Lotter v Salmon Street Ltd
[2006] VSC 495
•15 December 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4140 of 2004
BETWEEN
| DOREEN LOTTER (IN HER CAPACITY AS EXECUTRIX OF THE ESTATE OF JOSEPH LOTTER) | Plaintiff |
| and | |
| SALMON STREET LTD (ACN 004 125 197) | Defendant |
| and | |
| VERO INSURANCE LTD (ACN 005 297 807) | Third Party |
AND
No. 5705 of 2004
BETWEEN
| CYNTHIA RAE BLACK JONES (AS EXECUTRIX OF THE ESTATE OF DONALD FERGUSON) | Plaintiff |
| and | |
| COMMONWEALTH OF AUSTRALIA | Firstnamed Defendant |
| and | |
| SALMON STREET LTD (ACN 004 125 197) | Secondnamed Defendant |
| and | |
| CATERPILLAR OF AUSTRALIA PTY LTD (ACN 004 332 469) | Thirdnamed Defendant |
| and | |
| J C HUTTON PTY LTD (ACN 004 057 023) | Fourthnamed Defendant |
| and | |
| VERO INSURANCE LIMITED (ACN 005 297 807) | Third Party |
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JUDGE: | GILLARD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 November 2006 | |
DATE OF JUDGMENT: | 15 December 2006 | |
CASE MAY BE CITED AS: | Lotter v Salmon Street Ltd and Anor | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 495 | |
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SURVIVAL OF ACTIONS AFTER DEATH OF PLAINTIFF – Deceased an employee exposed to asbestos – Onset of symptoms after cessation of employment – Proceeding instituted in lifetime – Plaintiff dies before completion of proceeding – Estate entitled to recover damages for pain and suffering and loss of expectation of life by reason of Administration and Probate (Dust Diseases) Act 2000 – Workers’ compensation policy – Whether covered liability of employer where liability arose after policy ceased – Nature of proceeding after death – Section 29 Administration and Probate Act 1958 – Not a statutory cause of action – Whether liability to pay damages under 2000 Act was at common law or under the Act – Liability at common law – Insurer liable under policy -Application of Section 71A of Workers Compensation Act 1958 to impose liability on insurer – Section 71A not applicable.
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APPEARANCES: | Counsel | Solicitors |
| For the Defendant Salmon Street Limited (both proceedings) | Mr R. Gorton Q.C. with Mr D. Masel | Phillips Fox |
| For the Third Party (both proceedings) | Mr M. O’Loghlen Q.C. with Mr D. Brookes | Dibbs Abbott Stillman |
TABLE OF CONTENTS
Parties................................................................................................................................................... 1
Proceedings Compromised.............................................................................................................. 2
Issues.................................................................................................................................................... 2
Common Law Rule Precluding Proceeding After Death........................................................... 5
Law Changed...................................................................................................................................... 7
Law Changed in State of Victoria................................................................................................... 8
The 2000 Amendment...................................................................................................................... 16
Workers’ Compensation Policy..................................................................................................... 18
Section 71A Workers Compensation Act1958............................................................................. 23
Conclusion......................................................................................................................................... 34
HIS HONOUR:
Before the Court are two proceedings instituted by writ, which raised a common question and were heard together. Each proceeding involved a defendant seeking indemnity from an insurer joined as a third party, in respect to damages paid to an estate of a deceased worker who had been employed by the defendant. The defendant and the insurer were the same in each proceeding.
Parties
The first proceeding (“the Lotter proceeding”) was instituted on 16 January 2004 by Joseph Lotter against the defendant, Salmon Street Ltd (“Salmon Street”). Mr Lotter was employed by Salmon Street from April 1955 until August 1985, and during the course of his employment he was exposed to and inhaled asbestos dust particles and fibres. He ultimately suffered peritoneal mesothelioma and sued his employer for damages, his cause of action being a common law negligence claim. Mr Lotter died on 9 April 2004 before the proceeding was finalised. The proceeding was continued by his personal representative, who also brought a claim as a dependant pursuant to Part III of the Wrongs Act 1958.
Salmon Street sought an indemnity from its workers’ compensation insurer, Vero Insurance Ltd (“Vero Insurance”), pursuant to the contract of insurance between the parties. The insurer has refused to indemnify it in relation to certain claims brought by the estate. After the plaintiff’s death, his Executrix was substituted as plaintiff in her capacity as Executrix of his estate, and Salmon Street joined, as third party, Vero Insurance.
The writ in the second proceeding (“the Ferguson proceeding”) was issued on 29 April 2004 by the plaintiff Donald Ferguson. Mr Ferguson was employed by Salmon Street between 1969 and 1974, and in the course of his employment was exposed to and inhaled asbestos fibres. He later suffered from pleural mesothelioma. He joined as defendants a number of former employers, including Salmon Street, claiming damages, his cause of action also being a common law negligence claim. He died on 23 June 2004 before his proceeding was finalised. The proceeding was continued by his Executrix, who, in addition, made a claim pursuant to Part III of the Wrongs Act. The insurer of Salmon Street, Vero Insurance, refused to indemnify it and was joined as a third party in the proceeding.
Proceedings Compromised
On 13 December 2004, the Lotter proceeding was compromised. The claims made by the estate against Salmon Street included a claim for $124,000 for pecuniary loss, including medical and like expenses and funeral expenses, and also a claim of $161,000 for general damages for the deceased’s pain and suffering and loss of expectation of life (“general damages”).
Vero Insurance agreed to and did pay the amount of $124,000 and the costs, but declined to pay the sum of $161,000 for general damages on the basis that it was not obliged to do so under the insurance policy between the parties.
The Ferguson proceeding was compromised on 31 August 2004. The claim brought by the estate was settled with Salmon Street for $20,000 for pecuniary loss, $60,000 for legal costs and $160,000 for general damages, the latter sum paid jointly by all defendants. Vero Insurance paid the sum of $80,000 but refused to indemnify the employer Salmon Street for the $160,000 paid for general damages, on the ground that it was not bound to do so under the policy of insurance between the parties.
It was the refusal by Vero Insurance to indemnify Salmon Street in each proceeding which led to its joinder as a third party.
Issues
The issues in both proceedings are the same and it is convenient to consider the Lotter proceeding.
The relevant dates are –
23 February 1935
Joseph Lotter born
April 1955 –August 1985
Plaintiff employed by Salmon Street at its premises at Fisherman’s Bend and Dandenong, and exposed to asbestos dust and fibres
October 2003
Plaintiff diagnosed with peritoneal mesothelioma.
16 January 2004
Plaintiff issued proceeding in the Supreme Court of Victoria claiming damages for common law negligence.
9 April 2004
Plaintiff died.
Mr Lotter’s estate was substituted as plaintiff and the estate maintained the proceeding for damages for personal injuries and his death for the benefit of his estate, pursuant to s.29 of the Administration and Probate Act 1958 (“the Act”).
13 December 2004
Proceeding compromised and Salmon Street pays $160,000 to estate for general damages.
Prior to 7 December 1942, the common law rule in this State was that subject to a few exceptions, actions in tort died with the wronged party and the wrongdoer. Hence, any claim for general damages for personal injuries brought by a plaintiff who died before the proceeding was finalised, died with him. On 7 December 1942, the Survival of Actions Act 1942 was assented to and it amended the then s.25 of the Administration and Probate Act 1928. The amendment provided that a cause of action (subject to a few exceptions) vested in a deceased person shall survive for the benefit of his estate. However, the heads of damage were limited.
During Mr Lotter’s employment with Salmon Street, Vero Insurance was a party to a statutory indemnity policy with the employer. Under the terms of the policy, the insurer was obliged to indemnify the insured in respect to any payment of damages at common law or under any Acts of the State of Victoria. In the proceeding instituted by Mr Lotter and prior to his death, he was entitled to recover general damages at common law for pain and suffering, loss of enjoyment of life and the loss of expectation of life. When he died, his estate could not have recovered those damages under the 1942 amendment to the Act. The said heads of damages were expressly excluded by the Act. However, in the year 2000, the Act was amended by the Administration and Probate (Dust Diseases) Act 2000. It was assented to on 9 May 2000, and came into operation the following day.[1] The amendment permitted the estate, where a proceeding was brought in the name of a person who subsequently died, to recover general damages if the death of the plaintiff was from a dust related condition which was caused by the negligence of the employer. The estate was entitled to recover general damages for the deceased’s pain and suffering, bodily or mental harm suffered, and the curtailment of that person’s expectation of life. The new legislation came into operation after Mr Lotter and also Mr Ferguson ceased to be employed by Salmon Street.
[1]See s.2 of the amending Act.
The issue between the employer defendant and the third party insurer in each case can be simply stated. At the time when each plaintiff’s employment ceased, the law was clear. If the plaintiff died after instituting a proceeding and before it was finalised, the cause of action could be continued by the estate, but the estate was not entitled to recover the general damages. Each plaintiff ceased his employment prior to the amendment effected in 2000. After the amendment, the estate could recover the general damages. The insurer contends that it is necessary to consider whether the insurance policies in existence at the relevant times covered a claim which included recovery of general damages brought about by the amendment in the year 2000. It was submitted that on a proper construction of the Act and the insurance policy, the relevant policy did not cover the employer, who was obliged to pay damages as a result of the amending legislation of 2000.
In each proceeding, the plaintiff, prior to his death, had a common law claim against his employer for injuries suffered during the course of his employment. He would, upon proof of negligence by his employer, be entitled during his lifetime to the general damages pursuant to the common law. That was the common law in this country. Upon the death of each plaintiff, the deceased’s cause of action continued and by virtue of the amendment to the Act in 2000, the estate was entitled to recover the general damages, including damages for curtailment of the deceased’s expectation of life. The employer, Salmon Street, contended that it was entitled to be indemnified by Vero Insurance pursuant to the policy which existed between the parties at the time of the employment of each plaintiff. The cause of action arose in the course of the employment, at which time Vero Insurance insured the employer, and by reason of the 2000 amendment, the estate was entitled to recover general damages. It was the contention of Vero Insurance that on a proper analysis of the 1942 amendment to the law, the death resulted in the estate having a new cause of action and/or the 2000 amendment resulted in damages being payable pursuant to statute. The 2000 Statute was not in operation at the time of the employment, and the policy was confined to a damages liability under an Act, being an Act which applied during the operation of the policy. It was submitted that the insurance policy did not cover the claims resulting from the 2000 amendment. In the alternative, Salmon Street submitted that if the policy, properly construed, did not provide indemnity to the employer, nevertheless as a result of s.71A of the Workers’ Compensation Act 1958, Vero Insurance was liable to indemnify Salmon Street even though it was not liable under the terms of the policy.
These were the issues in each proceeding.
Common Law Rule Precluding Proceeding After Death
The ancient common law was that the death of a person did not give a cause of action and that a cause of action in tort died with the plaintiff.
In Fitch v Hyde-Cates,[2] Mason J described the old common law rules as follows:[3]
“(1) That in a civil court ‘the death of a human being could not be complained of as an injury’ (Baker v Bolton (1808)), a rule which was described by Lord Wright in Rose v Ford as ‘a dogma of somewhat obscure import and uncertain application’; and
(2) That a cause of action in tort died with the person in whom it vested and did not survive for the benefit of the estate – actio personalis moritur cum persona.”
[2](1982) 150 CLR 482.
[3]at p.487.
The effect of these rules was altered by statute. Both enactments were first introduced in England. In 1846, the Fatal Accidents Act, also known as Lord Campbell’s Act, and which is found in Part III of the Victorian Wrongs Act 1958, conferred a right of action on the dependant of a deceased person who died as a result of a wrongful act. The rule that the cause of action died with the plaintiff on his death was not amended in English law until nearly a century later. Sir Frederick Pollock, writing in 1923 and before the amendment, stated:
“We have next to consider the effect produced on liability for a wrong by the death of … the person wronged. … This is one of the least rational parts of our law. The common law maxim is actio personalis moritur cum persona, or the right of action for tort is put an end to by the death of either party, even if an action has been commenced in his lifetime.”[4]
(Emphasis added).
[4]See the Law of Torts by Sir Frederick Pollock – 12th Edition at p.60.
The maxim literally means – a personal action dies with the person. The rule goes back in English law over hundreds of years. Sir John Salmond, in his 6th Edition (1924) of the Law of Torts, noted that the rule was subject to exceptions as follows:
“This rule, however, which seems destitute of any rational basis, has been to a very large extent eaten away by exceptions, some of which were admitted by the common law itself, while others have been introduced by statutes ancient and modern. Their aggregate effect is, speaking generally, to abolish the rule so far as it relates to injuries to property, but to leave it in full operation with respect to injuries of other kinds.”
(Emphases added).
Sir Frederick Pollock dealt with the exceptions in his work and observed that the first exception was a statutory one enacted in 1330 by the statute 4Ed.III. c.7. The learned author referred to a number of other statutory exceptions, and then at page 65 said:
“Nothing in these statutes affects the case of a personal injury causing death, for which according to the maxim there is no remedy at all. It has been attempted to maintain that damage to the personal estate by reason of a personal injury, such as expenses of medical attendance, and loss of income through inability to work or attend business, will bring the case within the statute of Edward III. But it is held that ‘where the cause of action is in substance an injury to the person’ an action by personal representatives cannot be admitted on this ground: the original wrong itself, not only its consequences, must be an injury to property.”[5]
[5]The learned author referred to the case of Pulling v G.E.R. Co. (1882) 9 Q.B.D. 110.
Law Changed
The law in England was changed in 1934. The Law Reform (Miscellaneous Provisions) Act 1934 (Eng) laid down a general rule that on the death of any person, all causes of action subsisting against or vested in him shall survive against, or for the benefit of, his estate. The effect was that the rule was abrogated in relation to most causes of action, but the statute expressly excluded certain causes of action and, in addition, there were limitations imposed in respect of the damages recoverable in particular proceedings.
In Benham v Gambling[6], Viscount Simon L.C. described the rule and the amending legislation as follows:
“My Lords, under the common law of England it was the general rule that no executor or administrator could sue, or be sued, for any tort committed against or by the deceased in his lifetime. Such was the actual purport of the maxim ‘actio personalis moritur cum persona’ – a maxim which is both obscure in origin and inaccurate in expression, for the proposition that personal actions abate with the death of either party is, of course, not true, generally speaking, of causes of action arising out of contract. The common law rule was subject to important exceptions, some of them admitted by the common law itself and others introduced by statute. But the rule itself was in effect swept away by the Law Reform (Miscellaneous Provisions) Act 1934, which provides, subject to important exceptions which do not however affect the present appeal, that on the death of any person after the commencement of the Act all causes of action vested in him shall survive for the benefit of his estate. Accordingly, if an individual is injured by accident due to the negligence of another person, the claim for damages no longer abates at his death, but survives for the benefit of his estate and can be enforced in an action brought by his personal representative against the negligent defendant or against the defendant’s personal representative if the defendant has died, since the Act also provides for the survival of such a claim against the defendant’s estate.”
[6][1941] A.C. 157 at page 160.
The history of the old common law rule and its application were stated by Bowen L.J. in Finlay v Chirney[7].
[7](1888) 20 Q.B.D. 494 at pp.502 et seq.
The Victorian legislation, which was introduced into this State in 1942, was based on the English legislation. However, the Victorian provisions relating to damages were different. The history of the application of the English legislation during the 1930s explains why the Victorian Act excluded certain heads of damage.
Law Changed in State of Victoria
The Survival of Actions Act 1942 amended s.25 of the Administration and Probate Act 1928. However, the Victorian legislation excluded recovery for certain heads of damages which had been recoverable under the English legislation.
Section 25 of the 1928 Act provided exceptions to the common law rule that a cause of action vested in a plaintiff, died when he died.[8] These causes of action were available despite the death of the plaintiff. It is clear from the provisions of subsection 1 of the 1942 amendment that it was the intention of Parliament to abrogate the common law rule, but subject it to exceptions in respect to causes of action and also certain heads of damages.
[8]See 25(1) and (2) of the 1928 Act. These subsections permitted recovery by the estate for injury to the deceased’s personal and real estate and recovery of debt. Section 25(5) permitted a claim against the estate.
The long title to the Act was:
“An Act to amend the Law as to the Effect of Death in relation to Causes of Action.”
The long title may be used as an aid to interpretation, in particular to determine the scope and purpose of the Act, and to resolve uncertainty.[9]
[9]See Birch v Allen (1942) 65 CLR 621 at 625; Amatek Limited v Googoorewon Pty Ltd (1993) 176 CLR 471 at 477.
Subsection 2 of the 1942 Survival of Actions Act provided:
“2.(1)Section twenty-five of the Administration and Probate Act 1928 is hereby amended as follows:-
(a)For sub-sections (1) and (2) there shall be substituted the following sub-sections:-
‘(1)Subject to the provisions of this section, on the death of any person after the commencement of the Survival of Actions Act 1942, all causes of action subsisting against or vested in him shall survive against or (as the case may be) for the benefit of his estate:
Provided that this sub-section shall not apply to causes of action for defamation or seduction or for inducing one spouse to leave or remain apart from the other or to claims under Part IV. of the Marriage Act 1928 for damages on the ground of adultery.
(2)Where a cause of action survives as aforesaid for the benefit of the estate of a deceased person the damages recoverable for the benefit of the estate of that person –
(a)shall not include any exemplary damages;
(b)in the case of a breach of promise of marriage shall be limited to such damage (if any) to the estate of that person as flows from the breach of the promise to marry;
(c) where the death of that person has been caused by the act or omission which gives rise to the cause of action –
(i)shall be calculated without reference to any loss or gain to his estate consequent on his death, except that a sum in respect of funeral expenses may be included;
(ii)shall not include any damages for his pain or suffering or for any bodily or mental harm suffered by him or for the curtailment of his expectation of life’; and
(b)For sub-sections (5) (6) and (7) as amended by any Act there shall be substituted the following sub-sections:-
‘(5)No proceedings shall be maintainable in respect of a cause of action in tort which by virtue of sub-section (1) of this section has survived against the estate of a deceased person unless either –
(a)proceedings against him in respect of that cause of action were pending at the date of his death; or
(b)the cause of action arose not earlier than six months before his death and proceedings are taken in respect thereof not later than six months after his personal representative took out representation.
(6)Where damage has been suffered by reason of any act or omission in respect of which a cause of action would have subsisted against any person if that person had not died before or at the same time as the damage is suffered there shall be deemed for the purposes of this section to have been subsisting against him before his death such cause of action in respect of that act or omission as would have subsisted if he had died after the damage was suffered.
(7)The rights conferred by this section for the benefit of the estates of deceased persons shall be in addition to and not in derogation from any rights conferred on the dependants of a deceased person by Part III. of the Wrongs Act 1928 as amended by any Act, and this section shall apply in relation to causes of action under the said Part III. as so amended as it applies in relation to other causes of action not expressly excepted from the operation of sub-section (1) of this section’.
(2)In any case where the death of a person, against or in whom immediately before his death there was subsisting or vested a cause of action, occurred before the commencement of this Act the provisions of section twenty-five of the Administration and Probate Act 1928 shall have effect as if this Act had not passed.”
The Act can be analysed in this way. The common law rule was partially abrogated. There were some very personal causes of action which did not survive, and some of the causes of action were subject to a limitation in respect of the damages that could be recovered. It is pertinent to observe that the limitation on the recovery of damages found in s.25(2)(c)(ii) was not in the English Act of 1934. The English legislation in the 1930s produced substantial litigation grappling with questions concerning damages for pain and suffering and for curtailment of expectation of life, and the difficulties of assessment. Further, there was the criticism that the beneficiaries of the new legislation were in fact the beneficiaries of the estate, who reaped a windfall for the wrong done to the deceased, who was the one who had suffered the injury and loss.
Subsections 5 and 6 of the Victorian Act relate to the situation when the wrongdoer dies before the proceeding is finally determined.
Subsection 2 and the proviso thereto have been amended since 1942, but the amendments have no bearing on the issues raised in these proceedings. The relevant section in the 1958 Act is s.29. A new subsection 2A was inserted in the year 2000, and it will be necessary hereafter to consider the effect of that provision.
In determining the purpose of the legislation, it is appropriate to consider it in its historical setting. The old common law rule provided that any cause of action vested in a deceased person died with him. As stated, over the years the common law laid down by the Courts, and also Parliaments, have grafted a number of exceptions to the rule. The old rule did not apply to contractual claims. In addition, s.25 of the Victorian Administration and Probate Act 1928 itself contained statutory exceptions. The purpose of the Act, as the long title makes clear, was to amend the law as to the effect of death in relation to causes of action. The new provisions provided that the old rule of law did not apply to, inter alia, a cause of action which had vested in the deceased before he died. However, the old rule continued in respect to some personal causes of action which were expressly excepted in the new legislation. But the important thing to note was that as a result of the amendment, in a claim such as the present, the old rule had no effect on the cause of action vested in the plaintiff during his lifetime, as a result of his death. It continued.
The old common law rule was not abolished because, as the subsection makes clear, the amending legislation did not apply to claims in defamation, seduction, inducing one spouse to leave another, or claims for damages on the ground of adultery. The new provisions excluded certain heads of damage. In causes of action such as those in the present proceedings, the estate could not recover any exemplary damages. Where the death of the plaintiff had been caused by the negligent act which gave rise to the cause of action, the damages recoverable were to be calculated without any reference to any loss or gain to the estate consequent on death, except funeral expenses, which could be recovered. The estate could not recover general damages for pain and suffering, or for any bodily or mental harm suffered or for the curtailment of the expectation of life. The latter limitation on the general damages was not in the English legislation. The overall effect of the Victorian legislation was that the old common law rule did survive, but only in very limited circumstances. As a result of the amendment, the old common law rule did not apply to a common law cause of action seeking damages for personal injury as a result of the negligence of another.
The effect of the amending legislation on each of the deceased’s causes of action in the present proceedings can be analysed in this way. Prior to his death, the deceased had instituted a proceeding in this Court. His cause of action was a common law negligence claim against his former employer and he sought damages including general damages, and damages for economic loss. During his lifetime, he was entitled to recover the general damages and also economic loss. When he died, by reason of the provisions of the now s.29(1) of the 1958 Act, his death had no effect on his cause of action and the proof of his case. In order to establish his case, both before and after death, it was necessary for him, and later his personal representative, to prove that the employer owed him a duty of care, that the employer breached the duty of care, that is, that his employer was negligent, and that the negligence was a cause of his injuries. As long as he established that he had suffered some injury, his cause of action was complete. It was a common law cause of action to be determined in accordance with the principles of the common law. In order to establish his damages, he during his lifetime, and the estate after his death, would also rely upon the common law principles. As a result of the 1942 amendment, general damages were limited, but nevertheless his estate would have been entitled to recover funeral expenses and also economic loss suffered prior to his death, for example, loss of income, and medical and like expenses. Hence, before and after death, he and his estate would have established the case in exactly the same way. By reason of the amending legislation, his death had no effect upon the cause of action, save that some of the heads of damage were not open to his estate.
It was submitted by counsel for Vero Insurance that the amending Act created a new cause of action. I do not agree. In my opinion, the amending legislation did not create any new cause of action. The cause of action was the same both before and after death. That is not to say that the Act did not affect rights. It gave the right to bring or continue a proceeding after death where the law did not permit that in the past. However, it did not create a new cause of action.
The English legislation was discussed by the House of Lords in Rose v Ford[10]. In that case, a young woman was injured in a motor car accident. Her injuries were serious and two days later it was necessary to amputate her leg. Two days later, she died. Her father, as administrator of her estate, brought an action claiming damages under the English provisions of 1934 for the shortening of her expectation of life. Unlike the Victorian Act, that head of damage was not excluded by the English Act.
[10][1937] A.C. 826.
Lord Russell of Killowen, after referring to the English provision, stated:[11]
“My Lords, I agree with Greer LJ that the object of the statute, as appearing from its language, is to put a person, who has by his negligence caused damage to someone who has subsequently died, in the same position as regards liability (subject to certain qualifications which do not apply to the present case) as he would have been in, if the injured person had sued and recovered judgment while still alive.”
[11]At page 838.
His Lordship made it clear that the English Act did not create a new cause of action. He said:[12]
“But the Act of 1934 stands on quite a different footing. It in no way affects or deals with the common law doctrine. It creates no cause of action against a person causing the death of another, for damages occasioned to the plaintiff by that death. It does not (except as regards funeral expenses) contemplate, much less does it create, any cause of action in any one for damages resulting from death. What it does is (with certain exceptions) to preserve, notwithstanding the death of a person, all causes of action vested in that person when he died; but the claim to be asserted, is a claim in right of the deceased person.”
[12]At page 839.
In the same case, Lord Wright discussed the amending legislation. He noted that personal claims for breach of contract were outside the operation of the old common law rule, and observed how illogical the strict application of the rule was in a claim in negligence where personal injuries were caused. His Lordship then went on to observe, having discussed the amending Act and the mischief which was sought to be rectified:
“The words of the Act must with this introduction be construed as they stand.”[13]
[13]At p.842.
His Lordship considered the section in some detail. He discussed the question of whether there were any new rights, and said:[14]
“It is also, I think incorrect to say that the Act creates no new rights. Section 1, subsection 5, in express terms refers to the rights conferred by this Act. The Act gives rights of survivorship where before the Act there was no such right. It gives a new right because it prevents a right from being extinguished. It is, however, true that the personal representative has no right but what the deceased if alive could have enforced.”
(Emphasis added)
[14]At page 843.
It is important to emphasise that there is no new right given to the personal representative because what he is enforcing is the right that the deceased had prior to death. His Lordship then analysed the deceased’s cause of action and the effect of s.1 of the Act. He said this:[15]
“This way of looking at the case involves in my judgment a failure to give effect to s.1 of the Act of 1934. The moment before the girl died there was, as I think, apart from her actual death a cause of action vested in her for deprivation or loss of expectation of life. Before the Act, that cause of action would have ceased with her death. That same cause of action, by force of the Act, now survives in the administrator. It is not correct to say that the administrator requires under the Act a new or changed cause of action, as would be the case if he were a third party suing for the deceased’s death. The administrator simply stands in the shoes of the deceased and in a sense may be said to continue her life. The damages for loss of expectation of life are indeed on a different footing for those for loss of a leg. The former damages are to be based on her state as a young and healthy woman with the use of both legs at the moment before she was struck down. If in addition she got damages for the loss of her leg for the period of the normal expectation of life, she would be getting pro tanto damages twice over. But on the view of the Court of Appeal the defendant would be in the paradoxical position of being entitled to plead in mitigation of damage that he had not merely maimed but killed the plaintiff. … The Act has, however, not merely stated that it is amending the law as to the effect of death in relation to causes of action but has done so. The fact that the plaintiff has died before judgment is now in truth an irrelevant circumstance, save that it obviates to some extent the necessity of medical evidence that the accident had shortened the person’s life. The damage claim is not for the death, for which the victim herself could not have sued, any more than the administrator can who merely stands in her shoes.”
(Emphases added)
[15]At page 845.
In Partridge v Chick[16], Dixon, Williams, Webb and Kitto JJ, referring to the Victorian Survival of Actions Act, said:[17]
“In the meantime the wronged person, having sustained injuries, has a cause of action which has survived against the wrongdoer’s estate and, on the wronged person’s death, it will survive him too for the benefit of his estate.”
[16](1951) 84 CLR 611.
[17]At page 617.
The High Court went on to contrast that situation with the position under Lord Campbell’s Act, that is, Part III of the Victorian Wrongs Act 1958. There is no doubt that Lord Campbell’s Act established a new statutory cause of action. The High Court considered the authorities in Partridge v Chick[18] relating to the effect of Part III of the Wrongs Act. The Court held that the legislation created a new statutory cause of action. See also the reasoning in East v Breen[19] and Ruby v Marsh.[20]
[18]Supra.
[19][1975] VR 19.
[20](1975) 132 CLR 642.
In my opinion, whilst the 1942 Victorian legislation, which is in similar terms to the 1934 English legislation, does create a right of survivorship, it does not create a new cause of action. The estate is simply standing in the shoes of the deceased and enforcing the cause of action which was vested in the deceased prior to his death. There is no new cause of action created by statute. Counsel for both parties referred to a number of cases involving different legislation, which dealt with the issue of whether the legislation created a new cause of action. I am not assisted by any of those authorities.
The principles are correctly stated by Trindade & Cane in the Law of Torts in Australia, 3rd Edition, where the learned authors wrote:[21]
“A claim under a survival statute is not a new cause of action created by the Act; it is a cause of action existing independently of the Act and preserved from the extinction that the death of the deceased would otherwise have brought about.”
[21]At page 548.
I do not accept the submission of counsel for the third party insurer that the effect of the 1942 amendment to the Administration and Probate Act 1928 created a new cause of action. The cause of action was the same before and after the death of the plaintiff, although the amending legislation gave a right of survivorship to continue the proceeding. The proof of the estate’s case on liability, and the assessment of damages recoverable, as permitted by the 1942 legislation, were to be considered and determined in accordance with the principles of the common law. The same principles would have applied to the cause of action if the plaintiff had lived and the proceeding been heard and determined in his lifetime.
The 2000 Amendment
The Administration and Probate (Dust Diseases) Act 2000 amended s.29 of the Act by adding s.2A. It provides:
“(2A) Where –
(a)a cause of action survives under sub-section (1) for the benefit of the estate of a deceased person; and
(b)the death of that person is from a dust-related condition which has been caused by the act or omission which gives rise to the cause of action; and
(c)proceedings in respect of that cause of action were commenced by that person before his or her death and were pending at his or her death –
the damages recoverable for the benefit of the estate of that person shall include damages for all or any of the following –
(d)that person’s pain or suffering;
(e)any bodily or mental harm suffered by that person;
(f)the curtailment of that person’s expectation of life.”
Section 3 of the Act was amended to include a definition of a “dust-related condition”, which refers to a list of diseases specified in the First Schedule to the Act.
The new provision came into operation on 10 May 2000. It was common ground between the parties that the new provision applied to the cause of action that the deceased had when he was alive. Hence, on his death, the cause of action survived under s.29(1) of the Act. It was common ground that in each proceeding, the death of the plaintiff resulted from a dust related condition which was caused by the negligence of the employer, and the proceeding was instituted before the date of death. The dust related condition was one of the conditions set out in the First Schedule, namely, mesothelioma. It follows that prior to his death, the plaintiff was entitled, and after his death his estate was entitled, to recover general damages for pain and suffering, bodily and mental harm and the curtailment of his expectation of life.
It is the contention of Vero Insurance that although the estate was entitled to recover the damages from the employer, the statutory insurance policy in existence at the relevant time did not cover that part of the claim and, accordingly, the insurer was not liable to indemnify Salmon Street.
Workers’ Compensation Policy
During the period of the employment of each deceased by Salmon Street, there was in existence a workers’ compensation policy, the parties being the defendant Salmon Street and the third party Vero Insurance. In accordance with the provisions of the Workers Compensation Act 1958 and the regulations made thereunder, it was a statutory policy. During the relevant periods, there were three sets of regulations which contained the statutory form of policy. The regulations were the Workers Compensation Regulations 1954, the Workers Compensation Regulations 1975 and the Workers Compensation (Employers’ Indemnity) Regulations 1978.
The operative part of each policy was in similar wording. It was accepted by the parties that there was no real difference in the wording. Accordingly, it is convenient to set out part of the policy that was in the first Schedule to the regulations of 1978, which came into operation on 1 January 1979. Omitting the preamble, the policy went on to provide:
“THIS POLICY WITNESSETH that in consideration of the payment of or the agreement to pay to the Insurer the Premium shown in the Schedule for the Initial Period of Indemnity stated therein IT IS HEREBY AGREED that if during the said Initial Period or any Subsequent Period described in the Schedule (subject to the payment of premium as provided therein) any person employed in the business described in the Schedule who is a worker within the meaning of the Workers Compensation Act 1958 of the State of Victoria or any amendments thereof in force at the commencement of this indemnity or any renewal thereof (herein after called ‘the Act’) shall sustain personal injury or disease for which the insured shall become liable –
Section (a) – to pay compensation under the Act; or
Section (b) – to pay damages at Common Law or under any Act of the State of Victoria or any amendments thereof in force at the commencement of this indemnity or any renewal thereof –
except as hereinafter provided the Insurer will indemnify the Insured against all sums for which the Insurer may become so liable, and will, in addition, be responsible for all costs and expenses incurred with the consent of the Insurer in connection with any claim for such compensation or damages:”
(Emphasis added)
There is no doubt, and indeed it was common ground, that each deceased plaintiff was a worker, and secondly, that each sustained personal injury or disease for which the employer Salmon Street became liable to pay damages. However, it was the contention of Vero Insurance that it was not liable to indemnify the employer. It was submitted that on a proper construction of the policy, the damages that were payable to the estate for what has been described as general damages, were damages paid under an Act of the State of Victoria, namely, s.29 of the Administration and Probate Act 1958 as amended. It was submitted that the liability to pay arose under an Act, namely the 2000 amendment, and that this liability arose after the employment of both plaintiffs had ceased. In other words, the liability arose after the policy had ceased to operate. It followed that it could not be established that the liability to pay damages under that Act was in respect to an Act “in force at the commencement of the indemnity or any renewal thereof.”
The policy is a contract and must be construed in accordance with the principles relating to the construction of contracts. Counsel referred to a summary of the principles by Spigelman CJ in Orica Limited & Anor v CGU Insurance Limited[22]. At paragraph 11, his Honour summarised the principles concerning the construction of a statutory policy, which I gratefully adopt. His reasoning can be summarised as follows:
[22][2003] NSWCA 331.
•Although it is a mandatory statutory policy, it must be construed as a contract;
•The words of the policy must be construed, not the section of the Act which required the policy to exist;
•Nevertheless the provisions of the Act may assist in the proper construction if there are indicia in either the policy or the Act which make this appropriate;
•The extent of the indemnity is to be found in the language of the policy properly construed;
• The contra proferentem rule has no application;
•The mere fact that the legislated scheme requires an insurer to indemnify in respect of a worker’s claim does not evince an intention that the insurer should be liable whenever the employer is liable.
The object of construing a contract is to determine the common intention of the parties on an objective basis. The primary source of the intention is the words of the policy, construed in their normal meaning and in context, subject to any evidence in the policy or surrounding matters that the words were used in a particular meaning.
In my opinion, the words are clear and I will resist the temptation to summarise their effect by using different words. If the insured is liable to pay damages at common law or under an Act of the State of Victoria in force at the commencement of the policy or any renewal thereof, the insurer is bound to indemnify the insured.
There is no doubt that that is the effect of the words used, and there is no reason why the words should not be construed to give effect to their literal meaning. Indeed, I did not understand counsel for either party to suggest otherwise.
The question is whether the employer, in compromising each proceeding and paying a sum for general damages, is paying damages at common law or under an Act of the State of Victoria, that is, s.29 of the Administration and Probate Act 1958 as amended in the year 2000?
The question is - what is the effect of the new s.29(2A) of the Act? The rival contentions can be briefly stated. Salmon Street says that its liability arises because it paid damages at common law, whereas Vero Insurance contends the damages were payable under the said Act, which did not apply during the period of the policies. The liability arose when the 2000 Act into operation.
The answer to the question depends on what the amending Act does in relation to the rights of the deceased estate to recover damages, and whether it results in damages being recovered at common law or under the new sub-section (2A). In considering the question, it is appropriate to trace the history of the legislation and what Parliament intended to achieve, that is, the mischief that it sought to remedy.
When the Victorian Parliament amended s.25 of the Act in 1942, it did so basing the new legislation on the English Act of 1934, and in the knowledge that the House of Lords had held in 1937 in Rose v Ford[23] that the estate could recover damages at common law for loss of expectation of life. Further, the English authorities had established that the English legislation did not create a new statutory cause of action, but abrogated a rule which had been severely criticised by eminent lawyers as being an irrational one. When the Victorian Act was passed in 1942, unlike the English Act of 1934, it excluded recovery of any general damages in a proceeding where the death was caused by the wrongful act which gave rise to the cause of action. It therefore followed that although the plaintiff during his lifetime could recover damages for loss of curtailment of life, if the proceeding was not finalised before death, his estate could not recover those damages. For reasons which I have already stated, the effect of the 1942 amendment meant that the bar to bringing the proceeding was removed, but the proceeding remained the same and a personal representative stepped into the shoes of the deceased plaintiff and continued the claim. The legislation, however, limited some of the heads of damage. The legislation gave a right to continue the proceeding and to recover damages at common law, but it did not create a new cause of action.
[23]Supra.
During the period from 1934 to 1942, there were many reported cases in England dealing with the difficulties associated with estimating damages for, inter alia, loss of expectation of life. The controversy was discussed in an article by Sir Owen Dixon which appeared in the University of Queensland Law Journal in 1948.[24] The footnote which appears at p.240 of the article lists the many cases which were discussed by the English courts between the passing of the Act and 1942.[25] One of the criticisms of awarding damages for loss of expectation of life was that the relatives of the deceased were those who benefited. No doubt the Victorian Parliament was very alive to the controversy and the criticisms that were levelled at the 1934 English Act and accordingly, when the Victorian Act was passed in 1942, it excluded recovery of some damages including curtailment of expectation of life. However, the effect of the amending Act was the same as in England. I have already discussed the effect of the legislation. The result was that the claim continued, and the personal representative stood in the shoes of the deceased and recovered for the estate damages at common law.
[24]See Jesting Pilate at p.238.
[25]See also the article by Dr Kahn-Freund, which dealt with the same controversy.
The amending Act in 2000 excluded from the limitation on the heads of damage imposed by the 1942 legislation the deceased's pain and suffering, any bodily or mental harm suffered by him, and the curtailment of his expectation of life. This meant that the damages at common law, which the deceased could recover if he had survived, continued, and were not excluded. However, the amendment only related to a cause of action where the death of the plaintiff was caused by a dust-related condition which had been the result of the negligence of the wrongdoer. The limitation on the heads of damage which had been imposed in the 1942 legislation continued in relation to other claims. The new legislation did not in any way affect the cause of action. It still survived as a continuing cause of action. It was not a new cause of action. All that the 2000 legislation did was to remove the limitation which had been imposed by the 1942 legislation on particular heads of damage in a particular cause of action.
There can be no doubt that the common law recognised a right to recover damages for the loss of expectation of life in a proceeding brought by the wronged party. The authorities recognised that a plaintiff was entitled to recover such damages.[26] The amount that has been allowed for loss of expectation of life has usually been very modest. A critical assessment of this branch of the law, and the "going rate" of quantum, is to be found in the text Assessment of Damages for Personal Injury and Death, by Professor Harold Luntz[27]. When the amendment was enacted in the year 2000, the common law in this country recognised a right to recover damages by a living person for a loss of expectation of life, as well as the other heads of damage.
[26]See Skelton v Collins (1966) 115 CLR 94; and Sharman v Evans (1977) 138 CLR 563.
[27]4th ed. paras. 3.4.1 et seq.
When one analyses the purpose and effect of both the 1942 and 2000 legislation, it is my opinion that the damages recovered by the estate were damages payable at common law. This is because the common law recognised a right to claim general damages, the death did not in any way create a new cause of action, the 1942 Act placed the personal representative in the shoes of the plaintiff, entitling the estate to recover damages, and the 2000 amendment removed the bar concerning damages which had been imposed in 1942 in relation to particular defined proceedings. In my view, the damages paid to each estate were not paid under the amending Act. The liability was to pay the general damages at common law and the bar to their recovery imposed by the 1942 Act was removed by the 2000 Act.
Counsel for Vero Insurance submitted not only that the 1942 Act had created a new cause of action, but also that the amendment effected a substantive and not merely a procedural alteration to the law. Reference was made to a number of authorities, including Swannell v Farmer,[28] Dolling v National Australia Bank,[29] and the judgment of Fullagar J in Maxwell v Murphy.[30] These cases drew a distinction between substantive and procedural rights in a context of causes of action arising in other jurisdictions. I do not find them helpful. The real questions are – what were the effects of the 1942 amending legislation and the later amendments?
[28][1999] 1 VR 299
[29](2002) 5 VR 234 esp. at para. [12].
[30](1957) 96 CLR 261 at 286.
In my opinion, Vero Insurance is liable to indemnify Salmon Street pursuant to the policy for the general damages paid to the estate in each proceeding.
Section 71A Workers Compensation Act1958
In light of my conclusion, it is not necessary for the Court to consider the alternative submission put by Salmon Street, but in case I am wrong, and also because the matter was argued, I will briefly consider it.
It was submitted on behalf of Salmon Street that if the Court was of the opinion that the policy did not cover the payment of general damages made by the employer to the estate, because it was a liability to pay damages under an Act which was not in force at the relevant time, then s.71A of the Workers Compensation Act 1958 applied and that section made the insurer liable. Section 71A was inserted by the Workers Compensation (Amendment) Act 1984. It came into operation on 11 September 1984. It provides:
“71A. Liability of insurer
(1) This section applies where in any legal proceedings (whether instituted before or after the commencement of section 11 of the Workers Compensation (Amendment) Act 1984) it is necessary to determine whether any insurer or which of two or more insurers is liable under a policy of insurance or indemnity to indemnify an employer against any liability of the employer in relation to workers compensation under this or any other Act or at common law or otherwise in respect of a worker.
(2) Where this section applies, for the purposes of the determination the policy of insurance or indemnity shall be deemed to extend to indemnify the employer against any liability in relation to workers compensation under this or any other Act or at common law or otherwise which arises from the employment by the employer of the worker during the currency of a policy, whether or not that liability arises during the currency of a policy and whether or not that liability arises during the employment of the worker by the employer.”
This provision was introduced to overcome the problems which had been experienced in workers’ claims when employers changed insurers during the course of an employee’s period of employment, or changed insurers between employment and death, and where a worker changed employers, resulting in different employers with different insurers. Experience up to 1984 had shown that sometimes the employer, although liable to the employee, was unable to sheet home the liability to indemnify against an insurer.
In considering the rival contentions, I must proceed on the assumption that the insurance policy that was in existence at the relevant time did not indemnify the employer Salmon Street, because the liability to pay damages arose under an Act which was not in force at the relevant time. At the outset, I observe that it is a strange proposition that an insurer could be liable to indemnify an employer, even though the Court had come to the conclusion that in all the circumstances, the terms of the policy of insurance between the parties did not oblige the insurer to indemnify the insured employer. An employer was obliged by statute to enter into a policy of insurance with an insurer in respect to workers’ compensation claims. The employer had a choice as to the identity of the insurer, but both parties were bound to enter into a statutory form of policy. The policy was a contract between the parties. It regulated the rights and obligations as between the parties. As a matter of contract law, if the employer’s claim did not fall within the terms of the policy, an insurer was not bound to indemnify it. Yet it is argued on behalf of Salmon Street that, although the policy did not oblige the insurer to indemnify the employer, nevertheless s.71A made the insurer liable.
The application of s.71A involves a two-step exercise. The first step is to consider and determine whether the prerequisites set out in sub-s.(1) have been satisfied. If they have, then the section applies. Sub-s.(1) relevantly provides:
(i)where in any legal proceeding,
(ii)it is necessary to determine whether any insurer or which two or more insurers is liable,
(iii)under a policy of the insurance to indemnify an employer,
(iv)against any liability in relation to worker’s compensation under any Act –
the section applies.
It was submitted on behalf of Salmon Street that the provisions of sub‑s.(1) have been satisfied. On a literal construction, this is correct. This means the section applies. However, it is noted that in each of the present proceedings, one insurer was identified and, secondly, the insurer accepted liability under the relevant policy of insurance but not in respect to the damages which are recoverable as a result of the 2000 amendment. The situation in the present proceedings does not raise issues as to the identity of the insurer or which of two or more insurers is liable.
Proceeding on the assumption that the prerequisites set out in sub-s.(1) have been satisfied, the question then is whether the insurer is liable under sub-s.(2), even though it is not liable under the terms of the policy?
Sub-section (2) can be paraphrased as follows:
(i)Where this section applies (that is by reason of s.71A(1)),
(ii)for the purposes of the determination, i.e. whether an insurer is liable to indemnify,
(iii)the policy of insurance,
(iv)shall be deemed to extend to indemnify the employer against liability under an Act,
(v)which arises from the employment,
(vi)during the currency of the policy,
(vii)whether or not that liability arose during the currency of the policy and whether or not that liability arose during the employment of the worker by the employer.
It was submitted on behalf of Salmon Street that each of the conditions of sub‑s.(2) has been satisfied. It was put that the liability under the Act arose from the employment during the currency of the policy. Pausing there, it may be said that the liability of the employer did not arise from the employment during the currency of the policy, because on the assumptions made in considering this submission, the liability did not arise under the policy because of the wording. Further, the liability of Salmon Street to the estate arose after the term of the policy had ceased. However, the concluding words of the sub-section seem to contradict what is stated earlier in the sub‑section. It was contended on behalf of Salmon Street that the concluding words make it clear that although Vero Insurance was not liable under the policy of insurance, nevertheless it was liable by reason of sub‑s.(2).
In interpreting s.71A, it is necessary to consider the section as a whole. Whilst its application must be considered and determined in a two-step exercise, what the section means is to be determined by considering the section as a whole and in context.
In construing an Act of Parliament, the object of the exercise is to determine the intention of Parliament. The primary source of the intention is the words used by Parliament, applying them in their normal, everyday sense, unless there is evidence that the words are to be used in a different sense. The statutory provisions under consideration must be read in context, and taking into account the Act as a whole. Sometimes, the literal interpretation may lead to ambiguity, uncertainty, inconsistency or absurdity, and in those circumstances, the Court seeks to construe the provision to give effect to the intention of Parliament. One of the rules of interpretation laid down many years ago was the rule in Heydon’s case.[31] It is a rule which has often been acted upon. In Eastman Photographic Materials Company v Comptroller‑General of Patents Designs and Trademarks,[32] Lord Halsbury LC described the rule as follows:[33]
“Before dealing with the decision itself I think it is desirable, from what occurred in the course of the argument, to say something as to what sources of construction we are entitled to appeal to in order to construe a statute. Among the things which have passed into the canons of construction recorded in Heydon’s case, we are to see what was the law before the Act was passed, and what was the mischief or defect for which the law had not provided, what remedy Parliament appointed and the reason of the remedy.”
[31]See (1584) 3 Co Rep 8; 76 ER 637.
[32][1898] AC 571.
[33]At p.573.
The rule in Heydon’s case permits a court to consider the background history of the application of the law, and what Parliament sought to remedy in passing the legislation. The “mischief rule” approach to statutory interpretation established in Heydon’s case was the origin of the purposive approach, which required an interpretation of the statutory provisions consistent with the purpose of the legislation. Whether or not at common law that approach could only be applied if the literal approach resulted in ambiguity, inconsistency, uncertainty or absurdity, need not be further considered. This is because the Interpretation of Legislation Act 1984 in this State has laid down in s.35 that in interpreting a provision of an Act, a construction that would promote the purpose or object underlying the Act “shall be preferred to a construction that would not promote that purpose or object.”[34]
[34]See s.35(a).
In determining the purpose of an Act, s.35(b) authorises the Court to give consideration to any matter or document that is relevant to determine the purpose of the provision.
In Mills v Meeking,[35] Dawson J considered s.35. [36] His Honour observed:
“The requirement that a court should have regard to the purpose or object of an Act is hardly novel. It has always been the cardinal rule of statutory interpretation that a court should strive to give effect to the intention of Parliament. In doing so the purpose of the legislation may be all-important.”
[35](1990) 169 CLR 214.
[36]At pp.233 et seq.
His Honour said:[37]
“However, the literal rule of construction, whatever the qualifications with which it is expressed, must give way to a statutory injunction to prefer a construction which would promote the purpose of an Act to one which would not, especially where that purpose is set out in the Act. … The requirement that a court look to the purpose or object of the Act is thus more than an instruction to adopt the traditional mischief or purpose rule in preference to the literal rule of construction. … The approach required by s.35 needs no ambiguity or inconsistency; it allows a court to consider the purposes of an Act in determining whether there is more than one possible construction. Reference to the purposes may reveal that the draftsman has inadvertently overlooked something which he would have dealt with had his attention been drawn to it and if it is possible as a matter of construction to repair the defect, then this must be done. However, if the literal meaning of a provision is to be modified by reference to the purposes of the Act, the modification must be precisely identifiable as that which is necessary to effectuate those purposes and it must be consistent with the wording otherwise adopted by the draftsman. Section 35 requires a court to construe an Act, not to re-write it, in the light of its purposes.”
(Emphasis added).
[37]At p.235.
In my opinion, the wording of s.71A creates uncertainty, and especially sub‑s.(2). The wording of that sub‑section is internally inconsistent. Its literal application could lead to a result which is contrary to the law of contract. These considerations require the Court to consider the purposive rule. The liability of the insurer arises out of the contract of insurance. It is appropriate to consider the history of its enactment and why it was passed. The first source of the history and purpose of the section is to be found in the Second Reading Speech delivered to the Parliament by Mr Jolly, the then Treasurer, on 2 December 1983.
He informed Parliament[38]:
“Finally, the Bill will rectify a difficulty which has arisen for some employers in receiving indemnity from their insurers. A number of instances have arisen where the insurer at the time of a worker’s injury is denying liability in respect of a worker’s subsequent death if the employer concerned has changed insurance companies between the time of the injury and the death. Liability is also denied by the new insurer on the ground that the death was caused by an injury which occurred before the issue of their indemnity policy. This Bill provides for employers to be indemnified by the insurer at the time when the work related injury or disease occurred. Again any disputes arising will be determined by the Workers’ Compensation Board.”[39]
(Emphasis added).
[38](1584) 3 Co Rep 8; 76 ER 637 at 638.
[39](1982-4) Vol 373 Victorian Parliamentary Debates at p.2655.
It is noted that the mischief to be remedied was to resolve disputes between insurers so that an employer was indemnified by the insurer at the time when the work related injury or disease occurred. The problem concerned successive insurers. The remedy was to identify the insurer. That is not the situation here. Vero Insurance is identified. It was the insurer at the relevant time. However, the obligations under the policy did not include a liability to pay damages arising under an Act not then in force. The Treasurer was not referring to a situation where an insurer was identified at the time when the work related injury occurred and was not liable to indemnify the employer pursuant to the policy.
The other source of the background to the section is to be found in the Full Court decision in Davis & Young Pty Ltd (in Liquidation) v Assurance Compagniet Baltica Skandinavia Aktieshelskab.[40] The Full Court considered s.71A in that case.[41]
[40][1986] VR 203 at pp.213 et seq.
[41]At pp.213 et seq.
In that proceeding, the statutory policy of insurance prescribed by the regulations of 1975 required the employer to comply with a number of conditions. The policy further provided that the due observance and fulfilment of the policy conditions should be a condition precedent to any liability of the insurer under the policy. The insured employer had breached a number of conditions of the policy. By reason of the breaches, the insurer denied liability. The judge at first instance held that the insurer was entitled to refuse liability. The employer appealed, relying on s.71A. The Full Court held that the conditions which had been breached were conditions precedent to liability and, accordingly, the insurer was entitled to deny liability. It was then argued that despite that conclusion, s.71A made the insurer liable.
The Full Court noted that there was a live issue prior to the new legislation as to when “the insured became so liable”. Their Honours said:[42]
“Was it during the period of cover to which the policy related that liability arose? In cases where an employer changed its insurer it was often of the utmost importance to determine where the liability arose during the period of cover granted by insurer A or whether it arose during the period of cover granted by insurer B. Disease conditions such as hypertension and renal failure, allegedly caused or aggravated by a particular employment – as well as diseases due to the nature of the employment, but contracted by a gradual process – created difficulties. Claims by dependents following the death of a worker – some time after the happening of an injury but resulting from it – raised the same issue as was seen in the Ogden Industries case. (Privy Council decision (1968) 118 CLR 32.)
In 1983-84 writs were issued out of this Court, as well as summonses issued out of the County Court and in each case the several insurers, as defendants, denied liability to indemnify the employer on this ground. … In each case the issues raised were, when did liability arise, and whether an insurer, which no longer insured, should remain liable to indemnify the insured after the period of cover ceased?
It was submitted that the Legislature when passing s.71A intended to cure this apprehended ‘lacuna’ in the cover afforded to employers.”
[42]At p.215.
It is noted from both what the Full Court said and what was stated by Mr Jolly, that the legislation was passed to settle disputes as to when an insured became liable and which insurer was liable in the circumstances. It was that mischief which the legislation sought to remedy. That was the purpose of s.71A. In my opinion, the section must be construed to give effect to the purpose. This approach is supported by what their Honours said at p.215, where they observed:
"It seems that if once it is proven that the employer's liability arises from the employment of the worker during the currency of the particular policy, or policies, than that policy issued by the insurer to cover the employer during that period shall be deemed to extend to indemnify the employer – notwithstanding that the employer's liability to pay compensation to the worker or his dependents arose in terms outside the period of currency of the policy or after the worker in question left that particular employment.
The section, we find, intended to avoid disputes of the type which we have mentioned, disputes based upon the temporal limits of the cover and based upon the insurer's agreement, as assumedly expressed in the policy, to indemnify the employer against all sums for which the employer may become liable during the period of the cover."
(Emphases added)
Their Honours at p.216 summarised the effect of the sub-section as follows:
"After the section came into operation, if it could be proven that a particular liability of an employer arose from the employment of a worker during a period when a particular worker's compensation policy was current, the insurer in question could not avoid liability to indemnify the employer by relying upon the terms of the policy restricting the indemnity to liabilities which arose during the period of the cover. The ambit of the cover was deemed to be extended to cover such liabilities, whenever they arose."
[Emphasis added]
That is not the position in each of the proceedings before this Court. There is but one insurer. There is no question of a dispute involving another insurer. Vero Insurance accepts that it is liable under the policy during the currency of the policy. It accepts there was a liability to pay damages arising out of the employment during the currency of the policy. But, on the present argument, it was not a liability under the policy to pay general damages, as that liability only arose as a result of the 2000 amendment. The insurer is not seeking to avoid its obligations under the policy. It does not have a liability to pay the general damages under the policy. The assumptions made in this present submission are that the policy did not make the employer liable because at the time when the liability arose, there was no obligation on the employer to compensate the worker for general damages. This liability arose after the cessation of the policy period and was not caught by the policy. Section 71A does not cover that situation. This conclusion is reinforced by what the Full Court said in relation to liability under the terms of the policy. Their Honours said:[43]
"It is only the ambit of a policy which is deemed to be extended by s.71A, not the liability of the insurer in any particular case."
[43]At p.216.
After noting the particular operative words in the policy, their Honours went on to state:
"Section 71A will not avail the employer – nor make the insurer liable – if, for example, the premium as provided in the schedule is not, or has not been paid. In the present case, the liability of the employer to the worker clearly arose during the currency of the policy, and there is no question but that the employer is entitled to an indemnity, if the terms of the policy have not been breached. There is neither right not reason for the employer to invoke s.71A. The ambit of the policy is not in question."
(Emphasis added)
Paraphrasing what the Full Court said, in relation to each of the present proceedings before this Court, the liability of the employer to each of the workers did not arise during the currency of the policy because the liability to pay damages under an Act arose after the policy had ceased to operate, and according to its terms, the insurer was not liable under the policy. Given that, s.71A does not apply. The ambit of the policy is not in question in these proceedings. Further, the mischief that the legislation was aimed to rectify does not arise in each of the present proceedings. Section 71A operates to identify an insurer. It deals with the temporal limits of the cover. But it does not operate to change the terms of the policy. The section was not passed to fix in the insurer a liability which is imposed on an employer after the cessation of the policy and is not covered by the wording. The fact is that there was no liability under the policy because of its wording.
The argument put by counsel for Salmon Street was also raised in the Full Court proceeding and the Court dealt with it at p.217. The Full Court said:
“Mr Uren submitted that section 71A had the effect of making every insurer liable (even if the premium has not been paid), if once it can be proven that a work related liability arose during a period when it could be said that a policy is current. According to his submissions all the conditions are swept aside, so that it is so longer possible to rely upon any of them.
In our opinion, this is not the effect of the section. We think it is clear that this was not the intention of the legislature. In our view the section was designed only to extend the temporal ambit of the liabilities covered and put an end to those insoluble problems as to liability otherwise arising between insurers and between employers and insurers.
…
If this entails reading down the words of the section, then we should be prepared to do so, for we believe it was the legislative intent, but, in our opinion, a provision deeming to extend the temporal ambit of the indemnity does not expressly or impliedly require that conditions precedent not related to temporal ambit and formerly attaching to the original agreement to indemnify are no longer to apply to the deemed-to-be-extended statutory indemnity.”
Their Honours went on to observe that if that was the intention of Parliament, then sub-section 1 of s.71A would have been unnecessary and more direct language could have been used.
The Full Court concluded:
“The deeming provision is only to operate ‘for the purposes of the determination’ referred to in subsection 1, that is to say for the purposes of determining ‘whether any insurer or which of two or more insurers is liable under a policy of insurance to indemnify an employer’. This clearly contemplates a dispute as to the ambit of the cover, and it is, we believe, apparent from the references in subsection 2 to the words: ‘whether or not that liability arises during the currency of the policy and whether or not that liability arises during the employment of the work by the employer’ that the section is designed to cure the problem of determining the question of entitlement to indemnity when liability arises outside a period during which an insurer has had granted cover in the form of a policy required by the Regulations: S.R. No. 367 of 1975.”
I respectfully adopt that construction of s.71A. The policy in the present proceedings did not impose a liability on the insurer to indemnify Salmon Street in respect of a liability which arose under an Act not in operation at the relevant time, and which was not covered by the policy. There is no dispute as to the ambit of the cover. There is no dispute as to the identity of the insurer. In my opinion, s.71A does not apply.
Section 71A would not have assisted the employer in these proceedings if I had come to the conclusion that the policy did not cover the payment by the employer Salmon Street of general damages pursuant to s.29(2A) of the Act.
Conclusion
On a proper analysis of the amendment to the Administration and Probate Act passed in 1942, the enactment did not change the cause of action, but gave a right to the estate to continue with the cause of action after death. The plaintiff before death was entitled to recover general damages, but the right that was given by the amending Act limited the heads of damage that his estate could recover after his death. The damages that were payable, were payable at common law. The deceased's cause of action was at common law. The amendment to the Act effected in the year 2000 merely removed the bar to recover general damages which was imposed in 1942. It did not alter the cause of action, which was a common law cause of action. Accordingly, in my opinion, the employer is entitled to an indemnity under the employer’s indemnity policy relevant at the particular time. If I am wrong in that conclusion, in my opinion s.71A of the Workers’ Compensation Act would not make the insurer liable. Salmon Street is entitled to recover judgment in the Lotter proceeding in the sum of $161,000, and in the Ferguson proceeding its proportion of the sum of $160,000. I will hear the parties on the questions of interest and costs.
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