Sako v Workers Compensation Nominal Insurer [2018] NSWSC 627 | Case summary

Supreme Court of NSW|2024-05-24|Before: Scotting J

Introduction

The plaintiff seeks leave pursuant to s 5 Civil Liability (Third Party Claims Against Insurers) Act 2017 (the 2017 Act) to continue the proceedings against the sixth defendant, the Workers Compensation Nominal Insurer (WCNI), in respect of the liability of an uninsured employer of the plaintiff, Rabi Harmes.
The plaintiff seeks damages for personal injury against six defendants alleging that he has contracted silicosis and a psychological injury arising from his exposure to respirable crystalline silica (RCS) in the course of his employment with three employers: 1. Rabi Harmes, in the period of about late 2009 to late 2011/2012; 2. Italian Marble and Granite Pty Ltd (Italian Marble) from about late 2011/2012 to about May 2014; and 3. Granitestone Pty Ltd (Granitestone) from about April 2017 to about July 2022.
It is common ground that Italian Marble and Granitestone were insured under the Workers Compensation Act 1987 (the 1987 Act) but that the insurers are no longer in existence and that leave should be granted to continue the proceedings against the WCNI relating to those employers.
For the purposes of the Notice of Motion, the WCNI accepts that Mr Harmes was uninsured for the period of the plaintiff's employment, and that the plaintiff was employed by Mr Harmes.
The plaintiff contends that he is able to make a claim on the WCNI because his employer, Mr Harmes, was uninsured: s 140 of the 1987 Act. He contends that the meaning of "uninsured" in s 140 is contextually informed by the requirement in s 155(1) and s 155(1A) of the 1987 Act that an employer's policy of insurance was required to provide cover for an injury including a "dust disease" as defined by the Workers' Compensation (Dust Diseases) Act 1942 (the 1942 Act). He also relies on a body of extrinsic material to contend that when parliament introduced the Uninsured Liability Scheme (ULS) it was intended to provide cover for all workers, who through no fault on their part, were employed by a person without insurance cover.

The 2017 Act

Section 3 of the 2017 Act defines the term "insured liability" to mean, "a liability in respect of which an insured person is entitled to be indemnified by an insurer".
Section 4 of the 2017 Act provides:

4 Claimant may recover from insurer in certain circumstances (1) If an insured person has an insured liability to a person (the claimant), the claimant may, subject to this Act, recover the amount of the insured liability from the insurer in proceedings before a court. (2) The amount of the insured liability is the amount of indemnity (if any) payable pursuant to the terms of the contract of insurance in respect of the insured person's liability to the claimant. (3) In proceedings brought by a claimant against an insurer under this section, the insurer stands in the place of the insured person as if the proceedings were proceedings to recover damages, compensation or costs from the insured person. Accordingly (but subject to this Act), the parties have the same rights and liabilities, and the court has the same powers, as if the proceedings were proceedings brought against the insured person. (4) This section does not entitle a claimant to recover any amount from a re-insurer under a contract or arrangement for re-insurance.

Section 5 of the 2017 Act provides:

5 Leave to proceed (1) Proceedings may not be brought, or continued, against an insurer under section 4 except by leave of the court in which the proceedings are to be, or have been, commenced. (2) An application for leave may be made before or after proceedings under section 4 have been commenced. (3) Subject to subsection (4), the court may grant or refuse the claimant's application for leave. (4) Leave must be refused if the insurer can establish that it is entitled to disclaim liability under the contract of insurance or under any Act or law.

The threshold for a grant of leave under the 2017 Act is low. In Murphy McCarthy and Associates Pty Ltd v Zurich Australian Insurance Ltd [2018] NSWSC 627, Hammerschlag J observed at [16]-[17]: The requirement for leave under s 5(4) of the Act is one imposed to insulate insurers from exposure to untenable claims. The discretion to give leave to bring such a claim is to be exercised with this in mind. [The plaintiff] must have an arguable case against [the insured], there must be an arguable case that the policy responds to it and there must be a real possibility that if the judgment is obtained [the insured] would not be able to meet it.

Consideration

The WCNI is presently an active party to the proceedings, representing the interests of Italian Marble and Granitestone. Its interests include establishing the nature and extent of the plaintiff's exposure to RCS in his various periods of employment and seeking contribution and/or indemnity from the suppliers of the material that the plaintiff worked with. If the WCNI was also required to represent the interests of Mr Harmes, that would add very little to its existing role in the litigation and it is highly unlikely that it would add substantially to its costs.
A grant of leave or refusal of leave under s 5 of the 2017 Act, would be an interlocutory decision that would require the losing party to seek leave to appeal. It is arguable as to whether or not a final decision on the statutory interpretation point would arise in such an interlocutory appeal. The Court of Appeal may take the view that the statutory interpretation point does not arise for determination, because a grant of leave under s 5 of the 2017 Act requires only that the plaintiff demonstrate an arguable case.
The plaintiff's contentions as to the contextual interpretation of ss 140 and 155 as "mirror" provisions and the purposive interpretation based on the extrinsic materials are powerful. On the other hand, WCNI contends that the purposive interpretation has to overcome the language of the workers compensation legislation and in particular grapple with the definition of "injury" in s 4 of the 1987 Act (which excludes a "dust disease" as defined by the 1942 Act) and the meaning of "work injury damages" contained in s 250 Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act).
I am satisfied that the plaintiff has an arguable case. I am not satisfied that the WCNI has established it to be futile to the requisite standard.
It is convenient and efficient to allow the proceedings to continue against the WCNI. The WCNI, if so advised, can bring the statutory interpretation point on as a separate question or a stated case at an appropriate time. In the alternative, it could wait to argue the statutory interpretation point at the conclusion of the case, when all of the necessary findings of fact have been made.
The course I have taken means that it is unnecessary to finally determine the statutory interpretation point at this time. Accordingly, no party has been particularly successful, but may be in the future. In those circumstances the appropriate costs order is that costs be in the cause on this issue.

Orders

The orders I make are as follows: 1. I grant leave to the plaintiff to continue the proceedings against the sixth defendant pursuant to s 5 Civil Liability (Third Party Claims Against Insurers) Act 2017. 2. I grant leave to the plaintiff to file the Amended Statement of Claim annexed and marked "A" to the Notice of Motion. 3. Costs of the motion are costs in the cause.

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: 11 June 2024

Sako v Workers Compensation Nominal Insurer

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