Workcover Authority of New South Wales v Chubb Australia Ltd

[2000] NSWCA 221

CITATION:	Workcover Authority of New South Wales v Chubb Australia Ltd & Ors [2000] NSWCA 221
FILE NUMBER(S):	CA 40105/99
HEARING DATE(S):	27 July 2000
JUDGMENT DATE:	18 August 2000
PARTIES :	Workcover Authority of New South Wales (Appellant) Chubb Australia Ltd (First Respondent) Mercantile Mutual Insurance (Workers Compensation) Limited (Second Respondent) Government Insurance Office General of New South Wales (Third Respondent) AMP General Insurance Limited (Fourth Respondent) MMI Insurance Limited (Fifth Respondent) Mercantile Mutual Insurance (NSW Workers Compensation) Limited (Sixth Respondent)
JUDGMENT OF:	Powell JA at 1; Stein JA at 2; Foster AJA at 51

LOWER COURT JURISDICTION :	Dust Diseases Tribunal
LOWER COURT FILE NUMBER(S) :	DDT 160/97
LOWER COURT JUDICIAL OFFICER :	Armitage J

COUNSEL:	G F Little (Appellant) B R Ferrari (First Respondent) I G Harrison SC (Second and Sixth Respondents) J D Hislop QC (Third Respondent) L P McFee (Fourth Respondent) J A McIntyre SC/J A Kernick (Fifth Respondent)
SOLICITORS:	N W Aussel (Appellant) Eakin McCaffery Cox (First Respondent) McCulloch & Buggy (Second and Sixth Respondents) Moray & Agnew (Third Respondent) Dunhill Madden Butler (Fourth Respondent) A O Ellison (Fifth Respondent)
CATCHWORDS:	WORKERS COMPENSATION - DUST DISEASES - mesothelioma - risk of exposure - last employer on risk - D
LEGISLATION CITED:	Workers Compensation Act 1987, s 151 AB (1)(a)
CASES CITED:	Blayney Shire Council v Lobley (1995) 12 NSWCCR 52 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 GIO General Ltd v ABB Installation & Service Pty Ltd & Ors [2000] NSWCA 118 Manufacturers Mutual Insurance Ltd v Goodyear Australia Ltd (1997) 15 NSWCCR 538 MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289 Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269 Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd (1993) 34 NSWLR 269
DECISION:	Appeal allowed

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40105/99
DDT 160/97

POWELL JA
STEIN JA
FOSTER AJA

Friday, 18 August 2000

WORKCOVER AUTHORITY OF NEW SOUTH WALES v CHUBB AUSTRALIA LTD AND ORS

Background

A worker sued his employer Chubb Australia Ltd (first respondent) in the Dust Diseases Tribunal for damages for negligence which resulted in his contraction of mesothelioma. Chubb cross-claimed against various insurers. The trial judge found a verdict in the worker’s favour. His Honour found that in the course of his employment as a cleaner, the worker was exposed to asbestos dust up until 1978 which, on the probabilities, caused the mesothelioma.

His Honour then heard the cross-claim and found that his factual finding that the worker’s mesothelioma was caused by asbestos exposure ceasing in 1978 was the relevant liability for the purposes of s 151AB Workers Compensation Act 1987. Chubb was entitled to be indemnified by Workcover (the appellant), the insurer on risk in 1978. The cross-claim is the subject of the appeal.

The worker confined his statement of claim to the period of employment ending on 31 December 1984. He continued to be employed by Chubb until he retired in 1988 and was diagnosed with mesothelioma in 1997.

The appeal

The appellant submits that his Honour applied an incorrect test when he stated that there was no evidence that the plaintiff was ‘in fact’ exposed to asbestos as a result of the re-roofing of part of the work premises in 1983. It is submitted that his Honour should have considered whether the plaintiff was exposed to a risk.

The appellant submits that his Honour erred in applying his finding at trial, that the plaintiff’s last exposure to asbestos occurred in 1978 and in concluding that it would be impermissible to find an insurer on risk for a period of exposure for which Chubb wasn’t found liable in the main action.

Held (Stein JA, Powell JA and Foster AJA agreeing)

The question for his Honour to determine on the cross-claim was whether the worker was exposed to the risk of contracting mesothelioma by reason of his exposure to the inhalation of asbestos particles in the atmosphere. His Honour erred in purporting to apply MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 257, a closed and completed industrial deafness claim, which is distinguishable from the plaintiff’s occupational disease of mesothelioma. The mesothelioma was not diagnosed until 1997: the tort was not complete until then. His Honour was not required to foreclose his inquiry at 1978, the date of liability, but should have examined any evidence for exposure to risk up until the worker’s retirement in 1988.

Orders

Appeal allowed. His Honour’s judgment and orders on cross-claim set aside. Remit matter to his Honour to be dealt with in accordance with the reasons of the Court. Costs reserved.
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IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40105/99
DDT 160/97

POWELL JA
STEIN JA
FOSTER AJA

Friday, 18 August 2000

WORKCOVER AUTHORITY OF NEW SOUTH WALES v CHUBB AUSTRALIA LTD AND ORS
JUDGMENT

1    POWELL JA: I agree with Stein JA. 2    STEIN JA: Mr George Vasiliou sued his employer, Chubb Australia Ltd (the first respondent) in the Dust Diseases Tribunal for damages for negligence which resulted in his contraction of mesothelioma. Chubb cross-claimed against various insurers. The cross-claims were severed from the plaintiff’s claim and heard separately by Judge Armitage after he had found a verdict in the plaintiff’s favour of $182,763, subject to a deduction of dust diseases pension payments. His Honour found that, in the course of his employment as a cleaner, the plaintiff was exposed to asbestos dust up until 1978 which, on the probabilities, caused the mesothelioma. The appeal concerns his Honour’s decision on the cross-claim. 3    The periods of risk of the various insurers are as follows:

MMI Insurance Ltd	(5th Respondent)	1927 to 31/3/75
NEM General Insurance Association Ltd (In Liquidation) / Insurer’s Guarantee Fund or Workcover Authority of NSW	(Appellant)	31/3/75 to 31/5/81
AMP General Insurance Ltd	(4th Respondent)	31/5/81 to 31/3/82
Government Insurance Office of NSW	(3rd Respondent)	31/3/82 to 31/3/85
Mercantile Mutual Insurance (Workers Compensation) Ltd	(2nd Respondent)	31/3/85 to 30/6/87
Mercantile Mutual Insurance (NSW Workers Compensation) Ltd	(6th Respondent)	1/7/87 to date

4 At the hearing of the cross-claim the evidence which had been tendered at the trial was re-tendered. In addition, an occupational health and safety report of Mr H Schaapveld, the evidence of a Mr McNamara in other proceedings and a report from Dr Gianoutsos, was tendered. No witness was called for cross-examination. 5 On the cross-claim his Honour found that the plaintiff’s exposure to asbestos last occurred in 1978, thus Chubb was entitled to be indemnified by the appellant (Workcover) in respect of the damages awarded by the application of s 151AB of the Workers Compensation Act 1987. 6 Section 151AB relevantly provides:

(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 purpose of identifying from among a number of insurers under policies of insurance obtained by the employer for different periods which insurer or insurers is liable to indemnify the employer for the full amount of the damages or which is liable to pay the full amount of damages to the worker (without any right to a contribution from those other insurers):
(a) Any liability of that employer that arose before the relevant
commencement is taken to have arisen when the worker was last employed before that commencement by that employer in an employment to the nature of which the disease was due.

7    In his reasons for judgment on the cross-claim, his Honour was at pains to point out that, at the trial, he had expressly said that it was not open to find on the evidence that asbestos dust was in the atmosphere where the plaintiff worked after 1978. 8    His Honour then referred to the additional evidence tendered on the cross-claim. He noted that Mr Schaapveld’s report identified asbestos in Chubb’s premises, including ‘internal dust collected from the roof beams and rafters … which contained bundles of fibrous matter, which were invisible to the naked eye’. In fact, the portion of Mr Schaapveld’s report to which this referred stated that the fibrous matter was visible to the naked eye and his Honour was mislead by Chubb’s written submissions. 9    His Honour continued:

It is unnecessary to analyse further Mr Schaapveld’s report as set out in the cross-claimant’s initial submissions, except to observe that it undoubtedly establishes that there were potential sources of asbestos contamination in the atmosphere of the defendant’s premises other than those to which I had referred in my judgment as set out above.

10    The judge also referred to Chubb’s submissions concerning the replacement in 1983 of the asbestos-cement roof. The submission was that during this time ‘it would seem likely that the internal dusts identified on the roof beams and rafters … could have been disturbed and resuspended in the atmosphere’. 11    His Honour noted that the plaintiff had amended his Statement of Claim to confine it to the period of employment ending on 31 December 1984. The plaintiff continued to be employed by Chubb until he retired in 1988. He was diagnosed with mesothelioma in 1997. 12    Armitage J reviewed the authorities. He then purported to apply them to the case before him. He said the application of MMI Insurance Compensation (NSW) Ltd v Baker (1997) 41 NSWLR 289 and FAI Traders Insurance Co Ltd v HIH Winterthur Workers Compensation (NSW) Pty Ltd (1998) 45 NSWLR 257 absolved any post 1984 insurer. His Honour said that his factual finding that the plaintiff’s mesothelioma was caused by asbestos exposure ceasing in 1978 was a once and for all time determination of ‘liability’. It was the relevant liability for the purposes of s 151AB. The last insurer on risk in 1978 was NEM and thus the appellant Workcover was liable to indemnify Chubb. 13 Accordingly, Chubb was entitled to a verdict against Workcover. His Honour said that this was so regardless of the fact that the Schaapveld report ‘may be regarded as supporting asbestos exposure to the plaintiff … until 1983 because of, in particular, the re-roofing in that year … and because of the potential disturbance of asbestos dust on the rafters …’. 14 However, his Honour noted that Chubb acknowledged that there was no evidence that the plaintiff was ‘in fact’ exposed to asbestos as a result of the re-roofing. He added:

… the evidence does not disclose where the plaintiff was at the time this took place. For all I know, he may have been on extended leave, or on loan to some other factory also owned by Chubb.

15    I should say that there is no hint of a suggestion in the evidence that this may have been the case. 16    In any event, his Honour pointed out that the plaintiff did not recover a verdict reliant on exposure until 1984 but only on the basis of the finding that that exposure last occurred in 1978. He said:

It was that exposure upon which his verdict was founded. On the approach in Baker and in FAI Traders in particular, it would be impermissible to find an insurer on risk in respect of a period of exposure for which I did not find Chubb in the main action liable to indemnify Chubb in respect of the damages awarded against it.

17    It is the appellant’s submission that his Honour applied an incorrect test when he stated that there was no evidence that the plaintiff was ‘in fact’ exposed to asbestos as a result of the re-roofing of part of the premises in 1983. It is submitted that his Honour should have considered whether the plaintiff was exposed to ‘a risk’. Also, it is submitted that his Honour erred in applying his finding at the trial, that the plaintiff’s last exposure to asbestos occurred in 1978, and in concluding that it would be impermissible to find an insurer on risk in respect of a period of exposure for which he did not find Chubb liable in the main action.

18    I propose to briefly trace the relevant authorities. In CIC Workers’ Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 at 175 Gleeson CJ referred to the statement of Jordan CJ in Tame v Commonwealth Collieries Pty Ltd (1947) 47 SR (NSW) 269 at 272:

I think that ‘employment to the nature of which the disease was due’ means an employment of such a kind as to involve a risk to the employee contracting the gradual process disease which is disabling him.

19 In a judgment concurred in by Mahoney and Meagher JJA, Gleeson CJ said that the employment referred to in s 151AB was not a reference to a contractual relationship with Alcan but the ‘engagement in a form of activity which exposed him to a risk of a disease …’. 20 The Court endorsed the construction of the provision adopted by Rolfe J in Wellcome Australia Ltd v Australian Eagle Insurance Co Ltd (1993) 34 NSWLR 269. 21 CIC Workers Compensation (NSW) Ltd v Kellogg (Australia) Pty Ltd (1996) 40 NSWLR 422 extended the situation to include not only work tasks performed, but also a worker’s movements through the premises in the course of employment which exposed the worker to the risk of inhalation of asbestos particles. Priestley JA found that the worker was in fact exposed to asbestos particles in the atmosphere in various parts of the employer’s factory, (at 428). 22 The next case was Manufacturers Mutual Insurance Ltd v Goodyear Australia Ltd (1997) 15 NSWCCR 538. This was a mesothelioma case. The trial judge had found that the worker was not exposed to any asbestos dust between July and November 1987. However, Sheller JA found that the preponderance of the evidence established that the risk continued throughout the entirety of the worker’s employment and thereafter. Despite the best endeavours of the employer, the continual breakdown of asbestos in the building meant that it could not be said that his work during the second half of 1987 was carried on under conditions which made inhalation of asbestos dust impossible. 23 Sheppard AJA was of a like opinion. He said that there was evidence of the presence of asbestos dust on the premises continuing into the 1990s. The evidence established that the risk continued for the entirety of the plaintiff’s employment. 24 Baker was also decided in 1997. It was an industrial deafness case. In the course of his judgment Gleeson CJ made some remarks about the applicability of s 151AB. The plaintiff had confined his claim for damages to injuries sustained prior to 4 pm on 30 June 1987. This was done deliberately to preserve his common law rights. The Chief Justice said that at all material times to 30 June 1987 MMI was the insurer which had contracted to indemnify the employer in respect of the liability of the worker in question. His Honour explained that the purpose of s 151AB is related to a situation where there are two or more policies under which an employer is contractually entitled to indemnity in respect of damages for which a plaintiff sues. In such a case, the section selects one of the insurers to indemnify the employer. However, on the facts before the Court, the appellant was never liable to indemnify the employer in respect of any part of the damages for which the plaintiff sued. The section therefore had no operation, see pp 293 and 294 of the law report. 25 Baker was applied by the Court in another industrial deafness case, FAI, see Handley JA and Fitzgerald AJA. 26    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. 27    It is this distinction which must be kept steadily in mind when approaching the instant case and examining the authorities. 28    The most recent authority is GIO General Ltd v ABB Installation & Service Pty Ltd & Ors [2000] NSWCA 118, decided after Armitage J’s judgment. Unlike Baker and FAI, this was a mesothelioma case. The trial judge had found that while the plaintiff was exposed to the risk of inhalation of asbestos fibres between 1986 and 1993, on the probabilities he was not actually exposed to inhalation during that period (emphasis added). 29 The Court of Appeal pointed out that s 151AB(1)(a) was not directed to causation in fact, but was concerned with ‘exposure to a risk which may be causative of the disease’. 30 The Court referred to Blayney Shire Council v Lobley (1995) 12 NSWCCR 52 at 64 wherein Cole JA had said that attention must not be directed to ‘whether the employment then engaged in actually caused the injury but rather to whether the tendencies, incidents or characteristics of that employment were of a type which could give rise to the injury in fact suffered,’ (my emphasis). 31    It was noted in GIO v ABB that, to the extent that Baker and FAI dealt with claims made in artificially confined periods, they did not apply to the case. 32    Their Honours concluded:

In his reasons for judgment, the trial judge approached the resolution of the issue before him, using the language of “ actual exposure ”. That is not the test required by s 151AB(1)(a). What is required is that the worker be exposed to a risk of contracting the disease: see Alcan . Notwithstanding that we consider that the language of the trial judge is not consistent with the proper test as postulated in Alcan , we do not consider that his Honour has erred in his approach. On the facts relating to the exposure at the Kelloggs factory, it would be impossible, or virtually impossible, to prove that a person was exposed to the inhalation of asbestos. Rather, and we think this is what his Honour meant in his finding, the plaintiff was exposed to the risk of inhalation of asbestos on the two occasions in 1986 of which he gave evidence, but there was insufficient evidence to support a finding that he was exposed to the risk of inhalation of asbestos on any other occasion.

33    The real question for Armitage J to determine on the cross-claim was whether the plaintiff was exposed to the risk of contracting the disease of mesothelioma by reason of his exposure to the inhalation of asbestos particles in the atmosphere. It seems to me that his Honour was in error in purporting to apply Baker, a closed and completed industrial deafness claim, which is distinguishable from the plaintiff’s occupational disease of mesothelioma, not diagnosed until 1997. The tort was not complete until then. 34    It follows that his Honour was not required to foreclose his inquiry at 1978. Rather he was bound to examine the evidence of any exposure to risk of contracting mesothelioma after that date. Indeed, after 31 December 1984, being the last day alleged in the plaintiff’s amended Statement of Claim. In my opinion, his Honour should have examined any evidence for exposure to risk up until the plaintiff’s retirement in 1988. The fact that the plaintiff’s claim was confined to 1984 does not mean that an examination of the period to the plaintiff’s retirement for any exposure to risk is precluded on the cross-claim. 35    In my opinion, his Honour closed his mind to any evidence of exposure to risk of contracting the disease after 1978. His Honour’s references to the Schaapveld report do not transpose into any definitive findings of fact. The approach was in error. It misapplied Baker and FAI. 36    This means that it is necessary to examine Mr Schaapveld’s report which, because of his Honour’s approach, was not undertaken in any detailed fashion by the judge. 37    The report is dated July 1997. It examines Chubb’s factory at Waterloo in some detail and is in the nature of an occupational health and safety audit. The executive summary notes ‘high dust loadings which contain asbestos fibres on the factory roof beam and rafters’. Mr Schaapveld notes that the main factory building, to its current dimensions, was built before 1921. The middle section of the roof of asbestos-cement was replaced in 1983 by steel sheeting. The majority of the windows were in a state of disrepair. The roof beams and rafters were wooden, and it appears, exposed. 38    In dealing with the northern end of the foundry area the report states that:

there is a considerable amount of fine dust deposited on roof beams and rafters in this area. … This dust has the potential to be resuspended into the air of the building and thus could be inhaled or ingested by site personnel.

39    Two samples, numbers 1 and 2, were taken from these beams. Sample No 1 revealed trace chrysotile and trace amosite (both asbestos fibres) and sample 2 minor chrysotile and trace amosite. A ‘trace’ is less than 1% content by volume whereas ‘minor’ is 1 - 20% by volume. 40    Two other samples were taken from the beams and rafters at the western end of the building. Both of these samples (3 and 4) revealed trace chrysotile. In respect of the four samples the report noted that ‘[B]undles of fibrous matter were clearly visible to the naked eye’. 41    The more dangerous asbestos, crocidolite (blue asbestos) was found only in the external roof gutters. Mr Schaapveld believed that the source of trace asbestos in the internal dust samples was not from the asbestos-cement roofing sheets, its internal surfaces being unaffected by weathering. He said that it was possible that the asbestos fibres in the internal dusts were remnants from past site activities, when asbestos was used in manufacturing and fire-proofing. 42    One of the conclusions to the report stated:

Settled dust on the roofing beams and rafters of this area may contain copper, lead and crystalline silica which, if disturbed or resuspended into the factory atmosphere, may pose a threat to the health of site personnel.

43    Another conclusion stated:

… accumulated dusts on the internal surfaces of the roofing beams and rafters in the main factor building contain asbestos fibres. These fibres are suspected to originate from past manufacturing practices which utilised asbestos as a fire proofing material …

44    The report recommended the removal of the asbestos dust on the roofing beams and rafters ‘and other elevated dusty horizontal surfaces’. 45    There is no material in the report suggesting that any of the asbestos dust on the beams and rafters was liberated into the atmosphere of the factory at any time prior to the plaintiff’s retirement in 1988. The question is whether it can be so inferred. If the asbestos dust was not in the atmosphere, there can be no risk of the plaintiff inhaling it and thereby being exposed to the risk of contracting the disease of mesothelioma. 46    Unfortunately, there is nothing in the report, nor elsewhere in the evidence, concerning the ventilation in the premises, including within the roof space, as at 1988. Indeed, at any time prior to 1997. There are no photographs of the area of the premises and no information as to openings, windows or doors save one fleeting reference to the condition of the glass windows. 47    On the one hand, it may be reasonable to infer that dust on the rafters would be likely to have been disturbed or liberated at some stage over the passage of many years. On the other hand, the accumulation of dust that Mr Schaapveld found in 1997 may indicate that none of it would be likely to have become resuspended over time. It may reasonably be supposed that the asbestos particles floated up from the factory below because of the finding by the engineer on the condition of the asbestos-cement sheeting in the roof above the rafters and beams. However, this does not necessarily mean that it may be inferred that the asbestos dust would be likely to be resuspended into the atmosphere of the premises. 48    The question of what inferences, if any, may be drawn from the report is not an easy one bearing in mind the absence of cross-examination of the author, or of any other material throwing light on the issue. 49    The difficulty leads me to conclude that the matter ought be remitted to his Honour to deal with according to law. His Honour is required to consider whether there is evidence of the plaintiff’s exposure to the risk of inhaling asbestos particles in the atmosphere between 1979 and 1988. Whether this inquiry will involve the calling of further evidence will be a matter for his Honour. Consideration of the issue of exposure to risk of contracting mesothelioma up until 1988 will enable his Honour to determine which insurer is liable to indemnify the employer. 50    Accordingly, I propose that the matter be remitted to his Honour to be dealt with in accordance with my reasons. The appeal should be allowed and his Honour’s judgment and orders on the cross-claim set aside. Costs are reserved in case the parties wish to make submissions on the appropriate costs orders to be made. This may be done by written submissions. My conclusion on the appropriate course to be followed means that it is unnecessary, at this time, to consider the appellant’s alternative submission on Workcover’s liability. 51    FOSTER AJA: I agree with Stein JA.

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