Allianz Australia Workers Compensation (NSW) Limited v PPG Industries Australia Pty Limited
[2004] ACTCA 28
ALLIANZ AUSTRALIA WORKERS COMPENSATION (NSW) LIMITED v PPG INDUSTRIES AUSTRALIA PTY LIMITED [2004] ACTCA 28 (17 December 2004)
INSURANCE – Workers Compensation – “common law” extension – construction of policy – incorporation of proposal – whether cover limited to liability for injuries sustained in NSW – whether common law damages constitute “compensation in the nature of workers compensation”.
Workers Compensation Act 1951 (ACT)
Workers Compensation Act 1987 (NSW), ss 159(1), 13(1).
Workers Compensation (General) Regulation 1995 (NSW), reg 52(1)
Burton Lommers Contractors Pty Ltd v Manufacturers Mutual Insurance Ltd ((1990) 6 ANZ Ins Cas 61-000
Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
North v Marina [2003] NSWSC 64 (3 March 2003); (2003) 11 BPR 21,359
Anderson v Fitzgerald (1853) 4 HL Cas 484 at 507; 10 ER 551
Halford v Price (1960) 105 CLR 23
Alex Kay Pty Ltd v General Motors Acceptance Corporation and Hartford Fire Insurance Company [1963] VR 458
MGICA Ltd v United City Merchants (Australia) Ltd (1986) 4 ANZ Insurance Cases ¶60-729
Australian Aviation Underwriting Pty Ltd v Henry (1988) 12 NSWLR 121
Johnson v American Home Assurance Company (1998) 192 CLR 266
McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
No. ACTCA 12-2004
No. SC 610 of 2001
Judges: Higgins CJ, Crispin P, Weinberg J
Court of Appeal of the Australian Capital Territory
Date: 17 December 2004
IN THE SUPREME COURT OF THE ) No. ACTCA 12-2004
) No. SC 610 of 2001
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:ALLIANZ AUSTRALIA WORKERS COMPENSATION (NSW) LIMITED
Appellant
AND:PPG INDUSTRIES AUSTRALIA PTY LIMITED
Respondent
ORDER
Judges: Higgins CJ, Crispin P, Weinberg J
Date: 17 December 2004
Place: Canberra
THE COURT ORDERS THAT:
the appeal be dismissed with costs.
IN THE SUPREME COURT OF THE ) No. ACTCA 12-2004
) No. SC 610 of 2001
AUSTRALIAN CAPITAL TERRITORY )
)
COURT OF APPEAL )
ON APPEAL FROM THE MASTER OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
BETWEEN:ALLIANZ AUSTRALIA WORKERS COMPENSATION (NSW) LIMITED
Appellant
AND:PPG INDUSTRIES AUSTRALIA PTY LIMITED
Respondent
Judges: Higgins CJ, Crispin P, Weinberg J
Date: 17 December 2004
Place: Canberra
REASONS FOR JUDGMENT
THE COURT:
This is an appeal against an order of the Master requiring the appellant to pay the respondent the sum of $400,000 to indemnify the respondent against its liability to a former employee, Kevin Richard Tomlin, for damages and costs in respect of personal injuries sustained by him in the course of his employment. Mr Tomlin’s claim against the respondent was settled and the Master noted that the appellant, which had been joined as a third party to the proceedings, had accepted that the settlement was a reasonable one. However, it had maintained that it had no liability to indemnify the respondent because the relevant policy applied only to injuries sustained in New South Wales (NSW) and Mr Tomlin had been injured in the Australian Capital Territory (ACT).
The respondent is a national company engaged in the manufacture and sale of automotive paint. Its head office is in Victoria and it has sales offices in each of the state capitals. Mr Tomlin had been appointed as a technical sales representative for the south-western region of NSW which, for the respondent’s purposes, included the ACT. Mr Tomlin lived in Queanbeyan and the majority of his customers in the south-western region were located in NSW, though it appears that in the short time he had held his position prior to the accident he had devoted the bulk of his time to customers in the ACT.
He was injured on 25 or 26 May 1999 whilst attempting to replace an electric motor and gear box at the rear of a piece of equipment known as a “paint machine” at the premises of a customer in Canberra. He obtained compensation under the Workers Compensation Act 1951 (ACT) and subsequently commenced the proceedings heard before the Master, claiming damages for breach of the duty of care that the respondent had owed to him as his employer.
The respondent’s claim for an indemnity from the appellant in respect of the agreed damages had been based upon the terms of an employer’s insurance policy issued under the Workers Compensation Act 1987 (NSW) (“the Act”). The policy had commenced on 28 September 1998.
The respondent had purchased the automotive paint business earlier that year and had sought cover from the appellant, then MMI Workers Compensation (NSW) Limited, in the various Australian jurisdictions in which it intended to carry on business. The appellant had sent the respondent a number of proposal forms for cover in various Australian jurisdictions but the respondent had chosen to complete only those forms relating to NSW, Victoria (VIC), Tasmania (TAS), Western Australia (WA) and the Northern Territory (NT). Cover for accidents occurring in Queensland (QLD) or South Australia (SA) had been provided under state government monopoly arrangements which excluded the appellant. The respondent had not completed the ACT form but had treated Mr Tomlin as a NSW based employee and included his wages in the figures provided for the calculation of the premium applicable to the NSW policy.
The NSW proposal form included the following:
Do you have employees who are likely to perform work in another state or territory of Australia?
No
Yes If yes, advise states or territories
Please note that you will need to arrange separate cover for these employees. Please contact your insurance adviser or MMI for assistance.
A tick was placed in the box adjacent to the word “No”.
The form of policy prescribed by the regulations under NSW Act provided that:
The Proposal is the basis of this contract of insurance. Both the Proposal and the Schedule of Employer Particulars are considered to form part of this Policy.
The effect of this clause had to be considered in the light of s 159(1) of the Act which provided that:
A policy of insurance shall, in so far as it relates to any liability under this Act, contain only such provisions as are prescribed by the regulations but (subject to the regulations) may contain such other provisions relating to any liability at common law or any Act or Commonwealth Act as are appropriate to any particular case.
Regulation 52(1) of the Workers Compensation (General) Regulation 1995 (NSW) (“the regulations”) had provided as follows:
For the purposes of s 159 of the Act, a policy of insurance . . .
(a)must contain the provisions specified in Form 3, and
(b)may contain any other provisions, but only if those provisions have been agreed on by the insurer and employer concerned and approved by the Authority.
The policy issued by the appellant to the respondent had been in identical terms to Form 3 in Schedule 1 to the Regulations.
Clause 3 of the policy included the following covenant:
The Insurer will indemnify the Employer against all of the following sums for which the Employer becomes liable during or in respect of the period of insurance:
(a)compensation that the Employer becomes liable to pay under the Act to or in respect of any person who is a worker of the Employer . . .;
(b)any other amount that the Employer becomes liable to pay independently of the Act (but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the Commonwealth or a liability arising under the law of another country) for any injury to any such person . . .;
(c)costs and expenses incurred with the written consent of the Insurer in connection with the defence of any legal proceeding in which any such liability is alleged.
The respondent had contended that the amount payable pursuant to the consent judgment in favour of Mr Tomlin had been an “other amount” that it had become liable to pay independently of the NSW Act and that this liability had not fallen within the scope of the exception defined by the words in parenthesis in subclause 3(b). The Master noted that the appellant had essentially left this interpretation of the policy unchallenged, though it had maintained that the terms of the proposal, which as we have mentioned formed part of the policy, effectively limited the indemnity to liabilities occasioned as a result of injuries suffered within the state of NSW.
As the Master observed, there was no express provision in the policy to so limit the right to indemnity. Nor was there anything in the Act to support the implication of such a term. On the contrary, s 13(1) of the Act provided that:
If:
(a)an employer has a place of employment in New South Wales, or is for the time being present in New South Wales, and there employs a worker; and
(b)any such worker while outside New South Wales receives an injury under circumstances which, had the injury been received in New South Wales, would entitle the worker to compensation in accordance with this Act,
the injury is an injury to which this Act applies and compensation is payable accordingly.
Counsel for the appellant had relied upon the decision of Cole J in Burton Lommers Contractors Pty Ltd v Manufacturers Mutual Insurance Ltd ((1990) 6 ANZ Ins Cas 61-000. In that case an employee of a NSW company had been injured in the ACT and his Honour held that the employer was not entitled to an indemnity under an earlier policy of insurance issued pursuant to the Act. The relevant proposal form in that case had required the employer to specify all “situations” in which work was carried on, including work outside NSW. In response to that proposal form the policy had included the statement: “Situation for covers shown below: anywhere in New South Wales common law unlimited”. In these circumstances his Honour held that the parties had agreed that insurance cover would be provided only in respect of work in NSW.
The Master rejected the contention that the policy in the present case should be similarly construed. He said that the proposal was not in a prescribed form but had been drafted by or on behalf of the appellant and that the relevant question was imprecise and unclear. It was apparent that neither party had taken the question literally. Both parties had known that the respondent had employees likely to perform work in other parts of Australia. That was evident from the other proposals submitted. Whilst the note following the question and answer had informed the respondent of the need to arrange separate cover for these employees, it had already done so. All of the respondent’s employees had been covered under the various policies it had obtained and the total number of employees and the total estimated wages mentioned in the various proposals or application forms were equal to the respondent’s total staff numbers and payroll. Had the appellant wished to limit cover in the manner suggested, it should have done so in clear terms. The Master did not accept that the policy should be read down to limit its operation to liability for injuries sustained within NSW.
The Master rejected a further argument that Mr Tomlin had not been a “worker” within the meaning of the policy. He found that Mr Tomlin had been “a person who has entered into or works under a contract of service . . . with an employer”. Mr Tomlin had been interviewed and appointed in Sydney, reported to the State Sales Manager in Sydney, lived in NSW, was responsible for sales within a designated area of NSW, albeit one that included the ACT, and spent a significant part of his time attending distributors and customers in NSW. Hence, he was a worker for the purposes of the policy.
The Master also noted that the parties had pleaded competing allegations of estoppel but that neither had pressed any such allegation with any vigour.
The Master was satisfied that the respondent was entitled to the indemnity sought.
Mr Cranitch SC, who appeared for the appellant on the appeal, argued that the Master had erred in finding that the question in the proposal form had been imprecise and unclear. He submitted that, considered in context, the question had clearly sought an indication as to whether the respondent had engaged any employees in NSW who were likely to perform work in another state or territory of Australia or overseas. There was no evidence that if this meaning had been more clearly expressed it would have resulted in the respondent obtaining cover for the ACT.
Whilst these arguments were pressed with some vigour, the decisive question was not whether the respondent should have understood the question in the manner suggested or what further cover it might have sought had it done so but, rather, whether the relevant part of the proposal had the effect of limiting the scope of the indemnity provided by the policy.
Mr Cranitch submitted that, whilst the form of the policy was limited by the Act, the proposal was limited only to the extent that it could not require proponents to accept terms not contained in the prescribed form. It could limit the cover to liability for injuries sustained by workers engaged in work in a given state or territory. He relied upon the decision of Cole J in Burton Lommers as authority for the proposition that “it is not to the point” that the policy into which the proposal was incorporated was in a statutorily immutable form.
We are unable to accept this argument. The scope of the indemnity provided by the policy was defined by cl 3. That clause did not contain any provision for the scope of the indemnity to be further limited by reference to anything that might have been contained in the proposal form. The implication of such a provision could not have been justified by the principles in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 and would, in any event, have been excluded by s 159(1) of the Act and reg 52.
For present purposes it is unnecessary to consider what remedies might be available to an insurer induced to offer cover to an employer by reason of false statements in a proposal. The validity of the policy issued to the respondent has not been questioned and its provisions must be construed by reference to their terms and the statutory context in which it was issued.
Mr Cranitch also submitted that the Master had fallen into error by confusing the statutory entitlements of the worker to benefits under the Act with the extent of the employer’s liability. However, cl 3 of the policy clearly required the appellant to indemnify the respondent against any liabilities under the Act and it was appropriate for the Master to seek to ascertain the scope of the indemnity by reference to the scope of the potential liabilities which the respondent may have incurred under the Act. Furthermore, the respondent had contended that the amount payable to Mr Tomlin pursuant to the judgment fell within the description “any other amount that the Employer becomes liable to pay independently of the Act” and Mr Cranitch conceded that, in determining whether the indemnity was intended to apply to liability for injuries sustained outside NSW, the Master had been entitled to take into account the fact that the same clause of the policy would have provided an indemnity for any liability to pay compensation under the Act in respect of such an injury.
In any event, the provisions of cl 3 of the contract were mandatory and, as we have mentioned, the regulations permitted the policy to contain other provisions only if they had been agreed by both the insurer and employer and approved by the Authority. It was not suggested that the Authority had approved any implied term arising from the terms of the proposal or that, in completing the form as it did, the respondent could have absolved the appellant from its statutory obligation to indemnify the respondent to the extent required by cl 3.
During the course of the appeal, Mr Cranitch sought and obtained leave to argue that, despite the implicit concession to the contrary made in the proceedings before the Master, the exclusionary clause in sub cl 3(b) of the policy effectively excluded any indemnity for common law damages awarded in relation to an injury that had been sustained outside New South Wales.
As Mr Cranitch was obliged to concede, this argument was dependent upon the proposition that an award of damages for negligence fell within the description “compensation in the nature of workers compensation arising under any Act or other law of . . . a Territory . . .”. We do not think that the phrase can be interpreted so expansively. The phrase “workers compensation” has long been understood as referring to an entitlement to periodic payments to compensate an injured worker for medical expenses and/or loss of wages due to injury sustained during the course of the worker’s employment, irrespective of whether there has been any breach of duty by the employer. The concept is quite different from that of liability for common law damages obtained by a worker as a consequence of establishing that his injuries were attributable to negligence or breach of statutory duty on the part of the employer. The latter is not “in the nature of” the former. Indeed, Mr Cranitch himself referred to the sharp distinction that should be drawn between these concepts.
If the exclusionary clause had been intended to have the meaning suggested by Mr Cranitch, then this description of the liability to be excluded would have been unnecessary. The clause could have simply provided that the indemnity would not apply to any other amount that the employer became liable to pay independently of the Act for any injury to any such person sustained outside the state of New South Wales.
When the effect of a document or part of a document is unclear a reasonable construction should generally be preferred as representing the presumed intention of the parties. Furthermore, there is a long standing principle that if the words of a policy are ambiguous or otherise amenable to different constructions they should be construed by reference to the maxim “verba cartarum fortius accipiuntur contra proferentem”. This maxim may be translated as “the words of documents are to be taken strongly against the one who puts forward”: per Campbell J in North v Marina [2003] NSWSC 64 (3 March 2003); (2003) 11 BPR 21,359. Hence, the document will generally be construed against the party that put it forward: see also Anderson v Fitzgerald (1853) 4 HL Cas 484 at 507; 10 ER 551 at 560 per Lord St Leonards; Halford v Price (1960) 105 CLR 23 at 30 per Dixon CJ (with whom Menzies J agreed) 34 (per Fullagar J); Alex Kay Pty Ltd v General Motors Acceptance Corporation and Hartford Fire Insurance Company [1963] VR 458 at 463-464; MGICA Ltd v United City Merchants (Australia) Ltd (1986) 4 ANZ Insurance Cases ¶60-729 at 74,350 per Kirby P; Australian Aviation Underwriting Pty Ltd v Henry (1988) 12 NSWLR 121 at 126 per Hope JA; Johnson v American Home Assurance Company (1998) 192 CLR 266 at 274 per Kirby J; and McCann v Switzerland Insurance Australia Limited (2000) 203 CLR 579 at 602 per Kirby J. In the present case the policy was clearly put forward by the appellant and, even if there had otherwise been some doubt as to whether the exclusionary clause clause could have beeen construed in the manner suggested by Mr Cranitch, that doubt would have been effectively dispelled by the application of this maxim.
In our opinion the Master was right to find that the respondent was entitled to indemnity from the appellant and the further argument raised by Mr Cranitch on appeal should be rejected.
The appeal must be dismissed.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.
Associate:
Date: 17 December 2004
Counsel for the Appellant: Mr M Cranitch SC
Solicitor for the Appellant: Abbot Tout
Counsel for the Respondent: Mr G Lunney
Solicitor for the Respondent: Ken Cush & Associates
Date of hearing: 4 November 2004
Date of judgment: 17 December 2004
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