Dust Diseases Claims excluded from the Uninsured Liability Scheme

DDT: Sako v Workers Compensation Nominal Insurer [2024] NSWDDT 6

COA: Workers Compensation Nominal Insurer v Sako [2025] NSWCA 12

Before the Court was a single question – does s 140 of the Workers Compensation Act 1987 (NSW) (‘the 1987 Act’), which allows claims for work injury damages to be made against the Nominal Insurer, apply to a claim where the relevant injury is silicosis?  The answer was no.

In Sako v Workers Compensation Nominal Insurer [2024] NSWDDT 6, the Plaintiff, Marwan Sako (‘Mr Sako’), claimed damages in Dust Diseases Tribunal in New South Wales (DDT) for injuries including silicosis, latent tuberculosis and major depressive disorder.  Mr Sako alleged these conditions were developed because of exposure to respirable crystalline silica dust (‘RCSD’) during his work as a stonemason with three employers.

Issue

Mr Sako was employed by one of those employers, Mr Rabi Harmes, between the period of about late 2009 to late 2011/2012.  Mr Harmes was uninsured for the period of Mr Sako’s employment.

Pursuant to Section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (‘the 2017 Act’), Mr Sako sought leave to continue his proceedings against WCNI for the liabilities of Mr Harmes notwithstanding that there was no evidence of any policy of insurance covering Mr Harmes at the relevant time.  He also sought to make WCNI liable under the uninsured liabilities scheme.  WCNI submitted that on the proper construction, the claim, as relating to a dust disease, was excluded from the applicable workers compensation legislation.

Relevant Law

• Civil Liability (Third Party Claims Against Insurers) Act 2017 (Section 5 – Leave to Proceed)
• Workers Compensation Act 1987 (Sections 4 – Definition of “Injury,” 140 & 155 – Uninsured Employers)
• Workers’ Compensation (Dust Diseases) Act 1942 (Definition of “Dust Disease”)
• Workplace Injury Management and Workers Compensation Act 1998 (Section 250 – “Work Injury Damages”) (‘the 1998 Act’)

Held

The primary judge granted to the Plaintiff leave to continue the proceedings against WCNI pursuant to Section 5 of the 2017 Act, notwithstanding the absence of a policy of insurance, and permitted an Amended Statement of Claim to be filed by the Plaintiff for that purpose.  His Honour, Scotting J, did not determine the issue regarding WCNI’s liability under the uninsured liability scheme.

The Decision Appealed

WCNI sought leave to appeal to the Court of Appeal.  Ground 1 relating to the leave granted under the 2017 Act fell away at the hearing of the leave application, following concessions by the Plaintiff’s Senior Counsel.  Ground 2, read as follows: “The trial judge erred in law in granting leave to the respondent to amend his statement of claim in that the trial judge ought to have found that Section 140 of the Workers Compensation Act 1987 does not apply to a claim against an employer for damages where the relevant injury is silicosis.”  The right to appeal was pursuant to Section 32(1) of the Dust Diseases Tribunal Act 1989 (NSW) in that it related to a decision, being an error in point of law.  The leave application and appeal were heard before Stern JA, McHugh JA and Price AJA in the Court of Appeal on 21 November 2024.  The Judgment was delivered on 13 February 2025.

WCNI argued that Section 140 of the 1987 Act does not apply to a dust disease, such as silicosis, and that it did not have the effect of making WCNI liable for an uninsured employer.

The Court of Appeal found in favour of WCNI, granting leave to appeal with respect to Ground 2 and allowing the appeal.  The Court held:

• The definition of “injury” in Section 4 of the 1987 Act provides the literal meaning of the word “injury” in Section 140(1). This excludes dust diseases from the operation of Section 140(1).
• By reason of Section 3(1AA) of the 1987 Act, the definition of the words “work injury damages” in Section 250 of the 1998 Act provides the literal meaning of those words in Section 140(1) of the 1987 Act. This also excludes dust diseases from the operation of Section 140(1).
• The conclusion that Section 140(1) excludes dust disease claims is required by the text, context and history of the legislative scheme, including the longstanding distinction in the regulation of workers compensation between dust diseases and other workplace injuries. The purpose of using the two defined terms “work injury damages” and “injury” in Section 140(1) was clearly to exclude dust diseases from the uninsured liability regime.

In the Court of Appeal Judgment, His Honour, McHugh JA, with whom Stern JA and Price AJA agreed, made the following Orders:

1. Grant leave to appeal with respect to Ground 2 in the draft notice of appeal and direct the applicant to file a notice of appeal within seven days.
2. Appeal allowed.
3. Order (2) made by Scotting J on 11 June 2024 be set aside.
4. In lieu thereof, order that the plaintiff be refused leave to file the draft Amended Statement of Claim annexed to his notice of motion.
5. The applicant pay the respondent’s costs of the application for leave to appeal and of the appeal.

NB: WCNI did not oppose an order that it pay the Plaintiff’s costs of the application for leave to appeal and of the appeal and did not seek to disturb the costs order made below, which was that costs of the motion be costs in the cause.

6. The application for leave to appeal otherwise be dismissed.

Implications

Workers with dust diseases, including silicosis, are excluded from the uninsured liability scheme provided by Section 140 of the 1987 Act.  The scope of common law damages being more generous to claimants suffering from dust diseases than other workplace injuries provided at least one reason for the exclusion of dust disease claims from Section 140.

The Court made specific reference to the longstanding distinctions between work injury damages claims and common law dust disease claims.  The Court acknowledged that the legislative intention has been to maintain the distinction between dust diseases and the regime for compensation for other non-dust diseases claims.  McHugh JA quoted; “Given what would potentially be a large exposure of WCNI for uninsured dust diseases claims, it is not difficult to understand why Parliament might not choose to legislate to create such a liability.”

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