Ato v G and D Goorkiz t/as Dolphin Day Care Centre and WorkCover Authority of NSW and Liverpool Insurance Brokers Pty Ltd [2001] NSWCC 148

Reported Decision : (2001) 22 NSWCCR 122

Compensation Court of New South Wales

CITATION : Ato v G and D Goorkiz t/as Dolphin Day Care Centre and WorkCover Authority of NSW and Liverpool Insurance Brokers Pty Ltd [2001] NSWCC 148 Janet Ato v George and Diana Goorkiz t/as Dolphine Day Care Centre PARTIES : and WorkCover Authority of New South Wales and Liverpool Insurance Brokers Pty Ltd MATTER NUMBER(S) : 52543 of 1999 JUDGMENT OF: Neilson J at 1 Elements of Workers Compensation :- Insurance CATCHWORDS: Uninsured Liability and Indemnity Scheme Claim against broker WCA s 156A. Interpretation of section. "Representation" "any Insurance". LEGISLATION CITED: CASES CITED: DATES OF HEARING: 9/7/2001, 10/7/2001, 11/7/2001 EX TEMPORE JUDGMENT DATE : 07/11/2001

FOR APPLICANT: Applicant's Counsel was excused. FOR RESPONDENT: LEGAL REPRESENTATIVES: Mr T A Wardell instructed by A O Ellison appeared for the first respondent. Mr J P Deggens instructed by William Clinton appeared for the second respondent. Mr Turnbull instructed by McCabe Terrill appeared for the third party.

JUDGMENT: 1. The applicant, Janet Ato, commenced proceedings in this Court by application for determination filed on 4 November 1999. She claimed compensation from Mr George and Mrs Diana Goorkiz, who trade as the Dolphin Day Care Centre at Bonnyrigg. Mrs Ato also claimed compensation from the WorkCover Authority of New South Wales as administrator of the Uninsured Liability and Indemnity Scheme. 2. The matter came on for hearing before me on Monday, when, after some negotiation, the applicant's case settled against the first and second respondents. I have made findings which would enable me to make a commutation order in the worker's favour, but final orders have not been made because my findings on the current application may affect the final form of orders to be made. 3. The current application is the application of Mr and Mrs Goorkiz by way of third party notice against their insurance brokers, Liverpool Insurance Brokers Pty Ltd. Mr and Mrs Goorkiz, "the respondents", claim to be entitled to an order pursuant to s 156A of the Workers Compensation Act 1987 on the ground that Liverpool Insurance Brokers Pty Ltd, the third party, had engaged in conduct that constituted a contravention of s 156A. 4. In early 1998, Mr and Mrs Goorkiz decided to set up a day care centre for minding infant children. A licence to conduct such a business was issued by the Department of Community Services permitting commencement of the business on 15 April 1998. The business in fact commenced, on the sworn evidence of Mr and Mrs Goorkiz, on 16 April 1998. Prior to commencing the business, it is obvious that there would have been a large number of matters to attend to in order to establish the business. One of those matters was the question of insurance. Mr Goorkiz had recommended to him by a workmate, Liverpool Insurance Brokers Pty Ltd, and he made an approach to the brokerage for its assistance in arranging necessary insurances. Mr Wally Turner, now deceased, attended upon the Goorkiz' for the purpose of arranging insurances. 5. The oral evidence of Mrs Goorkiz suggests that the first meeting with Mr Turner was on 27 March 1998, but a date endorsed on a document, Exhibit 3, indicates that the meeting was in fact held on 26 March 1998. According to Mr Goorkiz, he asked Mr Turner to arrange for public liability insurance, workers compensation insurance and any other insurance that was required for the purpose of the proposed business. Mr Goorkiz' evidence made it quite clear that he raised the question of workers compensation insurance. According to Mr Goorkiz and his wife, Mr Turner had a small spiral notepad in which he made notes. Mr Goorkiz said that he told Mr Turner that they needed public liability and workers compensation insurance and then he pulled out his notepad and started to make some notes. 6. Mr Goorkiz also says that he told Mr Turner that he was going to work casually in the business; that Mrs Diana Goorkiz was going to work full-time and he thought that he also said that three other teachers would be working at the day care centre from the opening day. Mr Goorkiz went on to say that he then asked what other insurances were needed and a number of other insurances were discussed by Mr and Mrs Goorkiz and Mr Turner. Mr Goorkiz gave this evidence as to how the meeting of 26 March 1998 concluded: I believe we were insured because I remember two times of asking Wally - he's trying to sell us - he is more interested selling us other insurance than those two other ones and I asked him just before I walked out, before I had to go, I said, `You got the workers comp? ' and he flicked through his little pad backward, forward, backward, forward then he says, `Oh, yes, I've got it here' . 7. Generated at that meeting was at least one document which has found its way into evidence as Exhibit 3. That has been dated at the top on each page, 26 March 1998. The document is entitled "Commercial Insurance Quotation/Placement Form", which indicates the document was made for the purposes of preparing a quotation. Under the heading "Public/Products Liability Details" have been written the matter "38 children 5 teachers 1 director" and then sums indicating $5 million and $10 million. That document refers only to quotations being obtained for public liability cover for the sums of $5 million and $10 million. It appears that the quoted premium for the larger cover was a sum of $1,070. That document comprises two pages. There is a second document which is Exhibit 4 which contains only the second page of the two pages that comprise Exhibit 3. 8. However, it is clear from Exhibit 4 that it refers to insurances other than public liability insurance. For example, there is a quotation for fire insurance in the sum of $80,000 for business interruption for a period of 52 weeks in the sum of $120,000, for all contents burglary cover for $30,000, a cover for money lost in the sum of $6,500, for a policy for glass at replacement value, for machinery breakdown cover in the sum of $15,000 for computer equipment and a further $15,000 for other electronic equipment. 9. The last line of each of Exhibits 3 and 4 has in bold a statement thus: Workers Comp Required - Y/No. Initial: ----------- Cover Issued: Y/N. Underwriter: Date: 10. Neither of those questions or directions, however one describes them, has been filled in. There was a second meeting which appears to have occurred on or about 30 March 1998 in which financial discussions took place, both as to the likely cost of insurances and a method of paying for the insurance by monthly instalments. That required the respondents' taking up finance from a financier who would pay the insurance and the respondents would reimburse the financier by monthly instalments. It appears that documentation to effect that plan was signed at the second meeting, which as I said, appears to have been on or about 30 March 1998. 11. At that meeting, Mr and Mrs Goorkiz said that Mr Turner produced a document showing the various covers that were proposed. It appears that the document was similar to what is now Exhibit T-3, which bears date 29 April 1998. That document bears some relationship, but does not completely accord with the contents of Exhibit 4, the Commercial Quote/Placement slip. The oral evidence of Mr and Mrs Goorkiz was that they discussed the various covers proposed in the document similar to Exhibit T-3 and requested that the document be amended to delete certain forms of cover. 12. On perusing Exhibits T-3 and T-2, I have reached the conclusion that they are identical documents. There was some confusion in the presentation of exhibits and it now is not clear to me whether T-3 which bears date 29 April 1998 was the cover as initially proposed by Mr Turner, or is that presented at the second meeting or whether it was that following upon the agreement reached at the third meeting. In any event, at the third meeting certain parts of a business pack policy or certain covers under that general policy were deleted at the request of Mr and Mrs Goorkiz. There would appear to have been at least a meeting on 20 May 1998 when Mrs Goorkiz executed the application for the business pack policy. It is common ground that at no time after the first meeting, that is, after the meeting of 26 March 1998, was workers compensation insurance discussed. Mr Goorkiz made it quite clear that he felt embarrassed about asking Mr Turner about it because he had raised it twice on the first occasion and he did not think it proper to continue to remind Mr Turner of what he had already said he would do. 13. It is clear, furthermore, from the evidence of Mr and Mr Goorkiz that they did not believe workers compensation insurance to be contained in the business pack policy, the proposal for which was signed by Mrs Goorkiz on 20 May 1998. 14. Mr Turner died some time in early 1999 of a heart attack. Accordingly, the evidence of Mr and Mrs Goorkiz about their dealings with Mr Turner must be approached circumspectly because of the obvious inability of their evidence to be tested against the instructions and evidence of Mr Turner. Having said that, I do accept the thrust of the evidence of Mr and Mrs Goorkiz. I do accept that they requested Mr Turner to organise workers compensation insurance for them. There are a number of things which point in that direction. The applicant, Mrs Janet Ato, is related to Mr Goorkiz. She appears to have developed symptoms in her shoulders whilst carrying out Christmas craft activities with the children at the day care centre immediately prior to Christmas 1998. Mr Goorkiz had noted that Mrs Ato was distressed. He gave this evidence: Question What happened when Mrs Ato started making complaints about her shoulder. Answer Because she is related to me I believe she was embarrassed of making a claim. So I said to Diana, `Contact Liverpool Insurance Brokers, the next day in the morning and ask Wally' - I would have done it but I was too busy with my other job - I said, `Contact them and get a claim form and hand it out to her and if she's really injured and she wants to claim, well, all she has to do, fill it in'. I believe she was embarrassed or something, so I said, `We'll get that out of the way'. 15. It then transpired that Mr Goorkiz found out from his wife that no workers compensation insurance had been arranged. He consulted a solicitor and arranged for workers compensation claim forms against the Uninsured Liability and Indemnity Scheme to be obtained and forwarded to Mrs Ato. If Mr Goorkiz knew that he was uninsured or if he knew that he had failed to make any arrangements to take out workers compensation insurance, one might be cynical enough to believe he would have tried to dissuade his relative, the applicant, from making a claim or at least immediately arrange workers compensation cover and try to have Mrs Ato delay making any complaints or delay seeking medical assistance until after there had been an insurer who had been at risk at least for a couple of weeks before the claim was made. 16. Indeed, Mr and Mrs Goorkiz acted with the utmost probity in "putting themselves in" to the WorkCover Authority as having been uninsured when, through their solicitor, they approached the Authority in order to obtain claim forms for Mrs Ato. This leads me to the conclusion that Mr and Mrs Goorkiz honestly believed that they were insured for their liability under the Workers Compensation Acts. Even if they had thought that they were insured and then discovered that they were not, they could have made attempts to soften the burden on them, again by immediately affecting cover and inducing the applicant to cease complaining until an insurer was at risk. They did not do that at all, but acted in an honourable and straightforward fashion. That further consideration leads me to accept them as being honest and truthful in what they have told me. 17. Evidence given by Mrs Goorkiz as to what happened after her husband told her to ring up the insurance brokers and obtain claim forms also has to me the ring of truth and I believe unlikely to have been fabricated. She gave this evidence: Question You said you rang Mr Turner. Answer Yes. Question What did you say to him. Answer I explained the situation. Question No, what did you say to him. Answer I said, `If we can have the name of our workers compensation insurance ' - and he said he will check it and he will get back to me. He was going to look it up in the file and get back to me. Question Was that the end of that conversation. Answer Yes. Question What was the next thing that happened. Answer About 10 minutes later, he rang up and he said, `Diana, you haven't got any workers compensation' , and I said `How could that be?' . He said, `I don't know what happened. I don't know how it slipped my mind. I don't know what happened" , and he said he's going to come and see me. I ask him in the same thing. I said, `If that's the case, I need the workers compensation right now, this minute' . He said he's going to organise it.