Australia: Section 151Z Workers Compensation Act 1987 (NSW) - recovery against third party (head contractor) not against employer - adjustment of award on account of culpability of employer

Last Updated: 6 November 2008
Article by Olivia Dinkha

In Brief

  • Even if a plaintiff is restricted from suing his/her employer for common law damages, in assessing the contribution between an employer and any other tortfeasor, a Court is still required to undertake the exercise prescribed in s 151Z(2) of the Workers Compensation Act, 1987 ("Act") and calculate the notional liability of the employer.
  • Where a tortfeasor cannot obtain contribution from the employer, a plaintiff is only entitled to recover the proportion of the damages equal to the tortfeasor's level of culpability.


  • The plaintiff, Mr Leite, was working on a building site for the construction of a block of units in Ashfield. The defendants, M & L Tarabay, were the head contractors of the site. The defendants had contracted SS Formworking Pty Ltd, the plaintiff's employer, to complete the formwork at the site.
  • On 20 October 2004, the plaintiff was carrying a sheet of plywood and fell through an aperture in the floor of a multilevel car park. He fell about 2.5 metres and suffered severe injuries, including fractures to both shoulders and his left thigh just above the knee.

District Court Decision

  • The trial judge, Goldring DCJ, found in favour of the plaintiff with judgment in the sum of $228,128.90. His Honour reduced the damages by 30% on account of contributory negligence. However, his Honour did not make a reduction in respect of the plaintiff's employer's liability pursuant to s 151Z(2) of the Act.
  • His Honour held that s 151Z(2) was not applicable in the circumstances of the case. The first basis for this finding was based on his Honour's interpretation of the construction of s 151Z(2)(c),(d) and (e) which refers to recovery from the employer "as joint tortfeasor or otherwise". His Honour held that the liability of the defendants, as head contractors with overall management of the site, and the liability of the plaintiff's employer, were concurrent and independent liabilities, rather than a joint liability.
  • The second ground upon which his Honour declined to apply s 151Z was that a claim for damages against the employer would have failed because the plaintiff could not satisfy the precondition specified in Part 5, Division 3 of the Act, on the following grounds:
  1. The plaintiff would not be entitled to any damages against his employer as he was 68 at the time of the injury and therefore could not recover damages for loss of future earning capacity under the Act.
  2. No assessment had been made as required by s 151H(2) to determine the extent of his injuries so that an award of damages might be awarded in any case, that is that the plaintiff's whole person impairment exceeded the 15% threshold necessary to qualify him to sue his employer for damages.
  • Having held that reduction in respect of the employer's liability was not available under s 151Z(2), his Honour nevertheless expressed the view that 67% of the responsibility should be apportioned to the employer and 33% to the defendants.
  • After considering the operation of s 151Z, his Honour then went on to hold that although it is clear that the employer had a non-delegable duty of care to the plaintiff to provide a safe place of work, and that there was a breach of the duty, the defendants, as head contractors with the overall management of the site still owed a duty of care to the plaintiff, and breached that duty in a way that caused the plaintiff's injury. His Honour held that the defendant's duty of care extended to the responsibility to ensure that sub-contractors and their employees did not fall into openings in the concrete slab.
  • On the issue of contributory negligence, his Honour held that the plaintiff did not take care for his own safety and assessed his contributory negligence at 30%. His Honour held that the plaintiff had worked on building sites in Australia for about 40 years and in that time he ought to have been aware of the potential dangers of building sites. He held that it is clear that no reasonable workman, properly instructed, would have carried the plywood in the way that the plaintiff did so that his vision was observed because he was carrying the plywood in front of his face.

Court of Appeal Decision

  • Basten JA delivered the unanimous judgment.
  • His Honour held that the trial judge was correct in finding that both defendants and the plaintiff's employer shared culpability with respect to the plaintiff's accident. It was conceded by both the plaintiff and the defendants that the calculation required by s 151Z(2) must be undertaken. It was also conceded that the plaintiff would have been unsuccessful in obtaining an award for damages against his employer as a result of the statutory limitations on recoverable damages imposed by Part 5, Division 3 of the Act. Elucidating on the application of s 151Z in the present case, Basten JA held that s 151Z(2) (c),(d) and (e) extends to any liability in tort, and not just joint liabilities. Furthermore, his Honour noted that even if an employer, despite its culpability, has no liability to pay damages by reason of Part 5, Division 3 of the Act, the calculation under s 151Z(2) must still be undertaken.
  • The plaintiff cross appealed and the issues for determination by the Court of Appeal in relation to the cross appeal were as follows:
  1. Whether the trial judge's apportionment of responsibility between the employer and the appellants (defendants) was outside any reasonable discretionary range.
  2. Whether the trial judge's factual finding about the way the plaintiff was carrying the sheet of plywood, which led to the finding of contributory negligence, was correct.
  3. Whether the trial judge had erred by failing to award an amount for future domestic assistance.
  • In relation to the employer's liability, Basten JA found that the substance of the trial judge's judgment illustrated that he intended for the head contractor to primarily bear responsibility for the accident and that the balance of the responsibility ought to lie with the employer. Accordingly, Basten JA held that the trial judge intended that 67% of the liability should be apportioned to the defendants with 33% to the employer, and not the reverse.
  • Basten JA, held that the culpability of the employer should be one third and the culpability of the defendants two thirds. Accordingly the plaintiff was entitled to recover two thirds of the quantum of damages assessed otherwise than under the Act.
  • Basten JA noted that a sub-contractor may bear a greater proportion of liability in circumstances where injury results from activities for which the sub-contractor is primarily responsible, eg Fox v Leighton Contractors Pty Ltd [2008] NSWCA 23 and indicated a different conclusion may be reached in circumstances where the sub-contractor is working on a site over which it has limited control and where the head-contractor has the responsibility to ensure that the condition of the site is reasonably safe and to co-ordinate the activities of sub-contractors to ensure that those activities are carried out in a reasonably safe environment. His Honour also distinguished the relative positions of a sub-contractor and the principal contractor in body hire cases such as Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 which was materially different from the present case.
  • It was held that there was no factual basis for the finding of contributory negligence on the evidence, and that finding was set aside. As there was no alternative basis for a finding of contributory negligence proposed by the defendants, his Honour held that damages should not have been reduced by any amount on account of contributory negligence.
  • In respect of future domestic assistance, the plaintiff submitted that the trial judge erred in failing to allow future domestic assistance of 2 hours per week. Basten JA confirmed that no allowance for future attendant care services could be made, noting that the evidence of the plaintiff would be inadequate to support a finding of such need.


  • The Court of Appeal confirmed the approach to s 151Z(2) found in Dyldam Developments Pty Ltd v Jones 2008 NSWCA 56 and Leonard v Smith [1992] 27 NSWLR 5.
  • Where a plaintiff is not entitled to bring proceedings against his employer for modified common law damages pursuant to the Act, the exercise prescribed by s 151Z(2) must still be undertaken. The notional liability of the employer must be assessed in percentage terms, and the plaintiff's damages reduced by that percentage accordingly.
  • Each case is dependant on its own facts and the principles in determining the liability of a head contractor relative to a sub-contractor on a building site such as this case will often be materially different to the apportionment of liability in relation to an employer and an occupier in body hire cases. The overriding consideration relates to the degree of control and responsibilities for the condition of the site between the head contractor and sub-contractor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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