Johnson & Johnson Pty Ltd v Manufacturers Mutual Insurance Ltd & Ors

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG J TUESDAY 29 FEBRUARY 2000

4238/98 - JOHNSON & JOHNSON PTY LIMITED v MANUFACTURERS MUTUAL INSURANCE LIMITED & ORS

1 HIS HONOUR: By its amended statement of claim, the plaintiff sues four insurance companies for indemnity or contribution in respect of moneys it paid to a Mr Dyson pursuant to an order of his Honour Judge Johns in the Dust Diseases Tribunal of New South Wales. His Honour found, in the words of paragraph 8(i) to (iv) of the amended statement of claim: "(i) During the period from 8 June 1964 to 30 November 1990, the plaintiff was negligent in exposing Dyson to dust and bird droppings which caused a risk of injury of a kind which was reasonably foreseeable;

(ii) As a result of the negligence of the plaintiff, Dyson had contracted pulmonary cryptococcis and, therefore, the plaintiff was liable for damages;

(iii) Dyson had established breaches of statutory duty of section 41(2) of the Factories Shops and Industries Act 1962 (NSW);

(iv) Dyson had established that as a result of the breach of statutory duty he had suffered injury and, therefore, the plaintiff was liable for damages."

2 Paragraphs 11, 13, 15 and 17 of the amended statement of claim are as follows: "11. During the period from 8 June 1964 to 30 June 1980, the plaintiff had a policy of workers' compensation insurance with the first defendant in accordance with the Workers Compensation Act 1926 (NSW).

13. During the period from 30 June 1980 to 30 September 1986, the plaintiff had a policy of workers' compensation insurance with the second defendant in accordance with the Workers Compensation Act 1926 (NSW).

15. During the period from 30 September 1986 to 30 September 1987, the plaintiff had a policy of workers' compensation insurance with the third defendant in accordance with the Workers Compensation Act 1926 (NSW) and/or Workers Compensation Act 1987 (NSW).

17. During the period from 30 September 1987 to 1 January 1990, the plaintiff had a policy of workers' compensation insurance with the fourth defendant in accordance with the Workers Compensation Act 1987 (NSW)." 3 Paragraph 12 is as follows: "During the period from 8 June 1964 to 30 June 1980, whilst in the course of his employment with the plaintiff, Dyson was exposed to dust and bird droppings emanating from pigeon and other avian species which, as a consequence, led to Dyson suffering from cryptococcis." 4 Paragraphs 14, 16 and 18 are identical to paragraph 12 save for the dates. 5 Paragraphs 19 and 20 of the amended statement of claim are as follows: "19. At all material times the plaintiff was the employer of Dyson and liable independently of the Workers Compensation Act 1987 (NSW) for damages for an occupational disease contracted by Dyson (in accordance with section 151AB Workers Compensation Act 1987 (NSW)).

20. The plaintiff's liability to Dyson arose partly before and partly after the relevant commencement of section 151AB Workers Compensation Act 1987 (NSW) as amended by Act No 89 of 1995, in accordance with section 151AB(2) of the Workers Compensation Act 1987 (NSW)." 6 The only additional fact that need be mentioned (that is a fact for the purpose of the present motion) is that between 1 January 1990 and 30 November 1990 the plaintiff was a licensed self insurer under the Workers Compensation Act 1987, and was a self insurer in respect of the risks appertaining to Mr Dyson. 7 The proceedings have been on foot for almost two years and are not yet in a satisfactory state. After several false starts, the second defendant moved under Pt 13 r 5 of the Supreme Court Rules for an order striking out the amended statement of claim against it. I heard argument on that motion yesterday but, because of the constraints of time on the duty list and my wish to read the material again before I gave judgment, I reserved my decision. I was assisted by the oral and written submissions of Mr J Marshall of counsel for the applicant, and Mr Holmes QC and Mr McInerney for the plaintiff. Both sets of counsel submitted both oral and written arguments, and they were the main protagonists. I also heard oral submissions from Mr Hall QC and Mrs Stewart of counsel for the third defendant. Mr Cranitch SC for the fourth defendant and Mr Little for the first defendant made brief submissions supporting the second defendant/applicant. 8 The statement of claim essentially says that the plaintiff was insured by the four defendants for various periods in respect of its liability both under the Workers Compensation Act and at common law. Mr Dyson received damages from the Dust Diseases Tribunal because he contracted pulmonary cryptococcis due to his employment which involved cleaning buildings, particularly the pigeon droppings and birds nests from the plaintiff's buildings. The plaintiff is not sure when the liability occurred but it says that one or other or any of the defendants should indemnify it under the respective policies of insurance, under the doctrine of contribution, or because of s 151AB of the Workers Compensation Act 1987 as amended. 9 Section 151AB in its current form is as follows: "Special insurance provisions relating to occupational diseases. 151AB(1) If an employer is liable independently of this Act for damages for an occupational disease contracted by a worker, the following provisions have effect for the purpose of identifying from among a number of insurers under policies of insurance obtained by the employer for different periods which insurer or insurers is liable to indemnify the employer for the full amount of the damages or which is liable to pay the full amount of damages to the worker (without any right to a contribution from those other insurers):

(a) Any liability of that employer that arose before the relevant commencement is taken to have arisen when the worker was last employed before that commencement by that employer in an employment to the nature of which the disease was due. (b) Any liability of that employer that arose after the relevant commencement is taken to have arisen when the worker was last employed after that commencement by that employer in an employment to the nature of which the disease was due.

(2) If the employer's liability arose partly before and partly after the relevant commencement, the following additional provisions apply:

(a) Subsection (1)(a) applies to any liability that arose before that commencement and subsection (1)(b) applies to any liability that arose after that commencement, with the result that two insurers are identified as the insurers who are to be liable as referred to in subsection (1). These insurers are referred to in this subsection as the 'responsible insurers'. (b) Of the responsible insurers, the one that is the insurer in respect of the employer's liability that arose after the relevant commencement is to be the insurer 'primarily responsible' for the claim." 10 The relevant commencement date referred to in the section for these proceedings is 4 pm on 30 June 1987. 11 The motion is being tried on the common assumptions between the plaintiff and the second defendant. Thus, for the purpose of this motion I must assume that the plaintiff could, at the trial, establish the allegations contained in the amended statement of claim. This is convenient for present purposes but the point must be made, with great respect, that the way in which the amended statement of claim is framed is not completely satisfactory. The document is verified, as is required in the Equity Division, yet the statement of claim makes a number of alternative and inconsistent claims. I would have thought that in due course these will need to be reconsidered and only the material facts pleaded to which a person could reasonably put his or her oath. 12 One illustration of the problem is that the plaintiff's submissions indicate that on various possibilities, apart from s 151AB, different defendants could be liable depending upon when Mr Dyson was carrying out the work which led to his suffering from pulmonary cryptococcis. However, when one reads Judge Johns' judgment, the only evidence would appear to be that Mr Dyson started the relevant work "between 1986 and 1987". If that is the only evidence then to allege that the work took place between 1964 and 1986 would not seem to be an allegation that one could swear to. 13 There is also the submission put by Mr Hall QC that pulmonary cryptococcis is a problem that occurs when a microbe enters the lungs at a discrete point in time, so that it is not an occupational disease within the meaning of s 151AB at all. If this is to be a point that is to be run at the trial, the pleadings do not reflect it. This does not worry me for present purposes as I can just look at the pleadings, but it will need to be dealt with. 14 Technically, the prayers in the amended statement of claim are rather odd. In prayer (iii) there is an application for a declaration of contribution, but, as contribution is usually an equitable remedy given by the Court as a matter of fairness, one would have expected to see allegations of material fact in the body of the amended statement of claim which would lead the Court to order an amount of money to be paid as fair contribution. 15 I point these matters out because this sort of case has the habit of going on appeal, and appeal judges sometimes castigate trial judges for not dealing with matters in a short technical way when the technicalities are obvious enough. I point to them to show that I have not ignored them, but I have been urged to settle the main point in contention between the parties and not be over-technical, and that is what I will do. 16 Mr Holmes QC and Mr McInerney for the plaintiff submit primarily that s 151AB has no operation. They say that for the section to operate one must find that a self insurer is an insurer within the meaning of the section, and this is not a proper way of construing the section. As I understand the submissions, there were six primary reasons put forward as to why this was so: (a) it was put that on a literal reading of the section, a self insurer is not included within the term of "insurer", and that the authorities, principally Wunderlich Limited v Manufacturers' Mutual Insurance Limited [1981] 2 NSWLR 678, 685, support that contention; (b) as a matter of policy, that construction should be preferred because the purpose was to identify which insurer might be liable under its policy of insurance to indemnify the employer for the full amount of damages and that purpose has nothing to do with making self insurers liable for something that they should not otherwise have to bear; (c) the scheme of the Act again points in the same direction. The scheme was to streamline litigation by a worker where there was a continuous disease of gradual onset. It was not to re-apportion liability except in a sort of "swings and roundabouts" way, where companies which were insurers of many employers would, on average, come out line ball; (d) one should not lightly impute in the legislature an intention to deprive an employer of contribution from insurers, especially when the thrust of the Act appeared to be purely administrative; (e) the decision of Yeldham J in Australian Iron & Steel Pty Limited v Government Insurance Office of New South Wales (1985) 2 MVR 362, 366 was a soundly reasoned judgment, pointing out that as a general rule a self insurer is not an insurer at all, and this construction should be followed; and (f) when one looks at other sections of the Workers Compensation Act 1987 such as ss 189, 191, 217(g) one can see that where the legislature intended that a self insurer should be within the comprehension of the term "insurer" it said so. 17 Some of the plaintiff's submissions went to what the result should be, if I come to a view on the principal point of construction one way or the other. For reasons I will deal with later, I do not consider that it is of great use to explore these because I believe it is more appropriate for these reasons to be digested, and for the parties then to come back and argue as to what sort of orders should follow. 18 In his submissions Mr Marshall for the second defendant homes in on the words in s 151AB, "for the purpose of identifying from among a number of insurers under policies of insurance ...". He says that when one looks at the plaintiff's pleadings this is the purpose of the suit, and accordingly s 151AB applies. 19 One must then work through and see what is meant by the "insurer 'primarily responsible' for the claim" in s 151AB(2)(b). It is difficult to imagine that the legislature would have thought that one arrangement would prevail if there was no self insurer, and another if there were. When one looks at the purpose of the section, and one looks at the way in which the word "insurer" has been used, it is clear that the plaintiff as a self insurer is caught up in the section. 20 The summary I have just given of Mr Marshall's argument is probably inadequate, but it is fully developed in the eight-page written submissions, which will be left with the papers, together with, of course, Mr Holmes QC's submissions. 21 Mr Marshall referred to a series of authorities arguing that the way in which courts must approach legislation, especially social legislation of the present type, is what is commonly called the purposive approach. He referred to a series of cases but I need only mention two: Kingston v Keprose Pty Limited (No 3) (1987) 11 NSWLR 404, 421-424 and Newcastle City Council v GIO General Limited (1997) 191 CLR 85, 112-116, both judgments of McHugh J. There is no doubt that the purposive approach is the general way in which one approaches statutory construction these days but primarily, statutory construction is an exercise of looking at what the legislature said in the context of the general scheme of the Act. One only needs to weigh up a literal versus a purposive reading if one has a real doubt as there are really two alternatives. I do not consider the present is such a case so that there is little to be gained by the formula literal or purposive. 22 I believe that it is of some value to look at three of the cases. The first is the Wunderlich case to which I have already referred. In that case Yeldham J was dealing with an asbestosis case, and the wording of old subsections 18(6A) and 18(6B) of the Workers Compensation Act 1926. The wording in those two subsections was different, but his Honour, although he spent some time making it clear that he was applying a literal interpretation, did in fact read the two sets of expressions as setting out the purpose of the legislation, which was to permit a workers' compensation claimant to know who to sue without excess legal costs and then for the liability to be shared in accordance with the statutory formula. 23 In the Australian Iron & Steel case to which I have already referred, Yeldham J considered the case of a self insurer. The summons in the Commercial List before him sought "an order that the defendant pay a certain amount by way of indemnity". However, the main thrust of the case appears to be a claim for contribution between a self insurer and an insurance company. His Honour said there was no such claim because the self insurer was not to be treated as though he were an insurer. He said at 365, "The reality of the situation is that such an employer is not an insurer at all ... such an employer is simply uninsured ...". I will return to the significance of that case later. 24 In MMI Insurance Compensation (NSW) Limited v Baker (1997) 41 NSWLR 289 the Court of Appeal had to consider the application of s 151AB in a situation where the District Court had found that the only injuries for which it gave damages happened before the commencement date of the section. Up until that date there had been only one insurer, but since that date another insurance company had come into the picture. The District Court Judge found that under the section each had to pay one-half of the employer's damages. That was reversed by the Court of Appeal, the leading judgment being given by Gleeson CJ. At 293 the argument of the appellant is put that the purpose of the section was "related to a case where there are two or more policies of insurance under which an employer is contractually entitled to indemnity in respect of damages for which a plaintiff sues. In such a case the purpose of the section is to select one of them to indemnify the employer ... consequently ... whatever operation s 151AB might otherwise have had if there were two insurers at risk prior to 30 June 1987, it has no operation in a case where there only ever was one insurer at risk in relation to the plaintiff's cause of action." 25 The learned Chief Justice said that he accepted that argument and then said at 294F: "The hypothesis upon which subs (2) of s 151AB proceeds is that, in a case to which the section applies, where there are two or more insurers contractually liable to indemnify the plaintiff at least to some extent in respect of the relevant liability, the section is to enable a selection to be made from amongst those insurers." 26 I was initially affected by looking at Pt 7 of the Workers Compensation Act 1987 because if one looks, for instance, at ss 189, 190, 217 and 225 one can see that the legislature thought that unless it spelt things out a self insurer could be classed as an insurer, but the contrary impression is given by ss 1512AC and 184. In the end I really thought that the search produced an equivocal result. 27 When one reads Baker's case one can see that the learned Chief Justice keeps mentioning two or more insurers contractually liable to indemnify, or two or more insurers under a policy of insurance. There is no mystery as to where those words come from. When one looks at the commencing words of s 151AB one can actually see the words "a number of insurers under policies of insurance obtained by the employer". Accordingly, the insurers referred to in subs (1) are insurers who have issued policies of insurance and, to make things doubly clear, those policies of insurance have been obtained by the employer. This seems to me to preclude liability in the concept that the self insurer be an insurer, because the self insurer does not issue a policy of insurance and the section makes it clear that there are two distinct entities: (a) the employer; and (b) the insurers. 28 Accordingly, in my view a self insurer is not an insurer under section 151AB. It follows that when one goes down to section 151AB(2)(b), the plaintiff is not the insurer in respect of the employer's liability and is not a responsible insurer. What else follows is unclear. It is unclear because the argument before me really has not gone so far as to deal with the various possibilities. One possibility is that the plaintiff bears half the loss but may claim half the loss from the insurer who was the insurer as at 30 June 1987 or the last time at which Mr Dyson worked in this particular type of work. There is also a question as to whether there is any general law right of contribution for the period after 1987. 29 I said I would come back to the decision of Yeldham in the Australian Iron & Steel case. That case seems to be authority for the proposition that there would be no general law right of contribution. Although Yeldham J was an acknowledged expert in this area of the law, I would have thought that it was arguable that even though the principle of contribution between joint insurers did not apply, some other form of contribution might because, after all, the general principle of contribution is that it is obtainable if there are co-ordinate liabilities and the law as to what is a co-ordinate liability has been clarified in more recent times (see, for instance Street & Malls v Retravision (NSW) Pty Limited (1995) 56 FCR 588 at 597 and Hanave Pty Limited v LFOT Pty Limited (1999) 168 ALR 318, 327. See also the remarks of Santow J in FAI Traders Insurance Co Limited v Mercantile Mutual Insurance (Workers Compensation) Limited 31 August 1998, unreported, pp 13 and 14). 30 Another loose end, if I can call it that, is whether s 11(4) of the Dust Diseases Tribunal Act 1989 (NSW): (a) empowers the Dust Diseases Tribunal to deal with this sort of claim; or (b) has the operation that if one does not let the Tribunal deal with it, one is subject to Anshun estoppel. This point has arisen in the past (see Wellcome Australia Limited v Australian Eagle Insurance Co Limited (1993) 34 NSWLR 269, 285) and has not yet been decided. If Mr Hall or those in his interest wish to raise it, then the pleadings will at least need to be altered. However, my preliminary view is that it would take very clear words to exclude the jurisdiction of a court of equity to make an order for contribution in a proper case. 31 On the pleadings, as presently framed, I would probably need to dismiss the motion as the second defendant, on one alternative view of the facts, could possibly be liable. However, as Judge Johns found no relevant activity before "1986 to 1987" and as another defendant was the insurer as at the commencement date, my guess would be that if the pleadings were put in proper form it may well be possible to dismiss the second defendant and perhaps other defendants as well from the suit. 32 I should make one other comment. The proceedings were originally fixed for hearing before a Master by apparent consent of all parties last October. Last Friday, the day before the hearing, the Court was informed that at least one party objected to a Master hearing the case. As luck would have it, there was sufficient judge time available for a judge to hear the case yesterday. I could not really do very much about the problem because there was the additional problem that somehow or other the Court had set down for hearing a separate question, which had never been stated as a separate question, on the assumption that there would be agreed facts, which were never agreed. 33 However, I should make it clear that after 1 March 2000 when the new Rules come in, if the Court does fix a case before a Master and no one protests or asks the Judge to vary that order within a reasonable time - which I would think would ordinarily be seven days - then, if a hearing is aborted because someone decides at the last moment the Master is not to hear their case, penal orders for costs will be made almost as night follows day. 34 However, in the instant case I think the best thing is to publish these reasons and stand the matter over for, say, four weeks for mention so that the parties can work out what they want to do about the matter. It may be that other people will want to file motions so that issues can be clarified before the matter goes to trial and if so those motions can be made returnable before me on the next day, but the next day the matter will only be in the list for mention, not for hearing. 35 In view of the time that is usually taken for judgments to be corrected, distributed and considered by counsel, perhaps Thursday 30 March 2000 at 9.30am would be appropriate but my Associate, if she is contacted at least a week before, can vary that date to suit counsel.

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