Reconciling the statutory damages cap and a workers’ compensation insurers’ right of recovery: Is airspace above Victoria a ‘place’ outside Victoria?
Mar 2014 |
Introduction
In deciding if the airspace above Victoria constituted a 'place' outside Victoria, the Supreme Court of Victoria in Victorian WorkCover Authority v Virgin Australia Airlines Pty Ltd1 was also required to explore whether statutory caps on damages affected the deep-seated double-dipping principle.2
Background
On 24 August 2010, Mr Paul Tzovlas (Tzovlas) suffered an injury while a passenger on-board a Virgin Australia (Virgin) flight. The incident occurred in the airspace above Melbourne, Victoria.
As the injury was sustained in the course of Tzovlas' employment, he made a workers' compensation claim, receiving significant benefits from the Victorian WorkCover Authority (VWA). Tzovlas also pursued a claim for damages against Virgin pursuant to the Civil Aviation (Carriers' Liability) Act 1959 (Cth)3 (Carrier claim).
In turn, the VWA brought its own claim against Tzovlas,4 seeking to recover the workers' compensation benefits it had paid out from any damages Tzovlas recovered from Virgin. The recovery claim was issued pursuant to the Accident Compensation Act 1985 (Vic), which entitles the VWA to recover benefits it has paid to a worker when that worker also obtains damages for that same injury 'under the law of any place outside Victoria (whether within or outside Australia)'.5
In defending the recovery claim, Tzovlas contended the VWA was not entitled to recover the benefits it had paid out as:
1. The Carrier claim was not made 'under the law of any place outside Victoria'; and
2. He would be disadvantaged if any damages awarded under the Virgin claim (which are capped) where subject to the recovery provisions within the Accident Compensation Act 1985 (Vic).
The Supreme Court considered, and ultimately disagreed with, both arguments raised by Tzovlas - finding that the VWA was entitled to recover the benefits paid from any damages awarded to Tzovlas by virtue of the Carriers claim.
Was the Carrier's claim subject to the recovery provisions of the Accident Compensation Act 1985 (Vic)?
The first issue to be resolved by the Court was 'whether s 85(6) permits recovery of damages paid under Commonwealth legislation in respect of an injury occurring in the airspace above Victoria during the course of Victorian employment.' 6
The Court considered the crux of this question fell to an interpretation of the meaning of 'place'. Submissions were made on behalf of Tzovlas to the effect that 'place', in the context of s 85(6), bears exclusively the physical meaning.
However, in exploring the potential meanings of this word and the intent of the legislature, the Court held that the word 'place' could be used in an ordinary and natural way to describe a physical place or, importantly, a non-physical place, 'such as the jurisdictional source of a law'. On this basis, it was said the Commonwealth (statutory law) could satisfy the description of a 'place' under either of these purposes. As such, the VWA was held to be entitled to recover the benefits it had paid out from any damages awarded in the Carrier claim.
While not considered in the judgment, it is noted with interest that Tzovlas did not make submissions to the effect that it was Victorian legislation (Civil Aviation (Carriers' Liability) Act 1961 (Vic)) which endorsed / empowers the Commonwealth Act which regulated the Carrier claim and as such, the Carrier claim was not one pursued 'under the law of any place outside Victoria'. That said, given the Victorian Act endorses the relevant Commonwealth provisions as having effect on intra-State travel, Carter Newell expects the Court would nonetheless have reached the same conclusion.
Does the statutory cap on damages under the Civil Aviation (Carriers' Liability) Act 1959 (Cth) influence the double-dipping principle underpinning s 85(6)?
The Court was also posed with the submission that, where the capped amount payable under the Civil Aviation (Carriers' Liability) Act 1959 (Cth) is inadequate to compensate the worker fully for the injury sustained, the worker should also be entitled to retain the benefit of the compensation paid. In effect, Tzovlas was seeking to circumvent s 85(6), being to avoid double-compensation payments to a worker.
In support of his submission, Tzovlas relied on the dissenting comments made in Loongana Lime Pty Ltd v Worth:7
'Further, in the circumstances of the present case, it is common ground that by reason of the statutory cap under the CA Act, the amount payable by the carrier would be inadequate to compensate the worker fully for the injury he sustained. It is consistent with what might generally be regarded as the 'beneficent purpose' of the WCR Act that, where the statutory cap is inadequate, the worker should also be entitled to retain the benefit of compensation paid. It is not consistent with the apparent statutory policy of reducing the burden on the employer, to permit the worker to retain both sums. However the section is read, in the circumstances of the present case, one or the other of the statutory purposes will not have been achieved. There is no reason to consider that the policy against 'double dipping' should be given priority.'
On this basis, Tzovlas submitted his inadequate compensation award under the Civil Aviation (Carriers' Liability) Act 1959 (Cth) ought outweigh the VWA's right to recover its benefits from that inadequate award.
The Court disagreed, re-affirming that the objective purpose of s 85(6) was clear and 'does not have a shifting application depending upon the characterisation of the adequacy or otherwise of the damages or other payment'.
Accordingly, the effect of s 85(6) was upheld.
Considerations
While it has generally been accepted that a carriers' exposure to damages for any one injured passenger is limited to the statutory cap, there has been some uncertainty regarding the potential for a workers' compensation insurer to pay out benefits in excess of the statutory limit and then seek to recover same from the carrier - exposing the carrier to more than the damages cap.
Although the Tzovlas judgment doesn't expressly state such an occurrence is improper, the reasoning of the Court arguably infers that the existence of two claims against the carrier (by the injured worker and his employer / workers compensation insurer) will not enlarge the carrier's exposure to damages beyond the cap imposed under the Civil Aviation (Carriers' Liability) Act 1959 (Cth).
The decision can therefore provide some comfort to carriers and their insurers that the maximum amount of damages to which they will be exposed is the statutory cap.
Another potential consequence from this decision is that a claim which might have otherwise been made against a carrier may not be pursued where the applicable workers' compensation refund is considerable / in excess of the statutory damages cap - making a claim pursued by a worker passenger which is limited by the cap somewhat senseless.
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(1) [2013] VSC 720.
(2) Being, that a claimant cannot receive or be awarded compensation arising from the same loss through two different sources - effectively or potentially doubling their entitlement.
(3) As endorsed by the Civil Aviation (Carriers' Liability) Act 1961 (Vic).
(4) Seeking to have the issues resolved prior to the trial of the Carrier claim.
(5) Section 85(6).
(6) Para 71.
(7) [2006] WASCA 183.
