CGU Insurance Limited v AAI Limited; CGU Insurance Limited v AAI Limited

[2016] NSWCA 335

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

CGU Insurance Limited v AAI Limited; CGU Insurance Limited v AAI Limited [2016] NSWCA 335

Hearing dates:

7 September 2016

Decision date:

12 December 2016

Before:

McColl JA at [1];
Gleeson JA at [2];
Emmett AJA at [3]

Decision:

In Matter No. 2016/129941

 

1. The appeal be allowed.
2. The orders made by the Dust Diseases Tribunal on 1 March 2016 and 6 April 2016 be set aside.
3.   In lieu of those orders there be orders as follows:
(a)   judgment in favour of the cross-claimant against the first cross-defendant for the sum of $2,240,000 in respect of the damages payable to the plaintiff;
(b)   judgment in favour of the cross-claimant against the first cross-defendant for 40 per cent of the plaintiff’s costs to be agreed or assessed;
(c)   the first cross-defendant pay the cross-claimant’s costs of the cross-claim;
(d)   the cross-claimant pay the second cross-defendant’s costs of the cross-claim.
4. Leave be reserved to apply in relation to the reimbursement to the second cross-defendant of any sum paid by it to the plaintiff.

 

In Matter No. 2016/129951:

 1. The proceedings be dismissed.
2. There be no order as to the costs of the proceedings.

Catchwords:

WORKERS COMPENSATION – insurers’ liability for liability of indemnified employer of worker exposed to asbestos – occupational diseases – when liability of insurer taken to arise – construction of s 151AB of Workers Compensation Act 1987 (NSW) – where claimed liability is for injury or disease caused by exposure to asbestos fibre during particular period – whether liability taken to arise when worker last employed in that period – whether primary judge made enquiry into actual employment or nature of employment

  PRACTICE AND PROCEDURE – costs – whether Bullock order appropriately made – whether unsuccessful party had conducted litigation in some manner that made it fair or appropriate to make a Bullock order – whether order for costs on indemnity basis should be made against unsuccessful party

Legislation Cited:

Dust Diseases Tribunal Act 1989, s 32
Law Reform (Miscellaneous Provisions) Act 1946, ss 5(1), 6
Workers Compensation Act 1987 (NSW), s 151AB
Workers Compensation (Dust Diseases) Act 1942 (NSW), s 3, Sch 1

Cases Cited:

Allianz Australia Insurance Ltd v Pomfret (2015) 88 NSWLR 192; [2015] NSWCA 4
CIC Workers’ Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169
CIC Workers’ Compensation (NSW) Ltd v Kellogg (Aust) Pty Ltd (1996) 40 NSWLR 422
Gould v Vaggelis (1985) 157 CLR 215; [1985] HCA 75
ICI Operations Pty Ltd v WorkCover Authority of New South Wales (2004) 60 NSWLR 18; [2004] NSWCA 55
Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179
Wellcome Australia Ltd v Australia Eagle Insurance Co Ltd (1993) 34 NSWLR 269

Category:

Principal judgment

Parties:

CGU Insurance Limited (Appellant / Applicant)
AAI Limited (First Respondent)
Amaca Pty Limited (Second Respondent)

Representation:

Counsel:
Mr D Hooke SC / Mr T Bors (Appellant)
Mr B Walker SC / Mr DT Miller SC / Mr MJ Smith (First Respondent)
Mr DJ Russell SC (Second Respondent)

  Solicitors:
Curwoods Lawyers (Appellant)
Moray & Agnew Lawyers (First Respondent)
Mills Oakley Lawyers (Second Respondent)

File Number(s):

2016/129941; 2016/129951

 Decision under appeal 

Court or tribunal:

Dust Diseases Tribunal of New South Wales

Date of Decision:

1 March 2016; 6 April 2016

Before:

Curtis J

File Number(s):

197/2015/1

Judgment

1. McCOLL JA: I agree with Emmett AJA’s reasons and the orders his Honour proposes.

2. GLEESON JA: I agree with Emmett AJA.

3. EMMETT AJA: These two proceedings raise a question as to the proper construction of s 151AB of the Workers Compensation Act 1987 (NSW) (the Compensation Act). The question arises in connection with a claim by Mr Kevin Hastings for damages by reason of his contracting mesothelioma as a consequence of exposure to asbestos dust and fibre while employed by JA Westaway & Son Pty Limited (Westaway). Mr Hastings’ exposure resulted from his working with products manufactured by James Hardie & Coy Pty Limited, now known as Amaca Pty Limited (Amaca).

The Proceedings

4. Mr Hastings sued Amaca in the Dust Diseases Tribunal of New South Wales (the Tribunal). Amaca, in turn, cross-claimed against the first respondent and first cross-defendant, AAI Limited (AAI), and the appellant and second cross-defendant, CGU Insurance Limited (CGU), for contribution towards any damages that it might be found liable to pay to Mr Hastings. It claimed such contribution under the Law Reform (Miscellaneous Provisions) Act 1946 (the Contribution Act).

5. Section 5(1)(c) of the Contribution Act relevantly provides that, where damage is suffered by any person as a result of a tort, 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 tort-feasor or otherwise. Section 6(1) relevantly provides that, if an insured corporation has entered into a contract of insurance by which it is indemnified against liability to pay any damages, the amount of the insured corporation’s liability is, on the happening of the event giving rise to the claim for damages, to be a charge on all insurance moneys that are or may become payable in respect of that liability. Under s 6(2), if, on the happening of the event giving rise to such a claim for damages, the insured corporation is being wound up, s 6(1) applies notwithstanding the winding-up. Under s 6(4), every such charge is enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured corporation.

6. The claims for contribution against AAI and CGU were made by Amaca on the basis that Westaway had obtained policies of insurance from CGU and AAI insuring against liability of the nature claimed by Mr Hastings. Westaway was insured by AAI from prior to 15 September 1981 up to 4.00 pm on 14 December 1985 and from 4.00 pm on 14 December 1986 until after 19 December 1986. Westaway was insured by CGU from 4.00 pm on 14 December 1985 until 4.00.pm on 14 December 1986. Westaway has been de-registered and, accordingly, the claims were made by Amaca directly against CGU and AAI under s 6(4) of the Contribution Act.

7. The claims raised the question of which of AAI and CGU was liable to indemnify Westaway in respect of any liability that Westaway had to Mr Hastings. That question is regulated by s 151AB(1)(a) of the Compensation Act. Section 151AB(1)(a) relevantly provides that, for the purposes of any policy of insurance obtained by an employer, if the employer is liable independently of the Compensation Act for damages for an occupational disease contracted by a worker, that liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due. Under s 151AB(6) of the Compensation Act, occupational disease includes a dust disease as defined by the Workers Compensation (Dust Diseases) Act 1942 (NSW). Under s 3 and Schedule 1 of that Act, mesothelioma is defined as a dust disease.

8. Mr Hastings’ claim against Amaca in the Tribunal was settled for the sum of $5,600,000 plus costs. Amaca, CGU and AAI agreed that whichever of AAI and CGU was held by the Tribunal to be liable to indemnify Westaway would contribute 40 per cent of the damages and costs payable by Amaca to Mr Hastings under the consent judgment entered to give effect to the settlement. A judge of the Tribunal (the primary judge) determined, for reasons published on 1 March 2016, that CGU was liable to indemnify Westaway in respect of Amaca’s claim. Accordingly, the primary judge directed judgment for Amaca against CGU in the sum of $2,240,000 and for 40% of Mr Hastings’ costs as agreed or assessed. For reasons published on 6 April 2016, the primary judge ordered CGU to pay Amaca’s costs of the cross-claim on the ordinary basis and ordered Amaca to pay AAI’s costs on the party/party basis until 16 October 2015 and thereafter on the indemnity basis. His Honour also ordered CGU to indemnify Amaca in respect of the latter order.

9. By notice of appeal filed on 28 April 2016, CGU appeals, under s 32 of the Dust Diseases Tribunal Act 1989, from the orders made by the primary judge. Under s 32(1), such an appeal is limited to error in point of law. For more abundant caution, by summons filed on 28 April 2016, CGU also seeks judicial review of the orders made by the Tribunal. The grounds on which relief is sought in both proceedings are essentially the same.

Findings and Reasons of the Tribunal

10. Mr Hastings was employed by Westaway initially as an apprentice and, in his last year, as a tradesman, carpenter and joiner. The business of Westaway involved adding second storey conversions to existing houses. Westaway carried out approximately 50 such conversions each year and Mr Hastings worked on a new project approximately once every week. The first day on a project was spent in demolishing that part of the existing roof above the footprint of the planned extension. In fewer than 50 per cent of projects, the footprint and the necessary demolition extended to existing eaves and gables. Some eaves were made of asbestos cement material and others were made of timber. There was no evidence that gables contained asbestos.

11. The primary judge found that, in the course of his employment, Mr Hastings was exposed to asbestos dust and fibre liberated from building products manufactured by Amaca, upon which he worked. His exposure to new building products containing asbestos ended in January 1984, when Amaca ceased to supply products containing asbestos. However, his Honour also found that, in the course of his employment by Westaway, Mr Hastings was exposed to asbestos dust and fibre thrown up by demolition work involving old materials already in the houses to which additions were being made. Accordingly, after January 1984, Mr Hastings continued to be exposed to asbestos dust and fibre thrown up by demolition work involving old materials. However, that exposure was intermittent.

12. On two or three occasions during the course of his apprenticeship, which was completed towards the end of 1985, Mr Hastings removed asbestos cement roofing in the demolition phase. After the demolition, he spent three or four days erecting the framework and cladding the walls to lock up stage. The cladding work involved substantial exposure to asbestos dust and fibre thrown up the use of saws and grinders to cut asbestos cement sheeting.

13. The primary judge made several relevant findings as follows. First, between 15 September 1981 and 22 January 1984, when AAI was on risk, Mr Hastings was extensively exposed to the risk of inhaling asbestos dust and fibre released from Amaca products upon which he worked. Secondly, between 15 September 1985 and 14 December 1985, when AAI was still on risk, because of the number of projects on which Mr Hastings was engaged, he was more probably than not exposed to the risk of inhaling asbestos dust and fibre released by the demolition of eaves containing or made of asbestos cement and from the demolition of asbestos cement roofing. Finally, between 14 December 1985 and 14 December 1986, when CGU was on risk, because of the number of projects upon which Mr Hastings was engaged, he was exposed, at least on several occasions, to the risk of inhaling asbestos dust and fibre released by the demolition of eaves made from or containing asbestos cement.

14. Mr Hastings has no recollection of the work upon which he was engaged in that last week of his employment by Westaway, in the five days from 14 December 1986 to 19 December 1986, when AAI was on risk. The primary judge found that work involving the demolition of eaves containing asbestos took place on less than 50 per cent of the projects upon which Mr Hastings worked and that not all eaves were made of asbestos cement. Therefore, his Honour was not persuaded that it was more probable than not that Mr Hastings worked in demolishing asbestos cement eaves, with the attendant risk of inhaling asbestos dust and fibre, during the five days from 14 December 1986 to 19 December 1986.

15. The primary judge held that the liability of Westaway to Mr Hastings arose at some time between 14 December 1985 and 14 December 1986, when he last worked demolishing asbestos cement eaves and was, in consequence, exposed to the risk of inhaling dust and particles. His Honour held that, because there was a less than 50% chance of Mr Hastings having been exposed to asbestos fibre and dust between 15 December 1986 and 19 December 1986, such liability did not arise during that period. Therefore, his Honour concluded, CGU was liable because it was on risk during the period from 14 December 1985 to 14 December 1986.

Grounds Relied on by CGU

16. The grounds relied on by CGU may be summarised as follows:

• The primary judge erred in holding that Mr Hastings was last employed in employment, to the nature of which his disease is due, during the period of insurance for which CGU is liable within the meaning of s 151AB(1) of the Compensation Act,

• The primary judge erred in ordering that AAI’s costs be paid on the indemnity basis after 16 October 2015.

• The primary judge erred in ordering that CGU indemnify Amaca against its liability to pay AAI’s costs.

Relevant legal principles

17. The relevant legal principles are not in question. The issue in the proceedings in this Court is the application of those principles to the particular circumstances of the claim by Mr Hastings against Westaway. It is therefore necessary to say something about the relevant principles.

18. The critical phrase in section 151AB is “employment to the nature of which the disease was due”. The liability of Westaway is to be taken to have arisen when Mr Hastings was last employed by Westaway in employment to the nature of which the mesothelioma was due. The provision assumes a clear difference between “an employment to the nature of which the relevant disease was due”, on the one hand, and “an employment to the nature of which the disease was not due”, on the other. [1] The phrase in question requires that it be shown that there was a risk of a real kind that the disease in question would be contracted from the particular working conditions in which the worker was required to operate. Thus, an insurer will not be liable when the insurer comes on risk after the source of the disease is removed. [2]

    1. Wellcome Australia Ltd v Australia Eagle Insurance Co Ltd (1993) 34 NSWLR 269 at 276-277 as per Rolfe J (“Wellcome Australia”).

    2. Wellcome Australia at 279-280.

19. Where a worker is employed by an employer and spends considerable time engaged in an activity that brings the worker into daily contact with asbestos fibre, and then the activity in which the worker is engaged is changed, such that the worker is no longer brought into daily contact with asbestos fibre, and the worker then retires, the insurer made liable by s 151AB will be the insurer on risk up to the time of the change in activity and not the insurer who is on risk at the time of the retirement of the worker. [3] The concluding words of s 151AB are of crucial importance in determining the outcome in such a case. Attention must be directed, not to the contract of employment, but to the kind of work being done by the worker at various times. Exposure to substances capable of causing an occupational disease is a material fact in identifying the nature of the relevant employment. Where there is a material change in the nature of the worker’s employment, the insurer liable under s 151AB is the insurer on risk when the worker was last employed by the employer to do work that exposed the worker to asbestos. [4]

    3. CIC Workers’ Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 at 172-3, 177 as per Gleeson CJ, Mahoney and Meagher JJA agreeing (“CIC v Alcan”).

    4. CIC v Alcan at 173, 177.

20. A worker is within the operation of s 151AB(1) if, in the course of carrying out his employment, the worker is in fact exposed to risk because of the employment. Employment for that purpose embraces not only the actual work tasks performed by the worker, but also those of the worker’s movements through the employer’s premises in the course of employment, which exposed the worker to risk of inhalation of asbestos particles. [5]

    5. CIC Workers’ Compensation (NSW) Ltd v Kellogg (Aust) Pty Ltd (1996) 40 NSWLR 422 at 427 as per Priestly JA, Meagher and Beazley JJA agreeing.

21. Section 151AB addresses the difficulty of identifying the time when an employer’s liability crystallises for the purposes of claiming on insurers. The difficulty does not relate to the actual disease from which the worker suffers. Section 151AB seeks to achieve the purpose of facilitating claims by employers on insurers by using the nature of employment test to fix the date when the employer’s liability is to be taken or deemed to have arisen. The legislative device employed may be characterised as “rough and ready”, “artificial” and “fictional”. It is a fairly arbitrary legislative mechanism for identifying the relevant insurer in what would otherwise be an impossibly complex situation. [6]

    6. ICI Operations Pty Ltd v WorkCover Authority of New South Wales (2004) 60 NSWLR 18; [2004] NSWCA 55 at [197] as per McColl JA, Mason P and Meagher JA agreeing (“ICI Operations v Workcover”).

22. The introduction of the “nature of employment test” in the context of employer and insurer was to avoid the employer being “sent from pillar to post” while retaining the focus on the actual occupational disease from which the worker suffers. [7] The test directs attention to whether the nature of the worker’s employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers. The test is not confined to the specific duties that the worker undertook but requires a determination of whether the course of the worker’s employment exposed the worker to a risk of inhaling asbestos particles and thus of contracting the occupational disease from which the worker suffers. The test is not concerned with causation in fact but with exposure to a risk that may be causative of the occupational disease from which the worker suffers. It requires proof, on the balance of probabilities, that the nature of the worker’s employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers. [8]

    7. ICI Operations v WorkCover at [200].

    8. ICI Operations v WorkCover at [202].

23. Before s 151AB(1) applies, it must be established that an employer is liable for damages for an injury (relevantly an occupational disease) contracted following a period of exposure to conditions capable of causing that injury. The object of s 151AB(1) is to identify, from among the insurers on risk during that period, the insurer liable to indemnify the employer for the full amount of those damages, and without the benefit of contribution from any other insurer. The section achieves that object by deeming the time at which the employer’s liability for the injury consisting of the occupational disease arises to be the end of the period during which the worker was exposed to the conditions capable of causing the occupational disease for which the employer is liable in damages. [9]

    9. Allianz Australia Insurance Ltd v Pomfret (2015) 88 NSWLR 192; [2015] NSWCA 4 at [83] as per Meagher JA, Beazley P and McColl JA agreeing (“Allianz v Pomfret”).

24. Section 151AB(2) contemplates a “claim” for damages made by a worker and that the insurer “primarily responsible” will conduct and pay for the defence of that claim and indemnify the employer or pay the worker the full amount of the claim as determined or agreed. Accordingly, s 151AB(1) is to be construed as applying to the disease and liability that is the subject of the worker’s claim. A construction of s 151AB that could impose the liability to indemnify on a later insurer, who was not on risk during any part of the period of employment and exposure giving rise to the employer’s liability, must be rejected. That outcome would be inconsistent with the scheme and object of s 151AB, which is to fix the last of the insurers on risk during that period with the whole of the liability, notwithstanding that the other insurers on risk during the period might otherwise be partly liable to contribute to the liability of the employer. [10]

    10. Allianz v Pomfret at [86]-[87].

Reasoning

25. The question raised by these proceedings is whether the mesothelioma contracted by Mr Hastings was due to the nature of the employment in which he was employed during the period 14 December 1986 to 19 December 1986. Another way of framing the question would be whether there was a risk of a real kind that mesothelioma would be contracted from the particular working conditions in which Mr Hastings was required to operate during that period. [11] That calls for an inquiry as to “the nature of the employment” in which Mr Hastings was employed during the relevant period. The relevant enquiry is not concerned with the actual activity in which Mr Hastings was engaged during that period.

    11. Wellcome Australia at 279-280.

26. AAI contended, in effect, that the primary judge found that the mesothelioma contracted by Mr Hastings was not due to the nature of the employment in which Mr Hastings was employed during the five day period in question because his Honour was not satisfied, on the balance of probabilities, that in that period Mr Hastings actually worked demolishing asbestos cement eaves with the attendant risk of inhaling asbestos dust and fibre. However, his Honour did not make a finding that Mr Hastings was not engaged in work involving demolishing asbestos cement eaves during the period. Rather, his Honour was not persuaded that more probably than not he was so engaged. His Honour reached his conclusion, by a statistical analysis of the occasions in the period preceding 14 December 1986 when Mr Hastings was engaged in work that exposed him to the risk of inhaling asbestos dust and fibre.

27. That is to say, the primary judge embarked on a probability inquiry as to the work in which Mr Hastings was actually engaged in the five day period when AAI was last on risk. In doing so, his Honour did not direct attention to, or make a finding about, the nature of the employment in which Mr Hastings was employed during that period, as the relevant provision requires. To that extent, his Honour failed to address the correct question, namely, whether the mesothelioma was due to the nature of the employment in which Mr Hastings was employed during the five day period.

28. The evidence before the Tribunal was incapable of supporting a finding that the nature of the employment in which Mr Hastings was employed changed between 14 December 1985 and 19 December 1986. Indeed, the evidence is incapable of supporting a finding that the nature of the employment in which Mr Hastings was employed changed after January 1984, when Amaca ceased to supply products containing asbestos. From that time until the time when his employment ceased on 19 December 1986, the nature of the employment in which Mr Hastings was employed by Westaway was the same.

29. That is to say, Mr Hastings was engaged in employment, as a tradesman, carpenter and joiner, in performing work in connection with projects undertaken by Westaway of adding second storey conversions to existing houses. In the course of that employment, Mr Hastings was from time to time exposed to asbestos dust and fibre thrown up by demolition of old materials in the existing houses, as contained in eaves made with asbestos cement.

30. There was no evidence of the actual work in which Mr Hastings was engaged in the last five days of his employment by Westaway. Whether or not that actual work involved exposure to asbestos dust and fibre thrown up by the demolition of materials in eaves containing asbestos is not to the point. There was evidence as to the nature of the employment in which Mr Hastings was employed by Westaway throughout the whole of the period from January 1984 to 19 December 1986, namely, demolishing parts of houses consisting of old materials containing asbestos. The mesothelioma contracted by Mr Hastings was due to the nature of that employment. It follows that the liability of Westaway is taken to have arisen as at 19 December 1986, when Mr Hastings was last employed by Westaway in employment of that nature.

31. The primary judge erred in failing to address the correct question, having regard to the true construction of s 151AB. That was an error in point of law. It follows that the orders of the Tribunal should be set aside. In lieu of the order for judgment against CGU, there should be an order for judgment against AAI in the sum of $2,240,000 plus 40 per cent of Mr Hastings’ costs of his claim against Amaca.

32. The orders made by the Tribunal on 31 March 2016 suggest that the judgment entered against CGU had been satisfied by CGU by payment directly to Mr Hastings on 14 March 2016. In those circumstances, if need be, it would be appropriate for an order to be made that the sum of $2,240,000 be paid by AAI to CGU by way of restitution. If need be, leave should be reserved to the parties to make any necessary application in that regard.

Costs

33. In the light of the conclusion reached above, it is unnecessary to deal with the other grounds of appeal concerning costs. However, it is desirable to say something about the questions raised by those grounds.

34. All parties accept that the primary judge erred in making the order on 6 April 2016 that Amaca pay the costs of AAI of the cross-claim on an indemnity basis after 16 October 2015, since his Honour misdirected himself that r 42.15A of the Uniform Civil Procedure Rules applied to an offer of compromise made by AAI to Amaca on 15 October 2015. Accordingly, that order must be set aside.

35. AAI contended that this Court should re-exercise the discretion as to costs and order that Amaca pay AAI’s costs in respect of Amaca’s cross-claim, on the basis that the costs should follow the event, and that CGU should pay to AAI the difference between the amount in the preceding order and the costs AAI incurred from 6 February 2016 as assessed on an indemnity basis. That order for indemnity costs against CGU was said to be appropriate on the basis of CGU's unreasonable refusal of an offer of compromise made on 5 February 2016 by AAI to CGU. However, in circumstances where CGU succeeds in having the judgment against it in favour of Amaca set aside, it is unnecessary to determine any question as to how the Court would have re-exercised the discretion.

36. The remaining question would have been whether the order that CGU indemnify Amaca in respect of the costs that Amaca was ordered to pay to AAI should stand. That order was in the nature of a “Bullock Order”, made by the primary judge on the basis that, in all the circumstances, it was reasonable for Amaca to bring its cross-claim against both AAI and CGU.

37. The mere fact that the joinder of two defendants is reasonable does not necessarily mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. A Bullock Order should be made only if the court considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant. If nothing said or done by the unsuccessful defendant has led the plaintiff to sue the successful defendant, who was held not to be liable, there is no reason why the unsuccessful defendant should be required to pay for the plaintiff’s error or overcaution. [12] In addition to the question of whether the suing of the successful defendant was reasonable, there is also a requirement for the making of a Bullock Order that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant. [13]

    12. Gould v Vaggelis (1985) 157 CLR 215; [1985] HCA 75 at 229 as per Gibbs CJ.

    13. Gould v Vaggelis at 230.

38. Mr Hastings commenced proceedings against Amaca on 12 June 2015. On 2 September 2015, Amaca filed a cross-claim against AAI, as the insurer of Westaway on risk as at 19 December 1986, when Mr Hastings ceased employment with Westaway. On 15 October 2015, AAI filed a reply asserting that the last exposure of Mr Hastings to asbestos dust and fibre arose on a date prior to 14 December 1986. A statement supporting that contention by Mr Iain Westaway, a former principal of Westaway, was attached to the reply.

39. On 23 November 2015, Mr Hastings’ solicitors informed Amaca that Mr Hastings was not able to recall whether or not he had exposure to asbestos dust and fibre between 14 December 1986 and 19 December 1986. On 24 November 2015, Amaca joined CGU as a second cross-defendant.

40. On 27 November 2015, Amaca wrote to CGU saying that, despite its best efforts, it had no evidence to contradict the assertions made by AAI as to the last date of exposure. The letter said that, unless CGU agreed to accept liability in relation to the cross-claim, Amaca would not be in a position to release AAI from the proceedings. The letter concluded that, if CGU was found to be the relevant insurer by the Tribunal, a Bullock Order would be sought against CGU in relation to any order for costs made against Amaca in favour of AAI.

41. On 16 February 2016, CGU obtained a statement from Mr Westaway that was apparently inconsistent with his earlier statement. The later statement was to the effect that Mr Hastings was exposed to asbestos dust and fibre up to and including 19 December 1986. However, Mr Westaway was not called by CGU to give evidence before the Tribunal.

42. CGU contends that the order that CGU indemnify Amaca against its liability to pay AAI’s costs of the cross-claim was an error in point of law on the part of the primary judge. It asserts that his Honour had regard to irrelevant considerations and failed to have regard to relevant considerations and misapplied the relevant principles. Amaca contended before the Tribunal that its conduct in suing both AAI and CGU was reasonable and that, in addition, CGU took steps to lead Amaca to continue to sue AAI such that it was fair to impose liability on it for the costs incurred by Amaca to AAI. CGU’s response is that, while his Honour found that Amaca had acted reasonably and properly, that was not of itself sufficient and it was necessary for the Tribunal to find something in the conduct of CGU that made it a proper exercise of discretion to require it to pay AAI’s costs.

43. In considering whether to make a Bullock Order, the Court should, in the exercise of its discretion, balance two considerations of policy. The first is that an unnecessary multiplicity of actions should not be forced on litigants so that a plaintiff that acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have elected or taken separate actions. The second consideration of policy is that an unsuccessful defendant should not have to pay any more than one set of costs merely because it is unsuccessful. [14]

    14. Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179 at [128] as per Mason P, Stein and Heydon JJA agreeing.

44. There was no finding that CGU had conducted the litigation in some manner that made it fair or appropriate to visit upon it an order to indemnify Amaca in respect of AAI’s costs. The reasons given by his Honour in relation to costs amount to no more than a finding that CGU was not successful in its defence. The Tribunal was required to deal with a question of statutory construction, being the meaning of “nature of employment” in s 151AB. More importantly, on AAI’s case, there was a question of fact to be resolved as to when Mr Hastings was last employed in employment of the nature in question. That was determined on the evidence given by Mr Hastings in the witness box. In addition, it was in fact the conduct of AAI that led to the presence of two cross-defendants in the proceedings. This was not a case where CGU denied liability and asserted that AAI was liable, such that it was necessary for Amaca to join AAI. Rather, after AAI was joined, AAI denied that it was liable and asserted that CGU was liable.

45. In the absence of any finding of a basis upon which it was fair that CGU should be required to pay AAI’s costs, beyond the fact that CGU unsuccessfully made submissions on an issue of statutory construction, the primary judge appears to have erred in the exercise of his discretion. I would be therefore be disposed to conclude that, if CGU were to be held to be liable to indemnify Westaway, the Bullock Order should be set aside. However, it is unnecessary to decide that question.

46. As a final matter, CGU, in its written submissions in reply, said as follows:

“If the Court considers that the primary judge erred in his determination of the cross-claims, and that AAI was indeed the relevant insurer, then, having regard to CGU’s offer of compromise, it is submitted that the appropriate orders in relation to the costs below are:

a) Amaca to pay CGU’s costs of the cross-claim, assessed on the ordinary basis until 30 November 2015 and on the indemnity basis thereafter; and

b) AAI to pay Amaca’s costs of the cross-claim, assessed on the ordinary basis.”

47. The reference to “CGU’s offer of compromise” refers to an offer of compromise made by CGU on 30 November 2015 offering Amaca judgment in favour of CGU with no order as to costs. While the offer is referred to in the reasons of the primary judge, the text of the offer has not been included in the papers before this Court.

48. CGU’s proposed order that Amaca pay its costs on an indemnity basis after 30 November 2015 was not raised at first instance before the primary judge although, given the findings of the primary judge on the question of liability, that is understandable. More significantly, no such order was sought in either CGU’s Notice of Appeal or Summons Seeking Judicial Review and it was not mentioned in CGU’s written submissions in support of the appeal, or in oral submissions before this Court. The matter was raised for the first and only time in CGU’s written submissions in reply. In those circumstances, CGU’s submission seeking costs from Amaca on an indemnity basis after 30 November 2015 should be rejected.

Conclusion

49. The orders that I propose in the appeal proceedings are as follows:

1. The appeal be allowed.

2. The orders made by the Tribunal on 1 March 2016 and 6 April 2016 be set aside.

3. In lieu of those orders there be orders as follows:

1. judgment in favour of the cross-claimant against the first cross-defendant for the sum of $2,240,000 in respect of the damages payable to the plaintiff;

2. judgment in favour of the cross-claimant against the first cross-defendant for 40 per cent of the plaintiff’s cost to be agreed or assessed;

3. the first cross-defendant pay the cross-claimant’s costs of the cross-claim;

4. the cross-claimant pay the second cross-defendant’s costs of the cross-claim.

4. Leave be reserved to apply in relation to the reimbursement to the appellant of any sum paid by it to the plaintiff before the Dust Diseases Tribunal.

50. The orders that I propose in the judicial review proceedings are as follows:

1. The proceedings be dismissed.

2. There be no order as to the costs of the proceedings.

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Endnotes

Decision last updated: 12 December 2016