Reported Decision : 53 NSWLR 592 New South Wales Court of Appeal CITATION : Police Service of New South Wales v Honeysett [2001] NSWCA 452 FILE NUMBER(S) : CA 40371/00 HEARING DATE(S) : 17 September 2001 JUDGMENT DATE : 6 December 2001 PARTIES : Police Service of New South Wales v Tina Honeysett JUDGMENT OF : Priestley JA at 1; Ipp AJA at 33; Sperling J at 34 LOWER COURT JURISDICTION : District Court LOWER COURT DC 7308/98 FILE NUMBER(S) : LOWER COURT Herron DCJ JUDICIAL OFFICER : COUNSEL : Appellant - P. Hall QC / L. Ellison Respondent - K. Andrews SOLICITORS : Appellant - Hunt & Hunt Respondent - Gillis Delaney Brown CATCHWORDS : Workers compensation - Section 151Z of Workers Compensation Act 1987 - Section 213 Police Service Act 1990 - Section 3 Employees Liability Act 1991 - whether (1) police constable driving a paddy wagon while on duty is exercising "a function ... with respect to the protection of persons from injury or death or property from damage" within the meaning of s213 of Police Service Act - Held: on those facts and no more, answer is no - whether (2) police constable is an employee within meaning of s 3(1) of Employees Liability Act 1991 - Held: answer is yes. Employees Liability Act 1991 LEGISLATION CITED : Employees Liability (Indemnification of Employer) Act 1982 Police Service Act 1990 Workers Compensation Act 1987 CASES CITED: Attorney General (NSW) v Perpetual Trustee Company Limited (1955) 92 CLR 113 McGrath v Fairfield Municipal Council (1985) 156 CLR DECISION : Appeal dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40371/00 PRIESTLEY JA IPP AJA SPERLING J Thursday, 6 December 2001 POLICE SERVICE OF NEW SOUTH WALES v HONEYSETT 1 PRIESTLEY JA: Stated briefly, the circumstances from which this appeal arises were as follows. 2 Early in the morning of 31 July 1992 a police paddy wagon was being driven by Constable Honeysett with Constable Ozer as a passenger. Both were on duty. Constable Honeysett swerved to avoid a dog and hit a parked car. Both constables suffered some injury in the accident. Constable Ozer applied for and was awarded compensation under the Workers Compensation Act 1987. Under s 151Z(1) of that Act, where compensation was payable under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury and if the worker had recovered compensation, the person by whom the compensation was paid was "entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages)" (par (d)). 3 The Police Service of New South Wales, on the basis that it had paid the compensation which Constable Ozer had been awarded, brought an action in the District Court against Constable Honeysett claiming that the circumstances under which the compensation had been paid created a liability in her (because she had negligently caused the accident in which Constable Ozer was injured) and that it was therefore entitled to be indemnified by her to the extent of the damages for which she would have been liable to Constable Ozer for negligence. 4 By her Notice of Grounds of Defence, Constable Honeysett made a number of admissions including admissions that her negligence had caused the accident in which Constable Ozer was injured, in the circumstances alleged by the Police Service. Another admission was of par 1 of the Police Service's Statement of Claim which said "At all material times the Plaintiff was the employer of Tamer Ozer, a Constable of Police ('Ozer')". 5 Constable Honeysett did not admit par 7 of the Statement of Claim which alleged that as a consequence of Constable Honeysett's negligence Constable Ozer had suffered injuries particularised in the paragraph. However, at the trial before his Honour Judge Herron QC, the substance of the allegations in par 7 was proved and was not the subject of contest. 6 Constable Honeysett also did not admit par 8 of the Statement of Claim which said: "As a consequence of the injury, loss and damage to Ozer, the plaintiff paid him certain moneys pursuant to the plaintiff's obligations under the Workers Compensation Act 1987." At the trial, however, although it is possible that a real and arguable issue could have emerged from the non admission of par 8, the allegation in the paragraph was not contested and the trial was conducted on the footing that it was correct. 7 The principal issue on the pleadings arose in consequence of Constable Honeysett's denial of par 9 of the Statement of Claim which was the paragraph in which the plaintiff alleged its entitlement to indemnity pursuant to s 151Z(1)(d). Thus the issue was whether or not s 151Z(1)(d) applied to Constable Honeysett. The same issue was more explicitly raised by par 1(a) of the Notice of Grounds of Defence which asserted that "The plaintiff is not entitled to maintain these proceedings by virtue of: (a) s 3 of the Employees Liability Act (NSW) 1991…". (Paragraph 1(b) raised s 66 of the Insurance Contracts Act (Cwth) 1984 but this was not pursued at the trial.) The Employees Liability Act point became the principal, if not the only, legal issue contested between the parties. 8 Herron DCJ found against Constable Honeysett on the Employees Liability Act point. However, he found in her favour on a matter on which she had not relied, s 213 of the Police Service Act 1990. This section had been mentioned in passing in the submissions to the trial judge by counsel for the Police Service. The section was as follows: " Protection from Personal Liability (1) a member of the Police Service is not liable for any injury or damage caused by any act or omission of the member in the exercise by the member in good faith of a function conferred or imposed by or under this or any other act or law with respect to the protection of persons from injury or death or property from damage." 9 It is clear from the transcript of evidence and submissions at the trial that neither party was aware, while evidence was being given, that s 213 might be relevant in the action. This is shown by the absence of any evidence upon which the court could form an opinion, one way or the other, whether, at the time of the accident, Constable Honeysett was exercising in good faith "a function … with respect to the protection of persons from injury or death or property from damage". Counsel in this court agreed that that was the position. 10 Herron DCJ based his opinion of the applicability of s 213 in the case before him solely upon the facts that Constable Honeysett was driving a paddy wagon at the time of the accident, that being "a vehicle designed to convey persons arrested for offences" and that she and Constable Ozer were both on duty at the time. He said that the fact of the driving of the paddy wagon in those circumstances "demonstrates that both she and Mr Sheptitsky [as Constable Ozer had become] were engaged in protecting persons and property as part of their duties as police constables". This conclusion meant that he accepted that at the time of the accident Constable Honeysett was exercising a function as described in s 213. My own opinion is, respectfully, different from that of his Honour. In my view, more would be necessary to show that Constable Honeysett was exercising a relevant function than the two facts upon which his Honour relied. 11 In this court, as at first instance, the principal submission made by counsel for Constable Honeysett was that the Employees Liability Act 1991 was applicable to Constable Honeysett's tort, thus exempting her from liability to indemnify the Police Service. 12 Herron DCJ's reasons for not upholding the Employees Liability Act defence were founded on the well recognised position that the office of a constable of police is a public office, the holder of which is not in the same relation to the Crown as exists in "the domestic relation of servant and master" as the Privy Council in Attorney General (NSW) v Perpetual Trustee Company Limited (1955) 92 CLR 113, at 129, called it. The decision in the Privy Council affirmed what the High Court had held in the same case, (1952) 85 CLR 237. Before Herron DCJ, counsel for Constable Honeysett sought to argue that legislative changes since the Perpetual Trustee case made it clear that, at least for the purposes of s 3 of the Employees Liability Act, Constable Honeysett fell into the category of an employee. Herron DCJ felt himself unable to accept this submission. 13 In my opinion, when the circumstances in which the Employees Liability (Indemnification of Employer) Act 1982, and its successor, the distinctly clearer Employees Liability Act 1991, were enacted, are considered together with what is provided in s 151Z(1)(d) and the way in which the organisation of police was rearranged by the Police Service Act 1990, the submission should be accepted. 14 The history and reasons behind the introduction of the Employees Liability (Indemnification of Employer) Act 1982 are collected in a Draft Report on Employees Liability of the New South Wales Law Reform Commission of May 1988; see pars 2.10 to 2.13. (A note on the cover of the Draft Report says that it should be quoted in a written piece of work as an explanatory memorandum to the Attorney-General. It is nevertheless a very convenient point of reference for matters connected with its subject.) The principal section of the 1982 Act came to be regarded as presenting difficulties of interpretation which led to judicial decisions restricting the effect of the Act in ways unintended by its framers. To a large extent the effect of these restrictive decisions was reversed by the High Court in McGrath v Fairfield Municipal Council (1985) 156 CLR 672, (Mason, Wilson, Brennan, Deane and Dawson JJ). 15 McGrath is important in this area of the law not only because it returned the 1982 Act to its intended path but because the court also succinctly stated the purpose lying behind the act. The court (in joint reasons) said that the amendment to the law effected by the 1982 Act "sprang from a deeply rooted and general concern with the substance of the problem as it was thought to exist under the law as expounded in Lister v Romford Ice, namely, the perceived injustice in the employer's entitlement to recoupment whether under s 5(1)(c) or under the contract from an employee whose fault resulted in the employer becoming liable to a plaintiff. That perceived injustice arose from the conviction that the employer should shoulder the responsibility for damages for which he becomes liable in consequence of the 'fault' of his employee occurring as an incident of the latter's employment when in most instances the employer insures himself against that liability. Plainly enough this was the mischief which the act sought to remedy, a mischief of which lawyers at least were made aware by commentaries on, and reviews of, the decision of both the Court of Appeal and the House of Lords:" (at 676-7) 16 Although the High Court's decision in McGrath brought about the position that the 1982 Act would thereafter accomplish most of its intended purpose, the Draft Report nevertheless recommended that a different and clearer Act be substituted for it. Appendix A to the Draft Report was a draft bill for a proposed new Employees Liability Act. An Act with that name was passed in 1991. It generally adopted the terms of the Draft Report's proposal, with some rearrangement. Section 3 was in identical terms to cl 2 of the draft bill. It therefore seems to me to be appropriate to take into account when considering the 1991 Act the purposes as described in the Draft Report intended to be achieved by the 1982 Act and the criticism of the position that had existed before that Act was passed. These are entirely consistent with, and reinforce, what the High court said in McGrath. According to the Draft Report, the purpose of both Acts was to "[deprive] the employer of the right to indemnity against the employee whether based on contract or a claim for contribution under the 1946 Act …" (Draft Report, par 2.23, p 23). 17 The 1991 Act was assented to on 22 April 1991 and came into operation on 30 August 1991. Section 3 is as follows: " 3. (1) If an employee commits a tort for which his or her employer is also liable: (a) the employee is not liable to indemnify, or to pay any contribution to, the employer in respect of the liability incurred by the employer; and (b) the employer is liable to indemnify the employee in respect of liability incurred by the employee for the tort (unless the employee is otherwise entitled to an indemnity in respect of that liability). (2) Contribution under this section includes contribution as joint tortfeasor or otherwise." 18 The Police Service Act 1990 was assented to on 26 June 1990 and it commenced on 1 July 1990. This Act speaks in many places of the employment of Police officers. 19 Part 4 makes provision concerning the Commissioner of Police. Section 27 in Pt 4 provides that the "employment of the Commissioner is to be governed by a contract of employment…". 20 Part 5 deals with the Police Service Senior Executive Service. Section 41 in Pt 5 provides that "the employment of an Executive Officer shall be governed by a contract of employment …". Executive Officers are spoken of throughout Pt 5 as being in employment and as being subject to employment conditions in much the same way as employees in other occupations. 21 Part 6 which provides for "Non-executive officers of the Police Service" uses somewhat different language and its provisions, looked at in isolation, could be regarded as equivocal in regard to the employment question I am now considering. That equivocation is lessened by the heading of Pt 8: "General provisions relating to employment of all members of the Police Service". Although Pt 8 does not itself use the word employment, the situations it deals with and the prescriptions it lays down for members of the Police Service are all consistent both with the heading and with the idea that members are employees, who may at the same time hold the public office of Constable. 22 The Police Service Act in my opinion shows a use of the idea of employment in its ordinary sense running in parallel with a recognition of the continuing office of constable as an office that can be exercised simultaneously with an employment relationship existing between the Police service and a police officer. This seems to me to be a realistic recognition of the fact that the range of duties a police officer may be required to fulfil pursuant to the Police Service Act appears to be at least potentially and I would think almost certainly in practice, much wider than the range of duties required by the office of constable. 23 The same usage appears in and becomes more understandable from the Second Reading Speech on the Bill which became the Police Service Act 1990. (It is recorded in New south Wales Parliamentary Debates, Third Series, Vol 214 pp 2120-2130.) This speech set out the history behind the reorganisation of the Police Service by the 1990 Act. The Minister for Police began his Second Reading Speech in the Legislative Council by saying: "The Police Service Bill marks the most important legislative reform in the management of Police and the provision of police services to the community for nearly a century." (at 2120) 24 A little later he went on to say that one of the aims of the legislation was to replace the then existing bifurcated system consisting of a separate Police Force and Police Department; what was wanted was "a fully integrated staff while retaining the special role of operational police" (at 2121). 25 A little later he referred to the Police Service Senior Executive Service which was to be "totally integrated, … in keeping with the Bill's aim of establishing an integrated Police Service" (at 2124), and then: "I now turn to the provisions of the bill relating to the employment of non-executive members of the Police Service. The integration of all employees of the Police Service is central to the proposed reforms and reflects action already initiated by the Commissioner of Police and the Police Board. It is fair, logical and efficient that all employees of the one organisation be treated in the same manner. The bill will establish an integrated work force, with only two distinctions: whether the employee is required to undertake operational police duties and whether the employee is in temporary or permanent employment. For most of the twentieth century, the dichotomy of the police force and the department has existed, whereby a commissioner superintended police operations and a public servant acted as secretary and departmental head of the department. In other words, no one person exercised complete control. That was obviously not sound management practice. It led to inefficiency, confusion and unclear lines of responsibility." (at 2125) 26 A little later he said that "within the integrated system there would still be a differentiation between police officers and administrative officers" (at 2125). A little later again he said "the legislation will authorise the Commissioner of Police to designate positions that will be open to both divisions of employees" (at 2126). 27 In other places also in the speech the Minister spoke of police officers as employees. 28 Two features of the Minister's use of the language of employment in the speech are important for present purposes. One is that it shows that in ordinary language usage there is no difficulty in understanding that police officers are employees. The other is that, as it seems to me, it supports the view that that ordinary language usage is carried into the Police Service Act itself. 29 Further, in my opinion, there is no reason why, when the word "employee" is used, without definition, in the 1991 Employees Liability Act coming into force fourteen months after the Police Service Act, that word should not include a police officer serving under the Police Service Act 1990. 30 The Police Service Act shows that in many ways the conditions of service of police officers had been substantially assimilated to those of ordinary employees; the Workers Compensation Acts have shown the same development as have various Acts regulating industrial relations. The fact that some of these Acts, preceding the Police Service Act, only apply to police officers by virtue of deeming provisions does not detract from the factual situation that has now been reached that in virtually every way police officers are treated statutorily as employees and, in the Police Service Act, in 1990, were treated as employees in an undefined sense. 31 When those considerations are taken into account with the strong purpose behind the Employees Liability Acts of ensuring that persons in the position of employers should not be able to pass on to persons in the position of employees liabilities incurred by the employers as a result of things done by employees in the course of their employment, it seems to me that the word employee in s 3 of the Employees Liability Act 1991 should not only be read as including police officers working (to use a neutral term) for the Police Service pursuant to the Police Service Act but in fact means a class of person including police officers working pursuant to that Act. It may have been a slip of the draftsman when in par 1 of the Police Service's Statement of Claim the Police Service was described as "the employer of Tamer Ozer, a constable of police", without any qualification (see par 4 above). The paragraph however nevertheless seems to me to be a very good illustration of a perfectly ordinary use of the word "employer", and for reasons I have already indicated it seems to me to be completely appropriate to take the word "employee" in s 3 of the Employees Liability Act 1991 in its ordinary usage meaning. 32 I therefore come to the same conclusion as that of Herron DCJ, although for different reasons, and in my opinion the appeal should be dismissed with costs. 33 IPP AJA: I agree with Priestley JA. 34 SPERLING J: I agree with Priestley JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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