N.S. Donnelley P/L v CGU Workers Comp NSW Ltd

[2006] NSWDDT 26

Dust Diseases Tribunal

of New South Wales

CITATION:	(re Aitken) N.S. DONNELLEY PTY LTD v CGU WORKERS COMP NSW LTD AND ORS [2006] NSWDDT 26
PARTIES:	N.S. Donnelley Pty Limited (cross claimant) CGU Workers Compensation (NSW) Limited (first cross defendant) Allianz Australia Workers Compensation (NSW) Limited (second cross defendant) Bluescope Steel Limited (third cross defendant) Amaca Pty Limited (fourth cross defendant)
MATTER NUMBER(S):	373/03/3
JUDGMENT OF:	Kearns J
CATCHWORDS:	Dust Diseases Tribunal :- Cross-claim - against insurer - Baker's case - importance of analysing plaintiff's claim and/or findings of fact by trial judge
LEGISLATION CITED:	Workers' Compensation Act 1987 Uniform Civil Procedure Rules
CASES CITED:	Orica Limited v CGU Insurance Limited [2003] NSWCA 331; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Chubb Australia Ltd v MMI (Workers' Compensation) Ltd [1999] NSWDDT 7; MMI Insurance Compensation (NSW) Limited v Baker (1997); FAI Traders Insurance Co Limited v HIH Winterthur Workers' Compensation (NSW) Pty Ltd (1998) 45NSWLR 257
DATES OF HEARING:	17/07/06, 14/08/06
DATE OF JUDGMENT:	08/14/2006
EX TEMPORE JUDGMENT DATE:	08/14/2006
LEGAL REPRESENTATIVES:	Mr D J Russell SC instructed by David Begg & Associates appeared for the cross claimant. Mr D S Weinberger instructed by Moray & Agnew appeared for the first cross defendant. Mr G J Parker instructed by Ellison Tillyard Callanan appeared for the second cross defendant.

JUDGMENT:

KEARNS J

1. There are two Applications before me. One is brought by CGU Workers’ Compensation (NSW) Limited (CGU). It seeks to have dismissed a cross-claim brought against it by its insured, N S Donnelley Pty Limited (Donnelley). The basis of the application is, essentially, that CGU is not liable to indemnify Donnelley in respect of a judgment sum it was required to pay to James Aitken (the plaintiff). The other application is brought by Allianz Australia Limited (Allianz). It also seeks to have dismissed a cross-claim brought against it by Donnelley. Both raise the same point. It is convenient, therefore, to deal with one only and I shall deal with the one brought by CGU. The result in that one will determine the outcome of the other.

2. The plaintiff brought proceedings originally against Donnelley and, by amended statement of claim, against Donnelley and N S Donnelley Drillings Pty Limited (Drillings).

3. The amended statement of claim filed on 23 October 2003 alleged that the plaintiff was employed by Donnelley from about 1966 until about 1973 and during that time was exposed to and inhaled asbestos dust and fibre. It also alleged that from about 1973 to about 1991, he was employed by Drillings and was exposed to and inhaled asbestos dust and fibre.

4. Donnelley’s defence, filed on 3 December 2003, admitted employment alleged by the plaintiff. The form of admission was as follows:

Other than admitting employment between 1966, until about 1973, the first defendant does not admit the allegations contained in paragraph 2 of the Amended Statement of Claim.

5. On 23 December 2003, the plaintiff’s claim against Donnelley and Drillings was settled. The only term of settlement relevant for present purposes was the first and was as follows:

Verdict and judgment for the plaintiff as against the defendants in the sum of $222,500.00 for damages and $40,000.00 for party/party costs.

6. Donnelley issued a cross-claim against several cross-defendants. For present purposes, only the claims against CGU and Allianz are relevant. Its most recent form is contained in a document entitled “Amended Third Cross-Claim” and was filed on 1 May 2006. In the cross-claim, Donnelley alleged that it employed the plaintiff between 1 July 1986 and 8 November 1991. Donnelley alleged that the plaintiff was last employed by it in employment to the nature of which his disease of mesothelioma was due in the period between 1 July 1986 and 30 June 1990 when CGU was at risk or, alternatively, in the period between 30 June 1990 and 8 November 1991 when Allianz was at risk. In fact, in the former period, FAI Workers’ Compensation (NSW) Limited (FAI) was at risk, but nothing turns on that as CGU took over the liabilities of FAI. The claim was brought against CGU and Allianz in the alternative as Donnelley was not sure of the date of last exposure relevant for the purpose of section 151AB of the Workers’ Compensation Act 1987. From this point, I need not concern myself with the cross-claim against Allianz or its application to have that cross-claim dismissed.

7. In the cross-claim, the relief sought by Donnelley was:

a. Indemnity for the Judgment of $262,500 inclusive of costs;

b. Indemnity for the costs of NSD (ie. Donnelley) in defending the claim brought by the Plaintiff;

c. Interest;

d. Costs of this Cross Claim.

8. In support of the application to have the cross-claim dismissed, Mr Weinberger, counsel for CGU, read the affidavit of Stephen David Taylor-Jones of 16 June 2006. That affidavit covers material already set out in this Judgment.

9. In defence of Donnelley’s position, Mr Russell, senior counsel for Donnelley, read the affidavit of David John Allan Begg of 14 July 2006. That affidavit discloses the following:

(a) On 8 October 2003, Donnelley’s then solicitors (acting on instructions from Donnelley’s workers’ compensation insurer) requested further and better particulars of the plaintiff’s claim. That request included the following:

6. In relation to each separate period of employment after the Plaintiff commenced work on leaving school and whether or not the Plaintiff alleges he was exposed to asbestos whilst in that employment, please supply us with the following information:-

(a) The name of each employer

(b) The address of each employer last known to your client.

(c) A description of the classification or position in which your client was employed.

(d) A description of the nature of the work which your client was required to carry out.

(e) The places at which your client carried out work.

(f) The date on which the Plaintiff commenced work and the date on which he ceased work;

and

12. In relation to the Plaintiff’s alleged employment by the Defendant, please identify:

(a) The precise starting and finishing dates of such employment.

(b) The position(s) held by him during such employment.

(c) The precise duties carried out by him in each position.

(d) The precise location of the work carried out while employed in each position held.

(e) The duration of such duties in respect of each position held.

(f) The names of each machine worked on the by the Plaintiff during each period of employment in each position held.

(b) The responses to those requests referred Donnelley’s solicitors to the affidavit of the plaintiff of 8 October 2003.

(c) The affidavit of the plaintiff disclosed that he commenced work with Donnelley in 1966 (para 10), when employed by Donnelley he was exposed to and inhaled asbestos dust and fibre from 1966 until the early 1980s (paras 13, 14, 15 and 18) and that he worked for Donnelley until about 1991 when he retired (para 21).

(d) Group certificates were sent by the plaintiff’s solicitors to Donnelley’s then solicitors on 20 October 2003 and disclosed that the plaintiff was employed by Donnelley for the financial year ended 30 June 1972 and by Drillings for the financial years ended 30 June 1976, 1977, 1978, 1979, 1981 and 1982.

(e) On 17 November 2003, Donnelley’s present solicitors wrote to the plaintiff’s solicitors requesting further and better particulars of the plaintiff’s claim. On 21 November 2003, the plaintiff’s solicitors replied. This material was to the same effect as that set out in paragraphs numbered 1 and 2 above. Again, a further request for particulars was made on 26 November 2003 and a reply to the same effect received.

10. The purpose of this evidence, as I understood the argument of Mr Russell SC, was to demonstrate it was an open matter, and it was known to Donnelley’s relevant insurers well before the plaintiff’s claim was settled, that he was employed by Donnelley up until 1991, and not simply for the limited time alleged in the amended statement of claim.

11. The affidavit of Mr Begg also discloses that the plaintiff’s claim was brought on with urgency. The plaintiff was suffering from mesothelioma. When the matter was listed for directions on 19 December 2003, it was given a hearing date of 23 December 2003, the date it was settled. Because of the short time between service of the amended statement of claim and the hearing, Donnelley says it was unable to undertake a detailed, factual investigation as to the precise dates of employment of the plaintiff and his periods of exposure to asbestos. It is to be noted, however, that the allegations of employment made by the plaintiff in the amended statement of claim and in his affidavit are not consistent as to the identity of the employer at given periods, for example, the amended statement of claim alleges employment by Donnelley from 1966 until about 1973 and by Drillings thereafter, whereas his affidavit alleges employment by Donnelley until 1991. Right up until the plaintiff’s claim was settled, CGU had declined indemnity to Donnelley on the basis of the Court of Appeal decision in Orica Limited v CGU Insurance Limited [2003] NSWCA331. In that position, Donnelley and Drillings made a commercial decision based upon achieving the best financial outcome to settle the plaintiff’s claim and no criticism is levelled against them in respect of the figure agreed with the plaintiff.

12. Before the settlement of the plaintiff’s claim, Drillings issued a cross-claim against The WorkCover Authority. That has no bearing on the issue to be determined here. Then following the settlement of the plaintiff’s claim, Donnelley, on 28 April 2004 issued a cross-claim against CGU Insurance Limited. That cross-claim alleged, inter alia,

3. By policies of insurance no WC 10133933 and 10122941, and issued by the cross defendant’s predecessor in title, South British Insurance Company Limited, and in consideration of premiums paid by NSD (that is Donnelley) to the cross defendant, the cross defendant agreed to indemnify the cross claimant against all claims brought by ex-employees of the cross claimant.

13. The cross-claim went on to allege that the plaintiff had commenced proceedings in the Tribunal against Donnelley alleging negligence during his employment by Donnelley. The cross-claim claimed:

(a) Indemnity in respect of any liability owed to the plaintiff by the cross claimant.

(b) Interest.

(c) Costs.

14. That cross-claim was settled on 10 September 2004 for seventy-seven thousand five hundred dollars ($77,500) inclusive of costs. This again was a commercial decision based on an assertion by the insurer that its limit of indemnity was fifty thousand dollars ($50,000).

15. On or about 3 November 2004, Mr McIntyre, senior counsel for The WorkCover Authority, contacted Mr Russell SC and informed him that information available to his client suggested that the plaintiff may have been exposed to asbestos after 1985. Prior to this, Donnelley’s solicitor had not undertaken detailed investigations as to the last relevant date of exposure as his understanding was that it was 30 June 1985 as outlined in the plaintiff’s affidavit. I note that this is not quite what is asserted in the plaintiff’s affidavit, but it seems to me nothing turns on that.

16. The argument to dismiss the cross-claims, which I consider to be correct, is to the effect that the plaintiff’s employment by Donnelley as alleged in the Statement of Claim was limited to a period expiring in 1973. Donnelley admitted this in its defence. No allegation is made in the cross-claim that CGU was at risk in that period of employment. The allegation is that it was at risk from October 1985 to June 1990. What the cross-claim seeks is indemnity in respect of the judgment of two hundred and sixty-two thousand five hundred dollars ($262,500) obtained by the plaintiff. That judgment was in respect of the plaintiff’s employment by Donnelley up to 1973. There is, therefore, nothing in respect of which CGU is required to provide indemnity.

17. Before turning to the authorities, I note the argument of Mr Russell SC to the effect that they are distinguishable. The point of distinction is that they determined factual matters including the last relevant date of exposure whereas this case simply involved agreed terms of settlement. That is a point of distinction, but I do not think it withstands a proper analysis of the authorities.

18. Again, before turning to the authorities, I note that the test to be satisfied by the applicant is a stringent one as set out in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. The test is expressed in various ways by Barwick CJ at 129. As the Chief Justice pointed out, however, at 130, argument may be necessary to demonstrate that the case is so clearly untenable that it cannot succeed.

19. Mr Weinberger took me through Chubb Australia Ltd v MMI (Workers Compensation) Ltd [1999] NSWDDT 7 in some detail. I shall, however, start with MMI Insurance Compensation (NSW) Ltd v Baker 41 NSW LR 289 as it was a decision of the Court of Appeal. Mr Baker suffered hearing loss as a result of exposure to a noisy work environment caused by the negligence of his employer. He was found by the trial judge to have been exposed negligently to a noisy work environment beyond 30 June 1987. However, by his amended statement of claim he had limited his claim for damages to exposure up to 30 June 1987. The significance of the difference is that if his last relevant exposure was before 30 June 1987, it was one particular insurer that was required to indemnify his employer, but if it was after 30 June 1987, it was a different insurer. The reasoning of Gleeson CJ at 293E-G, I believe, exposes the problem faced by Donnelley in this case. His Honour there said,

The appellant’s second argument is that, in any event, the present is not a case to which s 151AB is directed. In the present case there was, prior to 30 June 1987, only one insurer, the third respondent, who was liable under a policy of insurance to indemnify Masport Marine in respect of the damages for which the plaintiff sued. The deeming provisions contained in subs (1) of s 151AB are expressed only to apply for the purpose of the section. The purpose of the section is explained in subs (2). That purpose is related to a case where there are two or more policies of insurance under which an employer is contractually entitled to indemnity in respect of damages for which a plaintiff sues. In such a case the purpose of the section is to select one of them to indemnify the employer. In the present case, however, the appellant was never liable to indemnify Masport Marine in respect of any part of the damages for which the plaintiff sued. Consequently, whatever operation s 151AB might otherwise have had if there were two insurers on risk prior to 30 June 1987, it has no operation in a case where there only ever was one insurer on risk in relation to the plaintiff’s cause of action.

20. The difficulty Donnelley faces here lies in respect of the damages for which the plaintiff sued. His amended statement of claim was limited to a period ending in 1973 when CGU was not at risk. Reference to the particulars in the plaintiff’s affidavit does not advance the matter because, although the plaintiff there alleged employment up to 1991, the allegation of exposure to asbestos did not extend beyond the early 1980s again at a time when CGU was not at risk.

21. Baker was followed in FAI Traders Insurance Co Limited v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257 (FAI). That was another hearing loss case giving rise to the same issue as was decided in Baker. The point was made tellingly by Handley JA at 261A,

One result of this construction is that the identity of the insurer liable to indemnify the employer can be affected by the date when proceedings for the recovery of damages are commenced by a worker and the period for which they are claimed. However that is the inexorable effect of the plain meaning of the section.

22. Chubb also followed Baker. It was a case of mesothelioma from exposure to asbestos. The plaintiff’s claim was limited to exposure up to 1984. The trial judge found exposure up to 1978. There was an attempt in the cross-claim to prove exposure after 1984 and inculpate an insurer on risk after that time. The trial judge held it was not permissible to look at an insurer on risk after 1978 when he found the last relevant exposure occurred (para 52).

23. What underlies Baker and also FAI is the importance of analysing the claim made by the plaintiff and what underlies Chubb is the need to ascertain the finding of the date of last relevant exposure. Such a finding, however, can have relevance only if it is within the sphere of claim made by the plaintiff; hence the findings of the trial judge of exposure to noise after 30 June 1987 in Baker and in FAI were of no moment as they were not findings within the claim made by the plaintiff.

24. The claim made by the plaintiff in this case may be seen in the alternative. Either it is as per the amended statement of claim in which event his claim was limited to employment and exposure up to 1973. Or, it is as per the particulars and affidavit in which event employment was up to 1991, but exposure was limited to the early 1980s. In either event, CGU was not liable to indemnify Donnelley. The distinction made by Mr Russell SC is one of no relevance because if a finding of exposure were made within the time frames alleged by the plaintiff in the amended statement of claim or the particulars and affidavit, it would not give rise to a liability on the part of CGU to indemnify and if it were made beyond those time frames, it would run into the very problem that arose in Baker and in FAI where such findings were made.

25. Accordingly, in my view, CGU’s application must succeed and so too must the application by Allianz.

26. I order, pursuant to Part 13 Rule 4(1)(b) of the Uniform Civil Procedure Rules, that the cross-claim brought by N.S. Donnelley Pty Limited against CGU Workers’ Compensation (NSW) Limited and against Allianz Australia Limited be dismissed.

Mr D J Russell, SC instructed by David Begg & Associates appeared for the first cross-claimant.

Mr D S Weinberger instructed by Moray & Agnew appeared for the first cross-defendant.

Mr G J Parker instructed by Ellison Tillyard Callanan appeared for the second cross-defendant.

I certify that the previous 26 paragraphs

are the reasons for Judgment of

His Honour Judge Kearns

Associate