Australia: Worker´s Compensation - Section 151Z Payment Recoverable From Entire Pool Of Damages Obtained, But Reduced By Contributory Negligence

Tamerji v Rhee [2008] NSWCA 314

In Brief

• The Court of Appeal confirmed that where a worker received damages from a tort feasor other than his employer, the worker was required to repay the employer the full amount of compensation previously paid by the employer and its insurer.

Background/Circumstances

The Appellant ("the Worker") was employed as a taxi driver by the Respondent ("the Employer") in October 2000. The Worker was injured when he was hit by a motor vehicle driven by Ms Gavin ("the Driver"). The Worker brought proceedings against the Driver and was awarded damages in the sum of $252,536.

Prior to the commencement of the action against the Driver, the Worker had received Workers compensation payments in the sum of $192,803.19. At the conclusion of the Worker's claim, the Employer wrote to the Worker's solicitors claiming entitlement to the full amount of his workers compensation payments.

District Court Proceedings

• The Employer sought the recovery of workers compensation payments from the Worker. The Employer claimed that the Worker's liability to repay the compensation arose out of Section 151Z (1)(b). The Section states:

• The Employer conceded that the section precluded them from recovering any part of the award for future economic loss or future expenses. The Employer asserted that it was entitled to recover the full amount of its previous payments of workers compensation.

• His Honour Judge McGrowdie held that the Employer was entitled to the amount of money claimed, together with certain other amounts for costs and interest.

Worker's Submissions

• The Worker submitted that of the past medical expenses that were included in the assessment, 2/5ths were not paid by the Employer's insurer.

• The Worker conceded that he owed a liability to repay damages in respect of past medical expenses that the Employer's workers compensation insurer actually paid. The dispute was whether the Worker had a liability to repay the damages in relation to past medical expenses incurred after the workers compensation insurer declined liability, and also in relation to past domestic assistance.

• Counsel for the Worker argued that Section 151C(1)(b) made the Worker liable to pay an amount of compensation that the Employer had paid. How, Counsel asked rhetorically, can an Employer be repaid an amount that the Employer did not pay in the first place?

• Counsel submitted that even if a Worker had recovered damages concerning some head of damages in relation to which he had received a compensation payment, the amount that the Worker was likely to repay for the damages received was limited to the amount of compensation that the Employer had actually paid.

Decision

• Campbell JA noted that Section 151Z(1)(b) operated whenever a Worker recovered any compensation under the Workers Compensation Act for an injury, and later recovered damages in respect of that injury from some person other than the Employer.

• His Honour considered that Section 151Z(1)(b) required the Worker to repay something that the Worker had received, namely the total of the amount of compensation that had been paid to the Worker for which the Worker had recovered damages.

• The Court of Appeal¹ referred to the High Court Determination in Tickle Industries Pty Limited v Hann in which a Northern Territory statue, closely analogous to Section 151Z, was considered. In Tickle, BarwickCJ, took a global approach to the damages from which compensation should be repaid under the equivalent of Section 151Z(1)(b):

• Campbell JA referred to his earlier determination in Turner v George Weston Foods (2007) 4 DDCR 571 where he considered the construction of Section 151Z:

• The amount of damages is to be treated as a single fund from which the worker is liable to repay the total amount of compensation that he or she has received.

Contributory Negligence

• Whilst neither party made any submissions in respect of the 5% finding of contributory negligence, Campbell JA made obiter comments about the effects of a finding of contributory negligence upon the operation of s.151Z. Section 10(2) of the Law Reform (Miscellaneous Provisions) Act states:

• In accordance with those provisions, His Honour stated that the amount recoverable would be the amount of the loss assessed, reduced by the proportion that was attributable to the Worker's contributory negligence.

Implications

• The Court of Appeal confirmed that when a claim for recovery is made by an Employer pursuant to Section 151Z of the Act, the amount of damages are to be treated as a single fund from which the Worker is liable to repay the total amount of compensation received.

• The recovery of compensation by an Employer is not to be broken down into heads of damages and what has been paid under those heads of damages, but is to be taken from the total amount of compensation paid.

• This decision confirms the protection which is afforded to Employers and their insurers on the amount of compensation that is recoverable from another tort feasor in claims involving Section 151Z of the Act.

• It is interesting to note the obiter comments of Campbell JA who was of the view that any compensation recoverable from damages is to be reduced by the proportion of the Worker's contributory negligence.

Footnote

1 Beazley, Ipp and Campbell JJA

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