Supreme Court New South Wales Medium Neutral Citation: Murdock v Lipman Pty Ltd (No 2) [2013] NSWSC 11 Hearing dates: On written submissions Decision date: 25 January 2013 Before: McCallum J Decision: Application for leave under s 151D(2) of the Workers Compensation Act 1987 to commence proceedings against the insurer standing in the shoes of the deregistered employer granted Catchwords: WORKERS COMPENSATION - application for leave to bring proceedings for damages out of time - whether fair and just to grant leave - whether employer precluded from recovering contribution from other tortfeasors - whether prejudice arising due to claims by employer for indemnity under s 151Z(1)(d) being statute-barred Legislation Cited: Law Reform (Miscellaneous Provisions) Act 1946, s 5 Limitation Act 1969, s 14 Workers Compensation Act 1987, s 151D(2), s 151Z Cases Cited: Murdock v Lipman Pty Limited [2012] NSWSC 983 South Sydney Area Health Service v Gadiry [2002] NSWCA 161; (2002) 54 NSWLR 495 Taouk v Maroun Taouk & Anor [2010] NSWCA 372 Category: Interlocutory applications Parties: Harold Murdock (plaintiff) Lipman Pty Limited (first defendant) Australis Group (Underwriting) Pty Limited (second defendant) Gallagher Bassett Services New South Wales Pty Ltd (proposed third defendant) Representation: R Sheldon SC, D Stanton (plaintiff) C Purdy (first defendant) K Burke (second defendant) S Flett (proposed third defendant) Slater & Gordon Lawyers (plaintiff) Moray & Agnew (first defendant) Colin Biggers & Paisley (second defendant) File Number(s): 2010/143429 Publication restriction: None Judgment 1HER HONOUR: On 24 August 2012, I extended the limitation period for the plaintiff's cause of action against the first and second defendants in these proceedings: see Murdock v Lipman Pty Ltd [2012] NSWSC 983. 2In that judgment, I deferred the determination of a separate application brought by the plaintiff for leave under s 151D(2) of the Workers Compensation Act 1987 to commence proceedings against Gallagher Bassett Services New South Wales Pty Ltd as the insurer of the deregistered employer, Deno's Hire Pty Limited. I considered that it was necessary, before determining that application, to afford Gallagher Bassett an opportunity to be heard as to an issue that had occurred to me only after the conclusion of the hearing. 3Section 151D of the Workers Compensation Act 1987 provides: 151D Time limit for commencement of court proceedings against employer for damages (1) (Repealed) (2) A person to whom compensation is payable under this Act is not entitled to commence court proceedings for damages in respect of the injury concerned against the employer liable to pay that compensation more than 3 years after the date on which the injury was received, except with the leave of the court in which the proceedings are to be taken. (3) The Limitation Act 1969 does not apply to or in respect of court proceedings to which this section applies. (4) This section does not apply to the commencement of court proceedings in respect of a claim within the meaning of Part 5 of the Motor Accidents Act 1988 or Chapter 5 of the Motor Accidents Compensation Act 1999. 4Subject to one issue, I was persuaded that it would be fair and just to grant the leave sought under that section to commence proceedings against Gallagher Bassett in substitution for the employer. The one issue that required further consideration was Gallagher Bassett's contention that it would suffer actual prejudice if the claim against it were allowed to proceed, since any cross-claim by it for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 would now be statute-barred. 5It was accepted by Gallagher Bassett that, assuming (as I felt bound to hold) it is now precluded from bringing any such cross-claims, the apportionment of contribution required to be undertaken under s 151Z(2) of the Workers Compensation Act will achieve the same result in part, but not in respect of any compensation payments made earlier than six years ago. 6That was said to be the case due to Gallagher Bassett's loss (owing to the passage of time) of any entitlement to claim indemnity under s 151Z(1)(d) of the Workers Compensation Act in respect of compensation payments made to the plaintiff more than six years ago. The limitation period for claiming indemnity under that section is six years from the time the cause of action accrues: s 14(1)(d) of the Limitation Act. Each compensation payment gives rise to a separate right to claim indemnity: Taouk at [58], citing South Sydney Area Health Service v Gadiry [2002] NSWCA 161; (2002) 54 NSWLR 495. Accordingly, at the time the point was raised, Gallagher Bassett was precluded from claiming indemnity for any payments made more than six years earlier (that is, before August 2006). Mr Murdock has been receiving compensation payments since the time of the accident in 2002. 7The argument proceeded on the untested premise that any such payments would not be brought to account in any apportionment of contribution under s 151Z(2) of the Workers Compensation Act. 8The point on which I considered I should give Gallagher Bassett an opportunity to be heard was explained at [119] to [121] of my earlier judgment, where I said: However, it is not clear to me why that should be regarded as prejudice occasioned by Mr Murdock's delay in bringing his claim. In particular, I do not understand why the employer in this case could not have sought indemnity under s 151Z(1)(d) for such payments within time. Indemnity could have been sought under that section regardless of any claim by Mr Murdock. That is what occurred in J Blackwood & Son Ltd v Skilled Engineering Ltd: see [18] of the judgment. The Court of Appeal declined to have regard to that consideration in Taouk because it had not been raised at first instance: at [70] to [72]. In the present case, the employer appears to have had every reason to consider claiming indemnity under s 151Z(1)(d) against the first and second defendants before the limitation period for doing so expired. The liability of those parties should have been brought to mind by the WorkCover prosecution, which was heard in 2005 and determined in 2006. That could well be an answer to the employer's submissions in the present case. However, it is an issue that occurred to me only after the hearing and as to which Gallagher Bassett has not been heard. Accordingly, before entering orders against Gallagher Bassett on that basis, I consider I should afford the parties an opportunity to address that point, should such an opportunity be sought. 9Gallagher Bassett exercised the opportunity to address that point, providing written submissions. The plaintiff provided written submissions in reply. 10Having considered those further submissions, I am not persuaded that Gallagher Bassett's loss (owing to the passage of time) of the opportunity to claim indemnity under s 151Z(1)(d) of the Workers Compensation Act in respect of the compensation payments made to the plaintiff more than six years ago amounts to prejudice occasioned by the grant of leave to commence proceedings for damages against the employer out of time. Accordingly, for the reasons set out in my earlier judgment, I have concluded that it would be fair and just to grant the leave sought by the plaintiff to commence proceedings against Gallagher Bassett. 11As submitted on behalf of the plaintiff, the right of an employer to claim indemnity under s 151Z(1)(d) of the Workers Compensation Act arises independently of any right of an injured worker to bring proceedings against a stranger for damages and is not in itself a claim for damages, let alone a claim for contribution to damages. It is a discrete statutory remedy that may be exercised by the employer at any time. 12The employer has, separately, an entitlement under s 151Z(1)(b) of the Act to be repaid the compensation paid by it in the event that the worker later recovers damages against a stranger. That entitlement may inform the forensic decisions made by the employer, but does not inform or derogate from the right to claim indemnity under s 151Z(1)(d). 13Gallagher Bassett submitted that, in considering whether any prejudice (due to the loss of entitlement to bring any claim for contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act 1946) is cured by the entitlement to claim indemnity under s 151Z(1)(d) of the Workers Compensation Act, the test should be one of reasonableness, that is, whether Gallagher Bassett ought reasonably to have claimed indemnity under that section within the time allowed under the Limitation Act. 14Whilst I accept that it is appropriate to consider all of the circumstances relating to the matters raised as allegedly visiting prejudice on Gallagher Bassett, including the reasonableness of the employer's conduct, it is important not to elevate that consideration to something in the nature of a rule or an element required to be proved by the plaintiff. 15The simple fact is that the employer did not exercise its rights under s 151Z(1)(d) of the Workers Compensation Act. I accept, as submitted on behalf of Gallagher Basset, that to do so would have required it to consider whether the plaintiff's injury was caused under circumstances creating a liability in some other person. Gallagher Bassett's submissions on that issue focussed acutely on its position as insurer, including its knowledge at various times and the fact that it did not retain solicitors until 2010 (following the institution of these proceedings against the first and second defendants). 16The proper approach, in my view, is to consider the position of the employer, in whose shoes Gallagher Bassett stands. As stated in my earlier judgment at [120], the employer appears to have had every reason to consider claiming indemnity under s 151Z(1)(d) against the first and second defendants before the limitation period for doing so expired. The liability of those parties should have been brought to mind by the WorkCover prosecution, which was heard in 2005 and determined in 2006. 17A further consideration is the fact noted in Gallagher Bassett's written submissions that, if the plaintiff's claim against either the first or second defendant is successful, Gallagher Bassett will recover all of its payments under s 151Z(1)(b). That point was relied upon by Gallagher Bassett as indicating the good sense in its not making any claim for indemnity under s 151Z(1)(d). Undoubtedly there is force in its position in that respect, but it does not follow that the consequences of that forensic decision should be visited upon the plaintiff. 18In any event, any claim for indemnity in respect of payments made since the time Gallagher Bassett retained its lawyers is not yet statute-barred. The critical period is the period from the date of the injury until mid-2006. 19As to that period, it was submitted that it is not reasonable to expect every employer to undertake inquiries as to the potential liability of other parties in every case where there is a suggestion of a recovery claim. However, I am only concerned with the case before me. By reason of the WorkCover investigation, completed within the time for making any claim under s 151Z(1)(d), the employer in the present case had detailed information as to the potential liability of others laid out for it on a platter. 20For those reasons, I consider it appropriate to make the orders sought by the plaintiff, as follows: (1)That Deno's Hire Pty Limited be joined as third defendant in the proceedings. (2)That Gallagher Bassett Services NSW Pty Limited be substituted for Deno's Hire Pty Limited as third defendant in the proceedings. (3)That the plaintiff have leave under s 151D of the Workers Compensation Act 1987 to commence the proceedings against the third defendant out of time. ********** 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: 25 January 2013