ICI Australia Operations Pty Ltd v WorkCover Authority of New South Wales

[2002] NSWDDT 9

Reported Decision (2002) 23 NSWCCR 678

Dust Diseases Tribunal

of New South Wales

CITATION:	ICI Australia Operations Pty Ltd v WorkCover Authority of New South Wales [2002] NSWDDT 9
PARTIES:	ICI Australia Operations Pty Ltd v CGU Insurance Ltd WorkCover Authority of New South Wales
MATTER NUMBER(S):	169 of 1997
JUDGMENT OF:	Curtis J at 1
CATCHWORDS:	Miscellaneous Matters :-
LEGISLATION CITED:
CASES CITED:
DATES OF HEARING:	26 February 2001, 6 February 2002, 16 april 2002, 21 June 2002
DATE OF JUDGMENT:	06/21/2002
LEGAL REPRESENTATIVES:	Mr G P F Rundle instructed by Phillips Fox appeared for the cross claimants Mr g F Little with Mr G J Parker instructed by P W Turk and Associates appeared for the cross defendant

JUDGMENT:

1. A plaintiff, George Roland Brazier, was employed by ICI Australia Operations Pty Limited (ICI) intermittently between 1950 and 1988. Until 1982 he was exposed in this employment to the inhalation of asbestos dust and fibre by reason of the negligence of ICI and in consequence contracted asbestos related lung disease.

2. He sued ICI in this Tribunal and on 14 August 2000 recovered judgment in the sum of $100,000 plus costs to be agreed or assessed.

3. CGU Insurance Limited (CGU) having been on 26 April 2000 appointed by Armitage J the designated insurer pursuant to s 151AC of the Workers Compensation Act 1987, has satisfied the plaintiff's judgment and paid his costs agreed at $56,103. CGU now claims reimbursement from the WorkCover Authority of New South Wales (the Authority) for these payments.

4. CGU contends that because an insolvent insurer, National Employers Mutual General Insurance Association Limited (NEM), was on risk when the plaintiff was last employed by ICI in an employment to the nature of which his disease was due, and because pursuant to s 151AB(1) and s 151AC(10) of the Workers Compensation Act 1987 NEM, if solvent, would be otherwise liable to reimburse CGU, the Authority is compelled by s 231(2), s 232(1), s 234(1)((a) and s 236(2) of the Workers Compensation Act 1987 to reimburse CGU.

5. The relevant facts are no longer in contest.

6. The Authority is constituted a corporation by s 14 of the Workplace (Injury Management) Act 1998 and pursuant to s 22(2) of that Act has such functions as may be conferred on it by the Workers Compensation Act 1987. S 227(1) of the Workers Compensation Act established a fund to be known as the "Insurer's Guarantee Fund" into which the workers compensation insurers are to make contributions. S 227(3) provides that there shall be paid out of the guarantee fund such amounts as may be authorised by the legislation, and s 227(4) that the guarantee fund shall, subject to the Act, be under the direction, control and management of the Authority.

7. Relevant sections of the Workers Compensation Act governing payments from the guarantee fund are as follows.

Appointment of Authority as Agent and Attorney of Employer and Worker.

S 231(1) The authority is by this section appointed the agent and attorney of an employer and a worker insured under a policy of insurance issued by an insolvent insurer.

S 231(2) As agent and attorney of such employer, the authority may exercise the rights and discharge the obligations of the employer -

(a) For the purpose of dealing with and finalising any claim against which the employer is indemnified under the policy of insurance;

(b) For the purpose of satisfying any such claim or any judgment or award against which the employer is indemnified under the policy of insurance. And-

(c) ...

8. Payments to Employer or Liquidator

S 232(1) Where an employer insured under a policy of insurance issued by an insolvent insurer has satisfied (whether before or after the insurer became an insolvent insurer for the purposes of this division or before or after the commencement of this division) any claim, judgment or award in respect of which the employer has not been indemnified under that policy, the authority, as manager of the guarantee fund, may pay from the guarantee fund to the employer an amount equal to the whole or any part of the amount paid by the employer in satisfaction of the claim, judgment or award.

S 232(2) Where the liquidator of an insolvent insurer has satisfied (whether before or after the insurer became an insolvent insurer for the purposes of this division or before or after the commencement of this division) any claim, judgment or award in respect of which an employer is entitled to be indemnified under a policy of insurance issued by the insolvent insurer, the authority, as manager of the guarantee fund, may pay from the guarantee fund to the liquidator an amount equal to the whole or any part of the amount paid by the liquidator in satisfaction of the claim, judgment or award.

S 232 (3) ...

S 232(4) The powers conferred by subsections (1) and (2) are exercisable at the absolute discretion of the authority and neither those sections operate nor the exercise of any of those powers operates so as to confer, directly or indirectly, any right on any person to whom a payment is or may be made under those subsections or on any other person.

9. Application of Guarantee Fund

S 234 (1) Out of the guarantee fund, the authority as manager of the that fund -

(a) shall pay the amount of any claim, judgment or award arising from or relating to any policy of insurance issued by an insolvent insurer, being a claim, judgment or award that it proposes to satisfy as agent and attorney of an employer and any other amounts required by this division to be paid from that fund:

(b) ...

(2) Where a payment is made by the authority as agent and attorney of an employer, being a payment authorised by this division, the authority shall not be entitled to recover the amount of that payment from the employer.

10. Payments of workers compensation when insolvent insurer dissolved

s 236 (1) When an insolvent insurer has been dissolved, the payments of compensation under judgments or awards relating to policies of insurance issued by the insolvent insurer which would, but for the dissolution taking place, be payable by the insolvent insurer shall continue and be paid out of the guarantee fund by the authority.

(2) When an insolvent insurer has been dissolved, a person who would have had, but for the dissolution of the insolvent insurer, an entitlement to payment of any amount arising from or relating to any policy of insurance issued by the insolvent insurer (being a policy in respect of which the insolvent insurer is the insurer) shall be entitled to payment of that amount out of the guarantee fund.

(3) A person referred to in subsection (2) may make a claim against the authority, as manager of the guarantee fund, in respect of an entitlement to payment of an amount under that subsection.

(4) The authority, as manager of the guarantee fund, is entitled to deal with and finalise a claim made under subsection (3) in relation to a policy of insurance issued by an insolvent insurer to the same extent as it would have been entitled to do so if the insolvent insurer had not been dissolved.

11. S 234 does no more than identify the fund from which these payments are to be made and, as was pointed out by Rolfe J in Workers Compensation Board of Queensland v WorkCover (1995) 36 NSWLR 732, does the same work as s 227(3). It identifies the source of payments rather than confers an additional power to make them.

12. S 236 relates not to damages but to payments of workers compensation. Subsections (2) and (3) confer on injured workers those same rights of direct action against the Authority as would otherwise exist pursuant to s 159(2) of the Act against the insurer if it were not insolvent. Although this section is expressed in general terms any construction creating rights against the fund inconsistent with the discretion reserved to the Authority in relation to common law claims is incompatible with the provisions of s 231(2) and s 232(4).

13. It may be seen that s 231 permits the Authority to pay monies to an injured worker in settlement of a claim or judgment and s 232 permits the Authority to pay monies to an employer or liquidator in reimbursement of monies paid by them to an injured worker in satisfaction of a claim or judgment.

14. The power conferred by s 231(2) is obviously inadequate to found the present claim. It only authorises payments to a worker whose claim remains unsatisfied.

15. To my mind, however, the power conferred by s 232(1) is adequate to authorise payment by the Authority to a designated insurer which has indemnified an employer whose actual insurer is insolvent. No violence may be done to the operation of the section by permitting payment to a designated insurer claiming in the name of the employer, by way of subrogation, whatever rights the employer may have to claim against the Authority.

16. It is important in this context to characterise the claim of the designated insurer as founded in subrogation rather than contribution or pursuant to the provisions of s 151AC(10).

17. Relevant to the characterisation of the claim by a designated insurer on the Authority are the provisions of s 151AC(10)(a) and s 151AC(10)(b) as follows.

(10) Adjustment after resolution of dispute If, on resolution of the dispute, it is determined that a designated insurer is not an insurer who is liable, then (in addition to any other liabilities) the insurer who is liable: (emphasis added)

(a) is liable to reimburse or indemnify the designated insurer for any amounts already paid by the designated insurer in that capacity (including any amounts paid on an interim basis), and

(b) is liable to reimburse or indemnify the employer for any costs of the worker already ordered by the Dust Diseases Tribunal …

18. Rolfe J in Workers Compensation of Queensland v WorkCover persuasively demonstrated that the Authority is not an insurer and is not liable to contribution.

19. Be that as it may, in Sydney Turf Club v Crowley (1971) 1 NSWLR 724 at 730, Jacobs JA with whom Manning JA agreed, held that:

If an insured claimed to be indemnified by one insurer and that insurer disclaims liability, but honestly and by way of ex gratia payment with reservation of his rights pays the amount of the claim, then he is entitled to be subrogated to the rights of the insured against the real insurer.
This circumstance constitutes an exception to the rule that an insured having been fully indemnified has no further rights against any insurer ( Austin v Zurich General Accident and Liability Insurance Company Limited 1945 1 KB 250) and would justify a payment by the Authority to the designated insurer.

20. In the alternative the designated insurer may perhaps be considered the agent of the employer in discharging a judgment entered against the employer. The section would permit reimbursement to the employer who would then account to the designated insurer. Either interpretation permits a workable solution to what may otherwise be a patently unfair operation of s 151AC.

21. The problem facing the present claimant is not, however, procedural. It is constituted by s 232(4) which vests absolute discretion in WorkCover and in terms prevents the accrual of the right for which CGU presently contends.

22. It may seem strange that Parliament by this privative enactment intended that the Authority may resist the apparently just claim of CGU, however as McClelland J observed in Enterprise Colorvideo Productions Pty Limited v Corporate Affairs Commission (1984) 1 NSWLR 223 at 228:

It is still no part of the judicial function, under the cloak of construction, to amend statutes merely to overcome shortcomings in their operation.

23. S 232(4) is unambiguous in its language; the words are clear in their meaning. It may be that Parliament intended to provide a device to control unrestricted access to a possibly limited resource. I note that s 232(1) and s 232 permit reimbursement to an employer or liquidator of an amount which may be a whole or any part of the award or amount paid by them.

24. My conclusions are inconsistent with those of Armitage J in Chubb Australia Limited v MMI (WC) Limited (1999) 17 NSWCCR 537. With the greatest respect I believe his Honour's comments at paragraphs 58 to 65 of that judgment to be wrong.

25. CGU, relying upon Commissioner of State Revenue (Victoria) v Royal Insurance Australia Limited (1994) 182 CLR at 51, advances an argument that in the circumstances of this case it is entitled to a judgment against the Authority founded upon the principles of unjust enrichment. In the case cited, notwithstanding the fact that the defendant, the Commissioner of State Revenue, possessed a statutory discretion to repay monies overpaid to the Commissioner because the monies were paid under a mistake of law, the claimant's right to recover the monies was to be found within general common law principles. The court held that the discretion could not be exercised to deny this independent legal right of recovery.

26. To my mind this submission by CGU does not take the argument any further. Any action founded in unjust enrichment is premised upon there being some unmet legal obligation. In the present case there is no legal obligation imposed upon the Authority to pay or repay monies to CGU and relief founded on unjust enrichment is not available.

27. CGU finally submits that the Authority may not in the purported exercise of its powers pursuant to s 232(1) exercise a discretion capriciously or without cause. For the purposes of this argument I can accept that the otherwise absolute discretion vested in the Authority by s 232(4) may be so constrained. There is, however, no material before me upon which I could find as a fact that the Authority in the instant case has refused to indemnify CGU capriciously or otherwise than in a responsible exercise of its statutory discretion.

28. In the course of proceedings before his Honour Judge Armitage in which ICI sought the appointment of a designated insurer pursuant to s 151AC, counsel for the Authority offered an undertaking that if ICI Australia Operations abandoned its claim for the appointment of a designated insurer pursuant to 151AC, and itself conducted the defence to Mr Brazier's claim, then the Authority would, in the event of NEM having been found to be the last insurer on risk pursuant to s 151AB, indemnify ICI. A careful reading of the transcript in which this undertaking was given confirms that the undertaking was given contingently and that it does not give rise to any estoppel pursuant to which the Authority may be prevented from asserting that it is subject to no obligation to indemnify ICI in respect of the plaintiff's judgment.

29. ICI claims an order that the Authority pay to ICI the costs expended by ICI in defending the claim brought by the plaintiff before the appointment of CGU as the designated insurer. It follows from the reasons which I have given above that this claim must also fail.

30. There is to be verdict for the WorkCover Authority of NSW on the cross claim by ICI Australia Operations Pty Limited and on the cross claim by CGU Insurance Limited. The cross-claimants are to pay the cross-defendant's costs.

Mr G P F Rundle instructed by Phillips Fox appeared for the cross claimants.

Mr G F Little SC with Mr G J Parker instructed by P W Turk and Associates appeared for the cross defendant.