Endeavour Energy v Precision Helicopters Pty Ltd (No 2)

[2015] NSWCA 357

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Endeavour Energy v Precision Helicopters Pty Ltd (No 2) [2015] NSWCA 357

Hearing dates:

On the papers

Decision date:

19 November 2015

Before:

Basten JA at [1];
Macfarlan JA at [78];
Sackville AJA at [79]

Decision:

(1)   In matter 2014/70909 (application for leave to appeal: Endeavour Energy and the Edwards children)

 

(a)   Dismiss the application for leave to appeal.
(b)   Order the applicant (Endeavour) to pay the costs of the Edwards children of the application.
(c)   No order as to the costs of the third respondent (Precision) and the fourth respondent (Telstra).

 

(2)   In matters 2014/70903 (including Precision’s cross-appeal), 2014/70909; 2014/70915 –

 

(a)   Set aside orders made by Johnson J on 13 February 2014 in matters SC 2008/289264; SC 2009/297468 and SC 2010/147165, other than the stays of the orders.
(b)   In lieu thereof –
(i) Declare that the liability of Precision Helicopters Pty Ltd with respect to personal injuries suffered by Simeon Edwards as a result of the crash landing of a helicopter on 4 April 2006 is limited to the amount of $500,000 pursuant to the Civil Aviation (Carriers’ Liability) Act 1967 (NSW).
(ii) Declare that the liability of Precision Helicopters Pty Ltd by way of indemnity in favour of Endeavour Energy, pursuant to s 151Z of the Workers Compensation Act 1987 (NSW) is capped in the same amount.
(iii) Declare that the total amount of the indemnity recoverable by Endeavour Energy under s 151Z of the Workers Compensation Act 1987 (NSW) is $7.42million.

 

(c)   In matter SC 2010/147165 give judgment in favour of Endeavour Energy:

 

(i)   against Precision Helicopters Pty Ltd in an amount of $500,000 plus interest;
(ii)   against Telstra Corporation Ltd in an amount of $3,902,700 plus interest;
(iii)   against Precision Helicopters and Telstra for the costs of the proceedings in the Common Law Division.

 

(d)   In matters SC 2008/289263 and SC 2008/289264 –

 

(i)   give judgment for the second plaintiff (Connor Edwards) and the third plaintiff (Ruby Anna Edwards) against Endeavour Energy and Telstra Corporation, for damages to be assessed;
(ii)   remit the matter to the Common Law Division for assessment of damages, determination of cross claims and orders for the costs incurred in the Division.

 

(e)   In matter SC 2009/297468, give judgment in favour of the plaintiff (Precision Helicopters):

 

(i)   against Endeavour Energy in the amount of $245,000 plus interest;
(ii)   against Telstra Corporation in the amount of $245,000 plus interest;

 

such judgments to have effect from 13 February 2014;

 

(iii)   order that Endeavour Energy and Telstra Corporation pay the costs of Precision of the trial with respect to this claim.

 

(3)   Order that Endeavour Energy and Telstra Corporation pay the costs of the cross-appeal by Precision Helicopters in matter CA 2014/70909.

 (4)   Order that Telstra Corporation pay one-third of Endeavour Energy’s costs of the appeal (other than the costs of the cross-appeal).

Catchwords:

TORTS – damages – personal injury damages – apportionment between defendants – operation of statutory cap – damage to property – apportionment – proportionate liability principle

  WORKERS’ COMPENSATION – indemnity – recovery by employer from other tortfeasors – where employer sued by worker but no judgment entered against employer – whether employer can only recover excess over its liability to contribute to the amount of damages

Legislation Cited:

Civil Aviation (Carriers’ Liability) Act 1959 (Cth), ss 36, 37; Pt IV
Civil Liability Act 2002 (NSW), ss 34, 35; Pt 4
Civil Procedure Act 2005 (NSW), s 100
Workers Compensation Act 1987 (NSW), ss 149, 150, 151Z
Workers’ Compensation Act 1926 (NSW), s 64
Workmen’s Compensation Act 1906 (UK), s 6

Cases Cited:

Dib Group Pty Ltd (t/as Hill & Co) v Cole [2009] NSWCA 210; [2009] Aust Torts Rep 82-022
Endeavour Energy v Precision Helicopters Pty Ltd [2015] NSWCA 169
I&J Foods Pty Ltd v Bergzam Pty Ltd [1997] NSWSC 118; 14 NSWCCR 486
J Blackwood & Son Ltd v Skilled Engineering Ltd [2008] NSWCA 142
Kondis v State Transport Authority (1984) 154 CLR 672
Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336

Category:

Consequential orders (other than Costs)

Parties:

Endeavour Energy (Appellant)
Precision Helicopters Pty Ltd (First Respondent)
Telstra Corporation Limited (Second Respondent)

Representation:

Counsel:
J E Maconachie QC/B A P Kelleher (Appellant)
Endeavour Energy)
T G R Parker SC/D A Lloyd (First Respondent)
D J Fagan SC/J Downing (Second Respondent)
K W Andrews (Edwards children)

  Solicitors:
Moray & Agnew (Appellant)
GSG Legal (First Respondent)
HWL Ebsworth (Second Respondent)
W H Parsons & Associates (Edwards children)

File Number(s):

2014/70903; 2014/70909; 2014/70915

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Common Law

Citation:

[2013] NSWSC 1899;
[2014] NSWSC 68

Date of Decision:

19 December 2013

Before:

Johnson J

File Number(s):

2010/147165; 2008/289264; 2009/297468

Judgment

1. BASTEN JA: On 4 April 2006 Mr Simeon Edwards (“the plaintiff”) suffered catastrophic head injuries in a helicopter crash near Wiseman’s Ferry. The accident occurred when the rear rotor of the helicopter caught an unmarked Telstra wire. He brought proceedings for damages against his employer (“Endeavour Energy”), the owner and operator of the helicopter (Precision Helicopters Pty Ltd – “Precision”) and Telstra Corporation Ltd. In addition, members of his family brought separate proceedings for compensation. Separate proceedings were brought by Precision against Endeavour Energy and Telstra for the damage caused to the helicopter.

2. The plaintiff’s claims were settled prior to trial. The claims by family members with respect to particular parties have also been settled, although there are issues as to quantification and apportionment outstanding.

3. A lengthy trial took place before Johnson J in the Common Law Division on what were, in essence, cross-claims between the defendants. Those proceedings involved three broad issues, namely (a) apportionment of liability between the defendants; (b) a claim for indemnity under the Workers Compensation Act 1987 (NSW), s 151Z(1), and (c) whether a statutory cap applied to the liability of Precision.

4. The principal judgment in this Court was delivered on 22 June 2015. [1] The Court varied the findings of the trial judge in two significant respects. First, it found (contrary to the view of the trial judge) that Telstra was liable for the accident. Secondly, it accepted that a statutory cap of $500,000 applied to the liability of Precision for damages for personal injury.

   1. Endeavour Energy v Precision Helicopters Pty Ltd [2015] NSWCA 169 (“principal judgment”).

5. The Court made the following findings as to negligence:[2]

“(a)   failure by Endeavour to inquire of Telstra as to its lines in the area;

(b)   failure by Endeavour to require Mr Edwards to wear a helmet;

(c)   failure by Precision to require Mr Edwards to wear a helmet;

(d)   failure by Telstra to remove the catenary wire, instead of re-erecting it when a pole collapsed ….”

2. Principal judgment at [163].

6. The only breach of duty by Precision related to its duty to Mr Edwards. Accordingly, it was entitled to recover the full amount of its loss by way of damage to the helicopter and for loss of business. This was an agreed amount of $490,000 plus interest. Precision was not concerned with the apportionment of that loss, it being entitled to a judgment against both Endeavour and Telstra. However, there was an issue as to whether their liability was joint and several, or apportionable under Part 4 of the Civil Liability Act 2002 (NSW).

7. No orders were made when delivering the principal judgment. Rather, the Court provided an opportunity for the parties to reach agreement, or file further written submissions, with respect to (i) apportionment, (ii) calculation of amounts payable and (iii) costs. The written submissions subsequently filed indicated a failure to reach agreement. Some significant issues were dealt with cursorily, no doubt reflecting the constraints imposed by the directions on length, which were largely followed. On the other hand, the submissions helpfully adopted broadly similar approaches.

8. Although not determinative of the respective liabilities for damages for personal injury, and although the amount in issue is a small proportion of the total amounts with respect to the personal injury claims, it is convenient to dispose of the proceedings brought by Precision first.

Precision’s claim – loss of helicopter

(a)   apportioning responsibility

9. Each of Endeavour and Telstra submitted that the other was responsible for 75% of the property loss suffered by Precision. To identify the source of this difference of opinion requires reference to the factual elements relied on in the submissions.

10. The Court concluded in its principal judgment that Endeavour was negligent in failing to make inquiry of the known owners of infrastructure in the area as to the location of power lines and related hazards. [3] In the same passage, the Court noted the absence of any submission that such an inquiry would not have yielded relevant information. Despite that, Endeavour’s apportionment submissions included the statement that “[i]nquiry of Telstra would have achieved nothing”. That was said to flow from evidence that the sole record of the existence of the catenary wire was an entry in a notebook of a retired field worker. [4] Nevertheless, in a later passage in the same submission, Endeavour stated that “Telstra had actual knowledge of the presence of the catenary”. [5] Telstra’s submissions in reply [6] appear to have accepted the second proposition in preference to the first and denied that it was open to Endeavour to seek different factual findings at this stage.

    3.    Principal judgment at [117] and [194].

    4.    Endeavour’s written submissions, 20 July 2015, par 15.

    5.    Endeavour’s written submissions, par 27(a).

    6.    Telstra’s written submissions in reply, 31 July 2015, pars 1 and 2.

11. In circumstances where final orders have not been made, it is possible for the parties to invite the Court to reconsider findings where a manifest and material error can be identified. It is not appropriate for a party (otherwise than by leave given in advance) to raise an issue which had not been agitated at the hearing of the appeal or in written submissions which preceded the hearing. That would provide a sufficient reason to reject any suggestion that the Court should now address any issue as to the causal relevance of Endeavour’s breach.

12. There is, however, an additional reason supporting that conclusion. A finding as to what information Telstra would have supplied if inquiry had been made of it requires a finding as to the question it would have been asked. It is likely that an inquiry would have been accompanied by a map showing Endeavour’s power lines. Whether a map would have been provided indicating the branch line over the Inman property would have been a critical issue. The map used by the plaintiff did not record that line. [7] No doubt it might have been inferred that, if the branch line had not been recorded on a map supplied to Telstra, Telstra’s catenary wire would not have been identified. The point is not to make a finding one way or the other, but to note the reason why the issue should not be addressed at this stage of the proceedings. Accordingly, apportionment should be determined on the basis that Endeavour was negligent in failing to make inquiry of Telstra as to the whereabouts of its lines and that, had an appropriate inquiry been made, Telstra would probably have identified the presence of the catenary wire.

    7. Principal judgment at [152].

13. That matter aside, the substance of Endeavour’s argument was that Telstra had created the risk of harm which materialised by re-erecting the catenary wire after a pole was replaced, in circumstances where the wire served no useful purpose and was unmarked as a potential hazard to low flying aircraft. By contrast, Endeavour’s breach of duty resulted from its failure to take a step which could only have ameliorated the risk of the harm created by Telstra’s conduct.

14. Telstra’s submissions focused on the fact that “Endeavour actually knew where the helicopter was to fly and that it had no actual knowledge of hazards in that area”. On the other hand, the fact that Telstra had no advance knowledge of the specific events which gave rise to the accident would have been more significant had Telstra been under an independent obligation of disclosure. That was not the basis of the finding against it. It was true that Endeavour knew (or should have known) of the area in which the helicopter was to fly, but to say that it “actually knew” of its lack of knowledge of hazards in that area (a known unknown) was simply to reiterate its failure to make inquiry.

15. Telstra also submitted that Endeavour’s relationship with Precision was contractual and involved a commercial benefit for Endeavour. Endeavour therefore had actual knowledge of the circumstances in which Precision’s property would be deployed for its (Endeavour’s) benefit.

16. These submissions reflect the balance which is to be achieved between the separate areas of causal responsibility. In a sense, apples must be compared with oranges. Endeavour, carrying out a commercial exercise with significant social value failed to make an inquiry as to the kind of hazard which it (and its commercial contractor, Precision) might face. On the other hand Telstra had created a risk for purposes which, so far as the evidence allowed, had no social value or significant purpose.

17. The appropriate course is to apportion responsibility equally with respect to Precision’s property claim.

(b)   proportionate liability

18. The agreed value of Precision’s claim being $490,000, if the liability is joint and several, there should be judgment against Endeavour and Telstra for the full amount. If, however, it is an “apportionable claim” under Pt 4 of the Civil Liability Act, there should be judgment against each for $245,000. (Precision also claimed interest, which neither it nor the other parties sought to quantify.) Endeavour, in its draft orders, treated the claim as joint and several, and did not address Telstra’s submission that the claim was an apportionable claim. Precision, somewhat coyly, referred to the need for “separate, apportioned judgments against Endeavour and Telstra.” For the reasons given below, Telstra’s submission should be accepted.

19. Part 4 of the Civil Liability Act defines an apportionable claim as “a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care”. [8] The claim by Precision involved both economic loss and damage to property.

    8. Civil Liability Act, s 34(1)(a).

20. Apportionment will only arise where there are “concurrent wrongdoers” which, in the present circumstances, would include Endeavour and Telstra whose separate acts and omissions caused the damage or loss the subject of the claim. [9]

    9. Civil Liability Act, s 34(2).

21. The operative provision, s 35(1), is in the following terms:

35   Proportionate liability for apportionable claims

(1)   In any proceedings involving an apportionable claim:

(a)   the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss, and

(b)   the court may give judgment against the defendant for not more than that amount.

22. Because the Court may give judgment against a particular defendant “for not more than” the amount reflecting its proportion of the damage or loss claimed, it follows that the Court cannot give judgment against either or both for the full amount of the claim. Accordingly, on Precision’s claim for economic loss and damage to property, the judgment must be for half the amount claimed, as against each defendant.

23. Telstra submitted that Precision was not entitled to recover pre-judgment interest with respect to its apportionable claim against Telstra. No reason was provided in support of this submission. It may have been intended to rely upon an inference derived from s 35(1) of the Civil Liability Act, limiting the liability of a defendant to a proportion of the damage or loss, so that no interest can be claimed on that damage or loss. The proposition that s 35 (if that be the source of the submission) derogates from the general power to award pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) must be considered highly contestable. It is not a submission which should be entertained when raised for the first time in a written submission in reply, dealing with the orders to be made, following the principal judgment.

Personal injury claims

24. The apportionment of loss for the personal injury claims of the plaintiff and his family members involves consideration of a different set of duties. Whilst Telstra’s breach remains the same as that identified above, Endeavour’s duty does not, in the sense that the law imposes a higher level of responsibility on an employer with respect to an employee than the responsibility placed upon a third party with respect to the safety of an individual who is not its employee.

25. There are circumstances in which the application of such a principle may be counterintuitive. For example, if a vehicle were to crash in circumstances which affected all occupants equally (both passengers and employees alike), such as a failure to maintain a mechanical system, the difference in levels of responsibility would be immaterial. In the present case, both kinds of duty were in play. Thus, the failure of Endeavour to make reasonably necessary inquiries of Telstra as to the positioning of Telstra’s infrastructure affected all occupants of the helicopter equally. On the other hand, a failure to require the plaintiff to wear a helmet did not. Precision’s obligation to ensure that the plaintiff wore a helmet arose from its control of the circumstances in which the helicopter was to be used. Endeavour’s obligation arose from its duty as the plaintiff’s employer.

26. Despite the different sources of the duty, Endeavour maintained that Precision “was in the best position to enforce or exhort helmet use” and that the legal obligation of the employer was properly to be viewed in the factual context in which its application arose.

27. Endeavour called in aid statements of principle made by this Court in Dib Group Pty Ltd (t/as Hill & Co) v Cole. [10] In the passage relied upon I stated (with the agreement of Beazley and McColl JJA):[11]

“The employer’s duty, however effected, to adopt safe systems of work and to provide proper plant and equipment, will operate differently on its own premises and in circumstances over which it has full control, as compared with premises under the control of others and circumstances over which it does not have control. Where the safety of premises is at stake, as in this case, it is appropriate to ask quite specific questions with respect to what may be expected of an employer exercising reasonable care for the safety of its employees. For example, is it reasonable for the employer to request or require access to premises to carry out its own safety inspection? Is it necessary (and sufficient) if the employer inquires of the occupier what steps it has taken to conduct such an assessment? Is it necessary (and sufficient) for the employer to inquire in specific terms of its own employees as to the nature of the conditions they encounter at other premises?”

10. [2009] NSWCA 210; [2009] Aust Torts Rep 82-022.

11. Dib at [54].

28. The questions raised involve matters of fact and degree. This was not a case in which the helicopter crashed because of a defect in its design or manufacture or inadequate maintenance. Endeavour owed the plaintiff a non-delegable duty to ensure that reasonable care was taken for his safety. [12] The breaches of duty (failure to inquire as to hazards and failure to require the wearing of a helmet) were both matters squarely within Endeavour’s control. True it was that whilst the plaintiff was in flight, Endeavour had no direct physical control over whether or not he wore a helmet. However, that was not the formulation of the breach of duty: the breach arose from Endeavour’s failure to require him to wear a helmet. The fact that it shared that obligation with Precision did not diminish Endeavour’s responsibility. The fact that Precision had a more immediate ability to enforce a “no helmet, no fly” requirement may suggest a greater causal potency resulting from its breach. However, neither party submitted that enforcement was a key issue. Although there was evidence about Endeavour employees not liking to wear helmets, the evidence did not establish that, had firm requirements been imposed either by Precision or Endeavour, the plaintiff would not have worn a helmet.

    12. Kondis v State Transport Authority (1984) 154 CLR 672 at 687–688 (Mason J, Deane and Dawson JJ agreeing), 689 (Murphy J), 694 (Brennan J).

29. More importantly, Endeavour bore responsibility for two separate breaches of duty in relation to the plaintiff. The ultimate apportionment of liability should reflect both that fact and its relationship as the plaintiff’s employer. Endeavour should bear 60% of the liability for personal injury, with the balance (20% each) being apportioned to Precision and Telstra respectively.

Endeavour’s claim for indemnity

(a)   basis of claim

30. The claim for indemnity brought by Endeavour arose under s 151Z of the Workers Compensation Act. So far as relevant, that provision stated:

151Z   Recovery against both employer and stranger

(1)   If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker’s employer to pay damages in respect of the injury, the following provisions have effect:

…

(d)   if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),

….

31. There was no dispute that the plaintiff suffered an injury for which compensation was payable and that the plaintiff had recovered compensation under the Act. Endeavour was a person by whom the compensation had been paid and was thus the party seeking to be indemnified by any person liable to pay damages “in respect of the injury”.

(b)   Precision’s response to claim

32. There was no suggestion that Precision had paid any amount on account of the injury to the plaintiff. However, Precision submitted that it was not obliged to pay any amount by way of indemnity. That was because, pursuant to s 36 of the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (“Carriers’ Liability Act”), its liability under Pt IV of the Act was “in substitution for any civil liability of the carrier under any other law in respect of the injury.”

33. The primary objection raised by Precision was that the only claim made by Endeavour was based upon Precision’s common law liability for negligence: the operation of the Carriers’ Liability Act precluded any such liability. In those terms, Precision raised a pure pleading point. However, the submission continued:

“Precision’s liability arises as a matter of strict liability out of the crash. As such the liability is an item of damage recoverable as against Endeavour on the same basis as in Precision’s successful property damage claim (see below). As between Precision and Endeavour, Precision would be entitled to full contribution from Endeavour and accordingly the amount of the indemnity is reduced to nothing.”

34. The pleading point should not be accepted. While it is true in terms that Endeavour did not plead that Precision was liable in damages under statute, rather than for breach of a duty of care, Precision’s defence (as it conceded in its submissions) did not expressly take this point. Nor was it submitted that such a point had been taken in the course of the trial, or in the course of the appeal. It is something of a curiosity that Precision accepts it has a liability to pay damages to the plaintiff in an amount of $500,000, of which it has apparently paid nothing, but now asserts that it is not required to pay any amount to anyone. It is possible that the answer lies in the fact that the plaintiff’s claims have been settled on a basis which is not revealed in the papers before this Court.

35. The second basis for Precision resisting the claim for indemnity is obscure. The pleading point aside, it is not clear what difference it makes that the liability was strict and not in negligence. (It is a liability for damages and therefore within s 151Z.)

36. Unlike the property damage claim, it was a liability to the plaintiff. The only basis upon which the indemnity could have been resisted might have been if Precision had a contractual indemnity claim against Endeavour. As Precision noted, however, its contractual indemnity claim failed. Nor does it appear that that was intended in the passage set out above, which speaks about the indemnity apparently existing, but being “reduced to nothing.” It may be that the submission sought a set off of the amount recoverable by way of damages for the property claim against the amount payable by way of statutory compensation, although the latter was marginally larger. No orders were formulated in these terms and the matter need not be pursued.

37. Endeavour read Precision’s submissions as suggesting that the statutory liability under the Carriers’ Liability Act was in substitution for the indemnity under the Workers Compensation Act. As Endeavour correctly noted, that could not be the case, because s 37 of the Carriers’ Liability Act expressly states that nothing in Pt IV excluded any liability of a carrier “to indemnify an employer of a passenger … in respect of any liability of, or payments made by, that employer … under a law … providing for compensation, however described, in the nature of workers’ compensation”. (The monetary cap nevertheless applied.) Thus, it is true that a carrier may still be liable for an indemnity with respect to repayment of workers’ compensation, but it is not entirely clear that this was the legal point which Precision sought to deny.

(c)   proposed calculations

38. The basic monetary amounts relevant to the exercise under s 151Z were agreed, namely that general law damages would have been assessed at $16 million and damages payable by the employer in accordance with the modified claims available under the Workers Compensation Act would have been $1.7 million. The amount of workers’ compensation paid so far has been agreed at $4,922,700.

39. Of the parties which made calculations, Endeavour used apportionment percentages varying from its preferred liability (15%) up to 50%. Telstra used its preferred figure of 80% liability against Endeavour. In the result, no party made the calculation based on 60% liability against Endeavour, identified above. Nevertheless, the variations can readily be made and the upper limit of the indemnity payable under s 151Z(1)(d) of the Workers Compensation Act may be calculated at $7.42 million, [13] a figure in excess of the compensation paid so far. According to Endeavour, it would therefore be entitled to judgment against Telstra for the full amount of the compensation paid and against Precision for $500,000. However, Telstra took exception to that calculation on the basis that the indemnity did not become payable until the employer had paid off its proportion in full. According to that calculation, on the basis that Endeavour bore 60% of the liability, it was required to pay $1.02 million (60% of $1.7m) before entitled to recoupment. On that calculation, the portion of the payment made so far which was recoverable was $3,902,700 ($4,922,700 – $1.02m).

    13.    That calculation is $16m less [60% of $16m = $9.6m] – [60% of $1.7m = $1.02m] = $8.58m; that is $16m – $8.58m = $7.42m,

40. One consequence of this conclusion is to vary the interest component of any recovery. On Endeavour’s calculations, accrued interest totalled $1,885,289. On Telstra’s calculation, depending on the percentage of liability, the figure was considerably lower. It appears likely to be in the order of $1 million, but the calculation cannot be undertaken on the material available to the Court.

(d)   deduction of employer’s portion

41. Telstra’s submission that Endeavour must first bear the part of the compensation payments equivalent to its notional contribution to a judgment for modified common law damages depended on the application of s 151Z(2)(e) of the Workers Compensation Act. That provision reads as follows:

151Z   Recovery against both employer and stranger

…

(2)   If, in respect of an injury to a worker for which compensation is payable under this Act:

(a)   the worker takes or is entitled to take proceedings independently of this Act to recover damages from a person other than the worker’s employer, and

(b)   the worker also takes or is entitled to take proceedings independently of this Act to recover damages from that employer,

the following provisions have effect:

…

(e)   if the worker does not take proceedings against that employer or does not accept satisfaction of the judgment against that employer, subsection (1) applies as if the worker had not been entitled to recover damages from that employer, except that:

(i)   if the compensation paid by that employer exceeds the amount of the contribution that could be recovered from that employer as a joint tortfeasor or otherwise – the indemnity referred to in subsection (1)(d) is for the amount of the excess only, and

(ii)   if the compensation paid by that employer does not exceed the amount of that contribution – subsection (1)(d) does not apply and the employer has, to the extent of the compensation so paid, a defence to an action for such a contribution.

42. There appears to have been a disagreement in the Court below as to whether subs (2)(e) was engaged or not. In this Court, the calculation adopted by Endeavour did not accept its application; that adopted by Telstra did. If subs (2)(e) is applicable, it is clear that the employer’s contribution must be taken into account before any entitlement to indemnity arises. It is only when the employer’s contribution has been accounted for that an excess can be identified, the amount of the excess being the amount of the indemnity.

43. For Endeavour to succeed in resisting this conclusion, its entitlement to indemnity must follow from subs (1)(d), read in isolation. It may readily be accepted that, in its ordinary meaning, the language of the chapeau to subs (1) is equally consistent with there being a liability in some third person, other than the worker’s employer, but also liability in the worker’s employer, on the one hand, and, on the other, a requirement that there be liability only in a person other than the worker’s employer. [14] If s 151Z(1)(d) applied in circumstances where both a third party and the employer were liable to pay damages in respect of an injury, it would not be necessary to consider further the operation of subs (2). However, that is not the law. The language used in the chapeau to s 151Z(1) is not materially different from the language used in a line of earlier statutes, including s 64(1) of the Workers’ Compensation Act 1926 (NSW). There is established authority holding that this language did not apply with respect to an employer which was itself liable in negligence. Were it otherwise, in the absence of any limitation allowing for apportionment, the negligent employer would enjoy a right to a complete indemnity, even if the employer’s share of the responsibility were greater than that of the third party. This view of the provision, limiting its application to the case where the employer itself has no liability in damages, was upheld unanimously by the High Court in Public Transport Commission v J Murray-More. [15]

    14. Public Transport Commission of New South Wales v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 349-350 (Gibbs J); cf Barwick CJ at 341.

    15. (1975) 132 CLR 336 at 350 (Gibbs J) and 353-354 (Jacobs J).

44. The earliest version of such a provision appears to have been s 6 of the Workmen’s Compensation Act 1906 (UK). [16] With the enactment of the Workers Compensation Act in 1987, the equivalent provision was found in s 150, with the relevant language materially unchanged, but with a new subs (2) which differed from the present provision, in part because s 149 had abolished the common law entitlement of a worker to recover damages from his or her employer. The subsequent history of amendment was outlined by Giles AJA in I&J Foods Pty Ltd v Bergzam Pty Ltd. [17] The absence of change to the chapeau necessitated the conclusion that, taken in isolation, s 151Z(1)(d) did not permit recovery of an indemnity in circumstances where the employer was liable in negligence. Thus, a significant purpose of subs (2)(e) was to provide for the application of subs (1)(d) in circumstances where the worker is entitled to take proceedings to recover damages from his or her employer, but either does not do so or does not obtain recovery against the employer. In those circumstances, subs (1) is said to apply as if the worker had not been entitled to recover damages from the employer, thus overcoming the constraint accepted in Public Transport Commission v J Murray-More.

    16.    The provision is set out in Public Transport Commission at 345, by McTiernan J.

    17. [1997] NSWSC 118; 14 NSWCCR 486 at 496C.

45. The employer’s right to indemnity still does not arise in circumstances where the worker has taken proceedings and has accepted satisfaction of a judgment against the employer. There is, however, an element of ambiguity in the language of paragraph (e), apparently framed in the alternative (not taking proceedings or not obtaining the satisfaction of a judgment). The present language was introduced in 1995, [18] with the reintroduction of the previously abolished right to recover damages from an employer. As noted by Giles AJA in I&J Foods:

“Thus section 151Z(2)(e) took effect by providing that section 151Z(1) should apply ‘as if the worker had not been entitled to recover damages from’ the employer, a tolerably clear statement that the limitation declared in Public Transport Commission… should be deemed out of existence so as to permit partial indemnity.”

18.    See WorkCover Legislation Amendment Act 1995 (NSW).

46. The history discussed in I&J Foods as to the inclusion and subsequent amendment of s 151Z(2) revealed a degree of hesitation and confusion as to what was sought to be done and how it should be effected. Thus subs (2) only applies where the worker “takes or is entitled to take” proceedings to recover damages from his or her employer: par (b). Nevertheless, where par (e) operates – that is where the worker does not take proceedings – subs (1) is applied as if the other limb of par (b) were negated. The intention to depart from the limitation on the operation of subs (1) explains the curiosity. On that approach, the words “except that”, preceding sub-paragraphs (i) and (ii), are not exceptions to all that precedes them in paragraph (e), but rather relate to the application of subs (1).

47. Telstra relied in its submissions on the explanation given by Campbell JA in J Blackwood & Son Ltd v Skilled Engineering Ltd. [19] However, at least parts of that reasoning were obiter and Giles JA took a simpler approach in relation to this issue, Beazley JA agreeing with Giles JA. It is not necessary here to explore the construction issue further.

    19. [2008] NSWCA 142 at [43]-[46] and [156]-[159].

48. Unless the opening words to par (e) are satisfied, Endeavour has no entitlement to indemnity, given that it is liable to the plaintiff in damages. As it is not in doubt that Mr Edwards commenced proceedings against Endeavour, it would seem that the first limb of par (e) was not satisfied. As the trial judge noted (and the court’s records confirm), “[o]n 16 September 2011, Harrison J approved a compromise as between Mr Edwards and other parties to the litigation, and noted that Mr Edwards discontinued the whole of the proceedings which he had initiated.”[20] On one view the opening words of par (e) would be satisfied had the plaintiff commenced proceedings but not obtained a judgment for damages against the employer. Support for that reading might follow from par (b), which appears to require that the employer be liable to the worker in damages. In any event, no party submitted that par (e) was not engaged and subs (1)(d) therefore applied, subject to the variation provided (relevantly) in sub-par (i). In short, Endeavour can obtain the excess of the compensation paid after allowance for the amount of the contribution which could be recovered from it “as a joint tortfeasor or otherwise”.

    20. Edwards v Endeavour Energy (No 4) [2013] NSWSC 1899 at [5].

49. There remained an issue, not identified in the submissions, as to how that liability should be apportioned (if at all) between Telstra and Precision. One answer may be that Precision made no claim to contribution, so that any reduction in the compensation recoverable pursuant to the indemnity must allow for the contribution payable by Endeavour to Telstra. It follows that the judgment to be given in the present case is limited in the manner proposed by Telstra. However, because the interest calculation is to be made on a different basis from that proposed by Telstra (or by Endeavour) it will be necessary for the parties to reach agreement as to the amount of interest to be included in the final orders.

50. One effect of the judgment will be that, Endeavour’s contribution having been accounted for in the first payment, the indemnity will continue to operate up to the amount of the damages payable by Telstra, unless other provisions within s 151Z are engaged.

Edwards children’s claims

51. The circumstances with respect to the claims by the Edwards children were set out in the principal judgment at [5]. The submissions now before the Court suggest there has been no development since the date of the principal judgment.

52. Endeavour’s submissions deal with questions of apportionment, but not specifically in relation to the Edwards children. With respect to orders in those proceedings, Endeavour submitted that the only order required was one setting aside orders 1, 4 and 5 “of the said judgment below.” The reference to the judgment is to the judgment “entered on 10 July 2014”. (The certificate was issued on 10 July 2014: the orders were entered on 13 February 2014.) The orders referred to dismissed what appears to be Telstra’s cross-claim (because there was no finding of liability against Telstra) and gave judgment for Telstra on Endeavour’s cross-claim (for the same reason). No orders were proposed in place of the orders to be set aside, although the reason for that may have been that there had not been an assessment of damages, nor (subject to delivery of this judgment) had there been any apportionment of responsibility. It might be inferred, however, that Endeavour accepted that the appropriate apportionment would apply to the children’s claims as well as to contribution to the damages for personal injury payable to the plaintiff.

53. Telstra’s submissions expressly treated the apportionment with respect to recovery under s 151Z of the Workers Compensation Act together with apportionment of the Edwards children’s claims. Telstra accepted (albeit at the lower level of 10%) the same apportionment should apply between it and Precision with respect to those claims. Those proportions followed through into draft orders.

51. The Edwards children filed brief submissions concurrently with the submissions in reply of the other parties, on 3 August 2015. Those submissions adopted the approach proposed by Telstra (although it is unclear what interest the Edwards children had in the apportionment of liability between the respective defendants), except in relation to costs in the Court below, with respect to which it was submitted (indisputably given that the proceedings below had not been concluded) that this Court should not make orders. (Costs in this Court will be dealt with separately.)

52. The only departure from this apparent common ground was to be found in Precision’s submission in reply which stated that if its primary submission (that all contribution claims against it should be dismissed) were to be rejected, the Court should leave the question of apportionment in respect of the Edwards children’s claims to the lower court. The submissions relied upon two propositions, the first was that the children not having established that they suffered compensable loss, the question of apportionment had not yet arisen. As a related point, it was said that any harm suffered by them was “different to the harm suffered by Mr Edwards.” Both these propositions are factually correct: however, it is not clear how either would affect apportionment, as a matter of principle.

53. A separate proposition was that “if the harm suffered by the children … was caused by the accident itself rather than Mr Edwards’ brain injury, Precision would contend that it has no liability.” The basis of that proposition is, presumably, the finding that Precision was liable only in respect of the failure to require Mr Edwards to wear a helmet. How the children could establish compensable loss on some basis unrelated to the injury caused to their father is obscure. No other party envisaged this possibility. In the circumstances, it should be rejected. Findings with respect to apportionment should, as accepted expressly or implicitly by the other parties, apply both to the indemnity claims and to the Edwards children’s claim.

54. Whilst Telstra submitted that the children’s claims were not subject to the Carriers’ Liability Act, Endeavour’s submissions suggested that they might be, pursuant to s 37 of the Carriers’ Liability Act, although subject to a cap. While s 37(b) refers to a liability to pay contribution, it is limited to a liability “in respect of” injury to a “passenger”. Whether the Carriers’ Liability Acts apply with respect to the children’s claims was not an issue agitated in this Court and need not be considered further. If there be a live issue, it will constitute part of the remitter.

55. It appears from orders made by the trial judge on 26 February 2015 that each of the Edwards children has discontinued his or her claim against Precision. Telstra noted that there remained a cross-claim by it against Precision which, it submitted, fell outside the cap on liability under the Carriers’ Liability Act. It also submitted that it was “too late” for Precision to assert reliance on the Carriers’ Liability Act in relation to Telstra’s cross-claim against it. These are not issues which are to be resolved in this Court: the whole of the outstanding proceedings with respect to the Edwards children’s claims will be remitted to the Common Law Division.

Costs

59. Both Endeavour and Precision submitted that costs should be assessed on a global basis, because of the interrelationship of issues and evidence. Telstra, by contrast, proposed separate costs orders in the separate proceedings.

60. There is merit in adopting the global approach. All of the proceedings depended upon identifying the relevant degrees of responsibility (if any) for the accident. That exercise applied as much to the assessment of liability for personal injury as for the property claims. Further, although Precision had a specific defence, relying on its strict, but capped, liability, it had a separate interest in the negligence claims in so far as it had its own claim for property damage and economic loss.

61. Unsurprisingly, the parties differed as to how costs should be apportioned. However, each sought in different calculations to apportion costs largely by reference to the apportionment of responsibility for the harm suffered by the respective claimants.

62. While proportionate responsibility is not an irrelevant factor, it should not dictate the appropriate costs order. In a simple motor accident case, a plaintiff will usually be entitled to recover costs even if the amount of the damages awarded were significantly less than that claimed, or if the amount were reduced on account of contributory negligence. The conventional way for a party to protect itself against a result in which it is partly successful (or partly unsuccessful) is to make an offer which, if not accepted, may have costs consequences depending on the final judgment. There was no suggestion that orders as to costs would be affected by unaccepted offers of compromise in the present cases.

63. A different way of approaching costs is to have regard to the time and resources devoted to particular issues, as part of the whole group of proceedings. At least so far as the appeals are concerned, the Court is in a reasonable position to make such an assessment. With respect to the costs of the trial, the basis for assessment is less well understood, but could be approached in a broad brush manner, based on the extensive material before the Court, but including particularly the judgment below.

64. The alternative course, namely to award costs according to the degrees of success in the specific proceedings, is likely to give rise to a heightened possibility of dispute and the need for an assessment of costs by reference to the separate proceedings.

65. Despite the desirability of a global assessment with respect to the appeals, the preferable course is to address separately the costs of the separate appeals and the cross-appeals.

66. It is convenient to deal first with Precision’s cross-appeal. The primary issue raised on the cross-appeal was a challenge to the conclusion at trial that the Carriers’ Liability Act did not apply with respect to the personal injury claim on behalf of the plaintiff. On that issue, Precision was successful. Precision also challenged the finding of negligence with respect to the failure to “promote the wearing of helmets by the staff of Endeavour”, an issue on which it failed, but which did not affect its ultimate liability. The cross-appeal also sought to obtain the benefit of any finding that Telstra was liable in negligence. The Court having found liability on the part of Telstra, Precision was entitled to such benefits as flowed from that liability, particularly with respect to its property damage claim.

67. Precision should have its costs of the cross-appeal (including costs with respect to the post-judgment submissions) against Endeavour and Telstra.

68. It is convenient to deal next with the claims of the Edwards children. They sought an order against Endeavour. The basis on which they did so is obscure. Nor did the Edwards children have any interest (nor were they parties to) the proceedings between Endeavour and Precision and Telstra with respect to the claimed indemnity under s 151Z of the Workers Compensation Act.

69. In so far as Endeavour sought to overturn the finding that Telstra was not liable, the Edwards children, for reasons which were not fully explained, aligned themselves with Telstra. However, they were not parties to that appeal and benefited from the judgment in favour of Telstra in their proceedings being set aside. However, it does not follow that they should obtain costs against Endeavour (as they sought).

70. The basis for their submission was a concession of liability made by Endeavour in the course of the appeal, in relation to the children’s claims. It was said (somewhat blandly) that following that concession the proceedings between Precision and the Edwards children were settled. It followed, the submission continued, that the Edwards children should have their costs of the appeal from Endeavour. However, there being no clear connection between the events upon which they relied, nor any adequate statement of their interest in the appeals, that submission should be rejected. They played what can best be described as an insubstantial role in the appeal proceedings and, to the extent that they incurred costs, they should bear their own costs.

71. It remains to consider an application for leave to appeal made by Endeavour in which the Edwards children, together with Precision and Telstra, were respondents. (It was in the course of that application that the concession was made.) Endeavour required leave because there had been an interlocutory judgment on liability only with respect to the Edwards children. Leave was sought on the basis that the issues sought to be raised on the application were “identical to the grounds of appeal in the appeal as of right” with respect to the other proceedings.

72. As the Court noted in its principal judgment[21] although Endeavour did not withdraw its application for leave to appeal, it “must presumably be dismissed.” No submission was made, post-judgment, to the contrary. The application should therefore be dismissed; the Edwards children should have their costs of that application.

    21. Principal judgment at [5].

73. So far as Endeavour’s appeals are concerned, Endeavour had a significant degree of success in establishing liability on the part of Telstra. Endeavour submitted that Telstra should pay 75% of its costs of the appeal proceedings, partly on the basis of the degree of liability which it sought to apportion against Telstra. Telstra adopted a similar approach, namely that there be a global order as to costs, reflecting the apportionment of liability. (Its apportionment submissions were a mirror image of Endeavour’s submissions.)

74. For the reasons noted above, apportionment of responsibility should not be the sole basis upon which costs are awarded.

75. Having obtained a finding of liability against Telstra, Endeavour was, in a legal sense, successful. On the other hand, the allocation of responsibility meant that, in a practical sense, its success was limited. Further, some allowance must be made in apportioning costs for the fact that attempts to apportion liability to Precision, based on its negligence, were rendered otiose by the finding that Precision had a capped strict liability.

76. In these circumstances, Telstra should pay one-third of Endeavour’s costs of the appeals, excluding costs incurred in relation to Precision’s cross-appeal.

Orders

77. For the reasons explained above, judgment cannot be given for monetary sums on the basis of the material before the Court. It is assumed that the parties will reach agreement as to the form of the final orders and, to the extent that variation is required of the orders set out below, the parties have leave to file orders varied by consent.

1. In matter 2014/70909 (application for leave to appeal: Endeavour Energy and the Edwards children)

1. Dismiss the application for leave to appeal.

2. Order the applicant (Endeavour) to pay the costs of the Edwards children of the application.

3. No order as to the costs of the third respondent (Precision) and the fourth respondent (Telstra).

2. In matters 2014/70903 (including Precision’s cross-appeal), 2014/70909; 2014/70915 –

1. Set aside orders made by Johnson J on 13 February 2014 in matters SC 2008/289264; SC 2009/297468 and SC 2010/147165, other than the stays of the orders.

2. In lieu thereof –

1. Declare that the liability of Precision Helicopters Pty Ltd with respect to personal injuries suffered by Simeon Edwards as a result of the crash landing of a helicopter on 4 April 2006 is limited to the amount of $500,000 pursuant to the Civil Aviation (Carriers’ Liability) Act 1967 (NSW).

2. Declare that the liability of Precision Helicopters Pty Ltd by way of indemnity in favour of Endeavour Energy, pursuant to s 151Z of the Workers Compensation Act 1987 (NSW) is capped in the same amount.

3. Declare that the total amount of the indemnity recoverable by Endeavour Energy under s 151Z of the Workers Compensation Act 1987 (NSW) is $7.42million.

3. In matter SC 2010/147165 give judgment in favour of Endeavour Energy:

1. against Precision Helicopters Pty Ltd in an amount of $500,000 plus interest;

2. against Telstra Corporation Ltd in an amount of $3,902,700 plus interest;

3. against Precision Helicopters and Telstra for the costs of the proceedings in the Common Law Division.

4. In matters SC 2008/289263 and SC 2008/289264 –

1. give judgment for the second plaintiff (Connor Edwards) and the third plaintiff (Ruby Anna Edwards) against Endeavour Energy and Telstra Corporation, for damages to be assessed;

2.    remit the matter to the Common Law Division for assessment of damages, determination of cross-claims and orders for the costs incurred in the Division.

5. In matter SC 2009/297468, give judgment in favour of the plaintiff (Precision Helicopters):

1. against Endeavour Energy in the amount of $245,000 plus interest;

2. against Telstra Corporation in the amount of $245,000 plus interest;

such judgments to have effect from 13 February 2014;

3. order that Endeavour Energy and Telstra Corporation pay the costs of Precision of the trial with respect to this claim.

3. Order that Endeavour Energy and Telstra Corporation pay the costs of the cross-appeal by Precision Helicopters in matter CA 2014/70909.

4. Order that Telstra Corporation pay one-third of Endeavour Energy’s costs of the appeal (other than the costs of the cross-appeal).

78. MACFARLAN JA: I agree with Basten JA.

79. SACKVILLE AJA: I agree with Basten JA.

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Endnotes

Decision last updated: 19 November 2015