In ISS Facility Services (NSW) Pty Ltd v State of New South Wales [2016] NSWCA 87 (ISS Facility), the New South Wales Court of Appeal displayed an interest in the proper construction of section 151Z(1)(d) of theWorkers Compensation Act 1987 (NSW) (WC).  The court displayed a willingness to consider the occupier’s argument: whether an occupier should provide a complete indemnity to a contractor for the amount of workers compensation paid by a contractor to their worker (ISS Facility Services was a contractor who supplied a worker to clean a public school) when both the occupier and contractor are liable at law for the cleaner’s injuries.  Although the court was not required to determine this point, the court indicated that there was substance to the occupier’s argument.

The facts — a cleaner, his contractor and a public school

A cleaner, Mr King, was injured whilst performing his duties at a public school. The State of New South Wales (State) was the occupier of the school. ISS Facility Services (ISS) was Mr King’s employer. Mr King was thus an invitee on the State’s property.

The injury — the dangers of roller door repair

Mr King was assisting an employee of the State, Mr Morgan, who was employed as a general assistant at the school. Mr King had climbed a ladder to help Mr Morgan unravel a roller door, which had come off its tracks, when it suddenly fell causing Mr King to fall injuring his head.

Mr King sued the State and ISS alleging they failed in their duty of care owed to him.

Primary judge — District Court

The primary judge found the State liable in negligence and assessed Mr King as being 30% contributory negligent. ISS was also held to be negligent and Mr King was assessed as being contributory negligent at 20%. Responsibility was apportioned as the State 75% and ISS 25%. Yes: Mr King was assessed as being contributory negligent, at different rates, to two separate tortfeasors.

Issues on appeal

ISS appealed arguing that the primary judge erred in making two different assessments of contributory negligence and misconstrued section 151Z of the WC. Mr King cross appealed arguing the primary judge erred in finding him contributory negligent. Additionally, Mr King argued that the primary judge failed to give adequate reasons for his Honour’s decision. The State’s cross appeal argued that its liability in negligence was not actually pleaded in the plaintiff’s statement of claim. The State also disagreed with the primary judge’s construction of section 151Z(1)(d).

In a unanimous decision, the Court of Appeal allowed the appeal and both cross appeals.

Separate assessments of contributory negligence

Emmett AJA (who provided the leading judgment) held the primary judge was not in error in providing separate assessments of contributory negligence. On this issue, his Honour said:

“…in circumstances where there are two tortfeasors, the question of contributory negligence on the part of a victim must be considered separately in relation to the respective duties of care owed to the victim by each tortfeasor. In the present case, a duty of care may be owed to Mr King by the State, on the one hand, and by ISS, on the other. Each of ISS and the State owed a different duty to Mr King and, accordingly, the breach of those duties by each tortfeasor will be different. While the actions of Mr King were the same, the relative responsibility, as against the State and as against ISS, that he had for the accident, if any, must be assessed in the light of the duty owed to him by the relevant tortfeasor.[1]

A trial judge’s obligation to analyse the evidence as a whole

In allowing the appeal and both cross claims, Emmett AJA considered that when there are different versions of events, a trial judge “must” analyse the evidence as a whole, and determine which of the “versions should be accepted”.[2] The primary judge failed to do this. Rather, the primary judge concluded a version of fact without adequate reasons as to why this version was adopted. This underpinned the success of ISS’s appeal and Mr King’s cross appeal. The State’s cross appeal was successful given the basis for its negligence was not actually pleaded in the plaintiff’s statement of claim.

The “section 151Z(1)(d) argument” advanced by the State as an occupier

When an injured worker is entitled to compensation under the WC (for example, in a workplace injury, which occurred to Mr King) section 151Z(1)(a) relevantly provides that, the worker may take action against the third person (in this case the School; the occupier) to recover damages and against the employer (or contractor; in this case ISS) to recover compensation.

Section 151Z(1)(d) provides an indemnity to the person that pays compensation to the worker. Typically, the employer (or contractor) pays this compensation. This indemnity is provided by the third person who was responsible at law for the injury to the worker (in this case the School). ISS sought to protect itself by calling upon this indemnity even though it was held to be partly liable at law for the injury to Mr King.

The State’s novel approach to section 151Z(1)(d)

The State’s contention was that ISS cannot claim entitlement to the section 151Z(1)(d) indemnity because ISS was in fact partly liable for Mr King’s injury. According to the State, the aim of section 151Z(1)(d) is to indemnify an employer who is obligated to pay workers compensation when a third person is responsible for the occurrence that caused the employer to pay this compensation. To do otherwise, the State contended, would be to provide an employer complete indemnity from a third person, even if the employer’s share in the responsibility for the injury was higher than the third person.

The Court of Appeal tacitly endorsed the State’s approach to section 151Z(1)(d)

As Emmett AJA decided in favour of the State’s cross appeal, his Honour found it unnecessary to decide the issue.

Importantly, his Honour said “there was considerable substance in the contentions advanced on behalf of the State”.[3] Indeed, his Honour opined that his failure to decide this question “should not be taken as an endorsement of the conclusions reached by the primary judge”.[4]

Occupiers stand ready

Where an invitee (worker) is injured on an occupier’s property and both the occupier and the employer (or contractor) of the worker are responsible at law for the worker’s injury, given the court’s interest, ISS Facility opens the scope for the occupier to argue that section 151Z(1)(d) does not entitle an employer to a complete indemnity for the compensation it has paid to the injured worker.