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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Irish Ispat Ltd. (In Voluntary Liquidation), Re [2004] IEHC 604 (4 February 2004)
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Cite as: [2004] IEHC 604
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Neutral Citation No: [2004] IEHC 604
HC 73/04
2002 NO. 268C
IN THE MATTER OF IRISH ISPAT LIMITED (IN VOLUNTARY LIQUIDATION)
AND IN THE MATTER OF SECTION 285(2)(g) OF THE COMPANIES ACT, 1963 (AS AMENDED)
AND IN THE MATTER OF AN APPLICATION BY RAY JACKSON LIQUIDATOR PURSUANT TO SECTION 280 OF THE COMPANIES ACT 1963
JUDGMENT of Ms. Justice Mella Carroll delivered the 4th day of February, 2004.
This application concerns a single issue namely the interpretation of s. 285 (2)(g) of the Companies Act, 1963 which provides:-
"In a winding up there shall be paid in priority to all other debts…
(g) unless the Company is being wound up voluntarily merely for the purpose of reconstruction or of amalgamation with another Company all amounts due from the Company in respect of damages and costs, payable to a person employed by it in connection with an accident occurring before the relevant date and in the course of his employment with the Company to the extent that the Company is not effectively indemnified by insurers against such damages and costs."
The relevant date in this case is 28th June, 2001, the date of the passing of the winding up resolution.
The particular phrase under examination is
"In connection with an accident…in the course of his employment with the Company".
A number of its employees have sued Irish Ispat Ltd. (in voluntary liquidation) (the "Company") in respect of hearing loss incurred during the course of employment. The question is, was it caused by an accident or a series of accidents.
There are four categories of employees claiming to have suffered damage to hearing who are represented by the Notice Parties.
The Company was insured for employers' liability up to June, 1986. Therefore, for claims arising prior to June, 1986 insurance cover exists. For claims arising from alleged damages which occurred both prior to June, 1986 and after that date, the insurer has agreed that it would indemnify the Company in respect of such claims on a pro-rata basis. The claim for preferential status under s. 285(2)(g) arises only in respect of the post-June 1986 damage claims.
Between 1937 when the Company first started operating the plant at Haulbowline and 28th June, 2001, approximately 1,300 persons were employed. Claims have been made or threatened by 162 persons.
The categories represented by the named Notice Parties are:-
1. Employees current at the date of the winding up resolution.
2. Former employees.
3. Actual plaintiffs, and
4. Proposed plaintiffs.
They all make the same claim, namely, that their alleged hearing loss or impairment was caused by an accident or series of accidents in the course of their employment with the Company. The liquidator has brought this application under s. 280 of the Companies Act, 1963 for the determination of the status of those claims for the purposes of s. 285(2)(g) of the Companies Act, 1963, namely, whether they rank as preferential debts. He claims that the alleged hearing loss incurred was a result of
on-going exposure to noise levels during the course of employment and was caused by a process of work and not by an accident or accidents.
The conditions at the plant at Haulbowline, is described by Joseph O'Sullivan, Consultant Engineer, in an affidavit filed on behalf of the claimants. He states that he visited the plant in the early 80's for various reasons, namely in connection with accidents of various sorts. He says the plant was a dangerous environment in which different accidents and injuries occurred over the years (which is not the issue here).
The plant was essentially two separate main areas, a foundry and a mill separated by a billet yard. He says at paragraphs 9 and 10:-
"9. The Ispat operation was in an extremely heavy industry and for the men working there, it was extremely heavy work. Visiting the plant subjected one to an assault on all the senses - flying sparks of molten metal, heat, dust, dirt and noise were all characteristic of the plant and caused problems of varying degrees. There was always a risk from impact or falling materials. Generally the heat, dust, flying sparks, noise, the danger of impacts, poor safety provision and inadequate repair and maintenance combined to create an extremely unpleasant and often dangerous environment.
10. However an overriding problem for Ispat employees was the noise. It immediately and forcefully struck any visitor on entry to the mill or foundry …".
He says at paragraph 13
"13. The noise environment in Ispat was categorised by specific, identifiable, discrete occurrences, which caused significant elevation of noise levels, on particular and repeated occasions at varying and often at irregular intervals. These noises were an irregular impulse type well above background levels. They were irregular in terms of their frequency of occurrence, intensity and cycle. …"
" 14. It is important to note that the level of background noises was low compared to the high impulse levels and that the intermittent high levels of impulse noise were the main contributors to daily personal noise exposure levels in excess of 90 dBA."
He identified the major causes of impulse noise in the mill (as distinct from background noise) as metal to metal contact, particularly where steel is stopped on the production line to be cut. The recommended rubber buffers did not last long. Those which were damaged or worn out were not replaced. He also described another major source of noise as coming from steel saws without covers. The cold saw in the mill could without warning operate for 20 seconds at an extremely loud and high pitched tone. The hot saw in the mill was another source of such noise. From time to time explosions occurred in the plant which gave rise to exceptional noise. Another source of discrete noise was the emptying of buckets into the furnace in the foundry.
He also described the failure to wear or enforce the use of earmuffs and of their ineffectiveness in any event. Anyone who removed earmuffs was exposed to a severe increase in exposure to sound. He referred to noise measurements. He said the occurrence of specific events producing impulse type noise identifiable against and above the background noise levels was a highly significant element of the plant environment.
Mr. T. Gerard O'Leary, a Consultant ENT/Head Neck Surgeon described that noise can cause inner ear trauma by damaging the inner ear hair cells. He says at paragraph 6 of his affidavit that damage to hearing from exposure to noise depends on a number of factors including the intensity and loudness of the sound, the duration of the sound and whether the sound is continuous or intermittent. He says it is difficult to predict the effect of impulse noise such as gun fire or drop-forging or the like. Constant noise levels over a long period of time are predictable in their outcome.
He said as a working rule in excess of 85dB over a 40 hour week is thought to be hazardous and cause hearing loss in 5% of the population. Noise levels of 90dB over a 40 hour week will result in 15% of the population developing hearing loss.
He refers to the hearing loss claims and says that he has examined several employees and former employees of the Company. In his experience in all such cases the case being made is due to exposure to loud workplace noise over long periods of time during the course of their employment.
Mr. Cyril Kenefick, a Consultant ENT surgeon, refers to Mr. O'Sullivan's affidavit describing specific and frequent individually identifiable occurrences of impulse noise which cause significant elevation of noise levels well above the background noise levels. Mr. Kenefick says that any of these impulses or any sequence of such impulses could, and he inferred probably did, cause damage to the hearing of persons exposed to them.
Mr. Patrick A. O'Meara a retired Consultant ENT surgeon has also sworn an affidavit in identical terms to Mr. Kenefick with the additional information that the audiograms of three of the claimants bear a striking resemblance to typical army deafness audiograms and much less so to typical audiograms of those deafened by continuous noise. His view as a matter of probability is that the hearing loss sustained by the workers in Company was caused, or at least primarily contributed to, by exposure to specific noise caused by discrete events.
In an unreported case, Irish Foundries Limited (In Liquidation) Burns v. Paul Doyle and Others (Unreported) [1977]. McWilliam J. dealt with the interpretation of
s. 285(2)(g) of the Companies Act, 1963. In that case the workers were exposed to excessive quantities of silica bearing dust, grease and other substances. It was accepted they had developed a disease as a result of the exposure. McWilliam J. referred to two passages from Halsburys Laws of England Vol. 27 (3rd Edt.) at page 802 and 803. He quoted the following passage which occurs at page 802:-
"The term 'accident' must be interpreted according to its popular meaning. It includes personal injury sustained under circumstances which can be referred to as a 'accident' and it also includes cases in which the results of the occurrences are so unexpected that they can be fairly be considered as accidental. Unexpected means unexpected by the person who is injured."
He said
"In view of one argument which was advanced on behalf of the employees, I would point out that this passage refers to the result of an occurrence having unexpected results and that the mere unexpected nature of the injury is not sufficient to constitute an accident."
He also quoted the following passage which occurs at page 803:-
"There are two types of cases. In the one type, there is found either a single accident followed by a result and injury or series of specific and ascertainable accidents followed by an injury which may be a consequences of any or all of them; and, in either case, it is immaterial that the precise time at which the accident happened cannot be located. In the other type there is a continuous process going on from day to day which gradually over the years produces incapacity. In the first of those types the resulting incapacity is held to be injury by accident; in the second it is not."
He stated
"This passage appears to me correctly to state the law."
There have been earlier cases dealing with workmens'compensation cases both in the U.K. and in the State. The Workman's Compensation Act, 1934 s. 15(1) provided that
"If in any employment personal injury by accident arising out of and in the course of the employment is caused to a workman his employer shall be liable to pay compensation."
A similar provision was contained in the English Workman's Compensation Act, 1925
s. 1(1).
In the case of Kelly v. Cement Limited [1940] I.R. 84, a decision of the Supreme Court dealt with the case where the plaintiff developed pleurisy as a result of exposure to cement dust over a period of approximately eleven months. In that case O'Sullivan C.J. reviewed a number of English cases. He agreed (at p. 94) with the view expressed by Sergeant L.J. in Williams v. Guest Keen and Nettlefolds Limited [1926] 1 K.B. 497,
"that an injury arising by the gradual and cumulative effect of industrial conditions producing disease was not regarded by the Workman's Compensation Act, 1906 as being within the ordinary sense of the word 'accident' and the same might be said of the framers of the Act of 1934."
Murnaghan J. (in a concurring judgment) said at page 96:-
"If the word 'accident' is interpreted in an etymological sense it has a colourless meaning in the sense of anything that happens. So used, it would be superfluous, and such cannot be said to be its proper meaning. It may be that in the early growth of the language unhappy events were attributed to chance through fear of offending unseen powers and that in some way this figure of speech has lingered on.
In all events there is a popular sense of the word which the House of Lords recognised in Fintan v. Thorley and Co. [1903] AC 443 and Lord McNaghten in his speech expressed (at page 448):-
"the popular and ordinary sense of the word as denoting an unlooked for mishap or an untoward event which is not expected or designed."
This meaning has been several times adopted in the House of Lords in later cases prior to the year 1922 when our first Constitution adopted the law then in force."
At page 98 he quoted Holmes L.J. in Finlay v. Guardians of Tullamore Union [1914] I.R. 233 referring to an amendment of the 1906 Workman's Compensation Act which compensated a workman who contracted a specified disease in a specified employment, in which he said:
"Now having regard to the way in which the Legislature has dealt with this matter… it seems to me that the Legislature has recognised the law to be such that injury which results from continuous employment in a dangerous trade is not an accident. It is otherwise if some single and unexpected event causes injury."
Murnaghan J. concluded his judgment saying
"A stronger, as it seems to me, principle of interpretation is that the Legislature itself has sanctioned the principle that repeated happenings, no one of which could be properly called an accident, cannot cumulatively be regarded as an accident."
In an English Workman Compensation case dealing with contracted silicosis (Roberts v. Dorothea Slate Quarry Co. Ltd. [1948] 2 AER 201 the House of Lords held that the silicosis could not be said to be the result of an accident or series of accidents and was not the result of injury by accident. Lord Porter said at page 205:-
"In truth two types of case have not always been sufficiently differentiated. In the one type there is found a single accident followed by a resultant injury as in Brintons Limited v. Turvey or series of specific and ascertainable accidents followed by an injury which may be the consequences of any or all of them as in Burrell (Charles) and Sons Limited v. Selvage. In either case it is immaterial that the time at which the accident occurred cannot be located. In the other type there is a continuous process going on substantially from day to day though not necessarily from minute to minute or even from hour to hour which gradually and over the years produces incapacity. In the first of these types the resulting incapacity is held to be injury by accident. In the second it is not. In the case of silicosis it is of course possible to divide up the cause of the final collapse and say that each particle of silica striking upon and adhering to the lung is a separate accident but however analytically maintainable, the attribution of a result of silicosis to an accidental cause is an unreal one. The distinction between accident and disease has been insisted on throughout the authorities and is I think well-founded. Counsel for the employers formulated the proposition on which he relied by suggesting that where a psychological condition is produced progressively by a cumulative process consisting of a series of occurrences operating over a period of time and the microscopical character of the occurrences and the period of time involved are such that in ordinary language, that process would be called a continuous process, the condition is not produced by an accident or accidents with the Acts. I do not know however that any explicit formula can be adopted with safety. There must nevertheless come a time when the indefinite number of so called accidents and the length of time over which they occur take away the element of accident and substitute that of process. In my opinion disability from silicosis is one of such instances. It cannot be said as a result of injury by accident."
In a later case, Pyrah v. Doncaster Company [1949] 1 AER 883 where a health worker contracted TB through close contact with tuberculous patients, it was held by the Court of Appeal that she was entitled to succeed on a Workman's Compensation claim. Denning L.J. said at page 892:-
"Where is the line to be drawn between a disease which is due to an accident or accidents and a disease which is due to a process of work. In my opinion the solution to that question is to be found by remembering that an accident is something fortuitous, something which is unsought and happens by chance, something of which can be predicted that even if it is very likely to happen and happen repeatedly, nevertheless it is still a chance that it does happen. Applying this test, if a disease can be attributed to one external factor only, whether that factor be trauma, exposure, exertion or infection or such like, then it is undoubtedly due to an accident even though the precise occasion on which it occurred cannot be ascertained; see Brintons v. Turvey, Innes v. Kynoch and Fife Coal Co. v. Young; but if the disease is due to a number of external factors acting in combination such as inhaling foreign particles over a long period, exposure to dust, or numerous cuts, then a distinction has to be drawn. On the one hand the disease is due to a series of accidents if the external factors which produce it occur fortuitously as a matter of chance. That was the case in Charles Burrell v. Selvage where although the cuts were numerous and repeated, nevertheless each one occurred as a matter of chance. On the other hand a disease is due, not to a series of accidents but to a process of work if the external factors which produce it are a continuous and necessary concomitant over a long period of the work in which the man is engaged. That was the case in Roberts v. Dorothea Slate Quarry Co. Ltd where the inhaling of the silica dust was not fortuitous but a necessary incident of the work."
When the law is applied to the facts of this case, it appears to me that the repeated incidents of impulse noise from whatever source were not unexpected or fortuitous. They did not occur by chance but as a result of the manufacturing process carried on in the foundry and the mill.
It would be straining the meaning of language to hold that every time a length of steel struck a halt, it happened by accident; that every time a saw emitted a loud high noise, it was an accident; or that the emptying of the bucket into the furnace with resultant noise happened by accident.
What the claimants say in relation to conditions at the factory would undoubtedly be relevant in a claim for damages for negligence or breach of statutory duty, which they are perfectly entitled to pursue. But they are not entitled to preferential status on a fictitious ground that their injuries resulted by accident.
Approved ; Mella Carroll
4th February 2004