Dust Diseases Tribunal of New South Wales CITATION : Macarthur-Onslow v Vero Workers' Comp (NSW) Ltd and Ors [2006] NSWDDT 27 This decision has been amended. Please see the end of the judgment for a list of the amendments. Neil Gordon Macarthur-Onslow (Plaintiff) Vero Workers' Compensation (NSW) Ltd The Insurer of Denzil Macarthur-Onslow Pty Ltd (Deregistered) PARTIES : Wallaby Grip Ltd Wallaby Grip (BAE) Pty Ltd (In Liquidation) Hillsdale Investments Pty Ltd (Formerly Denzil Macarthur-Onslow Pty Ltd MATTER NUMBER(S) : 5135/05 JUDGMENT OF: Duck J CATCHWORDS: Dust Diseases Tribunal :- Application to appoint a designated insurer pursuant to section 151AC of the Workers Compensation Act 1987 Workers Compensation Act, 1987 LEGISLATION CITED: Uniform Civil Procedure Rules Law Reform (Miscellaneous Provisions) Act, 1946 CASES CITED: ICI Australia Operations Pty Ltd v Work Cover Authority of New South Wales (2004) 60 NSWLR 18; National Mutual Fire Insurance Co Ltd v Commonwealth of Australia (1981) 1 NSWLR 400 DATES OF HEARING: 17/07/2006, 27/07/2006 DATE OF JUDGMENT: 07/27/2006 EX TEMPORE JUDGMENT DATE : 07/27/2006 Mr B McHardy of Mclaughlin & Riordan appeared for the Plaintiff Mr N Calnan of Lee & Lyons Lawyers appeared for the First Defendant LEGAL REPRESENTATIVES: Ms N Lapthorne of Phillips Fox Lawyers appeared for Amaca Pty Ltd Mr J de Greenlaw instructed by McCulloch P V & Buggy appeared for Mercantile Mutual Insurance Workers' Compensation Ltd Ms B Audsley of Thompson Cooper Lawyers appeared for CGU Workers' Compensation NSW Insurance Ltd JUDGMENT: DUCK J 1 The Tribunal has before it an application to appoint a designated insurer pursuant to section 151AC of the Workers Compensation Act 1987. That section makes reference to the provisions of section 151AB. It is convenient at the outset to set out the terms of the sections. Section 151AB(1) provides: (1) If an employer is liable independently of this Act for damages for an occupational disease contracted by a worker, the following provisions have effect for the purpose of any policy of insurance obtained by the employer for different periods which insurer or insurers is liable to indemnify the employer for the full amount of the damages or which is liable to pay the full amount of damages to the worker (without any right to a contribution from those other insurers) : (a) Any liability of that employer that arose before the relevant commencement is taken to have arisen when the worker was last employed before that commencement by that employer in an employment to the nature of which the disease was due. (b) Any liability of that employer that arose after the relevant commencement is taken to have arisen when the worker was last employed after that commencement by that employer in an employment to the nature of which the disease was due. 2 Subsection 2 makes provision for what should happen in the event that subsection 1(b) has application. Subsection (3) deals with a case in which there are two or more employers. Subsection (4) provides: (4) This section does not affect the amount of damages recoverable by a worker. Subsection (5) provides: (5) This section applies to any liability arising before or after the commencement of this Act and to any policy of insurance issued before or after that commencement . Subsection (6) provides: (6) In s 151AB and 151AC: occupational disease means a disease of such a nature as to be contracted by a gradual process and includes: (a) A dust disease as defined by the Workers Compensation (Dust Diseases) Act 1942 and (b) … (c) ... relevant commencement means ... 3 S 151AC provides as follows: (1) Application of this section This section applies in relation to an employer who was liable independently of this Act for damages for a dust disease as defined by the Workers' Compensation (Dust Diseases) Act 1942 contracted by a worker, where there is a dispute as to which of 2 or more insurers in a category of insurers is liable to indemnify the employer under any of the provisions of section 151AB. (2) Designated insurer to be responsible pending resolution of dispute For the purposes of section 151AB, and pending resolution of the dispute, the insurer who is the designated insurer in the relevant category under this section is to be treated as being the insurer who is so liable to indemnify the employer. Section 151AB has effect, and is to be construed, accordingly. (3) (Makes provision for the identification of the designated insurer.) (4) However, the insurers in a category may agree as to which of them is to be the designated insurer or the Dust Diseases Tribunal can order that any one of them is to be the designated insurer, and any such agreement or order overrides subsection (3). (5) (Makes provision for the designated insurer to act for other insurers.) (6) (Makes provision for other insurers to make submissions as to damages.) (7) (Provides methods of resolving the dispute.) (8) (Provides for arbitration of the dispute.) 4 Subsections (9) (10) and (11) I think are not presently relevant nor are subsections (12) (13) (14) and (15). 5 The way in which the present matter has arrived at the state it has reached should be recorded with a little care. The plaintiff filed a statement of claim on 22 December 2005. The defendants nominated in the statement of claim were Vero Workers' Compensation, that is Vero Insurance Ltd (Vero), which was sued as the insurer of a deregistered employer Denzil Macarthur-Onslow Pty Ltd. The second and third defendants were Wallaby Grip Ltd and Wallaby Grip (BAE) Pty Ltd. The statement of claim pleaded that the plaintiff suffered from mesothelioma. 6 The first defendant filed an appearance on 30 January 2006. Included in the appearance was this statement: The first defendant submits to the making of all orders sought and the giving or entry of judgment in respect of all claims made save as to costs. 7 In the light of events which have followed I think that the filing of an appearance in this form was probably a mistake. It caused, however, Pt 6 r 11 of the Uniform Civil Procedure Rules to have application. That rule provides as follows: 6.11 (1) A defendant who intends to take no active part in proceedings may include in the defendant's notice of appearance a statement to the effect that the defendant submits to the making of all orders sought and the giving or entry of judgment in respect of all claims made, to which may be added the words, "save as to costs". (2) Except by leave of the court, a defendant who has filed a notice of appearance containing a statement referred to in subrule (1) may not file a defence or affidavit or take any other step in the proceedings. 8 It will be apparent to those who are engaged in the case notwithstanding the rule Vero has been active in the proceedings. 9 The second and third defendants filed appearances on 31 January 2006. A statement of particulars required by the claims resolution process was filed by the plaintiff on 6 February 2006. On 22 February 2006 the second and third defendants filed a cross-claim against Amaca Pty Ltd (Amaca) seeking contribution or indemnity pursuant to section 5 of the Law Reform (Miscellaneous Provisions) Act 1946. On 23 February 2006 Vero filed a reply as required by the claims resolution process. On 3 March 2006 the second and third defendants filed replies to the plaintiff's statement of particulars as required by the claims resolution process. On 22 March 2006 Amaca, the cross-defendant, filed a reply. 10 On 10 April 2006 the first defendant, Vero filed a motion seeking an order that the plaintiff's action against it be struck out and an order for costs. The affidavit in support of that application was the affidavit of Brian Jacobsen, sworn on 2 March 2006. Stated shortly the affidavit deposed to the fact that a policy had been found only for one year, that is from 1 January 1975 to 31 December 1975 for the employer Denzil Macarthur-Onslow Pty Ltd. At a directions hearing on 10 April 2006 that motion was listed for hearing on 20 April 2006. On 11 April 2006 Vero filed a list of documents. On 2 May 2006 the plaintiff filed both a section 25(3) notice and a section 25B notice and a statement of particulars in the proceedings. On 8 May 2006 the second and third defendants filed a motion seeking the appointment of the first defendant as designated insurer. I should add that nothing seems to have happened on 20 April 2006 about Vero's application. 11 By early May concern had arisen about the state of the plaintiff's health. Arrangements were made to take his evidence at Ulladulla at a bedside sitting on 12 May. At that hearing Vero was represented by counsel who cross-examined the plaintiff. The second and third defendants were represented by counsel, Amaca was represented by counsel. In respect of the representation of Vero learned counsel appearing for that party cross-examined the plaintiff, in particular for present purposes, in a way intended to show that another insurer should bear the burden of carrying the action on behalf of the employer. 12 On 21 June 2006 the plaintiff filed an amended statement of claim which added the former employer, now known as Hillsdale Investments Pty Ltd, as a fourth defendant. The company which had been the employer was restored to the register pursuant to an order of the Supreme Court made on 13 June 2006. (See APX2 annexure C). 13 Following the taking of the plaintiff's evidence inquiries continued about what insurance was in fact in force in respect of the employer. Exhibit APX2 annexure C shows that the position appears to have been as follows; Vero Insurance Ltd insured up to 31 December 1975. CGU Workers Compensation NSW Ltd (CGU) was the insurer from 6 August 1975 to 30 June 1977. Mercantile Mutual Insurance Workers Compensation Ltd (Mercantile Mutual) was the insurer from 30 June 1977 to 30 June 1981. 14 On 17 July 2006 the hearing took place of the application for the appointment of a designated insurer. Mr Sheller appeared for CGU and after a time was excused from further attending the hearing. In substance this was because whatever the Court found about when the plaintiff was last employed in an employment to the nature of which his disease was due it was most unlikely that CGU would be the insurer for that period. 15 On the hearing of the application the evidence given by the plaintiff at the bedside hearing was tendered. An affidavit of Mr McHardy, the plaintiff's solicitor, sworn 17 July 2006 was tendered. It went to his inquiries about what insurance was on foot at relevant times. The affidavit of the plaintiff sworn 20 January 2006, which had been tendered in the principal proceedings, was again tendered on this application. The short affidavit of the plaintiff sworn on 19 April 2006, which was PX2 in the principal proceedings, was also tendered on the application. The industrial history relating to the plaintiff obtained by the Dust Diseases Board was tendered. There was a letter from the plaintiff's solicitors to QBE Insurance Co Limited bearing date 10 April 2006 tendered. I think for present purposes the significance of that letter has diminished with the passing of time. The defendants to the application tendered a letter from the plaintiff's solicitors to McCulloch & Buggy, solicitors for Mercantile Mutual, serving upon them copies of the relevant pleadings. The last document tendered was a copy of the reply filed by Vero in the claims resolution process. 16 The tendering of evidence was undertaken with little difficulty. Submissions were then made by Mr Gracie, firstly, on behalf of Vero. He pointed to the pleadings, he pointed to the evidence given by the plaintiff at the bedside hearing, in particular to that evidence given in cross-examination to counsel appearing for Vero at that hearing. He submitted that the Court would be guided by the judgment in ICI Australia Operations Pty Ltd v WorkCover Authority (2004) 60 NSWLR 18 in which an extensive review of the legislation under consideration was undertaken by the Court, in particular by McColl JA. He submitted that as a matter of statutory construction the last insurer should be nominated as designated insurer. 17 Mr de Greenlaw, who appeared for Mercantile Mutual, made some lengthy submissions. He pointed out in those submissions the difficult position in which his client had been placed by the way in which events had unfolded. I will go to the substance of the submissions in a moment, but they included reference to conduct which he described as unconscionable conduct and he submitted that various estoppels arose and that certain consequences should follow. I wish to make it as clear as I can that I do not believe that Vero was attempting to do anything other than take its part in the proceedings and to protect its own interests in an ordinary way. 18 Mr de Greenlaw submitted that, firstly, the Tribunal ought not appoint a designated insurer, or secondly that Vero should be directed to indemnify the defendant. I will come back to those suggestions in a moment or two. He then pointed out that no leave had been sought by the plaintiff to sue Vero in the statement of claim. Such leave, he submitted, was required by subsection (4) of section 6 of the Law Reform (Miscellaneous Provisions) Act 1946. It will be remembered that section 6 of that Act is the section which creates a charge on all insurance moneys payable pursuant to a policy in force in favour of the person having the right to claim damages from the indemnified employer, that is, from the insured. The provision is in the following terms: (1) If any person (hereinafter in this Part referred to as the insured) has, whether before or after the commencement of this Act, entered into a contract of insurance by which the person is indemnified against liability to pay any damages or compensation, the amount of the person's liability shall on the happening of the event giving rise to the claim for damages or compensation, and notwithstanding that the amount of such liability may not then have been determined, be a charge on all insurance moneys that are or may become payable in respect of that liability. (2) If, on the happening of the event giving rise to any claim for damages or compensation as aforesaid, the insured (being a corporation) is being wound up, or if any subsequent winding-up of the insured (being a corporation) is deemed to have commenced not later than the happening of that event, the provisions of subsection (1) shall apply notwithstanding the winding-up. 19 Subsection (3) is not presently relevant. Subsection (4) is in these terms: (4) Every such charge as aforesaid shall be enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured; and in respect of any such action and of the judgment given therein the parties shall, to the extent of the charge, have the same rights and liabilities, and the court shall have the same powers, as if the action were against the insured: Provided that, except where the provisions of subsection (2) apply, no such action shall be commenced in any court except with the leave of that court. Leave shall not be granted in any case where the court is satisfied that the insurer is entitled under the terms of the contract of insurance to disclaim liability, and that any proceedings, including arbitration proceedings, necessary to establish that the insurer is so entitled to disclaim, have been taken. … (7) No insurer shall be liable under this part for any greater sum than that fixed by the contract of insurance between the insurer and the insured. 20 In the circumstances of the present case section 6(2) seems to me to have had no application. The plaintiff's evidence, both in his affidavits and that evidence given orally relating to his leaving the employer and the disposition of the employer company to the company connected with Campbell's Soup, and the subsequent selling of assets and distribution of moneys to shareholders indicates that those things happened around 1980 and thereafter. The manifestation of symptoms of illness which were the damage which completed the tort upon which he sued occurred in 2005 (see APX3 the plaintiff's affidavit of 20 January 2006). By then the winding up of the employer was well and truly finished. If, as I think section 6(2) has no application then the leave of the Court was needed to commence proceedings against Vero, and that leave was not obtained. The effect is that the proceedings against Vero have been a nullity (see National Mutual Fire Insurance Co Ltd v The Commonwealth of Australia (1981) 1 NSWLR 400). Various submissions stemmed from these facts. Mr de Greenlaw submitted that because Vero should not have been a party in the absence of leave and because they have taken the active part in the case which they have taken, they cannot be heard now to disclaim liability. Further, he submitted that Vero's conduct in conducting the case in the way it did, and by that I think he means seeking to inculpate other insurers other than itself, amounted to unconscionable conduct. 21 Alternatively he submitted that they were taking advantage of the special vulnerability of other insurers who were not present at the bedside hearing and that they were then estopped from denying that they were liable to indemnify the employer. He submitted further that because Vero had been joined as a party it was unable to disclaim liability and that it sought to do so now. I am not sure that that is exactly correct, but that was the submission. It was submitted that Vero obtained an advantage, particularly when cross-examining the plaintiff at p 10 of the transcript, which cross-examination tended to inculpate other insurers rather than itself. It was submitted that had they not been present at the hearing that evidence would not have been adduced. Finally it was submitted that no insurer should be designated without the striking out of that evidence, which was identified as being the evidence at T10 line 12 to line 22 and the evidence given in re-examination T11 line 1 to line 4. It may be permitted perhaps to observe that the events and the submissions illustrate once more, if ever it needed illustrating, that the best laid plans of mice and men often go awry. 22 It seems to me that the whole purpose of section 151AB and 151AC was to make simple matters relating to insurance and employers so that the plaintiff's claim could be dealt with expeditiously and the insurance position could be sorted out later. The rights of a designated insurer are of course preserved by the scheme set up under section 151AC. 23 It seems to me that the pragmatic way to permit this action to go forward is to appoint a designated insurer. Refusing to appoint a designated insurer would leave the matter up in the air and how it would then proceed is not clear to me. I think an insurer ought to be designated. I acknowledge the force of the submissions made by Mr de Greenlaw about the unenviable position that his client has been placed in by the way in which the matter has unfolded. At the risk of being repetitious may I say that I do not think this has happened as a result of calculation or ill will or anything like that, it is just the way events have turned out. I think the answer to the matter requires the exercise of the power contained in section 151AC subparagraph (4). Vero has been engaged in the matter from its inception. It has taken part in the claims resolution process. It has filed a list of documents. It has taken part in the bedside hearing at which the plaintiff's evidence was taken and cross-examined him, and the steps taken in the proceedings by the company have been taken notwithstanding the nature of the appearance it filed and notwithstanding the absence of leave to commence proceedings against it in the first place. The practical way for the matter to go forward is to nominate Vero as the designated insurer, and I propose to make that order. 24 In respect of the submissions about limiting the use to which the plaintiff's evidence might be put, that will be a consideration not for the plaintiff's claim against the defendants but rather when the insurance questions fall to be sorted out later. At that time an application can be made as to the use to which the evidence obtained at the bedside hearing can be put. In determining to proceed this way I have deliberately refrained from making findings about when the plaintiff was last employed in an employment to the nature of which his disease is due. Those are matters which can be explored between the insurers at the appropriate time. I have some evidence on those issues. What other evidence there may be I do not know, and it seems to me to be counterproductive to be making findings on such matters at this stage in the circumstances in which we now find ourselves. 25 Section 151AC(4) I have already recounted. Having made provision in (3) about how a designated insurer might be identified, (4) provides that the insurers in the category may agree as to which of them is to be the designated insurer or the Dust Disease Tribunal can order that any one of them is to be the designated insurer, and any such agreement or order overrides (3). It is that power which I wish to utilise in designating Vero as the designated insurer. I do so with the intention that the various forensic difficulties which Mr de Greenlaw identified, some of which may well be real, may be overcome. 26 For the reasons which I have enunciated pursuant to section 151AC(4) I appoint Vero Insurance Ltd to be the designated insurer for the purposes of section 151AB of the Workers Compensation Act 1987. 27 As regards the costs of the application I propose that the costs be costs in the cause but I will hear parties on costs. 28 At the request of two of the parties present today, that is the second and third defendants and the representative of Mercantile Mutual, I reserve the costs of the application. 29 I grant leave to the plaintiff to file an amended statement of claim within two days. 30 I direct that the hearing of the cross-claim brought by the second and third defendants against Amaca Pty Ltd be severed. 31 I fix the hearing of the plaintiff's claim against the defendants for Thursday 3 August 2006 and Friday 4 August 2006. Mr B McHardy of Mclaughlin & Riordan appeared for the Plaintiff Mr N Calnan of Lee & Lyons Lawyers appeared for the First Defendant Ms N Lapthorne of Phillips Fox Lawyers appeared for Amaca Pty Ltd Mr J de Greenlaw instructed by McCulloch P V & Buggy appeared for Mercantile Mutual Insurance Workers' Compensation Ltd Ms B Audsley of Thompson Cooper Lawyers appeared for CGU Workers' Compensation NSW Insurance Ltd I certify that the previous 31 paragraphs Are the reasons for Judgment of His Honour Judge Duck Associate 31/08/2006 - On the title page only - Part of the plaintiff's surname was incorrectly spelt. It has now been corrected. - Paragraph(s) 0 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.