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 265

...

"I

• ~

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 No M30 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

ACC(2)	1	8/9/93
MASON CJ
BRENNAN J
DEANE J DAWSON J
TOOHEY J

VICTORIA

Appellants

and

BALTICA GENERAL INSURANCE CO

LTD

Respondent

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 8 SEPTEMBER 1993, AT 10.20 AM

Copyright in the High Court of Australia

MR R. MERKEL, QC: If the Court pleases, I appear with my

learned friend, MR M.F. FLEMING, on behalf of the

appellants in both matters.	(instructed by Purves
Clarke Richards)

MR B.J. SHAW, QC: If the Court pleases, I appear with my

learned friend, MR M. O'LOGHLEN, QC, for the

respondents and the respondent in each of the

matters. (instructed by Lander & Rogers)

MASON CJ: Yes, Mr Merkel.

MR MERKEL:  If I could hand up to Your Honours an outline of

our submissions. Could I indicate to Your Honours that we have also handed up to Your Honours a book

of documents which contain a number of documents

which hopefully will enable Your Honours to travel

through the joint appeal books more easily. In

particular, what we have set out behind tab 1 is a

more detailed outline of the submissions which we

wish to speak to. Tab 2 is a chronology in effect

in respect of the Senzo matter with all relevant

events with cross references to the appeal books.

Tab 3 sets out in chart form what has occurred

in Senzo, and I will have to explain that to

Your Honours, but it helps in effect understand the

facts and in fact encapsulates most of the facts.

Tabs 4 and 5 are the same documents in respect of

the Carter case. Tab 6 is the guide to the

legislative history of the provisions under

consideration in the present matter. Tab 7 sets

out the pre-1975 legislation that gives the context

ACC(2) 8/9/93

to the scheme adopted in 1975, and tab 8 sets out

some of the second reading speeches which were not

in the second legislation book that we had

delivered to the Court.

The parties have selected the two present cases as test cases to endeavour to deal with the

problems that have arisen as a result of the

amendments in 1975 and 1979 to the

Workers Compensation Act in Victoria by which rates

of weekly compensation increased for injuries

occurring both before and after the amending

legislation dates. The problem that arose is that

the liability to pay compensation arises upon

injury, but to the extent that the increases were

for weekly compensation for pre-amendment date

injuries, those increases were retrospective as far

as the employers were concerned.

Can I just identify a particular example of the problem. Thus, an injury to a worker on

30 June 1975 would have resulted in liability

accruing in the employer for weekly compensation at

the rate payable at that date, which was $43 a

week. The amending Act in 1975 increased that
weekly rate to $73 so that, under that scheme, when

compensation was payable at the rate applicable at

the date of its payment, that meant that for the

pre-amending date injury the compensation that

would, in fact, be payable was $73 a week, not $43

a week.

Now, section 72 of the Act required that all

employer liability for workers compensation be the

subject of statutory insurance under a statutory
policy. But the indemnity under the statutory
policy was at the rate payable in accordance with

the law at the commencement of the period of cover

under the policy. So that under the scheme, the

increase was not insured, so the employer was

uninsured for the amount of the increase in so far

as it related back to injuries prior to the

amending date. In so far as it related to injuries

occurring after the amended date, the employer was

fully insured because policies of insurance written

as from 1 July indemnified liability in respect of

the rate applicable at the commencement of the

period of insurance, and that rate had been
increased from $43 to $73 a week.

The difficulty confronting the legislature was how to deal with that increased liability of

employers. The problem was not a new one. It was

first dealt with in 1953 when increases had
occurred and the question at that time was how to

deal with the retrospectivity and what the

legislature did was that it enacted a provision

ACC(2) 8/9/93

which is very similar to that the subject of the

present Act and it made compensation payable under

the Act as at the date of payment. So that the

traditional common law view of this legislation,

which treated the liability as accruing at the date

of injury and the liability being at the rate of

compensation payable at the date of injury, was
changed in 1953 to make liability for the rate, irrespective of the date of injury, that at the

date of payment. But the legislature went further

and required that the statutory insurance cover the

increased liability so that from 1953 until 1975

when there was an increase the statutory policy

under the legislation indemnified the employer for
the full amount of the increase and insurers were

required to deal with the risk and the added

liability by reason of their own premiums, which

themselves were regulated in part under the

statute.

BRENNAN J:  What were the sections that achieved that

result?

MR MERKEL: 

It was section 15 of the Act and the forms of

the section can be seen - does Your Honour have the
legislation book volume l? At page 9, and this is

the state of the law as at 1975, this is reprint No

6, but the legislation history will give Your

Honour the precise provisions and the manner in which it was done and I will take Your Honour to

those in a moment, if I may.  But section 2(4)

provided that:

Notwithstanding anything to the contrary

in any rule of law or construction the

provisions of this Act as in force immediately

before the commencement of the -

1973 Act, which itself increased rates -

so far as they relate to rates or amounts of

compensation, shall apply with respect to

every payment of compensation made on or after

the 6th March, 1973 irrespective of the date
of occurrence or origin of the injury or
disease giving rise to the right to

compensation and -

it then provides "notwithstanding that an award" or

a payment for a lesser amount had been made, and

then went on to say that every policy of insurance

shall indemnify the employer in respect of the full

liability, that is the full amount of the increase.

That was the way it was done as at 1974 but the precise answer to Your Honours question appears

at tab 6 at page 18 of the appellants' book of

ACC(2) 4 8/9/93

documents and Your Honour will see in the pre-1975

history, and I will not take Your Honours to the

provisions because they are, in substance,

identical to that which was section 2(4), but the

scheme was important because what occurred is that

in each amending Act - sorry, paragraph 1 deals

with the 1951 Act which had liability as at the

date of injury which is the traditional way of

viewing liability under the Workers Compensation

Act. Rates increased in 1953. Then in Act 5676, by separate provisions, the rate was increased and

then by section 15, which is in the form of section
2(4), the increased rate applied irrespective of
the date of injury but there was to be full
statutory insurance, full insurance under the

statutory policy for the amount of increase.

The increase again occurred in 1972 as from

1973 and the section I took Your Honours to ensured

that the increase in 1973 was the subject of full

insurance. That was the situation as it existed in

1975.

In 1975 the legislature initially proposed to

deal with the 1975 increase, which was of the order
of 70 per cent and therefore substantially higher
than any prior increase, in much the same way by
increasing the liability of the employer and
providing for that increased liability to be

insured by the insurer under the statutory policy.

That gave rise to problems with the insurers and in

the events that occurred a different scheme was

undertaken and it had a number of steps.	The first
was that under the 1975 Act the rate of

compensation - I am referring now only to weekly

compensation, that is the only part that is

relevant - was increased of the order of

70 per cent - - -

DEANE J:  Mr Merkel, you said the rate increased again as

from 1973. Does that mean that there is a mistake

in 3 on page 18 which says the next increase was

"as from 9 May 1972"?

MR MERKEL:  Can I check that Your Honour? I had got the

1973 date, Your Honour, because of the scheme in

the 1973 amending Act which is 8417, but can I

check that and come back to Your Honour on the

answer to that?

The way in which it was dealt with in 1975 was

that weekly compensation was increased from $43 to

$73 a week. In the same way as it had previously

provided the legislature indicated that that rate

was payable for injury, whenever occurring, at the

rate applicable at the date of payment. That meant

the worker was fully protected so that he would not

ACC(2) 8/9/93

lose the value of his entitlement by reason of a

delay in payment.

The increase was retrospective for pre-1 July 1975 injury. The employer was liable

for that increase but was not insured in respect of

that increase and that increase was therefore

additional to that the employer would have

otherwise been liable to pay and, hereafter, if I

may refer to it as the "additional amount" because,

ultimately, the issue on appeal requires
construction of the words "additional amount" as
defined by the statute, and the case we are putting

is that the wording of the statute itself, and the

whole purpose of the scheme, was to provide
recompense for an insurer paying an additional

amount on behalf of an employer.

TOOHEY J:  Mr Merkel, when you use the term "retrospective",

does it have any significance other than to draw in

accidents occurring, or injuries sustained, before

the date of the amendment?

MR MERKEL:  No, Your Honour.

TOOHEY J: In other words it has no effect, as I understand

it, on payments already made by way of weekly

payments or otherwise.

MR MERKEL:  Save for one exception, that is right,

Your Honour, but the exception in the Act was that if a payment had been made of compensation which

was less than that which was the rate applicable to

the injury by reason of the retrospective

legislation, the work was entitled to the increased

rate. Your Honour will see in the provision I took
Your Honours to that - can I go back to page 9 of

the legislation book, Your Honour. Your Honour

will see at the top of page 10 that the provision

is that you get the increased rate for every

payment irrespective of whether there was an award

for a lesser amount or a payment of a lesser

amount.

TOOHEY J: Yes, but you only get it as from the date the

increased amount becomes operable.

MR MERKEL: That is so, Your Honour.

TOOHEY J: So, in that sense there is no retrospectivity.

MR MERKEL:  Yes, Your Honour is right; it focuses on the date of injury being prior to the amending date.

TOOHEY J: Could it have any effect on lump sum payments or

schedule payments?

ACC(2)	6	8/9/93
MR MERKEL:	Yes, Your Honour.	The critical problem in the

present case relates to lump sum payments because

they are redemption of weekly payments and, to the

extent, they redeem a weekly payment. Lump sum

redemptions after 1 July would have to be of weekly

payments at the increased rate because the rate the

worker is entitled to is compensation payable at

the date he receives his payment.

TOOHEY J:	You mean as a basis for redemption?
MR MERKEL:	Yes, Your Honour.

TOOHEY J: Yes.

MR MERKEL:  And can I indicate to Your Honour that at the

same time as the weekly rates were increased, the

primary statutory limit - it is called the
"applicable statutory limit" - for lump sum
payments was also increased to correspond with the

increasing weekly payments.

TOOHEY J: Yes, I understand that.

MR MERKEL:  So, upon the amending date the lump sum

entitlement increased proportionately to the weekly

payment entitlement.

TOOHEY J: Yes, thank you.

MR MERKEL:  I refer to it as retrospective in that sense and

in the sense I put earlier to the Court that, on
that day, the liability of the employer was

increased in respect of an injury occurring prior

to that date.

The problem arose in respect of recompense for the additional amount. The scheme was to impose

primary liability on the employer not to insure

that liability, but provide for the treasurer to

make a direction that insurers will pay that

additional amount on behalf of an employer as

compensation and to set up a scheme of recompense

for insurers who do so and it established the

Insurers' Guarantee Compensation Supplementation

Fund, which if I can refer to as the "IGCSF Fund".

Now, it was important that that fund was to be

funded entirely by surcharges imposed on employers
to meet their additional liability and what

occurred was, under the amending Act, a liability

was imposed on employers to pay a prescribed amount

in excess of their premium - it was, I think, of
the order of 25 per cent, in this case - which was

then collected by their insurers on behalf of the

State and then paid by the insurers to the State

and then became the IGCSF Fund.

ACC(2) 8/9/93

That meant that employers were insuring for

their ongoing liability to pay compensation as

increased for injuries occurring after the amending
date were uninsured for injuries prior to the

amending date, were required under the statute to

pay that uninsured amount but were indemnified, not

under the policy but under the statute, by the

treasurer requiring insurers to pay the additional

amount on behalf of employers, leaving insurers the

right to recompense from the fund funded by the

surcharge imposed on employers.

The clear object and purpose, and we say the

sole purpose, of the scheme of recompense was to

enable employers paying the additional amount on

behalf of - if I could restate that. It was to

enable insurers paying the increased amount which

was an additional amount on behalf of an employer
to be recompensed for that payment out of the fund

funded by the employers.

That scheme remained until 1979. Under the

1979 Act three things occurred. The first was

there was a fresh increase of the rate of

compensation from $73 to $105. The second was that

indexation was imposed so that there would not have

to be further amending Acts to increase workers

compensation. Under the 1979 scheme all payments

of compensation as from 1 July 1980 and annually

thereafter were to be indexed and increased by the

indexed amount. So that for the purposes of the

scheme, even though the amending date was the 1975

Act and the 1979 Act, each indexation date itself

became automatically an amending date because, on

that date, the worker was entitled to the

compensation increased by indexation, even though

the injury had occurred prior to that date. So

when we refer to the scheme for additional amounts,

the relevant dates, which I will call amending

dates if I might, are 1 July 1975, 1 December 1979,

1 July 1980 and annually thereafter because, on

each of those dates, there was a retrospective

increase in the sense that I have used those words

to Your Honours.

The problem that arose and led to the problems

in the present case are encapsulated by us in the

short outline I handed up to Your Honours this

morning at paragraph 4. Where there was only one

injury prior to an amending date, as I have

indicated it to Your Honours, there was never a

problem. The insurer paid the amount under its

policy, paid the additional amount required to be
paid under the statute and was entitled to claim
recompense - sorry, the insurer paid it on behalf

of the employer and the insurer claimed recompense

and received it under the relevant fund. I should

ACC(2) 8/9/93

say the 1979 Act set up the workers supplementation

fund which was funded by surcharges based on the

1979 increase and the indexation increases.

Likewise, no problem arose where there was

only one injury after the date of any increase,

because there the insurer paid the amount of its

indemnity under its policy and no additional amount

arose because there was no increase or

retrospective increase in liability. But the real

problem occurred where compensation, as in the
present cases, was payable in respect of incapacity

caused by both pre and post-amending date injury.

The insurers claimed that because there was

compensation payable in respect of the pre-amending

date injury by the employer as a result of an

injury which alone could have resulted in an

increased amount, they were entitled when the award

was paid to in effect treat that earliest date of

injury as the relevant date for recompense,

notwithstanding that the employer's liability under the award was not in any way increased by reason of the earlier injury, the liability for the award

being in respect of incapacity arising from
post-amending date injury and therefore the

insurance amount being for the full amount of

compensation payable, which did not include an

additional amount.

Now, the Full Court, and this really is where

the problem has rested until now, held that

insurers were entitled to select the earlier stated
injury, irrespective of their own period of

indemnity, and claim full recompense for additional

amounts paid on that basis, notwithstanding that

the indemnifying insurer had fully insured the

employer for payment of that amount. So that in

Senzo, for example, Heath's period of insurance was
after 1 July 1982 when the scheme had terminated
entirely. It paid, under the award, the full
amount of compensation payable for the incapacity

of the worker for injuries after 1 July 1982, going

back to 1973 - there was work injury throughout

employment.

The court held that it was entitled to select

the earliest date of injury, the subject of the

award, which was in January 1973 and claim an

additional amount comprised, in effect, of about, I

think it is more than half of the compensation it had paid. The court said, alternatively, each of
the successive insurers between 1973 up to Heath as

the last insurer on risk, could claim an additional

amount, again going back to the earliest date of

injury, so that the total either way would be no

more than 100 per cent.

ACC(2) 9 8/9/93

Now, the anomaly that that creates is

demonstrable because Heath obtained premium from

employers based upon the compensation payable under

the Act during its period of insurance, which was
increased by the 1975-1979 legislation and the

indexation increases. It then paid its liability,

which was to indemnify the employer, which was
fully insured at that point of time, but then it would claim recompense for more than half of the

compensation so paid by claiming a date of injury
back in 1973 when it did not have any cover, had no

liability, by reason of these provisions. In

effect, the court approached the matter from the

other end and said, if there was an injury at an

earlier date, then full recompense could be paid,

ignoring the later injury. We say the proper

approach under the statute and, again, giving

effect to its purpose, is to really only give

recompense for the uninsured amount. That is the

sole purpose upon which the surcharge was imposed

upon employers.

The way in which we put it and the question

that we say arises under the statute is in

paragraph 8 of our short outline. Before taking

Your Honours to the legislation, if I can identify the significance of what we have set out in

paragraph 8. An additional amount was defined by

reference to the compensation increased by virtue

of what I will call the retrospectivity provision,

which is that which I took Your Honours to in the

1973 Act.

What we say, in essence, is that an employer

in respect of the post-amendment date injury has

his liability under the Act arise under the primary
liability provisions, which are sections 5, 9(2)
and 9(3). Under those sections liability arises in
respect of injury during employment, and the amount

payable is that applicable at the date on which the

injury is suffered, and that is, during the period

of indemnity of the insurer on risk at that point
of time.	The result and consequence of that is

that the liability is fully insured under the

statutory policy and no resort need be made to the

retrospectivity provisions. So compensation paid

by the employer, in fact and as a matter of law, is
pursuant to the primary liability provisions, not

any retrospectivity provision.

The consequence of that is that because the

compensation paid by that employer, and by the

insurer on its behalf, was not by virtue of the

retrospectivity provision, there is no additional

amount. And that is what I might describe as the

short point of the statutory construction. The

longer route to it arises if there is said to be

ACC(2) 10 8/9/93

doubt as to the clear meaning of those provisions

and if that is the case then we say that the Court should give effect to the demonstrable purpose and

object of the scheme, as discerned from the

legislation, which we say is clear enough, but also

as explained in the relevant second reading

speeches, and that object and purpose was to pay

recompense to an employer and, through the

employer, to the insurer, to the extent that the

employer's liability is additional to that which it

would have otherwise been in respect of the payment

of compensation made under the award.

That is loosely what has been described in the

litigation to date as the date of injury point.

There is a second issue that arises, and if I can

explain that very briefly before taking

Your Honours now to the legislation. It arises in

respect of whether the contributing insurers have

an entitlement to recompense. What, of course,

happens is that there are successive insurers

covering an employer or different employers over a

period in which injury is suffered by a worker.	In
the events that occurred,the last insurer on risk is the insurer called upon by the employer for

indemnity, but that insurer seeks contribution from

the earlier prior insurers for different periods of

indemnity.

Because of the absence of any statutory right

of contribution for this kind of injury - there is

a statutory right in respect of deafness and

disease and because of the absence of, using a

neutral term, a recognized common law right of
contribution between successive workers
compensation insurers, the insurers entered into a
private agreement which is the insurers

contribution settlement agreement, which is at

pages 139 to 141 of the appeal book, pursuant to

which they agreed that the last insurer on risk

would have carriage of the workers claim and that

prior insurers would contribute to the amount paid,

either by agreement or by an arbitration method set	out in that agreement. What happened is when a
last insurer received a claim from a worker, it
handled and, in the two cases we are concerned with, settled the claim with a lump sum payment
redeeming weekly payments. The award was in
respect of injuries running throughout the workers
employment, it called upon contribution from the
prior insurers who each agreed or, in some instances, would have had arbitrated their
contributing amount and they then contributed the
amount agreed or arbitrated to the last insurer on
risk.

ACC(2) 11 8/9/93

Those contributing insurers claimed that they

were entitled to recompense under the fund. If our

primary argument is right that an additional amount

cannot be payable where there is injury after an

amending date then for that reason the

contributors' claims must fail. The alternative

way in which it is put that they must fail is set

out in brief in paragraph 10 of our short outline

in the last sentence. We say that the contributing

insurers have not satisfied any of the statutory

requirements for recompense and in particular their
amount paid is contribution under their private

agreement was not compensation paid on behalf of an

employer and it did not comprise an additional

amount. They are the two issues that arise.

Can I now take Your Honours to the

legislation? Before doing so, can I just take

Your Honours to the statutory scheme which is summarized on the first page of tab 1 of our book

of documents? We have set out, in effect, the

statutory scheme in general and the principles that

have governed workers compensation really for the

purpose of demonstrating the sensitivity of the

legislature to retrospectivity. Traditionally,

workers compensation legislation has been viewed as

having liability accrue at the date, or on the

happening, of an injury notwithstanding that

payment need not be made until supervening

incapacity.

In Kraljevich, a decision of this Court, the

Court held that in the absence of expressed

statutory provision, an increase in the amount of

compensation would not operate in respect of

injuries occurring prior to the date of increase.

Bushby v Morris deals with the successive liability

of employers where each injury results in or

materially contributes to a single incapacity.

It is in that context that we took

Your Honours to the 1953 scheme which really varied

the situation at common law by having retrospective

liability of the kind that Kraljevich said could

only be made by express statutory provision.

The 1975 Act is in our legislation folder, it

is Act 8733, and could I take Your Honours to it?

It is at page 64.	I had indicated to Your Honours
that the 1979 Act did three things.	I mentioned

two: it was the 1979 increase and indexation

increase. The third thing it did is it, in effect,

varied the provisions of this Act by adopting a

language common to both 1975 and 1979. So that the

provisions prevailing, in fact, from 1979, whilst

intending to adopt the substance of the 1975 Act,

used different language to do so. Not a great deal

ACC(2) 12 8/9/93

has been made of the difference, but I mention that

to Your Honours because the wording is different in

the 1979 Act.

The scheme of the Act is in section 2(a) -

sorry before doing so, I should take Your Honours

to sections 5(9) and 9(2) as they existed under the

Act in force at that time. That appears at

page 14. Section 5 was the section that imposed

primary liability on the employer. Section 9(2),

at page 17, provided for the liability for weekly

payments on total or partial incapacity, and the

rate was the rate set out in the clauses referred

to in section 9, which start at page 12, and the

clauses referred to set out the weekly rate at

page 19, in section l(b)(i), where Your Honours

will see the sum of $43. At page 21, Your Honours

will see the limit for incapacity in (iii), the sum

of $15,260. That is the limit in respect of weekly

payments, so that once weekly payments reach that

sum the liability - - -

MASON CJ:  What section is that, Mr Merkel? I cannot find

it.

MR MERKEL: Sorry, it is in the clauses referred to. It is

at page 21, Your Honour, it is (iii).

MASON CJ: Yes, I am looking at the wrong page - 21.

MR MERKEL:  It is l(b)(iii) of the clauses referred to in

clause 9.

The significance, just looking ahead if I may,

is that each time there is an amending Act, by

separate statutory provision in the amending Act
the figures I have taken Your Honour to in the

clauses referred to, $43 and $15,260 were increased

so that thereafter sections 5 and 9(2) operated

within themselves without resort to the

retrospectivity provision to impose liability on

the employer for the amount of compensation. Under

which was required under section 72, and again if I	section 72 which is at page 62 the statutory policy
could just ask Your Honours to note it, I will not
take Your Honours to it, but the forms of statutory policy relevant are set out at appeal book pages 124 to 137 and they indemnified the employer in respect of compensation payable as at the
commencement of the period of insurance.

It was that Act that was amended by 8733 at

page 64 and could I take Your Honours first to the

amendments at pages 69 and 70 because by section 6

of 8733 the rate of weekly compensation was

increased from $43 to $73. That is in

section 6(c), so that the clauses referred to were

ACC(2) 13 8/9/93

amended by that provision and clause (l)(b)(iii)

was amended by increasing the primary applicable

limit from $15,260 to $25,930. That is
section 6(e) at page 70.

So what we will ultimately be saying is that

section 6 of the amending Act, by amending of its
own force the clauses appended to 9(2) increased
the rate of compensation which was then fully
insured for the employer as from the date of the

amending Act. That is as from 1 July 1975. The

retrospectivity - - -

BRENNAN J: 

Is that step automatic? I mean you have the

increase in clause (l)(b)(i) and (iii) which
exposes the employer to the liability and then you

go to 72 to find the insurer's liability. Is that
right?

MR MERKEL: 

72, and then the statutory policy, yes,

Your Honour.

BRENNAN J:  Does the statutory policy indemnify the employer

against liability as it is from time to time or as

it is at the commencement of the policy?

MR MERKEL:  The correct answer, Your Honour, is as at the

commencement of the policy. That is the form of

statutory policy.

BRENNAN J:	So that there was not in fact a complete indemnity under the policy.
MR MERKEL:	I think what Your Honour says is correct, only because the policy indemnifies for the rate
applicable at the commencement of the policy, so within the period of the policy there may be an
element of uninsured liability. There may be that element, Your Honour.

BRENNAN J: Which would have been picked up on the renewal

of the policy in the following year.

MR MERKEL:  Yes, Your Honour, that is right. I am not sure

how in practice that was dealt with. It may not in

practice have been dealt with strictly as I have

indicated to Your Honour. It is only when you go

to the wording of the policy - and I should take

Your Honour to it. It is at page 124 of the appeal

book in the first volume. There are three

different forms of policy, but I do not think this

part changes. It starts at line 20 on page 124:

IT IS HEREBY AGREED that if during the said

Initial Period or any Subsequent Period

described in the Schedule ..... any person

employed in the business described in the

ACC(2) 14 8/9/93

Schedule who is a worker within the meaning of

the Workers Compensation Acts ..... or any
amendments thereof in force at the
commencement of this indemnity or any renewal

thereof (hereinafter called the "Act") shall

sustain personal injury or disease for which

the Insured shall become liable -

Section (a) - to pay compensation under the

Act; or -

and I leave out the common law provision -

the Insurer will indemnify the Insured against

all sums for which the Insured may become so

liable -

Your Honour, it seems that the definition of the

Act by being defined as at the commencement would

result in liability being at the commencement - the

Act in force as at commencement. But there may be

some doubt about that, Your Honour. I have given

Your Honour an answer that seems to be right, but I

am not sure that the practice or the understanding

was that indemnity was given for injury only at the

rate applicable at the date of commencement of the
policy. It may have been well given on the basis

of the rate applicable at the date of injury but,

as I understand it, nothing has been made of that

distinction or that possible discrepancy in this

litigation to date. But there is a hypothetical

possibility that the employer may have to pick up

some part of an increase during the period if the

indemnity was literally confined to the

commencement of the policy.

BRENNAN J: Correct me if I am wrong, but the way I am

reading this at the moment is that the condition on
which liability attaches is the sustaining of
personal injury or disease during an insured

period, the liability accruing whenever.

MR MERKEL:  The reason I took Your Honour to the cases on

the first page of the outline was that the cases

have made it fairly clear that liability vests upon

the occurrence of the injury, but it crystallizes

into an obligation to pay a specific amount upon

supervening incapacity, whenever, and without

statutory provision, the liability of the employer

and the indemnity he secured was always in respect

of the rate applicable at the date of injury; that

was determined by Hebburn and Kraljevich, which I

have referred to on the front page of our - - -

BRENNAN J:  I am sorry, I have not quite followed that,

because the wording is "the insurer will indemnify

ACC(2) 15 8/9/93

the insured against all sums for which the insured

may become so liable". Is that -

MR MERKEL:  Your Honour, that goes back to the liability in

section A to pay compensation under the Act and the

Act is defined as the Act in force at the commencement of the indemnity or any renewal.

BRENNAN J:  Where is that?

MR MERKEL: That is in the lines 23 to 25, Your Honour.

BRENNAN J:	I see, yes, I am sorry I missed that.
MR MERKEL:	Now if that is literally correct - so that

according to the principles I have enunciated to

Your Honours, the liability accrues to the employer

upon the occurrence of the injury, the indemnity is in respect of the rate applicable either during the policy or at the commencement of the policy, and

therefore the fact that incapacity supervenes at a

much later period, it may be many years later, the

liability then crystallizes into an obligation to

pay the amount as at the date of injury, unless the

legislation provided otherwise, which this

legislation did.

Going back to 8733, if I might, at page 64,

the scheme I took Your Honours to showed that the

rate at pages 69 to 70 amended the clauses appended

to section 9; the retrospectivity problem which,

just in response to Your Honour Justice Brennan's

question, related solely to injuries occurring

prior to the amending date, so that the problem

Your Honour put to me as a possibility was not

really addressed in this legislative scheme. The

amending provisions inserted section 2A in the Act
and they relate to, firstly, where an injury occurs

on or after 1 July. Sorry, section 11(1) relates
to the maims; section 2A(2) relates to death and

section 2A(3) relates to weekly payments, at

page 65. So the only relevant provision for

present purposes is section 2A(3). The formula

used was exactly that used in the 1953-1973

legislation:

Notwithstanding anything to the contrary in

any rule of law or construction -

that was designed to overcome the retrospectivity -

the presumption against retrospectivity -

the provisions of this Act as amended by the

Workers Compensation (Amendment) Act 1975, so

far as they relate to rates or amount of
compensation payable otherwise than in respect

of the death of a worker or in accordance with

ACC(2) 16 8/9/93

the Table appended to sub-section (1) of

section 11, shall apply with respect to every

payment -

I ask Your Honours to note the word "payment",

because it makes liability attach at the rate

applicable at the date of payment -

of compensation made on or after the 1st day
of July, 1975 irrespective of the date of
occurrence or origin of the injury or disease

giving rise to the right to compensation and

notwithstanding that compensation had accrued

or was payable before the 1st day of July,

1975 but was unpaid before that date or that -

and then there is the provisions for an award for a

lesser rate or amount or payment at a lesser

amount.

Now, the sole purpose of that provision was to deal with pre-amending date injury and to ensure

that the increased rate would apply to that

pre-amending date injury.	Then 2B dealt with the
insurance provision:

A policy of accident insurance or indemnity

operating to insure or indemnify an employer
against claims under this Act shall not insure
or indemnify the employer against any
increased liability incurred by reason of the

provision made by the Workers Compensation

(Amendment) Act 1975 in relation to any claim

in respect of an injury of a worker arising

out of or in the course of the employment of

the worker before the 1st day of July, 1975 -

So that that reversed the situation previously

applicable, because the insurer insured that

increase, but then went on for the recompense

scheme -

but an employer shall be entitled to be

recompensed from the Insurers Guarantee and

Compensation Supplementation Fund as provided

by Part v. to the extent of any increased

liability so incurred -

and we say those words are very important -

in relation to a claim in respect of an injury

of a worker arising out of or in the course of

the employment of the worker before the 1st

day of July, 1975 if he is entitled to

insurance of indemnity under any such policy.

ACC(2) 17 8/9/93

So, in simple words, what that said is that to the

extent that the employer's liability has been
increased by reason of the retrospectivity
provision in 2A(3) as to rates, to that extent

only, there is an entitlement for the employer to

be recompensed.

Now, the scheme for the insurer was in 2C(l)

and (2) over the page:

An insurer may and shall if required by the

Treasurer pay on behalf of an employer any

additional amount payable as compensation by

virtue of sub-section (3) of section 2A in

respect of an injury arising out of or in the
course of the employment of a worker before

the 1st day of July, 1975.

Now, the words "additional amount" there are of

considerable significance. That word is, in fact,
defined in the 1979 legislation, but we say it can
only mean in this context "additional to that which
the employer was otherwise liable to pay in respect
of the injury"; that is, additional to that it was

liable in any event to pay. Then, in subsection

( 2) :

An insurer shall be entitled to be recompensed

from the ..... Fund for any amount that the

insurer pays or is required to pay under

sub-section (1).

Could I jump ahead. So that, in effect, the

insurers were relived of the risk in respect of

increased amounts for pre-amendment date injury and the employers were to pay for that risk and bear it

by reason of the surcharges payable into the fund. and in section 92 there is an imposition of a

surcharge, which is called "the statutory premium

element", and that that, in subsection (4), is:

levied and collected for and on behalf of Her

Majesty.

Section 97(a) provides for the surcharges to

be paid to the treasurer, and section 98(l)(f), at
page 78, enables those moneys to be paid out as

authorized under the Act. I should say, the fund

was not just restricted to additional amounts or

recompense, it was also a guarantee fund, as well.

That was the situation in 1975.

The next amending Act was at page 82, and this

provided for an increase of the order of 40 per

cent. The same scheme was followed, but could I

take Your Honours first to the amendments to rates,

ACC(2) 18 8/9/93

which appears at page 97. Your Honours will see

that the rates were increased under section 6(l)(c)

and (d), the weekly rate was increased to $105 and

the primary applicable limit was increased to

$36,960.

The statute then, by section 2, at page 83,

redefined the 1975 scheme, in sections 2B and 2C,

to make it accord with the 1979 scheme. It defines

an additional amount in section 2(5) but otherwise

seeks to implement the scheme as I have outlined it

to Your Honours.	An additional amount is defined
there as:

an amount by which the sum payable as

compensation under this Act as in force

immediately before 1 July 1975 in respect of

an injury of a worker arising out of or in the

course of the employment of the worker before
1 July 1975 is increased by virtue of a

provision of the Workers Compensation

(Amendment) Act 1975.

TOOHEY J:  Does that do anything, putting the dates to one

side, that was not done by the reference to

additional amount in the earlier legislation?

MR MERKEL:  Properly construed, no, Your Honour. We say it

seeks to do what the 1975 Act did without any

change. But what we say is that the additional

amount that one derives from the 1975 Act, which is

additional to the liability which the employer

would have incurred in any event by reason of the

retrospectivity is accurately set out in that

definition, but to the extent that it is said there

is ambiguity that it could relate to a

post-amendment date injury, then we say that that

construction would be inconsistent with the 1975

Act, but otherwise, no, Your Honour.

The scheme post-1979 is set out at 2D(l) and

(2). 2D(l) is the equivalent of 2A(3).	I will not
read it, Your Honours. It is the retrospectivity

provision for injury pre-1 July 1979. 20(2) is the

retrospectivity provision for indexation increases

and 2E, 2F and 2G implement the scheme by which the

policy of insurance does not insure additional

amounts. The employer is liable; the employer can

seek recompense; the insurer, when paying on behalf

of an employer, can seek recompense from the fund.

So that is the same as the scheme set up in 1975 as

redefined in the 1979 legislation.

The important provision I should take

Your Honours to that I have not yet is at page 98.

In addition to the amendments to the clauses

setting out rates of compensation under section 9,

ACC(2) 19 8/9/93

at the top of page 98 there is a new subsection

which is 9(3) which provides for indexation

increases for each year as from 1 July 1980. So

that, if I can describe it simply this way, the Act

provided under section 9(2) for the increase in

weekly payments and in 9(3) for increases by

indexation increases annually from 1 July 1980 and

as a result there was retrospectivity in each

indexation increase in so far as it related to an

injury prior to the indexation date.

That 1979 Act at page 101 established the

workers supplementation fund which was set up

solely to provide recompense and its provisions

imposed a statutory surcharge and that was ongoing

to fund the indexation increases. Again, it is

formulated in much the same way as the ICGSF was in

the 1975 legislation, and finally the scheme was
terminated for injuries after 1 July 1982 by

Act 9613 at page 112, and the relevant provisions were at page 117. These are of importance in the

present case because they demonstrate yet another

anomaly of the argument put by the insurers.

The legislature decided that as from 1 July

1982 recompense would cease for injuries

thereafter, so under 4(b) the principal Act was

amended to terminate employer's entitlement to

recompense and under S(b) the scheme was terminated

for insurers. So, thereafter the additional

amounts would be payable for injuries occurring

after 1 July 1982 in the sense that if there was an

injury on 1 July 1982 there was an indexation

increase on 1 July 1983, that indexation increase

would operate under the statutory scheme for the

earlier injury. There was an additional amount

payable by the employer as compensation, but

neither it or the insurer was entitled to

recompense for that additional amount.

So that the scheme terminated as from that

date for injuries occurring after that date, but

some hundreds of millions of dollars are involved

in the issues as to how much is the insurer's

entitlement in respect of recompense for injuries
occurring prior to 1 July 1982 or injuries

occurring prior to and subsequent to 1 July 1982.

The insurers would claim, and the Full Court has

held, that if an injury occurs in 1987 which is

materially contributed to by an injury occurring

prior to 1 July 1982, insurers can go back to the

earliest date of injury and claim the full amount

of additional amounts calculated on that basis.

The magnitude of that claim is able to be

demonstrated from the chart that we have set out in

our book relating to Senzo. Can I take

ACC(2) 20 8/9/93

Your Honours to the book of documents to page 13.

We have sought to set out by chart the nature of

the problem. The chart appears a little

complicated but, if I can explain it, hopefully it

will be simplified. At the very bottom of the

page, the worker's injury which is an injury by

gradual process, started on 1 January 1973, with

his employment commencing on that date, and

continued to 1 May 1983. He was with the same

employer and during that period the employer had

successive workers compensation insurers, each on

risk for the periods there set out. For the period

to 30 June 1974 and to 30 June 1975, the rate of

compensation did not increase. So the employer was

fully insured for the portion under the hatched

section.

Can I just explain what the percentage is of.

Your Honours will see at the top the percentages of

the employer's cover under the statutory policy to

the employer's liability at the date of award.

Your Honours will see on the bottom line in the

left-hand corner the award ultimately made for

those injuries was made on 14 June 1985. So under

the scheme, as I have taken Your Honours to it, the

amount payable for compensation was that applicable

at the date of the award. So that the rates as

increased in 1975, 1979 and indexation increases

were all able to be the subject of the award made

in June 1985.

So dealing with that as the liability to

compensation payable for supervening incapacity,

which occurred in effect in May 1983, Royal

Insurance and Bishopsgate insured of the order of

40 per cent of the total amount of the award under

rates applicable prior to the 1975 increase.	their policy, because that was referable to the cover was at the rate applicable at that date and
that rate was increased, as Your Honours can see,
by the 1975 amendment.

So the employer was insured in respect of

compensation as ultimately payable of the order of

57 per cent and 42 per cent; the hatched amount is

what is the additional amount. That is the

increase of that insurer's liability which is

retrospective in the sense I have outlined to

Your Honours. If I can just describe it this way:

if the only injury was an injury occurring in 1973

and that did not result in an award until 1985 and

the claim was on Bishopsgate, then 60 per cent of

the award would have been an additional amount.

That is the increased amounts by reason of the increases in 75, 79 and the indexation increases

ACC(2) 21 8/9/93

relating back to injuries prior to the amending

dates.

If Mercantile was the only injury, likewise

57 per cent would have been insured for the

employer and 42 per cent would have been uninsured.

With each increase Your Honours will see that the

insured amount goes up as liability under the Act

is amended with prospective increases. So, Your

Honours will see the 1 December 1979 increase,
during which Mercantile is an insurer; a 1

July 1980 increase, during which Mercantile is the

insurer, and its period of cover finishing on 30

June 1981. Now, our point there is that there is

three different liabilities during its period of

cover.

We would say that its liability on

1 July 1980, which was commencement of its last
period of indemnity - at that date it was insuring

the employer for 72 per cent of the amount of the

award and there was an additional amount of only

17.84 per cent, that being the indexation increases

annually from 1 July 1981. So we would submit that

if the claim was by Mercantile for recompense and
it was the only insurer and the injury occurred

only during its period, it would have been entitled

to 17 per cent recompense.

NEM was the next insurer and, as Your Honours

will see, its period of cover finished -

commencement of 1983 and Your Honours will see that

because of indexation increases there was an

additional amount of 9.7 per cent in respect of its

period running out to nil.

The final insurer - and this is the issue that

comes up in Senzo - is the period of cover of

Heath's only commenced in 1 January 1983.	Now,
that was after Act 9613 had terminated an

entitlement to recompense for additional amounts,

so its period of cover was based upon rates of

insurance, applicable at that date, which did not
include, at that point, the 83 and 84 indexation

increases, so that there is a small section of an additional amount that recompense was not able to

given to C.E. Heath.

Now, what happened in Senzo is that Heath,

being the last insurer on risk, was the subject of
a claim for indemnity by the employer in respect of
injury occurring during Heath's period of
employment. Heath's solicitors then suggested to
the employer's solicitors that the claim be amended

so that it relate back to all injuries, starting in

1973.      The claim was then amended; an award made by

consent in the sum of $27,000, which is

ACC(2) 22 8/9/93

14 June 1985, and then Heath paid it and

contribution was agreed to be given by each of the

prior insurers based upon the time each was on

risk.

Now, what happened, which only highlights the

anomaly of the case that we say is put against us,

Heath put in a claim for an additional amount based upon injury occurring in respect of the worker on

1 January 1973. So that, if Your Honours see where

the line is at the bottom of the hatched section

for that period, the effect of that was to draw

that line right across so that 39.61 per cent was

insured, and 60-odd per cent was an additional

amount for which recompense was to be claimed.

The consequence of that, of course, is that

Heath, which had insured during its period up to

90 per cent, was able to get recompense of the

difference between 40 per cent and 90 per cent

under the fund, on the basis that injury occurred both before and after the amending date as I have defined it.

Now, again highlighting the anomaly, each of the contributing insurers also put their own claims

for supplementation in, which was recompense, and

each selected a different date. Their purported

basis of claim was that they each contributed to
the payment by Heath and the amount which they
contributed, they said, was compensation paid by

them on the employer's behalf, so they each claimed

and received recompense.	When this matter came
on - - -

BRENNAN J: They claimed this against the fund?

MR MERKEL: Against the fund.

BRENNAN J: Directly, not through C.E. Heath?

MR MERKEL: Directly, so that one had all insurers claiming

against the fund. When this came on for trial, or

before it came on for trial, it was apparent that

the insurers could not claim 200 per cent

recompense, it had to be limited to 100. So in the

course of the matter before His Honour Justice

Tadgell it was said that they could not succeed on

both bases, either the contributing insurers could claim up to 100 per cent including Heath, or Heath could claim up to 100 per cent and it could then

distribute the benefit back to its contributing

insurers. But that only highlights the capricious

and anomalous result one can get by, in effect,

defining the date of injury point as a right of an

insurer to select any date which is most

ACC(2) 23 8/9/93

advantageous to it to try and seek to maximize its

entitlement to recover recompense.

We say that the Full Court, in upholding that

approach and accepting that for all insurers,
irrespective of their period of cover, or
irrespective of the insurance which they had given,

or indemnity they had given the employer, were

entitled to claim the earliest date of injury,

really meant that in the result the employers were

paying a premium to secure insurance in the case of

Heath up to almost 100 per cent. But Heath were

then able to claim back from the employers through the surcharges imposed upon them under the statute on the basis that in effect they were only insuring

for the 39 per cent, which was the period

applicable in 1973. So that not only are the

insurers getting the windfall of getting premium

based upon cover for a percentage which is fully

insured in the relevant context and then recovering

recompense, that recompense is recovering twice

from the employers because they are the sole

contributors to the statutory fund.

MASON CJ:  What happened in Senzo was that pursuant to the

contribution agreement Heath, as the last insurer,

paid the amount and then the earlier insurers

claimed on the basis that Heath was paying on their

behalf.

MR MERKEL:	That is the way it has ultimately been put. course the claim put to the fund was really in a	Of
one line document in accordance with the
regulations, that each contributing insurer had

paid compensation on behalf of the employer as if
it were primarily liable under the award and the

statute, or under the policy, when in fact what

really happened was that they did not make

contribution pursuant to the liability under an

award, they made it pursuant to the contribution

agreement. But they have put the argument, and they

must put it, no doubt, that payment by way of

contribution under their settlement agreement is

the equivalent of payment under the award, which we

say it is not.

MASON CJ: Yes, and equivalent of payment by each of them

under the award.

MR MERKEL:  Yes, Your Honour. I should indicate that there

is one other section I have not taken Your Honours

to, which is relevant in this context. It is

section 28 of the Act, which is in volume 1.	Can I
just finally explain by reference to this

legislative jungle I have had to take Your Honours

through, that the easiest way of making sense out

of it ultimately is that reprint No 9, which is at

ACC(2) 24 8/9/93

page 124 is, in effect, the consolidating statute,

which consolidates all the various legislative

provisions I have taken Your Honours to, and that

is at page 124, but can I take Your Honours just

briefly to page 187. Page 187 sets out section 28

which provides that:

No payment (other than a weekly payment to a

worker ..... ) shall be deemed to be a payment

of compensation, or in valid compromise of any

claim, under this Act unless -

(a) the payment is made pursuant to an award

of the Board -

And it is an offence under section 28(2) to purport

to make a payment other "than in accordance with an

award".

Now, of course, we are not concerned with weekly payments of compensation, because under the

award there was a lump sum entitlement by way of

redemption. So that we say a further response to

what Your Honour the Chief Justice put to us, is

that it is not possible to make a payment of

compensation pursuant to the contribution

agreement. It must be, and can only be,

contribution by way of reimbursement to the last

insurer on risk who has paid compensation under an

award on behalf of the employer.

DEANE J:  On your approach, would the position be different

if there had been different employers at the time

of each injury?

MR MERKEL:  No, Your Honour. It would be the same result,

but more complicated because that would only

crystallize and focus on the error of the insurers,
because if there was a different employer it would

be undeniable that the last employer who sought

indemnity from his insurer was doing no more than

that in respect of the period of insurance, which is the last period of insurance.

DEANE J: But if there had been different employers under

the.Victorian legislation, would the last employer

have alone been liable, or would the liability have

been spread among the employers proportionately to

the contribution made by the relevant injury.

MR MERKEL:  Can I answer that in two parts, Your Honour: the

last employer is wholly liable for the incapacity

contributed to by injury during that period of

employment. Each earlier employer is separately

liable because injury accruing during its period of

employment gave rise to this right to compensation

on supervening incapacity. So that each is

ACC(2) 25 8/9/93

separately liable for injury in its period of

employment which, by reason of the statute, will

result in the events that have occurred in a

liability to pay the compensation payable on

incapacity. The position for insurers is more

complicated, but - - -

DEANE J: But I do still not follow employers. Say there

are 10 employers which, if one were to apportion

each injury as contributed one-tenth, now on what

you say, the last employer is liable for

100 per cent of the contribution. Is the first employer liable to 100 per cent or 10 per cent?

MR MERKEL:  He is liable for 100 per cent if injury during

his period of employment has resulted in or

materially contributed to the incapacity the

subject of the award.

DEANE J: That is what I said, each - - -

MR MERKEL: There is no apportionment, Your Honour.

DEANE J:	No apportionment?
MR MERKEL:	No apportionment.
DAWSON J:	What happens, if the claim is made against the

last employer, he is liable for the lot and that is

it, he has no recourse against the preceding

employers?

MR MERKEL: That is correct. Indeed, one of the cases we

have referred to - - -

DAWSON J:  So that the worker can select whichever of the 10

employers he chooses?

MR MERKEL: That is correct, Your Honour. Although the

further he goes back, the more difficult the causal

relationship, but what Your Honour says is correct.

DEANE J:  So in my example, if he decided to go against the

first, the first would be liable for 100 per cent?

MR MERKEL:  Yes, Your Honour.

DEANE J: Well, what say if he did go against the first and

got the 100 per cent, what would you say about the

first insurer if the injury was 1973 or 1971?

MR MERKEL:  The injury would also have to be 1971

because - - -

DEANE J: Say the 10 separate injuries, the first in 1971

which contributed 10 per cent, and the employee

goes against the first, what would you say there?

ACC(2) 26 8/9/93

MR MERKEL:	What would happen there, Your Honour, is what has happened in Senzo, that the first employer
would seek indemnity under its policy, in respect
of the injury, which is the last insurer. The last
insurer would be bound to indemnify under the statutory policy of the employee - - -
DEANE J:	No, but forget all about the arrangement between

the insurers, and the employee goes - the first

employer - and on what you said to Justice Dawson,

he gets an award of 100 per cent against the first

employer.

MR MERKEL:  Yes, Your Honour.

DEANE J: Well then, what about the first employer? Can it

make its claim, or it claims against its insurer?

MR MERKEL: It claims against its insurer.

DEANE J:	Or the insurer is taken over and pays?
MR MERKEL:	Yes, Your Honour.
DEANE J:	On your argument, if that first insurer is not a

party to any arrangement with other insurers and

pays the whole amount, can it claim?

MR MERKEL: 

For recompense, does Your Honour mean or - - -

DEANE J: 

On the fund.

MR MERKEL: 

It can claim on the fund, Your Honour, to the

extent to which its payment of compensation
included an additional amount in respect of its
period of insurance, and in fact in Carter - - -

DEANE J: Well in my example, that would be everything.

MR MERKEL: Well, no, Your Honour, because its indemnity was

only in respect of injury occurring during its

period of cover and therefore its period of cover

being restricted to, I thought, the 1980 injury,

it would only be entitled to claim supplementation

or recompense for additional amounts occurring

after that date, not before that date, because it
was fully insuring the employer for the full extent

of the liability at the rate applicable during its

period of injury. So that what happened in

Carter - this is why it becomes a little confusing

because of the indexation problem - - -

DEANE J: If I am taking you out of order, do not worry, but I do not follow the answer you have given and it is no doubt my difficulty, but the example given, on

the basis of your answer to Justice Dawson, is

where the first insurer, with no arrangement with

ACC(2) 27 8/9/93

the other insurers, pays out 100 per cent of the amount on the basis that, even though it was the first injury and only contributed 10 per cent to the damages, it is liable for the whole amount, or

the first employer was liable for the whole amount.

MR MERKEL:  Yes, Your Honour. In Your Honour's example, if

it were the only injury that contributed to the

incapacity - - -

DEANE J:	No, it was not; it was one of ten.
MR MERKEL:	Your Honour, we would say that in those

circumstances which, if I might say, are hard to

imagine happening in the real world, that because

there was a later injury that contributed to the

incapacity which was fully insured under a later
policy, there would be no additional amount because
the employer's liability has not been increased by
the retrospectivity. The employer's liability - I
think Your Honour's example cannot arise in the

real world or under the Act for this reason, that

compensation is only payable under the award. The

award will stipulate the injury in respect of which

it is payable. The moment the award states it is

injury - its post and pre-amendment date, there is

no additional amount.

DEANE J:  I do not want to take time, but let us assume

employer A employed employee B during 1971 and

thereafter the employment ceased. In 1971

employee B sustained an injury. In 1990 employee B becomes completely incapacitated and the incapacity

is caused as to one tenth by the 1971 injury.	He
claims only against employer A.	On the basis of

what you said to Justice Dawson, as I followed it, employer A cannot say, "My injury only contributed

10 per cent, therefore I'm only liable for

10 per cent"; he is liable for 100 per cent.

MR MERKEL: That is correct.

DEANE J: Presume employer A is insured with insurer C who

does not get on with any of the other insurers in

the club and has no arrangements with them but pays the whole of the award. On your argument, what are

insurer C's rights as against the fund? Can he

claim, as it were, the whole of the increased

amount?

MR MERKEL:  Yes, Your Honour, he can, but there is an

important fact which must underlie that answer.

Because Your Honour has said that the claim is in

respect of a 1971 injury, the award will be in

respect of a 1971 injury, the compensation will be
paid in respect of a 1971 injury. That is wholly

retrospective because all of the amending dates

ACC(2) 28 8/9/93

come after that, so that that employer will be

insured only to the 40 per cent. It is uninsured

for 60 per cent. That 60 per cent is additional to

the liability that it had prior to retrospectivity,

and it will recover all of that by way of

recompense. That is what I set out in our initial

outline as the no-problem case.

To deal with the matter Your Honour put to me

about a one-tenth contribution to the injury, the

Act just does not permit, in effect, apportionment

in that way. It makes each employer wholly liable.

But there are two exceptions, Your Honour, which

enable us to say the legislature turned to this

contribution problem and determined that it shall

only apply in two cases, that is disease and

deafness. So that, in effect, the common law

approach is seeking to superimpose a scheme on the

statute which is other than that which the statute

is provided for. And it is an important point, and

I will come to it later, that the scheme for

recompense is the statutory equity, which is not

intended to be supplanted by common law in the way

the contributing insurers are putting it.

DEANE J:  I follow that, but just going ahead, what my

question was directed at is this: if the employee

can, as it were, by selecting the first employer,

produce that result, the argument of anomaly

becomes a little less compelling.

MR MERKEL:  Yes, I follow that, Your Honour. I think the

reality is, it does not happen.

DEANE J: But then query whether, if the employee can

produce that result, all the employers, as it were,

by arrangement between them and directing the

liability to the first employer can produce that

result. Your answer is, no doubt, that they have

not done it.

MR MERKEL: Well, no, there is a better answer, Your Honour.

The better answer is that it cannot happen because

the award is determinative of the injury that has

resulted in compensation being payable and that

must be a complete answer to Your Honour's question

to me. It is not open to your first employer - - -

DEANE J: What, in this case, on the cases.we are concerned

with, the identified injury has been a post-1982

injury?

MR MERKEL: Includes post-1982 injury.

DEANE J: Includes.

TOOHEY J: Pre and post.

ACC(2) 29 8/9/93

MR MERKEL: Pre and post. This problem only arises with pre

and post. It can never arise in respect of a pre

or a post. That is the problem.

DEANE J: Well now, is there, between the decision below and

your argument, an intermediate ground?

MR MERKEL:  No, Your Honour, because the decision below says

that you ignore the post altogether and only look

at the pre.

DEANE J:  I follow that. But I said is there an

intermediate position between that extreme view and

your extreme view that you do apportion?

MR MERKEL: Well, with respect, Your Honour, no. But, with

the greatest of respect, we would say there is

nothing extreme about our view because if

Your Honours accept that the sole purpose of

imposing a surcharge on employers was to meet their

uninsured liability, which we say is undeniably

correct, our result, Your Honour, is exactly in

accordance with the statutory purpose.

DEANE J:  I did not mean extreme in that sense, I should

have said black and white.

MR MERKEL: Well, Your Honour we would submit not because of

my premise, that it is uninsured liability that

this is designed to provide recompense for.

DEANE J: So, nobody suggests that in the case where there

are four injuries, you do not do what Mr Shaw wants

and say, "Oh, you go back to the pre", or what you

want and say, "You only pay regard to the post",

but that you look at them all and say, "Well you

have got to work out the extent to which they

relate to the relevant injuries and, so far as it
relates to the earlier injuries, apportion."

MR MERKEL:  Your Honour, with respect, that would mix up two

separate problems.	One is the problem of
recompense.	Two is the problem of the extent to

which the earlier insurers should contribute to the

end insurer's liability. This has beset this case

from the start. Can I just follow that - - -

DEANE J:  The answer to my question is that nobody suggests

that and, on all approaches, that is simply an

impossible result, is it not?

MR MERKEL:  I think it is an impossible result, Your Honour,

because it cannot be achieved, because there is no

such thing as the extent to which an injury

contributes in this relevant sense, and it may be

something that is not workable, but there was a

more fundamental problem. If one divides the

ACC(2) 30 8/9/93

response into two parts and says the insurer paying

the compensation on behalf of the employer, to the

extent that that payment includes an additional

amount, that is the uninsured liability. That is

something it is entitled to recompense for.

So that its payment to the worker is comprised

in two parts. One is that which it is insured

under its policy and for which it has received

premium, and that which is uninsured for which it

receives recompense. What we say is that

Your Honour's question is really directed to the insurance contribution. I have no difficulty at

all, Your Honour, if it be the law - but we do not

get to it in this case - if then it says, "Of my

insured amount, I should seek contribution from

other insurers whose injuries they've indemnified
in respect of the same loss." That is an Albion

problem. That relates to contribution to its

insurance. To the extent it is paid an additional

amount, it looks not to the earlier insurers but to

the statutory fund. That is, we say, the critical

element. We say that gives effect to the scheme.

I have taken Your Honours to the situation -

BRENNAN J:  Mr Merkel, can I interrupt you just for a

moment. If in the case that Justice Deane was

putting to you there are ten employers, what is

there to stop an employee suing for ten separate

awards?

MR MERKEL:  Only, Your Honour, he cannot recover more than

the compensation payable for incapacity in respect of one injury. So if it is the same incapacity he

can only recover once. If 10 injuries result in 10

incapacities he could recover separately 10 times,

but once he had recovered in respect of the

incapacity that exhausted his right in respect of

injuries resulting in or contributing to that

incapacity.

Bushby v Morris is a decision of the Privy

Council that does deal with that problem,

Your Honour, of successive employers, each being

wholly liable and there the Privy Council indicated

that there was a lacuna in the Act in respect of

this contribution question.	But we say we need not
get to it.	In the present case it does not arise.

DEANE J: Mr Merkel, can I ask you one final question? Just

my own understanding: on your argument, and I

realize that you rely on the whole complex of

legislation, does the case ultimately turn on the

construction of 2F(l)(a) and 2G(3)(a), or is there a prior question about whether, even without those excluding sections, there would be any entitlement?

Is my question meaningful?

ACC(2)	31	8/9/93
MR MERKEL:	Yes, Your Honour.	We would say there is an

anterior question and that is: does the liability

of the employer, in respect of the amount paid

under the award, go any further than its source as

to quantum in sections 5, 9(2) and 9(3)?

DEANE J: So, you would say, even if (l)(a) were not there,

the case would not be covered, but (l)(a) takes it

outside in any event?

MR MERKEL:  Your Honour 2F(l)(a) is marginal, because that

only relates to the compensation payable for injury

after 1 July. It depends on what - we say that

any - our opponents would say that does not include

injury prior to 1 July.

DEANE J:	I follow that.
MR MERKEL:	And that produces the anomaly I have identified to Your Honour, that you could not get recompense
for the after but you could before. But our
anterior question is that you need not resort - the
definition of "additional amount", Your Honour,
always requires resort to what I have called the
retrospectivity provision, which is 2A(3), 2D(l) and 2D(2), and our primary argument is that the
employer's liability under the award has not been
increased by reason of that retrospectivity provision because the amount of the award is wholly able to be attributable to 5, 9(2) and 9(3),
because that is the compensation payable for the
injury for, what I will call, the later dates, and therefore the statutory scheme makes no sense if
the employer is to be recompensed for that which he is liable for without resort to the retrospectivity provision.
DEANE J:	I follow the way you put it, except, if your

argument be completely right, the case could be

resolved, could it not, by reference solely to

(l)(a) and (3)(a), in that - - -

MR MERKEL:  I think Senzo, Your Honour, I am not sure - if

Your Honour will just excuse me - I think Carter,

the chart for which is at page 17, would not be,

Your Honour.	Can I just take Your Honours briefly
to it.

DEANE J:  No, do not take time now. I understand your

argument.

MR MERKEL:  Senzo would be, Your Honour, Carter would not be

because Carter's injury is before the cut-off date.

DEANE J:  I see, thank you.

ACC(2) 32 8/9/93

BRENNAN J: Can I just interrupt once more. If in Senzo's

case Senzo claims and obtains an award against his

employer, if his employer then sought to enforce

of its policy liability and then, pursuant to the ministerial direction, paid the 60 per cent, what

his contractual rights under the policy with Royal

then?

MR MERKEL:  It would be entitled to full recompense for the

60 per cent because the award would be in respect

of injury during its period of insurance. That

would be the only relevant role it would have.

BRENNAN J: But would the ministerial direction have

required Royal Insurance to pay 60 per cent?

MR MERKEL:  Yes, Your Honour, because it would be required

to pay the additional amount on behalf of the

employer which, for injuries during that period, is

60 per cent. That would be the case that we set

out in our outline as the no-problem case.

BRENNAN J:  Why is it that you equate additional amount in

that period, or in respect of that period, with

additional amount as at June 1985?

MR MERKEL:  Because, Your Honour, the additional amount has

to be calculated by reference to the award

ultimately made. That determines the compensation

payable under the Act.

BRENNAN J:  The additional amount is determined by reference

to the employer's liability, is it not?

MR MERKEL:  Yes, as crystallizing incapacity which is

defined in the award.

BRENNAN J: Now, looking at Senzo, as at 1985 - I am sorry,

I will have to go back to 1983, will I not?

MR MERKEL:  I think 1985 is correct, because that is the

100 per cent figure, Your Honour. Everything is a

percentage of the 1985 award.

BRENNAN J: All right. Now, in 1985 the employer's

liability under the Act is based on what sections?

MR MERKEL:  We would say - for the Royal Insurance,

Your Honour?

BRENNAN J:	No, just general.
MR MERKEL:	It would be based upon sections S, 9(2) and

9(3), Your Honour, because they pick up all of the

increases.

ACC(2) 33 8/9/93

BRENNAN J: Right. Now, if the employer pays that amount in

1985, has the employer paid an additional amount?

MR MERKEL:  No, Your Honour, if it is in respect of injury

during that latter period.

BRENNAN J:  It is in respect of an injury. Why do you make

it of that latter period?

MR MERKEL:  Because the award must identify the injury which

contributed to the incapacity which gave rise to

the award, and the award itself is determinative of

that issue, and that "additional amount" is always

defined by reference to the date of the occurrence

of the injury which gave rise to the award. If the

injury was in 1985 and the award was in June 1985,

then there was no additional amount because there

was no retrospective increase. If the injury was
wholly before 1973 then the additional amount in

respect of that award is 60 per cent. The point we

make is that the anomaly is avoided by asking the

question, in respect of the employer's liability

for the injury which established the quantum, "Has

that liability been increased by reason of any of

the retrospectivity provisions?".	The answer must
be in respect of 84/85, "No."

BRENNAN J:  The answer is determined for any particular case

by the terms of the award which identifies the

injury, is that right?

MR MERKEL:	Yes, that must be correct, Your Honour.
BRENNAN J:	So that the chart that we have got in Senzo is

not really determinative of any liability. There

is only one liability under the award and that is

in respect of the date of injury therein specified.

MR MERKEL:  And, Your Honours will find that the dates -

that there is a form adopted in the Workers

Compensation Board, of "all forms all injuries",

which is, in effect, in these lump sum awards,

designed to try an say, "Well this is a final

settlement of everything." But, what has happened

is the injuries specified at least embrace injuries

that are within each of these periods, so that the

awards, Your Honour

BRENNAN J:	So the awards do not specify a particular injury, but specify all injuries that have occurred
during a period?

MR MERKEL:  And specific injuries on dates. Your Honour,

can I take you to 185 where, I think, Senzo is set

out. I think the problem comes up in this way,

Your Honour: the forms of award are all - by

consent, there is a sum of $20,000 paid:

ACC(2) 34 8/9/93

in respect of all injuries arising out of or

in the course of ..... employment -

What happened in Senzo, Your Honours, is that the

application was at page 144, and item 4 said a back

injury occurred:

throughout the course of the employment and in

particular on 21 January, 1983.

That is at line 24, Your Honour, page 144. The

employer sought indemnity from its insurer on risk

in that period, which is the last insurer on risk

at page 149. That insurer then conducted the claim

through its solicitors, Dessau and Milstein. At

page 155, the solicitors for the insurer write to the solicitors for the worker suggesting amending the claim for injury during dates that straddle

each of the prior insured's period of insurance,
saying, "We will consent to that." At page 157 the

claim is amended to cover all those dates, which

would mean contribution could be sought under the

agreement in respect of all the prior insurers.

Then the brief to counsel is at page 182, where

instructing solicitors say they are acting on

behalf of Heath, that is the last insurer. And

then the award is then made at page 185 and then
payment occurs by the solicitors for the last

insurer on risk at page 187.

BRENNAN J:  Now is there anything at 185 which identifies

the injury or the series of injuries?

MR MERKEL:  No, 185. What happened, Your Honour, in these

lump sum settlements is the form, rightly or

wrongly, probably wrongly, is adopted of saying

"all forms, all injuries" and that was the mode

adopted. But to try and overcome the problem to

ensure the test case can be truly that, the parties

agreed, as a fact, that injuries have occurred

throughout employment.	What Your Honour says about
the award is absolutely correct. This is the

standard form of award used, I think, in almost all

cases where there is a redemption of weekly

payments. So to try and endeavour to get the issue

of principle determined, the parties have

approached these cases on an agreed statement of

fact, particularly in Senzo, that injury occurred

throughout employment which contributed to the

incapacity.	So outside the award, that fact
arises.

BRENNAN J: Well, it does mean this though, does it not,

that the award is ineffective to identify the

injury in respect of which the amount of additional

payment can be quantified?

ACC(2) 35 8/9/93

MR MERKEL:  That is correct, Your Honour. You have to go

outside the award for that.

BRENNAN J: Well, is there anywhere to go?

MR MERKEL:  We say, no, Your Honour, there is nowhere to go,

but I appreciate what Your Honour is putting to me.

TOOHEY J: But would that statement be true, Mr Merkel, in

respect of an award directing the payment of weekly

payments?

MR MERKEL:  An award directing payment of weekly payment

will be an award in respect of a defined

incapacity, Your Honour. This "all forms all

injuries" would not arise - - -

TOOHEY J: Yes, I appreciate that, but would the defined

incapacity appear in the award itself? By picking

up the award as a piece of paper, you could

identify what, the date of injury and the nature of

the incapacity?

MR MERKEL:  I think, Your Honour, it will always set out the incapacity. I am told that it may not always set

out the actual injury, but I am told there is a

regulation of some legislation that defines what it

was required to -

TOOHEY J:  You mean, total incapacity or, if it is partial

incapacity, the percentage of partial incapacity?

MR MERKEL:  Yes, Your Honour. But if I can take that on

board and refer Your Honour to a provision, because

I understand it is dealt with.

The real problem in the present case,

Your Honours, really crystallizes when you look at

the regulations because - can I take Your Honours
to volume 2 of the legislation book, which set out

for the requirements for a claim for an additional

amount, and these regulations came in at page 282,

to enable the supplementation scheme to operate

with the amending Act. At 282 at regulation 4, it

says:

Every insurer who may be required to pay an additional amount on behalf of an employer as compensation by virtue of sub-section (3)

of Section 2A in respect of injury arising out
of or in the course of employment of a worker
before the first day of July, 1975, shall

furnish the following information -

and the information answers Your Honour's question,

the:

ACC(2) 36 8/9/93

Date of injury;

Rate of compensation payable as at
30th June, 1975;

Rate of compensation payable from

1st July, 1975.

Now, clearly, the regulations anticipated that this

problem we now have could not arise because you

either have an injury prior to 1 July giving rise

of itself to compensation, or you cannot claim

because you must state a date of injury and have a

rate of compensation in respect of that worker

which has been increased as from 1 July 1975, but

retrospectively. Then, in regulation 5:

Every application to the Treasurer for recompense from the Fund for an additional

amount paid on behalf of the employer as

compensation by virtue of -

the provision, and then it says:

shall be lodged with or forwarded to the

Insurance Commissioner and shall be in or to

the effect of the Second Schedule. and, Your Honour will see the Second Schedule at

284, and it sets out the relevant information that

is required:  "Claim No, Amount Paid, Period of

Disability Covered, Amount of Recompense Claimed

From the Fund."

Now what, in fact, happened in the cases, and

this comes out in Senzo, is that all of the

insurers stated a specific date of injury as if the

compensation was payable solely in respect of that

of injury, and can I take Your Honours to where

that appears. I am told it is at 211,

Your Honours, in volume 1. Sorry, it comes

actually out earlier, but 211 is an example. For

example, Heath - Your Honours will see an asterisk,

by Heath at the fourth asterisk is that they set	it is the fourth entry down. The information given
out a claim number; date of injury: 25 January
1973; employer: Australport Services.

BRENNAN J: This is Senzo, is it?

MR MERKEL:  Yes, Your Honour, that is Senzo. And in the

claim it says, "The amount paid, $20,000".	So, the
way the fund receives it is $20,000 is paid	for a
date of injury:	25 January 1973.

BRENNAN J: Is there anything, apart from that claim made by

C.E. Heath Underwriting, to indicate that any injury was received on 25 January 1973?

ACC(2) 37 8/9/93

MR MERKEL:	Only, Your Honour, the agreed fact was that injury occurred throughout employment each day.
That is how it comes up, so that you have to go
outside the award to say injury in fact occurred, but the vice really is identified because the
documentation claims they paid $20,000, date of
injury 25 January 1973. If that was correct then clearly they were entitled to the additional amount claimed if that was the only injury. But in fact
that had nothing to do with Heath's indemnity under
the policy. Their indemnity was in 1983 for injury occurring in that period for which there was no
additional amount or an additional amount not
recompensable under the statutory scheme because it
was cut off in June 1982.

I should say the same entry appears and our

list of relevant dates identify where the entries

are, but the same entries appear for each insurer

who each separately select a date convenient to

them for the amount they each paid. So each of the

contributing insurers put forward totally different

dates, usually for the others at an early date in

their period of indemnity.

TOOHEY J:  So presumably dates that were consistent with the

letter on page 157.

MR MERKEL:	I will have to check that.
TOOHEY J:	The letter to which you referred us which deletes the 1983 date as the date of injury and selects a
whole series of dates.

MR MERKEL:  Yes, I will check that, Your Honour. The actual

dates are set out in the documentation, I will have

to check whether that coincides. Although that may

be fortuitous in the present case but, in essence,

the supreme court decision held that they were

under claiming because the combined claim of each

contributing insurer can equal 100 per cent or the

claim by the end insurer can be 100 per cent. If

they each only claim during their period of

indemnity they are not getting, in effect,

40 per cent of the total award because each of them

has a smaller additional amount.

So that, in effect, the court, by not

confining an insurer's claim to a payment made

under its policy has, in effect, stretched the

ambit of entitlement beyond that which even the

insurers believed because they thought their claim

would restrict them to, at most, the earliest

period of their cover, which is what happened in

Senzo for all except Heath who went back to 1973.

I should say the amounts involved are extremely

large - some hundreds of millions of dollars turn

ACC(2) 38 8/9/93

upon this particular point. Could Your Honours

excuse me for a moment?

I am told, Your Honour, that the dates claimed

were not claimed by reference to the document I

read to Your Honour. I will just give Your Honour

the references, but the document is at page 157,

which is the letter Your Honour took me to, but in

the book of documents we have handed up to

Your Honours, at page 11, Your Honours will see

that the dates of each insurer's claim were

different. I think it is accurate to say all bar

Heath claimed, at least during their period of indemnity, usually an earliest period, because that

would give them maximum recompense.

So that, going back to the Senzo chart,

Your Honours, which is tab 3; for Royal and

Bishopsgate it did not matter, because if they claimed any date pre-1975 it was the same amount,

but for Mercantile, they claimed date of injury 26

March 1976. Their period of cover, Your Honour,

was to 1981, so that they selected as earlier date

as one could usefully get in their period of cover

to get the maximum recompense. NEM's date of

injury was 30 September 1981. That picked out its

date early in its period of cover, and Heath went

back to 1973.

But that approach shows how capricious the end

result, in fact, is, Your Honours, because they, in

effect, pick out a date of injury that is

convenient, but we say they get recompense for·

insured amounts which is precisely what the

statutory scheme intended they not get.

Could I take Your Honours back to tab 1 in our

book of documents. We have sought to set out the

substance of our construction argument on the date

of injury point at paragraphs 3 through to 5 - that

is in tab 1.	I have in effect identified them to
Your Honours, but the way we put it is: resort is
not required to the retrospectivity provisions.	We
try and indicate our position in respect of Senzo
and Carter in paragraphs 6 through to 12. I have

taken Your Honours to the relevant facts for Senzo

by reference to the chart. Can I just indicate

that I think I have taken Your Honours briefly

through the relevant documents which set out the

Senzo facts, but in our list of relevant dates at

pages 9 through to 11, we have given appeal book

references to all the relevant documents.

Can I just go briefly to Carter because that

involved a slightly different problem. Carter is

best explained by reference to page 17 at tab 5 of

the book of documents. The chart is constructed in

ACC(2) 39 8/9/93

exactly the same way but the injury, Your Honours

will see, was between 1977 and 1981.	The award is
in 1983.

BRENNAN J:	The same form of award?
MR MERKEL:	Yes, all forms, all injuries, Your Honour. AMP

was the last insurer and its period of indemnity
was from 1 July 1980 through to 28 March 1981. It

was the insurer on risk. It paid out the award,

which I think was $8000, on 20 September 1983.

Your Honours will see that its insured liability

was 82.16 per cent of the amount of the award.

Because of the indexation increases in 1981, 1982

of its payment of compensation which totalled 17.84 per cent. Because it had an injury prior to 1 July 1982 - that is the cut-off date - the amending dates for it being the indexation dates in	and 1983, there was an additional amount in respect reason of 2D(2) because they retrospectively increased the indexed increase for pre-indexation date injury. So it claimed and received properly
17.84 per cent as an additional amount, which is
the uninsured amount.
The problem in Carter arises with Baltica. Baltica was a prior insurer between September 1977
and 30 June 1979. It contributed 50 per cent of
the amount paid by the AMP. The AMP properly
claimed recompense and received it for the
17.84 per cent but Baltica, paying its $4000, which
is half the award, claimed to be entitled to
recompense for that amount based upon a date of
injury early in its period of cover. We say that
Baltica raises the two problems. One is whether
recompense is payable for an award in respect of injuries one finds outside the award, both before and after relevant amending dates, and also whether
its payment under the contribution agreement is
properly able to be said in any event payment of
compensation on behalf of the employer which
included an additional amount.

That is in essence the Baltica problem, but

this case really only concerns additional amounts

occurring prior to the date of cover by the insurer

paying the amount under the award.

The response we make to both cases is

endeavoured to be summarized by us at page 3 of the

submissions we have set out at tab 1. What we say

there is that in paragraph 6, the last insurer on

risk in respect of the employer's liability was

paying compensation for which the employer was

liable by virtue of sections 5, 9(2) and 9(3).

Section 9(3), Your Honours will recall, picks up

ACC(2) 40 8/9/93

the indexation increases; 9(2) operates of itself
to increase the weekly payments and the lump sum

entitlements, or the maximum lump sum entitlements.

We say as the quantum of the employers' liability

was not increased by virtue of the retrospectivity

provisions no additional amount as defined was paid

and - - -

BRENNAN J: That is not altogether accurate, is it, once you

concede that the employer's liability was increased

if you treat the award as being in respect of an

injury at an earlier date? Am I right in thinking

that the whole problem is to identify the date of injury in order to determine whether or not there

is an additional amount?

MR MERKEL:  We say the whole problem is not so much to

determine the date of injury, as Your Honour puts

it, we would say that the real problem is to

identify whether the employer's liability under the

award has been increased by reason of an injury

occurring prior to an amending date. It is a

slightly different question, we would say with

respect, Your Honour.

BRENNAN J: Let me assume that, instead of using the form

that they do in these awards, the award had

stipulated that the injury in respect of which it

was made was a 1973 or a 1975 injury. Would it not

be right to say that an employer's liability under

that award would have been increased and fall

within the terms of the statute?

MR MERKEL:  Yes, Your Honour.

BRENNAN J: Well now, the problem is that once you start

using these broad terms to cover everything, you

deny the possibility of identifying an injury and

thereby deny the possibility of identifying the

existence or otherwise of an additional amount.

MR MERKEL: With respect, not in the way which we say is

properly done under the Act, Your Honour, because

Your Honour said the liability of the employer

under the award. Once the award braces a

post-amendment date injury, it is not possible for

the liability of the employer under the award to

have been increased by reason of the pre-amendment

date injury.

DAWSON J: It amounts to this: all injuries, covers the

latest injury and in relation to the latest injury,

there is no additional amount.

MR MERKEL:  Yes, but there is no additional amount,

Your Honour, because the liability of the employer

has not been increased.

ACC(2) 41 8/9/93

DAWSON J: That is right, because it lies outside the

relevant date.

MR MERKEL:  Yes, that is right, and that is why we say,

Your Honour, the date of injury point in a sense is

a misnomer; it is only correct when there is one

injury and then that injury will determine whether

there is an additional amount or not. The minute

one gets multiple injuries straddling an amendment

date, then the answer, we say, must be as we have
put it, that the liability of the employer under
the award has not been increased by virtue of the

pre-amendment date statutory provision.

That is how we put it, and we say it must be

right because in Carter and Senzo the award was for

$20,000 and $8000 respectively. That was the award

that was payable in respect of all injuries, which meant the latest injury and, therefore, it was not

increased by virtue of the retrospectivity

provision because it was calculated by reference

to, and need not go outside, 5, 9(2) and 9(3).

That is why I took Your Honours, when I went to the

amending legislation, to section 6 of each Act,

because section 6 amended the clauses appended to
section 9. It was those sections that increased

the rate for all injuries occurring after each of the amending dates. It was only 2A(3), 2D(l) and

2D(2) that gave retrospectivity to that increase,

so no resort has had, under these awards, to those

provisions. That is how we put the substance of

our case.

What we endeavour to say is that that

construction fully accords with the statutory

scheme intended by Parliament to operate, which was

only to recompense an insurer paying an additional

amount, as we have put it, on behalf of an

employer. C.E. Heath did not pay such an

additional amount because it was fully insured for

the amount it paid, in the relevance sense, and

Each of the prior insurers, had they been the	therefore should not be entitled to recompense.	insurer and it was only injury in their period of
insurance, then they would have had an entitlement
to an additional amount.

I tried to turn the anomaly round full circle

by saying that our argument must be right because

the employers are paying premium for insurance with at that time, and then yet are paying surcharge to

the fund to recompense Heath as if they were not

fully insured. Because it is not a contest here

between a statutory fund and insurers, it is a

contest between employers and insurers, and each

side agrees that the liability must first be

ACC(2) 42 8/9/93

sourced in the employer. It is his uninsured

amount that must be the subject of recompense.

So we say it was sought to set this out in

paragraph 12, as to what the purpose is. I should

explain to Your Honours that although the scheme
provides for recompense for employers, because of

the Treasurer's direction, it meant that the scheme

really intended the recompense always to be to

insurers, and that is, in fact, what happened; so

that the employer was just a step towards the

insurer and identification of an uninsured amount.

There is one decision I should mention to

Your Honours. I do not want to take Your Honours

to it, but the words "by virtue of", which are the

critical provisions in the retrospectivity

provisions as enacted in 1979, the House of Lords

considered those words in Canada Steamship Lines

v R, (1952) AC 192, and at 212 and 213

Their Lordships said that the preferable construction of the words meant "in pursuant of a
right or privilege" rather than "as a consequence

of", and we would say that that is the proper

meaning here. So that, to succeed the employer

must show that the compensation includes an

additional amount paid pursuant to 2A(3), 2D(l) and

2D(2), and they have not done that.

In respect of the question of the relevance of

purpose or object, Your Honours have considered
this question a great deal recently, and if I can
only give Your Honours the cases we rely upon.
Under section 35 of the Victorian Interpretation of

the way in which Your Honour should approach the construction that would promote the purpose and

object and consideration can be given to inter alia
reports and proceedings in Parliament. I think

Your Honours' most recent consideration of this

provision was in Saraswati v Reg, 172 CLR 1, and we

would with respect adopt what His Honour

Justice McHugh said at page 21, about reference to

"extrinsic material" to ascertain the ordinary
meaning to give effect to the purpose and object.

We would also, with respect, adopt what

His Honour said in the New South Wales Court of
Appeal in Kingston v Keprose Pty Ltd,
(1987) 1 NSWLR 404, in particular His Honour's

discussion of the purposive approach at pages 421

through to 424, and Your Honours have considered
this problem in Cooper Brookes, and also with

respect to the Victorian Act in Catlow v Accident

Compensation Commission, 167 CLR 543, and Mills v
Meeking, 169 CLR 214.

ACC(2) 43 8/9/93

With respect to that object, we say that the parliamentary speeches - I will put it in two

parts. We say that the scheme of the Act as

discerned from the words used make clear that the

object is as we have set out in paragraph 12 of

that more detailed outline. But if there be doubt,

we say it is quite clear from the parliamentary

speeches that it was only recompense for an

uninsured amount ultimately paid that was to be the

subject of claims under the fund.

We sought to summarize the second reading

speeches that are relevant in our legislative

history guide, which is at page 18 of the book I took Your Honours to. Could I just briefly take

Your Honours to the second reading speeches we rely

upon for the construction we are intending. They are to be found in two parts but, firstly, could I take Your Honours to volume 2 of the legislation

book. It starts at page 321 and that - I will not

take Your Honours to the passages there, but that

was on 29 April 1975 and at first the

retrospectivity was to be fully insured so that, as

first put to Parliament, what was then discussed

was the same scheme as had operated previously.

But that changed and on 8 May the matter came back at page 350 when the government had amended the Act

to the form that it was currently in in 1975.

Mr Rossiter, in the second reading speech, at

page 350, set out the purpose of the amending
provisions at the bottom of column 1 and said at
the last line of column 1 at page 350:

I referred also to the fact that retrospectivity will create an additional

liability on employers to pay a further amount

of $97 million.

The purpose of the proposed new

section 2B of the principal Act is to enable

the insurers to obtain additional payments

He goes on to talk of the problems of solvency as which the Act places upon them -commensurate with the additional liability

originally planned and then at about point 6 of

that column, he says:

The additional liability which is created by

the provisions of this Bill in respect to

retrospectivity will make it impossible for

insurers to establish their solvency unless

they are able to obtain a premium income equal

to that additional liability.

Then he says half-way down the next paragraph:

ACC(2) 44 8/9/93

The effect of the amendment which I now

propose is to provide that the employer will
be entitled to be recompensed from the

fund ..... to the extent of the increased

liability incurred as a result of the

retrospective provisions of this Bill in
respect of an injury to a worker which arises

before 1st July, 1975.

There is a second reading speech in the Upper House

which deals a little more fully with the purpose.

That is at page 39 of the Court book of documents that I handed up to Your Honours this morning.

That is by Mr Hunt in the Upper House at page 39 at

tab Ba. Mr Hunt there talks in the first column,

about half-way down, at the bottom of the page:

to establish a fund in the Treasury which will

at least finance the cost of the retroactive

element -

Could I take Your Honours to the second column, the

last few lines. What he says in the last four

lines of the second column:

To meet that situation -

that is the retrospective increase -

a fund is now being established at the

Treasury from which this retroactive element

will be met. On this occasion it is estimated

that the cost ..... will be some $97 million.

The reference to cost only makes sense in the sense

that the expected cost to employers' outlays of

retrospectivity will be that amount. That was the

basis of the surcharge he talked about over the

next page. That was the 1975 material.

There was also similar material in respect of

the 1979 amendments. I will give Your Honours the

reference; I will not take Your Honours to them. and following, but particularly the purpose of the

workers supplementation fund is at page 48, and

also a further analysis of the plan at pages 50 to

51. But we say that those passages make it
undeniable that the purpose was as we have put it

at paragraph 12 of our more extensive outline to

Your Honours.

So that we really put it essentially in two

ways.	One is that resort was not had to section
2A(3), 2D(l) and 2D(2).	The second is that if

there was ambiguity or some doubt as to the meaning

or operation, then the purpose was purely to limit

ACC(2) 45 8/9/93

additional amounts to the extent the employer's

liability has been increased under the award by the

retroactive or retrospective provisions. We say

that on either basis, there was no additional

amount in the payments.

The other aspect of the case relates - there

is one aspect I should explain to Your Honours, and

that is paragraph 2 at pages 1 to 2 of this

outline. There is one slight complexity in the operation of the scheme, which we have tried to

explain. At line 5 at page 2 of the outline at
tab 1:

The increased amount of compensation payable for injuries occurring between the dates of each increase i.e. 1 July 1975,

1 December 1979, 1 July 1980 and annually

thereafter ("the Amendment date") was fully

insured -

But there is two conditions:

if incapacity supervened and payment was made

between those dates.

So that, the important point, because liability
attached to the rate at the date of payment, there
will always be an additional amount as in the

AMP case, where there is an indexation increase

supervening incapacity outside the two amending

dates, and that is how one gets an additional

amount. I only explain that so that the scheme is

accurately understood; it does not become relevant

to pre-amendment date injuries of the kind we are

concerned with in the present case.

They are the submissions that we wish to in respect of the, what has been called, date	put
of

injury. The question of contribution we deal with

at paragraph 13 of the more extended outline.	If
we are correct in our primary argument, that an

additional amount as defined only arises in respect

of pre-amendment date injury by resort to the
retrospective provisions, then because the amount

of the award was not increased by reference to

2A(3), 2D(l) and 2D(2), it does not change its

character in respect of amounts contributed by

contributing insurers. So that we never get to the

contribution question if we succeed on our question

of construction.

MASON CJ:  Mr Merkel, we will defer your argument until

2.15 pm.

AT 12.46 PM LUNCHEON ADJOURNMENT

ACC(2) 46 8/9/93

UPON RESUMING AT 2.19 PM:

MASON CJ: Yes, Mr Merkel.

MR MERKEL:  Could I just go back briefly to the questions

Your Honour Justice Deane asked me this morning.	I
embraced Your Honour's questions but I did so
looking at the problem from the eyes of the last
employer, rather than from an earlier employer, and if I can just postulate the following hypothesis
which, I think, embraces what Your Honour put to
me.
If there was employer A in 1973, and employer Bin 1983, and an injury was suffered
during both periods by the same worker which
resulted in incapacity in 1985. Could I just
assume in the Senzo situation, that was an award
for $20,000.	If the worker sued employer A only,

then the award of $20,000 would include 60 per cent

being an additional amount. If the worker sued

employer B only, there would be no relevant

additional amount and there would be no recompense,

in any event, because it was post-1982.

The problem is that if the employee sued both

A and B, and got an award for $20,000 against each, which would be satisfied by payment of one, if

employer A paid the amount of the award, that would

be because it was liable for injury in respect of

its period of employment which is 1973, not any

liability in respect of the 1983 injury, and he

would be entitled to recompense because his

liability has been increased by reason of the

retrospectivity provisions. Just to state it in

the context of our case: his liability would be by

reference to sections 5, 9(2), 9(3), 2A(3), 2D(l)

and 2D(2). That picks up the 75, 79 and indexation

increases.

If B paid the full amount of the award he

would not be entitled to any recompense, his
liability would be for injury in 1983 not 1973 and
liability would arise under sections 5, 9(2) and

9 ( 3) •

If I could then move to the cases we are

concerned with in these test cases which are not

those that I have just outlined, but where there is

only one employer. The situation in that case is

really that of B because B's liability was not

increased by any retrospective provision nor was

the employer. The employer's liability increased

by reason of any retrospective provision.

ACC(2) 47 8/9/93

Notionally it would be argued, no doubt, that his
liability notionally was increased by reason of the

1973 injury but in fact the liability under the

award to pay the sum of $20,000 was not increased

by the 1973 injury.

So that the anomaly that might arise in

Your Honour's example of an employee just suing or

seeking payment under the award from A only does

not arise in our situation. But, as I indicated to

Your Honour this morning, if an earlier employer was picked off and only an earlier employer was

picked off then the injury would not be in the
problem case because the only injury sued on would

be a pre-amending date injury.

We follow that, of course, through to the

insurer because the insurer's entitlement to

recompense only arises when the employer is

entitled to recompense, so that the insurer cannot

pay an additional amount unless that has been paid

by the employer. That is how we would put the

situation as arising under the scheme, and that is

consistent with its object and the proper

construction we have contended for.

There is a second matter I would seek to just

briefly return to, and that is the question raised
by Justice Brennan concerning the fact that the

award was for all injuries and one has to look

outside the award to find, on the agreed facts,

that there were injuries straddling the various

periods.

I think Your Honour raised with me that that

denies the possibility of identifying an additional

amount, and I think I said to Your Honour that is

correct. Your Honour later said when I indicated
that parties had agreed there was injury during
periods straddling amending dates, and Your Honour

said that amounts to a concession on our part, that

the defect in the award is not relevant to the

present case. That is correct, but I would wish to

delineate precisely what the concession is.

In order to get these cases, which are

terribly important, determined as test cases it was

agreed the injuries occurred for the purposes of

these two cases, and one has to look outside the

award to determine that fact. No point has been

taken that the award is, in terms, an all injuries

award, but that is a matter that may arise at a

later date, and I would not want the concession to

be taken that that award is unassailable, but it is

not a matter that arises at the present time on the
issues as raised by the parties. That could be a

serious issue but in another context, and it would

ACC(2) 48 8/9/93

really relate to different evidence and different

matters which we do not seek to raise here.

Your Honour Justice Deane also asked if the

legislation book reference to the 1972 Act was

mistaken as to the date of increase not being

9 May 1972. We have looked at that over lunch.	In
fact, the history is correct.	The increase from
$46 to $43 operated from 9 May 1972.	The reason

for the confusion was that in the 1973 Act 8417 at

tab 7e in section 2(4), the retrospectivity of that

increase was enacted only as from 6 March 1973 and

that led to some doubt, although it does not

matter. It may be that that was unnecessary

because section 2(3) in the earlier Act may have

picked it up in any event.

There was one other matter only that arises

out of questions asked this morning. I think

Your Honour Justice Brennan asked if there were any

statutory provisions which stipulated what was

with that. That appears at page 131 of the

required in an award concerning date of injury. dealt

legislation book and, unfortunately, as with many

things here this may have been honoured in the
breach. That was enacted in the 1979 amendments
and it required, in respect of pre-1975 injury,
specification of the period for which the
incapacity was calculated. It did not require the

statement of the date of injury.

I am instructed that the board treated that

requirement as only applying to an award made after

a hearing rather than by consent. The explanation

for the reason of that provision was - and I will
not take Your Honours to it - but, it is at

tab 8(b) at page 51 in the second reading speech,

and it does not appear to be related to the present

problem because date of injury was not specified

there, but other than that there does not seem to

be any requirement for an award to specify date of	injury or matters that would be of concern for the
way in which the scheme would operate.

MASON CJ:	Mr Merkel, while you are tidying up these matters, has the title to these proceedings been
amended? The title contains reference to Mr Jolly;
he ceased to be Treasurer many moons ago.

MR MERKEL:  I think Your Honour is correct. The Accident

Compensation Commission still retains its capacity

notwithstanding the amendment to the Act, but I

think in respect of the Treasurer that is right,

Your Honour.

ACC(2) 49 8/9/93

MASON CJ: Well, Mr Jolly's name ought to be taken out of

the title.

MR MERKEL:  No - can I seek instructions on that,

Your Honour? I think we may have to seek leave to

amend to include the current Treasurer.

MASON CJ: Yes.

MR MERKEL:  The last matter before going to contribution is

there is one further issue we wanted to put on the

date of injury point, which is different to that

which we have put already, and it is in

paragraph 10 of our outline at tab 1. It relates

to a discrete point to that which we have put

already, and that is that, .in our submission, the

direction referred to in the statute of the

Treasurer to an insurer means the insurer on risk

in respect of the relevant injury for which the

compensation has been paid. So that the scheme

only works if Heath, as insurer, during the 83

to 84 period is only able to claim recompense for

an additional amount paid by it on the employer's

behalf in respect of its period of risk, leaving it

to an earlier insurer to claim in respect of any

earlier insurer's period of risk.

We put it at the top of page 5 of our outline

that Heath was not the insurer in respect of any

pre-amendment date injury, and therefore could not

be subject to the Treasurer's direction under 2C(S)

or 2G(l), and we would put that any other

construction would produce the anomaly that the
direction is not to the insurer of the employer in

respect of the injury occurring during the

insurer's period of cover, but would be to any

insurer unrelated to the injury or the period on

risk.

We say that, properly construed, the statutory

scheme in 2B and 2C, it is at page 130 of the

legislation book that one sees this in the

consolidating Act, and the argument is purely one

of construction. If one starts at page 129 with

2B(l), it says:

This section applies to a policy of accident

insurance or indemnity operating to insure or

indemnify an employer against claims under

this Act.

(2) Subject to subsections (3) and (4), a
policy shall not insure or indemnify the

employer against any additional amount -

(3) is, in effect, a safety net:

ACC(2) so 8/9/93

Where the employer is not entitled to be

recompensed from the Fund for any additional

amount payable by him the policy shall insure

or indemnify the employer for that amount.

It is not easy to see what circumstances that would

arise in but it is clear that the policy in the

insurer is the insurer on risk in respect of the

injury for which the additional amount is being

paid. Subsection (5) defines the additional amount

as being restricted to amounts flowing from

pre-1 July 1975 injury and then 2C(l) provides for

the:

additional amount is payable by an employer -

and then 2C(5) says:

An insurer may, and shall if required by the

Treasurer of Victoria to do so, pay on behalf of an employer any additional amount -

We say the words "an insurer" properly construed in that context, and together with 2C(7)

which enables recompense in this scheme, must mean

the insurer on risk in respect of the injury for

which the additional amount has been paid. We

would submit that Heath is not such an insurer and

it can be tested. It has claimed a 1975 additional

amount, even though it was on risk in 1983. So we

say that to read the words as "any insurer", which

it would have to be read as to enable Heath to

claim is quite wrong and leads to absurd results

and it is clearly not what was intended. So that

we would put additionally to the arguments we have

put this morning that Heath could not be required
to pay an additional amount in respect of its

period of risk and therefore could not claim

recompense for it.

BRENNAN J:	Do we have a copy of the Treasurer's direction?
MR MERKEL:	Your Honour, an oddity has arisen there.	What

has happened is that when the matter was fought

before Mr Justice Tadgell, the parties had an

agreed book of common documents which they were

each entitled to tender documents from. One of the

documents in it was the form of direction given by

the Treasurer. Neither party in fact tendered it

and when this matter came up this morning, I sought

my learned friend's consent to tender the direction

because it seemed somewhat anomalous if it was not

before the Court. Both courts, that is at first

instance and on appeal, have said, based on comment

from the bar table, that there was a general

direction, and both matters are referred to in

ACC(2) 51 8/9/93

their judgment, but we would seek to hand it up to

Your Honours.

We do not believe anything ultimately turns on

it, but it is an important document which we say

Your Honours should have because it is the

direction given, or the form of direction given, in

the 1975 and 1979 legislative context. It was not

formally tendered in evidence, although it was open

to either side to tender it. So what has happened

is that secondary evidence has been given of it

from the bar table, and it seemed undesirable that

that happen.

MASON CJ: Yes, you can hand it in.

MR SHAW:  If the Court would hear me on that matter.

MASON CJ: Yes.

MR SHAW:  If the Court pleases, my learned friend quite

rightly said that the matter has been conducted

below on the basis that there was a requirement of

a particular nature, namely that all insurers were

required to pay the additional amounts. I do not

know that the documents in the book of common

documents in fact do constitute the requirement in

fact. They certainly indicate what everybody has

accepted, namely that a requirement of a general nature has been made. One is a circular and the

other is a letter directed to, as it happens, one

of the parties but not generally.

My learned friend's client, or one of them, is

the Treasurer. It was his requirement in some

former apotheosis, I suppose, that produced this consequence under the Act. We would not at this

stage wish anything be made of the terms of these

documents in case there is anything about them that

somebody might want to make a point of. The whole

matter has been conducted on one basis and we would

not like that to change.

MASON CJ: But you have seen the document, have you,

Mr Shaw?

MR SHAW:  I have seen the document. Oh yes, they are in the

book of common documents. My learned friend said,

yes, I have, and my learned friend asked me if I

minded and I said I did, for the reasons I have

given.

MASON CJ: Well, in the circumstances, we will not receive

them, Mr Merkel.

MR MERKEL: If the Court pleases. Could I now move to the

question of contribution? The submissions set out

ACC(2) 8/9/93

in respect of contribution are at tab 1,

paragraphs 13 through to 16. They only arise if we

lose on our point of construction and the question

then arises as to the contribution made by the

contributing insurers.

The procedure adopted was the same in each

case, that is that the employer claimed indemnity

from the last insurer on risk; the last insurer

conducted the claim and did so pursuant to its

entitlement under the insurer's private agreement.

Under that agreement the insurers were agreeing to

that occurring, but it was a matter open to them to

agree separately as to whether they would agree to

contribute. They each agreed to contribute. The

amount of contribution was to be determined at a

later date. The award was made; it was made

against the employer and it was made in proceedings

conducted by the last insurer on risk, meeting its

own liability under its own policy of indemnity.

After the amount of the award was paid by that insurer in respect of its liability under its

indemnity, the other insurers were called upon to

contribute by way of reimbursement. They each

agreed to contribute on a time-on risk basis for

the full amount of the award and then, based upon

that, apportioned liability on that basis between

them.

Under the indemnity agreement, it was open to

them to either agree or have someone arbitrate the

amount of contribution, but they agreed. They then

each claimed recompense in respect of the amount

they contributed to reimburse the last insurer on

risk.	The question arises as to whether they have
paid an amount by way of compensation.	We say that
the answer to that is put at two levels.

The first is in paragraph 13, and we say that

on no proper characterization of the payment, which

is a reimbursement under the insurer's settlement

and contribution agreement, did they pay an amount

as compensation. One way of ascertaining, or

establishing that is that under section 28, as I

indicated to Your Honours, compensation can only be

paid pursuant to an award. Their payment was

pursuant to their obligation under the settlement

and contribution agreement, so it was not a payment

as compensation. Secondly, it was not -

DEANE J:  Does it appear, Mr Merkel, whether they paid a

full percentage, or a full proportion, or did they

deduct what they claim to be entitled to get from

the fund from what they paid?

ACC(2) 53 8/9/93

MR MERKEL:  No, Your Honour, they paid a full percentage,

based on time on risk. So, if I can take

Your Honour to Carter as a good example.

DEANE J: Well, did C.E. Heath, on its approach, end up

making a profit on the loss?

MR MERKEL:  On its approach it would have made an healthy

profit because each of the insurers -

DEANE J:  I mean, it paid out $20,000 and if it got its

deduction from the fund, say, of $8000, it would be

$12,000 down, they got more than $12,000 from the

others, did it?

MR MERKEL:  I will have to check that, Your Honour. I am

not - - -

DEANE J: It will be interesting to see.

MR MERKEL:  I think the answer is yes, Your Honour, and I

will try and get the arithmetic so I can be more

precise. I will do the arithmetic to show

Your Honour that that is what happened. But, it

appeared to make a profit because it claimed the

full 40 per cent. The other insurers contributed,

as I understand it, their share, time on risk basis

to 20,000 and then in respect of their contribution

did not claim back to January 1973 but to a lesser

period, and they got a lesser recompense.

The Full Court, in struggling with the

problem, just said, "Well all are entitled to claim
back to 1973, therefore either Heath get it and how
they deal with it between the contributors is their business, not the funds, or the contributors get it

and therefore Heath cannot double count." But we

say that created a far bigger problem for the funds

than that which it started with, assuming each

insurer was only entitled to claim during its

period on risk.	I will try and give Your Honour
the arithmetic there.
The second reason why it was not able to be an

additional amount and did not satisfy the

requirements of the statute which are 2C(7) and

2G(3) was that it was not an amount paid on behalf

of the employer. It clearly was not. It was an

amount contributing by way of reimbursement to that

which the last insurer paid on behalf of the

employer.

The third reason is it did not include an

additional amount as defined. An additional amount

as defined is an amount paid by virtue of the

retrospectivity provision. This was paid by virtue

of their agreement, and the fact that there was

ACC(2) 54 8/9/93

agreement or arbitration within the agreement to

determine their liability. So that was not paid by

virtue of 2A(3) and it is not possible to actually

identify any part of that payment that could be

paid by virtue of 2A(3).

The fourth reason we put, is it is not paid

pursuant to a requirement of the Treasurer. Again, there may be, on one view, different ways of making the same point but they each raise a different

question of the source of the obligation.	11 Source 11
meaning whether it was paid pursuant to the agreement or under the statute.

BRENNAN J:  How do we find that as a matter of fact, that it

was paid pursuant to the agreement?

MR MERKEL:  Your Honour, those facts appear from the agreed

facts but probably more importantly, Your Honour,

in the book of documents I took Your Honour to this

morning. Could I take Your Honour to tab 2 first.

The summary of facts there would establish that

because what happened is on 12 May the worker

issued his application claiming injury in

particular on 21 January 1983.

The application was sent by the employer to

Heath, the last insurer on risk. Heath then refers

its application on 10 June to its solicitors

instructing to protect its interests. In June,

Heath seeks contribution under the agreement from

the other respondents. In June there is an

application, I took Your Honours to, to amend the

various dates between February 1984 and December

1984.      The various insurers agree to contribute.

In May 1985 Heath brief its counsel to act on

behalf of Heaths to appear at the hearing. On

14 June the award is made, and on 9 July Heath paid

the amount of the award. Now, if I can just stop

at that point. At that point of time, the legal	relationship between the parties is that Heath has	indemnified the employer under its policy pursuant
to the employer's claim against it. It has paid the amount of the award on behalf of the employer pursuant to its indemnity obligation to do so. It
has received agreement to contribute under the
contribution agreement, the amount of the
contribution having to be determined at a later
point.
It then, over at page 11 of the agreed facts, gets paid contribution - and the arithmetic I will
seek to hand up to Your Honours in a moment when I
get it, but it then gets contribution paid after it has paid the amount to the employer on various
dates in September, October and November 1985, and

ACC(2) 55 8/9/93

the relevant documents are there set out, and then

each of the contributing insurers then claim, in

the manner I identified to Your Honours this

morning, for recompense based upon an arbitrary

date of injury for the amount they paid to Heath.

BRENNAN J:  Do not we come back to this question as to

whether the payment that was made by Heath to

satisfy the award was made by them as agent for all

insurers?

MR MERKEL:  Your Honour, we would say nothing less could

establish a payment as compensation, but the courts

below have not found in favour of the insurers on

that point. Indeed, the Full Court said that even

though that may be the practical effect, it was not

found below by Justice Tadgell, nor by them, to be

the legal consequence, and the reason I have taken

Your Honour to the factual scenario that I have put

to Your Honour is that it is clear from the facts

that Heath paid in discharge of its liability.	The
contribution agreement did no more than give it a
right to seek contribution by a procedure to the

amount it paid but it did not establish, of itself,

agency nor do the facts establish agency.

BRENNAN J: Could you just give us the references either to

the agreed facts which establish that proposition,
or to the finding below which establishes that

proposition?

MR MERKEL: Yes, Your Honour. Firstly, the contribution

agreement is at pages 139 to 141. The way in which

the Full Court dealt with it, Your Honour, is in

volume 2, at page 399, at line 9. Their Honours

said:

Mr Shaw, QC for the respondents submitted that

by virtue of the Contribution Agreement that

last insurer paid compensation in each case as

"agent" of the co-insurers.	Mr Merkel
submitted that there was no agency, as at the
time of payment the identity of the
co-insurers was not known, nor the extent of
any contribution.

That was Keighley, Maxsted.

In addition Mr Merkel submitted that the

learned judge had erroneously held that such

agency did exist.

In fact, his Honour made no such finding

and did not base his decision on agency. He

said, in the case of Senzo, merely that the

"practical effect" of the Contribution

Agreement was to constitute the last insurer

ACC(2) 56 8/9/93

"agent" of the co-insurers "for the purpose of

settling the employer's claim for indemnity".

Can I take Your Honour to the contribution

agreement, which is at pages 139 to 141, and we say

that ultimately this merely provides a basis upon

which contribution can be made because of the

generally recognized failure of the common law to

clearly provide for such a right. Clause 2,

at 139, provided for:

The Insurer of the Employer who employed the

worker at the date of the injury (as defined

by section 3(1)) latest in time -

can I just stop there; that must mean an injury for

which that employer was liable, so that the last

insurer is liable, if there is such an injury, for

incapacity flowing from it -

the nature of which gives rise to the claim,

shall conduct the defence and meet any

legitimate claim in full, irrespective of

whether previous incidents or injuries have

occurred with previous employers or during a

period with another insurer.

Then:

Where an insurer meets its obligations as

required by clause two(2) -

can I indicate there that must mean, meeting any

claim against it in full to the extent of its

obligation, it is agreed that it is without:

prejudice to that insurer's right or
entitlement to claim contribution from any

previous insurers of that employer, or other

employers.

And then there is a 10-year limit.	And then it
goes in 4:

In the event that such contribution is not

resolved within a period of six (6) months of
the date of settlement of the worker's claim
the "Approved Insurers" agree to refer any
dispute concerning contribution to an

independent adjudicator ..... whose decision

will be final and conclusive -

And then it goes to deal with recompense:

In the event that a claim is subject to

recompense from the ..... Fund ..... the insurer

who has met his obligations in full -

ACC(2) 57 8/9/93

and I again emphasize "his obligations in full" -

shall claim recovery from the relevant

Fund ..... The net cost of the claim shall then

be apportioned amongst insurers in accordance

with their agreement contribution.

However, where the "last insurer" ..... is not

entitled to recompense from one or more of the

above Supplementation Funds this section will

not apply and each Insurer involved in the

settlement or contribution shall share in the

gross amount of settlement and seek their own

recovery (if applicable) from the relevant

body.

And then it comes in to respect all claims after

July 1.

Just to complete the factual scenario before I

go to the agreed facts, the actual facts were as I

have indicated to Your Honours, which indicated

that Heath acted in accordance with clause 2 and

discharged its liability to indemnify the employer

under its policy. Then on the agreed facts, can I

take Your Honours to page 110, subparagraph (8) at

the top of the page:

Each of the five insurers adhered to and

considered itself bound by the provisions of

the ..... Agreement made between insurers

approved by the Governor in Council under

section 72 -

At page 118 it says:

In acting for and on behalf of the employer as

one of its insurers as described -

and the steps are taken there as to what Heath

did -

the First Defendant was acting under and

pursuant to the provisions of the Settlement

and Contribution Agreement.

So that we say that takes you back to the

settlement agreement which we would construe in the

manner which we have put to Your Honours, in

particular clause 2, requiring the last insurer to of fact in favour of some kind of agency in respect of the payment of compensation, nor, in our
discharge its liability in respect of the injury
for which it was the insurer. We say that at no
time has there been a finding and, indeed, the Full

submission, on the evidence could there be.

ACC(2) 8/9/93

It would be in effect changing the whole

notion of contribution which is by way of
reimbursement to a sum paid under a primary

liability to seek to do so. The facts in Senzo as

agreed were slightly different but I do not think

raise any different question on the question of

agency. At page 504, paragraph 16 really amounts

to much the same as I have put to Your Honours,

although the wording is slightly different.

When Your Honours go through to the sequence

by which contribution by way of reimbursement was made, in fact that is what was intended under the

agreement and that is what occurred as a matter of

fact. So that we rely on those matters to make

good the submissions that we had put in

paragraph 13 and in respect of the question of

common law we say that the agreement superceded and

resolved the question of whether the common law

would apply by the insurers agreeing to their own

method of dealing with contribution which is

exhaustive under the agreement. So that we say

that they cannot resort to any common law doctrine,

whatever it may be, to supplement or treat the

agreement as non-existent, because it was pursuant

to that that the payments were made.

But we do make the point at paragraph 14, it

would no doubt be contended, and has been, that an

insurer during an earlier period has contributed an

amount larger than that which it was required to,

based on the amount it had insured, and therefore,

by being denied recompense, it has in effect

ultimately ended up paying more than that which it

should have legitimately contributed because of its

insured liability being not the amount paid

ultimately in 1983, but the limit of its insurance,

in 1973. And what we say, if that has happened, it

has arisen purely because of the manner of

apportionment, with each earlier insurer

contributing to the full amount where their policy,

which was the basis of their liability to

contribute under the agreement, really only

rendered them liable for a small part of the

ultimate amount of the award.

So that, by adopting a time on risk basis

between them for the full amount paid in 1983 or

1985, they have increased their liability; they

ought to have, if we are correct in our

submissions, adopted a different basis, at least

taking into account the different amounts insured

under the various policies and the fact that

premium had been paid on those different amounts.

So we say that they have brought that problem, in

effect, on themselves and cannot rely on it to, in

ACC(2) 59 8/9/93

effect, pull themselves up by their own boot

straps.

Can I answer, what I hope is accurate, the question of Your Honour Justice Deane about the

award with Heath. The award paid was $20,000.

They got contribution from NEM for $4000,

Mercantile $11,000, Bishopsgate $2000, and Royal

Insurance $2832. That totalled $19,832, so that

their contribution for their period of insurance

was, it would appear, $168. They got recompense

from the fund of $13,012, meaning that in the

result for $20,000 payment they received $32,844 in

their pocket. I am told those figures can be

derived from pages 332 and 333 of

Mr Justice Tadgell's judgment in volume 2. Just so

as to avoid any confusion, the passages in

His Honour's judgment deal with a cost addition,

but the figures I have given you remove the cost

element. Thus the problem, as seen by the fund,
has arisen.

The alternative way in which we put the question of contribution is really in paragraph 15,

page 7 of our outline, at tab 1. We say that the

contribution scheme is entirely based upon each

insurer being liable to pay an additional amount on

behalf of an employer during its statutory

obligation to do so. This goes back to the insurer

point I put earlier in respect of Heath. And that,

if we are wrong on all else, we say that the limit

of contribution which each insurer can claim must

be contribution in respect of the increase during

the employer's liability for injury during that

insurer's period on risk, not any earlier period,

and it should be really in respect of the extent to

which the employer's liability is increased during

that period by reason of the retrospectivity

provision. Now that would produce a dramatically

different financial consequence to that which

arises from the Full Court's decision.

The issue of common law entitlement was

decided to be decisive of this issue by the Full

Court, and that is why we have dealt with that in

paragraph 16. Their Honours in the Full Court
found that even though there was no agency, that

because common law contribution existed between

successive insurers, that meant that the character

of the amount contributed was as if it were

compensation and, therefore, at common law, that

contribution resulted in the amount being paid

being paid as compensation. It is to that

conclusion we address paragraph 16.

We say a number of matters. The first is that

there was no contribution pursuant to any common

ACC(2) 60 8/9/93

law obligation. The common law obligation could

only be determined, in effect, by a court

apportioning liability pursuant to the equitable

principles that may govern contribution. In any

event, we say there is no such right for a

successive workers compensation insurance, and this

is what I might call the Albion point. Albion

Insurance, which I will take Your Honours briefly

to establishes, certainly in the majority decision

of this Court, that there is only double insurance

when insurance is in respect of the same risk -

certainly the majority made that very clear.	And
may I say this: all the insurance contribution

cases involve double insurance where there are two

policies current in respect of the same risk which

give rise to an obligation to contribute to the

loss resulting from that risk.	We have five
different responses.

The first is that the insured risks for each

insurer are different - that is, to injury to a

worker during the currency of each policy, not to

injury during the currency of a later policy. So

that one has a different risk, or different

happening, which is the subject of insurance and

indemnity.

Secondly, the loss insured is different

because the loss insured in each policy is to pay

compensation in respect of the injury insured in

accordance with the law in force as to liability

and quantum at the commencement of the period of

indemnity, or if we be wrong on a literal

construction, during the period of indemnity,

section 72 may give some force to the alternative

view as to how the policy should be construed. So

it is a different loss. In the circumstances that

may ultimately occur, it may turn out to be the
same amount, but the source of liability and the

reason for liability for that loss is quite

different.

Thirdly, earlier insurers are asked to

contribute to a statutory liability which was never

insured by them, so that the issue of double

insurance in the Albion sense does not arise. That

arises only in respect of amounts insured under

policies. The statutory liability deals with what

was not insured under a policy, that is the so-

called or alleged additional amount.

The fourth reason is one which, in our submission, is decisive of why contribution cannot

apply if we are wrong on the earlier reasons, and

that is that the obligation to pay the additional

amount was imposed by statute and the statute

ACC(2) 61 8/9/93

itself contained a scheme both for recompense and

contribution.

So that to the extent that there was a

retrospective liability on insurers, the statute

set out a code for dealing with the problem and

there is no warrant for the common law to

superimpose on that statutory scheme any question

of contribution. It cannot be said that
contribution was something the statute did not

direct its mind to, or the legislature did not

because, as we have set out section 14 of the Act,

which was in operation in 1975, and section 25A
which was introduced in 1981, did provide for

contribution between employers and then insurers in

given circumstances which were not these.

Finally, we say that no right of contribution

exists for successive employers, and therefore no

basis for successive insurers. The authorities for

the last proposition are Bushby v Morris - although

it did not decide the point, Their Lordships

treated as a lacuna in the Act the question of
there being no right between successive employers

to contribution, and it would follow there would be

no right for successive insurers - and the New

South Wales Court of Appeal in the MMI v NEM case
held in respect of the counterpart provisions in

New South Wales that successive workers

compensation insurers did not satisfy the

requirements for contribution in the Albion sense

because they did not insure in the same risk, did not have policies current during the same time in respect of the loss suffered and the other

requirements which give rise to contribution did

not exist.

Finally, we would say that in the Albion

decision itself, the majority made it clear that it

was the liability for the same risk that gave rise

to an entitlement to contribution, not the

fortuitous circumstance that led to liability for
the same loss.	Can I just conclude by taking

Your Honours briefly to the majority in Albion. It

is 121 CLR 342. In Albion there was the workers compensation insurer in respect of injury caused

during employment and the motor vehicle insurer and

there was an injury to a worker during employment

from a motor vehicle, so the employer's liability

for the injury was the subject of indemnity under

two current policies. The question was whether

that was the same risk. In the joint judgment of
the Chief Justice, Sir Garfield Barwick, and

Justices McTiernan and Menzies, the way it is put

at page 344 at point 6:

ACC(2) 62 8/9/93

At the time of the accident both the employers' indemnity policy issued by the

plaintiff and the third party policy issued by

the defendant were current and enforceable.

That is one of the prerequisites for double

indemnity. Then at 345, Their Honours set out the

principle of double insurance. At point 6:

There is double insurance when an assured

is insured against the same risk with two

independent insurers.

Then down at point 9, Their Honours say:

The doctrine, however, only applies when each

insurer insures against the same risk -

That is amplified upon at page 346 in the top paragraph:

One policy may cover the risk of a whole

voyage and the other may cover only part of
the voyage. Differences of this sort may
affect the amount of contribution recoverable

but they do not bear upon the question whether

or not each insurer has insured against the

same risk so as to give rise to some

contribution. the element essential for

contribution is that, whatever else may be

covered by either of the policies, each must

cover the risk which has given rise to the

claim. There is no double insurance unless

each insurer is liable under his policy to

indemnify the insured in whole or in part
against the happening which has given rise to

the insured's loss or liability.

Now, the happening in our case, of course, is

the injury during a different period of employment.

Their Honours - - -

BRENNAN J: Is that right?
MR MERKEL:	We say yes, Your Honour.
BRENNAN J:	What do you say to the proposition that the

happening is the suffering of an incapacity?

MR MERKEL:  We say no, Your Honour, because this goes back

to the fundamental principles we outlined at page 1

that the liability accrues in respect of injury

occurring during employment. At that point of
time, liability vests and the liability is to pay,
subject to the statute, the rate applicable at that

point of time upon supervening incapacity, and that

is both the risk and the happening. The later

ACC(2) 63 8/9/93

insurer insures a different happening which is

injury during a later period of employment, in

accordance with the law, as to quantum and

liability then in force. That liability

crystallizes into a payment of the particular sum.

It is only quantum that is affected by the

supervening incapacity, the quantum is then

determined, but all of the cases - but the clearest passage, I think, is in Hebburn's case which we set out on page 1 - make it very clear that the

happening which gives rise to liability is the

injury during the period of employment, and we say

that is the underlying principle and, indeed, it is

expressed as such in the Court of Appeal decision

which, if I may take Your Honours to it very

briefly, but we say it is clear throughout the

majority and why take Your Honours to it, but at
317 at point 7 all the textbooks have always

established in this area that double insurance only

relates to the same risk, and they make that point

very strongly.

Justice Kitto, we would submit, focuses on one

view more on the same loss, but we say within his

judgment is the assumption that the same risk is

established. If one looks at 349 point 5, the last

two sentences of the main paragraph, His Honour

says:

The argument that is put to the contrary

may be condensed to the proposition that a

right to contribution exists whenever a loss

has occurred against which each of two or more
insurers has contracted to indemnify the one
insured, whatever differences there may in

other respects between the policies.

Now, in that passage, particularly in the

words:

whenever a loss is occurred against which each

of two or more insurers has contracted to indemnify the one insured -

seems to import an assumption that there is the

same risk, and then His Honour focuses at page 350,

in the top paragraph, on the principles generally

of contribution, and concludes, can I pick up at

about point 3:

So it has in respect of other kinds of

indemnity insurance ..... but whereas in

regard to marine and fire insurance it was

right to speak of a necessity for identity

both of subject matter ..... (e.g. damage by

fire caused in a particular manner) the

corresponding point in regard to accident

ACC(2) 64 8/9/93

insurance is made by saying that each policy must insure the same person against the very loss that in the event he has sustained, or

the very liability that in the event he has

incurred.

So, His Honour seems to be fusing the question of

loss and liability.

What is said to be derived from His Honour's

decision, particularly from page 352 in the top

paragraph, His Honour concludes:

What attracts the right of contribution

between insurers, then, is not any similarity

between the relevant insurance contracts as

regards their general nature or purpose or the

extent of the rights and obligations they

create, but it is simply the fact that each

contract is a contract of indemnity and covers

the identical loss that the identical insured

has sustained; for that is the situation in

which "the insured is to receive but one

satisfaction" ..... and accordingly all the
insurances are "regarded as truly one

insurance".

Now, we would say, His Honour's remarks there are

directed to coordinate liability in respect of the

same loss. We say it is stretching very much the

concepts in the case in an insurance law to say

that one ignores the risk and says, in the events

that have occurred fortuitously, are you both

liable to pay the same amount? Now we say

His Honour should not be construed as saying so,

particularly in the light of the very strong

statement by the majority that it must be the same

risk which is insured against. But His Honour uses

language of identical loss and stemming from a

coordinate liability, and we would say that that

imports the question of the same risk.

BRENNAN J:  Why can you not say that each was under a

liability to pay the amount awarded?

MR MERKEL: Because, if I can put it this way, Your Honour,

during an earlier period of insurance, when the insurance period is complete, the liability for injury in that period is to pay the amount of the

liability under the statute at that point of time

in accordance with liability at that point of time.

When there is a later injury, a different liability

arises for a different amount. In the events that

occur, in 1985, by reason of the law at that point

of time, both of those liabilities have resulted in

liability to pay the amount of the award. But

ACC(2) 65 8/9/93

that, Your Honour, has occurred by reason of a

number of events in between, which are - - -

BRENNAN J: True, but, looking at the line of insurers, can

it not be said, in respect of each one of them,

that either pursuant to the policy issued by them

respectively or, in some instances, pursuant to the
policy and the ministerial direction, each of them
is under a coordinate liability to indemnify the

employer in respect of the amount for which the

employer is liable under the award.

MR MERKEL:  In 1985, looking backwards, yes, Your Honour,

but in the period of cover, looking forwards, no.

BRENNAN J: But is not the right to contribution one which

arises on the discharge of the liability?

MR MERKEL: According to the majority decision in Albion,

and according to insurance law hitherto, the answer

would be, no, Your Honour, because it is

conditional upon elements being established, such

as two policies being current at the same time for

that liability and, secondly, insurance in respect

of the same risk and certain other prerequisites.

It was looking, at the time of cover, for the

liability at that time, ahead and culminating in

the liability crystallizing in an award or a

judgment or a payment, but it does not look only at

the fact which is put against us, that if both are

liable to contribute for different reasons and from

different sources of liability to the amount

ultimately paid, that there is a right of

contribution.

We say the law has not gone that far. Even

when you look at sureties; it is co-sureties in

respect of the same debt, but there is no general

law, and the law of joint tortefeasors is an

example of where it has gone in a different

direction, but says, any time any person pays an

amount which reduces another person's liability by

reason of the payment, that person is entitled to

contribution from that other person, irrespective

of the source of liability. And that is how high

it would have to be put against us for such a

doctrine to be applicable.

We have a further problem with what

Your Honour put to us and that is that Your Honour correctly said there there is two issues: one is

the liability to contribute to the insured amount, but that is irrelevant to this case; the second is the liability to contribute to the amount, the

subject of the Treasurer's direction. Now, we

would submit that that stands apart from both

insurance and contribution law, because it is a

ACC(2) 66 8/9/93

separate statutory liability arising by reference

to a requirement imposed by the Treasurer on an

insurer in respect of its period of insurance,

providing for a scheme of recompense for that

liability in total for that insurer.

So there is no reason why any earlier insurer

ever gets to this contribution point. So we say that there is a serious issue before one gets to

Your Honour's hypothesis in any event about why the

common law would superimpose on this statutory

scheme some further scheme by which the fund has to

give recompense to others who do not, we say, meet
the requirements of the statute or, to put it

another way, there is no reason for the Court to

try and strain the requirements of the statute to

cover that situation. They really fuse the

arguments we put earlier, into this particular

question which, itself, is dependent upon what

Your Honours find on the proper construction of the

statute.

I should refer Your Honours to the NEM, (1991)

6 ANZ Insurance Cases, case 61-038, where Their

Honours, in the Court of Appeal in New South Wales,

considered the very question and answered it in our

favour. We do rely very strongly on the decision

as a correct statement of the law, particularly at

pages 76,964 and hopefully Their Honours may
provide better answers than I have to Your Honour

Justice Brennan's questions. I certainly will not

read it to Your Honours, but Their Honours at first

column point 4 at 76,964 note the risk is different

and that is emphasized at the bottom of the first

column. Then follow the majority in Albion

requiring the same risk in the middle of the second

column, and Their Honours conclude thereafter at

point 5 in the second column:

But when one is dealing with consecutive

policies, as one is in the present appeals, I

do not see how it can be said that the

employer is insured against the same risk when

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

occurring in another. 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. 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.

ACC(2) 67 8/9/93

His Honour, Appeal Justice Samuels, then at 76,965

set out a passage of general principles of Ivamy,

and sets out three prerequisites for double

insurance, none of which are satisfied, and I

should say that all the texts and authorities would

support that as being the law at that point of

time, and then re-emphasizes there is not the same

risk.

Appeal Justice Priestly agrees. Sets out

His Honour's reasoning at the second last paragraph, second column, and Appeal Justice

Meagher also agrees.

So, we would submit that there is no warrant

for doing what the Full Court did in saying that,

in effect, it was the same loss and contribution

applies.

The final matter that I would seek very

briefly to do, is to take Your Honours to the Full

Court judgment to identify where we say the clear

error, which we would with respect submit, has

arisen. That is in volume 2 and can I take

Your Honours firstly to page 370. There are a

number of factual errors which Their Honours made

which we say are indicative of why Their Honours

ultimately fell into error in principle.

At line 20, at page 370, Their Honours, in

respect of the 1975 legislation, said that that was

a fundamental departure because it introduced

retrospectivity. In fact, that departure had

occurred from 1953 onwards, as we indicated to

Your Honours this morning. Could I jump ahead to

page 379, where there is a fairly fundamental error

which, we say, crept into Their Honours' reasoning.

At line 25, when Their Honours talked of the

indexation in 1975 and 1979 amendments, the first

point Their Honours made was:

rates of compensation are changed (s.2A(l) and

(2); s.2D{l) and (2)).

Their Honours must have intended 2A(3). 2A(l) and

(2) are about maims and death, but assuming that

they meant 2A(3), that error is fundamental because

the change to the rates of compensation, as I

indicated to Your Honours this morning, were not by

reference to those sections, but by reference to

section 6 of the amending Act which changed the

rates without reference and resort to the

retrospectivity provisions. So that, if

Their Honours thereafter, as we submit they have, proceeded on the assumption that the rates change stem from 2A(3), of course it would follow that any

payment of an increased amount in respect of an

ACC(2) 68 8/9/93

injury, whenever occurring, was by virtue of 2A(3).

That, we hope we demonstrated, was clearly wrong.

The rate change was section 6 in 8733, and section

6(1) and (2) in 9297.

Could I go ahead to page 389 where

Their Honours talk about the questions to be asked.

But particularly, at line 15, Their Honours say:

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 pursuant to a statutory, as

opposed to contractual, obligation to do so.

Now, it is those words, "as opposed to a

contractual obligation to do so" that, we submit,

are clearly in error because if they make the

payment under a contractual obligation to do so, it

is not possible to say that the payment has been

made by virtue of the statutory direction of the

Treasurer, which is 2C(S) and 2C(7). So we would

submit that what Their Honours appear to have done

is treated the increase under 2A(3) and 2(D)(l) and

(2), and then say, "Well, any insurer that pays an

increased amount can go back to the earliest date

of injury and claim recompense".

Could I go to page 390. Their Honours reject

our argument at line 6, which we have put to

Your Honours today:

The right of an insurer to recompense

arises if it "pays or is required to pay an

amount" under s 2C(S) or 2G(l). It was

implicit in the appellant's argument that the

only "insurer" who was eligible for recompense

was an insurer who was on risk at the time of

(and only at the time of) a pre-amendment

injury.

Their Honours reject that. At line 23,

Their Honours say:

The fact that it may at the same time

discharge its own contractual liability -

which is the last insurer on risk -

does not alter the essential character of the

payment which the worker receives.

Although at first sight it may be thought

that the "insurer" spoken of ins 2C(5) and

ACC(2) 69 8/9/93

2G(l) is the insurer who was on risk at the

time of the pre-amendment injury in respect of

which rates of compensation have been altered,

we do not consider that the reference is
limited in this way. Rather the sections

invite attention to a factual question -

whether an insurer "pays or is required to

pay" an "additional amount" on behalf of an

employer.

It is by in effect lifting the word "insurer" out

of the context and divorcing it from the purpose of

the scheme that Their Honours in effect say that

C.E. Heath can claim recompense for a pre-1975

injury. Then at page 391 Their Honours conclude

about the earliest point. At line 16,

Their Honours say:

It follows that we consider that in

determining whether an employer is liable to

pay an "additional amount" attention is to be

given to the earliest date of injury in
respect of which the award is made. That will

show whether the employer is liable to pay

compensation in respect of a pre-amendment

injury.

If I could just stop there: we would say that is

the first step, but Their Honours treat it as the

last step:

Nor does it matter for this purpose, that there may be post-amendment injuries which

also have materially contributed to the

worker's incapacity.

We say that that reasoning, together with what is

set out at 439 in respect of Senzo - at the bottom

of 438, top of 439, Their Honours say in respect of

the Senzo award, last line of 438:

The size of that additional amount is to be

calculated by reference to the earliest date

of injury covered by the award. When Heath

paid the amount of the award it satisfied the obligation of the employer to its worker, and thus paid an additional amount on behalf of

the employer.

Then Their Honours joined that together with

Their Honours' contribution conclusion.

Could I take Your Honours, just briefly, to

page 393. Their Honours dealt with our

contribution argument at line 20 where we put the

argument we have put to Your Honours that the real

source of the liability - and "source" is not a

ACC(2) 70 8/9/93

word we would use, it seems to camouflage the

issue - we say the correct question is: did the

contributing insurers pay pursuant to their

liability under the contribution agreement and we

say that answer is "yes''. Their Honours reject

that argument. Then at 398, Their Honours really

rely on Justice Kitto and then say that the New

South Wales Court of Appeal decision - last four

lines:

Moreover, it appears to have been founded on a

conclusion that in that case there was no

double insurance, while we are of the opinion

that the principles governing contribution

entitlement do not necessarily require such a
classification. In any event, the expression

"double insurance'' requires elaboration and

might well be understood to embrace the cover

by the co-insurers in the present cases.

That is as much as Their Honours said on the New

South Wales decision.

BRENNAN J: 

What do you say about that proposition, that

right to contribution does not depend upon double
insurance?

MR MERKEL: 

If Albion is relied upon, it does depend on

double insurance. If some broader equitable

principle is relied upon, then that gives rise to a

different question, but Albion was a double

insurance case, Your Honour, and we say that

"double insurance" is a term accepted and well

known in insurance law which has developed into its

own sphere of jurisprudence as to contribution

between insurers indemnifying different persons in

respect of particular liability. So we would

submit it would be a very substantial departure

from the Albion principle to say it is a principle

which is not an insurance principle but of wider

application.	We would submit that that is not how
it was put and that is not how Albion was run.

If some broad question of equitable

contribution is being put forward, we say the law

does not support it. Contribution has been

developed in particular categories: co-sureties;

insurers. We say there is no instance of

contribution of the kind that we are concerned with

here, nor is there any doctrine of unjust

enrichment or unfair result which would suggest

that if mere payment by one person reduces another

person's liability, irrespective of the source or

basis of that other person's liability, they can

get contribution. We would say that is a very

dramatic change but that is, in essence, what is

being put here.

ACC(2) 71 8/9/93

I should say this, that in Bushby v Morris

Their Lordships talk in terms of successive

employers paying, where the last employer pays the

award. That, pro tanto, discharges the liability

of the earlier employer and Their Lordships

referred to a New South Wales Court of Appeal

decision dealing with joint tortfeasors. It may not matter, but we would say the correct view in respect of successive employers is when the last

pays the amount owing on an incapacity under an

award does not discharge the liability of the

earlier employer. It may reduce it to nil, or

reduce it, but it does not, in effect, discharge

the liability as such. We would say in the workers

compensation context, that is not the way in which

we would properly define it because the earlier

employer's liability arising from a different

source from a statutory scheme applicable to it is

not discharged but it reduces it. Nothing may turn

on it but we would not wish to adopt

Their Lordships' language in that regard. At

page 400 Their Honours stated - - -

BRENNAN J: Since I have raised the question with you of

contribution, may I raise this: the right to
contribution, if there is one, simply by reason of

the existence of co-ordinate liabilities to meet

what could be described as the same loss, is a

right which would arise only when a particular

insurer discharged its liability by payment, and

even if it were to do so that would not give rise

to any statutory right under the Act.

MR MERKEL:  Yes, Your Honour. We would say that that must

be so, Your Honour, that whatever the law of

contribution is - and we put this at the outset of

our submissions - it cannot give rise to a right to

contribute to an amount imposed by statute as a

requirement to pay, particularly where the statute

imposes its own scheme of recompense for what is

paid. But we would, with respect, say that, for

the reasons set out in Albion and the NEM case in

the Court of Appeal, that this is not a co-ordinate

liability. It really is no more than in a

liability arising separately over different periods

which, in the circumstances, have resulted in two

parties having to pay the same amount.	We say that
is a different situation.

But Their Honours put is very highly at

page 400. There Honours, in effect, say at

lines 10 to 15, particularly their conclusion that

they rely on Albion to say:

a payment by the last insurer is "for the

benefit of all insurers on risk".

ACC(2) 72 8/9/93

We say that is to take a quote out of context, but

we say that that is not the correct principle of

Albion. Their Honours deal with Carter at

page 408. I only draw Your Honours' attention to

it; I do not think I need take Your Honours to any

separate part of it. And they deal with Senzo

at 437 to 439. One further criticism we would make

of Their Honours, with respect, is that, if nothing

else, if we are wrong on our main contentions - and

there is some doubt as to the meaning of this

statute - this is clearly a case where the second

reading speech would have thrown some light on the

matter, but Their Honours dealt with it in a rather

peremptory way at page 379, at lines 7 to 15.

Their Honours said:

The appellant submitted that its

contentions about the purpose of the

supplementation scheme were supported by the

Second Reading speech and parliamentary

debates ..... In our view, little if any

assistance is to be obtained from this source

because the legislative device ultimately

adopted was after amendment of the Bill in the

course of its passage through Parliament, so

that much of the debate related to a different

form of Bill.

Well, with the greatest of respect to

Their Honours, we cannot think of a more
appropriate situation to go to the passage of the
bill, including its amendments and the
explanations, to seek to understand why it was that

the bill emerged in the form it did, because the

passages I have taken Your Honour to are the bill

in respect of its current form, which were to

remedy the problem of the bill in its original

form. So, Their Honours have, in effect,

approached the matter in disregard of the purpose

and object or the evil, if one wishes to put it,

that the bill was designed to remedy.	And we would
say that again demonstrates the kind of error we

would say that Their Honours have fallen into, with

respect to Their Honours in this case.

It is, in our submission, for those reasons,

that the appeals should be allowed and that in each

of the two test cases, it should be determined that
there was no additional amount paid in respect of
the claims and no recompense available to the

insurers. If the Court pleases.

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

MR SHAW:  What I have handed up, if the Court pleases, is an

outline of argument in relation to Senzo, there is

a short outline in relation to Carter and there are

ACC(2) 73 8/9/93

two chronologies which might be of assistance to

the Court, one for each case.

MASON CJ: Yes, Mr Shaw.

MR SHAW:  If the Court pleases, the first point which my

learned friend argued was what he called the date
of injury point, and that involves a determination
of whether or not, in the circumstances of these

cases, there was any additional amount payable by

the employer. Now, "additional amount", what those

words mean, is, as my learned friend pointed out

although he did not read the definitions, defined
in the statute. It is defined in section 2B(5) and
it is defined, for the purposes of the 1979

increases, in amounts, in section 2L.

In our submission, the answer to the question

about additional amounts turns really on the proper

construction of those definitions. I would have

gone directly to those definitions had it not been

for the fact that my learned friend says, "Well,
even if the words do not, on their face, mean what
I say they mean, they should be read in that sense

because of the context in which they appear". Accordingly, if I might take the Court first,

consecutively, through the statutory scheme in

order to see what, in fact, it does do. It being

recalled that what we are concerned with here is

the statutory scheme which was given effect to in

1979 when the changes were introduced into the Act

which brought it into the form in which it is for

present purposes.

If I might take the Court to the legislation

book, first volume. These things appear in two

places. They appear at page 83 in the 1979 Act,

and in the consolidation. It is to the

consolidation that is perhaps most convenient to

go. If I might take the Court to page 128.

concerned with section 2A(3), on page 129, which Section 2A produces the 1979 changes, and we are provides that:

the provisions of this Act as amended by the

Workers Compensation (Amendment) Act 1975, so

far as they relate to rates or amounts of
compensation payable otherwise than in respect

of death -

or under the maims table -

shall apply with respect to every payment of

compensation made on or after the 1st day of occurrence or origin of the injury.

ACC(2) 74 8/9/93

Then we come to the sections as they became in

1979.       2B says:

(1) This section applies to a policy of
accident insurance or indemnity operating to

insure or indemnify an employer against claims

under this Act.

(2) Subject to sub-sections (3) and (4), a

policy shall not insure or indemnify the

employer against any additional amount payable
by him by virtue of the provisions of the

Workers Compensation (Amendment) Act 1975.

(3) Where the employer is not entitled to be

recompensed from the Fund for any additional

amount payable by him the policy shall insure

or indemnify the employer for that amount.

Then in subsection (5) is the definition of "additional amount'', to which I will come back in a

moment. In section 2C(l) there is a provision

that:

Where an additional amount is payable by an

employer as compensation by virtue of

section 2A(3) ..... the employer shall ..... be

entitled to be recompensed from the Fund for

that additional amount.

Then (5):

An insurer may, and shall if required by the

Treasurer of Victoria to do so, pay on behalf of an employer any additional amount payable

as compensation by virtue of section 2A(3) -

and subsection (7):

Subject to sub-sections (8) and (9), where an

insurer pays or is required to pay an amount

under sub-section (5), the insurer shall be

entitled to be recompensed from the Fund for

that additional amount.

So the recompense provisions so far as insurers are

concerned depend under the statute on either

payment in fact or being required to pay.

Then if one goes over, one has substantially

the same repeated in section 2D(l) and (2). In

section 2F there is the provision for recovery of

additional amounts by the employer. In section 2G,

provisions about the insurer who may be required by

the Treasurer to pay, and a provision for

recompense to an insurer in subsection (3) of that

section. In section 2L at page 136 and 137, a

ACC(2) 75 8/9/93

definition of "additional amount" for the purposes

of sections 2E and 2J. So there are two sets of

provisions with two sets of definitions which seem

to have substantially the same effect.

Then you have in Part Vat page 229 the provisions for setting up the first of the funds.

There is a provision in section 92 for a prescribed

surcharge which is to be fixed in subsection (2) by

a regulation limited to 40 per cent. There is a

provision that that is to be levied for the Crown
and it goes on to provide that the amounts are to be paid over. There is a provision in section 97

about what may be paid out of the fund. We find at

page 235 like provisions in relation to the second

of the two funds. At page 236 in section 106,

again provisions about, in this case, the
prescribed contribution. Again, the amount is to

be fixed by regulation and, again, it is not to

exceed 40 per cent.

So, that is the context in which one finds the

definition one sees in section 2A(5) on page 130.

Now, if I might take the Court to that definition.

The definition is:

"Additional amount" means an amount by which

the sum payable as compensation under this Act
as in force immediately before 1 July 1975 in
respect of an injury of a worker arising out
of or in the course of the employment of the
worker before 1 July 1975 is increased by

virtue of a provision of the Workers

Compensation (Amendment) Act 1975.

So, it is an amount by which the sum payable as

compensation under the Act as in force immediately

before 1 July 1975 in respect of an injury arising

before that date is increased by virtue of a

provision of the 1975 Act. So what one has to ask

one's self, is whether the sum payable as

compensation under the Act as in force before

1 July 1975 in respect of an injury arising before

1 July 1975 is increased by the 1975 Act.

If I might go to the outline. First of all we

point out in paragraph 1 that although, as the

conjuries of proceedings were originally

constituted, in some cases the insurers were

plaintiffs and in other cases the Accident

Compensation Commission and the Treasurer were
plaintiffs, in these two cases the plaintiffs are
the Accident Compensation Commission and the

Treasurer, so they have to establish the limited

question which was being dealt with by His Honour

Mr Justice Tadgell and the Full Court because, of

course, this did not represent the full trial of

ACC(2) 76 8/9/93

the test cases. There was an order which had the

effect of having some of the matters determined

first, in effect. That order was the order which

appears at page 470.

That is in Carter, and in Senzo it is at

page 26. So there are only limited questions

before the Court, and in relation to Senzo what was being sought to be established was that none of the

insurers was entitled to recompense from the fund.

So what the plaintiffs set out to establish was

that none of the insurers was entitled to

recompense. The Court has already seen the terms

of the award, that was at page 185, and in each of

the cases there was an agreed statement of facts

with annexes. The Senzo one commences at page 103

and the relevant agreement there is at page 107 in

paragraph 7A:

The parties are agreed that throughout

the course of employment of the worker with
the employer, the worker sustained an injury
within the meaning of Section 3 of the Workers

Compensation Act on every day (or week or month) of the employment and that each such

injury materially contributed to the worker's

incapacity in respect of which the award was

made. The dates of employment appear on the page

immediately before, 1968 to 1983. So that, one had

circumstances in which there was that agreement and

it follows, it is submitted, that the award was in

respect of all the injuries that I have just

referred to, simply because it says so.

Well, knowing that, one then asks oneself,

"Was the sum payable as compensation under the Act

as in force immediately before 1 July 1975, in
respect of injuries arising before 1 July 1975,

increased in Senzo's case by virtue of a provision

of the 1975 Act?", and, in our submission, the

answer to that must be, "Yes, it was.".

TOOHEY J:  Mr Shaw, why is the definite article used there;

what is "the" sum payable as compensation?	We have
been talking about weekly payments and lump	sum
payments; it does not say "any" sum payable	as
compensation, does it?

MR SHAW:	Your Honour, I do not imagine there is any reason for "the" as opposed to "any" or any as opposed to
"the".

TOOHEY J: Well, except that perhaps it suggests some sort

of particular concept, the sum payable. But do you

ACC(2) 77 8/9/93

understand it to mean "any" sum payable as

compensation under the Act?

MR SHAW:  Yes. If Your Honour looks at section 2L

Your Honour will see that by the time the draftsman

had progressed from B to L he thought that

Your Honour's idea was better then his first idea.

I do not know, Your Honour, that really anything

turns much on the difference.

TOOHEY J:  No. But at any rate, you approach it on the

basis that any increase in any sum payable under

the Act constitutes an additional amount?

MR SHAW:  Indeed, Your Honour, and my learned friend said

that the question was whether the amount of the

award had been increased, and he talked of the

significant matter as being whether the employer

was uninsured. But the definition simply does not

refer to insurance and, indeed, the whole - I

hesitate to say "statutory scheme". It seems to be

simply an introduction to saying, "I am about to

tell you what I hope it means.". But the sections

do progress through this progression. It starts

off with the idea, it is submitted, that the Act

imposes on employers a liability to pay

compensation to their employees in appropriate

cases and the obligation to pay the compensation

rests on the employer, whether it be an obligation

in respect of unincreased amounts or increased

amounts. So, the obligation in respect of
additional amounts is one which rests on the

employer and it is to the employer that the first

right of recompense from the funds is given.

It is simply not a case where the statute

simply says, "Well,. if an additional amount is

payable, whoever is the appropriate insurer will pay it and he can be recompensed from the fund",

and just leave the employer out.	It does not work
like that at all.	It proceeds in the way one would
assume that it would. It imposes the original

obligation on the employer and gives the employer

the original right to recompense and then goes on
to provide that the insurer may, and shall if

required by the treasurer, pay on behalf of the

employer any additional amount payable as

compensation.

So that the insurer's position is, as it were,

derivative from the employer's position, and my

learned friend, it is submitted, overstates his

case when he suggests that the scheme was a scheme

which, from the outset, simply contemplated that

the obligation to pay the additional amounts were

to rest, as it were, in the first place, on the

insurers because, quite apart from the fact that

ACC(2) 78 8/9/93

the obligation is placed initially on the employer,

the provisions about the insurer say that an

insurer may, and shall if required, pay.

So that, in our submission, there is really

nothing to lead one to give the words of the
definition a meaning other than they apparently
bear on their face, and the question is not: is
the amount of the award increased? The question
is: is the sum payable as compensation under the

Act, as enforced before 1 July 1975, in respect of

an injury arising before that date, increased by

the 1975 Act? And here we have undoubtedly

injuries before that date, and one has amounts of

compensation which are payable in respect of those

injuries. The amount of compensation being

awarded, as it is, in respect of all the injuries

is obviously an amount of compensation payable in

respect of all the injuries and one cannot say, it

is submitted, that that is not so because, if the

position were different, then different amounts

would have to be awarded in respect of each of the

injuries. Well, that simply has not happened.

In our submission, some assistance is gained

by looking at the position as it would be if,

instead of there being one employer, there had been

more than one, which was an example which was

discussed in the course of this morning, and it is

an example that we refer to in paragraph 5 of the

outline. We submit there that in those

circumstances the first employer would be bound to

pay an amount which would include additional

amounts which were recompensable under the

provisions of the 1975 Act in respect of the 1973

injury.

We have submitted that it is difficult to see

any escape from that and, indeed, as I understood

my learned friend after lunch, he did not - at

least in a post-prandial mood - seek to escape from
it.	He seemed to accept that in case where the

word "different" employers the amount payable by

the first employer would involve an additional

amount. He says that the position is different if

there is only one employer but the same injuries

and he says that the position is different in those

circumstances because the amount of the award

against the single employer has not increased.

Well, it is true that the amount of the award

has not increased in the sense that the money sum
has not increased, but the amount of the award in

so far as it relates to, or is in respect of, the

earlier injuries - and it is in respect of the

earlier injuries - is increased, because if that

were not so, one simply could not award, in respect

ACC(2) 79 8/9/93

of the earlier injuries, the amount of whatever it

might be: $20,000 in Senzo's case.

So that to say that the amount of the award is

not increased is merely to say that in respect of

the last injury, assuming that had been the only

one, and that had materially contributed to the

incapacity, you could have got an award of $20,000,

but it does not carry with it - or at least it
ought not carry with it the proposition that in
respect of the earliest injury, for example, one

could, apart from the provisions of the 1975 Act,

have got an award of $20,000.

DEANE J:  Mr Shaw, does not the way the facts have been put

to us, in one sense, conceal the problem?	I mean,
when you talk about $20,000 for all injuries

sustained, or arising out of a period of 15 years'

work, in one sense it does not tell you what the

problem is. I mean, say you have got a man who has

lost the finger on his left hand in the first five
years and the thumb on his righ~ hand in the second
five years: well, in that case, that wording
simply conceals the fact, in that he has lost the

finger on his left hand arising out of the

employment on the day it was cut off, and the thumb

on his right hand arising out of the employment on

that day.

On the other hand, take the case of the typist

who sustains RSI arising out of typing over a

period of 15 years. If it was not diagnosed until the end of the 15 years, say that arose out of the 15 years. Now, in the first case, one can see the

critical need to distinguish between the particular

injury and the date on which it arose out of

employment. In the other, it is not so apparent

that you can divide up the terms of employment at

all for the purposes of the workers compensation

legislation. I am not indicating any view, I am

just indicating a degree of confusion I am

experiencing.

MR SHAW:  Your Honour, the one thing this case produces

whenever I look at it, at least in me, is

confusion. It has become better as it goes on

because there are less and less of them. When

there were ten of them, it was absolutely

impossible to remember the difference between any

of them except that they all had something to do

with the Workers Compensation Act. So let me

assure Your Honour it is much improved from its

past state. I will have a look at it overnight,

Your Honour, but I think that the way in which the

facts are stated does not include the first example

and I think would include the second example,

except that I think Senzo is back. Apart from, no

ACC(2) 80 8/9/93

doubt, the strains that were associated with

everyday lifting things, there were a number of

actual incidents, so that it is not quite like the

typist who has been typing busily with nothing much

happening except suddenly at the end she is sick.

DEANE J:  What I am putting is possibly against you in that

underlying it is the thought that if properly
described an injury is said to arise out of

employment from 1 July 1970 to 1 July 1980, if that

is the proper characterization, when there is only

one employer involved, I am querying whether you

can ever say that that injury arose out of

employment before 1 July 1975.

MR SHAW:  What Your Honour is suggesting to me, in effect,

that there is one continuous injury, or something

or other.

DEANE J: Well, no, you see it is one injury. What the Act

refers to is not a number of injuries, it refers to

one injury arising out of a course of employment.

Well, now it is the - - -

MR SHAW:  I understood that is what the Act refers to, but

I thought what Your Honour was suggesting was that

the agreed facts suggested, as it were, one injury

or another.

DEANE J: Well, I do not know.

MR SHAW:  The answer to that is, I think, Your Honour, no,

that is not so, but I can take the Court to that

tomorrow, if that is a convenient moment.

DEANE J: If I can just delay you by flagging my problems

all the way down, and that is, I am wondering

whether, if the agreed facts do not differentiate,

on one approach it may be that the agreed facts do

not answer the question that has to be addressed for the purpose of the definition of "additional amount". Now, it may be that there is nothing in

that, but it is just something that has been

worrying me during the afternoon.

MR SHAW:  Your Honour, I had not foreseen that Your Honour

might say that, but I had foreseen that somebody
might say something of the same sort of general

effect and that is why I began by saying, we are

the defendants, not the plaintiffs.

MASON CJ:  We will adjourn until 9.45 am tomorrow, Mr Shaw.

AT 4.17 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 9 SEPTEMBER 1993

ACC(2) 81 8/9/93