The Victorian Government has made sweeping amendments to the Sale of Land Act 1962 (Vic). The amendments provide additional purchaser protections and restrict the sale of property on ANZAC day.

(Not) All Together Now – Victorian Workcover Authority Recovering from Entities within the same Corporate Group

Victoria’s biggest litigator, the Victorian WorkCover Authority, is putting effort into seeking to recover or obtain contribution from companies within the same corporate group. How can they, and what are the potential implications?

Some companies are structured through a group of legal entities for ease of operations, accounting or tax purposes. Staff of the group may be employed by one or more of the entities within the group. Where so, if an employee of one entity within the group is injured in connection with work performed at or for the benefit of another entity within the group, that second entity:

1. will not be covered by the group’s WorkCover Insurance Policy; and
2. may be financially exposed if its other insurance also does not cover the claim.

The Victorian WorkCover Authority (‘VWA’) has for a long time been able to seek recovery of past compensation paid to or on behalf of a worker injured in connection with their work from liable third parties [1] . It has also always been the case that the VWA can, on behalf of employers defending common law damages claims, seek to reduce its liability by obtaining contribution from third parties who have contributed to the damage[2].

These cases arise where the conduct of someone separate from the employing entity has contributed to the incident and caused some of the damage to the worker. For example where a worker is injured at a site operated by another company and that second company is pursued given its duty to the worker as an occupier of the premises or workplace [3].

The VWA is now using those provisions to seek to recover or obtain contribution from entities within the same corporate group despite the relationship and common business activity of the group and holding WorkCover insurance for the employees of the group. We have seen this in the aged care sector, but other industries operating through a group company arrangement may become a focus of the VWA.

How can the VWA do this?

The WorkCover legislation permits recovery against a ‘third party’.

Who is a third party in recovery actions was considered in the Court of Appeal as an entity which is not a party to payments made on the worker’s claim:

The Act does not define ‘third party’ and the natural and ordinary meaning of those words in the context of s 138 is any person having a liability but who was not a party to the compensation which was claimed and paid or for whom that payment is or may be payable. [4]

On this legal authority, any entity which does not employ the worker, pay or receive reimbursement by the VWA on the worker’s claim may be a third party. However, that case concerned unrelated entities and to date the relevant section of the WorkCover legislation does not appear to have been considered in the context of related entities.

Meanwhile, the common law test for contribution is where it is ‘just and equitable’ to apportion liability to another party.

Both the WorkCover legislation and the Wrongs Act concerning common law claims, render void any contractual term which requires an employer to indemnify a third party with respect to claims for indemnity or contribution respectively.[5]

Implications

Unlike time limits which turn on the date of an incident, the VWA has 6 years from the date each payment was made to or on behalf of a worker. Whilst periodic payments made prior to the 6 year mark will incrementally drop off a claim by the VWA, payments made within 6 years prior to the date the VWA commences a proceeding will be captured. As injured workers can remain on weekly benefits or require treatment for many years, there can be a large amount of compensation available to recover.

The biggest issue for a ‘related non-employer’ entity will be whether they are covered for the VWA claim by other insurance; such as a public liability policy. Some insurers specifically and intentionally excluded cover for this type of recovery action involving employees of related entities, and insurers are more recently declining to cover the risk into the future.
The VWA will not be more lenient in a claim against an uninsured related entity.

What should related entities do to manage the risk?

It would be prudent for members of a group of related companies to:

• Not panic; despite the above there may be some valid arguments to make against the VWA’s allegations depending on the company structure and operations. While this may not avoid a claim, it might help manage the claim.
• Conduct a review of its insurance portfolio to:

           1. ensure claims by the VWA against other parts of the related business are

               covered (this will relate to the current policy year and prospective claims)

           2. determine whether past insurance policies are likely to cover claims from the last

               6 years (in the event it does not the entity may need to provision for potential

                liabilities)

• Consider its current structure and review issues such as the manner in which it, operates, internally manages workcover claims and employs staff.

If you wish to know more about the issues identified in this note, please contact Ingrid Nunnink or Rosalind Gilsenan on (03) 9604 9400.

[1]  Previously s138 Accident Compensation Act 1985 and for injuries post 1 July 2014, s369 Workplace Injury Rehabilitation and Compensation Act 2013 (collectively referred to here as the WorkCover legislation)

[2] Part IV Wrongs Act 1958

[3] In common law or statutory OH&S duties.

[4] DSG Pty Ltd v VWA (2008) 20 VR 514 at 532-533 [87]-[89] considering the earlier iteration of the relevant section.

[5] Section 138(5) and s369(5) of the WorkCover legislation and s24AAA of the Wrongs Act.

Victoria has undertaken significant legal reform to enable survivors of childhood sexual and physical abuse by a person associated with an organisation or institution to access compensation.  The recent case of Perez v Reynolds & Anor [2020] VSC 537 confirms the Victorian system is on a similar trend with increasing damages awards for historical abuse survivors as shown in other parts of the country. 

By a majority of 4-1, the High Court has overturned the Full Federal Court’s ruling concerning how entitlements are to be calculated for personal/carer’s leave under section 96(1) of the Fair Work Act 2009 (Cth), which provides employees with 10 days of paid personal/carer’s leave per year.

This decision is vitally important for part-time employees and employees who work shifts of different lengths.

It confirms the long-standing approach regarding the accrual of personal/carer’s leave. Read a summary on the case here.

At MMRB we are aware that many families are concerned about how the current COVID-19 situation will affect their lives, particularly their ability to comply with parenting arrangements in light of the most recent Stay at Home Directions published by the Government on 30 March 2020.

In light of the challenges posed by COVID-19 to otherwise profitable Australian businesses, the safe harbour regime is of particular relevance. It is one avenue of assistance available for businesses facing financial difficulties as it provides companies with a better opportunity to restructure and formulate a recovery plan, which may extend beyond the temporary relief announced by the Australian Federal Government on 22 March 2020.

This is what we have been waiting for, but will it assist the Government’s desire that parties negotiate reasonably fairly and in good faith?