Blameless Recovery? Who Knew?

06 April 2017

Recovery of payments made to injured workers following workplace injuries was thought to require the identification of a third party tortfeasor/wrongdoer whose negligent actions would result in damages being payable to the worker in third party proceedings.  These were normally in the form of a head contractor, third party driver or host employer but has the Court of Appeal in NSW widened the net to include motor accidents that are deemed ‘blameless’ under the Motor Accidents Compensation Act? Is an actual third party liability now not required?

As a rule, when seeking to recover payments pursuant to section 151Z, we looked for injury caused by or in circumstances creating a liability in ‘some person other than the worker’s employer’, within this was read ‘liability to pay damages’. This is in accordance with the opening line of section 151Z(1).

However in the case of State of NSW v Wenham [2016] NSWCA 336, the Court of Appeal by majority determined that a ‘person’ is not required to be held liable within the meaning of section 151Z and that so long as the liability to pay damages is a liability in respect of the same injury as that form which the obligation to pay worker’s compensation arises, payments are recoverable in one of the ways specified in s151Z of the Workers Compensation Act [76].

In the above matter, the appellant was the employer of Ms Goddard who herself suffered injury when a wheel assembly disconnected from a truck driving in front of her.  It was conceded that the injury occurred as a result of a ‘blameless accident’ in accordance with section 7B of the Motor Accidents Compensation Act, 1999 (MACA).  Ms Goddard applied for and received workers compensation payments which were then sought to be recovered pursuant to section 151Z.

In upholding the appeal, the Court of Appeal held that where there is a blameless accident there is liability within section 151Z.  They noted that section 151Z did not require a person liable within the meaning of that section to be a ‘wrongdoer’ or ‘tortfeasor’ but that the section merely required that a liability arise which in turn created an entitlement to an indemnity from a person liable to pay damages.

The Court of Appeal focussed on section 151Z creating a liability to indemnify, not creating a liability to pay damages at common law.  As such, there was no requirement to prove there had been the commission of a tort or wrong.  Focus was given to the relevant text, history and policy which the Court considered supported the proposition that so long as there was a liability to pay damages under a statute other than the Workers Compensation Act, 1987 (NSW) then the claim could fall under section 151Z.

Practically, those seeking recovery under section 151Z will still need to prove liability in a third party and have support for the payments they are seeking to recover.  The provisions of section 7B of MACA are specialised in that they ‘deem’ a liability in the owner or driver of the motor vehicle in the use or operation of that vehicle.  Without this specific ‘deeming provision’ the indemnity claim would have failed.

This decision arguably raises some interesting issues and significantly broadens the scope of recovery actions which can only be seen as a win for employers and scheme agents operating under the NSW scheme.

The Court of Appeal decision broadens the scope of what can now be considered accidents which attract an entitlement to recover workers compensation payments made to an injured worker.  The flow on effect provides employers with the opportunity to improve their workers compensation liability position and exposure.

This article was written by Joanna Apostolopoulos, Partner and Melissa McDonald, Senior Associate.

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