The Workers Rehabilitation and Compensation Corporation (Appellant) v JR Engineering Services Pty Ltd, Western Mining Corporation (Olympic Dam Operations) and Jeffrey John Ball (Respondent 3) No. SCGRG 94/970...

[1995] SASC 4992

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA MOHR(2), OLSSON(1) AND DEBELLE(3) JJ

CWDS
Workers' compensation - Employer is contractor who services equipment - employer contracts to service plant and equipment of mining operator - employer agrees to indemnify mining operator in respect of any injury suffered by employees of the contractor - employee of contractor injured - mining operator held to be liable to make contribution in respect of the injury - whether agreement to indemnify is valid - whether contractor may recover from Workers Rehabilitation and Compensation Corporation an amount equal to the amount paid by it to indemnify the mining operator. Workers Rehabilitation and Compensation Act, 1986 ss 54(1), 54(4), 119, 105 and Wrongs Acts 25(1)(c). Currie v Dempsey (1967) 2 NSWR 532 and Technical Products Pty Ltd v State Government Insurance Office (Q) (1989) 167 CLR 45, applied. Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261, Westpac Banking Corporation v P and O Containers Ltd (1991) 102 ALRF 239; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Lister v Romford Ice and Cold Storage Co Ltd (1957) AC 555; Andrews v Ziersch (1994) 175 LSJS
377; Genders v GIO of NSW (1959) 102 CLR 363; Thiess Bros Pty Ltd v NZ Insurance Co Ltd (1965) 13 FLR 3; Club Motor Insurance Agency Pty Ltd v Sargent (1969) 118 CLR 658; Trustees Executors and Agency Co Ltd v Reilly
(1941) VR 110 and McDowell v Baker (1979) 144 CLR 413, considered.

HRNG ADELAIDE, 13 October 1994 #DATE 10:3:1995 #ADD 1:5:1995

Counsel for appellant Corporation:     Mr H Rowell

Solicitors for appellant Corporation:    Stratford and Co

Counsel for respondent JR Engineering:    Mr T Stanley

Solicitors for respondent JR Engineering: Mellor Olsson

Counsel for respondent WMC:     Mr R White

Solicitors for respondent WMC: Mouldens

Counsel for respondent Ball:     Mr Cocks

Solicitors for respondent Ball: D H Wilson

ORDER
Appeal allowed.

JUDGE1 OLSSON J This is an appeal by The Workers Rehabilitation and Compensation Corporation ("the Corporation") against that portion of a decision of a District Court Judge, pronounced on 15 June 1994, whereby the learned judge:-
    . ordered that the respondent Western Mining Corporation
     ("WMC") have judgment against the respondent JR
     Engineering Services Pty Ltd ("JRE") in the sum of
     $59,357.43, together with its costs of action to be
     taxed;
    . declared that WMC was entitled to be indemnified by JRE
     in respect of such sums as WMC is, or may be, liable to
     pay to the respondent Jeffrey John Ball ("Ball"), or to
the Corporation, pursuant to section 54 of the Workers
     Rehabilitation and Compensation Act, 1986 ("The
     Compensation Act") and
    . ordered that JRE was entitled to indemnity from the
     Corporation in respect of the judgment against it as
     indicated above.

2. The orders and declaration sought to be impugned arose from an action whereby Ball, as plaintiff, claimed damages from both JRE and WMC (as defendants) for personal injuries said to have been sustained by him on 24 April 1990. The claim was based on negligence and breach of duty alleged against both defendants. Each defendant sought contribution from the other. JRE joined the Corporation as a third party, seeking a statutory indemnity in respect of the claim by Ball.

3. The evidence revealed that, at the relevant time, Ball was an employee of JRE, which had entered into a contract with WMC to supply and manage "the necessary competent and qualified tradespersons to maintain and repair both fixed plant and mobile equipment" located at the WMC site at Olympic Dam. Ball was, by trade, a fitter and turner.

4. At all relevant times the plaintiff was a member of a "maintenance gang" falling under the supervision of one Moore, who was also a JRE employee. At the time at which Ball was injured, the maintenance gang was, for all practical purposes, working at the direction and under the control of one Walker, who was a mechanical foreman on the staff of WMC.

5. On 24 April 1990 Ball, Moore and a fellow employee named Osborn, were working on certain valves fitted to a large item of fixed plant known as a Lasta Press. Some difficulty was experienced by Moore and Osborn in re-assembling what was known as valve 31. It became necessary to retract a piston to re-position a diaphragm in the valve. This would normally have been achieved by connecting regulated (that is, relatively low, constant pressure) "instrument air" to the valve position. However, this was not available, because all systems at the press had been shut down for safety purposes, whilst the maintenance work was taking place.

6. Moore was under some pressure from senior WMC employees to get the press back "on line". He eventually ordered Ball (who had been working nearby on another valve) to secure and connect a very high pressure, unregulated, oxygen cylinder to the piston to re-position the valve parts. Ball did so, but the unregulated pressure caused the valve to explode, occasioning injury to him.

7. There is no present need to go into the fine detail as to how and why the explosion occurred.

8. Suffice it to say that the learned judge held that both JRE and WMC were liable in damages to Ball; and that his findings as to breach of duty leading to such damages in that regard are not now under challenge. He found JRE in breach of its non delegable duty to provide a safe system of work and WMC in reach of its general duty of care to Ball - having regard to the proximity between it and him, as disclosed by the evidence. He accepted the assertion that Ball had been guilty of contributory negligence to the extent of 10%. He thereupon proceeded to assess damages and entered judgment, in terms which I have already recited, as to the balance of 90% of the damages assessed.

9. The lastmentioned findings of the learned trial judge as between Ball (as plaintiff) and JRE and WMC (as defendants) are not now in dispute. What is in contention is the appropriateness of the consequential orders made as between JRE, WMC and the Corporation.

10. In that regard one complicating factor was the content of the contract entered into between JRE and WMC.

11. Inter alia, that document stipulated:-
    "2.1 The Contractor undertakes that all work performed by
    it or any person or third party employed by it pursuant to this
    Agreement shall be performed in a careful proper, workmanlike
    and professional manner and further undertakes to indemnify the
    Principal from any loss or damage which the Principal may suffer
    as a result of any activity carried out by the Contractor, its
    servants or agents.

2.2 The Contractor shall indemnify and keep indemnified,
    the Principal, its employees and agents, and hold each of
    them harmless from and against:

a) all loss of or damage to property,
    b) all loss or damage resulting from injury (including
    death) to any person including the Contractor, its employees
    and agents,
    in connection with any equipment that is the subject of this
    Contract, whether at Common law or under any statute, save
    for loss due to the sole negligence of the Principal, or
    loss occurring without negligence or the Contractor."

12. By virtue of the indemnity therein referred to, WMC sought to avail itself of section 25(1) of the Wrongs Act, which provided that:-
    "25. (1) Where damage is suffered by any person as a
    result of a tort (whether a crime or not) -

(a) ...

(b) ...

(c) any tort-feasor liable in respect of that damage may
    recover contribution from any other tort-feasor who is, or would
    at any time have been, liable in respect of the same damage,
    whether as a joint tort-feasor or otherwise, so, however, that
    no person shall be entitled to recover contribution under this
    section from any person entitled to be indemnified by him in
    respect of the liability in respect of which the contribution is
    sought".

13. The riposte of JRE to that proposition was that such an argument was not sustainable because, having regard to the provisions of section 119 of the Compensation Act, the contractual indemnity sought to be relied upon by WMC was void.

14. Subsection (1) of that section read as under:-
    "119. (1) Any agreement or arrangement entered into without
    the consent of the Corporation that purports to exclude,
    modify or restrict the operation of this Act is to that
    extent void and of no effect.

(2) Any purported waiver of a right conferred by or under
    this Act is void and of no effect."

15. It was further contended by JRE that any right that WMC might have had against it for contribution pursuant to the Wrongs Act was also unenforceable, because of the operation of section 54(4b) of the Compensation Act, which stipulated that:-
    "(4b) Where -

(a) a worker suffers a compensable disability (not being a
    disability that arises out of the use of a motor vehicle and
    gives rise to a liability of a kind referred to in
    subsection (2));

and

(b) action is taken against a person other than the
    employer for damages in respect of the disability,
    the other person has no right to recover contribution from
    the employer."

16. It was finally said, on behalf of JRE, that, because the claim by Ball against WMC was for common law damages generally (including economic loss), no liability attached to JRE, as Ball's employer, by virtue of the limiting provisions of section 54(1) of the Compensation Act. That subsection provided:-
    "54. (1) Subject to subsection (2), no liability attaches
    to an employer in respect of a compensable disability
    arising from employment by that employer except -

(a) a liability under this Act;

or

(b) a liability at common law for non-economic loss or
    solatium."

17. The learned District Court Judge considered those arguments.

18. He rejected the submission based on section 119 of the Compensation Act on the basis that the maxim ommia praesumuntur legitime facta donec probetur in contrarium applied; and that JRE bore the onus of proving its affirmative proposition that no consent had been given to the agreement for indemnity; and had not discharged that onus. He further held that section 54 was inapplicable, because that section focused its attention on contribution in the sense in which that expression is employed in the Wrongs Act - whereas what was here in issue was a claim for contractual indemnity. The two remedies of contribution and a right to indemnity were, he said, quite different in legal conceptual terms, even although, as a matter of fact, a right of contribution may, in some instances, amount to a practical indemnity.

19. The learned trial judge found that the liability of WMC in damages to Ball fell within the indemnity clause of the agreement, having first determined that liability should be apportioned as to 40% of the 90% against WMC and as to the balance of 50% against JRE.

20. He then directed his attention to the third party claim by JRE against the Corporation. This was based on section 105 of the Compensation Act which, as at the time of Ball's injury, read in these terms:-
    "105 An employer who is registered under this Act (not
    being an exempt employer), and any employer who is not required
    to be registered because of an exemption under the regulations,
    is insured by the Corporation, subject to terms and conditions
    prescribed by regulation, against any liability that may arise
    apart from this Act in respect of a compensable disability
    arising from employment (being employment to which this Act
    applies) by the employer."

21. Pirone DCJ rejected the contention of counsel for the Corporation that the effect of section 105, properly construed so as to give effect to the apparent statutory intention, was to ensure that its obligation to JRE could not exceed the JRE contribution to Ball, ie that it was limited to non economic loss up to 1.4 times the "prescribed sum", as provided for in the Compensation Act. He noted the consequential submission that JRE was not liable to WMC, as claimed, and that the Corporation's statutory liability to insure did not extend to some contractual liability of JRE, which - it was submitted - was simply not a liability "in respect of a compensable disability" under the Compensation Act.

22. Having regard to the historical evolution of section 105 and the contrast between the phraseology employed in it by way of comparison with its precursor, the learned trial judge was unable to accept such a proposition.

23. He noted that the precursor of section 105 was couched in these terms:-
    "A registered employer (not being an exempt employer) is
    insured by the Corporation, subject to the terms and conditions
    prescribed by regulation, against any liability that may arise
    apart from this Act for non-economic loss or solatium in respect
    of compensable disabilities arising from employment (being
    employment to which this Act applies) by the registered
    employer."

24. He reasoned that the specific difference in terminology employed in the later form of the section clearly indicated an intention on the part of the legislature to broaden the sphere of operation of the statutory insurance cover. Moreover, he was of opinion that the liability, the subject of the JRE claim against the Corporation, was in respect of a compensable disability within the meaning of section 105. On that basis he upheld the claim.

25. The present appeal puts in question the correctness of the foregoing lines of reasoning.

26. Counsel for the various parties sought to re-visit all of the above points in the context of that appeal.

27. The logical first question to be addressed is as to whether or not the indemnity enshrined in the agreement between JRE and WMC is enforceable, having regard to the provisions of sections 119 and 54 of the Compensation Act. This, as it seems to me, is not a question of whether the contractual indemnity is "illegal" in the technical sense, as debated before the learned trial judge. The issue is whether or not it is rendered void by the statute, because of both the nature of the indemnity, its practical effect and any lack of requisite consent on the part of the Corporation.

28. The first point to be made is that the indemnity clause appears as one of many clauses which, in total, constitute a bona fide commercial agreement between the parties, whereby WMC outsources its major equipment maintenance and repair requirements to JRE. It must be seen as an integral portion of an overall financial bargain struck, at arms length, between the parties, as part and parcel of the outsourcing arrangement. No doubt the indemnity clause had a not unimportant part to play in striking the rates to be paid for the services provided.

29. As was pointed out by Mr White, of counsel for WMC, it must be borne in mind that:-
    . the agreement did not set out to broaden or restrict any
     statutory rights or entitlements of the employee Ball - on
     the contrary they have not been affected at all;
    . so far as the Corporation is concerned:-
     - its liability to Ball is not altered
     - its duty to recoup JRE as to the proper quantum of
        Ball's claim for non-economic loss remains unaltered
     - its rights of recovery under subsections (5) and (7) of
section 54 of the Compensation Act have in no sense been
        abated.

30. So it is, he argued, that it simply cannot be said that the agreement operated so as to purport to exclude, modify or restrict the operation of the statute in a manner proscribed by section 119.

31. In my view this is a correct assessment of the situation because, as he submitted, the exclusion, modification or restriction addressed by section 119, is obviously concerned with the same subject matter as section 54, namely liability "in respect of a compensable disability arising from employment". The restriction imposed by the latter section relates only to that type of liability.

32. As was stressed by Mann CJ in The Trustees Executors and Agency Co Ltd v Reilly (1941) VLR 110 at 111, the phrase "in respect of" has a very wide connotation, which necessarily conveys some connection or relation between two subject matters.

33. That approach is consistent with what fell from the High Court in Technical Products Pty Ltd v State Government Insurance Office (Queensland)
(1989) 167 CLR 45 at 47, where it was pointed out that the phrase "in respect of" has a very wide meaning and possesses a chameleon-like quality, in that it commonly reflects the context in which it appears. It is not, it was said, susceptible of precise definition, but it implies a nexus in the sense of some discernible and rational link between the two subject matters in question. (See also Fraser v The South East Queensland Electricity Board (1992) 1 Qd R
508.) in McDowell v Baker (1979) 144 CLR 413 at 419 it was also commented that such a phrase has "the widest possible meaning of any expression intended to convey some connection or relation between two subject-matters to which the words refer". As was pointed out in Allingham v Redlands Returned Services Leagues Services Club (1988) 2 Qd R 593 at 596 it does not import any closer or causal connection than that where the phrase appears in the context "in respect of such injury". However, at the end of the day, the exact width of the expression will very much depend on the precise context in which it appears and a consideration of the purpose or object underlying the relevant legislation (Butler v Johnston, Guild and Somes (1984) 55 ALR 265 at 268).

34. There must, then, be a discernible or rational link, for the purposes of section 54, between a relevant disability and the liability said to attach to it. In the instant case what is in issue is a commercial contractual liability between two parties - other than the party actually sustaining a compensable disability - which is in fact "in respect of" loss or damage sustained by WMC as a consequence of personal injury to Ball. Moreover, if the Corporation is liable, by virtue of section 105 of the Compensation Act, as an insurer, to indemnify JRE in respect of sums which it is contractually bound to pay WMC, then, as Mr White so forcefully put it, such liability is a consequence of the statute operating according to its own terms; and not from any modification or restriction of the operation of it. The Corporation is, in the circumstances, merely being called upon to honour its statutory obligation as an insurer.

35. I also agree that, even if that view be considered incorrect, then an important question of evidentiary onus arose at trial. It is here that proper characterisation becomes important. The contract between JRE and WMC was not ex facie illegal. At worst it only became void in the event that it was shown to have been entered into without the consent of the Corporation.

36. If the Corporation desired to raise any issue of illegality or enforceability of the agreement, it was bound to make that affirmative plea and accept the evidentiary onus of making it good. (See the reasoning in Frank v Piliczky (1984) 117 LSJS 355 at 363-364, 374-376.) It did not do so, as the learned trial judge was at pains to point out. Thus no legal issue as to a potential operation of section 119 ever arose; and there was no evidentiary onus on WMC to address such a question. In fact the question was only identified at the eleventh hour in the course of counsel's addresses, when all parties had, of course, closed their cases.

37. It follows that the ultimate conclusions come to by the learned trial judge on these matters were correct, although not precisely for the reasons expressed by him.

38. Moreover, insofar as subsection (4b) of section 54 of the Compensation Act operates to restrict rights of recovery by third parties, it specifically directs its attention to a restriction on the right of such parties "to recover contribution from the employer". What is manifestly there in contemplation is the concept of contribution (in the technical, legal sense) as reflected upon by section 25(1) of the Wrongs Act. As the learned trial judge held, the legal concept of "contribution" is quite distinct and separate from the legal concept of an indemnity - particularly a contractual indemnity. This is readily illustrated by Birmingham and District Land Company v London and North Western Railway Company (1886) 34 Ch D 261, Westpac Banking Corporation v P and O Containers Ltd (1991) 102 ALR 239 and Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 596. Indeed the Wrongs Act itself makes such a distinction, in subsection (1)(c) of section 25.

39. On a reading of section 54 of the Compensation Act it at once becomes apparent that the word "contribution" was employed advisedly and does not (and was not intended to) remove any entitlement which relevant parties may have conferred by their express contractual arrangements.

40. It follows that section 54(4b) does not operate so as to avoid other than contributions between tort feasors pursuant to the statutory provisions in that regard. (See the reasoning in Andrews v Ziersch and Ors (Full Court, 17 March 1994, unreported).)

41. In the course of his argument Mr White suggested that section 105 of the Compensation Act ought to be read down, in the context of the statute, to exclude liability in respect of a contractual obligation such as that now before the Court. It ought, he said, to be strictly contained to its express terms, namely, an insurance against any liability that might arise, apart from the statute, in respect of a compensable disability stemming from employment.

42. For reasons which I have already expressed, section 105 clearly spans a width of potential damages wider than that for which an employer is bound to pay compensation, as delineated by section 54. The touchstone is that the liability for damages must arise "in respect of" a relevant compensable disability - that is to say, there must be a discernible and rational link between the disability and the liability.

43. The problem which arises in that regard, in the instant case, is that section 105 is, in my view, concerning itself with a liability directly incurred by an employer in relation to an injured employee who has sustained a compensable disability, whereas what is here in issue is a liability flowing from contractual relationships entered into between the employer and a third party, albeit that the "triggering" mechanism for that liability was a claim against the third party - which arose from a disability which happened to be compensable under the Compensation Act, because it occurred in the course of Ball's employment. In my opinion, when section 105 spoke of "liability ... in respect of a compensable disability arising from the employment" it was not directing attention to such a tenuous link - so far as the operation of that section was concerned.

44. I would therefore allow the appeal for the purpose of setting aside so much of paragraph 7 of the judgment appealed against as relates to the alleged section 105 liability, but would dismiss all other aspects of the appeal. Having regard to what would appear to be a typographical error in the final paragraph of the formal judgment as sealed and entered in this matter, I would hear counsel as to whether some correction of this text is required. The recitals in the order appealed against will also require some consequential correction.

JUDGE2 MOHR J I agree.

JUDGE3 DEBELLE J One of the employees of J R Engineering Services Pty Ltd ("JRE") was injured whilst working in the course of his employment by JRE on premises owned by Western Mining Corporation (Olympic Dam Operations) Pty Ltd ("WMC"). The questions in this appeal are

1. whether an agreement made between JRE and WMC by which
    JRE was required to indemnify WMC against any liability WMC
    may incur for injury to a person employed by JRE is valid,
    and

2. JRE can recover from the Workers Rehabilitation and
    Compensation Corporation ("the Corporation") pursuant to
    s105 of the Workers Rehabilitation and Compensation Act 1986
    an amount equal to the amount paid by it to indemnify WMC.

The issues arise in this way. 2. By an agreement dated 15 January 1990 WMC engaged JRE to maintain the plant and equipment at its mill in the metallurgical plant in its undertaking at Olympic Dam. JRE contracted to supply and manage the personnel to carry out the maintenance. It was a term of that agreement that JRE would indemnify WMC in respect of any liability which WMC might incur to any employee of JRE. The indemnity was provided in Clause 2 of Section D of the agreement. In Clause 2 the expression "the Contractor" refers to JRE and the expression "the Principal" is WMC. The relevant parts of Clause 2 provided:
    "2.1 The Contractor undertakes that all work performed by
    it or any person or third party employed by it pursuant to
    this Agreement shall be performed in a careful proper,
    workmanlike and professional manner and further undertakes
    to indemnify the Principal from any loss or damage which the
    Principal may suffer as a result of any activity carried out
    by the Contractor, its servants or agents.

2.2 The Contractor shall indemnify and keep indemnified,
    the Principal, its employees and agents, and hold each of
    them harmless from and against:

a) all loss of or damage to property,
    b) all loss or damage resulting from injury (including
    death) to any person including the Contractor, its employees
    and agents,
    in connection with any equipment that is the subject of this
    Contract, whether at Common Law or under any statute, save
    for loss due to the sole negligence of the Principal, or
    loss occurring without negligence of the Contractor."

JRE was an employer registered with the Corporation pursuant to the WorkersRehabilitation and Compensation Act ("the Act"). One of JRE's employees was a man named Ball. On 24 April 1990 Ball was injured while carrying out maintenance work on WMC's mill at Olympic Dam. He instituted an action for damages for the injuries he had sustained in the accident. He named both JRE and WMC as defendants. As against JRE he claimed damages for non-economic loss, apparently in recognition of the fact that by virtue of s54(1) of the Act that is the only loss recoverable from JRE, and as against WMC damages for both economic and non-economic loss. JRE and WMC served contribution notices upon one another. WMC pleaded, among other things, its reliance on the indemnity provided by Clause 2.

3. It is unnecessary to examine the facts relating to the accident in which Ball was injured or the issues concerning liability or the amount claimed for damages. The trial judge found that both JRE and WMC owed a duty of care to Ball and that each had been negligent in the discharge of that duty. He found also that Ball was guilty of contributory negligence and apportioned ten per cent of the responsibility for the accident against him. He then apportioned the liability of JRE and WMC in the proportion fifty per cent against JRE and forty per cent against WMC.

4. The issue then arose whether WMC could rely on its contractual indemnity and recover from JRE the amount which it had been ordered to pay by way of contribution to the award of damages. That in turn led to another question, namely, whether JRE was entitled to be indemnified by the Corporation under s105 of the Act in respect of its liability to indemnify WMC. The learned judge held that JRE was liable to indemnify WMC under the contact and that JRE in turn could be indemnified in respect of its liability by the Corporation.

5. The trial judge assessed the damages payable to Mr Ball in the total sum of $64,174.92 made up as follows:
    Non-economic loss   $22,500.00
    Economic loss  27,000.00
    Past hospital and medical expenses        5,889.80
    Travelling expenses   8,785.12
  $64,174.92

Those damages were then reduced by one-tenth for the contribution payable by Mr Ball. The trial judge then ordered that Mr Ball recover from JRE the sum of $21,690 being its liability for the non-economic loss inclusive of interest. He further ordered that Mr Ball recover from WMC the sum of $59,357.43 which was the total sum payable to Mr Ball less his contribution. The trial judge then ordered that WMC recover from JRE the sum of $59,357.43 together with its costs of the action save that upon payment by JRE to Mr Ball of the sum of $21,690, proceedings to enforce the judgment should be limited to the sum of $37,667.43 in addition to WMC's costs of the action. Finally, he ordered that JRE was entitled to be indemnified by the Corporation not only in respect of the sum of $21,690, the damages for non-economic loss, but also in respect of the amount it had to pay to WMC by virtue of the contractual indemnity. The Corporation appeals from that decision.

6. At the time of the accident, Mr Ball's rights as against JRE were limited to damages for non-economic loss and solatium: s54(1) of the Act. The damages for non-economic loss were limited by s54(4) of the Act to an amount equal to 1.4 times the prescribed sum. However, as against WMC, damages were at large. If this appeal succeeds, the judgment by which JRE was ordered to pay damages for the non-economic loss suffered by Mr Ball will not be affected. The only question is whether JRE is liable to indemnify WMC and, if so, whether JRE is entitled to recover from the Corporation in respect of that liability.

7. In addition to the limit upon the liability of employers contained in s54(1) of the Act, s54 contained other provisions limiting the liability of employers. One of these is subs(4b) of s54 which provides:
    "Where -

(a) a worker suffers a compensable disability (not being
    a disability that arises out of the use of a motor vehicle
    and gives rise to a liability of a kind referred to in
    subsection (2));

and

(b) action is taken against a person other than the
    employer for damages in respect of the disability,
    the other person has no right to recover contribution from
    the employer."

The Corporation first submits that the right of indemnity provided in the agreement between JRE and WMC is a right to recover contribution and thus the agreement is contrary to s54(4b). The Corporation then refers to s119 of the Act which provides:
    "(1) Any agreement or arrangement entered into without
    the consent of the Corporation that purports to exclude,
    modify or restrict the operation of this Act is to that
    extend void and of no effect.

(2) Any purported waiver of a right conferred by or
    under this Act is void and of no effect.

(3) Any person -

(a) who enters into any agreement or arrangement with
    intent either directly or indirectly to defeat, evade or
    prevent the operation of this act;

or

(b) who attempts to induce a person to waive a right or
    benefit conferred by or under this Act,
    is guilty of an offence.

Penalty: $5,000 or imprisonment for one year."

The Corporation contends that the right of indemnity provided in Clause 2 of the contract is void and of no effect because it arose out of an agreement made without the consent of the Corporation which purports to modify the operation of the Act. Finally, the Corporation refers to s105 of the Act. On 24 April 1990 s105 was expressed in these terms:
    "An employer who is registered under this Act (not being an
    exempt employer), and any employer who is not required to be
    registered because of an exemption under the regulations, is
    insured by the Corporation, subject to terms and conditions
    prescribed by regulation, against any liability that may
    arise apart from this Act in respect of a compensable
    disability arising from employment (being employment to
    which this Act applies) by the employer."

The Corporation calls s105 in aid in support of this contention that the word "contribution" in s54(4b) is intended to include a contractual indemnity.

8. The distinction between contribution and an indemnity is well known. An indemnity exists where A has agreed in a contract, express or implied, to indemnify B against any liability B may incur to others: Birmingham and District Land Co v London and North Western Railway Co (1886) 34 Ch D 261 at 267, 271; Westpac Banking Corporation v P and O Containers Ltd (1991) 102 ALR
239 at 241-242. In this context, contribution refers to the liability of joint tort-feasors pursuant to s25(1)(c) of the Wrongs Act to discharge the total liability to the plaintiff. Section 25(1)(c) itself distinguishes between the statutory liability to contribute and the contractual liability to indemnify. It provides:
    "25. (1) Where damage is suffered by any person as a
    result of a tort (whether a crime or not) -

(a) ...

(b) ...

(c) any tort-feasor liable in respect of that damage may
    recover contribution from any other tort-feasor who is, or
    would at any time have been, liable in respect of the same
    damage, whether as a joint tort-feasor or otherwise, so,
    however, that no person shall be entitled to recover
    contribution under this section from any person entitled to
    be indemnified by him in respect of the liability in respect
    of which the contribution is sought:"

A court has power to exempt any person from liability to make a contribution and to direct that the contribution to be recovered from any person shall amount to a complete indemnity: see s26 of the Wrongs Act. Thus, it is possible for a court to order contribution which would amount to a complete indemnity: see Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR
589, 595 and Lister v Romford Ice and Cold Storage Co Ltd (1957) AC 555, 579-80, 584-585. Notwithstanding that the contribution may in the result be equivalent to an indemnity, the law nevertheless distinguishes between a contribution which has the consequence of providing a complete indemnity and a contractual indemnity: see Port of Melbourne Authority v Anshun Pty Ltd (supra) at 596. The distinction between contribution and an indemnity is also to be found in Rule 37.01 of the Supreme Court Rules. A like rule is contained in the District Court Rules.

9. The expression in s54(4b) "a person other than the employer" is a reference to the injured worker: Andrews v Ziersch (1994) 175 LSJS 377, so that the subsection applies whenever an injured employee brings an action against some person other than his employer. The word "contribution" in s54(4b) is being used in the context of recovering contribution from a joint tort-feasor. It is not being used in the context of a contractual indemnity. For these reasons, s54(4b) does not operate so as to prevent recovery under a contractual indemnity. Had it been the intention that s54(4b) should prevent a person other than the employer from relying on a contract of indemnity, the subsection would have been expressed in quite different terms. Section 54(4b) does not, therefore, prevent WMC from relying on the indemnity in Clause 2 of the contract.

10. The distinction between an indemnity and contribution can be illustrated in other ways. Had the trial judge found that WMC was wholly liable for the injuries to Mr Ball, he would not by reason of s54(4b) have made any order for contribution against JRE. He would, however, have been constrained by the terms of the contract of indemnity to order that WMC be entitled to recover from JRE an amount equivalent to its liability to Mr Ball.

11. Mr Rowell, who appeared for the Corporation, submitted that, when construing s54(4b), the Court should look to the purpose of the Act. He submitted that the scheme of the Act is to restrict the common law rights of workers. On payment of the levy required under the Act, the employer is relieved of all but minor monetary obligations. The quid pro quo is that the Corporation is fixed with the liability to make all payments to an injured worker with the exceptions provided in the Act. In return, when a worker has sustained a disability which is to some extent attributable to a wrong committed a third party, the Corporation can recover all compensation paid under the Act from that third party. Section 54(4b) of the Act is an essential part of that scheme in that it prohibits a third party tort-feasor who might otherwise have a claim for contribution against the employer from obtaining contribution from the employer and in effect recovering back any monies paid or payable by it to the Corporation. Thus, he said, the word "contribution" in s54(4b) should be read to include an indemnity of a contractual nature. It would, he said, be a strange consequence if Parliament intended that while a third party tort-feasor could not recover any contribution from an employer which amounted to an indemnity, the third party could do so if there was contractual right to an indemnity. He called in aid ss105 and 119(1) of the Act to support this submission. That argument fails to pay heed to the clear and well established distinction between a contribution and an indemnity and must therefore fail. But even if the Court were to accept that submission, the Corporation would in this case fail on other grounds, to which reference shall be made in a moment.

12. I turn to examine s119(1). The operation of this provision is confined to those parts of an agreement which purport to exclude, modify or restrict the operation of the Act. If an agreement contains a clause which falls within that description, the agreement is not wholly void but void only to the extent that it does not purport to exclude, modify or restrict the operation of the Act. Given that s54(4b) does not operate to prevent a person sued by an injured worker from relying on a contractual indemnity, an agreement to indemnify does not purport to exclude, modify or restrict the operation of the Act. Clause 2 of the contract between JRE and WMC is, therefore, valid and WMC is entitled to be indemnified by JRE.

13. Even if it had been held that s54(4b) was intended to include contribution payable under a contractual indemnity, the Corporation would not, in the particular circumstances of this case, have been able to rely on s119. WMC had, as part of its case, pleaded the indemnity in Clause 2 of the contract. However, neither JRE nor the Corporation pleaded that the contract of indemnity was illegal on the ground that it offended s119. The issue of illegality did not arise until after the evidence had concluded and counsel were making their final submissions. No party applied to reopen their case to prove that the Corporation had not consented to the contract of indemnity. Section 119 is the provision which is intended to render illegal what might otherwise have been a lawful contract. The onus of proving the illegality, therefore, lay on JRE and the Corporation as the persons seeking to rely on s119: Currie v Dempsey (1967) 2 NSWR 532. Further, the question whether the Corporation consented to the agreement was a fact of which JRE and the Corporation would have had the most direct knowledge. In the absence of any direct evidence, the trial judge held that he should apply the maxim amnia praesumuntur legitime facta donec probetur in contrarium, that is to say, all things are presumed to have been legitimately done unless the contrary is proved. The failure of JRE and the Corporation to call evidence on this point entitled the trial judge to rely on the maxim. Thus, s119 did not apply in the circumstances of this case.

14. I would, therefore, uphold the conclusion of the trial judge that s119 did not invalidate JRE's obligation to indemnify WMC.

15. The remaining issue is whether JRE is able to recover from the Corporation that which it must pay WMC pursuant to its obligation to indemnify. JRE was a registered employer within the meaning of s105. Subject to the terms and conditions prescribed by regulation, an employer is insured against any liability that may arise outside the Act. The only other limitation on that liability is that the liability be in respect of a compensable disability arising from employment. The use of the expression "arising from employment" is a little tautologous since the combined effect of s3 and s30 of the Act is that a disability is compensable only if it arises from employment and otherwise satisfies the requirements of s30.

16. Section 105 is expressed in very wide terms and in terms which are wider in operation than its predecessor. The section was amended in 1988. Before the amendment, s105 was in these terms:
    "A registered employer (not being an exempt employer) is

    insured by the Corporation, subject to terms and conditions
    prescribed by regulation, against any liability that may
    arise apart from this Act for non-economic loss or solatium
    in respect of compensable disabilities arising from
    employment (being employment to which this Act applies) by
    the registered employer."

Thus, the 1988 amendment removed the provision limiting the insurance provided by the Corporation to a liability of the employer for non-economic loss and solatium. The amendment was plainly intended to increase the scope of the insurance provided by s105.

17. There is no regulation which qualifies the right of JRE to be insured under s105. JRE is, therefore, insured by the Corporation against any liability that may arise apart from the liability under the Act in respect of a compensable disability. The words "in respect of" have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer: Trustees Executors and Agency Co Ltd v Reilly (1941) VR 110, 111; McDowell v Baker (1979) 144 CLR
413, 419. Other decisions which point to the very wide import of the phrase include Genders v GIO of NSW (1959) 102 CLR 363, 387, Thiess Bros Pty Ltd v NZ Insurance Co Ltd (1965) 13 FLR 3, 6; and Club Motor Insurance Agency Pty Ltd v Sargent (1969) 118 CLR 658. But there must nevertheless be a connection or relationship between the two matters to which the words refer; they do not extend to any relationship, however tenuous: Technical Products Pty Ltd v State Government Insurance Office (Q) (1989) 167 CLR 45, 47, 51. The width with which s105 is expressed may have unintended consequences. These need not be examined now. It is sufficient for the purpose of this appeal to consider whether the contractual indemnity falls within its terms. The liability of JRE to indemnify did not arise in respect of a compensable disability but under the agreement to indemnify. Although the liability to indemnify under the agreement may be triggered by the fact that a worker has suffered a compensable disability, it is not the compensable disability which gives rise to the liability of JRE but the agreement to indemnify. The nexus between the liability to indemnity and a compensable desirability is too indirect to qualify as a liability "in respect of a compensable disability". JRE is not, therefore, entitled to be indemnified by the Corporation in respect of its liability to WMC.

18. The issues in this appeal serve to provide yet another instance of the desirability for a major review of the Act to deal with difficulties of construction.

19. For these reasons, I would allow the appeal only for the purpose only of setting aside that part of the orders made by the trial judge which require the Corporation to indemnify JRE in respect of its liability to WMC.