WCRA: WorkCover’s indemnity not trumped by an equitable contribution claim

State of Queensland v Seltsam Pty Ltd (2019) 2 QR 495

Headnote (reproduced)

A worker claimed to have been exposed to asbestos dust and to have developed mesothelioma following his employment by the applicant, which commenced in 1947, with the Queensland Housing Commission. Following a claim made by him for workers’ compensation, WorkCover accepted the claim and paid him statutory compensation under the Workers’ Compensation and Rehabilitation Act 2003. The worker did not take proceedings to recover damages.

WorkCover thereafter brought proceedings against the respondent, a supplier and manufacturer of asbestos, to recover the workers’ compensation it had paid out to the worker claiming an indemnity under the statutory right in s 207B(7).

WorkCover claimed that the worker had developed mesothelioma as a consequence of inhaling asbestos, that the asbestos came from products manufactured and supplied by the respondent, and that the worker’s mesothelioma was caused by the respondent’s negligence in breach of a duty of care owed by the respondent to the worker in, inter alia, failing to adequately warn of the dangers of asbestos, failing to remove the asbestos, and failing to take reasonable precautions to prevent inhalation.

At that time, s 207B relevantly provided:

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.

(2) An amount paid as compensation to a person for an injury, to which there is an entitlement to payment of damages at a time or for a period before the person becomes entitled to payment of damages by an employer or another person, is a first charge on any amount of damages recovered by the person to the extent of the amount paid as compensation to the person.

(7) 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.(8)Payment made as indemnity under subsection (7), to the extent of the payment, satisfies the person’s liability on a judgment for damages for the injury. …”(These sections have since been renumbered: relevantly ss 207B(7) and 207B(8) as ss 207B(8) and 207B(9)).

The respondent joined the employer as a third party to those proceedings and claimed equitable contribution against it.

The employer’s application for summary judgment against the respondent in the third party proceedings, on the ground that equitable contribution could not be claimed, was dismissed.

On application for leave to appeal, at issue was whether the supplier and manufacturer could maintain its claim for equitable contribution against the employer for any liability it may have to WorkCover pursuant to s 207B(7).

Held, (Morrison JA; Fraser JA and McMurdo JA agreeing) granting leave to appeal, allowing the appeal, and making orders giving summary judgment on the third party proceedings against the respondent:(1)That the principles applicable to equitable contribution are:(a)persons who are under coordinate liabilities to make good the one loss must share the burden pro rata;(b)equitable contribution may exist when the obligors are severally bound by different instruments in respect of the same liability;(c)it is possible to have a common obligation where the obligation of each of two obligors has a different source such as statute and contract, provided the obligations can be characterised as of the same nature and to the same extent;(d)equitable contribution does not apply between a liability which is primary, such as a liability in tort, delict or contract, and a liability which is generally secondary, such as the liability of an indemnity insurer to an injured party;(e)contribution is a two-way exercise; there is no contribution from one without contribution from the other;(f)the equity to seek contribution arises because the exercise of the rights of the obligee or creditor ought not to disadvantage some of those bearing a common burden; an equity does not arise merely because all of the obligors derive a benefit from a payment by one or more of them; the preferred expression is the wider term coordinate liabilities; an equity is not enlivened merely because the claimant’s payment operates to the financial benefit or relief of the other party; without a common legal burden or coordinate liability, no equity of contribution arises; and(g)the proposition that equity looks to substance rather than form cannot be invoked to depart from or modify the requirement that equity only intervenes if there is coordinate liability in respect of the one loss. [1], [18], [32].

HIH Claims Support Ltd v Insurance Australia Ltd (2011) 244 CLR 72, 87–90 [36]–[47] applied.

(2)That a claim under s 207B(7) Workers’ Compensation and Rehabilitation Act 2003 is a sui generis cause of action for a statutory indemnity, inhering in WorkCover (or the insurer) and to be pursued in its name, in which the common law liability of the person to the worker is a statutory element, but it is not in respect of the acts or omissions in that liability. [1], [17, [32].

Ex parte Workers’ Compensation Board of Queensland [1983] 1 Qd R 450, 458–459; WorkCover Queensland v Amaca Pty Ltd (2010) 241 CLR 420, 429–430 [15]–[19] considered.

(3) That the respondent’s liability to WorkCover under s 207B(7) Workers’ Compensation and Rehabilitation Act 2003 derived solely from the statutory right to recover the compensation paid out, and it was not a claim for damages much less a claim based in tort. WorkCover’s claim was to recover the compensation paid, whereas the employer’s liability (if any) would be for common law damages. That the extent of recovery by WorkCover under its s 207B(7) claim might be adjusted under s 207B(7)(a), by reference to what the common law damages might be, did not alter the fundamental fact that WorkCover’s claim was one to which the applicant (as employer) could never have been made liable. [1], [16]–[17], [23]–[24], [32].

Tuckwood v Rotherham Corporation [1921] 1 KB 526, 540; Ex parte Workers’ Compensation Board of Queensland [1983] 1 Qd R 450, 458–459; Victorian WorkCover Authority v Esso Australia Ltd (2001) 207 CLR 520, 527–528 [14]; WorkCover Queensland v Amaca Pty Ltd (2010) 241 CLR 420, 429–430 [15]–[19], 432 [26], 439 [53] applied.

(4)That, as the employer could not be made liable for the s 207B(7) claim, there was no coordinate liability and no common burden. [1], [25], [32].(5)That there was a lack of mutuality to found equitable contribution because any payment of damages by the employer would not and could not discharge the obligation of the respondent under s 207B(7), which was a claim which could not be brought against the employer. [1], [26]–[27], [32].

Burke v LFOT Pty Ltd (2002) 209 CLR 282, 298–299 [38]; Lavin v Toppi (2015) 254 CLR 459, 471 [41] applied.

(6)That equitable contribution will be denied where it would compel a result contrary to that for which the statute provides. Allowing equitable contribution against the employer would compel a result contrary to the Workers’ Compensation and Rehabilitation Act 2003. Section 207B(7) provides an avenue of recovery against persons who are not the employer. In other words, the charge given to WorkCover does not apply to the employer who is indemnified under the Act. WorkCover could not sue the employer for indemnity in respect of the compensation it paid yet the claim for equitable contribution made here by the respondent, if permitted, would achieve that result. [1], [28]–[29], [32].

Burke v LFOT Pty Ltd (2002) 209 CLR 282, 308–309 [66], 318 [93] applied.

Tickle Industries Pty Ltd v Hann (1974) 130 CLR 321, 326–327; WorkCover Queensland v Amaca Pty Ltd (2010) 241 CLR 420, 432 [27] considered.

(7) That, accordingly, the third party claim against the employer for equitable contribution should have been dismissed. [1], [19], [30], [32].

The decision of Koppenol DCJ was reversed.

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