Multiplex Constructions Pty Ltd v Royal & Sun Alliance Insurance Australia Ltd & Ors

[2006] HCATrans 19

[2006] HCATrans 019

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S141 of 2005

B e t w e e n -

MULTIPLEX CONSTRUCTIONS PTY LIMITED

Applicant

and

ROYAL & SUN ALLIANCE INSURANCE AUSTRALIA LIMITED

First Respondent

FUGEN HOLDINGS PTY LIMITED

Second Respondent

STUART IRVING

Third Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 FEBRUARY 2006, AT 11.40 AM

Copyright in the High Court of Australia

__________________

MR P.J. DEAKIN, QC:   If the Court pleases, I appear for the applicant with MR T.T. TO.  (instructed by Moray & Agnew)

MR I.G. HARRISON, SC:   If the Court pleases, I appear with my learned friend, MR E.C. MUSTON, for the first respondent.  (instructed by Abbott Tout)

GUMMOW J:   There is a submitting appearance from the third respondent and I think the second respondent has indicated there will be no oral submissions.  Yes, Mr Deakin.

MR DEAKIN:   There are, regrettably, two procedural matters that we need to address at the outset, your Honour.  The application was filed a few days out of time as a result of the intervention of Easter.  The circumstances in which that occurred are dealt with in an affidavit of Mr Taylor‑Jones of 6 April and ‑ ‑ ‑

GUMMOW J:   Is that application opposed? Yes, you have that leave.

MR DEAKIN:   Thank you, your Honour.  The second procedural matter – perhaps not strictly procedural but the second matter we need to address at the outset is that there has been raised against us a submission that we have insufficient standing to bring the application.

GUMMOW J:   Yes.

MR DEAKIN:   We have sought to address that issue in a third affidavit of Mr Taylor‑Jones that we understand has been placed with the papers and we seek leave to file and read that affidavit.  It is an affidavit of Stephen Taylor‑Jones of 31 January 2006.  Do your Honours have copies of that?  We have spare copies if your Honours do not but we thought it had been placed with the papers.

GUMMOW J:   Yes, you had better hand it up.  I have seen it but I cannot lay my hand on it at this minute.

MR DEAKIN:   Your Honour Justice Hayne has one?

HAYNE J:   Yes, I do.

MR DEAKIN:   Thank you.  We seek to read that affidavit on this application, if it please your Honours.

GUMMOW J:   What does all this show?

MR DEAKIN:   What it shows, your Honour - could I bring it to the nub of it?  The last document in the bundle is a letter from the solicitors for the employer, Fugen, the second respondent, indicating that they were not in a position to satisfy the amount payable to us pursuant to our indemnity and that in fact the company will shortly be wound up.

HAYNE J:   What follows from that?

MR DEAKIN:   All that follows from it, your Honour, is that we have an indemnity which we will never, in all likelihood, recover under unless Royal does indemnify its insured.

HAYNE J:   Is it captious simply to say “Business is business”?

MR DEAKIN:   It is captious but, your Honour, it does not preclude us from coming to this Court, with respect, because ‑ ‑ ‑

HAYNE J:   To complain of what in the hands of Multiplex?  What is Multiplex’s ‑ ‑ ‑

MR DEAKIN:   Multiplex has an undoubted entitlement to be fully indemnified by the party with whom it contracted and that party, on our case, has an entitlement to be fully indemnified for the full extent of its liability by the insurer and this is an appropriate vehicle to determine whether or not that insurance policy is applicable and without it we will not get our money back.  We have standing and ‑ ‑ ‑

HAYNE J:   A party, not the insured, complains that the insurer is not meeting an obligation it owes not to your party but to the insured.

MR DEAKIN:   Yes.  But, your Honour, it is no different, with respect, to a situation that frequently arises with defendants and third parties.  Often a third party will come to this Court without the defendant there to say, “Look, we want to argue something that the defendant has not bothered to argue before you”.  The defendant is this case has actually come to the court and said, “We agree with the submissions of the ‑ ‑ ‑

GUMMOW J:   What do you say often happens here?

MR DEAKIN:   That a defendant, your Honour, will not seek to be heard on an issue but the third party that has been held liable under a third party notice comes here to say, “We want to be heard on that judgment”.  Helicopter Sales is an example of it, your Honour, but there are other examples in which this Court has heard those sorts of applications.  Your Honours, we submit that we have standing and we are sufficiently interested in the outcome and we have an argument that we seek to raise.

Otherwise, your Honours, could we put it this way.  Every insolvent insured will result in a substantial saving to the insurer if he chooses, in some situations, to wrongly refuse to indemnify because the insolvent insured may well not be in a position to come to Court and argue the point and the insurer will get away with it, whereas, other parties, such as in this case, another tortfeasor, are legitimately entitled to say, “We should get our money back because the party with whom we had contracted had the benefit of the insurance contract”.

Could we draw two other matters to your Honours’ attention on this issue?  The first is that in addition to the contractual indemnity that we had under our contract, we also had an agreement with our contracting party that they would take out an insurance policy.  Now, they breached that agreement and – that is referred to in the judgment at first instance – and in the policy which they did have the insurer has said, “We are not liable.”

The second matter we wanted to draw to your Honours’ attention were the provisions of section 5 and section 6 of the workers compensation policy in this case because they make it plain that perhaps unlike many other insurance policies a workers compensation insurer is directly liable to a worker for the damages that are awarded against the employer and, equally, under section 6, the insurer is bound by and subject to any judgment, order, decision or award given or made against the employer.

GUMMOW J:   There was another point in this too, Mr Deakin.  You may have a good point on section 151E.  You appear for a company that can look after itself in ligation.  We do not have the advantage, given the course of the conduct of the litigation, of the views of the Court of Appeal on this question.

MR DEAKIN:   That is true.

GUMMOW J:   Why should we take this on?

MR DEAKIN:   The reason is twofold, your Honours.

GUMMOW J:   Why should we take it on?  Prima facie, the Court of Appeal sorts out these questions of the New South Wales accident structure.

MR DEAKIN:   We do not dispute what your Honour puts to us.  It is extraordinary but ‑ ‑ ‑

GUMMOW J:   …..

MR DEAKIN:   It is extraordinary that an important provision of the Act introduced in 1991 was not addressed in any case in which these issues are raised in the Court of Appeal.  It is extraordinary.  We accept that.  Your Honours know from the chronology that has been filed in this case ‑ ‑ ‑

GUMMOW J:   I cannot see why we should share the wonderment and grant special leave.

MR DEAKIN:   Because, your Honour, it is such a critical provision to a determination of this issue ‑ ‑ ‑

GUMMOW J:   Well, there can be another case.

MR DEAKIN:   And we would like to turn it around, in fact, to say one of the reasons why special leave should be granted in this case is because the law as determined by the New South Wales Court of Appeal has been determined without reference to a key provision of the Act which clearly governs the critical question, namely, whether liability under contract does fall within the policy.

HAYNE J:   It also seems to have been determined with a lack of attention to the distinction that may perhaps need to be drawn between liability and questions of contribution.

MR DEAKIN:   Indeed.

HAYNE J:   This all seems to have passed below – not much attention in argument, at least argument that is reflected in the judgments of the Court.  Now, with a party of your client’s standing, why should we get in at this stage in this vehicle to sort out that sort of thing?

MR DEAKIN:   Your Honour, we respectfully adopt what your Honour says.  The Court of Appeal has become embroiled in contribution arguments and ignored the fundamental submission put to it which…..accords with what your Honour has put to us.  We said to the Court of Appeal liability is determined at the date of injury and what happens later with contribution arguments and arguments about to what extent each tortfeasor is ‑ ‑ ‑

HAYNE J:   The liability of the tortfeasor is liability as to the whole, I would have thought, but in a vehicle like this where 151E is not adverted to, where there is this – you, apparently, looking to step into the shoes of the employer who is the insured.  Really, it is hard to see a less satisfactory vehicle.

MR DEAKIN:   Your Honour, with respect, it is an eminently suitable vehicle for these reasons.  Firstly, it is a very simple case and there are no other complications or issues that are going to trouble the Court at all.  The sole issue in this case is, does the workers compensation policy respond to a liability in contract or not?  The second point that your Honour has made in relation to section 151E ‑ ‑ ‑

HAYNE J:   Why?  That reveals exactly why the Court of Appeal has gone off the rails, if it has, because the liability that is in issue is the liability in tort and ‑ ‑ ‑

MR DEAKIN:   Indeed.  But, your Honour, that reinforces why this Court despite the irritation that it is undoubtedly causing your Honours ‑ ‑ ‑

HAYNE J:   No, it is not a question of irritation.

GUMMOW J:   We are constantly irritated but we are boundlessly patient.

MR DEAKIN:   But, your Honour, it is sufficiently important.  Every employer in New South Wales has a policy in this form.  The Court of Appeal, on what your Honour Justice Hayne has been correctly putting to us, has fundamentally got it wrong.  That is sufficiently important for this Court to correct it.  The fact that in addition to getting it wrong they have also ignored a key provision of the Act only reinforces why, with respect, special leave should be granted.

Your Honours, it is not as if it is going to unduly burden this Court by looking at that section.  Your Honour Justice Gummow has put it to us that your Honours do not have the benefit of the Court of Appeal’s reasons on section 151E, particularly subsection (3).  They have touched it but they declined to deal with it, as your Honours know from the second judgment.

GUMMOW J:   In the next case, if you people, to put it bluntly, get your act together, they will deal with it and it may never come here.

MR DEAKIN:   It may not but, your Honour, there may not be another case.  Your Honours simply do not know one way or another.  This is a simple case in which the point can be dealt with.  This Court can read the section and understand its plain relevance to the issues that are sought to be raised and we submit that from what your Honours have said to us the point is clearly important enough.  An error on the part of the Court of Appeal is sufficiently demonstrated for us to get special leave in this point, for us to be entitled to special leave in this case.

Your Honours, it is not a complicated provision and it is not a complicated question on our assessment of the matter and we respectfully adopt exactly what Justice Hayne has put as to what the law and the wording of this policy clearly calls for.

Your Honours, the other point we wanted to make is Brisbane Stevedoring has been distinguished on a basis that is manifestly wrong.  So it is not just a question of the Court of Appeal getting it wrong, which your Honours might have remarked on in other cases seems to occur with some frequency.  It is also a question of the Court of Appeal ignoring what this Court said in Brisbane Stevedoring. 

We do want to take your Honours briefly to the submissions that we make about what the Court of Appeal said as to why it was not bound by Brisbane Stevedoring.  Justice Ipp at 54 of the book said that it was materially different from the New South Wales legislation, the Queensland legislation, and therefore a different conclusion was still available to them in the light of the earlier decision of Nigel Watts.  His Honour fails to identify in any respect in what way the material difference arises and why a different conclusion should flow.

In Justice Santow’s decision at 44 of the book and going through to 45, Justice Santow does identify the relevant difference that he relies upon.  He draws the distinction between the Queensland words saying “in respect of injury” and the New South Wales words saying “for injury” and he says “for” is narrower than “in respect of” and therefore the Queensland wording is not of relevance to the construction of the New South Wales wording.

But can we draw your Honours’ attention to the fact that at least since 1972 the law in New South Wales clearly laid down and applied is to the effect that “for” is indistinguishable from and in fact means “in respect of”.  The sole case we need to take your Honours to in support of that proposition is Rheem Australia Ltd v Manufacturers’ Mutual Insurance Ltd [1984] 2 NSWLR 370 and the judgment of Justice Glass which is at 375 of the judgment. In the bundle that has been provided to your Honours it is page 36. Justice Glass says after referring to Cuckson’s Case on 375C:

Since 1972 when Findlay was decided by this Court the Cuckson construction of the indemnity has been authoritatively discarded.  From that time forward the phrase in the statutory indemnity “liability . . . for any injury to” a worker means on its proper construction “liability to any person consequent upon or in respect of injury to” a worker.  Applying that construction to the liability here proved leads to the conclusion that it falls within that indemnity and the employer is entitled to succeed against the insurer.

In the subsequent decision of Hooper, Justice McHugh, then a member of the Court of Appeal - Manufacturers Mutual v Hooper 1988 5 ANZ Ins Cas 60-849, Justice McHugh describes that passage as the ratio of the case. So we have a situation where in one of the judgments that your Honours have the judge says it is different but does not identify in what material respect or in what respect of any relevance and in the other judgment, Justice Santow, the respect which he identifies as being critical for why this Court’s decision should not be applied to reach a similar conclusion to the one that this Court has adopted flies in the face of the meaning that the Act has had, at least since 1972.

Your Honours, it is not just a question, with respect, of the Court of Appeal getting it wrong, it is the question of the Court of Appeal wrongly ignoring what this Court has decided with the Brisbane Stevedoring Case.  We submit it is further reason why special leave is granted in this case.

Your Honours, there are other matters that we wish to address.  I appreciate not all of them address your Honours’ concerns but it is not disputed in this case – as your Honour Justice Hayne was putting to us - that the tortfeasor/employer is liable for the full amount of damages.  It is not disputed that we have an entitlement to be indemnified for the full extent of our liability as a joint tortfeasor and yet the Court of Appeal has concluded that the limit of the insurer’s liability should be arbitrarily fixed at 50 per cent because of the application of the contribution legislation.

In the later case of Gordian Runoff which has been handed down subsequent to this decision, the Court of Appeal has said as much that mandated by the decision in this case the insurer’s liability is limited to that which is arrived at after the apportionment legislation is applied.  That has the inevitable consequence, far from there being a fund guaranteed to be available for a worker when he sues his employer and an employer is compulsorily insured under the statutory policy, in every single case now, on the Court of Appeal’s approach to the matter there will be a situation where, if the employer does not have the money then the worker is going to get no more than what the apportionment legislation leads to.

That, your Honours, is a major reason why the Court of Appeal is wrong and it is a major reason why in our submission the Court of Appeal’s decision should be overturned in this Court and special leave should be

granted leading to the decision being overturned in this Court.  Your Honour Justice Gummow says to us, well, we can look at it in another case but in every case your Honour this will be happening.  In every case in which the tortfeasor/employer is held only liable to a limited extent then the worker is only guaranteed that amount which the employer is held liable after the contribution legislation has been applied.  If the other tortfeasor is impecunious he is going to be left without any remedy at all for the balance of his verdict.

So, far from complying with what the statute was intended to achieve, which was a fund guaranteed to the worker for his money to be paid to him he will depend completely on the moneys available to the other tortfeasor as to whether he gets his money or not because all the workers compensation insurer will have to pay from now on under the law laid down by the New South Wales Court of Appeal is only that amount which he has been held liable to pay after the apportionment legislation has been applied.  It is so fundamentally contrary to what your Honour Justice Hayne has put to us at the outset of our submissions.  We submit that added to the 151E factor that those are compelling reasons why in our submission special leave should be granted in this case.

GUMMOW J:   Thank you.  We do not need to call on you, Mr Harrison.

Having regard to the conduct of this litigation in the New South Wales courts and to the position of the applicant in relation to the other parties to this litigation, this is not an appropriate occasion to consider the issues of principle which may arise.  In concluding that special leave should be refused, we do not thereby express any view on those issues of principle which were considered by the New South Wales Court of Appeal.  Special leave is refused with costs.

We will adjourn to reconstitute.

AT 12.04 PM THE MATTER WAS CONCLUDED