Section 151Z liability – not limited to common law

On 15 March 2016, District Court Judge Elkaim in the State of New South Wales v Wenham [2016] NSWDC 25 found that a party who seeks to rely on the indemnity provisions under section 151Z of the Workers Compensation Act 1987 (NSW) (section 151Z) cannot rely upon the blameless accident provisions¹.

His Honour succinctly summarised his views at [23] of his Judgment in this matter as follows:

The cause of action relied upon by the plaintiff is provided by section 151Z. That cause of action required there to be a wrongdoer. The deeming provision concerning fault in section 7B of the MACA² is a deeming provision only for the purposes of a claim for damages. It is there to assist the victim of a blameless accident. It does not extend, absent specific reference, to the cause of action provided by section 151Z.

The State of New South Wales were unsuccessful in their bid to call upon the indemnity provided for in section 151Z as the Court considered that there was no wrongdoer.

This decision supported the longstanding history that in claims for indemnity pursuant to section 151Z there must be a negligent wrongdoer, other than the employer.

The State of New South Wales subsequently filed an application seeking leave to appeal and to set aside the decision made by District Court Judge Elkaim.

The bench noted that this case raised important points regarding the construction of the statutory language and the interaction between the two difficult provisions, namely section 151Z and blameless accidents³.

The Court of Appeal ultimately granted the application made by the State of New South Wales with agreement by all three Justices, namely Acting Chief Justice Beazley, Justice Meagher and Justice Payne.

In coming to this decision, the Court of Appeal considered a number of aspects including the meaning of ‘wrongdoer’ and ‘liability’, as well as a review of the policy considerations related to this issue.

Wrongdoer

It was held that section 151Z does not require the liable third party under this section to be a ‘wrongdoer’ or a ‘tortfeasor’.

In coming to this conclusion, it was noted that the terms ‘wrongdoer’ and ‘tortfeasor’ do not appear in the statutory language of section 151Z.

Justice Payne reviewed the decision of Kurnell Passenger & Transport Services Pty Ltd v Randwick City Council (2009) NSWCA 56⁴ and noted that the terms ‘wrongdoer’ and ‘tortfeasor’ were recited for convenience, as opposed to reference to the statutory language.

Justice Payne also reviewed the decision of Workers Compensation Nominal Insurer v Nominal Defendant [2013] NSWCA 301 and noted that there was no suggestion that the terms ‘wrongdoer’ or ‘tortfeasor’ were essential to establishing a liability within section 151Z.

Liability

The court held that the term ‘liability’ created by statute under section 151Z(1) ie ‘the circumstances creating liability’ is not limited to liability at common law.

In coming to this conclusion, the court looked at the construction of section 151Z(1), namely:

• If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker’s employer to pay damages in respect of the injury, the following provisions have effect…

Justice Payne noted that the circumstance which create a liability to pay damages are not concerned with why there is a liability to pay such damages, but simply that there is a liability⁵.

Justice Payne also considered the history of the provision, in addition to the policy considerations (outlined below) and noted that in his view there is nothing to support the constriction of section 151Z as limiting the liability to a liability at common law⁶.

Blameless provisions

It is noted that the provisions under MACA provide that a blameless driver or owner is liable to pay damages by deeming that driver or owner to be at fault. Turning to the case at hand, this provision would have entitled the employee of the State of New South Wales, Ms Goddard to recover damages against both the driver and owner.

With the above in mind, Justice Payne considered that the indemnity created by section 151Z is one for the purposes of, and in connection with, a claim for damages in respect of her injury⁷.

Justice of Appeal Payne noted that if there is a liability to pay damages for the same injury as that from which the obligation to meet workers compensation payments arises, those payments are recoverable under section 151Z⁸.

In the circumstances, Justice Payne concisely summarised at [77] that:

‘..Since the right to indemnity is derived from the availability of a claim for damages, and is otherwise closely connected with it, the fault deemed to lie in the owner or driver is effective for the purposes of s.151Z of the Act. The entitlement in the Workers Compensation Act to indemnity is conditional upon establishing a liability in some third party to pay damages to the injured worker and not proof of the commission of a tort’.

Justice Payne also held that if the liability was to be intended to be a limited to liability at common law, in his view, it was ‘surprising’ that this limitation has never been expressly made.

Policy

It is noted that the worker at the centre of the subject workers compensation claim, Ms Goddard did not sue the owner or driver under the MACA blameless provisions for damages. However, had she done so, it was noted that the worker would have succeeded.

Based on the Respondent’s submission, the argument was that if a worker, such as Ms Goddard chose not to sue, the employer such as the State of New South Wales could not recover the compensation payments made to Ms Goddard. In the circumstances, Justice Payne considered that this would strongly point against the intended construction of section 151Z.

Justice Payne considered the decision of Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321 wherein Chief Justice Barwick opined ‘a sound rule of statutory construction that a meaning of the language employed by the legislature which would produce an unjust or capricious result is to be avoided’.

Turning to the subject case, Justice Payne considered that the Respondents assertion, namely that if the worker did not sue the driver, the workers compensation insurer would be prevented from seeking an indemnity, was ‘unjust or capricious’.

Justice Payne also considered the decision in Workers Compensation Nominal Insurer v Nominal Defendant [2013] NSWCA 301 where at [64] it was noted that:

‘…the liability of the wrongdoer is a “notional liability at common law [or under a statute other than the Compensation Act for pecuniary and non-pecuniary loss”.

In the circumstances, Justice Payne held that the policy considerations surrounding the construction and language of section 151Z supported the view that liability is not limited to common law liability but extends to any liability.

Conclusion

Justice Payne, with the agreement of Acting Chief Justice Beazley and Justice Meagher, held that the language, history and policy considerations for an action under section 151Z support the view that the employer, the State of New South Wales is entitled to rely upon the blameless provisions under MACA.

The appeal was allowed and the decision of the primary judge, District Court Judge Elkhaim was set aside.

We await the outcome of the Court of Appeal hearing.

¹Chapter 1, Part 1.2 of the Motor Accidents Compensation Act 1999 (NSW)
²Motor Accidents Compensation Act 1999 (NSW)
³State of New South Wales v Wenham [2016] NSW CA 336 at [36]
⁴Kurnell Passenger & Transport Services Pty Ltd v Randwick City Council (2009) 230 FLR 336; [200] NSWCA 56 at [6]
⁵State of New South Wales v Wenham [2016] NSW CA 336 at [71]
⁶State of New South Wales v Wenham [2016] NSW CA 336 at [73]
⁷State of New South Wales v Wenham [2016] NSW CA 336 at [75]
⁸State of New South Wales v Wenham [2016] NSW CA 336 at [76]