Two recent decisions, which were heard together in the NSW Court of Appeal1, have interpreted the operation of s151AB(1) of the Workers Compensation Act 1987 (NSW) and its application to dust disease matters in a way which may see an increase in successful claims against worker’s compensation insurers.
Section 151AB(1) provides that an employer’s liability for an occupational disease (which includes dust diseases) is taken to have arisen, for the purpose of their insurance policies “when the worker was last employed by the employer in employment to the nature of which the disease was due”.
Section 151AB(1) provides clarity regarding whom should indemnify in circumstances where an employer had a number of policies over a prolonged period of employment where exposure to harmful substances occurred. However, where an insurer cannot be identified for the date on which employment with the relevant employer ceased, the operation of s151AB(1) can leave the employer (seemingly) without coverage for the period of exposure entirely.
In this case, Mr Pomfret concluded his employment with Ceeco Products P/L (Ceeco) in December 1978. Ceeco had held an applicable policy of insurance with Allianz, but only until January 1978. During his employment with Ceeco, Mr Pomfret was exposed to asbestos dust. Mr Pomfret was diagnosed with asbestosis decades later, at which time Ceeco had been deregistered. Mr Pomfret brought proceedings directly against Allianz for compensation, pursuant to section 6 of the Law Reform (Miscellaneous Provisions) Act 1946. Importantly, Mr Pomfret’s pleadings only claimed compensation for his injury as caused by his exposure to asbestos up until 31 January 1978 (being the last date that Allianz had been “on risk”). Allianz relied on section 151AB(1) to deny indemnity. It argued that when Mr Pomfret was “last employed” in conditions to the nature of which his disease was due (i.e. December 1978), Allianz had not been “on risk”. A similar (though not identical) factual scenario arose in the matter of CGU v Davies, so the matters were heard together.
The NSW Court of Appeal determined (in a unanimous judgment) that:
- The “disease” referred to in section 151AB(1) is the occupational disease for which the employer is liable in damages. That liability may only be for injury or harm caused by a particular period of overall exposure.
- In order for the employer (and by extension the insurer) to be liable for this particular period, the plaintiff must establish that the pleaded period of exposure caused or substantially contributed to the harm or injury. In Pomfret (as in Davies), the plaintiff could do so, therefore the Court determined that it was arguable that Allianz was liable to indemnify.
It is possible for the plaintiff to successfully restrict their claim to a period which will attract known insurance cover. Insurers cannot assume that, because they were not the insurer “on risk” at the time that a worker’s employment ceased with its employer, that they will be afforded the protection of section 151AB(1), as this will depend on how the pleadings are framed (and, possibly) the nature of the disease contracted.
The full text of these decisions can be found here: