National Jet Systems Pty Ltd v Allianz Australia Insurance Limited No. Scciv-03-662

NATIONAL JET SYSTEMS PTY LTD v ALLIANZ AUSTRALIA INSURANCE LIMITED
[2004] SASC 146
Civil
GRAY J
Introduction
The Dispute

This is an application by the plaintiff National Jet Systems Pty Ltd (National Jet) for immediate relief. An application by the defendant Allianz Australia Insurance Limited (Allianz) to have this action cross vested to the Supreme Court of the Australian Capital Territory (ACT) was heard concurrently.
Claim for Indemnity
National Jet entered into a contract of insurance with Allianz in accordance with the provisions of Workers Compensation Act 1951 (ACT) (the ACT statute). As required by that legislation, National Jet was insured for any liability that may arise under or independently of the ACT statute in respect of any injury to an employee. The relevant terms of the policy are set out later in these reasons.
Pursuant to the contract National Jet claimed an indemnity from Allianz with respect to the claim instituted by Ms Rawson. The claim for indemnity was rejected. Allianz advised that as the contract of employment between Ms Rawson and National Jet was not entered into in the Australian Capital Territory (ACT) the policy did not extend to the claim. National Jet commenced proceedings seeking declarations that Allianz was liable to indemnify National Jet pursuant to the contract of insurance between National Jet and Allianz.
National Jet claimed that in September 1994 Allianz accepted an insurance proposal to provide National Jet with cover with respect to any liability arising out of any claim for personal injury by an employee under the ACT statute. The contract of insurance was renewed annually from 1994 to 2002. It was also claimed that Allianz was liable to pay all costs and expenses associated with any such claim.
National Jet claimed that the contract of insurance was current at the time of the alleged injuries suffered by Ms Rawson. It was said that Ms Rawson was a worker within the meaning of the ACT statute and that injury, loss and damage were suffered in the ACT.
National Jet sought the following declarations:
That it be ordered by way of immediate relief that the plaintiff is entitled to be indemnified by the defendant in respect of any liability that is determined in action number SC509 of 2001 in the Supreme Court of the Australian Capital Territory that it has to Susan Rawson in respect of injury sustained by her within the Australian Capital Territory in the period from the 18^th day of September 1994 until the 31^st day of July 1997 in the course of her employment with the plaintiff.
That it be ordered by way of immediate relief that the plaintiff is entitled to be indemnified by the defendant in respect of the legal costs which it has reasonably and properly incurred and will continue to incur in defending the claim being brought by Rawson.
Allianz accepted that the contract of insurance was in force at the time of Ms Rawson’s alleged injury but denied that it was a term of the contract that Allianz would indemnify National Jet System as alleged. Allianz in its defence pleaded:
In answer to the whole of the statement of claim, the defendant says that even if the matters alleged in Mrs Rawson’s statement of claim are taken to be true, which is not admitted, they are not such that the defendant is liable to indemnify the plaintiff in these proceedings.
Counsel for Allianz submitted that as the contract of employment was not made in the ACT, the ACT statute had no application. As a result it was contended that Allianz was not under any obligation to provide indemnity.
The Declaratory Procedure
A contract of insurance is a policy of indemnity and may be specifically enforced in equity before there has been any breach that would sustain an action at law. In equity the insured need not pay the damages for which the insured has been held liable, perhaps forcing ruin, before seeking relief. The insured is entitled to be relieved from liability. Alternatively declaratory judgment may be obtained if through the nature of the occurrence, some liability is likely to appear.[1]
[1] King v Port of London Authority [1920] AC 1; Ogden Industries Pty Ltd v Lucas (1968) 118 CLR 32 at 37 ; Phoenix Assurance Co of New Zealand Ltd v Borthwick CWS Ltd (1987) 4 ANZIC 60-810; Johnston v Salvage Association (1887) 19 QBD 458 at 460
Where an insurer has denied liability, proceedings may be brought before the claim against the insurer has been determined.[2] It is common for disputes concerning insurance to be addressed in third party proceedings. However in some circumstances the issue of whether an insurer is obliged to indemnify an insured should be determined as a preliminary issue.[3]
[2] Tannous v Mercantile Mutual Insurance Co Ltd [1978] 2 NSWLR 331
[3] Oei v Foster & Anor[1982] 2 Lloyd’s Reports 170
Where an insurer repudiates a claim before the insurance liability is established, an insured has a cause of action at once for anticipatory breach of the contract, regardless of whether the insurer’s liability has been established.
Immediate Relief
Rule 25.02 of the Supreme Court Rules 1988 (SA) provides that a plaintiff may apply for immediate relief after the issue of a summons.[4] The court has discretion to dispose of a matter summarily.
[4] Rule 25.02 provides:
National Jet submitted that the relevant criteria to satisfy rule 25.02 had been satisfied. Although this is an application for immediate relief, reliance was primarily placed on the contention that the facts giving rise to the claims for declarations were not in dispute. What arose for decision was the proper construction of the contract of insurance and associated with it the construction of the ACT statute.
In Settlement Wine Co Pty Ltd v National and General Insurance Co Ltd the court discussed the principles relating to immediate relief. King CJ observed:[5]
Immediate relief may be justified not only by circumstances of urgency requiring speedy decision of issues which are capable of resolution without lengthy trial, but also by the lack of any credible defence in the sense of real issue to be tried, irrespective of the existence of circumstances of urgency. If there were triable issue in the present case, it would be incapable of resolution without trial.
[5] (1988) 146 LSJS 150 at 154
The declarations include National Jet’s claim to an indemnity with respect to costs and expenses incurred by National Jet in defending the ACT proceedings. Although National Jet has been put to cost and expense in the ACT proceedings, it was not suggested that financial hardship had arisen. Arguments for urgency were not advanced. National Jet contended that its entitlement to an indemnity had been made out on the proven facts, no credible defence had been raised and that it was entitled to declaratory relief.
The Application to Cross Vest
Allianz sought an order that the within proceedings be transferred to the Supreme Court of the ACT pursuant to section 5 of the Jurisdiction of Courts (Cross Vesting) Act 1987 (SA) (the Cross Vesting Act).[6] In the alternative a stay was sought until further order.
[6] That section relevantly provides;
Counsel for Allianz submitted that this case turned on two issues, whether Ms Rawson was a worker within the meaning of the ACT statute, and whether the contract of insurance extended to the provision of indemnity for tortious injuries sustained outside the ACT. It was contended that given the complexities of the litigation, the preferable course would be for this court to cross-vest the matter to the ACT Supreme Court. It was further argued that it would inefficient and inappropriate to impose on the parties any risk that the issue of indemnity would need to be re-litigated. Counsel argued that, in the interests of justice, the best court to determine the issues in this matter was the ACT Supreme Court.
As earlier observed the basis of Allianz’s refusal to indemnify in this case was that the contract of employment between the worker and Ms Rawson was entered into outside of the ACT. It was contended that the resolution of this question would require the determination of factual matters related to the claim. It was submitted that the South Australian Supreme Court was not in the best position to determine these questions. Transfer of the proceedings would enable the application to be heard at the same time as Ms Rawson’s claim thereby assisting the efficient conduct of both matters. While it was accepted that the South Australian Supreme Court had jurisdiction to hear the matter, it was argued that the ACT Supreme Court was a more appropriate forum.[7]
[7] In an affidavit of Neville John Topfer, solicitor for the defendant, sworn 15 August 2003 the deponent stated:
The Hearing
The Affidavit Evidence
Affidavits were tendered by both parties without objection. Copies of policy documentation, company searches, documentation from the ACT proceedings and copies of correspondence were annexed.
An affidavit of Karen Wozniak, the manager of administration for National Jet, provided details of the workers compensation insurance carried by National Jet throughout the relevant period.
It was and is part of my responsibility to my employer to ensure that the appropriate workers compensation insurance is obtained for employees in the company and for this purpose the plaintiff between and including at least the month of September 1994 until June 1998 engaged the services of the firms of insurance brokers Parnell Cranston & Co for the periods commencing 3 September 1994 to 30 May 1997 and Alexander & Alexander for the period May 1997 to June 1998 to effect insurance on its behalf, including appropriate workers compensation entitlements and common law damages to its employees, whenever employed in Australia.
Ms Wozniak described the business operations of National Jet:
…At all times during the period of my employment the plaintiff has carried on and continues to carry on business as an operator of air charter transport in the States of New South Wales, Western Australia, Queensland and South Australia and in the Northern Territory and the Australian Capital Territory.
The plaintiff’s head office is situated in Adelaide. The plaintiff administers its business from Adelaide. The plaintiff’s management, administration staff, service operations facilities, and documents and records are all located in Adelaide.
The plaintiff maintains aircraft service/maintenance facilities in Adelaide, Perth, Melbourne, Canberra, Broome, Sydney, Darwin, Cairns and Brisbane. It has air crew based, and maintains crew rooms in each of these locations except Sydney.
Between and including at least September 1994 and 30 July 1997 the facilities maintained by the plaintiff in Canberra included a crew room which was located in leased premises in the main Canberra airport terminal building and comprised a flight planning and waiting area and a senior pilot and senior base flight attendant officers. This crew room was a place where aircrew employed by the plaintiff who were commencing or finishing duty would sign on and off. Pilot flight planning was conducted there, and a duty roster was displayed. Communication with management in Adelaide was available by fax, phone and email.
Anthony Cranston a licensed insurance broker for National Jet deposed:
In the said period I was from time to time instructed by the plaintiff to effect insurance on its behalf including appropriate workers compensation insurance in respect of any liability that the plaintiff might have for workers compensation entitlements and common law damages to its employees, whenever employed in Australia.
In carrying out these instructions for the plaintiff I have for a number of years, including the period between September 1994 and May 1997 had dealings with the defendant Allianz Australia Insurance Ltd (formerly known as MMI General Insurance Ltd) through its regional office in Canberra for the purpose of obtaining insurance for the plaintiff in respect of its potential liability, either at common law or pursuant to workers compensation legislation, to its employees in the Australian Capital Territory.
For the periods commencing 3 September 1994, 30 May 1995 and 31 May 1996 the defendant issued Employers Indemnity Policies of insurance to the plaintiff in respect of the plaintiff’s liability to pay compensation under the Australian Capital Territory Workers Compensation Act or independently of that Act to an employee who was or was deemed to be a worker for the purposes of that Act.
An affidavit of Neville John Topfer was tendered by Allianz. He was the solicitor with the carriage of the matter for Allianz. Mr Topfer deposed to the following:
Ms Susan Rawson, a former employee of the plaintiff, has issued proceedings in the Supreme Court of the Australia Capital Territory (“the ACT proceedings”). She alleges injury sustained in the course of her employment with the plaintiff, and claims damages.
…
Ms Rawson alleges she suffered injury due to exposure to engine fumes in the cabin on BAe146 aircraft during her employment with National Jet between 18 September 1994 and July 1997.
Allianz issued a policy of insurance to National Jet under the Workers Compensation Act 1951 (ACT) from 12 July 1991 to 30 June 2002.
Mr Topfer exhibited a copy of the policy of insurance. He also exhibited correspondence between the solicitors for National Jet and Allianz between September 2001 and July 2003. This correspondence evidences repeated requests by National Jet seeking Allianz’s acknowledgement of its obligation to provide indemnity. The responses on behalf of Allianz first addressed investigations that Allianz were then undertaking and finally concluded with a denial of an obligation to indemnify.
Mr Topfer’s affidavit then continued:
Allianz has declined to indemnify National Jet in respect of Ms Rawson’s claim because the contract of employment between Ms Rawson and National Jet was not made in the ACT, and Allianz considers that the policy does not respond to Ms Rawson’s claim.
Whether or not that position is correct will, in my opinion, require a determination of the following factual matters:
Where the contract of employment between Ms Rawson and National Jet was made;
In what place or places Ms Rawson suffered the exposure to fumes alleged in her statement of claim;
In what place or places Ms Rawson suffered injury from the exposure to fumes alleged in her statement of claim.
In relation to the place where the contract of employment between Ms Rawson and National Jet was made, exhibited hereto and marked “NJT3” is a true copy of what I believe to be the contract of employment. It is undated. I am informed by my partner Mr Ian Johnson and verily believe that on 19 November 2001 he had a telephone conversation with Mr John White, Solicitor for National Jet, in which Mr White told him that National Jet prepared the contract of employment for Ms Rawson in Adelaide, and sent it to her in Sydney where she was living to be signed. As far as I am aware, it has never been alleged by National Jet or Ms Rawson that the contract of employment was made in the Australian Capital Territory.
In relation to the place or places of exposure to fumes, I refer to paragraphs 37 to 57 inclusive of Ms Rawson’s statement of claim. Ms Rawson alleged exposure to fumes whilst the planes were on the ground and in flight. She flew from the ACT to Queensland and return, which would involve crossing New South Wales.
In relation to the place or places of injury alleged by Ms Rawson, her statement of claim appears to allege that she was in or over the ACT, New South Wales and/or Queensland when she experienced various symptoms or injuries. …
Determination of those factual matters may also assist to resolve the question of whether National Jet is entitled to indemnity from any South Australian, Queensland or New South Wales workers compensation insurer.
The following more detailed facts that have been established by the tendered affidavits:
-Allianz issued policies of insurance, renewed annually, that covered the entire period during which Ms Rawson was employed by National Jet.
- National Jet employed Ms Rawson from September 1994 to June 1997.
-Ms Rawson’s contract of employment with National Jet was entered into outside of the ACT. There is a dispute about whether this occurred in South Australia or New South Wales. However, it is not necessary to resolve this factual issue.
-National Jet’s business was based in Adelaide. However, in part the business was conducted in the ACT and other states of Australia.
-Ms Rawson’s duties required her to report daily at the Canberra Airport. To do so she drove from her home in NSW close to the ACT-NSW border.
-Ms Rawson’s duties were to work as a pilot. This involved departure from Canberra airport, travelling interstate to Queensland and NSW and returning at the end of the working day to the Canberra airport.
-Ms Rawson claimed to have suffered injury in the course of her employment with National Jet. Ms Rawson alleges that she was exposed to noxious fumes within the cabin of aircraft. She claimed that that exposure occurred during take off, whilst flying and when landing. Those activities occurred both on the ground in the ACT and in ACT airspace.
-Ms Rawson issued proceedings out of the ACT Supreme Court naming National Jet as defendant and alleging that National Jet breached the duty of care owed to her. She alleged that she suffered injury in the ACT and elsewhere. She sought damages for personal injury.
-The proceedings have been defended by National Jet and are currently being prepared to be set down for trial.
-National Jet has incurred costs and expenses as a result of their involvement in the proceedings.
-National Jet have sought an acknowledgment that Allianz is responsible to provide an indemnity pursuant to the terms of the contract of insurance and has invited Allianz to take over the proceedings.
-Allianz have declined to indemnify National Jet on the basis that the contract of employment was made outside of the ACT and that in those circumstances Ms Rawson was not a worker within the meaning of the ACT statute or the policy. It was said that the policy only indemnified Nation Jet Systems with respect to a person ‘who is or is deemed’ by the ACT Act to be a worker of National Jet.
The Policy
Counsel contended that National Jet entered into a contract of insurance seeking indemnity with respect to all workers compensation and common law claims in the geographic areas in which its business operated, including the ACT. The policy with Allianz specific to the ACT provided that Allianz would indemnify National Jet in accordance with the terms of the contract of insurance. That contract of insurance included the following terms:
Australian Capital Territory Workers’ Compensation Act 1951, as amended
Employers’ Indemnity Policy
Whereas by virtue of the Workers’ Compensation Act 1951, as amended, of the Australian Capital Territory (hereinafter called the Act) it is provided that every Employer shall obtain from an Insurer approved under the Act, a policy of insurance for an Unlimited amount in respect of any liability of the Employer that may arise:
(a)    under the Act; and
(b)    independently of the Act;
in respect of any injury to, or death of, any of the employer’s employees, and shall maintain such Policy in force and
…
Now this Policy witnesseth that in consideration of the payment by the Employer to the Insurer of the Premium shown in the Schedule (which Premium is subject to adjustment as hereinafter provided) for the period of insurance stated therein and thereafter to 4 o’clock in the afternoon of the last day of any subsequent period in respect of which the Premium shall have been paid to and accepted by the Insurer, the employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a Worker of such Employer or to pay the amount specified in respect of the Employer’s liability independently of the Act for any injury to any such person, then and in every such case, the Insurer will indemnify the Employer against all such sums for which the Employer shall be so liable; the Insurer will also pay all costs and expenses incurred with the written consent of the Insurer in connexion with the defence of any legal proceedings in which such liability is alleged. Provided that this Policy shall not extend to any business or occupation other than that described herein, unless and until particulars thereof shall have been supplied to and accepted by the Insurer and the acceptance of such extension endorsed hereon by the Insurer. And it is hereby further agreed that the above indemnity is made subject to the due and proper observance and fulfilment by the Employer of the conditions hereunder. And the Insurer shall be
(a)    directly liable to any worker, and in the event of the worker’s death to his or her dependants, to pay the compensation for which the Employer is liable and in respect of which the Employer is indemnified under this Policy, and
(b)    bound by and subject to any order, decision or award made against the Employer of any such worker under the provisions of the Act or in respect of the Employer’s liability independently of the Act and in respect of which the Employer is indemnified under this Policy. Provided lastly that this Policy shall be subject to the Act and the Rules and Regulations made thereunder, as in force from time to time, all of which shall be deemed to be incorporated in and form part of this Policy.
Conditions of Policy
Claims
The Employer shall give notice to the Insurer of any personal injury as soon as practicable after information as to the happening of the injury, or of any incapacity arising therefrom comes to the knowledge of the Employer or of the Employers representative for the time being, and shall forward to the Insurer forthwith after receipt thereof, every written notice of claim of proceedings, and all information as to any verbal notice of claim or proceedings.
Employers not to make Admissions
The Employer shall not, without the written authority of the Insurer, incur any expense of litigation or make any payment settlement, or admission of liability in respect of any injury to or claim made by any worker.
Defence of Proceedings
The Insurer shall in respect of anything indemnified under this Policy, including the bringing, defending, enforcing or settling of legal proceedings for the benefit of the Insurer, be entitled to use the name of the Employer. The Employer shall give all necessary information and assistance, and forward all documents to enable the Insurer to settle or resist any claim as the Insurer may think fit.
Subrogation
The Insurer shall be entitled to use the name of the Employer in any proceedings to enforce, for the benefit of the Insurer, any order made for costs or otherwise, and shall have the right of subrogation, in respect of all rights which the Employer may have against any person or persons who may be responsible to the Employer, or otherwise in respect of any claim for any injury covered by this Policy, and the Employer shall as and when required execute any necessary documents for the purpose of vesting such rights in the Insurer.
The ACT Supreme Court Action

Ms Rawson complained of foul odours during warm up, taxiing, takeoff and landing. These events occurred whilst Ms Rawson was within the territorial limits of the ACT. The events also occurred whilst she was performing duties outside the ACT.
Ms Rawson alleged that National Jet failed to ensure that the ventilation system of the aircraft she flew provided sufficient uncontaminated air under normal operating conditions. It was said that the aircraft provided unsafe working conditions and that National Jet breached its duty of care owed to her.
Ms Rawson’s statement of claim in the ACT proceedings included the following allegations:
The plaintiff is a resident of Sylvania, New South Wales. At all material times she was a commercial fixed wing aircraft pilot employed by [National Jet]. She was based in Canberra in the Australian Capital Territory (“ACT”).[8]
[8] In their defence to the statement of claim, [National Je] admitted:
…that during the relevant time the plaintiff was based in Canberra, in that she would normally report for and finish work at the Canberra crew room operated by NJS.
…
On or about 18 September 1994 the plaintiff entered into a contract of employment with [National Jet] as a Flying Officer flying the aircraft, based in Canberra in the ACT.[9]
[9] In their defence [National Jet] admitted this part of the statement of claim.
…
[National Jet]…as the plaintiff’s employer, owed the plaintiff a non-delegable duty of care to take reasonable steps to eliminate or reduce the risk of injury to the plaintiff in her workplace environment.
[National Jet]…in the course of its business as a contractor of air services, was an occupier of the aircraft (“the premises”) in which the plaintiff worked. [National Jet] invited the plaintiff onto its premises and owed her a duty of care to eliminate or reduce the risk of injury to her in its premises.
…
In or about November 1994 the plaintiff noticed the onset of ‘sinus-type’ headaches and fatigue, and a sore throat and husky voice during period of employment aboard the aircraft and immediately afterwards.
a. The plaintiffs symptoms tended to occur within several minutes to one hour after boarding the aircraft or starting aircraft air and lasted throughout a light, often reducing very soon after the plaintiff exited the aircraft and then persisting until two to three hours after the plaintiff left the aircraft.
b. The plaintiff noticed that her symptoms were more acute on the ground, during takeoff and descent.
The plaintiff frequently smelt foul odours in the aircraft which she experienced as more intense on the found with the air supply on, warm up and taxiing, takeoff, climb and descent and occasionally in cruise.
…
[National Jet] breached its duty of care to the plaintiff.
…
a.…failed to provide a safe working environment for the plaintiff.
b.…failed to take reasonable steps to ensure that every activity covered by the airline operator certificate and everything done in connection with such an activity was done with a reasonable degree of care and diligence…
c.…failed to ensure that the domestic and international ventilation standards in respect of which the aircraft was certificated were complied with…
d.…failed to ensure that under normal operating conditions and in the event of any probable failure of any aircraft system which would adversely affect the ventilating air…the ventilation system was designed to provide a sufficient amount of uncontaminated air to enable the plaintiff and other crew members to perform their duties without undue discomfort and fatigue.
e.…failed to ensure, or failed to take reasonable steps to ensure that the crew and passenger compartment air was free from harmful or hazardous concentrations of gases or vapours…
…
On at least 3 occasions … the plaintiff experienced nausea due to foul odours in the aircraft…[one of three particular occasions identified by the plaintiff was an occasion on departure from Canberra].
The plaintiff recalls having to leave to flight deck of the aircraft on other occasions due to nausea, headaches and irritations…
Ms Rawson particularised her injuries. Those injuries included:
Permanent head pressure…; Numbness in the head and face; Dizziness; Tingling in head, extending through limbs; Chemical sensitivity; Nausea, vomiting…
While Ms Rawson spent a proportion of her working hours outside the ACT, substantially her employment duties were centred in Canberra. Ms Rawson had to report to the Canberra Airport at the beginning and end of each shift. She undertook her ground duties at those premises and was involved in warm up, taxiing, take off and landing duties from the ACT.
The ACT Workers Compensation Legislation
It is to be recalled that the contract of insurance provided that Allianz would indemnify National Jet in respect of National Jet’s liability independently of the ACT statute in respect of any person who is or is deemed by the ACT statute to be a ‘worker’ of National Jet. A definition of ‘worker’ is contained within the ACT statute. The contract of insurance picks up the interpretation of ‘worker’ in the ACT statute. In determining the extent of National Jet’s right to indemnity it is necessary to ascertain whether Ms Rawson was a worker within the meaning of the ACT statute.
Workers compensation is a statutory system of compensation for work related injuries. In some States of Australia the statutory scheme is an alternative to common law damages. In others it replaces common law damages either in part or in full.[10] Workers compensation statutes are remedial legislation for the benefit of the worker. As such, where a statutory provision is ambiguous, the interpretation most favourable to the worker is to be preferred.[11]
[10] There is no right to common law damages in South Australia – see s54 Workers Rehabilitation and Compensation Act 1986 (SA). Rights to common law damages in the ACT are unrestricted.
[11] Workers Rehabilitation and Compensation Corporation v James (1992) 57 SASR 365 at 375 per Legoe J
The basis of all schemes is that an injury must be connected with the employment. The statutory compensation schemes are no-fault schemes applying to a person employed under a contract of employment. An entitlement to compensation flows from an injury related to employment. It was considered that the common law remedy of damages did not provide adequate redress for the victims of industrial accidents. Different statutes phrase the prescriptive degree of connection – usually an injury ‘arising out of or in the course of employment’. The ACT statute provides that it is:
an Act relating to compensation to workers for injuries arising out of or in the course of their employment, and for other purposes.
‘Worker’ for the purposes of the ACT statute is defined in section 6 to mean:
… any person who has entered into or works under a contract of service or apprenticeship with an employer, whether the contract is express or implied, oral or in writing, …
Section 6(8) is also said to be relevant:
Where an employer has a place of employment in the Territory…and there employs a worker whose employment under a contract of service…with that employer is not wholly carried out in the Territory and is in part carried out in any State or in any other Territory, then, if the worker, while in that State or other Territory, sustains personal injury under circumstances which had the injury been sustained in the Territory, would entitle the worker to compensation in accordance with this Act, the worker’s employer shall, subject to this Act, be liable to pay compensation in accordance with this Act as if the personal injury had arisen out of or in the course of the worker’s employment in the Territory.[12]
[12] This section was deleted by the 1997 Amending Act.
In the ACT, an employer’s insurer is directly liable to the worker for compensation which the employer is liable to pay. The prescribed form of contract of insurance provides that an insurer is bound by any judgment given against an employer.[13]
[13] Schedule 3 of the Workers Compensation Act 1951 (ACT) Act.
It was accepted by National Jet that any liability of Allianz was limited to injury suffered by a worker within the territorial limitations of the ACT. There was no suggestion that the contract of insurance had an extra-territorial operation.
The ACT Legislation and the Policy
In Mynott v Barnard[14] the High Court considered the interpretation of section 5(1) of the Workers Compensation Act 1928 (Vict) and the words
…if in any employment personal injury by accident arising out of and in the course of the employment is caused to a worker his employer shall …be liable to pay compensation.
[14] (1939) 62 CLR 68
In Mynott the deceased worker had lived at a border town in Victoria. nHe was engaged by a Victorian contractor to work on the construction of a building at a neighbouring border town in New South Wales. The work was confined to New South Wales. The worker was called upon to journey daily from his residence in Victoria to his work in New South Wales. The contract of employment was entered into in Victoria and was governed by the law of Victoria. An accident occurred at a building site in New South Wales. The worker died as a result of injuries sustained in the course of his employment. The question was whether his dependants were entitled to compensation pursuant to the provisions of the Victorian legislation.
Dixon J rejected the contention that the place of entry into the contract of employment was the relevant test and observed: [15]
… The test in all cases is the place where the employment is located. When the course of employment requires the workman to perform work beyond the borders of the State, a close question may at times be presented as to whether the employment itself is located here. Determination of that question may at times depend upon the relative weight to be given under all the circumstances to opposing considerations. The facts in each case, rather than juristic concepts, will govern such determination. Occasional transitory work beyond the State may reasonably be said to be work performed in the course of employment here; employment confined to work at a fixed place in another State is not employment within the State, for this State is concerned only remotely, if at all, with the conditions of such employment. Such illustrations may indicate the manner in which the test should be applied; we do not now attempt a more definite classification intended to cover all the varying circumstances that may enter into the question in other cases.
Dixon J referred to United States authorities and considered the principles discussed to be apposite:
In the application of the principles thus stated the courts of the State of New York have decided that a liability for workmen's compensation to the dependants of an air pilot killed in a crash outside the State was imposed upon his employers by the legislation of the State of New York because his employment was identified with New York as the place from which the air service was conducted, at which he was engaged and in which he lived (Tallman v. Colonial Air Transport, Inc.). Any other result would seem unreal. It would be, indeed, artificial to require the dependants, in New York, of the deceased pilot to resort to the law of the State over which the flight of the aeroplane happened to have taken him at the moment when it crashed.
But the principle applied was that formulated in Cameron v. Ellis Construction Co., namely, "that the Workmen's Compensation Law applies only to employment within the State, and that award of compensation may be made for injuries sustained outside the State only where those injuries arise out of and in the course of employment which is located here”.
This principle excludes the present case from the Victorian statute. The deceased's employment was not carried out or localized in Victoria but in New South Wales. [16]
Latham CJ reached the same conclusion. He rejected the place of the contract of employment as being a satisfactory criterion as the test for the applicability of the Victorian statute. He applied the reasoning of the Court of Appeal in Tomalin v S Pearson & Son Ltd[17] a decision approved by the Privy Council in Krzus v Crow’s Nest Pass Cole Co Ltd[18]. In the latter case Lord Atkinson made reference to the phrase ‘employment carried on in Malta’ as describing the work actually performed under the contract and not the contract of employment under which the work was to be carried on.
[15] (1939) 62 CLR 68 at 92-93
[16] (1939) 62 CLR 68 at 93
[17] [1909] 2 KB 61
[18] [1912] AC 590 at 597
In SWF Hoists & Industrial Pty Ltd v SGIC von Doussa J applied this reasoning: [19]
The fundamental criterion of the application of Workers Compensation Acts in the different States and Territories of Australia is that injury occur within the territorial limits of the state or Territory whilst the worker is there performing his employment.
[19] (1990) 6 ANZ Insurance Cases 61-002 at 76,694
For the purposes of National Jet’s claim, it was submitted that the fact that Ms Rawson was engaged in the course of her employment on the ground at Canberra in the ACT was of importance. It was accepted that she flew over and landed at locations in other States of Australia during the course of her employment.
Counsel for Allianz submitted that the definition of worker within the ACT statute necessarily implies that the contract of service is one entered into within the Australian Capital Territory. It was said that without this implicit assumption, there was no sufficient territorial nexus to make the ACT statute a valid law of the ACT. It was contended that the wording of section 6 also recognised that the contract of service must be entered into within the ACT. It was argued that as a result Ms Rawson was not a worker within the meaning of the legislation and that Allianz was not obliged to indemnify National Jet for Ms Rawon’s injuries in the circumstances that had been alleged.
In Mynott the court considered that there was no constitutional restriction on the Victorian statute addressing a contract of employment wherever made. Latham CJ observed:[20]
… Similarly, the statute might have been applied by its terms to all persons domiciled and resident in Victoria, or to all accidents in Victoria, or to all persons working in Victoria wherever the contract of employment was made, or to all contracts wherever made under which any work was to be done in Victoria where the accident also happened in Victoria, or more generally to any contracts which were in some defined sense Victorian contracts. Any such statute would, I think, have been a law "in and for Victoria" within the meaning of clause 1 of schedule 1 of 18 & 19 Vict. c. 55 (The Constitution Act) and would have been within the territorial competence of the legislature.
[20] (1939) 62 CLR 68 at 75
Starke J expressed a similar view. He concluded:[21]
None of these constructions presents any constitutional difficulty. Each invokes a circumstance that would attract the constitutional authority of the State of Victoria. The Workers' Compensation Act provides for compensation in respect of personal injuries by accident. It is not a contractual right, but a right which is imposed by the Act upon the relationship or status arising from a contract of employment. Either the accident or the contract would attract the constitutional authority of the legislature, but the accident, in my opinion, is the circumstance that has attracted the exercise of the legislative power in the Workers' Compensation Act.
The other members of the court did not identify any constitutional difficulty in reaching their decision. The submission that there was a lack of territorial nexus to make the ACT statute a valid Act is without substance and should be rejected.
[21] (1939) 62 CLR 68 at 89
Counsel for Allianz also submitted that the ACT statute did not seek to provide any benefits for injuries suffered outside of the ACT. It was submitted that the legislation only operated within a limited geographical area – being anywhere within the ACT. As earlier observed National Jet accepted this restriction.
Counsel for National Jet submitted that there were no findings of fact in the ACT proceedings that could impinge on the entitlement to indemnity. It was accepted that the findings in the ACT proceedings may effect the extent of the indemnification, but not the entitlement to indemnification itself.
Conclusion
The factual basis said to support National Jet is not relevantly disputed. The issue for consideration is the proper construction of the ACT statute and the policy of insurance. There is no reason why this court cannot determine the issues involved on this application for immediate relief. National Jet contended that it is entitled to a benefit, being indemnification with respect to the claim made by Ms Rawson arising out of an alleged injury caused in the course of her employment. It was contended that delay in the grant of relief would cause prejudice.
Ms Rawson’s working day began and ended in Canberra. Her duties were more often carried out there than in any other State or Territory of Australia. Ms Rawson’s employment was located substantially in the ACT. Ms Rawson reported for duty in the ACT, completed paperwork, took off and flew within the ACT. Following transitory attendances interstate she then returned to end the working day.
The National Jet air service was conducted from the ACT. It would be artificial, to use the words of Dixon J, to resort to the laws of another State to resolve Ms Rawson’s claim for damages for injury sustained, at least in part, in the ACT. Ms Rawson was a worker within the definition of ‘worker’ for the purposes of the ACT legislation.
If Ms Rawson successfully makes out the allegations of injury arising out of employment in the ACT Supreme Court proceedings, Allianz will be obliged to indemnify National Jet pursuant to the contract of insurance. National Jet is presently entitled to be indemnified for its costs and expenses of defending the proceedings.
Immediate relief should be granted. The following declarations should be made.
- National Jet Systems is entitled to be indemnified by Allianz Australia in respect of any liability that is determined in action number SC509 of 2001 in the Supreme Court of the Australian Capital Territory that National Jet Systems has to Susan Rawson in respect of injury sustained by her within the Australian Capital Territory in the course of her employment with National Jet Systems in the period from the 18^th day of September 1994 until the 31^st day of July 1997.
- National Jet Systems is entitled to be indemnified by Allianz Australia in respect of the legal costs and expenses which it has reasonably and properly incurred and will continue to reasonably and properly incur in defending the claim being brought by Susan Rawson insofar as such claim is made in respect of injuries alleged to have occurred in the Australian Capital Territory.
JUDGMENT CITATIONS LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1 King v Port of London Authority [1920] AC 1; Ogden Industries Pty Ltd v Lucas (1968) 118 CLR 32 at 37 ; Phoenix Assurance Co of New Zealand Ltd v Borthwick CWS Ltd (1987) 4 ANZIC 60-810; Johnston v Salvage Association (1887) 19 QBD 458 at 460
2      Tannous v Mercantile Mutual Insurance Co Ltd [1978] 2 NSWLR 331
3      Oei v Foster & Anor[1982] 2 Lloyd’s Reports 170
4      Rule 25.02 provides:
(1) In the alternative to Rule 25.01 the plaintiff may after the time of issuing his summons take out an application for immediate relief.
(2) The application shall be supported by an affidavit verifying the plaintiff’s claim and exhibiting all relevant documents.
(3) The application shall be returnable not less than two days after service.
5 (1988) 146 LSJS 150 at 154

6      That section relevantly provides;
(2) Where —
(a)     a proceeding (in this subsection referred to as the "relevant proceeding") is pending in the Supreme Court (in this subsection referred to as the "first court"); and
(b)(i) it appears to the first court that the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or
(ii)    it appears to the first court that having regard to —
(A)    whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory; and
(B)    the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in subsubparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction; and
(C)    the interests of justice,
it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or
(iii)it appears to the first court that it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory,
the first court shall transfer the relevant proceeding to that other Supreme Court.
* * * * * * * * * *
(7) A court may transfer a proceeding under this section on the application of a party to the proceeding, of its own motion or on the application of the Attorney-General of the Commonwealth or of a State or Territory.
7 In an affidavit of Neville John Topfer, solicitor for the defendant, sworn 15 August 2003 the deponent stated:
I believe that transfer of these proceedings to the ACT under the Cross Vesting Act is in the interests of justice and desirable for the following reasons:
- It would enable an application to be made for these proceedings to be heard at the same time as Ms Rawson’s claim;
- It would be open for the ACT Supreme Court to order that the two proceedings be heard together and/or that the evidence in one stand as the evidence in the other. This would facilitate determination of the factual matters outline above in a cost effective way.
- While it is acknowledged that the Supreme Court of South Australia has jurisdiction to hear this matter, in the interests of justice it is more appropriate for a matter claiming indemnification under a workers’ compensation policy in the Australian Capital Territory, in respect of proceedings brought in the Australian Capital Territory, to be determined by the Supreme Court of the Australian Capital Territory.
8     In their defence to the statement of claim, [National Je] admitted:
…that during the relevant time the plaintiff was based in Canberra, in that she would normally report for and finish work at the Canberra crew room operated by NJS.
9      In their defence [National Jet] admitted this part of the statement of claim.
10 There is no right to common law damages in South Australia – see s54 Workers Rehabilitation and Compensation Act 1986 (SA). Rights to common law damages in the ACT are unrestricted.
11Workers Rehabilitation and Compensation Corporation v James (1992) 57 SASR 365 at 375 per Legoe J
12     This section was deleted by the 1997 Amending Act.
13 Schedule 3 of the Workers Compensation Act 1951 (ACT) Act.
14 (1939) 62 CLR 68
15 (1939) 62 CLR 68 at 92-93
16 (1939) 62 CLR 68 at 93
17 [1909] 2 KB 61
18 [1912] AC 590 at 597
19 (1990) 6 ANZ Insurance Cases 61-002 at 76,694
20 (1939) 62 CLR 68 at 75
21 (1939) 62 CLR 68 at 89

(1) In the alternative to Rule 25.01 the plaintiff may after the time of issuing his summons take out an application for immediate relief.
(2) The application shall be supported by an affidavit verifying the plaintiff’s claim and exhibiting all relevant documents.
(3) The application shall be returnable not less than two days after service.

(2) Where —

(a) a proceeding (in this subsection referred to as the "relevant proceeding") is pending in the Supreme Court (in this subsection referred to as the "first court"); and

(b)(i) it appears to the first court that the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of another State or of a Territory and it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or

(ii) it appears to the first court that having regard to —

(A) whether, in the opinion of the first court, apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction, the relevant proceeding or a substantial part of the relevant proceeding would have been incapable of being instituted in the first court and capable of being instituted in the Supreme Court of another State or Territory; and
(B) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in subsubparagraph (A) and not within the jurisdiction of the first court apart from this Act and any law of the Commonwealth or another State relating to cross-vesting of jurisdiction; and

(C) the interests of justice,

it is more appropriate that the relevant proceeding be determined by that other Supreme Court; or

(iii)it appears to the first court that it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of another State or of a Territory,

the first court shall transfer the relevant proceeding to that other Supreme Court.

* * * * * * * * * *

(7) A court may transfer a proceeding under this section on the application of a party to the proceeding, of its own motion or on the application of the Attorney-General of the Commonwealth or of a State or Territory.

I believe that transfer of these proceedings to the ACT under the Cross Vesting Act is in the interests of justice and desirable for the following reasons:
- It would enable an application to be made for these proceedings to be heard at the same time as Ms Rawson’s claim;
- It would be open for the ACT Supreme Court to order that the two proceedings be heard together and/or that the evidence in one stand as the evidence in the other. This would facilitate determination of the factual matters outline above in a cost effective way.
- While it is acknowledged that the Supreme Court of South Australia has jurisdiction to hear this matter, in the interests of justice it is more appropriate for a matter claiming indemnification under a workers’ compensation policy in the Australian Capital Territory, in respect of proceedings brought in the Australian Capital Territory, to be determined by the Supreme Court of the Australian Capital Territory.

[2004] SASC 146

28 May 2004