Knuckey and 3 ors v Dyno Nobel Asia Pacific Limited - formerly Dyno Wesfarmers Limited

[2003] NSWSC 212

CITATION:	Knuckey and 3 ors v Dyno Nobel Asia Pacific Limited - formerly Dyno Wesfarmers Limited [2003] NSWSC 212
HEARING DATE(S):	28.10.02, 29.10.02, 30.10.02, 31,10/02
JUDGMENT DATE:	27 March 2003
JURISDICTION:	Common Law
JUDGMENT OF:	Mathews AJ
DECISION:	Principal Claim; In relation to Mrs Knujckey's claim for nervous shock I enter a verdict for the plaintiff in the amount of $83,000. Otherwise, and in accordance with the agreement reached between counsel, I have not purported in this judgment to translate my findings into monetary terms. This task is to be undertaken by the parties in accordance with the findings I have made. I leave it to the parties to bring in short minutes of the appropriate orders. If they are unable to agree, I will deal with outstanding issues by arrangement with the parties.; As to the Cross Claims, verdict for the first and second cross-defendants on the first cross-claim; Verdict for the cross-claimant against the third cross-defendant on the first cross-claim; Costs of all parties on the cross-claims are to follow the event unless submissions to the contrary are received by me within seven days of today.
CATCHWORDS:	Compensation to relatives - deceased killed in Papua New Guinea - likely employment position had he survived - assessment of superannuation - NSW law applies to quantification of damages, but provisions of NSW Workers Compensation Act do not apply - no discount for possible remarriage - spouse's claim for nervous shock - tort committed in Papua New Guinea - Papua New Guinea common law presumed to be the same as local law - claim allowed defendant's cross-claim against three insurance companies - contract of employment entered into in NSW, but NSW insurer excluded from ambit of claim - Papua New Guinea insurer held liable
LEGISLATION CITED:	NSW Workers Compensation Act 1987 Compensation to Relatives Act 1897 NSW Papua New Guinea Wrongs Miscellaneous Provisions Act New South Wales Law Reform (Miscellaneous Provisions Act 1944
CASES CITED:	Annetts v Australian Stations Pty Limited (2002] 76 ALJR 1348 Burton Lommers Contractors Pty Limited v Manufacturers Limited (1990) 6 ANZ Insurance Cases 61,000 De Sales v Ingrilli 193 ALR 130 Franklins Self Serve Pty Limited v Wyber (1990) 48 NSWLR 249 Gifford v Strang Patrick Stevedoring Pty Limited (2001) 51 NSWLR 606 James Hardie and Company v Hall (1998) 43 NSWLR 554 at 576 John Pfeiffer Pty Limited v Rogerson (2000) 203 CLR 503 Regie National des Usines Renault SA v Zhang [2002] 187 ALR 1 Roads and Traffic Authority v Cremona (2001) 35 MVR 190
PARTIES :	Margaret Knuckey - Plaintiff Carissa Robyn Knuckey - Second Plaintiff Aaron Kane Knuckey - Third Plaintiff Derryn Littlejohn Knuckey - Fourth Plaintiff
FILE NUMBER(S):	SC 20744/97
COUNSEL:	Mr M Joseph, SC with Mr M Cahill - Plaintiff Mr N Cotman SC with Mr R Parsons - Defendant Mr J Sharpe SC for Workcover Queensland - First Cross Defendant Mr C Hoeben SC for MMI workers' Compensation (NSW) Limited - Second Cross Defendant Mr Sheller for QBE Insurance (PNG) Limited - Third Cross Defendant
SOLICITORS:	Slater & Gordon - Plaintiff Gadens Lawyers Brisbane - Defendants Thynne & McCartney - Brisbane - First Cross Defendant Hickson Wisewoulds - Second Cross Defendant Phillips Fox - Third Cross Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MATHEWS AJ

27 March 2003

20744/97
Margaret KNUCKEY and 3 ors v DYNO NOBEL ASIA PACIFIC LIMITED – FORMERLY DYNO WESFARMERS LIMITED
JUDGMENT

1 HER HONOUR: On 2 August 1994 a catastrophic explosion took place at the Porgera Mine in Papua New Guinea which was operated by the defendant Dyno Wesfarmers (“Dyno”). Amongst the Australians killed in the explosion was Philip Knuckey who was then aged fifty. On 2 August 1994 Mr Knuckey’s widow, Margaret Knuckey, commenced proceedings against Dyno seeking compensation on behalf of herself and their three children for losses suffered as a result of her husband’s death. The statement of claim also sought damages for nervous shock said to have been sustained by Mrs Knuckey as a result of her husband’s death.

2 Before the hearing of the matter, Dyno admitted that Mr Knuckey was its employee, that he died in the course of his employment and that there was a relevant breach of duty on the part of Dyno. Accordingly, subject to proof of dependency, the only issues remaining in dispute in the compensation to relatives claim related to the assessment of damages.

3 There is no question but that Mrs Knuckey was financially dependent upon her husband. The extent of that dependency is one of the matters at issue in the case and I shall be discussing it later. But I should first recount the facts of the matter.

Factual background

4 Phillip Knuckey was born on 12 November 1943. He married his wife Margaret on 28 September 1947, which was her twenty-first birthday. They had three children, Carissa (born on 2 September 1973), Aaron (born on 28 June 1975) and Derryn (born on 17 July 1979).

5 Mr Knuckey had no formal tertiary qualifications. Immediately after he left school he commenced an apprenticeship as a butcher. At the age of about twenty he obtained a position as a soil technician with the CSIRO. During the late 1960’s and for most of the 1970’s he worked with the CSIRO, first as a soil technician and later in a technical position involving blasting operations in mines. In about 1979 he accepted an offer for employment with Cobar Mines where he remained for approximately eight years. During that time he received several promotions. He was initially promoted to a position as a blasting supervisor and by the time he left was working as underground foreman.

6 In about 1988 Mr Knuckey accepted a position as marketing manager in Kalgoorlie for the company which later became Dyno. He and his family remained in Kalgoorlie for a little under a year and then moved to Parkes in New South Wales where Mr Knuckey worked as marketing manager. In about January 1990 Mr and Mrs Knuckey moved to Cairns where Mr Knuckey took up a position as regional manager. He continued to work out of the Cairns office until his death in August 1994. In the meantime his role had expanded so that, at the time of his death, he was Dyno’s Pacific Basin area manager. In June 1994, when the then plant manager of Porgera mine was moved back to Australia, Mr Knuckey undertook that role in addition to his other duties. At the time of his death Mr Knuckey was working for ten days each month at Porgera and the balance of his time was based in his Cairns office. Mrs Knuckey described her husband’s attitude to his work in the following manner.

“Up to the time of his death, Phillip was a company man, through and through. He ate, slept and breathed Dyno affairs. He worked long and irregular hours. He would often have to be us at 4:00 am to meet incoming shipments of products or materials at the Cairns airport. He would often work Sunday afternoons and public holidays.
…
Phillip would often speak to me enthusiastically about Dyno’s business. Phillip found working for Dyno to be exciting, particularly as they were expanding into the Asian market. He liked dealing with international customers and also colleagues from other aspects of Dyno’s international operations including managers from Norway and Indonesia. He told me that he intended to take up other opportunities and positions with Dyno as they arose and we both understood that this might mean moving from our home in Cairns at some point in time. I was prepared to do so because we had shifted many times in the past.”

7 As to Mrs Knuckey’s employment history, she worked as a sales assistant until she and her husband moved to Cobar not long after they were married. She did not work again until after Aaron was born when she obtained casual part-time employment as a restaurant manager at a motel in Cobar. She interspersed this employment with other casual part-time employment until the late 1980’s. Thereafter she was engaged in full-time home duties.

8 Since her husband’s death Mrs Knuckey has worked for approximately three months as a teacher’s aid for a disabled boy. She has had no other paid employment during this period. Had her husband not been killed, she said that she had no intention of resuming any form of employment.

9 With this background I turn to discuss the issues to be determined in this case. The principal issues are as follows:

• To what extent would Mr Knuckey have been likely to achieve promotion within Dyno over his working life?

• Would Mr Knuckey have obtained an overseas position within Dyno?

• How should superannuation be assessed?

• Does the NSW Workers Compensation Act apply in the quantification of damages?

• What is the applicable dependency rate in relation to both Mrs Knuckey and the three children?

• What compensation should be allowed for non-pecuniary support?

• Should a discount be made for the prospect of re-marriage?

10 In addition, Mrs Knuckey’s claim for nervous shock arising out of the death of her husband needs to be determined. This falls into a different category from the other claims and will be discussed after the others have been dealt with.

11 At the end of all this, I will need to discuss cross-claims brought by Dyno seeking indemnity for the plaintiffs’ claim against three separate insurers.

12 The final point I should make before turning to discuss the individual matters listed above is that, with the exception of the nervous shock claim, I do not propose in this judgment to award specific sums of money under any one head. Although actuarial reports have been tendered by both parties, I do not see it as my role to make the calculations necessary to translate my findings on matters of principle into monetary terms. By agreement with the parties, I will deliver my judgment on the disputed matters of principle and then leave it to the parties to make calculations consequent upon my findings. Those figures will then be incorporated into my final judgment.

13 I now turn to discuss the issues listed above.

To what extent would Mr Knuckey have been likely to achieve promotion within Dyno over his working life?

14 Although Mr Knuckey had no tertiary qualifications, he clearly had qualities, experience and skills which fitted him for high managerial positions within the Dyno organisation. By 1994, at the age of fifty, he was Pacific Basin Area Manager. Moreover, when the manager of the Porgera operation was required to return to Australia in June 1994, it was Mr Knuckey who assumed management responsibility for Porgera in addition to his other roles.

15 The question is, had Mr Knuckey survived, what position would he have been likely to achieve by now within the Dyno organisation? What would have been his likely remuneration between 1994 and the present, and what should be the base upon which future salary loss is to be assessed? In a letter dated 24 July 2001 the secretary of Dyno, Mr Vale, specified three employees said to be in similar positions to Mr Knuckey for the purpose of setting out their comparable earnings. They were described in the letter as employee 1, 2 and 3. Although they were identified during the course of the proceedings, I think I should maintain their anonymity by describing them similarly here. Employee No.1 was described in the letter as “Manager Surface Mining Western Region” in Dyno’s Sales and Marketing Division. He was located in Perth. His then current salary was said to be $90,335. Employee No.2 was described as “Manager Surface Mining Eastern Region”. He was also in Dyno’s Sales and Marketing Division and was based in Brisbane. His annual base salary was said to be $74,000. Mr Vale commented in his letter that although these two position descriptions are similar, the areas of responsibilities and the reporting structure vary between these two employees, thus presumably explaining the significant disparity between their respective salaries. Employee No.3 was described as “Sales/Tech Representative East”. His 1999 salary was specified as $63,582. No more recent figures were provided. It is perhaps not surprising that the actuarial report prepared on behalf of the plaintiff used employee No.1 as a comparable earner to Mr Knuckey, whereas the defendant used employee No.3. However by the time of hearing, employee No.3’s salary had increased very considerably while that of employee No.2 had remained relatively static. The defendant then transferred its reliance to employee No.2.

16 A number of further documents in relation to each of these three employees were provided by the defendant at the hearing. These show that by 2002 each of them was receiving a significant sum of money by way of bonus. Even without these bonuses, the gross salary paid to employees Nos.1 and 3 had increased substantially by the year ended 30 June 2002. At that time, the gross payment (without bonuses) made to employee No.1 was $119,835. Employee No.2 received $76,200 and employee No.3 received $115,000. In addition, employee No.1 was paid a bonus of $44,096 (making a total payment of $163,931), employee No.2 was paid a bonus of $10,325 (making a total of $86,525) and employee No.3 received a bonus of $31,511, (making a total of $146,511).

17 Mr Joseph SC on behalf of Mrs Knuckey never formally resiled from his suggestion that employee No.1 should be used as a comparable earner. However by the end of the hearing the realistic debate was between employees Nos 2 and 3. The defendant suggested that employee No.2 was closest to Mr Knuckey. Mr Parsons, who appeared with Mr Cotman SC for Dyno, pointed out that employee No.3 had tertiary qualifications, including a Bachelor of Mining Engineering obtained in the United Kingdom. He was much younger than Mr Knuckey, having been born in 1965. It was suggested that the career path of employee No.2, who was born in 1955 and who had no relevant tertiary qualifications, more closely represented the track which Mr Knuckey would be likely to have followed had he not been killed.

18 It is true that there are a number of differences between the qualifications and the apparent career paths of Mr Knuckey and employee No. 3. However it was this employee, No.3, who Mr Ian Smith, now Vice President of the Nitrogen Products Group of Dyno, nominated as most closely representing the position which Mr Knuckey would probably have reached in Dyno had he survived. Mr Smith was previously Dyno’s General Manager International and had worked closely with Mr Knuckey. He was well aware of his background and experience, as well as those of employees Nos 2 and 3. Mr Smith commented that employee No.3 had very little operational experience. His expertise was largely in the area of underground, which was one of Mr Knuckey’s areas of expertise. Mr Smith went on to say that the position held by employee No.3 was significantly higher than that held by Mr Knuckey at the time of his death, and that he had allowed for promotion when he identified employee No.3’s position as the one which Mr Knuckey would probably have reached had he survived.

19 It is clear that Mr Smith is thoroughly conversant with all the details of the employment structure within Dyno and of the personnel within that structure, at least at the levels we are concerned with here. Mr Smith plainly held Mr Knuckey in extremely high regard. I see no reason to go behind his assessment of Mr Knuckey’s likely career path within the Dyno organisation. Accordingly I propose that the base earnings of employee No.3 be used as comparable earnings in assessing Mr Knuckey’s likely wage loss. These base earnings, as indicated, amounted to $115,000 in the year ended 30 June 2002.

20 This leaves outstanding two matters under this head. The first is the issue of bonuses. The second relates to a motor vehicle which was provided by Dyno to Mr Knuckey.

21 The parties were at issue as to how I should deal with the matter of bonuses. Mr Parsons urged that bonuses are personal to the employee in question and are liable to be withdrawn at the employer’s discretion. For these reasons the defendant’s actuary, Ms Fordyce, had not taken account of bonuses when she calculated future loss of income. Mr Joseph, on the other hand, urged that bonuses should be treated as an integral part of the employee’s total salary. He pointed out that it is not easy for an employer to cut back an employee’s benefits. If Dyno was proposing to do this, it should have adduced evidence to that effect.

22 There is some force in both arguments on this matter. Employee No.3’s most recent bonus is very high indeed: in 2002 it was $31,511, which was 27.4 percent of his base salary. In the previous year it was $9,650, or 8.7 percent of his then base salary. It seems to me that it would be fair to assume that a bonus in order of 12 percent would be likely to continue indefinitely, thus making it an appropriate rate for assessing future loss. As to the plaintiff’s argument that Dyno would be unlikely to reduce the rate of its employees’ bonuses, it did just that with employee No.1 between the 2000 and 2001 tax years.

23 According to this calculation, a bonus of 12 percent, or $13,800, should be allowed in addition to employee No.3’s base rate of $115,000, making a total figure of $128,800.

24 As to the motor vehicle, the plaintiff’s actuary calculated that this represented a continuing benefit of $276.59 per week or $14,383 per annum. However, according to the defendant’s actuary, the available records indicated that an amount of $16,113 was included in Mr Knuckey’s overall salary package by way of salary sacrifice. This consisted of $14,080 for the motor vehicle and $2,083 for FBT on the motor vehicle. Ms Fordyce concluded that the FBT component of $2083 represented the net benefit Mr Knuckey would have received in respect of the private use of his motor vehicle. She conceded in evidence that this figure would require adjustment if 90 percent of the use of the vehicle was for private purposes, as Mrs Knuckey has said it was.

25 It is impossible to make any firm findings on this matter. If Ms Fordyce’s assumptions are correct (other than her assumption as to the extent of private usage), then only a relatively small amount should be included in relation to a motor vehicle. The validity of her assumptions can no doubt be readily checked by the parties. So far as private usage is concerned, I suggest that calculations proceed on the assumption that the vehicle was used as to 85 percent for private purposes.

26 It goes without saying that interest is to be allowed on past losses at the normal rate. Future losses are to be discounted by the normal 3 percent, in spite of the defendant’s submission that a 5 percent rate should apply (as to which see later.) A deduction of 15 percent for vicissitudes is to be made in relation to future losses. I see no reason to make any deductions for vicissitudes on past losses. Mr Knuckey was on all accounts a fit, healthy man when he met his untimely death in 1994.

Would Mr Knuckey have obtained an overseas position within Dyno?

27 There was some evidence given at the hearing that, had Mr Knuckey survived, he would have been relocated by Dyno to Indonesia for the purpose of managing its Jakarta office. This would have entailed considerable financial benefits over and above any salary he would have received in Australia. It would not have adversely affected his promotional opportunities within this country. Accordingly, if I were to find that there was a realistic likelihood that Mr Knuckey would have worked in this expatriate position, then a further amount would need to be awarded in order to take account of this.

28 It appeared from the evidence of Mrs Knuckey, and also from Mr Smith’s evidence in chief, that there was a real likelihood of Mr Knuckey taking a position in Jakarta at the end of 1994 or beginning of 1995. However it emerged during Mr Smith’s cross-examination that another Dyno employee already had taken up the Jakarta position under a three-year contract which commenced on 1 June 1994 and was due to expire on 31 May 1997. Mr Smith was surprised by this. He said that it was not his recollection that the Jakarta position had already been taken before Mr Knuckey’s death. However, the documents speak for themselves, and it has to be assumed that this position would not, in the normal course of events, have become available until June 1997. In fact, the other employee’s assignment in Jakarta was terminated in November 1996 because of “performance concerns”. The position at that time would have been potentially available to Mr Knuckey.

29 It is unknown whether Mr Knuckey would have taken up the Jakarta position on that date. I could not say that there is a strong likelihood that he would. On the other hand, I cannot dismiss the possibility. I would assess it as a one-third possibility that for a three-year period between November 1996 and November 1999 Mr Knuckey would have occupied an expatriate posting in Jakarta. The compensation awarded should thus include one-third of the normal overseas loading during that period. Ms Fordyce appeared to place this loading at $12,000, but I leave it to the parties to calculate the precise amount.

How should superannuation be assessed?

30 Mr Knuckey joined Dyno’s superannuation fund on 11 December 1987. At that time it was a defined benefits superannuation fund. Members contributed up to 5 percent of their salary and Dyno contributed up to 15 percent of the members’ final average salary for each year of service.

31 There was a significant disparity between the superannuation calculations made by Dolman Bateman on behalf of the plaintiff and Ms Fordyce of Calabro Partners on behalf of the defendant. This was to large extent because Dolman Bateman used the salary of employee No.1 as the basis for its calculations whereas Calabro Partners used employee No.2. In accordance with my earlier findings, the salary of employee No.3 is to be taken into account for this purpose.

32 A further difference arises from the fact Dolman Bateman assumed that the superannuation fund would continue to be a defined benefits fund up to the date of Mr Knuckey’s notional retirement in 2008. In fact the evidence shows that on 1 January 1999 the Dyno superannuation fund changed from a defined benefits to an accumulated benefit structure. Dyno guaranteed to its employees that the amounts they would receive under the new scheme would be no less than their benefits under the previous one. It is obvious that Mrs Knuckey’s notional superannuation entitlements are to be calculated according to the evidence and therefore upon the basis that, as from 1 January 1999, the nature of Dyno’s superannuation scheme changed. Mr Joseph suggested that I should assess the amounts which would be returnable under both schemes, so as to ensure that Mrs Knuckey received the benefit of Dyno’s guarantee. However I do not see that to be my role here. In any event, when the Cremona allowance is added, I would regard it as extremely unlikely that the current scheme would be less generous than the one it replaced.

33 This brings me to discuss the decision of the Court of Appeal in Roads and Traffic Authority v Cremona (2001) 35 MVR 190. In that case, also a compensation to relatives case, the court upheld the trial judge’s finding that interest at the rate of 11 percent should be added to the amount of superannuation benefits notional receivable by the deceased under a superannuation scheme similar to that which Dyno now operates. The rate of 11 percent was based on expert evidence given at the hearing and took into account capital growth of the fund and investment income. In the present case a statement of Mr Vale, the Secretary of Dyno, was tendered by the defendant. This set out the net investment return of the Dyno superannuation fund between 30 June 1993 and the 30 June 2002. the average return was 8.21 percent. There were three years in which a return of more than 10 percent was achieved. These were 1993 (14 percent), 1996 (16.8 percent) and 1997 (12.9 percent). The years ended 30 June 2001 and 2002 showed a negative growth. Mr Vale said that, having regard to the investment market performance since June 2002, he was anticipating negative returns again for the 2002 - 2003 year. A “break even” year would reduce the average to a little over 7 percent. A loss will reduce it further.

34 Mr Joseph urged that an allowance of 7 percent under the Cremona principle was inadequate in the circumstances. However if Mr Vale’s evidence is to be accepted, (and there is no reason why it should not be), then 7 percent would appear to be the appropriate rate in this case.

35 Accordingly my finding is that superannuation is to be calculated according to the notional earnings of employee No.3. An allowance of 7 percent is to be made on the basis of Cremona. It is to be assumed that the bonus component of employee No.3’s total package will not be part of his superannuable salary. If I am wrong on this, then the calculations will need to be adjusted accordingly.

Application of the NSW Workers Compensation Act

36 In written submissions furnished after the completion of the hearing, it was suggested by the defendant that as the law of the forum, New South Wales, applies in the quantification of damages, the provisions of the NSW Workers Compensation Act 1987 (“the NSW Act”), are to be applied in the assessment of the plaintiff’s damages. If this submission were to succeed it would provide an income cap on Mr Knuckey’s notional wages and would increase the normal discount rate for future economic loss from 3 to 5 percent. It might also affect any awards of interest in favour of the plaintiff.

37 Until the High Court judgment in John Pfeiffer Pty Limited v Rogerson (2000) 203 CLR 503 the law of the forum was taken to apply in all cases involving torts committed outside the jurisdiction whether in an interstate or an international context. Pfeiffer involved an interstate tort with a federal element, namely proceedings commenced in the Australian Capital Territory in relation to an accident which had occurred in New South Wales. In a wide ranging judgment, the majority of the Court (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) determined that henceforth, in all torts with an interstate element, the law of the place of the wrong should be taken to be the governing law in relation to all matters of substance. It also determined that all issues relating to damages should be treated as substantive issues and thus be governed by the law of the place of the wrong.

38 In Regie National des Usines Renault SA v Zhang [2002] 187 ALR 1 the Court considered similar issues in relation to international torts. The majority of the Court (Gleeson, CJ, Gaudron, McHugh, Gummow and Hayne JJ) extended many of the principles enunciated in Pfeiffer into an international setting. In particular, they found that the substantive law for the determination of rights and liabilities in relation to foreign torts should be the law of the place of the wrong. However their Honours added a significant qualification to their extension of the Pfeiffer principles. As relevant here, they said as follows:

[76]
“To that outcome, several caveats should be entered. In Pfeiffer , reference is made to the difficulty in identifying a unifying principle which assists in making the distinction, in this universe of discourse, between questions of substance and those of procedure. The conclusion was reached that the application of limitation periods should continue to be governed by the lex loci delicti and, secondly, that

“ all questions about the kinds of damage, or amount of damages that may be recovered, would likewise be treated as substantive issues governed by the lex loci delicti.” (orginal emphasis)
We would reserve for further consideration, as the occasion arises, whether that latter proposition should be applied in cases of foreign tort.

39 This must be taken, in my view, to preserve the status quo in relation to the distinction between substantive and procedural issues in the assessment of damages. Put simply, matters dealing with potential heads of damage will be treated as substantive, whereas the quantification of damages will be taken to be procedural. (see Pfeiffer at Para [48]). In the circumstances of this case, therefore, New South Wales law will apply in relation to the quantification of damages.

40 I turn now to the provisions of the NSW Act which Mr Cotman says should be applied in this case. They are: s 151I which caps a worker’s notional weekly earnings, s 51J which stipulates a 5 percent discount rate and s 151M relating to the payment of interest. Mr Cotman relies upon s 151E which extends this Part of the Act to common law actions seeking damages arising out of the injury or death of a worker. These sections are said to apply to all awards of damages in respect of an injury caused by the negligence of the worker’s employer.

41 Contrary to Mr Cotman’s submission, I do not consider that these provisions are applicable in this case. In the normal course of events the NSW Act would not apply in relation to torts committed outside the jurisdiction. It is only by virtue of s 13 (1) that the Act has any extraterritorial operation. That section provides as follows:

13 (1) If:

(a) an employer has a place of employment in New South Wales, or is for the time being present in New South Wales, and there employs a worker, and
(b) any such worker while outside New South Wales receives an injury under circumstances which, had the injury been received in New South Wales, would entitle the worker to compensation in accordance with this Act,

the injury is an injury to which this Act applies, and compensation is payable accordingly.

42 This section applies only to entitle a worker to “compensation in accordance with this Act”. It does not purport to extend the provisions of the Act to liability which arises independently of the Act in relation to injuries suffered outside NSW. (See Cole J in Burton Lommers Contractors Pty Limited v Manufacturers Mutual Insurance Limited (1990) 6 ANZ Insurance Cases 61,000). Accordingly I find that the NSW Act does not apply to the quantification of damages in these proceedings.

43 Before finally leaving the subject of the Workers Compensation legislation, I should deal with a further issue that was raised in the latter stage of the proceedings. It appears that payments of compensation were made to Mrs Knuckey some years ago pursuant to the NSW Act. The question arises as to whether the plaintiffs’ damages should be reduced accordingly. Mr Joseph points out that the defendant has not pleaded the payment of benefits in this case. He concedes that the NSW Act contemplates the reduction of damages awarded pursuant to the Compensation to Relatives Act but points out that this is not such an action. Rather it is brought pursuant to the Papua New Guinea Wrongs Act.

44 In my view the normal deduction should be made in this case. If it were necessary for that purpose to allow the defendant to amend its defence instanter I would give leave accordingly. The New South Wales common law is firmly set against allowing double compensation in cases such as this. (See Franklins Self Serve Pty Limited v Wyber (1999) 48 NSWLR 249). Mr Joseph says that the defendant will need to satisfy the court that this is also the law of Papua New Guinea. However the normal principle of international law applies, namely that foreign law is presumed to be the same as local law. I have applied this presumption in the plaintiff’s favour in relation to Mrs Knuckey’s claim for nervous shock. It is equally applicable on this issue. Accordingly the plaintiff’s damages are to be reduced by any amount already received by way of workers compensation whether under the NSW Act or otherwise.

Dependency rate

45 In August 1994, when Mr Knuckey died, all three children were financially dependent on him, although the oldest, Carissa, was nearly twenty-one years old. Mr and Mrs Knuckey were committed to giving their children a tertiary education, and to supporting them in the meantime. None of them were entitled to receive Austudy.

46 It goes without saying that the dependency rate of each eligible claimant will vary according to the number of other dependents and the likely extent of their dependency. It is therefore necessary to discuss, albeit briefly, the position of the three Knuckey children as at the date of their father’s death.

47 Carissa Knuckey was born on 2 September 1973. She completed her secondary schooling at St Mary’s Catholic College, Cairns at the end of 1991. In 1992 she commenced a course in Environmental Science at James Cook University in Cairns. Whilst studying she was living at home. In 1994 Carissa took a year off her studies and travelled overseas. She resumed her studies in 1995 and in due course graduated in Environmental Science. The evidence does not indicate when this took place. I think I should assume that it was a four year course and that Carissa’s dependency on her father would have ceased at the end of 1996.

48 Aaron Knuckey was born on 28 June 1975 and was nineteen when his father died. He had completed his secondary studies, also at St Mary’s Catholic College, in 1992. In 1993 he enrolled in a Psychology Degree at James Cook University. He was living at home when his father died and was fully supported by his father’s income. Aaron completed his Honours Degree in Psychology at the end of 1998. It has to be assumed that his dependency would have continued until then.

49 Derryn Knuckey was born on 17 July 1979. In August 1994 he was living at home and was part way through year 9, the first year of his secondary schooling. He completed his schooling in 1997 and the following year enrolled in a Social Science in Psychology course at the Queensland University of Technology in Brisbane. He completed his Bachelor’s degree at the end of 2001. Mrs Knuckey said that her husband’s support would have continued even when her sons moved away from Cairns to continue their tertiary studies. It has to be assumed therefore that Derryn would have remained dependent on Mr Knuckey until the end of 2001.

50 With this background I turn to determine the dependency rate which should be applied in this case. Luntz Personal Injury for Personal Injury and Death 4th edition at chapter 9.3.3 contains a table setting out the percentage of dependency of surviving parent and children in situations where, as here, the deceased was the sole income earner for the household. That table represents the findings of a household expenditure survey conducted by the Australian Bureau of Statistics in 1998 and 1999. It sets out the average position and should be used as a guide only, to be moulded in accordance with the evidence rather than to take the place of evidence.

51 In this case I would place the percentage dependency of Mrs Knuckey higher than Luntz’s tables suggest and those of the children somewhat lower. Two of the three children had already completed their secondary schooling by the time Mr Knuckey died. Although the evidence indicates that they would have remained financially dependent on their father until they completed their tertiary education, it must be assumed that by that time they would have been able to obtain holiday jobs or other part time positions which would have reduced the extent of their dependency.

52 Mrs Knuckey’s evidence, which was essentially unchallenged in this respect, indicated that her husband had a relatively low level of personal expenditure. A great deal of his time was spent on work related activities. When he was overseas, all expenses including meals and accommodation were covered by Dyno. When he was at home, he would generally eat at home. He and his wife sometimes socialised with others at barbecues or similar functions. However Mrs Knuckey said that much of her husband’s social life was work related and paid for by Dyno. Dyno also provided much of Mr Knuckey’s work clothing. At the time of his death the mortgage on the family home had been paid off. A personal loan of $20,000 had been taken out in March 1994 which was repayable over a five year period.

53 In the light of all the evidence I propose to allow the dependency rates specified below:

• Surviving spouse and three dependant children.
This period presumably expired at the end of 1996 when Carissa finished her tertiary education. I would apply the following rate:
Spouse 35%
Carrisa 15%
Aaron 15%
Derryn 17%
TOTAL 82%

• Surviving spouse and two dependent children
Until December 1998 when Aaron finished his studies the following rate should apply:
Spouse 44 %
Aaron 17%

Derryn 17 %

TOTAL 78%

• Surviving spouse and one dependant child
The following rate should be applied until December 2001 when Derryn’s studies were completed.
Spouse 57%
Derryn 19 %
TOTAL 76%

• Spouse only
From December 2001 when all three children became financially independent, I would assess a dependency rate for Mrs Knuckey of 72 percent.

What compensation should be allowed for non-pecuniary support?

54 Mrs Knuckey described her late husband as being good with his hands. She said he regularly spent three to four hours per week on household maintenance including painting the house when required, carrying out general repairs and minor plumbing work. The two of them shared the outside and garden duties, with Mr Knuckey doing the heavy work and looking after their large in-ground pool. Mrs Knuckey estimated that he spent an additional three to four hours on this account. In addition he carried out minor maintenance on the second of their two motor vehicles (the first was maintained by Dyno) and assisted their children in their school work. A quote from V.I P Home Services dated 1 February 2002 was tendered into evidence claiming $33 per hour (GST inclusive) for “lawn mowing, snipping, gutter cleaning and pruning etc.”

55 The plaintiff’s “Economic Loss Report” which was prepared by Dolman Bateman & Co Pty Limited calculated the plaintiff’s loss of domestic support on the basis of Mr Knuckey spending 12.1 hours per week until age sixty-five in domestic activities and thereafter devoting 19.25 hours per week on this account. These figures were obtained from a report of the Australian Bureau of Statistics, “How Australians Use Their Time, 1997”. An hourly rate of $25 was stipulated, which was said to be the current rate for handymen and gardeners. The “Schedule of Future Loss of Domestic Support” which was attached to that report assumed that after retirement Mr Knuckey would have continued to spend 19.25 hours per week on domestic and maintenance duties until 18 October 1924, by which time he would have been almost eighty-one.

56 In my view these figures overestimate both the time that Mr Knuckey would have been likely to spend each week on domestic and maintenance matters as well as the duration for which he would have been likely to continue to do so. On the other hand, I think it appropriate to allow the higher rate of $33 per hour as sought in the quote from VIP Home Services.

57 In the light of Mrs Knuckey’s evidence I propose to assume that Mr Knuckey would have devoted nine hours per week on domestic and maintenance matters until he reached sixty-five. Thereafter, for a further ten years, he would have spent thirteen hours per week on these activities. As indicated, I would cost these services at $33 per hour. I shall leave it to the parties to make appropriate calculations on the basis of these findings. The normal additions and deductions are to be made in accordance with para (26) above.

Discount for remarriage

58 Mrs Knuckey said that she had no intention of remarrying or forming another relationship. It was therefore urged on her behalf that no deduction should be made for the possibility that she might at some time remarry or otherwise enter into a financially advantageous relationship.

59 Since the hearing of this matter the High Court has delivered its judgment in De Sales v Ingrilli 193 ALR 130. In that case the trial judge had ordered a 5 percent deduction to compensation otherwise awarded to a surviving spouse on account of the possibility of remarriage. It was argued on appeal that the court should revisit the rule that, in a wrongful death action, the court should assess the chance of a surviving spouse obtaining financial support in the future from remarriage or from a de facto relationship. The majority (Gaudron, Gummow, Hayne and Kirby JJ) acceded to this submission. They held that, in the absence of evidence of an actual or proposed remarriage or similar relationship with beneficial economic consequences, no separate allowance should be made for the possibility that a new relationship will be formed. Accordingly no allowance is to be made for the prospect of Mrs Knuckey remarrying or otherwise forming a financially beneficial relationship in the future.

60 The only remaining issue in the plaintiffs’ case is Mrs Knuckey’s claim for damages for nervous shock.

Mrs Knuckey’s claim for nervous shock

61 During the course of final addresses an issue arose as to the applicable law in relation to Mrs Knuckey’s nervous shock claim. Given that the tort of negligence is not complete until injury is suffered and that the injury in this case was suffered in Queensland, it was suggested that the tort might have occurred in Australia rather than in Papua New Guinea. However I am satisfied that this is not the case. The general rule is that a tort occurs where the breach of duty occurs or where the defendant “did the wrong” (James Hardie and Company v Hall (1998) 43 NSWLR 554 at 576). This plainly took place in Papua New Guinea.

62 I have earlier discussed the issue, raised in both Pfeiffer and Zhang, as to the choice of law rules in this situation. It is now clear that the availability of a cause of action for nervous shock is to be determined according to the law of the place of the wrong, which in this case is the law of Papua New Guinea. I was handed the Papua New Guinea Wrongs (Miscellaneous Provisions) Act during the hearing of this matter. Otherwise no evidence has been given as to the extent to which Papua New Guinea law recognises a claim for nervous shock such as that raised by Mrs Knuckey. Section 36 of the Wrongs Act provides:

“In an action for injury to the person, the plaintiff is not debarred from recovering damages merely because the injury complained of arose wholly or in part from mental or nervous shock.”

This section is identical to s 3(1) of the New South Wales Law Reform (Miscellaneous Provisions) Act 1944. However there is no parallel in the Papua New Guinea Wrongs Act to section 4 of the Law Reform (Micellaneous Provisions) Act 1944. This section extends liability for injury arising from mental or nervous shock to a parent or the spouse of a person killed as a result of the defendant’s neglect or default.

63 It is a principle of private international law that foreign law is presumed to be the same as local law. I think I can conclude, in the absence of any provision in the Papua New Guinea Wrongs Act similar to s 4 of the NSW Act, that that presumption has been displaced in relation to any statutory cause of action for nervous shock. However, a right to claim for nervous shock also exists under the common law. Mr Cotman SC suggested in his written submissions that this common law entitlement could not assist Mfrs Knuckey as it does not apply to persons who are merely told about an incident, however horrific the incident and however close the personal relationship. The plaintiff must herself have observed the incident or its aftermath. (Gifford v Strang Patrick Stevedoring Pty Limited [2001] 51 NSWLR 606).

64 However the law has moved on since Gifford. In Annetts v Australian Stations Pty Limited (2002)76 ALJR 1348 the majority of the High Court (Gleeson CJ, Gaudron, Gummow and Kirby JJ), albeit in three separate judgments, ruled that it was no longer a pre-requisite of liability in nervous shock cases that the plaintiff have directly perceived a distressing phenomenon or its immediate aftermath.

65 There is no evidence as to the common law of Papua New Guinea on this issue. In the absence of any such evidence I must presume that the law is essentially the same as in Australia. This law would provide a remedy to Mrs Knuckey in respect of her nervous shock claim. Accordingly I am satisfied that such a claim is available to her. In accordance with earlier discussion, the claim is to be quantified according to the provisions of NSW law.

66 I turn now to discuss the substance of Mrs Knuckey’s claim.

67 In an affidavit which was tendered as part of the plaintiff’s case, Mrs Knuckey said that before her husband’s death she never had any emotional problems of any lasting nature. Since then, she said, she has continued to suffer from depression and grief arising not only from the circumstances of her husband’s death and its aftermath but also ongoing severe grief due to her loss of her “best friend and partner”.

68 It is Mrs Knuckey’s case that, as a result of her husband’s death, she has suffered and continued to suffer a psychiatric illness consisting of a chronic major depressive disorder. This diagnosis is supported by Dr Mark Kneebone who saw her on 25 October 2000. Dr Kneebone furnished two reports, one dated 1 November 2000 and the second dated 24 January 2002. Dr Kneebone also gave evidence at the hearing on behalf of the plaintiff. In response, the defendant tendered a report of Dr John Champion dated 4 December 2001 in which he concluded that Mrs Knuckey had initially suffered a normal severe grief reaction and later a period of adjustment order. These had in due course resolved and he considered that she had no ongoing psychiatric disorder.

69 Before discussing these competing medical views I should briefly describe the evidence given by Mrs Knuckey and her children Aaron and Derryn on this aspect of her case.

70 Mrs Knuckey described in graphic terms the events of 2 August 1994 when she first learned of the accident which had caused her husband’s death. The news was broken to her by Dyno’s Townsville Area Manager, Mr Walker. The trauma was exacerbated by a psychologist who accompanied Mr Walker and insisted on telephoning Mrs Knuckey’s family and friends and suggesting that they come to the house to give her support. Mrs Knuckey found it extremely difficult to cope with the presence of all these people whilst trying to come to terms with the violent death of her husband. She said she felt “totally out of control, totally at a loss, totally numb, it was surreal, it was not real, it was just crazy.” Later she sought more information as to the details of her husband’s death but was frustrated in a number of respects and unable to obtain much of the information she wanted. In October 1994 she consulted her general practitioner, Dr Wall, complaining of stress. She was placed on Vallium, which was followed by other forms of medication. She currently takes Zoloft. Mrs Knuckey said that she had tried to discontinue her medication on occasions, but it had not been successful. When she did so, her panic attacks increased and she found herself unable to cope with normal everyday situations. Before her husband’s death she had no psychiatric problems and took no medication other than vitamins. She still has dreams about her husband’s death, sometimes as often as three times a month, although she said that this is now diminishing. She also has difficulty sleeping. Her alcohol intake increased dramatically after her husband’s death and has remained at a high level ever since.

71 Derryn Knuckey described his parents as having a “great relationship” with a high level of communication. He described his mother as a very strong woman. She was overwhelmed, he said, by the situation after her father’s death. There were occasions during those early days when he would come home from school and find her still in her pyjamas. In general he described his mother since 1994 as being more cynical, less optimistic and as having fluctuating mood changes. She eats less and drinks more than she did before Mr Knuckey died.

72 Aaron Knuckey described his mother as changing after his father died. He said:

“She appeared to be stressed all the time. She was quite anxious. She was quite emotional as well, becoming more irritated or angry at things but also becoming quite upset over small things. She was having trouble sleeping. Since the accident she has been drinking much more than previously.”

73 With this background I return to the psychiatric material. Dr Kneebone considered that Mrs Knuckey suffered a chronic major depressive episode with comorbid alcohol dependence arising from a severe grief reaction which remains unresolved. Dr Champion, as indicated, disputed this diagnosis. He found no apparent symptoms of depression or anxiety when he examined Mrs Knuckey on 29 November 2991. He considered that she had experienced a severe but essentially normal grief reaction following the death of her husband. A subsequent period of adjustment disorder had resolved over a period of years. Dr Champion expressed concern about the level of Mrs Knuckey’s alcohol intake but was unable to relate this to matters concerning her husband’s death. He considered that Mrs Knuckey may have been predisposed to a more severe than usual grief reaction because of the sudden violent and unexpected nature of her husband’s death and the remaining questions which had not been answered. However he did not believe that these circumstances had produced an ongoing psychiatric disorder.

74 Dr Kneebone was asked by the plaintiff’s lawyers to comment on Dr Champion’s report. He acknowledged that there can be a significant overlap of symptoms between clinical depression and severe grief. His report continued:

“The symptom overlap between severe grief and depression and the clinical ambiguity this can cause accounts to some degree for diagnostic divergence between Dr Champion and myself. The author of this report argues the case that whether Mrs Knuckey suffered from an adjustment disorder or a clinical depression or whether her grief was normal or abnormal there is no escaping the facts that her grief was severe, involved a profound sense of loss and caused Mrs Knuckey to endure significant emotional suffering over a significant period of time.”

75 Dr Kneebone, as indicated, gave evidence at the hearing. He considered that Mrs Knuckey’s grief reaction was abnormal. This was partially measured by the fact that it had persisted for six years when he first assessed her. He considered that her condition was chronic and that her symptoms were significant, impacting on her quality of life and her day to day function. The fact that her symptoms had continued for eight years by the time of hearing suggested, he said, that it is unlikely that Mrs Knuckey will achieve “full remission” from her symptoms. He considered that she would need ongoing counselling combined with medication. In cross-examination Dr Kneebone agreed that many people suffer the loss of loved ones in traumatic circumstances without falling into depressive illness. He commented:

“It is quite clear that while some people are resilient to severe life stress and others are not, that has not been fully understood. It is one of life’s mysteries.”

A little later he said

“All of us have a stress threshold and when that threshold is acceded we may dip into depression or a morbid psychological state. We are human.”

In Mrs Knuckey’s case the doctor considered that she had been subjected to a very severe stress that had triggered her ongoing depression.

76 Choosing between competing medical diagnoses is always a difficult task. In this case it is made easier by the fact that only one of the doctors gave evidence. Dr Kneebone was given an opportunity to elucidate his diagnosis and to explain the areas of divergence between himself and Dr Champion. In my view his evidence served to strengthen the weight to be attached to his opinions. I therefore accept that the plaintiff continues to suffer a psychiatric disorder as a result of the death of her husband. It was the death itself and the traumatic circumstances surrounding it which was primarily causative of this condition rather than the circumstances in which the news of his death was conveyed to Mrs Knuckey. See Annetts.

77 Accordingly I find that Mrs Knuckey is entitled to damages at the hands of the defendant for psychiatric injury caused by her husband’s death.

78 The only remaining issue is the assessment of damages, which is a notoriously difficult task in relation to claims of this nature.

79 Mrs Knuckey's quality of life has been significantly impaired as a result of the psychiatric symptoms she has suffered following her husband’s death. These include depression, anxiety and sleep disturbance. They have been accompanied by, and no doubt exacerbated by, Mrs Knuckey’s excessive intake of alcohol. With ongoing counselling and medication, however, it is likely, as Dr Kneebone suggests, that her symptoms will at least partially abate, although she will remain at risk of suffering a recurrence of severe symptoms in the event of any future stressful life events. Mr Joseph suggested that an award of general damages in the order of $100,000 would be appropriate, with $50,000 being attributed to the past and $50,000 to the future. I agree that $50,000 represents a reasonable recompense for the symptoms which Mrs Knuckey has suffered to date. However in my view the worst of those symptoms are now behind her. With the benefit of counselling and medication I consider that these symptoms will substantially abate, although Mrs Knuckey’s increased vulnerability must also be taken into account. I would allow $25,000 for the future. The total award of damages for non economic loss is thus $75,000.

80 An allowance must also be made for the cost of future treatment, which is likely to consist of both medication and counselling. As Mr Joseph concedes, the evidence on this matter has been left in a “very vague state.” Mr Joseph suggests that a global figure of $15,000 for past and future expenses is justified. In my view this would be excessive in the circumstances. Mrs Knuckey has certainly sought assistance from her general practitioner over the years in relation to her symptoms of stress. She has been taking Zoloft for a considerable time. The current cost is approximately $250 per year. I would assess her past medical expenses to be $3,000. As to the future, the ongoing counselling will clearly constitute a major factor. I would allow $5,000 for the future, making a total of $8,000 for Mrs Knuckey’s medical expenses. The total award of damages under this head is therefore $83,000 plus interest on past losses.

Dyno’s cross claims

81 This litigation had been complicated by the fact that Dyno has cross-claimed against three separate insurers seeking indemnity for any verdict obtained by the plaintiffs in these proceedings. The insurance companies are, in the sequence in which they were joined:

• Work Cover Queensland (“WCQ”)

• MMI workers Compensation (NSW) Limited (“MMI”)

• QBE Insurance (Papua New Guinea) Limited (“QBE”)

82 In August 1994 Dyno had an insurance policy with each of these companies in relation to workers compensation and associated liabilities. As the names of the cross-defendants indicate, they cover different geographic areas: WCQ is the Queensland insurer, MMI is the NSW insurer and QBE is the Papua New Guinea insurer.

83 At the time when Dyno first sought indemnity from the three cross-defendants, it was assumed that the substantive law of NSW would apply in these proceedings in all matters relating to the plaintiffs’ claim. However the High Court judgment in Zhang was made it clear that this is not the case. The plaintiffs’ claim is based on Papua New Guinea law, namely the Papua New Guinea Wrongs Act together with the Papua New Guinea common law.

84 The evidence indicates that Mr Knuckey’s contract of employment with Dyno was entered into in NSW, notwithstanding that his most recent period of employment was in Queensland or Papua New Guinea. On 6 November 1987 Dyno’s predecessor, Du Pont Wesfarmers Pty Limited, wrote to Mr Knuckey in Cobar offering him the position of Marketing Representative at Kalgoorley in Western Australia and setting out detailed terms of employment. This offer was accepted by Mr Knuckey who was then in NSW. It was this contract, albeit progressively varied over the years, which Mr Knuckey was still serving when he was killed in Papua New Guinea.

85 On this basis Dyno submits that s 13(1) of the NSW Workers Compensation Act (1987) (“the NSW Act”) comes into play, so that the NSW insurer, MMI, is potentially liable for the plaintiffs’ claim. That section provides as follows:

13. Injuries received outside New South Wales (cf former s 7 (1A), (1B))

(1) If:

(a) an employer has a place of employment in New South Wales, or is for the time being present in New South Wales, and there employs a worker, and
(b) any such worker while outside New South Wales receives an injury under circumstances which, had the injury been received in New South Wales, would entitle the worker to compensation in accordance with this Act,
the injury is an injury to which this Act applies, and compensation is payable accordingly.

86 Mr Hoeben SC, who appeared for MMI, stressed that the plaintiffs’ claim in this case is not for compensation under the NSW Act. Their claim is independent of that Act. In fact Dyno took out two policies with MMI, one relating to its liability under the NSW Act and the other providing cover for liability arising independently of the Act. It is this second policy with which we are concerned here.

87 There are, in my view, two reasons why this MMI policy does not cover the plaintiff’s claim in this case. I shall deal with them briefly. In this I am much indebted to Mr Hoeben’s clear and succinct written submissions.

88 Dyno’s policy with MMI was issued in response to a proposal made by Dyno on 23 July 1990. In that proposal, Dyno described its trade or business as “explosives manufacturer and sales”. In answer to the question, “premises where trade/business is carried out (situations must be shown, incl. operations outside NSW)”, a large number of locations were specified, most of them being outside NSW, but all of them being within Australia. In response to a further question “Have you any workers engaged otherwise than in connection with the business specified above?”, the “no” box was ticked. The proposal and declaration were said to be the basis of the contracts and were deemed to be incorporated into the policy.

89 It was a continuation of this policy which was in force when Mr Knuckey met his death in August 1994. the policy provided for the employer to notify the insurer of any change in the businesses or activities to which the policy applied. No such notice was provided by Dyno before August 1994. In these circumstances I accept Mr Hoeben’s submission that MMI’s policy was patently envisaged by the parties to apply only to Dyno’s activities within Australia.

90 There is in any event a further reason why MMI’s policy would not, in my view, apply in this case. This arises from the terms of the policy itself. Clause 3 of the policy provides as follows:

“3. The Insurer will indemnify the Employer against all of the following sums for which the Employer becomes liable during or in respect of the period of insurance:
(a) compensation that the Employer becomes liable to pay under the Act to or in respect of any person who is a worker of the Employer (including any person to whom the Employer is liable under Section 20 of the Act);
(b) any other amount that the Employer becomes liable to pay independently of the Act ( but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the commonwealth or a liability arising under the law of another country ) for any injury to any such person (not including liability in respect of an injury, suffered by a person other than such a worker, arising out of any rescue or attempted rescue); (emphasis added)
(c) costs and expenses incurred with the written consent of the Insurer in connection with the defence of any legal proceeding in which any such liability is alleged.”

91 In this case the defendant’s liability arises under of the laws of Papua New Guinea. If those laws did not allow for an action in the nature of Compensation to Relatives then, since Zhang, the plaintiffs would have had no case. In my view, therefore, even if MMI’s policy had otherwise applied to the plaintiffs in this case, the exclusion clause would have served to remove their claim from the ambit of MMI’s cover.

92 Mr Knuckey’s contract of employment having been entered into in NSW there is no relevant nexus between this action and the Queensland insurer, WCQ, so as to establish any liability on its part. Accordingly Dyno must fail in its cross-claims against MMI and WCQ.

93 This leaves outstanding Dyno’s claim against the Papua New Guinea insurer QBE. This aspect of the case is relatively simple. QBE concedes that in August 1994 Dyno had a policy of insurance with it which would cover the plaintiffs’ Compensation to Relatives claim. The only matters raised by QBE in response to Dyno’s cross-claim related to the possibility that another policy or policies with other insurers might also answer to the claim. However on my finding that is not the case. There is a real issue as to whether the QBE policy covers Mrs Knuckey’s claim for nervous shock, but that matter has not been debated before me and I make no finding upon it.

94 I therefore find that Dyno is entitled to indemnity from QBE at least in relation to the plaintiffs’ Compensation to Relatives claim

95 The formal orders I make under the cross-actions are as follows:

• Verdict for the first and second cross-defendants on the first cross-claim
• Verdict for the cross claimant against the third cross-defendant on the first cross-claim
• All parties’ costs to the various cross-claims are to follow the event unless submissions to the contrary are received by me within seven days of today.

Conclusion on the principal claim

96 In relation to Mrs Knuckey’s claim for nervous shock I enter a verdict for the plaintiff in the amount of $83,000.

97 Otherwise, in accordance with the agreement reached between counsel, I have not purported in this judgment to translate my findings into monetary terms. This task is to be undertaken by the parties in accordance with the findings I have already made. I leave it to the parties to bring in short minutes of the appropriate orders. If they are unable to agree, I will deal with outstanding issues by arrangement with the parties.

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Last Modified: 04/09/2003