Update: Endeavour Energy – where the liability falls
Dec 2015 |
Endeavour Energy v Precision Helicopters Pty Ltd (No 2) [2015] NSWCA 357
Readers may recall the Carter Newell July 2015 newsletter ‘Update: When does the Civil Aviation (Carriers’ Liability) Act 1967 (NSW) apply?’ in which we considered the NSW Court of Appeal’s decision in Endeavour Energy v Precision Helicopters Pty Ltd [2015] NSWCA 169 (Endeavour Energy decision).
The Court of Appeal has since delivered its judgment resolving outstanding disputes surrounding apportionment and indemnities.
Brief background
The key issues arising from the Endeavour Energy decision were canvassed in our July 2015 newsletter. Essentially, the Court of Appeal varied the findings of the trial judgment in two significant respects. Firstly, it concluded the claim was one which was caught by the Civil Aviation (Carriers’ Liability) Act 1967 (NSW) (CACLA) and, as such, Precision Helicopters Pty Ltd (Precision) was strictly liable to the injured plaintiff with an applicable damages cap of $500,000. Secondly, the Court of Appeal determined Telstra Corporation Limited (Telstra) was also liable for the plaintiff’s injuries.
Judgment was also found in favour of Precision in respect to its claim against Telstra and Endeavour Energy (Endeavour) for the damage sustained to its aircraft.
While issues of apportionment and indemnities were raised in the Endeavour Energy decision, the court did not make orders on these issues in the principal judgment, but rather invited the parties to reach an agreement on the matters. Agreement could not be reached and so the court received written submissions from the parties, resolving the matters on the papers.
Apportionment
The court first resolved apportionment of liability between Endeavour and Telstra for Precision’s property loss. While many factual issues were considered by the court in seeking to assess the liability split between these two defendants, causative uncertainties made this process difficult – with the court concluding ‘apples must be compared with oranges’. As such, and in highlighting the root of each defendants’ liability, responsibility was apportioned equally.
Importantly, the court accepted Telstra’s submission that Precision’s property damage claim was an apportionable claim under the Civil Liability Act 2002 (NSW). As such, both Telstra and Endeavour each bore half the damages claim, rather than being held jointly and severally liable for the entire loss.
In resolving the apportionment of the plaintiff’s injury claim, the court considered the sources of each defendants’ duty and the degree of responsibility each had in respect to the plaintiff. In balancing these issues, the court concluded Endeavour should bear 60% of liability, while the other two defendants shared the balance with 20% each.
Indemnity
A focal point of the judgment was resolving Endeavour’s claim for indemnity against Precision and Telstra under s 151Z of the Workers Compensation Act 1987 (NSW). In working through the mechanics of the recovery rights under s 151Z, and in also noting the curious submissions relied upon by Precision to resist the claim, the court upheld Endeavour’s recovery claim under s 151Z. That said, and while Endeavour’s recovery was quantified at $7.42 million, the liability of Precision under s 151Z was held to be limited to the $500,000 damages cap under the CALCA. Interest was recoverable on top of the cap.
Orders were also made in respect to costs, as well as the ongoing litigation by the children of the injured worker.
Comments
The court’s dissection of liability between the defendants provides a useful guide on what factors will be relevant when apportioning a claim such as this one. Certainly, it was clear that much weight was placed upon the causative effect of each defendants’ breach of their respective duties.
The determination of Endeavour’s s 151Z recovery claim was also an important reminder to carriers (and their insurers) that, while a carriers’ exposure to an injured worker’s damages is capped under the CALCA, that cap does not exhaust the s 151Z recovery – which applies equally and fully to the recovering employer. In other words, the carrier will be liable for the damages cap to the worker in addition to the same cap for the recovering employer (plus interest). As such, carriers and their insurers should ensure they make an appropriate allowance when assessing the carriers’ exposure to a loss.
Finally, and as seen in this judgment, s 151Z claims are notoriously difficult to resist. An option for a carrier to seek to protect itself from such a claim could be to include its own (effective) contractual indemnity in the agreement with the employer – which could be relied upon to effectively set-off the statutory indemnity under s 151Z.