No more passing the buck – s 151Z recovery proceedings and blameless accidents – State of NSW v Wenham [2016] NSWCA 336

Author: Benjamin Ferguson
Judgement Date: 5th December, 2016
Citation: State of NSW v Wenham [2016] NSWCA 336
Jurisdiction: New South Wales Court of Appeal
Principles

  • Workers compensation insurers are now entitled to be indemnified by a defendant driver who has been involved in an ‘blameless accident’, as defined by s 7A of the Motor Accident Compensation Act 1999 (NSW) (the MACA).
  • The ‘circumstances creating a liability’ referred to in s 151Z(1) of the Workers Compensation Act 1987 (NSW) (the WCA) need not involve a tortfeasor or wrongdoer in accordance with common law principles of negligence.|
  • Section 151Z of the WCA does not involve an examination of the mechanism of liability and is enlivened in any circumstance where liability exists.
Background

An employee of the NSW Police (the plaintiff) was injured in a ‘blameless accident’ during the course of her employment. The employee lodged a claim under the WCA and received workers compensation payments from the plaintiff. However, she did not make a claim for damages under the MACA.

Proceedings were commenced in the District Court of New South Wales (the District Court) by the insurer of the plaintiff who sought indemnity from the driver of the vehicle at fault (the defendant) for workers compensation payments, in accordance with s 151Z(1)(d) of the WCA.

The question before the District Court was whether the workers compensation insurer could rely on the ‘blameless accident’ provisions and the deemed liability of the defendant driver to seek indemnity in accordance with s 151Z(1)(d) of the WCA.

In answering this question, the District Court determined that:

(a)    The defendant in a ‘blameless accident’, as defined by s 7B of the MACA, is not a wrongdoer for the purposes of s 151Z of the WCA
(b)    The deeming provision in s 7B is specifically stated to be “for the purposes of and in connection with any claim for damages in respect of the death or injury” of a person. A claim for indemnity in accordance with s 151Z is not a claim for damages
(c)    The right under s 151Z is a right to indemnity and is not a claim for damages.2

The plaintiff appealed the decision.

New South Wales Court of Appeal (Court of Appeal) decision

The Court of Appeal, which was constituted by Beazley A/CJ and Payne and Meagher JJA, held that s 151Z does not require that the person liable to pay damages is a tortfeasor or wrongdoer and that the deemed fault and therefore liability conferred by s 7B is sufficient.

It follows that the liability required by s 151Z is not confined to common law liability only. A liability created by statute is sufficient and in that regard, the Court of Appeal confirmed that liability to pay damages within 151Z “is not concerned with why there is a liability to pay damages, and merely requires that there is one”.3

The Court of Appeal also addressed the issues raised by the District Court at first instance in relation to the distinction between ‘indemnity’ and a ‘claim for damages’ and whether the deeming provision in s 7B could apply in a claim other than for damages.

Specifically, the Court of Appeal held that:

“the MACA makes a blameless driver or owner liable to pay damages by deeming that driver or owner to be at fault ‘for the purposes of and in connection with any claim for damages in respect of death or injury’…The indemnity created by s 151Z(1) is one for the purposes of and in connection with a claim for damages in respect of… injury”4

The Court of Appeal therefore determined that, in circumstances of a ‘blameless accident’ where the liability to pay damages is a liability in respect of the same injury as that from which the obligation to pay workers compensation arises, the liability requirement in section 151Z is satisfied, notwithstanding the deeming provision contained in s 7B.

Why this case is important

The Court of Appeal’s decision reverses the decision of the District Court and makes it clear that workers compensation payments made as a result of death or injury that has arisen as a result of a ‘blameless accident’ is compensable and that a workers compensation insurer is entitled to a full indemnity from the driver who is deemed to be at fault.

Liability of a compulsory third party (CTP) insurer to indemnify the workers compensation insurer for payments made will arise where liability for damages is made out against the CTP insured by reason of s 7B, even in circumstances where the CTP insured is not a tortfeasor or wrongdoer in accordance with common law principles of negligence.

1Beazley A/CJ and Meagher and Paye JJA.
2State of NSW (NSW Police) v Wenham [2016] NSWDC 25 at [22].
3State of NSW v Wenham [2016] NSWCA 336 at [71].
4State of NSW (NSW Police) v Wenham [2016] NSWDC 25 at [75].