(Re Linquist) Burroughs Wellcome and Co and QBE Insurance v Wallaby Grip Ltd and Anor

Court of Appeal (NSW)|2006-04-03|Before: O'Meally P

Background 2 On 3 April 2006 Kenneth James Lindquist issued a statement of claim naming Peerless Engineering Pty Limited, now Burroughs Wellcome & Co (Australia) Pty Limited (Peerless) as first defendant, Drysys Pty Limited (formerely known as Drysys Equipment (Australia) Pty Limited) (Drysys) as second defendant and Leigh Mardon Pty Limited (Leigh Mardon) as third defendant. He claimed damages alleging that in the course of employment by each defendant he was negligently and in breach of statutory duty exposed to and inhaled asbestos dust and fibre. He alleged that as a result he contracted malignant mesothelioma. When the statement of claim was issued the second and third defendants were in liquidation and on 13 July 2006 an amended statement of claim was filed naming QBE Insurance (Australia) Limited (QBE), the insurer of the then second and third defendants, as second defendant.

The plaintiff's claim became urgent 3 On 8 August 2006, on the application of the plaintiff, the Tribunal ordered that his claim be removed from the claims resolution process established by Pt 4, Div 5 of the Dust Diseases Tribunal Regulation 2001 (the Regulation).

4 The basis of the plaintiff's application was that medical evidence indicated that his condition had deteriorated and his claim had become urgent. Cl 18(1)(a) of the Regulation authorises the Tribunal, in such circumstances, to remove a claim from the claims resolution process.

Is this application competent 5 It appears to be the case that when the original statement of claim was issued, the plaintiff had not obtained leave to proceed against Drysys and Leigh Mardon. Counsel for the now second defendant, QBE, submits that as the proceedings against Drysys and Leigh Mardon were incompetent, Peerless was the only original defendant.

6 According to the court file, the plaintiff filed his statement of particulars against Peerless on 28 June 2006. Cl 21 of the Regulation requires defendants in malignant claims to serve cross-claims within 10 business days of service of the plaintiff's documents. Counsel for QBE has informed me that Peerless was served with the plaintiff's statement of particulars not on 28 June but on 20 June 2006. Counsel for the cross-defendants says, because all defendants were obliged to serve cross-claims within 10 business days, that is by 13 July 2006, Peerless' cross-claim is the only one validly instituted.

7 The point now at issue is an important one and affects many cases in the Tribunal. Those who are regularly involved in litigation in this jurisdiction are anxious to have some guidance on the question. In the circumstances of the case, I believe it is possible to express an opinion without the necessity to consider whether, if there be procedural irregularities, the cross-claim of QBE and the present application are incompetent.

Progress of the plaintiff's case 8 On 8 August 2006, an order was made that the plaintiff's evidence be taken at his home on 16 August 2006. When that order was made, Mr Raman, acting for the cross-defendants, Wallaby Grip Limited and Wallaby Grip (BAE) Pty Limited (in liquidation), sought and obtained leave for the cross-defendants to attend and cross-examine the plaintiff on matters relevant to the nature and extent of his exposure to asbestos. The cross-claims allege the cross-defendants supplied asbestos material to the defendants with knowledge of its dangers. Also on 8 August 2006 the first defendant applied for an order that Div 5 of Pt 4 of the Regulation continue to apply. Mr Raman was unable to consent to that application and after some discussion, an order was made in these terms: On the application of the first defendant and with the consent of the second defendant pursuant to cl 18(7) of the Dust Diseases Tribunal Regulation Div 5 of Pt 4 of the said Regulation continues to apply. In the event the first defendant and the cross-defendants fail, on or before 17 August 2006 to agree upon the contribution of each, the registrar is forthwith to appoint a Contributions Assessor. Because he had no instructions on the matter, Mr Raman was unable to consent to or oppose the making of that order, and its terms were varied from those originally proposed to take account of his position.

9 On 16 August 2006 the plaintiff's evidence was taken at his home. He was cross-examined by counsel for the defendants and cross-defendants. Evidence was also taken from his wife and the hearing was then adjourned to the following day. On 17 August 2006 I was informed the plaintiff had settled his case and verdict and judgment in his favour were then entered jointly and severally against each defendant. On 17 August 2006 the cross-defendants made oral application to vary the order that Div 5 of Pt 4 of the Regulation continue to apply. Today, 18 August 2006, they formalised their application by filing a notice of motion.

The claims resolution process 10 The claims resolution process was established by the Regulation, as amended by Sch 2 of the Dust Diseases Tribunal Amendment (Claims Resolution) Act 2005. Pt 4 of the Regulation applies to claims in respect of asbestos related conditions. Div 4 of Pt 4 provides for the mediation of plaintiffs' claims and the exchange of information. Div 5 provides for an arbitrary assessment by a Contributions Assessor of the contribution parties are to make to a plaintiff's damages. The determination is made on the basis that a cross-defendant would be liable to pay damages to a plaintiff. Defendants and cross-defendants are required to contribute to a plaintiff's damages in accordance with the determination of the Contributions Assessor. A cross-defendant is not, however, bound by the determination of a Contributions Assessor and may subsequently challenge it by contesting the cross-claim. The claims resolution process establishes an interim process to facilitate the early conclusion of a plaintiff's claim.

Does the claims resolution process continue to apply 11 Because the plaintiff's claim has been settled, the cross-defendants say that the claims resolution process no longer applies. They maintain that "claim" in cl 11 and cl 16(2) of the Regulation means a claim brought by a plaintiff. They submit that a cross-claim is not a claim within cl 11 or cl 16(2). 12 Cl 11 of the Regulation defines "claim" to mean: a claim in proceedings in the Tribunal brought or to be brought under section 11 of the Act or transferred under section 12 of the Act

13 A claim under s 11(1) of the Dust Diseases Tribunal Act 1989 is one in which damages are claimed in respect of or as a consequence of a dust related condition. S 12 provides for the transfer to the Tribunal of such cases commenced in the Supreme Court or in the District Court. In 2005 s 11 was amended to include sub-s (1A). It operates from 1 July 2005. S 11(1A) is in these terms: (1A) Proceedings by any tortfeasor liable in respect of damage referred to in subsection (1) to recover contribution from any other tortfeasor liable in respect of that damage may be brought before the Tribunal. NOTE: This subsection does not prevent those proceedings being brought in another court.

14 Other subsections in s 11 relate to proceedings not within the exclusive jurisdiction of the Tribunal, but concerning which the Tribunal has concurrent jurisdiction with the Supreme Court or the District Court.

15 So far as is presently relevant cl 16(2) of the Regulation is in these terms: (2) The claim remains subject to the claims resolution process: (a) until the claim is settled by mediation or otherwise and the Tribunal makes an order to give effect to the settlement, … (b) …

16 Div 5 of the Regulation provides an interim regime of apportionment of liability to pay damages to a plaintiff by defendants and cross-defendants. The object of the Division is, as noted, to ensure that plaintiffs' claims are concluded quickly and are not delayed by disputes between defendants and cross-defendants. Under the Division the Registrar is required to appoint a Contributions Assessor. In the absence of agreement between defendants and cross-defendants the Contributions Assessor is required to make a determination of the contribution they are to make to a plaintiff's damages. I think it important to emphasise the determination is made on an arbitrary basis; it is made upon a consideration of the nature of the operations of those parties and the plaintiff's allegations in respect of duration of exposure. It has already been noted that the determination is interim and relates only to the obligation to pay damages to a plaintiff. It is not binding in disputes on apportionment between defendants and cross-defendants. If a party to a cross-claim disagrees with the determination of the Contributions Assessor it may, pursuant to cl 42(5) have the cross-claim litigated in the Tribunal.

Are cross-claims proceedings 17 Mr Scotting, in support of his submission that "claim" as used in the Regulation applies only to a plaintiff's claim, not cross-claims, has referred me to a number of decisions in the Equity Division and in the Court of Appeal Division of the Supreme Court.

18 In Amaca Pty Ltd v CSR Ltd (2001) 51 NSWLR 476; (2001) 21 NSWCCR 637 Bergin J considered whether claims between tortfeasors could be brought in either the Supreme Court or the Dust Diseases Tribunal. At [30] she said: 30. Section 10(1) of the Act provides that the Tribunal has exclusive jurisdiction to hear and determine "proceedings referred to in sections 11 and 12". The only "proceedings referred to" in s 11 are "proceedings for damages" in s 11(1). The reference to "proceedings" in s 11(3) and s 11(4) are specifically references back to s 11(1) proceedings. 31. "Matters" may be included in s 11(1) proceedings pursuant to s 11(3) and s 11(4) however those matters are not labelled "proceedings" in s 11. It seems to me that the legislature has carefully labelled them as a "claim in respect of some other matter" in s 11(3) and a "matter that is ancillary or related" in s 11(4). If it had been intended to include such "matters" in the exclusive jurisdiction of the Tribunal the legislative pen need only have inserted the word "proceedings" instead of "claim" in s 11(3) and instead of "matter that" where first appearing in s 11(4) of the Act. 32. The only "proceedings referred to" in s 12 of the Act are "proceedings of the kind referred to in s 11(1)".

19 Relying upon that opinion and upon the approval of it by Mason P in Wallaby Grip (BAE) Pty Ltd (inLiq) v Eraring Energy (Re James) (2004) 60 NSWLR 701; (2004) 1 DDCR 687, Mr Scotting says that a distinction has been made between a plaintiff's claim and a cross-claim and that a cross-claim is not a claim within s 11 or s 12 nor within cl 16 of the Regulation. This, he says, is because a cross-claim is an ancillary or related matter.

20 It is important to bear in mind that s 11 was amended in 2005 by inserting sub-s (1A). Because s 11(1A) operates from 1 July 2005 it was not in force when Amaca Pty Ltd v CSR Ltd (supra) and Wallaby Grip (BAE) Pty Ltd (in Liq) v Eraring Energy (supra) were decided. It was in force when Amaca Pty Limited v Cremer and Ors [2006] NSWCA 164 was decided.

21 Mr Scotting cited [78] in the judgment of McColl JA in Cremer. There she said: 78 "Proceedings" when used in ss 10-11 of the Tribunal Act plainly refers to the invocation of the Tribunal's jurisdiction to enforce the cause of action to recover damages in relation to the breach of duty referred to in s 11(1)(b) against the person said to have breached that duty. "Proceedings" in s 12B also refers to the invocation of the Tribunal's jurisdiction, clearly refers to s 11(1) proceedings and must, therefore, be given the same meaning as in that section: see Herbert Berry Associates Limited v Inland Revenue Commissioners at 1446.

22 I think it important to bear in mind that Cremer was a case which commenced before the death of the plaintiff and, after his death, further defendants were joined by the legal personal representative who maintained the proceedings on behalf of his estate. In that case the issue was not the issue with which we are concerned here. The question at issue in that case was whether s 12B applied so that general damages were available against defendants joined after the plaintiff's death. The Court of Appeal held that they were not and the expressions of opinion concerning the nature of "proceedings" quoted above should be considered in the light of the issue then committed to the Court of Appeal.

23 The nature of "proceedings" was considered also by Brereton J in Cremer. At 175 he said: 175. The position has subsequently - after the proceedings at first instance, and apparently in response to Wallaby Grip v Eraring - been complicated by the insertion, with effect from May 2005 [sic, 1 July 2005] , in s 11 of s 11(1A), which contemplates "proceedings . . . to recover contribution", so that it is no longer the case that the only proceedings referred to in s 11 are "proceedings for damages" in s 11(1): there is now also reference to "proceedings . . . to recover contribution" in s 11(2) [sic, S 11(3)] , which permits proceedings, by a tort-feasor liable in respect of such damages, to recover contribution, to be brought before the Tribunal but also in any other court of competent jurisdiction:- (1A) Proceedings by any tort-feasor liable in respect of damages referred to in subsection (1) to recover contribution from any other tort-feasor liable in respect of that damage may be brought before the Tribunal. Note. This subsection does not prevent those proceedings being brought in another court. 176. While the similarity of the phrase "proceedings . . . in relation to dust related conditions" in s 12A, and "proceedings . . . where the cause of action is for damages in respect of a dust related condition" in s 12B, favours the application to the construction of s 12B of a similar approach to that adopted to s 12A, that does no more than support a construction which limits the application of s 12B to proceedings under s 11(1), which the requirement that the cause of action be "for damages in respect of a dust related condition" does is [sic, in] any event. It does not illuminate whether it catches only proceedings on the cause of action in respect of which the s 11(1) proceedings were instituted before death, or extends to any other cause of action for damages in respect of a dust-related condition which might later be added by amendment.

24 These observations confirm my view that "claim" in cl 11 and cl 16 of the Regulation includes a cross-claim. Since 1 July 2005 cross-claims have become proceedings under s 11(1A) of the Act. Cl 16(2) of the Regulation provides that a claim remains subject to the claims resolution process until the claim is settled. The consequence is that cross-claims remain subject to the claims resolution process until they are dealt with in accordance with cl 16(2)(a) of the Regulation.

Was there acquiescence 25 QBE has submitted that the cross-defendants, by not opposing the order of 8 August 2006 acquiesced in it. It submitted that because of their acquiescence "equity would require that [the] cross-defendants are estopped or held to the assumption [of an agreement to extend the claims resolution process]". In support of this submission Mr Miller for QBE relies upon the decisions of the High Court of Australia in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 409 and 412 per Mason CJ, at 440 per Deane J; Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 at 506 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ and Giumelli and Anor v Giumelli (1999) 196 CLR 101 at [7] per Gleeson CJ, McHugh, Gummow and Callinan JJ.

26 I do not agree that the cross-defendants acquiesced in the order of 8 August 2006. Mr Raman was without instructions, other than to seek leave to cross-examine the plaintiff. The form of the order was adjusted to take account of his inability to consent to or oppose it. It should also be borne in mind that the application to remove the case from the claims resolution process was, as usually is the case, made on short notice because of the plaintiff's state of health and, it is fair to assume, without sufficient time for Mr Raman to obtain instructions from his clients.

27 It was also submitted that if, contrary to the above submission, it was found that the cross-defendants had not agreed under cl 16(3) of the Regulation (which allows parties to agree to extend the period for which the claim remains subject to the claims resolution process) their conduct "is such as can only be accounted for by holding [them] to the assumed state of affairs before, and at the time of settlement". Implicit in this submission is a suggestion that the case would not have settled unless the claims resolution process applied.

The claims resolution process applies to cross-claims until the Tribunal orders otherwise 28 My view is that the claims resolution process continues to apply until the Tribunal orders otherwise. There is nothing to warrant the conclusion that the plaintiff's case would not have settled after the claim were removed from the claims resolution process.

29 It has also been submitted that the defendants will suffer detriment if the cross-defendants were permitted to change their position. I do not see that the cross-defendants have changed their position. They neither consented to nor acquiesced in the order of 8 August 2006.

30 I have been informed from the bar table that the cross-defendants, who were, I am told, manufacturers and suppliers of asbestos products, do not dispute that there is evidence which, if accepted, would render them liable to contribute to the damages recovered by the plaintiff. The cross-defendants, however, vigorously dispute that their liability to the plaintiff had he sued them would be as great as a Contributions Assessor, applying the provisions of the Regulation, would determine.

Should the cross-claims be removed from the claims resolution process 31 Cl 18, to which reference has earlier been made, not only authorises the removal of a claim from the claims resolution process, but sub cl (7) gives a discretion to the Tribunal to order that Div 5, which relates to apportionment, should continue to apply. Cl 18(7) is in these terms: (7) If a claim is removed from the claims resolution process because the Tribunal determines under this clause that the claim is urgent, the Tribunal must consider whether to order the application to the claim of the provisions of Divisions 4 (Compulsory mediation) and 5 (Apportionment), and: (a) if the Tribunal does so order:

(i) those provisions apply as if the claim were still subject to the claims resolution process (subject to any modification ordered under subparagraph (ii)), and (ii) the Tribunal may, in ordering the application of those provisions to the claim, order that those provisions apply subject to specified modifications, and (iii) the Tribunal must by its order specify the period within which mediation or appointment under the applied provision must be completed, or

(b) if the Tribunal does not so order, despite an application for such an order by a party to the claim, the Tribunal must give its reasons for not so ordering.

32 It has been submitted by the cross-claimants that the time for ordering Div 5 should not apply, was when the application was made on 8 August 2006 last. With all respect to the arguments of counsel I am unable to agree that anything express or implied in cl 18(7) requires an order to be made that Div 5 does not apply when a plaintiff's claim is remover from the claims resolution process. It should be remembered that often cross-defendants are unaware of such an application or that such an order has been made. This is because applications to remove claims from the claims resolution process are made urgently and with notice given only to defendants. Because the extent and perhaps even the fact of the cross-defendant's liability to contribute to the plaintiff's damages is disputed it will be necessary, unless the case is resolved extracurially, to litigate the cross-claim. In my view that is sufficient reason for ordering that Div 5 should not apply. To submit the cross-claim for determination by a Contributions Assessor would only increase costs and possibly cause delay.

33 Counsel for the cross-claimants have submitted that in making such an order I would be acting contrary to the policy of the Regulation; that is, to achieve early resolution of a plaintiff's claim, and that I should not do so. If that were the case, it seems to me it would be difficult to envisage a circumstance in which it would be legitimate to order that Div 4 or Div 5 would not apply. Moreover, the object of achieving early resolution of the plaintiff's claim was achieved when the plaintiff and the defendants settled the action. Had the plaintiff's claim not been resolved, different considerations would apply.

Conclusion and orders 34 In summary therefore, the answer to the question does a cross-claim remain subject to the claims resolution process when a plaintiff's claim is settled is yes, unless the Tribunal in the exercise of its discretion considers Pt 4, Div 5 of the Regulation should not apply.

35 The order of 8 August 2006 made on the application of the first cross-defendant with the consent of the second cross-defendant is revoked. I urge the parties to engage co-operatively with a view to resolving their differences or, if my view is one which it is thought should be examined elsewhere, quickly to initiate and prosecute an appeal.

36 Because each of the cross-claimants and cross-defendants have succeeded in part and failed in part the appropriate order is that each should bear its own costs.

37 The matter will be listed for further directions on 21 August 2006.

Mr G P F Rundle instructed by Hicksons appeared for the first cross-claimant

Mr D T Miller instructed by Moray & Agnew appeared for the second cross-claimant

Mr A C Scotting instructed by Middletons Lawyers appeared for the first and second cross-defendants I certify that the previous37 paragraphs Are the reasons for Judgment of His Honour Judge O'Meally

06/12/2006 - An error was noticed in para 34 - Paragraph(s) 34

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION : (Re Linquist) Burroughs Wellcome and Co and QBE Insurance v Wallaby Grip Ltd and Anor [2006] NSWDDT 28 This decision has been amended. Please see the end of the judgment for a list of the amendments.

Amaca Pty Ltd v CSR Ltd (2001) 51 NSWLR 476; Wallaby Grip (BAE) Pty Ltd (in Liq) v Eraring Energy (Re James) (2004) 60 NSWLR 701; (2004) 1 DDCR 687; CASES CITED: Amaca Pty Ltd v Cremer and Ors [2006] NSWCA 164; The Commonwealth of Australia v Verwayen (1990) 170 CLR 394; Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485; Giumelli and Anor v Giumelli (1999) 196 CLR 101

(2001) 21 NSWCCR 637

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