Employer Liability for Asbestos Exposure Overturned

In a case concerning an employer's liability for asbestos-related occupational diseases, the NSW Court of Appeal overturned a lower court ruling, determining that the employer's liability arose when the worker was last employed in conditions leading to the disease.

OUTCOME: Allowed

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: [COMPANY_1] v [COMPANY_2]; [COMPANY_1] v [COMPANY_2] [2016] NSWCA 335 Hearing dates: 7 September 2016 Decision date: 12 December 2016 Before: [NAME_5] at [1]; Gleeson JA at [2]; Emmett AJA at [3] Decision: In Matter No. 2016/129941

1. The appeal be allowed.

2. The orders made by the Dust Diseases Tribunal on 1 March 2016 and 6 April 2016 be set aside.

3. In lieu of those orders there be orders as follows: (a) judgment in favour of the cross-claimant against the first cross-defendant for the sum of $2,240,000 in respect of the damages payable to the plaintiff; (b) judgment in favour of the cross-claimant against the first cross-defendant for 40 per cent of the plaintiff's costs to be agreed or assessed; (c) the first cross-defendant pay the cross-claimant's costs of the cross-claim; (d) the cross-claimant pay the second cross-defendant's costs of the cross-claim.

4. Leave be reserved to apply in relation to the reimbursement to the second cross-defendant of any sum paid by it to the plaintiff.

In Matter No. 2016/129951:

1. The proceedings be dismissed.

2. There be no order as to the costs of the proceedings. Catchwords: [NAME_6] – insurers' liability for liability of indemnified employer of worker exposed to asbestos – occupational diseases – when liability of insurer taken to arise – construction of s 151AB of [NAME_6] Act 1987 (NSW) – where claimed liability is for injury or disease caused by exposure to asbestos fibre during particular period – whether liability taken to arise when worker last employed in that period – whether primary judge made enquiry into actual employment or nature of employment

PRACTICE AND PROCEDURE – costs – whether Bullock order appropriately made – whether unsuccessful party had conducted litigation in some manner that made it fair or appropriate to make a Bullock order – whether order for costs on indemnity basis should be made against unsuccessful party Legislation Cited: Dust Diseases Tribunal Act 1989, s 32 Law Reform (Miscellaneous Provisions) Act 1946, ss 5(1), 6 [NAME_6] Act 1987 (NSW), s 151AB [NAME_6] (Dust Diseases) Act 1942 (NSW), s 3, Sch 1 Cases Cited: Allianz Australia Insurance Ltd v Pomfret (2015) 88 NSWLR 192; [2015] NSWCA 4 CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 CIC Workers' Compensation (NSW) Ltd v Kellogg (Aust) Pty Ltd (1996) 40 NSWLR 422 Gould v Vaggelis (1985) 157 CLR 215; [1985] HCA 75 [COMPANY_7] v [NAME_7] Authority of New South Wales (2004) 60 NSWLR 18; [2004] NSWCA 55 Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179 Wellcome Australia Ltd v Australia Eagle Insurance Co Ltd (1993) 34 NSWLR 269 Category: Principal judgment Parties: [COMPANY_1] (Appellant / Applicant) [COMPANY_2] (First Respondent) [COMPANY_9] (Second Respondent) Representation: Counsel: [redacted] [NAME_14] / [NAME_14] / [NAME_14] (First Respondent) Mr DJ Russell SC (Second Respondent)

Solicitors: [redacted] [NAME_17] (First Respondent) [NAME_18] (Second Respondent) File Number(s): 2016/129941; 2016/129951 Decision under appeal Court or tribunal: Dust Diseases Tribunal of New South Wales Date of Decision: 1 March 2016; 6 April 2016 Before: Curtis J File Number(s): 197/2015/1

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Judgment 1. [NAME_5]: I agree with Emmett AJA's reasons and the orders his Honour proposes.

2. GLEESON JA: I agree with Emmett AJA.

3. EMMETT AJA: These two proceedings raise a question as to the proper construction of s 151AB of the [NAME_6] Act 1987 (NSW) (the Compensation Act). The question arises in connection with a claim by [NAME_19] for damages by reason of his contracting mesothelioma as a consequence of exposure to asbestos dust and fibre while employed by [COMPANY_21] ([NAME_22]). [NAME_19]' exposure resulted from his working with products manufactured by [COMPANY_23], now known as [COMPANY_9] ([NAME_9]).

The Proceedings 1. [NAME_19] sued [NAME_9] in the Dust Diseases Tribunal of New South Wales (the Tribunal). [NAME_9], in turn, cross-claimed against the first respondent and first cross-defendant, [COMPANY_2] ([NAME_3]), and the appellant and second cross-defendant, [COMPANY_1] ([NAME_1]), for contribution towards any damages that it might be found liable to pay to [NAME_19]. It claimed such contribution under the Law Reform (Miscellaneous Provisions) Act 1946 (the Contribution Act).

2. Section 5(1)(c) of the Contribution Act relevantly provides that, where damage is suffered by any person as a result of a tort, any tort-feasor liable in respect of that damage may recover contribution from any other tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise. Section 6(1) relevantly provides that, if an insured corporation has entered into a contract of insurance by which it is indemnified against liability to pay any damages, the amount of the insured corporation's liability is, on the happening of the event giving rise to the claim for damages, to be a charge on all insurance moneys that are or may become payable in respect of that liability. Under s 6(2), if, on the happening of the event giving rise to such a claim for damages, the insured corporation is being wound up, s 6(1) applies notwithstanding the winding-up. Under s 6(4), every such charge is enforceable by way of an action against the insurer in the same way and in the same court as if the action were an action to recover damages or compensation from the insured corporation.

3. The claims for contribution against [NAME_3] and [NAME_1] were made by [NAME_9] on the basis that [NAME_22] had obtained policies of insurance from [NAME_1] and [NAME_3] insuring against liability of the nature claimed by [NAME_19]. [NAME_22] was insured by [NAME_3] from prior to 15 September 1981 up to 4.00 pm on 14 December 1985 and from 4.00 pm on 14 December 1986 until after 19 December 1986. [NAME_22] was insured by [NAME_1] from 4.00 pm on 14 December 1985 until 4.00.pm on 14 December 1986. [NAME_22] has been de-registered and, accordingly, the claims were made by [NAME_9] directly against [NAME_1] and [NAME_3] under s 6(4) of the Contribution Act.

4. The claims raised the question of which of [NAME_3] and [NAME_1] was liable to indemnify [NAME_22] in respect of any liability that [NAME_22] had to [NAME_19]. That question is regulated by s 151AB(1)(a) of the Compensation Act. Section 151AB(1)(a) relevantly provides that, for the purposes of any policy of insurance obtained by an employer, if the employer is liable independently of the Compensation Act for damages for an occupational disease contracted by a worker, that liability is taken to have arisen when the worker was last employed by the employer in employment to the nature of which the disease was due. Under s 151AB(6) of the Compensation Act, occupational disease includes a dust disease as defined by the [NAME_6] (Dust Diseases) Act 1942 (NSW). Under s 3 and Schedule 1 of that Act, mesothelioma is defined as a dust disease. 5. [NAME_19]' claim against [NAME_9] in the Tribunal was settled for the sum of $5,600,000 plus costs. [NAME_9], [NAME_1] and [NAME_3] agreed that whichever of [NAME_3] and [NAME_1] was held by the Tribunal to be liable to indemnify [NAME_22] would contribute 40 per cent of the damages and costs payable by [NAME_9] to [NAME_19] under the consent judgment entered to give effect to the settlement. A judge of the Tribunal (the primary judge) determined, for reasons published on 1 March 2016, that [NAME_1] was liable to indemnify [NAME_22] in respect of [NAME_9]'s claim.

Accordingly, the primary judge directed judgment for [NAME_9] against [NAME_1] in the sum of $2,240,000 and for 40% of [NAME_19]' costs as agreed or assessed. For reasons published on 6 April 2016, the primary judge ordered [NAME_1] to pay [NAME_9]'s costs of the cross-claim on the ordinary basis and ordered [NAME_9] to pay [NAME_3]'s costs on the party/party basis until 16 October 2015 and thereafter on the indemnity basis. His Honour also ordered [NAME_1] to indemnify [NAME_9] in respect of the latter order.

6. By notice of appeal filed on 28 April 2016, [NAME_1] appeals, under s 32 of the Dust Diseases Tribunal Act 1989, from the orders made by the primary judge. Under s 32(1), such an appeal is limited to error in point of law. For more abundant caution, by summons filed on 28 April 2016, [NAME_1] also seeks judicial review of the orders made by the Tribunal. The grounds on which relief is sought in both proceedings are essentially the same.

Findings and Reasons of the Tribunal 1. [NAME_19] was employed by [NAME_22] initially as an apprentice and, in his last year, as a tradesman, carpenter and joiner. The business of [NAME_22] involved adding second storey conversions to existing houses. [NAME_22] carried out approximately 50 such conversions each year and [NAME_19] worked on a new project approximately once every week. The first day on a project was spent in demolishing that part of the existing roof above the footprint of the planned extension. In fewer than 50 per cent of projects, the footprint and the necessary demolition extended to existing eaves and gables. Some eaves were made of asbestos cement material and others were made of timber. There was no evidence that gables contained asbestos.

2. The primary judge found that, in the course of his employment, [NAME_19] was exposed to asbestos dust and fibre liberated from building products manufactured by [NAME_9], upon which he worked. His exposure to new building products containing asbestos ended in January 1984, when [NAME_9] ceased to supply products containing asbestos. However, his Honour also found that, in the course of his employment by [NAME_22], [NAME_19] was exposed to asbestos dust and fibre thrown up by demolition work involving old materials already in the houses to which additions were being made.

Accordingly, after January 1984, [NAME_19] continued to be exposed to asbestos dust and fibre thrown up by demolition work involving old materials. However, that exposure was intermittent.

3. On two or three occasions during the course of his apprenticeship, which was completed towards the end of 1985, [NAME_19] removed asbestos cement roofing in the demolition phase. After the demolition, he spent three or four days erecting the framework and cladding the walls to lock up stage. The cladding work involved substantial exposure to asbestos dust and fibre thrown up the use of saws and grinders to cut asbestos cement sheeting.

4. The primary judge made several relevant findings as follows. First, between 15 September 1981 and 22 January 1984, when [NAME_3] was on risk, [NAME_19] was extensively exposed to the risk of inhaling asbestos dust and fibre released from [NAME_9] products upon which he worked. Secondly, between 15 September 1985 and 14 December 1985, when [NAME_3] was still on risk, because of the number of projects on which [NAME_19] was engaged, he was more probably than not exposed to the risk of inhaling asbestos dust and fibre released by the demolition of eaves containing or made of asbestos cement and from the demolition of asbestos cement roofing. Finally, between 14 December 1985 and 14 December 1986, when [NAME_1] was on risk, because of the number of projects upon which [NAME_19] was engaged, he was exposed, at least on several occasions, to the risk of inhaling asbestos dust and fibre released by the demolition of eaves made from or containing asbestos cement. 5. [NAME_19] has no recollection of the work upon which he was engaged in that last week of his employment by [NAME_22], in the five days from 14 December 1986 to 19 December 1986, when [NAME_3] was on risk. The primary judge found that work involving the demolition of eaves containing asbestos took place on less than 50 per cent of the projects upon which [NAME_19] worked and that not all eaves were made of asbestos cement. Therefore, his Honour was not persuaded that it was more probable than not that [NAME_19] worked in demolishing asbestos cement eaves, with the attendant risk of inhaling asbestos dust and fibre, during the five days from 14 December 1986 to 19 December 1986.

6. The primary judge held that the liability of [NAME_22] to [NAME_19] arose at some time between 14 December 1985 and 14 December 1986, when he last worked demolishing asbestos cement eaves and was, in consequence, exposed to the risk of inhaling dust and particles. His Honour held that, because there was a less than 50% chance of [NAME_19] having been exposed to asbestos fibre and dust between 15 December 1986 and 19 December 1986, such liability did not arise during that period. Therefore, his Honour concluded, [NAME_1] was liable because it was on risk during the period from 14 December 1985 to 14 December 1986.

Grounds Relied on by [NAME_1]

1. The grounds relied on by [NAME_1] may be summarised as follows: * The primary judge erred in holding that [NAME_19] was last employed in employment, to the nature of which his disease is due, during the period of insurance for which [NAME_1] is liable within the meaning of s 151AB(1) of the Compensation Act, * The primary judge erred in ordering that [NAME_3]'s costs be paid on the indemnity basis after 16 October 2015. * The primary judge erred in ordering that [NAME_1] indemnify [NAME_9] against its liability to pay [NAME_3]'s costs.

Relevant legal principles 1. The relevant legal principles are not in question. The issue in the proceedings in this Court is the application of those principles to the particular circumstances of the claim by [NAME_19] against [NAME_22]. It is therefore necessary to say something about the relevant principles.

2. The critical phrase in section 151AB is "employment to the nature of which the disease was due". The liability of [NAME_22] is to be taken to have arisen when [NAME_19] was last employed by [NAME_22] in employment to the nature of which the mesothelioma was due. The provision assumes a clear difference between "an employment to the nature of which the relevant disease was due", on the one hand, and "an employment to the nature of which the disease was not due", on the other. [1] The phrase in question requires that it be shown that there was a risk of a real kind that the disease in question would be contracted from the particular working conditions in which the worker was required to operate. Thus, an insurer will not be liable when the insurer comes on risk after the source of the disease is removed. [2]

3. Where a worker is employed by an employer and spends considerable time engaged in an activity that brings the worker into daily contact with asbestos fibre, and then the activity in which the worker is engaged is changed, such that the worker is no longer brought into daily contact with asbestos fibre, and the worker then retires, the insurer made liable by s 151AB will be the insurer on risk up to the time of the change in activity and not the insurer who is on risk at the time of the retirement of the worker. [3] The concluding words of s 151AB are of crucial importance in determining the outcome in such a case. Attention must be directed, not to the contract of employment, but to the kind of work being done by the worker at various times. Exposure to substances capable of causing an occupational disease is a material fact in identifying the nature of the relevant employment. Where there is a material change in the nature of the worker's employment, the insurer liable under s 151AB is the insurer on risk when the worker was last employed by the employer to do work that exposed the worker to asbestos. [4]

4. A worker is within the operation of s 151AB(1) if, in the course of carrying out his employment, the worker is in fact exposed to risk because of the employment. Employment for that purpose embraces not only the actual work tasks performed by the worker, but also those of the worker's movements through the employer's premises in the course of employment, which exposed the worker to risk of inhalation of asbestos particles. [5]

5. Section 151AB addresses the difficulty of identifying the time when an employer's liability crystallises for the purposes of claiming on insurers. The difficulty does not relate to the actual disease from which the worker suffers. Section 151AB seeks to achieve the purpose of facilitating claims by employers on insurers by using the nature of employment test to fix the date when the employer's liability is to be taken or deemed to have arisen. The legislative device employed may be characterised as "rough and ready", "artificial" and "fictional". It is a fairly arbitrary legislative mechanism for identifying the relevant insurer in what would otherwise be an impossibly complex situation. [6]

6. The introduction of the "nature of employment test" in the context of employer and insurer was to avoid the employer being "sent from pillar to post" while retaining the focus on the actual occupational disease from which the worker suffers. [7] The test directs attention to whether the nature of the worker's employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers. The test is not confined to the specific duties that the worker undertook but requires a determination of whether the course of the worker's employment exposed the worker to a risk of inhaling asbestos particles and thus of contracting the occupational disease from which the worker suffers. The test is not concerned with causation in fact but with exposure to a risk that may be causative of the occupational disease from which the worker suffers. It requires proof, on the balance of probabilities, that the nature of the worker's employment exposed the worker to a risk of contracting the occupational disease from which the worker suffers. [8]

7. Before s 151AB(1) applies, it must be established that an employer is liable for damages for an injury (relevantly an occupational disease) contracted following a period of exposure to conditions capable of causing that injury. The object of s 151AB(1) is to identify, from among the insurers on risk during that period, the insurer liable to indemnify the employer for the full amount of those damages, and without the benefit of contribution from any other insurer. The section achieves that object by deeming the time at which the employer's liability for the injury consisting of the occupational disease arises to be the end of the period during which the worker was exposed to the conditions capable of causing the occupational disease for which the employer is liable in damages. [9]

8. Section 151AB(2) contemplates a "claim" for damages made by a worker and that the insurer "primarily responsible" will conduct and pay for the defence of that claim and indemnify the employer or pay the worker the full amount of the claim as determined or agreed.

Accordingly, s 151AB(1) is to be construed as applying to the disease and liability that is the subject of the worker's claim. A construction of s 151AB that could impose the liability to indemnify on a later insurer, who was not on risk during any part of the period of employment and exposure giving rise to the employer's liability, must be rejected. That outcome would be inconsistent with the scheme and object of s 151AB, which is to fix the last of the insurers on risk during that period with the whole of the liability, notwithstanding that the other insurers on risk during the period might otherwise be partly liable to contribute to the liability of the employer. [10]

Reasoning 1. The question raised by these proceedings is whether the mesothelioma contracted by [NAME_19] was due to the nature of the employment in which he was employed during the period 14 December 1986 to 19 December 1986. Another way of framing the question would be whether there was a risk of a real kind that mesothelioma would be contracted from the particular working conditions in which [NAME_19] was required to operate during that period. [11] That calls for an inquiry as to "the nature of the employment" in which [NAME_19] was employed during the relevant period. The relevant enquiry is not concerned with the actual activity in which [NAME_19] was engaged during that period. 2. [NAME_3] contended, in effect, that the primary judge found that the mesothelioma contracted by [NAME_19] was not due to the nature of the employment in which [NAME_19] was employed during the five day period in question because his Honour was not satisfied, on the balance of probabilities, that in that period [NAME_19] actually worked demolishing asbestos cement eaves with the attendant risk of inhaling asbestos dust and fibre. However, his Honour did not make a finding that [NAME_19] was not engaged in work involving demolishing asbestos cement eaves during the period. Rather, his Honour was not persuaded that more probably than not he was so engaged. His Honour reached his conclusion, by a statistical analysis of the occasions in the period preceding 14 December 1986 when [NAME_19] was engaged in work that exposed him to the risk of inhaling asbestos dust and fibre.

3. That is to say, the primary judge embarked on a probability inquiry as to the work in which [NAME_19] was actually engaged in the five day period when [NAME_3] was last on risk. In doing so, his Honour did not direct attention to, or make a finding about, the nature of the employment in which [NAME_19] was employed during that period, as the relevant provision requires. To that extent, his Honour failed to address the correct question, namely, whether the mesothelioma was due to the nature of the employment in which [NAME_19] was employed during the five day period.

4. The evidence before the Tribunal was incapable of supporting a finding that the nature of the employment in which [NAME_19] was employed changed between 14 December 1985 and 19 December 1986. Indeed, the evidence is incapable of supporting a finding that the nature of the employment in which [NAME_19] was employed changed after January 1984, when [NAME_9] ceased to supply products containing asbestos. From that time until the time when his employment ceased on 19 December 1986, the nature of the employment in which [NAME_19] was employed by [NAME_22] was the same.

5. That is to say, [NAME_19] was engaged in employment, as a tradesman, carpenter and joiner, in performing work in connection with projects undertaken by [NAME_22] of adding second storey conversions to existing houses. In the course of that employment, [NAME_19] was from time to time exposed to asbestos dust and fibre thrown up by demolition of old materials in the existing houses, as contained in eaves made with asbestos cement.

6. There was no evidence of the actual work in which [NAME_19] was engaged in the last five days of his employment by [NAME_22]. Whether or not that actual work involved exposure to asbestos dust and fibre thrown up by the demolition of materials in eaves containing asbestos is not to the point. There was evidence as to the nature of the employment in which [NAME_19] was employed by [NAME_22] throughout the whole of the period from January 1984 to 19 December 1986, namely, demolishing parts of houses consisting of old materials containing asbestos. The mesothelioma contracted by [NAME_19] was due to the nature of that employment. It follows that the liability of [NAME_22] is taken to have arisen as at 19 December 1986, when [NAME_19] was last employed by [NAME_22] in employment of that nature.

7. The primary judge erred in failing to address the correct question, having regard to the true construction of s 151AB. That was an error in point of law. It follows that the orders of the Tribunal should be set aside. In lieu of the order for judgment against [NAME_1], there should be an order for judgment against [NAME_3] in the sum of $2,240,000 plus 40 per cent of [NAME_19]' costs of his claim against [NAME_9].

8. The orders made by the Tribunal on 31 March 2016 suggest that the judgment entered against [NAME_1] had been satisfied by [NAME_1] by payment directly to [NAME_19] on 14 March 2016. In those circumstances, if need be, it would be appropriate for an order to be made that the sum of $2,240,000 be paid by [NAME_3] to [NAME_1] by way of restitution. If need be, leave should be reserved to the parties to make any necessary application in that regard.

Costs 1. In the light of the conclusion reached above, it is unnecessary to deal with the other grounds of appeal concerning costs. However, it is desirable to say something about the questions raised by those grounds.

2. All parties accept that the primary judge erred in making the order on 6 April 2016 that [NAME_9] pay the costs of [NAME_3] of the cross-claim on an indemnity basis after 16 October 2015, since his Honour misdirected himself that r 42.15A of the Uniform Civil Procedure Rules applied to an offer of compromise made by [NAME_3] to [NAME_9] on 15 October 2015.

Accordingly, that order must be set aside. 3. [NAME_3] contended that this Court should re-exercise the discretion as to costs and order that [NAME_9] pay [NAME_3]'s costs in respect of [NAME_9]'s cross-claim, on the basis that the costs should follow the event, and that [NAME_1] should pay to [NAME_3] the difference between the amount in the preceding order and the costs [NAME_3] incurred from 6 February 2016 as assessed on an indemnity basis. That order for indemnity costs against [NAME_1] was said to be appropriate on the basis of [NAME_1]'s unreasonable refusal of an offer of compromise made on 5 February 2016 by [NAME_3] to [NAME_1]. However, in circumstances where [NAME_1] succeeds in having the judgment against it in favour of [NAME_9] set aside, it is unnecessary to determine any question as to how the Court would have re-exercised the discretion.

4. The remaining question would have been whether the order that [NAME_1] indemnify [NAME_9] in respect of the costs that [NAME_9] was ordered to pay to [NAME_3] should stand. That order was in the nature of a "Bullock Order", made by the primary judge on the basis that, in all the circumstances, it was reasonable for [NAME_9] to bring its cross-claim against both [NAME_3] and [NAME_1].

5. The mere fact that the joinder of two defendants is reasonable does not necessarily mean that the unsuccessful defendant should be ordered to pay, directly or indirectly, the costs of the successful defendant. A Bullock Order should be made only if the court considers it just that the costs of the successful defendant should be borne by the unsuccessful defendant. If nothing said or done by the unsuccessful defendant has led the plaintiff to sue the successful defendant, who was held not to be liable, there is no reason why the unsuccessful defendant should be required to pay for the plaintiff's error or overcaution. [12] In addition to the question of whether the suing of the successful defendant was reasonable, there is also a requirement for the making of a Bullock Order that the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant. [13] 6. [NAME_19] commenced proceedings against [NAME_9] on 12 June 2015. On 2 September 2015, [NAME_9] filed a cross-claim against [NAME_3], as the insurer of [NAME_22] on risk as at 19 December 1986, when [NAME_19] ceased employment with [NAME_22]. On 15 October 2015, [NAME_3] filed a reply asserting that the last exposure of [NAME_19] to asbestos dust and fibre arose on a date prior to 14 December 1986. A statement supporting that contention by [NAME_24], a former principal of [NAME_22], was attached to the reply.

7. On 23 November 2015, [NAME_19]' solicitors informed [NAME_9] that [NAME_19] was not able to recall whether or not he had exposure to asbestos dust and fibre between 14 December 1986 and 19 December 1986. On 24 November 2015, [NAME_9] joined [NAME_1] as a second cross-defendant.

8. On 27 November 2015, [NAME_9] wrote to [NAME_1] saying that, despite its best efforts, it had no evidence to contradict the assertions made by [NAME_3] as to the last date of exposure. The letter said that, unless [NAME_1] agreed to accept liability in relation to the cross-claim, [NAME_9] would not be in a position to release [NAME_3] from the proceedings. The letter concluded that, if [NAME_1] was found to be the relevant insurer by the Tribunal, a Bullock Order would be sought against [NAME_1] in relation to any order for costs made against [NAME_9] in favour of [NAME_3].

9. On 16 February 2016, [NAME_1] obtained a statement from [NAME_24] that was apparently inconsistent with his earlier statement. The later statement was to the effect that [NAME_19] was exposed to asbestos dust and fibre up to and including 19 December 1986. However, [NAME_24] was not called by [NAME_1] to give evidence before the Tribunal. 10. [NAME_1] contends that the order that [NAME_1] indemnify [NAME_9] against its liability to pay [NAME_3]'s costs of the cross-claim was an error in point of law on the part of the primary judge. It asserts that his Honour had regard to irrelevant considerations and failed to have regard to relevant considerations and misapplied the relevant principles. [NAME_9] contended before the Tribunal that its conduct in suing both [NAME_3] and [NAME_1] was reasonable and that, in addition, [NAME_1] took steps to lead [NAME_9] to continue to sue [NAME_3] such that it was fair to impose liability on it for the costs incurred by [NAME_9] to [NAME_3]. [NAME_1]'s response is that, while his Honour found that [NAME_9] had acted reasonably and properly, that was not of itself sufficient and it was necessary for the Tribunal to find something in the conduct of [NAME_1] that made it a proper exercise of discretion to require it to pay [NAME_3]'s costs.

11. In considering whether to make a Bullock Order, the Court should, in the exercise of its discretion, balance two considerations of policy. The first is that an unnecessary multiplicity of actions should not be forced on litigants so that a plaintiff that acts reasonably in joining two or more defendants should not be penalised or lose the fruits of his victory in costs on the basis that he should have elected or taken separate actions. The second consideration of policy is that an unsuccessful defendant should not have to pay any more than one set of costs merely because it is unsuccessful. [14]

12. There was no finding that [NAME_1] had conducted the litigation in some manner that made it fair or appropriate to visit upon it an order to indemnify [NAME_9] in respect of [NAME_3]'s costs. The reasons given by his Honour in relation to costs amount to no more than a finding that [NAME_1] was not successful in its defence. The Tribunal was required to deal with a question of statutory construction, being the meaning of "nature of employment" in s 151AB. More importantly, on [NAME_3]'s case, there was a question of fact to be resolved as to when [NAME_19] was last employed in employment of the nature in question. That was determined on the evidence given by [NAME_19] in the witness box. In addition, it was in fact the conduct of [NAME_3] that led to the presence of two cross-defendants in the proceedings. This was not a case where [NAME_1] denied liability and asserted that [NAME_3] was liable, such that it was necessary for [NAME_9] to join [NAME_3]. Rather, after [NAME_3] was joined, [NAME_3] denied that it was liable and asserted that [NAME_1] was liable.

13. In the absence of any finding of a basis upon which it was fair that [NAME_1] should be required to pay [NAME_3]'s costs, beyond the fact that [NAME_1] unsuccessfully made submissions on an issue of statutory construction, the primary judge appears to have erred in the exercise of his discretion. I would be therefore be disposed to conclude that, if [NAME_1] were to be held to be liable to indemnify [NAME_22], the Bullock Order should be set aside. However, it is unnecessary to decide that question.

14. As a final matter, [NAME_1], in its written submissions in reply, said as follows: "If the Court considers that the primary judge erred in his determination of the cross-claims, and that [NAME_3] was indeed the relevant insurer, then, having regard to [NAME_1]'s offer of compromise, it is submitted that the appropriate orders in relation to the costs below are: a) [NAME_9] to pay [NAME_1]'s costs of the cross-claim, assessed on the ordinary basis until 30 November 2015 and on the indemnity basis thereafter; and b) [NAME_3] to pay [NAME_9]'s costs of the cross-claim, assessed on the ordinary basis."

1. The reference to "[NAME_1]'s offer of compromise" refers to an offer of compromise made by [NAME_1] on 30 November 2015 offering [NAME_9] judgment in favour of [NAME_1] with no order as to costs. While the offer is referred to in the reasons of the primary judge, the text of the offer has not been included in the papers before this Court. 2. [NAME_1]'s proposed order that [NAME_9] pay its costs on an indemnity basis after 30 November 2015 was not raised at first instance before the primary judge although, given the findings of the primary judge on the question of liability, that is understandable. More significantly, no such order was sought in either [NAME_1]'s Notice of Appeal or Summons Seeking Judicial Review and it was not mentioned in [NAME_1]'s written submissions in support of the appeal, or in oral submissions before this Court. The matter was raised for the first and only time in [NAME_1]'s written submissions in reply. In those circumstances, [NAME_1]'s submission seeking costs from [NAME_9] on an indemnity basis after 30 November 2015 should be rejected.

Conclusion 1. The orders that I propose in the appeal proceedings are as follows:

1. The appeal be allowed.

2. The orders made by the Tribunal on 1 March 2016 and 6 April 2016 be set aside.

3. In lieu of those orders there be orders as follows: 1. judgment in favour of the cross-claimant against the first cross-defendant for the sum of $2,240,000 in respect of the damages payable to the plaintiff; 2. judgment in favour of the cross-claimant against the first cross-defendant for 40 per cent of the plaintiff's cost to be agreed or assessed; 3. the first cross-defendant pay the cross-claimant's costs of the cross-claim; 4. the cross-claimant pay the second cross-defendant's costs of the cross-claim.

1. Leave be reserved to apply in relation to the reimbursement to the appellant of any sum paid by it to the plaintiff before the Dust Diseases Tribunal.

1. The orders that I propose in the judicial review proceedings are as follows:

1. The proceedings be dismissed.

2. There be no order as to the costs of the proceedings.

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Endnotes 1. Wellcome Australia Ltd v Australia Eagle Insurance Co Ltd (1993) 34 NSWLR 269 at 276-277 as per Rolfe J ("[NAME_26]"). 2. [NAME_26] at 279-280.

3. CIC Workers' Compensation (NSW) Ltd v Alcan Australia Ltd (1994) 35 NSWLR 169 at 172-3, 177 as per Gleeson CJ, [NAME_27] and [NAME_28] agreeing ("[NAME_29] v [NAME_30]"). 4. [NAME_29] v [NAME_30] at 173, 177.

5. CIC Workers' Compensation (NSW) Ltd v Kellogg (Aust) Pty Ltd (1996) 40 NSWLR 422 at 427 as per Priestly JA, [NAME_28] and [NAME_31] agreeing. 6. [COMPANY_7] v [NAME_7] Authority of New South Wales (2004) 60 NSWLR 18; [2004] NSWCA 55 at [197] as per [NAME_5], Mason P and [NAME_32] agreeing ("[NAME_7] v [NAME_7]"). 7. [NAME_7] v [NAME_7] at [200]. 8. [NAME_7] v [NAME_7] at [202].

9. Allianz Australia Insurance Ltd v Pomfret (2015) 88 NSWLR 192; [2015] NSWCA 4 at [83] as per [NAME_32], [NAME_33] and [NAME_5] agreeing ("[NAME_34] v [NAME_35]"). 10. [NAME_34] v [NAME_35] at [86]-[87]. 11. [NAME_26] at 279-280.

12. Gould v Vaggelis (1985) 157 CLR 215; [1985] HCA 75 at 229 as per [NAME_36]. 13. [NAME_37] v [NAME_38] at 230.

14. Stevedoring Industry Finance Committee v Gibson [2000] NSWCA 179 at [128] as per Mason P, Stein and Heydon JJA agreeing. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 December 2016