BISHOPSGATE INSURANCE AUST LTD (IN LIQUIDATION) v BENSON SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CLARKE, MEAGHER and HANDLEY JJA 14 July 1995, 8 August 1995 [1995] NSWCA 46 FACTS The worker was injured several times before he was retrenched in 1990 while working for Comalco. During the time that the worker was employed, Comalco was represented by 5 insurers. Burke CCJ apportioned liability for damages between those insurers with the earliest insurer bearing the major share of responsibility and the last insurer (MMI(NSW)) the smallest share. The worker challenged the apportionment as erroneous in law. MMI(NSW) submitted that neither the findings made by Burke CCJ nor the evidence in the case provided a basis for a finding against the employer during the period between 1 January 1990 and October 1990 when MMI(NSW) was on risk. HELD Burke CCJ did not have the power to apportion the employer's liability between different insurers: s22 Workers Compensation Act 1987. That order is thus invalid and must be set aside. There is no evidence upon which it could be said that anything which occurred in the last ten months aggravated the worker's back or knee problems. The court is not in a position to make an award against MMI(NSW) on the evidence in the case. In awarding the worker an award under s66 and s67, the trial judge did not closely examine the question whether the nature and conditions of employment after 30 June 1987 did, in fact, aggravate his problems. The awards under s66 and s67 should be set aside and the proceedings remitted to the Compensation Court to reconsider the effects of the post July 1987 employment on the worker's injuries and the question as to which insurer should bear the responsibility. ORDERS (1) The appeal by Bishopgate is allowed; (2) The cross-appeal by MMI Workers' Compensation (NSW) Limited QBE Insurance Limited and QBE Workers' Compensation (NSW) Limited are allowed; (3) 0.(3), O.(4) and O.(5) in the award of 25 November 1993 set aside; (4) The award of 29 November 1993 be set aside; (5) That the questions whether the worker, John Alfred Benson, is entitled to awards under s66 and s67 of the Act, and if so in what amount, and which of the insurers is liable to indemnify the employer Comalco Aluminium Ltd in respect of its liability to the worker be remitted to the Compensation Court for determination in accordance with the reasons of this Court. (6) No order as to costs. Clarke JA John Alfred Benson ("the worker") was employed by Comalco Aluminium Ltd ("the employer") from 1968 until he was retrenched in 1990. During that time he sustained a number of injuries. The first, on 13 January 1976, when he twisted his left knee while moving a 44 gallon drum; the second, on 26 May 1983, when he injured his back unloading a truck and, the third, on 30 December 1983, when he fell onto a metal strip and was off work for three weeks. After he was retrenched he brought a claim for compensation under the Workers Compensation Act 1987 ("the Act") claiming weekly payments, and an award in respect of the loss of use of his left leg. His case was heard by Butchard C who 2 UNREPORTED JUDGMENTS found against him on his claim for weekly payments but made an award under s16 of the Workers Compensation Act 1926 in respect of the diminution of the full efficient use of his left leg. The worker sought a review of that award and the proceedings came before Burke J who made an award for weekly payments upon the basis of partial incapacity and awards under s66 and s67 of the Act in respect of the loss of use of the left leg and consequent pain and suffering. Following the making of that award Burke CCJ went on to consider the question of apportionment between insurers and made a consequential award to which I will later refer. During the time that the worker was employed by the employer the latter was represented by five insurers, namely: (a) Manufacturers Mutual Insurance Ltd ("MMI") from 30.6.61 to 30.6.78; (b) Bishopsgate Statutory Fund ("Bishopsgate") from 30.6.76 to 30. 6.83; (c) QBE Insurance Ltd ("QBE") from 1.7.83 to 30.6.87; (d) QBE Workers' Compensation (NSW) Ltd ("QBE") from 1.7.87 to 31.12.89; (e) MMI Workers' Compensation (NSW) Ltd ("MMI (NSW)") from 31.12.89. In his judgment Butchard C stated that the employer was represented in four guises, each on behalf of a separate insurer in a different period. Similarly before Burke CCJ the employer was represented by the insurers (one counsel appeared for both QBE companies). As I earlier indicated Burke CCJ apportioned the liability between those insurers with the earliest insurer, MMI, bearing the major share of responsibility and the last insurer MMI (NSW) the smallest share. Bishopsgate appealed from the decision of Burke CCJ and on the hearing of the appeal did not challenge the award in favour of the worker but contended only that the later award effecting apportionment should be set aside as erroneous in law. Bishopsgate submitted that a line of authorities of this Court supported that proposition and also led to the result that the final insurer (MMI(NSW)), should be held solely responsible for the employers' liability to the worker. The cases referred to were Manufacturers' Mutual Insurance United v National Employers' Mutual General Insurance Association Ltd (1989) 5 ANZ Ins Cas 60-906 and (1990) 6 ANZ Ins Cas 61-038; Insurers Guarantee Fund - NEM Insurance Association Ltd (In Liquidation) v GIO General Ltd [1994] 33 NSWLR 247; MLC Insurance Ltd v Pinto and Anor (NSW Court of Appeal, 15 March 1994, unreported); Insurers Guarantee Fund- NEM Insurance Association Ltd (In Liquidation) v Manufacturers Mutual Insurance Ltd and Ors (Court of Appeal, 12 August 1994, unreported); Maritime Services Board of New South Wales in the Interests of GIO v Moore and Anor, (NSW Court of Appeal, 26 May 1995, unreported) and Leone Holdings Pty Ltd v JW Kirkwood Pty Ltd (NSW Court of Appeal, 9 June 1995, unreported). Bishopsgate was supported by MMI and it must be accepted that the cases to which reference had been made do establish the propositions for which Bishopsgate contended. However, Mr Sharpe, counsel for MMI Workers' Compensation, has submitted that, as each of the insurers invited apportionment before Burke CCJ, it was not open to Bishopsgate, or any other insurer, to argue that the award effecting apportionment be set aside. The difficulty with this submission is that in the circumstances of the present case the provisions of the Act, and in particular s22, did not empower the court to apportion the employer's liability between different insurers. In short the court made an order which it was not empowered to make URBISHOPSGATE INSURANCE AUST LTD (IN LIQUIDATION) v BENSON (Clarke JA) 3 and the order was invalid. In these circumstances the consent of the parties is of no moment. The court had no power to make the orders appearing in the award and it must be set aside. Mr Sharpe made another submission, however, to the effect that neither the findings made by Burke CCJ nor the evidence in the case provided a basis for a finding against the employer during the period when MMI (NSW) was on risk. The submission, reduced to its essentials, was that there was no evidence to support a finding that any injury occurred to the worker in his employment between 1 January 1990 (when MMI (NSW) came on risk) and October 1990 when he was retrenched and therefore no basis for a finding that that insurer indemnify the employer in respect of its liability to the worker. In this context the observations of Samuels JA in the first of the cases mentioned above (at 76-964) are of no little importance. His Honour said: "Tt must be emphasised that the risk against which the insurer undertakes to provide indemnity is the payment of compensation for incapacity in respect of the employer's liability for an injury occurring during the currency of the insurer's engagement.... It would be a most remarkable thing if an insurer entering into a policy were to find itself liable, not for subsequent liability to make payments in respect of supervening incapacity, for which it would be well prepared, but for incapacity resulting from injuries which had occurred while that insurer was not on the risk, was not bound by any contractual engagement and was not in receipt of any premium." It is beyond question that there was no frank injury during that period but, insofar as Burke CCJ made a finding that the 'nature and conditions' of employment aggravated his injuries, counsel for the other insurers submitted that the evidence justified the conclusion that MMI (NSW) should be liable to indemnify the employer. The precise question facing the court was not addressed in terms by his Honour who was under the impression that he was able to apportion liability. Nonetheless, his Honour summed up his conclusion in these words: "Tn other words I think on the totality of the evidence, the rational inferences are that the worker had sustained frank incidents involving his knee and his back, but he also subjected both those parts of his body to fairly repeated stress thereafter, that that repeated stress was also a factor in the deterioration of both conditions and in the production of any limitation that might thereafter have resulted." When one turns to the evidence, however, one sees that the worker was moved to the air conditioning department of the employer in 1989 and there he did very light work. He said that during that period all he had to do was to wash the filters of the air conditioners and the work was very light. In the context of a knee that was deteriorating constitutionally, and continued to deteriorate after the worker had been retrenched, it is difficult to understand how it could be said that anything that happened at work during this period (and there was no frank injury) in any way contributed to his incapacity. Certainly the worker himself did not contend that his work at this time was a contributory factor. Counsel for the worker challenged these submissions and referred to evidence that, after the worker's return to work following injury in 1983, from time to time he got pain in his back and counsel supplemented that argument by referring to the workers' denial that he had not complained of pain in his back or knee in the last twelve months. That, however, was the totality of the evidence relevant to the point under consideration. Further, no counsel confronted the question whether 4 UNREPORTED JUDGMENTS anything done during the last ten months of employment in the very light work described contributed to the knee or back injury or incapacity. If the worker had based his case against his employer solely on the receipt of an injury during the last ten months it is readily apparent that the evidence led before the court could not possibly have justified an award in his favour and the claim would have been dismissed. Unfortunately, during the trial the position became clouded by the worker's reliance on the nature and conditions of his work and a failure on the part of anyone to confront the question whether anything which occurred in the last ten months was causative of the worker's incapacity. In his judgment on apportionment Burke CCJ said: "Firstly, | have the incident of 13 January 1976. The applicant then worked on for quite a long time, until October 1990; roughly fifteen years. Roughly eight years of that was doing substantial physical work. The last seven were lighter, particularly the last two. It has been held that the work that the applicant did over that time was a factor in producing the ultimate disability of the knee. The question is the proportionality... But how do you apportion the general strain? True, the applicant was on his feet for a substantial bit of his working life thereafter, but during the eight years that he was doing heavy work, that is probably three times as aggravating as when he was doing the lighter, less physically stressful. You can then say... and I can work it out and I think, under that system, MMI (new Act) would probably end up with something like 1 per cent or a bit less, which certainly belies the order of accuracy." His Honour was there saying, as I understand him, that he needed to take a broad look at the picture in the light of the evidence given. I can well appreciate the need, in certain circumstances, for a court to look broadly at the overall picture demonstrated by the evidence. But where, as here, it is necessary to make a finding in relation to the occurrence of an injury at a particular time I do not agree that the acceptance of a broad picture can be substituted for the need to find an evidentiary basis upon which to base a finding leading to liability. There is, in my opinion, no evidence, upon which it could be said that anything which occurred in the last ten months aggravated the worker's back or knee problems. The consequence, in my opinion, is that the court is not in a position to make an award against MMI (NSW) on the evidence in the case. During the hearing of the appeal it became reasonably apparent that the court was troubled about this lack of evidence and Mr Hoeben, counsel for QBE (that is, the two companies which insured the employer from July 1983 to December 1989) sought, and was granted leave, to cross-appeal to make an identical point in respect of the period during which his two clients were on risk. In his submission there was no evidence that anything which occurred after July 1983 contributed to the worker's injury. This is a more difficult proposition to sustain for there was evidence that the worker complained from time to time of things which occurred at work after 1983 which aggravated his back or his knee. However in my opinion it is not presently fruitful to embark upon a consideration of this question. I say this for two reasons. First, the worker has received an award for weekly payments in respect of partial incapacity and nothing which has occurred during this appeal throws any doubt upon his entitlement to maintain that award. It may be that there is a question as to who should be responsible to indemnify the employer in respect of that award but that does not present as a reason for setting the award aside. Accordingly, in my opinion, that award should stand. UFRJSHOPSGATE INSURANCE AUST LTD (IN LIQUIDATION) v BENSON (Handley JA) 5 The second matter is that the worker would be entitled to an award under s66 and s67 only if the injury which gave rise to the loss the subject of the award occurred after 30 June 1987. If it did not then the learned Commissioner's conclusion that an award should be made under s16 would be the correct one. The trial judge, while concluding that the incapacity or loss resulted from injuries received before and after 30 June 1987 did not closely examine the question whether the nature and conditions of employment after that date did, in fact, aggravate his problems. Having regard to the fact that the hearings were conducted at a time when it was thought permissible to apportion and that as a consequence careful attention was not directed to the question of the effects of the post July 1987 employment on the worker's injuries, and the question as to which insurer should bear the responsibility, it seems to me that it is necessary to set aside the awards under s66 and s67 and to remit the proceedings to the Compensation Court for consideration of the two questions to which I have made reference. I should not, however, leave the appeal without observing that Mr Sharpe complained that his Honour had reversed credibility based findings of the Commissioner despite the fact that he carried out his review on the papers (ie he did not receive any oral evidence). On the surface that is a powerful submission but when one tums to his Honour's judgment one sees that he has stated that it was generally conceded between the parties that the Commissioner had misconceived an important matter and that credibility was not a relevant issue in the review. Although this approach may have created difficulties in the conduct of the review this Court must accept that the parties were all of one mind and that is that the learned Judge was not to be inhibited by any findings on credibility made by the Commissioner. I would, therefore, reject the challenge made by Mr Sharpe insofar as it was based on this argument. In my opinion the following orders ought to be made: (1) The appeal by Bishopsgate is allowed; (2) The cross-appeal by MMI Workers' Compensation (NSW) Ltd, QBE Insurance Ltd and QBE Workers' Compensation (NSW) Ltd are allowed; (3) 0.(3), O.(4) and O.(5) in the award of 25 November 1993 set aside; (4) The award of 29 November 1993 be set aside; (5) That the questions whether the worker, John Alfred Benson, is entitled to awards under s66 and s67 of the Act, and if so in what amount, and which of the insurers is liable to indemnify the employer Comalco Aluminium Ltd in respect of its liability to the worker be remitted to the Compensation Court for determination in accordance with the reasons of this Court. (6) No order as to costs. Meagher JA I agree with Clarke JA. Handley JA I agree with Clarke JA. (1) The appeal by Bishopsgate is allowed; (2) The cross-appeal by MMI Workers' Compensation (NSW) Ltd, QBE Insurance Ltd and QBE Workers' Compensation (NSW) Ltd are allowed; (3) 0.(3), O.(4) and O.(5) in the award of 25 November 1993 set aside; (4) The award of 29 November 1993 be set aside; UNREPORTED JUDGMENTS (5) That the questions whether the worker, John Alfred Benson, is entitled to awards under s66 and s67 of the Act, and if so in what amount, and which of the insurers is liable to indemnify the employer Comalco Aluminium Ltd in respect of its liability to the worker be remitted to the Compensation Court for determination in accordance with the reasons of this Court. (6) No order as to costs. COUNSEL: Appellant: JN West QC and FFJ Davis First Respondent: M Thompson Second Respondent: W Kearns Third and Fifth Respondents: CR Hoeben Fourth Respondent: JL Sharpe SOLICITORS: Appellant: Ebsworth and Ebsworth First Respondent: McClellands Second Respondent: AO Ellison and Co Third and Fifth Respondents: Connery and Partners Fourth Respondent: Vandervords