Zoe is a legal information platform. Always consult the official source for authoritative text.
Coveney v Asbestos Injuries Compensation Fund Ltd; Davis v Asbestos Injuries Compensation Fund Ltd; WorkCover Queensland v Asbestos Injuries Compensation Fund Ltd - [2024] NSWCA 317 - NSWCA 2024 case summary — Zoe
Coveney v Asbestos Injuries Compensation Fund Ltd; Davis v Asbestos Injuries Compensation Fund Ltd; WorkCover Queensland v Asbestos Injuries Compensation Fund Ltd
[2024] NSWCA 317
Court of Appeal (NSW)|2024-12-18|Before: Ward P, Leeming JA, Payne JA
[2023] NSWCA 118
Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107
Source
Original judgment source is linked above.
Catchwords
[2021] NSWCA 246
Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (as liquidators of Octaviar Administration Pty Ltd (in liq)) (2015) 89 NSWLR 110[2015] NSWCA 85
Haines v Bendall (1991) 172 CLR 60[1991] HCA 15
Harris v Commercial Mines Ltd (1996) 186 CLR 1[2023] NSWCA 118
Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107[2018] NSWCA 227
Wholesale Distributors Ltd v Gibbons Holdings Ltd [2008] 1 NZLR 277
Judgment (6 paragraphs)
[1]
Background
The essence of the scheme is described in s 3 of the Winding up Act, namely, to set up a scheme for a long term winding up of three companies that were formerly within the James Hardie corporate group so as to ensure that not only present, but also future, liabilities of those companies in respect of personal injury or death of persons arising from exposure to any asbestos or asbestos products that were mined, manufactured, sold, distributed or used by those companies are dealt with (a) in accordance with the Funding Agreement, and (b) so that preference is given to those claims over other claims which are deferred. To that end, parts of the Corporations Act have been displaced, in accordance with s 5G of that Act.
The administration of AICF and the funds of which it is trustee is governed by a "tripartite arrangement" comprising the Winding up Act, the Trust Deed and the Funding Agreement, all of which should be construed harmoniously: Talifero v Asbestos Injuries Compensation Fund Ltd at [80].
From its inception almost two decades ago until February this year, AICF had provided funds to discharge liabilities of liable entities such as Amaca for personal injury claims which have been established by judgment, even if the injured plaintiff had been in receipt of workers compensation payments from employers (or employers' insurers) within Australia but outside New South Wales.
Certain claims may be brought against Amaca, Amaba and ABN 60 (which are defined to be "liable entities") and a trust is established whose principal purpose is to make payments discharging certain claims made against those companies. Liable entities are permitted to continue to conduct their business despite being insolvent, and indeed are prevented during the winding up period from applying for deregistration: s 28. The operating company is required to contribute funds to the charitable trust according to a formula which is based (speaking generally) on a proportion of its operating profit and the anticipated need for payments to discharge liabilities of liable entities. There is thus a direct connection between James Hardie 117 Pty Ltd's obligation to make payments and the scope of "payable liabilities".
The Funding Agreement is between the State of NSW, James Hardie Industries plc (the parent company of the James Hardie Group), James Hardie 117 Pty Ltd (the entity primarily liable to provide funding) and AICF (which joined by Deed of Accession in June 2006). The tripartite arrangement was a product of a Commission of Inquiry and subsequent negotiations between the State and James Hardie 117 Pty Ltd to provide some $4.5 billion to pay certain of Amaca's liabilities during Amaca's statutory winding-up period. The Winding up Act was intended to implement key parts of that Agreement, including the establishment of a trust fund to pay the liabilities of designated entities, and in April 2006 AICF was appointed trustee of that fund under the Trust Deed.
Mr Coveney contracted mesothelioma as a result of his exposure to Amaca's asbestos products during the course of his employment as a demolition labourer in Queensland. He had worked for third-party employers. On 31 March 2023, Mr Coveney applied to WorkCover Queensland for the payment of compensation pursuant to the Workers Compensation and Rehabilitation Act 2003 (Qld) for terminal illness, being mesothelioma. On 2 June 2023, WorkCover Queensland accepted Mr Coveney's claim and later paid him statutory compensation in a lump sum of $873,720. On 11 August 2023, Mr Coveney sued Amaca for damages in negligence in the Dust Diseases Tribunal of NSW and a consent judgment was entered against Amaca on 21 February 2024 giving judgment for $1 million plus costs of $190,000. (Amaca's cross-claim seeking contribution from Mr Coveney's employers, both of whom were insured by WorkCover Queensland, remains undetermined).
Mr Davis contracted mesothelioma as a result of his exposure to Amaca's asbestos products while he was working as a carpenter in Queensland, also for third-party employers. In March 2020, Mr Davis lodged a claim with WorkCover Queensland for statutory compensation. WorkCover Queensland paid Mr Davis compensation payments totalling $418,640. In July 2023, Mr Davis sued Amaca for negligence in the Dust Diseases Tribunal of NSW, and following a two day hearing (confined to quantification) on 7 and 8 February 2024, judgment was entered in Mr Davis' favour on 22 February 2024 in the amount of $897,020.64 plus costs: Davis v Amaca Pty Ltd [2024] NSWDDT 2.
AICF has not yet paid Mr Coveney for the judgment obtained against Amaca. There are two aspects in respect of which AICF sought advice:
1. Would AICF be justified in paying the $873,720 in respect of which Mr Coveney has already received workers compensation payments?
2. Would AICF be justified in paying the balance of the judgment debt of $316,280 (representing the balance of the judgment debt and the costs judgment) in respect of which WorkCover Queensland asserted a charge?
AICF has paid $476,820.64 to Mr Davis's solicitors' trust account. WorkCover Queensland asserts a charge over the entirety of what has been paid, and an entitlement to the unpaid portion of the judgment of $418,640. AICF sought advice as to whether it would be justified in paying the unpaid balance of Amaca's judgment debt of $418,640. (There is a minor discrepancy between those amounts and Mr Davis' judgment, which relates to an adjustment for the repayment of a Medicare benefit in the order of $1,000, on which nothing turns.)
On 5 February 2024, shortly before both of Messrs Coveney and Davis obtained judgments against Amaca, AICF wrote to each man's solicitors advising that it would not make payments discharging any liability found to be owed by Amaca to them insofar as WorkCover Queensland sought, or might seek, to recover such payments against the amounts of workers compensation it had paid either man.
In February and March 2024, WorkCover Queensland demanded that AICF pay the amounts previously paid as statutory compensation to each of Messrs Coveney and Davis to WorkCover Queensland as a first charge over the judgment moneys. It was accepted that that charge arose under section 207B of the Workers' Compensation and Rehabilitation Act 2003 (Qld), which reads:
207B Insurer's charge on damages for compensation paid
…
(2) An amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or another person, is a first charge on any amount of damages recovered by the person to the extent of the amount paid as compensation to the person.
…
(4) An employer or other person from whom the damages are recoverable must pay the insurer the amount of the first charge or, if the damages are not more than the amount of the first charge, the whole of the damages.
AICF contended that it did not have power to pay the judgment sum to Messrs Davis and Coveney because of limitations in the Winding up Act and the Funding Agreement. AICF asked WorkCover Queensland whether it claimed a charge over the difference between Mr Coveney's judgment sum and the compensation payments, so that it could pay that "top up amount" to Mr Coveney as soon as possible. WorkCover Queensland did not reply.
On 8 March 2024, WorkCover Queensland filed a statement of claim in the Supreme Court of Queensland against Amaca and Mr Coveney seeking, among other things, a declaration that WorkCover Queensland was entitled to a first charge over the judgments sums and mandatory injunctions to effect the payment of that sum to WorkCover Queensland. In April 2024 that proceeding was transferred to the Supreme Court of New South Wales under s 5(2) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Qld) because of its interrelationship with the trustee's application for judicial advice, but the proceedings were not consolidated and thus WorkCover Queensland continued not to be a party to AICF's application for judicial advice. AICF sought orders that it would be justified in not paying to WorkCover Queensland, as a first charge over the judgment moneys in respect of the judgments against Amaca, the amount paid in statutory compensation to Messrs Coveney and Davis.
It is not necessary to express views on all aspects of WorkCover Queensland's entitlements under statute, and in point of principle, it would be inappropriate in proceedings in a New South Wales court for judicial advice, in which no party claimed he or it was acting adversarially, for questions of the construction of the Queensland statute to be determined unnecessarily.
It is sufficient to observe that on any view, the Queensland statute confers on it a right to recover amounts paid by AICF to discharge judgments against Amaca, with the result that plaintiffs with actions for personal injury against Amaca will not, on the stance now adopted by AICF and endorsed by the advice given at first instance, be paid in full. This was explained by reference to Mr Davis' position, who had received $418,640 by way of workers compensation payments, and had been paid $478,000 in advance of judgment (it will be recalled that the only issue at the hearing in February 2024 was quantum):
ROBERTSON: … Sitting in my client's trust account is that $478,000 figure or thereabouts. But then [WorkCover Queensland] says well under the Queensland legislation you must pay over to me $418,640 of that amount. The consequence of that is that although my client vindicated an entitlement to $897,000 in damages in the Dust Diseases Tribunal, he will be left, if the trustee is correct, with only $58,000 in damages or thereabouts after it pays the amount demanded by [WorkCover Queensland]. True it is he's already had the benefit of the $418,640 in effect from WorkCover Queensland under that scheme. But in total he gets about $476,000 in money in damages or statutory compensation for a loss that has been assessed at $897,000. He is put in a significantly worse position than he would have been had he not been the worker of anyone and had he not had statutory entitlements under the Queensland legislation.
There was no issue about the correctness of what was said on behalf of Mr Davis. Ms Higgins confirmed this on behalf of AICF:
LEEMING JA: Does it follow if you're right on that and your previous submissions that the trustee doesn't have to pay anything more to either plaintiff but both of those plaintiffs are at risk, especially Mr Davis of having all this money taken back by Queensland WorkCover.
HIGGINS: I believe it does, your Honour, yes
LEEMING JA: It's an unpalatable consequence.
HIGGINS: We accept that, your Honour.
Likewise, the Attorney-General confirmed his position:
PAYNE JA: Is your submission, Mr Hume, when this scheme, the tripartite scheme, was set up, this was a deliberate design feature by the New South Wales Government that injured workers would have taken away from them their ability to recover from the trust any amounts paid in worker's compensation anywhere around the country. It seems a very surprising intention to me.
HUME: There is no doubt that the intention of the - the answer is yes, with a qualification. There is no doubt, in my submission, that the intention of the words in the chaussette to the definition of Payable Liability were to an extent to subtract from what would otherwise be Payable Liabilities of the trustee. There was an intention to take something that would otherwise be a Payable Liability and take it outside that universe. To that extent, there was an intention to reduce or limit the obligations of the trustee. In respect of -
PAYNE JA: Is what Mr Robertson said right? That this trust has been operating for something like 20 years and this issue is only being litigated for the first time now?
HUME: As far as I'm aware, yes.
Thus a person injured in Queensland or any other Australian State or Territory aside from New South Wales with a claim against Amaca and who has been in receipt of workers compensation payments is in a very different position from a person injured in Australia but outside New South Wales who is not entitled to workers compensation payments. Both may obtain judgments against Amaca. Amaca will probably lack funds to satisfy the judgment, and the steps available to the judgment creditor to enforce it are severely limited. However, the trustee will make a payment to the latter so as to satisfy the judgment debt, but insofar as any payment by the trustee is clawed back, or is liable to be clawed back pursuant to an interstate workers compensation insurer's entitlement to reimbursement, then the trustee is, as the position presently stands, justified in making no payment.
This concededly unpalatable outcome is contrary to the fundamental purpose of the regime which is designed to ensure that the liable entities including Amaca remain in extended winding up and AICF may exercise its powers to distribute funds in accordance with its charitable purpose so that, of all things, Amaca's liabilities for direct claims of asbestos-related personal injury may be discharged. The Funding Agreement recites that the parties' objective was:
To achieve a binding agreement intended to ensure that, after taking into account the existing assets of [Amaca, Amaba and ABN 60 (collectively Liable Entities)], sufficient funding is made available by the [James Hardie Industries] Group to fully compensate, on an agreed basis, all proven current and future Australian Asbestos personal injury and death Claimants against the Liable Entities.
It is true, as the Attorney-General submitted, that the closing words of the definition of "Payable Liabilities" reflect an intention to subtract something from the class of obligations the discharge of which is the principal purpose of the trust. But interstate employees injured by James Hardie products are an eminently foreseeable class of case, and almost all of them would be entitled to workers compensation, and would receive payments faster than they could establish a judgment against Amaca, and all interstate workers compensation regimes contain clawback provisions to recover payments when damages have been awarded. The result is that the scenario confronting Messrs Coveney and Davis is far removed from the periphery of liabilities in respect of which the tripartite arrangement was directed.
AICF and the New South Wales Attorney-General candidly acknowledged that that was the outcome of the advice given by the primary judge. They said that this was a consequence of WorkCover Queensland exercising, or threatening to exercise, its statutory entitlement to reimbursement, rather than waiving such rights. But, as WorkCover Queensland put it:
It is a most peculiar outcome that the Trustee's obligation to fund damages, which a claimant obtained judgment against a "Liable Entity" for, depends upon the indulgence of a third party that has a statutory charge over those damages.
The intention is most unlikely to have been to deny an asbestos victim funding of a "Proven Claim" which may make bringing such a claim unviable or leave the victim little or no funded damages from a "Liable Entity" unless a third party with a statutory charge over the damages payable [by] the "Liable Entity" gives up the rights afforded to it by statute.
The unpalatable outcome summarised above applies to employees with claims against Amaca incurred at workplaces within Australia but outside New South Wales. The position of New South Wales employees is different. The Workers Compensation Act 1987 (NSW) does not (for all practical purposes) apply, by reason of an exclusion in the definition of "injury". Instead, such claims are governed by the Workers' Compensation (Dust Diseases) Act 1942 (NSW). Generally speaking injured workers who receive damages from the Dust Diseases Board are not subject to a clawback from the Board, but instead the Board has an entitlement to make a claim itself, by reason of s 8E of that Act. Such claims are recognised within the tripartite arrangement. The Winding up Act defines in s 4 a "statutory recovery claim" as follows:
statutory recovery claim against a liable entity means any of the following claims -
(a) a claim against the entity under section 8E of the Workers' Compensation (Dust Diseases) Act 1942 for reimbursement of compensation paid or payable by the Workers' Compensation (Dust Diseases) Board,
(b) any other claim against the entity for the payment of compensation, or the reimbursement of compensation paid, under a statute enacted in Australia in circumstances of a kind prescribed by the regulations.
It is clear that Amaca's liability to pay a "statutory recovery claim" is a payable liability, and thus may be paid. But there have been no regulations made to accommodate recoveries pursuant to statute such as those made by WorkCover Queensland, and thus such claims for reimbursement are outside the scope of "statutory recovery claims".
The trustee's obligation to make payments is to be found in the Funding Agreement and the Trust Deed, and the Trust Deed is expressed (in cl 5.10) to be subject to the terms of the Funding Agreement. That is, in part, why the Funding Agreement is "the pre-dominant instrument": Re Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97 at [82].
The Winding up Act supports that conclusion. One of the "principal objects" of the Act, outlined in s 3, is to ensure that the liabilities of liable entities are "dealt with in accordance with the Final Funding Agreement". Section 32 of the Act confines the payments that may be made by AICF or Amaca to only Amaca's "payable liabilities" during Amaca's winding up period. The primary judge accepted that each judgment debt was a "proven personal asbestos claim". However, the primary judge held that the Trust Deed and Funding Agreement further circumscribed the payments that could be made out of the SPF, noting that s 23(1) of the Act endorses the primacy of any further limitations imposed by those two instruments:
23 Conduct of business during winding up period
(1) Subject to this Part, the powers of each liable entity must be exercised during the winding up period for the entity so as to -
…
(c) apply any funds provided from the SPF only in accordance with the conditions on which the funding is provided.
Clause 8 of the Funding Agreement provides:
8 SCOPE OF OBLIGATIONS
8.1 Application of funds
The Parties acknowledge that it is the intent of this deed and the [Winding up Act] and the Trust Deed to ensure that:
(a) the monies and other assets provided to the Trustee (including the JHI Contributions) may only be applied in the payment of SPF Funded Liabilities; and
(b) such monies and other assets are not to be applied to satisfy any other creditors of the Trustee or of the Liable Entities or of the JHI Group.
"SPF Funded Liability" is a more confined concept in the Funding Agreement than "payable liability" is in the Act. (Amaca is liable for all Payable Liabilities that are not SPF Funded Liabilities.) The definition of "SPF Funded Liability" includes only some of the itemised subsets of "Payable Liabilities" in the Funding Agreement, one of which is a "Personal Asbestos Claim".
Clause 13.7 deals with "statutory recovery claims" consistently with s 32(3) of the Winding up Act and the accompanying regulations. Clause 13.7(a) provides:
13.7 Limitations on Recoveries
(a)
(i) For the purposes of this cl 13.7, "Recoveries" means any statutory entitlement of the NSW Government or any Other Government or any governmental agency or authority of any such government ("Relevant Body") to impose liability on or to recover an amount or amounts from any person in respect of any payments made or to be made or benefits provided by a Relevant Body in respect of Personal Asbestos Claims or Marlew Claims (other than as a defendant or in settlement of any claim, including a cross claim or claim for contribution) that is from time to time a "statutory recovery claim" for the purposes of the [Winding up Act].
Note: Any statutory entitlement of a Relevant Body properly paid out of the damages payable as part of a Proven Claim pursuant to a judgment or settlement of a Personal Asbestos Claim or a Marlew Claim is not to be treated as a Recovery for the purposes of this clause 13.7.
(ii) The Parties agree and acknowledge that the intent of this clause 13.7 is to establish a framework for and to limit the JHI Group's funding of Recoveries under this deed and that the reference in section 32(3)(a) of the [Winding up Act] to "the funding set aside" under this deed for the payment of statutory recovery claims is a reference to the Annual Limit and the Term Limit provide for in clause 13.7(b).
Clause 13.7(b) provides that, in consideration of JHI and James Hardie 117's agreement "to include Recoveries within the scope of the funding arrangements set out in this deed (but only to the limited extent provided for in this clause 13.7), the NSW Government agrees to use its best endeavours to ensure, through the [Winding up Act], that the Liable Entities (or the Trustee on their behalf) cannot be compelled to pay (whether paid directly to Relevant Bodies or as a component of amounts payable or liabilities incurred in respect of Personal Asbestos Claims…) Recoveries which in aggregate exceed in any Financial Year" the lesser of the Liable Entities' liability to pay Recoveries or $750,000 per annum. It is unnecessary to summarise the balance of the clause save to note that cl 13.7(f) includes an undertaking that the New South Wales Government will not make or amend a regulation to prescribe any claim as a "statutory recovery claim" without James Hardie's written consent.
The provisions summarised above reflect the "tight" constraints upon statutory recovery claims on which the primary judge placed reliance.
[2]
The critical definitions
Clause 13.7 feeds into the cascade of definitions of "Personal Asbestos Claim", "Proven Liability" and "Payable Liability". There are some minor variations in these terms in the Funding Agreement and the Trust Deed, which are also defined slightly differently from the similar (uncapitalised) terms in the statute, but no party maintained that anything turned on the discrepancies. In the definitions reproduced below from the Funding Agreement, the words which are or may be applicable to the claims by Messrs Coveney and Davis have been emphasised.
SPF Funded Liability was defined to mean:
(a) only those liabilities described in paragraphs (a), (b), (c), (e), (g) and (h) of the definition of Payable Liability and excludes the liabilities described in paragraph (d) or (f) of the definition of "Payable Liability"; and
(b) a claim or category of claim which JHI and the NSW Government agree in writing is a "SPF Funded Liability" or a category of "SPF Funded Liability".
Payable Liability was defined to mean:
Payable Liability means:
(a) any Proven Claim (whether arising before or after the date of this deed);
(b) Operating Expenses;
(c) Claims Legal Costs;
…
(e) any pre-commencement claim (as defined in the [Winding up Act]) against a Liable Entity;
…
(g) Recoveries within the meaning and subject to the limits set out in clause 13.7; and
(h) any amount payable in connection with an Authorised Loan Facility …,
but in the cases of paragraphs (a), (c) and (e), excludes any such liabilities or claims to the extent that they have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.
Proven Claim is defined in cl 1.1 of the Funding Agreement (and identically in the trust deed) as follows:
Proven Claim means any Personal Asbestos Claim or Marlew Claim in respect of which final judgment has been given against, or a binding settlement has been entered into by a Liable Entity or any member of the JHI Group from time to time, and in each case, to the extent to which that entity incurs liability under that judgment or settlement (including any interest, costs or damages to be borne by a Liable Entity or the relevant member of the JHI Group pursuant to such judgment or settlement).
A Proven Claim includes a Personal Asbestos Claim, which is defined in cl 1.1 of the Funding Agreement (and the Trust Deed) as follows:
Personal Asbestos Claim means, subject to clause 13.7:
(a) any present or future personal injury or death claim by an individual or the legal personal representative of an individual, for damages under common law or under other law … which:
(i) arises from exposure to Asbestos occurring in Australia, …
(ii) is made in proceedings in an Australian court or tribunal; and
is made against all or any of the Liable Entities or any member of the JHINV Group from time to time;
(b) any claim made under compensation to relatives legislation by a relative of a deceased individual (or personal representative of such a relative) or (where permitted by law) the legal personal representative of a deceased individual in each case where the individual, but for such individual's death, would have been entitled to bring a claim of the kind described in paragraph (a); or
(c) a Contribution Claim made in relation to a claim described in paragraph (a) or (b),
but in each case excludes any Marlew Claim and any other claim to the extent they have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.
It is convenient immediately to note the following complexities.
First, there is a cascade of definitions, all of which must be satisfied if the trustee is to comply with its obligation only to pay SPF Funded Liabilities. Relevantly to the claims made by Messrs Coveney and Davis, that involves satisfying the definitions of Personal Asbestos Claim, then Proven Claim, then Payable Liability, and then SPF Funded Liabilities.
Secondly, there are two main ways by which the claims of Messrs Coveney and Davis may fall outside that cascade of definitions: by the words "subject to clause 13.7" in the definition of Personal Asbestos Claim, and by what was called the "Exclusion" - the similarly worded exclusions at the end of the definitions of each of "Personal Asbestos Claim" and "Payable Liability".
Thirdly, "Personal Asbestos Claims" are expressly "subject to" cl 13.7. That is a little awkward, because the definition identifies a class of claims, while cl 13.7 is a complex clause directed to limiting "Recoveries". However, the note to cl 13.7(a)(i) excludes statutory entitlements which are "properly" paid out of Proven Claims pursuant to a judgment or settlement of a Personal Asbestos Claim from being treated as a Recovery. Although that is merely a note, it reflects the idea that in some circumstances (and certainly in respect of claims pursuant to s 8E of the Workers' Compensation (Dust Diseases) Act 1942), a claim under statute for reimbursement from a judgment against Amaca is not to be treated as a "Recovery" and therefore is not to be excluded from the scope of Personal Asbestos Claims by reason of the subjection of that definition to cl 13.7. That is to say, none of the tight restrictions applicable to "Recoveries" in cl 13.7 applies if as a matter of the construction of Proven Claims and Personal Asbestos Claims there is a statutory entitlement to be paid out of the damages payable as part of a Proven Claim. The focus of debate in this Court was not on cl 13.7, but on the cascade of definitions of Personal Asbestos Claim, Proven Claim and Payable Liability.
Fourthly, on its face, "Personal Asbestos Claims" are candidates for membership of the class of "Proven Claims", which in turn are candidates for membership of the class of "Payable Liabilities". There are many other ways in which "Payable Liabilities" may come into existence, which need not be summarised. It was accepted that the claims by each of Messrs Coveney and Davis against Amaca for personal injury following their exposure to asbestos were Personal Asbestos Claims under paragraph (a) of the definition, subject perhaps to the Exclusion. They were claims for damages at common law against Amaca.
Fifthly, the additional elements of a "Proven Claim" (relevantly, a final decision by a court) were satisfied in respect of each of the claims advanced by Messrs Coveney and Davis when in February 2024, they obtained judgments in their favour against Amaca.
Sixthly, the Exclusion in the definition of "Payable Liability" is very similarly worded to that in "Personal Asbestos Claims". It is difficult to see why both are necessary.
Seventhly, the scope of those exclusions turns on the meaning of "a Worker's Compensation Scheme or Policy". The Funding Agreement defines that term as follows:
Worker's Compensation Scheme or Policy means any of the following:
(a) any worker's compensation scheme established by any law of the Commonwealth of Australia or of any State or Territory of Australia;
(b) any fund established to cover liabilities under insurance policies upon the actual or prospective insolvency of the insurer (including without limitation the Insurer Guarantee Fund established under the Worker's Compensation Act 1987 (NSW)); and
(c) any policy of insurance issued under or pursuant to such a scheme.
[3]
The reasons of the primary judge
There was a great deal of the reasons of the primary judge which all parties said was correct. The critical aspect of the reasons which was challenged in the main ground of this appeal was the conclusion that AICF lacked power to pay Messrs Coveney and Davis their respective judgment sums out of the SPF. In part this turned on the role played by cl 13.7, but it was principally a consequence of the "Exclusion" in the definitions of Personal Asbestos Claim and Payable Liability.
The primary judge adverted at [117] to the breadth of the definition of "Worker's Compensation Scheme or Policy" in clause 1.1 of the Funding Agreement.
Worker's Compensation Scheme or Policy means any of the following:
(a) any worker's compensation scheme established by any law of the Commonwealth of Australia or of any State or Territory of Australia;
(b) any fund established to cover liabilities under insurance policies upon the actual or prospective insolvency of the insurer (including without limitation the Insurer Guarantee Fund established under the Worker's Compensation Act 1987 (NSW)); and
(c) any policy of insurance issued under or pursuant to such a scheme.
(emphasis in primary judgment)
Although Messrs Coveney and Davis distinguished the workers compensation payments paid by their employer's insurer pursuant to contract, as opposed to being damages for a claim against Amaca, that submission was rejected by the primary judge, at [119]:
there is just no hint in the "tripartite arrangement" that any delineation was sought to be drawn between workers' compensation payments made in respect of a policy issued to a liable entity or to another employer.
The primary judge identified at [126]-[131] four difficulties with the contrary construction:
First, as a matter of language, the argument requires a restriction to be placed on the exclusion which is not readily apparent from the words used, nor otherwise evident from the contractual documents in which the exclusion appears, nor the context or surrounding circumstances. The funding agreement is not concerned with a precise identity, in terms of underlying cause of action or remedy, between the claim brought by an injured person in the Tribunal and any claim they may have lodged with a workers' compensation authority in respect of the same injuries. The funding agreement is concerned with the extent of James Hardie's obligation to fund the SPF to pay asbestos claims made against liable entities, whatever those claims may be and wherever those claims may be brought.
Through a series of defined terms, James Hardie's obligation is [pared] back, removing any obligation to fund claims which are not brought by an individual (or their legal personal representative), not for economic loss, not caused by exposure to asbestos in Australia or made in Australia, not brought in an Australian court or tribunal and not proven. James Hardie's funding obligation is further paired back "to the extent [the claim has] been recovered … under a Worker's Compensation Scheme or Policy". The exclusion simply reduces the funding obligation - in clear and plain terms - to the extent that the claimant has already obtained funds in respect of loss caused by their asbestos injuries from workers' compensation.
Second, adopting the construction proposed by WorkCover Queensland would radically reduce the operation of the exception, where common law damages are generally not paid under workers' compensation schemes. Whilst I do not expect the draftspersons to have had intricate knowledge of the workings of workers' compensation schemes across the land, it is the very nature of such schemes that they are 'no fault', paying workers scheduled payments for their injuries without limiting their ability to recover (generally) higher common law damages from responsible parties in due course. A court will strain against interpreting a contract so that a particular clause is nugatory or ineffective: Chapmans Ltd v Australian Stock Exchange Limited (1996) 67 FCR 402 at 411 (Lockhart and Hill JJ).
Third, for the trustee to pay money to WorkCover Queensland from the funds available to fund Payment Liabilities generally would run counter to the very specific arrangements to pay moneys to statutory authorities, which I have endeavoured to explain. The Winding Up Act and funding agreement together provide a mechanism by which a workers' compensation authority can recover payments from the SPF, which is very tightly circumscribed. WorkCover Queensland's entitlement to reimbursement could be a Payable Liability and, more relevantly, an SPF Funded Liability, if it met the requirements of subpar (g) of the definition of Payable Liability - "Recoveries within the meaning and subject to the limits set out in clause 13.7" - but presently does not in the absence of any regulations making this a "statutory recovery claim". The construction of the exception for which WorkCover Queensland contends is inconsistent with cl 13.7, where it is important to construe the provisions as a whole having regard to purpose and context.
Fourth, the construction contended for by WorkCover Queensland does not work particularly well for the exclusion to the definition of Payable Liability, which picks up liabilities or claims described in sub-par (c) of the definition, including Claims Legal Costs. This item cannot be described as common law damages either but is subject to the same exclusion. This indicates that the exclusion is not limited to damages.
As the trustee submitted, ss 32(2) and 32(3) of the Winding Up Act and the exclusion in the funding agreement seek to address the same issue in different ways, limiting recourse to the SPF in circumstances where the asbestos victim is recovering funding in respect of their injuries from another source. It is rational for the tripartite arrangement not to pay money to a person suffering from an asbestos injury where they have recovered money for that injury under a Worker's Compensation Scheme or Policy, be it one for the benefit of Amaca or a third-party employer. From the worker's perspective, they will receive full compensation once a 'top up' payment is received from the trustee, in addition to workers' compensation already received. From the trustee's perspective, funds are retained to pay other injured parties and extend the life of the fund.
The upshot was that the only payable liability was, in Mr Coveney's case, $316,280 (being the remaining $126,280 of the judgment sum, plus $190,000 in costs) and, in Mr Davis' case, the balance that is yet to be paid.
The second aspect of the primary judge's reasons was that AICF would be justified in not paying even those balances. Her Honour held that the payment of the payable liability was only a power, not a duty - and a power expressed in clause 5.9 of the Trust Deed to be in the trustee's "absolute discretion".
Her Honour further held that the trustee would be justified in not paying the above balances to Messrs Coveney and Davis in circumstances where WorkCover Queensland could immediately exercise its statutory charge over the amounts received. The primary judge discussed the principles governing the exercise of trustees' dispositive powers and concluded that, in light of the duty to act in the best interests of beneficiaries, AICF could refuse to make a distribution that is likely to be immediately expropriated from the object. Reference was made to the correspondence between AICF and WorkCover Queensland, in which WorkCover Queensland left open, albeit by silence, the possibility of asserting its charge immediately upon receipt by Messrs Coveney and Davis.
Separately, WorkCover Queensland submitted that AICF had power to pay out of the SPF an amount corresponding to WorkCover Queensland's statutory charge directly to WorkCover Queensland. That submission was rejected, and was outside the scope of the appeals in this Court.
As a result, the primary judge made the following substantive orders:
(1) Order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) and s 63 of the Trustee Act 1925 (NSW) that the plaintiff would be justified in not paying the sum of $873,720 to either WorkCover Queensland under s 207B(4) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) or Eric Thomas Coveney in satisfaction of the judgment against Amaca Pty Ltd (under NSW Administered Winding Up) (ACN 000 035 512) in proceeding number 2023/255894 in the Dust Diseases Tribunal of New South Wales (the Coveney Proceeding).
(2) Further order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) and s 63 of the Trustee Act 1925 (NSW) that the plaintiff would be justified in not paying the sum of $316,280 to Eric Thomas Coveney in satisfaction of the judgment against Amaca Pty Ltd (under NSW Administered Winding Up) (ACN 000 035 512) in the Coveney Proceeding in circumstances where WorkCover Queensland would or could enforce its statutory charge under s 207B(2) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) over that sum.
(3) Order pursuant to s 55 of the James Hardie Former Subsidiaries (Winding Up and Administration) Act 2005 (NSW) and s 63 of the Trustee Act 1925 (NSW) that the plaintiff would be justified in not paying the sum of $418,640 to WorkCover Queensland under s 207B(4) of the Workers' Compensation and Rehabilitation Act 2003 (Qld) or Barry Edward Davis in satisfaction of the judgment against Amaca Pty Ltd (under NSW Administered Winding Up) (ACN 000 035 512) in proceeding number 2023/232314 in the Dust Diseases Tribunal of New South Wales (the Davis Proceeding).
[4]
Parties' submissions and their resolution
The starting point is the text. The syntax of each Exclusion is not free from difficulty. There are two distinct difficulties, both of which turn on the words "to the extent". What words are qualified by "to the extent", and what does "to the extent" mean?
It will be recalled that, in the case of a Personal Asbestos Claim, the Exclusion is:
any Marlew Claim and any other claim to the extent they have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.
In the case of Payable Liabilities, the Exclusion is:
but in the cases of paragraphs (a), (c) and (e), excludes any such liabilities or claims to the extent that they have been recovered or are recoverable under a Worker's Compensation Scheme or Policy.
There was a debate as to whether one should start with the definition of "Payable Liabilities" or "Personal Asbestos Claim". That debate is relatively arid. The provisions are cognate, and need to be read together in order to achieve the purpose of delineating the extent to which the trustee may make distributions. It will be necessary to consider both definitions, but it is sensible to start with that which is lower in the hierarchy, because it attaches directly to the claims made by Messrs Coveney and Davis.
It seems clear enough that the words "to the extent" in the definition of Personal Asbestos Claim qualify both "any Marlew Claim" and "any other claim". That is because they are followed by three plural pronouns or verbs ("they", "have been recovered" and "are recoverable") and if "to the extent" qualified only "any other claim" then three singular pronouns or verbs would follow. That view is strengthened by the consideration that in the definition of Payable Liability the cognate Exclusion operates across the board ("excludes any such liabilities or claims"), including to Marlew Claims (which are expressly capable of being Proven Claims and therefore capable of falling within paragraph (a) of the definition of Payable Liability).
It is true that if the words "to the extent" qualify both "any Marlew Claim" and "any other claim", it is difficult to see what purpose is achieved by the exclusion commencing with "any Marlew Claim and any other claim". It would have been simpler to write "any claim" or perhaps "any claim (including any Marlew Claim)". However, where different definitions in the cascade which culminates in Payable Liabilities needlessly deploy substantially the same Exclusion, there can be little surprise that the wording is neither as concise nor as clear as it could be.
Turning from parsing the structure of the Exclusion to identifying its meaning, the Exclusion subtracts from what is a Personal Asbestos Claim but it does so only "to an extent". That involves an ellipsis which is a little problematic, in that the result of the application of the exclusion is to subtract from what would otherwise be the class of "Personal Asbestos Claims", but to do so by excluding certain claims "to an extent". The "extent" to which the exclusion applies is expressed in terms of claims being "recovered" or "recoverable", which is to speak in terms of a dollar amount. That is to say, the extent to which a claim is excluded from the definition of Personal Asbestos Claim is determined by looking forward to the actual or anticipated recovery of an amount of money.
The application of the dollar deduction is complicated further by itself having two limbs ("have been recovered" or "are recoverable") with the latter meaning that the unexercised capacity to recover an amount of money in the future reduces the amount of the claim here and now. It is easy to see how there could be disputes about the extent to which a Worker's Compensation Scheme or Policy might result in a future payment. Fortunately, this litigation involves only the actual workers compensation payments made to Messrs Coveney and Davis.
Fundamentally, it was submitted on behalf of Messrs Coveney and Davis and WorkCover Queensland that the exclusion in the definition of Personal Asbestos Claim should be understood as excluding a class of claims from the claims included earlier in the definition. The exclusion of claims "to the extent they have been recovered or are recoverable under a Worker's Compensation Scheme of Policy" could apply, so it was said, only to claims for damages under common law which had been made against a Liable Entity. The workers compensation payments which had been made to Messrs Coveney and Davis had not been claims for damages, nor had they been made against Amaca or any other Liable Entity. It followed that the money actually received by Messrs Coveney and Davis was the result of a claim which fell outside the scope of the claims caught by the opening paragraphs of the definition, and for that reason was not to be taken into account by the Exclusion.
As it was put in Mr Coveney's written submissions:
In the context of a "personal injury claim" made by an individual (subparagraph (a)), the Primary Judge failed to then consider that this "personal injury claim" (being one which is necessarily made against a "Liable Entity") is only excluded if the same "personal injury claim" (which is, definitionally, a claim against a "Liable Entity") has been recovered or is recoverable under a "Worker's Compensation Scheme or Policy".
The contrary argument relied on both the damages and the workers compensation being received to compensate for the same injury. AICF said that "a statutory compensation payment under that Queensland Act in respect of an injury arising from asbestos exposure constitutes a recovery of a personal injury claim by an individual for damages under common law arising from that same asbestos exposure and injury".
The trustee defended the reasoning of the primary judge at [120]-[121]:
What is then meant by the common phrase in the exclusions, "to the extent that [the liability or claim] has been recovered or are recoverable under a Worker's Compensation Scheme or Policy"? While "in strict legal language recover means recover by action … it is now often used in the larger sense of obtaining in any legal manner": Haines v Welch (1868) LR 4 CP 91 at 93; followed in Bluehaven Transport Pty Ltd v Deputy Commissioner of Taxation (2000) 157 FLR 26 at [13]-[14] (Williams J). In Cinema Plus Ltd (Administrators Appointed) v Australia and New Zealand Banking Group Ltd [2000] NSWCA 195, Sheller JA considered "Recover" means: "to get back into one's hands or possession something lost or taken away": at [121]. Everything depends on context. As used in the exceptions, I think "recovered or recoverable" is used in its ordinary English meaning 'to make up for or make good loss or damage to one's self': Macquarie Dictionary (9th ed, 2024, Pan Macmillan).
That is, if a personal injury or death claim made against a liable entity has been fully recovered under a Worker's Compensation Scheme or Policy, then the claim is wholly excluded. If a personal injury or death claim made against a liable entity has been partly recovered under a Worker's Compensation Scheme or Policy, then it is not a Personal Asbestos Claim or Payable Liability to that extent.
The trustee submitted that the primary judge's conclusion reflected a natural and common-sense way to construe the nested definitions that employed the exclusion referrable to a workers' compensation scheme or policy. It was said that:
A claim for damages is a claim for compensation to put the plaintiff in the position in which they would have been but for the wrong. Here that means paying compensation to put the plaintiffs in the position in which they would have been but for suffering the asbestos injury. A claim for damages arising from exposure to asbestos will invariably be or include a claim for compensation for an injury. That, we submit, is the character of a claim for damages. … It is, we submit, a natural use of language to regard the claim for damages to have been recovered to the extent that money has been paid to remedy the personal injury, the subject of the claim.
Similarly, the Attorney submitted that:
where an amount has been recovered or is recoverable in respect of an injury by a person under a "Workers Compensation Scheme or Policy", then any "Payable Liability" in respect of that injury is to be reduced by that amount. The focus of the tripartite scheme is on the loss or injury the subject of the claim, not the precise formulation of the claim itself.
Counsel accepted, properly, that the submission turned upon characterising the payments received by way of workers compensation as damages. That was supported by references to Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15 and Harris v Commercial Mines Ltd (1996) 186 CLR 1; [1996] HCA 49. Representative of the passages relied upon was the passage in the joint judgment in Haines at 69-70:
The injury for which compensation is payable under s 16 is an injury or loss for which common law damages are recoverable against a tortfeasor when the injury is occasioned by the wrongful conduct of the tortfeasor. It has not been, and could not be, suggested that compensation payable under the Act extends to loss or damage of a kind not compensable at common law. The fact that the Act directs that no payment made under the Act is to be retained upon the award of common law damages provides a statutory indication that such damages are considered to replace any workers' compensation payments. This, in turn, suggests that the same purpose is served by both payments under the Act and an award of damages at common law. Payments under s.16 of the Act are "by way of compensation". So, too, compensation underscores the award of common law damages.
But little use is served by relying on passages in other decisions in other contexts which compare workers compensation payments and damages at common law. The issue in Haines was whether interest should have been included in respect of payments of workers compensation, and parts of the reasoning turned on the "character" of those payments. That is well removed from the question of construction of the repeated exclusion in the definitions of Personal Asbestos Claim and Payable Liability in the Funding Agreement. As is commonly the case for questions of construction of legal instruments, a careful analysis of text, context and purpose is of greater assistance than reasons for judgment in a case where similar words in a different context were being construed.
We also see little utility in seeking to draw inferences from the different language employed when the Funding Agreement addresses "Marlew Claims" (which, speaking generally, were a class of claims arising from mining at Baryulgil). Some parties sought to rely upon parts of that wording to support the reasoning of the primary judge, while Mr Davis sought to rely upon different aspects of it to support the appeal. We agree with the approach adopted by Mr Coveney, which was that all of this was a distraction. Little is to be gained, in transactional documents as complex and cumbersomely drafted as those giving rise to this appeal, to look at different wording in other provisions which do not apply. The mode of reasoning is inferential at best, and assumes a coherence in the drafting of the whole of the document which is far from self-evident.
To reiterate, the reason there is scope for argument is that both Exclusions, but especially the Exclusion for Personal Asbestos Claims, employ an ellipsis. The bulk of the definition is directed to identifying a class of claims. However, the Exclusion does not exclude some members of the class. On its face, it excludes claims "to the extent" that such claims have been recovered or will be recovered. But the claim for damages at common law is quite different from the recovery of money in satisfaction of a judgment or compromise of that claim. The Exclusion requires one to look forward from the claim to a time when there has been or will be an amount of dollars recovered.
Hence the divide between the parties. If attention continues to be directed to the time at which the claim is made, then it is much more natural to read the words "to the extent they have been recovered or are recoverable" as referring to the claim at common law for damages against a James Hardie company. On the other hand, if one looks forward to the time at which there is a recovery, which is after all necessary in order to apply the Exclusion, then it is more natural to focus on the money which has been received and ask what is its nature. That reflected the essential difference between the submissions, especially those of Mr Walker for Mr Coveney, who emphasised the grammar of the Exclusion, and Ms Higgins for AICF, who emphasised the juristic nature of the workers compensation payments.
Ultimately the key difference as a matter of text comes down to the pronoun "they". The syntax is not straightforward, but it would be to inflict violence upon the parties' chosen language to read the words "Marlew Claim", "any other claim" and especially "they" in the Exclusion to mean anything other than the various claims which are defined by paragraphs (a), (b) and (c) to fall within the definition. It is true that the ordinary literal meaning is not always the legal meaning of a legal document, but it often is, and in any event it is the necessary starting point. There is also force in Mr Walker's submission that the documents representing the tripartite arrangement were negotiated over an extensive period of time, and perhaps for that reason are needlessly complex, but also for that reason not lightly should one depart from the ordinary textual meaning.
To illustrate the force of the textual considerations in the previous paragraph, it is useful to consider a slightly differently worded Exclusion, which omitted the pronoun "they". If the Exclusion were in the passive, so as to exclude claims "to the extent there has been or will be recovery under a Worker's Compensation Scheme of Policy", that would more soundly warrant a shift in focus from the claims defined by the definition to the portion of those claims for which compensation has not been received from workers compensation payments. The force of the pronoun "they" is that it insists that the Exclusion turns upon whether the claims earlier in the definition have been recovered or are recoverable, as opposed to whether there has been recovery for the injury.
Tending against the foregoing, we acknowledge the force of the proposition that the express exclusion to the extent that there have been recoveries "under a Worker's Compensation Scheme or Policy", twice in two separate definitions, coupled with the broad definition of "under a Worker's Compensation Scheme or Policy" and the facility to expand the operation of "statutory recovery claim", all suggests a regime whose starting point was the exclusion of clawback claims such as those brought by WorkCover Queensland, at least until some agreement had been reached which could then be reflected in a regulation.
Thus the primary judge acknowledged, and the trustee, Attorney-General and James Hardie 117 emphasised, the way that the broad definition of "Worker's Compensation Schemer Policy" would be undercut if the workers compensation payments received by Messrs Coveney and Davis were not treated as engaging the Exclusion. They submitted that if the narrower approach favoured by Messrs Coveney and Davis and WorkCover Queensland were the proper construction, much of that definition had no work to do. Against this, Messrs Coveney and Davis and WorkCover Queensland submitted that a literal reading of the Exclusion meant that it was confined to payments pursuant to workers compensation schemes which had the same nature as the claims which were comprehended by the earlier part of the definition, namely, claims for damages at common law against a liable entity.
But this Court's task is not to try to guess what the parties' probable intention was, and then to adjust the language accordingly. It is to construe the language chosen by the parties to reflect their bargain, doing so in light of the context and purpose. While it is true, as Mr Lockhart on behalf of James Hardie 117 emphasised, that if the idea were to include within the scope of Personal Asbestos Claim and Payable Liability the amenability of an inter-State workers compensation insurer seeking reimbursement, that could have been done much more straightforwardly than has occurred. But the Funding Agreement is replete with surplusage, which diminishes the force of that submission.
The purpose of the tripartite arrangement was clear, and it is difficult to see why in light of Mr Davis' receipt of workers compensation payments, he should only receive some half of the judgment he has obtained. The point of the decades-long winding up of Amaca and other Liable Entities and the funding of AICF was to permit claims by Australians exposed to James Hardies' products to be paid in full. We think that very clear language would be required to prevent a natural person who sustained personal injury from James Hardie's asbestos products, and who obtained judgment against Amaca, from being within the scope of the definitions of Personal Asbestos Claim and Payable Liability.
With the foregoing in mind, we return to the four considerations on which the primary judge relied at [126]-[131] which are reproduced above. We acknowledge the strength of the second, which turns on the width of the definition of Workers' Compensation Scheme or Policy. But we respectfully disagree with the weight attributed by the primary judge to the first, third and fourth.
Contrary to the first, and while we acknowledge that the definitions are far from being models of clarity, their ordinary textual meaning is to subtract a class of claims from those which would otherwise be Personal Asbestos Claims. The claims of Messrs Coveney and Davis which resulted in their receipt of workers compensation payments were not claims for damages at common law, and they were not claims against Amaca or some other Liable Entity. Both as a matter of grammar and as a matter of the claims falling within the Exclusion being of the same class as those defined earlier in the definition, the Exclusion does not apply to the claims for workers compensation. As Mr Davis put it, far from the construction placing a restriction which "is not readily apparent from the words used", the words used "are in plain sight: 'liabilities', 'claims' and 'they'".
Contrary to the third consideration, and whether or not claims for Recoveries are "very tightly circumscribed", the constraints in cl 13.7 are not to the point, once it is seen that statutory recoveries properly paid (which is to say, in accordance with the proper construction of Personal Asbestos Claim, Proven Claim and Payable Liability) are outside the operation of the clause. In this Court all parties proceeded on the basis that what mattered was the construction of the Exclusions, not the effect of cl 13.7.
Contrary to the fourth consideration, it is true that the Exclusion is harder to apply when it applies to Payable Liability. That is because it extends to claims and liabilities - thereby making express what is implicit in the Exclusion in the definition of Personal Asbestos Claims, which implicitly looks forward from the existence of a claim to the recovery or recoverability of an amount of money. But that difficulty is simply a product of the ellipsis in the drafting. We do not see it as a compelling reason to expand the scope of either Exclusion.
The primary judge in this section of her reasons also placed particular weight on the treatment of Legal Costs (which are one limb of the definition of Payable Liability). We respectfully disagree. There is no reason to doubt that the $1,000,000 and the $190,000 judgment debts owed by Amaca to Mr Coveney are in the same category. Each is very closely connected with the other. Each is the foreseeable and foreseen consequence of personal injury caused by exposure to James Hardie asbestos products.
[5]
Conclusion and orders
Like most contestable questions of construction, the considerations do not all point in the same direction. However, the textual arguments are relatively strong, and while it leads to surplusage elsewhere, that is of relatively little weight in documents replete with surplusage. The literal construction avoids the concededly unpalatable results whereby Australian workers harmed by James Hardie products who obtain judgment against a Liable Entity cannot obtain full satisfaction, merely by the commonplace fact that they have received workers compensation payments for the same injury. The parties' purpose is clear from the recital to the Funding Agreement, and it accords with the literal construction.
For what it is worth, the foregoing accords with the way the trustee has administered the trust for almost two decades, until February 2024. Of course, the parties' post-contractual conduct is not admissible as an aid to construction: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [35]. No party submitted to the contrary, and it is not open to this Court to rely upon it, notwithstanding the different position taken in New Zealand (Wholesale Distributors Ltd v Gibbons Holdings Ltd [2008] 1 NZLR 277; [2007] NZSC 37) and the United States of America (under art 2-208 of the Uniform Commercial Code) and in many international instruments to which the Vienna Sales Convention applies, and notwithstanding that the State of New South Wales and the operating James Hardie companies were intensively involved in the negotiations leading to the Funding Agreement and the Winding up Act.
For those reasons, there should be grants of leave, the appeals allowed, the orders made below set aside, and in lieu thereof AICF should be advised that it is justified in paying the judgments obtained by Messrs Coveney and Davis in full. It is appropriate to give the parties an opportunity to be heard as to the precise formulation of that advice, although we note that the conclusions we have reached accord with prayers 4 and 5 of AICF's amended summons. The advice sought in those paragraphs extended to whether the payment of interest on the judgment debts would be justified, and in light of the inclusion of interest in Proven Claim, we see no reason why it would not be justified.
Because the occasion for the advice was the claims of Messrs Coveney and Davis, which results in judgments against Amaca only a week or so after the trustee advised of its changed stance, their costs should follow the event. The directions below will entitle the parties to be heard as to whether the principle stated in Re Buckton [1907] 2 Ch 406 at 414 is applicable to the costs of any or all of Messrs Coveney and Davis and WorkCover Queensland.
We make the following orders:
In proceeding 2024/390046 commenced by Mr Coveney:
Join the Attorney-General of New South Wales as the second respondent.
Join James Hardie 117 Pty Ltd as the third respondent.
Join WorkCover Queensland as the fourth respondent.
Grant leave to appeal.
Order that the notice of appeal already filed by Mr Coveney in proceeding 2024/362958 be taken as the appeal filed in proceeding 2024/390046.
Appeal allowed.
Set aside the orders made by the primary judge on 13 September 2024 and 3 October 2024.
Direct the parties to supply agreed short minutes of order, or in lieu of agreement, minutes of the orders for which they contend accompanied by submissions not exceeding four pages, by 7 February 2025, and submissions in reply not exceeding three pages by 14 February 2025, with a view to orders thereafter being made without further hearing.
In proceeding 2024/373482 commenced by Mr Davis:
Join the Attorney-General of New South Wales as the second respondent.
Join James Hardie 117 Pty Ltd as the third respondent.
Join WorkCover Queensland as the fourth respondent.
Grant leave to appeal.
Direct Mr Davis to file a notice of appeal in accordance with the draft notice of appeal, and dispense with the requirements as to service.
Appeal allowed.
Set aside the orders made by the primary judge on 13 September 2024 and 3 October 2024.
Direct the parties to supply agreed short minutes of order, or in lieu of agreement, minutes of the orders for which they contend accompanied by submissions not exceeding four pages, by 7 February 2025, and submissions in reply not exceeding three pages by 14 February 2025, with a view to orders thereafter being made without further hearing.
In proceeding 2024/372881 commenced by WorkCover Queensland:
Join the Attorney-General of New South Wales as the second respondent.
Join James Hardie 117 Pty Ltd as the third respondent.
Grant leave to appeal.
Direct WorkCover Queensland to file a notice of appeal in accordance with the draft notice of appeal, and dispense with the requirements as to service.
Appeal allowed.
Set aside the orders made by the primary judge on 13 September 2024 and 3 October 2024.
Direct the parties to supply agreed short minutes of order, or in lieu of agreement, minutes of the orders for which they contend accompanied by submissions not exceeding four pages, by 7 February 2025, and submissions in reply not exceeding three pages by 14 February 2025, with a view to orders thereafter being made without further hearing.
[6]
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: 24 December 2024
Legislation Cited (12)
Workers Compensation and Rehabilitation Act 2003(Qld)
entitlement to reimbursement and a charge over the judgments - whether trustee justified in not making payments to discharge judgment debts of liable entity to the extent that they were subject to reimbursement by WorkCover Queensland
Legislation Cited: Corporations Act 2001 (Cth), s 5G
James Hardie Former Subsidiaries (Winding up and Administration) Act 2005 (NSW), ss 3, 4, 23, 32
Jurisdiction of Courts (Cross-vesting) Act 1987 (Qld), s 5
Supreme Court Act 1970 (NSW), s 101
Trustee Act 1925 (NSW), s 63
Uniform Civil Procedure Rules 2005 (NSW), rr 51.29, 55.2, 55.4
Uniform Commercial Code, Art 2-208
Workers Compensation Act 1987 (NSW)
Workers Compensation and Rehabilitation Act 2003 (Qld), s 207B
Workers' Compensation (Dust Diseases) Act 1942 (NSW), s 8E
Cases Cited: Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57
Beck v Henley [2014] NSWCA 201
Corporate Affairs Commission v Bradley [1974] 1 NSWLR 392
Davis v Amaca Pty Ltd [2024] NSWDDT 2
Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) (2021) 106 NSWLR 41; [2021] NSWCA 246
Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (as liquidators of Octaviar Administration Pty Ltd (in liq)) (2015) 89 NSWLR 110; [2015] NSWCA 85
Haines v Bendall (1991) 172 CLR 60; [1991] HCA 15
Harris v Commercial Mines Ltd (1996) 186 CLR 1; [1996] HCA 49
In the matter of Asbestos Injuries Compensation Fund Ltd (and WorkCover Queensland) [2024] NSWSC 1163
In the matter of Asbestos Injuries Compensation Fund Ltd (and WorkCover Queensland) (No 2) [2024] NSWSC 1238
Re Asbestos Injuries Compensation Fund Ltd [2011] NSWSC 97
Re Buckton [1907] 2 Ch 406
Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Ltd (in liq) (2023) 111 NSWLR 446; [2023] NSWCA 118
Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107; [2018] NSWCA 227
Wholesale Distributors Ltd v Gibbons Holdings Ltd [2008] 1 NZLR 277; [2007] NZSC 37
Category: Principal judgment
Parties: Eric Thomas Coveney (Applicant in 2024/390046 and purported Appellant in 2024/362958)
Barry Edward Davis (Applicant in 2024/373482)
WorkCover Queensland (Applicant in 2024/372881)
Asbestos Injuries Compensation Fund Ltd as trustee for the Asbestos Injuries Compensation Fund (First Respondent in all proceedings)
Attorney-General (NSW) (Second Respondent in all proceedings)
James Hardie 117 Pty Ltd (Third Respondent in all proceedings)
Representation: Counsel:
B Walker SC with A Giurtalis (Mr Coveney)
S Robertson SC with S Tzouganatos (Mr Davis)
P Dunning KC with K F Holyoak and A Schonell (WorkCover Queensland)
R Higgins SC with C Tran (AICF)
D Hume (Attorney-General (NSW))
J Lockhart SC with M Gvozdenovic (James Hardie 117 Pty Ltd)
Solicitors:
Maurice Blackburn Lawyers (Mr Coveney)
VBR Lawyers (Mr Davis)
BT Lawyers (WorkCover Queensland)
Baker & McKenzie (AICF)
Crown Solicitor's Office (Attorney-General (NSW))
McCulloch Robertson (James Hardie 117 Pty Ltd)
File Number(s): 2024/362958; 2024/372881; 2024/373482; 2024/390046
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of NSW
Jurisdiction: Equity
Citation: [2024] NSWSC 1163; [2024] NSWSC 1238
Date of Decision: 13 September 2024; 3 October 2024
Before: Rees J
File Number(s): 2024/121682
Procedural issues
Each of WorkCover Queensland, Mr Coveney and Mr Davis was heard as an interested party on the trustee's application for judicial advice, but was not joined to the proceeding. Each sought leave to appeal. In addition, Mr Coveney purported to appeal as of right, and filed a notice of appeal (which became proceeding 2024/362958; his summons seeking leave to appeal was proceeding 2024/390046).
AICF is the "SPF trustee" for the purposes of the Winding up Act. It is entitled by s 55 of that statute to seek "advice or direction". Any such advice or direction is to be given by order: s 55(7). A note to that subsection confirms that the right of appeal conferred by s 101(1)(a) of the Supreme Court Act 1970 (NSW) from any "order of the Court in a Division" applies to orders incorporating advice or directions. AICF also invoked the general power in s 63 of the Trustee Act 1925 (NSW), in respect of which once again the advice is to be given by order (UCPR r 55.2) and from which an appeal lies: UCPR r 55.4. A party to the proceedings in which the advice is sought thereby enjoys an appeal as of right, assuming the $100,000 monetary threshold in s 101(2)(m) is satisfied: Beck v Henley [2014] NSWCA 201 at [58].
However, none of Messrs Coveney or Davis or WorkCover Queensland was a party to AICF's application. As non-parties, their appeals are subject to the grant of leave: see Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (as liquidators of Octaviar Administration Pty Ltd (in liq)) (2015) 89 NSWLR 110; [2015] NSWCA 85 at [75]-[82]; Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Ltd (in liq) (2023) 111 NSWLR 446; [2023] NSWCA 118 at [7]. Talifero v Asbestos Injuries Compensation Fund Limited as Trustee for the Asbestos Injuries Compensation Fund (2018) 98 NSWLR 1107; [2018] NSWCA 227 at [19] applied Fortress Credit Corporation to advice given to the same trustee. Mr Davis submitted that the application of those principles to advice given to the same trustee was wrong. However, the submission was confined to a footnote of his written submissions, and was not sought to be developed orally. That falls well short of making out a proper basis to overturn a line of authority.
In any event, there was a concurrent hearing, in light of the fact that the decision would affect a large number of injured individuals and represented a change of stance from that taken by AICF over the last twenty years. Plainly the appeals present questions of law which are of general importance, and which warrant the grant of leave.
The NSW Attorney-General generally supported the stance of AICF. He intervened in the litigation, thereby becoming a party (see Corporate Affairs Commission v Bradley [1974] 1 NSWLR 392 at 396 and Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) (2021) 106 NSWLR 41; [2021] NSWCA 246 at [22]) who should have been joined to the applications for leave to appeal filed by Messrs Coveney, Davis and WorkCover Queensland and to Mr Coveney's appeal. However, he was given notice of the proceedings in this Court and participated by counsel. James Hardie 117 Pty Ltd, which is the operating company and remains subject to obligations to make payments to AICF, was heard as an interested party, and was likewise given notice of the proceedings in this Court, and participated by counsel.
The orders made by this Court will regularise the position with parties, by adding as a party to each proceeding the Attorney-General (who should have been joined having intervened below) and James Hardie 117 Pty Ltd, which (as will be seen) is directly affected by the construction reflected in the judicial advice, by reason of the quantum of payments it is required to make to AICF. Further, WorkCover Queensland will be joined to the proceedings commenced by each of Messrs Coveney and Davis, as it too is directly affected by the orders made. Mr Coveney's appeal is incompetent, but rather than dismissing it, and then granting leave to appeal and directing him to file a notice of appeal, the simpler course will be to let it stand as the appeal for which leave is granted by ordering that it be treated for all purposes as filed in proceeding 2024/390046.