Allianz Australia Insurance Limited v TIO [2008] NTSC 22

PARTIES:	ALLIANZ AUSTRALIA INSURANCE LIMITED

	v

	TERRITORY INSURANCE OFFICE

TITLE OF COURT:	SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:	SUPREME COURT OF THE TERRITORY EXERCISING APPELLATE JURISDICTION

FILE NO:	LA10 of 2007 (20622570)

DELIVERED:	15 MAY 2008

HEARING DATE:	8 MAY 2008

JUDGMENT OF:	ANGEL J

APPEAL FROM:	WORK HEALTH COURT

CATCHWORDS:

Insurance – Workers Compensation – Successive work injuries – Injuries occurring in periods during which employer insured with separate insurers – claim for contribution between insurers – whether double insurance – Work Health Act NT s 126A

Statute referred to:
Work Health Act NT s 126A

Cases cited:
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
HIH Casualty and General Ltd v Territory Insurance Office (1998) 120 NTR 24
Insurer’s Guarantee Fund – Nem General Insurance Association Limited v GIO General Limited (1994) 33 NSWLR 247
Manufacturers Mutual Insurance Ltd & Ors v National Employer’s Mutual General Insurance Ltd & Ors (1991) 6 ANZ Insurance Cases 61–038
National & General Insurance Company Limited v South British Insurance Company Limited & Ors (1982) 149 CLR 327

REPRESENTATION:

Counsel:
	Appellant:	B G McManamey
	Respondent:	S Walsh QC

Solicitors:
	Appellant:	Morgan Buckley
	Respondent:	Cridlands

Judgment category classification:	A
Judgment ID Number:	ang200804
Number of pages:	17

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Allianz Australia Insurance Limited v TIO [2008] NTSC 22
No. LA10 of 2007 (20622570)

	BETWEEN:

	ALLIANZ AUSTRALIA INSURANCE LIMTIED
	Appellant

	AND:

	TERRITORY INSURANCE OFFICE
	Respondent

CORAM:	ANGEL J

REASONS FOR JUDGMENT

(Delivered 15 May 2008)

[1]	This is an appeal from an order of the Work Health Court refusing the appellant leave nunc pro tunc to commence proceedings against the respondent pursuant to s 126A Work Health Act NT.
[2]	A worker, Shane Nayda, suffered three successive injuries in the course of his employment as a diesel fitter in the mining industry with Newmont Mining Services Pty Ltd. He suffered a back injury on 3 October 1993, a further back injury on 25 May 2000 and another on 14 August 2001.
[3]	The respondent, the Work Health Act NT approved insurer liable to indemnify Newmont Mining Services Pty Ltd against liability for compensation payable to the worker in respect of the injury of 5 October 1993, paid compensation to Nayda until he resumed full duties on 26 October 1993.
[4]	The appellant replaced the respondent as the Work Health Act NT approved insurer of Newmont on 1 July 1995. As a consequence of the further injury of 25 May 2000 Nayda was off work from 2 June 2000 to 13 June 2000 when he returned to work. Following the further back injury of 14 August 2001 Nayda lodged a compensation claim on 17 August 2001. On 30 August 2001 the appellant accepted liability to indemnify the employer to pay compensation. Nayda returned to work on restricted duties on 30 May 2002.
[5]	On 3 June 2002 the appellant received a medical report from Dr Bastian saying, inter alia, that the worker had sustained an aggravation of the 1993 injury in respect of which the respondent had paid compensation.
[6]	In May 2005 the appellant had the worker examined by a Dr Burke.  On 31 August 2005 the worker was made redundant. On 23 September 2005 the appellant received Dr Burke’s report which expressed the view that 80% of the worker’s current total permanent disability was due to the 1993 injury. 
[7]	On 4 November 2005 the appellant gave notice to the respondent that it may be liable pursuant to s 126A Work Health Act NT to contribute towards compensation payable to the worker.
[8]	On 28 November 2005 the worker commenced proceedings against Newmont for compensation. On 7 April 2006 a statement of claim was filed by the worker claiming permanent disability and weekly benefits and treatment expenses to date.
[9]	On 2 June 2006 the appellant received a medical report from Dr Graham. On 15 June 2006 the respondent acknowledged but disputed the appellant’s claim for contribution.
[10]	On 15 August 2006 proceedings pursuant to s 126A Work Health Act NT were commenced by the appellant against the respondent.
[11]	Both Nayda’s compensation claim against Newmont and the appellant’s s 126A claim against the respondent were listed for hearing together in the Work Health Court. The worker and employer resolved the worker’s compensation claim. The appellant and the respondent agreed the amount the respondent was liable to contribute to the agreed payout to the worker subject to a determination whether an order extending time to commence proceedings under s 126A should be made and subject to a determination that s 126A applied to permit an insurer – the appellant – to recover contribution from another insurer – the respondent – in circumstances where injuries occurring in the relevant periods of risk both contribute to an incapacity for which compensation was payable.
[12]	The application to extend time to commence the s 126A claim and argument as to whether s 126A applied were heard by the Work Health Court on 7–8 March 2007. The judgment from which the present appeal proceeds was delivered on 30 August 2007 refusing to extend time within which to pursue the s 126A claim whilst holding that s 126A did otherwise allow for contribution between the appellant and the respondent.
[13]	Section 126A provides:
“Liability as between approved insurers
(1)	Subject to subsection (2), where an employer is liable under this Act to pay compensation to a worker, the approved insurer of the employer at the time the claim is made shall indemnify the employer for the full amount of the employer's liability to the worker notwithstanding that the approved insurer may allege that, at the time the injury was sustained or the disease was caused, the liability to indemnify the employer (whether in whole or in part) was that of another approved insurer. 
(2)	Where an approved insurer who has indemnified an employer for the employer's liability to pay compensation to a worker under this Act is aware that another approved insurer may be liable to indemnify the employer for all or a part of the compensation paid, the first-mentioned insurer – 
(a)	shall notify the other insurer as soon as practicable after becoming aware of the insurer's potential liability; and 
(b)	may, within 6 months after becoming aware of the other insurer's potential liability or such longer period as the Court may allow – 
(i)	commence proceedings under Division 4 of Part VI to recover from the other insurer all or a part of the compensation paid; or 
(ii)	where other proceedings in respect of the claim for compensation have been commenced under that Division, join the other insurer as a party to those proceedings.
(3)	Where an approved insurer has indemnified an employer for the employer's liability to pay compensation to a worker under this Act and it is subsequently established that another approved insurer was liable to indemnify that employer in whole or in part, that other insurer shall reimburse the first-mentioned insurer such amount or amounts – 
(a)	as agreed between the 2 insurers; or 
(b)	in the absence of such agreement, as the Court determines.
(4)	In this section, "approved insurer" includes – 
(a)	a self-insurer; and 
(b)	the Territory.”
[14]	The appellant submitted that it was only in respect of compensation that had actually been paid that an insurer has to be aware that another insurer may be liable to indemnify the employer. It was submitted that it is only in respect of compensation that has been paid that an insurer can commence proceedings to recover from another insurer. It was submitted that the obligation upon an insurer to give notice to another insurer only arises in respect of compensation actually paid. The August 2001 injury suffered by the worker resulted in incapacity for work until May 2002. The August 2001 injury was preceded by a lengthy period of work doing full duties since October 1993. It was submitted that when he finally ceased work in August 2005, the August 2001 injury was no longer the immediate and obvious sole cause of the incapacity of the worker and it was only in 2005 that the real question arose whether the incapacity was as a result in part at least of the original injury of 1993. It was submitted the claim of the worker in 2005 was a new claim and that the appellant was entitled to consider its liability in respect of the new claim and to consider whether there was a possible entitlement to contribution from the respondent in respect of the liability arising from that new claim. In other words, it was submitted, the appellant was, so far as the six month period in s 126A Work Health Act NT was concerned, required to give notice to the respondent within six months of the worker’s incapacity in August 2005 rather than from Dr Bastian’s report of June 2002.
[15]	In HIH Casualty and General Ltd v Territory Insurance Office Kearney J rejected a submission that the requirement to give notice did not arise until the insurer had actually indemnified the employer in the sense that it had actually paid the employer. His Honour held it was significant that s 126A(2)(a) refers to “the employer’s liability to pay” when referring to the indemnity by the insurer. This connoted that “has indemnified” did not mean “has paid the employer”, but “has accepted liability under the policy of insurance”. His Honour acknowledged that the words “has indemnified” were to be read to mean “has agreed to indemnify”, that is, “liability” meant “obligation to pay” rather than actual payment.
[16]	Sitting at first instance were it necessary to do so I would accept Kearney J’s ruling on this issue. However it is not resolutive of the present case.
[17]	In HIH v TIO Kearney J also accepted a submission that the material question for the purposes of s 126A(2)(a) was “when did the appellant have some reasonable ground for supposing that the nature of the injury suffered by the worker was such that the appellant might have a claim for contribution against the respondent under the Act”.
[18]	Interestingly, neither party in HIH v TIO submitted that the actual words of the section should be applied. His Honour apparently did not consider whether what was required was an actual state of mind, that is, an actual awareness. Both counsel for the appellant and the respondent in the case at bar conceded that the section required an actual awareness by an insurer of another insurer’s potential liability. The words of the section require actual awareness. The requirement to give notice arises when an insurer “is aware” that another insurer may be liable, not “ought to have been aware”.
[19]	The learned Magistrate comprising the Work Health Court was required to make a finding as to when the appellant became aware of the potential liability of the respondent. No such finding was made. The learned Magistrate agreed that the test was “when did the appellant have some reasonable ground for supposing that the nature of the injury suffered by the worker was such that the appellant might have a claim for contribution against the respondent under the Act?” He rejected a submission that the appellant relevantly became aware when it received a claim form stating “the present condition caused by the work I do is an aggravation of the original injury”. Those words of the claim form are the same in essence as the opinion expressed by Dr Bastian in June 2002. Both opinions refer to the prior 1993 injury but neither says that the earlier injury contributed to the worker’s current incapacity in September 2005.
[20]	In his reasons the learned Magistrate said (para 35) that the report of Dr Bastian did not give the appellant “reasonable grounds for supposing there was a claim for contribution”. The appellant submitted that the learned Magistrate’s acceptance of that proposition should have resulted in the conclusion there was no requirement to give notice at that time. However that submission must be seen in the context of what the learned Magistrate held. 
[21]	Having referred to Dr Bastian’s report of 3 June 2002 the learned Magistrate said:
“34.	Mr Walsh, for TIO, submitted that this report, in the hands of Allianz, gave Allianz sufficient information for it to realise that another approved insurer may be liable to indemnify the employer for all or a part of the compensation paid. I accept that submission. Dr Bastian’s report could hardly be clearer in indicating to (sic) the incapacity following the 2001 injury. The report describes how the injury occurred (making it clear enough that it was a work related injury), that its effects persisted and that in Dr Bastian’s opinion, the 2001 injury was an aggravation of the 1993 injury and not a distinct new injury.
35.	Mr McManamey, counsel for Allianz, submitted that the report of Dr Bastian did not give Allianz ‘reasonable ground for supposing that there is a claim for contribution’. (I quote from his written outline of submission, paragraph 3.) I accept that submission also, but I do not believe it is to the point. The obligation that s 126A(2) uses the words ‘… another approved insurer may …’ and speaks in s 126A(2)(a) and (b) of the insurers’ ‘potential liability’. It seems to me that the legislature is not requiring the later insurer to be very sure at all of the earlier insurer’s liability. In my opinion, the information in Dr Bastian’s report should have alerted Allianz to the possibility that the 1993 insurer – TIO as it turned out – might well be at least partly liable. This is, in my judgement, the order of belief that the legislature had in mind when it used the word ‘potential’: more, that is than an inkling, but a long way short of a comfortable confidence.
36.	In my view, Allianz ought to have notified TIO as soon as practicable after receiving Dr Bastian’s report. Allianz, as Ms Robertson’s affirmation discloses, did nothing of the sort. The affirmation offers no explanation for their having done nothing and it is, I think, unsafe to infer any particular reason. Perhaps those at Allianz who read the report missed the significance of Dr Bastian’s references to the 1993 injury. Perhaps they mistakenly believed Allianz was the insurer then too.  Perhaps they were optimistic that Mr Nayda’s return to work would be long lasting.  Perhaps they were of the belief that the law did not permit contribution. At any rate, TIO received no notice”.
[22]	In the course of his reasons the learned Magistrate said that if 23 September 2005 – the day the appellant received Dr Burke’s report saying 80% of the worker’s incapacity was due to the 1993 injury – were the starting date, it would seem to him that the discretion of the court to allow a longer period than six months for the commencement of proceedings should be exercised in favour of the appellant. On the other hand the learned Magistrate said he was of the view that the starting date was the date of Dr Bastian’s report 3 June 2002, there being no explanation of the appellant’s failure to act under s 126A after receiving that report. The learned Magistrate so held because in his view Dr Bastian’s report in the hands of the appellant, gave the appellant sufficient information for it to realise that another approved insurer might be liable to indemnify the employer “for all or part of the compensation paid” (para 34). In the absence of any evidence to the contrary from the appellant it may readily be inferred that consequent upon Dr Bastian’s medical report the appellant was aware of the respondent’s potential liability.
[23]	In seeking an extension of time within which to pursue proceedings against the respondent, the appellant has the onus of satisfying the court that the six month time limit should be extended. In exercising its discretion the court is to consider the reasons for the delay, the length of the delay, the conduct of the parties, any prejudice suffered by either party, the prospects of success of the claim. The fact that the appellant will suffer prejudice if refused relief is not sufficient to warrant an extension in itself. It is not a matter of weighing the appellant’s prejudice against that of the respondent. The longer the delay, the more likely it is that the case will be decided on less evidence than was available previously and lengthy delay gives rise to a general presumption of prejudice. Prejudice one way or the other is not a necessary prerequisite to the granting or withholding of relief by way of extension of time within which to proceed. See, generally, Brisbane South Regional Health Authority v Taylor.
[24]	As is evident from s 126A(1) the appellant’s obligation to indemnify the employer is an obligation upon the appellant as “the approved insurer of the employer at the time the claim is made …”. Thus the appellant’s obligation to indemnify Newmont Mining Services Pty Ltd is predicated upon the employee making a claim for compensation. Nayda’s claim for total incapacity was first made in 2005. That claim was first particularised in his statement of claim filed 7 April 2006. 
[25]	Section 126A(2) only applies once an approved insurer has indemnified the employer. Therefore that insurer’s awareness that a second insurer may be liable to indemnify the employer can be no earlier than the time the first insurer has indemnified the employer. Section 126A(2) when it says “where an approved insurer who has indemnified an employer for the employer’s liability to pay compensation to a worker under this Act” means where an approved insurer, in this case the appellant, who has indemnified an employer for the employer’s liability to pay compensation claimed by a worker under this Act, that is, the obligation to give a notice within six months can only arise once a claim for compensation is made and not before. Therefore even accepting that the appellant was aware of the respondent’s potential liability because of Dr Bastian’s report of 3 June 2002 the obligation to notify the respondent with respect to the worker’s 2005 claim for compensation on the basis of total incapacity only arose once a claim for that compensation was made by the worker.
[26]	As already recounted, the learned Magistrate said that if 23 September 2005 were the starting date then the discretion of the court to allow a longer period than six months for the commencement of proceedings should be exercised in favour of the appellant. I have no reason to disagree with that assessment. It is a conclusion which was open on the evidence. The learned Magistrate said he would regard the giving of notice by the appellant to the respondent on 4 November 2005, after the appellant had been in possession of Dr Burke’s supplementary report for about six weeks, as being just within the bounds of “as soon as practicable”.
[27]	As was submitted by the respondent an applicant who comes to court with no explanation as to why delay occurred and no explanation for its lack of diligence in notifying and prosecuting its claim notwithstanding that Parliament has provided a time limit demonstrates little to justify a conclusion that it would be just and fair to exercise the courts discretion in its favour. As the learned Magistrate said, a court being asked to extend time ought to have some explanation for the delay placed before it by the party seeking the extension and in the absence of any explanation as to why the party did nothing it is difficult to argue or find that it would be unjust to that party for the court to do nothing, that is, to decline an extension of time.
[28]	In the present case it is clear enough in the circumstances that an extension of time should not be allowed in respect of the compensation paid in 2001 and 2002 and that, as the learned Magistrate said, if the six month time limit were to run from September 2005 rather than June 2002 an extension of time should be granted were the court satisfied that the appellant could obtain relief from the respondent under s 126A Work Health Act NT, a question to which I now turn.
[29]	The general intention underlying s 126A Work Health Act NT is clear enough, namely to ensure that workers are not kept waiting while insurers argue about who is required to indemnify for a particular claim. I agree with the respondent’s submission that Parliament has focused on liability to indemnify the employer rather than provide a statutory right to contribution where incapacity arises from more than one injury and liability to pay compensation is to be apportioned. In my opinion the section is not a procedural mechanism for apportionment of liability under the general law.
[30]	Section 126A(3) assumes liability of another insurer to indemnify the employer in whole or in part. The appellant was the approved insurer of the employer from 1 July 1995 and thereafter and the respondent was the approved insurer up to 30 June 1995. Was the respondent “liable” for the purposes of s 126A(3)?
[31]	The liability of the respondent to indemnify Newmont involves the construction of the policy of insurance which relates to injuries occurring in the course of the policy. The appellant and respondent each insured Newmont with respect to discrete periods. The liability of the appellant to indemnify Newmont arose from its policy of insurance to indemnify Newmont in respect of the claims arising from the injury in 2001 and the claim of 2005. The appellant is only responsible under its policy of insurance to indemnify Newmont for liability incurred by the employer during the period of that insurance. The employer is compulsorily required to insure and entitled to be indemnified in accordance with Part VII of the Act. Insurance policy terms must be in accordance with Schedule 2 of the Act. That statutory policy provides that the insurer shall be liable to pay compensation under the Act for an injury to a worker “if in the period of insurance the employer shall be liable to pay compensation under the Act”. Thus the respondent is only responsible with respect to liability to pay compensation arising under the Act in the relevant period of insurance.
[32]	The respondent paid compensation in respect of the 1993 injury for a short period and then Nayda returned to his normal duties. Thereafter there was no obligation upon the respondent to indemnify Newmont for compensation payable as a consequence of injuries sustained during the relevant period of insurance by the appellant as approved insurer under the Act.
[33]	The principle of double insurance does not apply. It cannot be said that the employer was insured with the appellant and the respondent against the same risk when one policy insured against liability for injuries incurred in one period and the other policy insured against liability for injuries occurring in another period. On a construction of the earlier insurance policy with the respondent the respondent was not promising to do anything in relation to the liability of the employer arising in the later period. The insurance policies of the appellant and the respondent were consecutive.
[34]	The present case concerns the correct construction of s 126A Work Health Act NT and the statutory indemnity policies under that Act. It is somewhat similar to the issue in the appeals in Manufacturers Mutual Insurance Ltd & Ors v National Employer’s Mutual General Insurance Ltd & Ors. In that case the NSW Court of Appeal said there was no authority for the proposition that when incapacity results from more than one injury and cannot be said to result from one particular injury, liability to indemnify arises and attaches to each of the insurers on the risk when any one of the injuries occurred to the extent that the injury contributed to the ultimate incapacity. Having noted that the NSW legislation contemplated liability which vests upon the happening of the compensable injury it followed that the insurer under a statutory policy of this kind is liable to indemnify the employer against incapacity stemming from an injury which occurs during the currency of the policy. Furthermore because the employer’s liability accrues when the injury occurs – it may well be before any incapacity follows, and therefore before any payment of compensation needs to be made – it is entirely possible that the insurer will be required to indemnify the employer, the assured, against payments of compensation actually made (notionally by the employer) after the period of policy has expired. The court emphasised that the risk against which the insurer undertakes to provide indemnity in a policy such as the present is the payment of compensation for incapacity in respect of the employer’s liability for any injury occurring during the currency of the insurer’s engagement. It is not liable for incapacity resulting from injuries which occurred while the insurer was not at risk, was not bound by any contractual engagement and was not in receipt of any premium. In the present case, as in that case, the court is dealing with consecutive policies. The employer is not insured against the same risk when one policy insures against liability for injuries occurring in one period and another policy against liability for injuries occurring in another period.
[35]	Prior to later amendments to the NSW compensation scheme it had been held that the insurer at risk at the time of the last injury causative of a worker’s incapacity was wholly liable to indemnify the employer and not entitled to contribution: National & General Insurance Company Limited v South British Insurance Company Limited & Ors.
[36]	In Insurer’s Guarantee Fund – Nem General Insurance Association Limited v GIO General Limited it was noted that the new s 22 of the NSW legislation dealt with liability to pay compensation under the Act which was to be apportioned. The majority in that case concluded that the last insurer was alone liable. Handley J at 264–265 noticed the difference between cases involving multiple separate incapacities and cases such as the present of a single incapacity. As Meagher JA said at 261B: “Apportionment of liability is a different concept from seeking contribution towards the payment of the liability. Contribution is not mentioned in s 22. If there is only one liability in question there is nothing to be apportioned”.
[37]	In my view, even though the legislative provisions differ, the reasoning in the cases to which I have referred applies here.
[38]	The learned Magistrate concluded that s 126A “was intended to permit liability in such a case as this to be split and that (the appellant) may, in the circumstances of this case, allege that the liability was in whole or in part that of (the respondent)”. I agree with the submission for the respondent that that conclusion overlooks that s 126A deals with rights of indemnity as between insurers and that entitlement to indemnity depends upon the proper construction of the statutory policy of insurance.
[39]	In conclusion, on a proper construction of the statutory policy of indemnity between the respondent and the employer the respondent was not promising to do anything in relation to the risk for which the appellant insured. The Work Health Court can therefore grant no relief to the appellant against the respondent under s 126A Work Health Act NT.
[40]	For these reasons the appeal is dismissed.
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