Allianz Australia v TIO

Case [2008] NTCA 12

Allianz Australia v TIO [2008] NTCA 12

PARTIES:ALLIANZ AUSTRALIA INSURANCE LIMITED

v

TERRITORY INSURANCE OFFICE

TITLE OF COURT:  COURT OF APPEAL OF THE NORTHERN TERRITORY

JURISDICTION:  CIVIL APPEAL FROM THE SUPREME COURT EXERCISING TERRITORY JURISDICTION

FILE NO:AP 8 of 2008 (20622570)

DELIVERED:  11 December 2008

HEARING DATES:  5 November 2008

JUDGMENT OF:  MARTIN (BR) CJ, MILDREN & THOMAS JJ

APPEAL FROM:  Supreme Court of the Northern Territory delivered 15 May 2008

CATCHWORDS:

INSURANCE – DOUBLE INSURANCE – WORKERS’ COMPENSATION LIABILITY

Total incapacity as a result of two separate injuries – application of s 126A Work Health Act (NT) – whether appellant entitled to recover from respondent part of compensation paid in respect of claim for total incapacity

INSURANCE – DOUBLE INSURANCE – WORKERS’ COMPENSATION LIABILITY

Whether extension of time should have been granted – when time begins – interpretation of s 126A of the Act – requirement to give notice

Pearce and Geddes, Statutory Interpretation in Australia, 6th ed, LexisNexis Butterworths, Sydney, 2006

Interpretation Act 1978 (NT), s 62A; Work Health Act 1986 (NT), s 3, s 4, s 53, s 55, s 64, s 65, s 69, s 70, s 71, s 72, s 73, s 80, s 82, s 85, s 103D, s 103J and s 126A; Work Health Amendment Act 1998 (NT), s 27; Workers’ Compensation Act 1926 (NSW), s 7(1)(a), s 9(1) and s 11(2)

Accident Compensation Commission v CE Health Underwriting & Insurance (Australia) Pty Ltd (1994) 68 ALJR 525; Albion Insurance Co Ltd v Government Insurance Office (NSW) (1969) 121 CLR 342; Australian Eagle Insurance Co Ltd v Federation Insurance Ltd (1976) 15 SASR 282; Bushby v Morris [1980] 1 NSWLR 81; HIH Casualty & General Insurance Ltd v Territory Insurance Office (1998) 120 NTR 24; Maddalozzo v Maddick (1998) 108 FLR 159; National Employers’ Mutual General Insurance Association Ltd v Calver & Ors [1983] 3 NSWLR 107, applied.

Arnotts Snack Products Pty Ltd v Yacob (1985) 155 CLR 171; Commercial & General Insurance Co Ltd v Government Insurance Office (NSW) (1973) 129 CLR 374; Foresight Pty Ltd (t/a Bridgestone Tyre Service) v Maddick (1991) 1 NTLR 209; Woodruffe v Northern Territory (2000) 10 NTLR 52; Work Social Club Katherine Inc v Rozycki (1998) 120 NTR 9, referred.

Insurers’ Guarantee Fund – NEM General Insurance Associated Ltd v GIO General Ltd (1994) 33 NSWLR 247; National & General Insurance Company Limited v South British Insurance Co Ltd & Ors (1982) 149 CLR 327, distinguished.

Manufacturers Mutual Insurance Ltd & Ors v National Employers’ Mutual General Insurance Association Ltd & Ors (1991) 6 ANZ Insurance Cases 61-038, overruled.

REPRESENTATION:

Counsel:

Appellant:P Barr QC

Respondent:  S Walsh QC

Solicitors:

Appellant:Hunt & Hunt

Respondent:  Minter Ellison

Judgment category classification:    A

Number of pages:  33

IN THE COURT OF APPEAL
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Allianz Australia v TIO [2008] NTCA 12

No. AP 8 of 2008 (20622570)

BETWEEN:

ALLIANZ AUSTRALIA…

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Allianz Australia v TIO [2008] NTCA 12
Case
[2008] NTCA 12
Decision Date

CaseChat Overview and Summary

In Allianz Australia Insurance Limited v TIO Insurance Limited, the parties were Allianz Australia Insurance Limited, the appellant, and TIO Insurance Limited, the respondent. The dispute centred around the interpretation of s 126A of the Workers Rehabilitation and Compensation Act, specifically whether Allianz was entitled to recover from TIO a portion of the compensation paid for Shane Nayda’s claim for total incapacity following a series of work-related injuries. The appeal was heard in the Supreme Court of the Northern Territory. The legal issues involved determining the precise scope of Allianz’s entitlement to indemnity from TIO under s 126A, the interpretation of the requirement to give notice, and whether an extension of time should have been granted for Allianz to pursue its claim.

The court examined the interplay between the 1993, 2000, and 2001 injuries, and how these related to Nayda's claim for total incapacity in 2005. It was held that Allianz’s obligation to indemnify Newmont, Nayda’s employer, did not arise until Nayda made a claim for compensation for total incapacity in 2005. The court further held that Allianz's awareness of TIO's potential liability could not predate the time Allianz indemnified Newmont, thus limiting the scope of Allianz’s entitlement to indemnity under s 126A. The principle of double insurance was deemed inapplicable, as the employer was not simultaneously insured against the same risk by both Allianz and TIO. The court dismissed the appeal, finding that Allianz could not recover from TIO based on the correct interpretation of s 126A and the principle of double insurance.

Given the findings, the court concluded that Allianz was not entitled to recover from TIO part of the compensation paid for Nayda’s total incapacity claim. Consequently, the appeal was dismissed, and Allianz was not granted an extension of time for its claim. The final orders affirmed the lower court's decision and dismissed Allianz’s appeal.

Orders

Orders of the court

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Background

Background to the litigation

This appeal raises questions as to the proper construction to be given to s 126A of the Work Health Act, now called the Workers’ Rehabilitation and Compensation Act.Factual background A worker, Shane Nayda (Nayda), was, at all material times, employed by Newmont Mining Services Pty Ltd (Newmont) as a diesel fitter. On 3 October 1993, Nayda suffered an injury to his back arising out of or in the course of his employment when lifting a heavy tub of dirt (the 1993 injury). As a result, he was off work completely for about one week and on light duties for a further fortnight, before resuming the full duties of his employment. Thereafter, he suffered intermittent back pain, controlled by non-prescription analgesics. It is a matter of controversy whether the 1993 injury was only a soft tissue injury, or whether it involved more lasting damage to spinal structures. Compensation was paid by his employer under the Work Health Act. At that time, the respondent (TIO) was Newmont’s approved insurer and TIO indemnified Newmont under its policy of insurance. On 25 May 2000, Nayda felt sudden low back pain whilst lifting packets of steel at his place of work (the 2000 injury). He went on to light duties for a few days until he consulted a medical practitioner on 2 June 2000. He was off work until he was certified fit to return to work on 13 June 2000, when he resumed his normal duties. The injury was reportedly a soft tissue “ligamentous/muscular injury” of the lumbar spine. It is not clear whether he received weekly or other compensation for the 2000 injury. At the time of the 2000 injury, Newmont’s approved insurer was the appellant (Allianz). On 14 August 2001, Nayda felt a sharp pain in his lower back as he was lifting a spare wheel and tyre at his place of employment (the 2001 injury). Nayda was either totally, or at least partially, incapacitated from his normal duties until July 2002. Thereafter he was certified fit for restricted duties and returned to work. Nayda lodged a claim for compensation with his employer on 17 August 2001. On 30 August 2001, Allianz, on behalf of Newmont, accepted the claim and reimbursed Newmont for weekly compensation paid to Nayda in respect of the 2001 injury from 15 November 2001 to 30 May 2002. On 3 June 2002, Allianz received a report from Dr Bastian, who examined Nayda on behalf of the employer. At the time of the examination, Nayda was undergoing a gradual return to work program with Newmont. Dr Bastian’s report included an opinion that “Nayda’s presentation is consistent with an aggravation of an ongoing back condition which stems back to [the 1993 injury]… the aggravation has resulted in a deterioration of his back condition and capacity for work which is permanent”. Allianz did not notify TIO after receiving Dr Bastian’s report that TIO may be liable to indemnify Newmont,[1] although Allianz knew of TIO’s potential liability at that time. Nayda continued in his employment working on restricted duties and continued to receive compensation in respect of the 2001 injury. On 19 August 2005, Newmont cancelled payments to Nayda. On 31 August 2005, Nayda’s employment was terminated based, apparently, on a medical report from Dr Burke, who examined Nayda at the request of Allianz. On 5 September 2005, Nayda gave a notice of dispute to “NT Work Safe”, which I presume means the Work Health Authority. I assume that the notice was given under s 103D of the Act, which then triggers to process of mediation of the dispute before a claim for compensation can be brought in the Work Health Court.[2]

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Consequently, Allianz’s application for leave to extend time was dismissed.The decision on appeal On appeal to the Supreme Court, Angel J held that the Work Health Court should have granted an extension of time in respect of the 2001 injury and payment of compensation made from September 2005, but not earlier. His Honour held that s 126A(2) only applied once an approved insurer has indemnified the employer. Therefore, Allianz’s awareness that TIO may be liable to indemnify Newmont can be no earlier than the time Allianz indemnified Newmont. Allianz’s obligation to indemnify Newmont could not arise until Nayda made a claim for compensation for total incapacity in 2005 which was first particularised in the Statement of Claim filed on 7 April 2006. The obligation to notify TIO with respect to the worker’s 2005 claim for compensation on the basis of total liability only arose once a claim for that compensation was made by the worker. Accordingly, as the Work Health Court found that notification was made ‘as soon as practicable’ (in respect of the 2005 claim) the extension of time ought to have been granted in those circumstances if the Court was satisfied that Allianz could obtain relief from TIO under s 126A of the Act. However, Angel J held that on the proper construction of s 126A, no relief was available because TIO was only responsible to indemnify Newmont’s liability to pay compensation in the relevant period of insurance. Further, the principle of double insurance did not apply because the employer was not insured with both insurers against the same risk when one policy insured against liabilities incurred in one period, whereas the other policy insured against liabilities incurred in another period. His Honour, in arriving at this conclusion, applied the reasoning in Manufacturers Mutual Insurance Ltd & Ors v National Employers’ Mutual General Insurance Association Ltd & Ors;[3] National & General Insurance Company Limited v South British Insurance Co Ltd & Ors;[4] and Insurer’s Guarantee Fund – NEM General Insurance Associated Limited v GIO General Limited.[5] No doubt his Honour felt obliged to follow those decisions, sitting at first instance, although none were strictly speaking binding upon him. Accordingly, his Honour dismissed the appeal.The appeal to this Court Allianz has appealed to this Court on the ground, essentially, that both Allianz and TIO were liable to indemnify Newmont in respect of the claim made in 2005 for total incapacity because the incapacity was caused by both the 1993 injury and the 2001 injury. Consequently, on the true construction of s 126A, Allianz is entitled to recover from TIO part of the compensation paid after Allianz made payments of compensation in respect of the 2005 claim. TIO’s position is that the decision of Angel J was correct on this point. Alternatively, TIO has filed a notice of contention claiming that Angel J was in error in concluding that an extension of time should have been otherwise granted. TIO’s position is that the Work Health Court’s decision on this point was correct.Was TIO liable to indemnify Newmont in respect of the 2005 claim?

Ratio Decidendi

Legal Principle Established

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