 5 April 2008
 01 August 2010
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Case Notes
APPEAL AGAINST AN INDEMNITY CLAIM FOR AN ASSESSMENT
OF THE NOTIONAL POOL
OCS Australia Pty Ltd v Cho [2010] NSWCA 85
The NSW Court of Appeal recently dismissed an appeal
regarding an indemnity issue under section 151Z(1)(d) of the
Workers Compensation Act 1987.
Mrs Janet Bowen was an employee of OCS Australia Pty Ltd
(‘OCS’) (the appellant). On the morning of 7 February 2002,
she was driving on her way to work when Helen Cho’s (the
defendant's) vehicle coming the other way made a right-hand
turn across oncoming traffic. Ms Cho’s vehicle was struck on its
near side by Mrs Bowen’s car and the car in the next lane. This
caused a sudden deceleration of Mrs Bowen’s car from 60 kph
to zero. Consequently, Mrs Bowen injured her back. OCS,
having paid substantial amounts for workers compensation and
medical expenses in respect of Mrs Bowen's injuries, brought
proceedings in the District Court against Ms Cho to enforce the
indemnity provided for in Section 151Z(1)(d) of the Workers
Compensation Act 1987 in respect of such payments.
Handley AJA noted that a Court hearing such proceedings is
bound, if the defendant’s liability is established, to assess the
damages the worker could have recovered from the tortfeasor
(the notional pool). This was articulated in Grant v Royal
Rehabilitation Centre Sydney [1999] NSWCA 250, 47 NSWLR
263 at 265, where Cole AJA said:
"There would be one determination of the quantum of
common law damages which the injured worker would
have recovered, which determination would be
binding as between the employer paying
compensation to the injured worker, and the
tortfeasor. Thereafter, once that limiting figure is
known, both the employer and the tortfeasor, or his
insurer, will know the extent to which the indemnity
provided by s 151Z(1)(d) is recoverable from the
tortfeasor. Certainty is introduced in the
first proceeding.”
OCS alleged that the motor vehicle accident was a
material contributing cause of Mrs Bowen’s injured
back and her incapacity for work following that
accident. It claimed indemnity for payments up to
the trial totalling $167,221.24 and alleged that the
notional pool was $720,998.
The trial Judge found that the motor vehicle accident
had caused only minor injuries from which the
worker had soon recovered and that her continuing
incapacity was the result of degenerative disease in
her lumbar spine, back injuries in the employment of
a previous employer, and surgical procedures. She
therefore assessed the notional pool of damages at
$3,392. She dismissed the action because Mrs Cho’s
third party insurer made an "interim payment" of
$112,452.84 to the workers compensation insurer.
OCS appealed claiming that a proper assessment
of the notional pool for the purposes of s 151Z(1)(d)
was in the order of $720,000. OCS had relied on s
127(2)(c)(ii) of the District Court Act which confers a
right of appeal which "involves (directly or indirectly)
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Rankin Nathan Case Notes (continued)
any claim, demand or question to or respecting any
property or civil right amounting to or of the value of
$100,000 or more." Ms Cho objected to the competency
of the appeal on the ground that the amount
recoverable in the appeal, if it was successful, would be
less than $100,000.
Handley AJA held that the appeal was competent. The
reasons for this conclusion was articulated by Gibbs J in
A-G ex rel Duncan v Andrews [1979] HCA 24, 145 CLR
573 at 579-581 by holding that competency under s
127(2)(c)(ii) of the District Court Act depended on the
value of the property or civil right and not the value of
the claim or question. Under s 127(2)(c) competency
depends on the amount involved in the appeal on the
amount of the judgment: Dunn v Ross Lamb Motors
[1978] 1 NSWLR 26.
Further, the indemnity conferred by s 151Z(1)(d) is
capped by the notional pool but otherwise extends to all
payments under the Act past and future in respect of the
injury. The right of indemnity attaches to each payment
under the Act as and when it is made: A-G v Arthur Ryan
Automobiles Ltd [1938] 2 KB 16 CA; South Eastern
Sydney Area Health Service v Gadiry [2002] NSWCA
161; 54 NSWLR 495.
If the employer’s right to the indemnity is established at
the first trial the judgment will create issue estoppels for
the right of indemnity and the notional pool which will be
binding in later proceedings to recover further
payments: Grant v Royal Rehabilitation Centre Sydney
[1999] NSWCA 250, 47 NSWLR 263. Thus the outer
limit of any future claims to indemnity by the employer
will be the size of the notional pool, as authoritatively
determined in the first proceedings.
the merits. The Court believed that the trial judge’s
reference to the primary findings by medical practitioners
who treated Mrs Bowen were sufficient reasons for
holding that the motor vehicle accident did not damage
the structure of Mrs Bowen’s lumbar spine but caused
minor injuries from which she recovered.
Implications
To enforce the indemnity under s 151Z(1)(d) of the
Workers Compensation Act 1987, the Court must assess
the damages that would have been recoverable by the
worker had he or she sued the tortfeasor, if liability was
established.
Further, the notional pool of damages so assessed
becomes the amount available to satisfy the indemnity:
Grant v Royal Rehabilitation Centre Sydney [1999]
NSWCA 250, 47 NSWLR 263
An appeal which seeks to increase the notional pool by
$100,000 or more where payments under the Act
continue is competent if it is bona fide and susceptible of
reasonable support: Cole v The Commonwealth [1961]
HCA 87, 106 CLR 653
Handley AJA also believed that the Court must be able
to determine the competency of quantum appeals in
personal injury cases without having to hear the appeal.
Competency cannot depend on the result. Consequently
a bona fide claim for the requisite amount that is
susceptible of reasonable support is sufficient to
demonstrate that the appeal involves a matter at issue
of that amount: Cole v The Commonwealth [1961] HCA
87, 106 CLR 653, 656.
However, while the appeal was competent, it failed on
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