IAG Limited trading as NRMA Insurance v Lucic

These proceedings arise from a motor vehicle accident in which the first defendant, Steven Lucic (the Claimant), was injured while he was in the course of his employment. The plaintiff, IAG Limited, trading as NRMA Insurance (the NRMA), was relevantly the compulsory third party insurer responsible for loss and damage suffered by the Claimant as a consequence of the negligence of the driver of the motor vehicle, Vincent Yung (the Driver). The Claimant received workers compensation payments on the basis that his injuries in the motor vehicle accident were sustained in the course of his employment.

By amended summons filed in Court on 22 May 2019, the NRMA seeks relief under s 69 of the Supreme Court Act 1970 (NSW) for orders setting aside the assessment made and certificate issued in respect of the Claimant by the third defendant, Allan Cowley (the Claims Assessor), in his capacity as a claims assessor of the second defendant, State Insurance Regulatory Authority (SIRA). SIRA has filed a submitting appearance. Workers Compensation Nominal Insurer, the fourth defendant (the WC Insurer), has, with the consent of the other parties, been granted leave to intervene.

All references to legislation in these reasons are references to the Motor Accidents Compensation Act 1999 (NSW) (the Act), unless otherwise indicated. In these reasons, “compensation” means payments made under the Workers Compensation Act 1987 (NSW) and “damages” means monies claimed, payable or paid in an action other than under the Workers Compensation Act.

The motor vehicle accident referred to above occurred on 31 August 2005. At that time, the Claimant was employed by Robert Bookman Enterprises Pty Ltd (the Employer), which has since been wound up. The Employer’s workers compensation insurer was Allianz Australia Workers Compensation (NSW) Limited (Allianz), the predecessor to the WC Insurer. The Claimant made a claim for compensation under the Workers Compensation Act from his Employer and a claim for damages under the Act against the NRMA. Allianz made payments under the Workers Compensation Act to the Claimant. On 14 August 2006 the NRMA admitted liability to the Claimant in a notice served under s 81.

In 2007, Allianz brought proceedings in the District Court against the Driver pursuant to s 151Z of the Workers Compensation Act (the Recovery Proceedings). The Recovery Proceedings were defended by the NRMA as the Driver’s insurer. On 3 October 2007 Truss DCJ ordered judgment in favour of Allianz in the sum of $91,096.79, which comprised $82,299.46, being the total payments of weekly compensation and out of pocket expenses, and interest of $8,797.33.

Truss DCJ indicated that she assessed the damages to which the plaintiff would have been entitled in a claim in negligence against the Driver to be $196,800, comprising the following:

The figure of $196,800 therefore became the limit of Allianz’s statutory indemnity against the NRMA. It was common ground that the NRMA has made payments to date up to the figure of $196,800. It has refused to make payments beyond that figure.

The NRMA applied for the Claimant’s claim to be exempted from assessment by the Claims Assessment and Resolution Service (CARS) pursuant to s 92(1)(b) and cl 14.6 of the Claims Assessment Guidelines (the Guidelines) on the basis that it was unsuitable for CARS assessment. On 30 July 2018, the Claims Assessor refused the NRMA’s application. This decision is not the subject of challenge. However, the NRMA re-agitated its application for exemption at the commencement of the CARS assessment referred to below and pressed the submissions it had made on the earlier application that there was an issue estoppel against the Claimant arising from the Recovery Proceedings.

The assessment of the Claimant’s claim was heard over two days, 15 May 2018 and 24 August 2018. The Claims Assessor’s decision was issued, together with his reasons, on 31 August 2018.

There are two aspects to the Claims Assessor’s decision: first, the finding that there was no issue estoppel or abuse of process which would prevent his making, or otherwise affect, the assessment; and, secondly, the assessment of Claimant’s damages at $1,548,026.45.

The Claims Assessor rejected the NRMA’s submission that there was an issue estoppel which operated against the Claimant arising from the Recovery Proceedings or that it was an abuse of process for the Claimant to seek to be entitled to greater damages than had been found by Truss DCJ in the Recovery Proceedings. The Claims Assessor decided that the Claimant could not be regarded as a “privy” with respect to the Recovery Proceedings and referred in his reasons to what Truss DCJ’s had said in the judgment as follows:

The Claims Assessor concluded his reasons on issue estoppel as follows:

The Claims Assessor rejected the NRMA’s argument that the CARS assessment amounted to an abuse of process or that the NRMA was being treated oppressively, unfairly and vexatiously.

As referred to above, the Claims Assessor assessed the Claimant’s damages as $1,548,026.45, which comprised the following:

Section 151Z of the Workers Compensation Act (s 151Z) relevantly provides:

The scheme of s 151Z recognises the entitlement of a worker to sue the employer and the wrongdoer: s 151Z(1)(a). Recovery of compensation by the worker followed by recovery of damages from the wrongdoer renders the worker liable to repay from those damages the compensation which he or she has been paid: s 151Z(1)(b). Once the worker recovers damages, he or she is not entitled to recover compensation: s 151Z(1)(c). The person who has paid such compensation has a right “to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages)”: s 151Z(1)(d). The right in s 151Z(1)(d) has been described as a right of statutory indemnity. A payment made by the wrongdoer under the statutory indemnity before the worker obtains judgment operates as a defence, to the extent of the amount, in the worker’s proceedings for damages: s 151Z(1)(e).

Thus, an employer is obliged to make workers compensation payments to a worker who has suffered an injury in the course of employment unless and until the worker recovers damages for such injury: s 151Z(1)(c). The employer can recover workers compensation payments from the wrongdoer pursuant to the statutory indemnity under s 151Z(1)(d); or from the worker from the damages awarded in the worker’s favour against the wrongdoer: s 151Z(1)(b). There is no obligation on a worker to claim damages against the wrongdoer.

The grounds of challenge are as follows:

The NRMA repeated in this Court the submissions it had made to the Claims Assessor in its first and second applications for exemption which were as follows.

The NRMA submitted, that in order for Allianz to recover its payments of workers compensation, it was necessary for Truss DCJ to determine, in the Recovery Proceedings, the notional pool of damages that would be recoverable by the Claimant: Grant v Royal Rehabilitation Centre (1999) 47 NSWLR 263; [1999] NSWCA 250. It argued that, as a consequence, Allianz had prosecuted the same claim for damages in the Recovery Proceedings as the Claimant was prosecuting in the CARS assessment. The NRMA submitted that the Recovery Proceedings were the “subject of a full contest on damages with the claimant giving evidence and being cross-examined and various evidence being tendered by the parties.” The NRMA contended that the judgment in the Recovery Proceedings created a binding estoppel as to the quantum of damages recoverable by the Claimant. Alternatively, it submitted that it would be an abuse of process, which would tend to bring the law into disrepute, to allow the Claimant to re-litigate quantum of damages. The NRMA’s contentions depended on the Claimant and the WC Insurer (including Allianz) being privies. The concept of privies is addressed below.

The NRMA argued that if the Claimant was entitled to damages as assessed by the Claims Assessor, it would follow that Allianz would recover substantially more than was determined by Truss DCJ in the Recovery Proceedings. It submitted that to allow the CARS assessment by the Claims Assessor to stand would be at odds with the principles of estoppel which, with a view to minimising the potential for embarrassment and inconsistency which can arise from multiple determinations of the same issue, operate to prevent the re-litigation of matters which have already been the subject of a determination by a competent tribunal.

The NRMA sought to distinguish Tomlinson v Ramsay Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 (addressed below) on which the Claimant relied in support of his submission that there was no privity of interest between him and Allianz. Further, the NRMA submitted, on the basis of “res judicata by way of an issue estoppel” that the judgment in the Recovery Proceedings relieved it of any liability, past or future, to pay Allianz any amount in excess of the amount determined in the judgment of Truss DCJ.

The Recovery Proceedings were proceedings taken by Allianz to recover on a statutory indemnity workers compensation payments already made to the Worker (under s 151Z(1)(d)) and to establish the limits of the indemnity.

Section 151Z(1)(d) creates a separate cause of action which is different to that vested in the worker: WorkCover Queensland v Amaca Pty Ltd (2010) 241 CLR 420; [2010] HCA 34 at [14], [19] (French CJ, Gummow, Crennan, Kiefel and Bell JJ). The worker’s claim against the wrongdoer is a claim in tort which is complete when injury is suffered. The worker’s damages in tort are to be assessed as at the date of judgment: O’Brien v McKean (1968) 118 CLR 540 at 545 (Barwick CJ); [1968] HCA 58. By contrast, the employer’s right under s 151Z(1)(d) is a right to be indemnified by the wrongdoer for workers compensation payments made to the worker.

In an action under s 151Z(1)(d), the employer must prove that the wrongdoer was, at some point, liable to the worker (whether or not the wrongdoer is still liable at the time of the s 151Z(1)(d) proceedings). This liability is to be assessed at the time of the wrong which caused the compensable injury: see the authorities referred to by McColl JA in Workers Compensation Nominal Insurer v Nominal Defendant [2013] NSWCA 301; (2013) 64 MVR 542 at [66].

Thus, in Workers Compensation Nominal Insurer v Nominal Defendant, the employer’s insurer, Workers Compensation Nominal Insurer (WCNI), was held to be obliged, in an action pursuant to the s 151Z statutory indemnity, to prove that the identity of the unknown vehicle could not be established after due inquiry and search as required by s 34 since this was an element of the Nominal Defendant’s liability to the injured worker.

Secondly, the court when determining a s 151Z(1)(d) claim must determine “notional damages”, being the amount that the worker would have recovered had the wrongdoer been sued by the worker. In this context the liability of the wrongdoer is, as was described by the High Court in WorkCover Queensland v Amaca Pty Ltd (at [26]), a “notional liability at common law [or under a statute other than the Workers Compensation Act] for pecuniary and non-pecuniary loss … having regard to limitations on the liability of the wrongdoer to the person who has received compensation” [Emphasis in original]. This second exercise is performed in order to determine the limits of the statutory indemnity. The “notional damages” are determined as at the time of judgment on the statutory indemnity claim.

The method by which a court approaches a claim pursuant to the statutory indemnity was outlined by Cole AJA (Mason P and Sheller JA agreeing) in Grant v Royal Rehabilitation Centre at [8]-[9]. His Honour said that the court must determine the quantum of common law damages which would have been recoverable had they been sued for; and the amount of compensation which has been paid. The determination of “notional damages” is necessary because it operates to limit the amount of the indemnity. His Honour explained the rationale for this process as follows, at [9]:

This case turns on the question whether, and in what circumstances, there is a res judicata or issue estoppel which has the consequence that the result of a worker’s action in tort against the wrongdoer affects, or is affected by, the result of the determination of the employer’s statutory indemnity under s 151Z(1)(d).

In order to address the parties’ submissions it is necessary to have regard to the relevant authorities. I propose to do so in chronological order. However, before addressing these authorities I propose to list the various possibilities which may arise, in the context of s 151Z, in terms of the claims that may be brought which involve a worker, an employer and a (putative) wrongdoer arising from a work-related injury caused by the negligence of the putative wrongdoer and the authority, or decision, for each category. The possibilities include:

In Tooth v Tillyer, Mrs Tillyer, an employee, was prohibited by s 12 of the Married Women’s Property Act 1882 (NSW) from suing her husband as a result of injuries she sustained by his negligence. The High Court concluded that as the husband was, as a matter of law, not legally liable for his negligence towards his wife, the wife’s employer (Tooth) had no entitlement to an indemnity against the husband for the compensation it had paid to his wife.

The High Court said at 611-612:

Category (3) is different from category (2) because it was the statute, the Married Women’s Property Act, which prevented the employer from ever being liable to the worker on the grounds that the employer and the worker were married. There was therefore no prospect that the employer could establish that the husband was liable to his wife in negligence as a matter of law.

In Tickle v Hahn, Tickle Industries Pty Ltd (Tickle) paid $6,300 to the widow and child of one of its employees who died as a result of a motor car accident in the course of employment. Tickle sought to recover the sum from the driver (Hahn). By that time the dependants’ rights to bring an action against Hahn had expired. The High Court held that Tickle was entitled to an indemnity from Hahn notwithstanding that the right of action of the late employee’s widow and child had been extinguished by the passage of time.

Barwick CJ decided the case on the basis that the employer’s right against the wrongdoer Hahn was available irrespective of “the action or inaction of the employee [or his dependants]” (327-328). His Honour also considered that any compromise between the wrongdoer and the employee could not affect the wrongdoer’s obligation to indemnify the employer because the employer’s right to indemnity was an independent right. Barwick CJ said that if there had been a compromise for a lesser sum, then “an assessment of damages must be made, clearly not in an action by the workman but in an action by the employer” (at 331).

In GIO v McDonald, the injured worker had brought proceedings against the putative wrongdoer (the GIO) which were resolved by consent on the basis that, without admission, judgment would be entered in favour of GIO but that GIO would pay the plaintiff’s costs as assessed at $15,000. Subsequently, the employer (McDonald) sought to proceed against GIO under the statutory indemnity and relied on the statutory predecessor to s 151Z(1)(d) (s 64 of the Workers Compensation Act 1926 (NSW)). Following a trial by jury, the jury found that GIO had been negligent and that the worker had been guilty of contributory negligence amounting to one third. The jury assessed the worker’s damages at $819,000 and found that the workers compensation paid by McDonald amounted to $391,066.92. The trial judge directed entry of judgment for $530,383.92, inclusive of interest pursuant to s 94 of the Supreme Court Act. GIO appealed on the ground that it was not a person liable to pay damages to the injured worker as it had obtained judgment in its favour in the proceedings brought by the worker.

The Court of Appeal dismissed the appeal, on the basis of what Barwick CJ said Tooth v Tillyer at 611-612 (set out above). In GIO v McDonald, unlike in Manners v Transfield (see below), the issue of alleged privity of interest between the employer and the worker was not argued.

The NRMA relied on Manners v Transfield in support of its contention that Allianz and the worker were, relevantly, privies for the purposes of issue estoppel and abuse of process.

In that case a worker sued the driver of a motor vehicle (Manners) for damages in negligence and failed to establish that he was liable. Accordingly judgment was ordered in favour of the driver after a contested hearing. The employer (Transfield) then brought its own independent claim for statutory indemnity against the driver. The employer succeeded at first instance and the driver appealed.

The Full Court of Western Australia, by majority (Rowland and Murray JJ, Malcolm CJ dissenting), allowed the appeal on the basis that there was an issue estoppel between the worker and the driver (that the driver was not liable to the worker), which bound the employer.

The majority found that there was “sufficient” privity of interest between the employer and the worker in respect of the issue that the driver was not liable for the injuries for which compensation had been paid to the worker. Rowland J referred to Tickle v Hann and said, at 132:

Murray J referred to Tooth v Tillyer and quoted from 612 where Dixon CJ, Williams, Webb and Fullagar JJ said that the employer’s right to indemnity:

Murray J considered that the employer’s right to the statutory indemnity was “in a real sense, derivative from the right of the worker to recover damages” and that there was the relevant “identicality of interest” between the employer and the worker to make them privies.

Malcolm CJ, in dissent, would have dismissed the appeal on the basis that the employer’s cause of action for statutory indemnity against the putative wrongdoer was independent of the worker’s cause of action for damages against the driver. Malcolm CJ said at 121:

Although GIO v McDonald was decided before Manners v Transfield, it was not referred to. The status of Manners v Transfield is important to the present case because of the reliance placed by the NRMA on the statements in the majority judgments that the employer’s statutory indemnity is a “derivative” of the worker’s claim and that there was “sufficient” privity between the worker and employer.

There are important differences between the present case and Manners v Transfield. In the present case, the WC Insurer brought proceedings on the statutory indemnity which were determined before the Claimant’s damages were assessed by the Claims Assessor; whereas in Manners v Transfield the employer sued on the statutory indemnity after the worker’s claim for damages against the driver had been determined by a judgment in favour of the driver. Further, liability was in issue in the worker’s claim against the driver; whereas there was no issue about the liability in negligence of the Driver (for which the NRMA was responsible) to the Claimant in the Recovery Proceedings.

Further, the result in Manners could have been arrived at without deciding that there was “sufficient” privity of interest between the employer and the worker, as it is explicable on a different basis. The alternative basis for the result in Manners was that the employer could not succeed against the driver because it could not establish the first limb of the statutory equivalent to s 151Z(1)(d): namely, it could not prove that the driver was “so liable” to the worker because the driver had a judgment in his favour against the worker. Whether this alternative analysis is correct has yet to be determined. It is unnecessary to determine it in the present case.

Manners v Transfield was considered by the Court of Appeal in QBE v Dolan. In that case, the worker commenced proceedings against his employer for compensation. Before those proceedings were determined, the worker commenced proceedings against the putative wrongdoer (Dolan), which were resolved on the basis that there would be a judgment for the putative wrongdoer, who would pay the worker’s costs of $4,000. Subsequently, the employer’s workers compensation insurer (QBE) brought proceedings under s 151Z(1)(d) against Dolan. Dolan argued that the judgment in his favour in the worker’s proceedings for damages meant that he did not have to pay on the statutory indemnity because he was not liable in negligence to the worker. Dolan succeeded at first instance. QBE’s appeal was upheld.

As in the present case, Dolan’s argument on the estoppel issue was based on the premise that QBE and the worker were privies in interest. Dolan relied on what was said in Tooth v Tillyer at 612 (in the passage extracted above) that the right given to the employer to claim indemnity under s 151Z(1)(c) was “derivative” and argued, on the basis of Manners v Transfield, that QBE was privy in interest to the claim brought by the worker.

Beazley JA (Mason P and Tobias JA agreeing) held that Manners v Transfield was not directly on point and decided that the result of QBE v Dolan should be governed by GIO v McDonald. Accordingly, the Court of Appeal held that there was no issue estoppel or res judicata which operated against QBE to prevent its recovering payments from Dolan under the statutory indemnity.

A further question arose in QBE v Dolan which did not need to be decided: namely, whether it would be open to an employer to sue a third party wrongdoer to obtain a different (higher) upper limit for the statutory indemnity if it was not satisfied with the amount of the damages awarded in an action by the worker against the wrongdoer. In response to Dolan’s submission that such a course would be open, Beazley JA said:

I do not regard her Honour as endorsing the decision in Manners v Transfield. Indeed, her Honour expressly reserved the position, having not followed Manners v Transfield in the result.

In none of the cases referred to above, with the sole exception of Manners v Transfield, has there been found to be an issue estoppel or res judicata on the basis of “sufficient” privity of interest between the worker and the employer. It is difficult to reconcile the majority decision in that case with the principles relating to issue estoppel and res judicata.

Mr Robinson SC who appeared with Ms Gumbert and Mr Maroya for the NRMA, accepted that the only basis for such an estoppel was that the WC Insurer and the Claimant were privies.

A privy is someone who has the benefit and bears the burden of a res judicata or issue estoppel, Thus, anyone on whom the rights and obligations of a legal entity devolve, such as an executor, administrator or trustee in bankruptcy or a purchaser or assignee, may be a privy: Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, 909-910. The relevant principles were summarised in KR Handley, Spencer Bower and Handley Res Judicata (4th ed, 2009, LexisNexis) in the following terms at [9.38]:

The principles governing privity of interest were stated in Ramsay v Pigram (1968) 118 CLR 271; [1968] HCA 34. In that case, Pigram brought proceedings in the Supreme Court for damages in negligence against Ramsay (the Nominal Defendant) arising from injuries he sustained in a motor vehicle accident when he was involved in a collision with a vehicle driven by a police officer in the course of his duties. The police officer (Thrift) had previously sued Pigram in the District Court for damages arising from the same collision. Pigram pleaded contributory negligence. The District Court proceedings were determined by a jury which returned a verdict for the police officer. The verdict necessarily indicated that the jury was not satisfied that the police officer had been guilty of contributory negligence, it being a complete defence at that time. In the subsequent action brought by Pigram, Ramsay argued that Pigram’s claim was defeated by an issue estoppel arising from the earlier proceedings on the basis that Ramsay and the police officer were privies.

The High Court (Barwick CJ, McTiernan, Kitto, Taylor and Windeyer JJ) found that there was no privity of interest between Ramsay and the police officer. Barwick CJ, Mr Tiernan and Windeyer JJ also found that the issues in the two proceedings were not identical. In the earlier proceedings in which the police officer had been the plaintiff, the issue was whether the police officer owed a personal duty towards Pigram. In the second proceedings the issue was whether the Government (for the liability of which Ramsay, as the Nominal Defendant, was responsible) owed a duty to Pigram. The Court found that there was no privity of interest between Ramsay or the Government and the police officer and that, therefore, neither Ramsay nor the Government was a privy of the police officer.

The principles established by Ramsay v Pigram were applied by the High Court in Tomlinson v Ramsey Food Processing on which the Claimant relied. In Tomlinson v Ramsey Food Processing, workers formerly employed by Ramsey Food Processing (RFP) complained to the Fair Work Ombudsman when RFP terminated its contract with the labour-hire company, T, by which they were employed following the termination of their employment with RFP. The Ombudsman brought proceedings against RFP to enforce the award in favour of the workers. The Federal Court held that RFP had been the true employer; that T had been its agent; and the interposition of T had been a sham.

Subsequently, one of the workers sued RFP in the District Court claiming damages in negligence for injuries he had sustained while working in the abattoir. The worker argued that T was his employer but that RFP owed him a duty of care. If RFP had been the worker’s employer, the worker’s claim would have been prohibited by statute. RFP argued that the worker was estopped by the orders made in the Federal Court proceedings from denying that RFP was his employer.

The High Court in Tomlinson v Ramsey Food Processing held that the orders made by the Federal Court did not create an issue estoppel as the worker was not a party to the proceedings and the Ombudsman did not represent the legal interests of the worker so as to give rise to an estoppel. The Ombudsman had been enforcing the award pursuant to his statutory functions and was not enforcing the worker’s entitlements on his behalf.

For the reasons given in more detail below, I consider that Tomlinson v Ramsey Food Processing is not relevantly distinguishable from the present case. Allianz was enforcing the statutory indemnity in its favour when it brought the Recovery Proceedings; it was not bringing a claim on behalf of the Claimant. Its interests were distinct from his. The issues in the Recovery Proceedings were materially different from the issues involved in the Claims Assessor’s assessment of the Claimant’s damages, as were the parties. Although in both matters there was a consideration of the Claimant’s damages, in the Recovery Proceedings this assessment was notional and was assessed as at the date of judgment of the Recovery Proceedings, which were within the control of the WC Insurer. Applying the principles in Ramsay v Pigram, there is no, or insufficient, privity of interest between the Claimant and the WC Insurer.

The decision in GIO v McDonald turned on questions of statutory construction and flowed from the dicta in Tooth v Tillyer. It is also consistent with the principles of res judicata and issue estoppel. The proceedings in the District Court brought by the worker against the driver (the GIO) created a res judicata between the worker and the GIO. The employer (McDonald) was not a party to those proceedings and therefore there was no res judicata which affected it. Nor was the employer inhibited by any issue estoppel or concepts of abuse of process. It was permitted to litigate the issue whether the driver had at some point of time a liability in negligence to the worker, that issue not having been determined in proceedings in which it had been a party.

It is difficult to see how there could be any privity of interest between the Claimant and the WC Insurer given their different interests and their different causes of action against the NRMA. The conclusion of the majority in Manners v Transfield rested, at least in part, on the description by the High Court in Tooth v Tillyer of the employer’s claim for statutory indemnity being “derivative” of the worker’s claim. However, the word “derivative” was used in that case to reason that because the employer was not, and could never have been, liable to the worker, the employer could not establish the first element of its claim for statutory indemnity. The High Court in Tooth v Tillyer did not find the worker and her employer to be “privies”. Indeed, it was the difference between their causes of action which led Malcolm CJ, who dissented in Manners v Transfield, to conclude that there was no privity between the worker and the employer.

There is a further reason to reject the analysis for which the NRMA contended in the present case. A conclusion that the Claimant was the privy of the WC Insurer would be antithetical to the principles of natural justice. The Claimant would, if the conclusion were accepted, be bound by the result of proceedings in which he had no opportunity to be heard as a party. His only participation in those proceedings was as a witness. The right to procedural fairness in these circumstances could only be removed by express statutory words or necessary implication: Coco v The Queen (1994) 179 CLR 427; [1994] HCA 15, applied in the context of procedural fairness in Kioa v West (1985) 159 CLR 550 at 609 (Brennan J); [1985] HCA 81; see also Saaed v Minister for Immigration and Citizenship (2010) 241 CLR 252; [2010] HCA 23 at [11]-[15] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ). There is no indication in either the Workers Compensation Act or the Motor Accidents Compensation Act of any such legislative intention.

The heads of damage for which Allianz contended in the Recovery Proceedings did not include several heads of damage which the Claimant claimed against the NRMA, such as damages for non-economic loss, past and future treatment, past gratuitous care and future commercial care. Mr Robinson was unable to articulate on what basis the Claimant would be prevented from claiming damages under these heads if the NRMA’s argument about privies were accepted. There was no necessary coincidence of interest between the interests of the WC Insurer and those of the Claimant. The Claimant did not claim “under or through” his employer: his claim for damages against the wrongdoer was independent of his employer’s claim on the statutory indemnity and did not depend on his being employed at all.

It is both instructive and important that Grant v Royal Rehabilitation Centre did not find that the determination of notional damages for the purposes of an action on the statutory indemnity was binding on the “injured worker” but rather that it was binding on the employer paying workers compensation to him and the wrongdoer. The reasons for this are obvious. A worker injured by the negligence of a third party (who is not his or her employer) is entitled to have his or damages assessed as at the date of judgment. An employer (or employer’s insurer) is entitled bring a recovery action before a worker’s damages have been determined. A finding made in such proceedings is necessarily speculative because it is, by definition, made in advance of the determination of the worker’s actual damages upon determination of the worker’s claim against the wrongdoer (or the wrongdoer’s insurer).

The following example illustrates the point. A worker sustains a neck injury by reason of the negligence of a driver. The employer’s insurer pays workers compensation benefits to the worker and brings recovery proceedings under s 151Z(1)(d) against the driver’s insurer. At the time of the recovery proceedings, the worker proposes to have surgery for his neck which is likely to be successful and restore his neck to full function. The court in the recovery proceedings determines the worker’s likely damages for his claim against the driver on the basis that the surgery is likely to be successful and assesses them at $200,000. The court in the recovery proceedings enters judgment for $150,000, being a full indemnity for the employer’s insurer for all the workers compensation payments it has made to the worker. After judgment in the recovery proceedings has been entered, the worker has the surgery which, though conducted non-negligently, renders the worker a paraplegic. The worker’s claim against the driver is heard and determined three years after the surgery, when the worker’s capacity and function have stabilised. The court awards the worker $6 million, being its assessment as at the date of judgment of the worker’s damages.

If the NRMA’s submissions were accepted, the worker’s damages, in the above example, would be limited to $200,000 (or $196,800 in the present case) because the worker and his employer were “privies” with the consequence that the issue estoppel as to the limit of the indemnity bound not only the employer but also the worker.

Manners v Transfield is distinguishable, since it turned on liability rather than damages. Accordingly, it did not address the question whether, as in the present case, if the wrongdoer accepted liability, the damages assessed in proceedings by the worker against the wrongdoer would be limited to the “notional damages” found in the Recovery Proceedings. It is, accordingly, not necessary to express a final view about the result in Manners v Transfield. However, for the reasons given above, I reject the submission that there is “sufficient” privity between the Claimant and the WC Insurer in the present case to make the result of the Recovery Proceedings binding on the Claimant.

All the cases referred to above are consistent with the following principles of res judicata and issue estoppel. In each of these principles, “party” includes a “privy” to the party. The principles are:

As referred to above, the majority in Manners v Transfield considered the principle in (3) to be applicable only on the basis that the employer and worker had sufficient privity of interest for the principle to apply. The application of these principles has the following consequences for the different categories I have identified above.

In scenario (1) (which includes the present case), an employer who establishes that the wrongdoer’s negligence caused the worker’s injury is entitled to judgment for the amount of the payments to the date of judgment under the statutory indemnity: s 151Z(1)(d). The employer will be entitled to further payments from the wrongdoer under the statutory indemnity up to the limit of the notional damages which the court in those proceedings has determined. The worker’s damages are not limited to the “notional damages” and will, if the worker sues the wrongdoer, be determined as at the date of judgment of the worker’s proceedings.

Scenario (2) was the case of Manners v Transfield. For the reasons given above, it is not necessary to address it further.

In scenario (3), the consequence for the employer is that it will not be entitled to recover on the statutory indemnity as the worker has never had any legal right to recover damages from the wrongdoer and therefore liability cannot be established as an element of the cause of action on the statutory indemnity: Tooth v Tillyer. Therefore any action on the statutory indemnity would be futile since, as a matter of law, the employer could not establish that the husband could ever have been liable to his wife.

In scenario (4), the employer would still be entitled to sue on the statutory indemnity as in Tickle v Hahn, notwithstanding that no action of damages could succeed against the wrongdoer.

In scenario (5), the employer would still be entitled to sue on the statutory indemnity as in GIO v McDonald and QBE v Dolan. It is not bound by the consent judgment between the worker and the wrongdoer and is entitled to judgment on the statutory indemnity as long as it can establish that the worker suffered an injury as a result of the wrongdoer’s negligence and can recover workers compensation payments made up to the limit of the damages which the court in those proceedings finds would have been recoverable had they been sued for by the worker. It appeared to be accepted that scenario (5) would occur in cases where a worker, having initiated proceedings to recover lump-sum damages, thought better of it and decided that it was preferable to continue to receive workers compensation payments than to relinquish the right to receive such payments, as would occur if an award of damages was made.

In scenario (6), the worker would be obliged to pay to the employer from the damages any amount referable to workers compensation payments because the worker is not entitled to retain both damages and compensation s 151Z(1)(b).

The matter to which Beazley JA adverted at [56]-[59] in QBE v Dolan, whether an employer who is dissatisfied with the quantum of damages awarded to a worker in the worker’s claim against the wrongdoer can bring an action on the statutory indemnity to have the notional damages (and therefore the limit of the statutory indemnity) determined at a higher figure, has yet to be determined.

The interest of an employer in a worker’s claim against the wrongdoer has, in some cases, led the employer to have its claim under the statutory indemnity heard together with the worker’s claim against the wrongdoer: see, for example Kay v Sydney Airport Corporation Ltd [2014] NSWSC 744. In such cases, there is only one assessment of the worker’s damages since the fact that the proceedings are heard together obviates the need for a notional assessment to be made for the purposes of determining the limit of the statutory indemnity since the limit corresponds to the damages as assessed on the worker’s claim. The procedure adopted in Kay v Sydney Airport Corporation Ltd is not available where the worker’s claim is determined by a CARS assessor rather than by a court. There is no provision in the Act which contemplates that the employer would be entitled to participate in the CARS assessment process.

The Claimant is not bound by the finding as to the notional damages in the Recovery Proceedings because he was neither a party nor privy to a party in those proceedings. There is no applicable issue estoppel. What the court in recovery proceedings is required to determine, as Cole AJA said in Grant v Royal Rehabilitation Centre, is the quantum of common law damages which would have been recoverable had they been sued for measured at the date of the recovery proceedings. This is a different question from the quantum of common law damages actually recoverable by the worker when he or she sues for them, which are measured from the date of judgment in those proceedings.

The effect of the judgment in the Recovery Proceedings is to create a res judicata between the Employer and Allianz (who are relevantly privies) and the Driver and the NRMA (who are also relevantly privies) as to the payments to the date of judgment and an issue estoppel as to the limit of the statutory indemnity, being the notional damages determined in those proceedings. Thus, irrespective of the assessment by the Claims Assessor, the limit of the statutory indemnity is $196,800, as found by Truss DCJ in the Recovery Proceedings. The Claimant, though a witness in the Recovery Proceedings, was neither a party nor a privy. Therefore there is no res judicata or issue estoppel against him arising from the Recovery Proceedings. The Claims Assessor was, accordingly, both entitled and obliged to assess the Claimant’s damages without regard to the limitation on the statutory indemnity which bound the NRMA and the WC Insurer.

It follows that the NRMA has not made out the issue estoppel ground.

Before turning to the remaining grounds I propose to summarise the applicable legislation in so far as it is relevant to them.

Part 3.4, “Medical Assessment” provides for certain matters (“medical assessment matters”) to be referred to medical assessors. Such matters include whether the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident is greater than 10%: s 58(1)(d). Following an assessment, a medical assessor is required to give a certificate, which is conclusive evidence as to the matters certified in any court proceedings or assessment by a claims assessor: s 61(1). This provision is subject to exceptions, none of which is presently relevant.

Section 94(1)(b) requires a claims assessor to make an assessment of “the amount of damages . . . (being the amount of damages that a court would be likely to award).” The assessment is to be made having regard to such information as is conveniently available: s 94(2). The assessment is to specify an amount of damages: s 94(3). The claims assessor is to issue a certificate as to the assessment to which is attached a brief statement of the reasons for the assessment: s 94(4) and (5). It was accepted that the assessment is binding on the parties, subject to the proceedings in this court for judicial review: s 95.

Those performing functions as claims assessors have been appointed by SIRA and are regarded by it as being “suitably qualified”: s 99. Section 104 provides for hearings before claims assessors. Section 104(4) relevantly provides:

Section 106 provides that claims assessments are subject to the relevant provisions of the Claims Assessment Guidelines (the Guidelines). It was common ground that the applicable Guidelines were those dated 1 May 2014.

Chapter 5, entitled “Awards of Damages”, modifies the common law principles relating to assessment of damages. It contains s 122(3) which provides:

Section 126, which is also contained in Chapter 5, provides:

Clause 16.2 of the Guidelines relevantly provides that the claims assessor is to take such measures as are reasonably practicable to ensure that the parties have an opportunity to have their submissions considered: cl 16.2.3.

Clause 18.4 of the Guidelines provides:

This ground requires consideration of the Claims Assessor’s reasons. The NRMA contended that the Claims Assessor misapprehended the NRMA’s concession in respect of the Claimant’s neck and “took a short cut” and did not undertake a legal assessment of causation as he was required to do. Mr Robinson submitted that this error was one which was evident from the face of the record, which included the reasons of the Claims Assessor.

In order to address this ground it is necessary to set out the Claims Assessor’s reasons in relation to the Claimant’s neck, which are as follows:

The Claims Assessor addressed the Claimant’s lumbar spine, with some reference in passing to the cervical spine. He returned to the issue of causation with respect to the cervical spine as follows:

After the first day of hearing before the Claims Assessor, the NRMA provided written submissions dated 9 July 2018 in which it said, under the heading “Causation – cervical spine”:

In these submissions, the NRMA addressed the various histories given by the Claimant from time to time in relation to neck problems and concluded:

Later in these submissions, the NRMA submitted, under the heading “Alternative Findings as to Causation”:

In oral submissions before me, Mr Robinson said of [61] at tr. 22.11-.17:

In support of its contention that the NRMA had not, at any stage, conceded that the Claimant’s “alleged neck injury was caused by the subject accident on 31 August 2005”, the NRMA read the affidavit of Jane Faulks affirmed 18 April 2019. The deponent, a Senior Claims Manager, was present at the two day hearing before the Claims Assessor. She was cross-examined by Mr Stone SC, who appeared with Mr McManamey for the Claimant, including by reference to comprehensive hand-written notes which she made over the two days of hearing. I accept, on the basis of Ms Faulks’ evidence, that the Claims Assessor asked the parties to provide written submissions following the conclusion of the second day of hearing in which they addressed issues of compensation relating to the neck and back, separately and together, by reference to the submissions on causation. The following exchange between Mr Stone and Ms Faulks occurred in the present proceedings:

On 3 September 2018, after the second day of the hearing before the Claims Assessor, the NRMA sent a written submission, as requested by the Claims Assessor, in which it said of present relevance:

On a fair reading of the NRMA’s submissions to the Claims Assessor, I am satisfied that the NRMA accepted that the Claimant had suffered a transient injury to his neck in the motor vehicle accident, the effects of which had ceased by 10 April 2006, less than a year after the accident. However, the NRMA contended that the substantial neck problems in respect of which the Claimant sought to be compensated were not caused by the accident.

Mr Robinson submitted that the Claims Assessor’s use of the word “ultimately” in paragraph [56] of the reasons was a powerful indication that the Claims Assessor regarded the acceptance by the NRMA as dispositive of the Claimant’s claim arising from an injury to his neck. He contended that the length of the reasons relating to the Claimant’s back, which followed paragraph [56] indicated that the Claims Assessor understood that, while there were substantial issues of causation regarding the Claimant’s back, the issues relating to the Claimant’s neck had been resolved by the NRMA’s concession.

I am not persuaded by this submission. I regard the Claims Assessor’s use of the word “ultimately” as indicating no more than that, whatever may have been the position before the conclusion of the hearing and final submissions, the NRMA accepted there had been at least some injury to the Claimant’s neck in the accident. If, as Mr Robinson contended, the Claims Assessor regarded the neck injury as a matter that had been resolved by the NRMA’s concession, it is difficult to see why the Claims Assessor reviewed the evidence and submissions relating to the Claimant’s neck in the context of causation at paragraphs [92]-[98]. I regard these paragraphs as constituting a detailed consideration of the evidence, including the assessments made by Medical Assessment Service (MAS) assessors, leading to the finding at paragraph [99].

It is of significance that, in paragraph [50] of the reasons, the Claims Assessor summarised the assessment by Dr Coyne, a MAS assessor, whose opinion was that the accident had caused a WPI of 25% “for which there was no deduction for pre-existing or subsequent causes”. The Claims Assessor was bound by what was in Dr Coyne’s certificate. It was common ground that the Claims Assessor was bound to make an award for non-economic loss on the basis of Dr Coyne’s certificate that the degree of permanent impairment was greater than 10%: Brown v Lewis (2006) 65 NSWLR 587; [2006] NSWCA 87 at [21] (Mason P). The Claims Assessor was not bound by Dr Coyne’s reasons. However, the Claims Assessor was entitled to take into account Dr Coyne’s reasons in deciding for himself whether the Claimant had established a causal link between the substantial neck problems and the accident. In substance, the Claims Assessor, as his reasons indicate, accepted the opinions of Drs Day and Coyne as to causation with respect to the Claimant’s neck. By reason of s 58(1)(d) and s 61(2), the Claims Assessor was entitled to regard Dr Coyne as having accepted the causal link between the neck impairment which he found and injuries sustained by the Claimant in the accident, as required by s 58(1)(d).

Mr Robinson also placed emphasis on the words “I have no difficulty therefore” in paragraph [99] of the reasons. I regard these words as apt to import an acceptance of the Claimant’s submissions set out in the previous paragraph as well as an acceptance of the opinions of Drs Day and Coyne. I do not regard the Claims Assessor’s findings as resting on the minor concession made by the NRMA referred to above. His reasons indicate that he weighed the evidence adduced by both parties and considered their submissions before preferring, and accepting, the evidence of Drs Day and Coyne to the evidence adduced by the NRMA.

In the alternative, the NRMA submitted that the Claims Assessor had denied it procedural fairness by failing to respond to the NRMA’s causation argument. It relied on Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24] and Rodger v De Gelder [2015] NSWCA 211; (2015) 71 MVR 514. In Rodger v De Gelder, the Court of Appeal found that a medical panel had made a jurisdictional error and failed to accord procedural fairness when it failed to engage with, or respond to, a substantial argument based on the circumstance that the claimant had made a contemporaneous complaint of the onset of pain in his thoracic spine resulting from the accident. For the reasons given above I am not satisfied that the Claims Assessor’s approach reveals any denial of procedural fairness or other error of law. It is plain from the reasons that he considered the NRMA’s arguments, submissions and evidence to the effect that the Claimant had suffered, at best, a transient injury to his neck as a result of the accident and rejected them, preferring instead the evidence of Drs Coyne and Day, not only as to impairment but also as to causation.

The NRMA has failed to make out the neck ground.

It is convenient to address these grounds together although there are differences between the ground relating to past economic loss and the ground relating to future economic loss.

The NRMA submitted that the Claims Assessor failed to comply with either s 94(5) or cl 18.4 of the Guidelines with respect to the awards for either past or future economic loss and failed to set out his actual path of reasoning for the awards, as he was required to do: Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [55]. The NRMA contended that the Claims Assessor made findings neither regarding the Claimant’s likely work but for the accident nor whether the Claimant had any residual work capacity following the accident.

The NRMA identified the following matters, which it described as “critical integers” (referring to Zahed v IAG Limited t/as NRMA Insurance [2016] NSWCA 55; (2016) 75 MVR 1 at [8] (Leeming JA)) for an award of past economic loss:

As with the neck ground, these grounds require consideration of the Claims Assessor’s reasons in relation to the awards for past and future economic loss.

The starting point is that, although the Act prescribes different requirements for past and future economic loss in that s 126 relates only to awards for damages for future economic loss, the requirement to give reasons can, in cases such as the present, impose similar requirements with respect to awards for past and future economic loss. The calculations of both past and future economic loss involve the assessment of hypothetical circumstances: Malec v J C Hutton Pty Ltd (1990) 169 CLR 638; [1990] HCA 20, which was referred to in a context similar to the present in The Nominal Defendant v Aychahawchar [2015] NSWCA 58; (2015) 70 MVR 89 at [18] (Adamson J, Basten and Gleeson JJA agreeing). Further, as I said in The Nominal Defendant v Aychahawchar at [18], the principle of coherence requires that where an assessment is to be made of the Claimant’s “most likely future circumstances but for the injury” for an award of future economic loss, this assessment will necessarily affect the assessment of the damages for the past. The date of the judgment following trial is an arbitrary date which divides the past from the future for the purposes of damages.

The Claims Assessor’s reasons included the following findings. But for the accident, the Claimant would probably have continued to work as a self-employed courier driver ([138] and [143]), although he would not have been continuously employed ([148]). As the 2005 financial year was the only full year in which he worked as a courier driver, it is appropriate that his earnings but for the accident be measured by reference to his last year of income rather than an average of the previous five years ([139] and [144]). As at the date of the accident he was earning $643.58 net per week.

Because the Claimant won one million dollars in the lottery, even but for the accident, he would have taken time off to go on extended holidays in Thailand and Europe as he did in any event ([146]).

If the Claimant’s loss of earnings for the past was total, the figure for past loss, taking into account CPI increases would be $568,542.16. This figure is too high for three reasons: there would have been periods of unemployment (due to his pre-existing spinal weakness) or holidays (as a result of the lottery win) and the Claimant has some residual earning capacity notwithstanding the accident ([146]; [148]; [159] and [160]).

Having regard to the factors referred to above, it is not appropriate to adopt a capitalised discounted figure based on weekly loss for the past 13 years since the accident. The upper limit figure (based on total loss of earning capacity and the assumption that the Claimant would have worked full-time as a courier driver without extended breaks) of $568,542.16 must be discounted. The discounted buffer figure for the past is $400,000, inclusive of superannuation ([148]-[149]).

The Claimant would, but for the accident, have worked until the age of 67 (18 years from the date of assessment). Although his prospects of returning to work are limited, he has some residual earning capacity: [160].

The current earnings for a self-employed courier driver were, as at the date of the assessment, $1,073.21 ([155]). If this figure is capitalised and discounted for the usual vicissitudes of 15%, the figure for future economic loss is $570,000 plus superannuation ([155]). This figure must be discounted to take account of the Claimant’s pre-existing spinal weakness and the residual earning capacity. A buffer of $400,000 is appropriate, taking into account vicissitudes plus superannuation ([160]).

There are, in substance, two main approaches to assessing the economic loss component in damages for personal injuries: the mathematical approach and the “buffer” or “cushion” approach. The mathematical approach is typically appropriate for a worker who had a fixed, continuous weekly income before the accident caused by the wrongdoer and who was wholly incapacitated for work following the accident. Past economic loss requires the net weekly income to be multiplied by the number of weeks between the accident and the date of assessment. Future economic loss requires the net weekly loss to be multiplied by a multiplier which depends on the number of years remaining in the worker’s working life. The lump sum figure is discounted for vicissitudes, which are typically 15%. This example is positioned at one end of the spectrum.

At the other end of the spectrum lies, for example, a casual worker whose earnings were not regular, or who may have been at the beginning of his or her career. This worker may have had pre-existing disabilities or other characteristics which might have taken him or her out of the workforce in any event. Damages are commonly assessed in such cases by way of a buffer. The Court of Appeal has held that an award of damages by way of a buffer is not inconsistent with the statutory requirements of s 126: Penrith City Council v Parks [2004] NSWCA 201 (particularly at [58]) and Allianz Australia Insurance Ltd v Kerr (2012) 83 NSWLR 302; [2012] NSWCA 13. The requirements of s 126 may be fulfilled in a buffer case by statements of greater generality: Allianz Australia Insurance Ltd v Kerr at [69] and Allianz Australia Insurance Ltd v Sprod (2012) 81 NSWLR 626; [2012] NSWCA 281 at [30] (Barrett JA, Campbell JA and Sackville AJA agreeing).

The particular matters which the NRMA contended were “critical integers”, the periods during which the Claimant would have worked were not identified; and the Claimant’s residual earning capacity, were incapable of precise quantification. The assessment of damages requires evaluative and quantitative judgments to be made which are not susceptible of simple mathematics because the assessment of past and future economic loss requires a comparison between hypothetical and actual (in the case of the past) and hypothetical and hypothetical (in the case of the future).

The Claims Assessor, in the present case, has adopted a blended approach by discounting the capitalised sums for past and future economic loss calculated by reference to weekly figures. In my view, the Claims Assessor’s reasons are sufficient to explain the decision to assess damages in this way. I consider that the Claims Assessor sufficiently complied with s 126 when the reasons are read fairly as a whole.

The economic loss grounds have not been made out.

None of the parties identified any reason why costs ought not follow the event in accordance with the general rule: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.

For the reasons given above, I make the following orders: