Burrows v Free Spirit Charters and Workcover Authority of New South Wales and Motor Yacht Holdings Pty Ltd [1999] NSWCC 2 (12 February 1999)

Last Updated: 5 July 1999

CITATION: Burrows v Free Spirit Charters and WorkCover Authority of New South Wales and Motor Yacht Holdings Pty Ltd [1999] NSWCC 2

PARTIES: Sarah Burrows

v

Free Spirit Charters and

WorkCover Authority of New South Wales and

Motor Yacht Holdings Pty Ltd

TITLE OF COURT: Compensation Court of NSW

JURISDICTION: Original

MATTER NO/S: NSWCC 36930 of 1998

DELIVERED ON: 12 February 1999

DELIVERED AT: Parramatta

HEARING DATES: 30 November 1998; 15 December 1998; 11 February 1999

JUDGMENT OF: Neilson J

NUMBER OF PARAGRAPHS: 45

CATCHWORDS: Workers Compensation Statutes & Delegated Legislation;

Entitlement and Liability - Person liable to pay compensation - Insurer;

Statutory Insurance Policy - Cancellation;

Whether retrospective "cancellation" available to employer and insurer: Held not. [paras 29-43];

Statutory policy cl10 - now cl18 under Workers Compensation (General) Regulation 1995;

WCA s184(13) now WIMWCA s184(7);

Cole v Cole (1997) 14 NSWCCR 462 approved.

REPRESENTATION

APPLICANT/S

Mr D A Baker instructed by Jones Staff & Co appeared for the applicant

RESPONDANT/S

Mr A J Candy instructed by the WorkCover Authority appeared for the second respondent

Mr J H Pearce instructed by Sparke Helmore appeared for the third respondent

Ms J Chapman instructed by McCulloch & Buggy appeared for the third party

Compensation Court Of New South Wales

Matter No 36930 of 1998

Sarah Burrows

v

Free Spirit Charters Pty Ltd

and

WorkCover Authority of NSW

and

Motor Yacht Holdings Pty Ltd

12 February 1999

JUDGMENT

NEILSON J

1. Miss Sarah Irving Burrows of St Ives claims weekly payments of compensation from 5 August 1996 to date and continuing pursuant to s40 and a lump sum under s66 for 40 per cent loss of efficient use of her left leg below the knee and a consequential lump sum for pain and suffering pursuant to s67. There is no dispute that the applicant was a worker. Eventually, counsel in submissions conceded that there is no dispute that at the material time the applicant was employed by the third respondent. There is no dispute that the contract of service was made in New South Wales. There is no dispute that in the course of her employment on 6 October 1995 the applicant injured her left leg. The injury occurred shortly after midnight on 6 October 1995. Hence, it can be seen why the date of injury is sometimes given as 5 October 1995. The injury occurred on a vessel called "Free Spirit", which was then plying the coastal waters of Queensland, near Cairns.

2. The applicant is entitled to benefits under the NSW statute because of the provisions of s13 of the Workers Compensation Act 1987. There are the usual disputes as to the quantum of the applicant's entitlement, but there is no suggestion that the applicant is not entitled either to weekly payments or to a lump sum under s66 in light of the way the case has been conducted. As I said there is no issue now that the applicant was employed by the third respondent, although it was suggested initially that she was employed by the first respondent. The substantial issue is whether the third respondent was insured at the time of the occurrence of the injury on 6 October 1995 by the third party, Mercantile Mutual Insurance (NSW Workers Compensation) Ltd.

3. I will deal with the applicant's claim against the third respondent firstly. Before doing that I should mention the background which led to the allegation that the applicant was employed by the first respondent. On 1 October 1985 a company was incorporated under the name Cloudgard No 29 Pty Ltd. On 14 December 1993 that company changed its name to Free Spirit Charters Pty Ltd. That remained the name of the company until 28 August 1995 when it became known as Motor Yacht Holdings Pty Ltd. This is the third respondent. The third respondent was the owner, and remains the owner, of the vessel "Free Spirit". In 1995 it was decided in order to protect the asset, namely the vessel, that a different company would carry out the charter operation of the vessel. To do that another company was used. That company was incorporated on 21 December 1993. That company has been identified as Coot Pty Ltd. On 28 August 1995 that company was re-named Free Spirit Charters Pty Ltd. This is the first respondent.

4. The idea entertained by the directors of each of the companies was that the charter operations of the vessel "Free Spirit" should be taken over with effect from 1st October 1995. However, the applicant's contract of service was made with the third respondent, prior to the first respondent's taking over the charter organisation. It clearly was intended that the contract of service be novated to the first respondent. However, a novation of a contract can not occur without the consent of each party. The applicant herself had to know about the proposed change and consent to it. The applicant was not apprised, on the evidence before me, of the novation of her contract to the new employer until approximately 15 November 1995, well after the injury which befell her on 6 October 1995. Therefore at the time that she was injured she remained employed by the third respondent.

5. On 6 October 1995 the vessel upon which she was working as a chef hit a swell and the applicant fell approximately a metre down some stairs which she was traversing at the time that the vessel hit a swell. She fell and noticed that she had injured her left foot. She iced her foot up and retired for the evening. The next morning one of the passengers on the vessel, a medical practitioner, examined her and suggested that the applicant be flown to Cairns. She was so flown and attended Cairns Base Hospital where some x-rays were performed which were said to reveal no abnormality. The applicant's leg was strapped and she was given some crutches. She returned to the vessel where she tried to continue working as a chef but that was quite impossible because a chef has to stand up for most of her or his time whilst working. The applicant sat and directed others as to what was to be done.

6. Approximately four weeks later she again attended the Cairns Base Hospital when the vessel was in port. Again she was given a restricted duties certificate. Eventually in late November or early December the vessel berthed at Port Douglas and the applicant there saw another medical practitioner who prescribed physiotherapy. Eventually the applicant was flown back to Sydney on 10 December 1995. She then came under the care of her usual medical practitioner, Dr Misaki Ikegame. Dr Ikegame referred the applicant on to Dr James Sullivan, an orthopaedic surgeon. Dr Sullivan arranged an MRI scan which showed a fracture through the talus, which was undisplaced, and also a complete rupture of the deltoid ligament. Dr Sullivan suspected that there may be some subchondral fracture and recommended an arthroscopy. Arthroscopy was performed on 31 January 1996 and the doctor did find an osteochrondal fragment which had broken off from the lateral aspect of the talus. That was surgically removed and the doctor proceeded to open repair of the deltoid ligament.

7. The applicant was then placed in plaster and was encouraged gradually to become weight-bearing. The applicant remained off work until 5 August 1996 when she commenced working for Vogue Entertaining. The applicant was paid benefits under Queensland law until 4 August 1996. The applicant's work with Vogue Entertaining was mainly sedentary. She was working as a research editor of the food department of Vogue magazine. There was some standing and walking involved. She pointed out that as an editor and journalist she was mainly performing sedentary work. That work persisted until 24 January 1998 when the applicant resigned her employment in order to travel overseas indefinitely. The applicant has embarked upon that trip, I am told from the Bar table, without objection.

8. That the applicant has been left with some residual loss of efficient use of the left leg below the knee is undoubted. Every doctor makes an assessment of such loss. The only question is what is its extent. There is really not much dispute that the applicant is unfit for her previous work as a chef on a vessel and indeed for chef's work generally. The applicant said that the work of a chef involved prolonged standing and no-one cross-examined her to suggest otherwise. Common sense indicates that what the applicant said is true.

9. Dr Sullivan expressed the view that the applicant should continue largely in a sedentary capacity and that such restriction is likely to be permanent. Dr Roebuck, qualified by the applicant's solicitors, said that the applicant's injury had forced her to change her employment and that that restriction on her employability was permanent. Dr Brian Hagan, qualified by the solicitors for the second respondent, the WorkCover Authority, said that the applicant was fit for her pre-injury work, but continued:

but with the restrictions on standing for longer than one hour or walking on rough ground and ascending and descending stairs and steps. She is not fit for her chef work on boats. Her inability stand [sic] for longer than one hour may restrict the possibility of employment as a chef. She is better suited for present level of cooking for photography sessions and magazine work.

That really is a concession by Dr Hagan that the applicant is unfit for work as a chef.

10. Dr Peter Burn, who was also qualified by the solicitors for the second respondent, commented that the applicant was ill-advised to work at sea again. When he continued in his report:

Provided Miss Burrows did not have to remain on her feet for prolonged periods, and could, say, rest for five to ten minutes every two hours, she should be capable of full-time employment in the Hospitality Industry for the next twenty years.

However, the challenged evidence is that the applicant's employment did require her to be on her feet for prolonged periods.

11. Dr Kalev Wilding was qualified by the solicitors who initially appeared for the first respondent but later appeared for the third respondent. He expressed this:

In my opinion she would not be capable performing work as a Chef on a charter vessel if she was required to stand for long periods of time. If work could be arranged where she only stood for one or two hours at a time and was then able to sit for one or two hours, then I feel she could cope with work as a chef on a charter vessel.

Such restricted work is not available to the applicant from the third respondent or indeed on the evidence before me from anyone else. Furthermore, Dr Wilding clearly expected that the applicant could not do prolonged standing in which the ordinary work of a chef involves.

12. I am persuaded on the evidence that the applicant is permanently unfit for her pre-injury work as a chef. In my view the applicant's ability to earn should be measured by her actual earnings in the employ of Vogue Entertaining. The question which then arises is what were the applicant's probable weekly earnings but for injury since 5 August 1996. There are some data which enable me to assess that. The applicant's actual average weekly earnings whilst she was employed by the third respondent were $888.88. However, the applicant was also provided with accommodation and meals on the vessel. In my view the proper value to be assigned to benefits, which the applicant was earning with the third respondent are approximately $1,000 per week. During the course of submissions no-one said otherwise, I having indicated to counsel arguendo to that effect.

13. What would the applicant's earnings have been since 5 August 1996? The applicant admitted that the moneys she was earning for the third respondent were greater than she had been earning prior thereto. However, wages change. The applicant had been looking for permanent work with the "Truffle Group" but it was unable to provide permanent work until after Christmas 1995. Hence, the applicant took the work with the third respondent. The applicant had in the past worked as the head chef at the Doyle's Restaurant "at Pyrmont" by which I infer is meant the Doyle's Bistro at the Sydney Fish Market.

14. There is in evidence a letter from Doyle's Seafood Pty Ltd in which it was stated that if that company were now to employ the applicant, taking into consideration her expertise and experience, her annual gross income would be between $70,000 and $80,000. That indicates earnings of between $1,346 per week and $1,538 per week. However, clearly the applicant would only be earning at this current time at the bottom of that range, which I shall round off to be $1,350. However, would the applicant obtain work at such prestigious restaurants as Doyle's on the Beach at Watson's Bay or Doyle's at the Quay? It appears to me unlikely. I do not believe $1,350 represents the applicant's probable weekly earnings. It appears to me that the applicant's work for Doyle's at a bistro would not be as well remunerated as working at more prestigious or upmarket restaurants.

15. Doing the best I can it appears to me that the applicant's probable weekly earnings but for injury have been from 5 August 1996 to 15 December 1997 $1,000 per week and from 16 October 1997 to date $1,100 per week.

16. During the first period the applicant's actual earnings were $653.85 per week and during the second period until 24 December 1997 $701.92 per week. The applicant's actual loss during the first period is $246.15 and during the second period is $298.08 per week. Provided the statutory maxima are not exceeded, in my view the applicant is entitled to such losses until 24 December 1997.

17. From Christmas Day 1998 the situation has changed. The applicant has voluntarily left the work force in order to travel. However, it is her intention to try to obtain work if she can and, in particular, to obtain work on a contract basis from Vogue Entertaining. The applicant will remain beyond the seas until her wanderlust is satiated or her money runs out. This is a discretionary matter. The applicant will be working if she can but clearly has removed herself from well-paid full-time work. In my view the applicant's loss must be moderated because of the discretion under s40.

18. It appears to me that the appropriate discount should be 50 per cent and rounding the sum off I believe that since 25 December 1997 the appropriate award for weekly payments is $150 per week. That, of course, can be reviewed when the applicant returns to Australia and re-enters the work force.

19. I turn now to the applicant's claim for lump sum compensation.. The first thing to say about the case is that I have no hesitation in accepting everything that Ms Burrows told me. Ms Burrows yesterday turned 38. She is a healthy and vigorous young lady, who remains single. Her evidence was straightforward and matter of fact, and in my view she is an honest witness. Those factors are to be taken into account in assessing the applicant's lump sum compensation under s66 because the extent of the loss of efficient use of the leg below the knee is dependent to a large extent on the applicant's complaints.

20. The medical assessments from the doctors that are before me cover the usual range. The first assessment is from the treating orthopaedic surgeon, Dr Sullivan. He believed that the applicant had a 20 per cent loss of efficient use of the left leg below the knee. The applicant's general practitioner, Dr Ikegame, assessed the same loss at being 30 per cent. Dr David Roebuck, qualified by the applicant's solicitors, saw the applicant on 12 November 1998 and diagnosed a 40 per cent loss. Dr Brian Hagan, a general surgeon, saw the applicant on 29 September 1997. He made two assessments. The first was of a 10 per cent impairment of the left lower limb, relying upon the Guide to the Evaluation of Permanent Impairment published by the American Medical Association in 1987. The other assessment the doctor made was a 30 per cent "impairment" of the left foot, relying upon the Workers Compensation Act. In a supplementary report Dr Hagan added a third assessment, that is a 10 per cent "impairment" of the left lower limb below the knee.

21. The American guides to permanent impairment do not provide the same tests as are provided by the Workers Compensation Act. See Cummins v G James Safety Glass Pty Ltd [1994] NSWCC 32; (1994) 10 NSWCCR 688. Furthermore, if there be a 30 per cent impairment of the foot it appears to me that the loss of the efficient use of the whole leg would be greater than 10 per cent. See Stokes v Brambles Australia Ltd [1994] NSWCC 22; (1994) 10 NSWCCR 515. Dr Wearne, also a general surgeon, said that using the American Guide to the Evaluation of Permanent Impairment the loss was 14 per cent but then thought that because of his findings of exaggeration the loss was only between 5 and 10 per cent. Dr Wilding, an orthopaedic surgeon, put the loss of efficient use of the left leg below the knee at 15 per cent. Accordingly, the assessments range between 5 per cent and 40 per cent. This leads me to consider the applicant's own evidence.

22. The evidence about what the applicant can and cannot do is persuasive in my view to be loss being more substantial than a nominal 5 or 10 per cent. She told me this:

In certain weather, my ankle clicks and locks and aches, and if I stand on it for very long it starts to ache. If I stand on it for too long it will swell up and cause me to limp when I walk. I can't walk over uneven surfaces or sloped ground without it becoming sore or swelling. I can't jump without it swelling or becoming sore ...

Question: Just hold it there for a minute. An inability to run as you used to do?

Answer: Yes.

Question: And to jump?

Answer: Yes.

23. The applicant then told me that she had been unable to return to aerobic exercise classes, that her major love of snow skiing had been interfered with substantially, that she had been unable to return to bushwalking and to more adventurous activities such as abseiling. Her enjoyment of scuba-diving has been interfered with because she can no longer wear large fins as the use of large fins causes pain in her left ankle. She now uses smaller fins. Even when the applicant uses smaller fins she finds that her left ankle becomes slightly swollen and a bit sore. She is unable to wear high-heeled footwear any more and unable generally to wear heavy shoes. The applicant's inability to pursue vigorous activity has caused an increase in her weight when she would prefer to be slimmer.

24. The applicant performs exercises daily that have been taught to her by a physiotherapist, and if she does not perform them she finds that her ankle locks up more often, is stiffer and is more likely to ache than if she does perform them. Generally, the applicant's ability to use her left leg for its primary purpose of locomotion - walking, running, jogging, jumping - has been greatly interfered with. Mr Pearce for the third respondent criticised the applicant's evidence on the basis that the applicant had gone to New Zealand and went skiing on five consecutive days. His submission was that the mere fact that the applicant could undertake such a trip is evidence that the disability is not as great as she would have me believe. I reject that submission.

25. The applicant, as I said, is a vigorous and otherwise healthy young lady. One often hears in this Court of people who, having injured themselves, take to their bed of pain and try to do nothing. The applicant is different. The applicant would like to get on with her life and do whatever she can, albeit that it causes pain. The fact that she undertook a skiing trip - limited as it was, as I shall shortly describe - indicates to me a stoical attitude and a wish to pursue her life rather than an absence of the disability of which she told me. The applicant was in New Zealand on a skiing holiday for ten days, skied for only five days, on each of those five days she was only on the ski slopes for two hours, only half that time would have actually been on the piste - the rest of the time being conveyed by T bars or chairlifts or in waiting.

26. The applicant said that after doing those activities her ankle was sore and that is why she gave up after five days during a ten day trip, and I find nothing inconsistent between that activity and the applicant's complaints to me. Bearing in mind what the applicant told me, I believe that the appropriate finding as to the loss of efficient use of the applicant's left leg below the knee is between the assessments of Dr Sullivan and Dr Ikegame. Those assessments were of course 20 per cent and 30 per cent. It appears to me consistent with the applicant's complaints and her activities and lifestyle - not that the latter matters much, but it is indicative of the range of activities to which her leg was put, that she has lost one-quarter of the use of her left leg below the knee. That entitles her to a lump sum for 25 per cent loss of efficient use of the left leg below the knee.

27. My finding under s67 entitles the applicant to lump sum compensation under s67 for pain and suffering, anxiety and distress. At the time of the injury the applicant was 34 years of age. As I said she attained her thirty-eighth anniversary yesterday. She has had problems for three years and four months, substantial problems during the period between the injury and her recovery from the surgery performed by Dr Sullivan. The applicant has ongoing symptoms and the prospect of post-traumatic osteoarthritis is raised by all the medical practitioners as a distinct possibility. None of them put it as a probability but in my view, in light of the operative findings commented upon by Dr Sullivan, it is probably likely. Furthermore, most recently the applicant has undergone a further MRI scan at the request of Dr Sullivan which in his view suggest secondary low-grade synovitis which may be a precursor to osteoarthritis. The applicant's life expectancy is good and the tables tell me that it is forty-four years. Forty-four years is not an inconsiderable period of time in which to suffer ongoing symptoms in the left leg below the knee which are likely to increase with the passage of time and the onset of osteoarthritis.

28. Doing the best I can, this case stands proportionate to a most extreme case of pain and suffering in the ratio of 1:3. That entitles the applicant to a lump sum under s67 of $22,066.67 of which I apportion $7,000 to the past.

29. I turn now to the insurance issue. There is no dispute that the third respondent had a policy of insurance in accordance with the provisions of the Act taken out with the Third Party to whom I shall refer merely as "Mercantile Mutual". The relevant policy period was from 30 June 1995 to 30 June 1996. On 16 October 1995, ten days after the applicant's injury, the agent of the third respondent wrote to Mercantile Mutual the following:

We write to request cancellation of the above workers compensation policy effective from 30 September, 1995.

The letter then goes on to state the gross wages paid for the period from 1 July 1995 to 30 September 1995 and continues:

Would you kindly cancel the above policy and reassess the premium due and payable based on the above information.

If you require any further information, please do not hesitate to be in contact.

30. There is no suggestion and no evidence of any further contact between the agent of the third respondent and Mercantile Mutual. Mercantile Mutual complied with the request, cancelled the policy and sent a refund to the third respondent. On the same day the same agent, namely Leonard Consultants Pty Ltd, wrote to Mercantile Mutual requesting a new workers compensation policy for the current first respondent, citing its correct company number. The letter then goes on to say this:

The company operates a business of charter vessel operations in both New South Wales and Queensland waters. There is currently a workers compensation policy in place for wages paid to workers in Queensland and we seek similar coverage for the company's operations, whilst in New South Wales waters.

Would you please effect a Workers Compensation Policy based on estimated wages of $30,000 being incurred for the period 1 November 1995 to 30 June 1996. We require the coverage to be in place for the first day of expected operations, being 1 November 1995.

We look forward to receiving a Policy Application in due course.

I infer that by "Policy Application" the agent was in effect requesting a proposal.

31. The relevant policy was the form current prior to the Workers Compensation (General) Regulation 1995 which came into force on 1 September 1995. Cl10 of the policy is this:

The insurer may, at any time by giving written notice to the Employer, cancel this Policy. The notice of cancellation shall be posted to the employer at the address of the employer last known to the Insurer, and the cancellation of the policy shall be effective on the expiration of seven clear days from the date of posting the notice. S184 of Act applies as if the policy had been cancelled under that section. Providing that the policy may not be cancelled without the consent of the WorkCover Authority first had and obtained.

32. The evidence before me made by way of concession is that Mercantile Mutual did not obtain specific permission from the WorkCover Authority to cancel the policy in question. The insurer's reply to that is that it relied on a general permission given to it by the predecessor of the WorkCover Authority in a circular of 31 July 1989. The circular provides "Guidelines for Cancellation of Policies". Part of that document is as follows:

For practical reasons, the Authority now gives consent to all fund managers to cancel policies when the reasons for cancellation of policies fall into one or more of the following categories.[sic]

1. Employer has ceased trading (including bankruptcy or liquidation of business).

2. The business' operations have been sold.

3. The company has been the subject of a take-over and the new owners wish to synchronise the period of insurance cover with that of the group.

Cancallations[sic] of policies for reasons other than those means listed above will constitute "special circumstances" which require that the consent of the Authority first be obtained.

33. Mercantile Mutual ask me to construe the words ".now gives consent" as being "hereby gives consent". Although it is not specifically stated, drawn in aid of such interpretation is the last paragraph, which I have quoted, which insists that in categories other than the three enumerated, the consent of the Authority must first be obtained - implying, therefore, that if the other circumstances applied, the consent would be inferred. There is force in that submission, although I would not be inclined to construe the words "now gives consent" as "hereby gives consent". It appears to me to be more of a statement of policy rather than giving a blanket consent. However, the last paragraph does tend to support the insurer's argument. However, the directive in the guideline is itself grossly deficient. No provision is made for circumstances, such as here, where a worker has been injured. One would have thought that the Authority would not permit a policy to be cancelled where there was an injured worker.

34. In any event I do not really need to construe this circular as if it were a statutory instrument because the present circumstances do not permit one to put the reason for cancellation of the policy within any of the three categories set out in the guideline which is Exhibit 20. The employer, the third respondent, gave no reason for the cancellation of the policy. It did not state that it had ceased trading; it did not state that the business operations had been sold; it did not state that the company had been the subject of a take-over. The insurer made no enquiry. The fact is that as a matter of law, the applicant and all others working on the vessel "Free Spirit" were still employed by the third respondent until mid-November 1995. Any contracts for carriage which had been made by passengers prior to 30 September 1995 would still have been in force in mid-October 1995.

35. The inference to be drawn is that people do not take out lengthy chartered vessel holidays without some planning and booking in advance. No reason having been given by the employer, no reason having been requested by the insurer, no enquiry having been made, it was not open, in my view, to the insurer to infer that the matter was within the guideline proposed in Exhibit 20. Therefore the insurer had to obtain permission of the WorkCover Authority for the cancellation of the policy. It did not. If it had have, the whole problem may have been obviated because one may have ascertained that the applicant had been injured and that her contract of service had been made in New South Wales.

36. I have been asked by learned counsel for Mercantile Mutual to infer that the letters about cancellation of the old policy and the letter requesting a new policy for the first respondent clearly indicated to Mercantile Mutual that the business was being transferred from one to the other and therefore that the matter fell within the first or second categories referred to in the guideline, which I have quoted. No such inference could properly be drawn in my view. Furthermore, it seems to me more likely that a request for renewed cover goes to one place and that a request for cancellation of a policy goes to another place. There is no internal cross-reference in either letter of 16 October 1995 to Mercantile Mutual to the other. Those letters are Exhibits 14 and 17. Furthermore, even if they were, one would see a glaring inconsistency: one letter that requested cancellation on 30 September 1995, the other only sought cover from 1 November 1995. One would have thought by looking at the letter of 16 October 1995 that the commencement by the first respondent of the business normally carried out by the third respondent was commencing on 1 November 1995 and not on 1 October 1995. But in any event all that is in my view also academic.

37. The question is what does cancellation of the policy mean? Etymologically, cancellation is a term relating to geometry. It refers to hatching something over with crossed lines. It became by analogy to refer to crossing something out. This led to it having a number of meanings. One of those meanings is to make void. Another of those meanings is to terminate. It is unfortunate that the Workers Compensation Act and consequential policy documents should use a word with two meanings, one of which has the legal meaning of recission or avoidment and the other having the legal meaning of termination or ending.

38. The question is what does cancellation mean in the Workers Compensation Act and the policy meaning which I am now construing? There is reference in cl10 of the policy in this case to s184. The then s184 of the Workers Compensation Act 1987 relates to the "cancellation of policies following cancellation or suspension of insurers licence". That makes a number of provisions as to what happens when the licence of the insurer is "cancelled". All of the provisions make it clear that policies already effected by the insurer prior to the cancellation of the licence remain in force. In particular, subs(13) is in the following terms:

The effect of the cancellation of a policy of insurance under this section is to terminate the period of the policy but, subject to this section, without affecting any right, obligation or liability acquired, accrued or incurred under the policy in respect of that period before its termination.

39. Clearly the word `cancellation' and the verb from which it is derived `cancel' are used to mean terminate and not to rescind. When the policy speaks of a cancellation of a policy it is referring to its ending and not to some form of recission. Furthermore, cl10 of the policy clearly imports s184, part of which is subs(13) which I just quoted. It makes it clear that cancellation cannot affect anything that has happened prior to the date of the cancellation. In this case the employer, the third respondent, had incurred a liability on 6 October 1996 to pay compensation to the applicant. The applicant herself had accrued a right enforceable against the third respondent and, once an award has been entered by this Court, directly enforceable against the insurer. The insurer had incurred a liability to indemnify the third respondent in respect of its liability to the applicant. Those liabilities and rights can not be affected for any period prior to the termination of the policy. Looking at the whole of the statutory scheme, in my view it is not open to an employer or an insurer to retrospectively cancel a policy. That is a form of recission or partial recission. As I put to the learned counsel for the third party arguendo would it not permit any employer, if retrospective cancellation was available, to, in effect, rescind a policy ab initio where, as far as the employer was aware, there had not been any claim made against him so that he could get his premium back.

40. In my view, the words in cl10 "and of the cancellation of a policy shall be effected on the expiration of seven clear days from the date of posting the notice." means that only seven days after posting of the notice can the policy be terminated. I reject the submission that the clause permits a posting of a notice which allows the termination to come into force at some time in the past.

41. Miss Chapman stressed the difference between the cl10 here in question and the cl18 as it became in the new policy under the Workers Compensation (General Regulation) 1995 which is in particular discussed by Commissioner Wright in Cole v Cole (1997) 14 NSWCCR 462. In my view the difference in verbiage is only a difference in style. The effect of both the old cl10 and the new cl18 are the same. Furthermore, the view I have come to is exactly that made by the learned Commissioner in the decision to which I have just referred, which I most respectfully approve. That being so, it was not open to the insurer as a matter of law to retrospectively cancel the policy. It could only cancel the policy with effect seven days after it purported to act on the request by the employer of the cancellation, that is no earlier than 23 October 1995, a considerable period of time after the applicant was injured.

42. In support of that construction of the Act, one can consider the decision of the Court of Appeal in Georgoulis v Mandalinic [1984] 1NSWLR 62. In that case Madalinic sought indemnity from GIO for the period from 7 May 1980 to 7 May 1981. The proposal was in fact received by the GIO on 5 June 1980. The GIO issued a cover note for a policy which was to have as its term 5 June 1980 to 7 May 1981. It is the common practice of insurers, in all categories of insurance, to only commence cover from the date on which a proposal is received. That is what happened in Georgoulis' case, and that without any adverse comment either by the learned trial judge, Mr Justice Yeldham, or by their Honours in the Court of Appeal, Hutley, Glass and Mahoney JJA. That this should be so is commercially understandable. A request for retrospective cover could expose an insurer to liabilities for accidents or losses which had already occurred. When a policy is cancelled it should not be cancelled retrospectively - in Workers Compensation Law at any rate - because it may, as would be the effect here if the insurer were not liable, defeat the worker's rights to have her entitlements paid by an insured respondent where an insurer was not made aware of the occurrence of the accident or injury in question. Thus, as a matter of law, the policy cannot be retrospectively cancelled but only terminated from a definite date seven days after the posting of the notice by the insurer of the cancellation required.

43. The submission was put to me that cancellation was not here involved. This was a mutual agreement by the insurer and the employer to vary the contract as to its term. However, that is not that which was requested of the insurer in the request of 16 October 1995. The request was to cancel the policy. Furthermore, the policy itself does not provide for any method of recission or termination except that contained in cl10. That that is so can be understood to be a matter of policy inherent in the various provisions of the Act relating to insurance of employers. Although the employer takes the policy, and is party to the policy, the policy is merely to protect the employer; the advantage is gained by injured workers, hence, a scheme which does not permit termination of a policy that is retrospective.

44. I have requested of the representatives of the parties whether any further reasons for judgment are required. I am told that none is so required.

45. For those reasons I make an award for the first respondent.

I make an award for the second respondent.

I make the following award for the applicant against the third respondent:

For $246.15 per week from 5 August 1996 to 15 December 1997, and

For $261.30 per week from 16 December 1997 to 31 March 1998, and

For $263.30 per week from 1 April 1998 to 31 September 1998, and

For $267.90 per week from 1 October 1998 to 24 December 1998, and

For $150 per week from 25 December 1998 to date and continuing, pursuant to s40.

For $23,152.50 for 25 per cent loss of efficient use of the applicant's left leg below the knee.

For $22,066.67 for under s67.

I order the third respondent to pay interest on the sum of weekly payments under the award at the rate of 3 per cent per annum from 16 December 1996.

I order the third respondent to pay interest on the lump sum awarded under s66 at the rate of 6 per cent per annum from 16 December 1996 to date.

I order the third respondent to pay interest on $7,000 the lump sum awarded under s66 at the rate of 3 per cent per annum from 16 December 1996.

I order the third respondent to pay the applicant's hospital, medical and like expenses pursuant to s60.

I order the third respondent to pay the applicant's costs.

I certify additional conference $200.

I recommend advice on evidence for applicant's counsel.

The applicant's costs will include those of 30 November and 15 December 1998.

I declare that the third respondent is entitled to be indemnified for the entirety of the award which I have pronounced in favour of the applicant, by the third party.

I order the third party to pay the costs of the second respondent and of the third respondent.

I order that the third party not be liable to pay the costs of either the second or third respondents in respect of work done on 30 November 1998.

Mr D A Baker instructed by Jones Staff & Co appeared for the applicant

No appearance for the first respondent

Mr A J Candy instructed by the WorkCover Authority appeared for the second respondent

Mr J H Pearce instructed by Sparke Helmore appeared for the third respondent

Ms J Chapman instructed by McCulloch & Buggy appeared for the third party