QBE WORKERS COMPENSATION (NSW) LIMITED v BAE SYSTEMS REGIONAL AIRCRAFT LIMITED (FORMERLY BRITISH AEROSPACE COMMERCIAL AIRCRAFT LIMITED) COMPANY (NO 2) [2006] NSWCA 135

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 (NO 2) [2006] NSWCA 135

HEARING DATE(S): 19 May 2006

JUDGMENT DATE: 29 May 2006

JUDGMENT OF: Spigelman CJ at 1; Tobias JA at 17; McColl JA at 18

DECISION: Appellants ordered to pay costs at the trial and appeal.

CATCHWORDS: Practice and Procedure - Costs - Appellant to pay costs - Where basis for proceedings abandoned on appeal

CASES CITED: QBC Workers Compensation (NSW) Limited v BAE Systems Reginal Aircraft Limited [2006] NSWCA 131

PARTIES: QBE WORKERS COMPENSATION (NSW) LIMITED (Claimant) BAE SYSTEMS REGIONAL AIRCRAFT LIMITED (Opponent)

FILE NUMBER(S): CA 40315/05

COUNSEL: P M Wood / D P M O'Dowd (Claimant) A S Bell / C P 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

- 5 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40315/05

SPIGELMAN CJ TOBIAS JA McCOLL JA

Monday 29 May 2006 QBE WORKERS COMPENSATION (NSW) LIMITED v BAE SYSTEMS REGIONAL AIRCRAFT LIMITED (FORMERLY BRITISH AEROSPACE COMMERCIAL AIRCRAFT LIMITED) COMPANY (NO 2) Judgment 1 SPIGELMAN CJ: The Court disposed of the substance of this appeal in an earlier judgment. (See QBE Workers Compensation (NSW) Limited v BAE Systems Regional Aircraft Limited [2006] NSWCA 131.) The question of costs was reserved. 2 As indicated in that judgment, the disposition of the appeal turned on the acceptance by the Appellant of the deletion of a reference to the substance triorthocresyl phosphate ("TOCP") from par [6] of the Statement of Claim. This had the effect of establishing that the Appellant relied in its action under s151Z(1)(d) of the Workers Compensation Act 1987 only upon the general release of fumes into the cabin, and did not rely on the fact that those fumes contained TOCP or on the toxic qualities of TOCP. This stance was consistent with the judgment of Moran J in the Compensation Court of New South Wales upon which the proceedings were based. 3 In this Court, the Respondent accepted that it was an essential feature of its case, as argued before Howie J and on appeal, that the Appellant was relying upon the presence of TOCP as a fundamental aspect of its case in negligence against the Respondent. During the course of oral submissions in this Court, it became apparent that that was not so. The Court accordingly made orders striking out the words from par [6] and otherwise allowed the appeal. 4 The Respondent may, subject to further consideration, pursue an application to strike out the Statement of Claim with respect to the claim in negligence for the release of fumes generally. 5 One matter remained outstanding: the issue of costs at first instance and on appeal. This turned to a substantial degree on how it was that the misunderstanding about the Appellant's case arose. 6 The basis of the misunderstanding was, of course, the inclusion of the words in par [6]. The purpose of the inclusion was emphasised in QBE's written submissions filed in the proceedings before Howie J, which stated: "QBE is not nor should it be bound by the decision of Judge Moran on the issues which shall be ventilated in these proceedings. The fumes were present; the worker suffered injury when working in that environment. Just because no fault was found by Judge Moran, (and no toxicity), does not mean that this Court will arrive at a similar finding." 7 The express reference to "toxicity" was a clear indication that QBE intended to pursue a case based both on the presence of TOCP and its toxic quality. 8 Accordingly, counsel appearing for the Respondent proceeded on that basis in his submissions before Howie J, when the following transpired: "BELL: … The insurer … has not been prepared to make an allegation that the entry of non-toxic fumes into the cabin was a negligent act. HIS HONOUR: But we don't have to worry about that, do we? The statement of claim makes it perfectly clear, as far as I can see at this stage, that the allegation is not just of fumes but of fumes which contained TOCP and which were the result of jet oil or fuel. BELL: That's right. HIS HONOUR: That's a specific allegation made against you. I don't know of any other allegation that there could be on the basis on which your company could be liable." 9 Counsel then appearing for the Appellant did not intervene at this stage, nor at any later stage when the Respondent's understanding of QBE's case was reiterated. Nor did counsel ever indicate, in express terms, that the assumption stated in the course of QBE's submissions before Howie J was in any way wrong. The assumption implicit in this, and other such exchanges, between counsel for the Respondent and his Honour was that the case which the Appellant sought to pursue was not only one based on the general release of fumes but also on the specific release of fumes which contained TOCP. 10 That the written submissions reflected a deliberate choice by QBE was confirmed in the following exchange with counsel for QBE: "HIS HONOUR: But you're going to mount a case differently than you mounted before the Compensation Court? O'DOWD: Not entirely, your Honour. Yes and no is the answer to that. We're entitled to. We're not bound by the findings of the Compensation Court." 11 Furthermore, the ability to reopen the issue of toxicity was asserted by counsel for QBE, when he said: "… if on our instructions, for example, they didn't believe the evidence that they put forward in response to the allegations in the worker's compensation court, that the fumes weren't toxic, that he puts that evidence before them. The court makes a determination based upon what evidence is before them. It doesn't follow necessarily that for all time they should be bound by the position they took in that case. New evidence comes to light. The determination of a court goes a particular way. They're found liable to pay damages. They seek to exercise their right to indemnity under section 151Z. It would be a very serious limitation on the rights of insurers to, in this situation, make an adverse finding." 12 Subsequently, counsel then appearing for the Appellant made express reference to the toxicity: "O'DOWD: … just because something isn't objectively toxic, having regard to what Dr Crank said doesn't necessarily follow that there be no liability on the defendant in respect of the plaintiff's claim because, on the wording of his Honour's judgment there was present in those fumes these chemicals. That's where, if you like, the issue of multichemical sensitivity might be irrelevant but that's more a position that a predisposing factor." (T 31) 13 Counsel returned to this issue: "O'DOWD: … the negligence case is put inter alia on this basis that the defendant, by its act or omission permitted these fumes to enter this cabin. HIS HONOUR: And they were toxic. O'DOWD: And these fumes, whether or not they were toxic, having regard to the opinion of Dr Crank or the conclusions that he draws, and the findings of Judge Moran does not matter. They contained these chemicals and in the subjective case of Miss Chew, they caused her damage and the way that the matter is pleaded, your Honour will see it does not use the term 'toxic' in paragraphs 5 or 6. It talks about the fumes containing the chemicals being permitted to be introduced, and that being the cause of the damage." 14 It can be seen that there were two elements here: the presence of TOCP and its toxicity. The submissions indicate that QBE was relying on the presence of TOCP in the fumes but, on one interpretation, it was not relying on the toxic quality of TOCP. However, the position was far from clear. Such ambiguity as existed was the responsibility of the Appellant. Throughout the submissions before Howie J, QBE maintained a right to advance a case inconsistent with the findings of the Compensation Court. 15 The Appellant did not at trial, in its Notice of Appeal or in its written submissions on appeal, characterise the reference to TOCP as essentially descriptive. It insisted, until questioned from the Bench in the course of oral submissions on appeal, on maintaining its pleading. It was not until the issue was raised in oral submissions on appeal that the Appellant accepted that the words could be struck out. 16 The whole of the proceedings before Howie J and in this Court turned on the presence of words which the Appellant now accepts to have been surplusage. The costs wasted are, in my opinion, entirely due to the Appellant's conduct. The Appellant should pay the costs before Howie J and of the appeal. 17 TOBIAS JA: I agree with Spigelman CJ. 18 McCOLL JA: I agree with Spigelman CJ. **********