QBE INSURANCE LIMITED v NOEL BULL

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

CA 40317/99 DDT 158/95 MASON P POWELL JA FITZGERALD JA

QBE INSURANCE LIMITED & ANOR v NOEL BULL & ORS JUDGMENT 1 THE COURT: At the conclusion of argument the Court refused leave to appeal and dismissed the summons with costs. Our reasons follow. 2 It is well known that litigation involving "common law" claims by plaintiffs suffering from dust diseases such as mesothelioma places immense pressure upon the legal system, including judges, court staff, barristers and solicitors and, most of all, the plaintiffs themselves. 3 This type of litigation frequently involves multiple defendants. These are not just successive employers of the plaintiff, but also manufacturers and suppliers of goods said to contain asbestos or other harmful ingredients. Cross claims for contribution and indemnity are the order of the day. The Court was informed that it is sometimes the practice of the Dust Diseases Tribunal to defer determining issues of contribution and indemnity until after the matter of the plaintiff's liability is resolved. Whether this involves the formal separation of issues or the mere deferral of argument relevant to disputes between the defendants and third parties is a little unclear. No doubt the practice varies depending on the circumstances. 4 Even with deferral or postponement of issues other than those touching liability as between the plaintiff and the defendant(s) this type of litigation is complex, costly, contentious and above all crushing as it bears upon a plaintiff who may be in the final days or weeks of life. Little wonder that Parliament has seen fit to address the substantive and procedural aspects of the further layer of disputation involving multiple insurers of a single defendant. This is the role of ss151AB and 151AC of the Workers Compensation Act 1987 ("the WC Act"). 5 Section 151AB was inserted in 1989. There had been a similar provision in the 1926 legislation, but it was not included in the WC Act when first passed. The history and purpose of such a provision were examined in CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169. In that case Gleeson CJ (with whom Mahoney JA and Meagher JA agreed) said (at 171): Section 151 AB deals with a problem of insurance that is particularly likely to arise in the case of occupational diseases contracted gradually by workers. The general purpose of the section is stated within it. It is to identify, from amongst a number of insurers under policies of insurance obtained by a single employer for different periods, one insurer which is to indemnify the employer for the full amount of the employer's liability to a worker who has contracted an occupational disease of the kind mentioned.

See also MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289 at 293. 6 Section 151AB applies to "occupational diseases" as defined in subs (6) thereof, a definition that includes, but is not confined to, a dust disease as defined in the Workers' Compensation (Dust Diseases) Act 1942. 7 The Workers Compensation Legislation Amendment (Dust Diseases and Other Matters) Act 1998 (No 130 of 1998) commenced on 1 December 1998. Several enactments dealing with dust diseases were amended. A number of the amendments seek to achieve what was described in the Minister's second reading speech in the Legislative Assembly as "a more humane approach" for addressing the procedural and other difficulties faced by plaintiffs "engaged in a race against time to have their pain and suffering damages claim finalised before death, for the benefit of their family" (Parliamentary Debates (Hansard), Legislative Assembly, 29 October 1988, p66). The Minister continued (at 67): Several of the other items in the bill aim to make resolution of common law claims in the Dust Diseases Tribunal faster and more efficient. One of those items involves situations where the worker's employer has been covered by two or more insurers over the period during which the worker was employed in dust-exposed duties. At present, disputes between those insurers about which of them is liable have the capacity to hold up payment of damages to workers who have a clear entitlement. The proposed changes address that problem by designating the last relevant insurer as the one responsible for dealing with the worker's claim. Separate arbitration arranged through the tribunal is then provided to resolve the insurance issues, following determination of the worker's claim. The bill gives the insurers in these cases scope to agree on some other process to resolve their dispute. Arbitration will apply as a kind of last resort if the dispute is not otherwise settled by the time the tribunal gives its judgment in the worker's proceedings. The tribunal is also given the flexibility to make orders under the rules for exemption from the designated insurer and arbitration provisions.

8 This passage summarises the purpose and broad effect of s151AC of the WC Act, which was introduced by Act No 130 of 1998, and with which this application is concerned. 9 Section 151AC is a long and complex provision and it is unnecessary to set it out in full. Subsection (1) states that the section applies in relation to an employer who is liable independently of the WC Act for damages for a dust disease contracted by a worker, where there is a dispute as to which of two or more insurers in a category of insurers is liable to indemnify the employer under any of the provisions of s151AB. In light of the obvious purpose of the section and the express provisions to which we refer later, the words "who is liable" should be read as including employers who are claimed to be liable. 10 Subsection (2) states that, for the purposes of s151AB, and pending resolution of the dispute (emphasis added), the insurer who is the "designated insurer" in the relevant category under the section is to be treated as being the insurer who is so liable to indemnify the employer. Subject to this stipulation, the subsection indicates that s151AB has effect, and is to be construed, accordingly. 11 Subsection (3) describes in detail how the designated insurer is to be identified in different circumstances. Nevertheless, subs (4) provides that the insurers in a category may agree as to which of them is to be the designated insurer. Absent agreement, the Dust Diseases Tribunal is also empowered by that subsection to order that any one of them is to be the designated insurer. Any such agreement or order overrides subs (3). 12 Subsection (5)(a) provides, by way of addition to the provisions of s151AB, that the designated insurer who is the insurer liable under s151AB(1) is to act for all the insurers in the relevant category "in the carriage of the insurance aspects of the claim". (Subs 5(b) makes a corresponding provision with respect to the designated insurer who is the insurer primarily responsible under s151AB(2).) The expression "carriage of the insurance aspects of the claim" is not defined. 13 Subsection (6) gives the other insurers in dispute the right, with the leave of the Tribunal, to make submissions to the Tribunal relating to the amount of damages payable to or in respect of the worker. 14 Several provisions make it plain that, when appointed, the designated insurer will, as insurer, exercise the rights and duties of the employer with reference to the litigation. Thus, the designated insurer is "pending resolution of the dispute …is to be treated as being the insurer who is … liable to indemnify the employer" (subs (2)). That insurer is "to act for all the insurers in the relevant category … in the carriage of the insurance aspects of the claim" (subs 5(a)). The task may not be easy and problems and conflicts may arise for which litigants and courts will need to devise appropriate procedures. However, it is difficult to envisage a clearer legislative statement that, as a general rule, the interests of the plaintiff in the speedy determination of the main claim are not to be prejudiced or impeded by disputes among the insurers. 15 The dispute as between the various insurers in the relevant category or categories is intended by s151AC to be resolved separately from the plaintiff's dispute with the employer. Subsection (7) provides expansively that the dispute may be resolved "by such processes as the parties to the dispute agree or as are otherwise available". Subsection (8) provides, as a final resort, that the dispute is to be resolved by arbitration under s38 of the Dust Diseases Tribunal Act 1989, unless the Dust Diseases Tribunal otherwise orders. Section 38 was also inserted by Act No 130 of 1998. It contemplates the making of rules dealing with every conceivable aspect of that type of dispute resolution. Specifically s38(2)(d) contemplates that the rules may require the plaintiff and other persons to give evidence at an arbitration. (The possibility that evidence might be taken on commission for the purpose of such arbitration if circumstances required was touched upon in argument, but this was not a matter considered in the context of the present case.) 16 So much for the general thrust of s151AC. Its obvious policy is properly to be given effect in the exercise of any judicial discretion touching the proceedings. Parliament has spoken clearly about the priority of the plaintiff's procedural interests, in the first instance. But the provision is not a straitjacket. Flexibility and innovation are clearly contemplated (see, eg subs (4) and (7)). 17 In this category of intended flexibility, reference should be made to s33(4)(n) of the Dust Diseases Tribunal Act 1989, a provision also inserted by Act No 130 of 1998. It is referred to in the last sentence of the passage from the Minister's second reading speech which is quoted in par 7 above. That power has been exercised in r12 of the Dust Diseases Tribunal Rules, which commenced from 18 December 1998. The rule provides that the Tribunal: may if it thinks fit order that all or any of the provisions of section 151AC of the Workers Compensation Act 1987 do not apply in or in relation to a particular case or in relation to a particular insurer: (a) on its own motion, or (b) on application by a party or by an insurer who is not a party.

The proceedings in the Dust Diseases Tribunal 18 Mr Noel Bull sued seven defendants in the Tribunal, four being successive employers and three being suppliers of asbestos to those employers. The fourth defendant is McNeal Engineering Pty Limited (hereafter referred to as "the employer"). 19 The employer was covered with respect to workers' compensation and common law liability with four different insurers during the period of the plaintiff's employment in which he was allegedly exposed to the risk of contracting the relevant "occupational disease". 20 The proceedings were commenced in October 1995 and are, we understand, well advanced but for problems stemming from disputes between the insurers of the employer as to which insurer is liable to indemnify pursuant to s151AB in the event of liability being found against the employer. 21 On 9 February 1999 the four insurers of the employer agreed that the third opponent Mercantile Mutual Insurance (Workers Compensation) Limited ("MMI") should be appointed the designated insurer pursuant to s151AC. A consent order to that effect was made that day. It would appear that the claimants QBE Insurance Limited ("QBE") and TGI Australia Limited ("TGI"), being two other insurers of the employer, had become parties to the proceedings in the Tribunal by cross-claims presumably emanating from the employer. This Court was informed that they had no involvement with any of the other defendants sued in the proceedings. 22 On 12 and 19 February respectively, QBE and TGI applied for leave to be separately represented at the hearing. The form of relief claimed in the Notices of Motion did not seek to limit in any way the right of participation sought by the respective applicants. However, we understand that it was made clear that what they wanted was the right to cross-examine the plaintiff during the main proceedings. This cross-examination would be directed to the otherwise deferred dispute between the various insurers of the employer as to their several liabilities in accordance with s151AB. 23 The applications were dismissed by O'Meally P on 23 March 1999. After recounting the facts and referring to ss151AB and 151AC his Honour adverted to the issues lying behind the dispute between the respective insurers. O'Meally P held that the merits or otherwise of that dispute did not impinge upon the question of construction of s151AC. His Honour set out s151AC in full. He noted the mischief identified in the Minister's second reading speech. He observed that TGI had submitted that the matter on which the applicants wished to cross-examine the plaintiff was concerned with the dispute between the insurers themselves, and did not involve the "insurance aspects of the claim". 24 The learned President saw two factors as operating against TGI's argument. First was the implication stemming from s151AC(6), which conferred a right to appear (by leave) for the limited purpose of making submissions as to damages. Second were the provisions in subs (7)ff for the separate, and later, resolution of disputes between insurers. 25 O'Meally P noted that cross-examination of the plaintiff on the issue of risk of disease would extend the length of the trial and make resolution of the plaintiff's claim slower and less efficient. In these circumstances the grant of leave sought would frustrate the intent of the section. 26 Having regard to the material before us, including the material indicating how the matter was fought below, we are satisfied that this is not an appropriate case in which to grant leave to appeal. 27 We are unpersuaded that there is an arguable case that O'Meally P erred in the refusal of the claimants' applications. He merely applied the policy and express terms of s151AC in a particular factual context. We do not read the judgment as denying the capacity of the Tribunal to respond flexibly to the needs of insurers in a proper case. 28 The nature and possible merits of the dispute between the various insurers remain shadowy and problematic. It is difficult to appreciate what the issue is, in the light of the refusal of special leave to appeal from this Court's decision in MMI Insurance Compensation (NSW) Limited v Baker and this Court's recent decision in FAI Traders Insurance Co Limited v HIH Winterthur Workers Compensation (NSW) Pty Limited (1998) 45 NSWLR 257. In any event, the merits or otherwise of that dispute do not impinge upon the construction of s151AC beyond providing an exemplar for its application. 29 Nothing appears on the record to show that the claimants will be prejudiced by deferral of the leading of evidence referable to their dispute inter se until after the conclusion of the main proceedings as between the plaintiff and his seven nominated defendants. There is nothing to indicate the present state of the plaintiff's health or its prognosis. The dilatory way in which the proceedings have been conducted in the Tribunal and in this Court by the claimants suggest that this has not been a factor so far as they are concerned. 30 We do not read his Honour's judgment as denying in any way the power of the Tribunal to order that all or any of the provisions of s151AC not apply in relation to cases before it (r12). It is inconceivable that the learned President was unaware of this power. What appears to be the case is that it was the claimants who overlooked it both at the time when they joined in the application for MMI to be appointed the designated insurer, and when they made their unsuccessful applications to be permitted to be separately represented so that their counsel could cross-examine the plaintiff.

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