Costigan v QBE Insurance

O'MEALLY P 1This is an application by Michael Costigan to appoint QBE Insurance (Australia) Limited (QBE) a designated insurer, pursuant to s 151AC of the Workers Compensation Act 1987 (the Workers Compensation Act) and s 33 (4) (n) of the Dust Diseases Tribunal Act 1989 . 2Mr Costigan commenced proceedings in the Tribunal by Statement of Claim filed on 7 December 2000, almost eleven years ago. There are good reasons, I am informed, why the case has been delayed, not the least of which is connected with the present application. 3On 23 August 2010, the plaintiff filed a further Statement of Claim naming Dai John Excavating Co Pty Ltd (Dai John) as fourth and additional defendant. 4The plaintiff alleges that as a result of exposure to silica dust in the course of his employment by a number of defendants, including Dai John, he has contracted silicosis, progressive massive fibrosis and certain other disorders. It is sufficient for present purposes to observe that silicosis is a divisible injury and progressive massive fibrosis is an indivisible injury. Silicosis is a dust disease as defined by the Workers Compensation (Dust Diseases) Act 1942 . 5The case the plaintiff seeks to make against Dai John is recited in par 3 of his Statement of Claim. It is: From on or about August 1971 for a period of approximately two months, from about June 1972 to about October 1972 for a period of about four months, from about March 1973 to about January 1974 for a period of about 11 months and from about March 1975 to about October 1975 for a period of about eight months the plaintiff was employed by the Fourth Defendant as a labourer carrying out excavation work using a jackhammer and shovel. Whilst so employed, the plaintiff was required to carry out jack hammering and shovelling in trenches that were being excavated in sandstone rock. As a consequence of the work performed by the plaintiff during the course of his employment with the Fourth Defendant, the plaintiff was exposed to and inhaled dust containing silica. The plaintiff seeks to recover his damages with respect to his employment with the Fourth Defendant from August 1971 to January 1974. 6QBE insured Dai John against liability arising independently of the Workers Compensation Act for the period 31 July 1969 to 15 November 1974. Between October 1970 and May 1973, Dai John was also insured by Associated General Contractors Insurance Co Ltd (AGC). It should be noted that the plaintiff continued employment by Dai John after QBE went off risk, but seeks damages only in respect of employment to January 1974, when QBE was on risk. 7Section 151AC of the Workers Compensation Act relevantly provides: (2) Designated insurer to be responsible pending resolution of dispute For the purposes of section 151AB, and pending resolution of the dispute, the insurer who is the designated insurer in the relevant category under this section is to be treated as being the insurer who is so liable to indemnify the employer. Section 151AB has effect, and is to be construed, accordingly. (3) Identification of designated insurer The following provisions have effect for the purpose of determining which insurer among the following categories of insurers is the designated insurer for the purposes of this section: (a) If, in the case of a liability that arose before the relevant commencement, there is a dispute as to which of 2 or more insurers is liable to indemnify the employer under section 151AB, the insurer who was the last of those insurers to be the employer's insurer while the worker was employed before that commencement by that employer is the designated insurer. (4) However, the insurers in a category may agree as to which of them is to be the designated insurer or the Dust Diseases Tribunal can order that any one of them is to be the designated insurer, and any such agreement or order overrides subsection (3). (5) Designated insurer to act for other insurers In addition to the provisions of section 151AB: (a) where subsection (3) (a) ... applies-the designated insurer who is the insurer liable under section 151AB (1) is to act for all the insurers in the relevant category in the carriage of the insurance aspects of the claim, and (6) Other insurers can make submissions as to damages Despite subsection (5), if the damages payable to or in respect of the worker have not been assessed, any of the other insurers in dispute may, with the leave of the Dust Diseases Tribunal, make submissions to the Tribunal relating to the amount of damages payable. (7) Methods of resolving dispute The dispute may be resolved by such processes as the parties to the dispute agree or as are otherwise available. (8) Arbitration under special provisions However, if the dispute has not been resolved by the relevant time, it is to be resolved by arbitration under section 38 of the Dust Diseases Tribunal Act 1989, unless the Dust Diseases Tribunal otherwise orders (whether before or after the arbitration commences). The relevant time is: (a) subject to paragraph (b), the time when the total amount of damages is assessed and payable, or (b) if the designated insurer pays the total amount of damages assessed, together with all costs payable, to or in respect of the worker, such later time as one of the parties to the dispute notifies to the other party or parties to the dispute. (9) Nature of resolution of dispute For the purposes of this section, the dispute is not resolved until it has been determined which of the insurers in dispute was the insurer when the worker was last employed at the relevant time by the employer in an employment to the nature of which the disease was due. That insurer is referred to in the following provisions of this section as an insurer who is liable . (10) Adjustment after resolution of dispute If, on resolution of the dispute, it is determined that a designated insurer is not an insurer who is liable, then (in addition to any other liabilities) the insurer who is liable: (a) is liable to reimburse or indemnify the designated insurer for any amounts already paid by the designated insurer in that capacity (including any amounts paid on an interim basis), and (b) is liable to reimburse or indemnify the employer for any costs of the worker already ordered by the Dust Diseases Tribunal, and (c) is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute incurred in earlier proceedings before the Tribunal because the insurer who is liable disputed liability (thereby giving rise wholly or in part to the dispute), and (d) without affecting the generality of paragraph (c), is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute (other than the designated insurer) incurred in any such earlier proceedings in making submissions to the Tribunal relating to the amount of damages payable to or in respect of the worker. (11) If, on resolution of the dispute, it is determined that a designated insurer is an insurer who is liable, then (in addition to any other liabilities) the insurer who is liable: (a) is liable to reimburse or indemnify the employer for any costs of the worker already ordered by the Dust Diseases Tribunal, and (b) is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute incurred in earlier proceedings before the Tribunal because the insurer who is liable disputed liability (thereby giving rise wholly or in part to the dispute), and (c) without affecting the generality of paragraph (b), is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute incurred in any such earlier proceedings in making submissions to the Tribunal relating to the amount of damages payable to or in respect of the worker. (12) Parties to dispute An insurer may be or become a party to the dispute even though the insurer was not a party to or represented in the original proceedings before the Dust Diseases Tribunal. Without limiting the foregoing, an insurer becomes a party to the dispute on being joined as a party to an arbitration under section 38 of the Dust Diseases Tribunal Act 1989. (13) Rules This section has effect subject to orders of the Dust Diseases Tribunal under rules referred to in section 33 (4) (n) of the Dust Diseases Tribunal Act 1989. 8Rule 12 of the Dust Diseases Tribunal Rules provides as follows: Application on section 151AC of the Workers Compensation Act 1987: The Tribunal may if it thinks fit order that all or any of the provisions of s 151AC of the Workers Compensation Act 1987 do not apply in or in relation to a particular case or in relation to a particular insurer: (a) on its own motion, or (b) application by a party or an insurer who is not a party. Section 151AB of the Workers Compensation Act relevantly provides: (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, ... (3) If 2 or more employers are jointly or severally liable for damages referred to in this section, the provisions of this section apply separately to each employer. (4) This section does not affect the amount of damages recoverable by a worker. (5) This section applies to any liability arising before or after the commencement of this Act and to any policy of insurance issued before or after that commencement. (6) In sections 151AB and 151AC: occupational disease means a disease of such a nature as to be contracted by a gradual process, and includes: (a) a dust disease as defined by the Workers' Compensation (Dust Diseases) Act 1942, and ... As noted in par [4] above silicosis is such a disease. 9Mr Little of senior counsel, appearing for QBE, submits that I would not appoint QBE as designated insurer because having done so, if the plaintiff succeeds, liability would fall on that insurer to pay such damages, or proportion of damages, awarded to the plaintiff as a result of breaches of duty to him in the employ of Dai John. This would, he said, be unfair because the plaintiff continued in "dusty employment" after QBE went off risk. Here it should be noted that attempts to ascertain whether Dai John was insured after QBE went off risk and, if so, by whom, were unsuccessful. 10Mr Little also submits that s 151AC is predicated upon the identification of an insurer liable under s 151AB . He further says that s 151AB does not operate to identify QBE as the insurer on risk at the time of the last relevant employment, more particularly, when the plaintiff was last employed in employment to the nature to which the diseases of silicosis and progressive massive fibrosis are due, earlier referred to as "dusty employment". 11In support of his argument, he has cited the decision of the Court of Appeal in WorkCover Authority of New South Wales v Chubb Australia Ltd & Ors [2000] NSWCA 221 ( Chubb ). That was a case in which, following a successful action by a plaintiff who contracted mesothelioma in his employment by Chubb, that company crossclaimed against various insurers. It was a case in which a final decision was made. 12Stein JA, in his judgment, noted that the case was not, as was Baker's case MMI Insurance Compensation (New South Wales) Ltd v Baker (1997) 41 NSWLR 29 to which he had referred, a closed claim for industrial deafness. He observed further that industrial deafness is a succession of completed tortious insults whereas mesothelioma, because of its aetiology, is not complete until the disease of mesothelioma strikes. 13Stein JA thought that the trial judge was in error in purporting to apply Baker to circumstances which were different from the case in respect of which the crossclaim was being litigated. 14Counsel have informed me that there is no decision of the Court of Appeal which considers the question I am to determine on this application. 15Though the allegations against Dai John are of exposure beyond the date upon which QBE went off risk, the plaintiff claims damages only in respect of breaches of duty in employment by it from 4 August 1971 to January 1974. During the whole of that period, QBE was on risk. As earlier noted, AGC also was on risk between October 1970 and May 1973. 16It is submitted by the plaintiff that decisions of this Court and of the Court of Appeal support the making of the order sought by the plaintiff. Those decisions include TGI Australia Ltd & Anor v Bull [1999] NSWDDT 1; (1999) 17 NSWCCR 652. In that case it was said: 4. By Act number 85 of 1988 the Parliament amended the Workers Compensation Act by inserting, amongst other sections, s 151AC. Broadly, that section provides that in the class of cases to which it applies, that is where an employer was during the period of employment of a worker, insured by two or more insurers and a dispute arises as to which of those insurers is liable to indemnify the employer, one insurer, known as "the designated insurer", may be appointed to conduct the proceedings on behalf of the employer. In this case each of the Four Defendant's four insurers agreed that Mercantile Mutual should be appointed the designated insurer, and, by order made on 9 February 1999, it was, by consent, appointed the designated insurer of that defendant. 5. Subsection (5) of s 151AC requires the designated insurer, liable under s 151AB, to act for all insurers in the carriage of the insurance aspects of the claim. There may be some confusion here because it has not yet been determined whether the Fourth Defendant is liable to pay damages to the plaintiff; thus neither has it been determined which insurer is liable under s 151AB. That confusion may be overcome by viewing the provisions of s 151AC(5) as Gleeson CJ viewed the provisions of s 151AB(2) in MMI Insurance Compensation (New South Wales) Ltd v Baker & Ors (1997) 41 NSWLR 289 at 293 that is, as applying to a case where there are two or more policies of insurance under which an employer is contractually entitled to indemnity in respect of damages for which a plaintiff sues. Section 151AC would be unworkable and otiose if it were necessary first to determine the identity of the insurer liable under s 151AB. 17In QBE Insurance Ltd v Bull [1999] NSWCA 185 at [28], the Court of Appeal said: The nature and possible merits of the dispute between the various insurers remain shadowy and problematic ... In any event, the merits or otherwise of that dispute do not impinge upon the construction of s 151AC beyond providing an exemplar for its application. And in (Re McMichael) BP Australia Pty Ltd v Allianz Australia Insurance Ltd & Ors [2007] NSWDDT 11 Curtis J said: 9. S151AC is predicated upon the two assumptions that the time when the employer's liability arose has not yet been established, and that the trial of the plaintiff's action should not be delayed by a trial of that issue. 10. In his second reading speech to the Bill introducing s151AC , the Minister said: "Several of the other items in the Bill are aimed to make resolution of common law claims in the Dust Diseases Tribunal faster and more efficient. One of those items involved situations where the worker's employer has been covered by two or more insurers over the period during which the worker was employed in dust exposed duties. At present, disputes between those insurers about which of them is liable, have the capacity to hold up payment of damages to workers who have a clear entitlement. The proposed changes address that problem by designating the last relevant insurer as the one responsible for dealing with the worker's claim. Separate arbitration arranged through the Tribunal is then provided to resolve the insurance issues, following determination of the worker's claim." 11. Parliament cannot have intended that s151AC required the Tribunal to receive evidence and make contested findings of fact as to the time at which the plaintiff was last employed in employment to the nature of which his disease was due. Such a literal reading of s151AC (3) leads to an absurd result. 12. Lord Scarman, in Stock v Frank Jones (Tipton) Ltd [1978] 1 WLR 231 at 238 said that it was legitimate to go beyond the literal meaning of statute if such meaning would "produce an absurdity which Parliament could not have intended, or destroy the remedy established by Parliament to deal with the mischief which the act is designed to combat." 13. In Re British Concrete Pipe Association [1983] 1 All ER 203, at 205 Sir John Donaldson MR said: "If, giving words the ordinary meaning, we are faced with extraordinary results which cannot have been intended by Parliament, we then have to move on to a second stage in which we re-examine the words and see whether they must in all circumstances have been intended by Parliament to have a different meaning or a more restricted meaning". 14. Three circumstances should be borne in mind. First, s151AC provides procedural relief only, and does not finally determine the rights of the parties. Secondly, s151AC(4) permits the Tribunal to override s151AC(3) . Thirdly, r12 of the Dust Diseases Tribunal Rules provides that the Tribunal may in any event order that all or any of the provisions of s151AC do not apply in a particular case. 15. I have concluded that the words, "in the case of a liability that arose", in s151AC(3) must be read as "in the case of a liability that upon the plaintiff's pleadings arose". Such a reading furthers the intentions of Parliament in dealing with the mischief which this section was designed to combat. It precludes the leading of evidence in what should be a routine administrative exercise before the Tribunal. 18In MacarthurOnslow v Vero Workers Compensation (NSW) Ltd & Ors [2006] NSWDDT 27, Duck J said: 22. It seems to me that the whole purpose of section 151AB and 151AC was to make simple matters relating to insurance and employers so that the plaintiff's claim could be dealt with expeditiously and the insurance position could be sorted out later. The rights of a designated insurer are of course preserved by the scheme set up under section 151AC . 19In (Re Staniforth) BlueScope Steel Ltd v Allianz Australia Insurance Ltd [2006] NSWDDT 42, Kearns J reaffirmed the opinion he expressed in M S Donnelly Pty Ltd v CGU Workers Compensation (New South Wales) Ltd [2006] NSWDDT 26, that s 151AB liability must be determined by reference to the allegations and pleadings made against the employer by the plaintiff. In doing so, Kearns J followed the approach of the Court of Appeal in Baker and FAI (supra). 20Mr Little SC pointed out that it was not apparent that Kearns J had been referred to or considered the decision of the Court of Appeal in Chubb , but in any event, the distinction between that case and this is that Chubb concerned a final decision and this application involves an interim or interlocutory order. The means and processes to deal with ultimate resolution are dealt with in s151AC (6) to (12) quoted above. 21In Coates Bros v FAI Traders Insurance Co Ltd & Ors [1999] NSWDDT 4; (1999) 18 NSWCCR 178, it was said: 10. By reason of the allegations made by the plaintiff it is my view that the designated insurer should be the insurer who last insured the defendant at the time of the last alleged exposure. 22In FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (New South Wales) Pty Ltd (1998) 45 NSWLR 257 (FAI) Handley JA, speaking of s 151AB , said at 261: One result of this construction is that the identity of the insurer liable to indemnify the employer can be affected by ... the period for which [damages] are claimed. 23That was a case in which damages were claimed for industrial deafness, and the plaintiff sought damages in respect of noise exposure to a date earlier than the date of his last exposure to loud noise. This was done for a legitimate forensic purpose which affected his claim for damages. It also affected the identity of the insurer liable to indemnify the plaintiff's employer. 24It is relevant here to note that the insurer whom the plaintiff wishes to be appointed designated insurer was the insurer at the time of the last alleged relevant exposure. The last relevant exposure as distinct from the last exposure was in January 1974, and for present purposes, one might consider that the last relevant alleged exposure is the one to be considered. 25QBE is the insurer which was last on risk at the last date of alleged relevant negligent exposure to silica. There are two insurers of Dai John and neither has agreed to indemnify it. Accordingly, one must assume that there is a dispute as to which insurer should indemnify it. In those circumstances, I think it appropriate to appoint QBE as the designated insurer of Dai John, and I will so order. 26I should also have referred to Mr Little's concern that if I make an order appointing QBE as designated insurer, it will, if the plaintiff succeeds, be required to indemnify the plaintiff for such part of the damages as may be awarded against Dai John. As it seems to me, there are two separate questions, and they are not necessarily connected. The determination of the payment of the plaintiff's damages in the event he succeeds is a question yet to be determined. 27QBE Insurance (Australia) Limited is appointed designated insurer for the purposes of s 151AC of the Workers Compensation Act. Its liability to indemnify Dai John Excavating Co Pty Ltd is a matter not yet considered. 28Costs of this application will be the plaintiff's costs in the cause. 29The Issues and Listings Conference appointed for 28 April 2011 is vacated. 30The matter will be listed for directions on Monday 23 May 2011. 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: 20 May 2011