The District Court finds the Negligence of an Employer can Reduce a Third Party’s Damages for Nervous Shock arising out of a Workplace Incident

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Ramsay Surveyors Pty Ltd v Toplace Pty Ltd & Others; Khouri v Toplace Pty Ltd & Others; Khouri v Toplace Pty Ltd & Others [2023] NSWDC 53

By Matthew Skelly, Senior Associate

On 13 March 2023 Judge Fitzsimmons SC DCJ handed down judgment in which he found, a mother’s entitlement to damages for nervous shock suffered as a result of her son’s workplace injury was subject to a 151Z(2)(c) of the Workers Compensation Act 1987 reduction by operation of section 30(4) of the Civil Liability Act 2002.

151Z(2)(c) of the Workers Compensation Act 1987

151Z(2)(c) of the Workers Compensation Act 1987 provides, in circumstances where the employer is not a party to common law proceedings for a workplace incident, the Court is to apportion damages between the Workers Compensation Act and the Civil Liability Act regimes.

In practice, this largely requires a Court to reduce a worker’s common law damages by the extent to which their employer is held to have contributed to the workplace injury and their loss.

Facts

On 25 January 2018, Michael Khouri was injured when he fell through an open penetration at a worksite and became impaled on exposed rebar below.  Mr Khouri, then employed by Ramsay Surveyors Pty Ltd, received workers compensation benefits and commenced proceedings in the District Court of NSW for common law damages against the formwork company responsible for the penetration and the head contractor responsible for the overall safety at the worksite.

In addition to Mr Khouri’s claim his mother brought a claim for the nervous shock suffered as a result of the incident.

Both Mr Khouri and his mother were successful in their claims with the Court finding Mr Khouri’s employer 20% liable for the loss he suffered.  The Court’s findings on liability were uncontroversial.

Decision on Quantum

The interest in this claim arises out of the assessment of the mother’s damages which included the consideration of section 30(4) of the Civil Liability Act 2002.  The Defendants submitted the provision operated to cause the Court to apply the reduction for common law damages under 151Z(2)(c) of the Workers Compensation Act 1987, in both Mr Khouri’s and his mother’s claims.

Section 30(4) of the Civil Liability Act 2002

Mental harm claims are governed and limited by Part 3 of the Civil Liability Act 2002.

Within Part 3 is Section 30 of the Act which provides limitations for the recovery for damaged for a pure mental harm as a result of a nervous shock. Section 30 provides damages are not recoverable for a nervous shock unless the person claiming damages witnessed the accident or was a close family member.  The mother succeeded in meeting this requirement for the obvious reason of being Mr Khouri’s close family member.

Section 30(4) however provides:

No damages are to be awarded to the plaintiff for pure mental harm if the recovery of damages from the defendant by or through the victim in respect of the act or omission would be prevented by any provision of this Act or any other written or unwritten law.

The Defendant’s argued, by operation of section 151Z(2)(c) of the Workers Compensation Act 1987, Mr Khouri was prevented from recovering common law damages to the extent his loss was caused by his employer.

Judge Fitzsimmons SC found, despite the fact one could characterise the operation of section 151Z(2)(c) of the Workers Compensation Act 1987, as a reduction in damages, the provision did prevent recovery of a portion of the damages.  Judge Fitzsimmons justified his interpretation of section 30(4) by reading it in the context of the whole section, which included the reduction of damages to the extent of the victims own contributory negligence (Section 30(3)).

Implications

Ramsay Surveyors Pty Ltd v Toplace Pty Ltd & Others; Khouri v Toplace Pty Ltd & Others; Khouri v Toplace Pty Ltd & Others [2023] NSWDC 53 is the first time a Court has considered the application of section 30(4) of the Civil Liability Act 2002 in the context of the Workers Compensation Act 1987.  The judgment is also of a lower Court and is therefore non-binding.

Despite the above, the judgment does show, at least in claims for nervous shock, an intention in the Civil Liability Act 2002 to limit the rights to damages for plaintiffs in secondary injury claims to those available to the injured party.  Where the person injured in the incident is not entitled to damages, then so too are those seeking damages though the victim.

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