Dyer v Dyno Nobel Asia Pacific Limited - formerly Dyno Wesfarmers Limited - [2003] NSWSC 198 - NSWSC 2003 case summary

Supreme Court of NSW|2003-03-27|Before: Mathews AJ, Mr J

CITATION : Dyer v Dyno Nobel Asia Pacific Limited - formerly Dyno Wesfarmers Limited [2003] NSWSC 198 HEARING DATE(S) : 21.10.02, 22.10.02, 23.10.02, 24.10.02, 31.10.02, JUDGMENT DATE : 27 March 2003 JURISDICTION: Common Law JUDGMENT OF : Mathews AJ DECISION : Principal Claim; In accordance with the agreement reached between counsel I have not purported in this judgment to translate my findings into monetary terms. This is to be done by the parties in accordance with the findings I have made. I leave it to the parties to bring in short minutes of the appropriate orders. If they are unable to agree, I will deal with outstanding issues by arrangement with the parties.; As to the Cross Claims, verdict for the first and second cross-defendants on the first cross-claim; verdict for the cross-claimant against the third cross-defendant on the first cross-claim; costs of all parties on the cross-claims are to follow the event unless submissions to the contrary are received by me within seven days of today.

CATCHWORDS : Compensation to relatives - deceased killed in Papua New Guinea - likely employment situation had he survived - assessment of likely superannuation entitlements - no discount for remarriage - cross-claims by defendant against three insurance companies - contract of employment entered into in NSW, but NSW insurer excluded from ambit of claim - Papua New Guinea insurer held liable - LEGISLATION CITED : Papua New Guinea Wrongs Act NSW Workers Compensation Act (1987) De Sales v Ingrilli 193 ALR 130 Malec v J C Hutton Pty Limited (1990) 169 CLR 638 CASES CITED : Roads and Traffic Authority v Cremona (2001) MVR 190; NSWCA 338; 16 November 2001 Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at 576 Regie National des Usines Renault SA v Zhang [2002] 187 ALR 1 Reese Bros Plastics Ltd v Hamon-Sobelco Australia Pty Ltd Jacquelyn DYER - Plaintiff Dyno Nobel Asia Pacific Limited (formerly Dyno Wesfarmers Limited) - Defendant PARTIES : Workcover Queensland - First Cross Defendant MMI Workers' Compensation Insurance - Second Cross Defendant QBE Insurance (PNG) Limited - Third Cross Defendant FILE NUMBER(S) : SC 20315/96 Ms A Katzmann SC with Mr M Cahill - Plaintiff Mr N Cotman SC with Mr R Parsons - Defendant COUNSEL : Mr J Sharpe SC for Workcover Queensland - First Cross Defendant Mr C Hoeben SC for MMI Workers' Compensation (NSW) Limited - Second Cross Defendant Mr Sheller for QBE Insurance (PNG) Limited - Third Cross Defendant Ken Hooper & Assoc- Gatton Qld - Plaintiff Gadens Lawyers Brisbane - Defendants SOLICITORS : Thynne & McCartney - Brisbane - First Cross Defendant Hickson Wisewoulds - Second Cross Defendant Phillips Fox - Third Cross Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20315/96 Jacquelyn DYER v DYNO NOBEL ASIA PACIFIC LIMITED - FORMERLY DYNO WESFARMERS LIMITED

JUDGMENT 1 HER HONOUR: Jeffrey Dyer was forty-seven years old when he was killed in an explosion on 2 August 1994. The explosion took place at the Porgera mine in Papua New Guinea which was operated by the defendant Dyno Wesfarmers Limited ("Dyno"). Mr Dyer was employed by Dyno as a shift supervisor at the time. 2 On 29 March 1996 Mr Dyer's widow, Jacquelyn Dyer, commenced proceedings against Dyno seeking compensation for losses suffered as a result of her husband's death. 3 Before the hearing of the matter, Dyno admitted that Mr Dyer was its employee, that he died in the course of his employment and that there was a relevant breach of duty on the part of Dyno. Accordingly, subject to proof of dependency, the only issues remaining in dispute at the hearing related to the assessment of damages. 4 There is no question but that Mrs Dyer was financially dependent upon her husband. The extent of that dependency is one of the matters at issue in the case and I shall be discussing it later. But I should first recount the facts of the matter.

Factual background 5 Jeffrey Dyer was born on 5 February 1947. He left school at the end of year 10 in 1962. Between 1963 and 1987 he had a number of jobs in different fields. These including working as a slaughterman in abattoirs, as a storeman, a forklift driver and a cattle breeder. In August 1987 he commenced employment with Dyno's predecessor, then known as Nitro Nobel Pty Limited. 6 Jacquelyn Dyer was born in October 1946. She met Mr Dyer in 1978 and they married on 1 February 1980. Each of them had three children from a previous marriage. Mr Dyer's children were born between 1969 and 1972 and Mrs Dyer's between 1967 and 1975. All six children were financially independent by the time of Mr Dyer's death. 7 Mrs Dyer worked for a time as a legal secretary between leaving school and having her first child in 1967. She has not been in paid employment since 1982. She is now fifty-seven years old and has no intention of returning to the work force. Nor, she says, does she have any particular skills or qualifications to enable her to do so. 8 Mr Dyer commenced his employment with Dyno, or its predecessor, as a leading hand at its plant at Helidon in Queensland. Although he had little by way of formal qualifications, he was on all accounts a committed, intelligent and loyal employee who was keen to take every promotional opportunity available within the organisation. In 1992 Dyno advertised amongst its employees for the position of plant operator at Porgera in Papua New Guinea. When Mr Dyer first raised with his wife the possibility of applying for this position in September 1992 Mrs Dyer was strongly opposed to him taking this step. She regarded Papua New Guinea as an unsafe place and tried to dissuade him from applying for this position. Mr Dyer said; "If I stay at Helidon I can't go any further. If I stay at Helidon I would be jumping up and down on the spot. I have to accept advancements as they come up." Mrs Dyer in due course relented and on 30 September 1992 Mr Dyer applied for the position in Porgera. 9 Mr Dyer's application was successful. On 21 October 1992 he was offered employment at the Porgera mine site at a gross salary of $US 54,000 per annum. This required that he be transferred to Dyno's International Division which operated out of Sydney. 10 On 28 November 1992 Mr Dyer commenced his work at Porgera. He worked on a "fly in, fly out" basis with Cairns as his home base. This meant that he flew at Dyno's expense from Cairns to Porgera where he worked for twenty days in succession. At the end of that period Dyno flew him back to Cairns. He then had ten days leave before starting the cycle again. 11 Earlier in 1992 Mr and Mrs Dyer had bought land at Toowoomba on which they had already started to build their home when the Porgera position became available. They decided not to move to Cairns but to remain at Toowoomba. Each month, therefore, Mr Dyer flew at his own expense from Cairns to Toowoomba and back. 12 During the twenty days each month that Mr Dyer spent at Porgera he was in almost daily contact with his wife. She kept copies of his letters, a number of which were tendered into evidence. These were testament to the closeness and strength of the bond which existed between them. When Mr Dyer took his ten days leave he and his wife spent the whole time in each other's company. Mr Dyer also did a considerable amount of work around the property during his leave, thus giving rise to a claim for the cost of services previously rendered by him. I will be discussing this later. 13 Porgera was something of a hardship post. Dyno employees were expected to work hard and for long hours during their twenty days of service. There were safety issues in relation to the mine and safety and security issues in relation to the Papua New Guinean Nationals employed at the mine site. Recreational activities were limited. Life at the site appeared to be one of fluctuation between intense pressure and general tedium. 14 There were, however, significant financial benefits associated with this position. Accommodation and food were provided free of charge. Virtually no expenses were incurred during Mr Dyer's twenty days of service. The salary was a generous one. On 12 January 1994 Mr Dyer was awarded a 1 percent wage increase, bringing his salary to US$54,540. As from July 1994 he was also paid a site allowance of 5 percent of his gross salary until the completion of his contract or the establishment of a new contract. His overall package was assessed in US dollars, then converted by Dyno into Papua New Guinea kina and tax was deducted at Papua New Guinea rates. The balance was paid into Mr Dyer's Australian Bank account. At the time of his death he was earning AU$4,177 net per month. 15 A number of matters were agreed between the parties before or during the course of the hearing before me. This served to isolate the main issues in dispute. Principal amongst the matters which were agreed upon was the method of calculating Mr Dyer's salary until his normal retirement age, on the assumption that he would have been employed in Australia and that he would have remained in roughly the same position in the company. This left the following issues outstanding:

• How long would Mr Dyer have continued to work overseas?

• To what extent would Mr Dyer have been likely to achieve promotion within Dyno over his working life? 16 The answers to these two questions will dictate the basis upon which Mrs Dyer is to be compensated for loss of support from her husband's wages. This is the major component of her claim. Other subsidiary issues also need to be determined. These are:

• Whether a discount should be made for the prospect of re-marriage. 17 In addition, several cross-claims have been lodged. These require a determination as to which of three insurance companies should be liable to indemnify Dyno for Mrs Dyer's claim. 18 I now turn to discuss the first of the major matters in contention between the parties.

How long would Mr Dyer have continued to work overseas? 19 The evidence indicates that Mr Dyer was very interested in employment opportunities outside Australia within the Dyno organisation. It was for this reason that he had applied for the position at Porgera. He saw expatriate postings as providing an opportunity for earning extra money and, more importantly, as a means of advancement within the company. His contract at Porgera was renewable on an annual basis. However the understanding was that, in the absence of another suitable posting, he would remain at Porgera for at least five years, namely until November 1997. 20 Porgera had two principal advantages for Mr Dyer. First, it was an overseas posting with all the benefits, financial and otherwise, which this entailed. Probably the most important of the non-financial benefits was Dyno's policy of "multi-skilling" its international employees, thereby enhancing their career prospects within the company. The other advantage to Mr Dyer was that the Porgera mine included a detonator assembly plant. Mr Dyer's main skills and experience lay in the field of detonator assembly. It was, his "fortë" according to Mr Ian Smith, who was then general manager of the International Division of Dyno and who is now a vice president of the company. 21 There are other aspects of the position at Porgera which were less than ideal for Mr Dyer. I have already mentioned the alternating pressure and tedium which appeared to mark life at the mine site. More important to Mr Dyer was the separation from his wife whom he adored. An overseas posting, where he could be accompanied by his wife and family, would have been a much more attractive proposition to him than working at Porgera. 22 For a period of about two months before Mr Dyer's death it appeared that such a posting was likely to eventuate. At that stage Dyno was hoping to obtain approval from the Government of Thailand to operate a plant in that country. The plant was to include a detonator assembly operation. Mr Dyer had been told by Mr Smith that, if the development was approved, he would be given a job in the Thai operation. This job would have enabled him to live in Thailand with his family, which he would have much preferred to the "fly in fly out" arrangement which existed at Porgera. 23 Mr Dyer was very enthusiastic about this prospect. In June 1994 he said to his wife; "Pack your bags, we're off to Thailand. I've got the job as manager with Dyno in Thailand. You will be able to come and live with me in Thailand." Mrs Dyer said "That's great. When do we go?" Mr Dyer answered "February next year." 24 Mr Smith in his evidence confirmed that Mr Dyer had requested a managerial position in Thailand. Had the venture proceeded, he said that Mr Dyer would have been employed as a site manager in the project. However as it transpired, the Thai project never eventuated, because Dyno failed to obtain the Thai Government's approval for its operations in that country. Mr Smith said in evidence that Dyno had not completely abandoned its idea of opening a plant in Thailand. However thus far no approval has been forthcoming. 25 Mrs Dyer was firmly of the view that, had her husband survived, he would have continued to work for Dyno in one of its overseas plants. She was asked by Ms Katzmann what she thought would have happened to her husband in the absence of the Thai posting. She said "If Thailand did not go ahead, I would have no hesitation in saying that we would have gone to some other overseas operation with that company" (T 29). She was asked to assume that there was no other alternative but staying in Papua New Guinea, to which she answered "I believe Jeff would have seen New Guinea, till to the end, whenever it was." Later, under cross-examination, she said that her husband would have been very disappointed in Dyno if it had brought him back to Australia. To ask him to come back to Australia, she said, was "completely contradictory" to the plans they said that they had for him. 26 The evidence indicates that Dyno is a company which rewards loyalty with loyalty. Where possible, it will do all it can to accommodate to the needs and wishes of its loyal employees. And there can be no doubt about Mr Dyer's loyalty to the organisation. Mr Smith clearly thought very highly of Mr Dyer, and said that he would have tried to accommodate to his wishes if at all possible. However there are not many overseas postings available for Australians in the Dyno organisation. The evidence is that outside Europe Dyno has plants in New Zealand, Malaysia, Japan and the Philippines, but these are all staffed by local employees. There is no position for Australian expatriates. Indeed outside Porgera, the only Dyno plant which employs Australians is its KPC plant in Kalimantan, Indonesia. 27 According to Mr Smith, the KPC plant offers family accommodation and also has attractive facilities such as a sailing club, a golf club and a tennis court. There is little if any trouble with the local people. Mr Smith contrasted the relative pleasant conditions at KPC with those at Porgera. Most Australian employees, he said, will stay at KPC for two, three or more contracts. Indeed some of them do not want to return to Australia at all. In contrast, people go to Porgera only to earn money. Some of them go back for two or three contracts but most of them do not want to return after their first stint. 28 Ms Katzmann submitted that the KPC plant would have provided an ideal posting for Mr Dyer, given its family accommodation and the nature of its facilities. (Mr Dyer was, on all accounts, a very keen golfer.) On the other hand, there are, at least at present, very few positions available for expatriates at that plant. According to Mr Smith, the mine commenced operations in 1990. It started with five Australian employees, a number which later grew to about twelve. However it is Dyno's policy to train local personnel to accept positions of responsibility in its overseas ventures. As a result, the number of expatriates at KPC has gradually been reduced. They presently number about four. Moreover Mr Dyer's skills were not, generally speaking, the type of skills required at KPC. Mr Dyer's particular expertise, as already mentioned, was in detonator assembly plant. Dyno had only three such plants worldwide: at Helidon, at Porgera and in Sweden (which is staffed entirely by locals). According to Mr Smith, the expatriate employees at KPC were generally involved in the supervision and safety maintenance of trucking operations. Mr Dyer had no mechanical qualifications which would have fitted him for the maintenance work. He might have been able to undertake a supervisory role, but there are, at least at present, only two of these positions available at KPC. Given that KPC was such a popular expatriate posting, Mr Dyer would have been extremely fortunate to obtain one of these two positions. 29 I accept that Mr Dyer would have continued to work outside Australia for as long as he was reasonably able to do so. This would probably have lasted at least until he had paid off the mortgage on the family home at Toowoomba. This, by dint of accelerated payments, was due to take place in January 1999. Thereafter, the defendant submits, Mr Dyer would probably have returned to Australia and resumed employment at Helidon. Mr Cotman SC, who appeared for the defendant, suggested that, once the mortgage was paid off, Mr Dyer's principal incentive to remain at Porgera would have disappeared. Porgera being such an inherently unattractive environment, and there being so few other available expatriate positions, it was most likely that at that stage Mr Dyer would have chosen to return to Australia so that he could be with his wife and enjoy his other interests such as golf, fishing and dog breeding. 30 Ms Katzmann, on the other hand, submitted that Mr Dyer would have continued to work overseas indefinitely. She relied in part on Mrs Dyer's evidence that, in the absence of the position in Thailand, her husband would have gone to another of Dyno's overseas operations. 31 Mrs Dyer, however, could not have been expected to know of the limited overseas postings available for Dyno's Australian employees. As discussed above, these are restricted to the supervisory positions at the KPC plant in Indonesia. At present there are only two of these. Between 1995 and 1999, when Mr Dyer would have been looking for alternative overseas postings outside Porgera, there might have been up to six of these positions at KPC. But four of them had already disappeared by the time Mr Smith gave his evidence in October 2002. Even if Mr Dyer had managed to secure such a position in the late 1990's, it may well have offered only a short-term posting. 32 On the other hand, Mr Dyer was clearly a determined man who very much wanted to advance his position in Dyno, preferably through overseas postings. Mr Smith would have accommodated to his wishes if at all possible. The chances of Mr Dyer securing a long-term appointment at KPC cannot be discounted. 33 Compensation to relatives cases invariably involve an assessment of hypothetical possibilities. In such cases the court will assess the degree of probability that an event would have occurred and will adjust its award of damages to reflect that probability. See Malec v J C Hutton Pty Limited (1990) 169 CLR 638. In Mr Dyer's case, I have little doubt that, in the absence of another overseas posting, he would have remained at Porgera at least until November 1997, and it is highly likely that he would have remained for another two years after that. He might have gained a long term posting in Indonesia, but the chances of this are not high for the reasons already mentioned. I think I should accommodate to the various possibilities by assuming that, had Mr Dyer survived, he would have remained in an overseas posting until November 1999. Thereafter there is a fifty percent chance that he would have been overseas until February 2002. I think it likely, by then, that he would have returned to Australia. 34 Accordingly, I propose that damages be assessed on the basis that Mr Dyer would have been in an overseas posting from the date of his death until November 1999 and that there was a fifty percent chance of his doing so from then until February 2002. Thereafter he would have returned to Australia for the remainder of his working life.

Mr Dyer's promotional prospects 35 Although Mr Dyer had little by way of formal qualifications, he had high aspirations for advancement within the Dyno organisation. Whilst still at Helidon he completed a "Career Audit Sheet" in which he specified "Plant Manager" as his ultimate career objective and "Production Supervisor" as his next logical assignment. On 1 October 1991 he completed an "Individual Experience Record" in which he said: "I would like to stay at Helidon if it expands to allow for advancement in the company. But I consider advancement more important than location so I would be happy to relocate anywhere."

According to Mrs Dyer, it was advancement, not money, which motivated her husband's decision to go to Porgera. 36 To be a plant manager would have entailed a considerable leap for Mr Dyer. His designated position at Helidon was that of leading hand, although Mrs Dyer was at pains to point out that he was in fact sole supervisor of the afternoon shift. Indeed he was described as a "shift supervisor" in Dyno's inter-company memo dated 14 October 1992 in which he and two others were recommended to be offered jobs at Porgera. In a memorandum of the previous day enclosing comments with regard to applicants from Helidon for the Porgera job, Mr Dyer was described in the following terms: "• A very good Leading Hand. • Has had experience working in a mining environment (in WA) and driving trucks. • Has good basic mechanical skills and is familiar with the Nonel Assembly equipment. • Has basis inventory control skills. • You will have to discuss in more detail the relocation package with him, as he has just purchased a new house near Helidon. • He is mature and able to work unsupervised. • Because of his Leading Hand's experience, he has a broad knowledge of most aspects of the manufacturing process." 37 At Porgera, Mr Dyer's designated position was Operations Supervisor. This placed him (and several others) next after the Site Manager and Assistant Site Manager in the chain of command at that time. 38 When Mr Dyer went to Porgera his skills were primarily in the area of detonator assembly. However these skills were being expanded by Dyno's policy of "multi-skilling" its expatriate employees. The real question is: had Mr Dyer remained at Porgera, or at another overseas posting, until November 1999 or February 2002, what position would he have reached by the time he left? And what would have been his position when he returned to Australia? 39 The defendant submitted that, notwithstanding his additional training, Mr Dyer's skills and experience would have remained essentially operational rather than managerial. There was no reason to suggest that he might have attained a managerial role had he survived, according to these submissions. 40 However it is clear that Mr Dyer's projected position in Thailand was to be a managerial one. According to Mrs Dyer, her husband told her in July 1994 that he would be the manager of "the entire facility" in Thailand. This accords with the evidence of Mr Smith, who said that Mr Dyer had requested a managerial function in Thailand. Had the project proceeded as planned, Mr Dyer would have been a site manager there. 41 Mr Smith also said that Mr Dyer was acquiring skills in managing people during his time at Porgera. A little later he gave the following assessment of Mr Dyer's performance: "A. It was generally accepted by all people in the international department, and our customers, that Geoff made quality product, his paperwork was excellent. He was a likeable, easy going bloke to get on with. Q: In that regard I take it you considered him to be a person who would fit in with the ex-patriate life-style for as long as he chose to pursue it? A. From my experience he was a pleasure to manage." 42 Mr Smith said that the skills which Mr Dyer was acquiring at Porgera would have allowed him to assume a position of assistant plant manager. With further time and appropriate training he might have aspired to the position of "plant manager". 43 Given Mr Smith's evidence on this matter and Mr Dyer's indisputably high aspirations, I must accept, against the defendant's submission, that had Mr Dyer remained at Porgera or in another overseas posting he would probably have advanced into a managerial position. The likelihood in my view is that by February 1997 he would have assumed the position of assistant site manager, and that of site manager by February 2000. I realise that these dates are entirely arbitrary, however that is the nature of assessments which are required to be made in these cases. 44 The extent to which these promotions would have sounded in financial advantage to Mr Dyer is not for me to determine at this stage. By arrangement with both parties, I am to deliver my findings on the outstanding matters in dispute and leave it to the parties to translate those findings into the appropriate award of damages. 45 The question remains as to what Mr Dyer's prospects would have been when he returned to Australia. In accordance with my previous finding this would probably have happened in Novermber 1999 or, at latest in February 2002 when Mr Dyer was fifty-five years old. 46 Dyno's policy, according to Mr Smith, is to ensure that all expatriate employees returning from overseas are given at least an equivalent job to the one they held before they left. In Mr Dyer's case, Mr Smith said that he would have got him the best job he could. 47 Assuming, according to my earlier findings, that Mr Dyer had already achieved a managerial position before returning to Australia, I would expect that he would have been give a position of similar responsibility upon his return. In other words, he would have come back to a position considerably senior to that which he held at Helidon before going to Papua New Guinea. 48 During the course of the hearing the parties agreed on a formula which represented Mr Dyer's notional Australian and expatriate wages for each year between 1994 and 2002. This was based on the assumption that, if Mr Dyer had remained in roughly the same position in the company, his salary would have increased by 5 percent each year. It was at all times conceded that these figures would hold good only to the extent that Mr Dyer did not obtain promotion within the company. However in accordance with the findings I have just made, I think it overwhelmingly likely that he would have obtained promotion. Accordingly the figures, at least from February 1997, will need to be revisited. 49 It is not possible for me to place a precise position within the company or a precise salary which Mr Dyer would have earned in 2002. Before he went to Porgera his skills were in detonation assembly which would suggest that he would probably have returned to Helidon, being the only detonator assembly plant in Australia. But Mr Dyer's skills would have expanded whilst he was overseas, and there may well have been other positions available for him, particularly as manager of one of Dyno's smaller plants. Mr Smith said that there is an upward succession of managerial positions, going from managing smaller plants to managing larger and more diversified ones. It could not be expected, in my view, that Mr Dyer would have returned to manage a plant of the size or complexity of Helidon. However it would have been within his grasp to manage a smaller one. 50 I am assuming in this judgment that phrases "site manager" and "plant manager" are used interchangeably within Dyno. That seems to be the case from the documentary material I have read. If that assumption is incorrect, then further evidence might need to be given to clarify this matter. 51 The salary which Mr Dyer would have received on his return to Australia will form the basis upon which future loss of income is to be assessed. I leave it to the parties, in accordance with the findings I have just made, to reach an agreement as to what that salary would probably have been, on the assumption that Mr Dyer would probably have been manager of one of Dyno's smaller plants. In the absence of agreement I will take further evidence as to the salaries of various managers within the Dyno organisation.

Conclusion relating to wages 52 In summary, my findings relating to loss of support from Mr Dyer's wages are:

Mr Dyer would probably have continued to work outside Australia, either at Porgera or elsewhere, until November 1999. There is a 50 percent chance that he would then have remained overseas until February 2002. Thereafter he would have returned to Australia for the rest of his working life.

Mr Dyer would probably have continued in the same position which he held at death until about February 1997 when he would have been promoted to Assistant Site Manager. In about February 2000 he would probably have been promoted to Site Manager.

When Mr Dyer returned to Australia in February 2002 he would probably have been employed as Plant Manager at one of Dyno's smaller to medium sized plants. The salary he would have received in such a position is to be used as a basis for computation of his notional future wages. 53 It goes without saying that interest is to be allowed on past losses at the normal rate. In assessing interest, account is to be taken of the fact that Mrs Dyer received $99,681 from WCQ not long after her husband's death. Future losses are to be discounted by the normal 3 percent. A deduction of 15 percent for vicissitudes is to be made in relation to future losses. I see no reason to make any deductions for vicissitudes on past losses. Mr Dyer was a fit, healthy forty-seven year old man when he died. 54 I turn now to the remaining issues which need to be determined. The first of these relates to superannuation.

Superannuation 55 Two issues require determination under this head.

(a) The amount of the employer contribution in relation to Mr Dyer's overseas salary.

(b) The effect of the decision in Roads and Traffic Authority v Cremona (2001) MVR 190; NSWCA 338; 16 November 2001.

(a) The extent of employer contribution . 56 It was agreed between both parties that it was reasonable to assess Mr Dyer's notional superannuation at 12 percent of his gross salary so long as he was employed in Australia. However, complications have arisen in relation to the extent to which Mr Dyer's overseas salary would have been subject to superannuation. The parties agreed that between 1996 and 2002 there was an average difference of $33,000 between the net salary which Mr Dyer would have received in Australia and that which he would have received overseas. Mr Dooley, the accountant called by the plaintiff, calculated the superannuation which Mr Dyer would have received upon the assumption that the whole of his salary, including his overseas margin, was subject to superannuation. Indeed, Mr Dooley "grossed up" the net margin of $33,000 to reach a much higher figure. He then added this total figure to Mr Dyer's base salary in order to reach his notional salary for superannuation purposes. Mr Cotman queried this approach during Mr Dooley's cross-examination. Later Mr Cotman called Mr Vale, the Secretary of Dyno, who produced the wage records of four of Dyno's employees working at Porgera. In relation to only one of these employees did Dyno pay a superannuation contribution upon his entire salary. In relation to the other three, the figures upon which Dyno paid its contribution was less than the net figure paid into the employees' bank account after payment of Papua New Guinea tax and other allowances. There was no uniformity between the figures because, according to Mr Vale, Dyno reached individual agreements with each employee as to the amount of salary which would attract superannuation contribution. 57 It is clear, as the defendant points out, that the figures upon which Mr Dooley based his calculations are unduly generous to the plaintiff. I think the only reasonable approach is to average out the percentage of superannuable salary of each of the four Porgera employees whose records were provided by Mr Vale, and assume that Mr Dyer would have fallen within that average. 58 According to my calculations, the average superannuable salary of the four Porgera employees referred to by Mr Vale was 91.7 percent of their net salary including their overseas allowance. In my view it would be appropriate to apply this formula when calculating Mr Dyer's superannuation entitlements during the time he would probably have been working overseas. This still leads to a superannuation benefit considerable in excess of that which he would have received had he been employed locally.

(b) The effects of the decision in Roads and Traffic Authority v Cremona 59 In Roads and Traffic Authority v Cremona [2001] MVA 35 at 190, a compensation to relatives case, the Court of Appeal upheld the trial judge's finding that interest at the rate of 11 percent should be added to the amount of superannuation benefits notionally receivable by the deceased. The rate of 11 percent was based on expert evidence given at the hearing and took into account capital growth and investment income. 60 Mr Dooley initially calculated the superannuation payments without allowing any interest component at all. Subsequently he made alternative calculations on the basis of an interest rate of 7 percent and 11 percent respectively. The first of these, 7 percent, would appear to be appropriate in this case. The evidence supporting this conclusion is to be found in a statement of Mr Vale which sets out the net investment return of the Dyno superannuation fund between 30 June 1993 and 30 June 2002. The average return over that period was 8.21 percent. There were three years in which a return of more than 10 percent was achieved. These were 1993 (14 percent), 1996 (16.8 percent) and 1997 (12.9 percent). The years ended 30 June 2001 and 2002 showed a negative growth. Mr Vale said that, having regard to the investment market performance since June 2002 he was anticipating negative returns again for the 2002 - 2003 year. A "break even" year would reduce the average to a little over 7 percent. A loss will reduce it further. 61 I therefore find that interest at the rate of 7 percent should be added to Mr Dyer's notional superannuation benefits in accordance with the decision in Cremona.

Dependency rate 62 Mrs Dyer said that during the course of their marriage she looked after all her and her husband's joint financial affairs. Mr Dyer's earnings were paid into a bank account which she operated. She would give her husband $50 when he left for Porgera so that when he returned he could buy a bottle of Scotch and a carton of cigarettes. He had no expenditure at Porgera. Food, accommodation transport and laundry were all provided on site. Nor was alcohol permitted at the mine. Accordingly, for twenty days each month, Mr Dyer had no private expenditure at all. For the remaining ten days any expenditure was incurred on activities he shared with his wife or otherwise on household items. 63 It follows that, at least while Mr Dyer remained at Porgera, the proportion of his income which he used for his own purposes was very low. It was for this reason that Mr Dooley specified a dependency rate of 85 percent. In the normal course of events this would be an unduly high figure. However in the unusual circumstances which existed whilst Mr Dyer was at Porgera, I do not regard it as an unrealistic assessment. 64 Given that, according to my finding, Mr Dyer would have been likely to remain at Porgera, or at another overseas posting, at least until November 1999, I think it appropriate to allow the high dependency rate of 85 percent during that period. Thereafter I would reduce it to 75 percent. This is well above the rate specified in Luntz Assessment of Damages for Personal Injury and Death 4th Ed at Table 9.1, which suggests the normal dependency of a non earning spouse without children to be 65.6 percent. However Mr Dyer was clearly a man of simple needs. Almost all his recreational activities were conducted together with his wife. Accordingly his individual needs and expenses would have remained relatively low.

Non-pecuniary support 65 Mrs Dyer in her preliminary affidavit gave details of the extensive work which she said her husband would perform around the home whilst he was on leave. She estimated that he would have spent approximately twelve hours per month on household and car maintenance. It was suggested in cross-examination that this was an exaggeration, a proposition which Mrs Dyer strongly disputed. No contrary evidence was called by the defendant. 66 I propose to allow the amount claimed by the plaintiff under this head. A quote was presented for work around the house at the rate of $33 per hour. Allowing twelve hours each month the annual figure of $4,752 is reached. This should be allowed for the past, subject to appropriate reductions, and also into the future, until Mr Dyer would have reached seventy years.

Discount for remarriage 67 Mrs Dyer said that she had no intention of remarrying or forming another relationship. It was therefore urged on her behalf that no deduction should be made for the possibility that she might at some time remarry or otherwise enter into a financially advantageous relationship. 68 Since the hearing of this matter the High Court delivered its judgment in De Sales v Ingrilli 193 ALR 130. In that case the trial judge had ordered a 5 percent deduction to compensation otherwise awarded to a surviving spouse on account of the possibility of remarriage. It was argued on appeal that the court should revisit the rule that, in a wrongful death action, the court should assess the chance of a surviving spouse obtaining financial support in the future from remarriage or from a de facto relationship. The majority (Gaudron, Gummow, Hayne and Kirby JJ) acceded to this submission. They held that, in the absence of evidence of an actual or proposed remarriage or similar relationship with beneficial economic consequences, no separate allowance should be made for the possibility that a new relationship will be formed. Accordingly no allowance is to be made for the prospect of Mrs Dyer remarrying or otherwise forming a financially beneficial relationship in the future.

Dyno's cross claims 69 This litigation has been complicated by the fact that Dyno has cross-claimed against three separate insurers seeking indemnity for any verdict obtained by Mrs Dyer in these proceedings. The insurance companies are, in the sequence in which they were joined:

• QBE Insurance (Papua New Guinea) Limited ("QBE") 70 At the relevant time Dyno had an insurance policy with each of these companies in relation to workers compensation and associated liabilities. As the names of the cross-defendants indicate, they cover different geographic areas: WCQ is the Queensland insurer, MMI is the NSW insurer and QBE is the Papua New Guinea insurer. 71 At the time when Dyno first sought indemnity from the three cross-defendants, it was assumed that the substantive law of NSW would apply in these proceedings in all matters relating to Mrs Dyer's claim. However the High Court judgment in Regie National des Usines Renault SA v Zhang [2002] 187 ALR 1 has made it clear that this is not the case. Mrs Dyer's claim is based on Papua New Guinea law, namely the Papua New Guinea Wrongs Act. This, together with the fact that Mr Dyer died in an accident in Papua New Guinea, indicates such a close link with that country that one would expect Dyno's Papua New Guinea insurer to be primarily liable to indemnify the company in relation to Mrs Dyer's claim. 72 With one important qualification, QBE does not dispute its liability to indemnify Dyno in relation to Mrs Dyer's claim. This qualification arises if it is determined that another of the cross-defendants is also liable under its policy with Dyno. In that event, a real question arises as to which insurer should first indemnify Dyno in relation to these proceedings. 73 In ascertaining whether another policy might apply to this case, it is necessary first to determine where the contract of employment between Dyno and Mr Dyer was entered into, being the contract which Mr Dyer was performing when he died. If the contract was entered into in NSW then there was inadequate nexus between Mr Dyer and the Queensland insurer to create any liability in WCQ. Nor can the NSW insurer be liable, for reasons given later. However if Mr Dyer's employment contract was entered into in Queensland then section 4 of the Queensland Workers Compensation Act 1990 potentially comes into play. That section provides as follows: Section 4 - Application of Act to workers "This Act applies so as to confer an entitlement in respect of injury suffered by a worker - (a) on the worker; or (b) if the injury is, or results in, the worker's death - on the worker's dependants; if - (c) the worker is in Queensland at the time of the injury is suffered; or (d) the worker is not in Queensland at the time the injury is suffered, if - (i) the worker entered into the contract of service or apprenticeship (in respect of the employment out of, or in the course of, which the injury arose) in Queensland with an employer who, at the time the contract was entered into, had a place of employment, or was present, in Queensland; and (ii) the worker commenced employment under the contract in Queensland; and (iii) employment under the contract is, or was, with the knowledge and consent of the employer, carried out partly in Queensland and partly outside Queensland; unless in the Board's opinion, the worker has been continuously employed outside Queensland for longer than 2 years;

and in no other case. 74 It is undisputed that Mr Dyer's initial employment with Dyno took place in Queensland. On the 18 July 1987 Mr Dyer wrote to Dyno, or its predecessor, applying for an advertised position as process worker. His application was successful and his employment commenced on 17 August 1987. Mr Dyer at the time was living in Queensland and all correspondence and negotiations took place in that State. The real issue under this head is whether, when Mr Dyer was killed in August 1994, he was still employed under that original contract or whether a later contract was formed when Mr Dyer accepted the position at Porgera. On 21 October 1992 a letter was sent to Mr Dyer in Queensland from Dyno's Sydney office "confirming our offer" that he be employed as operator at the Porgera mine site. The letter set out the various terms of the proposed position including salary, superannuation and re-location to Cairns. The letter concluded in the following terms: "Your signing of the duplicate copy of this letter and returning to us will be indication of your intention to proceed with this offer."

Mr Dyer's signature appears on the second page of this letter, indicating his acceptance of its terms. The evidence shows that he faxed this acceptance from Queensland to Dyno's office in NSW. 75 The question is whether this correspondence in October 1992 constituted a new contract of employment. If it did, it must be determined whether it was entered into in Queensland or NSW. 76 It is a question of fact whether a change in an employee's duties, mutually consented to, will be characterised as the termination of an existing contract and the commencement of a new one, or simply a variation of the terms of the existing contract. To some extent it is a matter of degree. Relatively minor changes are likely to be treated as variations whereas substantial changes are more likely to be regarded as constituting a new contract. In Quinn v Jack Chia (Australia) Ltd [1992] 1VR 567 at 576 - 577 Ashley J said: "Where employer and employee agree to an alteration in the employee's duties and responsibilities which is profound, a court should be more ready to hold (unless the original contract of employment provided for the contingency) that a new contract has replaced the old; or at least that the old contract, as varied, contained terms objectively appropriate to the new relationship created." 77 In the present case the changes to Mr Dyer's working conditions as a result of his proposed transfer to Porgera were more than profound: they were fundamental. Virtually every aspect of his new appointment was of a different order from his existing conditions of employment. Accordingly I conclude that a new contract was formed when Mr Dyer accepted Dyno's offer of employment at Porgera as contained in its letter dated 21 October 1992. As indicated, his acceptance was conveyed by his signing a copy of that letter and faxing it back to Dyno's office in Sydney. 78 The question then arises as to whether the new contract was formed in Queensland, where Mr Dyer's acceptance was sent, or in NSW where it was received. Recent authority would dictate the latter. In Reese Bros Plastics Ltd v Hamon-Sobelco Australia Pty Ltd (1988) 5 BPR 11,106, the trial judge's finding was confirmed that in relation to telex and facsimile transmissions which are near-instantaneous methods of communication, the contract is made where the acceptance is received. In the present case this means that the contract was made in NSW 79 Accordingly my finding is that the contract of service in the course of which Mr Dyer was killed was entered into in NSW. On this basis Dyno submits that s 13(1) of the NSW Workers Compensation Act (1987) ("the NSW Act") comes into play, so that the NSW insurer, MMI, is potentially liable for the plaintiffs' claim. That section provides as follows:

Injuries received outside New South Wales (cf former s 7 (1A), (1B))

(1) If: (a) an employer has a place of employment in New South Wales, or is for the time being present in New South Wales, and there employs a worker, and (b) any such worker while outside New South Wales receives an injury under circumstances which, had the injury been received in New South Wales, would entitle the worker to compensation in accordance with this Act, the injury is an injury to which this Act applies, and compensation is payable accordingly. 80 Mr Hoeben SC, who appeared for MMI, stressed that Mrs Dyer's claim in this case is not for compensation under the NSW Act. Her claim is independent of that Act. In fact Dyno took out two policies with MMI, one relating to its liability under the NSW Act and the other providing cover for liability arising independently of the Act. It is this second policy with which we are concerned here. 81 There are, in my view, two reasons why this MMI policy does not cover the plaintiff's claim in this case. I shall deal with them briefly. In this I am much indebted to Mr Hoeben's clear and succinct written submissions. 82 Dyno's policy with MMI was issued in response to a proposal made by Dyno on 23 July 1990. In that proposal, Dyno described its trade or business as "explosives manufacturer and sales". In answer to the question, "premises where trade/business is carried out (situations must be shown, incl. operations outside NSW)", a large number of locations were specified, most of them being outside NSW, but all of them being within Australia. In response to a further question "Have you any workers engaged otherwise than in connection with the business specified above?", the "no" box was ticked. The proposal and declaration were said to be the basis of the contracts and were deemed to be incorporated into the policy. 83 It was a continuation of this policy which was in force when Mr Dyer met his death in August 1994. the policy provided for the employer to notify the insurer of any change in the businesses or activities to which the policy applied. No such notice was provided by Dyno before August 1994. In these circumstances I accept Mr Hoeben's submission that MMI's policy was patently envisaged by the parties to apply only to Dyno's activities within Australia. 84 There is in any event a further reason why MMI's policy would not, in my view, apply in this case. This arises from the terms of the policy itself. Clause 3 of the policy provides as follows: "3. The Insurer will indemnify the Employer against all of the following sums for which the Employer becomes liable during or in respect of the period of insurance: (a) compensation that the Employer becomes liable to pay under the Act to or in respect of any person who is a worker of the Employer (including any person to whom the Employer is liable under Section 20 of the Act); (b) any other amount that the Employer becomes liable to pay independently of the Act ( but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the commonwealth or a liability arising under the law of another country ) for any injury to any such person (not including liability in respect of an injury, suffered by a person other than such a worker, arising out of any rescue or attempted rescue); (emphasis added) (c) costs and expenses incurred with the written consent of the Insurer in connection with the defence of any legal proceeding in which any such liability is alleged." 85 In this case the defendant's liability arises under of the laws of Papua New Guinea. If those laws did not allow for an action in the nature of Compensation to Relatives then, since Zhang, Mrs Dyer would have had no case. In my view therefore, even if MMI's policy had otherwise applied to Mrs Dyer's claim, the exclusion clause would have served to remove it from the ambit of MMI's cover. 86 Mr Dyer's contract of employment having been entered into in NSW there is no relevant nexus between this action and the Queensland insurer, WCQ, so as to establish any liability on its part. Accordingly Dyno must fail in its cross-claims against MMI and WCQ. 87 This leaves outstanding Dyno's claim against the Papua New Guinea insurer QBE. As I indicated earlier, this aspect of the case is relatively simple. QBE concedes that in August 1994 Dyno had a policy of insurance with it which would cover Mrs Dyer's Compensation to Relatives claim. The only matters raised by QBE in response to Dyno's cross-claim related to the possibility that another policy or policies with other insurers might also answer to the claim. However on my finding that is not the case. 88 I therefore find that Dyno is entitled to indemnity from QBE in relation to this claim. 89 Finally I must mention WCQ's cross-claim against Mrs Dyer. This seeks the return of money paid to her under mistaken belief that WCQ was liable in relation to her claim. The total amount is $99,681. 90 It is clear that WCQ is entitled to repayment of this amount, either from the plaintiff once she has received her verdict from the defendant, or directly from the defendant. As I understand it, no costs or interest are sought from the plaintiff on this amount. 91 In the case of all parties to the various cross-actions costs are to follow the event unless submissions to the contrary are received by me within seven days of to-day.

Conclusion 92 In accordance with the agreement reached between counsel I have not purported in this judgment to translate my findings into monetary terms. This is to be done by the parties in accordance with the findings I have made. I leave it to the parties to bring in short minutes of the appropriate orders. If they are unable to agree, I will deal with outstanding issues by arrangement with the parties. **********

Last Modified: 04/09/2003 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.

Dyer v Dyno Nobel Asia Pacific Limited - formerly Dyno Wesfarmers Limited

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