Jamal v Workers Compensation Nominal Insurer (NSWCA 2023)

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Key Takeaways

Section 155 of the Workers Compensation Act 1987 (the 1987 Act) provides that it is compulsory for employers to obtain and maintain a policy of workers compensation insurance in respect of all workers it employs. Section 145A of the 1987 Act imposes a liability on a culpable director to reimburse the Insurance Fund the amount of any payment made under a claim for workers compensation where the company was uninsured. Any director of a company who is in contravention of s155 is personally liable to reimburse the insurance fund unless they can discharge the onus of proof to establish the defences under s145A(5) of the 1987 Act.

Brief Facts

The worker suffered an injury in the course of his employment with Al Maamoun and Co Pty Ltd (the Company) in April 2014. The Company, a family run business, did not hold a workers compensation insurance policy at the time of the worker’s injury in contravention of s155 of the 1987 Act. The Nominal Insurer paid the worker $258,565.75 in compensation and sought to recover the amount paid from the company’s sole director, Ms Jamal (the appellant).

The Nominal Insurer commenced proceedings against the appellant in the NSWDC. It was the appellant’s evidence that employees did not receive a wage and would take their expenses from the till and record this in a book. As such, it was argued that, in accordance with s155AA(1) of the 1987 Act, the Company was exempt from the requirement to obtain an insurance policy because the wages paid during the applicable financial year were less than $7,500.

The primary judge found that the Company was not an exempt employer within the meaning of s155AA(1) of the 1987 Act and that the appellant was liable to reimburse the Nominal Insurer the full amount received by the worker following his claim for workers compensation. The appellant’s evidence that she was not aware of the company’s contravention of s155 of the 1987 Act and that she was not in a position to influence the Company’s conduct was rejected by the primary judge.

Judgment

On appeal, the issues before the NSWSC were:

1. whether the primary judge had erred in finding that the appellant had actual knowledge of the company’s contravention of s155(1) of the 1987 Act;
2. whether the primary judge had erred in finding that, if the appellant did not have actual knowledge of the company’s contravention of the 1987 Act, the appellant had been wilfully blind to such contravention, so as to disentitle her to the exculpatory ground contained in s145A(5)(a) of the Act;
3. whether the appellant was required to establish she had neither actual nor constructive knowledge of the company’s contravention to be exercised under s145A(5)(a);
4. whether the primary judge had erred in finding that the appellant had not established that she had not been in a position to influence the company’s conduct in relation to its contravention of s155(1) of the 1987 Act, so as to disentitle her to the exculpatory ground contained in s145A(5)(b) of the 1987 Act;
5. in the alternative to Grounds 1-3, whether the primary judge had erred in finding that the appellant was liable to pay the full amount of $258,565.75.

The Court dismissed the appeal in its entirety noting that the appellant’s evidence as to whether or not she had actual knowledge of the Company’s breach of s155 was inconsistent. The Court found the inconsistency of the appellant’s answers in cross-examination provided ample basis for the primary judge not to be satisfied as to her credit.

The Court also found that the primary judge did not err in finding that the appellant had failed to discharge her onus of proving that she was not in a position to influence the Company’s conduct because, as sole director of the Company, it was she who was in a position to manage the Company’s affairs. The fact that on her evidence she left the conduct of the affairs of the Company to someone else did not mean that she was not in a position to influence the conduct of the Company.

Implications

Where a non-exempt company fails to maintain a policy of workers compensation insurance and a worker suffers an injury, the company is liable to reimburse the Workers Compensation Nominal Insurer the amount of compensation paid for or to the worker. If the amount payable is not recoverable from the company, s145A of the 1987 Act holds directors personally liable to reimburse the Nominal Insurer. The onus of proof lies with the culpable director(s) to establish any defence made under s145A of the 1987 Act.