The proposed new proviso (f) to section 10 (1) of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 does not involve, in the case where the injured person does not proceed against the third party tortfeasor for damages, any alteration to the present law as to the rights and liabilities inter se of the third party tortfeasor and the employer who has paid workers’ compensation. This paper is directly concerned with the workers’ Compensation Act, 1926-1967 only in so far as the Act relates to adjustments to be made when a judgment for damages is obtained or damages are recovered. Nevertheless the Commission draws attention to the fact that a consequences of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 is that whereas before that Act contributory negligence of the injured worker would have been a complete answer to any claim by the employer for indemnity under section 64 (1) (b) of the Workers’ Compensation Act, the effect of the Law Reform (Miscellaneous Provisions) Act, 1965-1968 is that the employer can recover from the third party tortfeasor, despite the contributory negligence, the full amount of the workers’ compensation paid. The amount which the employer can recover from the third party tortfeasor is not scaled down because of contributory negligence. For the purposes of this paper the relevance of the extent of the indemnity to the amount of the workers’ compensation payments reduced to the same extent as the damages recoverable by the injured person, then, prima facie, no problem would be created by the fact that section 64 (1) (c) of the Workers’ Compensation Act provides that if, after payments under the indemnity have been made the injured person obtains judgment for damages, the indemnity payments shall be a satisfaction pro tanto of the judgment. Such an amendment, however, would give rise to other problems. One of the problems is that the extent to which the total of workers’ compensation payments would be reduced for the purpose of determining the amount to be paid under section 64 (1) (b), as so amended, might not be the same as the extent to which the damages would be reduced in the subsequent action brought by the injured worker. This is shown by the following example. The employer sues the third party tortfeasor for payment under section 64 (1) (b) as amended. In this section, to which the injured worker is not a party, the employer recovers $2,700 being the total of the workers’ compensation payments, $3,000 reduced by 10% because of contributory negligence of the workers. The judgment is fully satisfied. The worker sues the third party tortfeasor. No res judicata or issue estoppel arises from the earlier action. The parties are not the same. In the later action for damages, to which the employer is not a party, the damages are reduced by 50% because of contributory negligence. The question would then arise as to whether the judgment for damages should be satisfied as to the $2,700 in fact paid under the indemnity or as to $1,500 which is the amount which would have been paid under the indemnity if, in the action on the indemnity, the reduction for contributory negligence had been 50% and not 10%.

The Law Reform (Miscellaneous Provisions) Act, 1965-1968 does result in an anomaly as to the extent to which the employer is re-imbursed for his workers’ compensation payments. If, before the worker enforces the indemnity under section 64 (1) (b), he obtains a full re-imbursement and does not have to make a refund if, in the later action for damages, it is found that the workers has been guilty of contributory negligence. The indemnity obligation under section 64 (1) (b) lapses when the worker obtains judgment against the third party tortfeasor, but the employer still obtains re-imbursement indirectly out of the pocket of the third party tortfeasor, because of the obligation of the worker to refund workers’ compensation out of the damages recovered from the third party tortfeasor (section 64 (1) (a)). In this case, however, if the damages have been reduced because of contributory negligence, the re-imbursement to the employer is reduced to the same extent as the damages have been reduced (section 10 (1) (d) of the Law Reform (Miscellaneous Provisions) Act 1965-1968). One view which might be taken is that the tortfeasor should be obliged, notwithstanding that the plaintiff has obtained judgment for damages, to pay to the employer the balance of the monies necessary fully to re-imburse the employer. This would be one way of correcting the anomaly. In effect it would mean that the third party tortfeasor fully indemnifies, directly or indirectly, the employer and does so whether or not the indemnity is enforced before the workers obtains judgment for damages. To complete the scheme it would be necessary to provide that if the third party tortfeasor has paid, before the judgment shall be satisfied only to the amount of the indemnity payment reduced to the same extent as the damages are reduced because of the contributory negligence.

It could be argued in favour of not limiting the extent of the re-imbursement to the employer by reference to the contributory negligence of the worker that the financial loss has been sustained, not by the worker, but by the employer and that the employer should not be prejudiced by contributory negligence which is not attributable to him on ordinary legal principles. In support of this argument it could be submitted that the approach should be the same as it is in a per quod action, whether brought by a husband or an employer, namely that contributory negligence of the injured person is irrelevant (Curran v. Young 112 C L R 99). It is, however, an overstatement to say that in a per quod action contributory negligence of the injured person is irrelevant. The contributory negligence is attributable to the husband “if the conduct of the wife occurred when she was doing something which she was either expressly or impliedly authorised to do on his behalf” (ibid per Barwick C J at p.101) and the contributory negligence of the servant is attributable to the master where “the injuries were occasioned in such circumstances as to render the master responsible for the servant’s action, that is to say, (where) they were being done in the course of the servant’s employment.” (ibid - per Taylor J at p.109). On the other hand relatively few workers who receive workers’ compensation in respect of injuries inflicted by a third party tortfeasor were acting, at the time of the injury, in the course of their employment. Usually, in such cases, they were journeying between their place of employment and place of abode. A more fundamental difficulty in the argument is that section 64 of the Workers’ Compensation Act makes it clear that the employer’s right to indemnity is a derivative right. It is not sufficient that the conduct of the third party tortfeasor was of a tortious quality. It must entail liability to the worker in an action for tort. Prior to the Law Reform (Miscellaneous Provisions) Act, 1965-1968 no right to indemnity arose if the injured person had been guilty of contributory negligence. It is otherwise in a per quod action. It is sufficient to found a per quod action that the conduct of the defendant in respect of the injured person was of a tortious quality, even though it did not give that person a right of action. Prior to the Law Reform (Miscellaneous Provisions) Act 1965-1968 a per quod action lay despite contributory negligence by the person injured (Curran v. Young - supra). It is also relevant that “the policy which is evident on the face of s.64 is that compensation should not, … as a burden to the tortfeasor, be cumulative on damages” (Watson v. Newcastle Corporation 106 C L R 426 per McTiernan, J. at p.433). This has been the policy of the Workers’ Compensation Act throughout its history.