MANUFACTURERS' MUTUAL INSURANCE LTD v ST LUKES HOSPITAL SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, CLARKE and HANDLEY JJA 8 August 1991, 14 August 1991 [1991] NSWCA 188 INSURANCE — double insurance common law extension of workers' compensation policy — public liability policy — which policy applies — held: Workers' compensation policy applies declaration to that effect reworded. INSURANCE — double insurance — workers ' compensation cover — public liability cover — worker injured in fall in hospital premises — whether common law extension of workers ' compensation policy applies — if so, public liability cover excluded — held: Workers ' compensation policy applies — new declaration to that effect substituted. WORKERS' COMPENSATION — insurance — indemnity to employer common law extension — scope of indemnity — whether workers' compensation or public liability policy applies to indemnify employer in respect of injury to worker on premises — held: Workers ' compensation policy applies — declaration made. Workers' Compensation Act 1926. Kirby P I agree with Handley JA. Clarke JA I agree with Handley JA. Handley JA This appeal from a declaratory order made by Brownie J raises a question as to the proper construction of the compulsory employers indemnity policy prescribed by the regulations under the Workers Compensation Act 1926. On 14 July 1986 Helen Levido who was employed by St. Lukes Hospital and a worker within the meaning of the Act sustained injuries as a result of a fall in premises owned by the hospital. In 1987 she commenced proceedings in the Common Law Division of this Court to recover damages for her injuries. The hospital had in force at the relevant time an employers indemnity policy with the appellant and also a public liability policy with the second respondent. Neither insurer would accept liability under its policy to indemnify the hospital against any judgment in favour of the plaintiff in the common law action. Accordingly the hospital applied by summons in the Commercial Division seeking a declaration as to its entitlement to indemnity under one or other of the policies. The parties agreed, for the purposes of the proceedings, upon certain facts. However paragraph five of the Agreed Statement merely sets out the material allegations in the plaintiffs statement of claim. The relevant cover clause in the employer's indemnity policy provides: "...IF... the Employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such employer, or to pay an unlimited amount in respect of his liability independently of the Act for any injury to any such person THEN, and in every such case the Insurer will indemnify the Employer..." Brownie J made a declaration in the following terms: "Tf, in proceedings No. 14218 of 1987 in the Common Law Division of the Court between Helen Levido as plaintiff and [the hospital] as defendant Helen Levido proves the facts set forth in para 5 in the Statement of Agreed Facts, Exhibit A in the present proceedings, then the second defendant is bound under 2 UNREPORTED JUDGMENTS Policy No MW220167189 to indemnify the [hospital] (subject to the terms of that policy) in respect of any sums which it shall become liable to pay to Helen Levido in those circumstances." The insurer under the employer's indemnity policy has appealed to this Court. The appellant's principal submission was that its policy did not cover the hospital in respect of its liability to the plaintiff as an occupier. The appellant further submitted that when the plaintiff slipped and fell in premises provided by the hospital for staff accommodation she was not working, but on her way to work. Accordingly at the time she was not a worker, and any common law liability to her was outside the cover. A related submission was that "injury" in the common law extension bore its defined meaning in the Act and did not apply to accidents on journeys which did not arise out of or in the course of the worker's employment. There was no dispute that the hospital is liable to pay compensation under the Act in respect of the plaintiff's injuries either because they arose in the course of her employment or in the course of a daily or other periodic journey. There was also no dispute that the appellant is bound to indemnify the hospital in respect of its liability to the plaintiff under the Act. Nevertheless it was submitted that the common law liability (if any) of the hospital to the plaintiff as an occupier was not within the common law extension. In my judgment the language of the extension "... to pay an unlimited amount in respect of his liability independently of the Act for any injury to such person" applies without any doubt to the hospital's common law liability (if any) to the plaintiff. Since the extension refers in terms to liability independently of the Act there is no reason whatever for reading the word "injury" there as having its artificial statutory meaning. The only question therefore is whether the plaintiff is "any such person" for the purposes of the extension. This is a reference back to the person identified in the earlier part of the cover clause. This part of the clause, so far as relevant, applies to the employer's liability "to pay compensation under the Act to... any person who is... a worker of such employer". The hospital as employer was liable to pay compensation under the Act to the plaintiff as its worker. The plaintiff was therefore "any such person" within the common law extension. In other words if an injury to a worker is compensable and within the basic cover, any liability of the employer in respect of the same injury to that worker which arises independently of the Act will be within the extension. It follows in my judgment that the appeal fails in substance and should be dismissed. However it became clear in the course of argument that the form of the declaration made by Brownie J created certain difficulties. Proof of the facts in para 5 of the Agreed Statement would not create any issue estoppels as between the hospital and the appellant or necessarily bind the appellant, particularly if it did not take over the conduct of the common law proceedings. Paragraph (ii) and (iii) were expressed in the alternative and this might have created some embarrassment. Moreover the hospital might well be entitled to indemnity from the appellant on the basis of facts other than those referred to in the declaration in its present form. Accordingly in my opinion this Court should substitute a declaration that on the true construction of the employer's indemnity policy No MW220167189 issued to St Lukes Hospital the appellant is bound, subject to the terms and conditions of the policy, to indemnify the Hospital in respect of its liability (if WAANUFACTURERS' MUTUAL INSURANCE LTD v ST LUKES HOSPITAL (Handley JAB any) independently of the Act to the plaintiff in proceedings No 14218 of 1987 in the Common Law Division if the hospital was liable to pay compensation under the Workers Compensation Act to the plaintiff in respect of the injury the subject of such proceedings. Since the appeal has failed in substance, and any difficulties with the form of the declaration could have been dealt with by the judge prior to the order being entered the appellant must pay the costs of both respondents. ORDERS 1. Appeal allowed in part; 2. Set aside the declaration contained in the orders of Brownie J dated 6 October 1989 and entered on 13 March 1990; 3. In lieu of the aforesaid declaration, declare that on the true construction of the employer's indemnity policy number MW220167189 issued to St Lukes Hospital, the appellant is bound, subject to the terms and conditions of the policy, to indemnify the Hospital in respect of its liability (if any) independently of the Act to the plaintiff in proceedings number 14218 of 1987 in the Common Law Division if the Hospital was liable to pay compensation under the Workers Compensation Act to the plaintiff in respect of the injury the subject of such proceedings; and 4. The appellant to pay the costs of the respondents of the appeal. Counsel for Appellant: W P Kearns Ist Solicitors for Appellant: A O Ellison and Co Counsel for Respondent: C R Hoeben Solicitors for 1st Respondent: Ebsworth and Ebsworth Counsel for 2nd Respondent: J Poulos QC / S T White Solicitors for 2nd Respondent: Abbott Tout Russell Kennedy