National & General Insurance Co Ltd v South British Insurance Co Ltd [1982] HCA 62; (1982) 149 CLR 327 (4 November 1982)

HIGH COURT OF AUSTRALIA

NATIONAL & GENERAL INSURANCE CO. LTD. v. SOUTH BRITISH INSURANCE CO. LTD. [1982] HCA 62; (1982) 149 CLR 327

Workers' Compensation (N.S.W.)

High Court of Australia
Mason(1), Murphy(2), Wilson(3), Brennan(4) and Deane(5) JJ.

CATCHWORDS

Workers' Compensation (N.S.W.) - Successive injuries over long period of employment with same employer - Total incapacity deemed to arise from last injury - Award of last injury compensation - Insurance granted successively by several insurers - Indemnity against employer's liability to pay compensation during relevant period of insurance - &Which insurer liable to indemnify - Workers' Compensation Act 1926 (N.S.W.), s. 11(2).

HEARING

1982, July 28; November 4. 4:11:1982
APPEAL from the Supreme Court of New South Wales.

DECISION

November 4.
The following written judgments were delivered: -
MASON J. I would dismiss the appeal for the reasons given by Deane J. (at

MURPHY J. I agree with Deane J. The appeal should be dismissed. (at p329)

WILSON J. I would dismiss this appeal for the reasons given by Deane J. (at p329)

BRENNAN J. I agree in the reasons for judgment of Deane J. The appeal should be dismissed with costs. (at p329)

DEANE J. This appeal is from the Supreme Court of New South Wales (Court of Appeal). At issue is the respective liability of four different insurers in respect of an award made in favour of a worker against an insured employer. The award was made on 25 March 1980 by the Workers' Compensation Commission pursuant to the provisions of the Workers' Compensation Act, 1926 (N.S.W.) ("the Act"). It ordered that weekly compensation be paid by the employer to the worker on the basis of partial incapacity for periods from 1 April 1978 to 24 July 1978 and on the basis of notional total incapacity for periods from 25 July 1978 up to, and continuing beyond, the date of the award. The insured employer was the Council of the Shire of Lake Macquarie ("the Council"). (at p330)

2. The workers' employment with the Council commenced in 1966 and continued until some time after 5 January 1977. His duties involved heavy work and the use of graders and other vehicles. On a number of different occasions in the course of his employment, the worker received injuries to his back, in particular in the lumbosacral disc region, culminating in an incident on 5 January 1977 when a tractor, which he was driving, slipped over a bank. He was totally incapacitated for work from that day to 31 March 1978 and partially incapacitated for work from 1 April 1978 onwards. At some time subsequent to 5 January 1977, his employment was terminated on the ground that he was medically unfit for work. In July 1978, while unemployed and partially incapacitated, the worker sought suitable employment with the Council. The Council advised him that it was not in a position to offer him employment at that time. It is common ground that, from 25 July 1978, the Council failed to provide the worker with suitable employment during his partial incapacity for work. (at p330)

3. The learned judge who made the award (Judge Williams) found that the worker had received injury to his low back arising out of and in the course of his employment with the Council on no less than thirteen separate occasions and had suffered an aggravation of low back disability during periods of performance of heavy work for the Council between July 1967 and 4 January 1977. He found that the worker was but partially incapacitated for the period from 1 April, 1978 to the date of the award but held that he was entitled to weekly compensation on the basis of notional total incapacity from 25 July 1978 by reason of the Council's failure to provide him with suitable employment as required by s. 11(2) of the Act. His Honour also found that the subsisting partial incapacity was "as a result of, at least, the injury of 5 January 1977 and the injuries of 21 July 1967, 6 December 1973 and 18 March 1975". In other words, his Honour found that there was a single existing partial incapacity and that that incapacity resulted from, at least, the four specified separate injuries. In that regard, the present case is to be contrasted with Timber Trade Mutual Insurance Ltd. National Employers' Mutual General Insurance Association Ltd. (1979) 2 NSWLR 532 where the finding by the Workers' Compensation Commission was of two distinct partial incapacities. (at p330)

4. During the period from October 1966 to March 1981, five different insurers successively indemnified the Council against liability to pay compensation under the Act. At relevant times prior to 30 June 1970, the insurer was South British Insurance Co. Ltd. ("South British"). From 30 June 1970 to 30 June 1974, the Council was insured by Bishopsgate Insurance Australia Ltd. ("Bishopsgate"). On 18 March 1975, the insurer was Western Australian Insurance Co. (Canberra) Ltd. ("Western Australian"). National & General Insurance Co. Ltd. ("National & General") was at risk at the time the worker sustained injury on 5 January 1977. National Employers' Mutual General Insurance Association Ltd. ("National Employers'") was the insurer on and after 25 July 1978. Each of the policies was in the form prescribed by the Regulations made under the Act. The relevant words of each policy were:
". . . if during the (period of insurance) the employer shall be liable to pay compensation under the Act to or in respect of any person who is or is deemed by the Act to be a worker of such employer, then and in every such case the insurer will indemnify the employer against all such sums for which the employer shall be so liable . . . . " (at p331)

5. Faced with a dispute among its insurers as to liabilty to indemnify or contribute under their respective policies, the Council instituted proceedings for declaratory relief and consequential orders in the Supreme Court of New South Wales against all five of them. The matter was heard by Yeldham J. South British, Bishopsgate, Western Australian and National & General agreed, without prejudice, to share equally the Council's liability for the closed periods to 24 July 1978 in respect of which compensation was ordered on the basis of partial incapacity. There remained in dispute the question of indemnity and contribution in relation to the Council's liability for the periods subsequent to that date in respect of which weekly compensation on the basis of notional total incapacity was awarded. His Honour held that National Employers', whose only connection with the award was that it happened to be at risk at a time when s. 11(2) of the Act operated to deem the partial incapacity to be total, was under no liability in respect of the amounts awarded. There was no appeal from his Honour's decision in that regard. His Honour also held that National & General, which was the insurer at risk on 5 January 1977 when the worker sustained the last causative injury, was solely liable to indemnify the Council. South British, Bishopsgate and Western Australian, each of which had been at risk when one of the other causative injuries was sustained, were held by his Honour to be under no liability either to indemnify the Council or to make contribution to National & General. (at p332)

6. National & General appealed to the Court of Appeal from Yeldham J.'s decision that it alone was liable to indemnify the Council and that it had no right to contribution from the other insurers. The Court of Appeal dismissed its appeal. National & General now appeals from that decision of the Court of Appeal. The respondents to the appeal are South British, Bishopgate and Western Australian. (at p332)

7. The evidence before Yeldham J. consisted of the reasons for judgment, findings and award of Judge Williams in the Workers' Compensation Commission which were received in evidence without objection. His Honour dealt with the matter on the basis of Judge Williams' finding that the worker's underlying partial incapacity subsequent to 25 July 1978 was "a result of, at least, the injury of 5 January 1977 and the injuries of 21 July 1967, 6 December 1973 and 18 March 1975". Each of those injuries had been sustained by the worker in the course of his employment. Before this Court, senior counsel for the respondent insurers sought, by reference to some passages in Judge Williams' reasons for judgment, to challenge Yeldham J.'s acceptance of that finding. In a situation where the finding was admitted in evidence without objection and the material which was before Judge Williams was not tendered before Yeldham J. and is not in evidence, I am not prepared to reject or disregard that finding. In my view, Yeldham J. was correct in dealing with the matter on the basis of it, I propose to do likewise. (at p332)

8. As Yeldham J. pointed out, a single incapacity may, for purposes of workers' compensation legislation, be attributable to more than one injury: Harwood v. Wyken Colliery Co. (1913) 2 KB 158 ; Bushby v. Morris (1980) 1 NSWLR 81 . It is plain that Judge Williams' finding that the partial incapacity "resulted", at least, from the four injuries which he specified was deliberately worded in the terms of s. 9 of the Act which provides that, subject to the provisions of ss. 11 and 13, where total or partial incapacity for work "results" from an injury, the compensation payable by the employer under the Act shall include the payments for which the section provides. Each of these four injuries provided a distinct base for the liability of the Council to pay compensation on the basis of partial incapacity. Each of the appellant and respondent insurers was at risk when one of those injuries was suffered. Prima facie, that liability to pay compensation on the basis of partial incapacity was covered by the indemnity of each of the insurers. Whether that was so is not, however, the question in issue in the present appeal. At issue in the present appeal is the liability of the insurers in respect of payments to which the worker was entitled, not on the basis of his partial incapacity, but on the basis of a deemed total incapacity arising pursuant to s. 11(2) of the Act. (at p333)

9. At the time the worker sustained injury on 21 July 1967, s. 11(2) of the Act provided:
"An employer shall provide suitable employment for his injured worker during the worker's partial incapacity for his pre-injury employment.
Upon any failure by such employer to provide suitable employment as aforesaid the worker's incapacity for work shall be deemed to be total, and he shall be compensated accordingly."
The sub-section was amended by Act No. 97 of 1967, the amendment taking effect on 4 January 1968, by substituting the word "work" for the words "his pre-injury employment" at the end of the first paragraph. It remained in that form until 29 April 1980 when the following new sub-section was substituted by Act No. 79 of 1980:
"An employer shall provide suitable employment for his injured worker during the worker's partial incapacity for work but, if the employer fails to do so, the worker shall be compensated as if his incapacity for work were total, unless -
(a) where the employer is an employer referred to in section 18c(2) - the Registrar;

(b) where the compensation is payable under Part IIA - the Registrar; or
(c) in any other case - the insurer,
provides, or arranges for, such suitable employment having regard to the

worker's incapacity and place of abode."
It has not been suggested that anything turns in the present case upon the differences between the various forms which the sub-section has taken and it is appropriate to refer to it in the form which it took in the period (4 January 1968 to 29 April 1980) in which the last three causative injuries were sustained. (at p333)

10. The obligation to provide suitable employment for "his" partially incapacitated worker is imposed upon "(a)n employer". In a case where partial incapacity results from one injury only and the relationship of employer and employee persists, there is no room for contest as to the identity of the employer who is under the statutory obligation to provide suitable employment. It is the current employer. Where, however, incapacity results from a number of injuries sustained by the worker in the course of employment with different employers or, as in the present case, the worker has ceased to be employed, the identification of the employer or employers under the statutory obligation imposed by s. 11(2) involves questions as to the correct construction of that sub-section. (at p334)

11. Section 11(2) is not, by reason of the reference to "his injured worker", to be construed as applying only while the relationship of employment persists: an employer is, in an appropriate case, under the obligation to provide a partially incapacitated worker with suitable employment regardless of whether the worker remains in his employ. Thus, the fact that the Council terminated the worker's employment in the present case did not remove it from the scope of the sub-section. On the other hand, where a single incapacity results from a number of injuries sustained in the course of a worker's employment with a number of successive employers, the sub-section does not impose a statutory obligation to provide suitable employment upon every employer in whose service a causative injury was sustained. While a previous employer will be liable to pay compensation in respect of a partial incapacity which, for the purposes of the Act, results from an injury sustained by a worker in the course of employment with him and from other injuries sustained in the course of subsequent employment with other employers, s. 11(2) does not require such an employer to provide suitable employment for such a former employee. In such a case, the employer to whom the sub-section refers is the employer in whose service there was sustained the injury to which the partial incapacity in its present state can be related, namely, the employer at the time when the last of the causative injuries was sustained. (at p334)

12. The failure by an employer to fulfil the statutory obligation imposed upon him by s. 11(2) does not constitute an offence under the Act or lead to any sanction other than that for which the sub-section itself provides, namely, that the worker's incapacity for work is deemed to be total and the worker is entitled to "be compensated accordingly". The Act does not expressly identify the person liable to pay compensation on the basis of notional total incapacity. In my view however, it is plain that the liability is imposed upon the employer whose failure to fulfil the statutory obligation of providing suitable employment has resulted in compensation being payable on that basis. While that liability may not crystallize unless and until there is a failure to provide suitable employment in prusuance of s. 11(2), it arises at the time of the happening of the injury: Fisher v. Hebburn Ltd. [1960] HCA 80; (1960) 105 CLR 188, at pp 202-203 ; Geraldton Building Co. Pty. Ltd. v. May [1977] HCA 17; (1977) 136 CLR 379, at pp 384,404 . As Barwick C.J., speaking for the majority of the Court, commented in Bain v. Frank G. O'Brien Ltd. (1976) 135 CLR 158, at p 161 , "The receipt of the compensable injury . . . of itself exposes the employer to this liability to pay the larger compensation if that employment is not provided". In a case where a single partial incapacity has resulted from a number of injuries sustained by a worker while employed by different employers and where the employer at the time of the last causative injury has failed to provide suitable employment, the liability of that last employer to pay compensation on the basis of notional total incapacity can properly be seen as flowing from that injury. Similarly, where the underlying partial incapacity has resulted from a number of separate injuries sustained by a worker in the course of his employment with the one employer who has failed to provide suitable employment, the liability to pay compensation in respect of notional total incapacity is properly to be seen as flowing from the last injury and as having arisen at the time of that injury. (at p335)

13. The risk insured against under each of the insurance policies in the present case was liability of the Council to pay compensation under the Act to a worker. Each policy indemnifies the Council in respect of any such liability arising from an occurrence within the period of the policy. The Council's liability to pay compensation in respect of notional total incapacity was not "to any degree dependent" upon the continuance of the partial incapacity which attracted the provisions of s. 11(2) (Bain v. Frank G. O'Brien Ltd. (1976) 135 CLR, at p 164 ) and, while it existed, displaced any liability to pay compensation in respect of that partial incapacity. The liability to pay compensation on the basis of notional total incapacity in the event of failure to fulfil the statutory obligation to provide suitable employment arose on, and flowed from, the occurrence of the last injury from which the partial incapacity resulted, namely, the injury sustained on 5 January 1977. At that time, the only insurer at risk was National & General. It follows that National & General was alone bound to indemnify the Council in respect of its liability to pay compensation to the worker on the basis of notional total incapacity for the periods from 25 July 1978. The other insurers were not bound to indemnify the Council in respect of that liability. Nor, since National & General's policy was the only policy which covered the relevant liability, were the other insurers under any obligation to contribute to the amounts which National & General was required to pay either to the Council or the worker in discharge of its obligation to indemnify the Council in respect of the s. 11(2) payment. (at p335)

14. There are two further matters of which brief mention should be made. The first is that it has not been necessary for the purposes of the present appeal to consider the operation of the provisions of s. 11(2) in a case where the last of a number of injuries from which partial incapacity has resulted is sustained privately. The second is that the reference to Bushby v. Morris (1980) 1 NSWLR 81 should not be seen as indicating necessary agreement with the view, apparently accepted by the Privy Council in that case, that common law principles of causation are applicable to determine whether it can properly be said, for the purposes of the Act, that a partial incapacity "results" from a specified injury. In particular, it has not been necessary in the present case to consider whether, contrary to what was said by Taylor J. in The Commonwealth v. Butler [1958] HCA 56; (1958) 102 CLR 465, at pp 476-477 , the fact that an injury is a causa sine qua non of incapacity in itself suffices to found a conclusion that, for the purposes of the Act, the incapacity results from that injury. (at p336)

15. The appeal should be dismissed with costs. (at p336)

ORDER

Appeal dismissed with costs.