MLC INSURANCE LTD v PINTO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, MEAGHER and HANDLEY JJA 21 October 1993, 15 March 1994 [1994] NSWCA 206 WORKERS' COMPENSATION — liability of successive insurers of employer of injured worker — worker entitled to compensation for single incapacity pursuant to s16(1) of the Workers' Compensation Act 1987 — whether Compensation Court has power pursuant to s22 of the Workers' Compensation Act to order apportionment between insurers when worker suffered successive injuries INSURANCE — apportionment amongst insurers — workers' compensation — liability for award under s16(1) Workers' Compensation Act 1987 — whether falls on last insurer — whether may be apportioned among insurers at times of relevant injuries Held: (by the Court) s22 only enables Compensation Court to order apportionment where two or more injuries have given rise to a single incapacity so that two or more employers or two or more insurers are liable for the same compensation. Held: (per Clarke JA) liability amongst insurers for s16 award may not be apportioned under s22 because s16 contains its own code. The Insurers ' Guarantee Fund NEM General Insurance Association Ltd (In Liquidation) v GIO General Ltd (Court of Appeal, 15 March 1994) followed; Morris v George [1977] 2 NSWLR 552, [1980] 1 NSWLR 81; NEM v Calver [1983] 3 NSWLR 107 and Manufacturers Mutual v National Employers' Mutual (1989) 5 ANZ Insurance Cases 60 - 906, (1990) 6 ANZ Insurance Cases 61.938 referred to. Clarke JA This appeal concerns the power of the Compensation Court to apportion liability to indemnify an employer amongst two or more insurers in circumstances where the worker recovered an award for compensation against that employer for total incapacity resulting from the aggravation of a disease caused by the work undertaken by the worker in the course of his employment. The facts are set out in the judgment of Handley JA and I shall refer to them only as far as it is necessary for the purposes of a clear understanding of my reasoning, and in summary form. Burke CCJ found that the worker had suffered from a degenerative disease of the back before he suffered any work injuries. On 3 May 1983 he received an injury to his back in the course of his employment with Civil and Civic Pty Ltd ("C and C") He was incapacitated and unfit for work for one month but then he returned to work and after a short period resumed full duties. Between May 1983 and April 1988 he received multiple further injuries to his back in the course of his employment with C and C and in April 1988 he ceased work. He was paid compensation until 6 July 1988 and claimed compensation thereafter. The judge found that he was totally incapacitated from that date onwards and made an award in his favour. All injuries were received in the course of his employment with C and C which was, relevantly, insured by MLC Insurance Ltd ("MLC") prior to 30 June 1987 and QBE Insurance Ltd ("QBE") thereafter The latter submitted that the liability 2 UNREPORTED JUDGMENTS to indemnify C and C should be apportioned under s22(1) of the Workers' Compensation Act 1987 ("the Act") His Honour accepted the submission and apportioned the liability as to 85 per cent to MLC and 15 per cent to QBE. The former has appealed on the ground, inter alia, that in the circumstances of this case the court had no power to order apportionment under s22 of the Act. In The Insurers ' Guarantee Fund NEM General Insurance Association Ltd (In Liquidation) v GIO General Ltd (Court of Appeal, 15 March 1994, unreported) Handley JA (at 12) has expressed the opinion that s22 permits of apportionment only where a worker's incapacity, total or partial, resulted from separate injuries (cf Morris v George [1977] 2 NSWLR 552, [1980] 1 NSWLR 81). This is so whether the apportionment involves the liabilities of different employers or the insurers of those employers or even the insurers of a single employer In each case, however, the power to apportion is conditioned on a finding that the incapacity, or as the case may be, results from more than one injury. This is an opinion with which I respectfully agree It follows that the first inquiry in the present appeal involves determining whether his Honour found that the incapacity resulted from two or more injuries. This is a somewhat complicated exercise for his Honour gave three separate judgments which related to the worker's incapacity and which need to be considered. In the first his Honour described the incident of 3 May 1983 as one of the 'factors' leading to, and the work performed since then as 'contributing' to, his incapacity in April 1988 and following There was, of course, no need to go further because that hearing was concerned with the worker's entitlement to an award. In his next judgment he referred to his earlier finding in terms which do not assist in the resolution of the present problem The third hearing was concerned with apportionment and the judgment is of primary importance At the start his Honour referred to his earlier finding "that between 3 May 1983 and April 1988 the worker had suffered a series of injuries to his back which collectively resulted in his total incapacity". He then considered whether this was an injury case or a disease case and concluded in favour of the latter saying that the worker had suffered from a pre injury (pre 1983) degenerative back, which was a disease which had been aggravated by the injuries. He expressed his ultimate finding in these words "Tt (the incapacity) has been found to result from the initial incident and the multiple traumata constituted by heavy work thereafter to April 1988". In the context of the finding that there had been a number of aggravations of a pre existing disease, and the earlier statements, I would not have understood his Honour to have found that this was a case in which the incapacity had resulted from two, or more, distinct injuries. In my view his finding was that the various injuries had collectively resulted in the total incapacity of the worker. In this context it should be borne in mind that there is a difference between a finding that an injury was a contributing cause to an incapacity and a finding that the incapacity results from the injury. This distinction was discussed by Moffitt P in Morris v George (at 566 to 568) and NEM v Calver [1983] 3 NSWLR 107 at 109. The discussions by Moffitt P in those cases have also been helpful to me in reaching my conclusion insofar as they emphasise the rarity with which a finding that incapacity resulted from each of two injuries could be reached. It is, I suppose, possible that, where an injury consists in the aggravation of a disease, incapacity may result from that aggravation as well as a separate injury although, for the reasons given by Moffitt P, I find it almost impossible to conceive such a URJ MLC INSURANCE LTD v PINTO (Clarke JA) 3 case. Certainly I do not think that this was a case in which, once it had been found to be a disease case, such a finding was open. This consideration reinforces my expressed understanding of his Honour's findings. Once the conclusion is reached that this was not a Morris v George case it was not open to his Honour to apportion the liability to indemnify C and C. I should not, however, conclude this judgment without reference to s16 of the Act for the argument before his Honour and this Court focussed on the effect of this section and its application is confirmatory of the conclusion I have reached. In s4 of the Act 'injury' is defined, relevantly, to include personal injury arising out of or in the course of employment and the aggravation of a disease to which the employment was a contributing factor. S9 provides that a worker who has received an injury is entitled to compensation in accordance with the Act. I then come to s16 which reads: "16(1) If an injury consists in the aggravation, acceleration, exacerbation or deterioration of a disease: (a) the injury shall, for the purposes of this Act, be deemed to have happened: (i) at the time of the worker's death or incapacity; or (ii) if death or incapacity has not resulted from the injury - at the time the worker makes a claim for compensation with respect to the injury; and (b) if the worker's employment with 2 or more employers has been a contributing factor to the aggravation, acceleration, exacerbation or deterioration - compensation is payable by the employer who last employed the worker in that employment (2) Any employers who, during the 12 months preceding a worker's death or incapacity or the date of the claim (as the case requires), employed the worker in any such employment shall be liable to make to the employer by whom compensation is payable such contributions as, in default of agreement, may be determined by the Compensation Court. (3) In this section, a reference to an injury includes a reference to a loss or impairment for which compensation is payable under Division 4 of Pt3. (4) This section does not apply to an injury to which s17 applies." MLC has submitted that the judge's findings that this was a case in which the worker's employment had aggravated the disease led necessarily to the conclusion that the injury which caused the incapacity be deemed to have occurred in April 1988 and that, as QBE was then solely on risk, it was wholly liable to indemnify C and C His Honour rejected this argument on the ground that s16 was concerned with a different problem, that being the difficulty which arose when a worker was employed by more than one employer. It may be true to say that s16 was introduced into the Act as a means of removing some of the difficulties which arise when a worker who suffers from a disease, which is aggravated by employment conditions, has worked for two or more employers in the period leading up to his or her incapacity and that that is the major area of operation of the section. Nonetheless, the section is not expressly limited to that type of case and effect must be given to its words. S$16(1)(a)(i), for instance, provides that where a worker is incapacitated as a result of an injury consisting in the aggravation etc of a disease the injury which he or she establishes is deemed to have happened at the time of the onset of incapacity. Similarly in the case of death and, where it is not claimed that incapacity resulted from the injury, the notional time of the occurrence of the injury is the time of death or the time of the claim for compensation, as the case may be. 4 UNREPORTED JUDGMENTS When subpara(i) and subpara(ii) of subs16(1)(a) are read together there can, I think, be no doubt that the injury referred to in s16(1)(a) is the injury which resulted in the death or incapacity referred to in s16(1)(a)(i) or the claim referred to in s16(1)(a)(ii). Accordingly, once a worker has established that he or she has suffered an aggravation of a disease to which his or her employment was a contributory factor and that incapacity resulted from that aggravation there is no need to enquire when the injury (constituted by that aggravation) occurred for it is deemed to have happened at the specific time identified in the section. In the present case the worker established (a) that he suffered from a disease; (b) that his employment was a contributory factor to the aggravation of the disease; (c) and that as a result of the aggravation (that is, the injury) he was totally incapacitated In my view the clear words of s16 apply to this situation and deem the injury which caused the incapacity to have happened in April 1988. I do not regard the occurrence of a much earlier incident which aggravated the disease and which resulted in an incapacity from which the worker recovered sufficiently to enable him to carry out his pre incident work for a number of years derogates from this conclusion. At that time (1983) he suffered an incapacity as a result of an injury which (if the 1987 Act had applied) would have been deemed to have occurred at the time of the incapacity. But the court was not concerned in the present case with that incapacity. It was concerned with one which arose in 1988 and, on the judge's findings, as a result an injury constituted by aggravations of the disease occurring up to the time of incapacity. In these circumstances the injury which caused the 1988 incapacity is deemed to have occurred in April 1988. This approach is consistent with the scheme of s16(1), as reference to s16(1)(b) makes clear. This paragraph provides that in a case where the aggravation occurred in employment with two or more employers the last employer is solely liable, subject to the narrow exception in s16(2). In short the scheme is designed to avoid the obvious problems associated with ascertaining the time of the occurrence of the injury which could arise in disease cases. It avoids those problems by (a) deeming the date of occurrence of the injury, (b) placing liability to pay compensation upon the last employer and (c) enabling that employer to recover contribution from other employers (where that employment was a contributory factor to the aggravation of the disease) who had employed the worker during the period of 12 months preceding the deemed date of injury. It is clear to me that the provisions of s16(1)(b) and (2) provide, in effect, a code in disease cases and there is no room for apportionment of liability to a worker between employers. The only claim for relief which is authorised by the section is the claim by an employer for contribution under s16(2) As Handley JA has pointed out, in The Insurers' Guarantee Fund NEM General Insurance Association Ltd (In Liquidation) v GIO General Ltd, contribution and apportionment are quite different concepts. It should also be observed that s16 is supplemented by s18 which makes provision for the liability of insurers to indemnify a person ordered to make a contribution under s16(2). In cases of personal injury arising out of, or in the course of, employment s22 applies and in disease cases s16 and s18 apply. URJ MLC INSURANCE LTD v PINTO (Handley JA) 5 The only proviso to these conclusions is that I cannot exclude the remote possibility that there may be a case in which the incapacity is found to result from each of a frank injury and the aggravation of a disease. In that event difficult questions would arise as to apportionment and it may be that s22 would enable an apportionment between different employers, or insurers. However, that is not this case and there is no room for the operation of s22 in the light of the judge's findings of fact. I agree with the orders proposed by Handley JA. Meagher JA I agree with Handley JA. Handley JA This is an appeal by MLC Insurance Ltd (MLC) the workers' compensation insurer of Civil and Civic Pty Ltd (the employer) from an award of Burke CCJ apportioning liability for compensation payable to Antonio Pinto (the worker) between itself and QBE Insurance Ltd (QBE). Burke CCJ published reasons for judgment and made orders on 31 January and 4 December 1991 and 24 April 1992. On 31 January he found that the worker had been totally incapacitated for work from 7 July 1988 and continuing as a result of a back injury on 3 May 1983 and "multiple further injury to his back in the course of his employment" between May 1983 and April 1988 and awarded weekly compensation accordingly. On 4 December he awarded $7,506 under s66 for impairment of the worker's back and on 24 April he ordered that the liabilities of the employer be apportioned pursuant to s22 eighty five per cent to MLC which was on risk until 30 June 1987, and fifteen per cent to QBE which was on risk thereafter. MLC appealed against the order for apportionment but did not against the awards of compensation. There was no cross appeal. The appeal, which was well argued by senior counsel for both insurers, turns on the effect of s22 of the 1987 Act as substituted by the Workers' Compensation (Amendment) Act 1991 with effect from 18 October 1991. In his first judgment Burke CCJ found that the worker, a builder's labourer, had suffered a relevant back injury on 3 May 1983, and was off for a month. He then returned to light work but after five or six months resumed normal duties. He continued until April 1988 but his back got steadily worse and he was then forced to give up work as a builder's labourer. He was paid compensation until 6 July 1988. Liability for further compensation was then disputed. The trial Judge held that the injury of 3 May 1983 was one of the factors from which the worker's total incapacity resulted, and that his work over the ensuing years "contributed its measure to the deterioration in his back condition". He did not decide whether the case was one of injury simpliciter or one where the only injury "consisted in" the aggravation of the worker's underlying degenerative condition and as such within s16. In his third judgment Burke CCJ resolved this question. He found that "the better interpretation of the effects of the various injuries on Mr Pinto's back is that they have contributed to the acceleration and deterioration of those changes... I am therefore of the view that this is a 'disease' case. The injuries have aggravated etc that pre existing disease". He added that the worker's incapacity resulted from "the initial incident of May 1983 and the multiple traumata constituted by heavy work thereafter to April 1988." He also found that s16 produced a deemed injury in April 1988 at the time the worker became totally incapacitated for work. He rejected a submission from MLC that s22 did not authorise apportionment 6 UNREPORTED JUDGMENTS between the two insurers, and concluded that "the frank incident of May 1983 set in train all that followed" and apportioned liability accordingly. MLC has not challenged the apportionment as such but only the power to make it. It is clear from the Judge's findings that the worker has a single incapacity due to the cumulative effect of the "incident" of May 1983 and the nature of the worker's employment after his return to work. The last period of that employment occurred while QBE was on risk and in accordance with the Judge's findings s16(1)(a)(i) deemed the injury which consisted of the aggravation of the worker's degenerative disease by his employment to have happened at the time of his incapacity in April 1988. It is clear therefore that the initial liability to indemnify the employer fell upon QBE alone. The essential issue is whether s22 authorised the order of the trial Judge "apportioning" these liabilities between QBE and MLC. For the reasons given in the judgments of Meagher JA and myself in The Insurers' Guarantee Fund NEM General Insurance Association Ltd (In Liquidation) v GIO General Ltd published today s22 has no application in the present case. QBE was on risk in April 1988 when the worker's aggravation injury was deemed to have happened and had been on risk since 30 June 1987 during the latter part of the worker's employment. Accordingly it alone was liable. See Manufacturers Mutual v National Employers' Mutual (1989) 5 ANZ Insurance Cases 60 - 906, (1990) 6 ANZ Insurance Cases 61 - 038 (CA). Since QBE was liable and MLC was not there was no common liability to apportion and no basis for apportionment. In particular there was no basis for an apportionment between the two insurers which operated to reduce the liability of each by the amount apportioned to the other. Moreover in my opinion there could be no apportionment under s22 in respect of liabilities either to the worker or the employer which at the date of the order had already been satisfied by payment. Liabilities to pay compensation cannot, in the language of s22(7), be reduced by apportionment after they have been discharged. In my opinion therefore the following orders should be made: 1. Appeal allowed. 2. Set aside the orders of Burke CCJ of 24 April 1992 apportioning liability for weekly compensation, s60 expenses, lump sum compensation and costs as between MLC and QBE. 3. In lieu thereof declare that the respondent QBE is alone liable to indemnify the employer for the compensation awarded by Burke CCJ by his orders of 31 January and 4 December 1991. 4. The respondent QBE to pay MLC's costs of the proceedings in the Compensation Court from and after 4 December 1991. 5. The respondent QBE to pay the costs of the appellant and of the first respondent of this appeal. 1. Appeal allowed. 2. Set aside the orders of Burke CCJ of 24 April 1992 apportioning liability for weekly compensation, s60 expenses, lump sum compensation and costs as between MLC and QBE. 3. In lieu thereof declare that the respondent QBE is alone liable to indemnify the employer for the compensation awarded by Burke CCJ by his orders of 31 January and 4 December 1991. URJ MLC INSURANCE LTD v PINTO (Handley JA) 7 4. The respondent QBE to pay MLC's costs of the proceedings in the Compensation Court from and after 4 December 1991. 5. The respondent QBE to pay the costs of the appellant and of the first respondent of this appeal. Counsel for the Appellant: PDEAKIN QC/CJ WYNYARD Instructed by: NEVILL AND EDWARDS Counsel for Ist Respondent: H COXInstructed by: BOWEN AND GERATHY Counsel for 2nd Respondent: J HISLOP QC/P A RICKARD 15 Instructed by: GARDENS RIDGEWAY253545