By David Slatyer, Partner 

Facts

The defendants manufactured insulation products containing asbestos, in NSW between 1966 and 1979. The products were supplied and distributed both in Queensland and NSW.

The worker was employed as a fitter and turner in NSW between 1962 and 1969 and subsequently as a boilermaker in Queensland between 1987 and 1989. It was not in issue that the worker had been exposed to products manufactured by the defendants while working in NSW and Queensland and that he subsequently developed malignant mesothelioma (although causation remained in issue).

The worker made an application for compensation with WorkCover Queensland pursuant to the Workers’ Compensation and Rehabilitation Act 2003 (‘WCRA’). It was not in issue that the claim was accepted and the worker was paid $657,023.50 compensation by Workcover Queensland.

The statutory right of recovery

WorkCover Queensland brought an action in the District Court seeking indemnity from the defendants based upon WorkCover Queensland’s statutory cause of action created by section 207B WCRA, which relevantly provides:

207B Insurer’s charge on damages for compensation paid

(1) This section applies to—

(a) an injury sustained by a worker in circumstances creating—

(i) an entitlement to compensation; and 

(ii) a legal liability in the worker’s employer, or other person, to pay damages for the injury, independently of this Act; and

(b) damages that an employer is not indemnified against under this Act.

… 

(8) If a person who has received compensation has not recovered, or taken proceedings to recover, damages for the injury from another person, other than the worker’s employer— 

(a) the insurer is entitled to be indemnified for the amount of the compensation by the other person to the extent of that person’s liability for the damages, so far as the amount of damages payable for the injury by that person extends; and 

(b) to that end, the insurer is subrogated to the rights of the person for the injury.

WorkCover Queensland’s application

In its Amended Statement of Claim, WorkCover Queensland pleaded that:

“In the premises the Plaintiff is entitled, pursuant to section 207B(8) of the WCRA, to be indemnified by the First Defendant and Second Defendant for the sum of [the amount] being the compensation paid by the Plaintiff to the Worker in respect of the Injury.”

In their Further Amended Defence the defendants denied that WorkCover Queensland was entitled to indemnity under s 207B on the basis that section 113(1) of the WCRA provides that compensation is only payable in relation to employment that is connected with Queensland and that, as there was no entitlement to compensation for the worker under the WCRA with respect to his NSW employment, WorkCover Queensland had no right of recovery for compensation paid with respect to any injury caused or contributed to during the worker’s NSW employment.

WorkCover Queensland applied to have those paragraphs of the defendants’ defence struck out on the basis that the defendants’ pleading was misconceived as a matter of law in asserting that section 207B of the Act was not satisfied in respect of the worker’s NSW employment. At first instance the District Court declined to determine the issue, ruling that it was a matter for trial, not for an application.

WorkCover Queensland’s appeal to the QCA

WorkCover Queensland appealed. The QCA defined the sole question for determination as follows (at [18]):

“The important point of law is whether s 207B affords a right of recovery only for compensation paid for Queensland employment and not for NSW employment or any contribution made to the injury by asbestos exposure in NSW employment”

Adopting the analysis of section 207B propounded by Justice Morrison in State of Queensland v Seltsam Pty Limited [2019] QCA 248, the QCA held in summary that:

1. The entitlement created by section 207B is not a claim for damages, but a cause of action created by statute for indemnity against a person liable to pay damages to another;
2. The statutory right of indemnity is not to be equated with the cause of action which the worker would have had against the wrongdoer;
3. WorkCover’s right under s 207B is not tortious in character, nor is it a claim for damages or a subrogation claim. It is not a claim derivative of any claim of the worker;
4. Section 207B creates a cause of action separate to that vested in the worker; and
5. The wrongdoer’s liability is an ingredient of the statutory right. However, although proof of fault in a s 207B action is necessary in order to claim the indemnity, the action is not brought in respect of that fault; the right to indemnity is not based upon the default of the person alleged to be liable.

Section 237(1)(a)(ii)(A) of the WCRA includes a requirement that a notice of assessment be issued for at least one injury from the “same event”, but section 31(2) of the WCRA provides that the “same event” may in fact be “repeated exposure” over the course of many years, at many different places, so long as the conditions of the exposure are the “same”.

As the WCRA recognises latent onset injuries, aggravations and injuries caused by multiple events with different factual scenarios or circumstances, including those occurring in different places and at different times, the QCA held that there is no reason to read the word “circumstances” referred to in s 207B(1)(a) as the “same circumstances”, as had been contended by the defendants.

Therefore, the defendants’ pleading that WorkCover Queensland’s allegation that it was entitled to recover the whole of the amount paid to the worker (including in relation for any injury sustained in NSW), was misconceived as a matter of law. The defendants’ offending paragraphs of the defence in this respect were struck out.

The QCA held that WorkCover Queensland still carried the onus to prove that the defendants tortiously caused any injury sustained in NSW, but once that is established on the facts, WorkCover Queensland is entitled to recovery of all compensation paid with respect to any NSW injury, notwithstanding the worker himself had no entitlement to compensation for the NSW injury in Queensland.

Takeaway

This statutory cause of action has had low utilisation in the past; however this case demonstrates the risk for non-employers and their insurers that WorkCover Queensland is willing to change that.

This QCA decision also establishes that non-employers can be liable to indemnify WorkCover Queensland for compensation paid to a worker for damage caused outside Queensland, even though the worker had no right to compensation within Queensland. WorkCover Queensland need only establish that the defendant was a wrongdoer which contributed to the injury/condition sustained in another jurisdiction.

Claims for damages for industrial latent onset injuries and insidious diseases such as mesothelioma and silicosis create risks for insurers of product manufacturers and suppliers that can be difficult to precisely assess due to the effluxion of time and the involvement of multiple employers, product manufacturers, importers and suppliers, often across jurisdictions.