INSURERS GUARANTEE FUND NEM GENERAL INSURANCE ASSOCIATION LTD v MANUFACTURERS MUTUAL INSURANCE LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY, SHELLER and POWELL JJA 12 August 1994, 12 August 1994 [1994] NSWCA 149 WORKERS COMPENSATION — APPORTIONMENT BETWEEN PARTIES MUTUAL INSURANCE LTD and ORS WORKERS' COMPENSATION — liability of successive insurers of employer of injured worker — trial judge held worker entitled to compensation as a result of injury causing total incapacity when last insurer on risk — whether trial judge correct to apportion liability under s22 Workers' Compensation Act 1987 — held: he was not — s22 only authorises apportionment between employers and insurers where concurrent awards for the same compensation have been or could have been made against two or more employers as a result of two or more injuries: Insurers Guarantee Fund — NEM General Insurance Ltd (In Liquidation) v GIO General Ltd (1994) 33 NSWLR 247; MLC Insurance Ltd v Pinto and Anor (1994) 8 ANZ Insurance Cases 75336 applied. WORKERS' COMPENSATION — apportionment — whether findings of trial judge supported finding that incapacity resulted from earlier injury in 1982 when appellant on risk — HELD: they could not — the trial judge's findings could only support the view that the last injury in 1987 was the cause of the worker's total incapacity: Manufacturers Mutual Insurance v National Employers Mutual (1989) 6 ANZ Insurance Cases 76788, (1990) 6 ANZ Insurance Cases 76960 applied. ORDERS 1. Grant leave to the appellant to amend the notice of appeal in accordance with the draft filed in Court. 2. Appeal allowed. 3. Orders for apportionment made by Johns CCJ set aside. 4. Declare that the second respondent, MMI Workers Compensation (NSW) Ltd is liable to indemnify the Kiama Municipal Council for the award made by Johns CCJ in favour of the worker. 5. Order the appellant to pay the worker's costs of this appeal; otherwise make no order as to the costs of the appeal. 6. Declare that the appellant and the first respondent are entitled to be repaid by the second respondent any amounts they have paid directly to the worker or by way of contribution pursuant to the apportionment orders made by Johns CCJ. 7. No interest is to be payable on such moneys if they are repaid within twenty-eight days from today. 8. Liberty to apply to this Court for the purposes of obtaining a substantive order for the repayment of the sums in question if that is necessary. Handley JA This is an appeal by the statutory successor to NEM General Insurance Association Ltd, a former licensed insurer under the Workers' Compensation Act which had insured the Kiama Municipal Council. It is an appeal against an award made by Johns CCJ on 25 November 1991. The proceedings before the Judge involved the determination of the Council's liability to a former employee, a Mr Roy Stewart, and of the consequent liability of three successive licensed insurers of the council, first the appellant!s 2 UNREPORTED JUDGMENTS predecessor and then Manufacturers Mutual Insurance, the first respondent, and MMI Workers Compensation (NSW) Ltd, the second respondent. The original notice of appeal challenged the award in favour of the worker on a number of grounds, but these were all withdrawn last Friday in the course of a directions hearing before myself, and from that point onwards the worker's award was not challenged in this appeal. The substantial issue raised by the remaining grounds of appeal and those grounds as amended, concerned the orders made by the trial judge purporting to apportion liability for compensation paid and payable to the worker among the three licensed insurers. The findings of the trial judge established that this worker, who was a plant operator and truck driver, suffered injuries to his cervical spine and neck in 1982, 1984, 1985 and 1987 in the course of his employment, and that the nature and condition of his employment also contributed to his medical problems in that area. The appellant's predecessor was on risk for the first of those injuries. The first respondent was on risk for the second and third and the second respondent for the last which occurred after the commencement of the 1987 Act. The Judge purported to apportion 70% of the liability to the appellant, 20% to the first respondent and 10% to the second. These orders were based on s22 of the Workers' Compensation Act 1987, as amended by the Workers' Compensation Amendment Act 1991 which came into force on 18 October 1991, after counsel's addresses had concluded on 17 October 1991, but before judgment which was delivered on 25 November 1991. It is apparent from the addresses included in the appeal book that his Honour was not given proper assistance by counsel on the proper construction and application of the new section. The application for apportionment was made orally by counsel then appearing for the second respondent and the existence of power in the Court to make the orders sought was acquiesced in by counsel then appearing for the other insurers. Subsequent decisions of this court in Insurers Guarantee Fund - NEM General Insurance Ltd (In Liquidation) u GIO General Ltd (1994) 33 NSWLR 247 and MLC Insurance Ltd v Pinto and Anor (1994) 8 ANZ Insurance Cases 75336 have established that the Judge's findings did not bring the case within the new s 22 and that he had no power to order any apportionment against the insurers on risk at the time of the 1982, 1984, and 1985 injuries. Mr Poulos QC did not seek to challenge those decisions, except formally, in order to preserve his client's rights to take the matter further if so advised. However, he did seek to distinguish them in the light of the findings of fact by the trial judge. It soon became apparent as his submissions developed that he was seeking to challenge the decision of this Court in Manufacturers Mutual Insurance Ltd v National Employers Mutual General Insurance Ltd and Ors (1990) 6 ANZ Insurance Cases 76960. In that case the Court dismissed an appeal from a decision of Cole J reported in (1989) 5 ANZ Insurance Cases 75788. In the recent cases this Court has decided - in one case unanimously and in another case by majority - that s22, as amended in 1991, only authorised an apportionment of liability between employers and their insurers where concurrent awards for the same compensation have been or could have been made against two or more employers as a result of two or more injuries, on the basis that the worker's incapacity "resulted" from each of those injuries. UWRSIURERS GUARANTEE FUND NEM GENERAL INSURANCE ASSOCIATION LTD 3 MANUFACTURERS MUTUAL INSURANCE LTD (Handley JA) The Court also decided that where only a single employer was involved apportionment could only be ordered between successive insurers if the injuries were such that had they occurred in the course of employment with different employers, concurrent awards could have been supported against two or more of those employers for the same amount of compensation. In other words, the Court held that s22 only applied to cases of the kind illustrated in Morris v George (1977) 2 NSWLR 552, affirmed by the Privy Council in Bushby v Morris (1980) 1 NSWLR 81, where the worker's injuries were such that concurrent awards could be supported against different employers for the same compensation. Such awards can only be made where each of the injuries is itself a sufficient cause of the worker's incapacity, so that each injury would support a separate award for the full compensation against the employer responsible. Mr Poulos' endeavours to distinguish the present case from the recent decisions of this Court therefore depended upon establishing that, on the findings of the trial Judge, a single award could have been made based upon the 1982 injury alone, or else concurrent awards for the full amount of the compensation could have been made based on each of the injuries. This submission necessarily involved a challenge to the decisions of Cole J and this Court in Manufacturers Mutual Insurance v National Employers Mutual (1989) 5 ANZ Insurance Cases 75788, (1990) 6 ANZ Insurance Cases 76960. The relevant conclusion by Cole J which was expressly approved in this Court, appears at 75793 as follows: [1] "Where, however, a single partial incapacity results from a number of injuries sustained by the employee in the course of his employment with the one employer, it is consistent with the view stated by the High Court in South British when dealing with s11(2), that the obligation to make payment pursuant to s11(1) is 'properly to be seen as flowing from the last injury and as having arisen at the time of that injury" (Deane J at 335). Thus the insurer at risk at that time is responsible to indemnify the employer'. I would refuse leave to reargue the 1990 decision of this Court. It was followed recently in The Insurers Guarantee Fund NEM General Insurance Association Ltd v GIO General Ltd case and I have not been persuaded that any ground has been made out for thinking that either of these decisions was wrongly decided on the present point. There only remains for consideration the submission that the Judge's findings show that this was a Morris v George case. This submission fails on the facts. The findings of Johns CCJ at 151, 153, 156, 157, 159-160 and 166 demonstrate that this was a case where 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 total incapacity which resulted. It seems to me that the findings at 153 and 156-157 in particular dictate this view. Once it is accepted that the last injury made an effective causative contribution to the worker's resulting condition of total incapacity, the case falls squarely within the Manufacturers Mutual Insurance v National Employer's Mutual decision with the inevitable result, at least in this Court, that the insurer on risk at the time of the 1987 injury is wholly responsible for any compensation payable thereafter to the worker. In my opinion, therefore, the appeal succeeds, the orders for apportionment should be set aside, and a declaration made that the second respondent is solely liable to indemnify the employer for any compensation payable to the worker following the 1987 injury. UNREPORTED JUDGMENTS The remaining question concerns costs. The appellant succeeds on a point which was not raised in the Compensation Court. In these circumstances Mr West QC properly accepts that the appellant should be responsible for the worker's costs of the appeal, and I would make such an order. Mr Perry for the first respondent indicated that his client was prepared to bear its own costs in this Court. I would make such an order. Mr Poulos who appeared on behalf of the second respondent indicated likewise, and I would make such an order in respect of his client as well. Sheller JA I agree with the orders proposed by the presiding Judge and with the reasons that his Honour has given for them. Powell JA I also agree. The orders I would propose are: 1. 2. 3. 4. Grant leave to the appellant to amend the notice of appeal in accordance with the draft filed in Court. Appeal allowed. Orders for apportionment made by Johns CCJ set aside. Declare that the second respondent, MMI Workers Compensation (NSW) Ltd is liable to indemnify the Kiama Municipal Council for the award made by Johns CCJ in favour of the worker. Order the appellant to pay the worker's costs of this appeal; otherwise make no order as to the costs of the appeal. Declare that the appellant and the first respondent are entitled to be repaid by the second respondent any amounts they have paid directly to the worker or by way of contribution pursuant to the apportionment orders made by Johns CCJ. No interest is to be payable on such moneys if they are repaid within twenty-eight days from today. Liberty to apply to this Court for the purposes of obtaining a substantive order for the repayment of the sums in question if that is necessary.