Stephen Taylor-Jones (pictured), a partner at Moray & Agnew, has discussed the implications of the recent New South Wales Court of Appeal decision in Workers Compensation Nominal Insurer v Sako.
The ruling confirmed that claimants suffering from dust diseases are not entitled to access the uninsured liability scheme, reinforcing the long-standing legal distinction between statutory workers’ compensation and common law damages claims for occupational illnesses.
The case involved a claim by Sako, who initiated proceedings in the Dust Diseases Tribunal against the Workers Compensation Nominal Insurer (WCNI).
Sako pursued claims against three deregistered employers, two of which had workers’ compensation insurance through WCNI. The third employer, Harmes, did not hold insurance.
Sako sought to amend his claim, arguing that WCNI was responsible for Harmes’ liability under the uninsured liability scheme established by the Workers Compensation Act 1987 (NSW).
He also attempted to pursue WCNI as an “insurer” under the Civil Liability (Third Parties Claims Against Insurers) Act 2017 (NSW). WCNI opposed the application, contending that it did not meet the definition of an insurer under the 2017 Act and that dust disease claims were outside the scope of the uninsured liability scheme.
A lower court initially granted Sako leave to proceed, determining that the legal interpretation of the uninsured liability scheme’s applicability to dust diseases was arguable. WCNI subsequently appealed the decision.
The appeal centred on the interpretation of Section 140 of the 1987 Act, which allows claims under the uninsured liability scheme for compensation or work injury damages related to an “injury” suffered by a worker whose employer lacked insurance.
However, under the statute, “injury” is defined in a way that excludes dust diseases, which are instead covered by the Workers Compensation (Dust Diseases) Act 1942 (NSW).
WCNI argued that the legislative framework had always treated dust diseases and other workplace injuries separately, with different statutory compensation mechanisms in place. It pointed to the absence of any reference to dust diseases in Section 140, asserting that if lawmakers had intended to include such claims under the uninsured liability scheme, they would have explicitly done so.
The case also considered the definition of “work injury damages” under the Workplace Injury Management and Workers Compensation Act 1998 (NSW). WCNI maintained that the availability of work injury damages is contingent on meeting specific procedural requirements under the 1998 Act, which apply only to injuries as defined by the 1987 Act. Since dust diseases do not fall within this definition, WCNI argued that Sako’s claim did not qualify.
The Court of Appeal granted WCNI leave to appeal, ruling that the uninsured liability scheme applies only to claimants with injuries as defined by the 1987 Act and does not extend to dust disease claimants.
The court found that Sako’s condition, silicosis, fell under the 1942 Act, which meant he was not entitled to claim under the uninsured liability scheme. As a result, the court ruled that his proposed amendment to include WCNI as an insurer had no legal basis, and the appeal was upheld.
Sako also conceded that, without an insurance policy in place, WCNI could not be joined under the 2017 Act.
Taylor-Jones said that the ruling provides clarity regarding the scope of the uninsured liability scheme. The decision confirms that dust disease claimants cannot use the scheme to recover damages and that joint tortfeasors cannot seek contribution through it.
He added that this ruling is significant for cases involving uninsured or deregistered employers, particularly in light of the long latency periods associated with dust diseases. The decision also underscores the legal distinction between statutory workers’ compensation claims and common law damages claims for dust diseases.
While most businesses comply with their workers’ compensation insurance obligations, Taylor-Jones said that smaller employers sometimes fail to secure coverage. The decision offers a clearer framework for determining legal options in cases where an uninsured employer is no longer in operation.
