In personal injuries litigation involving employer and non-employer defendants, it is often the case that the non-employer defendant will have a contract claim against the employer which exceeds the employer’s liability at common law. Historically WorkCover has refused to indemnify the employer for that purely contractual liability. 

As such, in practice, contractual claims against employers are often uninsured and ultimately abandoned.

Where they are pursued, WorkCover does not insure them.

Whether WorkCover could maintain that position was the subject of adjudication in the test case Byrne v People Resourcing (Qld) Pty Ltd & Anor.

The facts of the matter were that Nicholas Byrne (the plaintiff) was injured in the course of his work on the Airport Link project. He brought a claim for damages for personal injuries against People Resourcing (Qld) Pty Ltd, his employer and a contracted provider of labour hire, and Thiess John Holland, the principal contractor and host employer of the plaintiff pursuant to a labour hire agreement.  Barry.Nilsson. acted for TJH.

The labour hire agreement between the employer and TJH contained contractual indemnities, warranties and obligations in favour of TJH. 

Mr Byrne’s claim was settled prior to trial and the only issue for determination by the court pertained to the extent of WorkCover’s obligation to indemnify the employer pursuant to its contractual obligations under the indemnity.

The Chief Justice of the Supreme Court published reasons which followed State Government Insurance Office (Queensland) v Brisbane Stevedoring Pty Ltd (1969) 123 CLR 228.

His Honour found that Brisbane Stevedoring was authority for the proposition that the negligent employer incurred liability for the full amount of the judgment and, by virtue of the contractual indemnity in TJH’s favour, it  had “become legally liable” to pay the full amount of damages. This was a liability that WorkCover must meet.

Accordingly, where the employer had promised to indemnify the non-employer defendant, WorkCover must in this instance stand behind that indemnity and meet 100% of the judgment amount. 

WorkCover is likely to appeal.

In the interim, as a result of the decision non-employer defendants entitled to the benefit of contractual indemnities from employers now ought to seek to rely on those indemnities to limit their exposure, and press for those contractual promises to be given their full effect.