Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Allianz Australia Insurance Ltd v Pomfret [2015] NSWCA 4 Hearing dates: 7 August 2014 Decision date: 11 February 2015 Before: Beazley P at [1]; McColl JA at [2]; Basten JA at [3]; Macfarlan JA at [28]; Meagher JA at [29] Decision: 1.Grant leave to the applicant to appeal from the decision and orders of the Dust Diseases Tribunal of New South Wales (Kearns J) of 3 June 2014. 2.Direct that the applicant file and serve a notice of appeal in the form of the draft notice contained in the White Book, within seven days of the date of this order. 3.Appeal dismissed. 4.Applicant/appellant pay the respondent's costs of the application for leave and the appeal. Catchwords: WORKERS COMPENSATION - employer's liability – occupational diseases – when liability of employer taken to arise – construction of s 151AB Workers Compensation Act 1987 (NSW) – whether 'disease' in s 151AB(1)(a) refers only to the injury or harm which is the subject of the claimed liability – where claimed liability is for injury or disease caused by exposure to asbestos fibre during particular period – whether liability taken to arise when worker last employed in that period – distinction between 'divisible' and 'indivisible' harm or injury Legislation Cited: Corporations Act 2001 (Cth) Dust Diseases Tribunal Act 1989 (NSW), s 32(4) Law Reform (Miscellaneous Provisions) Act 1946 (NSW) WorkCover Legislation Amendment Act 1995 (NSW) Workers Compensation Act 1926 (NSW), s 8, s 18(1) Workers Compensation Act 1987 (NSW), s 151AB Workers Compensation Legislation Amendment Act 2004 Workers' Compensation Regulations (NSW) Workers' Compensation (Dust Diseases) Act 1942-1967 (NSW) Workers' Compensation (Dust Diseases) Amendment Act 1967 (NSW), s 6(2)(b)(iii) Workmen's Compensation Act 1916 (NSW), s 12 Cases Cited: Amaca Pty Ltd v Booth [2011] HCA 53; 246 CLR 36 Amaca Pty Ltd v Ellis [2010] HCA 5; 240 CLR 111 Barras v Aberdeen Stream Trawling and Fishing Co Ltd [1933] AC 402 Blatchford v Staddon and Founds [1927] AC 461 Bonnington Castings Ltd v Wardlaw [1956] AC 613 Cartledge v E Jopling & Sons Ltd [1963] AC 758 CIC Workers' Compensation (NSW) Limited v Alcan Australia Limited (1994) 34 NSWLR 169 Davies v ACN 000008195 Pty Ltd (formerly R Fowler Ltd) [2013] NSWDDT 10 Dingle v Associated Newspapers Ltd [1961] 2 QB 162 Energize Fitness Pty Ltd v Vero Insurance Limited [2012] NSWCA 213 FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257 FAI Traders Insurance Co Ltd v HIH Winterthur Workers' Compensation (NSW) Pty Ltd [1999] HCA Trans 250 Gett v Tabet [2009] NSWCA 76; [2009] Aust Torts Rep 82-005; 254 ALR 504 GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; 19 NSWCCR 720 Government Insurance Office of NSW v Colgate Palmolive Pty Ltd [2001] NSWCA 24; 50 NSWLR 729 Holtby v Brigham & Cowan (Hull) Ltd [2000] 3 All ER 421 ICI Australia Operations Pty Limited v WorkCover Authority of New South Wales [2004] NSWCA 55; 60 NSWLR 18 March v Stramare (E&MH) Pty Ltd [1991] HCA 12 ; 171 CLR 506 MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289 Orica Limited v CGU Insurance Limited [2003] NSWCA 331; 59 NSWLR 14 QBE Insurance (Australia) Limited v Dust Diseases Tribunal of NSW [2011] NSWCA 421 Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229 Smith v Mann [1932] HCA 30; 47 CLR 426 Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269 Thompson v Smiths Shiprepairers (North Shields) Ltd [1984] 1 QB 405 University of NSW v AAI Ltd [2014] NSWCA 153 Wakelin v London & South Western Railway Co (1886) 12 App Cas 41 Wardley Australia Limited v Western Australia [1992] HCA 55; 174 CLR 514 WorkCover Authority of New South Wales v Chubb Australia Limited [2000] NSWCA 221; 20 NSWLCCR 614 Wunderlich Ltd v Manufacturers Mutual Insurance Ltd [1981] 2 NSWLR 678 Texts Cited: Malcolm Clarke, The Law of Insurance Contracts (5th ed, 2006, informa) Pearce and Geddes, Statutory Interpretation in Australia (7th ed, 2011) at [3.44]-[3.49] Category: Principal judgment Parties: Allianz Australia Insurance Ltd (Appellant) Wade Alfred Pomfret (First Respondent) Wallaby Grip (BAE) Pty Limited (in liquidation) (Second Respondent) Representation: Counsel: D Hooke SC with D Toomey (Appellant) B M Toomey QC with A McSpedden (First Respondent) Solicitors: Rankin Ellison Lawyers (Appellant) Turner Freeman Lawyers (First Respondent) K & L Gates (Second Respondent) File Number(s): 2014/187360 Decision under appeal Court or tribunal: Dust Diseases Tribunal of NSW Date of Decision: 03 June 2013 Before: Kearns DCJ File Number(s): DDT No. 49 of 2014 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] The worker, Mr Pomfret, was employed by Ceeco Products Pty Limited ("Ceeco") in 1974 and again from early 1976 until 23 December 1978. During these periods, he was exposed to asbestos dust and fibre. Up until 31 January 1978, a contract of insurance existed between Allianz Australia Insurance Ltd ("Allianz"), or its predecessor, and Ceeco. By this contract Ceeco was indemnified against any common law liability as employer arising during the policy period. Ceeco has been deregistered. Mr Pomfret brought proceedings directly against Allianz, as Ceeco's insurer, to recover compensation for asbestosis and asbestos related pleural diseases. Those proceedings were brought to enforce a charge under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). That claim was for injury, being asbestosis, caused by exposure to fibre and dust whilst in his employment by Ceeco prior to 31 January 1978. Section 151AB(1) Workers Compensation Act 1987 (NSW) deems an employer's liability for an occupational disease to arise 'when the worker was last employed by the employer in employment to the nature of which the disease was due'. Allianz contended that the relevant 'disease' was asbestosis and that it was not liable to indemnify Ceeco because Mr Pomfret continued to be employed until 23 December 1978. When Mr Pomfret was 'last employed' in conditions to the nature of which that occupational disease was due, it was not 'on risk' at that time. Kearns J in the Dust Diseases Tribunal held that there was an arguable case that Allianz was liable to indemnify Ceeco in respect of its liability as Mr Pomfret's employer. Allianz sought leave to appeal that decision. The issues for determination on appeal were: (i) Whether leave should be granted to appeal the decision of Kearns J in the Dust Diseases Tribunal of NSW; (ii) Whether, in construing s 151AB(1)(a) Workers Compensation Act 1987 (NSW), 'disease' refers only to the harm or injury for which liability is claimed or to the whole of the occupational disease contracted by the employee; and (iii) Whether the primary judge correctly concluded that there was an arguable case that Allianz was liable to indemnify Ceeco in respect of Mr Pomfret's claim. The court held, granting leave to appeal and dismissing the appeal: In relation to (i) (Per Meagher JA, Beazley P, McColl, Basten and Macfarlan JJA agreeing) Leave to appeal should be granted because the question as to the construction of s 151AB(1)(a) Workers Compensation Act 1987 (NSW) is of general application and importance, and has also arisen in the appeal CGU Insurance Ltd v Davies [2015] NSWCA 5: [1], [2], [27], [28], [32]. In relation to (ii) (Per Meagher JA, Beazley P, McColl, Basten and Macfarlan JJA agreeing) The purpose of s 151AB is to identify the insurer liable to indemnify an employer liable for an occupational disease of gradual onset contracted over a period of employment involving exposure to the relevant harmful conditions: [1], [2], [10], [28], [54]-[57], [62] (Per Meagher JA, Beazley P, McColl, Basten and Macfarlan JJA agreeing) The "disease" referred to in s 151AB(1)(a) is the "occupational disease" for which the employer is liable in damages. That liability may only be for injury or harm caused by a particular period of exposure: [1], [2], [18], [28], [84]. MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289; FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257 applied. (Per Meagher JA, Beazley P, McColl, Basten and Macfarlan JJA agreeing) Irrespective of whether the employee claims that the employer is liable for all harm or injury caused by an occupational disease or only for that resulting from exposure during a particular period, it must be established that the period of exposure caused or substantially contributed to the harm or injury which is the subject of the claim: [1], [2], [23], [28], [58] Wakelin v London & South Western Railway Co (1886) 12 App Cas 41; Bonnington Castings Ltd v Wardlaw [1956] AC 613; March v Stramare (E&MH) Pty Ltd [1991] HCA 12; 171 CLR 506; Amaca Pty Ltd v Ellis [2010] HCA 5; 240 CLR 111; Amaca Pty Ltd v Booth [2011] HCA 53; 246 CLR 36 applied. (Per Meagher JA, Beazley P, McColl and Macfarlan JJA agreeing) Whether an occupational disease may be the subject of liability limited to injury or harm caused by a particular period of exposure is a question of fact. Injuries in relation to which such a claim may be made are described as 'divisible', as opposed to 'indivisible'. An injury which is a dust disease may be divisible if the progress and severity of the disease are related to the quantity of the harmful agent ingested such that it is possible to say that some injury arose from a particular period of exposure: [1], [2], [28], [48], [78], [85]. Dingle v Associated Newspapers Ltd [1961] 2 QB 162; WorkCover Authority of NSW v Chubb Australia Limited [2000] NSWCA 221; 20 NSWLCCR 614 applied. QBE Insurance (Australia) Limited v Dust Diseases Tribunal of NSW [2011] NSWCA 421 considered. Thompson v Smith Ship Repairers (North Shields) Ltd [1984] 1 QB 405; Holtby v Brigham & Cowan (Hull) Ltd [2000] 3 All ER 421; Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229 referred to. (Per Basten JA) If the harm is 'indivisible', the shorter period may render causation more difficult to establish; if the harm is 'divisible' causation may be established, but the degree of harm may be limited. Section 151AB is not concerned with these questions: [23]-[26] WorkCover Authority of NSW v Chubb Australia Limited [2000] NSWCA 221; 20 NSWLCCR 614 considered but not applied. In relation to (iii) (Per Meagher JA, Beazley P, McColl, Basten and Macfarlan JJA agreeing) The primary judge correctly concluded that there was an arguable case that Allianz was liable to indemnify Ceeco in respect of the claimed liability to the worker, Mr Pomfret: [1], [2], [27], [28], [88]. Judgment 1. BEAZLEY P: I have had the advantage of reading in draft the reasons of Meagher JA. I agree with his Honour's reasons and the orders he proposes. 2. McCOLL JA: I agree with Meagher JA's reasons and the orders his Honour proposes. 3. BASTEN JA: The applicant, Allianz Australia Insurance Ltd, provided a statutory policy insuring Mr Pomfret's employer, Ceeco Products Pty Ltd, against liability for damages arising from his employment. Allianz was "on risk" until 31 January 1978 (that is there was a policy of insurance issued to the plaintiff's employer, responding to a claim for damages by the plaintiff, in force until that date). During that period the plaintiff was exposed to asbestos dust. The plaintiff remained in that employment after 31 January 1978, until 23 December 1978. By the time the illness became symptomatic, Ceeco had long since been deregistered, but the plaintiff proceeded directly against Allianz. 4. The further amended statement of claim dated 3 June 2014 stated that the plaintiff made "no allegations of negligence, breach of contract or breach of statutory duties and does not seek damages against [Allianz] in respect of any exposure to asbestos that the plaintiff may have had during employment with Ceeco after 31 January 1978". Nevertheless such exposure was pleaded with respect to the second defendant (Wallaby Grip, which was the manufacturer of the asbestos gloves which produced the dust) throughout the period of employment with Ceeco Pty Ltd. The employer's liability is "taken to have arisen" at the date "when the worker was last employed by the employer in employment to the nature of which the disease was due", within the terms of s 151AB(1)(a) of the Workers Compensation Act 1987 (NSW). Accordingly, Allianz submitted, as there was no policy of insurance issued by it to Ceeco in force when the plaintiff was last so employed, Allianz' earlier policy did not respond to that liability. 5. Whether that submission should be accepted depends upon the proper construction of s 151AB(1)(a) read as a whole. The section now provides: 151AB Special insurance provisions relating to occupational diseases (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 purposes of any policy of insurance obtained by the employer: (a) the liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due …. 1. The precondition to the operation of (a) has two limbs, namely (a) liability of the employer for damages, (b) which damages were "for an occupational disease contracted by [the plaintiff]". It is that liability which is taken to have arisen at the time specified in paragraph (a). 2. The plaintiff's "disease" was variously identified in the pleading as asbestosis, asbestosis related pleural disease and asbestos related pleural plaques. The nature of the employment giving rise to those conditions was said to be exposure to airborne asbestos dust, without protective equipment. The issue sought to be raised by the applicant was whether the date on which the plaintiff was last employed in such employment was (as Allianz alleged) the last day of his employment with Ceeco, the conditions allegedly continuing throughout that time of employment, or (as the plaintiff contended) the last day on which the liability pleaded by the plaintiff, being a date on which he was so employed, arose. 3. It may be accepted that a literal reading of the words in paragraph (a) support Allianz' contention. However, if the words are read in their context and bearing in mind the nature of the subject matter with which they deal, it is almost inevitable that some limitation must be placed on that meaning. Thus, the conditions may have continued unabated throughout the relevant period of employment, but, for the period after the end of the claim, there may have been sufficient steps taken by the employer (for example, by providing protective equipment and directing that it be used) that the exposure thereafter would not be tortious. It seems inherently unlikely that the legislature intended to shift liability from the insurer at the time of the tortious conduct onto the insurer at a time when the conduct was no longer tortious: Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269 at 272 (Jordan CJ); CIC Workers Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 at 176G (Gleeson CJ). However, Allianz submitted that the correct reading of paragraph (a) was that it referred to the point where the plaintiff was last "exposed to risk" in the course of his employment, not when he was last subjected to tortious events. 4. The issue is formulated in that way because the statutory policy has, at all relevant times, been a liability based policy. (Although labels can be misleading, the statutory policy is neither an occurrence based, nor a claims made, policy.) It is for that reason s 151AB works by deeming a point at which liability is taken to have arisen. The result is that, within the terms of the statutory policy in force in 1978, during the period it was in force, it covered the employer if "the employer shall be liable … to pay compensation … or to pay any other amount … in respect of his liability independently of the Act for any injury to any [employee]". (The terms of the statutory policy have not remained unchanged.) 5. Given that the purpose of the provision is to identify "from amongst 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 employer's liability to a worker", the results, as between insurers, may be somewhat arbitrary: CIC v Alcan at 171 (Gleeson CJ). On the other hand, it is not appropriate to give the section a construction which would achieve a result so arbitrary so as impose liability on an insurer which on any view was not liable. 6. Counsel for the plaintiff made the further point that s 151AB was not intended to limit the relief or the forensic choices available to an injured worker to sue for damages. That may be accepted: however, it is also true that the section was not intended to remove from an employer its right of indemnity under a statutory policy against which it might claim. It would be surprising, therefore, if the section, which has effect "for the purposes of any policy of insurance", was to render the employer uninsured although its liability was referable only to a period for which it had insurance cover. 7. The means to avoid these results lies in a construction of the provision which treats the liability (as determined in those proceedings) to have arisen when the worker was last exposed to "tortious dust" (to adapt the language of Bonnington Castings Ltd v Wardlaw [1956] AC 613) on which liability was based. To adopt the alternative approach would be to invite litigation at the instance of the insurer to prove that the employer was liable at some other time when the insurer was not "on risk", being a time at which the plaintiff was not seeking to prove that the employer was so liable. 8. The principal argument against that construction is that the plaintiff can "manipulate" the pleadings so as to restrict his or her claim to a period which will attract known insurance cover or a solvent employer. If accepted that submission would invite further potential litigation, as to whether the plaintiff chose the end point of the period for good forensic reasons (other than the existence of a solvent or insured defendant) or only because there was then a solvent or insured defendant. In most circumstances, a defendant cannot complain if the plaintiff seeks to sue it because it is solvent, when others may be jointly or severally liable, either as to the same damages or for further damages. Rather, the question is whether the defendant who is sued is liable. If the plaintiff does not join all potentially liable parties, he or she may be at risk of failure. Similarly, the defendant cannot complain that the plaintiff has elected to proceed on one cause of action when others might be thought available. That is, a defendant cannot seek to have the proceedings dismissed on the grounds of a selective approach by the plaintiff. There is nothing in the legislative scheme embodied in s 151AB to suggest that a different approach is required with respect to that provision. 9. As the applicant recognised, the construction adopted above is consistent with that adopted in earlier decisions of this Court. Amendments to the workers' compensation legislation commencing in 1987 imposed significant constraints on recovery of common law damages. On occasion, claims were made limited to injuries received before the commencement of the new legislation (at 4pm on 30 June 1987). One such case was MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289. In that case, Gleeson CJ (with whom Meagher and Powell JJA agreed) noted at 291-292: "The purpose of the amendment to the plaintiff's statement of claim was to ensure that his claim for damages would be dealt with wholly on the basis of his common law rights as they had accrued prior to 30 June 1987, and to avoid any consequence that might otherwise have flowed from the 1987 and 1989 legislation. Gallen ADCJ dealt with the case upon the basis that the amendment was effective to achieve that result, and it is common ground on this appeal that his Honour was correct to do so." 1. This proposition was said to demonstrate that the issue now sought to be raised did not arise in MMI v Baker. No doubt the issue was not determinative of the outcome, which rested on other points, but the statement set out above is ambiguous. It is unclear whether what was said to have been concededly effective was the language of the pleading or the use of a pleading as a mechanism to restrict the scope of the claim and thus avoid the effect of the transitional provisions, the operation of s 151AB or both. 2. The issue arose more directly in FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257. That case involved a claim for damages for industrial deafness, where exposure was continuing after the date of the claim. Handley JA (with whom Sheppard and Fitzgerald AJJA agreed) noted that an attempt to engage s 151AB encountered the difficulty that there was "only ever one insurer contractually obliged to indemnify the employer in respect of the whole liability in question": MMI at 294. After referring to that passage, Handley JA continued at 260: "This decision, from which the High Court refused special leave to appeal, negatives, in a case such as this, the liability of any insurer which only came on risk after the expiration of the period during which the liability was incurred." 1. It is clear from this language that reference to "the liability" was a reference to the liability asserted (and established) in the proceedings. After referring to the terms which are now found in paragraph (a), Handley JA continued at 260-261: "This liability is of course for damages caused by exposure to industrial noise up to 30 June 1987. In this case the 'disease' when last referred to in the section is not industrial deafness simpliciter but industrial deafness caused by noise exposure up to 30 June 1987. This is the same 'disease' as that first referred to, namely that for which Caltex is liable to pay damages. … If the plaintiff had persisted in his claim to recover damages for industrial deafness caused by his noise exposure after 30 June 1987, another insurer may have become liable for the whole of those damages. However in all probability the plaintiff would not have recovered any damages for his noise exposure after June 1987 because of the restrictions of Div 3 of Part 5 of the Act …. If so the only damages awarded would have been for the period up to 30 June 1987 and the appellant would have been the insurer liable." 1. The construction of the statute adopted in FAI v HIH is consistent with that proposed above. Because both general principles of statutory construction and authority support such an approach, it should be adopted. 2. To the extent necessary, the applicant sought to have this Court reconsider the reasoning in FAI. As held in Gett v Tabet [2009] NSWCA 76; [2009] Aust Torts Rep 82-005; 254 ALR 504 at [301] this Court should only depart from its own earlier authority for "compelling reasons". The applicant's submissions did not identify what practical or jurisprudential considerations constituted compelling reasons in relation to this legislation. 3. Counsel for the respondents submitted that there were significant reasons not to adopt a different approach. First, in dismissing an application for special leave to appeal from FAI, Gummow and Callinan JJ did not call on the respondent, but declared that the decision of the Court of Appeal was "correct": FAI Traders Insurance Co Ltd v HIH Winterthur Workers' Compensation (NSW) Pty Ltd [1999] HCA Trans 250. Secondly, attention was drawn to the fact that s 151AB has been recast since it was inserted in 1991, but not so as to demonstrate an intention to vary the effect of the provision considered in FAI. Although it may not always be plausible to assume that the legislature understood and accepted the construction of particular legislation provided by judgments of superior courts prior to amendment, this is an area where there are large institutional interests (namely of insurers) at stake and it may more readily be inferred that a failure to change the language demonstrated a legislative intention to adopt the established meaning: Barras v Aberdeen Stream Trawling and Fishing Co Ltd [1933] AC 402 at 446 (Lord Macmillan) and other authorities referred to by Pearce and Geddes, Statutory Interpretation in Australia (7th ed, 2011) at [3.44]-[3.49]. 4. Counsel for the applicant, by way of response, noted that the form of the present provision reflected earlier legislation and not the form considered in FAI. That is partly true, although the present structure does not directly reflect the earlier legislation, namely s 18(6B) of the Workers' Compensation Act 1926 (NSW). On the other hand, the critical language is sufficiently similar to reveal no intention to vary its operation. The submissions for the respondent should be accepted. 5. On either view, no compelling reason is shown to adopt a different approach from that discussed above. It follows that the application must be dismissed. 6. It is not necessary for the purposes of this case to consider whether different considerations apply as between "divisible" and "indivisible" conditions. As explained in Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229, a divisible condition arises where an exogenous agent "operates cumulatively first to cause the disease and then to progress the disease", by contrast with an indivisible condition which is caused by a single asbestos fibre or mosquito bite, or even a dose-related condition where ingestion of an exogenous agent operates cumulatively up to a threshold when the disease is triggered, but the severity of the disease, once triggered, is not increased by the degree of exposure: at [12]-[14] (Lord Phillips, President). Section 151AB(1) is not concerned with the problems of causation faced by a plaintiff. Those problems will arise whether or not the plaintiff relies upon the whole of the period of exposure in the course of employment by the defendant, or whether the plaintiff limits the period on which he or she seeks to rely. If the harm is "indivisible", the shorter period may render causation more difficult to establish; if the harm is "divisible" causation may be established, but the degree of harm may be limited. Section 151AB is not concerned with those questions, but merely with the point in time at which liability is taken to have arisen. 7. In this context, attention was drawn to the decision of this Court in Workcover Authority of New South Wales v Chubb Australia Ltd [2000] NSWCA 221; 20 NSWCCR 614. That case involved the determination of cross-claims by the employer against various insurers. In determining the plaintiff's claim, the Dust Diseases Tribunal had found that the last exposure to asbestos occurred in 1978. The plaintiff's claim had confined the period of employment relied upon to that ending on 31 December 1984, although his employment had continued until 1988: at [11]. In dealing with the cross-claim, Stein JA (Powell JA and Foster AJA agreeing) stated at [34]: "It follows that his Honour was not required to foreclose his inquiry at 1978. Rather he was bound to examine the evidence of any exposure to risk of contracting mesothelioma after that date. Indeed, after 31 December 1984, being the last day alleged in the plaintiff's amended Statement of Claim. In my opinion, his Honour should have examined any evidence for exposure to risk up until the plaintiff's retirement in 1988. The fact that the plaintiff's claim was confined to 1984 does not mean that an examination of the period to the plaintiff's retirement for any exposure to risk is precluded on the cross-claim." 1. Why the cross-claim was required to be determined on the basis of different evidence and for a period which was not the subject of the finding of liability is not entirely clear. The Court in Chubb treated the fact that mesothelioma was an indivisible condition as of critical significance in distinguishing cases such as MMI v Baker, which involved divisible conditions (industrial deafness). The Court said that Baker, which dealt with a claim made in an artificially confined period, did not apply to the case in hand: at [32]. Why that was so was not clearly explained. Reference was also made in Chubb to a passage in GIO General Ltd v ABB Installation & Service Pty Ltd [2000] NSWCA 118; 19 NSWCCR 720 at [37], distinguishing "actual exposure" from exposure "to a risk of contracting the disease". That point is not presently relevant. 2. To the extent that a principle can be derived from Chubb, it may not apply to a claim made by the worker against an insurer. If it does, I would not accept the attempted point of distinction from MMI v Baker: on that issue Chubb should not be followed. 3. For these reasons I agree with the orders proposed by Meagher JA. Subject to the foregoing, I also agree with his reasons. 4. MACFARLAN JA: I agree with Meagher JA. 5. MEAGHER JA: This application for leave to appeal is concerned with the construction and application of s 151AB(1)(a) of the Workers Compensation Act 1987 (NSW) (1987 Act) in relation to a worker's common law claim for damages for asbestosis. 6. The applicant insurer (Allianz) seeks leave under s 32(4) of the Dust Diseases Tribunal Act 1989 (NSW) to appeal from the interlocutory decision of Kearns J in Pomfret v Allianz Australia Insurance Ltd (Dust Diseases Tribunal of NSW, 3 June 2014, unrep). By that decision the respondent worker (Mr Pomfret) was granted leave pursuant to s 6(4) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) to enforce directly against Allianz his claim for common law damages against its insured, Ceeco Products Pty Limited (Ceeco). 7. Allianz's application for leave was heard with the appeal from the decision of Kearns J in CGU Insurance Limited v Davies [2015] NSWCA 5. That appeal raises the same issues of construction in relation to a different worker's common law claim for damages for silicosis. 8. Because the questions of construction concern a provision which is of general application and importance and also arise in the appeal by CGU Insurance Ltd (CGU), although in slightly different circumstances, leave to appeal should be granted. Each appeal is limited to questions of law: s 32(1). The respondent worker's claim for damages 1. The respondent was employed by Ceeco in 1974 and from early 1976 until 23 December 1978 as a dye setter and operator and was exposed to asbestos in each of those periods. Allianz was Ceeco's workers' compensation insurer, or is liable as the successor of that insurer, for those periods but only up to 31 January 1978. Ceeco's workers' compensation insurer between that date and 23 December 1978, if there was one, has not been identified. Ceeco has been deregistered and accordingly has ceased to exist (Corporations Act 2001 (Cth), s 601AD(1)). 2. On an application for leave under s 6(4) an applicant must demonstrate an arguable case of liability as against the insured (Ceeco) and an arguable case that the insurer's policy responds to that liability: see the decision of this Court in Energize Fitness Pty Ltd v Vero Insurance Limited [2012] NSWCA 213 at [52] – [56] per Campbell JA. 3. The claim against Allianz is made by the further amended statement of claim which the primary judge gave the respondent leave to file at the same time as leave was granted to him to proceed against Allianz. The principal amendment made by that pleading was to limit the allegations of negligence, breach of contract and breach of statutory duty against Ceeco to a period of employment and exposure which ended on 31 January 1978, notwithstanding that the respondent continued to be employed by Ceeco, and exposed to asbestos dust in that employment, until 23 December 1978. 4. That pleading includes the following allegations: 2B From a date in about early 1974 to a date in about late 1974 and from a date in about early 1976 to 31 January 1978 the Plaintiff was employed by [Ceeco] as a dye setter and was exposed to asbestos from regularly handling and wearing asbestos gloves through the course of his employment at Ceeco's factory located at Belmore, New South Wales. As a consequence, the Plaintiff was exposed to and inhaled asbestos dust and fibre. 2C At all material times there existed between Ceeco and [Allianz] a contract of insurance whereby [Allianz] agreed upon the payment of certain premiums to indemnify against liability for damages for Ceeco in respect of any claim for damages arising independently of the Workers Compensation Act 1926. [Reference is then made to the claim to relief under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946] 2D The Plaintiff makes no allegations of negligence, breach of contract or breach of statutory duties and does not seek damages against [Allianz] in respect of any exposure to asbestos that the Plaintiff may have had during employment with Ceeco after 31 January 1978. … 7 As a consequence of the Plaintiff's exposure to asbestos whilst employed by [Chariot another and subsequent employer] and Ceeco and from products containing asbestos manufactured by [Wallaby Grip, a supplier of asbestos products to Chariot and Ceeco], the Plaintiff has contracted asbestosis, asbestos related pleural disease and asbestos related pleural plaques and has suffered pain, injury, loss and damage. 8 The cause of the Plaintiff's pain, injury, loss and damage was the negligence of the Defendants and breaches by Chariot and Ceeco of contractual obligations owed to the Plaintiff and breaches of statutory duty owed by Chariot and Ceeco. 1. In oral argument, senior counsel for the respondent emphasised that, as para 2D above makes clear, the harm or injury for which his client sought damages was that resulting from exposure to asbestos during the pleaded period and did not include any harm or injury resulting from exposure after that period. The terms of the workers compensation policy 1. It is common ground that the contract of insurance by or under which Allianz was liable to indemnify Ceeco took the form of the compulsory employer's indemnity policy which the latter was required to obtain by s 18(1) of the Workers Compensation Act 1926 (NSW) (1926 Act). Regulation 1 of the Workers' Compensation Regulations (NSW) as applicable in 1978 and 1979 required that the policy contain the following promises by the insurer: NOW THIS POLICY WITNESSETH that in consideration of the payment by the Employer to the Insurer of the above-mentioned Premium … IF, [in the policy period], the Employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such Employer or to pay any other amount not exceeding one hundred thousand dollars in respect of his liability independently of the Act for any injury to any such person, THEN, and in every such case the Insurer will indemnify the Employer against all such sums for which the Employer shall be so liable; … PROVIDED … AND it is hereby further agreed that the above indemnity is made subject to the due and proper observance and fulfilment by the Employer of the conditions hereunder, and the Insurer shall be (a) directly liable to any worker and in the event of his death, to his dependants, to pay the compensation or other amount for which the Employer is liable and in respect of which the Employer is indemnified under this Policy; and (b) bound by and subject to any judgment, order, decision or award given or made against the Employer under the provisions of the Act or in respect of his liability independently of the Act and in respect of which the Employer is indemnified under this Policy … 1. At this point, three matters can be noted about the terms of that insurance. First, it indemnifies against any common law liability of the employer (described as "liability independently of the Act") which accrues within the policy period. In Orica Limited v CGU Insurance Limited [2003] NSWCA 331; 59 NSWLR 14, this Court (Spigelman CJ and Mason P, Santow JA dissenting) held that it is the liability, rather than any occurrence or event giving rise to it, which must happen in the policy period: at [28], [32], [63], [70]; cf University of NSW v AAI Limited [2014] NSWCA 153 at [51]. Secondly, that liability must be for any "injury" which, as used in the policy, includes a dust disease as defined in the Workers' Compensation (Dust Diseases) Act 1942 (NSW), as amended in 1967, and the aggravation, acceleration, exacerbation or deterioration of such a disease: 1926 Act, s 18(1). Those diseases include asbestosis and silicosis. The effect of these provisions was to require an employer whose workers were exposed to dust diseases to insure its common law liability in respect of those diseases, notwithstanding that it had no liability under the 1926 Act to pay workers' compensation in relation to them because they were excluded from the definition of "injury" in s 6(1) of that Act. Thirdly, the terms of the policy provided, as s 18(3)(a) of the 1926 Act required, that the insurer was liable to pay the amount of the indemnity to the worker or to his or her dependants. Section 151AB of the 1987 Act 1. This section applies to an employer's liability arising before or after 30 June 1987 and to any policy of insurance issued before or after that date: s 151AB(5). It applies only in relation to liabilities for damages for occupational diseases which are defined in s 151AB(6) to mean "a disease of such a nature as to be contracted by a gradual process" and to include a dust disease as defined in the Workers' Compensation (Dust Diseases) Act 1942, a total or partial loss of sight which is of gradual onset and the condition known as "boilermaker's deafness". These diseases, because they are of gradual onset, usually involve difficult factual and legal questions as to when liability arises. They relevantly include asbestosis, asbestos related pleural diseases and silicosis. They also include mesothelioma. The definition of "dust disease" in the 1942 Act, unlike that in s 18(1) of the 1926 Act, does not include the aggravation, acceleration, or deterioration of these diseases. 2. As the liability of Ceeco which the respondent seeks to enforce directly against Allianz is for damages for asbestosis and asbestos related pleural diseases, the provisions of s 151AB apply to the policies of insurance under which Allianz is liable. Allianz says that the effect of the application of s 151AB(1)(a) in the circumstances described above is to deem Ceeco's liability to the respondent to have arisen after 31 January 1978, at a time when neither it nor its predecessor was on risk. 3. The legislative history of that provision, and of similar provisions applying in relation to the liability to pay workers' compensation for diseases of gradual onset, has been described, in varying degrees of detail, by Gleeson CJ in CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 at 173 – 175; McColl JA in ICI Australia Operations Pty Limited v WorkCover Authority of New South Wales [2004] NSWCA 55; 60 NSWLR 18 at [97] – [113] and, more recently, Basten JA in University of NSW v AAI Limited at [14] – [16]. 4. In its current form, s 151AB provides: 151AB Special insurance provisions relating to occupational diseases 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 purposes of any policy of insurance obtained by the employer: 1. the liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due, subject to paragraph (b), 2. if the worker was employed by the employer in employment to the nature of which the disease was due both before and after the relevant commencement, the liability is taken to have arisen both when the worker was last employed by the employer in employment to the nature of which the disease was due before the relevant commencement and when the worker was last employed by the employer in employment to the nature of which the disease was due after the relevant commencement. 1. In a case in which subsection (1)(b) applies, 2 insurers will be liable under policies of insurance to indemnify the employer (or pay damages to the worker) and the following provisions apply with respect to those insurers (referred to in this subsection as the responsible insurers): 1. Of the responsible insurers, the one that is the insurer in respect of the employer's liability that arose after the relevant commencement is to be the insurer primarily responsible for the claim. 2. The responsible insurers can however agree as to which of them is to be primarily responsible for the claim or the court can order that one of them is to be the insurer primarily responsible, and any such agreement or order overrides paragraph (a). 3. The insurer who is primarily responsible for the claim is to act for both the responsible insurers in respect of any claim for the damages and has sole liability for the claim (that is, it is to indemnify the employer for the full amount of the damages or is to pay the full amount of damages to the worker, without any right to a contribution from any other insurer, except as provided by paragraph (d)). 4. The insurer who is primarily responsible is entitled to recover from the other responsible insurer half of the amount paid as damages to the worker, half of the amount paid in respect of the worker's legal costs and half of such reasonable amount as the insurer primarily responsible may have incurred in respect of its own legal expenses in the matter. 1. If 2 or more employers are jointly or severally liable for damages referred to in this section, the provisions of this section apply separately to each employer. 2. This section does not affect the amount of damages recoverable by a worker. 3. 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. 1. The reference to "relevant commencement" in subs (1)(b) is to 4 pm on 30 June 1987: s 151AB(6). Neither that subsection nor subs (2) is engaged in the present case because the relevant employment and exposure occurred before 30 June 1987. The provisions of subs (2) remain relevant, however, to the question of construction which arises in relation to subs (1)(a). That is so because those provisions contemplate a "claim" for damages being made by the worker and that the insurer "primarily responsible" for indemnifying the employer in respect of that claimed liability may be identified and act "in respect of" that claim before it has been finally determined or resolved. Allianz's argument and the decision of the primary judge 1. Allianz submits that the inquiry called for by s 151AB(1)(a) as to "when the worker was last employed by the employer in employment to the nature of which the disease was due" is not limited to the particular injury or harm constituted by the disease for which the worker seeks to hold the employer liable. On the respondent's case, that is injury or harm caused only by exposure to asbestos during periods of employment ending on 31 January 1978. Allianz contends that the "disease" referred to in subs (1)(a) is the whole of any relevant occupational disease contracted by the worker and includes in relation to the respondent any injury or harm due to asbestosis or asbestos related pleural disease caused by exposure after 31 January 1978. As it was not on risk at that later time, Allianz says that there is no arguable case that it is liable to indemnify Ceeco. That is because, by s 151AB(1)(a), Ceeco's liability to the respondent is taken to have arisen after 31 January 1978. For that reason Allianz says that the respondent's application for leave to enforce the charge arising under s 6(1) should have been refused. 2. The primary judge rejected that argument holding that s 151AB(1) is directed to determining the time at which an employer's liability for damages for an occupational disease is to be taken to have arisen. For that reason it must be read as concerned only with the period or periods of employment that could have caused the injury or "disease" which is the subject of the relevant liability: [6]. 3. In so concluding, his Honour referred to and relied upon his decision in Davies v ACN 000008195 Pty Ltd (formerly R Fowler Ltd) [2013] NSWDDT 10, which is the subject of CGU's appeal. It was not contested in that case that the worker, who had contracted silicosis and aggravated silicosis, known as progressive massive fibrosis, could claim damages for injury from that disease caused by a specific period of exposure. 4. Whether an occupational disease may be the subject of a claim limited to disease due to a particular period of exposure is a question of fact which depends upon the scientific and medical evidence as to the way in which the disease is caused and progresses: Dingle v Associated Newspapers Ltd [1961] 2 QB 162 at 189. Injuries consisting of diseases in relation to which such a claim may be made are described as "divisible", as opposed to "indivisible". The sense in which these descriptors are used in this context is explained in a series of English decisions including Dingle v Associated Newspapers Ltd at 188 – 189; Thompson v Smiths Shiprepairers (North Shields) Ltd [1984] 1 QB 405 at 437 – 444; Holtby v Brigham & Cowan (Hull) Ltd [2000] 3 All ER 421 at [20] – [23]; and Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10; [2011] 2 AC 229 at [12] – [17]. 5. An injury which is a dust disease may be divisible if the progress and severity of the disease are related to the quantity of the harmful agent that is ingested. Because of that relationship, a claimant may be entitled to recover damages for the injury constituted by disease caused by exposure during a particular period. As Lord Phillips notes in Sienkiewicz v Greif at [17], in that way responsibility for a divisible disease is apportioned "so that an individual defendant is liable for no more than his share of the disease". 6. In applying s 151AB(1) in Davies v R Fowler Ltd the primary judge held that the time that the worker was last employed in employment to the nature of which his silicosis was due was the end of the period of exposure for which the employer was claimed to be liable. His Honour applied the same reasoning to the respondent's claim against Ceeco and Allianz, on the basis, not disputed on appeal, that asbestosis and asbestos related pleural diseases also are "divisible" diseases able to be the subject of claims for damages for injury caused by a particular period of exposure. Discussion 1. The physiological mechanisms that produce diseases contracted by a gradual process involve the ingestion or inhalation over time of an outside agent, such as asbestos fibre or silica dust, or exposure over time to harmful working conditions, such as excessive noise. The manner in which these diseases are contracted and progress varies from disease to disease. In some cases there is a dose threshold which must be reached before the disease starts and then becomes symptomatic: Sienkiewicz v Greif at [13] – [14]. 2. In its argument before this Court, Allianz does not rely on there being any distinction between the way s 151AB(1) applies to occupational diseases, whether divisible or indivisible. It says that the "disease" referred to in subs (1)(a) is the "occupational disease contracted by" the worker that is referred to in the opening words of the subsection. What is described is a single occupational disease and that remains so irrespective of whether the damages for which the employer is liable are for the whole or only part of that disease, and in the latter case, only for the part caused or capable of being caused by a particular period of exposure. 3. The resolution of this question of construction depends primarily on the language of these provisions, understood in their immediate context, and "in the light" of the purpose of the current form of s 151AB, which is made clear in the earlier provisions upon which it is based. 4. In the context of workers' compensation legislation, it has long been recognised that diseases contracted by a gradual process present particular difficulties for identifying, from amongst a number of employers and insurers, the employer and insurer responsible, either for payment of workers' compensation or for satisfying any common law liability. That is because the worker may have been exposed to the same disease causing conditions for long periods of time and in successive employments with different employers. 5. When making the same observation, Gleeson CJ in CIC Workers' Compensation v Alcan Australia at 173-174 cited Viscount Sumner's explanation of the need for legislative intervention in relation to such diseases given in Blatchford v Staddon and Founds [1927] AC 461 at 467: Their peculiar character made much more extensive provision necessary. They come on gradually; their first steps may not be perceptible for some time; their rate of progress may vary widely; they have various ups and downs. … 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 meeting this defence by proof that it actually arose during and out of his employment by the respondent he might well find the difficulty insuperable. 1. The first provisions enacted in New South Wales addressing the difficulties presented by diseases of gradual onset in the context of the liability for workers' compensation were s 12 of the Workmen's Compensation Act 1916 (NSW) and, later, ss 7(4) and (5) of the 1926 Act. Those provisions were based on s 8 of the Workmen's Compensation Act 1906 (UK). Subsections 7(4) and (5), in referring to "employment to the nature of which the disease was due" were concerned with exposure to a risk which might be causative of the relevant "disease" rather than with causation in fact. In Smith v Mann [1932] HCA 30; 47 CLR 426, adopting the same interpretation as was held in Blatchford v Staddon to apply to the equivalent English provisions, it was said that employment answered that description if it was of the same nature and character as the work to which the "disease was due": per Starke J at 441. That meaning of this expression has consistently been applied in this Court: see Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269; CIC Workers' Compensation v Alcan Australia; GIO General v ABB Installation & Service Pty Ltd [2000] NSWCA 118; 19 NSWCCR 720; Government Insurance Office of NSW v Colgate Palmolive Pty Ltd [2001] NSWCA 24; 50 NSWLR 729; and ICI Australia v WorkCover. In Tame, Jordan CJ described (at 272) employment answering that description as being "employment of such a kind as to involve a risk to the employee contracting the gradual process disease which is disabling him". 2. Subsections 7(4) and (5) of the 1926 Act, and their successors, ss 15 and 16 of the 1987 Act, are directed to identifying the employer liable to pay compensation for a disease of gradual onset that has resulted in death or incapacity or the making of a claim for compensation. As Dixon J noted in Smith v Mann at 449, the "nature of a disease contracted by a gradual process is such as to make it difficult, and sometimes impossible, to say how far a particular period of employment contributed" to the disease which has resulted in death or incapacity. His Honour identified the purpose of subs 7(4) as being "to pitch upon the latest employer for the purpose of immediate liability to the worker". That employer was identified by reference to the period of employment ending at the time of the death or incapacity and the employer made primarily liable was the employer at the end of that period. 3. An employer who has exposed an employee to harmful conditions over a period of time may be liable for injury or disease, if it is established that the period of exposure "caused or materially contributed" to the injury or disease: Wakelin v London & South Western Railway Co (1886) 12 App Cas 41 at 47; Bonnington Castings Ltd v Wardlaw [1956] AC 613 at 621; March v Stramare (E&MH) Pty Ltd [1991] HCA 12; 171 CLR 506 at 514, 524-525; Amaca Pty Ltd v Ellis [2010] HCA 5; 240 CLR 111 at [67]; Amaca Pty Ltd v Booth [2011] HCA 53; 246 CLR 36 at [47], [70]. These principles apply irrespective of whether the claimant seeks to hold the defendant liable for all of the harm sustained by reason of the contracting of a disease or only that harm sustained because of injury or disease caused by exposure during a particular period, assuming that the evidence establishes that the injury or disease resulting is divisible in the relevant sense: Sienkiewicz v Greif per Lord Phillips at [17]. 4. In either case the employer's tortious liability for negligence or breach of statutory duty does not arise until the worker has suffered injury that is compensable at common law: Orica v CGU Insurance at [32], [72], [74], [130] citing Cartledge v E Jopling & Sons Ltd [1963] AC 758 and Wardley Australia Limited v Western Australia [1992] HCA 55; 174 CLR 514 at 526. That liability may not arise until after the worker has ceased employment with the relevant employer; and may be following periods of employment with other employers that have involved exposure to the same disease causing conditions. In the case of hearing loss due to exposure to noise the evidence may prove that sufficient injury was sustained at the time of exposure, although it may not have been measureable or noticeable at that time. In such a case, as appears from the explanation of Mustill J in Thompson v Smiths Shiprepairers Ltd at 440 – 441, the cause of action would arise at the time of that injury, notwithstanding that its occurrence was not appreciated at that time. 5. The current form of s 151AB, and its predecessors including s 18(6B) of the 1926 Act, address these difficulties in determining when common law liability for occupational diseases arises. Section 18(6B) was enacted by the Workers' Compensation (Dust Diseases) Amendment Act 1967 (NSW), s 6(2)(b)(iii). In the Second Reading Speech, the Minister for Labour and Industry (Mr Willis) said (Parliamentary Debates, Legislative Assembly, 14 March 1967, at 4112): 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 … By this amendment it will be clear which insurer has liability in those cases where the employer has changed from one insurer to another while the worker was employed in the hazardous occupation. 1. The application of s 18(6B) was considered by Yeldham J in Wunderlich Ltd v Manufacturers Mutual Insurance Ltd [1981] 2 NSWLR 678. His Honour described (at 684) its object as being to "crystallise the time at which the liability of an insurer (or a self-insurer) for a particular type of injury is to be deemed to arise". He noted that the deeming provision had the effect not only of imposing liability upon one insurer but also of relieving other insurers from liability, including to make contribution. He described s 18(6B) as 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". The question raised in the present appeal did not arise in that case. 2. There was no provision similar to s 18(6B) in the 1987 Act when first enacted. The legislative context leading to the enactment of s 151AB is referred to by Gleeson CJ (Meagher and Powell JJA agreeing) in MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289 at 291. The section as introduced in 1991 (by the Workers Compensation (Amendment) Act 1991 (NSW) Sch 4(5)) described its purpose as being "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". 3. The Explanatory note accompanying that amendment said: The proposed 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 would arise if an employer has, over the period when the worker contracted the disease, obtained policies of insurance from different insurers. The proposed 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 previous insurers. The proposed section does not affect the right of the worker to recover all the damages to which the worker is entitled. A similar provision applies to claims for workers compensation and previously applied to common law claims under s 18(6B) of the Workers Compensation Act 1926. [Emphasis added] 1. The "similar provision" referred to in that note is s 15 of the 1987 Act. The period "when the worker contracted the disease" must be understood as the period during which the worker was exposed to conditions capable of causing the injury or disease that is the subject of the liability. The earlier suggestion that the insurers liable in respect of that period "may each be partly liable to contribute to the liability" of the employer is explained by the "exposure" theory of liability under which each insurer was said to be liable to contribute to the employer's liability for injury caused during the periods that it was on risk. (For a discussion of that theory see Malcolm Clarke, The Law of Insurance Contracts (5th ed, 2006, Informa) at 17-4C2). Thus s 151AB applied when there was more than one insurer on risk during the relevant period which was the whole of any period of exposure that was capable of causing the occupational injury or disease for which the insured employer was liable. As the earlier discussion concerning a "divisible" injury shows, a defining characteristic of an occupational disease answering that description may be that it was caused by the inhalation of asbestos fibre or silica dust during a particular period or before a particular date. 2. That first version of s 151AB was amended in 1995, 1999 and, most recently and to its current form, in 2004 by the Workers Compensation Legislation Amendment Act 2004 (NSW), Sch 1[4]. That form, unlike the earlier versions of s 151AB, does not expressly record its purpose. However, the legislative history to which I have referred and the language and scheme of the provision do not suggest that its purpose has changed. 3. The application of s 151AB, as enacted in 1991, to damages claims for injuries defined as caused by particular periods of exposure has been considered by this Court in two cases. Each involved a claim for industrial deafness for a closed period ending on 30 June 1987. Each claim was based upon a cause of action that accrued on or before that date in order to ensure that it was not subject to the modified common law damages regime which was introduced in 1989 and applied to injuries received after 4pm on 30 June 1987: 1987 Act, s 151U. 4. In MMI Insurance v Baker the issue was which of two insurers was liable to indemnify an employer for liability for hearing loss due to exposure to noise during a period which ended on 30 June 1987. Because the worker had continued in employment in noisy conditions after 30 June 1987, when another insurer was on risk, MMI relied on s 151AB(1) as having the effect that it was not liable for that disease. The Court rejected that argument. 5. When considering the application of s 151AB(1) the Court focused on the employer's liability as alleged and found. Noting that the deeming worked by that provision was expressed only to apply for the "purpose" of the section, Gleeson CJ continued (at 293 – 294): That purpose, as explained in subs (2), has no application to the present case. The liability of the employer for damages was in respect of a cause of action that arose before the commencement of the 1987 legislation, and was confined to injuries suffered before that time. The hypothesis upon which subs (2) of s 151AB proceeds is that, in a case to which the section applies, there are two or more insurers contractually liable to indemnify the employer at least to some extent in respect of the relevant liability. The purpose of the section is to enable a selection to be made from amongst those insurers. In this case, however, there was only ever one insurer contractually obliged to indemnify the employer in respect of the whole liability in question. (Emphasis added) 1. A similar question was addressed in FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257. After the worker's proceedings were commenced and before the hearing, he was granted leave to amend his claim to one for "deafness caused before 4 pm on 30 June 1987". FAI, the insurer on risk as at 30 June 1987, argued that by the application of s 151AB, because the worker had continued to be employed in noisy conditions after that date, the insurer then on risk was the insurer liable to indemnify. That argument was rejected by Handley JA (Sheppard AJA agreeing) because the "liability" which was the subject of the deeming provision, was the claimed liability for damages due to exposure to noise up to 30 June 1987. His Honour continued (at 260-261): In this case the "disease" when last referred to in the section is not industrial deafness simpliciter but industrial deafness caused by noise exposure up to 30 June 1987. This is the same "disease" as that first referred to, namely that for which Caltex is liable to pay damages. 1. Handley JA also observed (at 260) that the construction argued for by FAI could produce a "startling" outcome. If the worker continued in employment of the same nature, the insurer on risk when the proceedings were commenced could go off risk and one or more other insurers could go on and off risk while the action was pending. The identity of the insurer liable could not be ascertained until the time of judgment, assuming the employment had not ceased in the meantime. Fitzgerald AJA also preferred (at 261) a construction of s 151AB(1) which was concerned with identifying the time when the injured worker was last employed in the period to which the employer's claimed liability was referable. 2. There are four further decisions of this Court that were referred to in argument. Two involved claims for damages for mesothelioma and one was a claim for the consequences of asthma, bronchitis and emphysema. The fourth concerned the application of s 151AC of the 1987 Act. 3. The first of those decisions, GIO General v ABB Installation, was not a case in which the claim to damages was limited to injury resulting from a particular period of exposure or that was claimed to be "divisible": see Sienkiewicz v Greif at [15]. The worker was employed over two relevant periods, the first from 1966 to 1969 and the second from 1986 to 1993. In 1995 he was diagnosed with mesothelioma. The employer's cross claim against its insurers, which attracted the application of s 151AB, was dealt with after the worker's claim had been determined. In the earlier hearing the trial judge had found that the worker's exposure to asbestos in the period from 1966 to 1969 was causative of the mesothelioma. 4. When addressing the cross claim, the trial judge proceeded on the basis that the worker had also been exposed to asbestos in December 1986, when GIO General was on risk. On the basis of that finding he held that s 151AB applied to make GIO General liable to indemnify ABB. GIO General appealed from that determination contending that TGI was the insurer on risk at the end of the period from 1966 to 1969 which was the period of "causative exposure identified by the trial judge in the first hearing": [12]. 5. The Court (Mason P, Beazley and Heydon JJA) dismissed GIO General's appeal concluding at [38]: It was not necessary for the purposes of [s 151AB] for it to be established that the exposure to asbestos in December 1986 was a cause of the plaintiff's mesothelioma. All that had to be established was that his employment at this time was, to use the words of Gleeson CJ in Alcan at 177: …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. 1. The Court referred to and distinguished the decisions in MMI Insurance v Baker and FAI v HIH Winterthur on the basis that they concerned claims made in "artificially confined periods": [32]. When referring to MMI Insurance v Baker the Court adopted Gleeson CJ's description (MMI Insurance v Baker at 293) of s 151AB as being concerned with which of two or more policies indemnified an employer "in respect of damages for which a plaintiff sues". 2. The second decision is WorkCover Authority of New South Wales v Chubb Australia Limited [2000] NSWCA 221. It raised a similar issue to that addressed in GIO General v ABB Installation. The worker's claim was confined to a period of employment ending on 31 December 1984, although he continued to be employed by Chubb until 1988. The trial judge found that the worker's mesothelioma was caused by his exposure to asbestos dust up until 1978. In a separate and later hearing the trial judge addressed the employer's cross claim against various insurers. On the basis of evidence led in the cross claim the trial judge found that the worker may have been exposed to asbestos for a brief period in 1983. He concluded however that as his determination of the employer's "liability" was based on exposure ending in 1978, the last insurer relevantly on risk for the purposes of the application of s 151AB(1) was the insurer in 1978. That insurer was WorkCover. 3. This Court (Stein JA, Powell JA and Foster AJA agreeing) allowed WorkCover's appeal and remitted the matter for further consideration of whether there was a risk to the worker of contracting mesothelioma between 1979 and 1988. In doing so, the decisions in MMI Insurance v Baker and FAI v HIH Winterthur were distinguished on the basis that they concerned closed claims for industrial deafness and not a claim for mesothelioma. As that disease had not been diagnosed until 1997, Stein JA concluded: [34] It follows that his Honour was not required to foreclose his inquiry at 1978. Rather he was bound to examine the evidence of any exposure to risk of contracting mesothelioma after that date. Indeed, after 31 December 1984, being the last day alleged in the plaintiff's amended Statement of Claim. In my opinion, his Honour should have examined any evidence for exposure to risk up until the plaintiff's retirement in 1988. The fact that the plaintiff's claim was confined to 1984 does not mean that an examination of the period to the plaintiff's retirement for any exposure to risk is precluded on the cross-claim. [Emphasis added] 1. What immediately may be observed, and is implicit in the basis on which the two earlier decisions were distinguished, is that if mesothelioma is an indivisible injury, it cannot correctly be described as having as a defining characteristic that it was due to a period of exposure which is less extensive than the period that in the particular circumstances was in fact capable of causing or contributing to the contracting of the disease. 2. The third decision is GIO v Colgate Palmolive. The worker was employed by Colgate as a fitter between 1966 and 1991. Between 1967 and 1970 he inhaled proteolitic enzymes which caused him to contract asthma, bronchitis and emphysema. Between 1972 and 1987 he was exposed to harmful fumes from welding which exacerbated those diseases. The principal issue was whether the second period involved "employment to the nature of which [those earlier diseases were] due". GIO was the insurer on risk in June 1987. Applying s 151AB the trial judge ordered that it indemnify Colgate against its liability for the diseases contracted as a result of the worker's exposure during the whole of the period from 1966 to 1987. 3. GIO's appeal raised three related arguments; first, that there were two different sets of occupational diseases and that it could not be liable for the first set; alternatively, that the relevant diseases were those contracted as a result of the first period of exposure and the welding work undertaken when it was on risk at the end of the second period was not employment "to the nature of which" those earlier diseases were due; and thirdly that the occupational diseases contracted in the first period did not include any exacerbation or aggravation which occurred as a result of the later period of exposure. 4. In rejecting those arguments Heydon JA (Priestley and Sheller JJA agreeing) accepted that the "occupational diseases" in relation to which liability might arise could be described by reference to a period of exposure. In that respect his Honour said: [36] … An "occupational disease" is, by definition, "a disease of such a nature as to be contracted by a gradual process". The "disease" referred to at the end of s 151AB(1)(a) is the "occupational disease" for which the employer is liable independently of the Act. The plaintiff's proceedings commenced in 1990. In his amended statement of claim the plaintiff alleged "injury, loss and damage" from welding fumes and enzymes between "1966 and approximately 1987". The particulars of injury were: (a) Severe emphysema; (b) Chronic bronchitis; (c) Asthma. The plaintiff's proceedings against the employer were settled on 12 May 1999 by judgment in favour of the plaintiff in the sum of $250,000. … The occupational diseases in relation to which the plaintiff recovered by reason of the employer's admission of liability and settlement with the plaintiff were not limited to those diseases as they had advanced by 1970. The plaintiff sued in relation to the state the diseases had reached after gradual processes, in 1987. The processes of those diseases were not complete at the moment of initial diagnosis. They had reached a more fully developed stage by 30 June 1987, particularly of their own force, partly because of the plaintiff's welding work, and probably partly because of the plaintiff's smoking. 1. Finally, the respondent relies upon the following observation of Macfarlan JA in QBE Insurance (Australia) Limited v Dust Diseases Tribunal of NSW [2011] NSWCA 421 at [16], as correctly stating the position in relation to divisible diseases, which, in the proceedings under appeal in that case, were agreed to include asbestosis and asbestos related pleural disease: It has been held in cases concerning the divisible condition of industrial deafness that the date upon which the employer's liability is taken to have arisen for the purpose of s 151AB(1) can in effect be selected by the worker choosing a date for the cessation of the period to which his or her damages claim relates which is prior to the cessation of his or her relevant employment [reference is made to MMI Insurance v Baker and FAI v HIH Winterthur Compensation]. However the position has been held to be otherwise in the case of indivisible injuries [reference is made to WorkCover v Chubb and GIO v Colgate Palmolive]. Decision 1. The pre-condition that must be satisfied for the application of s 151AB(1) is that an employer is liable for damages for an injury (relevantly an occupational disease) contracted following a period of exposure to conditions capable of causing that injury. The object of the subsection is to identify from the insurers on risk during that period the insurer liable to indemnify the employer for the full amount of those damages, and without the benefit of contribution from any other insurer. It does so by deeming the time at which the employer's liability for that injury arises. That time is the end of the period during which the worker was exposed to the conditions capable of causing the injury for which the employer is liable in damages. 2. The "disease" referred to in subs 1(a) is the "occupational disease" for which the employer is liable in damages: MMI Insurance v Baker; FAI v HIH Winterthur; GIO v ABB Installation. That liability may be for injury or harm from a disease caused by a particular period of exposure, provided that injury or harm is separate from injury or harm from the disease caused by any other periods of exposure: MMI Insurance v Baker; FAI v HIH Winterthur; GIO General v ABB Installation; WorkCover Authority v Chubb. 3. The identification of the liability upon which s 151AB is to operate must in the first instance depend on the formulation of the worker's claim and the underlying cause of action on which that claim is based: MMI Insurance v Baker; FAI v HIH Winterthur; GIO v Colgate Palmolive. However the way in which that claim is formulated cannot have the consequence, in the application of s 151AB, that a liability for damages may arise in respect of part only of the injury or harm constituted by the contracting of an indivisible disease: WorkCover Authority v Chubb. 4. A construction of s 151AB(1) as applying to the disease and liability which is the subject of the worker's claim finds support in the language of s 151AB(2) which contemplates a "claim" for damages made by the worker and that the insurer "primarily responsible" will conduct and pay for the defence of that claim and indemnify the employer or pay the worker the full amount of the claim as determined or agreed. 5. The interpretation of s 151AB urged by Allianz (and CGU) should be rejected. Accepting, as each does, that an employer may be liable for injury caused by exposure to asbestos or silica dust during a particular period, the application of that interpretation could impose the liability to indemnify on a later insurer who was not on risk during any part of the period of employment and exposure giving rise to the employer's liability, that liability being circumscribed by the ambit of the applicant's claim. That outcome is inconsistent with the scheme and object of the section which, as the Explanatory note to s 18(6B) made clear, is to fix the last of the insurers on risk during that period with the whole of the liability, notwithstanding that the other insurers on risk during the period might otherwise "each be partly liable to contribute to the liability" of the employer. 6. The respondent's construction of s 151AB, which accords with that adopted in earlier decisions of this Court, is clearly to be preferred. The primary judge correctly concluded that there was, by the application of s 151AB, an arguable case that Allianz was liable to indemnify Ceeco in respect of its liability as employer which is the subject of the respondent's pleaded claim. Proposed orders 1. The following orders should be made: 1. Grant leave to the applicant to appeal from the decision and orders of the Dust Diseases Tribunal of New South Wales (Kearns J) of 3 June 2014. 2. Direct that the applicant file and serve a notice of appeal in the form of the draft notice contained in the White Book within seven days of the date of this order. 3. Appeal dismissed. 4. Applicant/appellant pay the respondent's costs of the application for leave and the appeal. ********** Amendments 15 July 2015 - [38] - second sentence amended from "That policy, by reg 1.... included the following" to "Regulation 1... required that the policy contain" [39] - words "as amended in 1967" inserted [48] and [59] - reference to "Thompson v Smith Ship Repairers" changed to "Thompson v Smiths Shiprepairers" [56] - reference to "Workmans' Compensation Act" changed to "Workmen's Compensation Act" [86] - reference to "primarily responsible" changed to "primarily liable" 06 August 2015 - [11] - correcting spelling of "referable". [12] - amending "adopt" to read "adapt". [14] - correcting citation of MMI v Baker from (1990) to read (1997). [16] - correcting page number from 295 to 294 in citation of MMI v Baker. [24] - correcting "20 NSWLCCR" to read "NSWCCR". 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. Decision last updated: 06 August 2015