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[2012] NSWSC 450
mixed. The Court determined that the employer was entitled to an indemnity under s 151Z(1)(d) and ruled on the principles governing specified compensation components. The parties were to bring in Short...
The Court decided that the Council could claim an indemnity from the non-employer wrongdoer for compensation paid in respect of the Plaintiff's work-related upper-back injuries, even though the Council had itself been sued and found negligent. The amount depended on what the compensation related to. The Court accepted identified portions of the lump-sum payments, excluded most later weekly payments because the lumbar injury caused the relevant inability to work, included a period associated with shoulder operations, and accepted a 50 per cent allocation for treatment relating to both injury areas. The parties were to do the arithmetic and provide Short Minutes.
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2,042 words · generated 01/10/2026
This is a further judgment in Milich v The Council of the City of Canterbury, following Davies J's principal reasons published on 23 April 2012. The further hearing addressed unresolved damages calculations and, chiefly, the scope of the Council's indemnity under s 151Z of the Workers Compensation Act 1987. The judgment says the earlier findings left the final damages figure unresolved, including out-of-pocket expenses and the Fox v Wood component ([1]–[4]).
No linked legislation citations have been extracted yet.
The parties resolved some items before the further hearing. They agreed to add $40,000 to out-of-pocket expenses and that the Fox v Wood component was $2,856 ([4]). They did not agree whether an indemnity should be ordered or which amounts should be included. They asked the Court to decide principles rather than do the arithmetic, and agreed they would calculate the resulting figures themselves ([5]).
The Court summarised the relevant findings from the principal judgment. The Plaintiff's lumbar spine injuries were not caused by his employment or hiring by the Council. His upper-back injuries were caused by work undertaken for the Council, for which both Defendants were liable. His permanent impairment from employment with Ready Workforce was assessed at 11 per cent, comprising cervical spine and upper extremity impairment. The Court also recorded that work-related upper-back injuries caused incapacity only to 30 June 2006, and that those injuries did not prevent the Plaintiff continuing with the milk run ([14]).
The principal question was whether the Council could obtain an indemnity despite having been sued and found negligent. A second question concerned how to separate compensation relating to the compensable upper-back injuries from amounts associated with the non-compensable lumbar injuries. The result was not a single total damages or indemnity award in this judgment. Davies J determined the principles and directed the parties to bring in Short Minutes ([28]).
On the availability of an indemnity, the Plaintiff relied on Public Transport Commission of NSW v J Murray-More (NSW) Pty Ltd. His argument was that where an employer was also negligent, an indemnity was available only in the circumstances specified by s 151Z(2)(e), and the Council could not rely on that provision because the Plaintiff had sued it ([6]). The Plaintiff also relied on I&J Foods Pty Ltd v Bergzam Pty Ltd and J Blackwood & Son v Skilled Engineering, arguing that their discussion of partial indemnity was confined to cases where the worker had not sued the employer ([6]).
The Council argued that Williams v Twynam Agricultural Group and Cobcroft v Aggcon supported an indemnity where an employer had been sued and found liable. It also relied on the structure of s 151Z, particularly subs (1)(a), to submit that the indemnity did not depend on whether the worker sued the employer ([7]).
Davies J accepted the Council's position. First, the Court identified provisions in Pt 5 of the Act that indicated the statutory scheme was intended to prevent double recovery. The judgment listed s 151A(1) and several parts of s 151Z ([9]). Secondly, it relied on Campbell JA's explanation in J Blackwood & Son that s 151Z(1)(d) gave an employer a prima facie right to recover compensation payments from a non-employer wrongdoer, whether or not the employer was itself a tortfeasor ([10]–[11]). Davies J considered that statement a strong indication that the authority was not limited to cases where the worker had not sued the employer ([11]).
Thirdly, the Court considered Williams and Cobcroft clear indications that the reasoning in I&J Foods was not confined to that narrower situation. Davies J stated that those decisions should be followed unless plainly wrong, and said they were not plainly wrong and accorded with the analysis in J Blackwood & Son ([12]). The Court therefore held that the Council could obtain the s 151Z(1)(d) indemnity notwithstanding that it had been sued and found in breach of duty ([13]).
For the amounts, the Court separated the relevant categories rather than applying one approach to all compensation. The parties agreed that $14,000 of the $20,000 s 66 lump sum should be included, reflecting the 11 per cent whole-person impairment relating to the upper-back area ([15]). For the s 67 pain and suffering amount, they agreed the relevant total was $12,500 but disagreed on its allocation. Davies J accepted the Council's calculation of 11/15, or $9,166.67, using the impairment assessment as an analogous measure of the compensable share of pain and suffering ([16]–[17]).
The analysis of weekly payments turned on causation of incapacity. The Court had found that the Plaintiff's work-related injuries did not prevent him from continuing the milk run, and that the lumbar spine was the reason he stopped that work ([21]). The Court also referred to medical evidence that assessed him as fit for modified duties from the perspective of his shoulder injuries ([22]). Because weekly payments compensated inability to work, the Court held that later payments should not be apportioned merely because the Plaintiff continued to have problems from the upper-back injuries. The Court instead asked whether those injuries caused the inability to work ([23]).
There was, however, a defined period in which shoulder-related incapacity was shown. The Plaintiff had shoulder operations on 14 April and 16 June 2009. The reports did not establish the exact period of incapacity clearly, but the Court inferred that he would have been unable to work between the operations and probably for about six weeks after the second operation. It included weekly payments from 13 April to 28 July 2009 ([24]–[25]).
Treatment expenses were treated differently. Where a consultation or service related to both upper and lower back areas, the Court considered that it could not be said that the occasion for the consultation was exclusively one injury or the other. It accepted a 50 per cent allocation as a practical, broad-brush solution where the service provider's time for each injury could not be reconstructed ([26]–[27]).
The judgment does not purport to set out a complete account of the law before the dispute. It records competing submissions about how J Murray-More, I&J Foods and J Blackwood & Son applied where an employer had itself been sued. The Plaintiff argued for a restricted indemnity in that situation; the Council contended that the statutory indemnity could still operate ([6]–[7]).
The Court's determination was that s 151Z(1)(d) could provide an indemnity even if the employer was sued and found negligent. The reasoning rested on the statutory provisions aimed at avoiding double recovery and the reading of s 151Z(1)(d) described in J Blackwood & Son ([9]–[13]). Davies J also treated Williams and Cobcroft as supporting that reading and followed them because they were not considered plainly wrong ([12]).
The judgment's practical clarification is that availability of an indemnity does not mean every compensation payment made by the employer automatically falls within it. The relevant connection between a payment and the compensable injury still mattered. Lump sums were apportioned by reference to impairment; weekly payments by reference to the cause of inability to work; and mixed treatment expenses by a practical allocation where the service related to both injury areas ([15]–[27]). These are the principles Davies J applied to the record before the Court, rather than a claim that every future case must use the same percentages or method.
At [8], Davies J stated: “an indemnity is available to the employer notwithstanding that it has been sued and found to be negligent.” In plain English, the employer's own liability to the worker did not, by itself, prevent it claiming the statutory indemnity from a non-employer wrongdoer.
At [11], the judgment quoted Campbell JA's explanation in J Blackwood & Son that the employer's prima facie right under s 151Z(1)(d) exists “whether or not the employer is itself a tortfeasor”. Davies J regarded that passage as strong support for rejecting the Plaintiff's proposed limitation ([11]). The quotation is from the authority, but the significance attributed to it in this judgment is Davies J's.
At [23], Davies J explained that where inability to work resulted from an injury that was not compensable in the relevant employment sense, it was not appropriate to apportion weekly payments merely because the worker still had compensable symptoms. The point is that a continuing symptom and the cause of work incapacity are different questions.
At [25], the Court included the period 13 April to 28 July 2009 because the shoulder operations supported a finding of temporary upper-back-related incapacity. This was an inference from the timing of the two operations and the available medical material, not a general fixed period for recovery from shoulder surgery.
At [27], Davies J accepted that a 50 per cent allocation for mixed treatment items was broad-brush, but considered it necessary because the time spent treating each area could not be ascertained. The passage illustrates a practical allocation on the evidence and circumstances before the Court, not a universal rule that mixed treatment must always be split equally.
The decision is relevant to a statutory indemnity question where a worker has sued both an employer and another alleged wrongdoer, and the employer seeks recovery under s 151Z(1)(d) for compensation it paid. The feature addressed directly is that the employer was itself sued and found negligent. The Court held that this feature did not, without more, prevent an indemnity ([8]–[13]).
The decision is also relevant where the worker has multiple injuries, some connected with the relevant employment and others not, and the compensation history includes different kinds of payments. The Court's approach depended on distinguishing the causal basis of each category. For weekly payments, it examined what caused the worker's inability to work. For permanent impairment and pain and suffering lump sums, it used impairment-based allocation. For treatment expenses, it considered whether the service could be attributed to one injury or related to both ([15]–[27]).
The factual limits matter. The judgment relied on previous findings about the origin of the Plaintiff's lumbar and upper-back injuries, his ability to perform the milk run, the effects of shoulder operations, and the parties' agreement about certain amounts. It therefore does not decide how to apportion compensation in the absence of comparable findings or evidence.
The supplied judgment identifies no later decisions applying, distinguishing, or reconsidering Milich (No. 2). It refers to the earlier principal judgment, Milich v The Council of the City of Canterbury [2012] NSWSC 59, and to authorities that Davies J considered when reaching the indemnity decision. Those authorities include J Blackwood & Son, Williams, Cobcroft, I&J Foods and J Murray-More ([6]–[13]).
Accordingly, the later treatment of this decision cannot be established from the judgment text provided. The decision itself records that Davies J considered Williams and Cobcroft supportive and not plainly wrong, and treated J Blackwood & Son as consistent with the broader construction of s 151Z(1)(d) ([11]–[12]). That records the Court's use of those authorities in 2012, not how later courts may have treated Milich.
The judgment resolves the legal principles the parties asked Davies J to determine, but leaves the arithmetic to them. The parties were to calculate the indemnity components and prepare Short Minutes ([5], [28]). The text does not state the final total indemnity, nor does it provide the calculations for each treatment item.
The Court notes that the employer tendered a colour-coded chart of treatment expenses, but says the chart's accuracy was not relevant to deciding the principles because the parties asked the Court not to perform the calculations ([26]). The final treatment figure therefore cannot be derived from this judgment alone.
The judgment also does not explain how the parties ultimately applied the 50 per cent allocation to each jointly related treatment item, or whether agreement was reached on the resulting Short Minutes. Costs were left to be heard if the issue could not be resolved ([28]). Nor does the supplied text establish how later courts have interpreted or applied the decision. Those matters require sources beyond this judgment.
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Judgment 1I published my reasons in this matter on 23 April 2012: Milich v The Council of the City of Canterbury [2012] NSWSC 59. 2By reason of my findings that it was only the injuries to the neck/shoulders and upper back area (which I will refer to compendiously as the upper back area) that were attributable to the negligence of the Defendants, it was not possible to reach a final figure for damages to be awarded to the Plaintiff. In particular, it was not possible to come to a final view about the out of pocket expenses or on the component for Fox v Wood (1981) 148 CLR 438. 3Further, I noted the indemnity provided by s 151Z(1)(d) Workers Compensation Act 1987 and said that in the circumstances it was not possible to calculate the amount of that indemnity because no attempt had been made to calculate what compensation had been paid in respect of the injuries to the upper back area. I directed that the parties prepare Short Minutes to deal with these matters. However, agreement was not possible and the matter was re-listed for further argument. 4At that further hearing I was informed that agreement had been reached that there should be added to the out of pocket expenses the sum of $40,000 and that the amount of the Fox v Wood component was $2,856. The parties were not agreed on whether an indemnity should be ordered although there was agreement on some but not all of the components of such an indemnity, should it be granted. 5Two matters associated with the indemnity under s 151Z were argued. First, in circumstances where the worker had taken proceedings against both his employer and a third party, and it had been determined that both were negligent, was an indemnity available to the employer under s 151Z? Secondly, if an indemnity was available, what amounts were to be included in that indemnity? In dealing with the second matter the parties asked only that I should determine matters of principle and not descend into arithmetic. The parties agreed that they would perform the calculations based on my determinations of the matters of principle.
6The Plaintiff submitted that what was said in Public Transport Commission of NSW v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 341 applied here to deny an indemnity to the employer. This was because, where an employer was also negligent, the only circumstances where an indemnity was provided to the employer were those found in s 151Z(2)(e): I&J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 and J Blackwood & Son v Skilled Engineering [2008] NSWCA 142 at [143]. The employer here could not bring itself within subs (2)(e) because the worker had taken proceedings against the employer. I&J Foods and J Blackwood & Son were both cases where the worker had not taken proceedings against the employer. What was said in those cases concerning J Murray-More, namely "that the limitation declared in [that case] should be deemed out of existence so as to permit partial indemnity", was confined to such a situation: I&J Foods at 496. 7The employer submitted that both Hoeben J (as his Honour then was) in Williams v Twynam Agricultural Group Pty Ltd [2011] NSWSC 1098 and Fullerton J in Cobcroft v Aggcon Pty Ltd [2011] NSWSC 1287 held that an indemnity was available in a situation where the employer had been sued and found liable. The employer also pointed to the scheme established by s 151Z, and to sub-s (1)(a) in particular, and submitted that an indemnity was available.regardless of whether the employer was sued by the worker. 8In my opinion an indemnity is available to the employer notwithstanding that it has been sued and found to be negligent. A number of matters suggest that this is the correct understanding of s 151Z and of both I&J Foods and J Blackwood & Son. 9First, one can discern a number of indications in Pt 5 of the Workers Compensation Act (dealing with common law remedies) that the worker is not entitled to double dip - s 151A(1), s 151Z(1)(a), (b), (c), (e) and (e)(i). 10Secondly, in balancing matters between the employer and the non-employer wrongdoer Campbell JA (with whom Beazley JA and seemingly Giles JA agreed) said this about s 151Z in J Blackwood & Son: [33] Section 151Z(2) deals with the consequences of an employer tortfeasor never ending up paying, by way of damages, more than its proportionate share of the responsibility for the worker's injuries, multiplied by the total damages that the worker is entitled to receive under the modified damages regime established by the Act. The consequences with which it is concerned are on the liability of a non-employer wrongdoer to pay damages to an injured worker, and on the employer's right under section 151Z(1)(d) to obtain indemnity for workers compensation payments it has made to the worker. 11Thirdly, when discussing s 151Z(1)(d) before considering how s 151Z(2)(e) modified that prima facie situation Campbell JA said this: [44] It is the prima facie effect of section 151Z(1)(d) that an employer who has paid compensation to a worker is entitled to recover the amount of that compensation from any non-employer wrongdoer whose wrong has caused the injury that led to the payment of the compensation, provided only that the non-employer wrongdoer does not end up paying more than the amount of the damages which the non-employer wrongdoer would have had to pay if sued for that wrong. Further, that prima facie right of the employer under section 151Z(1)(d) is one that the employer has whether or not the employer is itself a tortfeasor who has caused the injury to the worker with respect to which the compensation has been paid. (emphasis added) This is a strong indication that, contrary to the Plaintiff's submission, the decision in J Blackwood & Son was not directed only to the situation where a worker had not taken proceedings against the employer. 12Fourthly, the decisions in Williams v Twynam and Cobcroft v Aggcon are clear indications that the reasoning in I&J Foods was not confined to the position where a worker has not taken proceedings against the employer. I consider that I ought to follow those decisions unless I consider them to be plainly wrong. I do not consider those decisions to be plainly wrong and, further, they seem to me to accord with the analysis provided by Campbell JA in J Blackwood & Son although that decision does not appear to have been cited to either Hoeben J or Fullerton J. 13Accordingly, notwithstanding that the Plaintiff sued the employer and I found a breach of duty on the part of the employer, the employer is entitled to the indemnity referred to in s 151Z(1)(d).
What in principle is recoverable under the indemnity?
14It is necessary to summarise the findings I made in my principal judgment: (a) the injuries to the Plaintiff's lumbar spine were not caused by his employment nor his hiring by the Council (para [92]); (b) the injuries to the upper back area were caused by the work the Plaintiff undertook for the Council, for which both Defendants were liable (paras [102], [106] and [129]); (c) the Plaintiff's degree of permanent impairment occasioned by his employment with the Second Defendant was 11% (5% to the cervical spine, 4% for the right upper extremity and 2% for the left upper extremity) (para [133]) - I note a typographical error in my earlier judgment where 6% appears in respect of the cervical spine, and an error in the date of the certificate which should read 4 June 2007; (d) the Plaintiff was incapacitated for work by reason of work related (ie upper back area) injuries to 30 June 2006 (para [152]); (e) it was not the Plaintiff's work related injuries that prevented him continuing with the milk run (paras [151]-[152]). 15The parties agree that if an indemnity is to be ordered $14,000 of the lump sum of $20,000 ordered pursuant to s 66 of the Act should be included. That is derived from 11% of the whole person impairment assessed by Dr Bye relating to the upper back area. Each 1% up to and including 10% is worth $1250 and each 1% above that is worthy $1500. 16The parties agree that the relevant figure for pain and suffering pursuant to s 67 is $12,500 (being 25% of $50,000) but do not agree on whether, and if so how much of, that figure should form part of the indemnity. The employer submits that the appropriate figure is $9,166.67 (11/15 x $12,500). The Plaintiff submits that it cannot be apportioned because it relates to both compensable and non-compensable injuries and should not, therefore, be included in any indemnity. 17In my opinion the employer's submissions should be accepted. Dr Bye's assessment can be used analogously in relation to the pain and suffering component. The impairment he assessed would also reflect itself in the pain and suffering for which the Plaintiff was compensated under s 67. The amount of $9,166.67 should be included in the indemnity. 18Weekly payments of compensation were made for two periods. The first was 21 April 2005 to 2 July 2006. The parties are agreed that those payments should be included in any indemnity. The second period was from 1 September 2007 to 7 April 2012. The Plaintiff says this period should not be included. The employer says the payments for this period should be apportioned between the upper back area and the lower back. 19The Plaintiff relies upon my finding in paragraph 14(e) above to argue that the only economic loss shown to have resulted from the work related injuries ceased on 30 June 2006. The Plaintiff says that payments made after that time should not be allowed because they cannot be solely related to the injuries to the upper back area. 20The employer submits that an apportionment should be made of the second period of compensation payments based on the relative incapacity caused on the one hand by the upper back area and on the other by the lower back area. The employer says that if this were not done it would offend the general principle against double compensation which is applied in the workers compensation/damages field - see Mason P in Franklins Self Serve Pty Ltd v Wyber [1999] NSWCA 390 at [29]. The employer points also to matters during this period that relate only to the upper back area such as the operations the Plaintiff underwent on his shoulders. 21In my opinion, and except for some specific periods, the weekly compensation payments for the second period should not be included in the indemnity. In my earlier judgment I said this at [151]: The fact that the Plaintiff was able to work on the milk run doing moderately heavy bending and lifting work on a repetitive basis, and the fact that he only ceased that work for reasons associated with his lumbar spine, strongly points to the fact that the Plaintiff has been fit for work at least of that intensity since he began it in the middle of 2006. Further support is derived for this proposition from the fact that until 3 or 4 weeks before the Plaintiff ceased that work he was intending to buy the milk run in one form or another. In addition I held that the Plaintiff should receive a cushion only in respect of future wage loss - see at [155]. 22The second joint report of Dr Bodel and Dr Machart of 5 April 2011 regarded him as being fit for modified duties "purely from the point of view of his shoulder injuries". 23The payment of weekly compensation is in respect of the inability to work. Where the reason for the inability to work is not the compensable injury but some other injury, as I have found, it is not appropriate to apportion the weekly compensation payments simply because the Plaintiff has some ongoing problems from the compensable injuries. Those ongoing problems from the compensable injuries are reflected in the apportionment of s 66 and s 67 payments which are assessed largely independently of working capacity. To apportion the weekly payments would be inconsistent with my findings of the cause of the Plaintiff's inability to work. 24Nevertheless, the medical history shows that, regardless of the lower back injury, there were some periods where the Plaintiff was unable to work because of the upper back injuries. These periods relate to the operations the Plaintiff underwent on his shoulders on 14 April 2009 and 16 June 2009. There were some reports in evidence from Professor George Murrell who performed the operations. The reports provide very little assistance in determining how long after each operation the Plaintiff might have been unable to work as a result of the operation. A report of 6 July 2009 referred to the Plaintiff having physiotherapy three times per week and hydrotherapy. Other reports (eg Dr Vasic, Pain Management Specialist, 30 September 2009) identify the hydrotherapy as being in respect of the lower back and sciatic problems. The three sessions of physiotherapy per week point to some extent to an incapacity for work which flowed from the operations. 25Bearing in mind the closeness in time of the two operations I consider that the Plaintiff would have been unfit for work by reason of the shoulder problems in the period between the operations and probably for about six weeks after the second operation. Accordingly, weekly compensation payments for the period 13 April 2009 to 28 July 2009 should form part of the indemnity. 26In relation to treatment expenses, the Plaintiff submits that only those expenses that are clearly referable to the upper back area should be included in the indemnity. If those treatments include matters for the lower back they should not form part of the indemnity. The employer has tendered a colour coded chart identifying in yellow treatments that relate to the upper back area only, in red, treatments that relate to the lower back and leg area only, and in blue, treatments that relate to both areas. The employer submits that for the blue items they should be apportioned 50% to each of the two areas. The Plaintiff disputes the accuracy of the colour-coded chart. However, the parties confirmed when discussing this aspect that I am only to make findings in principle. Accordingly, the chart's accuracy is not relevant to my consideration. 27In my opinion the employer's submission should be accepted. It is appropriate to apportion the treatments coded blue. Treatment expenses must be considered differently from weekly payments and more analogously with the pain and suffering lump sum award, although in relation to that lump sum there was a logical arithmetical basis for the apportionment, namely, 11/15ths of the whole sum based on Dr Bye's assessment. The issue with weekly payments was the cause of the incapacity for work. I made specific findings in that regard. By comparison, if the Plaintiff consults a doctor or a paramedic with regard to both areas of his back it cannot be said that the cause or occasion for the consultation is one or the other. Applying 50% may be a broad-brush approach but it is impossible, at this remove, to ascertain how much time was taken by the service provider in respect of each injury.
28The parties should bring in Short Minutes to give effect to my reasons in this judgment and my earlier one. I will hear the parties on costs if that issue cannot be resolved.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 July 2012
Milich
The Council of the City of Canterbury
(1981) 148 CLR 438
(1997) 14 NSWCCR 486
(1975) 132 CLR 336
The Court determined that the employer was entitled to an indemnity under s 151Z(1)(d) and ruled on the principles governing specified compensation components. The parties were to bring in Short Minutes to give effect to this judgment and the earlier judgment. Costs would be heard if unresolved.