State of NSW v Wenham

Court of Appeal (NSW)|2016-10-05|Before: Meagher JA, Payne JA

Solicitors: TurksLegal (applicant) Moray & Agnew (first and second respondents) File Number(s): 2016/110800 Decision under appeal Court or tribunal: District Court of NSW Jurisdiction: Civil Date of Decision: 15 March 2016 Before: Elkaim SC DCJ File Number(s): 2015/114495

headnote [This headnote is not to be read as part of the judgment] The appellant was the employer of Ms Goddard. Ms Goddard was driving behind a truck driven by the first respondent and owned by the second respondent. A wheel assembly disconnected from the truck, collided with the vehicle Ms Goddard was driving, and caused her injury. The respondents conceded that the accident satisfied the definition of a "blameless motor accident" contained in s 7A of the Motor Accidents Compensation Act 1999 (NSW) (MACA). Section 7B of the MACA relevantly provides: (1) The death of or injury to a person that results from a blameless motor accident involving a motor vehicle that has motor accident insurance cover for the accident is, for the purposes of and in connection with any claim for damages in respect of the death or injury, deemed to have been caused by the fault of the owner or driver of the motor vehicle in the use or operation of the vehicle. Ms Goddard claimed and received worker's compensation payments from the appellant under the Workers Compensation Act 1987 (NSW). Section 151Z of that Act relevantly 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: ... (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), ... The appellant sought indemnity from the respondents under s 151Z(1)(d). The primary judge determined as a separate question whether the appellant was entitled, in an action under s 151Z(1)(d) of the Workers Compensation Act, to rely upon the "blameless motor accident" provisions of the MACA. His Honour held that the appellant could not rely on those provisions. The Court held, allowing the appeal: (1) Section 151Z does not require that the person who is liable, within the meaning of that section, to be a "wrongdoer" or "tortfeasor": Beazley A/CJ at [1]; Meagher JA at [2], [15]; Payne JA at [52]-[58]. Workers Compensation Nominal Insurer v Nominal Defendant [2013] NSWCA 301 considered. (2) Upon satisfaction of s 7A of the MACA, and the deeming of fault by s 7B, there is "liability" within the meaning of s 151Z of the Workers Compensation Act: Beazley A/CJ at [1]; Meagher JA at [2], [15]; Payne JA at [63]-[69]. (3) There is no textual warrant for reading the word "liability" in s 151Z of the Workers Compensation Act as "liability at common law": Beazley A/CJ at [1]; Meagher JA at [2], [15]; Payne JA at [70]-[73]. (4) The correct construction of s 151Z(2) is inconsistent with the respondents' arguments. Notwithstanding the difference in the language of sub-ss 151Z(1) and (2)(a), the employer or its insurer by whom compensation has been paid is entitled to be indemnified by the third party liable, independently of the Workers Compensation Act, for damages in respect of the same injury: Beazley A/CJ at [1]; Meagher JA at [9]-[12]. (5) The legal mechanism by which the "person other than the worker's employer" becomes liable to pay damages is not relevant for the purposes of s 151Z. Provided the liability to pay damages is a liability in respect of the same injury and arises out of the same circumstances as those that caused that injury, the payments are recoverable under s 151Z(1)(d): Beazley A/CJ at [1]; Meagher JA at [2], [17]; Payne JA at [74]-[77]. (6) The text and history of s 151Z of the Workers Compensation Act support the conclusion that the section is to be understood as addressing any liability which arises in the circumstances, not simply a liability which arises at common law: Beazley A/CJ at [1]; Meagher JA at [2], [15]; Payne JA at [79]-[80]. CSR Timber Products v Weathertex Pty Ltd (2013) 83 NSWLR 433; [2013] NSWCA 49 considered. (7) Policy considerations support the conclusion that the language of s 151Z of the Workers Compensation Act is to be understood as addressing any liability which arises in the circumstances, not simply one which arises under common law: Beazley A/CJ at [1]; Meagher JA at [2], [15]; Payne JA [81]-[90]. Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321 considered.

Judgment

BEAZLEY A/CJ: I have had the advantage of reading in draft the reasons of Payne JA and agree with his Honour's reasons and orders. I also agree with the additional remarks of Meagher JA.
MEAGHER JA: I agree for the reasons given by Payne JA that leave to appeal should be granted and the appeal allowed with costs. I make the following additional observations. In doing so I have assumed the reader is familiar with the relevant facts, as recited in Payne JA's reasons.
The issue in the appeal is whether the State (as employer) is entitled to be indemnified by one or other of the respondents (as owner or driver of the B double truck) in respect of workers' compensation payments made by it to its employee, Ms Goddard. That issue turns on the construction of s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW), and is whether either was a "person so liable to pay those damages" within para (d).
The respondents contend that neither of them answers that description because the liability that they have to the worker as a result of the blameless motor accident is by reason only of the deeming of fault by s 7B of the Motor Accidents Compensation Act 1999 (NSW).
Before considering the arguments made in support of that contention it is necessary to refer to the statutory scheme worked by s 151Z (set out in Payne JA's reasons at [29] below). The legislative history of that section is set out in my judgment in CSR Timber Products v Weathertex Pty Ltd (2013) 83 NSWLR 433; [2013] NSWCA 49 at [30]-[36].
Considered alone, s 151Z(1) does not apply where the employer is liable to the worker for damages independently of the Workers Compensation Act. That is because its application depends, as provided by the language of the chapeau, on the injury for which compensation is payable being caused "under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury" (emphasis added).
In those circumstances s 151Z(1) regulates the enforcement by the worker of both the employer's liability to pay compensation under that Act and the liability of any other person to pay damages in respect of the same injury. It does so by paras (a) to (e1) which provide that as between that employer and any third party liable for damages, the primary burden to compensate in respect of the injury is to be borne by the third party. Those paragraphs are directed to ensuring that the outcome between the three parties - injured worker, employer liable to pay compensation and third party liable to pay damages - is the same irrespective of who the worker first proceeds against and recovers either damages or compensation.
Section s 151Z(1)(a) acknowledges that the worker may take proceedings both against the employer liable for compensation, and against any third party, and makes clear that the worker is not entitled to retain both damages and compensation. Paragraph (b) provides for any compensation to be repaid out of damages recovered from the third party and para (c) prevents the worker from recovering any such compensation if he or she has first recovered damages from the third party. In circumstances where the worker has not recovered damages from the third party, para (d) produces the same outcome as between the third party and employer as would be produced if damages had been recovered and para (b) or (c) applied. Finally, consistently with the operation of para (d), paras (e) and (e1) ensure that the third party has the benefit of any amount paid by way of indemnity, either by way of defence or in satisfaction of any judgment in proceedings brought by the worker.
Section 151Z(2) regulates the position where the worker is entitled independently of the Workers Compensation Act to recover damages both from the employer and from "a person other than the worker's employer".
It addresses, in the context of there being contribution claims available as between the worker's employer and any third party liable for damages in respect of the same injury, the fact that modified common law damages are recoverable against the employer in accordance with Pt 5 Div 3 of the Workers Compensation Act. Section 151Z(2)(d) provides that, as between the third party and employer as joint tortfeasor, the amount recoverable by way of contribution is to be determined as if the whole of the damages for which each was liable are to be assessed in accordance with Pt 5 Div 3. Paragraph (c) reduces the damages recoverable by the worker from the third party to take account of the lesser amount that the third party is entitled to recover by way of contribution from the employer because of that modified damages regime.
Finally, and significantly in the present context, para (e) addresses the circumstance that the worker does not commence proceedings against the employer in relation to its independent liability, but recovers compensation under the Act. In that event s 151Z(1)(d) (which as appears above entitles the employer or its insurer to be indemnified by the third party) is to apply "as if the worker had not been entitled to recover damages from that employer", but subject to the exceptions in s 151Z(2)(e)(i) and (ii). Those exceptions limit or exclude the right to that indemnity depending on whether the amount of workers' compensation paid by the employer or insurer exceeds the amount of the contribution that "could be recovered" by the third party from the employer as joint tortfeasor.
The significance of this last provision is that notwithstanding there being a difference in the language of s 151Z(1) and s 151Z(2)(a), the employer or its insurer by whom compensation has been paid is entitled to be indemnified by the third party liable, independently of the Act, for damages in respect of the same injury.
Turning then to the respondents' two arguments; first, it is said that the "circumstances" in which the relevant injury was caused are not "circumstances creating a liability" because of the absence from those circumstances of any actual fault on their part. This submission assumes, by its reliance on the absence of any actual fault, that the question whether the injury was caused under circumstances "creating a liability" in some other person is to be answered by reference only to the common law. Acknowledging this, the respondents submitted that these words are to be construed as if they said "creating a liability arising wholly under the common law".
Secondly, the respondents submit that the deeming of fault by s 7B is expressed to be only "for the purposes of and in connection with any claim for damages in respect of the death or injury" and that the State's claim to an indemnity under s 151Z(1)(d) does not answer that description. It was accepted that this argument would not apply to proceedings brought by the worker (Ms Goddard) against the respondents to recover damages as contemplated by s 151Z(1)(a). It follows, if this argument were accepted, that a third party liable to pay damages by reason of a deeming of fault in accordance with s 7B will bear the primary burden to compensate in respect of the relevant injury only if the worker takes proceedings against and recovers damages from that third party. In that event para (b) or para (c) would apply.
As to the first of these arguments, "a liability" in s 151Z(1) means any liability. There is no reason in the language or context of s 151Z(1) to read "liability" down and as referring only to a liability arising wholly under the common law. The purpose of the provision is to permit the worker to pursue any person liable to pay damages in respect of the injury for which compensation is payable and to provide for what should happen in that event. Acceptance of the respondents' argument would leave some such "damages" recovered by the worker outside the application of s 151Z(1). It would also have the consequence that s 151Z(2) would apply to any third party liability to pay damages in respect of the injury (by reason of the language of s 151Z(2)(a)) whereas in the same circumstances s 151Z(1) may not. In a blameless motor accident case, such as the present, the respondent's argument would mean that if the worker was entitled to take proceedings against the employer independently of the Act (so as to attract the application of s 151Z(2)), but did not do so, the person by whom workers' compensation was paid would (by the application of s 151Z(2)(e)) be entitled to an indemnity in accordance with s 151Z(1)(d); although that person would not be entitled to such an indemnity under s 151Z(1)(d), if the worker is not entitled to recover damages from the employer independently of the Act.
The "circumstances" in s 151Z(1) under which the relevant third party liability must be created are those in which the injury for which compensation is payable was caused. In Page v Burtwell [1908] 2 KB 758 the Court of Appeal rejected an argument that the Court had to determine judicially that there was such a legal liability before an equivalent provision could apply. It was held to be sufficient that there were circumstances alleged to create such a liability. Here those circumstances attract the application of the "blameless accident" provisions in Pt 1.2 Div 1 of the Motor Accidents Compensation Act. That application deems fault with the result that the circumstances give rise to (and create in the relevant sense) the alleged liability of the respondents as owner or driver.
The respondents' second argument ignores the language of s 151Z(1). The person against whom the entitlement to indemnity under para (d) arises is "the person so liable to pay those damages". That person is within the language of the chapeau any person who in the circumstances in which the compensated injury was caused is liable to pay damages to the worker in respect of the same injury. In relation to the respondents, the relevant question is whether those circumstances give rise to a liability answering that description. In other words, does the worker have a claim for damages against the respondents in respect of the injury resulting from the motor accident. In that context the application of s 7B is engaged because that inquiry is "for the purposes of and in connection with" a claim for damages in respect of that injury, namely the worker's claim against the respondents as owner or driver.
PAYNE JA: The State of New South Wales seeks leave to appeal from a decision of Elkaim DCJ concerning the proper interpretation of s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW).

Relevant facts

The State of New South Wales (who I will refer to as the appellant in these reasons) was the employer of Ms Jennifer Goddard. Ms Goddard was driving behind a "B-double" truck owned by Mr Phillip Whittman, who was the second defendant in the court below, and driven by Mr Timothy Wenham, who was the first defendant in the court below.
As Ms Goddard was driving behind the truck a wheel assembly "somehow became disconnected from the truck" and came into her path, collided with the vehicle she was driving, and caused her injury.
The truck was registered and insured in South Australia. There was no issue before the primary judge that the truck had "motor accident cover" within the meaning of s 3B of the Motor Accidents Compensation Act 1999 (NSW) (MACA).
Ms Goddard claimed and received payments under the Workers Compensation Act. She did not make a claim for damages under the MACA.

Decision of the primary judge

The appellant's claim is based on s 151Z(1)(d) of the Workers Compensation Act. The appellant accepts that it is unable to prove a breach of duty of care on the part of the respondents in the use or operation of the motor vehicle from which the wheel came.
The only basis upon which the entitlement to an indemnity is pursued is that the respondents are persons "liable" to pay damages to Ms Goddard (and accordingly within s 151Z(1)) by the application of the deeming provision in the MACA dealing with blameless motor accidents.
In the court below the respondents conceded that the accident satisfied the definition of a "blameless motor accident" contained in s 7A of the MACA.
The primary judge determined a separate question, namely whether the employer was entitled, in an action under s 151Z(1)(d) of the Workers Compensation Act, to rely upon the "blameless motor accident" provisions of the MACA (Part 1.2, Div 1).
His Honour held that the appellant could not rely on those provisions: J[23]-[25]. He did so for the following reasons: 1. section 151Z(1)(d) of the Workers Compensation Act required that there be a wrongdoer and that the defendant under the blameless accident provisions was not a wrongdoer: J[21] and 22; 2. 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: J22; and 3. the right created by s 151Z(1)(d) was not a claim for damages: J22.
The effect of his Honour's decision was to deny the appellant a right to recover payments made to, or on behalf of Ms Goddard, who was injured in the accident, in circumstances where the appellant concedes it cannot prove negligence or another tort.

Relevant statutory provisions

Section 151Z 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: (a) the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation, (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 worker's injury under this Act, and the worker is not entitled to any further compensation, (c) if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act, (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), (e) if any payment is made under the indemnity and, at the time of the payment, the worker has not obtained judgment for damages against the person paying under the indemnity, the payment is, to the extent of its amount, a defence to proceedings by the worker against that person for damages, (e1) if any payment is made under the indemnity and, at the time of the payment, the worker has obtained judgment for damages against the person paying under the indemnity (but judgment has not been satisfied), the payment, to the extent of its amount, satisfies the judgment, (f) all questions relating to matters arising under this section are, in default of agreement, to be settled by action or, with the consent of the parties, by the Commission. (2) If, in respect of an injury to a worker for which compensation is payable under this Act: (a) the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker's employer, and (b) the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer, the following provisions have effect: (c) the damages that may be recovered from the person by the worker in proceedings referred to in paragraph (a) are to be reduced by the amount by which the contribution which the person would (but for this Part) be entitled to recover from the employer as a joint tortfeasor or otherwise exceeds the amount of the contribution recoverable, (d) the amount of the contribution that the person is entitled to recover from the employer as a joint tortfeasor or otherwise is to be determined as if the whole of the damages were assessed in accordance with provisions of Division 3 as to the award of damages, (e) if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that: (i) if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise - the indemnity referred to in subsection (1) (d) is for the amount of the excess only, and (ii) if the compensation paid by that employer does not exceed the amount of that contribution - subsection (1) (d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution. (3) This section applies to proceedings taken independently of this Act by a person to whom compensation is payable under this Act in respect of the death of a worker as a result of an injury. (4) If a worker is liable under subsection (1) (b) to repay any money out of damages recovered by the worker, the worker is not liable to repay the money out of any damages payable after the date of recovery by way of periodic or other payments for loss of future earnings or earning capacity or for future expenses. (5) For the avoidance of doubt, this section applies and is taken always to have applied to the recovery of compensation or damages, whether or not the compensation or damages were paid under an award or judgment. For example, compensation or damages may be paid under an agreement.
This case involves the interaction of s 151Z(1) with another difficult provision, s 7A of the MACA, which provides that: 7A Definition of "blameless motor accident" In this Division: blameless motor accident means 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 of the MACA provides: 7B Liability for damages in case of blameless motor accident (1) The death of or injury to a person that results from a blameless motor accident involving a motor vehicle that has motor accident insurance cover for the accident is, for the purposes of and in connection with any claim for damages in respect of the death or injury, deemed to have been caused by the fault of the owner or driver of the motor vehicle in the use or operation of the vehicle. Note. Section 3B defines what is meant by a motor vehicle having motor accident insurance cover for a motor accident. (2) If the blameless motor accident involved more than one motor vehicle that has motor accident insurance cover for the accident, the death or injury is deemed to have been caused by the fault of the owner or driver of each of those motor vehicles in the use or operation of the vehicle.
Section 3A of the MACA provides: 3A General restrictions on application of Act (1) This Act (including any third-party policy under this Act) applies only in respect of the death of or injury to a person that is caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle and only if the death or injury is a result of and is caused (whether or not as a result of a defect in the vehicle) during: (a) the driving of the vehicle, or (b) a collision, or action taken to avoid a collision, with the vehicle, or (c) the vehicle's running out of control, or (d) a dangerous situation caused by the driving of the vehicle, a collision or action taken to avoid a collision with the vehicle, or the vehicle's running out of control. Note. Part 1.2 (No-fault claims - children and blameless accidents) extends the operation of this Act for certain limited purposes to motor accidents that have not in fact been caused by the fault of the owner or driver of the motor vehicle. Part 1.2 achieves this result by deeming such accidents to have been caused by the fault of the owner or driver of the motor vehicle in the use or the operation of the vehicle provided that: (a) the vehicle was involved in the accident and had motor accident insurance cover for the accident, and (b) the accident was not caused by the fault of any other person or the accident resulted in the death of or injury to a child. The early payment scheme provided for under Part 3.2 extends to all injured persons injured in a motor accident (including at fault drivers, pedestrians and other road users). The bulk billing arrangements provided for under section 54 extend to any person injured in a motor accident (even if the motor accident was caused, partly or wholly, by the fault of that person). (2) This Act (including any third-party policy under this Act) does not apply in respect of an injury that arises gradually from a series of incidents
Section 3B relevantly provides as follows: 3B Restrictions on application of claims provisions - accident must be insured or work accident (1) The application of Chapters 3-6 in respect of death or injury that results from the use or operation of a motor vehicle is limited to death or injury that: (a) is caused by a motor accident for which the vehicle has motor accident insurance cover, or (b) gives rise to a work injury claim, other than a work injury claim in respect of the death of or injury to a coal miner (as defined in clause 3 of Part 18 of Schedule 6 to the Workers Compensation Act 1987). Note. Part 1.2 (No-fault claims - children and blameless accidents) extends the operation of this Act for certain limited purposes to motor accidents that have not in fact been caused by the fault of the owner or driver of the motor vehicle. Part 1.2 achieves this result by deeming such accidents to have been caused by the fault of the owner or driver of the motor vehicle in the use or the operation of the vehicle provided that: (a) the vehicle was involved in the accident and had motor accident insurance cover for the accident, and (b) the accident was not caused by the fault of any other person or the accident resulted in the death of or injury to a child. ...
Section 122 of the MACA provides: 122 Damages in respect of motor accidents (1) This Chapter applies to and in respect of an award of damages which relates to the death of or injury to a person caused by the fault of the owner or driver of a motor vehicle in the use or operation of the vehicle. (2) This Chapter does not apply to or in respect of a motor accident occurring before the commencement of this Act. (3) This Chapter applies to and in respect of the assessment of damages by a claims assessor under Part 4.4 in the same way as it applies to and in respect of an award of damages by a court. Note. See Motor Accidents Act 1988 for motor accidents occurring before the commencement of this Act. See section 121 of the Transport Administration Act 1988 for the application of this Chapter to railway, ferry and other public transport accidents. This Chapter applies only if the death or injury was caused by a motor accident for which the vehicle has motor accident insurance cover or that gives rise to a work injury claim (except a work injury claim by a coal miner). See section 3B.

Decision of the primary judge

The essence of the primary judge's decision was brief and can be set out in full: [19] I think the starting point for the argument must go back to the terms of Section 151Z(1), in particular the following relevant parts: "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), ..." [20] The words "under circumstances creating a liability" in Section 151Z(1) have been interpreted to refer to a wrongdoing by the person who is to provide the indemnity. McColl J[A], in Workers Compensation Nominal Insurer v Nominal Defendant [2013] NSWCA 301 provided a comprehensive explanation of Section 151Z. Commencing at paragraph 62, her Honour said: "[62] Thus s 151Z creates a legislative scheme designed to reimburse the party liable to pay compensation out of the fund provided by the party liable to pay damages (the "wrongdoer") but it applies only where the "'circumstances creating' liability for the compensable injury also create a liability in the tortfeasor to pay damages": Kurnell (at [31]); Franklins Self Serve Pty Ltd v Wyber [1999] NSWCA 390; (1999) 48 NSWLR 249 (at [52], [53], [99]) per Mason P (Sheller JA and Cole AJA agreeing). [63] The right which is given to the employer who has paid compensation rests on the existence for however brief a time of a true liability to pay damages in some wrongdoer or wrongdoers in respect of the injury for which compensation was payable and has been paid and, in that sense, has been described as "derivative": Tooth & Co Ltd v Tillyer [1956] HCA 49; (1956) 95 CLR 605 (at 612) per Dixon CJ, Williams, Webb and Fullagar JJ; QBE Workers Compensation (NSW) Ltd v Dolan [2004] NSWCA 458; (2004) 62 NSWLR 42 (at [42] - [43]) per Beazley JA (Mason P and Tobias JA agreeing). [64] The statutory right of indemnity conferred by s 151Z(1)(d) upon the person who has paid the compensation is not to be equated to the cause of action which the worker would have had against the wrongdoer. Section 151Z(1)(d) creates a cause of action separate to that vested in the worker: WorkCover Queensland v Amaca Pty Ltd [2010] HCA 34; (2010) 241 CLR 420 (at [14], [19]) per French CJ, Gummow, Crennan, Kiefel and Bell JJ. The claim to enforce the entitlement to indemnity is not a claim in tort, rather it is a cause of action created by statute for an indemnity against a person liable to pay damages to another: Esso Australia Ltd v Victorian WorkCover Authority [2000] VSCA 74; (2000) 1 VR 246 (at [28]) per Winneke P (Tadgell and Chernov JJA agreeing); approved Victorian WorkCover Authority v Esso Australia Ltd (at [14]) per Gleeson CJ, Gummow, Hayne and Callinan JJ. The liability of the wrongdoer is a "'notional liability at common law [or under a statute other than the Compensation Act] for pecuniary and non-pecuniary loss' ... having regard to limitations on the liability of the wrongdoer to the person who has received compensation": WorkCover Queensland v Amaca Pty Ltd (at [26]). [21] What I think emerges plainly from the above passages is that the person liable to pay damages must have been a wrongdoer and secondly that the right of indemnity "is not to be equated to the cause of action which the worker would have had against the wrongdoer" (paragraph 64). [22] Bearing these just made points in mind, and returning to the plaintiff's assertion that the necessity for there to be a wrongdoer is catered for by the deeming provision in Section 7B of the MACA, I think the following emerges: (a) The defendant under the blameless accident provisions is not a wrongdoer under the WCA. (b) The deeming provision in Section 7B is specifically stated to be "for the purposes of and in connection with any claim for damages in respect of the death or injury" of any person. (c) The right under Section 151Z is a right to indemnity. It is not a claim for damages. [23] I think I can put my conclusion, in summary form, in this way: The cause of action relied upon by the plaintiff is provided by Section 151Z. That cause of action requires there to be a wrongdoer. The deeming provision concerning fault in Section 7B of the MACA is a deeming provision only for the purposes of a claim for damages. It is there to assist the victim of a blameless accident. It does not extend, absent specific reference, to the cause of action provided by Section 151Z. [24] I think this conclusion resolves the question before me. However I think I should add some comments arising from the plaintiff's reliance on [The Nominal Defendant v Hi-Light Industries Pty Limited; The Nominal Defendant v State of New South Wales (2004) 61 NSWLR 585; [2004] NSWCA 423]. The plaintiff submitted that the decision allowed the court "to impose liability on an artificial person created by MACA". If the Court of Appeal countenanced this approach then it would not doubt countenance, according to the plaintiff, the even smaller step of imposing liability on the defendants where that liability is a product of the plain terms of the blameless accident provisions. The problem here is however, extending that liability to create a wrongdoing on the defendants' part beyond the deeming provision in Section 7B. As I have said that deeming provision is for "the purposes of and in connection with any claim for damages ...". A cause of action created by Section 151Z(1) is not a claim for damages, it is a claim for indemnity. I therefore do not think that the decision assists the plaintiff.

Leave to appeal

Leave to appeal should be granted. This case raises is an important point of construction about the interaction of two difficult provisions.

The appellant's submissions

It will be recalled that in the court below the respondents conceded that the accident satisfied the definition of a "blameless motor accident" contained in s 7A of the MACA. It was also accepted that if Ms Goddard had made a claim under the MACA, the respondents would have been liable to pay her damages under that Act.
Accordingly the appellant submitted that the first of the statutory pre-conditions to its claim under s 151Z(1)(d) - that Ms Goddard's injury, for which workers' compensation was payable, was "caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury" - was satisfied.
It was submitted that all that was required to be shown was that the circumstances in which the liability to pay workers' compensation for injury arose also created a liability in some person other than Ms Goddard's employer to pay damages in respect of that injury.
It was submitted that the decision of the primary judge, and the respondents' submissions on the appeal, did not sufficiently engage with the liability here admitted by the respondents to pay damages to Ms Goddard.
The appellant submitted that the relevant question is whether the "circumstances creating a liability" are such that there is a liability "to pay damages". Even if the determination of liability under the MACA was made by a court, there would nevertheless be a liability in the driver or owner in the present case to pay damages to Ms Goddard arising at the time of the accident.

The respondents' submissions

The respondents' argument on the appeal bore little relationship to what was presented before the primary judge. That argument was not addressed in its written submissions, which essentially repeated the matters which had found favour with the primary judge. As will become apparent, the respondents did not seek to support the reasoning of the primary judge.
It was submitted that the blameless accident provisions in ss 7A and 7B of the MACA deem a liability for a limited purpose under that Act and do not themselves meet the description of "circumstances creating a liability … to pay damages" within the meaning of s 151Z(1).
First, it was submitted that the conclusion that satisfies s 7A, that a motor accident has occurred not caused by the fault of the owner or driver of any motor vehicle involved in the accident, is inconsistent with circumstances which create a "liability" within the meaning of s 151Z(1).
It was submitted that the "circumstances" here engaged do not create the liability but, rather, s 7B of the MACA does, for the limited purposes of that Act only: The conclusion that satisfies 7A is inconsistent with there being a liability. That's really the point we are making.
Secondly, the related submission was made that the "liability" in s 151Z(1) could not be a liability created by a statute. It was submitted that "the circumstances creating a liability" should be construed as meaning circumstances "creating a liability at common law".
This was because: ... the gateway which is the deeming of fault is only for that very limited purpose and it's not for any broader purpose such as the claim for indemnity in this case. It's deemed only for the purposes of and in connection with a claim for damages and that is outside what the claim for indemnity is because it's a statutory claim.
Thirdly, it was submitted that the deeming provisions in s 7B did not apply because the deeming was only "in connection with" a claim for damages and not a claim for indemnity.
Fourthly, it was submitted that to the extent that the respondents' construction gave rise to anomalous results, namely that an injured worker could obtain both compensation and damages, that was a matter for another day (as Ms Goddard had not made a MACA claim) and could be addressed in any event by the double compensation principle. It was submitted that Franklins Self Serve Pty Ltd v Wyber (1999) 48 NSWLR 249; [1999] NSWCA 390 at [53] provided a relevant analogy: [53] The section attempts to deal comprehensively with several contingencies. But its sphere of application is restricted. It applies only where rights accrue against the employer and a stranger. And subs (1) requires that "circumstances creating" liability for the compensable injury themselves also created a liability in the stranger to pay damages. The words "damages in respect of the injury" in that subsection have received a restricted interpretation, because of the necessary implication that the injury giving rise to the liability to damages is the injury which created a liability to pay compensation. Successive decisions of this Court have applied these limitations in a variety of factual situations.

Relevant principles

The relevant principles of statutory construction were not controversial on this appeal. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27; [2009] HCA 41 at [47], the plurality emphasised that construction must begin with a consideration of the text itself and while the language employed is the surest guide, its meaning may require consideration of the context, which includes the general purpose and policy of the provision, in particular the mischief it is seeking to remedy: see also Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500; [2012] HCA 32 at [41]; Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39].

Decision of the primary judge - requirement for a "tortfeasor" or "wrongdoer"

The terms "wrongdoer" and "tortfeasor" and their place in the statutory construction of s 151Z were at the heart of the primary judge's decision. The primary judge relied heavily on the use of the terms "tortfeasor" and "wrongdoer" in the judgment of McColl JA in Workers Compensation Nominal Insurer v Nominal Defendant [2013] NSWCA 301 (quoted at [35] above).
In oral argument, Senior Counsel for the respondent accepted that s 151Z does not require that the person who is liable within the meaning of that section to be a "wrongdoer" or a "tortfeasor". That concession was properly made.
The terms "tortfeasor" and "wrongdoer" do not appear in the relevant statutory language. The primary judge at [20]-[24] of his judgment (set out above) took out of context statements made by McColl JA in Workers Compensation Nominal Insurer v Nominal Defendant.
In the passages relied upon by the primary judge, her Honour was quoting from her earlier judgment in Kurnell Passenger & Transport Service Pty Ltd v Randwick City Council (2009) 230 FLR 336; [2009] NSWCA 59 at [6]. By reference to that decision it is clear that the statutory language of s 151Z was reproduced in full by her Honour and that the terms "tortfeasor" and "wrongdoer" were only being used as convenient shorthand.
There was no suggestion by her Honour in Workers Compensation Nominal Insurer v Nominal Defendant that being a "wrongdoer" or a "tortfeasor" was a necessary condition of liability within the meaning of s 151Z(1). The use of those terms by McColl JA in that case, and the other cases to which her Honour referred, did not determine that only a "tortfeasor" or a "wrongdoer" could be liable under s 151Z(1).
Further, the fact that the words "tortfeasor" or "wrongdoer" can be found to be used as a shorthand expression in many of the authorities dealing with the "recovery action" provisions in workers' compensation legislation is not to the point. In the particular facts of those cases damages were recoverable upon proof of negligence or some other tort.
The decision of McColl JA in Workers Compensation Nominal Insurer v Nominal Defendant provides no support for the construction accepted by the primary judge. The question of whether a third party was required to be a "wrongdoer" or a "tortfeasor" did not arise in that case or the other authorities to which her Honour referred.
That conclusion is sufficient to address the reasoning of the primary judge and the principal argument advanced by the respondent in writing. That reasoning and those submissions cannot be supported by the authorities upon which reliance was placed.

Relevant text

In construing the obligations here engaged it is appropriate to commence with a consideration of the statutory text.
Section 151Z(1) of the Workers Compensation Act is engaged upon demonstration of "liability in some person other than the worker's employer to pay damages in respect of the injury". Thus, what is required is a "liability" in a person other than the employer to "pay damages in respect of the injury".
The initial questions posed by the text of s 151Z(1) are what are the "circumstances" and do they create a "liability" in any other person. The "circumstances" to which reference must be made and which must create the liability are in the language of s 151Z(1) those in which the injury "was caused".
The "blameless motor accident" provisions in ss 7A and 7B deem the owner or driver to have been at "fault" where the MACA defines "fault" as "negligence or any other tort": s 3.
The respondent's submission that upon satisfaction of the definition in s 7A of the MACA there is no "fault" on the part of the driver and the owner here and thus no "liability" within the meaning of s 151Z should be rejected.
First, the question in s 151Z(1) is not "fault"; the question is "liability". It is not correct as a matter of construction of s 151Z(1) that because there is no "fault" there is no liability.
Secondly, s 7B of the MACA in any event deems fault (relevantly upon each of the respondents here).
Thirdly, the circumstances here create a "liability". Fault is deemed by reason of the operation of the MACA. The MACA deems fault where there is not otherwise fault. The other "circumstances" are taken as they are proved in fact.
Fourthly, satisfaction of the introductory words of s 151Z(1) does not require separate proof of an entitlement to an indemnity under s 151Z(1)(d). The introductory words of s 151Z(1) look simply at the position as between the injured person and, in the present case, the respondents.
Fifthly, the relevance of the use of the word "creating" in s 151Z(1) is to indicate that the "circumstances" have to give rise to a liability at the point in time when they occur. When one reads s 151Z in full its concern is with circumstances creating a "liability … to pay damages". 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.
Sixthly, the words "in some person" are relevant. If s 151Z(1)(d) was really directed only at a "tortfeasor", the section would have so provided.
The second, related, submission that the "liability" in s 151Z(1) could not be a liability created by a statute and that "the circumstances creating a liability" should be construed as meaning circumstances "creating a liability at common law" should also be rejected.
First, the "circumstances" creating a liability do not exist in a vacuum. The "liability ... to pay damages" that the section requires is not concerned with why there is a liability to pay damages, merely that there is one. There is no textual warrant for reading words into the statute, the effect of which would be to erect an unexpressed premise, referable to "liability at common law".
Secondly, as I have said, the "circumstances" to which reference must be made and which must create the liability are in the language of s 151Z(1) those in which the injury "was caused". In every case the question of whether there is a "liability" ... "to pay damages" is to be determined by the application of legal principle, whether that liability arises under the common law or under a statute other than the Workers Compensation Act.
Thirdly, the relevant history and policy matters, addressed below, point strongly against a constriction of s 151Z(1) as limited to "liability at common law".
The respondents' submission that the deeming provisions in s 7B did not apply because the deeming was only "in connection with" a claim for damages and not "indemnity" should also be rejected.
First, the MACA makes a blameless driver or owner liable to pay damages by deeming that driver or owner to be at fault "for the purposes of and in connection with any claim for damages in respect of the death or injury": s 7B(1). The effect of that provision is that the employee, Ms Goddard, would have been entitled to recover damages had she sued the respondents. The indemnity created by s 151Z(1)(d) is one for the purposes of and in connection with a claim for damages in respect of her injury.
Secondly, s 151Z(1)(d) creates an entitlement to an indemnity from "the person so liable to pay those damages". The "person so liable to pay those damages" is a reference back to the introductory words of s 151Z(1). That is, a reference to the person other than the employer who has a "liability" … "to pay damages in respect of the injury". The legal mechanism by which the other person comes to be "liable" to pay damages is not relevant to this inquiry. Provided the liability to pay damages is a liability in respect of the same injury as that from which the obligation to pay worker's compensation arises, payments are recoverable in one of the ways specified in s 151Z of the Workers Compensation Act.
Thirdly, since the right to indemnity is derived from the availability of a claim for damages, and is otherwise closely connected with it, the fault deemed to lie in the owner or driver is effective for the purposes of s 151Z of the Workers Compensation Act. The entitlement in the Workers Compensation Act to indemnity is conditioned upon establishing a liability in some third party to pay damages to the injured worker and not proof of the commission of a tort.
Finally, so far as textual considerations are concerned, s 3B(1)(b) of the MACA is also inconsistent with the respondents' preferred construction. That section makes clear that an injury might give rise to a work injury claim as well as a motor accident claim.

History of the provision

Turning to the history of the provision, in CSR Timber Products v Weathertex Pty Ltd (2013) 83 NSWLR 433; [2013] NSWCA 49, this Court traced the history of s 151Z and in particular the words "creating a liability" which appear in s 151Z(1)(d) at [30]-[33]: [30] Similar provisions to those in s 151Z(1) have been contained in workers compensation legislation since 1897. Those provisions recognised that the worker may have a claim against a third party liable to pay damages independently of the relevant Act as well as a claim under that Act against the person liable to pay compensation. Section 6 of the Workmen's Compensation Act 1897 (UK) provided that the worker could "at his option, proceed, either at law against that person to recover damages, or against his employer for compensation under this Act, but not against both". If compensation under the Act was paid, the "employer [was] entitled to be indemnified" by that other person: see Oliver v Nautilus Steam Shipping Company Ltd [1903] 2 KB 639; Page v Burtwell [1908] 2 KB 758. [31] Unlike that earlier provision, s 6 of the Workmen's Compensation Act, 1906 (UK) allowed the worker to take proceedings against the person liable to pay damages and the employer liable to pay compensation but provided that if the worker recovered damages and compensation he was not entitled to retain both. It also provided that if the worker only recovered compensation, the employer was entitled to be indemnified by the third party liable to pay damages. Section 17 of the Workmen's Compensation Act 1910 (Act No 10 of 1910) and s 10 of the Workmen's Compensation Act 1916 (Act No 71 of 1916) were in the same terms as s 6 of the 1906 UK Act. Section 64(b) of the Workers' Compensation Act 1926 (Act No 15 of 1926), which later became s 64(1)(b), was in substantially the same terms as those earlier provisions. The successors of these provisions are ss 150(1) of the 1987 Act, as originally enacted, and s 151Z(1). [32] The 1987 Act as originally enacted abolished the worker's entitlement to damages at common law. Section 149(1)(a) provided that a worker was not entitled to recover damages from "the worker's employer" in respect of an injury to the worker for which compensation was payable under the Act "by that employer". In 1989, the Workers Compensation (Benefits) Amendment Act 1989 reinstated the right of the worker to sue the employer at common law but provided for modified common law remedies. [33] Section 151Z(1), as did these earlier provisions, regulates the enforcement by a worker of remedies under the common law and under the Act in respect of an injury for which compensation is payable. It is critical to an understanding of the scheme of s 151Z to appreciate that if s 151Z(1) is considered alone, it does not apply where the employer is liable to the worker for damages at common law. That is because its application depends on the injury for which compensation is payable being caused under circumstances creating liability in "some person other than the worker's employer" to pay damages in respect of that injury: see, in relation to s 64(1) of the 1926 Act, Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd [1975] HCA 28; 132 CLR 336 at 341, 348, 351, 352, 354; and, in relation to s 151Z(1) of the 1987 Act; I&J Foods Pty Ltd v Bergzam Pty Ltd (1997) 14 NSWCCR 486 at 492-496.
The language of "some person other than the worker's employer" and the long history of the provision supports the conclusion that the section is to be understood as addressing any liability which arises in the circumstances, not simply one which arises at common law. If a limitation to claims arising at common law were intended it is surprising in such a long legislative history that it was never made express.

Policy Considerations

The respondents' construction produces the anomalous result that if the worker had sued the respondents for damages she would have succeeded. In the present case, however, where she chose not to sue, the employer cannot recover payments of compensation made to her in respect of the same injury. That result points strongly against the construction contended for by the respondents.
Equally, the respondents accepted that a further consequence of their construction was that the worker may recover both damages under the MACA and compensation. It was submitted that this otherwise anomalous result was addressed by application of the double compensation principle: Manser v Spry (1994) 181 CLR 428.
The construction advanced by the respondents has the effect that within this provision, which deals with the range of proceedings which the injured worker might take to recover damages for the injury, there is a group of claims which are outside the scope of s 151Z(1).
In Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321 Barwick CJ considered an analogous submission in relation to an earlier version of workers compensation legislation applying in the Northern Territory. The Chief Justice described the finding of the Court of Appeal in that case as giving rise to a capricious result in that the decision of the worker as to the amount he would settle for might defeat or prevent the employer from recovering payments made (at 331). The Supreme Court's view would deny par. (d) any operation except in a case where the workman has sued the tortfeasor to judgment. It construed par. (d) as requiring the assessment of damages as a condition precedent to the right of indemnity. His Honour, having regard to his construction of the section, concluded that if an assessment of damages at the instance of the workman or his representative could not be made, e.g. by reason of the lapse of time or because of a release of claims by the workman, no right to indemnity could arise. But such a result is both obviously unjust to the compensating employer and capricious as placing it in the hands of the compensated workman to prevent or defeat any right of the employer to recover from the tortfeasor the whole or any part of compensation which he has paid. It is, in my opinion, a sound rule of statutory construction that a meaning of the language employed by the legislature which would produce an unjust or capricious result is to be avoided. (italics added)
In the present case the outcome of the respondents' construction can properly be described as unjust or capricious.
A brief consideration of the nominal defendant cases also points to difficulties with the construction of s 151Z(1) proposed by the respondents.
McColl JA's judgment in Workers Compensation Nominal Insurer v Nominal Defendant made the point at [64]: ... The liability of the wrongdoer is a "'notional liability at common law [or under a statute other than the Compensation Act] for pecuniary and non-pecuniary loss' ... having regard to limitations on the liability of the wrongdoer to the person who has received compensation": WorkCover Queensland v Amaca Pty Ltd (at [26]). (italics added)
That passage accurately describes the position in the present case. There is a liability to pay damages under a statute other than the Workers Compensation Act. In my view her Honour's decision provides further support for the proposition that it was specifically envisaged that a statutory liability such as the present could fall within the provisions of s 151Z(1).
Finally, the submission that the anomalous results which arise by reason of the respondents' suggested construction should be addressed by application of the double compensation principle should be rejected. No reason in the history or policy of the provisions was suggested which would provide any support for leaving such an important issue to an application of the double compensation principle. There is a vast array of statutory provisions which may give rise to liability in a person who may not be the person's employer: for example Part VIB of the Competition and Consumer Act 2010 (Cth) which is entitled "Claims for damages or compensation for death or personal injury". No policy reason was advanced by the respondents for regulating recoveries by injured workers under that Act who were also entitled to workers compensation payments by the application of the double compensation principle. The application of the double compensation principle, in any event, would not address the issue of the resolution of claims between a person liable under the Competition and Consumer Act to a worker and an employer liable to the same worker in respect of the same injury under the Workers Compensation Act.
Policy considerations also support the conclusion that the language of the section is to be understood as addressing any liability which arises in the circumstances, not simply one which arises under common law.

Conclusion and Orders

Accordingly, in my view the relevant text, history and policy all point in the same direction. The employer here was entitled, in an action under s 151Z(1)(d) of the Workers Compensation Act, to rely upon the "blameless motor accident" provisions of the MACA (Part 1.2, Div 1).
For these reasons the appeal should be allowed and the decision of the primary judge set aside.
The following orders should be made: 1. Application for leave to appeal granted. 2. Notice of Appeal in the form at White Book 20 to be filed within seven days. 3. Appeal allowed. 4. The respondents to pay the appellant's costs as agreed or assessed in this Court. 5. Set aside orders of Elkaim DCJ made 15 March 2016 and instead order: 1. The question of whether the employer was entitled, in an action under s 151Z(1)(d) of the Workers Compensation Act 1987 (NSW), to rely upon the "blameless motor accident" provisions of the Motor Accidents Compensation Act 1999 (NSW) (Part 1.2, Div 1) should be answered - "Yes". 2. The respondents to pay the appellant's costs as agreed or assessed in the District Court.

Amendments 05 December 2016 - paragraph number in headnote removed 05 December 2016 - the word "in" deleted from order 5(b) 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: 05 December 2016

(Cth), Pt VIB Motor Accidents Compensation Act 1999(NSW)

(1997) 14 NSWCCR 486

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