Amaca Pty Limited v AAI Limited (Re Simpson)

[2019] NSWDDT 11

Dust Diseases Tribunal

New South Wales

Medium Neutral Citation:	Amaca Pty Limited v AAI Limited (Re Simpson) [2019] NSWDDT 11
Hearing dates:	10 December 2019
Date of orders:	13 December 2019
Decision date:	13 December 2019
Before:	Russell SC DCJ
Decision:	(1)   Dismiss the defendant’s Notice of Motion filed on 27 November 2019. (2)   Order the defendant to pay the costs of AAI Limited of the Motion.
Catchwords:	CONTRIBUTION – whether defendant tortfeasor can obtain leave to sue the insurer of a concurrent tortfeasor which has been deregistered - Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) ss 3, 4, 5 CONTRIBUTION – whether a claim for contribution is a claim for damages - Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5
Legislation Cited:	Civil Liability Act 2002 (NSW) Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) Law Reform (Married Women and Tortfeasors) Act 1935 (Eng) Law Reform (Miscellaneous Provisions) Act 1946 (NSW) Trade Practices Act 1974 (Cth)
Cases Cited:	Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337 Murphy, McCarthy and Associates Pty Limited v Zurich Australian Insurance Limited [2018] NSWSC 627
Texts Cited:	Civil Liability (Third Party Claims Against Insurers) Bill 2017 (NSW), Second Reading Speech (Legislative Council 3 May 2017) Law Reform (Miscellaneous Provisions) Bill 1946 (NSW), First Reading Speech (Legislative Assembly 5 March 1946) Luntz, “Assessment of Damages for Personal Injury and Death”, Fourth Edition, LexisNexis NSW Law Reform Commission, Report 89, “Contribution between persons liable for the same damage” NSW Law Reform Commission, Report 143, “third party claims on insurance money”
Category:	Procedural and other rulings
Parties:	Colin Simpson as legal personal representative of the estate of the late Jacqueline Simpson (Plaintiff) Amaca Pty Limited (Defendant) AAI Limited (Proposed Cross-Defendant)
Representation:	Counsel: I Griscti (Defendant) S Taylor-Jones (Solicitor) (Proposed Cross-Defendant) Solicitors: Mills Oakley (Defendant) Moray & Agnew (Proposed Cross-Defendant)
File Number(s):	DDT 379/2019

Judgment

BACKGROUND

1. By an Amended Statement of Claim filed on 18 November 2019 the plaintiff, as legal personal representative of the estate of the late Jacqueline Simpson (the deceased) sues Amaca Pty Limited (Amaca) as the sole defendant. The Amended Statement of Claim pleads that in late 1978 or early 1979 the deceased engaged builders to perform building and renovation work at a nursery and florist business called Wentworthville Florist and Nursery. The deceased worked as a florist at that business. The pleading alleges that the deceased contracted mesothelioma from exposure to asbestos dust and fibre in the course of that renovation work and that the asbestos cement building products to which she was exposed were manufactured and/or supplied by Amaca.

2. A Defence has not yet been filed by Amaca to the Amended Statement of Claim. By a Notice of Motion filed on 27 November 2019 Amaca seeks leave pursuant to ss 4 and 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the Act) to commence proceedings against AAI Limited (AAI), which is admitted to be the insurer of the company Wentworthville Florist and Nursery Pty Limited (Wentworthville). That company is deregistered. The allegation is that it was the employer of the deceased.

3. In support of the motion Amaca has provided a draft Cross-Claim against AAI. The relief claimed is contribution and/or indemnity from AAI towards the liability of Amaca (if any) in the principal proceedings pursuant to ss 4 and 5 of the Act. Those sections and that Act give no right of contribution or indemnity to a tortfeasor. I propose to read the draft Cross-Claim as one which seeks contribution and/or indemnity from AAI pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (the 1946 Act).

Statutory Provisions

4. Section 4 of the Act provides:

“4 Claimant may recover from insurer in certain circumstances

(1) If an insured person has an insured liability to a person (the "claimant"), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court.

(2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person’s liability to the claimant.

(3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person.

(4) This section does not entitle a claimant to recover any amount from a re-insurer under a contract or arrangement for re-insurance.”

5. Section 5 of the Act provides:

“5 Leave to proceed

(1) Proceedings may not be brought, or continued, against an insurer under section 4 except by leave of the court in which the proceedings are to be, or have been, commenced.

(2) An application for leave may be made before or after proceedings under section 4 have been commenced.

(3) Subject to subsection (4), the court may grant or refuse the claimant’s application for leave.

(4) Leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law.”

6. Section 3 of the Act is the definition section. It contains the following:

“"claimant" —see section 4.

"court" means a court or tribunal of New South Wales.

"insured liability" means a liability in respect of which an insured person is entitled to be indemnified by the insurer.

"insured person" means a person who is, in respect of a liability to a third party, entitled to indemnity pursuant to the terms of a contract of insurance, and includes a person who is not a party to the contract of insurance but is specified or referred to in the contract, whether by name or otherwise, as a person to whom the benefit of the insurance cover provided by the contract extends.

"liability" means a liability to pay damages, compensation or costs.”

Issue for Determination

7. The issue for determination which arises on this Motion is whether a defendant, which wishes to seek contribution from a concurrent tortfeasor, can avail itself of the rights given by the Act. In particular, when the Act speaks of “liability” meaning “a liability to pay damages, compensation or costs”, does the Act apply where the claim is not for damages or compensation, but is one for statutory contribution?

Provisions in the Act

8. The key provision in the Act is s 4(1):

“If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court.”

9. Within s 4(1) there are words and phrases which are defined in s 3 of the Act. The starting point is the definition of “liability” which means “a liability to pay damages, compensation or costs”.

10. The phrase “insured person” means “a person who is, in respect of a liability to a third party, entitled to an indemnity pursuant to the terms of a contract of insurance…”. Given that there is a definition of the word “liability”, the full and expanded definition of “insured person” is “a person who is, in respect of a liability to pay damages, compensation or costs to a third party, entitled to indemnity pursuant to the terms of a contract of insurance…”.

11. Section 4(1) contains the phrase “insured liability”. Section 3(1) defines “insured liability” to mean “a liability in respect of which an insured person is entitled to be indemnified by the insurer”. The definition of “insured liability” needs to be expanded in the light of the definition of the single word “liability” in s 3(1). The expanded definition of “insured liability” is that it means “a liability to pay damages, compensation or costs in respect of which an insured person is entitled to be indemnified by the insurer”.

12. It is clear beyond argument that if the plaintiff had sued Wentworthville as a defendant, the plaintiff could have obtained a grant of leave under s 5 of the Act to sue AAI. That is because Wentworthville was “an insured person” within the meaning of the Act which had an insured liability to pay damages to the plaintiff.

13. Such a liability could arise in one of several ways. In Murphy, McCarthy and Associates Pty Limited v Zurich Australian Insurance Limited [2018] NSWSC 627 the plaintiff Murphy, McCarthy and Associates Pty Limited (MMA) had a contract with CFC Fibre Cement Pty Ltd (CFC) for waterproofing and coating the internal walls on a construction site. MMA alleged that the work done by CFC had significant defects. MMA asserted that it had a claim for damages against CFC in contract, tort and under the Australian Consumer Law. CFC went into liquidation. MMA sought leave to bring proceedings against Zurich, the insurer of CFC, for recovery of its damages.

14. Justice Hammerschlag found that the Zurich policy, on its proper construction, arguably responded to the claim of MMA against CFC. His Honour granted leave under s 5(4) of the Act for MMA to bring proceedings directly against Zurich. This judgment shows that even claims for pure economic loss (in this case for breach of a construction contract) fall within s 4 of the Act. Just like claims by plaintiffs who suffer personal injury, they are claims for damages.

15. The party seeking leave under the Act does not need to be a plaintiff. Leave can be granted to a defendant seeking to cross-claim against the insurer of an insolvent or deregistered cross-defendant, providing that the claim is a claim for damages. One example of a defendant being given leave (under similar legislation which preceded the Act) is Energize Fitness Pty Ltd v Vero Insurance Limited [2012] NSWCA 213. There the claim brought by the defendant was a claim under the Trade Practices Act 1974 (Cth), for damages suffered by the defendant. There was also a claim in negligence, presumably for damages suffered directly by the defendant, caused by the negligence of the cross-defendant – at [17].

Background to the Act

16. The Act was the result of Report 143 of the NSW Law Reform Commission. This Report recommended repeal of s 6 of the 1946 Act and its replacement with the provisions of the Act. The Act as passed by Parliament implemented all of the recommendations in Report 143. Section 6 of the 1946 Act was replaced by the Act.

17. The policy considerations underlying s 6 were described by the Attorney-General (Legislative Assembly 5 March 1946) in the first reading speech of the Law Reform (Miscellaneous Provisions) Bill 1946 (NSW):

“Except in regards to workers’ compensation and motor vehicles (third party) insurance, it is possible for an injured person to obtain a judgment against an insured person and yet be deprived of the fruits of that judgment, because there is nothing in the law to prevent an insured person collecting his insurance money and just disappearing. Similarly, there is nothing to prevent an insured person, when sued, going to his insurance company and releasing it from its liability to him on payment to him of a lump sum which he immediately dissipates or makes away with . . . The amendment imposes no additional liability on insurers, and will, I am confident, be accepted as just by insurance companies generally.”            (emphasis added)

18. Section 6(1) of the 1946 Act was enacted to give rights to injured persons. It did so by enabling a claim where there was “a contract of insurance by which the person is indemnified against liability to pay any damages or compensation”.

19. Speaking of the repealed provision, in the Second Reading Speech (Legislative Council, 3 May 2017), the Honourable David Clarke said:

“Section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 allows a plaintiff to recover damages or compensation from a defendant’s insurance proceeds. It allows the plaintiff to do so from the insurer where proceeds against the defendant, who is the insured, are not possible or would be pointless because, for example, the defendant is missing or insolvent.”

20. The Second Reading Speech makes it plain that the rights given by s 6 of the 1946 Act were rights given to parties who had suffered damage to recover damages (or compensation) directly from the insurer of a party liable for such damages. Section 6 of the 1946 Act did not extend to giving a defendant tortfeasor the right to seek contribution in a claim against an insolvent tortfeasor’s insurance policy.

Nature of a contribution claim

21. The case of Merryweather v Nixan (1799) 8 TR 186; 101 ER 1337, established that contribution between joint tortfeasors is not available at common law. Later decisions extended the position to cover non-intentional torts and situations involving several concurrent tortfeasors as well as joint tortfeasors – NSW Law Reform Commission, Report 89, par 1.12.

22. The rule in Merryweather v Nixan made it necessary to enact a statutory right of contribution between joint wrongdoers. Contribution between tortfeasors was introduced in England in 1935 by the Law Reform (Married Women and Tortfeasors) Act 1935 (Eng). In New South Wales similar provisions were introduced in s 5 of the 1946 Act – NSW Law Reform Commission, Report 89, par 1.15.

23. If Amaca has any liability to the plaintiff, then it can seek to recover contribution from another tortfeasor towards such liability under s 5(1)(c) of the 1946 Act which provides:

“Where damage is suffered by any person as a result of the tort (whether a crime or not):

…

(c)    any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.”

24. The word “damage” refers to injury, harm or loss and the word “damages” refers to the sum of money awarded by a court to a plaintiff who sues in tort or contract - see Luntz, “Assessment of Damages for Personal Injury and Death”, Fourth Edition, LexisNexis para 1.1.1. A tortfeasor such as Amaca which seeks contribution from another tortfeasor has not suffered “damage” and is not awarded “damages”. A claim for contribution brought pursuant to s 5(1)(c) is not a claim for damages.

25. This proposition is further reinforced by consideration of how courts assess such claims. A claim for damages made in the Dust Diseases Tribunal is assessed on common law principles, with certain limited modifications imposed by the Civil Liability Act 2002 (NSW). By contrast, a claim for contribution is assessed in accordance with s 5(2) of the 1946 Act which provides:

“In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.”

26. Finally, the clear distinction between claims for damages and claims for contribution can be seen in s 11 of the Dust Diseases Tribunal Act 1989, which provides:

“Claims for damages for dust diseases etc to be brought under this Act

(1) If:

(a) a person is suffering, or has suffered, from a dust-related condition or a person who has died was, immediately before death, suffering from a dust-related condition, and

(b) it is alleged that the dust-related condition was attributable or partly attributable to a breach of a duty owed to the person by another person, and

(c) the person who is or was suffering from the dust-related condition or a person claiming through that person would, but for this Act, have been entitled to bring an action for the recovery of damages in respect of that dust-related condition or death,

proceedings for damages in respect of that dust-related condition or death may be brought before the Tribunal and may not be brought or entertained before any other court or tribunal.

(1A) Proceedings by any tort-feasor liable in respect of damages referred to in subsection (1) to recover contribution from any other tort-feasor liable in respect of that damage may be brought before the Tribunal.[Note: This subsection does not prevent those proceedings being brought in another court.]”                  (emphasis added)

27. The argument which Amaca would have against the Wentworthville is that damage has been suffered by a person (the deceased) as a result of a tort (committed by Amaca), and that Amaca is a tortfeasor liable in respect of that damage. Under s 5(1)(c) of the 1946 Act it may seek to recover contribution from any other tortfeasor (Wentworthville) who, if sued, would have been liable to the deceased in respect of the same damage.

Conclusion

28. The plain words of s 4(1) of the Act, when understood and interpreted in light of the definitions contained in s 3(1) of the Act, lead me to conclude that leave can only be granted under the Act to a person who seeks to recover damages against the insurer of a defendant, where a recovery against the defendant is not possible. In the Dust Diseases Tribunal, such claims against insurers are regularly the subject of grants of leave, where a negligent corporate employer is insolvent or has been deregistered. Mesothelioma is a disease caused by exposure many decades ago. Many potential corporate defendant employers have long since gone into liquidation and been deregistered.

29. I find that the provisions in the Act do not enable Amaca to obtain leave to sue AAI, as the insurer of Wentworthville, because the theoretical claim which Amaca has against that other tortfeasor is not a claim for damages or compensation, but is a separate and distinct claim for contribution.

30. If Amaca wishes to pursue a contribution claim against AAI as the insurer of Wentworthville, it has a remedy under s 601AH of the Corporations Act (2001) (Cth), which it can pursue in another place.

Orders

31. The orders are:

1. Dismiss the defendant’s Notice of Motion filed on 27 November 2019.

2. Order the defendant to pay the costs of AAI Limited of the Motion.

**********

Decision last updated: 13 December 2019