WCRA: assignment of a personal injuries action ok, if commercial

WorkCover Queensland v AMACA Pty Limited [2012] QCA 240

I refer to my earlier post concerning the decision of Boddice J in WorkCover Queensland v Amaca Pty Limited (No 2) [2011] QSC 358 and note the appeal was allowed and the question of whether; it was valid at law to assign to the plaintiff (WorkCover) the benefit of the personal injuries cause of action of the deceased worker was upheld in WorkCover’s favour.

The assignment by the deceased worker’s estate took place in circumstances where WorkCover was seeking indemnity and recovery from a third party (Amaca Pty Ltd) of the compensation payments made to the deceased worker. WorkCover advanced it did not have the benefit of subrogation/indemnity under s.207B of Workers’ Compensation and Rehabilitation Act 2003 (“Act”)  because the deceased worker had commenced proceedings (and discontinued them) without recovery from Amaca Pty Ltd in terms of sub-section 7 of the Act. The commencement of proceedings was aimed at protecting the worker’s right pending acceptance of the statutory claim for compensation. Hence, without the benefit of subrogation/indemnity under s.207B, the issue for determination was one of assignment for a personal injuries cause of action.

Gotterson JA with whom Martin J concurred (and the President separately allowing the appeal):

[64] Drawing upon the authorities to which I have referred, I understand the law now to be that a right to claim damages in negligence may be validly assigned where the assignee has a genuine commercial interest in the assignment.

Genuine commercial interest

[65] From the discussion in the cases, several characteristics for sufficiency as a genuine commercial interest in this context can be discerned. In the first place, where the assignee relies on a genuine commercial interest to sustain an assignment, that interest must be one that has come into existence prior to the assignment. Plainly, a commercial interest in exploiting an assigned right, even if to recoup an amount paid in exchange for the assignment, would not, of itself, suffice. A commercial interest merely of that kind would tend to taint the assignment as savouring of maintenance or as champertous. It was on that basis that the assignment in Trendtex failed. The anonymous third party assignee had had no prior dealings with the parties to the assigned causes of action from which a genuine commercial interest might have arisen prior to the assignment.[57]

[66] Secondly, the pre-existing commercial interest need not be an interest which, itself, is enforceable at law or in equity. In Brownton, for example, the commercial interest that a defendant who had settled with the plaintiff had in recouping, if only partially, against another defendant who had refused to settle, was held sufficient to sustain an assignment of the plaintiff’s rights against that defendant to the other defendant who had settled. The assignee’s interest in recoupment was not a legally enforceable interest; yet, clearly, it was a genuine commercial interest which was in existence at the time of the assignment. Another example is found in Victoria Insurance Co v King[58] which concerned an assignment by an insured to an underwriter of causes of action against a tortfeasor in circumstances where the insured did not have a right of subrogation. The underwriter clearly had a commercial interest in recouping payment made under the policy. Griffith CJ (with whom Chubb and Real JJ concurred) was in no doubt that the assignment was valid.[59]

[67] The learned Judge who determined the separate question here was of the view that the interest which pre-exists must be one “…which receives ancillary support from the assignment”.[60] The discussion by his Honour suggests that he had in mind an interest in the nature of a right enforceable at law or in equity for which ancillary support was given by the assignment. Quite possibly his Honour was influenced in his approach by an argument advanced before him that upon payment of the lump sum compensation, WorkCover acquired what might be described as an inchoate right to indemnity by Amaca under s 207B(7) of the WCR Act. That, it seems, was the sole pre-existing interest upon which reliance was placed at the hearing of the application. On the view of the extent of that subsection taken by the parties, WorkCover had no such right to indemnity, and reliance upon such a right was misplaced. Recognition that a genuine interest, commercial in nature and not necessarily legally enforceable, might support an assignment would have been appropriate, but apparently was overlooked.

Validity of this assignment

[68] At the dates when the parties respectively executed the Deed, WorkCover had an interest in an assignment to it by the Estate of the causes of action. The interest it had was in recoupment, fully or partially, of the amount that it had paid out to Rourke by way of statutory compensation. That interest was not a legal one; but it was a genuine commercial interest. Moreover, it was an interest which arose upon payment of the compensation and well before execution of the Deed.

[69] The Deed itself does not suggest, nor was there extrinsic evidence to the effect, that the payment of compensation was conditioned upon subsequent execution of the Deed or upon subsequent assignment by Rourke or the Estate of the causes of action. In every sense, WorkCover’s commercial interest pre-existed the assignment.

[70] In my view, WorkCover did have a genuine commercial interest in the assignment at the time it occurred. That interest validates the assignment. It also precludes argument that the assignment was champertous or savoured of maintenance.

[71] As well, it is worth noting that, under the terms of the Deed, there is no scope for WorkCover to profit by the assignment. Under Clause 2.6, if the total sum Workcover recovers pursuant to the assignment exceeds the lump sum statutory compensation it paid to Rourke, it is to hold the excess in trust for the Estate and then to pay it to the Estate as directed by the personal representative. Whilst, as Lloyd LJ summarised in Brownton, the making of a profit by an assignee from an assignment is not fatal to it, no element of potential issue of profit making by WorkCover is present here.

Brisbane Barrister – David Cormack

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