Application for Special Leave to Appeal - Appeal - Application for special leave to appeal and appeal heard concurrently - Miscarriage of justice - Failure to consider arguments raised.

Workers Compensation Act 1987 (NSW), s 22.

3 Set aside Order No 2 of the Court of Appeal of New South Wales dismissing costs of that cross-appeal.

4 Remit the cross-appeal of QBE Insurance Limited to the Court of Appeal of New South Wales to be re-determined by that Court.

5 Respondents to pay the appellant's costs in this Court. The costs of the cross-appeal in the Court of Appeal to abide by the outcome of its re-determination.

GAUDRON, McHUGH AND GUMMOW JJ. QBE Insurance Limited ("QBE") seeks special leave to appeal against an order of the Supreme Court of New South Wales (Court of Appeal). That order dismissed a cross-appeal by QBE against an order made by the Compensation Court of New South Wales apportioning liability for workers' compensation payments among three insurers, one of whom was QBE. The first respondent, Switzerland Insurance Workers Compensation (NSW) Limited ("Switzerland NSW"), was one of the other two insurers whose liability was apportioned.

2. QBE contends that the Court of Appeal dismissed its cross-appeal without considering the only ground of appeal upon which it relied. The parties to the special leave application agree that, if special leave to appeal is granted, the Court, as presently constituted, should hear and determine the appeal by QBE. In our opinion, special leave to appeal should be granted and the appeal should be allowed.

3. The apportionment of liability arose out of proceedings commenced in the Compensation Court by Mr Wayne Burley against Linfox Transport (Australia) Pty Ltd ("Linfox") and H and D McRae Carriers Pty Ltd ("McRae"). Mr Burley sought compensation for incapacity resulting from back injuries sustained in the course of his employment as a truck driver with those companies.

4. On 13 May 1986, Mr Burley sustained an injury while employed by Linfox. The Compensation Court (Duck J) found that in that incident Mr Burley suffered injuries to the two lumbar discs at the L4-5 and L5-S1 levels. He was off work for about 10 weeks.

5. In September 1986, he left the employ of Linfox to work for McRae. He was employed by that company from September 1986 until about 26 June 1990, working as a truck driver until June 1989 and for the remaining period as an office worker. During the course of his employment with McRae, Mr Burley sustained two further injuries to his back. The first occurred on 2 November 1986 as the result of an incident, the details of which he had forgotten when he gave evidence in the Compensation Court. However, he said that something happened to him at work which caused further pain in his lower back, as a result of which he went home "for a time". The second injury occurred between 2 November 1986 and 1 June 1989 "by virtue of the nature and conditions of his employment" as a truck driver with McRae. Duck J found "that the continued driving of semi-trailers after he had injured discs in his low back, aggravated the symptoms in his low back".

6. On or about 26 June 1990, Linfox took over the operations of McRae. Mr Burley was then employed by Linfox in the office and later, probably in December 1991, as a truck driver. On 30 December 1991, he again injured his back in the course of his employment. Duck J found that this incident "produced a marked aggravation of symptoms and was ultimately sufficient to have the applicant off work for seven months". The company terminated his employment on 15 September 1992.

7. As a result of his injuries, Mr Burley has undergone surgery, has been off work for lengthy periods, and has been partially incapacitated for work since 19 April 1991. Duck J made various awards of compensation for Mr Burley's injuries and periods of incapacity including an award for continuing incapacity and lump sum payments under ss 66 and 67 of the Workers Compensation Act 1987 (NSW) ("the Act") for permanent injury and pain and suffering.

8. At the time of Mr Burley's injury on 13 May 1986, QBE was the insurer of Linfox. When the incident of 2 November 1986 occurred, Switzerland and General Insurance Company Ltd ("Switzerland General") was McRae's insurer. After 30 June 1987, Switzerland NSW became McRae's insurer. When Linfox took over McRae's operations, Switzerland NSW also became its insurer.

9. Pursuant to the provisions of s 22 of the Act, Duck J apportioned the liability of the respective employers and their insurers for the awards of compensation that he had made in favour of Mr Burley. His Honour held that Linfox was 70 per cent liable and McRae 30 per cent liable for the awards. He apportioned Linfox's 70 per cent liability as to 60 per cent to QBE and 10 per cent to Switzerland NSW. He apportioned McRae's 30 per cent liability as to 7.5 per cent to Switzerland General and 22.5 per cent to Switzerland NSW. That is to say, his Honour held that QBE should be liable for 60 per cent of the awards payable to Mr Burley.

10. Switzerland NSW and McRae appealed to the Court of Appeal against all awards made in favour of Mr Burley except those arising out of the injury of 13 May 1986. QBE, which was a respondent to the appeal, cross-appealed on various grounds, one of which was:

"12. That His Honour, having found that the last injury made an

effective causative contribution to the worker's resulting condition, erred in not holding the insurer on risk at that time to be wholly responsible for any compensation payable."

11. On the hearing of the cross-appeal, QBE relied only on ground 12. Its written submissions stated:

"Accordingly, QBE says that the worker's incapacity whilst

employed by Linfox was materially contributed to by injuries that occurred in periods of risk other than its own. The QBE accordingly relies on the authority of this Court in The Insurers Guarantee Fund - NEM General Insurance Associated Limited (in liquidation) v GIO General Limited, unreported, Court of Appeal, 15 March 1994, MLC Insurance Limited v Pinto and Anor, NSW Court of Appeal (1994) 8 ANZ Insurance Cases 61-211 and Insurance Guarantee Fund NEM General Insurance Associated Limited v Manufacturers Mutual Insurance and Ors, unreported, Court of Appeal, delivered 12 August 1994.

The findings of His Honour clearly indicate that the totality of the injuries suffered by the worker had a cumulative effect on his capacity for work, so that the last injury made a causative contribution to the incapacity which resulted (see Handley J in NEM v MMI, 12 August 1994).

QBE submits that there is no reason why the last insurer for Linfox should not pay all compensation payments, whether or not they are in the nature of weekly payments or lump sum compensation and the like."

12. These submissions were supported by oral argument on the hearing of the cross-appeal.

13. It is certainly arguable that The Insurers' Guarantee Fund v GIO (1) establishes that, when a worker has a single partial incapacity caused by a succession of injuries, the insurer who is liable for that incapacity is the insurer who was on risk when the last causative injury occurred. According to that decision, insurers who were on risk in respect of the earlier injuries are not liable to contribute. Apportionment under s 22 of the Act is available, therefore, only when there is a common liability of two or more employers or two or more insurers for the same compensation for an incapacity (2). These propositions are the basis for QBE's contentions (1) that Linfox is wholly responsible for Mr Burley's continuing incapacity and the awards made in respect of it because the injury of 30 December 1991 was the last causative injury of that incapacity; and (2) that Switzerland NSW, being the only insurer on risk at that time, must bear all liability for those awards.

14. If QBE is correct about the settled doctrine of the Court of Appeal of New South Wales in interpreting s 22 of the Act, then the questions for determination on the cross-appeal were whether Mr Burley had a single partial incapacity caused by a succession of injuries, whether the injury of 30 December 1991 was the last causative injury of that incapacity, and whether Switzerland NSW was the only insurer on risk in respect of that injury. If those questions were answered in the affirmative, QBE was not liable for the awards in respect of the continuing incapacity.

15. QBE contends that Duck J did not apportion the liability of either the employers or the insurers in accordance with Insurers' Guarantee Fund. Thus, in apportioning liability between Linfox and McRae, his Honour said:

"As between the first and second respondent (that is Linfox and

McRae) it seems to me clear enough that the major damage was done in the episode of May 1986. Against that, the applicant then drove trucks for approximately three years, during the course of which he was getting worse and ultimately the need for surgery arose because of the worsening symptoms. Further and by dint of a strange circumstance, the last injury was again suffered in the employment of the first respondent.

The matter is not susceptible of close mathematical analysis. It seems to me that the first respondent should bear 70% of the responsibility for the awards and the second respondent 30%."

16. In the course of apportioning liability between the insurers, his Honour said that, as between the incidents of May 1986 and 30 December 1991, that is, the two injuries for which Linfox was liable:

"(I)t seems to me clear enough that the major harm was done in

the first incident. The second incident has some part to play and, doing the best I can, I propose to apportion the liability to pay compensation 60 percent to QBE, which company was on risk up to 30 June 1986, and 10 percent to Switzerland Insurance Workers Compensation (NSW) Limited, which company was on risk at the time of the second incident."

17. His Honour then dealt with the apportionment of the liability of the insurers of McRae and concluded his judgment by stating:

"I apportion the first respondent's (Linfox's) liability to pay

compensation pursuant to section 66 (the lump sum provisions) and to make weekly payments between the relevant insurers as follows: as to 60 percent to be borne by QBE Insurance, as to 10 percent to be borne by Switzerland Insurance Workers Compensation NSW Limited.

I apportion the second respondent's (McRae's) liability to pay compensation pursuant to section 66 and to make weekly payments between the relevant insurers as follows: as to one-quarter by Switzerland General Insurance Co Limited and as to three-quarters by Switzerland Insurance Workers Compensation NSW Limited.

The section 60 expenses ought to be apportioned similarly having regard to the date on which they were incurred."

18. QBE contends that his Honour did not apportion liability in accordance with Insurers' Guarantee Fund notwithstanding that he had found that Mr Burley had a single partial incapacity caused by a succession of injuries, the last of which occurred on 30 December 1991 when Switzerland NSW alone was on risk. To support this claim QBE points to statements in his Honour's judgment when he gave judgment on Mr Burley's claim for compensation. Thus, his Honour said:

"(I)t seems to me that his incapacity for work is the PRODUCT of

injuries received before the commencement of the Workers Compensation Act 1987 and afterwards." (our emphasis)

19. Further, in making his award pursuant to s 66 of the Act, his Honour said:

"(The) impairment is the PRODUCT of the various injuries I have

described. They are injuries received both before the commencement of the Workers Compensation Act and afterwards. The injuries received have been in the employment of both the first and second respondent." (our emphasis)

20. It is clear that Duck J did not apportion liability upon the basis for which QBE contends. Whether his Honour was referred to Insurers' Guarantee Fund is not clear, but the point was clearly raised in the Court of Appeal by the notice of cross-appeal and the written submissions filed by QBE. Furthermore, the transcript of argument in the Court of Appeal shows that QBE argued the point in that Court and that counsel for Switzerland NSW did not argue that the principle of Insurers' Guarantee Fund was inapplicable. However, the judgment of the Court of Appeal gives no indication that the point was considered. In dealing with the cross-appeal, Mahoney JA, giving the judgment of the Court of Appeal, said:

"The question remains whether the liability of the Linfox

company was properly apportioned between QBE (sixty) and as to Switzerland (ten). This apportionment presumably was made upon the basis to which I have referred, namely, that, as his Honour said, 'the major harm was done in the first' injury. As the judge indicated, in his earlier judgment, apportionment in the relevant circumstances was 'not susceptible of close mathematical analysis'. I am not satisfied that the judge erred in the apportionment that he made."

21. The judgment of the Court does not refer to the authorities or to the principle for which QBE contends. Nor does it make any evaluation of the findings of Duck J to determine whether Mr Burley had sustained a single partial incapacity caused by a succession of injuries, whether the injury of 30 December 1991 was the last causative injury of that incapacity or whether Switzerland NSW alone was on risk when that injury occurred.

22. Mr Bennett QC, for the respondents, contended in this Court that the case did not fall within the Insurers' Guarantee Fund line of cases. He submitted that the cases in the Supreme Court of New South Wales on s 22 of the Act fall into two categories:

(1) if there are successive injuries having compensable cumulative effect and each of them in the absence of the others would have been compensable, s 22 permits apportionment;

(2) if there are successive injuries having compensable cumulative effect but none of them in the absence of the others would have been compensable, s 22 does not permit apportionment and only the employer at the time of the last injury is liable.

23. Mr Bennett contends that, upon the findings of Duck J, the present case fell into the first category and that his Honour was entitled to apportion all of the liability under the awards.

24. Whether or not Mr Bennett's categorisation of the authorities is correct is debatable. So is QBE's contention that the case falls within the principle that it claims is the basis of Insurers' Guarantee Fund. But neither of those matters is relevant. The ground of cross-appeal raised by QBE was plainly arguable, and the judgment of the Court of Appeal gives no indication that the Court considered ground twelve. If it did, the reasons given by the Court cannot be regarded as proper reasons for rejecting that ground. In either case, there has been a miscarriage of justice calling for the intervention of this Court.

25. Special leave to appeal should be granted, and the appeal allowed with costs. The order of the Court of Appeal dismissing QBE's cross-appeal should be set aside. The matter should be remitted to that Court to hear and determine the cross-appeal.

2 See Insurers' Guarantee Fund (1994) 33 NSWLR 247 at 266-267 per Handley JA.