New South Wales Court of Appeal CITATION: QBE WORKERS COMPENSATION (NSW) LIMITED v BAE SYSTEMS REGIONAL AIRCRAFT LIMITED (FORMERLY BRITISH AEROSPACE COMMERCIAL AIRCRAFT LIMITED) COMPANY [2006] NSWCA 131 HEARING DATE(S): 19 May 2006 JUDGMENT DATE: 19 May 2006 JUDGMENT OF: Spigelman CJ at 1; Tobias JA at 25; McColl JA at 26 EX TEMPORE JUDGMENT DATE: 05/19/2006 DECISION: 1. Leave to appeal granted. Notice of appeal to be filed within 7 days; 2. Appeal allowed; 3. Set aside the orders of Howie J on 24 March 2005; 4. Strike out the words "contained tirorthocresyl phosphate which" in par [6] of the Statement of Claim; 5. Dismiss the Respondent's Notice of Motion filed on 20 April 2004; 6. The time for filing any motion under Part 12 r 11 be extended to 28 days from today's date; 7. If within the 28 day period referred to in Order 6 the opponent does not file a Notice of Motion, the Appellant is granted leave to proceed under Part 11 r 4 of the Uniform Rules. CATCHWORDS: Practice and Procedure – Appeal – Whether statement of claim an abuse of process LEGISLATION CITED: Workers Compensation Act 1987, s151Z(1)(d) Supreme Court Rules, Part 10 r 1A CASES CITED: Agar v Hyde (2000) 201 CLR 552 Chew v Eastwest Airlines Ltd (Unreported, Compensation Court of New South Wales, Moran J, 28 April 1999) PARTIES: QBE Workers Compensation (NSW) Limited (Claimant) BAE Systems Regional Aircraft Limited (Opponent) FILE NUMBER(S): CA 40315/2005 COUNSEL: PM Wood, DPM O'Dowd (Claimant) AS Bell, CP Carter (Opponent) SOLICITORS: Gillis Delaney Lawyers (Claimant) Norton White (Opponent) LOWER COURT JURISDICTION: Supreme Court LOWER COURT FILE NUMBER(S): SC 20251/2003 LOWER COURT JUDICIAL OFFICER: Howie J LOWER COURT DATE OF DECISION: 24 March 2005 LOWER COURT MEDIUM NEUTRAL CITATION: [2005] NSWSC 232 - 7 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40315/05 SPIGELMAN CJ TOBIAS JA McCOLL JA Friday 22 May 2006 QBE WORKERS COMPENSATION (NSW) LIMITED v BAE SYSTEMS REGIONAL AIRCRAFT LIMITED (FORMERLY BRITISH AEROSPACE COMMERCIAL AIRCRAFT LIMITED) COMPANY Judgment 1 SPIGELMAN CJ: The Claimant is the workers compensation insurer for two companies that formerly carried on the business of airlines in Australia, namely Ansett Australia Limited and Eastwest Airlines Limited. A flight attendant who had been employed, successively I assume, by each of these companies, took proceedings against them in the former Compensation Court of New South Wales for incapacity arising from the course of her employment by reason of her exposure to fumes in the cabin of an aircraft known as the BAe 146 being an aircraft manufactured by the Opponent. 2 The Claimant instituted proceedings in the Supreme Court of New South Wales seeking an indemnity from the Opponent pursuant to s151Z(1)(d) of the Workers Compensation Act 1987 which provides: "(1) If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury, the following provisions have effect: … (d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages)." 3 The flight attendant received compensation under the Act, relevantly weekly compensation for incapacity after 30 October 1993. This was determined in a judgment of Judge Moran in Chew v Eastwest Airlines Limited & Ansett Airlines Limited (Compensation Court of New South Wales, unreported, 28 April 1999). 4 The basis upon which his Honour found in favour of the applicant in that Court became of central significance to the issues in the proceedings in the Supreme Court. 5 The Statement of Claim in the Supreme Court contained the following relevant assertions: "5. The worker's injuries were caused by her inhalation of mobile jet oil and fuel fumes ('the fumes") which entered the cabin of the BAE 146 aircraft on which the worker was deployed by Ansett and Eastwest. 6. The fumes which were inhaled by the worker contained triorthocresyl phosphate which caused the workers injuries and disabilities for which Ansett and Eastwest were required to pay compensation under the Act. 7. The Defendant was the manufacturer of each of the 146 Series 200 and Series 300 passenger aircraft ('the aircraft') on which the worker was deployed by Ansett and Eastwest. 8. The Defendant owed the worker a duty to take reasonable care for the safety in the design and manufacture of the aircraft. 9. In breach of its duty of care, the Defendant's aircraft contained design and manufacture defects." 6 Thereafter the Statement of Claim set out 14 particulars of negligence, most of which turned on the entry of "fumes", as defined, into the cabin of the aircraft. 7 Howie J set aside the Statement of Claim on two alternative grounds. First, his Honour determined that the proceedings had insufficient prospects of success to require the Opponent to be put to the trouble and inconvenience of defending proceedings in this Court. (His Honour applied the decision of the High Court in Agar v Hyde (2000) 201 CLR 552 esp at [55]). Secondly, his Honour determined that the proceedings were an abuse of process on the basis that the workers compensation insurer, at least as a privy to the companies on the record in the Compensation Court proceedings, sought to pursue a claim in the Supreme Court on a basis inconsistent with the position that it had adopted in the Compensation Court proceedings. 8 The Claimant seeks leave to appeal from the interlocutory order of Howie J. 9 As noted above, pars [5] and [6] of the Statement of Claim in the Supreme Court contain different terminology. An issue has arisen in this Court as to the proper interpretation of pars [5] and [6]. How the matter was argued before Howie J is also material, for reasons that I will come to. I propose that the Court reserve the question of costs that turn on how this matter was argued before Howie J. 10 In par [5] of the Statement of Claim the word "fumes" is defined in terms of inhalation of mobile jet oil and fuel fumes. The word is also repeated in par [6] but with the additional reference that the fumes "contained triorthocresyl phosphate" ("TOCP") as the substance which caused the worker's injuries. It is the presence of those words in par [6] of the Statement of Claim that become central to the disposition of this appeal. 11 Before Howie J, the Opponent contested the issue of whether or not the Court should assume jurisdiction, on the basis that the cause of action arose pursuant to Pt 10 r 1A of the Supreme Court Rules in its then form. This issue is not pressed on the appeal. 12 The case for which the flight attendant contended in the Compensation Court was summarised by Moran J in the following passage: "2 … Her case is that between January 1992 and 30 October 1993, she was exposed to fumes, toxic substances and other irritants whilst carrying out her duties as a flight attendant in aircraft known as BAe 146. The applicant alleges that the fumes within the aircraft cabin to which she was exposed contained mobile jet oil 2 which, in turn, contained the toxic substance known as triorthocresyl phosphate ('TOCP'). The applicant alleges that TOCP as a toxic substance caused damage to the applicant's physiology which gave rise to the applicant's chronic ongoing symptoms and disabilities diagnosed by her doctors as 'Multiple Chemical Sensitivity' ('MCS'). Alternatively the applicant alleges her symptoms and incapacity have resulted from aggravation of a condition of glandular fever or a viral infection described as an Epstein Barr virus; that the aggravation occurred over the period January 1992 until October 1993 and the effects of the aggravation are still present." 13 His Honour went on to accept the alternative case, namely the case that the incapacity resulted from the aggravation, etc, of a pre-existing condition. His Honour doubted the first case based on a diagnosis of multiple chemical sensitivity, but did not find it necessary to decide it. He said "24 The applicant puts her case in the alternative so I do not think it necessary for me to decide whether or not a diagnosis of multiple chemical sensitivity is appropriate in this case. I must say at the outset though that there certainly is a weight of medical evidence in this case against such a label, in particular from Dr Lobley, Dr Carroll, Dr Julian Lee, Dr Pryor and others. 25 I prefer the evidence given by the respondent's doctors, in particular, Dr Carroll and Professor Lobley, that the diagnosis of multiple chemical sensitivity is wrong and that the applicant is suffering from an aggravation of glandular fever or Epstein Barr virus." 14 The contentions on behalf of the Claimant were summarised by Moran J, in a form fully set out by Howie J, as follows: "(a) there is relatively little dispute that from time to time the Applicant in the course of her employment with the Respondent was exposed to fumes vapours or smoke (hereafter referred to as 'fumes') of varying character and varying composition during the period about January 1992 to October 1993; (b) as to the various composition of the fumes to which the Applicant was exposed even if those fumes contained mobile jet oil 2 those fumes did not contain any TOCP and (other than a transient irritant effect) the presence of mobile jet oil 2 in the fumes, if any, did not give rise to any damage to the physiology of the Applicant; (c) the Applicant had a pre-existing condition in the form of the Epstein Barr virus, glandular fever or some other similar viral condition which rendered the Applicant unusually susceptible to exposure to fumes such as those which were from time to time present in the aircraft in which the Applicant worked; and (d) by reason of the Applicant's pre-existing condition exposure to the fumes from time to time resulted in an aggravation, acceleration or exacerbation of the Applicant's pre-existing condition is a compensable 'injury' within the meaning of the Workers Compensation Act 1987 (NSW)." 15 It does appear that the Claimant in this Court and/or its privies, conceded that liability under the Workers Compensation Act had to follow from the aggravation of the pre-existing condition. It was no doubt for that reason that his Honour did not find it necessary to determine the case, on the basis of the first stated case which turned on the toxicity of TOCP. 16 The issue that arose before Howie J and in this Court is whether or not it was the intention of the pleadings to rely on TOCP. It does appear that Howie J proceeded on the basis that the presence of TOCP and, perhaps less clearly, its toxicity, was a matter which was sought to be agitated by the Claimant in the Supreme Court as plaintiff under the Statement of Claim. 17 In the course of argument in this Court, Mr P Wood, who appeared for the Claimant, contended that that was not the position taken by the Claimant and that in substance the reference to TOCP in par [6] of the Statement of Claim was surplusage. He said that the position of the Claimant was that it wished to proceed on the basis on which the Compensation Court had made its finding, i.e. that by reason of the presence of fumes in the cabin, the worker had recovered compensation and it was the presence of fumes, without any particular reference to the presence of any toxic element, which constituted the negligence claim that it wished to pursue against the Opponent. 18 It appears clear from the judgment of Howie J that his Honour did not proceed on this basis, although there are some references which indicate that his Honour accepted that the question of toxicity was not in issue. Nevertheless, it does appear that his Honour proceeded on the basis that the presence of TOCP was itself a critical aspect of the case. 19 Mr A Bell, who appears for the Opponent, accepted that the presence of TOCP was the basis of the case that the Opponent mounted below and seeks to argue in this Court as a basis for rejecting the application before this Court. However, it now appears, on the basis of the concessions made by Mr Wood, that the reference to TOCP is not material to the cause of action which the Claimant seeks to pursue in the Supreme Court. 20 On that basis the appropriate order for this Court to make is to set aside the orders made below and strike out the reference in par [6]. What this means for the future conduct of the proceedings is not something that needs to be determined, save as to the issue of costs. The issue has arisen, particularly from the point of view of the Opponent, very much on the run. Mr Bell ought to be given leave to make further submissions on the costs question. Mr Wood has indicated that he has made his submissions but there may be some submissions in reply. 21 Mr Bell has indicated that he would need to take further instructions and consider the position as to whether or not the test in Agar v Hyde was satisfied with respect to the case now sought to be mounted, namely one based on the general presence of fumes, rather than the particular presence of TOCP. Plainly, nothing I have said would prevent the Opponent pursuing such a case by way of Notice of Motion, in accordance with the Rules, in the future. It is appropriate in the circumstances to extend the time for the taking out of such a Notice of Motion. Mr Bell has indicated that 28 days is the appropriate time and I propose the Court make such an order. 22 These proceedings have turned only on the question of the presence of TOCP in the Statement of Claim. Nothing I have said indicates one view or another about the prospects of success with respect to a case based on the presence of fumes generally in the cabin. 23 In my opinion leave should be granted and the appeal allowed. The Court should make an order with respect to par [6] of the Statement of Claim and ought also to reserve the question of costs for further consideration. 24 The orders I propose are: 1 An order granting leave to appeal. Notice of appeal to be filed within seven days. 2 An order the appeal be allowed. 3 An order setting aside the orders of Howie J on 24 March 2005. 4 An order striking out the words "contained tirorthocresyl phosphate which" in par [6] of the Statement of Claim. 5 An order that the Respondent's Notice of Motion filed on 20 April 2004 be dismissed. 6 An order that the time for filing any motion under P 12 r 11 be extended to 28 days from today's date. 7 If within the 28 day period referred to in order 6 the Opponent does not file a Notice of Motion, the Appellant is granted leave to proceed under Pt 11 r 4 of the Uniform Rules. 8 Costs reserved. 25 TOBIAS JA: I agree. 26 McCOLL JA: I also agree. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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