Australia: Court of Appeal examines the scope of a designated insurer in terms of divisible and indivisible occupational diseases

Curwoods Case Note
Last Updated: 11 January 2012
Article by David Chong and Andrew Spearritt

QBE Insurance (Australia) Ltd v Dust Diseases Tribunal of NSW [2011] NSWCA 421

NSW Court of Appeal1

In Brief

  • The Court of Appeal overturned the decision of the Dust Diseases Tribunal which appointed a designated insurer pursuant to s 151AC of the Workers Compensation Act 1987 (Act) in circumstances where there was no dispute between insurers.
  • Section 151AB of the Workers Compensation Act 1987 is a necessary consideration for the purposes of appointing a designated insurer pursuant to s 151AC of the Act, at least in respect of indivisible injuries.


In August 2010, Michael Costigan (plaintiff) filed a Further Amended Statement of Claim in the Dust Diseases Tribunal of New South Wales seeking damages in respect of the conditions of silicosis (divisible) and progressive massive fibrosis (indivisible). The plaintiff alleged exposure to dust containing silica during various periods of employment with Dai John Excavating & Co Pty Limited (Dai John) from August 1971 to October 1975.

However, the claim was specifically confined in respect of damage occasioned by exposure up until January 1974, coinciding with the end of the period for which QBE Insurance (Australia) Limited (QBE) provided workers compensation to Dai John. The subsequent workers compensation insurer could not be identified despite numerous attempts.

In April 2011, on application by the plaintiff, the former President of the Dust Diseases Tribunal of New South Wales appointed QBE as the designated insurer pursuant to s 151AC of the Act.

His Honour's decision was based inter alia on the basis that "QBE [was] the insurer which was last on risk at the last date of alleged relevant negligent exposure to silica."

QBE sought an order pursuant to s 69 of the Supreme Court Act 1970 that his Honour's order be quashed on the basis of a jurisdictional error and/or error of law on the face of the record.

Court of Appeal Decision

Macfarlan JA, who delivered the primary judgment, examined the effect of s 151AB of the Act and noted that it was a deeming provision, deeming an employer's liability to have arisen "when the worker was last employed by the employer in employment to the nature of which the disease was due." His Honour also noted that in the case of a divisible condition, s 151AB has the effect of imposing liability for the whole loss upon an insurer on risk at the time that the relevant employment ceased and relieving those insurers who were earlier on risk from liability for the share of the loss that they would otherwise have had to bear.2

However, his Honour noted that s 151AC is a machinery provision aimed at ensuring that an injured plaintiff is compensated promptly in circumstances where there is a dispute between two or more insurers as to which insurer is liable to provide indemnity in respect of the claim. In essence, the operation of s 151AC must be predicated upon the basis that there is a dispute between two or more insurers.

At some time prior to QBE providing insurance to Dai John, Associated General Contractors Insurance Co Ltd (AGC) was on risk. At no stage was it contended by either QBE or AGC that the other was liable to indemnify Dai John in respect of the claim. However, in his judgment at first instance, O'Meally P stated that "there are two insurers of Dai John and neither has agreed to indemnify it. Accordingly, one must assume that there is a dispute as to which insurer should indemnify it." Macfarlan JA held that there was no basis upon which his Honour could have made that assumption and there was therefore no basis on which his Honour could have concluded that there was a dispute between two or more insurers for the purposes of s 151AC of the Act. On that basis, his Honour's order appointing QBE as the designated insurer pursuant to s 151AC of the Act ought be quashed.

However, Macfarlan JA made obiter comments to the effect that liability in respect of the plaintiff's divisible injuries should be taken to have arisen on the date upon which the claim for damages was confined (January 1974) and that as QBE was on risk at that time, it should be liable to indemnify Dai John in respect of that damage.

His Honour proposed that the orders made by O'Meally P be quashed with the plaintiff paying QBE's costs of the Court of Appeal proceedings.

Both Beazley and Meagher JJA agreed with the reasoning of his Honour Justice Macfarlan and the orders proposed. Obiter comments of Meagher JA suggested that it was still open as to whether or not ss 151AB and 151AC differentiate between divisible and indivisible injuries and whether or not QBE was still liable to indemnify Dai John at least in respect of the "divisible" injury of silicosis.


This decision confirms that a plaintiff is not able to artificially restrict his or her claim for damages for the purposes of choosing which policy of insurance should be triggered in respect of a claim for damages in respect of indivisible injuries such as mesothelioma, lung cancer or progressive massive fibrosis.

However, their Honours' obiter comments potentially leave it open for a plaintiff to "pick and choose" which insurer is liable to indemnify in respect of "divisible" injuries.

The potential impact of their Honours' obiter comments means that plaintiffs may be able to avoid the legislative objective of ss 151AB and 151AC of the Act notwithstanding the fact that divisible injuries are still "occupational diseases" within the meaning of the Act.

The obiter comments appear to overlook the unchallenged authority of Jordan CJ in Tame v Commonwealth Collieries Pty Ltd3 in which he held that silicosis was a disease of gradual process. Although silicosis may be a divisible condition, the fact remains that it is still a disease of gradual process and long latency and is therefore subject to the regime of s 151AB.


1 Beazley JA, Macfarlan JA and Meagher JA

2 Paragraph 11

3 (1947) 47 SR(NSW) 269

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