Welcome to the January 2017 Edition of the Edwards Michael Powell eBulletin

Big Boost for Section 151Z Recoveries

A recent Court of Appeal decision of State of NSW v Wenham [2016] NSWCA  336 (5 December 2016) has significantly extended the opportunities available for section 151Z recoveries, which are now available when compensation is payable to a worker injured in a “blameless” motor vehicle accident.

“blameless motor accident” is defined by section 7A of the Motor Accidents Compensation Act 1999 as meaning: –

“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.”

Section 7B effectively provides that in these circumstances the injury is “deemed” to have been caused by the fault of the owner or driver of the motor vehicle (having CTP cover).

There is an exclusion by virtue of section 7E for the driver of the vehicle if the accident was caused by an act or omission of the driver, but drivers can still recover damages against the owner provided the accident was caused by the use or operation of the vehicle that does not involve fault (see Whitfield v Melenewycz [2016] NSWCA 235).

Section 7F provides that damages payable in respect of blameless accidents may still be reduced by contributory negligence.

These provisions apply to accidents on or after 01 October 2007.

Section 151Z of the Workers Compensation Act 1987 provides: –

“(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:

(b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the workers injury under this Act, and the worker is not entitled to any further compensation,

(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)…”

In State of NSW v Wenham, the Court of Appeal overturned a first instance decision of Elkaim DCJ, who found that the employer could not rely on “blameless motor accident” provisions of the MACA for the purposes of section 151Z recovery because: –

  • Section 151Z(1)(d) of the WCA requires that there be a wrongdoer and that the defendant under the blameless accident provisions was not a wrongdoer,
  • The deeming of fault was only “for the purposes of and in connection with any claim for damages in respect of the death of or injury” to a person, and
  •  The right created by section 151Z(1)(d) was not a claim for damages.

The Court of Appeal did not consider that being a “wrongdoer” was a necessary condition of liability within the meaning of section 151Z (1); all that is required is that there be a “liability in some person other than the worker’s employer to pay damages in respect of the injury” – a precondition satisfied by the provisions of the MACA  making a blameless driver or owner liable to pay damages by deeming that driver or owner to be at fault.  The Court rejected the notion that in order for section 151Z(1) to be engaged, it was necessary for a liability to arise at common law, preferring a construction that recovery is payable in respect of “any” liability to pay damages arising in the circumstances, including liability arising from the deeming provisions of the MACA.  The Court also noted that once the provisions were engaged, section 151Z(1) (d) created an entitlement to an end to an indemnity from “the person so liable to pay those damages”.

Section 151Z recovery actions are usually pursued against third parties who have been negligent in a traditional sense, involving considerations of duty of care and breach of duty of care.  The most obvious cases  involve claims against negligent third-party drivers, building contractors and host employers.  There have also been some more obscure cases, such as CSR Timber Products v Weathertex Pty Ltd (2013) 83 NSWLR 433, where an employer deemed to be liable for workers compensation pursuant to the Disease provisions of the WCA successfully recovered compensation pursuant to section 151Z from a prior (negligent) employer for its causative contribution to the injury.

This decision is a reminder that an expansive approach can be successful and reinforces the importance of having regard to the specific language of section 151Z (1); all that is required in order to effect recovery is that there be a liability in some person other than the worker’s employer (i.e. the employer liable to pay compensation) to pay damages in respect of the injury.