Introduction

The 30 May 2022 decision in Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622, handed down by a single Judge in the Federal Court of Australia, has highlighted numerous issues which give pause for thought – specifically regarding how employers should manage their risk, and how injured workers should bring claims for damages for personal injury.

Where an employer is exposed to damages for breach of provisions of the Fair Work Act 2009 or other Commonwealth legislation (such as anti-discrimination law, as well as in negligence), the Federal Court is not restricted in the way it assesses damages by the limitations in the NSW Workers Compensation Act 1987.

With this in mind, employers within the NSW workers compensation scheme may be entitled to indemnity from Icare and SIRA if the breach of the Fair Work Act 2009 arises from an “injury” to the worker. 

The Court has made it clear though, that a worker cannot double dip - and must account for any state compensation received.

Background

In Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622, the worker, Mrs Leggett, was employed at a racing club where she was responsible for managing the club’s sponsorships.  She said that over an extended period in 2016 she was micromanaged and bullied by her manager, which led to a psychiatric injury. 

She made a claim for workers compensation under the NSW legislation. She alleged injury in May 2016.  She received compensation for weekly benefits and medical expenses for the entire first, second and third entitlement period from Icare.

She brought a claim in the NSW Workers Compensation Commission for lump sum compensation.  The Arbitrator held that she had a 19% Whole Person Impairment as a result of injury in May 2016.  She was awarded lump sum compensation for 19% Whole Person Impairment. 

She subsequently made a claim against her employer, alleging breach of the Fair Work Act 2009.  She said that the bullying conduct of the employer was adverse action which injured her in her employment.  She pointed to specific conduct of the employer in October 2016, which led to the termination of her employment.

She said this was a breach of s.340 of the Fair Work Act 2009, and claimed compensation under s.545 of that legislation for both non‑economic and economic loss.

Questions for the Court

In the Federal Court, Justice Rares undertook a liability assessment and found that the employer had injured the worker in her employment, and was in breach of s.340 of the Fair Work Act 2009. 

His Honour accepted that Mrs Leggett should be entitled to compensation under s.545 of that Act.  The question he needed to answer was how and in what manner he should assess that compensation, given:

• the past findings of the NSW Arbitrator of an injury in May 2016;
• the past paid statutory compensation, including lump sum compensation; and
• whether in making a decision as to what compensation is payable under the Fair Work Act 2009, he needed to apply the principles for assessing work injury damages under Part 5 of the Workers Compensation Act 1987.

Constitutional issues

The employer argued that in assessing the compensation payable under the Fair Work Act 2009, this was in essence work injury damages, and the Court was obliged to apply the provisions in Part 5 of the Workers Compensation Act 1987, which limit the amount of damages that can be ordered. 

Mrs Leggett argued that this legislation did not apply.  Mrs Leggett’s argument was that she should be entitled to non-economic loss in addition to the amount she had already received under the State legislation for lump sum compensation for impairment, and that she should be entitled to receive compensation for her loss of earnings indefinitely, as well as for her medical expenses.

In the course of a technical argument, Justice Rares accepted that the relevant parts of the NSW Workers Compensation Act 1987 were clearly inconsistent with the terms of the Fair Work Act 2009 - a Commonwealth piece of legislation, which allowed an order for unfettered compensation.

He said, therefore, that prima facie the Fair Work Act 2009 covered the field and excluded the operation of the NSW legislation.  His Honour held that legislation of the Commonwealth Parliament (i.e. the Fair Work Act 2009) was not subject to a fetter by the NSW Parliament’s limitation on damages claims set out in the Workers Compensation Act 1987. 

Justice Rares said that because there was inconsistency between the Fair Work Act 2009 and the damages provisions in the NSW legislation, the NSW legislation did not operate to limit the compensation payable under the Fair Work Act 2009.

His Honour thus concluded that the claim which Mrs Leggett made under the Fair Work Act 2009 should be assessed for compensation under general common law rules, and was not subject to the restrictive terms of the Workers Compensation Act 1987.

Assessment of damages

His Honour then said that he should disregard the May 2016 injury and assess the loss arising from the October 2016 injury for breach of the Fair Work Act 2009 - and that having done that, he should then apply the logical rule of avoiding double compensation and deducting any compensation already received. 

His Honour accepted that as a result of the injury in October 2016, Mrs Leggett was unable to return to employment.  He said that pursuant to s.545 of the Fair Work Act 2009, she was entitled to compensation for pain and suffering or non‑economic loss, she was entitled to loss of earnings and any other losses. 

He conceded that because of the severity of the bullying and harassment and the effect upon her, she should recover an amount for non‑economic loss of $200,000.  Further, he said this should be clear of and exclusive and over and above the lump sum compensation she had previously received under the NSW scheme for lump sums.

One would think that the proper way for him to do this was to say that her measure of non‑economic loss should be, say, $250,000, and then deduct the prior allowance for impairment compensation.  This may be an area for Appeal.

In respect to loss of earning capacity, His Honour proceeded to say that she would have earned income until her 67th birthday, and awarded damages on the basis of that loss of earnings from the date of injury until her 67th birthday, together with loss of superannuation.

Rather than applying multiplier tables, he discounted the amount by 17.5% for vicissitudes.  In NSW the normal discount for vicissitudes on future economic loss is 15%, but the allowance is subject to a discounted rate for early receipt of the funds.

No double dipping

His Honour discussed several cases interpreting the NSW legislation and rules about repayment of statutory benefits on recovery of common law damages – these being the decisions in Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 and Manser v Spry And Another (1994) 181 CLR 428. 

His Honour accepted that while those cases related to statutory interpretation, there is an indisputable common law principle that when assessing a loss from a tort or a statutory breach, the Court must consider the position that the plaintiff would have been in had the breach not occurred. 

In doing so, the Court is entitled to consider other benefits received by that worker.  Justice Rares referred to the following trite statement:

“If it can be shown that the Plaintiff has already received recompense in any form in respect of a loss for which compensation is claimed against the Defendant, then the Plaintiff’s loss requiring compensation from that Defendant is regarded as discharged.  The award of compensation with respect to that loss against that Defendant would be double recovery.”

Thus, His Honour gave the employer credit for payments made under the NSW workers compensation legislation.

Policy response

It is notable that employers within the NSW workers compensation scheme are subject to a statutory policy, which is set out in the schedule to the regulation.  This covers employers for “any other amount that the employer becomes liable to pay independently of the Act . . . for injury to any such person…”

Whist we doubt that this policy was intended to catch liabilities arising under the Fair Work Act 2009 or  the Commonwealth disability legislation, a respectable argument can be made that the liability of this employer for compensation under the Fair Work Act 2009 may well be indemnifiable under the NSW workers compensation policy, because it arises independently of the Act for the injury to Mrs Leggett.

Key learnings
 

1. When assessing any case, there should be a clear analysis of:

1. what the causes of action are;
2. what the losses from each of those causes of action are; and
3. what needs to be brought into account to determine the loss. 

A plaintiff cannot be better off by reason of a tort or breach than they would have been had the breach not occurred.

2. Moving forward, it can be expected that solicitors representing workers will avoid confining their analysis of causes of action to the Workers Compensation Act 1987 or negligence. 
   
   They are now likely to trawl far and wide to see if there might be a breach of the Fair Work Act 2009, or any of the Commonwealth anti-discrimination Acts entitling them to a greater allowance of damages. 
    
3. Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622 also gives pause for thought regarding the proper and better consideration of the releases that employers might seek on settlement of claims. 
   
   Whilst there can be no contracting out of the NSW scheme, it is arguable on the settlement of the claim under the NSW scheme that a release should be obtained from any claim under Commonwealth legislation.
    
4. If an employer is faced with a claim such as this, it should analyse the cause of action under the Fair Work Act 2009, or the antidiscrimination legislation, to determine if exposure arises from an “injury”.  If so, the employer should contemplate pursuing indemnity for the claim under its NSW iCare workers compensation policy.

If you have a query relating to any of the information in this article, or would like to speak with Nick Maley, Partner within Holman Webb’s Workplace Relations Group in respect of a separate matter – please don’t hesitate to get in touch today.