Power Technologies Pty Limited v State Insurance Regulatory Authority & Ors;

Court of Appeal (NSW)|2017-12-04

Solicitors: Turner Freeman (plaintiff) Firths (defendant/cross-claimant) William Roberts Lawyers (first cross-defendant) Kemp & Co Lawyers (second cross-defendant) Rankin Ellison (third cross-defendant) Rankin Ellison (fourth cross-defendant) File Number(s): DDT 215/2017/CC2

Judgment

Mr Peter Watson sued Power Technologies Pty Limited (formerly ICAL), his employer between 1974 and November 1987, by a Statement of Claim dated 14 July 2017.
During his employment the plaintiff had exposure to asbestos dust. The plaintiff contracted mesothelioma and sought damages against the defendant. Those proceedings were settled on the first day of the hearing.
The defendant filed two cross-claims. The first, most recently pleaded by an Amended Cross-Claim filed on 25 September 2017, sought contribution towards damages and costs from other tortfeasors. Amaca Pty Limited is the first cross-defendant. Wallaby Grip (NSW) Pty Limited is the second cross-defendant. The Electricity Authorities Ministerial Holding Corporation is the third cross-defendant (responsible for the torts of Delta Electricity) and the fourth cross-defendant (responsible for the torts of Macquarie Generation). That Cross-Claim was also settled.

THE PLAINTIFF'S EVIDENCE

The defendant's factory was at South Street, Rydalmere.
The plaintiff worked for the defendant in the early 1970s as a casual iron worker. The plaintiff had extensive exposure to asbestos dust while working as a casual iron worker. In mid-1975 he became a permanent worker as an apprentice draftsman. When he completed his apprenticeship in about 1979 he was transferred to the Commissioning Department. This department fulfilled contracts to maintain boilers. He worked in the Commissioning Department between 1980 and 1983. He had bystander exposure to asbestos dust as a qualified draftsman and then a commissioning engineer. During that time he regularly walked in and out of the factory where asbestos dust was generated during manufacturing and repair processes. The detail of that exposure does not matter in the present proceedings. It was significant exposure.
While the defendant was working as a draftsman and later as a commissioning engineer he went to power stations at Wallerawang, Vales Point, Munmorah and Liddell in New South Wales and Yallourn in Victoria. He was exposed to significant asbestos dust during shutdowns at these power stations.
In March 1983 the plaintiff was promoted to the position of contracts engineer by the defendant. He was responsible for the insulation contract at the Loy Yang Power Station in Victoria. This was an asbestos-free power station. The plaintiff said that after March 1983 he believes that he had no exposure to asbestos dust while working as a contracts engineer.
There was another possible source of exposure to asbestos dust at Rydalmere between the early 1970s and March 1983. During this time the plaintiff regularly visited the area out of the back and to the south of the defendant's factory, adjacent to the Parramatta River. He often had his lunch there with other workers. He said, without objection: "I have since been informed by other former employees of ICAL and I believe that the car park area and portions of the foreshore around the river were all filled using asbestos rubble and waste products from the James Hardie factory across the river. I believe that I had further exposure to asbestos dust from that source. There was regular traffic going through the car park all the time, stirring up the dust."
In relation to this possible source of exposure after March 1983, the plaintiff said that once he was promoted to be a contracts engineer he never joined the factory workers having lunch at the back of the factory alongside the Parramatta River. He ate his lunch in the office along with other men working there. He either brought his lunch from home (after he was married in November 1983) or he purchased a lunch order at a local café.
By 1983 the main car park, which had been one site of asbestos dumping, had been sealed with bitumen. When working as a contracts engineer the plaintiff parked primarily in the ICAL car park beside the main office block. Sometimes he parked in the Council car park across the road.
From March 1983 the plaintiff worked as a contracts engineer on the ground floor of the office building. The main workshop and factory was located in a large separate building behind the main office building. From the day of his promotion to be a contracts engineer he never went into the works area of the factory again. His days were usually spent working in the main office building on the ground floor, apart from monthly visits to the project at Loy Yang.
Thus the plaintiff said that he believed that he had no asbestos exposure after March 1983 because: 1. he never went back into the works area of the factory again; 2. he worked in the drawing room of the office building where there was no asbestos used; 3. he went to the Loy Yang Power Station but there was no asbestos there; 4. he never went out the back of the factory alongside the river to have his lunch; 5. the main car park, which had been an asbestos dumping ground, had been sealed with bitumen.
While that was the plaintiff's belief and the basis for it, other evidence was tendered on the cross-claim which has to be analysed in the light of s 151AB and the cases which explain the meaning of the section.
The plaintiff was cross-examined by senior counsel for the first cross-defendant. He recalled walking over loose fill at the back of the factory but at the time he did not know what the material was. He could not say whether the area at the back of the factory remained in the same condition after March 1983, because he never went down there again. The plaintiff agreed that when the wind blew, particularly a westerly wind, it blew up the dust from that fill. Such dust blew into the factory. He agreed that it was possible that the dust blew down the passageway at the side of the factory on the Park Road side.
The plaintiff agreed that from time to time people from the office walked down to the factory and back. It was possible that those employees might have accumulated dust on their clothing or their shoes. There was no system for cleaning when people left the factory and came back to the office.
Employees who worked in the factory itself were not permitted to come into the main office building.
The plaintiff was also cross-examined by senior counsel for the third and fourth cross-defendants. He was shown an aerial photograph of the site which was put into evidence. The ICAL factory was bounded to the north by South Street, to the east by Park Road, and to the south by the Parramatta River. The main car park, which had been one of the asbestos dumping grounds, was situated on the northeast corner of the site. That was the car park which was covered with bitumen by 1983. The other dumping site was the land to the south of the factory and down to the northern bank of the Parramatta River.

EVIDENCE TENDERED BY THE FIRST CROSS-DEFENDANT

The first cross-defendant tendered an affidavit by Mr Henry Bede Cassidy dated 12 July 1984. Mr Cassidy is deceased.
He was born in 1924 and in 1940 went to work for James Hardie & Coy Pty Limited ("James Hardie") in the "fibro factory" at Camellia. He left James Hardie in 1942 to serve in the Australian Army.
In 1949 he commenced employment with Warrell Engineering at Yennora. In March 1962 Warrell was taken over by the defendant and he moved to the defendant's factory at 38 South Street, Rydalmere, across the Parramatta River from his old place of employment at the James Hardie fibro factory at Camellia. In his affidavit Mr Cassidy gave evidence about exposure to asbestos dust in the course of his work with the defendant. He worked at Rydalmere until 1984.
In relation to the dumping of James Hardie asbestos waste at the defendant's factory, he said: "During the mid-1960's to mid-1970's at ICAL I recall trucks with James Hardie logos and names on them coming in the front big roller door of the plant and going through to the end down towards the Parramatta River. They carried loads of fibro dust and offcuts and filled large areas of ICAL land. I frequently went there to get jigs which were left over outside or to cut plates. I saw, stepped in and felt fibro bits and dust over the area. The wind blew the dust into the factory particularly into 5 bay close to where I worked and it was very dusty where we worked outside. In places the fill was 10 or 12 feet deep and a lot of trucks came dumping the fibro debris which looked the same as when I worked across the river. In winter, the westerly wind stirred the dust up along the back of the site where the fibro was not covered up."
The first cross-defendant also tendered the affidavit of Mr Michael Muller dated 7 July 2008. Mr Muller is deceased.
Mr Muller commenced work with the defendant in 1961 and worked there continuously until the end of 1985. He gave evidence about his work inside the factory with asbestos materials. So far as the material dumped at the defendant's site is concerned he said: "ICAL was located across the river from Hardies. There were always a lot of trucks coming into the ICAL yard. It was a big site. It sat on 10 acres. There was a lot of dumping of materials that went on at the ICAL site. Material was dumped in the car park at the front of the factory and down the side of the factory. Trucks drove through the factory and dumped material at the back of the factory going down towards the river. The trucks came from James Hardie & Coy Pty Limited. I used to go down into the yard and around the river regularly looking for steel. There were all sorts of material, rubble and rubbish dumped around the banks of the river. Most of this area was damp. I did this right up until I ceased employment in about 1985."
I accept the evidence set out above from the affidavits of Mr Cassidy and Mr Muller. I recognise that there was no opportunity at this hearing to cross-examine those deponents. I accept the evidence firstly because there was no evidence tendered to the contrary of what was said by Mr Cassidy and Mr Muller about the dumping. Secondly, Mr Cassidy had his last day of work at the defendant in 1984 and Mr Muller had his last day of work at the defendant in 1985. The workers compensation insurer on risk on both those dates was AAI Limited. Mr Cassidy's affidavit was served in his own proceedings for damages. Mr Muller's affidavit was served in his own proceedings for damages. In both those proceedings the relevant workers compensation insurer would have become aware of the allegations of dumping and could have either called evidence to contradict what was said by both plaintiffs, or at least investigated those claims. No contrary evidence was put forward.
The first cross-defendant tendered an Asbestos Assessment Report September 2009 prepared for Parramatta City Council by the Department of Environment, Climate Change and Water. The Department investigated concerns about asbestos waste uncovered from former James Hardie disposal sites in suburban Sydney. Twenty nine sites were identified in the Parramatta City Council Local Government Area. Only sixteen could be located by the time of the report. Of those sixteen sites, eleven were found to have visible evidence of asbestos in the open area of the site and five sites had no visible evidence of asbestos.
One of the eleven sites identified and located was the defendant's factory premises at 38 South Street, Rydalmere.
The report recorded that information from James Hardie stated that during the period 1965 to 1975, industrial waste, including crushed cement waste and sludge, was buried at a depth of up to three metres in the swampy area of the ICAL site, which was the embankment of the Parramatta River. An assessment of the site was conducted by the Department in December 2007 which found that asbestos was present as bonded sheet matrix and broken cement pipe along the river bank. There was visible asbestos which the Department recommended to Council should be removed. The report made recommendations for a management plan for the future.
The first cross-defendant also tendered a report dated April 2010 from the same Department entitled "Regulation Project - James Hardie Asbestos Waste Contamination Legacy". This report covered sites across the Sydney area, in which there were 47 potential asbestos disposal sites associated with James Hardie. The Department conducted site inspections of the sites which it determined needed assessment. Parramatta Local Government Area contained 29 of the 47 potential asbestos disposal sites. The other sites were in the Local Government Areas of Holroyd (5), Homebush (3), Auburn (3), Fairfield (2), Blacktown (2), Baulkham Hills (1), Liverpool (1) and Wingecarribee (1).
An appendix to the report listed all of these potential sites. Site no. 29 was the defendant's factory at Rydalmere. This report simply repeated the material concerning the defendant's site which was in the earlier 2009 detailed report about the Parramatta district.
Finally, the first cross-defendant tendered the plaintiff's 1988 Group Certificate, which showed that the last day of employment of the plaintiff at ICAL was 6 November 1987.
The second cross-defendant tendered no evidence.

EVIDENCE TENDERED BY THE THIRD AND FOURTH CROSS-DEFENDANTS

These parties tendered the affidavit of Mr William Kilpatrick dated 8 April 1992. It was acknowledged that he was deceased.
Mr Kilpatrick was born in Scotland in 1920 and came to Australia in 1961. He worked for the defendant between 1961 and his retrenchment in 1983. He was a boilermaker and he was always based in the ICAL factory at Rydalmere. He worked extensively with asbestos materials.
Mr Kilpatrick gave evidence that the defendant stopped using asbestos in approximately 1982. He said: "In approximately 1982 however we were just told by the company to stop using asbestos. All of a sudden all of the asbestos products in the factory were taken away and replaced with a silicone substitute. We never saw any asbestos at ICAL after that time."
Mr Kilpatrick said nothing about any asbestos dumping at the ICAL factory. He did say that the factory itself was always dusty.
I accept the evidence of Mr Kilpatrick about the defendant ceasing to use asbestos in approximately 1982. Firstly, there was no evidence called to the contrary. Secondly, the Kilpatrick affidavit was served in his own claim against the defendant. He ceased working at the defendant in 1983. NEM was the insurer on risk until 30 June 1983 and for the balance of 1983 the second cross-defendant was the insurer on risk. One of these two insurers must have defended the Kilpatrick claim and thus had the opportunity to investigate the allegation that asbestos ceased to be used in 1982. Having regard to the terms of s 151AB, the cessation of the use of asbestos in 1982 would have thrown the liability to indemnify the defendant upon one of these insurers. I infer that they had the opportunity to investigate the Kilpatrick claim about cessation of asbestos use in 1982.
In these proceedings, neither the first nor the second cross-defendants tendered any evidence to the contrary. That reinforces my conclusion that I should accept that evidence as accurate. It is to be noted that I offered the first cross-defendant the opportunity to make any application (including for adjournment) when the Kilpatrick affidavit went into evidence. No application was made.

RELEVANT LEGAL PRINCIPLES

The meaning and operation of s 151AB of the Workers Compensation Act 1987 has been the subject of many decisions in the Court of Appeal. The most recent is CGU Insurance Limited v AAI Limited [2016] NSWCA 335. The judgment of Acting Justice Emmett set out the relevant legal principles and by footnotes, provided references as to where those principles are to be found in earlier decisions.
As identified by Acting Justice Emmett (with whom the other two Judges of Appeal agreed) the principles are: 1. The critical phrase in s 151AB is "employment to the nature of which the disease was due". 2. The phrase in question requires that it be shown that there was a risk of a real kind that the disease in question would be contracted from the particular working conditions in which the worker was required to operate. 3. Thus an insurer will not be liable when the insurer comes on risk after the source of the disease is removed. 4. Attention must be directed, not to the contract of employment, but to the kind of work being done by the worker at various times. 5. Exposure to substances capable of causing an occupational disease is a material fact in identifying the nature of the relevant employment. 6. Where there is a material change in the nature of the worker's employment, the insurer liable under s 151AB is the insurer on risk when the worker was last employed by the employer to do work that exposed the worker to asbestos. 7. A worker is within the operation of s 151AB(1) if, in the course of carrying out his employment, the worker is in fact exposed to risk because of the employment. 8. Employment for that purpose embraces not only the actual work tasks performed by the worker, but also those of the worker's movements through the employer's premises in the course of employment, which exposed the worker to risk of inhalation of asbestos particles. 9. The "nature of employment" test directs attention to whether the nature of the worker's employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers. 10. The test is not concerned with causation in fact but with exposure to a risk that maybe causative of the occupational disease from which the worker suffers. 11. It requires proof, on the balance of probabilities, that the nature of the worker's employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers.
In Tame v Commonwealth Collieries Pty Limited (1947) 47 SR (NSW) 269 the Court of Appeal considered a case of silicosis contracted by the inhalation of silica dust. Chief Justice Jordan said: "I agree that if it had been established that, although his last employment was such as ordinarily involved a risk of inhaling silica dust, nevertheless work with his last employer was carried on under special circumstances which made inhalation of silica dust impossible, the worker would have failed."
It does not matter that the risk was a low risk. Even a low risk is sufficient. In GIO General Limited v ABB Installation & Services Pty Limited (2000) 19 NSWCCR 720, the Court of Appeal said at [39]: "Although the risk may have been very low, it was still a risk".

CONSIDERATION AND FINDINGS OF FACT

I accept the plaintiff as a witness of truth. I accept the evidence contained in the affidavits of Mr Cassidy and Mr Muller concerning the dumping of James Hardie asbestos material at the defendant's site, for the reasons set out above. I accept the evidence of Mr Kilpatrick contained in his affidavit that in 1982 the defendant ceased to use asbestos, for the reasons set out above.
I make the following findings of fact.
The plaintiff was exposed to significant levels of asbestos dust while working in the defendant's factory as an apprentice draftsman, a draftsman and a commissioning engineer.
The exposure to significant levels of asbestos dust ceased in 1982 when the defendant stopped using asbestos.
Were the defendant's site otherwise pristine, this event would fix the date on which the plaintiff was last employed by the defendant in employment to the nature of which the disease of mesothelioma was due.
Between 1965 and 1975 James Hardie dumped large quantities of asbestos material at the defendant's site.
The James Hardie material was dumped upon the area on the northwest corner of the property which was a car park.
The material dumped on the car park was sealed by 1983, as by that date the car park was covered with bitumen.
The James Hardie material was also dumped in the area to the south of the factory and to the north of the embankment of the Parramatta River.
The material dumped at the rear of the factory was up to three metres deep.
When the material was first dumped, bits of fibro and dust were visible on the ground.
That area was never covered or sealed.
When the Department of Environment Climate Change and Water inspected the defendant's site in December 2007, asbestos material which had been dumped by James Hardie many years before was still visible on the ground.
When Mr Cassidy worked at the defendant's factory, and right up until he ceased in 1984, westerly wind blew the asbestos dust from the rear of the factory north into the factory itself and to locations outside the factory.
That was still the position as at 1985 when Mr Muller ceased work at the defendant's premises.
Given that there was still exposed asbestos material present in December 2009 when the Department made its inspection of the rear of the defendant's site, I find that asbestos dust from the dumped James Hardie material at the rear of the factory was blown away from the river and across the defendant's entire site right up until the Department's observations in December 2009.
The plaintiff ceased to have significant exposure from working in the factory itself or attending power stations after March 1983. The plaintiff ceased to have exposure from attendance at the dumping ground at the rear of the factory after March 1983.
After March 1993 and until November 1987 the plaintiff parked his car either in the main car park or across the road in the Council car park and walked to the office building at the start of the day, and away from the office building and towards his car at the end of the day.
I find that given that he worked in this fashion between March 1983 and November 1987 when he ceased work for the defendant, the plaintiff was exposed to asbestos dust which on windy days blew from the direction of the river towards the direction of South Street and the front of the defendant's site.
There was a risk of a real kind that the disease of mesothelioma would be contracted from the working conditions of the plaintiff between March 1983 and November 1987.
That risk came about not through direct work with asbestos, but through the plaintiff's movements in, out of and around the defendant's premises in the course of employment, which exposed the plaintiff to the risk of inhalation of asbestos particles.
The nature of the plaintiff's employment between March 1983 and November 1987 exposed the plaintiff to a risk of contracting the occupational disease of mesothelioma from which he suffers.

CONCLUSIONS

The date on which the plaintiff was last employed by the defendant, in employment to the nature of which the disease was due, was his last day of work being 6 November 1987.
Subject to a matter of law considered below, the insurer on risk on that date was the fourth cross-defendant Allianz Insurance Workers Compensation (NSW) Limited.

SECTION 151AB(1)(b)

No submissions were directed by counsel in relation to s 151AB(1)(b).
Set out in full, s 151AB(1) provides: "(1) If an employer is liable independently of this Act for damages for an occupational disease contracted by a worker, the following provisions have effect for the purposes of any policy of insurance obtained by the employer: (a) the liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due, subject to paragraph (b), (b) if the worker was employed by the employer in employment to the nature of which the disease was due both before and after the relevant commencement, the liability is taken to have arisen both when the worker was last employed by the employer in employment to the nature of which the disease was due before the relevant commencement and when the worker was last employed by the employer in employment to the nature of which the disease was due after the relevant commencement."
Section 151AB(1)(b) speaks of the identification of a date "both before and after the relevant commencement". Section 151AB(6) defines "relevant commencement" to mean 4.00pm on 30 June 1987.
In this case s 151AB(1)(b) has to be considered, as the plaintiff was employed by the defendant in employment to the nature of which the disease was due both before and after 4.00pm on 30 June 1987. As luck would have it, the third cross-defendant Allianz Australia Insurance Limited was the workers compensation insurer of the defendant up to 30 June 1987 and the fourth cross-defendant Allianz Insurance Workers Compensation (NSW) Limited was the workers compensation insurer of the defendant after 30 June 1987, and, crucially, on 6 November 1987 which is the date recited above.
Thus by operation of s 151AB(1)(b), the liability is taken to have arisen both on 30 June 1987 when the third cross-defendant was on risk and on 6 November 1987 when the fourth cross-defendant was on risk.
So far as I know, this may not matter in practical terms, as I note that both insurers were represented by the same solicitor and senior counsel.
The issue of how the liability is to be borne between two insurers is dealt with by s 151AB(2) which provides as follows: "(2) In a case in which subsection (1)(b) applies, 2 insurers will be liable under policies of insurance to indemnify the employer (or pay damages to the worker) and the following provisions apply with respect to those insurers (referred to in this subsection as the "responsible insurers"): (a) 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. (b) The responsible insurers can however agree as to which of them is to be primarily responsible for the claim or the court can order that one of them is to be the insurer primarily responsible, and any such agreement or order overrides paragraph (a). (c) The insurer who is primarily responsible for the claim is to act for both the responsible insurers in respect of any claim for the damages and has sole liability for the claim (that is, it is to indemnify the employer for the full amount of the damages or is to pay the full amount of damages to the worker, without any right to a contribution from any other insurer, except as provided by paragraph (d)). (d) The insurer who is primarily responsible is entitled to recover from the other responsible insurer half of the amount paid as damages to the worker, half of the amount paid in respect of the worker's legal costs and half of such reasonable amount as the insurer primarily responsible may have incurred in respect of its own legal expenses in the matter."
While no submissions were directed to the operation of s 151AB(2), it seems to me plain that the "responsible insurer" who has to indemnify the defendant is the fourth cross-defendant, as it is the insurer "in respect of the employer's liability that arose after the relevant commencement" - s 151AB(2)(a).
As the balance of s 151AB(2) notes, the insurers can agree between themselves to some different outcome - s 151AB(2)(b) - and the insurer "primarily responsible" can have a recovery against the earlier "responsible insurer" - s 151AB(2)(d).
As I have said, this issue was not raised during submissions, and it may be that it has no practical significance. However, I indicate that if any party wishes to make submissions regarding the effect of s 151AB(1)(b) and s 151AB(2), I will reconsider that matter pursuant to s 13(6) of the Dust Diseases Tribunal Act 1989.
The matter is going to have to come back to me, after delivery of this judgment, in any event, to deal with costs applications. At that time any party wishing to raise the matters above should do so.

ORDERS

My orders are as follows: 1. Order the fourth cross-defendant to indemnify the defendant/cross-claimant for: 1. the defendant's share of the damages and costs payable by the defendant to the plaintiff; 2. the defendant's costs of defending the plaintiff's claim. 1. Grant leave to any party pursuant to s 13(6) of the Dust Diseases Tribunal Act 1989 to seek a reconsideration of that part of the judgment dealing with s 151AB(1)(b) and s 151AB(2) of the Workers Compensation Act 1987. 2. Reserve the issue of costs of the Amended Second Cross-Claim. 3. List the matter for Directions at 9.30am on Thursday, 14 December 2017 to deal with any application for reconsideration and any applications for costs. 4. Note that at the Directions Hearing on 14 December 2017, I expect all parties to be in a position to deliver a timetable for the further consideration of any outstanding matters.

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: 07 December 2017

(2000) 19 NSWCCR 720

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