Transfield Pty Ltd v WorkCover Authority of New South Wales

[2002] NSWDDT 12

Reported Decision (2002) 24 NSWCCR 38

Dust Diseases Tribunal

of New South Wales

CITATION:	Transfield Pty Ltd v WorkCover Authority of New South Wales [2002] NSWDDT 12
PARTIES:	Transfield Pty Ltd WorkCover Authority of New South Wales QBE Insurance Ltd QBE Insurance Ltd
MATTER NUMBER(S):	187 of 2001
JUDGMENT OF:	Curtis J at 1
CATCHWORDS:	Miscellaneous Matters :-
LEGISLATION CITED:
CASES CITED:
DATES OF HEARING:	9 May 2002 & 16 July 2002
DATE OF JUDGMENT:	08/05/2002
LEGAL REPRESENTATIVES:	Mr C L Thompson instructed by Carroll and O'Dea appeared for the applicant on the motion Transfield Pty Ltd Mr G J Parker instructed by Hunt and Hunt appeared for the respondent WorkCover Authority of New South Wales Mr N Chen instructed by Moray and Agnew appeared for the respondent QBE Insurance Ltd

JUDGMENT:

Dust Diseases Tribunal of New South Wales

Matter Number DDT187 of 2001

(Re: Ronald Arthur Morgan)

Transfield Pty Ltd

v

WorkCover Authority of New South Wales

and

QBE Insurance Ltd

5 August 2002

JUDGMENT

CURTIS J

1. Transfield Pty Ltd (Transfield) suffered vexation and incurred costs in persuading the WorkCover Authority of New South Wales (the Authority) to indemnify Transfield against its common law liability to Donald Arthur Morgan, a former employee. It wants the Authority to pay those costs.

The facts

2. Mr Morgan contracted asbestos related diseases while employed by Transfield between 4 August 1962 and 5 August 1975. He sued Transfield and others in this Tribunal.

3. Transfield was insured against common law liability by QBE Insurance Ltd (QBE) between 1960 and 30 June 1975 and thereafter by Associated General Insurance Contractors Co Ltd (AGCI), a company which became insolvent in 1980 and which has since been dissolved.

4. For some time uncertainty existed as to the date upon which the plaintiff was last employed in an employment to the nature of which his disease was due relevant to the imposition of an obligation to indemnify pursuant to s 151AB of the Workers Compensation Act 1987. In consequence QBE, one insurer potentially liable, denied liability to indemnify. On 13 December 2001 Messrs Hunt and Hunt, solicitors, responding to a demand for indemnity made by the plaintiff’s solicitors upon "The Secretary, Insurers Guarantee Fund - Associated General Contractors Insurance Co Ltd (in liquidation)" also denied liability.

5. "Insurers Guarantee Fund - Associated Contractors Insurance Co Ltd (in liquidation)" is not a legal entity. The legal personality from which Transfield may claim indemnity is in fact the WorkCover Authority of New South Wales, constituted by s14 and s 22(2) of the Workplace (Injury Management) Act 1998 administrator of the Insurers Guarantee Fund established by s 227(1) of the Workers Compensation Act 1987. The entitlement to indemnity is created by the Associated General Contractors Insurance Co Ltd Act 1980 (as amended) (the AGCI Act) s 15 of which is in the following terms:

Entitlements payable after dissolution of the company

15(1) When the Company [AGCI] has been dissolved a person who would have had (but for the dissolution taking place) an entitlement to payment of any amount arising from or pertaining to any policy of insurance issued by the Company is entitled to payment of that amount:

(a)Out of the fund; and

(b)After the fund is closed, out of the Contribution Fund.

(2)A person referred to in subsection (1) may make a claim against the Government Insurance Office [the Authority since 1991, pursuant to s 2A of the Act], as manager of the Contribution Fund, in respect of an entitlement to payment of an amount under that subsection.

(3)[The Authority], as manager of the Contribution Fund:

(a) may in all respects deal with and finalise a claim made under subsection (2); and

(b) may exercise any right the Company would have had but for its dissolution arising from or pertaining to that claim or any judgment or award made pursuant to that claim,

as if the [Authority] had been the insurer under the policy from which that claim arises or to which it pertains.

(3A) When the Company has been dissolved, the payments of compensation under judgments or awards pertaining to policies of insurance issued by the Company which would (but for the dissolution taking place) be payable by the Company are to continue and be paid by [the Authority]:

(a) out of the fund; and

(b) after the fund is closed, out of the Contribution Fund.

(4) Out of the Contribution Fund [the Authority]:

(a)shall, as manager of the Contribution Fund, satisfy any liability the Company would have had but for its dissolution arising from or pertaining to a claim made under subs(2) or any judgment or award made pursuant to that claim or referred to in subsection (3A); and

(b) . . .

6. On 21 February 2002 the plaintiff swore his affidavit which confirmed employment of the relevant nature until 5 August 1975, a date upon which AGCI was on risk. In consequence Transfield on 1 March 2002 filed a motion seeking orders that the statement of claim be amended to substitute Insurance Guarantee Fund Associated General Contractors Insurance Co Ltd (in liquidation) for Transfield as defendant and that Insurance Guarantee Fund Associated General Contractors Insurance Co (in liquidation) be appointed designated insurer pursuant to s 151AC of the Workers Compensation Act.

7. The motion is not a pretty pleading. A defendant may not amend a plaintiff's pleading. Access to the Insurance Guarantee Fund by way of indemnity is contingent upon the liability of Transfield in any event. Insurance Guarantee Fund Associated General Contractors Insurance Co Ltd (in liquidation) is not a legal entity. The appropriate procedure was the issue of a cross-claim by Transfield against the Authority claiming indemnity pursuant to s 15 of the AGCI Act 1980.

8. In any event it is apparent that the Authority accepted the facts to which the plaintiff had deposed and on 15 April 2002, when judgment was entered by consent for the plaintiff against Transfield, agreed to indemnify. A document entitled "Heads of Agreement" was completed on this day by solicitors acting for Transfield, QBE, and by Alyssa Fitzgerald of Hunt and Hunt, purportedly acting for "Insurance Guarantee Fund - Associated General Contractors Insurance Co (in liquidation)". The document records the agreement that Associated General Contractors Insurance Co Ltd will indemnify Transfield in respect of the judgment sum of $28,333 pursuant to the terms of settlement entered between the plaintiff and the defendant and will also indemnify Transfield in respect of costs incurred in defending the claim from 26 October 2001 save for the costs associated with the notice of motion filed by Transfield on 1 March 2002. Transfield reserved liberty to apply to have all costs issues related to the motion determined by the Tribunal.

The Dispute

9. The motion filed on 1 March 2002 is now before me. It has been amended at my suggestion so as to substitute the Authority as respondent but otherwise bears little relation to the present dispute between the parties.

10. Transfield wants the Authority to pay the costs incurred in identifying the Authority as the party from whom it would seek indemnity and in instituting process by which the Authority would be compelled to indemnify. On the face of it this seems just and reasonable.

11. The Authority, however, contends that it never was nor could be liable to orders that it indemnify Transfield and that in any event it was never amenable to the particular orders sought in the motion and cannot be liable for the costs incurred by Transfield in pressing the claim.

Discretion to Deny Indemnity

12. Mr Parker for WorkCover has submitted that because s 232 of the Workers Compensation Act 1987 authorising payments from the Insurance Guarantee Fund to an employer whose insurer is insolvent contains within s 232(4) the reservation of an absolute discretion to the Authority, no right accrues in the employer to demand the indemnity. This much is true where the employer claims pursuant to that Act (see Re Brazier DDT 169 of 1997, 21 June 2002 unreported). A claim pursuant to s 15 of the AGCI Act is, however, subject to no such defence. A claimant in the terms of s 15(1) is "... entitled to payment ..." and s 15(4)(a) directs that the Authority "shall . . satisfy. . .any judgment. . .made pursuant to that claim . . ."

Operation of s 151AB of the Workers Compensation Act 1987

13. A further question then arises as to whether s 151AB enacted "for the purpose of identifying from a number of insurers ... which insurer is liable to indemnify the employer" operates upon the liability of Transfield. For reasons expressed by Rolfe J in Workers Compensation Board of Queensland v WorkCover (1995 36 NSWLR 732) it is plain that WorkCover is not itself an insurer. Nevertheless, the entitlement generated by s 15 of the AGCI Act is to be determined upon facts as they would have been "but for the dissolution taking place". Once the inquiry postulated upon those terms establishes that AGCI if solvent, would have been liable pursuant to s 151AB, the employer has an entitlement to receive, and the Authority a duty to pay, the indemnity.

Operation of s 151AC of the Workers Compensation Act 1987

14. S 151AC operates in real time and cannot operate upon a fiction that no dissolution of AGCI has taken place. Only an existing legal personality being an insurer may be appointed the designated insurer pursuant to s 151AC. WorkCover is not such an entity and the motion in its terms seeking the appointment of the Authority as the designated insurer was always doomed to fail. In that circumstance an order that WorkCover pay the costs of the motion is quite inappropriate.

15. WorkCover claims its costs of the motion. In my opinion WorkCover should have squarely accepted its liability to Transfield pursuant to s 15 of the AGCI Act, notwithstanding the difficulty Transfield solicitors found in seeking to define and enforce that liability. In the circumstances the Authority is to bear its own costs.

Another matter

16. QBE was named as a respondent to this motion although the pleading in its terms seeks no relief against QBE. On 15 April 2002 when the plaintiff’s matter came on for hearing, Transfield sought and obtained leave of the Tribunal to issue a cross-claim against QBE. Prudently QBE attended by counsel on 9 May when this motion came on for hearing. The pleadings of Transfield have, to say the least, been confused. Transfield is to pay the costs of QBE.

Orders

(1) Motion dismissed.

(2) Transfield Pty Ltd and the WorkCover Authority of New South Wales to bear their own costs of the motion.

(3) Transfield Pty Ltd to pay the costs of QBE Insurance Ltd.

Mr C L Thompson instructed by Carroll and O'Dea appeared for Transfield Pty Ltd applicant on the motion

Mr G J Parker instructed by Hunt and Hunt appeared for the respondent WorkCover Authority of New South Wales

Mr N Chen instructed by Moray and Agnew appeared for the respondent QBE Insurance Ltd