Australia: Liability To Pay Damages Outside The Employee/Employer Relationship

Last Updated: 3 March 2009
Article by Michael Poulos and Todd Kirchner

George v Survery [2009] NSWSC 5
12 January 2009
Harrison J

In Brief

This matter involved a worker who suffered an injury (heart condition) that arose out of the course of his employment. The Supreme Court determined that an employer was entitled to be indemnified pursuant to section 151Z of the Workers Compensation Act 1987 (the 1987 Act) for compensation paid by it in circumstances creating a liability in the worker's negligent treating doctor to pay damages in respect of the same injury.

The Facts

On 12 June 2003 the Plaintiff consulted the Defendant, who was a registered general practitioner, after experiencing a sudden onset of chest pain whilst pulling a pallet onto a tail gate during the course of his employment with K&E George Pty Ltd ("the employer").

The Plaintiff continued to have chest pain, sought treatment from the Defendant and returned to work, suffering from further aggravations of the injury. On 22 July 2003, the Plaintiff suffered a myocardial infarction in the course of carrying out his duties with the employer.

The Defendant admitted that he owed the Plaintiff a duty of care to exercise reasonable care and skill in the provision of advice and treatment in respect of the chest pain. The Defendant conceded that it breached that duty and that his negligence caused an acute myocardial infarction and ventricular failure on 22 July 2003.

On 8 January 2004, GIO Workers Compensation (NSW) Ltd accepted liability and the Plaintiff continued to receive weekly payments of compensation. In separate proceedings, the employer sought against the present Defendant, a declaration that the employer was entitled to an indemnity pursuant to Section 151Z(1)(d) of the 1987 Act and that the Plaintiff was liable to repay to the employer the compensation paid to the Plaintiff out of any damages obtained from the Defendant in those proceedings.


Section 151Z of the 1987 Act provides, inter alia:

(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:

  1. the worker may take proceedings both against that person to recover damages and against any person liable to pay compensation under this Act for payment of that compensation, but is not entitled to retain both damages and compensation,
  2. if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker's injury under this Act, and the worker is not entitled to any further compensation,
  3. if the worker firstly recovers those damages the worker is not entitled to recover compensation under this Act,
  4. 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),


The Plaintiff asserted that assuming there was a liability in a stranger to pay damages, there must also be both identity of injury and the circumstances that caused it. In respect of injury, it was asserted that the Plaintiff's injuries occurred in circumstances arising out of his employment, as did the Defendant's breach of duty (seeking medical advice for the chest pain). Accordingly, there was an identity of causal circumstance giving rise to the work injuries and the injuries for which damages were payable.

The Defendant conceded that whilst the initial angina attack on 12 June 2003 was unrelated to any negligence on the part of the Defendant, the angina attacks from 12 June 2003 to 21 July 2003 and the aggravation of the underlying coronary heart disease by heavy physical work accelerating the heart attack were caused and/or contributed to by the Plaintiff's work and the negligence of the Defendant.

The Defendant also submitted that the injury for which workers compensation was payable to the Plaintiff was not an injury that was caused under circumstances creating the Defendant's liability to pay him common law damages. Even accepting that there was an identity of injury, there was not an identity of the circumstances that caused it.

The Decision

Justice Harrison noted that the most common factual circumstances in which Section 151Z applied were when a worker was injured in a motor vehicle accident whilst in the course of a work related journey, and where an employee was injured at premises of a "host employer" as a result of the negligence of the latter.

His Honour considered that:

'the words 'circumstances creating a liability" in s151Z(1) refer in this case to the creation of a liability in the defendant "to pay damages". The defendant's negligent failure to treat the plaintiff in a timely way did not create any liability in him to pay damages, or any liability at all, until some loss or damage had been caused by that negligent failure. When liability arose on 22 July 2003, it did so as the result of an injury for which compensation was payable to the plaintiff under the Act."

The critical was word was "creating". In was Justice Harrison's view that the section contemplated the creation of a liability to pay damages and no such liability was created until loss or damage was suffered. The circumstances under which the Defendant's "liability" was "created" were the circumstances that created the plaintiff's injury, not the anterior circumstances that constituted the Defendant's breach of duty.

His Honour referred to Kornjaca v Steel Mains Pty Ltd [1974] INS WLR 343 where a plaintiff injured his back at work through the negligence of his employer and later suffered an aggravation whilst in the employment of another employer. The Second employer claimed an indemnity from the first employer for the workers compensation payments it had made to the plaintiff. Glass JA rejected indemnity and noted:

"It was necessary for an employer to prove that the injury occurred under circumstances creating a liability in damages to the worker. It does not seem possible to regard a pre-existing liability, which became more extensive on the happening of the injury, as one which was then created."

In contrast, the present case did not involve a pre-existing liability in the defendant that became more extensive when the injury occurred. The Defendant's liability was created when the compensable injury occurred, ie the myocardial infarction on 22 July 2003.

Justice Harrison determined that section 151Z(1) applied to the circumstances of the case and found that the injury for which compensation was payable under the Act was caused under circumstances creating a liability in the Defendant to pay damages in respect of the injury.


The Court reinforced previous decisions (Dudley v Condell Park Carrying Co Pty Ltd) (1988) 4 NSW CCR 58 that in circumstances in which section 151Z may apply, the case determinative issue will be the circumstances under which the injury was caused, and whether they created a legal liability (to pay damages) in a stranger outside of the employee/employer relationship.

There must be both identity of injury and the circumstances that caused it to create a liability in a stranger to pay damages.

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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