Dust Diseases Tribunal of New South Wales CITATION : Orica Australia Pty Ltd v CGU Insurance Ltd [2002] NSWDDT 8 PARTIES : Orica Australia Pty Ltd CGU Insurance Ltd MATTER NUMBER(S) : 454 of 2001 JUDGMENT OF: Curtis J at 1 CATCHWORDS: Miscellaneous Matters :- Cross Claims Insurance LEGISLATION CITED: CASES CITED: DATES OF HEARING: 23 May 2002 DATE OF JUDGMENT: 06/07/2002 Mr G P F Rundle instructed by Phillips Fox appeared for the cross claimant LEGAL REPRESENTATIVES: Mr G F Little SC instructed by Pricewaterhouse Coopers Legal appeared for the cross defendant JUDGMENT: 1. A plaintiff, John Beaumont Dunstan was employed by Orica Australia Pty Ltd (Orica) between April 1959 and August 1961. During that time he inhaled asbestos dust and fibre by reason of the negligence of Orica and in consequence, in August 2001, contracted the disease of mesothelioma. He sued Orica in this Tribunal and on 15 May 2002 recovered damages in the sum of $240,000. 2. Orica now claims indemnity against this judgment from CGU Insurance Ltd (CGU) which company issued policies of insurance to Orica pursuant to the provisions of the Workers Compensation Act 1926 during the period of the plaintiff's employment. 3. CGU admits insurance but asserts that: (a) It is not liable to indemnify Orica because the policy indemnified only against a liability of Orica that arose during the period of insurance. Because the liability of Orica arose only when the plaintiff suffered damage; that is in August 2001, the policy issued by CGU does not respond. (b) In the alternative the indemnity was limited by the terms of its policy to $60,000. Does the Statutory Policy Respond to this Liability? 4. The statutory form of policy issued by CGU to Orica provided relevantly 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 ____ , 19__ and 4 o'clock in the afternoon of the ____ day of ____ ,19__ and thereafter to 4 o'clock in the afternoon of the last day of any 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 or is deemed by the Act to be a worker of such employer or to pay any other amount not exceeding £20,000 in respect of his liability independently of the Act for any injury to any such person, THEN, and in every such case the insurer will indemnify the employer against all such sums for which the employer shall be so liable .... 5. In the submission of CGU the relevant words to be construed are: If between the (relevant days) in respect of which the premium shall have been paid and accepted by the insurer, the employer shall be liable ... to pay any amount in respect of his liability independently of the Act ... then in every such case the insurer will indemnify ... 6. The deceptively simple question of fact is whether, damage being the gist of the plaintiff's action, Orica during the period of insurance was liable to pay any damages to Mr Dunstan had he then sued. 7. It is of course well established that: "under the common law a plaintiff can only recover compensation for actual loss or damage incurred, as distinct from potential or likely damage". (Per Mason CJ, Dawson, Gaudron, McHugh JJ in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 526.) 8. The plaintiff during the period of insurance inhaled asbestos fibre which lodged in the tissue of his lungs, causing no disease or disability present at that time, and it was not until many years later that the disease of mesothelioma resulted from the presence of those fibres. 9. It is true that when the fibres first penetrated his lungs the plaintiff suffered what may be termed bodily injury. In Favelle Mort Ltd v Murray (1975-1976) 133 CLR 580, the High Court held that the external cause or excitement of a disease constituted personal injury within the meaning of s 6 of the Workers Compensation Act 1926. It is also true that not all persons who suffer injury by way of lung penetration by asbestos fibre develop the disease of mesothelioma. 10. In Gibson v SIFC (DDT 89 of 1996 2 June 1998 (unreported)), I attempted to resolve the conundrum of whether "injury" within the general meaning of the word may be suffered without "damage" giving rise to an action in these terms: It is true that had the plaintiff brought his action on the day preceding the relevant date he may have failed for want of proof that his asbestos exposure had caused him damage. Symptoms did not occur until 1994. At that time the flaw in the plaintiff's action would have been want of evidence that his exposure had caused him more than the possibility of loss. (See Wardley Australia Ltd v State of Western Australia 1992 175 CLR 514 at 526). We do know, however, in retrospect, that the plaintiff's inhalation of asbestos fibre had caused in him pathological changes, present at the relevant date, that would inevitably and inexorably lead to the symptoms from which he now suffers. Had this evidence been available to him in 1978 he would be, albeit symptom free, entitled to damages no less than a person negligently subjected to the HIV virus who will inevitably contract AIDS. The argument of SIFC addresses not the perfection of the tort but the availability of evidence of such perfection at the relevant date. 11. In the light of the discussion of the matter by the High Court in Crimmins v Stevedoring Industry Finance Committee (1999) 2000 CLR 1, I do not believe that this approach is tenable. McHugh J at 52 said: Given that both parties accept that the damage for which the plaintiff seeks to recover damages occurred shortly before symptoms were diagnosed in 1997, 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 along a judgment for the tort of negligence at the suit of the plaintiff.' The tort of negligence is derived from the action on the case. Damage is the gist of that action and is an essential element of the cause of action. 12. The event which triggers the obligation to indemnify in the present case is the creation of a liability to pay damages during the period of cover, not the occurrence of an injury. 13. In State Mines Control Authority v Government Insurance Office of New South Wales 1964 65 SR NSW 258, Walsh JA, considering the statutory form of policy in relation to a liability under the Workers' Compensation Act said at 262: This liability is imposed in terms which imply `a reference to a point of time or event, and it is apparent that the occurrence of incapacity is the event or time intended.' ... in this particular type of case it is not possible for the purpose of determining whether a given liability comes into being within or outside a particular period of insurance cover to apply the notions of an inchoate or contingent liability arising at one point of time, that is, when an injury occurs. 14. After this decision, and 3 years after the plaintiff left the employ of Orica, Parliament, by the Workers Compensation (Dust Diseases) Amendment Act 1967 enacted s 18(6B) of the Workers' Compensation Act in the following terms: (6B) For the purpose of any contract of insurance or indemnity obtained by an employer after the commencement of Pt III of the Workers Compensation (Dust Diseases) Amendment Act, 1967, or obtained by him before and being maintained in force after such commencement, the liability of the employer, independently of this Act, for an injury, being an occupational disease, to a worker shall be deemed to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due. In this paragraph 'occupational disease' means a disease which is of such a nature as to be contracted by a gradual process. . . 15. That this legislation was thought necessary gives implicit support to the argument advanced by CGU in this case. The section does not assist Orica because it is not retrospective other than to the limited extent apparent from its terms. I conclude that CGU is not liable to indemnify Orica in respect of the plaintiff's judgment. Is the Indemnity Otherwise Limited? 16. Having considered the careful submissions of both counsel, I believe my reasoning and conclusions in Di Cecco v Mercantile Mutual Insurance (Workers' Compensation) Ltd [2002] DDT 1 on this issue may be wrong. I believe that decision to be on appeal, and not unreasonably, both parties in the present matter have indicated a desire for appellate scrutiny of my reasoning upon the first question. In the circumstances, I do not think it useful to visit this issue further. 17. Verdict for CGU Insurance Ltd on the cross claim by Orica Australia Pty Ltd. Mr G P F Rundle instructed by Phillips Fox appeared for the cross claimant Mr G F Little instructed by Pricewaterhouse Coopers Legal appeared for the 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.