Reported Decision : 60 NSWLR 18 New South Wales Court of Appeal CITATION : ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited) & 1 Ors v The WorkCover Authority of New South Wales [2004] NSWCA 55 revised - 12/03/2004 HEARING DATE(S) : 2 May 2003 JUDGMENT DATE : 11 March 2004 JUDGMENT OF : Mason P at 1; Meagher JA at 2; McColl JA at 4 DECISION : The Appeal 1. Appeal allowed. 2. Declare that the WorkCover Authority of New South Wales is liable to indemnify ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited) in respect of the damages and costs paid to George Roland Brazier in and arising out of proceedings in the Dust Diseases Tribunal of New South Wales numbered 169 of 1997 between George Roland Brazier and ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited). 3. Order the WorkCover Authority of New South Wales to pay the costs of and associated with the Appeal and in the Court below. The Cross-Appeal 1. Cross-Appeal dismissed. 2. Cross-appellant to pay the costs of the Cross-Appeal. CATCHWORDS : WORKERS COMPENSATION - DUST DISEASES - INSURANCE - meaning of "employment to the nature of which the disease was due" in s 151AB of the Workers Compensation Act 1987 - whether the Court is required to have regard to the actual occupational disease suffered by the worker - standard of proof required - extent to which Judges of the Dust Diseases Tribunal are entitled to rely upon their knowledge as members of a specialised tribunal - insolvent insurers - whether s 232 of the Workers Compensation Act 1987 confers a discretion on the WorkCover Authority to make payments out of the Insurers' Guarantee Fund - capacity in which an insurer designated pursuant to s 151AC of the Workers Compensation Act 1987 makes a payment to or on behalf of an employer - whether the WorkCover Authority has power to reimburse an employer pursuant to s 232 where the employer's liability has been discharged by the designated insurer - effect of undertaking to the Dust Diseases Tribunal by the WorkCover Authority that it would reimburse employer - D Commonwealth Employees Compensation Act 1930-1956 s 10(1) Courts Legislation Amendment Act 1998 (NSW) Dust Diseases Tribunal Act 1989 (NSW) s 11A, s 32, s 32(1) Interpretation Act 1987 (NSW) s 5, s 9 WorkCover Legislation (Amendment) Act 1995 (NSW) Workers Compensation (Benefits) Amendment Act 1989 (NSW) Workers' Compensation Act 1912 (NSW) s 12 Workers' Compensation Act 1926 (NSW) s 6, s 7, s 7(4), s 7(5), s 18(1), s 18(6A), s 18(6B), Part IIIB, s 30Q(2) LEGISLATION CITED : Workers Compensation Act 1987 (NSW) s 3, s 34, s 93, s 124, Part 5 Division 5, s 151AB, s 151AB(1), s 151AB(1)(a), s 151AB(1)(b), s 151AB(2), s 151AB(6), s 151AC, s 151AC(1), s 151AC(2), s 151AC(5), s 151AC(5)(a), s 151AC(6), s 151AC(9), s 151AC(10), s 151AC(10)(a), s 159, s 159(2), s 159(3), s 159(5), Part 7 Division 3, Part 7 Division 6, s 218(2), s 221, s 221(2), s 221(4), s 221A, s 222, Part 7 Division 7, s 225, s 225(1), s 226, s 226(1), s 227, s 227(1), s 227(2), s 227(3), s 227(4), s 228, s 228(1), s 228(2), s 228(2A), s 228(2B), s 228(4), s 229, s 230, s 231, s 231(2), s 231(2)(b), s 231(3), s 231(4), s 231(7), s 232, s 232(1), s 232(2), s 232(3), s 232(4), s 233, s 233(1), s 233(2), s 233(3), s 233(4), s 234, s 234(1), s 234(1)(a), s 235, s 236, s 236(2), s 236(3), s 236(4) Workers Compensation (Amendment) Act 1985 (NSW) Schedule 5 Workers Compensation (Amendment) Act 1991 No 2 (NSW) Schedule 3 [9] Workers' Compensation (Dust Diseases) Act 1942 (NSW) s 3, Schedule 1 Workers' Compensation (Dust Diseases) Amendment Act 1967 (NSW) Workers Compensation Legislation Amendment Act 1998 (NSW) Schedule [163] Workers Compensation Legislation Amendment (Dust Diseases & Other Matters) Act 1998 (NSW) Workmen's Compensation Act 1906 (UK) s 8, s 8(1), s 8(1)(a), s 8(1)(c)(iii) Workmen's Compensation Act 1925 (UK) s 43 Workmen's Compensation Ordinance 1949 (NT) s 9(1)(a) Anderson Stuart v Treleaven (2000) 49 NSWLR 88 Austin v Zurich General Accident & Liability Insurance Company Limited [1945] KB 250 Azzopardi v Tasman UEB Industries (1985) 4 NSWLR 139 Blatchford v Staddon and Founds [1927] AC 461 Brazier v ICI Australia Operations Pty Ltd (2000) 19 NSWCCR 623 Bryer v Metropolitan Water Sewerage & Drainage Board (1939) 39 SR (NSW) 321 Bull v Attorney-General (NSW) (1913) 17 CLR 370 Castellain v Preston (1883) 11 QBD 380 Chubb Australia Limited v Mercantile Mutual Insurance (Workers Compensation) Limited [1999] NSW DDT 7; (1999) 17 NSWCCR 537 CIC Workers' Compensation (NSW) Limited v Alcan Australia Limited (1994) 35 NSWLR 169 CIC Workers' Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422 Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51 Connair Pty Ltd v Frederiksen (1979) 142 CLR 485 Di Cecco v Mercantile Mutual Insurance (Workers Compensation) Limited [2002] NSWDDT 1; (2002) 23 NSWCCR 143 Ellerbeck Collieries Limited v Cornhill Insurance Co [1932] 1 KB 401 Enterprise Colorvideo Productions Pty Limited v Corporate Affairs Commission (NSW) [1984] 1 NSWLR 223 Fisher v Hebburn Ltd (1960) 105 CLR 188 GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720 Government Insurance Office of NSW v Colgate Palmolive Pty Ltd (2001) NSWCA 24; (2001) 50 NSWLR 729; (2001) NSWCCR 436 Hopwood v Textile Paper Tube Co Ltd [1946] 1 All ER 618 J & H Timbers Pty Limited v Nelson (1972) 126 CLR 625 Kealley v Jones [1979] 1 NSWLR 723 Kemp v Darling Island Stevedoring & Lighterage Co Limited (1959) 76 WN (NSW) 707 CASES CITED : King v Victoria Insurance [1896] AC 250 Malathounis v H & J Pappas t/as Pappas Excavations & Ors (1996) 13 NSWCCR 438 Manufacturers' Mutual Insurance Ltd v Goodyear Australia Ltd (1997) 15 NSWCCR 538 Orica Limited v CGU Insurance Ltd [2003] NSWCA 331 Pavey & Mathews Pty Limited v Paul (1987) 162 CLR 221 QBE Insurance Limited v Bull [1999] NSWCA 185; (1999) 18 NSWCCR 169 R v City of Westminster Assessment Committee [1941] 1 KB 53 R v Norfolk County Council (1891) 60 LJ QB 379 Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 Samad v District Court of New South Wales (2002) 209 CLR 140 Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262 Smith v Mann [1932] HCA 30; (1932) 47 CLR 426 State Mines Control Authority v GIO (NSW) (1964) 65 (SR) (NSW) 258 Sydney Turf Club v Crowley [1971] 1 NSWLR 724 Tame v Commonwealth Collieries Pty Limited (1947) 47 SR (NSW) 269 The Commonwealth v Bourne (1960) 104 CLR 32 The Commonwealth v Thompson (1960) 104 CLR 48 Thorby v Goldberg (1964) 112 CLR 597 Transport Accident Commission v C.M.T. Construction of Metropolitan Tunnels and Another (1988) 165 CLR 436 Wallaby Grip (BAE) Pty Limited (in liq) v Macleay Area Health Service (1998); 17 NSWCCR 355 Ward v Williams (1955) 92 CLR 496 Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd (1993) 34 NSWLR 269 WorkCover Authority of NSW v Chubb Australia Ltd [2000] NSWCA 221; (2000) 20 NSWCCR 614 Workers Compensation Board of Queensland v WorkCover Authority of New South Wales (1995) 36 NSWLR 732 Wunderlich Ltd v Manufacturers' Mutual Insurance Ltd [1981] 2 NSWLR 678 ICI Operations Pty Limited (now known as Orica Australia Pty Limited) (First Appellant/First Cross-Claimant) CGU Insurance Limited (Second Appellant/Second Cross-Claimant) PARTIES : The WorkCover Authority of New South Wales (Respondent/Cross-Defendant) FAI Traders Insurance Company Ltd (Third Respondent/Cross-Appellant) FAI Workers Compensation (NSW) Ltd (Fourth Respondent/Cross-Appellant) FILE NUMBER(S) : CA 40628/02 Mr J D Hislop QC/Mr G P F Rundle (First/Second Appellants) & (First/Second Cross-Respondents) (ICI/CGU) COUNSEL : Mr G F Little SC/Mr G J Parker (First Respondent/Cross-Appellant) (Workcover) Mr C R R Hoeben SC/N E Chen (Third Respondent/Third Cross-Respondent) (FAI Traders) Mr G M Watson SC (Fourth Respondent/Fourth Cross-Respondent) (FAI Workers Compensation) Phillips Fox (First/Second Appellants) & (First/Second Cross-Respondents) (ICI/CGU) SOLICITORS : Turks Legal (First Respondent/Cross-Appellant) (WorkCover) Sparke Helmore (Third Respondent/Third Cross-Respondent) (FAI Traders) Moray & Agnew (Fourth Respondent/Fourth Cross-Respondent) (FAI Workers Compensation) LOWER COURT Dust Diseases Tribunal JURISDICTION : LOWER COURT DDT 169/97 FILE NUMBER(S) : LOWER COURT Curtis J JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40628/02 DDT 169/97 MASON P MEAGHER JA McCOLL JA Thursday, 11 March 2004 ICI AUSTRALIA OPERATIONS PTY LIMITED (now known as ORICA AUSTRALIA PTY LIMITED) & 1 Ors v THE WORKCOVER AUTHORITY OF NEW SOUTH WALES FACTS: George Roland Brazier was employed by ICI Australia Operations Pty Limited ("ICI") between 1950 to 1951, 1953 to 1954 and 1955 to 8 July 1988. He commenced proceedings in the Dust Diseases Tribunal against ICI on 3 November 1997 in which he sought to recover damages in relation to medical conditions from which he alleged he suffered as a result of exposure to the inhalation of asbestos dust and fibres during his employment. Mr Brazier's proceedings were settled in August 2000 for $100,000 plus costs. Those monies were paid to Mr Brazier by CGU Insurance Limited ("CGU") which had been appointed ICI's designated insurer pursuant to s 151AC(2) of the Workers Compensation Act 1987 (NSW) ("the Act"). Mr Brazier's proceedings against ICI led to three hearings in the Dust Diseases Tribunal. The first concerned ICI's application for an order pursuant to s 151AC of the Act which led to Armitage J appointing CGU the designated insurer on 26 April 2000. In the second hearing, Curtis J determined, for the purposes of s 151AB of the Act, that Mr Brazier had last been employed by ICI in employment to the nature of which his disease was due in August 1984 (the "Liability Proceedings"). The effect of that conclusion was that the insurer on risk during the relevant period was NEM, which was an "insolvent insurer" for the purposes of s 226(1) of the Act. Part 7 Division 7 of the Act gives the WorkCover Authority of NSW (the "WorkCover Authority") the power to make payments from the Insurers' Guarantee Fund to, among others, employers who would, but for an insurer's insolvency, be entitled to indemnity under an insurance policy issued by the insolvent insurer. ICI and CGU sought to recover the damages and costs associated with Mr Brazier's proceedings from the Insurers' Guarantee Fund. In the final hearing Curtis J held they were not entitled to recover those monies (the "Indemnity Proceedings"). ICI and CGU appealed, challenging Curtis J's decision in the Indemnity Proceedings (the "Indemnity Appeal"). The WorkCover Authority cross-appealed, challenging Curtis J's decision in the Liability Proceedings that Mr Brazier was last employed in August 1984 in an employment to the nature of which his disease was due (the "Liability Cross-Appeal"). HELD per McColl JA (Mason P and Meagher JA agreeing): Allowing the appeal: 1. Section 232 of the Act confers a discretion on the WorkCover Authority whether to make payments out of the Insurers' Guarantee Fund: Workers Compensation Board of Queensland v WorkCover Authority of New South Wales (1995) 36 NSWLR 732; Samad v District Court of New South Wales (2002) 209 CLR 140 referred to; Chubb Australia Limited v Mercantile Mutual Insurance (Workers Compensation) Limited [1999] NSW DDT 7; (1999) 17 NSWCCR 537 overruled. 2. An insurer designated pursuant to s 151AC of the Act which discharges an employer's liability for damages in respect of an occupational disease contracted by a worker makes that payment as statutory agent for the employer: QBE Insurance Limited v Bull [1999] NSWCA 185, (1999) 18 NSWCCR 169 referred to and explained. 3. The WorkCover Authority has power to reimburse an employer pursuant to s 232 of the Act where the employer's liability for damages in respect of an occupational disease contracted by a worker has been discharged by an insurer designated pursuant to s 151AC of the Act: QBE Insurance Limited v Bull [1999] NSWCA 185, (1999) 18 NSWCCR 169 explained. 4. By undertaking to Armitage J that it would reimburse ICI pursuant to s 232 of the Act in relation to any liability ICI incurred to Mr Brazier, the WorkCover Authority effectively and lawfully bound itself as to how it would exercise its statutory discretion: Thorby v Goldberg (1964) 112 CLR 597 referred to. 5. The WorkCover Authority was bound to honour its undertaking to Armitage J. Dismissing the cross-appeal: 6. In determining, for the purposes of s 151AB of the Act, when a worker was last employed "in employment to the nature of which the disease was due", the Court is required to have regard to the actual occupational disease suffered by the worker: Blatchford v Staddon and Founds [1927] AC 461; Smith v Mann [1932] HCA 30, (1932) 47 CLR 426; Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269; CIC Workers' Compensation (NSW) Limited v Alcan Australia Limited (1994) 35 NSWLR 169; The Commonwealth v Bourne (1960) 104 CLR 32; The Commonwealth v Thompson (1960) 104 CLR 48; Connair Pty Ltd v Frederiksen (1979) 142 CLR 485; Wunderlich Ltd v Manufacturers' Mutual Insurance Ltd [1981] 2 NSWLR 678; Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd (1993) 34 NSWLR 269; CIC Workers' Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422; Manufacturers' Mutual Insurance Ltd v Goodyear Australia Ltd (1997) 15 NSWCCR 538; GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720; WorkCover Authority of NSW v Chubb Australia Ltd [2000] NSWCA 221, (2000) 20 NSWCCR 614; Government Insurance Office of NSW v Colgate Palmolive Pty Ltd [2001] NSWCA 24; (2001) 50 NSWLR 729; (2001) NSWCCR 436 referred to. 7. To satisfy the test prescribed by s 151AB of the Act it must be established, on the balance of probabilities, that the nature of the worker's employment exposed the worker to a risk of contracting the actual occupational disease from which he or she suffered: The Commonwealth v Bourne (1960) 104 CLR 32; Hopwood v Textile Paper Tube Co Ltd [1946] 1 All ER 618; GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720; Manufacturers' Mutual Insurance Ltd v Goodyear Australia Ltd (1997) 15 NSWCCR 538; GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720 referred to. 8. Curtis J was entitled to rely upon his knowledge as a member of a specialised tribunal to express a view about the quantity of exposure to asbestos dust which might cause mesothelioma as opposed to that which might cause the diseases from which Mr Brazier suffered: Bryer v Metropolitan Water Sewerage & Drainage Board (1939) 39 SR (NSW) 321; Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269; J & H Timbers Pty Limited v Nelson (1972) 126 CLR 625; Kealley v Jones [1979] 1 NSWLR 723; Kemp v Darling Island Stevedoring & Lighterage Co Limited (1959) 76 WN (NSW) 707; Mechanical Advantage Group Pty Limited v George [2003] NSWCA 121, (2003) 25 NSWCCR 368; GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720; Wallaby Grip (BAE) Pty Limited (in liq) v Macleay Area Health Service (1998) 17 NSWCCR 355 referred to. ORDERS: The Appeal 1. Appeal allowed. 2. Declare that the WorkCover Authority of New South Wales is liable to indemnify ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited) in respect of the damages and costs paid to George Roland Brazier in and arising out of proceedings in the Dust Diseases Tribunal of New South Wales numbered 169 of 1997 between George Roland Brazier and ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited). 3. Order the WorkCover Authority of New South Wales to pay the costs of and associated with the Appeal and in the Court below. The Cross-Appeal 1. Cross-Appeal dismissed. 2. Cross-appellant to pay the costs of the Cross-Appeal. INDEX Para No Introduction 4 The Issues on Appeal 10 Outline of Statutory Background 15 Statement of the Case The Pleadings 22 The Designated Insurer Proceedings 35 The Liability Proceedings 39 The Indemnity Proceedings 57 The Liability Cross-Appeal 75 The Authority's Submissions 76 FAI Traders' Submissions 88 FAI Workers' Submissions 93 ICI 96 Industrial Diseases of Gradual Onset: Statutory Background Nature of Employment Test: s 151AB 97 Insurers and Dust Diseases: s 151AC 115 Judicial Consideration Nature of Employment Test and Employees 120 Nature of Employment Test and Insurers 144 The Liability Cross-Appeal: Consideration Nature of Employment Test Identifying the Disease 192 The level of exposure to risk 208 No Evidence Submission 216 The Liability Cross-Appeal: Conclusion 235 The Indemnity Appeal 237 Statutory Background 241 ICI's Submissions 258 The Authority's Submissions 271 The Indemnity Appeal: Consideration Role of the Designated Insurer 287 Duty or Discretion 308 Content of the Authority's Discretion 348 The Indemnity Appeal: Conclusion 374 Relief 376 Orders 378 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40628/02 DDT 169/97 MASON P MEAGHER JA McCOLL JA Thursday, 11 March 2004 ICI AUSTRALIA OPERATIONS PTY LIMITED (now known as ORICA AUSTRALIA PTY LIMITED) & 1 Ors v THE WORKCOVER AUTHORITY OF NEW SOUTH WALES Judgment 1 MASON P: I agree with McColl JA whose reasons for judgment I have had the privilege of reading. 2 MEAGHER JA: I agree with the orders proposed by McColl JA. 3 I agree generally with her Honour's reasons. 4 McCOLL JA: George Roland Brazier was employed by ICI Australia Operations Pty Limited ("ICI") between 1950 to 1951, 1953 to 1954 and 1955 to 8 July 1988. He commenced proceedings against ICI on 3 November 1997 in the Dust Diseases Tribunal in which he sought to recover damages in relation to medical conditions from which he alleged he suffered as a result of exposure to the inhalation of asbestos dust and fibres during his employment. Mr Brazier's proceedings were settled in August 2000 for $100,000 plus costs. Those monies were paid to Mr Brazier by CGU Insurance Limited ("CGU") which had been appointed ICI's designated insurer pursuant to s 151AC(2) of the Workers Compensation Act 1987 (NSW) (the "1987 Compensation Act"). 5 The proceedings have a complex history. Mr Brazier's proceedings against ICI led to three hearings in the Dust Diseases Tribunal. The first hearing concerned ICI's application for the order pursuant to s 151AC of the 1987 Compensation Act for the appointment of a "designated insurer" (the "Designated Insurer Proceedings"). These proceedings led to Armitage J appointing CGU the designated insurer on 26 April 2000 in circumstances to which I will refer in more detail below. In the second hearing Curtis J determined, for the purposes of s 151AB of the 1987 Compensation Act, that Mr Brazier had last been employed by ICI in employment to the nature of which his disease was due in August 1984 (the "Liability Proceedings"). 6 During the period of Mr Brazier's employment, ICI had arranged workers compensation insurance with a succession of insurers as set out below: Date Insurer Prior to 30 September 1973 CGU 30 September 1973 to 30 September 1985 National Employers Mutual General Indemnity Association Limited ("NEM") 30 September 1985 to 30 September 1987 FAI Traders Insurance Limited ("FAI Traders") 30 September 1987 to 30 September 1989 FAI Workers Compensation (NSW) Limited ("FAI Workers") 7 The effect of Curtis J's conclusion in the Liability Proceedings was that the insurer on risk during the relevant period was NEM. It was common ground that, at all relevant times, NEM was an "insolvent insurer" for the purposes of s 226(1) of the 1987 Compensation Act. 8 The WorkCover Authority of NSW (the "Authority") manages the Insurers' Guarantee Fund (the "Guarantee Fund") pursuant to Part 7, Division 7 of the 1987 Compensation Act. Division 7 gives the Authority power to make payments from the Guarantee Fund to, among others, employers who would, but for an insurer's insolvency, be entitled to indemnity under an insurance policy issued by the insolvent insurer. 9 ICI and CGU sought to recover the damages and costs associated with Mr Brazier's proceedings from the Guarantee Fund. In the final hearing Curtis J held they were not entitled to recover those monies (the "Indemnity Proceedings"). The Issues on Appeal 10 ICI and CGU filed a Notice of Appeal challenging Curtis J's decision in the Indemnity Proceedings rejecting their claim against the Authority for indemnity in respect of the amounts paid to satisfy Mr Brazier's judgment and costs (the "Indemnity Appeal"). 11 The Authority filed a Notice of Cross-Appeal in which it challenged Curtis J's decision in the Liability Proceedings that Mr Brazier was last employed on 15 August 1984 in an employment to the nature of which his disease was due (the "Liability Cross-Appeal"). 12 FAI Traders and FAI Workers were joined as respondents to the Liability Cross-Appeal. 13 In the course of the hearing of the appeal ICI/CGU sought and were granted leave to file an amended Notice of Appeal joining FAI Traders and FAI Workers as respondents to their appeal. The Amended Notice of Appeal complained that Curtis J had erred in not finding that either FAI Traders or FAI Workers was the insurer liable pursuant to s 151AB. It sought orders requiring one or other of those parties to indemnify ICI/CGU in respect of the judgment and costs paid and incurred in respect of Mr Brazier's claim. 14 Although ICI and CGU were both parties to the proceedings below and were both appellants, their counsel, Mr Hislop QC, acknowledged that the claim against the Authority was in fact a claim on behalf of ICI and that ICI alone would have been the "appropriate vehicle" to mount the claim. The Authority did not dispute that proposition. Outline of Statutory Background 15 The appeal and cross-appeal raise issues concerning two statutory schemes. 16 The first statutory scheme is that established by sections 151AB and 151AC of Part 5, Division 5 of the 1987 Compensation Act. Those provisions constitute part of a legislative scheme intended to ensure the efficient disposition of proceedings brought by an employee in relation to a disease of such a nature as to be contracted by gradual process (an "occupational disease") against an employer insured for its workers' compensation liabilities by a number of insurers during the period in which the occupational disease is said to have been contracted. 17 Section 151AB provides, in substance, that if an employer is liable at common law for damages for an occupational disease contracted by a worker, then, in order to identify from among a number of insurers under policies 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, the employer's liability is taken to have arisen when the worker was last employed by that employer in an employment to the nature of which the disease was due. 18 The issue raised in relation to s 151AB concerns the nature of the test posed by the words "employment to the nature of which the disease was due" (the "nature of employment test"). The issue is whether the nature of employment test requires determining whether the nature of a worker's employment exposed the worker to a risk of contracting the actual dust disease from which the worker suffered or, rather, requires determining whether the nature of the worker's employment exposed the worker to a risk of contracting any dust-related disease. 19 The second statutory scheme is that established by Part 7, Division 7 of the 1987 Compensation Act to deal with the liabilities of an insolvent insurer. Three questions arise. First, is the Authority under an obligation or does it have a discretion whether to make payments out of the Guarantee Fund to an employer insured by an insolvent insurer where that employer has satisfied a judgment in respect of which it has not been indemnified under the policy issued by the insolvent insurer? Secondly, if it is under an obligation to make such payments, does it have power to make such payments where an insurer designated as such pursuant to s 151AC of the 1987 Compensation Act discharged the employer's liability? Thirdly, if it has a discretion whether to make such payments, do the circumstances of this case nevertheless require that it indemnify ICI in respect of the monies paid and costs incurred in respect of Mr Brazier's proceedings? 20 The issues concerning Division 7 involve, as a subsidiary issue, the role of an insurer, designated as an insurer pursuant to s 151AC, which has indemnified an employer in respect of its liability for damages for an occupational disease contracted by an employee or former employee in circumstances where the insurer which, on the proper application of the nature of employment test, is the "insurer who is liable" (s 151AC(9)) to indemnify the employer for that liability, is insolvent. 21 Section 151AC provides, in substance, that where there is a dispute as to which of two or more insurers is liable to indemnify an employer who is liable at common law for damages for an occupational disease contracted by a worker, then for the purposes of s 151AB, and pending resolution of the dispute, the Dust Diseases Tribunal may designate an insurer which is "treated as being the insurer liable to indemnify the employer". Statement of the Case The Pleadings 22 On 26 September 1999 ICI filed a First Cross-Claim against the Authority pleading that pursuant to the 1987 Compensation Act, the Authority was its agent and attorney in respect of the NEM policy. It asserted that if Mr Brazier recovered damages the Authority was liable to indemnify it in respect of such damages pursuant to s 151AB of the 1987 Compensation Act. It sought a declaration and orders to give effect to that assertion. 23 In March 2000 ICI, pursuant to an Amended Notice of Motion, sought orders that any of CGU, the Authority as the agent and attorney of NEM or FAI Traders be designated as its insurer pursuant to s 151AC. 24 On 5 June 2000 Mr Brazier filed an Amended Statement of Claim in which he alleged that in the course of his employment with ICI he had been exposed to asbestos fibres in circumstances constituting negligence and/or breach of statutory duty by ICI. The periods of exposure upon which he relied were 1950-1951, 1953-1954 and 1955-1982. He claimed provisional damages pursuant to s 11A of the Dust Diseases Tribunal Act 1989 (NSW) for the conditions of pleural plaques, extensive bilateral pleural thickening, asbestos related pleural disease and pulmonary asbestosis. He also sought an order that he might claim further damages pursuant to s 11A if he developed further asbestos related diseases. 25 CGU was appointed ICI's designated insurer on 26 April 2000. 26 Mr Brazier's claim was settled on 14 August 2000. CGU paid him damages in the sum of $100,000 as well as his costs of $56,103. 27 On 7 September 2000 ICI filed a Third Cross-Claim against FAI Traders and FAI Workers claiming indemnity pursuant to s 151AB in respect of the damages paid to Mr Brazier. 28 Subsequent to the settlement of Mr Brazier's claim, ICI amended its First Cross-Claim against the Authority. In its Amended First Cross-Claim it pleaded that Mr Brazier had recovered damages from it in respect of the periods referred to in the Amended Statement of Claim, that the damages had been satisfied by CGU after it was named as the designated insurer, and that CGU had not indemnified ICI pursuant to s 151AB. ICI sought a declaration that the Authority was liable to indemnify it in relation to the damages paid to Mr Brazier. 29 ICI also amended its cross-claim against FAI Traders and FAI Workers. In its Amended Third Cross-Claim it pleaded that during the period from about 1982 until 1988, Mr Brazier had performed his employment duties in its fitters' shop and been exposed to asbestos dust and fibres. It pleaded that Mr Brazier had recovered damages from it in respect of the periods referred to in the Amended Statement of Claim, that that amount had been satisfied by CGU after it was named as the designated insurer and that CGU had not indemnified ICI pursuant to s 151AB. ICI sought a declaration that either FAI Traders or FAI Workers was liable to indemnify it in relation to the damages paid to Mr Brazier. 30 ICI's Amended First and Third Cross-Claims were amended yet again. The amendments added CGU as the Second Cross-Claimant. The Further Amended First and Third Cross-Claims asserted as against the Authority, FAI Traders and FAI Workers respectively that CGU was not ICI's insurer at the time when Mr Brazier was last employed in employment to the nature of which his disease was due. ICI and CGU asserted that one or other of NEM, FAI Traders or FAI Workers was the insurer on risk when Mr Brazier was last employed in employment to the nature of which his disease was due. Insofar as the Authority was concerned, ICI/CGU asserted that NEM was relevantly on risk for the purpose of the nature of employment test and, again asserted that Mr Brazier's damages had been satisfied by CGU after it was named as the designated insurer and that CGU had not indemnified ICI pursuant to s 151AB. 31 CGU claimed that any of the Authority, FAI Traders or FAI Workers was liable to indemnify it pursuant to s 151AC in respect to the damages paid to Mr Brazier. ICI and CGU sought orders giving effect to that assertion. 32 The Authority filed a defence to ICI/CGU's Further Amended First Cross- Claim. It did not admit that NEM was on risk when Mr Brazier was last employed in employment to the nature of which the disease was due. It pleaded that it was not an insurer for the purposes of s 151AB or s 151AC and that it was not liable or entitled to make any payment except in accordance with Division 7 of Part 7 of the 1987 Compensation Act. It denied that ICI had satisfied the judgment. It relied without elaboration upon s 232(4) of the 1987 Compensation Act. 33 On 9 June 2002 ICI and CGU filed a Second Further Amended First Cross-Claim against the Authority in which they pleaded that ICI had satisfied Mr Brazier's judgment by CGU's payment to him of $100,000 by way of damages and $56,103 by way of costs. They also pleaded they had incurred expenses in defending his claim. In addition to the relief already sought, they sought a declaration that ICI had satisfied a claim, judgment or award in respect of which it had not been indemnified by NEM. The declaration picked up the terminology of s 232(1) of the 1987 Compensation Act. 34 The Authority does not appear to have filed a further defence to this document, no doubt taking the view that its earlier denial that ICI had satisfied Mr Brazier's judgment sufficiently traversed the claim for a declaration. The Designated Insurer Proceedings 35 The Designated Insurer Proceedings were heard by Armitage J, who, on 26 April 2000, ordered that CGU be designated as ICI's insurer pursuant to s 151AC in relation to any liability ICI had to Mr Brazier in the proceedings: Brazier v ICI Australia Operations Pty Ltd (2000) 19 NSWCCR 623. 36 There is only one aspect of the Designated Insurer Proceedings which requires attention. Mr Parker, who appeared for the Authority before Armitage J, opposed ICI's application that the Authority be appointed a designated insurer on the basis of two statements he proffered to the Court. He read those statements onto the record in the following terms: "Mr Parker: 'The WorkCover Authority consents to the defendant having conduct of the defence' and secondly, 'if the defendant satisfies any judgment then under section 232 of the 1987 Act the WorkCover Authority will reimburse the employer for the judgment paid.' " 37 Armitage J dealt with those statements in his judgment in two passages as follows: "3…[T]he WorkCover Authority by its counsel Mr Parker, offered an undertaking that in the event of factual findings being made at the trial triggering such an obligation, it will comply with s 232(1) of the [ Workers' Compensation ] Act [1987] to indemnify the defendant which was the plaintiff's employer. 4. Mr Parker was careful not to paraphrase that obligation, and properly so, since he represents a statutory body with obligations defined within the four corners of the statute constituting it, but effectively that undertaking would seem to mean that if findings of fact are made which would, but for the insolvency of NEMGIA, have resulted in that insurer being liable under s 151AB of the Act, then the WorkCover Authority will indemnify the defendant in respect of what would otherwise have been the contractual obligation of NEMGIA to meet any judgment against the defendant. 5. The WorkCover Authority by its counsel, Mr Parker, otherwise contends that it is not an insurer within the meaning of s 151AB of the Act. That was one of the matters which was agitated before me in Chubb Australia Limited v Mercantile Mutual Insurance (Workers' Compensation) Limited (1999) 17 NSWCCR 537. I am told from the Bar Table by various counsel, including Mr Parker, that a Notice of Appeal has been filed by the WorkCover Authority in that case, and that the hearing of the appeal in the Court of Appeal is pending. It follows that my decision in Chubb Australia may be reversed by the Court of Appeal and that that Court may hold that the submission of the WorkCover Authority today that it is not an insurer within the meaning of s 151AB of the Act is correct. 6. It seems to me in those circumstances, therefore, that if I were to nominate the WorkCover Authority as the designated insurer within s 151AC of the Act, the result may well be that the WorkCover Authority may seek to preserve its position and immediately file a notice of appeal and refuse to indemnify the defendant in respect of any verdict in the plaintiff's favour against it in the proceedings. 7. Quite apart from that, as Mr McIntyre for the defendant urges, the WorkCover Authority may also contend that any factual findings made in the proceedings do not trigger its obligation to indemnify under s 232(1), so that the defendant loses the benefit of the scheme provided by s 151AC, which, as Mr McIntyre contends, has the purpose of preventing a defendant employer, which has complied with its obligations under the Act and has at all times maintained workers compensation insurance, having nevertheless to meet personally, out of its own pocket, any verdict and of course any order for costs found against it in proceedings brought by any of its employees, including the plaintiff in the present case, and then to seek indemnity from its insurers. …. 13. The factors pointing to designation of CGU Insurance Ltd, the insurer on risk immediately prior to the period of risk of NEMGIA, are that, as I have already observed and as Mr McIntyre urges on behalf of the defendant, the WorkCover Authority contends that it is not an insurer within the meaning of s 151AB of the Act and so contended in Chubb Australia in which the decision of the Court of Appeal is pending, and that quite apart from this, the WorkCover Authority may, in the event of factual findings in the proceedings between the plaintiff and the defendant suggesting this course, deny its liability to indemnify the defendant under s 232, and also in order to preserve its position in relation to its contention that it is not an insurer within s 151AB. Such eventualities would inevitably delay recovery of any verdict by the plaintiff, whose interests s151AC is also designed to protect … 15. Mr Parker urges, as did Mr Virtue for CGU Insurance Limited as I understood him, that the appropriate course was for me to refuse any order that a designated insurer be appointed, and to leave the defendant to conduct its own defence and to seek indemnity from whichever insurer was liable, depending on the factual findings made by the Tribunal. That course … seems to me to deny to the defendant the benefits of s 151AC and I do not propose to take it. 16. I have some misgivings about appointing CGU Insurance Limited as the designated insurer, in view of Mr Virtue's well argued submission that on the pleadings, upon which he says I should decide this motion, the period of risk….which is last in line on the plaintiff's own allegation of exposure to asbestos until the year 1982 is that of NEMGIA and, he says, if the Tribunal makes a factual finding of negligent asbestos exposure until 1982, the obligation under s 232 of the WorkCover Authority to indemnify the defendant is triggered. That may be so, but it seems to me that the purpose of s 151AC is to provide the defendant with an insurer which will conduct the proceedings on its behalf and meet any verdict against it, subject to the right of the insurer to seek indemnity elsewhere. That purpose will only be effected…if I designate CGU Insurance Limited as the designated insurer." 38 It will be recalled that ICI was last insured by CGU prior to 30 September 1973. The Liability Proceedings 39 Following the settlement with Mr Brazier, Curtis J heard ICI/CGU's cross-claims. It appears to have been common ground in the Liability Proceedings that the settlement with Mr Brazier should be treated as satisfying the threshold to s 151AB, in other words, that ICI was liable independently of the 1987 Compensation Act for an occupational disease contracted by Mr Brazier. 40 Curtis J directed himself that, in order to determine the nature of employment test, he was required to resolve "the question…of whether the employment exposed the worker to a risk of contracting the actual disease from which he suffers." 41 Curtis J found that Mr Brazier suffered from asbestos related pleural disease and asbestosis caused by the inhalation of significant quantities of asbestos fibre. Those are two of the diseases specified in Schedule 1 to the Workers' Compensation (Dust Diseases) Act 1942 and, therefore, fell within the definition of an "occupational disease" in s 151AB(6) of the 1987 Compensation Act. 42 Curtis J then turned to determine when Mr Brazier was last employed by ICI in employment to the nature of which his disease was due. 43 He stated that the diseases from which Mr Brazier suffered were "caused by inhalation of significant quantities of asbestos fibre, unlike the disease of mesothelioma which may be due to relatively trifling exposure to asbestos". 44 He referred to evidence from Mr Brazier of "substantial exposure to asbestos dust and fibre" in ICI's employment prior to 1982. He also took into account Mr Brazier's evidence that ICI started to phase out asbestos lagging in about 1982, evidence from Mr Forbes (a maintenance foreman employed by ICI at the same site at which Mr Brazier had worked) that nearly all asbestos had been removed prior to 1985 and evidence from Mr Adis (the works engineer at ICI's premises during most of the relevant period) that there was little asbestos remaining by the late eighties. He also referred to an ICI memorandum dated 15 August 1984 which stated that "all low level (up to 5 metres above the ground) asbestos has been removed and replaced by acceptable insulating material…all other asbestos removal is to be undertaken as part of a series of expansion project (sic) …during the following three years …" 45 Mr Brazier thought there was no asbestos at ICI after 1982, but could not say for certain. Neither Mr Forbes or Mr Adis could say there was no asbestos up until Mr Brazier ceased working for ICI in 1988. Mr Forbes thought if there was any, it would have been "tiny hidden amounts". Mr Adis thought there was "little remaining by the late eighties". 46 ICI/CGU tendered an asbestos survey conducted by Dames and Moore Pty Limited which indicated that as at 11 June 1997 there was corrugated asbestos cement sheeting comprising the walls of the ICI factory and that those walls had been subjected to damage in the years after installation. Although Curtis J concluded that the Dames and Moore Pty Limited report meant he could not rely upon the ICI memorandum of 15 August 1984 that all asbestos up to 5 metres above the ground had been removed and replaced, he also noted that the authors of the Dames and Moore report concluded the risk to the health of building occupants was low as the asbestos present within the plant was identified as "hard". That meant that the "asbestos fibre [was] not released when rubbed between the fingers but the structure of the matrix is destroyed by mechanical abrading such as cutting and hammering". 47 Curtis J held that the evidence demonstrated that it was probable that between 1973 and 1984 Mr Brazier was employed by ICI in employment during which "he was exposed to the probable inhalation…. of substantial quantities of asbestos dust and fibre". 48 His Honour accepted that it was possible Mr Brazier was exposed to the inhalation of asbestos fibre after 1984, but was not actually persuaded that Mr Brazier did, at any time after that date, inhale asbestos fibre. Indeed, he concluded that more probably than not after 1984 Mr Brazier inhaled no asbestos dust or fibre. 49 Curtis J recorded "the possibility" that until 1988 when Mr Brazier last worked for ICI, he may have inhaled asbestos fibre if asbestos sheeting which was still present in ICI's premises as late as 11 June 1997 suffered damage at a time when he was working nearby. While he concluded that that possibility might have exposed Mr Brazier to the risk of contracting mesothelioma, which, as I have noted, his Honour had already said might be caused by relatively trifling exposure to asbestos, it would not, he held, have exposed Mr Brazier to the risk of contracting the diseases which actually afflicted him. 50 He noted that a worker was only exposed to the risk of asbestosis if he inhaled fibre in substantial quantities. He concluded that proof of a possibility, that possibility "being less than 50%", that a worker may have inhaled some asbestos fibre during a particular period did not "satisfy proof that upon the probabilities that employment in that period was of the nature to which a disease is due (sic)." 51 Curtis J's findings require close scrutiny to determine precisely how he resolved the nature of employment test. Having regard to the test which his Honour had posed for himself, which required identification of employment which exposed the worker to "a risk of contracting the actual disease from which he suffered", it is apparent in my view that he reached his conclusion by the following process of reasoning. 52 First, his Honour concluded that it was probable that between 1973 and 1984 Mr Brazier was employed by ICI in employment to the nature of which his diseases were due because he was exposed to the probable inhalation in that period of substantial quantities of asbestos dust and fibre. In his Honour's view those diseases were caused by inhalation of significant quantities of asbestos fibre. 53 Secondly, his Honour concluded that it was possible that after 1984 Mr Brazier was exposed to the inhalation of asbestos fibre if asbestos sheeting suffered damage at a time when he was working nearby but that even if Mr Brazier had inhaled asbestos fibre after 1984 and until 1988, that inhalation might have exposed him to the risk of contracting the disease of mesothelioma, but not to the risk of contracting asbestosis and asbestos related pleural disease. 54 Accordingly he held Mr Brazier was last employed by ICI in employment to the nature of which his occupational disease was due on 15 August 1984 when ICI's asbestos removal programme had been substantially completed. 55 NEM was ICI's workers' compensation insurer as at 15 August 1984. 56 The consequence of Curtis J's decision in the liability proceedings was that ICI/CGU's cross-claims against FAI Traders and FAI Workers were dismissed with costs. The Indemnity Proceedings 57 As a result of the finding that Mr Brazier was last employed by ICI in employment to the nature of which his occupational disease was due on 15 August 1984, ICI/CGU pursued the Second Further Amended First Cross-Claim seeking indemnity from the Authority for the payments made to Mr Brazier. Although, as on the appeal, the same counsel appeared for both ICI and CGU, some of the arguments advanced appeared to found the claim for relief on circumstances unique to each party. As I have already recorded, that was not the position on appeal where, in essence, all arguments were advanced on behalf of ICI. In order that Curtis J's approach in the Indemnity Proceedings can be understood I have sought to identify whether a particular claim was advanced on behalf of ICI or CGU jointly or severally. 58 ICI/CGU put the claim against the Authority in a number of ways. First, they claimed a right to indemnity arising from the terms of the 1987 Compensation Act. Alternatively CGU claimed that in the circumstances of the case it was entitled to judgment based upon principles of unjust enrichment. CGU also submitted that the Authority might not, in the purported exercise of its powers pursuant to s 232(1) of the 1987 Compensation Act, exercise its discretion capriciously or without cause. Finally ICI/CGU relied upon an estoppel founded on the undertaking the Authority gave in the Designated Insurer Proceedings. 59 CGU contended it had a statutory right to indemnity because NEM, an insolvent insurer, was on risk when Mr Brazier was last employed by ICI in an employment to the nature of which his disease was due. It submitted that because, pursuant to s 151AB(1) and s 151AC(10) of the 1987 Compensation Act, NEM, if solvent, would be liable to reimburse CGU, the Authority was compelled by s 231(2), s 232(1), s 234(1) and s 236(2) of the Act to reimburse CGU. Curtis J appears to have dealt with this argument by characterising CGU's claim as not being an adjustment claim pursuant to s 151AC(10). 60 His Honour found that a categorisation of the claim as one pursuant to s 151AC(10) was inappropriate because that section provides for an adjustment between the designated insurer and the "insurer who is liable". As his Honour pointed out in Workers Compensation Board of Queensland v WorkCover Authority of New South Wales (1995) 36 NSWLR 732, Rolfe J held that the Authority was not an insurer and was not, therefore, subject to claims in the nature of contribution based upon principles of double insurance. By parity of reasoning, CGU could not claim the Authority was an "insurer" for the purposes of s 151AC(10). 61 Curtis J characterised CGU's claim as designated insurer as founded on subrogation, relying upon the principle expounded in Sydney Turf Club v Crowley [1971] 1 NSWLR 724 at 730 by Jacobs JA (with whom Manning JA agreed) holding that: "If an insured claimed to be indemnified by one insurer and that insurer disclaims liability, but honestly and by way of ex gratia payment with reservation of his rights pays the amount of the claim, then he is entitled to be subrogated to the rights of the insured against the real insurer." 62 In Curtis J's view, application of this principle constituted an exception to the rule that an insured having been fully indemnified has no further rights against an insurer: cf Austin v Zurich General Accident & Liability Insurance Company Limited [1945] KB 250 at 258 per Uthwatt J and would justify a payment to the designated insurer. 63 Curtis J concluded that the power conferred by s 232(1) was adequate to authorise payment by the Authority to a designated insurer which had indemnified an employer whose actual insurer was insolvent. In his Honour's view no violence was done to the operation of the section by permitting payment to a designated insurer claiming in the name of the employer, by way of subrogation, whatever rights the employer may have to claim against the Authority. 64 Curtis J considered an alternative proposition, namely that a designated insurer may be considered the agent of the employer in discharging a judgment entered against the employer. In such circumstances, in his Honour's view, s 232(1) would permit the Authority to reimburse the employer who would then account to the designated insurer. 65 In his Honour's view either the subrogation route or the agency proposition would permit "a workable solution to what may otherwise be a patently unfair operation of s 151AC." 66 Curtis J concluded, however, that neither of his "workable solutions" could avail ICI/CGU because, in his view, s 232(4) of the 1987 Compensation Act gave the Authority an absolute discretion to decide whether to make a payment from the Guarantee Fund pursuant to s 232(1). He also held that s 232(4) in terms prevented any right to reimbursement accruing on behalf of ICI to which CGU could become subrogated. 67 Having reached this conclusion, his Honour remarked that it might seem strange that "Parliament by this privative enactment intended that the Authority may resist the apparently just claim of CGU" but drew some solace from McClelland J's observation in Enterprise Colorvideo Productions Pty Limited v Corporate Affairs Commission (NSW) [1984] 1 NSWLR 223 at 228: "It is still no part of the judicial function, under the cloak of construction, to amend statutes merely to overcome shortcomings in their operations." 68 His Honour surmised that the unambiguous discretion he found was reposed in the Authority pursuant to s 232(4) might have been intended by Parliament to provide a device to control unrestricted access to a possibly limited resource. He found some support for that proposition in the fact that both subsections 232(1) and 232(2) permitted reimbursement of an employer or liquidator respectively of an amount that might be the whole or any part of the award or amount paid by them. 69 Curtis J acknowledged that his conclusions were inconsistent with Armitage J's decision in Chubb Australia Limited v Mercantile Mutual Insurance (Workers Compensation) Limited [1999] NSW DDT 7; (1999) 17 NSWCCR 537 but expressed the view that he believed Armitage J's comments at paras 58 to 65 of that judgment to be wrong. In Chubb Armitage J concluded, in effect, that the Authority was under a statutory obligation pursuant to Division 7 to indemnify an insolvent insurer in respect of its liability to an employer, either for workers' compensation payments under the 1987 Compensation Act or for damages at common law. I shall consider that judgment in greater detail below. 70 CGU advanced three other arguments before Curtis J to make good its claim for indemnity. The first was founded upon unjust enrichment relying upon Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR 51. Curtis J rejected that argument because he held that an action founded in unjust enrichment was premised upon there being an unmet legal obligation. He held that because the Authority was under no legal obligation to pay or repay monies to ICI/CGU, relief founded on unjust enrichment was not available. 71 The second argument was that the Authority could not act capriciously or without cause in exercising its discretion pursuant to s 232(1). Curtis J accepted the submission as a proposition of law but found there was no material before him upon which he could find as a fact that the Authority had refused to indemnify CGU capriciously or otherwise than in a responsible exercise of its statutory discretion. 72 Finally, his Honour considered the argument that the undertaking given by the Authority in the Designated Insurer Proceedings estopped the Authority from denying it was liable to indemnify ICI in respect of Mr Brazier's judgment. 73 Curtis J held that a careful reading of the transcript in which the Authority's undertaking was given confirmed that it was given contingently and that it did not give rise to any estoppel pursuant to which the Authority might be prevented from asserting that it was not obliged to indemnify ICI in respect of Mr Brazier's judgment. Although his Honour did not specify the contingency to which, in his view, the undertaking was subject, it appears that he believed it was subject to the condition that no designated insurer was appointed and that ICI conducted the defence to Mr Brazier's claim itself. 74 Curtis J entered a verdict for the Authority on ICI/CGU's Cross-Claim. The Liability Cross-Appeal 75 It is appropriate to consider first the Liability Cross-Appeal in which the Authority challenges Curtis J's decision in the s 151AB proceedings. It was common ground that if the Liability Cross-Appeal succeeds the Indemnity Appeal becomes redundant. However if the Liability Cross-Appeal succeeds, the consequence of ICI's Amended Notice of Appeal would be that one or other of FAI Traders or FAI Workers would be the insurer liable pursuant to s 151AC(9) of the 1987 Compensation Act. Nature of Employment Test: The Authority's Submissions 76 The Authority contended that Curtis J had erred in law by applying the wrong legal test to determine the nature of employment test: cf s 32(1) Dust Diseases Tribunal Act 1989. 77 The Authority submitted that the nature of employment test did not require proof that any particular quantity of asbestos fibre was available for inhalation or that any particular exposure was causative of the disease in fact. It referred to CIC Workers' Compensation (NSW) Limited v Alcan Australia Limited (1994) 35 NSWLR 169 at 176-177; GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720 at [19]; WorkCover Authority of NSW v Chubb Australia Ltd [2000] NSWCA 221; (2000) 20 NSWCCR 614 and Government Insurance Office of NSW v Colgate Palmolive Pty Ltd (2001) NSWCA 24 at [35]; (2001) 50 NSWLR 729; (2001) NSWCCR 436. 78 The Authority submitted that as each of the diseases identified in Mr Brazier's Amended Statement of Claim was due to exposure to asbestos in employment, Curtis J should have determined whether "the employment after 15 August 1984 carried a risk of exposing a worker (not necessarily the plaintiff) to the risk of a disease from the inhalation of asbestos." It submitted that the risk did not have to be a real risk nor did there have to be evidence that the worker had actually come into contact with the asbestos. It submitted that Government Insurance Office v Colgate Palmolive, above, was "clear authority" for these propositions. 79 It argued that the test Curtis J posed would require the Court to receive evidence as to the quantity of asbestos fibre necessary to contract a particular disease and may result in a different insurer being liable depending on the disease in fact contracted by the plaintiff. It submitted that in circumstances where the plaintiff had the misfortune of contracting both asbestosis and mesothelioma, one insurer might be liable for the former and another for the latter. 80 The Authority submitted that Curtis J's finding that "more probably than not after 1984 Mr Brazier inhaled no asbestos dust or fibre" was to be read in the context of the words which immediately succeeded it, namely "the possibility that until 1988 when he last worked for ICI he may have inhaled asbestos fibre if asbestos sheeting suffered damage at a time when he was working nearby". It submitted that it was apparent from Curtis J's finding that there was asbestos sheeting present in the factory after August 1984 and that from time to time it was damaged, thus liberating asbestos fibre. It referred to Mr Brazier's and Mr Forbes' evidence that neither of them could exclude the possibility that Mr Brazier had inhaled fibre after 1985. Accordingly, the Authority submitted that notwithstanding the fact that Curtis J expressed himself in the language of "possibility", he thought it probable that Mr Brazier inhaled asbestos fibre to the date of his retirement in July 1988. 81 On this basis, as the disease conditions of which Mr Brazier complained were due to the inhalation of asbestos fibre, it submitted that if Curtis J had applied the "correct" nature of employment test, he would have found that Mr Brazier continued to be exposed to a risk of inhaling asbestos fibre and dust up until the date of his retirement on 8 July 1988. 82 In oral submissions, Mr Little SC also submitted that the nature of employment test could be satisfied where there was a possibility rather than a probability that Mr Brazier may have been be exposed to asbestos after August 1984. 83 Mr Little SC contended that despite the change in the nature of Mr Brazier's exposure to asbestos after August 1984 by virtue of the quantitative reduction in the risk of exposure to asbestos fibre Curtis J had identified, the nature of Mr Brazier's employment had not changed. 84 The Authority's argument that the nature of employment test did not require proof that a worker was exposed to the risk of inhaling any particular quantity of asbestos fibre was related to its argument that the test did not require proof that the worker was exposed to a risk of incurring the actual occupational disease in question. 85 The Authority also raised an evidentiary issue. It accepted that Mr Brazier's diseases were attributable to the inhalation of asbestos. It argued, however, that there was no evidence before Curtis J which enabled him to determine the quantity of asbestos fibre necessary to be inhaled to cause the conditions in respect of which Mr Brazier sued when compared with the quantity to be inhaled to cause mesothelioma. 86 No party complained that the Authority was precluded from raising the no evidence issue because s 32 of the Dust Diseases Tribunal Act 1989 limits an appeal to this Court to a point of law or a question as to the admission or rejection of evidence. In my view, in any event, the contention that Curtis J made a determination in the absence of evidence to support the finding is a question of law: see Anderson Stuart v Treleaven (2000) 49 NSWLR 88 at 102 [67]. 87 The Authority submitted that the Court of Appeal should correct Curtis J's error of law by declaring FAI Workers - ICI's insurer from 30 September 1987 until 30 September 1989 - to be the insurer liable pursuant to s 151AB. Nature of Employment Test: FAI Traders' Submissions 88 FAI Traders submitted that the Authority's argument amounted to a submission that the words "the disease" in s 151AB(1) were used generically to mean "an asbestos-related disease" but did not mean the actual occupational disease contracted by the worker. It submitted that the point was wrong, involved a misreading of s 151AB(1) and was contrary to authority. 89 FAI Traders submitted that the vice of the Authority's submissions was that they sought to elide the concept of "employment to the nature of which the disease was due" which involves a generic element, with the concept of "disease" as used in s 151AB(1) which required identification of the actual occupational disease contracted by the worker. It submitted that the first step required by s 151AB(1) was to identify the actual occupational disease contracted by the worker as, until that was done with some particularity, it was not possible to determine the nature of employment test. 90 Accordingly, it submitted that once Curtis J had determined that Mr Brazier was suffering from asbestosis and an asbestos related pleural disease, it was logical, indeed necessary, for his Honour to look at the nature of Mr Brazier's employment to determine whether it had exposed him to a risk of developing those diseases. FAI Traders submitted that Curtis J found that the employment after 15 August 1984 did not expose Mr Brazier to such a risk and that that was a finding of fact which was open to his Honour. 91 FAI Traders submitted that it was notorious, and known to Curtis J as a judge of the Dust Diseases Tribunal, that relatively light exposure to asbestos can cause the condition of mesothelioma but that substantial exposure was required to cause asbestosis or an asbestos related pleural disease. It submitted that Curtis J had found as a fact that after 15 August 1984 there was no possibility of such exposure and consequently no risk of developing those diseases. 92 Finally, FAI Traders submitted that even if it was found that Curtis J had posed the wrong legal test, and, I infer, that the correct test was that for which the Authority contended, the last period during which Mr Brazier was employed in an employment to the nature of which the disease was due was in July 1988, which was outside the period of cover provided by FAI Traders. On that basis, the correct insurer for the purposes of s 151AB was FAI Workers – the insurer on risk at that date. Accordingly, it submitted the judgment in its favour entered by Curtis J in the Liability Proceedings should stand. Nature of Employment Test: FAI Workers' Submissions 93 FAI Workers submitted that Curtis J's findings were decisive. In particular it pointed to his recording of the "possibility that until 1988 when [Mr Brazier] last worked for ICI he may have inhaled asbestos fibre if asbestos sheeting suffered damage at a time when he was working nearby." FAI Workers submitted there was no evidence that any asbestos sheeting was damaged between 1984 and 1988. 94 It submitted that Curtis J correctly directed himself by inquiring into when Mr Brazier was last exposed to asbestos in circumstances potentially causative of the diseases from which he suffered. In the light of his factual findings, FAI Traders submitted that it was inevitable (and correct) that Curtis J arrived at the conclusion that there had been no relevant exposure to asbestos after 15 August 1984. 95 As to the Authority's submission that the true legal inquiry for the purposes of s 151AB was whether the continuing employment was in circumstances in which Mr Brazier could have contracted any asbestos disease - even if he had not contracted such a disease - FAI Workers submitted that the Authority's submission did not accord with the plain words of s 151AB, that it was inconsistent with authority, referring to Tame v Commonwealth Collieries Pty Limited (1947) 47 SR (NSW) 269 at 272 and, finally, that if the submission was correct it would lead to absurd results. Nature of Employment Test: ICI 96 ICI made no substantive submissions on the cross-appeal, resting, as I understand its position, on the outcome of this controversy as between the Authority, FAI Traders and FAI Workers. Industrial Diseases of Gradual Onset: Statutory Background Nature of Employment Test: section 151AB 97 The phrase "in employment to the nature of which the disease was due" in s 151AB has a lengthy legislative history. It is derived from the phrase, "due to the nature of employment", used in s 8(1)(a) of the Workmen's Compensation Act 1906 (UK), a provision intended to facilitate a worker's ability to recover statutory worker's compensation in relation to a disabling industrial disease. 98 Section 8(1) provided, in substance, that where the disablement or death of a workman was caused by an industrial disease "and the disease (was) due to the nature of any employment in which the workman was employed at any time within the twelve months previous to the date of the disablement or suspension", the workman or his dependents was entitled to compensation as if the disease was a personal injury by accident arising out of, and in the course of, that employment. The section went on to provide that where the disease was "of such a nature as to be contracted by a gradual process" the compensation should be recoverable from the employer who last employed the workman during the period of 12 months "in the employment to the nature of which the disease was due". 99 The English legislation making specific provision for workers who contracted diseases by gradual process was adopted in New South Wales, first in s 12 of the Workers' Compensation Act 1912 and then in s 7 of the Workers' Compensation Act 1926 (NSW) (the "1926 Compensation Act"). Section 7 dealt with an employer's liability to pay compensation to workers in respect of injuries, which were defined to include a disease contracted in the course of employment (s 6). Subsection 7(4) substantially reproduced s 8(1)(c)(iii) of the Workmen's Compensation Act 1906 (UK). It provided: "(4) Where the injury is a disease which is of such a nature as to be contracted by a gradual process compensation shall be payable by the employer in whose employment the worker is or who last employed the worker. Any employers who, during the twelve months preceding a worker's incapacity, employed him in any employment to the nature of which the disease was due, shall be liable to make to the employer by whom compensation is payable such contributions as, in default of agreement, may be determined by the Court …" 100 Subsection 7(5) provided that: "for the purposes of subsections (4) and (4A)…the injury shall be deemed to have happened at the time of the worker's incapacity." 101 While provisions such as subsection 7(4) may have facilitated a worker's ability to recover compensation in respect of a disease contracted by a gradual process, employers found liable to pay compensation pursuant to subsection 7(4) encountered difficulties in recovering that compensation from their worker's compensation insurer. 102 Curtis J traced the history of s 18(6B) of the 1926 Compensation Act and s 151AB in Malathounis v H & J Pappas t/as Pappas Excavations & Ors (1996) 13 NSWCCR 438 at 450ff and Di Cecco v Mercantile Mutual Insurance (Workers Compensation) Limited [2002] NSWDDT 1; (2002) 23 NSWCCR 143 ("Di Cecco"). Di Cecco was recently referred to in Orica Limited v CGU Insurance Ltd [2003] NSWCA 331 at [42] and [177] but not in a manner which was critical of Curtis J's historical analysis. 103 According to Curtis J two decisions, Fisher v Hebburn Ltd (1960) 105 CLR 188 and State Mines Control Authority v GIO (NSW) (1964) 65 SR (NSW) 258 revealed a flaw in the 1926 Compensation Act and, in particular, in the ability of an employer found liable under a "nature of employment" claim pursuant to s 7(4) to recover from the insurer on risk during the period of employment. 104 In State Mines Control Authority v GIO (NSW) the plaintiff employer was found liable to compensate a former employee who had been incapacitated by a disease of gradual onset many years after leaving its employment. The employer was unsuccessful in claiming on the insurer on risk during the period of employment because no "injury" pursuant to s 7(4) had occurred during the period of indemnity. It was also unsuccessful in its claim against the insurer on risk at the time of "injury" because the statutory form of policy did not cover a liability to a person who was not in the insured's employ during the currency of the policy. As Curtis J explained in Di Cecco "[t]o remedy this gap in the compulsory insurance scheme Parliament enacted the Workers' Compensation (Amendment) Act 1964 which inserted s 18(6A) [in the 1926 Compensation Act]". The view that subsection (6A) was inserted because of the decision in State Mines Control Authority v GIO (NSW) was also expressed by Yeldham J in Wunderlich Ltd v Manufacturers' Mutual Insurance Ltd [1981] 2 NSWLR 678 at 682. 105 Thus, the 1926 Compensation Act was amended first, in 1964, by inserting subsection 18(6A) to facilitate an employer's ability to recover from an insurer in respect of payments of worker's compensation in relation to a disease of gradual onset and then, in 1967, by the Workers' Compensation (Dust Diseases) (Amendment) Act. The latter Act made two significant amendments. It amended s 18(1) of the 1926 Compensation Act to require employers to insure against liability at common law in respect of dust diseases. It also inserted subsection 18(6B) to facilitate an employer's ability to recover from an insurer in respect of payments of damages in relation to a disease of gradual onset. Subsection 18(6B) was the precursor to s 151AB. Those subsections provided: "(6A) Where before or after the commencement of the Workers Compensation (Amendment) Act 1964 an employer has become liable under this Act to pay compensation to a worker in respect of incapacity resulting from an injury referred to in subsection (4) or (4A) of section 7 … then for the purpose of determining whether any insurer or which of two or more insurers is liable under a contract of insurance or indemnity in respect of that compensation, the liability of the employer shall notwithstanding the provisions of sections 7(5) and 16(1A) be deemed to have arisen immediately before the worker ceased to be employed by the employer. (6B) For the purposes of any policy of insurance or indemnity obtained by an employer after the commencement of Part 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 an employment to the nature of which the disease was due." 106 Subsection 18(6B) defined "occupational disease" to mean a disease which was of such a nature as to be contracted by a gradual process. 107 The Workers' Compensation (Dust Diseases) (Amendment) Act also amended s 18(1) of the 1926 Compensation Act to require employers to insure against liability at common law in respect of dust diseases. 108 In the Second Reading Speech to the Workers' Compensation (Dust Diseases) (Amendment) Bill, Mr Willis, the Minister for Labour and Industry, explained the amendments as follows (NSW Parliamentary Debates, (Legislative Assembly), 14 March 1967, Third Series, Vol 66, 4105, 4112): "Sufferers from dust diseases in many cases only become aware of the exact nature of their ill-health some ten, twenty or thirty years after their last exposure to dust, and the insidious onset of dust diseases demands special treatment by legislation as far as workers' compensation is concerned…. (4112) At present there is no compulsion upon employers to take out insurance policies against common law liability to workers in respect of silicosis. The bill requires employers to take out such insurance, so that the common law liability of employers against all dust diseases must be covered. On this point the principal Act is amended to increase from $40,000 to $50,000 the minimum indemnity under insurance policies in respect of common law liability for all injuries and diseases. Difficulties have arisen in determining precisely when the common law liability of the employer for dust diseases and other occupational diseases actually occurs. To clarify the position the principal Act is amended so that the liability is deemed to have arisen when the worker was last employed by the employer in the occupation that gave rise to the disease. … this is an extension of the provisions of s 18(6A) of the principal Act, which makes similar provisions in relation to statutory liability only. By this amendment it will be clear which insurer has liability in those cases when the employer has changed from one insurer to another while the worker was employed in the hazardous occupation." 109 In 1987, the 1926 Compensation Act was repealed by the 1987 Compensation Act which, in Part 5, abolished a worker's rights to bring common law proceedings against his or her employer where the employer was liable to pay worker's compensation. The 1987 Compensation Act came into operation on 30 June 1987. The original Part 5 was repealed in 1989 by the Workers Compensation (Benefits) Amendment Act 1989. Although workers' common law rights to seek damages against their employer were restored, that restoration was subject to limits set out in the new Part 5. 110 Following the restoration of common law rights in 1989, s 151AB was inserted in Division 5 (headed "Miscellaneous Provisions") of Part 5 of the 1987 Compensation Act by the Workers Compensation (Amendment) Act 1991. In its original form s 151AB (which was closely modelled on subsection 18(6B)) relevantly provided: "151AB. (1) If an employer is liable independently of this Act for damages for an occupational disease contracted by a worker, the liability is to be taken (for the purpose of this section only) to have arisen when the worker was last employed by that employer in an employment to the nature of which the disease was due. (2) The purpose of this section is to identify (from among a number of insurers under policies of insurance obtained by a single employer for different periods) one insurer which is to indemnify the employer for the full amount of the damages or which is to pay the full amount of damages to the worker, without any right to a contribution from those other insurers." 111 As Gleeson CJ commented in CIC Workers' Compensation (NSW) Limited v Alcan Australia Limited (1994) 35 NSWLR 169 at 173, the general purpose of the new section was stated within it (ss (2)). It was perhaps for this reason that s 151AB was not referred to in the Second Reading Speech to the 1991 Bill. However the Explanatory Note appended to s 151AB in Schedule 4 of the Workers Compensation (Amendment) Act 1991 explained it in the following terms: "The section applies where a number of insurers may each be partly liable to contribute to the liability of an employer for common law damages to a worker who suffers from an occupational disease. This situation will arise if an employer has, over the period when the worker contracted the disease, obtained policies of insurance from different insurers. The section provides that the insurer which last insured the employer in respect of the worker is liable to indemnify the employer for all the damages and is not entitled to claim contributions from the previous insurer. The section does not affect the right of the worker to recover all the damages to which the worker is entitled." 112 The original subsections 151AB(1) and (2) were omitted by the WorkCover Legislation (Amendment) Act 1995 and the current provision, which commenced on 20 December 1995, inserted. Subsection 151AB(2) of the current provision differentiates between liability arising before and after 30 June 1987. The amendment was intended to divide liability equally between the insurer who covered the employer immediately before the commencement of the 1987 Compensation Act and the insurer who covered the employer after that commencement, when the worker was last employed in the relevant employment. The insertion of the new subsection 151AB(2) was at the expense of the statement of the section's purpose. The amended s 151AB did not reproduce the statement of the purpose which had appeared in subsection (2) of the original s 151AB. 113 Section 151AB of the 1987 Compensation Act in its current form relevantly 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 identifying from among a number of insurers under policies 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. … (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. (6) In sections 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 … "relevant commencement" means: (a) except as provided by paragraph (b)—4 pm on 30 June 1987, …" 114 "Dust disease" as defined by the Workers' Compensation (Dust Diseases) Act 1942 means any disease specified in Schedule 1: s 3 Workers' Compensation (Dust Diseases) Act 1942. Asbestosis and asbestosis related pleural diseases, two of the conditions from which Mr Brazier suffered, are included in Schedule 1. Insurers and dust diseases: section 151AC 115 Section 151AC was inserted in the Workers Compensation Act by the Workers Compensation Legislation Amendment (Dust Diseases & Other Matters) Act 1998 (No 130 of 1998) which commenced on 1 December 1998. 116 In the Second Reading Speech the Attorney General, the Honourable J W Shaw QC MLC, stated that the "main purposes of [the Bill] are to increase the fairness of workers' compensation and common law provisions relating to dust diseases, to make procedural changes to enable more efficient disposal of proceedings in the Dust Diseases Tribunal and facilitate the settlement of claims, and to make other miscellaneous revisions": see NSW Parliamentary Debates (Legislative Council) Third Series, 17 November 1998, Vol 268 at 9973. 117 The Second Reading Speech dealt with s 151AC in the following manner (NSW Parliamentary Debates (Legislative Council) Third Series, 17 November 1998, Vol 268 at 9974): "A further provision designed to improve procedures involves situations where the worker's employer has been covered by two or more insurers over the time when the worker was employed in dust-exposed duties. At present, disputes between those insurers about which of them is liable have the potential to delay payment of damages to workers who have a clear entitlement. The proposed changes address that problem by designating the last relevant insurer as the one responsible for initially dealing with the worker's claim. That will include acting as defendant in the proceedings and, if appropriate, arriving at a compromise or settlement with the claimant. Separate arbitration is to be provided to resolve the insurance issues, following resolution of the worker's claim." 118 The Explanatory Notes to the 1998 Bill described the new section in the following terms: "… section 151AC … is intended to complement section 151AB. Section 151AB provides a scheme for identifying one insurer (or in some cases two insurers) who are to be liable to pay the damages in case of disease contracted by a gradual process, including a dust disease. Proposed section 151AC provides a mechanism in the case of a dust disease to designate one of two or more insurers for this purpose on an interim basis, pending resolution of a dispute as to which of them is liable. The proposed section 151AC will be capable of being disapplied by the Dust Diseases Tribunal in accordance with rules made under the Dust Diseases Tribunal Act 1989." 119 Section 151AC relevantly provides: "151AC Further special insurance provisions relating to dust diseases (1) Application of this section This section applies in relation to an employer who is 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) Identification of designated insurer The following provisions have effect for the purpose of determining which insurer among the following categories of insurers is the designated insurer for the purposes of this section: (a) If, in the case of a liability that arose before the relevant commencement, there is a dispute as to which of 2 or more insurers is liable to indemnify the employer under section 151AB, the insurer who was the last of those insurers to be the employer's insurer while the worker was employed before that commencement by that employer is the designated insurer. (b) If, in the case of a liability that arose after the relevant commencement, there is a dispute as to which of 2 or more insurers is liable to indemnify the employer under section 151AB, the insurer who was the last of those insurers to be the employer's insurer while the worker was employed after that commencement by that employer is the designated insurer. (c) If, in the case of a liability that arose partly before and partly after the relevant commencement, there is a dispute as to which of 2 or more insurers is liable to indemnify the employer under section 151AB in respect of any liability that arose before that commencement, the insurer who was the last of those insurers to be the employer's insurer while the worker was employed before that commencement by that employer is the designated insurer. (d) If, in the case of a liability that arose partly before and partly after the relevant commencement, there is a dispute as to which of 2 or more insurers is liable to indemnify the employer under section 151AB in respect of any liability that arose after that commencement, the insurer who was the last of those insurers to be the employer's insurer while the worker was employed after that commencement by that employer is 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) Designated insurer to act for other insurers In addition to the provisions of section 151AB: (a) where subsection (3) (a) or (b) applies—the designated insurer who is the insurer liable under section 151AB (1) is to act for all the insurers in the relevant category in the carriage of the insurance aspects of the claim, and (b) where subsection (3) (c) or (d) applies—the designated insurer who is the insurer who is primarily responsible under section 151AB (2) is to act for all the insurers in the 2 relevant categories in the carriage of the insurance aspects of the claim. (6) Other insurers can make submissions as to damages Despite subsection (5), if the damages payable to or in respect of the worker have not been assessed, any of the other insurers in dispute may, with the leave of the Dust Diseases Tribunal, make submissions to the Tribunal relating to the amount of damages payable. (7) Methods of resolving dispute The dispute may be resolved by such processes as the parties to the dispute agree or as are otherwise available. (8) Arbitration under special provisions … (9) Nature of resolution of dispute For the purposes of this section, the dispute is not resolved until it has been determined which of the insurers in dispute was the insurer when the worker was last employed at the relevant time by the employer in an employment to the nature of which the disease was due. That insurer is referred to in the following provisions of this section as an insurer who is liable . (10) Adjustment after resolution of dispute If, on resolution of the dispute, it is determined that a designated insurer is not an insurer who is liable, then (in addition to any other liabilities) the insurer who is liable: (a) is liable to reimburse or indemnify the designated insurer for any amounts already paid by the designated insurer in that capacity (including any amounts paid on an interim basis), and (b) is liable to reimburse or indemnify the employer for any costs of the worker already ordered by the Dust Diseases Tribunal, and (c) is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute incurred in earlier proceedings before the Tribunal because the insurer who is liable disputed liability (thereby giving rise wholly or in part to the dispute), and (d) without affecting the generality of paragraph (c), is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute (other than the designated insurer) incurred in any such earlier proceedings in making submissions to the Tribunal relating to the amount of damages payable to or in respect of the worker. (11) If, on resolution of the dispute, it is determined that a designated insurer is an insurer who is liable, then (in addition to any other liabilities) the insurer who is liable: (a) is liable to reimburse or indemnify the employer for any costs of the worker already ordered by the Dust Diseases Tribunal, and (b) is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute incurred in earlier proceedings before the Tribunal because the insurer who is liable disputed liability (thereby giving rise wholly or in part to the dispute), and (c) without affecting the generality of paragraph (b), is (subject to any order of the Dust Diseases Tribunal) liable to pay the reasonable costs of any of the insurers in dispute incurred in any such earlier proceedings in making submissions to the Tribunal relating to the amount of damages payable to or in respect of the worker. (12) Parties to dispute An insurer may be or become a party to the dispute even though the insurer was not a party to or represented in the original proceedings before the Dust Diseases Tribunal. Without limiting the foregoing, an insurer becomes a party to the dispute on being joined as a party to an arbitration under section 38 of the Dust Diseases Tribunal Act 1989 . (13) Rules This section has effect subject to orders of the Dust Diseases Tribunal under rules referred to in section 33 (4) (n) of the Dust Diseases Tribunal Act 1989 . (14) Transitional … (15) Definition In this section: category of insurers means the category consisting of the insurers in dispute as referred to in a paragraph of subsection (3). Judicial Consideration The Nature of Employment Test and Employees 120 Blatchford v Staddon and Founds [1927] AC 461, which might be regarded as the seminal authority in this area, held that the nature of employment test facilitated the ability of a worker, disabled by an industrial disease of gradual onset, to recover damages in relation to that disease by casting the immediate liability to pay compensation for the disease upon the latest employer to whose employment the disease was incidental, even though the worker could not prove that that employment had actually caused the disease. While Blatchford acknowledged that such a scheme had an element of artificiality, all the Law Lords recognised that such artificiality was necessary to cope with the peculiar incidents of diseases of gradual onset. 121 Blatchford concerned the proper construction of s 8(1) of the Workmen's Compensation Act 1906 (UK). Viscount Sumner described the insidious manner in which diseases which afflicted a worker as an incident to the worker's trade and the processes used in it might become manifest so that they could not properly be called "accidents" within the scheme of workers' compensation legislation. Such problems, according to Viscount Sumner, led the legislature to devise a scheme which would overcome the difficulties of proving a causal connection between a worker's disease and the employment in which he was engaged. He described two solutions in the following passage (at 467 – 470): "In the case of such diseases, an applicant, who had not been long in the employment of the respondent, would naturally be met with the suggestion that his disease had been previously contracted and therefore did not arise out of it; and in meeting this defence by proof that it actually arose during and out of employment by the respondent he might well find the difficulty insuperable. … [M]ore had to be done than simply declare the disease to be an accident. Means had to be found enabling the workman to recover compensation from an employer even though he could not prove the precise time when the disease was contracted. [His Lordship referred to the terms of s 8(1) and continued] [Section 8 is] intended to obviate the disadvantage which would handicap the workman if he had to prove disablement by disease, as if for an accident … they provide a means, perhaps rough and ready , of enabling a suffering workman to get compensation from some one certain, in respect of a disease contracted at a wholly uncertain time. … a scheme is thus disclosed for bringing industrial diseases into the Act of 1906, which substantially meets their peculiar features mentioned above. The way in which this is done sufficiently meets the objection that, unless shown in the clearest words, an intention cannot be imputed to the Legislature to make one employer pay for what was entirely due to the service of others. The intention is clear. The objection was pointedly phrased by saying that 'the last employer' named in the section must mean 'the last relevant employer,' the last employer in point of time, out of and in the course of whose employment the disease had wholly or partly arisen. I think that the scheme of the section is on its face such that the last employer cannot be thus limited. The ground for making him the person from whom compensation is to be recoverable, is that he is a person certain and designated, upon whom the workman may claim without being sent from pillar to post. … The paternal benevolence of the Legislature towards workmen is well known and if the price of that benevolence is paid by the last employer, who thus has to bear others' burdens, there is nothing new in this kind of legislation …". (Emphasis supplied) 122 Viscount Sumner then turned to consider the meaning of the words "to the nature of" in s 8(1). He said, (at 470): "Their meaning cannot be the same as if the section had simply said 'is due to' any employment. I think they are inserted because this part of the section is not concerned directly with something arising out of the particular service of the particular employer sued, but with results which are incidental to the class of employment, in which the workman has served several employers. If the disease is incidental to that class of employment, so that it can be attributed to service therein, then he is to be compensated, as if something could be proved, which ex hypothesi may not be proved - namely, as if an accident had arisen out of and in the course of that employment under a particular employer and at a particular time and had been proved to have so arisen." 123 Lord Atkinson referred (at 475) to the contention that under s 8(1) an employer could not escape liability by proving that the workman's disease was not contracted whilst he was in the employer's employment as, while "strange and rather unjust", necessitated by the Act. Lord Wrenbury (at 480) was "driven to say contrary to the real facts as found the statute has rendered liable an employer whose services had nothing to do with the workman's state of health". Lord Blanesburgh (at 485-6) saw the result as "arbitrary" but said it "cuts both ways" on the basis that in another case the employer might be free of all liability even though the claimant's disease "was contracted in their own works". This remark was presumably intended to refer to an employer whose period of employment of the "injured" worker ceased prior to the twelve months referred to in s 8(1). 124 In Ellerbeck Collieries Limited v Cornhill Insurance Co [1932] 1 KB 401 at 406, Scrutton LJ referred to the legislation dealing with industrial diseases as involving "elaborate fictions". His Lordship was referring to s 43 of the Workmen's Compensation Act 1925 (UK) which reproduced s 8(1) of the 1906 Workmen's Compensation Act. Later, after referring to the difficulties a workman afflicted with a disease of gradual onset had in identifying an employer from whom to claim compensation, Scrutton LJ (at 409) described s 43 as "a conventional and artificial means for enabling the workman to get compensation, leaving the various employers to fight out their proportion of the liability between themselves." 125 In Smith v Mann [1932] HCA 30; (1932) 47 CLR 426 the High Court applied the Blatchford interpretation of the nature of employment test to s 7(4) of the 1926 Compensation Act. The High Court held that it was sufficient for a worker suffering from a disease contracted by gradual process to demonstrate that the disease was incidental to the class of employment with an employer during the twelve months preceding his disablement. It is clear that the Court regarded the task dictated by subsection 7(4) as requiring identification of the nature of employment by reference to the particular disease from which the worker was suffering. Thus Rich J said (CLR at 439-440): "In my opinion the provision [s 7(1) and (4)] was not intended to restrict the right of workers but to enlarge them. Its object was to fix upon the ultimate employer of the worker a direct liability to him, leaving the employer to recover from previous employers subject to the limitation of time expressed in the section. No doubt in the case of the ultimate as in that of the other employers the employment must be one to the nature of which the disease of the worker was due, but it is not necessary that the worker should establish that the disease from which he is suffering was actually brought about or contributed to by the employment of the last employer." (Emphasis supplied) 126 Starke J said (CLR at 443): "… the Act contains no limitation of time within which the disease must be contracted. It must arise, no doubt, from the nature of the employment . But it is not necessary that it should arise 'out of the particular service of the particular employer sued': it is enough if the disease is 'incidental to that class of employment so that it can be attributed to service therein' ". (Emphasis supplied) 127 Dixon J said (CLR at 449): "[T]he diseases dealt with are those which are contracted by a gradual process and are due to the nature of an employment. … It seems proper to understand the provision in the first paragraph as confined to employers who do employ or have employed the worker in an employment to the nature of which the disease is due , but any further restriction upon the class of employment or any further requirement as to causation seems unwarranted." (Emphasis supplied) 128 In Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269, the Full Court considered the nature of the risk a worker had to prove to satisfy the nature of employment test. Tame concerned a claim for compensation pursuant to s 7(4) of the 1926 Compensation Act by a worker suffering from pulmonary fibrosis. He had worked for the respondent for a month removing sandstone from a coal seam with a drilling machine. There was no evidence he had actually inhaled silica dust during this period. Indeed, under cross-examination he said that the weather was so wet while he was working that there was no dust. The medical evidence was that work on sandstone over a period, even in the open air where no protection was afforded from dust, would be sufficient to produce pulmonary fibrosis, a sequel of silicosis. The evidence showed that the worker was suffering from a totally incapacitating pulmonary fibrosis before he commenced employment. Nevertheless, his last employer was held liable, because his work in the coal mine was employment to the nature of which his disease was due. 129 Jordan CJ (with whom Street J agreed), referred to the ratios in Smith v Mann and Blatchford that the nature of employment test was satisfied by demonstrating that the disease from which the worker suffered was incidental to the nature of his employment, and said (at 272): "This part of [s 7(4)] is not concerned directly with something arising out of the particular service of the particular employer sued, but with results which are incidental to the class of employment, in which the workman has served several employers. … I think that 'employment to the nature of which the disease was due' means an employment of such a kind as to involve a risk of the employee contracting the gradual process disease which is disabling him. In the present case, what is complained of is a disease contracted by a gradual process of the inhalation of silica dust. For the worker to succeed, it was necessary for him to satisfy the Commission that his employment with his last employer was of such a kind as to expose him to the risk of inhaling silica dust. … I agree that if it had been established that, although his last employment was such as ordinarily involved a risk of inhaling silica dust, nevertheless work with his last employer was carried out under special conditions which made inhalation of silica dust impossible, the worker would have failed … [after referring to the evidence of wet weather and the worker's evidence that there was no dust as proving there was no dust being inhaled, the Chief Justice continued] But the Commission was entitled to take into account its general knowledge of silicosis and to form the opinion that the facts so deposed did not satisfy it that the conditions of employment did not expose the worker to the ordinary risks of such employment but that the general evidence showed that they left him exposed to some risk of inhaling silica dust." (Emphasis supplied) 130 In CIC Workers' Compensation (NSW) Limited v Alcan Australia Limited (1994) 35 NSWLR 169 at 173 ("Alcan") Gleeson CJ described the portion of Jordan CJ's judgment which I have underlined as "a clear exposition of the principle that had been applied in Blatchford, and that has been applied ever since". 131 The High Court revisited the nature of employment test in a number of cases dealing with comparable legislation. All of those decisions emphasised that the linchpin of the test was the actual disease from which the worker suffered. 132 In The Commonwealth v Bourne (1960) 104 CLR 32 the High Court considered s 10(1) of the Commonwealth Employees Compensation Act 1930-1956. Section 10(1) reflected s 7(4) of the 1926 Compensation Act. It imposed a liability upon the Commonwealth to pay compensation in circumstances where "the death of an employee is caused by a disease, and the disease is due to the nature of the employment in which the employee was engaged by the Commonwealth". Bourne concerned a claim for compensation by the widow of an investigating officer in the Sales Tax Branch of the Taxation Department of the Commonwealth, who died from coronary sclerosis and myocardial degeneration while on annual leave. There was evidence that the disease had progressively developed over a number of years. There was also evidence that for eight months before his death the officer had been engaged on a specific task of investigation of magnitude and importance which seemed to cause him great worry, anxiety and feelings of frustration. The medical opinions about the place of worry in the progress and acceleration of cardiac disease were divergent. The Commonwealth appealed from a finding in the County Court that the officer's death had been caused by a disease due to the nature of his employment by the Commonwealth. The appeal was upheld. 133 Dixon CJ held that the County Court judge's conclusion could not stand for three reasons, all of which make it plain that, in his Honour's view, s 10 focused upon the particular disease from which the employee was suffering. 134 First, Dixon CJ concluded (at 37-38) that it did not "sufficiently appear that it was the employment upon which (the officer) was engaged that formed the source of any psychological condition that may have borne upon the progress of his cardiac deterioration and failure". Secondly, his Honour concluded (at 38) that it was not established "upon a balance of probabilities that there was any acceleration by his work or its nature of the progressive degenerative disease from which he suffered." Thirdly, his Honour concluded (at 38) that the expression in s 10(1), "due to the nature of the employment in which the employee is engaged", did not cover "an employment which has no particular tendency to give rise to a disease, contribute or conduce to it or accelerate it and no incident, adjunct or quality of which involves those employed therein in any particular liability to the contraction of the disease or to the aggravation or acceleration of its course." 135 Dixon CJ pointed out (at 38) that the phrase "nature of the employment" was "no novelty … in the law of employer's liability", referring to s 43(1) of the Workmens' Compensation Act 1925 (UK). He observed that the phrase "due to the nature of the employment" and not "due to the employment" was used "to provide for ready recourse by the employee to the latest employer who employed him in work to the nature of which his complaint was due independently of the question whether working for the particular employer contributed at all to his condition or aggravated it or accelerated its development." He concluded that it "was accordingly necessary to make the nature of the work the test and not the actual work done or the employment as it actually affected the man." While acknowledging (at 39) "that the word 'nature' is a wide as well as a vague word", his Honour concluded "it does seem to refer to a connection between the 'disease' in the defined sense and the description of employment in virtue of its tendencies, incidents or characteristics." 136 Similar remarks indicating the necessity to demonstrate the connection between the actual condition which led to the death of the deceased and the nature of the employment appear in the other judgments. Taylor J stated (at 42) that for the widow to recover compensation pursuant to s 10 "[I]t was … necessary for [her] to show that the disease which caused the death of her husband was due to the nature of the employment in which he was engaged". Menzies J said (at 44) "the words 'the nature of the employment' … indicate that the appropriate inquiry is concerned with the nature of the employment and its relationship with the disease which brought about death …". He held that s 10 only dealt with cases "when the employment ordinarily involves a risk of the disease so that the disease is 'due to the nature of the employment'". 137 Windeyer J did not find it necessary to determine the proper construction of s 10 as, in his view (at 46), arteriosclerosis could not possibly be regarded as an occupational disease of employees of the Taxation Department. However it is plain his Honour, too, was of the view that s 10 focused upon the actual disease from which the employee was suffering. In The Commonwealth v Thompson (1960) 104 CLR 48, which was decided on the same day as The Commonwealth v Bourne, Windeyer J said (at 56): "For a disease to be due to the nature of the employment in which the employee was engaged, the employment must be such that it ordinarily tends to cause that disease . That is to say, it must be a property of that form of employment to produce that disease , so that contracting that disease can be said to be a natural result of being engaged in that employment." (Emphasis supplied) 138 Similar remarks indicating the necessity to demonstrate a connection between the particular disease from which the deceased suffered and the nature of employment were made in Thompson by Dixon CJ (at 53), Fullagar J (at 53), Taylor J (at 55) and Menzies J who (at 55-56) observed: "The coronary disease which brought about the death of the deceased was not a disease due to the nature of the deceased's employment in the sense that the disease was incidental to that class of employment so that it can be attributed to service therein – to use the language of Viscount Sumner in Blatchford v Staddon and Founds [1927] AC 461 at 470 which was adopted by Starke J in Smith v Mann (1932) 47 CL 426 at 443." 139 The "rough and ready" solution devised by the legislature to obviate the difficulties of proving the cause of diseases of gradual onset did not dilute the standard of proof required by the nature of employment test. In Bourne Dixon CJ had referred to the fact that the widow had not proved "on the balance of probabilities" that the worker's disease was incidental to the nature of his employment. That observation did not form part of the ratio of Bourne. The issue was raised squarely in Hopwood v Textile Paper Tube Co Ltd [1946] 1 All ER 618. Tucker L.J. (who delivered the judgment of the Court) held (at 620) that the burden of proof in proceedings pursuant to s 43 of the Workmens' Compensation Act 1925 (Imp) was the same as that in any other civil proceedings. The worker was required to prove, on the balance of probabilities, that the employment in which he had been engaged for the preceding twelve months was of such a nature as "to cause the particular disease from which he was suffering", although he was not required to prove "that the disease in fact resulted from his employment with any particular employer". Tucker L.J. also held (at 621) that a workman could not discharge his burden of proof if he had established merely that it was possible, rather than probable, that the disease was due to the nature of the employment. He said: "The mere statement that something is possible but improbable appears to us in itself to negative the existence of that degree of proof which is always required in legal proceedings." 140 Hopwood was referred to with approval by Gibbs J in Connair Pty Ltd v Frederiksen (1979) 142 CLR 485. Connair concerned the question whether the nature of the respondent's employment had a tendency to cause, aggravate or accelerate his obsessive-compulsive personality due to the stress of being a pilot with a commercial airline. The High Court, by majority, (Gibbs, Mason and Murphy JJ; Barwick CJ and Stephen J dissenting), held that it did, with the result that his employer was liable to pay compensation pursuant to s 9(1)(a) of the Workmen's Compensation Ordinance 1949 (NT). Section 9(1) was in substance on all fours with s 10(1) of the Commonwealth Employees Compensation Act 1930-1956 (Cth) considered in The Commonwealth v Bourne and The Commonwealth v Thompson. 141 It is clear from the judgment of all members of the Court that they considered the "nature of employment" test posed by s 9(1)(a) required an analysis of the relationship between the actual disease from which the workman was suffering and the employment in which he was relevantly engaged. 142 Barwick CJ pointed out (at 487-488) that "[i]t is well settled … that for an applicant worker to obtain compensation under s 9(1) of the Workmen's Compensation Ordinance 1949 (NT), the disease from which he suffers or the stage a pre-existing disease has reached during his employment with the respondent employer must be due to the nature of the employment." 143 Gibbs J (with whose judgment Murphy J, at 508, expressed his general agreement) after referring to Blatchford and Bourne accepted the Hopwood formulation of the nature of employment test, saying (at 494) that "once the workman proved that the employment was 'of a nature to cause the particular disease' from which he was suffering, he was not required to prove that the disease in fact resulted from his employment with any particular employer". The Nature of Employment Test and Insurers 144 The phrase "employment to the nature of which the disease was due" as it appeared in s 18(6B) appears to have been the subject of little judicial consideration. In Wunderlich Ltd v Manufacturers' Mutual Insurance Ltd [1981] 2 NSWLR 678 at 685, Yeldham J expressed the opinion that "s 18(6B) provides a code for determining whether or not a particular insurer is liable to indemnify an employer in respect of damages payable by that employer for an injury of the relevant kind." As much may be accepted, too, in relation to s 151AB. 145 The Court of Appeal, however, has considered s 151AB on a number of occasions in which it has drawn heavily on the jurisprudence concerning the nature of employment test in the context of claims made by workers. 146 In Alcan the Court considered whether the phrase "employment to the nature of which the disease was due" in s 151AB attached liability to the last insurer of the employer in whose employment the worker contracted a disease as O'Meally J had held at first instance or, rather, required determining the kind of work being done by the employee at various times as Rolfe J held in Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd (1993) 34 NSWLR 269. Gleeson CJ (with whom Mahoney and Meagher JJA agreed) held that Rolfe J's decision in Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd was correct. 147 Echoing the opinions expressed in Blatchford concerning the "rough and ready" operation of the nature of employment test, Gleeson CJ (at 173) described s 151AB as "a fairly arbitrary legislative mechanism for identifying the relevant insurer in what would otherwise be an impossibly complex situation". He pointed out, referring to Blatchford, that "[f]rom the earliest days of workers' compensation legislation, both in England and in Australia, industrial diseases of gradual onset have been recognised as a cause of difficulties requiring special legislative treatment." 148 His Honour observed (at 174) that "the concluding words in the present s 151AB of the Workers Compensation Act 1987 of New South Wales [in the employment to the nature of which the disease was due] are the same words as were used in the English [Workmen's Compensation] Act of 1906". Having referred to the fact that the meaning of those words had been authoritatively established in Blatchford, Gleeson CJ held that the concluding words in s 151AB should have the same meaning as was given to the like expression in Blatchford, Smith v Mann and Tame v Commonwealth Collieries Pty Ltd. His Honour said (at 176): "… [T]here is every reason to conclude that they have the same meaning. The context is the same. The problem being addressed is that of a disease contracted by a gradual process. The idea of a disease being due to employment of a certain nature directs attention, not to the contract of employment, but to the work being performed and the exposure to risk involved in that work. The reasoning in Blatchford and the cases that have followed, applies with equal force to s 151AB." 149 It is useful to look closely at the facts in CIC. The late Mr Nikola Crnkovic had been employed by Alcan from October 1961 until November 1987. In April 1993 he manifested symptoms of mesothelioma from which he subsequently died. Shortly before he died, he obtained an award of damages in the Dust Diseases Tribunal against Alcan. Alcan had had a number of insurers over the period of his employment. From September 1982 until October 1985 the insurer was American Home Assurance Co Limited. From October 1985 until October 1987 the insurer was Norwich Winterthur Insurance (Aust) Limited and from October 1987 until Mr Crnkovic left Alcan's employ, the insurer was CIC Workers Compensation (NSW) Limited. Judge O'Meally found that after 4 October 1985, apparently as a result of the treatment or removal of asbestos at Alcan's premises, Mr Crnkovic was no longer exposed to asbestos. 150 Judge O'Meally had held CIC to be the insurer liable pursuant to s 151AB because, in his Honour's view (see 172FG), "once it has been determined that a worker has contracted a disease in the course of employment for which the employer is liable in damages, the last insurer must indemnify the employer against that liability, for the employment was employment to the nature of which the disease as due and the liability is deemed to have arisen when the worker was employed". His Honour did not regard the concluding words of s 151AB(1) as making any material difference to liability. 151 Gleeson CJ gave what he described as a "simple example" of the way s 151AB would operate as construed by Judge O'Meally (at 172-173): "Suppose that a worker was employed by a company for twenty years, and spent the first fifteen of those years engaged in an activity which brought him into daily contact with asbestos fibre, and the last five of those years working as a gardener. On the approach just described, the insurer made liable by s 151AB would be the insurer on risk at the time of the retirement of the worker, even though that insurer might only have come on risk after the worker had taken up his duties as a gardener." 152 His Honour then looked at the situation if the view of s 151AB expressed by Rolfe J in Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd was accepted. Gleeson CJ explained that accepting Rolfe J's test meant (at 173): "… [I]n the present context, exposure to substances capable of causing an occupational disease is a material factor in identifying the nature of the relevant employment. In the example just given, there was a material change in the nature of the worker's employment at the time he commenced to work as a gardener. The insurer liable under s 151AB would be the insurer on risk when the worker was last employed by the employer to do work which exposed the worker to asbestos." 153 Returning to his earlier example, Gleeson CJ said the construction supported by authority "appears to make good sense". As his Honour said (at 176): "To revert to the example given earlier of the worker exposed to asbestos who later turned to gardening, why should the legislature have intended to render liable under s 151AB an insurer who came on risk whilst the nature of the relevant employment was gardening? Or, to address the other possibility advanced, why should the legislature have intended to render liable under s 151AB an insurer who came on risk only after a programme of asbestos removal had been undertaken (and, perhaps, had negotiated a premium accordingly)?" 154 Gleeson CJ concluded his analysis by saying (at 177): "In its application to the facts of the present case, the construction correctly preferred by Rolfe J produces the result that Mr Crnkovic's exposure to asbestos must be regarded as a material factor in identifying the employment to the nature of which his disease was due. The employment referred to is not a contractual relationship with Alcan, but the engagement in a form of activity which exposed him to a risk of a disease of such a nature as to be contracted by a gradual process ." (Emphasis supplied) 155 Although in the passage underlined Gleeson CJ appears to refer to the relevant employment as exposing the worker to a risk of contracting a disease of a general nature, it is apparent in my view, that his Honour was not saying that the employment could be identified without reference to the actual occupational disease from which the employee was suffering. First, in the sentence immediately preceding the underlined passage, his Honour had referred to exposure to asbestos as being a material factor in identifying the employment "to the nature of which [Mr Crnkovic's] disease was due". Secondly, his Honour had held that the line of authority commencing with Blatchford and in Australia with Smith v Mann and Tame should be applied in determining the meaning of s 151AB. Those authorities, as I have earlier explained, required application of the nature of employment test by reference to the particular disease from which the worker was suffering. 156 In CIC Workers' Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422 ("Kellogg") Priestley JA (with whom Meagher and Beazley JJA agreed) held that for the purpose of the nature of employment test, employment embraced not only the work tasks performed by the worker, but also the worker's movements through the employer's premises in the course of employment which exposed the worker to the risk of contracting an occupational disease. 157 In Kellogg the worker had contracted mesothelioma. His case was that he had been directly exposed to the risk of contracting that disease by being brought into physical contact with machinery, equipment, piping and the like, which were protected or covered by asbestos which released dust or were otherwise associated with asbestos in a friable state. According to Priestley JA (at 424) the worker's evidence of his direct contact of this kind until about 1984 was "strong and sufficient to found his case". 158 The evidence at the worker's trial was that from 1984 onwards the worker was not required to work upon asbestos lined machinery or piping. Nevertheless an investigation by an industrial hygienist disclosed major locations within Kellogg's premises in which asbestos materials were still observed at the time of that report in May 1991. CIC had insured Kellogg from 1 July 1988 to 30 June 1992. 159 Johns J in the Dust Diseases Tribunal held, applying the nature of employment test, that CIC was liable to indemnify in relation to its liability to the worker. The Court of Appeal upheld that conclusion. It did so on the basis that, even though the worker was not required to work on asbestos lined machinery after 1984, the evidence supported the proposition that the worker would still be exposed to asbestos particles in the atmosphere in various parts of Kellogg's factory. 160 Priestley JA held (at 427): "…an employee [is] within the requirements of [s 151AB(1)] if in the course of carrying out the employment the employee was in fact exposed to risk because of the employment , employment for this purpose embracing not only the actual work tasks performed by the employee, but also those of the employee's movements through the employer's premises in the course of employment which exposed the employee to risk of inhalation of asbestos particles." (Emphasis supplied) 161 In applying that test, Priestley JA (at 427F, 428G) accepted John J's finding (set out at 426C) that: "The character, nature and incidence (sic) of the plaintiff's employment make it clear to me that his employment to the present time is of such a kind as to involve a risk of contracting the disease or is capable of causing it . … It is unnecessary to show that it was the cause of injury, but rather was apt to produce it. ..." (Emphasis supplied) 162 That passage makes it clear that the inquiry with which the nature of employment test was concerned was directed to identifying the nature of the worker's employment by reference to the actual occupational disease from which he or she suffered. 163 The same approach was taken in Manufacturers' Mutual Insurance Ltd v Goodyear Australia Ltd (1997) 15 NSWCCR 538 in which the nature of employment test was considered in the circumstances of an employee who successfully recovered damages for mesothelioma from Goodyear. Johns J found that he was not exposed to any asbestos dust during the final five months of his employment (July - November 1987) with the result that the appellant was held to be the insurer liable to indemnify Goodyear. The Court of Appeal overturned that conclusion, finding that MMI Workers' Compensation was the insurer liable to indemnify Goodyear. 164 It is important to bear in mind in considering the Court's reversal of Johns J's finding of fact, that in December 1997, when Manufacturers' Mutual Insurance Ltd v Goodyear Australia Ltd was determined, s 32 of the Dust Diseases Tribunal Act provided for an appeal to this Court which amounted to a complete rehearing: see Seltsam Pty Ltd v McGuiness [2000] NSWCA 29; (2000) 49 NSWLR 262 per Spigelman CJ at 266 [15]; Stein JA at 291 [190]; Davies AJA at 305 [265]. As I have earlier noted, the current s 32 (which was inserted into the Dust Diseases Tribunal Act 1989 by the Courts Legislation Amendment Act 1998) which commenced on 4 December 1998, limits the ambit of an appeal from a decision of the Dust Diseases Tribunal. Significantly, it does not enable this Court to conduct a review of the facts and reach a conclusion on the facts which differs from that of the Dust Diseases Tribunal, unless that different view arises as the product of an error of law or because of the wrongful admission or rejection of evidence. 165 In Manufacturers' Mutual Insurance Ltd v Goodyear Australia Ltd, Johns J expressed the issue he was required to determine to resolve the nature of employment test as being to identify employment which was "of such a kind as to involve a risk of the employee contracting 'the gradual process disease' which was disabling him." Sheppard AJA (with whom Sheller and Powell JJA relevantly agreed) said (at 545) that his Honour's statement of principle was in accordance with the authorities. 166 Judge Johns had held that the worker was not exposed to the relevant risk after June 1987 because, during that period, there was a protocol in force pursuant to which any asbestos identified as hazardous was clearly marked by barricades, warning signs and warning tape. The worker gave evidence that he saw no such signs between July and November 1987 – from which Johns J inferred that he was not, therefore, exposed to any asbestos dust. However, both Sheller JA and Sheppard AJA (with whose judgment Powell JA entirely agreed) concluded that evidence given by the plant manager in charge of the site, Mr Love, demonstrated that the continued presence of asbestos which continued to break down in Goodyear's factory presented a problem until its closure in the 1990's. 167 Mr Love acknowledged that the sources of asbestos contamination continued at the factory after the worker's employment had ceased, although from the mid 1970s steps were taken both to remove those sources and to minimise the danger they posed. Despite those measures he conceded that there might have been free asbestos emanating from an undiscovered source into the 1990's. 168 Sheller JA said (15 NSWCCR at 541): "However, as Sheppard AJA has pointed out, Mr Love's evidence shows that the continued presence of asbestos in the Goodyear factory presented a problem right up to the time that the factory closed in the 1990s. I agree that the preponderance of the evidence establishes that the risk continued through the entirety of Mr Jeal's employment and thereafter. In Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269 at 272 Jordan CJ said that "employment to the nature of which the disease was due" means an employment of such a kind as to involve a risk to the employee contracting the gradual process disease which is disabling him. Such was the risk to which Mr Jeal was exposed and I do not think it could be said that his work during the second half of 1987 was carried on under conditions which made inhalation of asbestos dust impossible. Despite Goodyear's best efforts, the problem continued because of continual breakdown of the asbestos in the building and in the machinery in it." (Emphasis supplied) 169 Sheppard AJA said (at 542 – 543): "The purpose of s 151AB of the Act is to reduce the complexity and cost of resolving disputes among insurers which at various times have provided an employer with insurance cover … s 151AB may appear to have a somewhat arbitrary operation but the approach of the legislature was that, although that might sometimes be the case, the application of the section over time to a variety of situations, employers and insurers would probably not lead to very much overall unfairness in the long term." 170 Sheppard AJA concluded (at 556) that: "The evidence given by Mr Love establishes that, despite his best efforts, the problem continued into the 1990s simply because of continual breakdown of the asbestos in the building and in the machinery in it. In my opinion, the preponderance of the evidence establishes that the risk continued throughout the entirety of the period of the plaintiff's employment and thereafter. At times it may have been less than it was at others. But it did not go away. The plaintiff may have genuinely thought that it had, but Mr Love's evidence makes it clear that it had not. In my opinion, the evidence demonstrates that the plaintiff remained at risk during the latter months of his employment when MMI was the insurer." 171 Sheppard AJA considered a secondary submission made by counsel for MMI Workers' Compensation that on the basis of the medical evidence it was unlikely that asbestos particles generated after 1 July 1987 were "the cause of the plaintiff's mesothelioma". As the subsequent cases to which I refer below make clear, it is not necessary for the purposes of s 151AB to prove causation in fact but, merely, exposure to a risk which may be causative of the occupational disease. Nevertheless it is useful to note that in considering this argument, Sheppard AJA adopted the position (similar to Gleeson CJ's gardener example in CIC) that as long as, "on the face of the medical evidence, it is possible, in a real and not a fanciful sense, for the plaintiff to have been exposed after 1 July 1987 to asbestos fibres from which he may have contracted the disease, that is enough to bring MMI within the section." While he acknowledged (at 557) that the result might be thought to be artificial, he said, echoing Lord Blanesburgh in Blatchford, that that was so "because of the arbitrary operation of the section." 172 CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd confirmed that the nature of employment test in the employer-insurer context requires determining whether the worker's occupational disease is incidental to the employment in which the worker was engaged. CIC Workers Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd held that the nature of employment test was not confined to the specific duties the employee undertook but required determining whether the course of the worker's employment exposed the worker to the risk of inhaling asbestos particles. 173 Subsequent cases have addressed the issues of causation and the nature of the risk to which the worker was exposed in the course of employment. 174 In GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; (2000) 19 NSWCCR 720 the Court (Mason P, Beazley and Heydon JJA) held (at [19]), applying Jordan CJ's statement in Tame v Commonwealth Collieries Pty Ltd that "it is not necessary that the presence, or some aggravation, of the disease should be in some degree due to service with the last employer," that that statement made it "plain that s 151AB(1)(a) is not concerned with causation in fact … [but] with exposure to a risk which may be causative of the disease." 175 In GIO General Ltd v ABB Installation & Service Pty Ltd Curtis J found ABB liable in damages to the plaintiff for negligently exposing him to asbestos during the period 1966 – 1969, which exposure his Honour held caused his mesothelioma. In applying the nature of employment test however, Curtis J found GIO, ABB's insurer as at December 1986, liable to indemnify ABB in respect of the damages and costs recovered by the plaintiff. This was because of evidence that the plaintiff had been exposed to asbestos fibres while in ABB's employ on 2 occasions in 1986, the latest being in December of that year. 176 GIO appealed, arguing that Curtis J should have found the insurer on risk as at 1966 – 1969 liable to indemnify ABB. The Court rejected that challenge. 177 The Court noted (at [10]) that Curtis J had considered "that there was insufficient evidence to establish that, upon the probabilities, [the worker] was actually exposed to the inhalation of asbestos fibre during [1986 – 1993]. The Court held that Curtis J had erred in approaching the resolution of the issue before him using the language of "actual exposure", saying ([at 37]): "That is not the test required by s 151AB(1)(a). What is required is that the worker be exposed to a risk of contracting the disease (see Alcan). Notwithstanding that we consider that the language of the trial judge is not consistent with the proper test as postulated in Alcan , we do not consider that his Honour has erred in his approach. On the facts relating to the exposure at the Kellogg's factory, it would be impossible, or virtually impossible to prove that a person was exposed to the inhalation of asbestos. Rather, and we think this is what his Honour meant in his finding, the plaintiff was exposed to the risk of inhalation of asbestos on the two occasions in 1986 of which he gave evidence, but there was insufficient evidence to support a finding that he was exposed to the risk of inhalation of asbestos on any other occasion. [38] In our opinion this evidence was sufficient to support his Honour's finding that the appellant was the insurer on risk for the purposes of s 151AB. It was not necessary for the purposes of the section for it to be established that the exposure to asbestos in December 1986 was a cause of the plaintiff's mesothelioma … [39] Although the risk may have been very low, it was still a risk …" 178 In applying the test he had formulated, Curtis J also directed himself in conventional terms as to the burden of proof. In other words, he held (see [34]) that the nature of employment test had to be satisfied on the balance of probabilities and that he was satisfied to that standard in relation to the 1986 incidents. After 1986 while the circumstances of the plaintiff's work "raised the possibility" of exposure to the inhalation of asbestos dust, that evidence, in his Honour's view, was insufficient to support a finding of the relevant risk. 179 In holding that the evidence sufficiently supported Curtis J's finding that the insurer on risk for the purposes of s 151AB was the insurer as at December 1986, it is clear, in my view, that the Court endorsed Curtis J's view that the nature of employment test as between employer and insurer was to be resolved on the balance of probabilities. That is the view taken in the context of a worker's claim in Hopwood v Textile Paper Tube Co Ltd [1946] 1 All ER 618 to which I have already referred. 180 GIO General Ltd v ABB Installation & Service Pty Ltd was followed in WorkCover Authority of NSW v Chubb Australia Ltd [2000] NSWCA 221; (2000) 20 NSWCCR 614 at [34], [49]. The Court (Stein JA, Powell JA and Foster AJA agreeing) held that in considering the nature of employment test, the trial judge was not required to foreclose the inquiry at 1978, being the date when, in his view, the evidence disclosed that the plaintiff was "in fact" exposed to asbestos, but rather was required to consider whether there was evidence that the plaintiff was exposed to the risk of inhaling asbestos particles in the atmosphere between 1979 and 1988, and therefore, to the risk of contracting mesothelioma. 181 Government Insurance Office of NSW v Colgate Palmolive Pty Ltd [2001] NSWCA 24; (2001) 50 NSWLR 729; (2001) NSWCCR 436 again emphasised that s 151AB(1)(a) is not concerned with causation in fact but only with exposure to a risk which might cause the disease from which the employee suffered. 182 The trial judge had concluded that Colgate Palmolive's liability to pay damages to the plaintiff in respect of occupational diseases contracted by him in the course of his employment arose on 30 June 1987. The Government Insurance Office of NSW was Colgate Palmolive's insurer at that date and, accordingly, applying s 151AB, the trial judge found it was liable to indemnify Colgate Palmolive in respect of its liability to the plaintiff. 183 The trial judge had made the following findings of fact. Colgate Palmolive had employed the plaintiff, Mr Grenowitz, from 1966 until November 1991. He smoked one packet of cigarettes a day until about 1984. Between June 1967 and 1970 he inhaled proteolitic enzymes, a component of soap powder, in the course of his employment which caused him to contract asthma, bronchitis and emphysema, which were diseases to which he was predisposed because of his smoking. Between 1972 and 1988 he performed welding work which exposed him to harmful fumes. Between 1972 and 1986 he spent 15-20 per cent of his working hours welding. Between 1986 and June 1987 he spent about 5 per cent of his working hours welding. The fumes from the welding caused material aggravation of his asthma, bronchitis and emphysema. 184 The trial judge found that because of the fumes the welding work was capable of causing the diseases asthma, bronchitis and emphysema, had they not already been present in Mr Grenowitz's lungs. On that basis he concluded that Mr Grenowitz's work between January and 30 June 1987 was employment to the nature of which those diseases may be due. The trial judge found that welding was an employment implicated by the medical profession in the aetiology of diseases of the lung, such as those suffered by the plaintiff, because of the properties of welding fumes. He also found that all exposures to welding fumes were important in the progression of Mr Grenowitz's lung diseases and the effect of the welding fumes was cumulative (see Heydon JA at [4]). 185 Heydon JA (at [22]) interpreted the finding that all exposures to welding fumes were important in the progression of Mr Grenowitz's lung diseases and that the effect of the fumes had been cumulative as implying a finding that the exposure from January to July 1987 was important and (at [24]) as amounting to a conclusion that "the employment of the plaintiff in the period 1 January-30 June 1987 was an employment 'to the nature of which [the diseases] were due'." 186 Heydon JA (with whose judgment Priestley and Sheller JJA agreed) referred (at [7]) to the review this Court undertook of the authorities in GIO General Limited v ABB Installation & Service Pty Ltd and its conclusion that the effect of those earlier cases was that: "s 151AB(1)(a) is not concerned with causation in fact. Rather, it is concerned with exposure to a risk which may be causative of the disease." and added: "To use the words of Gibbs J in another context in Connair Pty Ltd v Frederiksen (1979) 53 ALJR 505 at 508-9, the inquiry is into whether the employment under consideration had an "incident, aspect or characteristic" which "would be expected to occur in employment of that class" and which carried a risk which was potentially causative of the disease suffered by the relevant employee." (Emphasis supplied) 187 His Honour substantially repeated the view expressed in the underlined passage at [37] and [57] where he said that s 151AB requires "an inquiry into whether the actual work engaged in involves a risk of contracting the disease in question". 188 The Government Insurance Office sought to challenge the trial judge's conclusion on the basis that the nature of employment test was satisfied by the trial judge's finding that the inhalation of the proteolitic enzymes caused Mr Grenowitz to contract asthma, bronchitis and emphysema and that although the welding fumes "aggravated" the diseases and "worsened" them, the application of s 151AB(1)(a) did not turn on aggravation and worsening but on identification of the "employment to the nature of which the disease was due". The GIO contended, as the plaintiff had contracted diseases which were caused and well advanced by the time GIO came on risk, that s 151AB was not attracted. 189 Heydon JA dealt with that submission in the following terms (at [35]): "First, although the GIO accepted the correctness of GIO General Ltd v ABB Installation & Service Pty Ltd , the submission rests on the construction rejected in that case. It looks to what actually caused the diseases. It does not look to what aspects of the employment carried a risk of the occurrence of the diseases . Even if the distinction between the initial causation of the diseases and their later aggravation were sound, the true inquiry into whether the employment was 'an employment to the nature of which the disease was due' turns on potentiality, not actuality. In that respect, the trial judge made a crucial finding about the employer's requirement that the plaintiff do welding work generating fumes: 'The work, because of these fumes, was of such a nature as to be capable of causing each of these diseases had they not been already present in the plaintiff's lungs'. That is a finding, assuming it to be supported by evidence, which is sufficient support for the trial judge's conclusion that the employer's liability arose on 30 June 1987. It was supported by evidence: paras 40-43 below. And it is a finding of fact: Coal & Allied Operations Pty Ltd v Collins (1989) 5 NSWCCR 218 at 225 per Meagher JA (Mahoney JA concurring)." (Emphasis supplied) 190 The significance of Government Insurance Office of NSW v Colgate Palmolive Pty Ltd is its emphasis that the nature of employment test looks to the potential incidents of the worker's employment, not to its actual effect. It was irrelevant to the nature of employment test that the worker's early exposure to proteolitic enzymes was the actual cause of his diseases. It was equally irrelevant that the later exposure to welding fumes could, if one accepted the GIO's argument, only have aggravated the worker's diseases. What the Court was required to determine was when the worker was last employed in employment which exposed him to a risk which was potentially causative of the diseases from which he actually suffered. 191 The conclusion in Government Insurance Office of NSW v Colgate Palmolive Pty Ltd echoed Jordan CJ's statement in Tame (at 272) to which I have referred, that the nature of employment test "is not concerned directly with something arising out of the particular service of the particular employer sued, but with results which are incidental to the class of employment, in which the worker has served several employers…", albeit that, in the present context, the last phrase should be read as "during which the employer has had various insurers". Consideration Nature of employment test: identifying the disease 192 In my view the trial judge was correct to hold that the nature of employment test required him to consider whether the nature of Mr Brazier's employment exposed him to a risk of contracting the actual disease from which he suffered. That test is required by the statutory history, by the language of s 151AB, is consistent with its purpose and is extensively supported by authority. 193 Section 8 of the Workmen's Compensation Act 1906 (UK) and its Australian progeny required an inquiry into the nature of employment by reference to the actual disease from which the worker was suffering. This is apparent both from the text of those provisions and the authorities to which I have referred. This is unremarkable. While the date the worker's disease was contracted was obscure due to the insidious nature of its onset, the actual disease was identifiable. It was the focus of the nature of employment test. 194 When the nature of employment test was transposed to the employer-insurer context the actual disease from which the worker suffered remained its focus. 195 The language of s 151AB requires the Court to focus upon the actual occupational disease contracted by the worker for which the employer is liable, independently of the Act, for damages. The references to "an occupational disease" for which the employer is "liable independently of this Act" (i.e. at common law) in the first clause of s 151AB(1) are carried through into sub-paragraphs 1(a) and (b) which direct the Court to identify a deemed date at which the employer's liability is to be "taken to have arisen". That is "when the worker was last employed … in an employment to the nature of which the disease was due". 196 Thus both the concepts of "the disease" and the "liability" in sub-paragraphs 1(a) and (b) relate back to the words "liable" and "occupational disease" in the umbrella clause. This is a plain manifestation of the legislature's intention that the employer should be able to recover indemnity from an insurer in respect of the damages paid in respect of the worker's occupational disease, but that in order to overcome the difficulties which would be occasioned by requiring the employer to prove when the risk attached under a particular insurance policy, it was necessary (because of the insidious nature of occupational diseases) to fix an artificial date when the liability would be deemed to have arisen. 197 The difficulties s 151AB addressed related to identifying the time when the employer's liability crystallised for the purpose of claiming on insurers. The difficulties did not relate to the actual disease from which the worker suffered. Section 151AB achieved the purpose of facilitating employers' claims on insurers by using the nature of employment test to fix the date when the employer's liability was taken or deemed to have arisen. To this extent, the legislative device employed in s 151AB had the same "rough and ready", "artificial" and fictional features associated with s 8(1) of the Workmen's Compensation Act 1906 (UK). Indeed Gleeson CJ used similar language to that used in Blatchford when, in Alcan (at 173) he referred to s 151AB as "a fairly arbitrary legislative mechanism for identifying the relevant insurer in what would otherwise be an impossibly complex situation". 198 The mechanism only needed to be "fairly arbitrary" to fix a date which would otherwise be uncertain because of the insidious nature of occupational diseases. There was nothing in the nature of those diseases themselves which detracted from the precise disease from which the worker suffered being the focus of the nature of employment test both in a worker's action and in an employer's action to recover indemnity from an insurer. 199 There is, however, in my view, no room either in the language of s 151AB or its purpose for introducing into this arbitrary or "virtual" world of s 151AB liability yet another artificial construct, to pile fiction upon fiction, by ignoring the actual occupational disease from which the worker is suffering and to look only at, as FAI Traders' submissions characterise the Authority's argument, a generic asbestos related disease. The language of the statute does not compel the further step for which the Authority contends. 200 The conclusion that the language of s 151AB requires consideration of the actual occupational disease from which the worker suffers is consistent, too, with the Second Reading Speech delivered when s 18(6B) was introduced and with the Explanatory Note to s 151AB, both of which made it plain, in my view, that the introduction of the nature of employment test in the employer-insurer context was to avoid the employer, like the worker, being "sent from pillar to post" (Blatchford at 470) while retaining the focus on the actual occupational disease from which the worker is suffering. 201 This construction of s 151AB is borne out by the authorities. 202 The authorities support the following propositions: (a) the nature of employment test directs attention to whether the nature of the worker's employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers: Alcan ; Colgate Palmolive; (b) the nature of employment test is not confined to the specific duties the employee undertook but requires determining whether the course of the worker's employment exposed the worker to a risk of inhaling asbestos particles and thus of contracting the occupational disease from which the worker suffers: Kellogg. (c) the nature of employment test is not concerned with causation in fact but with exposure to a risk which may be causative of the occupational disease from which the worker suffers: GIO General Ltd v ABB Installation & Service Pty Ltd ; Colgate Palmolive. (d) the nature of employment test requires proof, on the balance of probabilities, that the nature of the worker's employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers: GIO General Ltd v ABB Installation & Service Pty Ltd . 203 None of the s 151AB cases directly concerned the question whether the nature of employment test required the Court to focus upon the actual disease from which the worker suffered or, as the Authority argues, any disease caused by exposure to asbestos. However, the acceptance in Alcan of the applicability of the nature of employment test as derived from Blatchford, Smith v Mann and Tame, all of which focussed upon the actual occupational disease from which the worker suffered, is powerful support for the same approach being taken when applying s 151AB. 204 As I have earlier noted, the Authority relied heavily on Government Insurance Office of New South Wales v Colgate Palmolive Pty Ltd. It submitted that case was "clear authority" for the proposition that the nature of employment test was satisfied if "the employment after 15 August 1984 carried a risk of exposing a worker (not necessarily the plaintiff) to the risk of a disease from the inhalation of asbestos." Put another way, it submitted that where there was the possibility of exposure to asbestos, that was employment exposing people to a risk of disease from the inhalation of asbestos and thus the nature of employment test was satisfied. 205 It also submitted that once the trial judge found there were possible exposures beyond August 1984, he erred in foreclosing his inquiry at the date of actual exposure. It argued that Colgate Palmolive supported the proposition that the nature of employment test was satisfied because Mr Brazier's continued work, after the period when NEM was found to be on risk, was found by the trial judge to carry with it the possibility of further exposure to asbestos because there was still asbestos on the premises. 206 FAI Traders submitted that the Authority's submissions about Colgate Palmolive were wrong. It submitted that Colgate Palmolive focused entirely upon the actual disease process which Mr Grenowitz suffered from, not a hypothetical disease process and not a hypothetical form of employment. It submitted that Colgate Palmolive required identification of "a real risk and a real exposure, not hypotheticals". It submitted that that was made plain, in Colgate Palmolive, by the passage at [37], where Heydon JA said "the mandate of s 151AB(1)(a), as construed in GIO General Ltd v ABB Installation & Service Pty Ltd, [is] to identify the moment when the employee was last employed … 'in an employment to the nature of which the disease was due', that is, an employment which in its nature was capable of creating the risk of the employee incurring the disease" and in the passage (at [57]) to which I have already referred. 207 In my view FAI Traders' submissions are correct. The clear focus of the decision in Colgate Palmolive was on the actual diseases from which the worker suffered and whether the actual work in which he was engaged involved a risk of contracting the diseases in question. Properly understood, Colgate Palmolive confirms that the focus of the nature of employment test is whether the nature of the worker's employment exposed the worker to a risk of contracting the actual occupational disease from which he or she suffered. Nature of employment test: the level of exposure to risk 208 The Authority made a number of complaints about the effect of Curtis J's test in terms of proving the necessary exposure to risk. It submitted that Curtis J's test would require the Court to receive evidence as to the quantity of asbestos fibre necessary to contract a particular disease and may result in a different insurer being liable depending on the disease in fact contracted by the plaintiff. 209 It argued the nature of employment test did not require it to be shown that any particular quantity of asbestos fibre was available for inhalation in fact. This submission was allied to its arguments that the nature of employment test did not require identification of a "real risk". 210 The Authority relied upon the principal authorities dealing with s 151AB to which I have already referred. None of those authorities directly considered whether the nature of employment test required proof of exposure to a quantity of asbestos fibre sufficient to cause the worker's occupational disease. The issue does not appear to have arisen. However, it would be consistent with the fact that they held that the nature of employment test required determining that the worker was exposed to the risk of contracting the actual occupational disease, that the employer is required to prove that the quantity of asbestos fibre to which the worker was exposed was sufficient to cause the occupational disease from which the worker suffered. 211 To the extent that there has been reference to issues of the level of exposure to asbestos, the authorities do not support the Authority's submission. 212 Alcan makes it clear that the level of exposure to asbestos is relevant to determining the nature of employment test. Clearly, if the quantity of asbestos to which the worker was exposed was reduced so that, in Gleeson CJ's gardener example in Alcan, the worker was no longer exposed to a risk of inhaling asbestos fibres, then the nature of employment test would no longer be satisfied. 213 Gleeson CJ's example was one of all or nothing exposure. Clearly there will be intermediate situations in which there is some risk of exposure, but, as in this case, a risk which is insufficient to expose the worker to the risk of contracting the actual occupational disease. 214 The nature of the risk which must be identified to satisfy the nature of employment test was touched upon in Manufacturers' Mutual Insurance Limited v Goodyear Australia Ltd where Sheppard AJA referred to the medical evidence as disclosing "a real and not a fanciful" risk for the plaintiff to be exposed to asbestos fibres from which he may have contracted mesothelioma. Further, in GIO General Limited v ABB Installation & Service Pty Limited, while the Court said the risk might be "low", it endorsed the trial judge's proposition that s 151AB required proof on the balance of probabilities. It is implicit in the Court's acceptance of that proposition, in my view, that to satisfy the nature of employment test it must be established, on the balance of probabilities, that the worker was exposed to a real risk of contracting the actual disease from which he or she suffered. 215 This conclusion means that the Authority's submission, that the nature of Mr Brazier's employment did not change although the quantity of asbestos to which he may have been exposed was reduced, must be rejected. No evidence submission 216 As I have noted, the Authority submitted that there was no evidence before Curtis J which would enable a conclusion as to the quantity of asbestos fibre to be inhaled to cause the conditions from which Mr Brazier was suffering compared with the quantity required to be inhaled to cause the condition of mesothelioma. 217 The Authority also submitted that the test formulated by Curtis J would require the Court to receive evidence as to the quantity of asbestos fibre necessary to contract a particular disease and may result in a different insurer being liable depending on the disease in fact contracted by the plaintiff. It submitted that in circumstances where the plaintiff had the misfortune of contracting both asbestosis and mesothelioma, one insurer may be liable for the former condition and another for the latter. 218 FAI Traders submitted that, in effect, Curtis J was entitled to rely upon his knowledge as a Judge of the Dust Diseases Tribunal in expressing his opinion about the degree of exposure to asbestos which would cause mesothelioma as opposed to exposure which would cause asbestos related pleural disease or asbestosis. FAI Workers did not deal with this point. 219 Neither party referred the Court to any authority. However there is a strong line of authority supporting the proposition that Curtis J was entitled to rely upon knowledge acquired as a member of a specialised tribunal. 220 In Bryer v Metropolitan Water Sewerage & Drainage Board (1939) 39 SR (NSW) 321 Jordan CJ (with whom Halse Rogers and Bavin JJ concurred) held (at 330) that the Workers' Compensation Commission was entitled to use general knowledge acquired in "investigating … thousands of cases in which evidence is given as to conditions of employment and rates of pay" "not only for the purpose of supplying gaps in the evidence given before it as to matters which it is required by statute to determine … but also for the purpose of weighing and testing any evidence that may actually be tendered." 221 In Tame v Commonwealth Collieries Pty Limited, above at 272, Jordan CJ, after referring to Bryer and R v City of Westminster Assessment Committee [1941] 1 KB 53 at 69, held that the Workers' Compensation Commission "was entitled to take into account its general knowledge of silicosis and to form the opinion that the facts so deposed to did not satisfy it that the conditions of employment did not expose the worker to the ordinary risks of such employment but that the general evidence showed that they left him exposed to some risk of inhaling silica dust." 222 In J & H Timbers Pty Limited v Nelson (1972) 126 CLR 625 Barwick CJ and Gibbs J expressly approved Jordan CJ's conclusion in Bryer concerning the Workers' Compensation Commission's ability to draw on its general knowledge and experience. 223 In Kealley v Jones [1979] 1 NSWLR 723 at 734, Moffitt P referred to Bryer, Kemp v Darling Island Stevedoring & Lighterage Co Limited (1959) 76 WN (NSW) 707 and J & H Timbers Pty Limited v Nelson at 634, 644 and 651, as authority for the proposition that "[j]udges of the Workers' Compensation Commission have long been accorded the right to resort to an immense fund of general knowledge concerning conditions of employment and rates of pay". 224 Young CJ in Eq referred to Kealley v Jones in Mechanical Advantage Group Pty Limited v George [2003] NSWCA 121; (2003) 25 NSWCCR 368 and observed (at [63]) that "… the principle in the workers' compensation area has probably become so entrenched as to become sacrosanct. But it must be noted that the principle only applies to data on conditions of employment and rates of pay and like matters. It does not extend to the knowledge that a member of the Compensation Court may obtain merely because he or she constantly travels the roads of New South Wales." 225 Finally in GIO General Limited v ABB Installation & Service Pty Limited, above at [34], the Court of Appeal referred to Curtis J's statement (quoted at [11]) that: "[Section 151AB] requires the claimant to establish when upon the probabilities the worker last worked in an atmosphere where asbestos fibres were actually present. Because all exposure is relevant in the aetiology of the disease of mesothelioma, the quantity of fibre is irrelevant. It may be otherwise in diseases of silicosis or asbestosis." 226 The Court of Appeal referred to the penultimate sentence in that passage without criticism in the following terms (at [34]): "In making this finding, his Honour was apparently drawing on his experience as a member of a specialist tribunal: see Bryer v Metropolitan Water Sewerage and Drainage Board (1939) 39 SR (NSW) 321 at 330; R v City of Westminster Assessment Committee [1941] 1 KB 63 at 69." 227 In Wallaby Grip (BAE) Pty Limited (in liq) v Macleay Area Health Service (1998) 17 NSWCCR 355 at 365 Beazley JA (with whom Sheller JA and Sheppard AJA agreed) held that where the medical and scientific knowledge could not provide the legally certain answers which common law causation principles demanded, the trial judge could not, in effect, complete the evidentiary gap "by reliance upon his expertise acquired as a member of a specialist tribunal." That case concerned the difficulties of proving causation in a mesothelioma case as between multiple alleged joint tortfeasors. Her Honour did not refer to the Bryer line of authority. Her Honour's statement, nevertheless, appears to me to express the commonsense view, that even a member of a specialist tribunal cannot rely upon "expertise" which is not supported by an accepted body of medical and scientific knowledge. 228 It might be noted that Wallaby Grip was not referred to in GIO General Limited v ABB Installation & Service Pty Limited as detracting from the proposition that a member of the Dust Diseases Tribunal was entitled to rely upon specialised knowledge. 229 According to Cross on Evidence at [3135] there is a distinction between "general expertise which enables the specialist tribunal to understand quickly the evidence before it and to draw appropriate inferences from the evidence, and special knowledge which permits it to assert the existence of a particular fact." In the latter case, according to Cross, "it is not proper for the tribunal to act upon such special knowledge without disclosing it to the parties and affording them the opportunity to rebut it or qualify by argument or by adducing evidence of the existence of that particular fact or by assigning a different significance to it." 230 Assuming, without deciding, that Curtis J's statement concerning the levels of exposure to asbestos necessary to cause the diseases from which Mr Brazier suffered as opposed to mesothelioma fell into the second category, two matters should be noted. First, during the Liability Proceedings before Curtis J, Mr Little SC, counsel for the Authority submitted that Curtis J had a "warrant from the Court of Appeal" to take "judicial notice of the fact that asbestos in weathering releases fibres which fall to the ground to be stirred up by feet". He said the "warrant" was to be found in GIO General Limited v ABB Installation & Service Pty Limited. 231 Secondly, Curtis J's judgment in the Liability Proceedings was ex tempore. Having heard his statement about the levels of exposure necessary to cause the diseases from which Mr Brazier suffered as opposed to mesothelioma, no party sought the opportunity to rebut it or qualify it by argument or calling further evidence. 232 In my view the Bryer line of authority, confirmed in its applicability to the Dust Diseases Tribunal by a recent unanimous judgment of this Court in GIO General Limited v ABB Installation & Service Pty Limited, establishes that Curtis J was entitled to rely upon his knowledge as a member of a specialised tribunal to express a view about the quantity of exposure to asbestos dust which might cause mesothelioma as opposed to that which might cause the diseases from which Mr Brazier had suffered. Indeed the statement his Honour made appears to have been an extension of the proposition articulated, and approved, in GIO General Limited v ABB Installation & Service Pty Limited. 233 However, even if the Bryer line of authority did not persuade me, in my view the Authority's conduct of the proceedings before Curtis J is such that it cannot be heard to complain in this Court about his Honour's reliance upon that specialised knowledge. 234 Curtis J found as a fact that the nature of Mr Brazier's employment after 15 August 1984 did not expose him, on the balance of probabilities, to a risk of developing the diseases from which he was suffering. After that date, his Honour found, at best, there was a possibility of exposure to asbestos fibre, but that possibility would not have exposed Mr Brazier to a risk of contracting the actual diseases from which he suffered. It is not open to this Court to disturb that finding of fact. Conclusion 235 Both the language of s 151AB and the authorities to which I have referred demonstrate that the sheet anchor of s 151AB liability is the actual occupational disease in respect of which the employer is liable to the worker for damages, for which damages the insurer identified pursuant to s 151AB is then liable to indemnify the employer. It is only when that disease is identified that the nature of the employee's employment can be examined, in order to identify the time when the s 151AB insurance liability is fixed. 236 In my view the Liability Cross-Appeal should be dismissed. The Indemnity Appeal 237 The conclusion that the Liability Cross-Appeal should be dismissed means that it is necessary to consider the principal appeal concerning ICI's claim for indemnity from the Authority. 238 The effect of Curtis J's determination of the s 151AB dispute - that Mr Brazier was last employed by ICI in employment to the nature of which his occupational disease was due on 15 August 1994 - meant that NEM was the "insurer who is liable" within s 151AC(9). If NEM had not been insolvent, s 151AC(10)(a) would have operated to require NEM to indemnify CGU for any amounts already paid by it in its capacity as designated insurer. ICI and CGU looked to the Guarantee Fund for reimbursement in respect to the amounts paid to Mr Brazier because NEM was an insolvent insurer. 239 The current controversy concerns the Authority's contention that while it would have reimbursed ICI had ICI paid Mr Brazier's damages, it had no power to do so where CGU was appointed as designated insurer. 240 Before dealing with the parties' submissions it is relevant to note three matters. First, the Authority had no quarrel with the quantum of the settlement with Mr Brazier. Secondly, the Authority was prepared to meet ICI's liability to Mr Brazier if that liability had been discharged by ICI as "the employer". From this, it follows, that there was no issue that the Guarantee Fund was able to fund that claim. Thirdly, the Authority regarded its hands as constrained by the terms of Division 7 because, in its view, a "designated insurer" rather than "the employer" had discharged ICI's liability. It was, as Mr Little SC informed Curtis J, a question of power: could the Authority reimburse an employer out of the Guarantee Fund where the employer's liability to a worker had been discharged by a payment made by a designated insurer? The Insurers' Guarantee Fund: Statutory Background 241 The provisions dealing with the Insurers' Guarantee Fund now found in Part 7, Division 7 of the 1987 Compensation Act were originally inserted in the 1926 Compensation Act in June 1985 as Part IIIB – Insurers' Guarantee Fund - by the Workers Compensation (Amendment) Act 1985 (Schedule 5). The new Part IIIB (sections 30O - 30ZC) provided for the establishment of the Guarantee Fund. When first passed, s 30Q(2) provided that, subject to Part IIIB of the 1926 Compensation Act and of the regulations, the Guarantee Fund should be under the direction, control and management of the Government Insurance Office of New South Wales. 242 The Workers Compensation (Amendment) Bill was introduced as one of a number of cognate bills described by Mr Hills, the Minister for Industrial Relations, in the Second Reading Speech, as intended to "to improve the efficiency of the Workers' Compensation Scheme [NSW] so as to ensure that workers' compensation arrangements are as effective as possible in the delivery of benefits to injured workers and to assist in their rehabilitation at a cost level that is sustainable by employers.": NSW Parliamentary Debates, (Legislative Assembly), Third Series, 23 April 1985, Vol 185 at 6773. 243 The Second Reading Speech to the Workers Compensation (Amendment) Bill which inserted the Guarantee Fund provisions in the 1926 Compensation Act cast no light upon the purpose of the Fund's establishment. However, the Explanatory Note to the Bill identified one of its objects as being: "(m) to insert a new Part IIIB in the Act - … (ii) establishing the Insurers' Guarantee Fund ("the Guarantee Fund") which is to be applied for satisfying the workers' compensation liabilities of insolvent insurers (Schedule 5 – proposed s 30Q); (iii) requiring insurers licensed under the Act to contribute to the Guarantee Fund the amounts necessary to satisfy the workers' compensation liabilities of insolvent insurers (Schedule 5 – proposed s 30R); and (iv) appointing the Government Insurance Office the agent and attorney of an employer insured under a workers' compensation policy issued by an insolvent insurer so as to enable that Office, as manager of the Guarantee Fund, to deal with and satisfy claims, judgments and awards arising under the policy (Schedule 5 – proposed s 30U)." 244 As earlier noted the 1987 Compensation Act which repealed the 1926 Compensation Act came into operation on 30 June 1987. The provisions of the former Part IIIB of the 1926 Compensation Act were reproduced in "Part 7 – Insurance, Division 7 – Insurers' Guarantee Fund" of the new Act. The only substantive difference between the provisions in the 1926 Compensation Act and the 1987 Compensation Act was the addition of the references to the "worker" in s 231 which I have underlined below. Otherwise the 1987 provisions repeated the 1926 provisions in more contemporary language and style. 245 The 1987 provisions continued the Government Insurance Office's role in relation to the Guarantee Fund. The Workers Compensation (Amendment) Act 1991 No. 2, Schedule 3 [9] replaced references to the Government Insurance Office with references to the Authority which, the Explanatory Note stated, was to take over management of the Guarantee Fund. 246 Turning to Division 7, "insolvent insurer" is defined in s 225(1) to mean "an insurer to which an order of the Minister in force under section 226 relates". "Insurer" means a "licensed insurer, a former licensed insurer or a self-insurer, but does not include an insolvent insurer." A "licensed insurer" is an insurer who holds a licence granted under Division 3 of Part 7 and in force: s 3, 1987 Compensation Act. 247 Section 226(1) enables the Minister, "[i]f…satisfied that a liquidator or provisional liquidator has been appointed in respect of an insurer, or that an insurer has been dissolved…by order published in the Gazette, [to] declare that the insurer is an insolvent insurer for the purposes of this Division." 248 Section 227 relevantly provides: "227 Insurers' Guarantee Fund (cf former s 30Q) (1) There is established a fund to be known as the "Insurers' Guarantee Fund". (2) There shall be paid into the Guarantee Fund: (a) the contributions required by section 228 or the regulations to be paid by insurers, … (3) There shall be paid out of the Guarantee Fund such amounts as may be authorised by this Division, any other Act or the regulations to be paid out of that Fund. (4) The Guarantee Fund shall, subject to this Act, be under the direction, control and management of the Authority…" 249 Section 228 deals extensively with the Authority's power to determine amounts to be contributed to the Guarantee Fund by insurers, the calculation of each insurer's contribution (subsections (2) and (2B)) and, in respect of contributions required from insurers, enables the Authority to compel their payment (subsection (4)). Subsection (1) relevantly states: "228 Contributions to Guarantee Fund (cf former s 30R) (1) The Authority may, in respect of any financial year prescribed by the regulations, determine the amount to be contributed to the Guarantee Fund in respect of that year, being an amount which the Authority considers is necessary: (a) to satisfy, during that financial year, claims, judgments and awards arising from or relating to policies of insurance issued by insurers that were, before the commencement of Schedule 3(3) to the Workers Compensation (Benefits) Amendment Act 1991 , declared under section 226 to be insolvent insurers, …" 250 Subsection (2A) confers a like power of determination in respect of "claims, judgments and awards arising from or relating to policies of insurance issued by insurers that were, after the commencement of Schedule 3(3) to the Workers Compensation (Benefits) Amendment Act 1991 declared under section 226 to be insolvent insurers." 251 Section 229 requires the liquidator of an insolvent insurer, on receiving any claim relating to any policy of insurance issued by the insolvent insurer, to forward the claim to the Authority. Section 230 requires the liquidator of an insolvent insurer, whenever requested to do so by the Authority, to provide information to the Authority relating to policies of insurance issued by the insolvent insurer and all claims, judgments or awards made in respect of any such policies in the liquidator's possession and to supply to the Authority all information in the liquidator's possession relating to any such policies or any such claims, judgments or awards. 252 Section 231 provides: "231 Appointment of Authority as agent and attorney of employer and worker (cf former s 30U) (1) The Authority is by this section appointed the agent and attorney of an employer and a worker insured under a policy of insurance issued by an insolvent insurer. (2) As agent and attorney of such an employer, the Authority may exercise the rights and discharge the obligations of the employer: (a) for the purpose of dealing with and finalising any claim against which the employer is indemnified under the policy of insurance, (b) for the purpose of satisfying any such claim or any judgment or award against which the employer is indemnified under the policy of insurance, and (c) for any other purpose prescribed by the regulations. (3) As agent and attorney of such an employer or a worker, the Authority may exercise the rights of the employer or worker in connection with the policy of insurance: (a) for the purpose of proving in the winding up of the insolvent insurer and receiving any dividends or other money payable to the employer or worker in the winding up, (b) for the purpose of recovering any money which the employer or worker is entitled to recover under section 151Z of this Act or section 64 of the former Act, (c) for the purpose of recovering any money which the employer or worker is entitled under the policy of insurance to recover from the person who issued the policy, being a policy referred to in paragraph (b) of the definition of "policy of insurance issued by an insolvent insurer" in section 225, and (d) for any other purpose prescribed by the regulations. (4) The Authority may exercise rights and discharge obligations as agent in the name of the employer or worker concerned, or in its own name. (5) All rights vested in an insurer or insolvent insurer and all obligations imposed on an insurer or insolvent insurer, being rights or obligations: (a) arising from or relating to a policy of insurance issued by an insolvent insurer to an employer, and (b) which may or shall be exercised or discharged for the purpose of: (i) dealing with and finalising any claim against which the employer is indemnified under the policy, or (ii) satisfying any claim, judgment or award, against which the employer is indemnified under the policy, are vested in or imposed on the employer. (6) Subsection (5) shall not be construed so as to vest in or impose on an employer, or to affect in any other way: (a) a right of an insurer or insolvent insurer to be indemnified by a reinsurer or an obligation of an insurer or insolvent insurer to indemnify an employer, or (b) any other prescribed right or obligation. (7) If the Authority is, under this section, empowered to exercise any rights, or to discharge any obligations, of an employer or a worker as agent and attorney, the employer or worker is not entitled, without the consent of the Authority, to exercise those rights or discharge those obligations. (8) The appointment effected by this section may be revoked only by an Act." (Emphasis supplied) 253 Section 232 of the Act provides: "232 Payments to employer or liquidator (cf former s 30V) (1) Where an employer insured under a policy of insurance issued by an insolvent insurer has satisfied (whether before or after the insurer became an insolvent insurer for the purposes of this Division or before or after the commencement of this Division) any claim, judgment or award in respect of which the employer has not been indemnified under that policy, the Authority, as manager of the Guarantee Fund, may pay from the Guarantee Fund to the employer an amount equal to the whole or any part of the amount paid by the employer in satisfaction of the claim, judgment or award. (2) Where the liquidator of an insolvent insurer has satisfied (whether before or after the insurer became an insolvent insurer for the purposes of this Division or before or after the commencement of this Division) any claim, judgment or award in respect of which an employer is entitled to be indemnified under a policy of insurance issued by the insolvent insurer, the Authority, as manager of the Guarantee Fund, may pay from the Guarantee Fund to the liquidator an amount equal to the whole or any part of the amount paid by the liquidator in satisfaction of the claim, judgment or award. (3) Where: (a) a payment is made under subsection (1) to an employer in respect of a claim, judgment or award, the Authority shall be deemed, to the extent of the payment , to have satisfied the claim, judgment or award as agent and attorney of the employer, or (b) a payment is made under subsection (2) to the liquidator of an insolvent insurer in respect of a claim by or on behalf of any person or a judgment or award for the benefit of any person, the Authority shall be deemed, to the extent of the payment, to have satisfied the claim, judgment or award as agent and attorney of the employer of the person in respect of whom the payment is made. (4) The powers conferred by subsections (1) and (2) are exercisable at the absolute discretion of the Authority and neither those subsections operate nor the exercise of any of those powers operates so as to confer, directly or indirectly, any right on any person to whom a payment is or may be made under those subsections or on any other person." (Emphasis supplied) 254 Section 234 provides: "234 Application of Guarantee Fund (cf former s 30X) (1) Out of the Guarantee Fund, the Authority as manager of that Fund: (a) shall pay the amount of any claim, judgment or award arising from or relating to any policy of insurance issued by an insolvent insurer, being a claim, judgment or award that it proposes to satisfy as agent and attorney of an employer , and any other amounts required by this Division to be paid from that Fund, and (b) is entitled: … (ii) to be indemnified against all payments made by it and all costs and expenses that it may incur in or in connection with the exercise of its functions under this Division. (2) Where a payment is made by the Authority as agent and attorney of an employer, being a payment authorised by this Division, the Authority shall not be entitled to recover the amount of that payment from the employer." (Emphasis supplied) 255 Section 235 enables the Authority to recover amounts under contracts or arrangements for reinsurance to which the insolvent insurer was entitled "[t]o the extent that any amounts are paid out of the Guarantee Fund in respect of a claim, judgment or award pursuant to section 234…". Such monies as are recovered are to be paid into the Guarantee Fund. 256 Section 236 provides: " 236 Payments of workers compensation when insolvent insurer dissolved (cf former s 30Z) (1) When an insolvent insurer has been dissolved, the payments of compensation under judgments or awards relating to policies of insurance issued by the insolvent insurer which would, but for the dissolution taking place, be payable by the insolvent insurer shall continue and be paid out of the Guarantee Fund by the Authority. (2) When an insolvent insurer has been dissolved, a person who would have had, but for the dissolution of the insolvent insurer, an entitlement to payment of any amount arising from or relating to any policy of insurance issued by the insolvent insurer (being a policy in respect of which the insolvent insurer is the insurer) shall be entitled to payment of that amount out of the Guarantee Fund. (3) A person referred to in subsection (2) may make a claim against the Authority, as manager of the Guarantee Fund, in respect of an entitlement to payment of an amount under that subsection. (4) The Authority, as manager of the Guarantee Fund, is entitled to deal with and finalise a claim made under subsection (3) in relation to a policy of insurance issued by an insolvent insurer to the same extent as it would have been entitled to do so if the insolvent insurer had not been dissolved." 257 It is plain, in my view, that the purpose of Division 7 was to ensure that funds would be available to meet any workers' claims or judgments and awards in favour of workers arising from or relating to policies of insurance issued by insolvent insurers. This was clearly why s 228(1) conferred upon the Authority power to determine and levy amounts to be contributed to the Guarantee Fund to satisfy such claims. The Indemnity Appeal: ICI's submissions 258 ICI submitted that it would be have been entitled to indemnity from NEM in respect of Mr Brazier's judgment and costs had NEM not been in liquidation. 259 It submitted that the purpose of the Guarantee Fund was to satisfy claims, judgments and awards arising from or relating to policies of insurance issued by insurers declared to be insolvent insurers. It observed that the funds for this purpose were levied from existing insurers, referring to s 228(2). 260 ICI submitted that Curtis J's conclusion, that s 232(1) was adequate to authorise payment by the Authority to a designated insurer which had indemnified an employer whose actual insurer was insolvent, was correct. 261 It submitted that Curtis J erred, however, in concluding that the Authority had a discretion whether to make a payment under s 232(1). ICI submitted that s 232(1) obliged the Authority to reimburse ICI. It relied upon Armitage J's decision in Chubb Australia Limited v MMI (Workers Compensation) Limited. 262 ICI submitted that, having found s 232(1) was adequate to authorise payment, Curtis J's conclusion that the Authority had a discretion to refuse to make payment would defeat the principal purpose for which the Guarantee Fund was established and produce a most inequitable result. 263 As to Curtis J's conclusion that there was no evidence to justify a finding that the Authority had exercised its discretion capriciously, ICI referred to three matters upon which Curtis J could have found that the Authority had exercised its discretion capriciously or without cause or otherwise than in a responsible exercise of its statutory discretion in refusing to indemnify CGU. Those matters were first, the fact of ICI's entitlement to indemnity from NEM had that company not been insolvent, secondly, the existence of the Guarantee Fund and thirdly, the fact that the circumstances of the case fell within the terms of s 232(1). ICI submitted that Curtis J's failure to refer to and consider these matters was an error of law and that correct application of principle required the exercise of the discretion by the Authority in favour of reimbursing ICI. 264 ICI also submitted that Curtis J's construction of the undertaking was erroneous. It submitted that the Authority had given a clear undertaking, not subject to any contingency, that in the circumstances as determined it would indemnify ICI. Accordingly, it submitted, the Authority was estopped from proceeding contrary to that undertaking. 265 ICI submitted that Curtis J was in error in concluding that the principle of unjust enrichment had no application on the basis that such a claim must be premised upon an unmet legal obligation. Alternatively, it submitted that, in any event, there was a legal obligation on the Authority to pay the claim based on its submission as to the preferred construction of s 232(1). 266 ICI submitted that the principles of unjust enrichment were attracted because the Authority had collected funds from insurers for the purpose of meeting its claim among others. It argued that the collection of those moneys constituted an enrichment of the Authority which, in the circumstances, it would be unjust for it to retain. 267 Finally, ICI raised four points of construction. First, it submitted that Curtis J was in error in holding that s 234 merely identified the source of payment. It submitted that subsection 227(3) performed that function and that, upon its proper construction, s 234 imposed an obligation on the Authority to pay their claim. To hold otherwise would be to render s 234 otiose. 268 Secondly, ICI submitted that the fact that s 236(2) imposed an obligation on the Authority to make payments out of the Guarantee Fund once an insurer was dissolved meant that there must be an obligation to make such payments before dissolution. Mr Hislop QC submitted that that obligation was found in s 234. ICI also submitted that Curtis J was in error in holding that s 236 was limited to payments of workers' compensation. 269 Thirdly, ICI submitted that Curtis J was in error in concluding that subsection 231(2) was inadequate to found the claim to reimbursement as it only authorised payments to a worker whose claim remained unsatisfied. It argued the section had a wider ambit and extended to its situation. This submission was not developed. 270 Finally, ICI submitted that the Authority stood in the shoes of NEM and was liable under subsection 151AC(10)(a) to reimburse CGU. The Indemnity Appeal: the Authority's Submissions 271 The Authority made two submissions about its power to make payments out of the Guarantee Fund. 272 First, it submitted that it was not entitled to make any payment from the Guarantee Fund unless authorised by an express provision, referring to subsection 227(3) and to Workers Compensation Board v Queensland WorkCover Authority of New South Wales, above, at 739E. It submitted that s 232(1) was the only provision in Division 7 which authorised a payment to an employer by way of reimbursement but that that subsection did not authorise it to make a payment from the Guarantee Fund to an employer such as ICI whose liability in damages had been satisfied by a designated insurer. As a corollary, it submitted that s 232(1) did not authorise it to make a payment to a designated insurer such as CGU. 273 Secondly, the Authority submitted that Curtis J correctly characterised s 232 as conferring an unfettered discretion upon it. It submitted that conclusion was consistent with the language of the section. 274 It also argued that that conclusion was supported by the circumstance that the Authority had limited funds derived predominantly from continuing solvent insurers. Two matters might be noted in respect of this submission. First, there was no evidence as to there being any limitation on the funds available from the Guarantee Fund. Indeed, the fact the Authority was prepared to give the undertaking in the Designated Insurer Proceedings when the quantum of Mr Brazier's claim had not been determined belies the suggestion there was a limit on the Guarantee Fund. Secondly, subsections 228(1) and (2A) to which I have already referred prima facie require the Authority to levy sufficient contributions from insurers to ensure there are sufficient funds in the Guarantee Fund to satisfy claims, judgments and awards arising from or relating to policies of insurance issued by insolvent insurers. 275 The Authority submitted that the purpose of the Guarantee Fund was to ensure that injured workers were provided with a fund from which they might recover compensation and damages. It was not, however, the Authority submitted, the purpose of Division 7 Part 7 "to fulfil the role of substitute insurer". It submitted that it might well be that, in the nature of claims made, the limited resources of the Guarantee Fund made it imperative that the Authority have a discretion to decline to pay some claims. 276 The Authority submitted that Curtis J was correct to conclude that s 231(2)(b) was limited to payments made to a worker in satisfaction of a judgment or award against the employer. It submitted that s 231(2) was a facilitative provision permitting the Authority to exercise rights and discharge obligations of the employer. It submitted that s 231(2) permitted the Authority to satisfy an unsatisfied claim, but did not require it to do so - in other words that it had a discretion to make payments pursuant to s 231. It submitted that that discretion was further confirmed by s 231(7). 277 The Authority submitted that Curtis J's conclusion that subsection 234(1) merely identified the fund from which payments might be made was consistent with Rolfe J's conclusion to that effect in Workers Compensation Board of Queensland v WorkCover Authority of New South Wales, above, at 742A-B. 278 The Authority also submitted that s 234(1) did not authorise payment to the employer but, rather, payment to a person who had a "claim, judgment or award" arising from or relating to a policy of insurance issued by an insolvent insurer. It argued that s 234(1) did not impose an obligation upon it to make payments but retained the notion of discretion by the phrase, "that it proposes to satisfy". It submitted that that phrase made it plain that the Authority had to make a decision to pay an amount of any claim, judgment or award. 279 It submitted that s 234(1) was an inappropriate vehicle for ICI's claim assuming, contrary to its earlier submission, that s 234 could be seen as an independent source of authority for payment. This was because, it submitted, ICI's claims were for payments to be made either to the employer or to its insurer. It submitted that ICI's claim was in respect to its liability as employer in damages to Mr Brazier, while CGU's claim was in respect of its contractual and/or s 151AC obligation imposed on it by its insurance policy in favour of ICI. Neither claim, the Authority submitted, represented a claim, judgment or award arising from or relating to a policy of insurance issued by the insolvent insurer. 280 The Authority submitted that s 236 had no application for two reasons. First, it only applied where the insolvent insurer had been dissolved which, it was common ground, NEM had not been. Secondly, it submitted that s 236 was limited to payments of workers' compensation and that a claim for damages and costs was not such a payment, referring to Gosper v Christopherson (1986) 160 CLR 423. 281 The Authority submitted that Curtis J correctly concluded that s 236 relates to workers' compensation and not damages claims. It argued that s 236 fulfilled the function of permitting action directly against the Authority by those who would be entitled to pursue the insurer directly under s 159. I assume this was intended to be a reference to s 159(5) which provides that a liability under a policy of insurance, of an insurer to a worker under a provision inserted in the policy under s 159(2) or (3), is enforceable as if the worker were a party to the policy. 282 The Authority submitted that the purpose of s 236 was to ensure that injured workers who were receiving payments of compensation by way of judgments or awards remained entitled to enforce those judgments and awards against the Authority as they would have been able to had the insurer not been dissolved. The Authority submitted neither ICI or CGU satisfied any requisite description in s 236. 283 The Authority submitted that the only body which could be subjected to an order pursuant to either s 151AB or s 151AC was an "insurer". It submitted that it was not an "insurer" referring to the definition of an "insurer" in s 225 of Division 7 to which I have already referred and the definition of a "licensed insurer" in s 3 of the 1987 Compensation Act as "an insurer who is the holder of a licence granted under Division 3 of Part 7" and in force. 284 The Authority submitted that ICI's claim for unjust enrichment must fail for three reasons. First, the Authority had not recovered or retained any benefit at its expense: referring to Pavey & Mathews Pty Limited v Paul (1987) 162 CLR 221 at 227, 255, and 256-257. Secondly, ICI had not made any payment to the Authority: referring to Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at [17] and [240]. Thirdly, it was not unjust, unfair, unconscionable or inequitable for the Authority to decline to provide a benefit to ICI in circumstances in which ICI's detriment derived from the insolvency of its insurer. 285 As to ICI's complaint about Curtis J's failure to consider the evidence in relation to the exercise of the discretion point, the Authority submitted that Curtis J was not in error but, in any event, having regard to the fact that the appeal was limited to a point of law (s 32(1) Dust Diseases Tribunal Act 1989) this ground of appeal could not be agitated. 286 Insofar as the undertaking was concerned, the Authority submitted that counsel for ICI/CGU had conceded that the undertaking was conditional and that the condition remained unfulfilled. In those circumstances, it submitted that Curtis J's conclusion was correct. Consideration Role of the Designated insurer 287 The Authority's submission that it did not have power to reimburse ICI where ICI's liability had been discharged by a designated insurer appeared to rest, in the first instance, upon the proposition that, in such circumstances the employer had not satisfied the claim. This submission requires, in the first instance, considering the effect of designating an insurer pursuant to s 151AC(2) and, in particular, the character of a payment made by a designated insurer. 288 The Dust Diseases Tribunal was established to provide "fast track procedures" to facilitate the disposition of proceedings involving persons diagnosed with diseases of gradual onset: Second Reading Speech to the Dust Diseases Tribunal Bill, NSW Parliamentary Debates (Legislative Assembly), 3 May 1989, Vol 207 at 7398 – 7399. Although s 151AC is found in the 1987 Compensation Act rather than the Dust Diseases Tribunal Act 1989, it relates only to common law proceedings in relation to dust diseases. It is plainly intended to form part of that "fast track" regime. 289 Section 151AC recognises the priority of a plaintiff's procedural interests (see QBE Insurance Limited v Bull [1999] NSWCA 185; (1999) 18 NSWCCR 169 at [16]). It creates an interregnum to keep disputes between insurers in abeyance, while the plaintiff's proceedings are resolved. It then provides a flexible mechanism within which those disputes may be resolved in due course. 290 Section 151AC(2) provides that the designated insurer is "to be treated as being the insurer who is … liable to indemnify the employer…" "for the purposes of s 151AB and pending resolution of the dispute." The "dispute" is the dispute as to which of two or more insurers was liable to indemnify the insurer pursuant to s 151AB: s 151AC(1). 291 The words "treated as being" in s 151AC(2) operate in the same manner as a deeming provision. They create a statutory fiction so that pending the resolution of the insurer's dispute, the designated insurer is to be treated as the insurer liable to provide indemnity to the employer, even though it may ultimately be found that, in fact, another insurer is the "insurer who is liable" in accordance with s 151AC(9) after the nature of employment inquiry has been undertaken (s 151AB). 292 Adopting the device of a statutory fiction does not mean the designated insurer is acting as an insurer respondent to an insurance policy. As Cave J said in R v Norfolk County Council (1891) 60 LJ QB 379 at 380: "Generally speaking, when you talk of a thing being deemed to be something, you do not mean to say that it is that which it is to be deemed to be. It is rather an admission that it is not what is deemed to be, and that, notwithstanding it is not that particular thing, nevertheless, for the purposes of the Act it is deemed to be that thing." 293 The limited and procedural role of the designated insurer is recognised by the fact that while s 151AC(5) provides for the designated insurer to act for all the disputing insurers in the carriage of the insurance aspects of the claim, s 151AC(6) gives the other disputing insurers the right to make submissions in the Dust Diseases Tribunal relating to the damages payable to the worker. Subsection (6) thus recognises that other insurers have a substantive interest in the worker's claim and in the quantum of the sum for which, when the insurance dispute is resolved, they may become liable. 294 When an insurer is designated pursuant to s 151AC, the effect is that as between the employer and the designated insurer, the designated insurer stands in the employer's shoes both for the purposes of conducting the principal proceedings involving the worker and for the purposes of meeting any liability in respect of those proceedings either by indemnifying the employer, in the sense of putting the employer in funds, for the full amount of the damages or by paying the damages to the worker (s 151AC(2), s 151AB(1)). 295 Any such payments are made only because s 151AC directs that the designated insurer must make that payment pending resolution of the insurers' dispute. 296 The s 151AC dispute is not resolved until it is determined pursuant to s 151AB which of the disputing insurers was "the insurer when the worker was last employed at the relevant time by the employer in an employment to the nature of which the disease was due": s 151AC(9). Once that is determined, that insurer is "an insurer who is liable" (s 151AC(9)) a term which has significance in s 151AC(10) dealing with the adjustment of amounts paid and costs incurred after resolution of the dispute. 297 In what capacity, then, does the designated insurer make any payment to or on behalf of the employer? 298 The Authority sought to argue that CGU's payment to Mr Brazier was to be treated as a payment in its own right, rather than a payment on behalf of ICI. Mr Little SC, for the Authority, was pressed by the Court on a number of occasions to explain why the fact ICI's liability was discharged by a designated insurer, meant ICI had not satisfied the claim. He never clearly articulated why that was so. In essence he submitted that because CGU paid the verdict, ICI had not paid it. 299 In QBE Insurance Limited v Bull, above, at [14], the Court (Mason P, Powell and Fitzgerald JJA) referred to subsections 151AC(2) and (5)(a) as making "it plain, that when appointed the designated insurer, will, as insurer, exercise the rights and duties of the employer with reference to the litigation" (Emphasis added). I do not understand their Honours' observation (which was, in any event, obiter) to detract from the proposition that the designated insurer's role as such "insurer" is a statutory fiction not reflective of the true situation. 300 In reality the designated insurer is not, or may not be, the insurer who was liable. As I have sought to explain, that insurer is not identified until the s 151AB(1) exercise is determined. When the designated insurer pays any damages for which the employer has been found to be liable for an occupational disease contracted by a worker it does so not because it is in fact liable to indemnify the employer pursuant to any contract of insurance but because that is the effect of its designation as insurer pursuant to s 151AC(2). Put another way, the designated insurer does not pay pursuant to a liability arising from a contract of insurance, but because of its statutory designation. 301 In my view, the designated insurer discharges the employer's liability as statutory agent for the employer. Thus, although the moneys to discharge Mr Brazier's claim came from CGU, they should be treated as having been paid by ICI. It is in fact ICI, the employer, which satisfied Mr Brazier's claim. 302 An alternative view, and one which found favour with Curtis J, was that insofar as CGU was concerned having paid Mr Brazier's claim on behalf of ICI by virtue of its designated insurer basis it should be treated as if it had made a bona fide ex gratia payment thus entitling it to be subrogated to ICI's rights under the policy of insurance: see King v Victoria Insurance [1896] AC 250; Sydney Turf Club v Crowley [1971] 1 NSWLR 724. 303 It should also be recalled that Curtis J held that no violence was done to s 232(1) by permitting payment to a designated insurer claiming in the name of the employer by way of subrogation whatever "rights" the employer may have to claim against the Authority. While the Authority did not, in terms, challenge his Honour's conclusion in this respect, it did submit that Division 7 did not authorise any payment to CGU. 304 This submission begs the question. If Curtis J's conclusion is correct and CGU is subrogated to ICI's claim then if the Authority was required to reimburse ICI pursuant to s 232(1), ICI would be required to account to CGU for those monies: Castellain v Preston (1883) 11 QBD 380; Transport Accident Commission v C.M.T. Construction of Metropolitan Tunnels and Another (1988) 165 CLR 436 at 441 per Wilson, Dawson, Toohey and Gaudron JJ. 305 The question whether s 232 permitted payment to a designated insurer does not, in my view, arise. The Authority clearly has power to reimburse ICI. 306 It would be a remarkable interpretation of the 1987 Compensation Act, in my view, if the effect of the insertion of s 151AC with the intention of benefiting the disposition of workers' proceedings while, at the same time, preserving the status quo for insurers, could be found to have the result for which the Authority contends, namely to shut the door of the Guarantee Fund to employers whose liability had been discharged by a designated insurer. 307 The Authority's stance that it had no power to reimburse ICI where CGU had paid Mr Brazier as designated insurer was clearly misconceived. Does s 232(1) impose a duty or confer a discretion? 308 Once it has been concluded that the fact that CGU discharged ICI's liability to Mr Brazier is not an impediment to the Authority having power to reimburse ICI, the question arises whether it has an obligation or only a discretion whether to reimburse ICI from the Guarantee Fund. 309 In order to determine this issue it is necessary to look closely at the Division 7 scheme. 310 Section 231 is clearly intended to empower the Authority to make payments in respect of claims which have not been satisfied by the employer. Section 232 empowers the Authority to make reimbursement in respect of the prior satisfaction of claims either by the employer or the liquidator of the insolvent insurer: see Workers Compensation Board of Queensland v WorkCover Authority (NSW) per Rolfe at 739, 741. 311 Thus, if there is a provision in Division 7 which authorises the Authority to reimburse ICI, s 232 is the most probable source of that power. In my view both the language and purpose of s 232 demonstrate that the Authority has discretion whether to make payments to employers pursuant to that section. 312 The fact that s 232 confers a discretion rather than a duty is manifested in a number of ways. First, both subsections 232(1) and (2) use the language of discretion in providing that "the Authority as manager of the Guarantee Fund, may pay from the Guarantee Fund … to the employer or liquidator respectively". 313 Section 9 of the Interpretation Act 1987 (NSW), which applies save insofar as a contrary intention appears in an Act or instrument (s 5), provides "the word 'may', if used to confer a power, indicates that the power may be exercised or not, at discretion." Section 9 is the current expression of legislative intervention in New South Wales "to restrain the development of the notion that permissive words may have a compulsive effect": Samad v District Court of New South Wales (2002) 209 CLR 140 at [33] per Gleeson CJ and McHugh J referring to Ward v Williams (1955) 92 CLR 496 at 506. 314 Section 9 is, therefore, a powerful starting point to consideration of the proper construction of s 232. Nevertheless, before s 9 can operate according to its terms, it is necessary to consider whether a contrary intention appears in the Act. 315 The language of permission is repeated in subsections 232(1) and (2), which provides that the Authority "may pay … an amount equal to the whole or any part of the amount" already paid. An ability to decide whether to provide reimbursement in whole or part does not sit comfortably with the notion of a duty to reimburse. 316 The proposition that the Authority might not provide reimbursement to the full extent of the amount an employer or a liquidator may have paid to satisfy a claim, judgment or award is carried forward into subsection 232(3) deeming the Authority to have satisfied the claim, judgment or award as Agent and Attorney of the employer "to the extent of the payment". 317 Finally, subsection 232(4) both makes it plain that subsections 232(1) and (2) confer powers, thus invoking the language of s 9 of the Interpretation Act, but also spells out in no uncertain terms that those powers are exercisable "at the absolute discretion of the Authority". 318 Thus every internal indicium in s 232 dictates the conclusion that the Authority has a discretion whether to make a payment from the Guarantee Fund in respect of a claim, judgment or award which has been satisfied. 319 There is nothing in the statutory context in which s 232 is found which detracts from that conclusion. 320 Section 231, the only other section in Division 7 which, in my view, deals with the question of payment, also uses the language of discretion, providing in subsections (2), (3) and (4) that "the Authority may exercise" the various rights and obligations referred to in those subsections. It does not provide, as does s 232, that the Authority, should it exercise those s 231 rights and/or discharge those obligations, may do so in whole or part. The reason for that is clear. Should the Authority decide pursuant to subsection 231(2) to satisfy any claim against which the employer is indemnified under a policy of insurance, it makes that payment, albeit from the Guarantee Fund, as agent and attorney of the employer. An employer which is obliged to satisfy a claim, judgment or award, is liable at common law for the full amount of such claims, judgments or awards. It cannot satisfy any such claim, judgment or award by paying less than one hundred percent. The Authority stands in the shoes of the employer under s 231 and, should it decide to make a payment, is subject to the same entire obligation. 321 The fact that s 231 does not contain a provision in the terms of s 232(4) expressly confirming that the powers to make payment are exercisable at "the absolute discretion of the Authority", does not detract from the conclusion that it has a discretion under s 231. As I have already pointed out, the use of the word "may", absent contrary indication, is sufficient to indicate that the Authority is vested with a discretion as to whether or not to exercise its powers under s 231. 322 I also do not accept ICI's submission that upon its proper construction s 234 imposed an obligation on the Authority to pay their claim and that to hold otherwise would be to render s 234 otiose. I agree with Rolfe J's conclusion in Workers' Compensation Board of Queensland v WorkCover Authority (NSW) above, at 742, that s 234 is a "source of payments, rather than an additional power to make them." It is true that Rolfe J expressed some bemusement as to why, in his view, both s 227(3) and s 234(1) "should be required to do what seems to me to be essentially the same work." 323 It was not necessary for Rolfe J to resolve the dilemma he identified concerning subsections 227(3) and 234(1). Further, his Honour's view was that the two subsections did "essentially the same work". When closely examined, however, subsections 227(3) and 234(1) can be satisfactorily placed in the statutory scheme. 324 Section 227 establishes the Guarantee Fund (ss (1)), identifies the source of payments into it (ss (2)) - specifying that payments out of the Guarantee Fund includes amounts authorised by Division 7, any other Act or the regulations (ss (3)) - identifies the Authority as Manager of the Fund (ss (4)) and gives the Authority power to invest the Guarantee Fund. 325 The next section which deals with payments out of the Guarantee Fund is s 232. Both subsections 232(1) and 232(2) specify that the Authority "may pay from the Guarantee Fund" in whole or in part, the amounts referred to in those subsections. 326 When one turns to s 234(1)(a) it can be seen that that subsection authorises the Authority to pay out of the Guarantee Fund amounts it proposes to satisfy as agent or attorney of an employer for the purposes of s 231. Section 234(1)(a) was required because s 231 does not specify that payments made under that section are to be made out of the Guarantee Fund. Why the drafter did not adopt the same model as was used in s 232 is not clear, but need not be considered further. 327 There remains for consideration the work the words "any other amounts required by this division to be paid from that fund" in subsection 234(1) perform. The word "required" manifests some notion of obligation. 328 In order to identify any other provision which "requires" the Authority to make a payment, it is necessary to unravel the interstices of s 233. Section 233 operates by various cross-references to other provisions of the 1987 Compensation Act. Its original intention was to assimilate the position of the Authority to that of the insurer which, but for its insolvency, would have been liable to indemnify an employer to whom it had issued a relevant policy. Subsections 233(1) and (4) are no longer relevant as the sections they cross-referenced (ss 93, 124 and 34) were repealed by the Workers Compensation Legislation Amendment Act 1998, No 85 Schedule [163]. 329 Subsections 233(2) and (3) were intended to operate to effect an adjustment between the Insurers' Contribution Fund and the Guarantee Fund. 330 The Insurers' Contribution Fund was established by Part 7 Division 6 of the 1987 Compensation Act which operated until the Contribution Fund was closed in accordance with s 221A. The Contribution Fund was under the direction, control and management of the Authority: s 218(2). Subsections 221(2) and (4) provided that: "there shall be payable from the Contribution Fund to an insurer" and then detailed amounts to be paid. It suffices for present purposes to say that the amounts to be paid from the Contribution Fund to an insurer relate to the difference between the weekly compensation paid by an insurer in respect of various periods and lump sums paid by an insurer to redeem wholly or in part the liability to pay weekly compensation. Subsection 233(2) ensures that if the Authority has made a payment as agent and attorney of an employer pursuant to a policy of insurance issued by an insolvent insurer, then s 221 is to apply to it as it would have applied to and in respect of the payment had it been made by the Authority as the insurer under the policy. 331 Section 222 operates to ensure that if an insurer has received any payment from the Contribution Fund in respect of any compensation paid by the consumer and then receives from "another person the whole or any part of the compensation the insurer has paid, the insurer shall forthwith repay to the Authority for payment into that Fund" that proportion of the compensation as has been received. Subsection 233(3) provides that s 222 applies to and in respect of any payment the Authority has received in accordance with subsection 221/233(2) as if the Authority were an insurer which had received that payment in respect of compensation paid to it. 332 Section 233(3) would operate, for example, to ensure that if, pursuant to s 235, the Authority exercised the rights and powers of the insolvent insurer to recover from a reinsurer an amount it had paid out of the Guarantee Fund in respect of a claim, judgment or award pursuant to s 234, then, to the extent it had been reimbursed in respect of any such payment out of the Contribution Fund, it was required to make repayment to the Contribution Fund pursuant to s 222/ss 233(3). 333 So understood, it can be seen that the word "required" in s 234 again merely identifies the Guarantee Fund as a source of payment. It does not confer a power. It plays no part in the operation of s 232. 334 Finally I turn to consider ICI's submission concerning s 236. It is true that subsection 236(2) provides where an insolvent insurer has been dissolved, that "a person who would have had, but for the dissolution of the insolvent insurer, an entitlement to payment of any amount arising from or relating to any policy of insurance issued by the insolvent insurer … shall be entitled to payment of that amount out of the Guarantee Fund." 335 Subsection 236(3) enables a person referred to in subsection (2) to make a claim against the Authority in respect of "an entitlement to payment of an amount under that subsection." Subsection 236(4) provides that the Authority is "entitled to deal with and finalise a claim made under subsection (3) … to the same extent as it would have been entitled to do so if the insolvent insurer had not been dissolved." 336 In my view, the use of the language of "entitlement" in subsection 236(2) does not, contrary to ICI's submission, impose a duty upon the Authority to make payments out of the Guarantee Fund. The effect of subsection 236(4) is that if a claim is made pursuant to s 236(3), then the Authority is to deal with it, if it is an unsatisfied claim, as it may deal with such a claim pursuant to s 231 or, if the claim has been satisfied, by considering whether to reimburse a payer in accordance with s 232. 337 The intention of s 236 was to ensure that claims could still be made and the Authority could still make payments out of the Guarantee Fund even though the insurer had been dissolved. Section 236 was necessary because, once dissolved, a company ceased to exist, as too did its debts and liabilities so far as enforcement against the company was concerned. Section 236 confirmed, in case of doubt, that any liabilities of the insolvent insurer continued notwithstanding its dissolution. It served also to confirm that the Authority had power to make payments out of the Guarantee Fund, notwithstanding that dissolution. 338 This analysis of Division 7 serves to confirm, in my view, the correctness of the Authority's submission that it has a discretion as to whether or not to make payments out of the Guarantee Fund. The language of the Division dealing with payments is replete with the language of discretion. Nothing in the scheme of Division 7 in my view, indicates that the word "may" in subsections 232(1) and (2), bears any other than a permissive meaning. 339 In addition to its submissions concerning the language of Division 7, ICI's submission that s 232(1) imposed an obligation on the Authority turned principally upon Armitage J's judgment in Chubb Australia Limited v MMI (WC) Limited (1999) 17 NSWCCR 537. Chubb concerned a cross-claim by Chubb Australia Limited ("Chubb") against various insurers claiming indemnity in respect of a judgment it had suffered in an action by an employee, George Vasiliou, arising from his alleged exposure to asbestos dust and fibre leading to mesothelioma. Chubb had been insured by a number of insurers during the period Mr Vasiliou had been in its employ. Armitage J was required to determine, for the purposes of the cross-claim, which of the insurers was the insurer liable to indemnity Chubb in accordance with the nature of the employment test prescribed by s 151AB. 340 Armitage J held that it was "NEM-IGF" (which acronym, although not explained by his Honour, I understand to have been intended to refer to both NEM and the Guarantee Fund). As much is plain from the fact that even though his Honour pointed out that, prima facie, his conclusion meant that Chubb was entitled to a verdict against NEM-IGF (at [49]), he went on to consider whether he could enter such a verdict having regard to the fact that NEM was an insolvent insurer. In order to determine that question, Armitage J considered submissions made on behalf of NEM-IGF based on the proposition that such a verdict could not be entered because of the operation of Part 7, Division 7 of the 1987 Compensation Act. 341 NEM-IGF argued that because the definition of "insurer" in s 225(1) in Division 7 did not include an "insolvent insurer", NEM could not be an "insurer" for the purposes of s 151AB. Armitage J disposed of that argument (at [54]) by pointing out that s 225(1) was qualified by the words "in this Division" meaning that the s 225 definition of "insurer" did not apply to s 151AB which appears in Part 5, Division 5. Accordingly he held that the expression "insurer" in s 151AB could include an insolvent insurer. 342 He held (at [59]) that, despite the use of the word "may" in s 231(2), the Authority did not have "a discretion whether or not to indemnify an employer covered by a policy of insurance with an insolvent insurer from the Insurers' Guarantee Fund". 343 NEM-IGF had argued s 231 conferred a discretion upon it, relying upon Rolfe J's decision in Workers' Compensation Board of Queensland v WorkCover Authority (NSW), above, and, in particular, Rolfe J's statement (at 741F – G) that the Authority's "power to pay is subject to the absolute discretion conferred on the defendant by subs (4)." In Armitage J's view (at [63]) the "absolute discretion" to which Rolfe J was referring (at 741F and 742A) was that conferred by s 231(4) providing that: "The Authority may exercise rights and discharge obligations as agent in the name of the employer or worker concerned, or in its own name." 344 In fact, in the passages to which Armitage J referred, Rolfe J was referring to the "absolute discretion" conferred by s 232(4). 345 Armitage J held (at [66]) that Chubb was entitled to a verdict against NEM-IGF for indemnity under the policy of insurance issued by the insolvent insurer, NEM. Reading between the lines it appears the Authority treated that conclusion as exposing it to a judgment it was required to satisfy out of the Guarantee Fund. 346 The Authority appealed from Armitage J's decision. The appellant in those proceedings was named as the "WorkCover Authority of New South Wales". Elsewhere in this judgment I have dealt with the Court of Appeal's conclusion that Armitage J had erred in his application of the nature of employment test: WorkCover Authority of NSW v Chubb Australia Limited [2000] NSWCA 221; (2000) 20 NSWCCR 614. As a result of that conclusion it was unnecessary for the Court of Appeal to consider the Authority's argument about whether it could be exposed to a liability to indemnify Chubb (see Stein JA (at [50]). 347 In my view Armitage J erred in Chubb Australia Limited v MMI (WC) Limited in concluding that s 231 did not confer a discretion upon the Authority. What is the content of the Authority's discretion? 348 A finding that the Authority has a discretion as to whether or not to make a payment pursuant to s 232, however, is not the end of the matter. 349 It is important, in considering the nature of the s 232 discretion to bear in mind that it is a remedial section intended to ameliorate the effect of an insurer's insolvency. It should be construed to give the fullest relief which a fair reading of its language will allow: Bull v Attorney-General (NSW) (1913) 17 CLR 370 at 384. 350 There is no doubt, in my view, that the Authority had a power to reimburse ICI in respect of the satisfaction of Mr Brazier's judgment. The Authority is a public body vested with a power to be exercised in order to discharge amounts for which an insolvent insurer would otherwise have been liable pursuant to a policy of insurance issued to an employer. The Authority is empowered to require contributions to the Guarantee Fund sufficient to satisfy during any financial year the claims, judgments and awards arising from or relating to the policies of insurance issued by those insolvent insurers. 351 The legislature clearly intended, in my view, that the Authority should have sufficient funds to satisfy all claims, judgments and awards arising from or relating to such policies of insurance. 352 It might, in those circumstances, be regarded as unusual that the Authority has a discretion as to whether to make payments out of the Guarantee Fund in respect of satisfied claims, judgments and awards. Nevertheless, as I have explained, the legislature has made it clear that the Authority has a discretion in that respect. 353 Even though the Authority's discretion pursuant to s 232 is described as "an absolute discretion", that does not mean that its discretion is unfettered. The nature or extent of the discretion may be inferred from the legislative scheme within which it operates. It was in those circumstances that ICI submitted, and Curtis J accepted, that the Authority could not act capriciously or without cause in exercising its s 232(1) discretion. The Authority did not challenge the proposition that it could not act capriciously in the exercise of its discretion. Rather, it confined itself to the submission that there was no basis for an assertion that it had actually exercised its discretion. 354 I do not accept the Authority's submission in this respect. The Authority exercised its discretion under s 232, in my view, when it undertook to Armitage J in the Designated Insurer Proceedings that "if the defendant satisfies any judgment then under s 232 of the 1987 Act the WorkCover Authority will reimburse the employer for the judgment paid." 355 It now seeks to assert that even though ICI's liability in respect of Mr Brazier's judgment has been discharged and, further, even though ICI was insured under a policy of insurance issued by an insolvent insurer, it can decline to meet that undertaking because ICI's liability in respect of the judgment was paid by a designated insurer. 356 I have already rejected the Authority's argument that if CGU discharged ICI's obligation as designated insurer, that meant ICI had not satisfied Mr Brazier's claim. 357 Mr Little SC next submitted that the Authority was "fettered in its payment to the designated insurer because it was appointed agent of the employer and workers for the purpose of resolving their disputes". He did not elaborate on that submission which in my view was meaningless. 358 Next, he said the Guarantee Fund was a fund of last resort, intended to deal with employers and workers. As I understand the last submission, it went not to power, but to discretion. In other words the Authority's position was that if another party, in this case, a designated insurer, discharged the employer's liability, it would not exercise its s 232 discretion to reimburse the employer. This was because it perceived its role as being to preserve the assets of the Guarantee Fund. If another insurer had discharged the employer's liability, that, in the Authority's submission, absolved it from the responsibility for making payment. 359 Mr Little submitted that it was not a capricious exercise of the Authority's discretion for it to adopt the position that it could decline to indemnify ICI in circumstances where CGU had met ICI's liability on the basis that the Guarantee Fund was a fund of "last resort". He submitted that if another insurer was "going to pick up the payment then WorkCover is absolved from the responsibility for doing it". He submitted that it was the Authority's view that "if another insurer is going to pick it up [a plaintiff's judgment] because the Judge has designated somebody else to pay it, WorkCover say well that's not the purpose of our Fund." 360 Mr Little SC contended that the undertaking was subject to "the condition … that WorkCover would indemnify if no insurer was designated". 361 He submitted that by persisting in its application pursuant to s 151AC ICI put itself "out of Court". He said that if ICI had remained the party conducting the proceedings and NEM had been found to be the insurer liable by a correct application of an employment test, the Authority would have paid. 362 I do not accept that the undertaking was subject to the contingency for which the Authority contends. 363 It is important, in this context, to go beyond the terms of the undertaking as set out in Armitage J's judgment and, as Curtis J did, examine the transcript of the hearing before Armitage J which the Authority attached to its written submissions. 364 Mr Parker, who appeared for the Authority before Armitage J, opposed ICI's application that the Authority be appointed a designated insurer on the basis of two undertakings proffered to the Court. He read those matters onto the record in the following terms: "Mr Parker: 'The WorkCover Authority consents to the defendant having conduct of the defence' and secondly, 'if the defendant satisfies any judgment then under section 232 of the 1987 Act the WorkCover Authority will reimburse the employer for the judgment paid.' " 365 As will be apparent from Mr Parker's statement he did not give an undertaking of payment contingent upon a designated insurer not being appointed. At best, it might be said to be a matter the Authority contends should be read into the undertaking if it is assumed, contrary to my finding, that it was CGU as insurer, rather than ICI as employer, which satisfied Mr Brazier's judgment. 366 It does not appear that Armitage J understood the undertaking to be subject to the contingency for which Mr Little SC contends. His Honour recorded his understanding of the undertaking as seeming to him "to mean that if findings of fact are made which would, but for the insolvency of [NEM] have resulted in that insurer being liable under s 151AB … then the WorkCover Authority will indemnify the defendant in respect of what otherwise would have been the contractual obligation of [NEM] to meet any judgment against the defendant." 367 It is clear, in my view, from that statement, that the Authority's undertaking to reimburse the employer was not contingent upon Armitage J not appointing a designated insurer. Rather, the undertaking appears to have been carefully framed to repeat the language of s 232(1). This was undoubtedly so that if any payment was made by the Authority, it was a payment authorised by the Division: s 227(3). 368 Mr Little sought to add a further gloss to the undertaking, namely that it should be read either as "if the defendant satisfies any judgment out of its own funds" or as "if the defendant itself pays". As Meagher JA pointed out, however, the undertaking could not have meant that ICI had to pay out of its own funds. Mr Little conceded for example, that if ICI had borrowed the money to pay the judgment, then the undertaking would apply. This makes it plain (if demonstration was necessary) that the Authority accepted ICI did not have to pay the judgment out of its own monies. 369 That the Authority was concerned with the issue of power is clear from Mr Little SC's statement to Curtis J that "because of the way the trial was conducted there be (sic) no power on us to pay …". Mr Little SC was repeating to Curtis J the view, which I have held to be erroneous, that the effect of a payment by CGU as designated insurer was that ICI had not satisfied the judgment. 370 It should also be noted that after Mr Parker informed Armitage J of the terms of the Authority's undertaking, he added "in my submission it resolves the issue under Vasiliou". That was a reference to Armitage J's decision in Chubb Australia Limited v MMI (Workers Compensation) Limited to which I have already referred, in which his Honour had held that the Authority was under a statutory obligation to indemnify an insolvent insurer in respect of its liability to an employer. That case was then the subject of an appeal to this Court, the hearing of which was pending at the time of the Designated Insurer Proceedings. Armitage J was concerned that if his conclusion as to the statutory obligation was reversed in this Court, the Authority would not reimburse ICI for the damages it might be found liable to pay to Mr Brazier. 371 My understanding of Mr Parker's statement that his undertaking resolved the issue under Vasiliou was that he was informing Armitage J that whatever the outcome of the decision on the appeal, the Authority would reimburse ICI pursuant to s 232 if ICI satisfied any judgment. 372 By giving the undertaking, the Authority effectively and, in my view, lawfully, bound itself as to how it would exercise its statutory discretion: see Thorby v Goldberg (1964) 112 CLR 597 at 605 – 606. 373 As I have held the effect of CGU, as designated insurer, satisfying ICI's liability to Mr Brazier was that ICI had, in fact, satisfied the judgment, the Authority should be required to honour the undertaking it gave to Armitage J in the Designated Insurer Proceedings. Conclusion 374 In my view, Curtis J was correct to hold that s 232 permitted a payment to be made to ICI even though CGU had satisfied its liability to Mr Brazier. His Honour was also correct to hold that the Authority had a discretion whether to make the payment to ICI. However, in my view, his Honour erred in characterising the undertaking the Authority gave to Armitage J as contingent. However, even if it was in fact contingent, it was subject to a contingency which turned on the Authority's erroneous views of its powers. The Authority acknowledged in the course of argument that if ICI paid Mr Brazier's damages and costs, it would reimburse ICI i.e. honour the undertaking. 375 Thus while Curtis J stated the law correctly, he erred in applying it to the facts. That is an error of law: Azzopardi v Tasman UEB Industries (1985) 4 NSWLR 139 at 150C, 157A, F. Relief 376 In its Notice of Appeal, ICI asked that the verdict for the Authority on its cross-claims be set aside and that instead, the declarations and orders sought by ICI in the Second Further Amended First Cross-Claim be made. 377 Although the claim for those declarations was not repeated in the Third Further Amended Cross-Claim the Authority did not object to the resurrection of the claim for the declaration. Orders 378 I would make the following orders: The Appeal 1. Appeal allowed. 2. Declare that the WorkCover Authority of New South Wales is liable to indemnify ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited) in respect of the damages and costs paid to George Roland Brazier in and arising out of proceedings in the Dust Diseases Tribunal of New South Wales numbered 169 of 1997 between George Roland Brazier and ICI Australia Operations Pty Limited (now known as Orica Australia Pty Limited). 3. Order the WorkCover Authority of New South Wales to pay the costs of and associated with the Appeal and in the Court below. The Cross-Appeal 1. Cross-Appeal dismissed. 2. Cross-appellant to pay the costs of the Cross-Appeal. ******************** Last Modified: 03/16/2004 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.