Court of Appeal remits novel argument regarding the interpretation of section 151Z to the District Court for re-hearing

Mr John King, the plaintiff at first instance, was employed by ISS Facility Services (NSW) Pty Ltd (ISS) as a cleaner at a public school in New South Wales (State). In January 2009 Mr King sustained an injury when he and a direct employee of the school, Mr Morgan, were repairing a broken roller door. That door was located within the grounds of the school, and whilst attempting to repair it, the door unwound itself and struck Mr King on the head.

On 25 August 2015, District Court Judge Sorby (primary judge) delivered his judgment in this matter finding negligence in both the State and ISS, with an apportionment of responsibility at 75% and 25% respectively. Interestingly, the primary judge’s approach to the assessment of contributory negligence in the part of Mr King was somewhat novel in the sense that he allowed 30% in respect of Mr King’s claim against the State and 20% in respect of his claim against ISS.

In light of the findings in relation to liability between the State and ISS, as well as the two separate assessments of contributory negligence in the part of Mr King, the primary judge’s findings and his interpretation of the operation of section 151Z of the Workers Compensation Act 1987 (NSW) (WCA) were raised on appeal.

In this regard, ISS appealed the primary judge’s decision as follows:

1. His Honour had erred in making two different assessments of contributory negligence in the part of Mr King.
2. His Honour had misconstrued the operation of section 151Z of the WCA in respect of ISS’s entitlement to an indemnity from the State.
3. His Honour had erred in dismissing ISS’s claim for interest on the amount of compensation paid by it (via its workers compensation insurer) to for, or on behalf of Mr King.

Mr King cross-appealed arguing that the primary judge erred in finding that he was guilty of any contributory negligence on the basis that His Honour had failed to make appropriate findings and to give adequate reasons as to how he had contributed to the accident. Mr King also complained about the making of two different assessments as to contributory negligence as against the State and ISS.

The State also cross-appealed arguing that the primary judge had made an error when he found that the State had breached their duty of care owed to Mr King on the basis of an argument that had not been pleaded by either the Mr King, or by ISS. The State also appealed on the basis that the primary judge had erred in his apportionment of liability between it and ISS and as a result the primary judge had incorrectly applied s 151Z of the WCA.

In its pleadings in the lower court, ISS reportedly sought a complete indemnity (to the value of the total of the workers compensation payments it had made to Mr King) from the State in line with section 151Z(1)(d) of the WCA.

In a novel argument, with potentially significant ramifications for the broader application of section 151Z, the State argued that ISS had no entitlement to an indemnity under section 151Z(1)(d) of the WCA on the basis that it had been found negligent. The State’s contentions are summarised at paragraphs [54](emphasis added):

… 151Z(1)(d) should be construed as excluding any right of indemnity for the employer where the employer’s negligence contributes to the occurrence out of which the right to compensation arose. It contends that the object of s 151Z is to provide an indemnity for an employer who has paid compensation by the third person, who is responsible in law for the occurrence that has caused the employer to be liable to pay compensation. It contends that the provision is intended to cover the case where the only liability of the employer to the worker is the statutory liability to pay compensation.

 In a comment that could have significant implications for this area if the State’s argument were accepted Acting Judge of Appeals Emmett made an observation that the State’s argument had ‘considerable substance’.

However, having regard to the fact that his decision was to remit the matter to the District Court for re-hearing on the basis that primary judge failed to provide adequate reasons, he considered it was not necessary for him to express a view on this complex question, or for that matter, the approach in making two distinct assessments of contributory negligence.

The traditional application of section 151Z (1)(d) of the WCA allows for a contribution to be obtained by an employer from a third party in circumstances where the court finds negligence in that employer. We anticipate the State will continue their novel argument in the District Court that in circumstances where negligence is found in an employer there is no right to seek an indemnity under section 151Z of the WCA.

We anticipate that, as a consequence of the arguments raised in the Court of Appeal and Acting Judge of Appeals Emmett’s obiter comments, there will be renewed focus and argument on what was has been a relatively settled area of the law.

ISS Facility Services (NSW) Pty Ltd v State of New South Wales [2016] NSWCA 87