RECENT APPEAL DECISION CONFIRMS S151Z RECOVERIES WILL SUCCEED IN ‘BLAMELESS ACCIDENT’ CLAIMS

Motor Vehicle Directions

State of NSW v Wenham [2016] NSWSC 336

Decision of the NSW Court of Appeal on 5 December 2016 (Beazley ACJ, Meagher and Payne JJA)

Summary

This week’s decision of the NSW Court of Appeal has determined that a workers compensation insurer is entitled to recover payments made to an injured worker pursuant to a s151Z of the Workers Compensation Act 1987 (WCA) in circumstances where the accident was a “blameless accident” under the Motor Accidents Compensation Act 1999 (MACA).

To do so, the Court of Appeal determined that the third party from whom the workers compensation insurer seeks recovery does not need to be “wrongdoer” or “tortfeasor”. The Court held that s151Z(1)(d) of the WCA is not concerned with the legal mechanism upon which a third party becomes liable, only that they are ‘liable to pay damages’. Such liability can be created if the worker’s injury was sustained in circumstances satisfying the blameless accident provisions of the MACA.

Background

The worker, Ms Jennifer Goddard, was an employee of the NSW Police Force and was involved in a motor vehicle accident while in the course of her employment.

A semitrailer, driven by the defendant Mr Wenham, was travelling on the Hume Highway, at Bargo, NSW. Without notice, the front wheel assembly of the semi-trailer detached due to a mechanical failure, and came to rest between lanes 1 and 2 of the Highway. The semitrailer was able to drive to the shoulder of the highway. The conditions were described as being dark, and with light fog.

The worker, who was travelling in her car at 100km per hour, began to change lanes to avoid the semitrailer (which had its hazard lights on), and collided with the stationary wheel. She was injured as a result of the collision and made a workers compensation claim against her employer, the State of NSW. However, she ultimately elected not to bring CTP proceedings.

Recovery proceedings pursuant to s151Z(1)(d) of the WCA were eventually commenced in the District Court of NSW against Mr Wenham’s CTP insurer. The claim was made on the basis that Mr Wenham had been negligent, or in the alternative, that the accident fell within the definition of a “blameless motor accident” under section 7A of the MACA.

Section 151Z(1)(d) of the WCA provides:

151Z Recovery against both employer and stranger

  1.  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:(d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

(a) …

(d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

Section 7A of the MACA defines a “blameless motor accident” as:

“a motor accident not caused by the fault of the owner or driver of any motor vehicle involved in the accident in the use or operation of the vehicle and not caused by the fault of any other person.”

First instance decision

The District Court of NSW (Elkaim DCJ) was asked to determine as a separate question:

Can a plaintiff seeking an indemnity pursuant to section 151Z(1)(d) of the Workers Compensation Act 1987 (NSW) rely upon the “blameless accident provisions” contained in Chapter 1 Part 1.2 of the Motor Accidents Compensation Act 1999 (NSW) to obtain the indemnity sought?

His Honour answered that question “No”.

The District Court agreed with the submission of the CTP insurer that it had no obligation to indemnify the workers compensation insurer pursuant to s151Z, as its insured was not a “wrongdoer” for the purposes of s151Z in circumstances where the insured driver had not been negligent.

New South Wales Court of Appeal

The District Court decision was an interlocutory one, therefore leave to appeal was needed. The Court of Appeal gave the workers compensation insurer leave to appeal and allowed the appeal, determining that the separate question should be answered “Yes”.

The Court of Appeal determined that section 151Z did not require the person who is liable to pay damages to be either a “wrongdoer” or a “tortfeasor” at common law. It held that the primary judge had incorrectly applied those phrases from earlier judgments, where the terms were used as a “convenient shorthand”.

Payne JA, with whom the Court agreed, considered that s151Z was only concerned with the position as between the injured person (the worker) and, in the present case, the CTP insurer. The CTP insurer conceded that had the worker commenced CTP proceedings personally, she would have been entitled to rely upon the blameless accident provisions of MACA.

When reading s151Z, the Court of Appeal held that the section was only concerned with the circumstance creating a “liability…to pay damages”. Justice Payne said for the Court:

The circumstances creating that liability, including the operation of s 7B, give rise to a liability at the point in time when they occur, although determination of that liability may be much later, after determination by a court.

Accordingly, while a Court applying ss7A and 7B may deem liability upon a CTP insurer at a later point in time, it should be considered that the liability, in fact, arose at the time of the accident.

That being the case the CTP insurer had a ‘liability to pay damages’ within the meaning of that expression in s151Z(1)(d) of the WCA, even though that liability did not arise at common law, and despite the fact its insured was not a “tortfeasor” or a “wrongdoer”.

Comments

A workers compensation insurer is now able to seek recovery of payments in claims which are deemed to be “blameless accidents”. All that insurer needs to do is to establish there is liability to pay damages to the worker in someone other than the employer, and that the liability arose in respect of the same injury and out of the same circumstances as those that caused the injury.

We anticipate that there will be a number of recovery claims which had been determined to have been “blameless” which were awaiting the determination of the issue and which may now be pursued.

Authored by Paul Mison, Senior Associate, Sydney.


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