Section 151Z – come one, come all – it is not only available to the person who actually paid the compensation

Thorn v Monteleone; Thorn v Kelly [2021] NSWCA 319

On 16 December 2021, the NSW Court of Appeal confirmed that the phrase “the person by whom the compensation was paid” contained in Section 151Z refers to:

  1. the Nominal Insurer;

  2. the Insurer who pays the compensation; and

  3. the Employer.

The literal interpretation proposed by the appellant, and its liability insurer, that only the person who actually made the compensation payment could rely upon Section 151Z to recover it; was wrong.

Facts

Monteleone was employed by the Kellys as a farm contractor.

He suffered an injury in 2013 during the course of his employment whilst he was assisting the Thorns to unload sheep from a truck.

The Kellys were uninsured for workers compensation purposes.

The Nominal Insurer stepped in and paid Monteleone $212,599.71 in workers compensation payments under the Workers Compensation Act 1987 (NSW) (‘the Act’).

The Kellys only reimbursed part to the workers compensation payments made ($72,410.06), to the Nominal Insurer.

Monteleone sued the Thorns in negligence.

The Kellys sued the Thorns under Section 151Z(1)(d) to recover all of the workers compensation payments made to Monteleone.

On 19 February 2021, Justice Cavanagh determined that the Thorns were liable to Monteleone and assessed damages at approx. $1.4M. He also determined that the Kellys were entitled to recover all of the workers compensation payments made.

The Thorns appealed.

Held 

Justice Cavanagh’s interpretation of section 151Z was correct because “the person by whom the compensation was paid” should be interpreted as referring to the person who paid, or on whose behalf payment was made.

The intent and effect of the Act, is that compensation for an injury occurring in the course of employment is payable to a worker by the employer, irrespective of the insurance position of the employer: Section 9.

The intent of s 151Z(1)(d) is to allow the burden of workers compensation payments made to be passed onto the third-party tortfeasor who is liable to pay damages in respect of the injury.

Take Home

Be wary of third party insurers advising you on how to interpret the Act you deal with every day. If the Kellys had listened to them, they may have missed out on recovering a further $140,000.

Author: Michael Lamproglou