What happened: The NSW Court of Appeal ruled 2-1 that a workers' comp authority that mistakenly paid a claim can recover from the authority that should have paid - even though it never asked for the payment.
Who's involved: iCare (NSW workers' comp insurer) and the Victorian WorkCover Authority, disputing who should bear the cost of a catastrophically injured fruit picker's claim.
What's at stake: $1,538,154.20 in compensation iCare paid to the worker over five years.
Why it matters: The decision creates a new legal pathway for cross-border workers' comp recovery - state authorities can no longer avoid repaying a sister scheme that picked up the tab by mistake.
Where it stands: Appeal dismissed 2-1; a High Court challenge is possible given the dissent and the novelty of the principle.
A fruit picker fell from a ladder on an orchard in rural New South Wales in July 2017 and suffered catastrophic spinal injuries. More than nine years later, the question of who should pay for his care has produced a Court of Appeal ruling that changes how Australia's state workers' compensation schemes settle their debts with each other.
The NSW Court of Appeal ruled 2-1 that iCare, the NSW workers' compensation nominal insurer, can recover $1,538,154.20 from Victoria's WorkCover Authority. That is the amount iCare paid the worker over five years, on the mistaken belief that his employment was connected to New South Wales. It was not. His employer, Mr Handy Professor Pty Ltd, was a Melbourne-based labour hire company.
The confusion started almost immediately after the accident. The worker had been picking fruit in Hillston for Super Seasons Pty Ltd, but he was employed through Mr Handy Professor, which had supplied him as part of a labour hire arrangement. When iCare's scheme agent flagged the issue and tried to refer the claim to Victoria, VWA's agent sent it straight back. "This is a NSW claim," the Victorian agent wrote. "The worker lives and works in NSW."
That turned out to be wrong.
iCare commissioned two investigation reports. Neither pointed clearly to Victoria. The worker's own account was difficult to follow - not surprising, given the severity of his injuries and his language difficulties. A director of the labour hire company denied ever employing him. On that basis, iCare accepted the claim in October 2017 and began paying.
VWA rejected the claim the same month. It held that position for close to five years.
By August 2022, the true picture had emerged. VWA accepted the worker's claim and started paying compensation from that date forward. But it refused to reimburse iCare for the $1,538,154.20 already spent. VWA's argument was simple: it never received any money from iCare, never asked iCare to pay the worker, and owed nothing.
iCare sued, arguing that VWA had been enriched at its expense. Under Victoria's rule against paying compensation twice, VWA was no longer liable for the period iCare had already covered. In practical terms, iCare's mistake had wiped a $1.5 million obligation off VWA's books.
The trial judge agreed with iCare. VWA appealed.
The appeal turned on a question Australian courts had not squarely answered before: can you recover money you paid to a third party by mistake, when that payment happened to wipe out someone else's debt - even though that someone else never asked you to pay?
VWA said no. The established rule, drawing on long-standing High Court authority, is that you cannot force a liability on someone behind their back. If you pay another person's debt without being asked, that is your problem.
McHugh JA, writing for the 2-1 majority, accepted that general principle but held it was not the end of the story. The court drew an analogy with cases where a party is compelled by law to pay someone else's debt. In those situations, the law already allows recovery without a request. The majority reasoned that a genuine mistake works the same way - neither a compelled payment nor a mistaken one is voluntary, and in both cases it would be unjust for the party who got the benefit to keep it.
The court held there is a right to recovery where a party pays a third person in the genuine but mistaken belief it is liable, the payment is not requested or compelled, and it delivers a clear benefit to the defendant by relieving them of a necessary expense.
One concession from VWA drove the point home. VWA's senior counsel accepted that if iCare recovered the money from the worker directly, the worker would then have an "unanswerable claim" against VWA for the same amount. Either way, VWA pays.
Harrison AJA dissented. In his view, iCare always had a statutory right to recover the money from the worker under the double-compensation provisions and chose not to use it. iCare, he wrote, was "the author of its own predicament," and there was no need to create a new legal pathway when the existing scheme already provided a remedy.
The majority also rejected VWA's fallback argument that it had changed its position and lost the chance to claim an indemnity from the farm operator, Super Seasons. The court found that argument speculative. VWA had let Super Seasons exit the proceedings while iCare's claim was actively in play - hardly a decision made in good faith reliance on keeping the benefit of iCare's mistake.
The bottom line, as the majority framed it: the worker receives the compensation he was always entitled to, VWA bears the cost it was always liable for, and iCare - which was never liable - is made whole. No party gets a windfall.
The case was heard on July 28, 2026, in the NSW Court of Appeal, with orders delivered on November 12, 2026. With a 2-1 split and a novel principle at stake, the question may yet reach the High Court.
The allegations and claims discussed in this article are based on the court's published reasons for judgment. The appeal was determined on the papers and oral submissions of the parties. No findings in this article should be read as independent assertions by Insurance Business.
