the injured worker by way of compensation.
His Honour cautioned against the defendants’ preference for a literal approach, observing that in practice:
“[i]t would mean, if correct, that the mere commencement of a proceeding is enough to forever defeat the right of indemnity and … that the mere commencement of a proceeding by the worker against any tortfeasor is enough to forever defeat the right of indemnity from every tortfeasor. It would also mean that the second limb of the chapeau – the actual recovery of damages – would have no work to do because, without more, the right to statutory indemnification would be lost once the recovery proceeding was filed. Whether that proceeding later resulted in recovery of damages would be irrelevant on the defendants’ construction of the provision although, oddly, a charge would still attach to any damages that were recovered.” [29].
He also noted that the courts have long recognised that the adoption of a literal approach can present difficulties (see Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321 per Barwick CJ); and that the meaning of the words of a provision will depart from their usual literal meaning when the context and scheme of the provisions suggest that the words do not bear that literal meaning (see Taylor v The Owners – Strata Plan 11564 (2014) 253 CLR 531, [37], [65]–[66]; R v A2 (2019) 93 ALJR 1106, [32]–[37]; Unions (NSW) v State of New South Wales (2019) 264 CLR 595, [171]). Further, there is scope for courts to depart from the literal meaning of a provision where it does not conform to the evident purpose or policy of a particular provision: see Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, 321; R v A2 (2019) 93 ALJR 1106, [37]; Taylor v The Owners – Strata Plan 11564 (2014) 253 CLR 531, [37]; R v A2 (2019) 93 ALJR 1106, [32]–[37].
In his Honour’s view, the purpose of s 207B(8) is to avoid proceedings taken by the worker being on foot at the same time as proceedings by WorkCover for the indemnity. In his Honour’s view, the words “has not recovered, or taken proceedings to recover, damages” simply amount to a temporal limitation on the insurer’s entitlement to indemnification, noting that the proceeding brought by the injured worker needs to be one that retains, as its active purpose, the exercise by the worker of their right to pursue damages against a party other than his or her employer. His Honour held that it follows that the rights of the insurer to indemnification will be suspended for the duration of such a proceeding whilst it remains on foot. He clarified:
“Where, for example, the worker has commenced a proceeding but, by the time the indemnity is claimed, the proceeding has been abandoned, it could not be said that the worker has taken proceedings to recover damages in the sense required by the provision. Any such proceeding would by then be devoid of the purpose which the provision explicitly requires i.e., to recover damages.” [32].
In the result he was not prepared to accept the construction of s 207B(8) contended for by the defendants.
A Jarro