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[2024] QCA 171
In this judgment, the Chief Justice (with whom Boddice JA and Henry J agreed) considered the operation of s 236B Workers’ Compensation and Rehabilitation Act 2003, and in particular whether subsection (3) requires the statutory insurer WorkCover Queensland to indemnify third parties for damages by operation of contracts entered into between employers and third parties. The Court held that the third party’s indemnity against the employer was void; that s 236B provides that WorkCover Queensland is not bound to indemnify an employer for liability stemming from a contractual indemnity between it and a third party; and that s 236B also invalidates any part of an agreement between an employer and a third party which stipulates that the employer indemnify the third party.
Bowskill CJ, Boddice JA and Henry J
13 September 2024
Mr Bilson had been employed by Vatsonic Communications Pty Ltd to operate a hydro vac truck. Vatsonic Communications Pty Ltd had a contract with the Townsville City Council pursuant to which it supplied “wet hire” of a vac truck, which included the truck, vacuum hose and operator. He suffered an injury whilst working in accordance with those arrangements, [1], and instituted proceedings against both his employer and the Council seeking damages for negligence and/or breach of contract. His employer issued third party proceedings against the Council, inclusive of a claim for indemnity, in accordance with the terms of a contract between them. [2].
Mr Bilson succeeded at first instance. The trial judge apportioned liability 70 percent to Vatsonic Communications Pty Ltd, having regard to its responsibility as the employer, and 30 percent to the Council, in view of the actions of its workers. Insofar as the effect of the contractual indemnity as between the two, the trial judge held that the Council was entitled to be indemnified by Vatsonic Communications Pty Ltd and that s 236B Workers’ Compensation and Rehabilitation Act 2003 did not operate to void the agreement between the parties and was inapplicable. [3], [116]. As a result of those findings, the trial judge assessed damages and entered judgment solely against Vatsonic Communications Pty Ltd.
All parties appealed the decision, as did WorkCover Queensland as a separate appellant in the proceedings. [4], [8], [10]. The key issues in dispute on the appeal (and cross-appeal) included:
(1)the application of s 236B Workers’ Compensation and Rehabilitation Act 2003 and whether the trial judge erred in constructing the provision as not voiding the indemnity clause;
(2)whether the trial judge erred in apportioning liability;
(3)on what basis general damages should be assessed against the Council (in circumstances where there was common ground that the trial judge ought to have assessed damages against the Council and that Mr Bilson was entitled to judgment in his favour against both the Council and his employer).
Section 236B Workers’ Compensation and Rehabilitation Act 2003
Section 236B provides:
“236B Liability of contributors
(1)This section applies to an agreement between an employer and another person under which the employer indemnifies the other person for any legal liability of the person to pay damages for injury sustained by a worker.
(2)The agreement does not prevent the insurer from adding the other person as a contributor under section 278A in relation to the employer’s liability or the insurer’s liability for the worker’s injury.
(3)The agreement is void to the extent it provides for the employer, or has the effect of requiring the employer, to indemnify the other person for any contribution claim made by the insurer against the other person.
(4)In this section—
damages includes damages under a legal liability existing independently of this Act, whether or not within the meaning of section 10.”
Section 236B was inserted as part of the Workers’ Compensation and Rehabilitation Act 2016. The Chief Justice observed, the original explanatory memoranda to the Bill indicated that the primary impetus of the amendment was “to reverse the effect of the Byrne decision and prohibit the contractual transfer of liability from principals to contractors which will save WorkCover Queensland an estimated $40 million per annum”. [124]. The judgment in Byrne v People Resourcing (Qld) Pty Ltd [2014] QSC 269, a landmark decision at the time, had resulted in WorkCover being required to indemnify employers for additional damages in certain circumstances where contractual indemnities in favour of third parties increased their liability.
Her Honour clarified that, notwithstanding one of the key objectives of the Bill was to reverse the effect of the decision in Byrne, having regard to the words used in s 236B(3), it has a broader outcome. The effect of the subsection is twofold. It operates to both clarify that WorkCover is not required to indemnify an insured employer for the amount of an injured worker’s damages that the employer is obliged to pay to another person under an indemnity clause contained in an agreement between the employer and the other person, and it also provides that the agreement is void to the extent it provides for the employer to indemnify the other person for any contribution claim made by the insurer against the other person. It follows from the plain meaning of those words that the other person (in the current matter, the Council) is unable to enforce the indemnity clause under the agreement. [127].
Her Honour noted that other aspects of the explanatory notes lent support for the conclusion that this was the original statutory intent. They included the reference to the effect of the amendment being to “prohibit the contractual transfer of liability from principals to contractors”, as well as the additional expressed purpose of the amendments, which was “ensur[ing] reasonable cost levels for employers and provid[ing] for the protection of employers’ interests in relation to claims for damages for workers’ injuries”. [128].
Her Honour therefore held that section 236B applied in this case, and that the contract between Vatsonic and the Council was void to the extent it provided for Vatsonic to indemnify the Council. [129].
Apportionment of liability
The Court concluded that accordingly, the plaintiff was entitled to judgment against each of the employer and the Council and that orders ought also be made reflecting the conclusions as to contribution between them. [130]. In that regard the Court endorsed the apportionment which the trial judge had arrived at as appropriate, observing that since Vatsonic was the employer, as well as the specialist contractor, it followed that it ought to bear a greater proportion of the liability. [73].
Assessment of damages against the Council
The parties all agreed that at first instance damages properly ought to have been awarded against the Council. The issue arising was that unlike Vatsonic, the claim against the Council was not governed by the restrictions in Workers’ Compensation and Rehabilitation Act 2003 as to quantum (but rather the common law). [132]. Vatsonic contended that in the claim against the Council, the correct quantum for general damages ought to be equivalent to the amount of general damages awarded as if assessed pursuant to Schedules 3 and 4 of Civil Liability Regulation 2014 and/or Schedules 8 and 9 Workers’ Compensation and Rehabilitation Regulation 2014. [137]. It made the submissions in case it was held liable on the contractual indemnity for the damages awarded against the Council. It further contended that the Injury Scale Value ratings contained in Civil Liability Regulation 2003 and Workers’ Compensation and Rehabilitation Regulation 2014 “are the real life paradigm of assessing ‘fair and reasonable’ compensation” whilst recognising what the High Court in Planet Fisheries Pty Ltd v La Rosa (1968) 119 CLR 118, 125 referred to as “current general ideas of fairness and moderation”. [138], [139].
The Court observed that the point raised a question of law with a clear answer, which was:
“… that, despite having had the opportunity to do so, and despite a pattern in this particular area of the law of legislative responses to court decisions, the legislature has not seen fit to regulate the assessment of damages for claims which are otherwise governed by the common law. There have been a number of cases in which damages have been assessed both at common law (against one party) and in accordance with the ISV system (against another). Yet, … no steps have been taken to amend the legislation to ‘deprive access to damages unregulated by statute’ in circumstances where, as in the case of Mr Bilson’s claim against the Council, s 5(1)(b) operates to exclude the operation of statute. I can see no justification, in the broad statement of principle in Planet Fisheries, for applying the statutory ISV regime to an assessment of damages at common law. If that is to occur, it ought to be done by legislative amendment”. [142]. (citations omitted)
The Court awarded damages to the plaintiff, as assessed against the Council, of $590,801.57. [150].
A Jarro