Ansell Ltd v CGU Insurance Ltd

[2016] NSWSC 1345

Supreme Court

New South Wales

Medium Neutral Citation:	Ansell Ltd v CGU Insurance Ltd [2016] NSWSC 1345
Hearing dates:	19/09/2016
Date of orders:	27 September 2016
Decision date:	27 September 2016
Jurisdiction:	Equity - Commercial List
Before:	McDougall J
Decision:	Summons dismissed with costs.
Catchwords:	INSURANCE – contracts of insurance – where insurer is liable to indemnify insured – whether relevant policy includes a limitation of liability – where there is limited evidence available due to the relevant date of the policy being 1967 – Workers Compensation Act 1926 (NSW)
Legislation Cited:	Workers Compensation Act 1926 (NSW) Workers Compensation (Amendment) Act 1953 (NSW) Workers Compensation Act 1987 (NSW)
Cases Cited:	Blatch v Archer (1774) 1 Cowp 63 Jones v Dunkel (1959) 101 CLR 298 (1959) Payne v Parker [1976] 1 NSWLR 191 Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444
Category:	Principal judgment
Parties:	Ansell Ltd (Plaintiff) CGU Insurance Ltd (Defendant)
Representation:	Counsel: T G R Parker SC / D F Villa D J Hooke SC / T Bors     Solicitors: Piper Alderman (Plaintiff) Curwoods Lawyers (Defendant)
File Number(s):	2016/32399

Judgment

1. HIS HONOUR:   For many years, Commercial Union Assurance Company of Australia Ltd, a predecessor of the defendant (CGU), issued policies of insurance to the plaintiff (Ansell, then known by its former name Dunlop Rubber Australia Ltd). Those policies insured Ansell in respect of its liabilities to its employees under the Workers Compensation Act 1926 (NSW) (the Act), and for its liabilities, independently of the Act, to those employees for injuries. I shall refer to the latter insurance as “the common law extension”. In short, the policies were issued to enable Ansell to meet its obligations under s 18 of the Act.

2. For the year of insurance ended 1 July 1967 (which, the parties agree, is the relevant year), the policy was in the form (I shall refer to this form as “the statutory policy”) stated in the Appendix to Division 1 of the Regulations made under the Act, as from time to time amended. Thus, among other things, the policy was required to insure Ansell under the common law extension for at least £20,000.

3. It is common ground that the 1967 policy (as I shall call it) responded to a claim made by a worker, pursuant to which the worker recovered damages under a judgment of the Dust Diseases Tribunal of New South Wales (the Tribunal) entered on 11 June 2015. Ansell and CGU are at odds as to whether (as CGU claims) CGU’s liability under the common law extension is capped at $100,000.

4. Ansell suggested that if that primary issue were decided against it, there would be a further controversy, relating to CGU’s ongoing obligation to prosecute, at its own expense, a cross-claim against another employer, Amaca Pty Ltd (Amaca) said to have contributed to the worker’s injury.

Factual background

5. The worker in question was employed by Ansell up until late 1966 or the first half of 1967. The parties agree that in the course of that employment, the worker was exposed to asbestos which led to her contracting mesothelioma.

6. The worker commenced proceedings in the Tribunal in November 2014. She asserted that Ansell had been negligent in exposing her to asbestos in the course of her employment. Ansell (more accurately, CGU exercising its right of subrogation) cross-claimed against Amaca. Amaca had also employed the worker and, CGU contended, had negligently exposed her to asbestos.

7. Under the Tribunal’s Claims Resolution Process, an assessor determined that liability for any amount that should be found or agreed to be owing to the worker should be apportioned 65% to Amaca and 35% to Ansell.

8. Thereafter, the worker’s claim was settled in the amount of $420,000 with costs. Costs were later agreed at $40,000. The effect of the assessor’s apportionment is that Amaca must pay its allocated percentage of the claim to the worker, and Ansell must pay its. However, the assessor’s determination is not binding. Ansell and Amaca may, if they wish, continue to litigate the cross-claim in the Tribunal. If the Tribunal concludes, ultimately, that there should be some different apportionment, then Ansell or Amaca must pay whatever adjustment is required.

9. Ansell has paid $164,250 to the worker. That payment is said to represent 35% of the judgment amount plus $17,250 on account of her costs. For reasons that are not clear (having regard to the present controversy between the parties), CGU has paid $150,000 to Ansell in respect of Ansell’s liability to the worker.

10. It is common ground between the parties that s 151AB of the Workers Compensation Act 1987 (NSW) applies in the circumstances of this case. It is also common ground between the parties that, by virtue of s 151AB(1)(a), Ansell’s common law liability to the worker is deemed to have arisen at the time when she ceased to be employed by Ansell; that is to say, during the currency of the 1967 policy.

Relevant provisions of the Act and the Regulations

11. When the Act was enacted, and for some years thereafter, s 18(1) required all employers to obtain from a licensed insurer “a policy of insurance of indemnity for the full amount of [the employer’s] liability under this Act to all workers employed by [the employer]”. That section was amended by the Workers Compensation (Amendment) Act 1953 (NSW) so that, from the commencement of the amending Act, the policy was required to indemnify the employer as well “for an amount of at least three thousand pounds in respect of [its] liability independently of this Act for any injury to any such worker”.

12. Subsequent amendments increased the minimum amount of the common law extension to £20,000. It was common ground that this was the minimum amount fixed at all relevant times from 1962 to 1967.

13. Between 1962 and 1967, s 18(3)(a) of the Act read, so far as it is relevant:

Every policy of insurance or indemnity shall, in so far as it relates to any liability referred to in subsection one of this section, contain only such provisions as are prescribed, but may contain such other provisions relating to any other liability at common law or under any Act or Commonwealth Act as are appropriate to any particular case.

14. For the 1967 year, the statutory policy contained the following insuring clause:

NOW THIS POLICY WITNESSETH that in consideration of the payment by the Employer to the Insurer of the abovementioned Premium… IF, [during the currency of the policy]… the Employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such Employer or to pay any other amount not exceeding twenty thousand pounds in respect of [the employer’s] liability independently of the Act for injury to any such person,

THEN, and in every such case the Insurer will indemnify the Employer against all such sums for which the Employer shall be so liable; the Insurer will also pay all costs and expenses incurred with the written consent of the Insurer in connection with the defence of any legal proceedings in which such liability is alleged.

15. With effect from 18 November 1966, the words “twenty thousand pounds” were omitted and the words “forty thousand dollars” were inserted.

16. Conditions 4 and 5 of the statutory policy read as follows:

Defence of proceedings

4.   The Insurer shall in respect of anything indemnified under this Policy, including the bringing, defending, enforcing or settling of legal proceedings for the benefit of the Insurer, be entitled to use the name of the Employer. The Employer shall give all necessary information and assistance, and forward all documents to enable the Insurer to settle or resist any claim as the Insurer may think fit.

Subrogation

5.   The insurer shall be entitled to use the name of the Employer in any proceedings to enforce, for the benefit of the Insurer, any order made for costs or otherwise, and shall have the right of subrogation in respect of all rights which the Employer may have against any person or persons who may be responsible to the Employer, or otherwise in respect of any claim for any injury covered by this Policy, and the Employer shall as and when required execute any necessary documents for the purpose of vesting such rights in the Insurer.

The evidence

17. It was common ground between Ansell and CGU that CGU bore the onus of proving, on the balance of probabilities, that its liability to indemnify Ansell under the common law extension was capped, and to prove the amount of the cap. That agreed position reflected the decision of the High Court in Wallaby Grip Ltd v QBE Insurance (Australia) Ltd (2010) 240 CLR 444.

18. Ansell called no evidence. CGU relied on affidavits sworn by its solicitor Mr Spearritt, who proved the form of the Regulations at various times, and Mr Staples. Neither Mr Spearritt or Mr Staples was cross-examined.

19. Mr Staples has worked for CGU and predecessor companies since 1959. From 1962 or 1963, he had sole responsibility for handling Ansell’s claims for workers compensation and associated claims for damages at common law. He said that there were between 1,500 and 1,600 claims annually relating to Ansell’s premises at Drummoyne, and a further 800 to 900 claims annually relating to Ansell’s premises at Bankstown.

20. Mr Staples said that at no stage whilst managing those thousands of claims did he ever “come across a claim for [Ansell] which was the subject of an unlimited level of cover under the common law extension to the statutory employers’ indemnity policy”.

21. Mr Staples identified records of CGU relating to a claim made by another employee of Ansell, arising out of an injury said to have occurred on 24 May 1962. That worker made a claim on 11 July 1962. He commenced proceedings in the then Workers Compensation Commission of New South Wales in 1967. In March 1968, the Commission made an award in favour of the respondent (Ansell).

22. Having regard to the apparent date of injury, one would think that the responding policy should have been that in force for the year to 1 July 1962. However, in CGU’s records, the claim was recorded under the policy (number 5330) in force for the following year. Further, when the claim was reagitated in 1967 (apparently, on about 19 July 1967), the details were recorded by reference not to that earlier policy or the policy then in force, but to policy number 1503 for the year ending 1 July 1967.

23. Mr Staples identified a “claims jacket” for the claim file relating to the claim attributed to policy 5330, and another claims jacket for the claim file relating to the claim attributed to policy 1503. Each claims jacket identified the insured as “Dunlop Rubber Australia Limited” in respect of its Drummoyne premises.

24. The details recorded on the claims jacket for policy 5330 included, against the printed words “Common Law”, the handwritten symbol and figures “£50,000”. For the claims jacket relating to policy 1503, the same figures had been written against the printed words “Common Law”. It looks very much as though someone had put a “$” symbol in front of those figures, and then overwritten that symbol with the “£” symbol. Those symbols were then crossed out, and someone else, unidentified in the evidence, wrote “£50,000” underneath the previous handwritten notation.

25. The claims jacket relating to policy 1503 recorded that the claim had been “reported” on 19 July 1967. It is quite clear, however, when one looks at the name of the insured and the name of the worker, and at the date and details of the alleged injury, that it relates to exactly the same claim as does the other claim file, contained within the claims jacket relating to policy 5330.

26. If (as would be likely) the second claims jacket (and second claim file) were opened on or after 19 July 1967, about 18 months had elapsed since the change to decimal currency (14 February 1966). Further, about 8 months had elapsed since the form of statutory policy was amended (by regulation) to give effect to the change to decimal currency.

27. Mr Staples did not identify the author of the notation “£50,000” on the 1967 claims jacket. He did however say that he had written the words “Dawson Waldron” on that file, together with the figures “212-00” (i.e., presumably dollars), the number “13”, the words “Legal Costs” and the figures “288-00” (again, presumably, dollars).

28. That is the extent of CGU’s evidence as to the limit of indemnity. Mr Staples said that he had not been able to locate any documents other than those to which I have referred “that identify the level of cover under the common law extension for the relevant employers’ indemnity policy”.

The parties’ submissions

29. The question is in essence whether that evidence, standing alone but uncontradicted, proves, on the balance of probabilities, that for the 1967 year, CGU’s liability under the common law extension was capped at $100,000. That question falls to be answered on the basis that both parties accepted that the claims jackets were business records and that they were capable of proving the matters recorded on them. The real question was: what exactly do those recorded matters prove?

30. Mr Parker of Senior Counsel, who appeared with Mr Villa of Counsel for Ansell, accepted that the claims jacket for policy 1503 proved that there was a limit of liability, for the common law extension, of £50,000. However, he submitted, on a fair reading of that claims jacket in context, the limit of liability that it proved was for the common law extension under the 1962 policy, policy 5330. Mr Parker submitted that the claim had been recorded under that policy; that if it were that policy that responded, then the ultimate defence of the claim should have been conducted under that policy; and thus that the later claims jacket should be read as referring to that earlier policy.

31. That reading of the claims jacket was reinforced, Mr Parker submitted, by the use of pounds (the currency applicable to the earlier policy) rather than dollars (the currency applicable to the later policy, at least from 18 November 1966).

32. Mr Hooke of Senior Counsel, who appeared with Mr Bors of Counsel for CGU, submitted that the later claims jacket should be read as referring to the limit of liability under the policy that it expressly identified: policy number 1503, for the year ended 1 July 1967. Mr Hooke accepted that in fact, that policy had expired at the time that the claim was reported (or reported again): 19 July 1967. However, he submitted, this was consistent with the way that the claim had been treated when it was first reported: 11 July 1962. Although (because the injury is said to have occurred on 24 May 62) the claim should have been recorded against the policy current to 1 July 1962, it was in fact recorded against the policy that was current at the date the claim was reported. I have to say that the suggested consistency escapes me.

33. Mr Hooke submitted that the Court could infer that the recording of the claims limit on each jacket referred to the policy described on each jacket.

34. Mr Hooke submitted, further, that the means of proof really lay with Ansell. He relied on the observations of Lord Mansfield CJ in Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. He submitted, further, that a Jones v Dunkel inference (Jones v Dunkel (1959) 101 CLR 298) should be drawn against Ansell, because it had neither called evidence from its records of the terms of the policy nor explained its inability to do so.

35. Mr Parker submitted that no Jones v Dunkel inference should be drawn unless the Court could be satisfied that the missing evidence would illuminate the particular matter (he referred to Glass J to in Payne v Parker [1976] 1 NSWLR 191 at 20; see also Hutley JA at 197 and Mahoney JA at 208). In this case, Mr Parker submitted, there was no basis on which the Court could conclude that Ansell had any evidence in its possession that was capable of casting light on the factual issue. In any event, Mr Parker submitted, the Court should decide the matter on the basis of the evidence that was before it, rather than speculate on what other evidence might have been called.

Decision

36. The starting point is, as I have said, that CGU bears the onus of proving both that there was a relevant limitation and the amount of that limitation. Next, as is obvious, that question has to be decided upon the basis of the unchallenged evidence. I incline to the view that neither Blatch v Archer nor Jones v Dunkel has a great deal of work to do in this case. The reason is simple. If the evidence is capable of establishing that there was a cap of £50,000, there is no need to go further. There is no contradictory evidence, and thus no real need to analyse the suggested failure of one party or the other to call evidence (or further evidence).

37. In any event, I am far from persuaded that it is so clearly self-evident that Ansell, no doubt after numerous corporate reorganisations, should have in its possession insurance records going back 49 years and more, that its failure to produce any such records at trial should be held against it in the way Mr Hooke submitted. And if it were correct to say, as Mr Hooke submitted, that one would expect an insured in Ansell’s position to have such records available to it then, equally, one might expect an insurer in CGU’s position to have the corresponding records available to it.

38. I turn to what evidence there is. Each claims jacket is divided, by bold horizontal and vertical lines, into a number of sections. For the earlier claims jacket, the relevant section is that appearing on the top right hand side of the jacket. That box has the following printed material:

Policy No ………………………………..

Expiry Date ………………………………   

Agency …………………………………...

Policy Current …….………………………

Premium Paid …………………………….

Common Law …………………………….

Reinsurance ………………………………

39. Against each printed section, words and numbers have been written in by hand (and in the case of the word “Agency”, a stamp has been impressed and supplemented by handwriting).

40. It seems to me to be clear that all the material stated in that section, or box, relates to policy number 5330.

41. The format of the later claims jacket is slightly different. There is a box just below the top right hand side, which has printed on it all the same words except “Policy No” and “Reinsurance”.

42. Below that box there is the printed word “Reinsurance”. Above that box, but enclosed within their own box, are the printed words “Policy No.”

43. For the later claims jacket, the policy number, 1503, has been written in. Material is then written against each of the other boxes except that there is nothing against the words “Premium Paid” or the word “Reinsurance”.

44. Mr Parker’s submission is in effect that in the later claims jacket, the stated limit for the common law extension should be treated as applying not to the policy that is described in the preceding lines in the same section (and that is identified in the box immediately above that section) but, rather, to another policy, which can only be identified by inference from the date of the injury. I do not think that this is the correct way to read the document. On the contrary, I think that the descriptive material should be read as relating to the policy that is specifically identified, both by number and by expiry date.

45. I do accept, as Mr Parker submitted, that the identified policy was not one that responded to the claim. If the relevant event were the date when the injury giving rise to the claim arose (and this would seem to be correct), the responding policy was that in force up until 1 July 1962. If however it were the date of reporting of the claim that determined the responding policy, that would identify the policy for the year ended 1 July 1968, not the identified policy for the year ending 1 July 1967. It follows that, however one views the documents, there are anomalies and inconsistencies that are not resolved by the evidence.

39. Regardless of those matters, the obvious inference as to each claims jacket is that some employee of CGU attempted to identify the policy that responded to the claim and attempted to set out the relevant details (i.e., those required by the form of the claims jacket to be inserted) of that policy. It is reasonable to assume that if the employee who completed the claims jackets was not sufficiently familiar with the policies to fill out the details from memory, he or she would have consulted the policy before doing so.

40. There is force in Mr Parker’s submissions recorded at [31] above. However, when the later policy was issued, the statutory form referred to pounds, not dollars. And the very way in which the relevant part of the claims jacket was completed (see at [24] above) confirms what is, at least for people of a certain age, common knowledge: the state of confusion for some considerable time following 14 February 1966. It is hardly surprising that a claims officer who had handled many claims under policies denominated in pounds might have completed the claims jacket in the way that happened.

41. It follows, in my view, that the proper inference to be drawn from each of the claims jackets is that it states the details relevant (in the sense just explained) for the specific policy identified, both by number and by expiry date, on it. Thus, in my view:

NOT IMPLEMENTED: support for m:oMath -

£50,000 ; and

1. the proper inference to be drawn from the earlier claims jacket is that it proves, for policy number 5330 expiring 1 July 1963, that there was a limit of liability for the common law extension of

2. the proper inference to be drawn from the later claims jacket is that it proves, for policy number 1503 expiring 1 July 1967, the like limit of liability for the common law extension.

49. I am satisfied, on the balance of probabilities, that the later policy did include a limitation of liability for the common law extension as CGU contends, and that the figure was £50,000 (or $100,000).

50. It follows that Ansell is not entitled to the primary relief that it claims.

51. The parties accepted that, if I were to come to that conclusion, there would be no need for me to deal with consequential orders such as repayment by Ansell to CGU of amounts overpaid under the common law extension.

The cross-claim against Amaca

52. CGU’s position is that the cross-claim is of no utility to it. It accepts that, having commenced the cross-claim pursuant to its right of subrogation under condition 5 of the statutory policy, it is liable both for the costs incurred to date in prosecuting it and for any costs to date that may be ordered in favour of Amaca against Ansell.

53. CGU has suggested that Ansell should take responsibility for deciding whether to continue the cross-claim or whether to permit CGU to settle it on the best terms available.

54. Mr Parker submitted that the decision was CGU’s to make, and that it was not appropriate for CGU to attempt to foist that decision onto Ansell. Mr Hooke appeared to accept that the decision was indeed was one that CGU could and should make.

55. In those circumstances, it does not seem to me that there is any present issue relating to the cross-claim against Amaca. It follows, as Mr Hooke submitted, that there is no present controversy that could be quelled by the grant of declaratory relief.

Conclusion and orders

56. Bearing in mind, as I have said, that the parties accept that they should adjust their financial obligations in line with what I have said (of course, subject to any appeal and the outcome thereof), the appropriate order seems to me to be that the summons should be dismissed.

57. Although I have not heard from the parties as to costs, I see no reason why costs should not follow the event. If either party wishes to contend for a different or further order as to costs, it should make application within 14 days and I will give directions for the resolution of that application.

58. The orders that I make are:

1. summons dismissed;

2. order the plaintiff to pay the defendant’s costs;

3. direct that the exhibits be returned.

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Decision last updated: 27 September 2016