Taylor v Company Solutions (Aust) Pty Ltd  QSC 309
David James Taylor was employed as a labourer by a labour hire company, Company Solutions. In the course of his employment he was seriously injured while working for the host employer, Kalmar Equipment at a site owned and operated by Patrick Stevedores.
A common law claim against Company Solutions, Kalmar and Patricks was settled for $1,391,325.00. Company Solutions’ contribution was the amount of the workers compensation benefits that had already been paid with Kalmar and Patricks paying the balance of $1,117,052.49. Because of the nature of Mr Taylor’s injuries the settlement required sanctioning by the Supreme Court.
Justice Douglas sanctioned the settlement on 12 July 2011. His orders took into account the requirement for insurers to obtain clearances from statutory bodies, including Medicare and Centrelink, prior to paying the injured worker and, if money is owed to the statutory bodies, to make payment from the settlement. The orders required the settlement monies to be paid within 21 days of receipt of the final statutory clearance.
There were delays in the issuing of the clearances and the balance of the settlement money was not paid until 15 March 2012, some eight months after the settlement had been sanctioned.
After payment of the settlement, Mr Taylor brought an application for an order that Kalmar and Patricks should pay him interest on their portion of the money calculated from the date of the sanction hearing until the date of payment.
Justice Douglas noted that the reason interest is recoverable generally is that the right of the injured person to the settlement money accrues on the date of the accident. The defendant has the benefit of the money from the date of the accident until the date the settlement is reached or the Court hands down its judgment. They are able to use it as they wish and, at the very least, it earns them interest. It is unfair for an injured worker to be deprived of the interest earned by their money while still held by the defendant.
Section 48 of the Supreme Court Act allows for the payment of interest on “unpaid” damages from the date of judgment however, unless the Court orders otherwise, it is not payable if the money is paid within 21 days of judgment.
On behalf of Kalmar and Patricks it was argued that the obligation to pay the settlement money did not arise at the date of the sanction hearing, as it does with a judgment, but 21 days after receipt of the final statutory clearance, therefore, the money was not “unpaid” and accruing interest. It was noted that an insurer cannot pay the settlement money unless they first obtain a clearance from Medicare.
Justice Douglas held that the obligation to pay the settlement money arose on the date of the sanction but was postponed until the clearances were received. He accepted an argument made on behalf of Mr Taylor that had Kalmar and Patricks wished to avoid paying interest on the “unpaid” settlement money they could have inserted a clause to that effect into the agreement he sanctioned in July 2011.
The outcome was that Kalmar and Patricks were ordered to pay $64,062.93 in interest to Mr Taylor calculated from the date of the sanction hearing.
This case is one of relevance to insurers, particularly where the settlement sums are significant and there is potential for large sums of interest to accumulate when there is a delay in the issuing of statutory clearances. To protect themselves from being obligated to pay interest on settlements insurers should consider having a term inserted into a settlement agreement that interest is not to run until a particular period after the defendant has received the relevant clearances.
A copy of the Judgment can be found here.