CGU Insurance Ltd v Davies

Judgment

1. BEAZLEY P: I have had the advantage of reading in draft the reasons of Meagher JA. I agree with his Honour's reasons and the orders he proposes.
2. McCOLL JA: I agree with Meagher JA's reasons and the orders his Honour proposes.
3. BASTEN JA: As explained by Meagher JA, the answer to the present appeal is provided by the reasoning in the related decision of Allianz Australia Insurance Ltd v Pomfret [2015] NSWCA 4.
4. The difference between this case and Pomfret is purely a function of the stage reached in the proceedings below. Pomfret required the application of s 151AB(1) of the Workers Compensation Act 1987 (NSW) at an interlocutory stage: the present claim by the respondent estate against Mr Davies' employer has been settled on the basis of the employer's liability in an agreed sum. The only question is whether the appellant is liable to meet that claim.
5. The claim was for damages for the late Mr Davies' illness resulting from exposure to silica dust up to 30 June 1979. The exposure of Mr Davies in the course of his employment continued for a period after June 1979, but his pleaded claim was confined to the period ending on 30 June. Liability has been determined on the basis of that claim. The appellant was liable to indemnify the employer with respect to that period, but not any later period.
6. The terms of s 151AB are set out by Meagher JA and need not be repeated. The "liability" to which the section refers is the liability of the employer to the worker for damages for an occupational disease. Before the worker's claim is determined, that liability remains contingent, but the potential liability may be identified by reference to the plaintiff's pleading. The employer's liability is, in all respects, the contingency upon which the section operates: it does not affect that liability, but provides when the liability is "taken to have arisen", for the purposes of any policy of insurance obtained by the employer.
7. The appellant (or more precisely a company for whose liabilities the appellant is now responsible) was "on risk" as at 30 June 1979. That was the last date to which the claim related. If further harm were caused after that date, which may be assumed, the liability of the employer, with respect to the worker's claim, did not extend to that harm.
8. As explained in Pomfret and earlier authorities, the statutory provision should not be understood to deem the liability to have arisen at a time with respect to which the employer has not been found liable.
9. The employer has been found liable for damages for the occupational disease suffered by Mr Davies as at 30 June 1979: it has not been found liable for any aggravation of that condition thereafter, nor for any disease suffered thereafter. The disease as it existed as at that date was not due to the conditions of employment in any subsequent period.
10. The appellant sought to distinguish this reasoning, relying on the decision of this Court in Workcover Authority of New South Wales v Chubb Australia Ltd [2000] NSWCA 221; 20 NSWCCR 614. As explained in Pomfret, that case involved mesothelioma, which is sometimes described as an "indivisible disease". Assuming that the distinction between divisible and indivisible diseases is relevant for the purposes of s 151AB(1) (a proposition which I doubted in Pomfret) then the case is distinguishable from Chubb because the disease was divisible in the sense explained by Lord Phillips in Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229. If the distinction is not valid, then I would reject the reasoning in Chubb. That reasoning is not firmly based in the statutory language and there is, therefore, compelling reason to consider that it was wrong, in accordance with the principle identified in Gett v Tabet [2009] NSWCA 76; [2009] Aust Torts Rep 82-005; 254 ALR 504 at [301].
11. The appellant sought to introduce yet another point of discrimination, that is, between diseases which involve a gradual process, but reveal their presence with contemporaneous symptoms, and those involving a long period of latency. If that correctly identifies the distinction relied upon (which was not entirely clear) it is without foundation in the statutory language and should be rejected.
12. It remains to refer briefly to the decision of this Court in Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; 59 NSWLR 14. The reliance placed upon this decision by the appellant was limited to oral argument and was not fully explained. Orica was a case involving liability for mesothelioma and may be distinguishable on that basis. The focus of the analysis in that case was the operation of the statutory policy with respect to such a condition in relation to a form of s 151AB which was in significantly different terms to the present provision. Spigelman CJ (who, with Mason P, constituted the majority on this issue) noted that the employer conceded that s 151AB had no direct relevance to the case as it was then concerned with the situation in which there were two insurers: at [41]. (Santow JA took a different view as to the operation of s 151AB, as then in force.) Given the change in the statutory scheme and the absence of a reasoned consideration of the operation of s 151AB even in its then form, this case provided no assistance to the appellant.
13. As proposed by Meagher JA, the appeal should be dismissed with costs.
14. MACFARLAN JA: I agree with Meagher JA.
15. MEAGHER JA: This appeal from the decision of the primary judge (Kearns J) in Davies v ACN 000 008 195 Pty Ltd (formerly R Fowler Ltd) [2013] NSWDDT 10 is concerned with the application of s 151AB of the Workers Compensation Act 1987 (NSW) to a claim to damages for silicosis and progressive massive fibrosis.
16. This appeal was heard with the application for leave to appeal in Allianz Australia Insurance Ltd v Pomfret [2015] NSWCA 4. For the reasons which follow, it should be dismissed with costs.
17. The relevant facts are not in dispute. Eric Davies was employed as a pottery caster by R Fowler Ltd (Fowler) during the period from July 1940 to August 1979. He was then employed by Seapip Pty Ltd (Seapip) (formerly James Hardie Plumbing & Pipelines Pty Ltd), from August 1979 when it acquired Fowler's pottery business. During each of those employments Mr Davies was exposed to and inhaled silica dust. As a consequence he contracted silicosis and progressive massive fibrosis.
18. In 2011 Mr Davies commenced proceedings for damages against the appellant and Seapip for negligence, breach of statutory duty and breach of contract. Mr Davies died in March 2013 and his wife, the respondent, now brings that claim for the benefit of his estate pursuant to the Law Reform (Miscellaneous Provisions) Act 1944 (NSW), s 2.
19. Although, when in the employ of Fowler, Mr Davies was exposed to silica dust until sometime in August 1979, his pleaded claim was confined to silicosis and progressive massive fibrosis caused by exposure to silica dust up to 30 June 1979. No claim was made for any injury or disease suffered as a result of Mr Davies' subsequent exposure to silica dust whilst employed by Fowler in July and August 1979.
20. Before the primary judge the parties agreed that Mr Davies' estate is entitled to recover $300,000 by way of damages. That agreement is an admission by the appellant (CGU) that Fowler was liable to Mr Davies for damages on the basis claimed.
21. The South British Insurance Company Ltd (South British) was the workers compensation insurer of Fowler up to and for some years prior to 30 June 1979. CGU has assumed the liabilities of South British under those insurances. There is no known workers compensation insurer of Fowler for the period after 30 June 1979 and before it sold its pottery business to Seapip in August 1979.
22. The issue in the proceedings before the primary judge was whether CGU was liable to indemnify Fowler. It contended that, standing in the shoes of South British, it was not liable because the policy that applied for the period ending 30 June 1979 only indemnified against liability accruing during the period of insurance. For that proposition, it relies upon the decision of this Court in Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; 59 NSWLR 14.
23. Section 151AB(1), as amended by the Workers Compensation Legislation Amendment Act 2004 (NSW) Sch 1 [4], provides: 151AB Special insurance provisions relating to occupational diseases (1) If an employer is liable independently of this Act for damages for an occupational disease contracted by a worker, the following provisions have effect for the purposes of any policy of insurance obtained by the employer: (a) The liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due, subject to paragraph (b). (b) [This paragraph is not relevant to these proceedings because Mr Davies was only employed by Fowler before 'the relevant commencement' which is 4pm on 30 June 1987].
24. Addressing the language of s 151AB, CGU argues that by s 151AB(1)(a) Fowler's liability is deemed to have arisen when Mr Davies was last employed by it "in employment to the nature of which the disease was due". The relevant occupational disease was silicosis and progressive massive fibrosis and Mr Davies continued to be employed after 30 June 1979 in conditions to the nature of which that disease was due. Therefore Fowler's liability arose after 30 June 1979 and after South British ceased to be on risk.
25. For the reasons given in my judgment in Allianz Australia Insurance Ltd v Pomfret this argument should be rejected. The relevant liability, which in this case was agreed, is for an occupational disease caused only by exposure to silica dust during a particular period. Mr Davies' claim was in respect of a period of employment, to the nature of which that "disease" was due, which ended on 30 June 1979. That is the time at which by s 151AB(1) Fowler's liability for that disease is taken to have arisen. South British was on risk at that time and its policy indemnified Fowler against that liability.

Proposed orders

1. The following orders should be made: 1. Appeal dismissed. 2. Appellant pay the respondent's costs of the appeal.

Amendments 13 March 2015 - changed "Allianz Australia Insurance Ltd v Pomfret [2015] NSWCA 16" to "Allianz Australia Insurance Ltd v Pomfret [2015] NSWCA 4" in paragraph 16 23 May 2016 - Amended "Allianz" to read "Pomfret" in second sentence of [4]. 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. Decision last updated: 23 May 2016