Employer’s negligence limits its right of recovery from another tortfeasor Employer’s negligence limits its right of recovery from another tortfeasor

Employer’s negligence limits its right of recovery from another tortfeasor

1 February 2018 | Employment and Safety

Whether an employer, who was also a tortfeasor, could recover payments of workers compensation from another tortfeasor.

In Issue

  • Apportionment of liability.
  • Whether an employer is entitled to recover compensation from a third party tortfeasor when the employer is also found to be liable.

The Background

The employer, Parkes Shire Council (the Council), engaged South West Helicopters Pty Ltd (South West) to conduct an aerial weed survey of an area for which the Council was responsible.

On 2 February 2006, a helicopter carrying two council employees, Malcolm Buerckner and Ian Stephenson, hit an overhead wire owned by Essential Energy and crashed, killing both council employees and the pilot who was employed by South West.

Various proceedings arose out of the crash, including a claim for damages under the Compensation to Relatives Act 1897 (NSW) by the family of Mr Stephenson against the Council and South West. Essential Energy was joined in each proceeding.

This note focuses on the Council’s right of recovery under s151Z(1)(d) of the Workers Compensation Act 1987 (NSW) (WCA) which states an employer, who has made compensation payments, is entitled to claim indemnity from a tortfeasor who is liable to pay damages to the injured worker.

The Decision at Trial

The trial judge held that both the Council (Mr Stephenson’s employer) and South West had breached the duty of care they owed to Mr Stephenson and apportioned 20% of the liability to the Council, and  80% to South West.

The court held that the Council was entitled to recover 80% of the compensation it had paid from South West, despite finding the Council’s negligence had also contributed to Mr Stephenson’s death.

The Issues on Appeal

South West appealed in relation to the finding of apportionment and that the Council was entitled to recover its workers compensation payments from them.

South West argued that s151Z WCA did not confer a right of indemnity in the employer if the employer itself was found to be partly liable for the worker’s injury. The Council disagreed with this contended construction.

The Decision on Appeal

South West’s appeal was upheld on both grounds. The Court of Appeal apportioned one-third liability to the Council and two-thirds to South West.

Consistent with the High Court decision in Public Transport Commission of NSW v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336, which was relied upon by South West, the Court of Appeal held that s151Z(1)(d) WCA does not confer a right of indemnity in circumstances where the employer is a tortfeasor. It only confers a right of indemnity in circumstances where the employer has no tortious liability to the worker.

Implications for you

In circumstances where an employer has contributed to a worker’s injury, its workers compensation insurer’s ability to pursue recovery action against another tortfeasor under s151Z is now limited. Section 151Z(2)(e) is only applicable where the worker has not commenced proceedings against the employer for damages or does not accept satisfaction of a judgment for damages against the employer. 

In circumstances where s151Z(2)(e) does not apply, workers compensation insurers may consider recovering compensation payments via the commencement of  a contribution claim against a third party tortfeasor rather than initiating recovery proceedings under s151Z(1)(d).

South West Helicopters Pty Ltd v Stephenson [2017] NSWCA 312

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Helen Li

Helen Li

Special Counsel