Australia: Section 151Z(1)(d) recovery from a former employer in the context of a "disease of gradual onset"
Curwoods Case Note

CSR Timber Products Pty Limited v Weathertex Pty Limited [2013] NSWCA 49

In Brief

• There is no issue estoppel in respect of evidentiary facts found in the course of determining a matter of fact.
• The expression "the worker's employer" in s 151Z of the Workers Compensation Act 1987 (the 1987 Act) refers to the employer liable to pay compensation under s 9(1) of the 1987 Act.

Background

The worker was employed by CSR Timber Products Pty Limited (CSR) as a woodworker from 15 March 1965 until 31 October 1998 at a masonite factory in Raymond Terrace. Weathertex Pty Limited (Weathertex) purchased the factory from CSR on 1 November 1998 and the worker continued to work as an employee of Weathertex until February 2004.

The worker's duties included sawmilling hardwood logs and chipping planks which exposed him to significant quantities of hardwood dust. The worker developed an adenocarcinoma of the right nasal cavity and paranasal sinuses that was diagnosed on 15 February 2004. On 16 February 2004, the worker made a claim for compensation against Weathertex. Weathertex disputed the claim and argued that CSR was liable to pay compensation to the worker. That dispute was referred to the Workers Compensation Commission for determination.

On 13 December 2007, the Commission held that Weathertex, as the last employer who employed the worker in employment to the nature of which the disease was due, was liable to pay compensation to the worker. There was no appeal from that decision and as at March 2010, Weathertex had paid compensation of approximately $215,000 to the worker.

Weathertex commenced proceedings in the District Court against CSR to recover the compensation it had paid by way of an indemnity under s 151Z(1)(d) of the 1987 Act and alleged that the injury (the carcinoma) was caused by the nature and conditions of the worker's employment with CSR.

CSR raised a number of issues in its defence including that it was not a "person other than the worker's employer" who could be liable to indemnify Weathertex under s 151Z(1)(d), and that it had the benefit of an issue estoppel by reason of the decision of the Commission.

Two questions were formulated for decision as separate questions in accordance with r 28.2 of the Uniform Civil Procedure Rules 2005 (UCPR). Firstly, was Weathertex estopped by the decision of the Commission from pressing its claim under s 151Z against CSR? Secondly, upon the proper construction of s 151Z, was it open to Weathertex to press its claim against CSR? At first instance, Kearns DCJ answered the first question "No" and the second question "Yes". CSR appealed in relation to the separate questions.

Court of Appeal

In the Court of Appeal, Meagher JA, with whom Bathurst CJ and Hoeben JA agreed, confirmed it was not in issue that the decision of the Commission was a final decision which could give rise to an issue estoppel. His Honour noted, however, that there was no issue estoppel in respect of evidentiary facts found in the course of determining a matter of fact² .

Relevant to the Commission's decision was that the worker had contracted a carcinoma in the course of his employment from 1965 to February 2004; that employment was a substantial contributing factor; that the carcinoma was a disease of such a nature as to be contracted by a gradual process; that the worker had made a claim for compensation on 16 February 2004; and that Weathertex was the last employer who had employed the worker in employment to the nature of which the disease was due: see ss 4, 9A and 15 of the 1987 Act.

It was unnecessary for the worker to establish that his employment with Weathertex was a substantial contributing factor. Rather, the worker only had to establish that the carcinoma was caused by employment of the nature of that in which he was engaged by Weathertex (a woodworker exposed to hardwood dust). It was also unnecessary for the Commission to determine that the carcinoma had been contracted during the course of the worker's employment with Weathertex as distinct from his employment with CSR.

His Honour considered that the Commission's refusal to find that the carcinoma had developed by 31 October 1998 did not amount to a finding that it had not been contracted during the worker's employment with CSR. Further, it was not necessary for such a finding to be made in order to decide that Weathertex was liable to pay compensation to the worker. Accordingly, his Honour held that CSR did not have the benefit of an issue estoppel and further, that Kearns DCJ had determined the first question correctly.

Section 151Z(1)(d) of the 1987 Act provides:

"151Z Recovery against both employer and stranger

1. If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury, the following provisions have effect:

2. ...

   4. if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages),"

Applying the principles of statutory construction, Meagher JA undertook a comprehensive review of s 151Z(1). His Honour observed at [33] that the application of that section depended on the injury being caused in circumstances creating liability in "some person other than the worker's employer" to pay damages in respect of that injury.

His Honour considered that a construction of "worker's employer" as referring, with respect to an injury, to the employer liable to pay compensation for that injury under s 9(1) of the 1987 Act would give effect to the object of s 151Z; did not lead to unreasonable results; was consistent with the provisions of s 151Z(2)(e); and was not inconsistent with the operation of ss 15(2), 16(2) and 17(1)(d) of the 1987 Act which provide the statutory right to contribution.

At [41] to [43] his Honour stated:

"The Act does not take away the worker's right at common law to sue a previous employer in the position of CSR for a disease caused solely by its employment of the worker. Section 151Z(1) should be construed consistently with that being the position and as allowing, by paragraph (a), the worker to take proceedings against the employer liable to pay compensation and any third party liable independently of the Act, even if that third party is a former employer. Paragraphs (b) and (c) of s 151Z(1) prevent the worker from having double recovery and provide that the primary burden for the compensation falls on any third party so liable.

...

If the references to a person "other than" the worker's employer were not capable of applying to a previous employer in the position in which CSR is alleged to be, s 151Z(1) would not regulate the exercise of all of the worker's common law rights of recovery in respect of the compensable injury or provide the employer liable to pay compensation with rights of recovery as against all persons liable independently of the Act to the worker.

...

These provisions operate in the same way if the compensable injury is a disease of gradual onset and the employer liable to pay compensation as the last employer has recovered contribution in respect of that compensation from earlier employers under s 15(2) of the 1987 Act."

For the above reasons his Honour concluded that the expression "the worker's employer" in s 151Z refers to the employer liable to pay compensation under s 9(1) of the 1987 Act. His Honour also distinguished the facts of this case from those in Kornjaca v Steel Mains Pty Ltd³ and Kempsey District Hospital v Thackham⁴ on the basis that there was only one injury (as opposed to a series of successive injuries as occurred in those cases). His Honour therefore found that Kearns DCJ had determined the second question correctly.

Implications

This decision confirms that, in circumstances where an injured worker suffers from a disease of gradual onset, there may be scope for recovery under s 151Z(1)(d) from former employers who also employed the worker in employment to which the nature of the disease was due.

The right of recovery would appear to be limited to "indivisible" diseases such as cancer caused by, for example, airborne pollutants, hazardous substances and/or sun exposure, and where the circumstances in which the disease was contracted creates a liability to pay damages in the former employer(s).

Employers should take care to identify all potential avenues of recovery on receipt of claims for compensation from workers so as to avoid recovery claims becoming statute barred by operation of the Limitation Act 1969.

Footnotes

¹ Bathurst CJ, Meagher and Hoeben JJA
² Blair v Curran [1939] HCA 23 at [532]; Brewer v Brewer [1953] HCA 19 at [15] to [16]
³ [1974] 1 NSWLR 343
⁴ (1995) 36 NSWLR 492

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