Accident Compensation Commission & Ors v Ce Heath Underwriting & Insurance (Australia) Pty Ltd & Ors; Accident Compensation Commission & Ors v Baltica General Insurance Co Ltd

[1993] HCATrans 267

~

~ '-~~·:,

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M29 of 1993

B e t w e e n -

THE ACCIDENT COMPENSATION

COMMISSION, THE HONOURABLE

R.H. JOLLY (who sues as The

Treasurer for the State of Victoria) and THE STATE OF

VICTORIA

Appellants

and

C.E. HEATH UNDERWRITING &

INSURANCE (AUSTRALIA) PTY LTD,

ROYAL INSURANCE AUSTRALIA

LIMITED, NATIONAL EMPLOYERS'

MUTUAL GENERAL INSURANCE

ASSOCIATION LTD (in

liquidation) and MERCANTILE

MUTUAL INSURANCE (WORKERS

COMPENSATION) LTD

Respondents

Office of the Registry

Melbourne ~o M30 of 1993

B e t w e e n -

THE ACCIDENT COMPENSATION

COMMISSION, THE HONOURABLE

R.H. JOLLY (who sues as The

ACC(2)	82	9/9/93
MASON CJ BRENNAN J DEANE J DAWSON J
TOOHEY J

Treasurer for the State of Victoria) and THE STATE OF

VICTORIA

Appellants

and

BALTICA GENERAL INSURANCE CO

LTD

Respondent

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 9 SEPTEMBER 1993, AT 9.51 AM

(Continued from 8/9/93)

Copyright in the High Court of Australia

MASON CJ: Yes, Mr Merkel.

MR MERKEL:  If the Court pleases, before my learned friend

commences, if we could seek leave to substitute the

name of the present Treasurer, that is

Alan Robert Stockdale, for Mr Jolly. I understand

my learned friends do not oppose that amendment.

MASON CJ: Very well. Mr Shaw.

MR SHAW:  If the Court pleases, if I might commence with

dealing with a number of matters which arose in the

course of argument yesterday.	Your Honour
Justice Deane asked a question of my learned friend
which amounted to saying:	was C.E. Heath or
anybody else making a profit?	My learned friend

gave an answer which seemed to suggest that the

answer was yes, but the fact is, it is submitted,

that the answer is no. That appears from page 333

at about line 17. It was pointed out that the

amount of recompense received was in excess of the

claim and at line 21:

It can also be seen that the amount received

by the firstnamed defendant by way of
recompense and contribution in respect of the

award to Senzo exceeded $40,000. That

anomalous and unintended result was brought

about by the fact that the firstnamed

defendant made its claims for contribution on

a gross basis without taking into account the

ACC(2) 83 9/9/93

prospect that it might make (as in fact it

did) a claim for recompense in relation to the

gross sum it paid out for the $20,000 lump sum

award. The firstnamed defendant concedes (as

it indeed did before this litigation began) -

and that material is in fact in the appeal books.

The letters are at 219 and 231 -

that that involved an error on its part and

that it cannot retain the whole or what it

received by way of recompense and

contribution. It contends and concedes that

the total recompense receivable in respect of

the lump sum award of $20,000 should have been

distributed between the parties liable to pay

the amount of the lump sum in the proportions for which they were respectively liable. The

doubling up in claims for recompense has not

given rise to the present problem: if

recompense is allowable any necessary
adjustments between those entitled to it, and

any necessary repayment to the Fund, can be

made. The dispute arises because the

plaintiffs contend that, in the circumstances,

no right to recompense arose at all, which

contention the defendants deny.

The position was the same in the Full Court

and I will not go to that, but it is page 483. So,

the answer is, in our submission, no, not yes.

BRENNAN J:  The basis being that the excess over the $20,000

is distributable to the prior insurers. Is that

the proposition?

MR SHAW:  No, Your Honour. That the claims for recompense

doubled up in an unallowable way, and that there

should have either been one claim for it all, or

separate claims for the different bits, but not

both.

BRENNAN J: If it is one claim for it all, then is that

insurer, the last insurer, entitled to stipulate

the first date of injury as the relevant date?

MR SHAW:	Yes, we would submit so, yes, Your Honour.
BRENNAN J:	So that even though it ends up paying only some $198 out of its own pocket, it is entitled to a
refund which brings it over the -
MR SHAW:	No, it would get the refund, but it would have to

distribute - - -

BRENNAN J: That is what I am saying. It would have to

distribute it.

ACC(2) 84 9/9/93

MR SHAW:	Yes, Your Honour.
BRENNAN J:	The proposition depends upon the fact that it is

distributable, that excess.

MR SHAW:	Yes, Your Honour.
BRENNAN J:	What is the legal basis on which it is

distributable?

MR SHAW:  It depends on the submission about contribution,

Your Honour.	The rights as between the various
insurers.

BRENNAN J:	Which you will come to at some stage?
MR SHAW:	I will come to that, but in fact, Your Honour, it

is all fixed by the contribution agreement here, in

fact, so that what the position would be if there

were not such an agreement is really, in a sense,

by the way.

The second fact that we wanted to refer to was

this that my learned friend said something

yesterday which seemed to suggest that claims for

recompense were being made from the fund in

circumstances where there were pre-amendment

injuries and post-amendment injuries, in

circumstances where the funds were not aware that
claims were being made in that way, and was

assuming that the only relevant injuries were a

particular injury at a particular date and not a

series of injuries.

In our submission that, too, is incorrect and

the fact of the matter is that in each of the

particular cases that this Court is concerned with

one of the insurers had gone into liquidation, so

that it was replaced - if that is the right word -

by the fund itself, and in each case a claim was

made by the fund for recompense on the very basis	that it now contests claims can be made, and that
appears at page 333, in relation to Senzo and 342
in relation to Carter. If I can just go to one of those to illustrate it, 342 at line 15, His Honour
says:

However, that is, the plaintiffs now contend

that A.M.P. alone was entitled to recompense -

and this notwithstanding that a claim for

recompense was made by the I.G.C.S.F. and

administratively allowed in respect of the

proportionate liability of Palmdale.

Palmdale being the insolvent insurer, the insolvent

insurer in the other case was Bishopsgate.

ACC(2) 85 9/9/93

So that the position was that claims were in fact being made on this basis to the fund's

knowledge, and accepted, and no difficulties arose,

I think, in relation to this point until 1987.

Difficulties first arose, and that was in relation

to the Commonwealth settlement point in 1984. So

that, what is now being asserted as a recognizable

statutory scheme is, if one accepts my learned

friend's scheme, something which nobody realized

was the scheme, neither the funds, nor the

insurers, nor the employers, until 10 years at

least after the system had come into operation, and

it is submitted that that is a very odd suggestion.

The next matter that we wanted to refer to was

this: Your Honour Justice Deane asked yesterday

whether the agreed facts were sufficiently precise

to enable one to distinguish between the various

kinds of events which might have given rise to

liability. It is submitted that it is perfectly

clear that in the courts below the matter proceeded
on the basis that I was putting to the Court

yesterday. For example, at page 375, in the

judgment of the Full Court, at line 12, the

Full Court says:

Both the date of injury and the

contribution points arose from circumstances

where a worker suffered a series of injuries,

each of which materially contributed to an

incapacity for which an award of workers'

compensation was made, and some

were pre and some were post, and at 381, at

line 22, the Full Court says:

In each of the cases which raise the point, it

was agreed that a worker had sustained a

series of injuries, each of which materially

contributed to incapacity.

And at 319 to 320 His Honour the trial judge

proceeds on the same basis. Your Honour

Justice Toohey yesterday asked whether it was usual

in any circumstances to identify the injury in the

award and I think my learned friend suggested that

that did happen in relation to awards of weekly

sums. Our belief is that the answer is that it in

fact never did happen in respect of any kinds of

injury. Reference was yesterday made to the

provisions of section 2C(ll), and in the transcript

at page 667 to 669, a copy of which can be supplied

to the Court if it is desired, my learned friend's
then junior, Mr Middleton, conceded that the
provisions of that section were irrelevant for

present purposes.

ACC(2) 86 9/9/93

The last of the matters which arose in the

course of argument yesterday to which we wish to
refer was the question of whether the sum

compromised the position in between the black and

the white position. We think there possibly is

because it depends on how recompense is calculated,
but the question is not one which really arises at

this point in this litigation because the question
is in each case: is recompense payable at all?

The plaintiffs are saying: no, not at all.

MASON CJ:  Mr Shaw, in the event that it does become

material in our consideration of the matter to give

weight to the concession that you say was made,

there are two courses we could pursue. One, we

could ask Mr Merkel if he agrees with what you have

said on that topic or, alternatively, if not, we

ought to be provided with a copy of the transcript

which records the concession.

MR SHAW:  If Your Honour pleases. We do have copies here

which can be handed up.

MASON CJ: Thank you.

DEANE J:	I do not quite follow what you have just said.
MR SHAW:	Which bit, Your Honour?

DEANE J: That we are not concerned with the extent of

entitlement to recompense. Take, for example, the

position for which you are contending and that is,

for the purposes of the legislation, one can, as it

were, look beyond the award made against the last insurer and identify as it were the components of

that award from the viewpoint of the contributing

insurers. Now, without putting to you any

suggestion at all as to the effect of the

legislation, one could envisage a circumstance in

which one would say, "Well, for the purposes of the

legislation one therefore treats the insurers as

each entitled to make an appropriate contribution

and as each entitled to recompense from the fund by

reference to that contribution, and the result of

that is that the last insurer is not entitled to

any recompense at all in respect of its own

component of the total award.	Do you follow the
point?

MR SHAW:	Yes, I do.
DEANE J:	Now, are you saying that that is something that we

are not concerned with, that it suffices if we say, "Oh, here there are three contributing insurers and

the final insurer. The fund is liable to make

recompense in relation to the additional amount

included in the contribution of the first insurer.

ACC(2) 87 9/9/93

Therefore, the fund is wrong when it says it does not have to make any contribution at all."

MR SHAW:  Your Honour, there are two cases. In one of the

cases, which is Senzo, there were claims made by

all the insurers and that produced this doubling up

that we have already referred to.	In the other
case - - -

DEANE J:  Now, in relation to that as I follow it, you say

that the last insurer is entitled to make the claim but the claim has to be treated as encompassing the contributing amounts and the last insurer has to

adjust its receipts accordingly.

MR SHAW:  Or alternatively, the claims might be made by

each.

DEANE J: Right.

MR SHAW: In the other case - - -

DEANE J: That case raises the question I am asking you. Is

it sufficient if we say, because this is what I

understand you to say, "Well, whichever way you

look at it, some recompense is due in respect of

the first contributing insurer's portion and

Mr Shaw says we do not have to go any further."

MR SHAW:  I do not know, Your Honour, that what I say has

ever been accepted as leading to such a rapid

conclusion.

DEANE J: Assuming if what you say is correct - - -

MR SHAW:  Your Honour, it really depends, I suppose, on

whether, in that case, the question is, is nobody

entitled to recompense or are each of them entitled

to recompense.	I had thought from the way in
which - - -

DEANE J:  I follow that is what you say, but if one

disregards this legislation and were to ask, "What

would be the fair result here?", there is obviously

something to be said for the view that you look at

the individual contributions and you look at the
relevant injury or the relevant term of employment,

and you answer by reference to those portions

whether, if they had stood alone, the individual

insurer would be entitled to recompense. Now, as I

follow it, both arguments just pass that by as if

it is not involved in the case.

MR SHAW:  Your Honour, we had understood, really, in

relation to Senzo, that the question is, is nobody

entitled to recompense? If the answer is yes, that

is enough, that is wrong.

ACC(2) 88 9/9/93

DEANE J: Obviously that is so, if nobody is entitled.

MR SHAW:  If the answer is somebody is entitled to

recompense; it is enough to say that, but it really

does not raise - Your Honour, the Court has not

been taken to the pleadings, but the pleadings

raise a whole host of issues. There are estoppels

and all sorts of things, none of which are

presently relevant.

DEANE J: Can I just try and tie you down completely? Say,

in relation to Senzo, in looking at it, one reaches

the conclusion that whatever the result in relation

to other contributions, in so far as the first

contributing insurer's share is concerned, somebody

is entitled to compensation in relation to that,

because that insurer is required to contribute more

than it would have been liable at the time it went

off risk if the injury had occurred then. Well

now, is what you say, if we reach that, we finish

there and we do not go beyond it and say, well now

what about the second, third contributing insurer's

portion and what about the share which the final

insurer is landed with in any event?

MR SHAW:  If Your Honour will permit me to be tied down in

company? Your Honour, I shall get some

instructions on that matter. I think the answer is

yes but, I should say this, the second case does

not enable that escape because of the circumstances

of it.

DEANE J: What, is not there a - - -

MR SHAW: There is only one defendant in that case.

DEANE J:	And no contributing insurer?
MR SHAW:	No, there were three insurers, and a claim was

made for recompense by the last, but not for the

whole amount as it were, and the question arises in
relation to one of the others.	So that the

question, in that sense, is not escapable. If I

might now take the Court to the judgments below.

If I could first - - -

BRENNAN J: Could I just, before you get to there, I do not

wish to interrupt the flow of your argument,

especially if you are coming to this in the

contribution area, but is it right to say that the

absence of any profit on the part of the last

insurer is dependent upon the distribution of the

excess received being governed by the terms of the

agreement that was made between the insurers?

MR SHAW:  I am not sure that I can answer that absolutely

because the position of the other parties is also

ACC(2) 89 9/9/93

governed by the settlement agreement, so the whole

position as between them is regulated. If there

were not any agreement, it may be that the position
would be different as to who could make the various

claims. I say that for this reason - and this will all arise in what I have to say about contribution: the right to claim recompense is given by the

statute to an insurer who pays, and it seems that

includes voluntarily, or is required to pay

recompense.

BRENNAN J:  Or is required to pay compensation.

MR SHAW:  The additional amount, I should have said. So one

has to ask, in respect of an insurer who is saying

that he is entitled to claim recompense from the

fund, have you paid an additional amount or have

you been required to pay an additional amount?

Either of those seems to be sufficient. It is

obvious that no more than the largest sum of

recompense can be recovered in total. That is to

say, if one takes the earliest injury and looks at
the additional amount which is payable in respect

of that, that fixes the largest amount of

recompense from the fund which can be available, as

it fixes the largest additional amount. How that

is split up depends on when the injuries occurred,
the number of insurers in between and what the

contributions are as between them.

BRENNAN J: But if the compensation from the fund is

determined by reference to the liability of the

first insurer, then there must be some excess

somewhere because subsequent insurers were liable

for larger amounts.

MR SHAW:  Your Honour, it all depends, in our submission, in

the first place not on the position of the

insurers, it all depends on the position of the

employer, because it is the employer who is bound

to pay compensation and it is the compensation
which includes the additional amount.	So the first

question is: is there an additional amount? In order to decide "is there an additional amount", one asks that question, it is submitted, about the

employer, and that arises from the nature of the

Act. Then when one comes to the insurers - take

the case of an award, for example: if there is an

award made and it is decided that it includes an

additional amount, then the question is, "Can

claims be made by the insurers for recompense for

the fund in relation to the payment of that

additional amount?"

BRENNAN J:  Payment of what additional amount?

ACC(2) 90 9/9/93

MR SHAW:  The additional amount payable by the employer

under the award which has been satisfied by the

insurer, whoever it is who has paid.

BRENNAN J: Ascertained by reference to the first date of

injury?

MR SHAW:	Yes.
DAWSON J:	Why do you take the liability arising from the

first injury rather than the liability arising from

the last injury?

MR SHAW: For this reason, Your Honour, that the statute

defines "additional amount" in a way which leads to

that consequence, because it defines it by

reference to increases in sums payable as

compensation in respect of injuries.

DAWSON J: If you take the last injury and the liability

arising from that, there is no additional sum

payable.

MR SHAW:	Your Honour, that is true.
DAWSON J:	I think this is the problem; there is nothing to indicate which you select.
MR SHAW:	If one has an award which is made in respect of a

whole series of injuries, and some of them are

before the relevant dates then, we submit, the
position is that the amount - I have left out a

step: if each of those injuries has materially

contributed to the relevant incapacity, then the

sum which is payable in respect of the incapacity

could have been recovered in respect of each of the

injuries singularly, but - - -

DAWSON J:  The problem is that although they can be

different injuries, there can only be one liability

and that is a liability to pay compensation in

accordance with the Act, which is to pay weekly

payments and, of course, the lump sum is in

redemption of those weekly payments.

MR SHAW:	Yes.
DAWSON J:	Now, it does not mean that you can go down the

line and select one or other. Even though the

award is in compensation of all the injuries, in

effect, if you are satisfying the liability which

arises from the last injury, there is no additional

payment. You say I should not look at that, I

should look at the other one, but why?

MR SHAW:  Your Honour, because that is what, in our

submission, the Act says -

ACC(2) 91 9/9/93

DAWSON J:  Where does it say it?

MR SHAW: In the definition of "additional amount".

DAWSON J: It does not.

MR SHAW: Well, Your Honour, what it says is: one looks to see shether there is a sum payable as compensation under the Act in respect of, say, pre-1975 injuries

and the answer is, in these circumstances, there

is.

DAWSON J: If you take the first injury, well one of the

earlier injuries, but there is not if you take the

last injury. That is the dilemma; I mean I do not

know the answer to it.

MR SHAW:  Your Honour, it is perfectly true what Your Honour

has said to me, but the award is in respect of all

the injuries, and although it may be true

that -

DAWSON J: But, the award is not in respect of injuries.

The award is in satisfaction of a liability to pay

compensation in accordance with the Act. There is

only one liability. It may be triggered off by a

series of injuries, but there is only one

liability, and if that liability can be satisfied

in a way that involves no additional payment, why

should it not be?

MR SHAW: Well, Your Honour says there is only one

liability, but if one considers the position of not

one employer but two - - -

DAWSON J:  No, just take one for the moment. I mean, the

liability here is to make weekly payments. Now,

presumably, the incapacity did not occur until, what, 1985 and up to that time the liability is

really only a contingent liability, is it not?

MR SHAW: Well, I do not know about that, Your Honour - - -

DAWSON J: Well, it is a liability to pay compensation in

accordance with the Act, compensation is only

payable when there is incapacity and you measure

the incapacity at the time ..

MR SHAW:  Yes, that is true, Your Honour.

DAWSON J: It is only a contingent liability up to 1983, and

the time that it becomes an actual liability there

is an employer, who is under a different Act, who

does not make an additional payment.

MR SHAW:  I know Your Honour does not want to look at two

employers - - -

ACC(2)	92	9/9/93
DAWSON J:	I am putting this to you.	I am by any means

convinced about it.

MR SHAW:  In our submission, when one looks at the two

employer situation, there has been an injury during

the course of each of the two employments which

materially contributes to the end incapacity.	One
then might get an award against each of them in respect - - -

DAWSON J:  You would have to select - well, I suppose you

could claim against all of them, but there is only

the one incapacity, so - - -

MR SHAW:  You could not get paid more than once, certainly

not. But, you could have an award which was, I

mean, say it was for a lump sum, because it is a

bit more difficult to think of for practical
purposes in weekly payments, but you might get an

award of a lump sum as in the case I suppose, of

joint tortfeasors or something, which is a lump sum

awarded against the two employers. You can only

obviously recover from one of them the whole, but

you might recover part from each, I suppose, if one

did not have enough money or whatever it was. So

that, in our submission, that demonstrates that the

happening of the separate injuries, although it

does not crystallize into a liability to pay - - -

DAWSON J:  But that is the important thing. The error seems

to be to think of the injury as giving a right to a

claim for something like damages and then when you get to the end to apportion it, but it does not do

that at all. The liability is really not a

liability at all. It is at most, a contingent
liability, and when it becomes an actual liability,

which is in 1985, it is a liability to make weekly

payments at that time and at that time the amount

of the weekly payment is fixed under the 1983 Act.

So that there is no additional amount payable. You

cannot go back, because there never was a liability

in 1975 or 1973. All there was was an injury.

MR SHAW:  There was an injury which gave rise at that time

to a right to compensation.

DAWSON J:  No, to a right to compensation if and when

incapacity occurred, and it had not occurred.

MR SHAW:  It had not then occurred, that is true,

Your Honour.

DAWSON J:  And it might never occur.

MR SHAW: That is also true; the man might die. But one has

to look, it is submitted, because one is directed

to by the provisions of the Act, at the whole

ACC(2) 93 9/9/93

course of the injuries. One simply asks oneself

whether the sum payable under the Act is increased

in respect of one of these earlier injuries. In

our submission, it is, albeit, as Your Honour says,

the incapacity has to occur before it crystallizes.

DAWSON J: But it is not increased because the incapacity

does not occur until the 1983 Act is in force.

MR SHAW:  Your Honour, that would be so if the only - I

suppose this is double Dutch, but if the only

injury were the last injury, of course that is so,

but it is not.

DAWSON J: Perhaps I will put it this way: the liability is

not a liability to pay anything when the injury

occurs. It only is a liability to pay something

when incapacity occurs. The payment is not

increased, or the liability to payment is not
increased, if it occurs after 1983. That is the

way I think it is put.

MR SHAW:  Your Honour, in the present situation what might

happen, although it has not happened in these

cases, is that a claim could have been made based

simply on the first injury. If that had been done,

then -

DAWSON J:  It is still the same thing. The liability to pay

based on the first injury only arose after 1983.

MR SHAW: That is true, Your Honour, but if. -

DAWSON J: It is a difficult concept, a liability to do

nothing. I am talking about a contingent

liability, but the liability to pay is the

important thing, because it is the payment which

you are looking at when you are talking about

increase.

MR SHAW:  What one is talking about is an increase in the

amount payable.

DAWSON J: There is no amount payable when the first injury

occurs. An amount only becomes payable when

incapacity occurs.

MR SHAW:  Yes, and in the present situation a worker could

have sued had he chose in respect only of the first

injury and got the same award.

DAWSON J: But it would be still in respect of the post-1983

incapacity.

MR SHAW:  Yes, yes it would. But in those circumstances, it

is submitted, there would clearly be an additional

amount.

ACC(2) 94 9/9/93

BRENNAN J:  I can understand that, I think, Mr Shaw, but the

one point I do not quite understand is why you say

in the case of Senzo, for example, that when he

discharged the obligation of the employer under the

award, what it did was to pay an additional amount. Why do you give it the character of a payment of an

additional amount as distinct from the character of

a payment under the then existing insurance

arrangements?

MR SHAW:  Simply because, Your Honour, the award is made in

respect of the whole string of injuries.

BRENNAN J: True, including the last.

MR SHAW: Including the last, yes.

BRENNAN J:  So that to describe the award as having been

made in respect of the string of injuries is to say

it is an award that is made in respect of

injuries - it is an award which, in relation to

some injuries, contains an additional amount; in

respect of other injuries, does not.

MR SHAW:	Yes.
BRENNAN J:	Why then, since it is a single amount, do you

ascribe to the payment - the character of a payment of an additional amount, leaving out of account the

fact that it is also a payment in respect of

something that is not an additional amount?

MR SHAW:  Simply because, Your Honour, the award being an

award in relation to the earliest injuries, each of

which themselves would have justified the same

award, in so far as it is in respect of those

injuries, the amount payable in respect of them has

been increased.

BRENNAN J: But that was not a payment for which C.E. Heath

was responsible. It was not liable for that.

MR SHAW:  Your Honour, in our submission, the question about

an additional amount has to be asked first in

relation to the employer - - -

BRENNAN J: True.

MR SHAW:  - - - and the award is against the employer.

BRENNAN J: True.

MR SHAW:  If you like, imagine there were not any insurers,

and one says here was this award against the

employer, it was in respect - the award was made in

respect of a string of injuries, each of which

would have justified an award in the same amount.

ACC(2) 95 9/9/93

When one asks oneself, "Is the amount payable by the employer under that award an amount which

includes an additional amount?", the way in which

one answers that question is, it is submitted, to

ask oneself whether the amount payable under the

award in respect of the earliest injury - say there

were two, rather than a number - has been increased

by virtue of a provision of the 1975 Act.

BRENNAN J:	And the answer to that is, yes.
MR SHAW:	Yes.

BRENNAN J: But is that the question? Or is the question,

when a payment is made, or a liability accrues to

make this payment, "Is the payment or the liability
to be given the character of a payment of an

additional amount, or not to be given that character?" And the Act seems to me to be

thoroughly silent as to that proposition; that

there are perhaps two indicia: one is, who makes

the payment, and was that paying party, in the case
of an insurer, liable in respect of the first

injury? The second is: if the payment is to be

referable to the first injury, then why is it that

there is not, over a period, as in Senzo's case, an

inevitable over-compensation?

MR SHAW:  Your Honour, if one takes the example that

Your Honour was giving, and one has the award

against the employer, one has to ask oneself, it is

submitted, whether, under that award, an additional

amount is payable? I say that, Your Honour,

because I have repeated the words of the Act,

section 2C says:

Where an additional amount is payable by an employer as compensation by virtue of

section 2A(3), so far as it ..... the employer shall ..... be entitled to be recompensed from

the Fund for that additional amount.

So that, it is submitted that the question is -

when we are looking at the question of recompense -
whether, that is the first question, an additional

amount is payable by an employer, and the

submission which we make is that it is payable by

the employer, albeit that the award being made in

relation not only to the earlier injuries but in relation to the later injuries, had it been made

only in relation to the last injury, for example,

there would have been no additional amount - - -

DAWSON J: You see, I do not understand that - well, I do

not understand quite a lot, that in particular -

because if there is an obligation to pay the whole

amount under the later Act in respect of the last

ACC(2) 96 9/9/93

injury, that must overtake any earlier obligations.

If you have an obligation to pay an amount

involving no additional amount, you do not have an

obligation to pay an additional amount because your

obligation must be the larger obligation.

MR SHAW: But, Your Honour, one may have an obligation to

pay amounts, which obligation being the same

obligation, arises from different sources.

DAWSON J: Well, I do not see that that is so, for the

moment.

MR SHAW:  I suppose I have to go back to my example of the

two employers.

DEANE J: But does that really help you.	I mean - - -
MR SHAW:	I hope so, Your Honour.
DEANE J:	Does not your example of the two employers really

indicate that there is a problem where there are

two employers that is not involved in this case?

MR SHAW: Well, there is certainly a different problem,

Your Honour, yes.

DEANE J: Ultimately, after all this, do not we come down to

the simple question whether the employer has to

pay, and pay is the operative word, an additional

amount by virtue of the retrospective provision?

MR SHAW:  No, Your Honour, in our submission that is not the

question. The question, if you delete out the

insurers for a minute, the question in relation to

the employer is not whether an additional amount

has been paid - - -

DEANE J: Is payable?
MR SHAW:	But whether it is payable.

DEANE J: Yes. If you go to 130 in the statutes, and I am

asking, even though I might sound as if I am
saying, because it seems to me I am beginning to

understand what the case is about. Ultimately,

does it not come down to the construction of 2C and

the question whether in this case an additional

amount is in fact payable for the reason that the

increase in rates was made retrospective? Now, if

one looks at it and says, "Cut out subsection (3)

and you find that the one employer has to pay at

the increased rates because a contributing injury

occurred after the date of the increase", must you

not necessarily answer 2C in the negative, and that

ACC(2) 97 9/9/93

is, he would have had to pay those in any event,

quite apart from the retrospective clause?

MR SHAW:  Your Honour, the first question is, is there an

additional amount payable. In our submission - - -

DEANE J: No, that isolates the question; the first - - -

MR SHAW:	One has to go and ask other questions, it is true.
DEANE J:	The only question is, is an additional amount

payable by virtue of. I mean you cannot say, "Oh

there is an additional amount, or an additional

amount would have been payable in different

circumstances". The only question is, does

section 2A(3), by imposing retrospectivity, make an

additional amount payable to that which would have

been payable in any event?

MR SHAW:  Yes, Your Honour. And, the significant thing is,

we submit, that the right to compensation is given

in relation to employers where an additional amount

is payable.

DEANE J: Let us look at the one employer and you say, "Well

now here the incapacity resulted from injury both

before and after the commencement date." That
being so, if you delete subsection (3) he is liable
in relation to the incapacity by reference to the

increased rates because injury after the

commencement date was a significant contributing

factor to the incapacity.

MR SHAW:	Yes.
DEANE J:	Then why is that not the end of it?

MR SHAW: Because, Your Honour, subsection (3) is there, and

because that makes payable as compensation in

respect of the earlier injuries, an increased

amount. And, Your Honour, in our submission, you

simply could not have an award in the form of this

award, covering all the injuries as it does, for

the $20,000 or for the amount which is fixed,
without the operation of subsection (3) because, in

respect of the earlier injuries, a smaller amount

would have been payable and you simply could not

make an award of that amount in respect of the

earlier injuries.

DEANE J:  I understand that. What would be put against you,

I would have thought, would be, for relevant

purposes, if all those periods of employment

constitute significant contributing causes to the

incapacitating injury, the relevant question, when

one looks at that award, is still, "Has the

retrospective provision increased the employer's

ACC(2) 98 9/9/93

liability to pay?", and the answer is that it has

not.

MR SHAW: Well, you see, Your Honour, in our submission,

that cannot be the question and the reason it

cannot be the question is because of the definition

of "additional amount". And "additional" amount is
defined, not in terms of what is payable, full

stop, but in terms of what is payable in respect of

particular injuries. So that it is true one might

get a different answer if one stopped at "payable",

but when one goes on and sees that it is payable in
respect of a certain kind of injury, then one has
to ask oneself, not is the amount of the award

increased but, in respect of these injuries, has

the amount payable been increased. And the answer

to that is, it has. It is perfectly true it has

not been increased in relation to the later ones,

but it has in relation to the earlier one. So that

one has an obligation which includes an additional

amount.

DEANE J:  I follow that. I just say that it seems to me the

answer to that may be that it is one thing to ask

what is the injury but, having said that, if you

are asking it in a meaningful sense, you then have

to ask: what is the relevant period of employment?

If a period of employment includes employment which significantly contributed after the commencement date, that is the relevant period of employment for the purpose of the subsection (3) question.

MR SHAW: But, Your Honour, the liability arises not out of

employment, but out of injuries arising in the

course of employment.

DEANE J: Yes, but the additional amount definition focuses

on the period of employment.

MR SHAW: It focuses, Your Honour, on
DEANE J:	I cannot find it now, Mr Shaw.
MR SHAW:	Page 130, Your Honour.  I had lost it, too. It

focuses on injuries arising before a certain date.

DEANE J:  No, injury arising out of or in the course of

employment.

MR SHAW:  Yes, absolutely. In our submission, that means in

respect of an injury of a worker arising before

1 July 1975 out of or in the course of employment.

BRENNAN J:  The problem is that additional amount is a

definition which is hinged on a pre-1975 injury.

It says nothing about compensation which arises

from a post-1975 injury.

ACC(2) 99 9/9/93

MR SHAW:  No, it does not.

BRENNAN J: But that does not really answer the question

that if there be a liability which can be described

as including an additional amount and the same
liability in terms of quantum and the obligation to

discharge does not contain an additional amount,

how one characterizes a payment that is made in

discharge of that liability. All that you can say

is that looked at from one point of view, this

contains an additional amount. Looked at from

another point of view, it does not.

MR SHAW:  Your Honour put the question, or the suggestion,

in terms of payment and the definition is not in

terms of payment.

BRENNAN J:  The liability is, if you look at 2A. The

obligation to pay is only - the application of the

amending Act is contingent upon the making of a

payment.

MR SHAW:  But that is so far as they relate to rates or

amounts of compensation payable, and so on.

BRENNAN J: Yes. When absent 2A(3), there would be no

additional amount.

MR SHAW: No, there would not. That is true. If I might

take the Court briefly to, first of all, what was

said by the trial judge at 334 to 335. That is in

the course of His Honour's reasons in relation to

Senzo, and it will be seen at 335 at line 12 that

he adopts, in relation to the first defendant,

which is the last insurer, his reasoning in

relation to Fonyodi and the passage in relation to

Fonyodi will be seen in the course of His Honour's

reasons about that case beginning at page 316. At

318 His Honour sets out the effects of the Workers

Compensation Act and its effect on the way
compensation is payable.	Going to 320 at line 13,
His Honour says:

In order to determine whether the award

of $20,000 compensation made on 8th October

1985 included any "additional amount" it is in

my opinion necessary to ask and answer the

question: for what was the compensation of

$20,000 awarded? In terms it was "in

settlement of all other forms of future

compensation in respect of all injuries

arising out of or in the course of" the
worker's employment with the employer.

Liability for compensation arose only under

s.5 of the 1958 Act ..... It does not accord

with the agreed facts or the common sense of

the case to say that the compensation was

ACC(2) 100 9/9/93

referable only to the last injury that

contributed to incapacity in January 1983. Liability for compensation attached at the

time of occurrence of each injury arising out

of or in the course of the worker's employment

by the employer and in my view it is not

correct to say that the compensation was not

referable to each of the admitted compensable

injuries suffered by the worker.

And then he goes on to deal with the effect of the

amendments and, at line 13, says:

The insurer paid "additional amounts" and,

subject to one further argument for the

plaintiffs that I must notice, was entitled to

recompense for those amounts .....

The further argument was along the

following lines. Acceptance of the

submissions for the defendant involves a

recognition of the fact that the defendant

paid compensation for which the employer

became liable under s.5 at times before the

defendant became the employer's insurer. It

would have been open to the worker to have

relied on any of the injuries he suffered (all

of which materially contributed to his

incapacity in respect of which the award of

compensation was made) in order to support the

award: Bushby v Morris, (1980) NSWLR 81. The employer would therefore have been entitled to

claim indemnity for the whole award from any

of the four insurers who, between them,

provided cover during the period of Fonyodi's

employment.

Then he says, "As a matter of practicality" the way in which the thing was conducted depended on the

contribution agreement and, at line 12:	it is argued that the defendant, if it
succeeds in this case, would in truth obtain
recompense as to the whole of the "additional amounts" by virtue of the Contribution Agreement and not because it had paid them "by
virtue of" the relevant provisions of the 1958
Act.

And then he goes on and says, at line 20:

The insurer can obtain only so much recompense

as could have been obtained by an employer

whose insurer he is, but if the insurer

indemnifies the employer he can obtain all the

recompense that the employer would have been

ACC(2) 101 9/9/93

entitled to obtain had he paid the

compensation.

And then he comes to the conclusion, and he refers

to a case where that position was arrived at. That

is the case referred to at 323, at line 14,

Australian Eagle, a case which was not referred to

in the MIM case, to which I will refer a little

later. And the same line of reasoning is adopted

by the Full Court, commencing at page 389 and going

through to 392.

Going back to the outline:  I have already

made the submissions which are contained in

paragraph 7.	We go on in paragraphs 8, 9 and 10 to
deal with the statutory scheme argument.	In our

submission, when one looks at the terms of the

speeches that my learned friend referred to, both

simply by page reference and by reading out the

passages to the Court - I shall not go to those
passages but they are, in our submission,
completely neutral. In our submission, there is

nothing to be found in the terms of the statute or

in the speeches which lead to any different

conclusion than the conclusion one reaches by

simply reading the terms of the statute.

BRENNAN J:  Mr Shaw, in paragraph 8 you say:

Obtaining recompense would have been no

windfall to the employer.

Could I just ask how that operates in the case of

Senzo - and I am looking at tab 3 of the

appellants' papers. If the employer had paid the

amount of $20,000 and claimed recompense on the

footing that that $20,000 was in respect of an

injury occurring in 1973, why would he not have had

a windfall?

MR SHAW:  I am sorry, I have lost the thing, Your Honour.

BRENNAN J: It is simple enough, I think. If you take the

first - - -

MR SHAW:  What page is it, Your Honour?

BRENNAN J:  Tab 3. If Heath paid the $20,000 awarded and

then claimed recompense on the footing that the

relevant injury occurred in 1973, why would there

not have been a windfall to the employer?

MR SHAW:  Your Honour will recall that what happened was

that the funds were set up and financed by

prescribed surcharges and contributions on
premiums. They were collected by the insurers and

then paid on to the various funds. So that, I

ACC(2) 102 9/9/93

suppose in a way, one was insuring oneself against

the liability to pay an additional amount. That is not an accurate way of describing it, but employers

were being charged an amount of money which was

paid into a fund which was intended to be paid out

to meet any additional amounts which the employer
had to pay.

Perhaps I should also say this: the amount of

the surcharge or contribution, a maximum was fixed
in the statute - it was up to 40 per cent - but

what exactly it was was to be determined by

regulation. There is really no evidence at all as

to either how the contributions or surcharges were

fixed - by reference to what possible claims, I

mean - nor is there any evidence at all as to how

the insurers, when they were fixing their own premiums for subsequent policies, fixed their

premiums.

My learned friend, in his submissions,

suggested that the premiums by the insurers were
fixed on the basis that if a later injury occurred

they would be wholly liable in respect of it, but

there is simply no evidence about that, nor is

there any evidence about the way in which

contributions were fixed, and the other is just as

likely - - -

BRENNAN J: Well, putting it another way, if the employer

had claimed the recompense, he would have got

60 per cent back into his pocket, is that right?

MR SHAW:  Yes.

BRENNAN J: And, if C.E. Heath claimed the recompense they

get 60 per cent back into their pocket?

MR SHAW:	Yes.
BRENNAN J: But, in distributing the 60 per cent to the

previous insurers they pay them only respectively

9.7, 17.8, 24.3 and 42.68, is that right?

MR SHAW:  Your Honour, I am not quite sure what the

percentages were -

BRENNAN J: Well, whatever the percentages are. They are

less than 60, so Heath ends up with a profit?

MR SHAW: Well, Your Honour, no, all that would have

happened is that the amount for which it was liable

would have been reduced.

BRENNAN J:  Amount for which what would have been liable?

Heath pays $20,000.

ACC(2) 103 9/9/93

MR SHAW:  Yes.

BRENNAN J: It is to get 60 per cent back on recompense, on

your argument; what does it do with it?

MR SHAW:  It shares it amongst the people who are entitled.

BRENNAN J: Well, somebody must be getting a profit, because

those subsequent to Bishopsgate were liable under

their policies for an amount which exceeded

40 per cent.

MR SHAW: Well, that depends, Your Honour, on how one

regards the operation of the funds and the payment of the premiums, and how they were all calculated.

In our submission that does not necessarily follow

at all.

BRENNAN J: Well, does this follow, that if a claim had been

made against Mercantile Mutual, to take an example,

in respect of the injury which occurred on 1 July

1980, it would have been entitled to recompense in

an amount of 24.37 per cent, or whatever it might

have been, of the amount paid out.

MR SHAW:  Yes.

BRENNAN J: Whereas now, under your argument, it will

receive a recompense of 40 per cent.

MR SHAW:  I am sorry, I think I got a little lost, but it

would, according to our submission; be entitled to

claim recompense on the 40 per cent-odd basis.

BRENNAN J: That is right.

MR SHAW:  Yes, Your Honour.

BRENNAN J: In other words, its position has been improved

by the fact that the claim was not made in respect

of an injury covered by its policy; not claimed

specifically in respect of an injury covered by its

policy.

MR SHAW:  Yes. By reason of the arrangements between the

insurers. If I might now go to the contribution

point - - -

DEANE J:  Mr Shaw, before you do that, and I do not want to

take time, I would just like your answer to this,

as I read Justice Tadgell's judgment at the pages

you referred us to, it seems to weigh against

rather than in favour of your argument that

C. E. Heath is entitled to recompense in respect of

its period of cover, or in respect of the

proportion of the employment in its period of

cover. Do you follow my question?

ACC(2) 104 9/9/93

MR SHAW:  Yes.

DEANE J: Am I wrong in that, or - - -

MR SHAW:	No, I think you are right in that, Your Honour.
DEANE J:	I see.  Good, thank you.
MR SHAW:	If I could now go to the contribution point. The

directions of the Treasurer are referred to in the

judgments below at 258 and 265 and in the

Full Court at 375. The sections of the Act in

relation to the insurers are 2C(7), that is to say:

where an insurer pays or is required to pay an
amount under sub-section (5), the insurer

shall be entitled to be recompensed -

So that if the insurer is required by the Treasurer

to pay on behalf of the employer any additional

amount, he is entitled to recompense, and he is
also entitled to recompense if he pays. Dealing

with the last insurer first, I have already taken the Court to the passage I think that Your Honour

just referred to at 321 in the judgment of

Justice Tadgell and, in our submission, one may say

in respect of the last insurer that it has not only

paid, but been required to pay, since it was an

insurer on risk. At 389 to 90 the Full Court

examines the operation of these provisions and at

the top of page 389 says:

it must be borne steadily in mind that the

sections require the identification of an

additional amount that is payable by an

employer and thus invite attention, at least

in the first instance, not to any question of

the liability of an insurer but to the

liability of an employer to the worker.	Once
this is recognized the fundamental error in
the appellant's submission is apparent. The
first question is whether an employer is liable to pay an "additional amount". If the employer is liable, the next question is
whether an insurer "pays" or "is required to
pay" that amount on behalf of the employer.
The fact that an insurer may otherwise have
been obliged to outlay the same amount of
money is irrelevant to the question whether a
payment by it discharges a liability of the
employer. Further there is nothing in the
sections which suggests that the insurer may
seek recompense only if it has discharged the employer's liability to the worker in
circumstances where it would not otherwise have been liable to outlay the amount
concerned or only where it makes the payment

ACC(2) 105 9/9/93

pursuant to a statutory, as opposed to

contractual, obligation to do so. Rather the

sections invite attention to the two questions

that we have identified - is the employer

liable to pay an additional amount; does an

insurer pay, or is it required to pay that

amount on behalf of the employer?

Then, going over to page 390 at line 6:

The right of an insurer to recompense

arises if it "pays or is required to pay an

amount" under section 2C(S) or 2G(l).

And they go on and examine that question and come

to the conclusion that an additional amount is in

fact payable and in fact has been paid. My learned

friend made two submissions: one rested on the

meaning of "by virtue of". "By virtue of", I

should say, appears in the definition of

"Additional Amount" and in the section which gives

the Treasurer the right to require an insurer to

pay and, in our submission, when one looks at where

the words "by virtue of" appear in the Act, all
that is being referred to is compensation which is

payable or an increase which follows from the

various provisions which are referred to.

When the insurer is referred to in

subsection C(S), it is submitted that the power

given to the Treasurer extends to any insurer of

the employer who is on risk. At 335, in the

judgment of Justice Tadgell, he commences to deal

with the question of the ability of the other

insurers to claim, and he concludes that they do

have an ability to claim. At the bottom of

page 336, at line 18, he points out that the

settlement of the contribution agreement was a

practical necessity and says that, at line 22:

The practical effect of the contribution

Agreement and its implementation in the

circumstances of this case was, in my opinion,

to constitute the firstnamed defendant agent

of the other defendants for the purpose of

settling the employer's claim for indemnity.

The effect of the satisfaction by the

firstnamed defendant of the worker's claim

against the employer was as though the

firstnamed defendant had discharged on behalf

of the other insurers their due obligations to
the employer to indemnify him in the
proportions of their contribution to the first

defendant. That is to say, payment by the

first named defendant was made for the benefit

of all defendants.

ACC(2) 106 9/9/93

And then, going down to the bottom of page -

BRENNAN J:  Why would there be an agency on behalf of the

other insurers if the employer sought payment only

from the insurer who paid?

MR SHAW:  Your Honour, because of the effect of the

settlement and contribution agreement - if I might

take Your Honour to the next page. After

His Honour saying that he would not construe the

contribution agreement technically, at line 4 on

page 338, he said:

I was also invited to conclude that there is

no evidence that the firstnamed defendant, who

met the claim in accordance with the

Contribution Agreement, did so on behalf of

others. I do not agree. Indeed the

communications between the defendants entirely

support the conclusion I have drawn.

What he is referring there to is this fact, that

what one is concerned with here is dealing with the

claim and in the end making the payment. The

question is, in doing that, was the last insurer

acting as the agent or for the others? If one

looks in paragraph 16(a) of the outline,

Your Honour will see that there is a reference at

the end of paragraph (a) to a series of pages in

the appeal book. Those pages contain

correspondence between the last insurer and the

other insurers; the last insurer writing and

saying, "Well, here this claim has been made

against us and we want to act pursuant to the

settlement and contribution agreement on behalf of

you because you were on risk, too; do you agree?"

The letters show that they did and they agreed

to pay contributions. That all occurred before the

award was made. So that, in our submission, there

is quite considerable evidence that the last

insurer was acting for the others. That the
insurer was acting on behalf of the employer

appears at page 113 in paragraph 17 of the agreed

facts.

BRENNAN J:  Does it follow that because the last insurer was

acting with the authority of the previous insurers, that the payment which that insurer makes should be

invested with the character of a payment made of

the several amounts for which the previous insurers

were liable?

MR SHAW:  The way in which the contribution agreement is

drawn up certainly means that as between the

insurers that is so.

ACC(2)	107	9/9/93
BRENNAN J:	Of course, but that may not be the relevant relationship.	I would have thought the relevant

relationship was the relationship between the last

insurer and the employer.

MR SHAW: That is certainly a relevant relationship,

Your Honour, yes.

BRENNAN J:  I would have thought that that was the relevant

relationship that one would look to in order to

give a character to the payment that was made. The

employer resorts to the last insurer for indemnity.

The last insurer takes over the conduct of

litigation and makes the payment, and the employer
is thus discharged. The employer knows nothing of

the agreement between the previous insurers. He

simply resorts to his current insurer and has the

liability satisfied.

MR SHAW:  Your Honour, that ignores the circumstances in

which the settlement and contribution agreement

came into existence. It came into existence

because, in circumstances like Senzo where the

employer made a claim on the last insurer, the last

insurer had begun, in many cases, to say, "I will

not pay because there are other insurers who are

relevant", and that had led to a great deal of

difficulty because everybody had to be joined and

the thing became terribly complicated. It was out

of those circumstances because the government said,

"Look, really, this cannot go on because workers

are not being paid when they ought to be paid

because there is this difficulty about which of the

insurers is liable. Something has to be done or we

will legislate in order to fix it." It was out of

those circumstances that the agreement was drawn up

and in fact nearly all insurers adhered to it.

That circumstance is referred to by His Honour - I

will have the passage turned up.

What we submit is that in relation to those

other insurers they paid because of the
contribution agreement, and they were required to

pay because of the Treasurer's requirement and,

accordingly, they too were entitled to recompense

in accordance with the terms of the Act. We go on

in paragraph 17 of the outline to deal with the

situation if, instead of the settlement of

contribution agreement having been drawn up to
provide for the last insurer to deal with the
matter as it provided for the earliest and if, in
fact, the claim had been made on the earliest, it
would seem that, in those circumstances, a claim
for recompense could be made and, in our

submission, the fact that the other solution was

adopted ought not make any difference.

ACC(2) 108 9/9/93

Now, if I might last go to the question of

contribution, apart from the settlement of

contribution agreement, because it was accepted

below that had there not been such an agreement

there would have been a right at common law or

equity to contribution. My learned friend

suggested, as we understood him, that contribution was confined to cases of double insurance. In our

submission that is simply not so; contribution

applies in all sorts of circumstances.

For example, it applies as between co-

sureties, it applies - in some circumstances at any

rate - as between joint tortfeasors, and it is true

that in England, Merryweather v Nixan limited the

extent of contributions between co-tortfeasors, but

that was done on policy grounds. It is clear from

Palmer v Wick in the Privy Council, 84 AC 318, it

is case 18 on our list of cases, that contribution
is available, at least in Scotland, on that basis.

In Stoljar's Law of Quasi-Contract he refers to, at page 152:

contribution is available as between joint
debtors, as well as between co-trustees,

co-partners or co-directors.

And he refers, for example, to an instance given by

Lord Kenyon in Child v Morley, where Lord Kenyon

said:

I remember a case in Rolle's Abridgment, where a party met to dine at a tavern, and after

dinner all but one of them went away without

paying their quota of the reckoning, and that

one paid for all the rest; and it was holden

that he might recover from the others their

aliquot proportions.

Other examples are, for example, granting a rent
charge out of land, then selling the land in

separate portions; the charger then taking all the

rent from one of the new proprietors and that
proprietor is entitled to contribution from the
other proprietor. So, in our submission, it is

perfectly clear that contribution is available in

very many circumstances as the Full Court says.

Then my learned friend said that the case of

Albion, 121 CLR 342, demonstrated that there was no

double insurance here and he referred to what was

said by the majority of the Court at 345 to 346.

In our submission, assistance may be derived from

that case, but more assistance is derived by

reading, on page 346, a little further than he

ACC(2) 109 9/9/93

read. There the two insurances were an insurance,

one, to:

indemnify the Employer -

this is at the bottom of page 343 -

against liability to pay damages at Common

Law ..... in respect of, personal injury to any

employee who is a worker within the meaning of

the Workers' Compensation Act.

And the other insurance was an insurance against

death or injury caused by or arising out of the use of a motor vehicle and Mr Justice Myers had come to the conclusion that they were not the same risk.

And in the middle of page 346 they set out what

His Honour said:

The plaintiff insured against the risk of a

servant becoming entitled to compensation from

his employer for any injury in the course of
his employment, whether the right to

compensation arose from the insured's

negligence, or not. The defendant insured

against the risk of any person becoming

entitled to damages for injury arising out of

the use of a motor vehicle caused by the

negligence of the insured. I do not think

that it can be fairly said that the insured

company insured against the same risk with

both the plaintiff and the defendant.

The Court goes on:

It is at this point that we, with

respect, have come to a different conclusion

from that of his Honour. It seems to us that

each policy did cover the very risk against

which the policy holder did seek indemnity

from one of the insurers. The matter can, we

think, be decided simply enough by inquiring

whether payment by one insurer of the policy
holder's claim for indemnity would provide the

other insurer with a defence to a like claim

against it.

If one asks that question here, one does have, it

is submitted, double insurance. My learned friend

referred to Manufacturers Mutual Insurance v National Employers' Mutual General Insurance

Association, 6 ANZ Insurance Cases.	The argument
of those two cases took half a day.	The judgment

was unreserved and the court was not referred to

the Australian Eagle case that I referred to

earlier. Moreover, if one goes to the report at

ACC(2) 110 9/9/93

page 76,964, in the second column, the first

complete paragraph, Justice Samuels says:

The principles of double insurance, I

have said, were debated below, but received a

rather more cavalier treatment on the appeal.

Mr Grieve first repudiated reliance upon those

principles but then recanted, and

Mr Puckeridge moored himself firmly in the lee

of the doctrine so that I must refer to it

first of all.

So that double insurance did not appear to loom

very large in the argument. But going down to the

bottom of that column, His Honour says:

Furthermore, double insurance requires

that each insurer is liable to pay the whole

of the indemnity. That seems to have been

accepted here because of the way in which the

claims have been made by the appellants.

Mr Grieve, when asked, conceded that in MMI's

case a claim made against NEM in respect of

the relevant incapacity could not have

succeeded, and I would entirely agree.

So it is in fact very, very difficult to discover

what the facts are but, if that is so, then of

course the test in Albion was not satisfied but

satisfied for that reason rather than the reasons

which His Honour gives. Going back to the

paragraph immediately before the one which I just

read, which is a passage that my learned friend

referred to, His Honour said:

It is possible that one could have two

employers' indemnity policies on foot at the

same time. But when one is dealing with

consecutive policies, as one is in the present

when one policy insures against liability for

appeals, I do not see how it can be said that the employer is insured against the same risk

injuries occurring in one year and the other
policy against liability for injuries
occurring in another.

His Honour goes on:

It is not to the point to argue that a different result may ensue if ultimately, incapacity arises from a disability in which

the consequences of both those injuries are

implicated.

Which would seem to be the present case:

ACC(2) 111 9/9/93

That injury - that amalgam, if I may term it so - is not the same as the two independent

categories of injury against which the two

policies separately insured. The employer's

liability for the combined effects of two

injuries is not congruent with the several

liability flowing from each of two separate

injuries.

So, the facts, just in so far as one can tell, seem

to be entirely different. There, in fact, is a

case where consecutive insurances were held to give

rise to double insurance. That case is Keene

Corporation v Insurance Company of North America

and Others, (1981) 667 Federal Reporter, 2d series,

1034, 1050-1051. It is a decision of the Federal

Court of Appeal of the United States.

Might I add two further things. The first is

in relation to the meaning of "by virtue of". My

learned friend suggested, as we would understand

it, that in fact the increases were affected by

reason of the provisions of section 5 and 9 and

perhaps 11 of the Act, or the amendments to them,

and not by virtue of the provisions of

section 2A(3). If my learned friend were right in

that it would lead to the consequence that there

never were an additional amount because all the

increases were affected that way, if one looks at

it in that sense. In our submission, it cannot

mean that.

The second matter is this - most of this I

have said before, but not all of it - it relates

really to what Your Honour Justice Deane said about

black and white. I said to Your Honour that really

the question of what the amount of recompense was

did not arise, and Your Honour said, "Well, it may

arise incidentally if one is concerned with the

position of one insurer who may not be entitled at

all". So, in that sense one does have to deal with

it, and we accept that, but they are, it is

submitted, separate questions, whether somebody is

entitled to recompense and, if so, how much, how

one works it out.

There are various possible ways of working it

out and some ways of working it out might lead to

greater recompense than others. One reason for

working it out in a way which produces a smaller

amount would be, of course, that it eliminates or

reduces a profit, which might otherwise result if

that were so.

I said I would hand up the copies of the

transcript where that concession was made, and

these are they. The other thing I had to do was

ACC(2) 112 9/9/93

find the passage that recounted the circumstances

in which the settlement and contribution agreement

came into existence. I have not yet found that.

BRENNAN J: But your submission would be that once it is

found, those circumstances are such as not only to
account for the agreement but to give the

agreement, as it were, such a customary force that

those who are in the business of insuring must be

taken to know that their relationship with their

last insurer is governed by the terms of the

agreement.

MR SHAW:  Yes, Your Honour.

BRENNAN J: That is a very wide proposition, is it not?

MR SHAW: It is, Your Honour, but where one has the

circumstances that I related to Your Honour and the

evil is remedied in that particular way, it is

really providing for, amongst others, employers a

way of dealing with the problem which had arisen

which was, as it were, for everybody's benefit.

BRENNAN J:  Do you contend that the evidence goes as far as

establishing a custom of the market?

MR SHAW:  No, I do not.

BRENNAN J: Then, if you do not, is the evidence material?

Or put in another way, is there some other finding of fact which would bind the particular employer?

MR SHAW: There is not any finding in relation to the

particular employer, no, Your Honour.

BRENNAN J: Absent a finding a fact affecting the particular

employer, so that we can get an understanding of

the particular relationship between that employer

and the last insurer, and absent a custom of the

market, is there any other way in which the

existence of the agreement could give colour to the

relationship between the employer and the last

insurer?

MR SHAW:  I suppose, Your Honour, simply as colouring the

approach of one of the parties to that relationship

which, in our submission, is sufficient in the

present circumstances.	I will find the passage,
Your Honour.

BRENNAN J: Yes, thank you.

MASON CJ:	Mr Merkel?
MR MERKEL:	If the Court pleases, at paragraph 17 of my

learned friend's outline he referred to certain

ACC(2) 113 9/9/93

suggested concessions of counsel before

Mr Justice Tadgell. Can I just point out that what

is there referred to were matters stated in

argument and closing addresses, and the matter was

conducted in the Full Court in a way that was quite

different to those concessions and, indeed, if I

could give Your Honours the reference, at appeal

book 389, at lines 10 to 15, and 391 to 392. It is

clear that the matter conducted in the Full Court

was on the same basis as conducted here. That is,

that where there are post-amendment date injuries
there is no additional amount so, we say, it may be a good debating point before the Full Court, but it

is not a matter of relevance before Your Honours.

My learned friend kept seeking resort to the

problem that arises with different employers as if

it somehow throws light on the present problem and,

we say the simple reason why it does not is that

the Act in 2C(l), (5) and (7) focuses on the

liability of the employer. So, that if a liability

of an earlier employer is increased, then the Act

has its own scheme for that employer, but where

there is only a single employer the issues arise,

as we have put it in our submissions in-chief, so

that there is no inconsistency between the two

situations.

My learned friend also sought to say there was

neither windfall nor profit in the Heath situation.

Can I just give Your Honours the appeal book

references. At appeal book page 333, the separate

amounts received in Senzo by way of recompense, as

claimed, were Royal $1590.35, NEM $949.20,

MMI $5568 and Bishopsgate $1012.40, so the total

was $9119.95. C.E. Heath claimed, and received,

recompense of $13,012 therefore having a net

recompense in excess of the others of $3892.05.

Now, Your Honour Justice Brennan took my

learned friend to tab 3 of Senzo to indicate the

windfall for the employer and the insurer, and my

learned friend gave an answer to Your Honour which

was, in fact, inconsistent with the decision of the

Full Court. Could I just take your Your Honours

briefly to the Senzo chart because it makes a point

that that profit was not accidental, and was quite

real. What my learned friend said to Your Honour

is that each contributing insurer is entitled to

recompense in respect of the hatched portion. So,

that when Your Honour gave him the example of

Mercantile Mutual by claiming an earlier date would

get recompense for 42.68 per cent rather than the

24.37 per cent, in fact, the Full Court by

accepting that recompense is based on the earlier

state, which goes back to January 1973, and that

appears at appeal book 391 and 439, means that the

ACC(2) 114 9/9/93

profit made by Heath, by the court's acceptance of

its claim, as a proper claim, draws the line

across, as a hatched area, with a total recompense

of 60.39 per cent for the whole of the period.

So that, what Your Honours said to my learned

friend is a windfall for the employer because he is
liable, without any retrospectivity, for 100 per
cent of the claim, and yet can get 60 per cent

recompense, and likewise the insurer, indemnifying

him, is liable to indemnify for 100 per cent, yet
gets recompensed for 60 per cent. Each of the

contributing insurers only claim recompense in

respect of an injury during their period. So that,

there is a windfall in the result and, we would

submit, that flows from the Full Court's reasoning

that one draws the line often ignores in totality

any post-amendment injury and, indeed, the fact of

it.

The question was also raised about the fact

that a contributing insurer may be treated unfairly

on the submissions we have put, and we said to

Your Honours, and we would wish to emphasize that

if apportionment was carried out in accordance with

the principles that my learned friend contends for

in Albion, it would have been by reference to the

amount of insurance they had each insured, or

indemnified the employer for, because for those
earlier insurers the statutory requirement did not

operate to require them to pay an amount on behalf

of the employer. It operated only in respect of

the last insurer and there was no additional

amount.

So that is unfairness flows, it comes from the

manner they selected of apportionment, which was

not by reference to the amount they were insured

for, and the equity of that is demonstrable because

their insurance was based on a premium for that

quantum. Heath's insurance was based upon a

premium for its quantum. So that apportionment in

accordance with the contribution principles my

learned friend has contended for would not have

resulted in unfairness. So that, if there is that

result, we do not concede there is, it is

irrelevant to the present case because Your Honours

could not assume that the manner of apportionment

was correct.

I should also mention that Your Honour

Justice Brennan pointed out to my learned friend

that 2A(3) hinges upon payment. Can I just

indicate to Your Honours that the regulations which

govern entitlement to recompense also, themselves,

require payment before an entitlement arises. If I

can just give Your Honours the references in the

ACC(2) 115 9/9/93

legislation book volume 2. The 1975 regulations

are at 282, the 1979 regulations are at 288, and

the 1985 regulations in this regard are at

pages 301 and following. So that my learned

friend's emphasis on a liability increasing by a

requirement to pay, in fact is not the entitlement

that is required in accordance with the regulations

and no suggestion as to invalidity has been made

concerning them.

It was also put by my learned friend that

Your Honours can analyse this entirely in the

context of the position of the employer. That is

right, but only so far as it goes. If an employer

is not entitled to recompense, then there is no

additional amount. If an employer could have been

entitled to recompense, had it been an earlier

injury only in respect of which the claim was made,

one still has to go to the insurer to look at who

made the payment. In that sense, 2C(S) makes it

clear that the insurer's entitlement stems from it

paying on behalf of the employer and, because of

the Treasurer's requirement under 2C(S), the scheme

ultimately recompenses to recompense insurers and

only insurers because employers, by the statutory

scheme, were indemnified against any liability

under this scheme once the Treasurer's requirement

had been made.

Could I go finally to the question of

contribution. My learned friend put to

Your Honours that under the contribution and

settlement agreement, an agency was created. We

would say to the contrary; clauses 2 and 3 of that

agreement, which appears at appeal book 139 to 141,

assume that the contribution only arises after and

upon the last insurer discharging its liability to

indemnify the employer. What thereafter occurs is a procedure for contribution, not as principal and

agent, because contribution is irrelevant to that

question - that is reimbursement as of right under

a separate principle of law - but contribution to

the amount that was paid in discharge of the last

insurer's liability.

So we say that the very notion of contribution

connotes a very different legal relationship to the

principal and agency that he put forward. So that

we would submit that one never gets to the Albion

principle or contribution concepts, and it was

contribution concepts which led to that agreement

being entered into. It is in contrast to the

principal/agency that he has contended for and

which I remind Your Honours was not found as a fact

to exist by either of the courts below.

ACC(2) 116 9/9/93

Finally, he referred to the MMI case as not being easily understood. We say that the MMI case

applied the very principle of the majority in

Albion which was the requirement of the same risk. We say the principles of the Court of Appeal apply

fully to what my learned friend has put as his case

and there is not any satisfaction of the

prerequisites for contribution. But, in any event,

we would submit, if contribution does not create a

principal/agent relationship, which it does not, it

does not take him to the point he must reach which

is payment by the contributing insurer of

compensation on behalf of the employer. So we

would submit, for those reasons, the appeal should

be allowed. If Your Honours please.

MASON CJ: Thank you, Mr Merkel. Yes, Mr Shaw?

MR SHAW:  The passage appears in the judgment of the

Full Court, if Your Honour pleases. It is at 383
to 385 and the reference is, to Mr Ellis' evidence,

which relates to the matter - his witness statement

is at 237 and his cross-examination is at 71.

MASON CJ:  Thank you. The Court will consider its decision

in this matter.

AT 11.52 AM THE MATTER WAS ADJOURNED SINE DIE

ACC(2) 117 9/9/93