Section 151Z Recovery claims against the Nominal Defendant
March 16, 2012
Penrith City Council v Nominal Defendant & Anor  NSWDC 18
District Court Judge Levy SC delivered judgment on 7 March 2012 in this s151Z(1)(d) Workers Compensation Act 1987 recovery action. The plaintiff employer / workers compensation insurer was unsuccessful in proving negligence of both the driver of a bus on which the worker was a passenger, and the driver of a vehicle which stopped suddenly in front of the bus.
The case is of interest when considering CTP insurers’ defences of workers compensation recovery actions. The workers compensation insurer has to prove all necessary liability facts to ground a recovery action. It is often the case such actions are brought years after the accident giving rise to the claim, and in the absence of initial detailed factual investigation by the workers compensation insurer, they can encounter difficulties in proving their case. There can be additional difficulties in securing the worker’s cooperation (as principal plaintiff witness), or the worker’s recall of events several years after the accident may be poor.
Penrith City Council was seeking to recover workers compensation benefits paid in the sum of $219,529.98 plus pre-judgment interest in the amount of $53,968.63, plus costs.
On 21 July 2003, the worker, Ms Angela Blacklow, was on a bus along Mount Street in Mt Druitt on her way home from work. The bus was approaching the intersection of Luxford Road in the kerbside lane. The bus braked suddenly and swerved to avoid a collision with a motor vehicle in front which had stopped suddenly, although the traffic lights were green at the intersection. The worker was thrown from her seat and onto the floor of the bus, sustaining injury.
There were factual difficulties for the plaintiff as the accident was not fully investigated at the time. It was assumed that the bus was owned by Westbus Pty Limited which operated buses on that route. However, the bus or its driver could not be identified.
The plaintiff sued two defendants, East Realisations Pty Limited (in Liquidation) as it carried the burden of any liabilities of Westbus, the owner of the bus, as first defendant, and the Nominal Defendant in two capacities (firstly as an alternative to the first defendant, as the bus driver could not be identified, and secondly in respect of the driver of the other vehicle who could not be identified either).
Issues of Interest
The case discussed some issues of interest with respect to workers compensation recoveries against CTP insurers, involving liability, procedural issues and quantum under the Motor Accidents Compensation Act 1999 (‘MAC Act’) namely:
- Alleged negligence of the two drivers
- Due inquiry and search.
Driver of the Bus
With respect to the alleged negligence of the bus driver it was argued by the plaintiff that, being in control of a powerful heavy vehicle, and being a professional driver, the bus driver had additional obligations for the safety of others, including towards his passengers. Judge Levy said the obligation of the driver was to take reasonable care whilst driving the bus, including trying to avoid a collision that might occur as a result of the foreseeable actions of other road users. He found that there was no evidence that the driver of the bus had either driven or had reacted unreasonably, imprudently or negligently.
There was no evidence of excessive speed on the part of the bus driver before the collision. There was no evidence as to what, if anything, might have caused the driver of the motor vehicle in front of the bus to stop suddenly, or whether those factors also operated to influence the actions of the bus driver in braking heavily and swerving.
The absence of any additional factual information about the reasons for the driver of the other motor vehicle in front stopping suddenly, and what the bus driver may have observed, was a major flaw in the plaintiff’s case.
The plaintiff argued the bus driver failed to drive at a sufficient distance behind a vehicle travelling in front so as to enable safe stopping to avoid a collision. Rejecting this argument, his Honour found that a collision was avoided and therefore the driver adequately discharged any duty owed as a result of Rule 126 of the Australian Road Rules, which concerns driving at a safe distance behind the vehicle travelling in front.
It was also argued by the plaintiff that the need for the driver of the bus to swerve was evidence that supported the conclusion that the bus was not being driven safely. Judge Levy said this argument was flawed as there was no evidence of the distance between the two vehicles.
The Driver of the Motor Vehicle
As to alleged negligence of the driver of the other vehicle Judge Levy said it could not be suggested it was unlawful to stop, despite there being a green light permitting it to continue, if the prevailing traffic conditions so required. As to prevailing traffic conditions, it was possible the driver had been confronted by the sudden appearance of a pedestrian on or near the roadway, or an animal, or some other object and in those circumstances, the appropriate reaction would include stopping suddenly.
The court found the plaintiff failed to discharge the onus of showing that the driver of the vehicle in front of the bus breached of any duty of care that he / she owed to other road users.
Section 34 MAC Act – due inquiry and search
As the court found there was no negligence of the drivers of the unidentified vehicles, the question of due inquiry and search did not relevantly arise. However, the issue was considered in the event of an appeal.
The plaintiff had proceeded against East Realisations Pty Limited (in Liquidation) as first defendant, as it carried the burden of any liabilities of Westbus which was taken over by other companies in 2005. In seeking to proceed against East Realisations Pty Limited, the plaintiff tendered a bundle of certificates documenting that Westbus owned a number of vehicles similar to the type of bus identified, along with the registration numbers, and that Zurich was the CTP insurer in respect of each of those buses. The court was not satisfied that this information was sufficient to enable a finding on the balance of probabilities, that a particular bus was involved in the accident. The evidence was not sufficient to attach blame to a particular bus or driver, or for liability to attach to a particular policy of insurance.
The claim against the first defendant therefore failed.
Therefore, the requirements of due inquiry and search pursuant to s34 of the MAC Act was considered. The plaintiff submitted it was not required to satisfy the due inquiry and search provisions of the section relying on the decision in NSW v Nominal Defendant  NSWCA. That is, it was submitted that the bus was indisputably a Westbus bus, which precluded invoking the description that its identity ‘can not after due inquiry and search be established’. In the NSW v Nominal Defendant case the bus in question was indisputably a government bus.
Judge Levy accepted that neither the injured worker or the employer had occasion to undertake a search for the identity of the owner and / or driver of the bus until much later in the piece, and only after the plaintiff had incurred substantial payments, when the trail for potential inquiries was cold.
However, it was stated there was still an important inquiry that was ‘due’ taking it out of the category of futile inquiry or charade procedures. Judge Levy held that the plaintiff, or its insurer, failed to make a rudimentary inquiry of the liquidator or administrator of the first defendant company to seek to search its records for a driver’s roster or similar records, or to seek to identify a past or present employee with a relevant corporate memory of routes, drivers and rosters.
Such an inquiry may have been futile, but it was nevertheless ‘due’ according to the requirements of s34. Therefore, the plaintiff’s claims against the Nominal Defendant in both its guises failed.
In recovery actions such as this, and absent agreement between the parties to the recovery action, the court is required to perform an assessment of notional damages to which the worker would have been entitled had she made a CTP claim pursuant to the provisions of the MAC Act. That sum sets the upper limit that the plaintiff could recover, exclusive of interest and costs. In this case the parties had agreed notional damages were $300,000, so had the court found in favour of the plaintiff’s on liability and due enquiry and search, the court didn’t have to assess notional damages. The agreed notional damages were less than the plaintiff’s payments on the workers compensation claim (just under $220,000).
Some of the workers compensation payments made which the plaintiff sought to recover were statute barred, having been made more than six years before proceedings were commenced. Had the plaintiff succeeded on liability, the plaintiff could not pursue recovery of those payments made more than six years before proceedings for recovery were commenced.
It will be interesting to see if the workers compensation insurer appeals in relation to his Honour’s treatment of the liability issue, and / or satisfaction of the requirement for due inquiry and search.
Authored by David Grant, Senior Associate, Sydney.
November 20, 2018
Bank of Queensland Ltd v AIG Australia Ltd  NSWSC 1689 Clients of a financial planner had been defrauded in a…Continue reading
March 23, 2018
Euro Pools Plc (in administration) v Royal & Sun Alliance Insurance Plc  EWHC 46 (Comm) Despite the terms of a…Continue reading
October 26, 2015
Surfstone Pty Ltd & Anor v Morgan Consulting Engineers Pty Ltd  QSC 290 A contractual limitation of liability clause contained…Continue reading