Dust Diseases Tribunal of New South Wales CITATION : Integral Energy v Allianz Australia Insurance Ltd and ors [2005] NSWDDT 25 Integral Energy Allianz Australia Insurance Ltd PARTIES : GIO General Ltd CGU Workers' Compensation (NSW) Ltd AXA Insurance Australia Ltd MATTER NUMBER(S) : 259 of 2000/1 and 156 of 2001/1 JUDGMENT OF: Curtis J CATCHWORDS: :- Cross Claims - Insurance Workers' Compensation Act 1987 LEGISLATION CITED: Workers' Compensation (Dust Diseases) Act 1942 CASES CITED: Orica Ltd v CGU Insurance Ltd (2003) 59 NSWLR 14 DATES OF HEARING: 23 May 2005 DATE OF JUDGMENT: 05/24/2005 Ms L P McFee instructed by Leigh Virtue and Associates appeared for the Cross Claimant Mr G J Parker instructed by A O Ellison and Co appeared for the first Cross Defendant LEGAL REPRESENTATIVES: Mr A Scotting instructed by Moray and Agnew appeared for the second Cross Defendant Mr I Judd instructed by Hunt and Hunt appeared for the third Cross Defendant Mr A B Parker instructed by Peter A Collins and Associates appeared for the fourth Cross Defendant JUDGMENT: Dust Diseases Tribunal of New South Wales Matter Number DDT 259/00/1 (Re: Annette Heather Mangold as Legal Personal Representative of the Estate of the late Robert Mangold) and Matter Number DDT 156/01/1 (Re: Annette Mangold) Integral Energy v Allianz Australia Insurance Ltd GIO General Ltd CGU Workers' Compensation (NSW) Ltd AXA Insurance Australia Ltd 24 May 2005 JUDGMENT CURTIS J INTRODUCTION 1. In 2000 Mr Robert Mangold, a former employee of Prospect County Council to whose liabilities Integral Energy is successor, contracted mesothelioma in consequence of exposure to asbestos fibres in the course of his employment. Mr Mangold died on 25 February 2001. On 19 February 2002 Integral Energy consented to judgment in favour of Mr Mangold's legal personal representative in an action for damages in the sum of $170,000 inclusive of costs, and a judgment in favour of his widow in an action pursuant to Compensation to Relatives Act 1897 in the sum of $5,200 inclusive of costs. On the evidence before me these sums were reasonable as to amount and fairly reflect the liability of Integral Energy. 2. Integral Energy now claims indemnity from its insurers. The indemnities and periods of risk of the cross-defendants and the period of self-insurance are as follows: GIO -.1 March 1960 to 31 December 1966 AXA - 1 June 1967 to 31 December 1969 CGU - 1 January 1970 to 31 December 1973 GIO - 1 January 1974 to 31 December 1976 Allianz - 1 January 1977 to 31 December 1980 1 January 1981 to date - self insurance FACTS 3. Mr Mangold was employed by Prospect County Council between 14 March 1960 and September 1993. He describes his work as follows: From 14 March 1960 until September 1993 I worked as an electrician and as an electrical engineering design draftsman for the Prospect County Council. I began work with the council as a customer service fitter. For about five years, I did service work on domestic electrical appliances. I worked on laundry coppers, hot water systems and kitchen stoves. Water heaters and stoves were insulated with asbestos materials in various forms including friable packing and panelling materials. Domestic appliances were wired with asbestos insulated wiring. For several hours daily, this dripping of wire and management of packing and panelling materials produced visible asbestos dust in the atmosphere of my workplace. I used a van for my service work. The atmosphere of the van and the flat surfaces of the van were constantly contaminated with visible dust from asbestos insulating materials used on wiring for electrical appliances. For at least half the time of my first five years with the council, I was exposed to visible atmospheric asbestos dust from insulating materials. The dust was visible on my clothes and body. The dust was visible on flat surfaces of my workplace. From 1965 until 1993 I worked for the council as an electrical engineering design draftsman. My work as design draftsman regularly took me onto building sites for inspections and approvals of electrical installation. For about 2 hours each month I was exposed to visible atmospheric asbestos dust from asbestos cement building materials. The building materials were cut and worked by tradesmen using power tools. 4. This account of Mr Mangold's exposure as a design draftsman is corroborated by fellow employees, Mr Drew Ferguson and Mr Brian Waites. 5. While there were some changes in Mr Mangold's duties effected in 1978, the evidence of Mr Gardiner, his supervisor, between 1978 and 1996, does not assist any conclusion that the plaintiff's account of his duties from 1965 to 1978 should not be accepted. 6. Although Mr Mangold said to Dr Zwi that he was not exposed to asbestos after 1965 this statement must be taken to refer to the heavier exposure before 1965. 7. The nature of employment throughout the period 1960-1993 was sufficient to cause the disease of mesothelioma. I accept the evidence of Dr Douglas Henderson that mesothelioma is attributable to total cumulative occupational exposure to asbestos and conclude that the exposure during each of the several periods of insurance materially contributed to Mr Mangold's disease. Each of these several exposures occurred in consequence of breach of duty owed by Prospect County Council to Mr Mangold. THE CLAIM 8. The claim by Integral Energy proceeds on the basis that each of the policies responds to the risk and each insurer is bound to indemnify Integral Energy wholly or proportionately in respect of each judgment, or in the alternative that Allianz, the last insurer on risk, is liable pursuant to s151AB of the Workers Compensation Act 1987 to indemnify proportionately to the periods of insurance by all cross-defendants, and self insurance. 9. It is conceded by Integral Energy that each policy was issued in the statutory form conveniently reproduced in the 1979 edition of Workers Compensation (NSW) by C P Mills at p 633. The insuring clause in the policy is as follows: Now this policy witnesseth that in consideration of the payment by the employer to the insurer of the abovementioned premium ... if, between the .......... day of ............ and 4 o'clock in the afternoon in the day of .......... and thereafter to 4 o'clock in the afternoon of the last day of the subsequent period in respect of which the premium shall have been paid to and accepted by the insurer, the employer shall be liable to pay compensation under the Act to or in respect of any person who is deemed by the Act to be a worker of such employer or to pay any other amount .... in respect of his liability independently of the Act ... to any such person. THEN, and in every such case the insurer will indemnify the employer against all sums for which the employer shall be so liable. (emphasis added) 10. Integral Energy contends that the liability of Integral Energy upon which this policy fixes occurred during each period of insurance because in each period injury occurred, which injury constituted certain damage inevitably and inexorably leading to the formation of the tumour, disability and death. 11. This argument cannot stand with the reasons given in the Court of Appeal by both Spigelman CJ and Mason P in Orica Ltd v CGU Insurance Ltd 2003 59 NSWLR 14 at pars 32 and 63. At par 32 Spigelman CJ said this: If the words of the policy - 'liable to pay' - mean the same with respect to the two circumstances to which they apply - that is, 'compensation under the Act' and 'in respect of his liability independently of the Act ' - then the policy responds in the later case only if the employer's liability has, within the relevant period, 'vested ' or 'accrued.' In my opinion, that does not occur earlier than the time of onset of mesothelioma. Damage is the gist of the action in negligence. The 'injury' occasioned at the time of penetration of the lung by a fibre, if it be injury within the meaning of the policy at all, which I doubt, is so negligible in and of itself, as distinct from its potential, that it does not constitute damage that is compensable at common law. At pars 63 and 64 Mason P said: I agree with Santow JA that the inhalation of asbestos fibres was an 'injury' but each policy required the employer's liability to pay compensation/common law damages for the injury to accrue during the term of the policy. The Chief Justice's analysis shows that the critical question is whether, between the two dates identified in each policy, the employer became 'liable to pay' an amount with respect to its liability to the worker, being a liability, independently of the Act. The latter concept is commonly and loosely described as liability at common law. If such liability arose the insurer was bound to indemnify the employer 'against all such sums for which the employer shall be so liable.' 12. The critical question for the fixing of liability to indemnify is when did the damage occur? In the case of mesothelioma, damage is constituted by the development of the tumour, not the earlier damage constituting the penetration of the lung by the fibre and alteration to the DNA which occurred at some indeterminate later time, the effect of which was to lay down the conditions for the growth of the tumour. 13. I find that the damage occurred in the year 2000 when the tumour formed and none of the insurers was on risk. No policy responds. 14. In the alternative Integral Energy relies upon s151AAA of the Workers Compensation Act 1987 which is in the following terms: 151AAA - Special Provision for common law policies under pre-1995 policies (1) A policy of insurance issued before 1 September 1995 (including a policy issued under the former Act) operates in respect of a liability of the employer for an injury to a worker that arises independently of this Act or the former Act as if the liability rose at the time of injury. (2) This section does not apply to a liability in respect of an occupational disease within the meaning of s 151AB. 15. It is the contention of Integral Energy that the legislature was conscious of the distinction between injury and damage when it selected the former word and upon the present facts injury occurred during each period of insurance. The necessary further contention by Integral Energy is that the liability generated by s151AAA(1) cannot be a liability in respect of an occupational disease within the meaning of s151AB excluded by s151AAA(2) because s151AB is not engaged at all upon the facts. The liability, it submits, is not a liability generated by s151AB and is therefore a discrete liability, that is, a liability not within the meaning of s151AB. 16. I cannot accept this argument. The liabilities of which s151AAA(2) speaks are liabilities in respect of those occupational diseases conveniently defined in s 151AB(6) which provides: (6) In section 151AB and sestion 151AC: Occupational disease means a disease of such a nature as to be contracted by a gradual process, that includes: (a) A dust disease as defined by the Workers Compensation (Dust Diseases) Act (1942); and (b) ... (c) ... 17. Mesothelioma is a dust disease as defined by the Workers Compensation (Dust Diseases) Act 1942. 18. S151AAA does not assist the cross claimant. No policy of insurance responds to the risk. Any consideration of co-ordinate liability is irrelevant because there is no liability upon the part of any insurer which may or may not be co-ordinate with that of the cross-claimant. 19. The cross-claims are dismissed in each matter. 20. The cross-claimant is to pay the costs of the cross-defendants. 21. Liberty on the part of the cross defendants to make further application in relation to the appropriate costs order. Ms L McFee instructed by Leigh Virtue and Associates appeared for the Cross-Claimant Mr G J Parker instructed by A O Ellison and Co appeared for the 1st Cross-Defendant Mr A Scotting instructed by Moray and Agnew appeared for the 2nd Cross-Defendant Mr I Judd instructed by Hunt and Hunt appeared for the 3rd Cross-Defendant Mr A Parker instructed by Peter A Collins and Associates appeared for the 4th Cross-Defendant DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.