QBE Insurance (Australia) Ltd v Dust Diseases Tribunal of NSW

[2011] NSWCA 421

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

QBE Insurance (Australia) Ltd v Dust Diseases Tribunal of NSW [2011] NSWCA 421

Hearing dates:

24 November 2011

Decision date:

22 December 2011

Before:

Beazley JA at [1]
Macfarlan JA at [4]
Meagher JA at [31]

Decision:

(1) An order pursuant to s 69 of the Supreme Court Act quashing the orders made on 21 April 2011 in proceedings 307/2000 in the Dust Diseases Tribunal appointing QBE Insurance (Australia) Ltd as designated insurer for the purposes of s 151AC of the Workers Compensation Act and ordering that the costs of the application for that order be the plaintiff's costs in the cause.

(2) Order that the third defendant, Michael Costigan, pay the costs of QBE Insurance (Australia) Ltd of the proceedings in this Court.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

ADMINISTRATIVE LAW - proceedings in the Dust Diseases Tribunal - primary judge made an order pursuant to s 151AC Workers Compensation Act 1987 appointing appellant insurer as the designated insurer liable to indemnify defendant employer under s 151AB - no dispute between insurers as to which was liable to indemnify the employer - whether primary judge's decision was vitiated by jurisdictional error

WORKERS COMPENSATION - worker claimed damages in the Dust Diseases Tribunal in respect of divisible and indivisible injuries - worker continued relevant employment with defendant employer after appellant insurer went off risk but confined his damages claim to a shorter period - primary judge concluded that the last date to which worker's claim was expressed to relate was the relevant date for the purposes of s 151AB(1) Workers Compensation Act 1987 rather than the later date when worker's relevant employment ceased - whether conclusion was erroneous insofar as it related to the worker's indivisible injury claim

Legislation Cited:

Supreme Court Act 1970
Workers Compensation Act 1926
Workers Compensation Act 1987

Cases Cited:

CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169
CIC Workers' Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422
FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257
Government Insurance Office of New South Wales v Colgate Palmolive Pty Ltd [2001] NSWCA 24; 50 NSWLR 729
Kirk v Industrial Court (NSW) [2010] HCA 1; 239 CLR 531
MMI Insurance Compensation (NSW) Ltd v Baker (1990) 41 NSWLR 289
Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; 59 NSWLR 14
Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10
WorkCover Authority of New South Wales v Chubb Australia Ltd [2000] NSWCA 221

Category:

Principal judgment

Parties:

QBE Insurance (Australia) Ltd (Applicant) Dust Diseases Tribunal of NSW (First Respondent)
Dai John Excavating & Co Pty Ltd (In liquidation) (Second Respondent)
Michael Costigan (Third Respondent)
Sydney Water (Fourth Respondent)
Wyvell Pty Ltd (formerly known as Harnett Constructions Pty Ltd) (Fifth Respondent)

Representation:

G F Little SC/T S Little (Applicant)
D Letcher QC/S Tzouganatos (Third Respondent)
Curwoods Lawyers (Applicant)
Turner Freeman Lawyers (Third Respondent)

File Number(s):

CA 2011/289607

 Decision under appeal 

Citation:

Costigan v QBE Insurance (Australia) Ltd

Date of Decision:

2011-04-21 00:00:00

Before:

O'Meally PDDT

File Number(s):

DDT 307/2000

Judgment

1. BEAZLEY JA : I have had the advantage of reading in draft the reasons of Macfarlan and Meagher JJA. I agree in substance with both their Honour's reasons and with the orders proposed by Macfarlan JA. However, I wish to reserve my position on the following matter, that is Macfarlan JA's observation, at [18], in respect of the employer's liability for Mr Costigan's indivisible injury of progressive massive fibrosis. There, his Honour indicates that Mr Costigan's employer's liability for the indivisible injury will be deemed, pursuant to s 151AB(1), to have arisen not earlier than Mr Costigan's last period of employment with Dai John: see WorkCover Authority of New South Wales v Chubb Australia Ltd [2000] NSWCA 221 and Government Insurance Office of New South Wales v Colgate Palmolive Pty Ltd [2001] NSWCA 24; 50 NSWLR 729.

1. In Chubb , the worker's disease was mesothelioma. The Court stated, at [26], that a cause of action where the damage is mesothelioma is not complete until the disease strikes. The Court also commented that it will not be known which asbestos fibre caused the mesothelioma. The medical evidence that is adduced in mesothelioma cases does not, as I understand it, support the " one fibre theory " of attribution of the disease. Whether decisions such as Chubb will need to be reconsidered in the light of current medical knowledge is a question which does not presently arise.

1. There was no medical evidence in this case to enable a determination as to when progressive massive fibrosis " strikes ", to use the language of Chubb . Accordingly, I would reserve my opinion as to whether the employer's liability for Mr Costigan's progressive massive fibrosis is deemed to have arisen not earlier than 1975, being the last period of employment with Dai John.

1. MACFARLAN JA : QBE Insurance (Australia) Ltd ("QBE") seeks an order pursuant to s 69 of the Supreme Court Act 1970 quashing a decision dated 21 April 2011 given by Judge O'Meally (President of the Dust Diseases Tribunal of New South Wales) in proceedings in the Tribunal between Mr Michael Costigan as plaintiff and Dai John Excavating & Co Pty Ltd ("Dai John") and others as defendants. QBE contends that his Honour's reasons for judgment disclose a jurisdictional error and/or an error of law on the face of the record.

Proceedings in the Dust Diseases Tribunal

1. Mr Costigan pleaded the following in his Further Amended Statement of Claim dated 23 August 2010:

"3. From on or about August 1971 for a period of approximately two months, from about June 1972 to about October 1972 for a period of about four months, from about March 1973 to about January 1974 for a period of about 11 months and from about March 1975 to about October 1975 for a period of about eight months the plaintiff was employed by the [Dai John] as a labourer carrying out excavation work using a jackhammer and shovel. Whilst so employed, the plaintiff was required to carry out jack hammering and shovelling in trenches that were being excavated in sandstone rock. As a consequence of the work performed by the plaintiff during the course of his employment with the [Dai John], the plaintiff was exposed to and inhaled dust containing silica. The plaintiff seeks to recover his damages with respect to his employment with the [Dai John] from August 1971 to January 1974."

1. By Notice of Motion dated 7 April 2011, Mr Costigan sought an order pursuant to s 151AC of the Workers Compensation Act 1987 (the "1987 Act") appointing QBE as the "designated insurer" liable to indemnify Dai John under s 151AB of the 1987 Act.

1. By the decision dated 21 April 2011, the primary judge made an order appointing QBE as the designated insurer but noted that "[i]ts liability to indemnify Dai John ... is a matter not yet considered" (Judgment [27]). QBE seeks to have this order quashed.

The statutory provisions

1. The relevant parts of s 151AB and s 151AC (both in the form accepted by the parties to be applicable to the present proceedings) are as follows:

" 151AB Special insurance provisions relating to occupational diseases

(1) If an employer is liable independently of this Act for damages for an occupational disease contracted by a worker, the following provisions have effect for the purposes of any policy of insurance obtained by the employer:

(a) the liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due, subject to paragraph (b), [which is not relevant to these proceedings],

...

(4) This section does not affect the amount of damages recoverable by a worker.

...

(6) In sections 151AB and 151AC:

occupational disease means a disease of such a nature as to be contracted by a gradual process, and includes:

(a) a dust disease as defined by the Workers' Compensation (Dust Diseases) Act 1942 , and

(b) total or partial loss of sight which is of gradual onset, and

(c) the condition known as 'boilermaker's deafness' or any deafness of similar origin.

relevant commencement means:

(a) except as provided by paragraph (b) [which is not presently relevant] - 4 pm on 30 June 1987, or ...

...

151AC Further special insurance provisions relating to dust diseases

(1) Application of this section

This section applies in relation to an employer who is liable independently of this Act for damages for a dust disease as defined by the Workers' Compensation (Dust Diseases) Act 1942 contracted by a worker, where there is a dispute as to which of 2 or more insurers in a category of insurers is liable to indemnify the employer under any of the provisions of section 151AB.

(2) Designated insurer to be responsible pending resolution of dispute

For the purposes of section 151AB, and pending resolution of the dispute, the insurer who is the designated insurer in the relevant category under this section is to be treated as being the insurer who is so liable to indemnify the employer. Section 151AB has effect, and is to be construed, accordingly.

(3) Identification of designated insurer

The following provisions have effect for the purpose of determining which insurer among the following categories of insurers is the designated insurer for the purposes of this section:

(a) If, in the case of a liability that arose before the relevant commencement, there is a dispute as to which of 2 or more insurers is liable to indemnify the employer under section 151AB, the insurer who was the last of those insurers to be the employer's insurer while the worker was employed before that commencement by that employer is the designated insurer.

...

(4) However, the insurers in a category may agree as to which of them is to be the designated insurer or the Dust Diseases Tribunal can order that any one of them is to be the designated insurer, and any such agreement or order overrides subsection (3).

(5) Designated insurer to act for other insurers

In addition to the provisions of section 151AB:

(a) where subsection (3) (a) or (b) applies-the designated insurer who is the insurer liable under section 151AB (1) is to act for all the insurers in the relevant category in the carriage of the insurance aspects of the claim, and

...

(15) Definition

In this section:

category of insurers means the category consisting of the insurers in dispute as referred to in a paragraph of subsection (3)."

The effect of s 151AB

1. Section 151AB may have the effect of imposing a liability upon insurers in circumstances in which they are not otherwise liable under policies of insurance that they have issued. For example, the form of policy required to be issued pursuant to the now repealed Workers Compensation Act 1926 (the "1926 Act") did not provide indemnity where damage in the form of mesothelioma was suffered outside the term of the policy, even if the injury inducing such disease occurred during the term ( Orica Ltd v CGU Insurance Ltd [2003] NSWCA 331; 59 NSWLR 14 at [32]). In some circumstances s 151AB may affect this position by deeming liability to have arisen on a date falling within the term of the policy.

1. Some conditions, such as industrial deafness, that fall within the definition of "occupational disease" in s 151AB, although occurring gradually and having a long latency period, result from a number of distinct and complete tortious acts, rendering insurers liable in respect of such damage as is suffered upon the occurrence of those acts within the terms of operation of the insurance policies that they have issued. The difference between such divisible injuries and injuries that are indivisible (such as mesothelioma) was explained by this Court in WorkCover Authority of New South Wales v Chubb Australia Ltd [2000] NSWCA 221 at [26] in a passage that was cited with approval in Government Insurance Office of New South Wales v Colgate Palmolive Pty Ltd [2001] NSWCA 24; 50 NSWLR 729 at [65]:

"At this point, it is important to note that there is a significant difference between a closed claim for industrial deafness and a claim in respect of mesothelioma. The former is a succession of completed tortious insults whereas the latter, because of its aetiology, is not complete until the disease of mesothelioma strikes, usually many many years after the asbestos exposure. Also, one will normally not know which asbestos fibre caused the mesothelioma. It could be an asbestos fibre inhaled during any time over a lengthy period of exposure ... "

The difference is also explained by Lord Phillips P in Sienkiewicz v Greif (UK) Ltd [2011] UKSC 10 at [12] - [17].

1. In the case of divisible injuries s 151AB(1) changes the contractual position likely to have arisen out of relevant insurance policies by deeming the employer's liability to have arisen "when the worker was last employed by the employer in employment to the nature of which the disease was due" (subject to an exception that is not of present relevance). The reference to "employment to the nature of which the disease was due" is primarily a reference to work that exposed the employee to the risk of contracting the relevant condition ( CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169) but extends beyond the actual work undertaken to an employee's movements through the employer's premises in the course of employment, if that movement exposed the employee to the risk of contracting the relevant condition ( CIC Workers' Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422). Thus in the case of a divisible condition s 151AB has the effect of imposing liability for the whole loss upon the insurer on risk at the time that the relevant employment exposure ceased and relieving those insurers who were earlier on risk from liability for the share of the loss that they would otherwise have had to bear.

1. In the present case Mr Costigan's Further Amended Statement of Claim alleged that during various periods that he was employed by Dai John, concluding in October 1975, he was exposed to and inhaled dust that contained silica, leading to him suffering the following conditions:

"(a) Silicosis.

(b) Progressive Massive Fibrosis.

(c) Rheumatoid Arthritis.

(d) Psychiatric injury including Major Depressive Disorder."

1. In a finding that was not challenged in this Court, the primary judge referred to silicosis as a divisible injury and progressive massive fibrosis as an indivisible injury (Judgment [4]).

1. QBE insured Dai John against liability arising independently of the 1926 Act (that is, common law and other statutory liability) from July 1969 to November 1974. Dai John was also insured by Associated General Contractors Insurance Co Ltd ("AGC") between October 1970 and May 1973 (Judgment [6]). The primary judge noted that "attempts to ascertain whether Dai John was insured after QBE went off risk and, if so, by whom, were unsuccessful" (Judgment [9]).

1. According to Mr Costigan's Further Amended Statement of Claim, his employment with Dai John during which he was exposed to the risk of contracting the occupational diseases that he alleged he did contract did not conclude until October 1975. However Mr Costigan expressly limited his claim for damages to those arising out of his employment to January 1974 (see last sentence of paragraph 3, quoted in [5] above). Plainly this was done in an attempt to ensure that, by reason of s 151AB(1)(a), Dai John's liability arose whilst QBE was on risk as insurer, rather than at a later point of time during Mr Costigan's employment when no known insurer was on risk.

1. It has been held in cases concerning the divisible condition of industrial deafness that the date upon which the employer's liability is taken to have arisen for the purpose of s 151AB(1) can in effect be selected by the worker choosing a date for the cessation of the period to which his or her damages claim relates which is prior to the cessation of his or her relevant employment ( MMI Insurance Compensation (NSW) Ltd v Baker (1990) 41 NSWLR 289 at 293 - 4; FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257 at 260 - 1). However the position has been held to be otherwise in the case of indivisible injuries ( WorkCover Authority v Chubb Australia Ltd at [33] - [34]; GIO v Colgate Palmolive at [65]).

1. The effect of these authorities is that if Mr Costigan proves the allegations made in his Further Amended Statement of Claim, his employer's liability for the divisible injuries that he claims to have suffered (that is, his injuries other than progressive massive fibrosis) will be taken to have arisen on the last day of his relevant employment in January 1974 (that being the date to which his damages claim is confined), notwithstanding that relevant employment by Dai John also occurred subsequently, between March and October 1975. As QBE was on risk in January 1974 it will in these circumstances be liable to indemnify Dai John in respect of the damages payable by Dai John in respect of those injuries.

1. The position is different with respect to Mr Costigan's progressive massive fibrosis claim because the parties accept that that is an indivisible injury. The date upon which s 151AB(1) deems Dai John's liability in respect of that injury to have arisen is not earlier than Mr Costigan's last period of employment with Dai John (being in 1975) (see WorkCover v Chubb and GIO v Colgate Palmolive referred to in [16] above). In respect of that injury Mr Costigan cannot, as he can in the case of his divisible injuries, effectively select an earlier date by limiting the period in respect of which he claims damages. Thus the relevant date for that claim occurs at a time when QBE was no longer on risk. As Dai John is in liquidation and it had no known insurer after 1974, Mr Costigan's recovery of damages on that claim will be impaired, if not thwarted. In an apparent attempt to avoid this result, Mr Costigan sought and obtained, pursuant to s 151AC(4), the appointment of QBE as "the designated insurer".

The effect of s 151AC

1. Section 151AC is in essence a machinery provision designed to facilitate the prompt resolution of the worker's claim where there is a dispute between insurers as to which is liable to indemnify the worker's employer and to ensure that the existence of that dispute does not delay that resolution. It provides for the identification of one of the disputant insurers as the "designated insurer". The effect of the section is encapsulated in the heading to s 151AC(2): "Designated insurer to be responsible pending resolution of dispute".

1. As s 151AC(2) provides that for the purposes of s 151AB (and pending resolution of the dispute between the insurers) the designated insurer is to be treated as being the insurer who is liable to indemnify the employer, it is at least arguable that an order appointing an insurer as the designated insurer may have an important substantive effect: it may render the designated insurer liable to indemnify the employer for the benefit of the worker immediately upon the worker proving his or her claim, irrespective of any argument that the designated insurer may have that it is not so liable. On this view that insurer's only remedy would be to obtain reimbursement from the other disputant insurers in the event that it were ultimately found that the designated insurer was not "the insurer who is liable" (see s 151AC(10)).

1. It would perhaps be surprising if this view were correct as s 151AC otherwise appears to be a section dealing with interim mechanics rather than one affecting ultimate substantive rights. However it is not necessary for the purpose of disposing of the present proceedings to express a view as to the proper construction of s 151AC(2). It is sufficient to recognise that an assumption that the view to which I have referred has, or at least may have, force explains Mr Costigan's eagerness to obtain the appointment of QBE as the designated insurer and QBE's resistance to that occurring.

The primary judge's reasoning

1. Having referred to various authorities, the primary judge expressed the following conclusions:

"23. [ FAI Traders Insurance ] was a case in which damages were claimed for industrial deafness, and the plaintiff sought damages in respect of noise exposure to a date earlier than the date of his last exposure to loud noise. This was done for a legitimate forensic purpose which affected his claim for damages. It also affected the identity of the insurer liable to indemnify the plaintiff's employer.

24. It is relevant here to note that the insurer whom the plaintiff wishes to be appointed designated insurer was the insurer at the time of the last alleged relevant exposure. The last relevant exposure as distinct from the last exposure was in January 1974, and for present purposes, one might consider that the last relevant alleged exposure is the one to be considered.

25. QBE is the insurer which was last on risk at the last date of alleged relevant negligent exposure to silica. There are two insurers of Dai John and neither has agreed to indemnify it. Accordingly, one must assume that there is a dispute as to which insurer should indemnify it. In those circumstances, I think it appropriate to appoint QBE as the designated insurer of Dai John, and I will so order.

26. I should also have referred to Mr Little's concern that if I make an order appointing QBE as designated insurer, it will, if the plaintiff succeeds, be required to indemnify the plaintiff for such part of the damages as may be awarded against Dai John. As it seems to me, there are two separate questions, and they are not necessarily connected. The determination of the payment of the plaintiff's damages in the event he succeeds is a question yet to be determined.

27. QBE Insurance (Australia) Limited is appointed designated insurer for the purposes of s 151AC of the Workers Compensation Act. Its liability to indemnify Dai John Excavating Co Pty Ltd is a matter not yet considered."

The correctness of the primary judge's reasoning

1. Leaving aside the claim in respect of progressive massive fibrosis (with which I will deal later), the insurance position was that QBE was on risk at the relevant date in January 1974, but AGC was not then on risk, although it earlier had been. In the absence of any suggestion that Mr Costigan's allegation that he was in relevant employment with Dai John in January 1974 was incorrect, there was in these circumstances no sensible argument available that s 151AB(1) had the effect of rendering AGC liable as an insurer in place of, or in addition to, QBE. This is reflected by AGC's withdrawal of its initial appearance in the proceedings once QBE was identified as an insurer that was later on risk (Transcript p 11, lines 2-4).

1. Neither party suggested to this Court that there was any actual dispute between QBE and AGC, or between either of those companies and Dai John or Mr Costigan, as to whether AGC was liable to indemnify the employer. The primary judge did not suggest that there was any evidence of such a dispute but said: "[t]here are two insurers of Dai John and neither has agreed to indemnify it. Accordingly, one must assume that there is a dispute as to which insurer should indemnify it" ([25]). I do not, with respect, consider that there was any basis upon his Honour could have made that assumption. There was no sensible argument available that AGC had a liability and, at least by the date of the hearing in the Tribunal, no-one appears to have been so contending. Nor was there any suggestion that there was an insurer other than QBE or AGC which might be liable to indemnify the employer.

1. In my view there was therefore no basis upon which the primary judge could have concluded that, in the words of s 151AC(1), there was "a dispute as to which of 2 or more insurers in a category of insurers is liable to indemnify the employer under any of the provisions of s 151AB". Section 151AC(1) plainly indicates that the existence of such a dispute is a condition for the application of s 151AC. As that condition was not fulfilled, the section did not apply in the circumstances before the primary judge and his Honour had no power to make the order that he made under s 151AC(4) appointing QBE as the designated insurer. His Honour's decision was thus vitiated by jurisdictional error and should be quashed by an order made pursuant to s 69 of the Supreme Court Act .

1. The reasoning that led the primary judge to appoint QBE as the designated insurer did not distinguish between Mr Costigan's claims in respect of silicosis, which his Honour had earlier noted was a divisible injury, and progressive massive fibrosis, which his Honour had earlier noted was an indivisible injury. (This was perhaps understandable as Mr Costigan's counsel had told his Honour that silicosis was "the foundation" of Mr Costigan's claim: Transcript p 5, lines 23-30). His Honour concluded that, by reason of FAI Traders Insurance , the last date to which Mr Costigan's claim was expressed to relate was the relevant date for the purposes of s 151AB(1), rather than the date of his last relevant exposure to silica. In light of the decisions in WorkCover v Chubb and GIO v Colgate Palmolive (see [16] above), this view was erroneous insofar as it applied to Mr Costigan's claim in respect of the indivisible condition of progressive massive fibrosis.

1. Turning back to his Honour's power to make an order under s 151AC(4), the conclusion I have expressed in [25] above concerning Mr Costigan's other claims is also warranted in respect of his progressive massive fibrosis claim. As in the case of the silicosis claim, there was no basis for the Tribunal to conclude that a dispute of the type referred to in s 151AC(1) existed. If Mr Costigan succeeds in proving the allegations that he makes in respect of his progressive massive fibrosis claim, the relevant date for the purposes of s 151AB will not be the last exposure date falling in January 1974 (which will be the date referable to the silicosis claim) but will be the later date when his relevant employment ceased. This is so irrespective of the period to which Mr Costigan's claim is confined. It is clear in these circumstances that not only will AGC have no liability but also that QBE will not be liable, because it was then off risk. Regard to the progressive massive fibrosis claim therefore confirms that the order appointing QBE as designated insurer should be quashed.

1. It is unnecessary for the purposes of these proceedings to express a view as to whether the fact that QBE cannot have any liability to indemnify Dai John in respect of Mr Costigan's progressive massive fibrosis claim alone should have precluded QBE's appointment as the designated insurer, irrespective of whether a dispute between insurers existed. It would have been necessary to consider in this context that this was not Mr Costigan's only claim and that he claimed damages in respect of both divisible and indivisible injuries.

Orders

1. For the reasons that I have given I propose that the following orders be made:

(1) An order pursuant to s 69 of the Supreme Court Act quashing the orders made on 21 April 2011 in proceedings 307/2000 in the Dust Diseases Tribunal appointing QBE Insurance (Australia) Ltd as designated insurer for the purposes of s 151AC of the Workers Compensation Act and ordering that the costs of the application for that order be the plaintiff's costs in the cause.

(2) Order that the third defendant, Michael Costigan, pay the costs of QBE Insurance (Australia) Ltd of the proceedings in this Court.

1. For the reasons given in Kirk v Industrial Court (NSW) [2010] HCA 1; 239 CLR 531 at [110] - [111] this Court is not able to make the further order sought by QBE that Mr Costigan pay its costs of the application dealt with by the primary judge.

1. MEAGHER JA : Michael Costigan ( Costigan ) claims damages against Dai John Excavating Co Pty Ltd ( Dai John ) and three other defendants for diseases contracted as a result of exposure to silica dust in the course of his employment. Dai John is now in liquidation. QBE Insurance (Aust) Ltd ( QBE ) insured Dai John against liability arising independently of the Workers Compensation Act 1926 ( 1926 Act ) for the period 31 July 1969 to 15 November 1974. On 21 April 2011, Judge O'Meally (President of the Dust Diseases Tribunal of New South Wales) ordered that QBE should be the "designated insurer" of Dai John in respect of its claimed liability to Costigan. That order was made under s 151AC(4) of the Workers Compensation Act 1987 ( 1987 Act ).

1. QBE seeks an order pursuant to s 69 of the Supreme Court Act 1970 quashing that order on the basis that there was error on the face of the record and jurisdictional error. The "face of the record" relevantly includes the reasons expressed by Judge O'Meally: s 69(3), (4).

1. Section 151AC is concerned with circumstances in which "there is a dispute as to which of 2 or more insurers in a category of insurers is liable to indemnify the employer under any of the provisions of section 151AB" in respect of a liability for an occupational disease contracted by the worker: s 151AC(1). The reference to "category" is to one of the categories of insurers described in s 151AC(3). For a liability of an employer to a worker arising before 30 June 1987 and by virtue of the deeming provision in s 151AB(1), the relevant category is s 151AC(3)(a). Section 151AC(9) confirms that the subject matter of the "dispute" to which s 151AC is directed is which of two or more insurers "was the insurer when the worker was last employed at the relevant time by the employer in an employment to the nature of which the disease was due".

1. Section 151AB(1) deems any liability which arises independently of that Act for damages for an occupational disease "to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due": as to the meaning of "employment" in this expression see CIC Workers Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 at 173, 177; and CIC Workers Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422 at 426, 427. Therefore, for s 151AC to be engaged in respect of the liability of an employer for an occupational disease, there must be a dispute as to which of two or more insurers was the insurer at the time s 151AB(1)(a) deems the employer's liability for that disease to have arisen.

1. Costigan claims damages for more than one "occupational disease" contracted by reason of his exposure to silica dust. However, in the way he has made his claim against Dai John there is not, and could not be on the facts found by the primary judge, any dispute as to which of two or more insurers was the insurer at the time s 151AB(1)(a) deems Dai John's liability for the claimed diseases to have arisen.

1. To make good that conclusion, it is necessary to set out certain of the facts as found by the primary judge:

"4. The plaintiff alleges that as a result of exposure to silica dust in the course of his employment by a number of defendants, including Dai John, he has contracted silicosis, progressive massive fibrosis and certain other disorders. It is sufficient for present purposes to observe that silicosis is a divisible injury and progressive massive fibrosis is an indivisible injury. Silicosis is a dust disease as defined by the Workers Compensation (Dust Diseases) Act 1942 .

5. The case the plaintiff seeks to make against Dai John is recited in par 3 of his Statement of Claim. It is:

From on or about August 1971 for a period of approximately two months, from about June 1972 to about October 1972 for a period of about four months, from about March 1973 to about January 1974 for a period of about 11 months and from about March 1975 to about October 1975 for a period of about eight months the plaintiff was employed by the Fourth Defendant as a labourer carrying out excavation work using a jackhammer and shovel. Whilst so employed, the plaintiff was required to carry out jack hammering and shovelling in trenches that were being excavated in sandstone rock. As a consequence of the work performed by the plaintiff during the course of his employment with the Fourth Defendant, the plaintiff was exposed to and inhaled dust containing silica. The plaintiff seeks to recover his damages with respect to his employment with the Fourth Defendant from August 1971 to January 1974.

6. QBE insured Dai John against liability arising independently of the Workers Compensation Act for the period 31 July 1969 to 15 November 1974. Between October 1970 and May 1973, Dai John was also insured by Associated General Contractors Insurance Co Ltd (AGC). It should be noted that the plaintiff continued employment by Dai John after QBE went off risk, but seeks damages only in respect of employment to January 1974, when QBE was on risk."

1. Notwithstanding that Costigan alleges that he was employed by Dai John in employment where he was exposed to and inhaled silica dust for four periods commencing in about August 1971 and ending in about October 1975, he only seeks to recover damages with respect to his employment during the period from August 1971 to January 1974. Macfarlan JA at [16] to [18] provides an explanation as to why Costigan has confined his damages claim to the period ending in January 1974.

1. As that explanation shows, there are issues as to whether, in respect of some of the diseases for which Costigan claims damages, QBE is liable to indemnify it by the operation of the deeming provision in s 151AB(1)(a). In relation to any damages for progressive massive fibrosis, QBE says it is not liable to indemnify Dai John because it is an indivisible injury and the time at which liability is deemed by s 151AB(1)(a) to have arisen is October 1975. The position is different in relation to any liability for damages for silicosis, which is a divisible injury. In the way Costigan's claim is made, any liability may be deemed to have arisen in January 1974.

1. There can be no similar dispute between Associated General Contractors Insurance Co Ltd ( AGC ) and Dai John or Costigan. AGC ceased to insure Dai John in May 1973 and, for the reasons given above, the time when Costigan was "last employed", for the purpose of the deeming provision, was either January 1974 or October 1975. For that reason, there could be no issue as between Dai John or Costigan and AGC as to whether it could be liable to indemnify Dai John in respect of any of the claimed diseases, whether divisible or indivisible. It could not.

1. Notwithstanding that this was the position, the primary judge dealt with the matter as follows:

"25. QBE is the insurer which was last on risk at the last date of alleged relevant negligent exposure to silica. There are two insurers of Dai John and neither has agreed to indemnify it. Accordingly, one must assume that there is a dispute as to which insurer should indemnify it. In those circumstances, I think it appropriate to appoint QBE as the designated insurer of Dai John, and I will so order."

1. It is correct that there were two insurers of Dai John and that neither had agreed to indemnify it. However, there could not be a dispute between AGC and QBE, or between AGC and Dai John or Costigan, as to whether AGC was liable for the reasons given above. The only conclusion available on the evidence was that there was not a dispute as to which of the insurers was the insurer when the worker was "last employed". The only dispute was (and remains) whether in respect of claims for particular diseases, QBE was the insurer when the worker was "last employed".

1. In the circumstances, there was jurisdictional error and error on the face of the record. The order made under s 151AC(4) should be quashed. I agree with the orders proposed by Macfarlan JA.

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Decision last updated: 22 December 2011