In re Dargan, the plaintiff suffered from mesothelioma and before his death, the plaintiff received from WorkCover the statutory benefit of $627,407.00 and entered into an agreement with WorkCover to pursue a claim against Amaca Pty Limited (“Amaca”). The terms of the agreement included that:
- Mr Dargan would retain in full the statutory benefit received from WorkCover Qld;
- in the event that the proceeds of the proceedings against Amaca were less than the statutory benefit paid to Mr Dargan, Mr Dargan would be entitled to retain 20% of those proceeds with the balance being paid to WorkCover Qld;
- in the event that the proceeds of the proceedings against Amaca were in excess of the statutory benefits paid to Mr Dargan, the whole of the amount of the statutory benefit would be paid to WorkCover Qld with Mr Dargan entitled to the excess.
The purpose of the agreement was to facilitate indirect recovery on behalf of WorkCover against Amaca on that action of the statutory benefits paid to the plaintiff and to ensure if the amount recovered was less than the statutory benefits, the plaintiff retained at least 20% of the amount recovered against Amaca. Section 207B of the Workers’ Compensation and Rehabilitation Act 2003 (QLD) (“WCRA”) provides the mechanism for recovery of statutory benefits and relevantly provides:
(1) This section applies to—
(a) an injury sustained by a worker in circumstances creating—
(i) an entitlement to compensation; and
(ii) a legal liability in the worker’s employer, or other person, to pay damages for the injury, independently of this Act; and
(b) damages that an employer is not indemnified against under this Act.
(2) An amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or another person, is a first charge on any amount of damages recovered by the person to the extent of the amount paid as compensation to the person.
(3) An employer or other person from whom the damages are recoverable must pay the insurer the amount of the first charge or, if the damages are not more than the amount of the first charge, the whole of the damages.
(4) Payment to the insurer under subsection (3), to the extent of the payment, satisfies the liability of the employer or other person for payment of the damages.
(5) A person cannot settle, for a sum less than the amount that is a first charge on damages under subsection (2), a claim for damages had by the person independently of this Act for an injury to which there is an entitlement to payment of damages without the insurer’s written consent.
(6) If, without the insurer’s consent, a settlement mentioned in subsection (5) is made, then to the extent that the damages recovered are insufficient to meet all payments due to the insurer under this section—
(a) the insurer is entitled to be indemnified by the employer or other person who is required by the settlement to pay the damages; and
(b) to that end, the insurer is subrogated to the rights of the person who has sought the damages, as if the settlement had not been made.
(7) 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.
(8) Payment made as indemnity under subsection (7), to the extent of the payment, satisfies the person’s liability on a judgment for damages for the injury.
The plaintiff later commenced proceedings against Amaca and Amaca joined Northern Sydney Local Health District (Northern Health), Hunter & New England Local Health District (Hunter Health) and the State of Queensland.
The plaintiff was exposed to asbestos in Queensland and New South Wales by employers. The plaintiff subsequently died, and his claim was reconstituted and continued by his legal personal representative
The plaintiff’s claim as against Amaca was settled for $410,000.00 plus costs of $40,000.00. Amaca then sought contribution from the remaining tortfeasors. Contributions were later apportioned and agreed as follows:
- Amaca- 70.2%
- Northern Health – 15.25%
- Hunter Health – 7.05%
- The State of Qld – 7.5%.
The proceedings before Kerns J considered the apportionments of Northern Health and Hunter Health and s.5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (“LRA”). The analogous provision of the NSW Act is s.6 of the Law Reform Act 1965 (QLD).
Section 5 of the LRA relevantly provides:
(1) Where damage is suffered by any person as a result of a tort (whether a crime or not):
(c) any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.
(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.
In issue was whether the tortfeasors Northern Health and Hunter Health would if sued, be liable to the plaintiff, and secondly, whether the plaintiff was doubly compensated because of the agreement with WorkCover.
Kearns J rejected that the plaintiff was doubly compensated. In so doing, Kearns J found that the action against Amaca was for exposure to its product and the assessment of damages was about that action and not the statutory benefits paid. The action was not about a claim against the insured represented by WorkCover. The agreement with WorkCover did not for this reason amount to double compensation.
Kearns J went on to note that even if the plaintiff recovered more than the statutory benefit, the law would not prevent the plaintiff from holding onto the statutory benefit and the damages, which the agreement in any event contemplated by way of refund. The right of recovery of the statutory benefit lay with WorkCover under s.207B of the WCRA. The effect of s.207B did not deny the plaintiff his claim against Amaca. As such, the agreement remained and did not alter the nature of the claim by the plaintiff against Amaca.
Kearns J considered that it was a matter for WorkCover to enforce recovery and in the event, it chose by agreement to allow the plaintiff to retain 20%, it was properly seen as a payment by WorkCover under the contract. Kearns J considered the agreement was properly entered into and not prohibited under s.207B of the WCRA and took into account the risks of such an action and the prospects of success.
Kearns J noted if there were any double compensation it would be between the plaintiff and WorkCover and not Amaca, because the amount did not increase the liability of Amaca. In the end, the plaintiff did not recover more, but less than the statutory benefit received. Accordingly, the plaintiff received the benefit of the contractual provision with WorkCover, which Amaca was not privy to, and it did not affect Amaca’s liability to the plaintiff – The National Insurance Company of New Zealand Ltd v Espagne (1961) 105 CLR 569.
Kearns J found that the agreement did not alter that Amaca retained its right to the cross-claims against the tortfeasors and the agreement did not change those rights. The only change was that the plaintiff retained $82,000.00 (20%) after Amaca refunded WorkCover 80% of the $410,000.00. Accordingly, Amaca recovered against Northern Health the sum of $68,625.00 and as against Hunter Health the amount of $33,750.00.
David Cormack – Brisbane Barrister & Mediator