Federal Court of Australia

Leggett v Hawkesbury Race Club Limited (No 4) [2022] FCA 622

ORDERS

THE COURT ORDERS THAT:

1.    On or before 1 June 2022, the parties file a draft form of orders and a schedule of calculations, consistent with the reasons for judgment delivered today.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

RARES J:

1    On 24 December 2021, I delivered my reasons in Leggett v Hawkesbury Race Club Limited (No 3) [2021] FCA 1658 (the principal reasons) and stood the proceedings over to 11 February 2022 to make orders and to fix the hearing of Mrs Leggett’s claim for penalties. I shall use the same defined terms in these reasons as in the principal reasons.

2    At the case management hearing on 11 February 2022, I fixed a hearing on 4 March 2022 to deal with the outstanding issues. At the latter hearing, the parties agreed that orders should be made to give effect to certain of my findings in the principal reasons. Those included that there be judgment on Mrs Leggett’s claim for breach of contract in the sum of $24,233 (inclusive of pre-judgment interest), declarations that the Club contravened ss 90(2), 323 and 340 of the Fair Work Act 2009 (Cth) and s 4 of the Long Service Leave Act 1955 (NSW) and that the Club be ordered to pay Mrs Leggett $300,000 in respect of costs. They also agreed that the Club pay to Mrs Leggett the following penalties pursuant to s 546 of the Fair Work Act:

(a)    $45,900 in respect of the first s 340 claim;

(b)    $45,900 in respect of the second s 340 claim and its contravention of s 323 of the Fair Work Act for failing to pay her commissions in full within one month of those commissions becoming payable;

(c)    $22,950 in respect of its contravention of ss 90(2) and 323 of the Fair Work Act for failing to pay her accrued entitlement to annual leave when her employment terminated on 15 March 2017; and

(d)    $45,900 in respect of its contravention of s 323 of the Fair Work Act and s 4 of the Long Service Leave Act for failing to pay her accrued entitlement to long service leave when her employment terminated on 15 March 2017.

3    However, the Club did not consent to the imposition of those orders. Rather it agreed that, first, the form of the orders and, secondly, the amounts of penalties to reflect the seriousness of its contraventions of the Fair Work Act that I found (that were agreed), were appropriate to give effect to my principal reasons. I consider that the agreed quantum of the penalties is appropriate.

4    The parties had been unable to resolve four matters on 11 February 2022 and, on 4 March 2022, I heard argument on them. However, during the argument on 4 March 2022, an issue emerged as to whether the provisions of the Workers Compensation Act 1987 (NSW) could govern, or be relevant to, the assessment of Mrs Leggett’s claim for compensation under s 545(1) and (2)(b) of the Fair Work Act (the constitutional issue).

5    Mrs Leggett made a claim clearly (at least to me) for the first time on that occasion, that she was entitled to full compensation under s 545(1) and (2)(b) for past and future economic loss, that was unaffected by any limitation in the Workers Compensation Act, for her loss based on her suffering psychiatric injury and other damage “because of” the Club’s contraventions of the civil remedy provisions, namely its adverse action comprising the first and second s 340 claims that occurred on and after 9 October 2016. She now put this claim in address as the governing alternative that was entirely independent of her claim for work injury damages under the Workers Compensation Act.

6    To illustrate why I was confused about how Mrs Leggett was putting her work injury damages claim, the parties’ “proposed consent/contested orders”, that they provided for the purpose of illustrating the issues to be determined on 4 March 2022. That document recorded what they agreed as “consent orders”, in the sense described in [3] above, and also each party’s proposed orders 12–14, which dealt with matters that they had not agreed, as follows:

Consent orders

…

3.     Judgment for the applicant on her claim for work injury damages.

…

Applicant’s proposed orders:

12.    Pursuant to section 545 of the Fair Work Act, the respondent is to pay the applicant compensation for her losses arising from the respondent’s contraventions of the Fair Work Act, assessed as follows:

a.    $200,000 for non-economic loss

b.    $1,068,642 for past economic loss

c.    $917,359 for future economic loss.

13.     The respondent pay the applicant $63,391 for pre-judgment interest on past economic loss.

14.     The respondent is to have credit for weekly payments of compensation in the sum of $561,513.

Respondent’s proposed orders:

12.    Pursuant to section 545 of the Fair Work Act, the respondent is to pay the applicant compensation for non-economic loss in the sum of $153,390.

13.    The applicant is awarded work injury damages, assessed as follows:

a.    $586,625 for past economic loss

b.    $712,800 for future economic loss

c.    $154,702 for income tax deduced from weekly compensation pursuant to Fox v Wood.

14.    The respondent is to have credit for weekly payments of compensation in the sum of $561,513.

(emphasis added)

7    That stance caused me to perceive that there was an apparent inconsistency between the limited rights and remedies, under the State law, of an employee who suffered injury as a result of the negligence of her employer involving conduct that amounted to adverse action, and her rights to compensation under the Fair Work Act. As a result, I required the parties to file and serve on the Attorneys-General a notice under s 78B of the Judiciary Act 1903 (Cth) in relation to that issue and adjourned the hearing to 27 April 2022. The parties each served notices under s 78B by 7 April 2022, but no Attorney-General sought to intervene.

8    The other four outstanding issues that the parties argued are:

(1)    if Mrs Leggett is entitled to work injury damages, whether her future economic loss should be calculated for the purposes of s 151I of the Workers Compensation Act by applying my finding of an allowance of 17.5% for vicissitudes of life, as she contends, to her uncapped damages which exceed (even after applying the 17.5% discount) the capped maximum indexed amount fixed pursuant to ss 34 and 151I of that Act or, as the Club contends, to the maximum capped amount under s 34 (the s 151I issue);

(2)    whether the sum of $46,610 that Mrs Leggett was paid pursuant to s 151H of the Workers Compensation Act for her assessed 19% permanent impairment caused by Mr Rudolph’s bullying of her (the impairment award), should be deducted from the compensation of $200,000 that I had considered (at [219] of my principal reasons) that she should have been awarded in addition to whatever work injury damages she was entitled to be paid (the impairment award issue);

(3)    whether Mrs Leggett is estopped from being able to sue on any claim for work injury damages by the decision of the senior arbitrator of the Workers’ Compensation Commission on 7 December 2017 that she had suffered a psychological injury, arising out of, or in the course of, her employment from May 2016 to 10 October 2016: see Leggett v Hawkesbury Race Club Limited (No 1) [2021] FCA 1298 (the estoppel issue); and

(4)    whether I should dismiss Mrs Leggett’s work injury damages claim and order compensation only under s 545(1) and (2)(b) or make separate awards of damages and compensation in accordance with s 151I of the Workers Compensation Act and s 545 of the Fair Work Act (the form of judgment issue).

The Club seeks to reopen the work injury damages claim findings

9    On 11 February 2022, senior counsel for the Club submitted that there appeared to be an internal flaw between, first, my findings that Mrs Leggett manifested signs to Mr Rudolph and three of the Club’s directors that she was at risk of suffering psychiatric injury at various times in the period between 20 July 2016 and 9 October 2016 and secondly, the existence of an estoppel that the parties agreed existed on the first day of the hearing, being that the arbitrator had found that she had sustained a psychological injury (as defined in s 11A(3) of the Workers Compensation Act as including psychiatric injury) arising out of, or in the course of, her employment from May 2016 to 10 October 2016: see Leggett (No 1) [2021] FCA 1298. Senior counsel appropriately and sensibly drew this apparent flaw to my attention in the circumstance that I had not made final orders and should have the opportunity to deal with this issue so as to avoid any unnecessary appeal.

10    As the argument on reopening developed I realised that I had not appreciated, when giving my principal reasons, although counsel on both sides understood, that Mrs Leggett sought damages for her psychiatric injury under both, or alternatively, the Workers Compensation Act (as work injury damages limited by its provisions) or s 545(2)(b) of the Fair Work Act (as compensation not subject to any statutory constraint). As my obtuseness to the latter claim diffused, the constitutional issue emerged, no doubt because both parties had argued earlier, as reflected in draft order 3 of the proposed consent/contested orders, as if the State Act continued to be relevant to the calculation of compensation in respect of Mrs Leggett’s past and future economic loss under s 545(1) and (2)(b).

11    This confusion also affected the treatment of the impairment award. The Club argued that it was relevant to, and should be taken into account in, reducing any compensation pursuant to my findings that, in addition to any work injury damages to which Mrs Leggett was entitled in accordance with the Workers Compensation Act, she should receive $200,000 under s 545(1) and (2)(b) of the Fair Work Act. I indicated in my principal reasons that I had considered that the $200,000 was appropriate as an award in addition to all damages or compensation payable under the State legislation.

12    Now that it has become clear to me that I had misapprehended how Mrs Leggett put her claim under s 545(1) and (2)(b) of the Fair Work Act, I have reconsidered what damages and compensation she should be awarded under both the federal and State legislation.

The legislative context

13    Relevantly, Div 2 of Pt 1–3 of the Fair Work Act provides:

Division 2—Interaction with State and Territory laws

26 Act excludes State or Territory industrial laws

(1)    This Act is intended to apply to the exclusion of all State or Territory industrial laws so far as they would otherwise apply in relation to a national system employee or a national system employer.

(2)     A State or Territory industrial law is:

(a)     a general State industrial law; or

(b)     an Act of a State or Territory that applies to employment generally and has one or more of the following as its main purpose or one or more of its main purposes:

…

(v)     providing for rights and remedies connected with the termination of employment;

(vi)     providing for rights and remedies connected with conduct that adversely affects an employee in his or her employment; or

…

(4)     A law or an Act of a State or Territory applies to employment generally if it applies (subject to constitutional limitations) to:

(a)     all employers and employees in the State or Territory; or

(b)     all employers and employees in the State or Territory except those identified (by reference to a class or otherwise) by a law of the State or Territory.

For this purpose, it does not matter whether or not the law also applies to other persons, or whether or not an exercise of a power under the law affects all the persons to whom the law applies.

27 State and Territory laws that are not excluded by section 26

…

(1)    Section 26 does not apply to a law of a State or Territory so far as:

(b)     the law is prescribed by the regulations as a law to which section 26 does not apply; or

(c)     the law deals with any non-excluded matters; or

…

(2)     The non-excluded matters are as follows:

(a)     superannuation;

(b)     workers compensation;

…

30 Act may exclude State and Territory laws etc. in other cases

This Division is not a complete statement of the circumstances in which this Act and instruments made under it are intended to apply to the exclusion of, or prevail over, laws of the States and Territories or instruments made under those laws.

(emphasis added)

14    In addition, s 130 provides that, ordinarily, an employee is not entitled to take or accrue any leave of absence under Pt 2-2 of the Fair Work Act when the employee is absent from work because of a personal illness or personal injury for which he or she is receiving compensation under the laws of the Commonwealth, a State or Territory “that is about workers’ compensation”.

15    The Fair Work Act provides in s 545(1) and (2):

(1)  The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

…

(2)  Without limiting subsection (1), orders the Federal Court or Federal Circuit and Family Court of Australia (Division 2) may make include the following:

(a)  an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;

(b)  an order awarding compensation for loss that a person has suffered because of the contravention;

(c)  an order for reinstatement of a person.

(emphasis added)

16    Relevantly, as at 10 October 2016, the Workers Compensation Act provided in Pt 5:

149 Definitions

(1)  In this Part:

damages includes:

(a) any form of monetary compensation, and

(b) without limiting paragraph (a), any amount paid under a compromise or settlement of a claim for damages (whether or not legal proceedings have been instituted),

but does not include:

(c) compensation under this Act, or

…

Division 2 Common law and other remedies generally

…

151A Effect of recovery of damages on compensation

(1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act then (except to the extent that subsection (2), (3), (4) or (5) covers the case):

(a) the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned (including compensation claimed but not yet paid), and

(b) the amount of any weekly payments of compensation already paid in respect of the injury concerned is to be deducted from the damages (awarded or otherwise paid as a lump sum) and is to be paid to the person who paid the compensation, and

(c) the person ceases to be entitled to participate in any injury management program provided for under this Act or the 1998 Act.

…

Division 3 Modified common law damages

151E Application—modified common law damages

(1) This Division applies to an award of damages in respect of:

(a) an injury to a worker, or

(b) the death of a worker resulting from or caused by an injury,

being an injury caused by the negligence or other tort of the worker’s employer.

…

(3) This Division applies to an award of damages in respect of an injury caused by the negligence or other tort of the worker’s employer even though the damages are recovered in an action for breach of contract or in any other action.

(4) Subsection (3) is enacted for the avoidance of doubt and has effect in respect of actions brought before as well as after the commencement of that subsection.

151F General regulation of court awards

A court may not award damages to a person contrary to this Division.

151G Only damages for past and future loss of earnings may be awarded

(1) The only damages that may be awarded are:

(a) damages for past economic loss due to loss of earnings, and

(b) damages for future economic loss due to the deprivation or impairment of earning capacity.

…

151I Calculation of past and future loss of earnings

(1) In awarding damages, the court is to disregard the amount (if any) by which the injured or deceased worker’s net weekly earnings would (but for the injury or death) have exceeded the amount that is the maximum amount of weekly payments of compensation under section 34 (even though that maximum amount under section 34 is a maximum gross earnings amount).

(2) The maximum amount of weekly payments of compensation under section 34 for a future period is to be the amount that the court considers is likely to be the amount for that period having regard to the operation of Division 6 of Part 3 (Indexation of amounts of benefits).

(3) This section applies even though weekly payments of compensation to the worker concerned are not subject to the maximum amount prescribed under section 34.

…

151J Damages for future economic loss—discount rate

(1) For the purposes of an award of damages, the present value of future economic loss is to be qualified by adopting the prescribed discount rate.

(2) The prescribed discount rate is:

(a) a discount rate of the percentage prescribed by the regulations, or

(b) if no percentage is so prescribed, a discount rate of 5 per cent.

(3) Except as provided by this section, nothing in this section affects any other law relating to the discounting of sums awarded as damages.

(emphasis added)

17    The maximum amount of net weekly earnings under s 34 was fixed in s 34(1) and subsequently indexed in accordance with s 34(2) and Div 6 of Pt 3 and, at the time when this was argued, was $2,282.30 per week.

The constitutional issue

18    As I suggested above, the constitutional issue emerged in a somewhat tortured way. During the trial, the parties focussed on Mrs Leggett’s claim for work injury damages for personal injury as essentially governed by common law principles applicable to negligence or breach of contract of an employer in the Club’s position, as modified by the provisions of Pt 5 of the Workers Compensation Act, dealing with the assessment of damages for such claims, in particular in Div 3 of Pt 5. However, in final submissions Mrs Leggett sought (as she had in prayer 5 of the amended originating application and par 67(e) of the amended statement of claim) compensation under s 545 of the Fair Work Act in respect of the Club’s contraventions of s 340. In her final written submissions, she sought awards as if they were alternatives on both bases. But neither she nor the Club alluded to the constitutional issue and neither gave any notice of it under s 78B of the Judiciary Act. On the other hand, the Club appeared to concentrate at the trial on the damages being payable only in accordance with the Workers Compensation Act.

19    Both before and after I delivered my principal reasons, the parties advanced divergent approaches as to how Mrs Leggett’s damages or compensation should be assessed. That crystallised in my belated appreciation that, based on my findings in the principal reasons, s 545 might cover the field. That was because I had found that the adverse action that Mr Rudolph took, within the meaning of s 340 of the Fair Work Act, on 9 and 10 October 2016 had caused Mrs Leggett to suffer the psychiatric injury of major depressive disorder and anxiety that caused her incapacity to work in the future. Moreover, because the Club raised the estoppel issue on 11 February 2022, the question of what injury the estoppel related to came into further focus.

20    I had not perceived the Club to have relied at the trial on the proposition that because of determinations made by the arbitrator, Mrs Leggett could not maintain her case at all. That was because, according to the Club’s more recent elucidation, the arbitrator had determined that she had suffered a psychological injury in May 2016 and therefore there was no time in which anyone on behalf of the Club could have appreciated, before then, that she was at risk of psychiatric injury. In other words, the Club was now asserting, or as it contends, reiterating, that the evidence of Mrs Leggett’s later experiences that I found would have conveyed to a reasonable employer in the Club’s position that she was at such a risk in the period prior to 9 October 2016 (as I found at [193]–[199]), was irrelevant because it post-dated her first suffering psychological injury.

21    The various veils having been removed from my eyes, the constitutional issue has become central.

The Club’s submissions

22    The Club argued that the approach I had taken in the principal reasons, before the constitutional issue emerged, of making an award for work injury damages based on the provisions of Pt 5 of the Workers Compensation Act and making a separate award for compensation under s 545 was appropriate and correct. It contended that the Fair Work Act did not exclude the operation of Pt 5 of the Workers Compensation Act because it was a law that dealt with a non-excluded matter, within the meaning of s 27(1)(b) and (2)(b) of the Fair Work Act, namely workers compensation. The Club submitted that s 27(1)(b) and (2)(b) evinced a legislative intention that the Fair Work Act would not cover the field in relation to legislation dealing with workers compensation, including matters such as common law actions for damages arising out of, or governed by, the Workers Compensation Act. It argued that both the federal and State Acts could, and did, operate concurrently, especially since s 545(1) of the Fair Work Act confers power on the Court to “make any order the Court considers appropriate” if, as here, there is a finding the Club contravened s 340 of the latter Act.

23    The Club argued that if Mrs Leggett recovers compensation under s 545 of the Fair Work Act that recovery would not be a recovery of damages in respect of an injury that it, as an employer, is liable to pay compensation under the Workers Compensation Act within the meaning of s 151A of that Act. It relied on a line of authority including Hood Constructions Pty Ltd v Nicholas (1987) 9 NSWLR 60, Vanramer Pty Ltd t/as Bathurst Funeral and Cremation Services v Higgins (1991) 24 NSWLR 661 and Kempsey District Hospital v Thackham (1995) 36 NSWLR 492 in support of its contention that Mrs Leggett’s work injury damages claim should be dismissed so as to avoid her being doubly compensated for the same injury. That was because, it contended, if s 545 of the Fair Work Act were the source of its liability to compensate her, then the compensation would not be damages that she recovered in respect of an injury within the meaning of s 151A of the Workers Compensation Act.

Consideration

24    I reject the Club’s argument on the constitutional issue. It was common ground that the Club was a national system employer and Mrs Leggett a national system employee so that the Fair Work Act applied to this matter.

25    For the purposes of s 109 of the Constitution, a State law is invalid to the extent that it is directly or indirectly inconsistent with a Commonwealth law. Direct inconsistency occurs if the State law alters, impairs or detracts from the operation of the Commonwealth law. Indirect inconsistency occurs if a law of the Commonwealth is construed as expressing the intention of the Parliament that it will “cover the field” or “cover the subject-matter with which it deals” or that it states “completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed”: Work Health Authority v Outback Ballooning Pty Ltd (2019) 266 CLR 428 at 446–447 [31]–[33] per Kiefel CJ, Bell, Keane, Nettle and Gordon JJ and the cases there cited. However, French CJ, Gummow, Heydon, Crennan, Kiefel and Bell JJ said in Jemena Asset Management Pty Ltd v Coinvest Ltd (2011) 244 CLR 508 at 525 [42], that while the two tests, of direct and indirect inconsistency, recognise different aspects of inconsistency, they are “directed to the same end, are interrelated and in any one case more than one test may be applied in order to establish inconsistency for the purposes of s 109”. They said that all tests for inconsistency “for the purpose of s 109 are tests for discerning whether a ‘real conflict’ (see, eg, Collins v Charles Marshall Pty Ltd (1955) 92 CLR 529 at 553) exists between a Commonwealth law and a State law”.

26    Part 5 of the Workers Compensation Act deals with, among other matters, the right to claim damages against an employer for negligence “in respect of an injury caused by the negligence or other tort of the worker’s employer even though the damages are recovered in an action for breach of contract or any other action” (s 151E(3)). In particular, ss 151E, 151F and 151G make clear that the only damages that can be awarded in respect of, relevantly, an injury to a worker caused by the negligence or other tort or breach of contract of his or her employer are for past and future economic loss calculated so as not to exceed the limits that that Act prescribes.

27    In contrast, the Parliament expressed s 545(1) and (2)(b) of the Fair Work Act to give a plenary power to this Court (and the Federal Circuit and Family Court of Australia) when satisfied that a person has contravened, or proposes to contravene, a civil remedy provision. That power authorises this Court to “make any order the court considers appropriate” including “an order awarding compensation for loss that a person has suffered because of the contravention” (emphasis added). A legislative provision conferring jurisdiction or granting powers to a court should not be construed “by making implications or imposing limitations which are not found in the express words”: The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 per Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ.

28    It is a commonplace that, as a result of an injury caused by negligence or another tort of an employer, a worker’s contract of employment can be terminated. Relevantly, s 26(2)(b)(v) of the Fair Work Act provides that an Act of a State or Territory that applies to employment generally and has a main purpose of “providing for rights and remedies connected with the termination of employment” will be inoperative in respect of a national system employee. The clearest case is if the worker dies or becomes so impaired as a result of the injury that he or she cannot continue the employment, as s 26(2)(b)(v) of the Fair Work Act contemplates. Here, Mrs Leggett accepted the Club’s repudiation of her contract of employment on 15 March 2017 (see the principal reasons [128], [160]–[163]). When unaware of the constitutional issue and the effect of ss 26 and 27 of the Fair Work Act, I held wrongly, at [163] of the principal reasons, that s 151E(3) of the Workers Compensation Act could apply to Mrs Leggett’s rights and remedies, by saying that Mrs Leggett:

is entitled to substantial damages for the Club’s breach of contract. However, those damages must be assessed taking into account Mrs Leggett’s psychiatric injury and s 151E(3) of the Workers Compensation Act 1987 (NSW).

29    More importantly for the present issue, one main purpose of Pt 5 of the Workers Compensation Act is to provide for and regulate rights and remedies connected with conduct that adversely affects an employee in his or her employment within the meaning of s 26(2)(b)(vi) of the Fair Work Act. An employee can sustain a psychological injury, as defined in s 11A(3) of the Workers Compensation Act, as a consequence of how he or she is treated or what he or she experiences (including being exposed to traumatic situations) in his or her employment, such as being, or perceiving that he or she is being, bullied or harassed by a person for whose conduct the employer is legally responsible. The Workers Compensation Act, in s 151F, prohibits a court from awarding damages contrary to Div 3 of Pt 5. That Division “applies to an award of damages in respect of … an injury to a worker … being an injury caused by the negligence or other tort of the worker’s employer” (s 151E(1)) and provides that damages are limited to past and future economic loss of earnings and earning capacity, as constrained by ss 151H, 151I and 151J.

30    Here, the Club’s contraventions of s 340(1)(a)(ii) of the Fair Work Act caused and or aggravated Mrs Leggett’s psychiatric injury (see [137]–[159] of the principal reasons), entitling her to a remedy under s 545.

31    The expressions used in s 545(2)(b) “compensation” and “loss that a person has suffered” are not defined in the Fair Work Act. But the provision creates a causal link that the loss for which compensation may be awarded must arise “because of the contravention” of that Act. Many contraventions of civil remedy provisions as defined in s 539 do not result, or necessarily result, in economic loss. For example, a misleading representation in a document given to an employer by an organisation seeking to be covered under an enterprise agreement will contravene s 179(1) and or (5) and render an employee, a bargaining representative and or an inspector liable for a civil remedy. A person who is the subject of adverse action in contravention of the general protections provisions in Pt 3-1 may, but need not necessarily, suffer an economic loss because of the contravention, for example, if the person is an employee or prospective employee, discriminated against in relation to how other persons in his or her actual or prospective position would be treated (eg, items 1 and 2 in s 342(1)).

32    Importantly, item 1 in s 342(1) of the Fair Work Act provides that an employer takes adverse action against an employee if, among other actions, the employer “(a) dismisses the employee; (b) injures the employee in his or her employment” (emphasis added). A loss caused by an injury to an employee in his or her employ can extend beyond pure economic loss and, of course, include other damages to him or her caused by personal injury.

33    In Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 403 [31], 407 [44]–[45], 408–409 [47]–[52], Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ explained that the statutory nature of the remedies for a person who suffered loss or damage in ss 82 and 87 of the Trade Practices Act 1974 (Cth), now renamed the Competition and Consumer Act 2010 (Cth), could not be construed as limited to damages recoverable under the general law. Likewise, the broad remedial purpose evinced in s 545(1) and (2)(b) cannot be construed as confined to compensation for economic loss. While the remedy of common law damages is a different form of relief from the statutory right to compensation created by s 545(1) and (2)(b), in the present context, both are directed to restoring the injured employee to the position he or she would have been in had the employer not been negligent or contravened the civil remedy provision.

34    The Parliament evinced the intention in s 26(1) and (2) of the Fair Work Act (subject to the exceptions in s 27) that that Act would apply to the exclusion of any State or Territory industrial law that had, as a main purpose, providing for rights and remedies connected with conduct that adversely affects an employee in his or her employment. The Workers Compensation Act deals with the non-excluded matter of workers compensation within the meaning of s 27(1)(c) and (2)(b) of the Fair Work Act. Relevantly, s 27(1)(c) creates an exception to the field covered by s 26 by providing, in respect of non-excluded matters (as defined in s 27(2)), that s 26 “does not apply to a law of a State or Territory so far as … (c) the law deals with [workers compensation]”.

35    Part 5 of the Workers Compensation Act relevantly has a main purpose of providing for and limiting rights and remedies applying to employment generally for recovery of damages as defined in s 149(1). Part 5 limits the scope of what damages can be recovered and their quantum. But, the definition of “damages” in s 149(1) of the Workers Compensation Act makes clear that the word “damages”, when used in Pt 5, includes any form of monetary compensation except, relevantly, compensation under the Workers Compensation Act itself. That evinces the State’s legislative intention that, when Pt 5 deals with damages, its main purpose is not to deal with workers compensation but the different subject matter comprising other forms of compensation, including common law damages. It follows that “so far as” Pt 5 deals with “damages” as defined in s 149(1) and otherwise provides for rights and remedies connected with the termination of employment or conduct that adversely affects an employee in his or her employment (within the meaning of s 26(2)(b)(v) and (vi) of the Fair Work Act), the State law would have an operation beyond the excluded matter of workers compensation within the meaning of s 27(1)(c) and so Pt 5 is excluded from having any operation in respect of relief that is available under s 545 of the Fair Work Act by force of s 26(1).

36    Item 1 of s 342(1) of the Fair Work Act defines adverse action as including action where an employer “injures the employee in his or her employment”. It follows that where a person suffers loss “because of the contravention” of a civil remedy provision of the Fair Work Act, s 545(1) and (2)(b) of that Act cover the subject-matter of all loss that the person suffers: Outback Ballooning 266 CLR at 450 [45]. That is because s 545(1) and (2)(b) provide “a rule to be observed” and so evince an intention to cover the subject matter of compensation for a loss that a person suffers because of a contravention of a civil remedy provision, by providing “exclusively what the law upon that subject-matter should be”.

37    Part 5 of the Workers’ Compensation Act provides for rights and remedies, including at least in respect of adverse action that caused a (psychological or psychiatric) injury to an employee in his or her employment, being conduct that adversely affects the employee in his or her employment. Mrs Leggett’s two s 340 claims under the Fair Work Act created a constitutional matter (under s 76(ii)) so that, by force of s 26(2)(b)(vi), any of the parties’ rights or remedies under the State law were inoperative.

38    Moreover, Pt 5 of the Workers Compensation Act cannot operate to command any court, State, territorial or federal, exercising federal jurisdiction in a matter that is conferred or invested in that court, as to the manner of the exercise of that federal jurisdiction. That is because a State Parliament has no legislative power over the matter. The Constitution vests the entire legislative power to make laws with respect to the conferral and exercise of federal jurisdiction in the Parliament of the Commonwealth: Rizeq v Western Australia (2017) 262 CLR 1 at 26 [61] per Bell, Gageler, Keane, Nettle and Gordon JJ, see too at 14 [15] per Kiefel CJ; Herron v HarperCollins Publishers Australia Pty Ltd [2022] FCAFC 68 per Lee J at [338], with whom Rares J at [85] and Wigney J at [233] agreed.

39    Accordingly, the provisions of Pt 5 of the Workers Compensation Act have no operation in relation to the assessment of compensation for any loss that Mrs Leggett suffered as a result of the Club’s contraventions the subject of my findings on the first and second s 340 claims at [137]–[163] and [208]–[219] in my principal reasons. Clearly enough, in those reasons, I proceeded on the erroneous understanding that s 545 of the Fair Work Act was not inconsistent with Pt 5 of the Workers Compensation Act. Importantly, I found Mr Rudolph’s bullying and intimidating conduct on 9 and 10 October 2016, that comprised the first s 340 claim was “the last straw” that led to her breaking down on that occasion and becoming permanently incapable of working: see [95]–[97], [144]–[147], [205]–[207], [214], [216]–[218]. Mr Rudolph’s conduct constituting the second s 340 claim aggravated her injury: see at [148]–[150].

40    On this basis, Mrs Leggett is entitled to be compensated fully under s 545(2)(b) of the Fair Work Act, without regard to Pt 5 of the Workers Compensation Act, for her past and future economic loss that she has suffered because of the Club’s contraventions of the Fair Work Act, the damage to her feelings and her loss of enjoyment of life.

What amount of compensation should be awarded?

41    Mrs Leggett received a total of $561,513 weekly payments of workers compensation for the 5 year period ending on 9 October 2021 (the paid compensation) and in respect of those income tax totalling $154,702 had been paid on her behalf (the paid tax). The parties agreed that the principle in Fox v Wood (1981) 148 CLR 438 would apply to bring to account the value of the paid tax in the calculation of the benefit that Mrs Leggett had received in respect of the paid compensation. By force of s 39(1) of the Workers Compensation Act, Mrs Leggett has no further entitlement to any weekly payment of compensation beyond the aggregate period of 260 weeks (5 years) in respect of her psychological injury as found by the arbitrator. She also has received the impairment award.

42    The question then arises as to how to treat Mrs Leggett’s receipts of the benefit of the paid compensation, the paid tax and the impairment award (collectively, the total compensation) in arriving at the award of compensation to be made under s 545.

43    In Thackham 36 NSWLR at 509A–B, Handley JA, in agreeing with Meagher JA, observed that a line of authority (including Hood Constructions 9 NSWLR 60; Vanramer 24 NSWLR 661 and Manser v Spry (1994) 181 CLR 428) had discerned a clear legislative intention under workers compensation legislation that an injured worker should not retain both compensation and full damages for the same injury. This is reflected in s 151A(1)(b) of the Workers Compensation Act. However, as the Club argued, this requires a process of characterisation of the source of liability for the worker’s entitlement to payment of each of the compensation and the damages.

44    The authorities to which the Club referred establish that compensation that a worker receives in respect of a second injury caused by a different person can be retained, even though the second injury is reasonably foreseeable to the employer at the time of the initial tort. That was because the second person was liable to pay only for the damage that the second injury caused: Thackham 36 NSWLR at 506G–508B.

45    In Dionisatos (for the Estate of the Late George Dionisatos) v Acrow Formwork & Scaffolding Pty Ltd (2015) 91 NSWLR 34 at 73–74 [201]–[205] Gleeson JA, with whom Basten JA (at 38 [1]) and Macfarlan JA (at 44 [33]) agreed, discussed the rule against double compensation. He explained that the purpose of an award of damages in tort is to compensate the injured party so that he, she or it will be in the same position as if the tort had not occurred. It follows that the injured party cannot recover more than he, she or it has lost. Gleeson JA cited with approval the following passage from Mason P’s reasons in SAS Trustee Corporation v Budd (2005) 3 DDCR 382 at 389 [33]:

The rule against double compensation may be invoked by one or more defendants. If it can be shown that the plaintiff/claimant has already received recompense in any form in respect of the loss for which compensation is claimed against the defendant invoking the rule, then the plaintiff’s loss requiring compensation from that defendant is regarded as discharged pro tanto. To award compensation with respect to that loss against that defendant would be to permit double recovery by the plaintiff in respect of a loss no longer calling to be compensated.”

(emphasis added)

46    Gleeson JA said that the cases had identified three possible indicia of the legislative intention in respect of whether a benefit paid to an injured party should be treated as deductible from an award of damages, namely: (1) the financial source of the benefit; (2) a provision that requires the benefit to be repaid out of any damages awarded; and (3) the nature of the benefit: see also Manser 181 CLR at 434–436 per Mason CJ, Brennan, Dawson, Toohey and McHugh JJ.

47    Where all the indicia fail to indicate the legislative intention, the court must apply the settled principle that the damages awarded should put the injured party in the same position he, she or it would have had, so far as money can do, as if the tort had not been committed: Manser 181 CLR at 437.

48    In Manser 181 CLR 428, the injured worker received payments in respect of her suffering a disability that arose from her employment, being hospital and medical expenses, weekly compensation for wages lost by reason of the disability and a lump sum for permanent and compensable disability, in substitution for any entitlement to non-economic loss at common law for tortiously inflicted injury. Mason CJ, Brennan, Dawson, Toohey and McHugh JJ held (at 438–439) that because workers compensation legislation was not designed to confer benefits to be added to damages that the worker could recover at common law for a loss caused by an event that was unrelated to his or her work, the compensation or benefits payable could not, under the statute, be “ordinary incidents of a worker’s employment which must be taken into account in assessing the damages of a plaintiff-employee for loss and damage for which a tortfeasor is liable at common law” (at 438–439).

49    Similarly, in Harris v Commercial Minerals Ltd (1996) 186 CLR 1 at 18, Dawson, Toohey, Gaudron, McHugh and Gummow JJ said that where a workers compensation statute provided for payment of compensation for economic loss suffered as a result of work injuries to which the legislation applied, the nature of the benefit of those payments of compensation “does not point to a legislative intention that the benefits should not be deductible from awards of damages in respect of injuries giving rise to those benefits”. They held that common law courts should regard benefits under the workers compensation statute “as compensation for injury and as a substitute or partial substitute for wages lost”. Accordingly, because the fundamental rule is that the injured party cannot recover more in damages for tort than he, she or it has lost, payments of compensation under the statute were deductible from common law damages that were otherwise payable by the employer.

50    The position of Mrs Leggett and the Club is different here. That is because the detailed scheme of the Workers Compensation Act in relation to the interaction between payments of compensation and the modified entitlement to damages at common law in respect of an injury to a worker caused by his or her employer’s negligence or other tort did not, indeed could not, direct how a court exercising jurisdiction under s 545(1) and (2)(b) of the Fair Work Act should assess compensation for loss caused because of the employer’s contravention of a civil remedy provision.

51    Any award under s 545(2)(b) is not made at common law. Rather, it is a form of statutory compensation for loss in supplementation of the more general power in s 545(1) to make “any order the court considers appropriate” if satisfied that a person has contravened a civil remedy provision. And, the relevant causal nexus between the entitlement to an order for compensation is that the person suffered the loss “because of the contravention”.

52    I am of opinion that principles applied at common law can be of assistance in evaluating how to approach the calculation of compensation under s 545(2)(b) where a person has already received some money in respect of the subject-matter of a contravention of a civil remedy provision. However, these principles are not controlling or determinative any more than in other situations involving other statutory remedies: Murphy 216 CLR at 403 [31], 407 [44]–[45], 408–409 [47]–[52].

53    Here, Mrs Leggett has received the total compensation in respect of, at least some of, her past economic loss, loss of earning capacity, pain and suffering and loss of enjoyment of life. The total compensation was payable by force of the arbitrator’s determination, namely that Mrs Leggett had suffered a psychological injury arising out of, or in the course of, her employment, from May 2016 to 10 October 2016. However, the Club’s first contravention of s 340 occurred because of Mr Rudolph’s conduct on 9 and 10 October 2016. That conduct was “the last straw” and caused her to suffer, then and there, the major depressive disorder with anxiety that rendered her incapable of working. Those events caused a significant change from her earlier psychological injury that was building up in the period between May 2016 and 8 October 2016 and rendered her permanently incapacitated from 10 October 2016. The evidence demonstrated that the Club’s subsequent conduct, the subject of the second s 340 claim, in withholding payment of her entitlements in the period after 10 October 2016 to 15 March 2017, exacerbated Mrs Leggett’s condition.

54    In considering whether Mrs Leggett should receive compensation for loss because of the Club’s contraventions of s 340, the total compensation has had the practical, and in my opinion, legal effect of reducing any loss that she has suffered because of her incapacity by reason of her psychiatric illness from 9 and 10 October 2016 that Mr Rudolph’s conduct caused on and after those days. She would be overcompensated unless the total compensation that Mrs Leggett has received were taken into account in arriving at any award of compensation under s 545(2)(b) for which the Club is liable. She does not need any compensation for loss in respect of the total compensation that she has already received.

55    Moreover, as I have explained above, the provisions in Pt 5 of the Workers Compensation Act cannot operate to command the judicial exercise of the power to award compensation under s 545(2)(b) of the Fair Work Act. That is so notwithstanding that s 151A(1)(b) of the Workers Compensation Act may be characterised as a law that deals with workers compensation as a non-excluded matter within the meaning of s 27(1)(b) and (2)(b) of the Fair Work Act. The State law cannot operate to affect or change the character of payments of compensation ordered under s 545 of the Fair Work Act as being appropriate to remedy loss that a person has suffered because of a contravention of that Act.

56    The effect of s 151A(1)(b) of the Workers Compensation Act is to require a person in Mrs Leggett’s position who “recovers damages in respect of an injury from the employer liable to pay compensation under this Act” to repay any workers compensation, which here is the total compensation. However, the statutory compensation payable by the Club for Mrs Leggett’s loss under s 545(2)(b) of the Fair Work Act is not “damages” within the meaning of s 151A(1)(b) of the State law because s 151A(1)(b) cannot apply to the calculation of, or right to, compensation under the federal law. Her loss, to which the compensation payable under s 545(2)(b) applies, is to be measured by comparing her position as it is against what it would have been but for the Club’s contravention of the Fair Work Act. The fact that she has received the total compensation already must be taken into account in comparing her before and after position.

57    While both parties appeared to accept that Mrs Leggett should not receive double compensation, their calculations proceeded on the basis that s 151A(1)(b) of the Workers Compensation Act should operate on the order for compensation under s 545(2)(b) of the Fair Work Act. That was because they both included the components of the total compensation in the gross sum to be ordered under s 545(2)(b) which, presumably, would be payable, if s 151A(1)(b) applied, to Racing NSW, as the Club’s workers compensation insurer. However, that approach appears to assume that the provisions of the State law have some operation in relation to orders made under s 545 in respect of a contravention in exercise of the Court’s jurisdiction and powers under the Fair Work Act.

58    I am of opinion that Pt 5 of the Workers Compensation Act cannot regulate or affect any right or remedy for which the Fair Work Act provides, connected with conduct that adversely affects an employee in his or her employment. Thus, the Court can have regard to the fact that the employee has received workers compensation for an injury connected to conduct that adversely affected him or her in his or her employment in ascertaining any loss for which compensation under s 545 should be ordered. Any payments of workers compensation received or payable under the State law in respect of the same conduct, ordinarily, should be taken into account in assessing the further sum, if any, needed to compensate the employee in respect of the employer’s contravention of the Fair Work Act. This should occur on the basis that the employee’s right to retain or receive the existing payments and entitlements to workers compensation are independent of, and unaffected by, what is necessary in an order under s 545(2)(b) to compensate him or her. The ascertainment of that sum can, and ordinarily will, take those separate payments and entitlements into account.

59    Accordingly, I am of opinion that Mrs Leggett is entitled to compensation under s 545(2)(b) for any loss she has suffered in addition to that, measured in money, for which she has received (and can retain) the total compensation. In other words, the compensation to be ordered under s 545(2)(b) is a net, not a gross, amount of the overall loss. That approach gives the Club credit for the amount of the total compensation in reducing the quantum of an order for statutory compensation under s 545(2)(b).

60    The Club’s liability to pay compensation under s 545(2)(b) for loss that she suffered because of its contraventions of s 340 does not depend on Mrs Leggett establishing any claim in negligence or other tort against the Club. Rather, its liability to compensate her is the statutory consequence of each of its two contraventions of s 340 that caused Mrs Leggett to suffer loss.

The four outstanding issues

61    Because of my conclusion that Mrs Leggett is entitled to compensation under s 545 of the Fair Work Act for all loss or damage that she has sustained the subject of this matter, it is not necessary to resolve the four outstanding issues. However, in case I have erred and because the matters were fully argued, I will deal with how I would have resolved them had they been relevant.

The s 151I issue

62    The Club argued that the regime in Div 3 of Pt 5 of the Workers Compensation Act was restrictive and that discounts for vicissitudes operate on compensable losses by way of damages. It contended that this restrictive approach is reflected in what s 151I(1) instructs the Court to disregard in awarding damages, namely, any amount of net weekly earnings above the cap in s 34. It submitted that the scheme of Div 3 of Pt 5 was unambiguous and congruent with the State’s legislative intention to restrict the damages recoverable at common law, as evinced in the Civil Liability Act 2002 (NSW).

Consideration

63    The only authority that the parties were able to find that dealt with whether one applied the discount for vicissitudes to the future earning capacity before considering whether the amount exceeds the cap in s 151I or to the cap itself is D’Herville v Mt Arthur Coal Pty Ltd [2021] NSWSC 1367 at [112]–[113]. There, S Campbell J reduced the cap amount to take account of the vicissitudes even though the plaintiff’s future weekly earnings would have exceeded it. However, this seems to have been because the current question did not appear to have been in issue before his Honour. He gave no reasons for the choice of the method of reduction, presumably because there was no issue between the parties and he proceeded as he did.

64    Damages for future economic loss are recoverable by force of s 151G(1)(b) “due to the deprivation of earning capacity”. The Act requires, in s 151I(1), that the calculation of the amount of net weekly earnings disregards any amount that the injured worker would have earned but for the injury and that exceeds the maximum amount as fixed pursuant to s 34. Importantly, s 151I is dealing with an hypothetical situation, namely what the injured worker would have earned in the future, but for the injury. (I have omitted referring to the case of a deceased worker for brevity.) The ascertainment of what a person would have earned in the future is also governed by s 151I(2), which requires the Court to evaluate what the indexed maximum sum under s 34 will be in the period of future economic loss.

65    Crucially, s 151I operates as a limitation on what, under s 151G(1)(b), is the injured worker’s entitlement to “damages for future economic loss due to loss of earning capacity”. I am of opinion that it is necessary to assess those damages under s 151G(1)(b) before disregarding the amount, if any, that s 151I(1) requires. The ascertainment of damages for future economic loss due to the deprivation of earning capacity has a cognate quality that requires an overall evaluation of what would occur in the future. This includes consideration of how much the injured worker would have earned, how long he or she would have continued working, whether, for example, he or she would have had health or other personal reasons to stop working before retiring, and whether his or her employment would have continued. Hence, an allowance for vicissitudes necessarily affects the damages under s 151G(1)(b) to which an injured worker is entitled. Once one has arrived at that sum, the cap in s 151I(1) operates on the amount of net weekly earnings that must be disregarded in calculating the damages that can be awarded, based on those hypothetical earnings. The court also must use a working hypothesis of the amount of tax that the injured worker will have to pay in the future in order to arrive at the net weekly earnings equivalent to the gross sum, before tax, that s 34 prescribes (as s 151I(1) makes clear). Future years’ taxation scales may vary and are uncertain. In addition, the court may need to take any legislated or proposed changes to the taxation legislation into account in arriving at the net weekly loss of earnings.

66    In my opinion, the Club’s construction of how s 151I operates is incorrect. If the amount of future net weekly earnings after discounting for vicissitudes is more than the maximum amount of weekly payments of compensation under s 34, then the damages must be calculated using the latter figure. The purpose of the cap in s 151I is to fix a maximum amount of damages after taking into account the anticipated future gross earnings of the injured worker and the impact on those of taxation, possible increases of the maximum amount payable under s 151I(2) and vicissitudes.

The estoppel issue

67    Mrs Leggett’s claim under s 151E(1)(a) of the Workers Compensation Act was for an award of damages “in respect of an injury” to her caused by the negligence of her employer, the Club.

68    The arbitrator’s finding related to her claim for worker’s compensation under s 9(1) of the Act which provided that a worker “who has received an injury … shall receive compensation from the worker’s employer in accordance with this Act”.

69    Importantly, s 15(1)(a)(i) provides that if an injury is “a disease or injury which is of such a nature as to be contracted by a gradual process … the injury shall, for the purposes of this Act, be deemed to have happened at the time of the worker’s death or incapacity” (emphasis added). An injury, as defined in s 4(a), “means personal injury arising out of or in the course of employment” and includes, by force of s 4(b), a disease, injury or aggravation of a disease or injury in the course of employment, but only if the employment was the main contributing factor to the contraction or aggravation of the disease. A psychological injury is defined in s 11A(3) as:

an injury (as defined in section 4) that is a psychological or psychiatric disorder. This term extends to include the physiological effect of such a disorder on the nervous system.

(emphasis added)

70    Compensation for non-economic loss is payable under Div 4 of Pt 3 of the Workers Compensation Act to a worker who, relevantly, receives a primary psychological injury amounting to permanent impairment of at least 15%. A primary psychological injury (i.e. one that does not arise as a consequence of a physical injury), as defined in s 65A(5), includes a psychiatric injury. Under s 66, a worker who receives an injury that results in a prescribed degree of permanent impairment is entitled to receive compensation as the section provides. (Mrs Leggett received the impairment award pursuant to s 66.)

The Club’s submissions

71    It was common ground that the arbitrator’s reasons created an estoppel that Mrs Leggett had sustained a psychological injury in the period between May 2016 and 10 October 2016 caused by bullying (see Leggett (No 1) [2021] FCA 1298 at [2]). The Club contended that, by force of Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44, it could never be liable to her for work injury damages on the basis of my findings in the principal reasons at [166]–[199]. That was because, the Club submitted, my findings at [193]–[199], that a reasonable person in the Club’s position would have considered that, from 20 July 2016, Mrs Leggett was at risk of suffering a psychiatric injury if Mr Rudolph’s bullying conduct continued, had ignored the effect of the estoppel and common ground, based on it, that she had already been injured by 20 July 2016. It argued in its written submissions:

The difficulties about this are:

(a)     By force of the common ground estoppel the Applicant was already injured by late July 2016. By force of the binding estoppel the injury, and it is stressed “the injury”, occurred from May to October. This is an estoppel as to the existence of injury over that period, not of something different. The injury had been present for about three months by 20 July 2016 and five months by late September 2016.

(b)    To proceed on the basis that between 20 July and late September 2016 things were happening which were short of injury but indications of risk or vulnerability is to proceed inconsistently with the estoppel upon the basis of which the case had to be decided.

Then as to the occurrence of actual injury i.e. of a move beyond risk or vulnerability, the Court appears to have found that that occurred over two specific days, 9 and 10 October 2016: Reasons [2016] [sic]. This too contradicts or is inconsistent with the estoppel as to injury.

(emphasis added)

Consideration

72    The arbitrator did not make an express finding about the precise “psychological injury” within the definition in s 11A(3) that he determined Mrs Leggett had sustained. Nor was it necessary for him to distinguish between whether at any time the nature of the injury changed from psychological to psychiatric. Rather, he said at [161]–[163]:

[161] In summary, the medical opinions of Drs Parsonage and Jovanova support a primary psychological injury arising from the applicant’s dealings with Mr Rudolph since he became the CEO in May 2016. Dr Tran’s opinion carries less weight in the absence of a report from him. Dr Smith also accepts that the applicant developed a Major Depressive Disorder due to the events on 9 October 2016 and on 10 October 2016.

[162] Whilst I agree that the incidents on 9 October 2016 and 10 October 2016 no doubt contributed to the applicant’s psychological condition, having regard to the totality of the medical evidence, the emails and the applicant’s statement, coupled with the histories that she provided to the various doctors, the common sense evaluation of the causal chain supports the contention that the applicant sustained an injury arising out of or in the course of her employment as a result of her dealings with Mr Rudolph from May 2016 to 10 October 2016 (deemed).

[163] The next question to consider is whether the applicant’s employment was the main contributing factor to the psychological condition.

(emphasis added)

73    This is consistent with my finding (at [205]), based on the joint experts’ report, that Mrs Leggett’s psychological health progressively eroded from mid 2016 to 9 October 2016. Her progression from psychological injury to psychiatric injury is captured in the damage from Dr Parsonage’s report that I quoted in [205] of the principal reasons. I said (at [205]–[206]):

[205] She had been placed in an intolerable position by the way Mr Rudolph had been treating her. The expert psychiatrists agreed, in Dr Parsonage’s words:

Mrs Leggett’s psychological health was progressively eroded from mid-2016 to 9 October 2016 by at least her perception that she was being treated unfairly, that her integrity was being questioned and that the CEO was deliberately creating circumstances in which she would either be forced to leave or he would have grounds to remove her from her position.

[206] As I have found, Dr Parsonage’s description of Mrs Leggett’s perception reflected the fact of Mr Rudolph’s behaviour towards her. It would have been reasonably foreseeable to a reasonable employer in the Club’s position that an incident, such as occurred on 9 and 10 October 2016, would be “the last straw” and she would break down with a psychiatric injury. Sustained bullying is well understood in the community as capable of causing psychiatric injury to its victim.

(emphasis added)

74    Contrary to the Club’s argument, the parties’ common recognition that the arbitrator determined that Mrs Leggett suffered a psychological injury arising out of, or in the course of her employment from May 2016 to 10 October 2016 did not entail that the injury occurred from the inception of that period. The arbitrator found at [162] of his reasons that Mrs Leggett “sustained an injury arising out of or in the course of her employment as a result of her dealings with Mr Rudolph from May 2016 to 10 October 2016 (deemed)” (emphasis added). The reference to “(deemed)” was to the effect of s 15(1)(a)(i) of the Workers Compensation Act. He made his determinative finding at [170], namely that she sustained that injury “arising out of or in the course of her employment prior to 10 October 2016 (deemed)” (emphasis added) and that most, if not all, of the events of which she complained “were the whole and predominant cause of her injury”.

75    The certificate of determination given on 7 December 2017 included orders that the Club pay Mrs Leggett workers compensation based on what the arbitrator recorded as, relevantly, determinations 1 and 3, namely:

1.    The applicant sustained a psychological injury arising out of or in the course of her employment from May 2016 to 10 October 2016 (deemed).

…

3.    The applicant has no current work capacity from 10 October 2016 to date.

(emphasis added)

76    Notably, the arbitrator found that, pursuant to s 15(1)(a)(i) of the Workers Compensation Act, the deemed date of Mrs Leggett’s injury was 10 October 2016. That was the date when she became incapacitated and the date about which s 15(1)(a)(i) required the arbitrator to make a finding so as to give rise to the right to compensation. The arbitrator did not need to find, for the purposes of the Workers Compensation Act, that Mrs Leggett had sustained her injury at the inception of the period when Mr Rudolph commenced as chief executive officer in May 2016. As the determinative finding of the arbitrator in [170] of his reasons established, Mrs Leggett sustained her injury arising out of or in the course of her employment prior to 10 October 2016 when she was incapacitated.

77    In Blair v Curran (1939) 62 CLR 464 at 532, Dixon J said in relation to a state of fact necessarily decided by a prior decision:

Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact, the issue estoppel is confined to those ultimate facts which form the ingredients of the cause of action, that is, the title to the right established.

(emphasis added)

78    Here, the indispensable finding that the arbitrator made, required by s 15(1)(a)(i) of the Workers Compensation Act, that gave rise to Mrs Leggett’s entitlement to compensation, was that Mrs Leggett’s incapacity was caused by an injury that happened on 10 October 2016, because that date was when “the injury shall, for the purposes of the Act, be deemed to have happened”. Because the psychological disease was of such a nature that it was a gradual process, no compensation, based on determination 1, was payable under the Act unless and until Mrs Leggett suffered an injury which the Act deemed to have occurred when she suffered incapacity. The arbitrator determined that she suffered incapacity, and hence an injury, only on 10 October 2016, because the Act deemed that Mrs Leggett suffered her compensable psychological injury happened only on that date, as found in determination 3.

79    Determination 1 did not create an issue estoppel in respect of the date on which Mrs Leggett sustained her injury, although it did create one in relation to its having arisen out of or in the course of her employment by the Club over the period from May 2016 to 10 October 2016. But a finding about that time period of her employment in his reasons (at [162] and [170]) was not legally indispensable to the arbitrator’s award. The legally indispensable fact was that she suffered an injury within the meaning of s 15(1)(a)(i), “for the purposes of this Act” (emphasis added), on 10 October 2016. That was because her incapacity on that date was caused by the injury or disease that arose out of or in the course of her employment, and so created a right to compensation from the deemed date of the injury. The time period before the date of deemed incapacity was irrelevant to Mrs Leggett’s right to workers compensation that accrued only on her suffering the deemed injury on 10 October 2016.

80    As Dixon J said in Blair 62 CLR at 533:

The difficulty in the actual application of these conceptions is to distinguish the matters fundamental or cardinal to the prior decision or judgment, decree or order or necessarily involved in it as its legal justification or foundation from matters which even though actually raised and decided as being in the circumstances of the case the determining considerations, yet are not in point of law the essential foundation or groundwork of the judgment, decree or order.

(emphasis added)

81    The arbitrator’s finding in respect of dates between May 2016 and 10 October 2016 was not essential to the finding of when, for the purposes of the Act, was the date of her injury. That is because s 15(1)(a)(i) created a right to compensation for psychological injury only from the date of the worker’s incapacity. The arbitrator’s determinations and findings did not, and could not, give rise to any issue estoppel about whether or when, prior to 10 October 2016, Mrs Leggett had suffered any psychological injury. That is because the Workers Compensation Act deemed her to have suffered a psychological injury only when she became incapacitated.

82    In addition, the arbitrator’s finding in determination 1 did not depend on or determine any particular time within the period from May 2016 to 10 October 2016 as the date on which Mrs Leggett’s condition of mind had so changed that it could be said that, at that point, she had sustained a recognisable psychiatric, as opposed to a psychological, injury. The fact that Mrs Leggett may have begun, or begun to develop a susceptibility to experience symptoms of, the psychiatric disorder or disease of depression earlier than 10 October 2016, does not mean that the event that caused her deemed incapacity on 10 October 2016 was inevitable before then or excused the Club from its duty to exercise reasonable care to prevent the risk of such an incapacitating injury occurring at any relevant time after May 2016. This is reflected in my findings at [205]–[206] in the principal reasons.

83    The Club pointed out that, in my principal reasons, I had treated Mrs Leggett’s experience and manifestations of distress in the period between May 2016 and 9 October 2016 as signs that she may suffer psychiatric injury in the future if, as happened, Mr Rudolph’s bullying and harassment of her continued, rather than as an earlier phase, or manifestation, of her psychiatric disease that I found incapacitated her on 9 and 10 October 2016.

84    The estoppel in the arbitrator’s determination 1 was, and the Workers Compensation Act only required, a finding that Mrs Leggett sustained a psychological injury, which could, but need not, include a psychiatric injury. Certainly, the arbitrator made no finding that Mrs Leggett had suffered a psychiatric injury. The joint expert report of Drs Roberts and Parsonage in this proceeding referred to their agreement in their individual reports that Mrs Leggett’s psychiatric condition was a significant depressive disorder with anxiety that “arose from… in particular, the difficulties she had with… Mr Rudolph” as outlined in their respective reports dated 18 January 2019 and 24 July 2017. In my opinion, what they meant emerges in Dr Roberts’ report of 18 January 2019, where he wrote:

I further agree with Dr Parsonage same page paragraph (2) “To summarise, Mrs Leggett’s condition was caused by the culmination of perceived bullying and intimidation at work of which the incidents of 9 and 10 October 2016 were the last straw, of her condition being worsened by the loss of her job, role and status and by the treatment which she received as unfair after she stopped work, in relation to a lack of support and not being paid the money which she felt was owed to her”.

(emphasis added)

85    An employee may display “evident signs” of distress to an employer indicative of a risk to his or her mental health in circumstances where the inherent nature of the job was known to both parties to the contract of employment. Moreover, an aggravation of an existing disease is an injury within the meaning of the definition of “injury” in s 4 of the Workers Compensation Act: cf Kozarov v Victoria [2022] HCA 12 at [2]–[3] and [18] per Kiefel CJ and Keane J, [53]–[54] per Gageler and Gleeson JJ, [79]–[80] per Gordon and Steward JJ. Edelman J agreed at [99] with Gageler and Gleeson JJ as well as with Gordon and Steward JJ.

86    Even assuming that, as the Club had argued, Mrs Leggett suffered a psychological injury before 20 July 2016, that injury was not as profound when it became the psychiatric injury that she experienced as the “last straw” of Mr Rudolph’s conduct on 9 and 10 October 2016. That psychiatric injury was aggravated and worsened in the following months while she remained employed to 15 March 2017. Each aggravation of an existing injury is an injury for the purposes of the Workers Compensation Act. It is pellucid that what happened to Mrs Leggett’s mental condition on 9 and 10 October 2016 was a qualitatively different manifestation of a psychiatric injury, being the “significant depressive disorder with anxiety” that made her incapable of working after 10 October 2016, from whatever psychological injury she may have had earlier. That coincided with the arbitrator’s finding of a deemed injury only as at 10 October 2016 from whatever the state of the disease then affecting her mental health was.

87    In those circumstances, Mrs Leggett is not estopped from claiming damages at common law in negligence or for breach of contract.

The impairment award issue

88    The Club argued that the separate award of compensation that originally I had intended to make under s 545(2)(b) of the Fair Work Act in respect of the effect of the adverse action it had taken against her should be reduced by $46,610, being the value of the impairment award under s 151H of the Workers Compensation Act: see the principal reasons at [216]–[219]. It contended that this would avoid her obtaining a double recovery for the same loss.

89    I reject the Club’s argument. I had taken the impairment award into account at [211] of my principal reasons as part of the compensation that she had already received and intended the $200,000 award to be in addition to all of her entitlements under or arrived at having regard to the provisions of the Workers Compensation Act, including ss 66 and 151I.

The form of judgment issue

90    I reject the Club’s argument that it is necessary to make an order dismissing Mrs Leggett’s work injury damages claim. There is no risk of Mrs Leggett recovering double or any compensation from the Club hereafter under the Workers Compensation Act. Her rights against the Club will merge in the solidary order for payment of the lump sum of compensation that I will order it to pay her on all her claims. I have explained in these reasons how I arrived at the calculation of the final judgment sum.

91    There has been a tension in the Club’s position that underlay some of the confusion in the presentation of argument in this matter. That arose because of the subrogated position of Racing NSW, as the Club’s workers compensation insurer, and the uninsured liabilities of the Club. The underlying dispute as to the extent of the cover to which the Club is entitled under its statutory workers compensation insurance is not part of this matter and I do not intend to make orders in a way that might resolve it, albeit that the legal consequences of my orders may bear on its outcome.

Conclusion

92    In my opinion, Mrs Leggett is entitled to a lump sum as compensation under s 545(1) and (2)(b) calculated as follows:

(a)    her past economic loss from 16 March 2017 to the present time comprising her average of gross weekly income, indexed by increases in the consumer price index as at 1 July in each year from 2017 and superannuation based on the applicable statutory rates, from time to time, in respect of those earnings;

(b)    less the paid compensation and paid tax;

(c)    pre-judgment interest on the difference between pars (a) and (b);

(d)    her future economic loss from today, calculated on the basis of the net present value of the total of the current amount of what Mrs Leggett’s average weekly earnings would have been, discounted by 17.5% for vicissitudes, together with superannuation based on the statutory rates that will apply for superannuation until she turns 67 years of age; and

(e)    $200,000, in addition to the impairment award, together with pre-judgment interest from 10 October 2016, as compensation for pain and suffering and the reduction in her quality of life having regard to the overall amount that I have found appropriate to compensate her and the penalties that will be paid to her.

93    In the event that I have erred in construing how compensation should be calculated under s 545(2)(b) of the Fair Work Act, so that Mrs Leggett comes under a liability to repay some or all of the paid compensation, I will order that the Club indemnify her in respect of that liability should it arise.

94    I will make final orders to reflect both the above and the form of orders that the parties agreed on 4 March 2022 to reflect my earlier findings. The parties should confer and within 2 days file draft orders to reflect the terms of the orders in the form which they agreed on 4 March 2022 together with their calculations of the lump sum to be ordered on the basis in [92] above and an order for the indemnity to which I refer in [93] above.

Associate:

Dated:    30 May 2022