Dust Diseases Tribunal of New South Wales CITATION : Longo v GIO General Ltd [2003] NSWDDT 6 Antonio Longo v PARTIES : Sydney Water Corporation GIO General Limited K W Monk Equipment Pty Limited Telstra Corporation Limited MATTER NUMBER(S) : 245 of 2000 JUDGMENT OF: Johns J at 1 Miscellaneous Matters - Proceedings :- Notice of Motion Law Reform (Miscellaneous Provisions) Act 1946 s 6(4) Leave sought thereunder to join an insurer as a defendant CATCHWORDS: Named insurer not the insurer at the last date of employment Period of uninsurance up to last date of employment Workers Compensation Act 1987 s 151AB Application thereof when one insurer only Contingent or potential liability of a policy of insurance Dust Diseases Tribunal Act 1989 Law Reform (Miscellaneous Provisions) Act 1946, s 6 LEGISLATION CITED: Workers Compensation Act 1926, s 7, s 18 Workers Compensation Act 1987, s 151AB Workers Compensation Legislation (Dust Diseases and Other Matters) Act 1998 No 130, sch 3 Australian Iron & Steel Pty Ltd v Government Insurance Office Of New South Wales (1985) 2 MVR 362; Commercial Union Assurance v Baird (1999) 47 NSWLR 735; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; Favelle Mort Ltd v Murray (1975-76) 133 CLR 580; GIO General Ltd v Malathounis (1997) 15 NSWCCR 255; Johnson & Johnson Pty Ltd v Manufacturers Mutual Insurance Ltd & Ors [2000] NSWSC 155; MMI Insurance v Baker (1997) 41 NSWLR 289; CASES CITED: Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537; Orica Australia Pty Ltd v CGU Insurance Ltd [2002] NSWDDT 8; Oswald v Bailey (1987) 11 NSWLR 715; Spain v Metropolitan Meat Industry Board [1971] 1 NSWLR 91; State Mines Authority v Government Insurance Office of New South Wales (1964) 65 SR (NSW) 258; State of New South Wales v AXA Insurance Australia Limited (2002) 54 NSWLR 409; Wintle v Stevedoring Industry Financing Committee (unreported Supreme Court of Victoria; 5 April 1989); Wunderlich v Manufacturers' Mutual Insurance Ltd [1981] 2 NSWLR 678 DATES OF HEARING: 24/03/2003, 27/03/2003 DATE OF JUDGMENT: 04/17/2003 FOR APPLICANT PLAINTIFF: Mr F Tuscano instructed by McLaughlin & Riordan LEGAL REPRESENTATIVES: FOR RESPONDENT SECOND DEFENDANT: Mr A C Scotting instructed by Thompson Cooper Lawyers JUDGMENT: 1. The Applicant Plaintiff seeks by way of a Notice of Motion that leave be granted to him pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 to proceed against GIO General Ltd. 2. The third further amended Statement of Claim alleges that between 19 April 1969 and 16 April 1972 the plaintiff was employed by K W Monk Pty Ltd as a labourer and Plumber's Assistant and in the course of the plaintiff's employment it is alleged he was required to excavate trenches through sandstone rock strata and drill and grind concrete surfaces. It further alleges that as a consequence of this employment silica and other rock dust particles were liberated into the atmosphere and were inhaled by the plaintiff. 3. It is conceded by the respondent defendant to the Notice of Motion that through its predecessor it insured K W Monk Pty Ltd pursuant to the Workers Compensation legislation from 1969 to 30 June 1971. 4. The injuries and disabilities particularised in the statement of claim relate to silicosis and carcinoma of the lung and consequential disabilities and conditions. 5. The plaintiff's then employer K W Monk Pty Ltd was deregistered on 11 September 1998. (See exhibit MPX 2, Annexure A and exhibit MPX 3 Annexures A, B, and C). K W Monk, a former director of the company, confirms that the plaintiff was employed and gave evidence that he insured for Workers Compensation with the GIO of New South Wales through a broker. All his Workers Compensation business was done through the same broker and he only ever recalls insuring with the GIO until some time in the late 1980s when the company changed over to the AMP. 6. The plaintiff's former employer did not have any records in respect of its insurance with the GIO and the few records that did remain were delivered to the liquidator when the company was deregistered. 7. The respondent in its evidence by its solicitor confirms various periods when the respondent insured the plaintiff's former employer, relevantly between 19 April 1967 and 30 June 1971. Various other periods appear but are not relevant to the present Statement of Claim. 8. Each of the respective legal practitioners has undertaken extensive searches in an endeavour to find documentation that would relate to any insurers in respect to the period 1 July 1971 to 16 April 1972. In that regard the endeavours by the plaintiff's solicitors have related to inquiries of Mr Monk who has sworn an affidavit in this Notice of Motion, and also inquiries with the liquidator and the issue of various subpoenas to insurance brokers and insurance companies and investigations of the former director of the former insurer's brokerage firm with whom Mr Monk and his companies dealt. 9. The result of all the inquiries undertaken has disclosed an inability to ascertain if K W Monk Pty Ltd was insured pursuant to the provisions of the Workers Compensation Act 1926 during the period 1 July 1971 to 16 April 1972. The relevant searches by the respondent to this application have revealed only the result in terms of the documents that it now holds to which I have already referred. 10. The statutory provisions relevant to the orders sought in this Notice of Motion are the Law Reform (Miscellaneous Provisions) Act 1946 s 6, and s 151AB of the Workers Compensation Act 1987 which for relevant purposes appears in similar terms to previous sections of the Workers Compensation Act 1926. 11. The accepted approach of a court to grant leave pursuant to provisions of s 6(4) has been laid down by Priestly JA in Oswald v Bailey (1987) 11 NSWLR 715 at 734–736. So much has also recently been accepted by the Court of Appeal in State of New South Wales v AXA Insurance Australia Limited (2002) 54 NSWLR 409. 12. In Oswald v Bailey Priestly JA indicated that a principal test which the court applies in deciding whether or not to grant leave pursuant to s 6 is whether the applicant has shown an arguable case of liability against the insured, being a liability against which the insured is indemnified by a contract of insurance in force at the time of the happening of the event said to give rise to the claim. An applicant had to show an arguable case on four matters. The first was whether there is an arguable case of liability against K W Monk Pty Ltd. The next two matters relate to whether at the time when K W Monk Pty Ltd's liability arose it was indemnified by a contract of insurance against such liability and the amount of any such liability which then became a charge on all insurance monies payable in respect of that liability. 13. In Commercial Union Assurance v Baird (1999) 47 NSWLR 735 at 741 Davies AJA indicated that the provisions of the legislature made it clear that any intended matter which is to be relied upon by any insurer to extinguish or reduces the insured' liability is to be raised by the insurer and that the onus will be on the insurer to establish it. 14. The essence of the respondent insurer's defence depends upon the application and the consequences of that application of s 18(6) to the Workers Compensation Act 1926. In that regard the respondent insurer relies upon the decision of Yeldham J in Wunderlich v Manufacturers' Mutual Insurance Ltd [1981] 2 NSWLR 678. In that case it was held that an employer was not entitled to indemnity from an insurer who did not insure that employer at the cessation of employment of an employee. In that case Yeldham J indicated that it was open to any insurer under a policy of the type described to raise by way of defence, the fact that it is not liable to indemnify the employer because of the deeming provisions of the subsection. Young J in Johnson & Johnson Pty Ltd v Manufacturers Mutual Insurance Ltd & Ors [2000] NSWSC 155 accepted that approach. 15. The applicant plaintiff submits that s 151AB has no application because its purpose is to identify from among a number of insurers maintaining a policy in force during the period of employment which is liable to indemnify the employer . In this case he submits there is only one insurer and the section can have no operation. The applicant plaintiff also maintains that any interpretation of the relationship between s 151AB and s 6(4) which deflects the plaintiff's claim would give rise to an unjust and unintended result. 16. It seems to me that this issue was dealt with by the Court of Appeal in the matter of GIO General Ltd v Malathounis (1997) 15 NSWCCR 255 at 258–263. This was a matter that was on appeal from the Tribunal regarding the seeking of leave pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 where the plaintiff was claiming that his employer and a certain number of defendants were liable to him in negligence and breach of statutory duty which resulted in his suffering from silicosis. The appellant was the insurer under the Workers Compensation Act 1926 of the joint first defendants. An order was sought by way of Notice of Motion for leave to bring an action against the insurer. In that matter it was held that s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 did not apply to policies of insurance taken out pursuant to s 18 of the Workers Compensation Act 1926 as a consequence of the effect of s 6(8) of the 1946 Act. 17. What is of significance, it seems to me, appears at 262 where reference was made to Spain v Metropolitan Meat Industry Board [1971] 1 NSWLR 91 wherein Isaacs J considered whether the section applied to a claim arising under a policy of Workers Compensation insurance. At 102 he observed that the legislature was presumed to have known of the interpretation placed upon s 18 and stated: In my view the same reasoning and result applies to this extended common-law form of liability created by the statute, and so in the case of such a policy taken out by an employer under the Workers' Compensation Act in respect of his common-law liability the operation of s 18 of the Workers' Compensation Act makes such a policy and its indemnity one operating under that Act and restricts the enforceability of the claim against the insurance company and restricts the liability of the insurance company to pay to a situation where there has first been a recovery by verdict and judgment against the employer for such damages. But for sub-s (8) of s 6 of the Law Reform (Miscellaneous Provisions) Act there would be, after the passing of the latter Act, a diametrically opposite situation created by the Law Reform (Miscellaneous Provisions) Act in favour of the worker injured by an employer's negligence to that contained in s 18 of the Workers' Compensation Act as interpreted judicially in Devine's case [(1928) 28 SR (NSW) 503; 45 WN 140] , because the latter section only gives rise to recourse to the insurers monies against the insurance company after liability has been established by judgment against the employer, whereas s 6 gives the right to bring the action under sub-s (4) with leave of the court, notwithstanding that the amount of the liability may not have been determined. [Emphasis added]. 18. This view was confirmed by the Court of Appeal in Malathounis (supra) as a correct view of the law. 19. If the Law Reform (Miscellaneous Provisions) Act had remained as it was then the applicant plaintiff would not succeed. However, subsection (9) of s 6 was enacted at the same time as a number of amendments to the Dust Diseases Tribunal Act. The amending legislation, which was Schedule 3 of the Workers Compensation Legislation (Dust Diseases and Other Matters) Act 1998 No 130, amended s 6 to include subsection (9). 20. It relevantly provides: (9) Despite subsection (8), this section applies in relation to a policy of workers compensation insurance entered into by an employer (whether entered into before or after the commencement of this subsection), where the employer: (a) being a natural person, has died, or is permanently resident outside the Commonwealth and its Territories, or cannot after due inquiry and search be found, or (b) being a corporation (other than a company that has commenced to be wound up), has ceased to exist, or (c) being a company, corporation, society, association or other body (other than a company that has commenced to be wound up), was at the time when it commenced to employ workers to which the policy relates incorporated outside the Commonwealth and its Territories and registered as a foreign company under the laws of any State or Territory and is not so registered under any such law, or (d) being a company, is in the course of being wound up 21. In the second reading speeches (Legislative Assembly 29 October 1998 and Legislative Council 17 November 1998) the then Attorney-General indicated that the main purposes of the Bill were to increase the fairness of common law provisions relating to dust diseases, and to make procedural changes to enable more efficient disposal of the proceedings in the Dust Diseases Tribunal and facilitate the settlement of claims, and to make other miscellaneous provisions. 22. It would seem to me, therefore, that this subsection is designed for particular circumstances usually more relevant to matters before the Tribunal to allow a worker injured by an employer's negligence to bring an action under s 6(4) with leave of the court notwithstanding that the amount of the liability has not been determined. 23. In this matter K W Monk Pty Ltd has been deregistered and has ceased to exist and is an employer clearly within the provisions of subsection (9)(b). In those circumstances it seems to me that a consideration of those matters relevant to the exercise of discretion pursuant to s 6 should be made. 24. As previously indicated the respondent insurer submits that it is entitled to disclaim indemnity on the grounds of the decision of Yeldham J in Wunderlich (supra). The respondent submits that the leave of the court which is required under the provisions of s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 not be granted as the insurer is entitled to disclaim liability on the basis of s 151AB of the Workers Compensation Act 1987. The obligation to secure leave is intended to limit cases against insurers to those where such proceedings are necessary or appropriate. 25. In Wunderlich (supra) at 684 Yeldham J concluded that the object of s 18(6B) was to crystallise the time at which the liability of an insurer (or a self-insurer) for a particular type of injury is deemed to arise. He also referred to a problem not expressly referred to from the use of the words "being maintained in force" which was he said to be taken as a reference to a policy that was at least for a time continued in force after the commencement of the 1967 amending Act to the Workers Compensation Act 1926 even though no longer in force at the time when the worker was last employed by the employer as contemplated by the subsection itself. He also stated that if an employer had secured a policy from another insurer after that with the defendant had been terminated, and if that policy had been in force when the applicant was last employed the new insurer would be liable to indemnify the employer in respect of the claim. That would be the result, he said, whether the employer sought indemnity from its new insurer or its previous insurer. That construction, he said, was not any different when there was no new policy or where the employer was a self-insurer. 26. What he then said (at 685) indicates that the subsection operates for the purposes of a claim against an insurer whose policy continued in force at least for a time and provided the insurer with a defence to the employer's claim notwithstanding that the policy was terminated prior to the claim being made. 27. Subsequently, however, in Australian Iron & Steel Pty Ltd v Government Insurance Office Of New South Wales (1985) 2 MVR 362 Yeldham J concluded that a self-insurer is not an insurer at all. Such an employer is simply uninsured. However, because it is the holder of an appropriate licence under s 18(1)(a) and because of the express provisions of 18(c) the uninsured liability scheme is not involved in the case an employer is exempted by reason of that licence from obligation to insure. 28. In Johnson & Johnson (supra), Young J considered the authorities and concluded for the purposes of s 151AB, the successor in the new act to s 18, there is no real distinction to be made between the two sections and that a self-insurer is not an insurer under this section. The basis appears to me to be that there was no policy being maintained in force . Young J indicated that the words "a number of insurers under policies of insurance obtained by the employer" referred to insurers who had issued policies of insurance. This precluded liability in a self-insurer because the self-insurer does not issue a policy of insurance and the section makes clear that there are two distinct entities; the employer and the insurer. 29. In MMI Insurance v Baker (1997) 41 NSWLR 289 Gleeson CJ stated that the deeming provisions contained in subsection (1) of s 151AB are expressed to apply for the purpose of the section. The purpose of the section is explained he stated in subsection (2). That purpose is related to a case where there are two or more policies of insurance under which an employer is contractually entitled to indemnity in respect of damages for which a plaintiff sues. In such a case the section selects one of the insurers to indemnify the employer. MMI in that case was never liable to indemnify the employer in respect of any part of the damages for which the plaintiff sued. He further indicated that the section whatever operation it might have had if there were two insurers on risk in the relevant period it had no operation in a case where there was only ever one insurer on risk in relation to the plaintiff's cause of action. 30. The respondent insurer has made an additional submission which is based on the assumption that s 151AB does not apply. This submission is founded upon a decision by Curtis J in Orica Australia Pty Ltd v CGU Insurance Ltd [2002] NSWDDT 8. In this matter his Honour concluded that the insurer was not liable to indemnify Orica under a policy of insurance current at the time of the plaintiff's exposure to asbestos dust. The basis of his conclusion related to a consideration of what was said by McHugh J in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1. In considering the nature of the policy and the meaning of the words "shall be liable," his Honour concluded that because damage is the gist of the plaintiff's action he could not have recovered any damages had he sued the defendant in his case while the policy was in force. There is a well-established principle as he indicated under the common law that a plaintiff can only recover compensation for actual damage or loss incurred as distinct from potential or likely damage. In Crimmins (supra, at 52), McHugh J indicated that "Tadgell JA was plainly right when he said that it is 'scarcely possible to contend that the authority could have been amenable on or at any time before 26 February 1978 to a claim, let alone a judgment, for the tort of negligence at the suit of the [plaintiff]'." McHugh J further indicated (at 52) that damage is the gist of that action and it is an essential element of the cause of the action. 31. Upon this basis Curtis J indicated that the event which triggers the obligation to indemnify is the creation of a liability to pay damages during the period of cover, not the occurrence of an injury. He also referred to State Mines Authority v Government Insurance Office of New South Wales (1964) 65 SR (NSW) 258 at 262. 32. However, at 262 Walsh J referred to the well established principle of an inchoate liability arising upon the happening of an event of an injury and existing prior to the onset of any incapacity. What he then concluded was that in his opinion this principle could not be applied to a case in which liability was established by resort to s 7(4) of the then Workers Compensation Act. This case dealt with the question of the liability of an insurer under the provisions of that act. 33. There doesn't seem to be any dispute in my view as to the question of whether the plaintiff in this case suffered what may be termed bodily injury during the time of any exposure (see Favelle Mort Ltd v Murray (1975-76) 133 CLR 580). 34. In this matter I am of the view that s 151AB probably does not apply and that the determination of the question of the liability of the insurer is to be determined by the terms of the policy. In any event I think such a proposition is arguable. The terms of the policy in respect of indemnity specify "in respect of his liability independently of the act for any injury to any such person [who is or is deemed by the Act to be a worker]" an amount of at least $50,000. 35. Although Crimmins dealt with the provisions of a statute McHugh J also stated at 52-53: To say that the plaintiff did not have a complete cause of action as at 26 February 1978, however, does not end the matter. In two cases involving this very question and legislation, two judges have expressed their opinion that "liabilities" includes "potential" or "contingent" liabilities … The precise meaning to be given to the word "liabilities" depends on its context … In some contexts, the meaning of "liabilities" will be wide enough to embrace a "contingent" or "inchoate" liability. 36. In Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at 584 Windeyer J in describing the words 'liable' and 'liability' stated: [T]here are at least three main senses in which lawyers speak of a liability or liabilities. The first, a legal obligation or duty: the second the consequence of a breach of such an obligation or duty: the third a situation in which a duty or obligation can arise as the result of the occurrence of some act or event. 37. It seems to me that there is no reason for giving the word its narrow meaning and the meaning of the policy should be resolved in a way that protects rather than destroys potential rights: see Crimmins at 56 per McHugh J. In any event in the presence of a choice between a restricted meaning of liability and one which embraces potential or contingent liabilities it should be given the meaning that would save potential rights in tort that would have matured into causes of action. It is not, as McHugh J further stated (at 56), wrong to speak of a contingent liability in tort that existed in some past period. 38. The evidence in the case is likely to suggest that the mesothelioma developed from the exposure to asbestos over the relevant period (at least in part) of the insurance policy. At the end of the period it would be accurate to describe a contingent liability in tort which would become a complete cause of action "on the development of mesothelioma with the effluxion of time:" Crimmins at 56 per McHugh J. 39. Kirby J in Crimmins indicated (at 68) that the starting point is to recognise that the words 'liability' and 'liable' are not fixed either in their ordinary usage in the English-language or by the assignment of a technical legal meaning. The context is all. 40. Kirby J affirmed (at 68) that in some contexts liable will connote found liable in law but in other contexts it will connote potential, contingent or notional liability if certain events occur. Kirby J (at 69) cited with approval the obiter passage of McGarvie J in Wintle v Stevedoring Industry Financing Committee (unreported Supreme Court of Victoria; 5 April 1989) where his Honour stated: [I]t is hardly to be expected that Parliament intended that if a liability which was in the process of crystallising but had not crystallised before the relevant date, crystallised after the relevant date, the party to whom the liability would have been owed if it had crystallised before the relevant date, be left without remedy. 41. Kirby J at 70 then stated: Obviously, upon the assumption made for the purposes of the present argument, some lasting physiological change short of injury took place in the deceased's body at the time of his exposure to asbestos fibres whilst employed as a waterside worker in the 1960s. The mere fact that it produced no immediate symptoms and constituted no "injury", in the sense of occasioning damage for which the deceased could then have sued, does not destroy its contingent potential. The same would be true in a case of negligent exposure of a person to an extremely serious virus, such as strains of hepatitis or the human immunodeficiency virus. The potentiality for future damage would be caused at the moment of such exposure. Without such exposure there would be no possibility of future damage, absent a new event. There seems no reason of principle to treat such a case as different from the liability of a surety under a guarantee before the events giving rise to legal obligations have occurred. There may be no legal "obligation" of the Authority actually existing immediately before the expiration of the period specified. 42. For these reasons it seems to me that liability pursuant to provisions of the policy should not be given a meaning so narrow that it excludes potential or contingent liabilities in circumstances where the evidence in this case is likely to be not dissimilar to the situation discussed by Kirby J. In any event it would seem to me clearly arguable. 43. Therefore, I think there are real questions to be determined whether or not in these circumstances the respondent insurer is entitled to disclaim indemnity. I do not think that this is a case that is so clear as to justify the summary intervention of the court to prevent the plaintiff submitting his case for determination in the appointed manner before the Tribunal. I do not think that the arguments of the respondent insurer are of sufficient strength to prevent the Tribunal being satisfied that the insurer is entitled to disclaim liability. It follows that the prohibition in s 6(4) does not operate in the present case. I can see no reason why leave should not be granted. 44. I make orders in accordance with paragraph 3 of the Notice of Motion dated 25 November 2002. 45. I order that the costs of the Notice of Motion be costs in the cause. Mr F Tuscano instructed by McLaughlin & Riordan appeared for the Plaintiff Mr A C Scotting instructed by Thompson Cooper Lawyers appeared for the Second 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.