McGrath v Fairfield Municipal Council

McGrath, an employee of Fairfield Municipal Council, appealed to the High Court of Australia against a decision of the Court of Appeal of the Supreme Court of New South Wales. The dispute concerned the Council's claim for indemnity against McGrath for damages it had paid to a third party due to McGrath's negligent performance of his duties.

The High Court was required to determine whether the Council's right of indemnity against McGrath was abrogated by s 5(1)(c) of the *Law Reform (Miscellaneous Provisions) Act 1946* (N.S.W.) or s 2(3) of the *Employees' Liability (Indemnification of Employer) Act 1982* (N.S.W.). Specifically, the court considered whether these provisions, which deal with contribution between tortfeasors and the liability of employees to indemnify employers, extinguished the employer's common law right of indemnity.

The High Court held that neither of the statutory provisions abrogated the Council's common law right of indemnity. The Court reasoned that s 5(1)(c) of the 1946 Act was concerned with contribution between joint tortfeasors and did not affect the separate right of an employer to seek indemnity from an employee whose negligence caused the employer to be liable to a third party. Similarly, s 2(3) of the 1982 Act, which limited an employee's liability to an employer in certain circumstances, was interpreted as not displacing the common law right of indemnity where the employee's conduct was fundamentally a breach of duty to the employer.

The High Court allowed the appeal, setting aside the order of the Court of Appeal and ordering that the appeal to that Court be dismissed with costs.