Australia: If you can't take the direct route, try a detour: the Court of Appeal resuscitates a workers' compensation recovery claim
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WorkCover Queensland v Amaca Pty Limited [2012] QCA 240

Introduction

The Queensland Court of Appeal has validated the assignment of a cause of action for personal injuries to enable recovery of statutory workers’ compensation paid by the insurer in circumstances where, the parties conceded, the insurer’s statutory right of recovery had been extinguished.

Facts

On 7 January 2009, WorkCover Queensland accepted a statutory compensation claim brought by Douglas Rourke in relation to lung cancer/mesothelioma and asbestos related pleural disease, sustained as a result of exposure to asbestos during the course of his employment and self-employment as a carpenter between 1967 and 1983. WorkCover paid statutory compensation totalling $550,351.50.

Mr Rourke alleged that his condition had arisen as a result of handling asbestos cement fibro sheeting manufactured by Amaca Pty Ltd (formerly James Hardie & Coy Pty Ltd). Mr Rourke had filed a claim against Amaca in the Queensland Supreme Court on 19 December 2008, seeking damages in this regard. The Supreme Court claim was not served or proceeded with by Mr Rourke.

WorkCover wished to seek recovery of compensation paid from Amaca. It is important to note that WorkCover proceeded on the basis it could not pursue its statutory right to recover compensation paid pursuant to sections 207B(7) and (8) of the Workers’ Compensation and Rehabilitation Act 2003 (Qld). Subsection (7) allows the insurer to seek recovery from third parties where the worker “has not recovered, or taken proceedings to recover, damages for the injury”. WorkCover conceded that its statutory right of recovery from Amaca was extinguished by Rourke commencing proceedings against Amaca.

Mr Rourke died on 12 January 2009. On 12 June 2009, Mr Rourke’s personal representative executed a Deed of Acknowledgement and Assignment assigning his cause of action for damages (which survived pursuant to the Succession Act 1981) against Amaca to WorkCover. The Deed was also executed by WorkCover and Mr Rourke’s employers (and it is to be noted that Amaca was never an employer of Mr Rourke). The Deed provided that if the proceedings resulted in an award of damages in excess of statutory compensation paid by WorkCover, WorkCover would hold the excess in trust for the benefit of Mr Rourke’s estate.

WorkCover was subsequently substituted as a plaintiff in Mr Rourke’s Supreme Court claim, and the statement of claim was amended to reflect this. Amaca filed a defence alleging, inter alia, that the assignment was invalid as the cause of action was not capable of assignment.

WorkCover applied to the Supreme Court to have the issue of the validity of the assignment determined as a separate question. At first instance, Boddice J found it unnecessary to decide whether or not a cause of action in tort for personal injuries was capable of assignment, because of his finding that in any event WorkCover did not establish a pre-existing genuine substantial or commercial interest in the assignment. WorkCover appealed the issue.

Decision

The Court of Appeal found unanimously that the assignment was valid.

The Court stated the common law to be that a right to claim damages in negligence (including a claim for personal injuries) may be validly assigned where the assignee has a genuine commercial interest in the assignment. Importantly, the Court noted that the genuine commercial interest must come into existence prior to the assignment, although need not necessarily be a legally enforceable interest.

The Court found that WorkCover’s commercial interest, which predated the assignment, was in recoupment of statutory compensation paid and was akin to an insurer’s right of subrogation. The Court said the interest arose upon payment of the compensation. Although not a legal interest (on the basis of the parties’ agreed view of section 207B), it was nevertheless a genuine commercial interest. The Court found that this interest validated the assignment.

Implications

It is common practice for a worker, afflicted by a latent onset injury which is a terminal condition (that is, a condition which is likely to result in a worker’s death within two years of diagnosis), giving rise to a right to workers’ compensation, to commence proceedings for damages against potentially culpable parties in addition to issuing a statutory claim. It is common that if the statutory claim is accepted, the common law claim remains unserved and not pursued, because in these cases the statutory benefits will often well exceed what the worker might hope to recover by way of damages at common law.

This decision overcomes the potential exclusionary wording in section 207B(7), where the worker has initiated a common law claim for damages, in allowing the insurer to proceed to recoup compensation paid via other means.

It is notable, in the author’s view, that both parties agreed that section 207B(7) of the Workers’ Compensation and Rehabilitation Act 2003 did not give WorkCover a statutory right of subrogation in this case because Mr Rourke had “taken proceedings to recover damages” from Amaca by filing, but not otherwise proceeding with, a claim. Gotterson J in the Court of Appeal acknowledges, understandably in the author’s view, scope for argument on this point. In the author’s view, despite the tight language of the provision it is difficult to accept that the Court could construe section 207B(7) as forever precluding the insurer from pursuing a recovery action by the worker’s mere filing of a claim, without service of the claim or prosecution of the claim in any way.

It remains to be seen, but the real advantage of the assignment might be in whether Amaca can now resist payment of WorkCover’s claim by virtue of the provisions of the James Hardie Former Subsidiaries (Winding up and Administration) Act 2005, which Amaca would no doubt have otherwise relied upon had WorkCover pursued statutory recovery pursuant to section 207B.

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