Whilst workers compensation recoveries (under section 151Z of the Workers Compensation Act 1987 NSW) have long been the bane of a CTP insurer’s/lawyer’s existence, a concerning trend appears to be emerging - recovery action on a historical CTP claim.
By 'historical' it is meant a recovery in excess of 10 years from the date of the motor vehicle accident, and in some cases as long as 22 years post-accident where payments are ongoing. Of further note, these historical claims also (in several cases) involve first responders, usually Ambulance crew or Police Officers who have suffered psychiatric injury.
The trending increase in these claims has been observed in both NSW and Queensland. Whether the trend continues will likely depend upon whether the workers compensation insurer is successful in either settling or enforcing a recovery from the CTP insurer or alternatively whether the CTP insurer can succeed on a dismissal of proceedings. There is likely significant evidentiary prejudice to the CTP insurer arising from the delay.
The cases and the prejudice faced by the CTP insurer
One example is a CTP insurer was put on notice of a 151Z recovery action arising out of a motor vehicle accident which occurred in 2006. The worker was a retired firefighter and allegedly suffered a psychiatric condition as a result of attending the accident scene. The worker appears to have first made a claim to the workers compensation insurer regarding this motor vehicle accident in 2019. The worker kept working as a firefighter for many years after the 2006 accident.
The significant elapse of time since the date of the motor accident means that the insurer is faced with considerable difficulty and prejudice in gathering evidence, speaking to witnesses, and even locating the insured. There also are important issues of causation which always arise in first responder claims when the worker has a lengthy history of attending multiple traumatic scenes over time. The inability to gather important evidence has particular significance (or indeed prejudice) for the CTP insurer when attempting to determine whether, the mental harm provisions, namely section 30 of the Civil Liability Act 2002 (NSW) (CLA), have been satisfied.
This section states:
The worker is only entitled to recover damages for pure mental harm where he witnessed, at the scene, the victim being killed, injured, or put in peril.
The CTP insurer by being notified of the recovery so late has lost the opportunity to obtain independent evidentiary verification that section 30 has been satisfied. At this distance from the accident, even the workers own recollections of the details of the accident scene may not be reliable.
Police and Ambulance records are often sparing with important details, such as precisely what role the worker/first responder performed at the scene. Did they actually see/assist the injured or deceased or did they direct traffic away and secure the scene without interaction with the injured party? Was the psychological trauma provoked by this accident or as a result of perhaps subsequent cumulative attendance at traumatic scenes?
Other recovery claim examples include a police officer who attended a motor vehicle accident over 12 years ago, and another from a firefighter who attended a motor accident scene over 22 years ago, this claim being particularly complex as it is a recurrence of injury claim.
It must be acknowledged that the pure mental harm provisions across states differ. South Australia, Victoria and Tasmania, like New South Wales all enacted legislative provisions to narrow the scope of mental harm claims, following the recommendations of the Ipp report, which was the 2002 review of the law of negligence.
In Queensland, the Queensland Civil Liability Act 2003 does not contain a mental harm provision at all, liability for another person’s psychiatric injury is governed solely by the common law and not by statute. In this regard the case of AAI Limited v Caffrey  QCA 293, is particularly relevant, to see the Queensland perspective. In this case, which involved a first responder (policeman) who sued a CTP insurer seeking damages for psychological injury, sustained at an accident scene, the Court of Appeal affirmed that it was the role of the court to apply the common law principles of tort liability. The court went on to note that (in the absence of any legislative intervention) it was not the role of the court to undertake a policy analysis of the law of tort liability – which was essentially the argument of the appellant. The Court of Appeal upheld the trial judge’s decision, that the CTP insured owed a duty of care to the plaintiff (policeman) and had breached that duty, which resulted in psychological injury.
It is possible that this decision may have contributed to the increase in claims by first responders and recovery actions by workers compensation insurers.
However, irrespective of whether the common law or legislation applies, the challenges faced by CTP insurers in investigating historical claims is the same. When the trail of evidence has gone cold or evaporated entirely it is difficult to independently assess the merit of the recovery action.
Does the Limitation Act help the CTP insurer?
The short answer is, partially, at least in NSW.
Section 14(1)(d) of the Limitation Act 1969 (NSW) (the Limitation Act) says that any cause of action to recover money recoverable by virtue of an enactment is not maintainable if brought after the limitation period of 6 years running from the date on which the cause of action first accrues to the plaintiff. Relevant to a 151Z recovery, the cause of action arises in relation to each workers’ compensation payment and the 6 years starts to run from the date of each payment.
The difficulty is that the workers compensation payments can start and stop and then reactivate again, with the CTP insurer caught, if the reactivation of payments is within a six-year period of the recovery notification. This is the basic dicta set down in the case of South Eastern Sydney Area Health Service v Gadiry & Anor  NSW CA 161 (Gadiry).
In Gadiry, the Court determined that an action for recovery may be instituted at any time, despite the onerous burden this places on the CTP insurer. The effect of the Limitation Act is that any workers compensation payment made outside a 6-year period from the commencement of proceedings is statute barred.
Notably, however, Gadiry is also authority for the fact that each payment of weekly compensation has its own limitation period of 6 years from the date of payment by the employer or workers’ compensation insurer.
The Answer for CTP Insurers – may be a stay of proceedings?
A defendant who applies for either summary dismissal or permanent stay bears a heavy burden. In General Steel Industries Inc v Commissioner for Railways (NSW)  HCA 69; (1964) 112 CLR 125 (9 November 1964) Barwick CJ said:
'The plaintiff rightly points out that the jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion'.
Whether a stay is an appropriate course of action will very much turn on the facts of the individual case, however it is a consideration for the CTP insurer to bear in mind.
In circumstances where witnesses cannot be traced and documents relating to the accident circumstances are inadequate to the point where, for example, section 30 of the CLA cannot be tested, or liability overall is unclear, then a permanent stay of proceedings (in NSW) pursuant to section 67 of the Civil Procedure Act 2005) may be achievable. Alternatively, an order that the proceedings be dismissed (in NSW pursuant to r.13.4 of the Uniform Civil Procedure Rules 2005) may be appropriate.
The District Court of NSW will shortly be requested to consider both of these options (as alternate propositions). As the action is effectively between two insurers rather than against the worker, it will be interesting to see whether the Court is still minded to use its powers to summarily dismiss, 'sparingly'.
In the context where (at least in NSW) the state government oversees both the CTP and workers’ compensation schemes, the merit must be questioned, in what amounts to shifting risk from one scheme to the other with such significant evidentiary problems. If it has been adopted as a policy, then it warrants reconsideration given the waste of costs and time, including Court time.