D F Formwork Pty Limited v Ilija Batar [1993] ACTSC 3; (1993) 111 FLR 472 (27 January 1993)

SUPREME COURT OF THE ACT

D F FORMWORK PTY LIMITED v. ILIJA BATAR
No. SC 738 of 1992
Number of pages - 18
Workers' Compensation
[1993] ACTSC 3; (1993) 111 FLR 472

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Higgins J.(1)

CATCHWORDS

Workers' Compensation - Oral agreement to settle - Retraction of agreement - Refusal to sign Forms 27 and 28 and common law release - Effect under Workers' Compensation Act 1951 (ACT)

Workers' Compensation Act 1951 (ACT), ss.6(1),13, 21A(1), 23, 24

Workers' Compensation Rules

Magistrates' Court (Civil Jurisdiction) Act 1982, s.311(1)

Magistrates' Court Rules

Buseska v. Sergio and Anor [1990] ACTSC 37; (1990) 102 FLR 157

Saarman v. St Mary's College (1979) Tas R 176

Hatton v. Great Boulder Gold Mines Pty Ltd (1981) WAR 349

McIlwraith McEacharn Ltd v. Sweetman [1930] HCA 37; (1930) 44 CLR 116

Vine v. North Coast Steam Navigation Co (1921) 22 SR (NSW) 1

Statham v. Grundy (1917) 19 WALR 61

HEARING

CANBERRA, 20 November 1992 27:1:1993

Counsel for the Plaintiff: Mr G Parker

Instructing solicitors: Messrs Sly and Weigall

Counsel for the Defendant: Mr G Stretton

Instructing solicitors: Messrs Snedden Hall and Gallop

ORDER

The Court orders that:
1.The application be dismissed.

DECISION

HIGGINS J. On 29 June 1989 the defendant was injured in the course of his employment by the plaintiff. He sustained an injury to his cervical spine.

2. In consequence, the defendant filed a claim for worker's compensation in the Magistrates' Court. It was, in due course, set down for hearing on 14 September 1992. The hearing commenced that day. It concluded the next day.

3. The plaintiff was represented by Mr Mark Treffers (solicitor, Sly and Weigall) briefing Mr McNally of counsel. The defendant was represented by Mr Gary Robb (solicitor, Gary Robb and Associates) briefing Mr Crowe of counsel.

4. Negotiations with a view to settlement of the claim took place between the respective solicitors and counsel.

5. At about 11.30am on 14 September 1992, Mr Treffers spoke to Mr Robb as follows in respect of the matter
"Robb: I can't put an offer to you. You will need to put an

offer first. There is a Social Security payback of $15,000.00,
medical expenses total $8,000.00 and costs are $7,000.00.
Treffers: I'll seek instructions."

A little later Mr Treffers said to Mr Robb

"I'm instructed to offer $25,000.00 inclusive of costs."

6. During the luncheon adjournment, Mr Robb told Mr Treffers that the defendant would accept $90,000.00 inclusive of costs.

7. A little later, after getting instructions, Mr Treffers said to Mr Robb

"Your offer is rejected. Our client will increase its offer to
$40,000.00 inclusive."

Mr Robb said

"That's not good enough. You will need to get at least
$60,000.00."

Mr Treffers consulted with his client again and then said to Mr Robb

"I can put $50,000.00 inclusive."

8. In the meantime, however, Mr Robb had put an offer of $75,000.00 inclusive of costs to Mr McNally. The latter informed Mr Treffers of it. Mr Treffers took that information as a rejection of the offer of $50,000.00 and a counter-offer of $75,000.00 (inclusive of costs).

9. After the hearing of the matter concluded, further discussions occurred between the solicitors over the telephone.

"Treffers: Our client is prepared to offer $60,000.00 inclusive
of costs."

Mr Robb later responded

"Robb: He won't move. The minimum he will take is $75,000.00
inclusive.
Treffers: I will seek instructions."

Mr Treffers did so and then contacted Mr Robb.

"Treffers: That offer is accepted. That's a redemption and
common law release.
Robb: Yes.
Treffers: We will need to tell the Magistrate that it has settled
and have it mentioned in the morning.
Robb: I'll get Bob Crowe to do that and mention it at 10 o'clock
tomorrow."

The next morning, before the matter was mentioned, Mr Robb telephoned Mr Treffers.

"Robb: Mr Batar has changed his mind.
Treffers: As far as we are concerned the matter is settled."

10. On the morning of 16 September 1992, the Magistrate was informed of the above situation. Mr Treffers then prepared Forms 27 and 28 (forms prescribed under the Workers' Compensation Act 1951 (ACT) (the "Compensation Act")) and a common law release. They were handed to Mr Robb by Mr Treffers for signature by the defendant, although he was aware at that time of the defendant's instructions to Mr Robb.

11. That afternoon, Mr Robb telephoned Mr Treffers.

"Robb: He (that is the defendant) acknowledges that he instructed
me yesterday to do what I did and that he has changed his mind."

Mr Treffers wrote confirming this. His letter concluded:

"We advise that we are signing Forms 27 and 28 in accordance with
the Rules and will forthwith lodge the same with the Court for
registration. We confirm that our client's cheque will be
available upon registration of the redemption and execution of the
common law release."

12. On 17 September 1992, the matter was mentioned again before the learned Magistrate by Mr Crowe and Mr McNally. The latter confirmed that the above conversations and agreements had been arrived at.

13. Mr Crowe, however, did not concede that the agreement concluded the matter. He contended that, until registered in accordance with the Compensation Act, the agreement had no force or effect. He submitted that the matter should be brought to the notice of a "clerk of the court" (now a Registrar) who would refer the matter to a Magistrate for enquiry.

14. The defendant, as foreshadowed, declined to sign the Memorandum of Agreement (Form 27) or the supporting document providing the prescribed information (Form 28). He also declined to sign a release of his common law rights to damages in respect of the injury suffered on 29 June 1989.

15. The plaintiff remains ready, willing and able to carry out the terms of the verbal agreement.

16. The defendant filed an affidavit. The only new matter to emerge is that he denies, in effect, that he positively instructed Mr Robb to accept $75,000.00 inclusive of costs and expenses. He agrees that he did instruct Mr Robb not to accept less than $75,000.00 inclusive of costs and expenses. It is possible that there was a misunderstanding between the defendant and Mr Robb as to the effect of the defendant's instructions.

17. On the other hand, it was also revealed that, after consulting his present solicitors, the defendant caused them to send a letter to the Registrar, Magistrates' Court. That letter was dated 28 September 1992 and, presumably, written on instructions. It acknowledged that, on 15 September 1992, the defendant had instructed Mr Robb to accept an offer of settlement in the sum of $75,000.00 inclusive of costs and expenses. It further asserted that, overnight, the defendant became concerned about the adequacy of the proposed settlement. Thereafter he sought to withdraw those instructions even though they had, by then, resulted in the oral agreement referred to. The letter went on to support a contention that the proposed settlement sum was inadequate and submitted that the question of its inadequacy should be referred to a Magistrate for enquiry. Formal notice was given on 28 September 1992 disputing the "genuineness" of the agreement recorded in Form 27.

18. At the hearing before me, on 20 November 1992, it was conceded that Mr Robb had, at least, ostensible authority to propose, and to accept, a settlement of the defendant's claim on the terms referred to by Mr Treffers.

19. The question raised by the summons taken out by the plaintiff is whether it is open to the defendant to treat the agreement referred to as unenforceable or whether the defendant's rights under the Compensation Act have, effectively, been determined by the agreement. The plaintiff seeks a declaration to the latter effect.

20. But for the suggested operation of the Compensation Act, the plaintiff would be entitled to the relief sought. The case is otherwise indistinguishable from Buseska v. Sergio and Anor [1990] ACTSC 37; (1990) 102 FLR 157.

21. The defendant's contention is that the provisions of the Compensation Act render the agreement enforceable only if it is not, after enquiry found "inadequate".

The Compensation Act
22. Part IV of the Compensation Act is relevant. Section 23 provides

"23. (1) Except as provided by this section, a worker shall not be
entitled, in respect of personal injury arising out of or in the
course of his or her employment, to receive compensation or any
payment by way of compensation from his or her employer both
independently of and also under this Act.
(3) Where a worker is awarded damages against his or her employer in
respect of an injury independently of this Act -
(a) amounts received by him or her under this Act in respect of that
injury shall, to the extent that they do not exceed the damages, be
deemed to have been paid by the employer in or towards satisfaction of
the damages; and
(b) he or she shall be entitled to recover under this Act so much (if
any) of the amount which, but for this section, would be payable under
this Act as does not exceed any unsatisfied balance of the damages."

23. The word "damages" is defined in s.21A(1) as including
"... an amount paid under a compromise or settlement of a claim for damages, whether legal proceedings had been instituted or not, but does not include an amount paid for costs incurred in connection with proceedings in a court."

24. The purpose of s.23 is to ensure that, if a common law claim for damages is settled by agreement, the sum paid pursuant to that agreement includes any sum or sums paid in respect of that same personal injury under the Compensation Act. The worker remains entitled to recover "under this Act" the outstanding balance of the sum so agreed. I take s.23(3)(b) to be concerned with enforcement of the agreement for damages rather than disturbing or reversing the bar in s.23(1) on the enjoyment not only of damages (as defined) but also of compensation payable under the Compensation Act.

25. For the purposes of s.23 it is necessary to determine whether the agreed sum of $75,000.00 (inclusive of legal costs and expenses) was in respect of the liability of the plaintiff to the defendant under the Act or independently of it or some combination thereof.

26. In the conversations between solicitors preceding the agreement, the "common law release" was mentioned only after the final figure was proposed for acceptance.

27. Form 27, signed by the plaintiff's solicitors for the plaintiff, after formal recitals, provided as follows:-

"1. That the Respondent will pay the Applicant and the Applicant
agrees to accept the sum of Seventy-five thousand dollars ($75,000.00)
compensation inclusive of costs in full satisfaction of all of the
abovenamed Applicant's claims against the abovenamed Respondent
inclusive of all expenses which may arise or may have arisen under
Section 11 of the Act (excluding such expenses which as at 15th
September 1992 have been paid by the Respondent) and all liabilities
alleged to arise pursuant to the First and Second Schedules of the
Act.
2. That the Applicant will do all things reasonably required by the
Respondent to have this Agreement registered under the provisions of
the Workers' Compensation Act 1951 and the said sum of Seventy-five
thousand dollars ($75,000.00) shall not be payable until this
Agreement is so registered."

Clause 1 refers to the proposed payment being "in full satisfaction of all the abovenamed (defendant's) claims against the abovenamed (plaintiff)".

28. Payment of the agreed sum to the defendant was expressed to be dependant on registration of the agreement (cl.2). That was an unnecessary stipulation if the liability "independently" of the Compensation Act had already been discharged by the agreement to pay "damages". The terms of Form 28 do not cast any light on the intended character of the agreed sum.

29. The Deed of Release prepared pursuant to the oral agreement is of no great assistance either. It may be taken to represent the plaintiff's view of the effect of the agreement between the parties. However, it was not signed by the defendant or his duly authorised agent. Its precise terms cannot therefore be taken to represent the view of the defendant or any authorised agent of his as to what the agreement was or how it should be understood.

30. There is no doubt that the plaintiff, in consideration for the sum of $75,000.00, sought the release of all the defendant's rights to compensation under the Compensation Act and all of his common law rights arising out of his injury on 29 June 1989. That was the bargain to which the defendant agreed. Neither party intended the agreement to be conditional on the approval of a Magistrate.

31. The provisions of the Act to which I have previously referred say nothing as to whether a worker may, by oral agreement, irrevocably release his or her rights under the Act. Nor do those provisions say anything as to whether any approval or other condition is or may be imposed on such a release.

32. Section 13 of the Compensation Act is relevant. It provides

"(2) A provision in an agreement or other document whereby -
(a) a right conferred on a worker by this Act is excluded or
limited in any way; or
(b) the liability imposed on an employer by this Act is excluded
or limited in any way;
is void."

Of course, the "right" and the "liability" referred to above are qualifed by the terms of s.23 of the Act.

33. The "right" to compensation of a worker is also referred to in Schedule 1 to the Act.

34. Paragraph 12 thereof provides

"A weekly payment (other than a weekly payment referred to in
sub-paragraph (1)(a)(i)) payable under this Act may be varied
or ended by agreement or by arbitration under this Act."

35. The reference to sub-paragraph 1(a)(i) is a reference to benefits accruing to dependants of a worker who dies as a result of the injury. It is not relevant for present purposes.

36. In this case, of course, there was no determination of the liability of the employer to the worker. There was a claim for weekly payments. However, it can hardly have been intended that weekly payments have to be fixed by award or agreement before the liability to pay them can be "varied or ended".

37. Section 24 of the Act confirms that view.

"All matters and questions (other than prosecutions for offences)
arising under this Act shall, where no other provision is made in
this Act, in the absence of agreement, be settled by arbitration
in accordance with Schedule 4."

An arbitration was in progress when agreement was reached.

38. Paragraph 9 of Schedule 4 refers to the situation where an agreement is reached before the compensation payable under the Act has been ascertained. It provides that a memorandum of the agreement shall be sent to and recorded by the Registrar. The consequence of the recording of the agreement is that "the memorandum shall for all purposes be enforceable as a judgment of the Court".

39. There are provisos expressed in paragraph 9. It was submitted that sub-paragraph 9(d) was applicable.

"Where it appears to the Registrar of the Court, on any information
which the Clerk (sic, should be "Registrar") considers sufficient,
that an agreement made before ascertainment of compensation between a
worker and a worker's employer for payment of a lump sum by way of
compromise in satisfaction of all claims ... ought not to be
registered by reason of the inadequacy of the sum of amount ... the
Clerk may refuse to record the memorandum of the agreement sent to him
or her for registration, and refer the matter to the Court, which
shall, in accordance with Rules of Court, make such order (including
an order as to any sum already paid under the agreement) as under the
circumstances it thinks just."

40. It was also submitted that paragraph 10 was relevant. It reads

"An agreement as to the redemption of a weekly payment by a lump sum,
if not registered in accordance with this Act, shall not ... exempt
the person by whom the weekly payment is payable from liability to
continue to make that weekly payment ... unless ... the person proves
that the failure to register was not due to any neglect or default on
that person's part."

41. Whether or not the agreement was "as to the redemption of a weekly payment", it was certainly proved that the lack of registration was not due to any "neglect or default" of the plaintiff. Paragraph 10, therefore, has no bearing on the continued liability, if any, of the plaintiff.

42. There is a reference in sub-paragraph 9(d) to "Rules of Court". The "Court" referred to is the Magistrates Court (see s.6(1), Compensation Act). However, the Rules made (or continued) under the Compensation Act are cited as the "Workers' Compensation Rules". The term "Rules of Court", was, in context, intended to refer to those Rules now cited as the "Workers' Compensation Rules" (the "Rules"). It would be inappropriate to construe the reference to the "Rules of Court" as a reference to the Magistrates Court Rules continued in operation by virtue of s.311(1) of the Magistrates Court (Civil Jurisdiction) Act 1982.

43. Division V of the Rules contains provisions relating to agreements .

44. In this case, the defendant purported to dispute the "genuineness of the memorandum". That was not appropriate. It seems that what the defendant intended was to dispute the unconditional subsistence or enforceability of the agreement (see Rule 39). The defendant, by his solicitors' letter, raised an objection based on the adequacy of the proposed settlement. Rule 42 requires the Registrar, on receipt of such an objection to registration, to "consider the objection or information in accordance with that proviso (Schedule 4, clause 9(d)), and with Rule 44".

45. If the Registrar decides to refer the matter to the Court, the Court may decide to enquire into the matter and make such orders or give such directions as "it thinks just" (see Rule 44(8)).

46. As a matter of construction, it seems to me that the agreement, constituted by the conversations between the solicitors then acting for the plaintiff and the defendant, was for the compromise of the proceedings, then in the course of hearing, for arbitration of a dispute as to the compensation payable to the defendant under the Compensation Act. It was a term of that agreement that the defendant also release any common law rights against the plaintiff independently of that Act. The agreement was intended to effect a compromise and release of "all claims".

47. Nevertheless, the agreement in question is subject to the provisions of the Act relating to the registration and enforcement of agreements, including an enquiry into the adequacy thereof. It is relevant to the issue that the agreement includes the purported release of all the common law rights the defendant had (or might have had) against the plaintiff.

48. Similar provisions were considered by Everett J., under the relevant Tasmanian legislation, in Saarman v. St Mary's College (1979) Tas R 176. The review under that legislation was to be conducted by a judge rather than a Magistrate. It is clear, however, that the purpose of that "review" was to protect the worker, not only from an "unconscionable" bargain, but also to relieve him or her from the effect of an agreement which had manifestly failed to give the worker a fair and just settlement of his or her claim. Of course, the onus is on the worker to demonstrate that inadequacy.

49. The right to review of the agreement will cease to exist, once it is registered (see, for example, Hatton v. Great Boulder Gold Mines Pty Ltd (1981) WAR 349; McIlwraith McEacharn Ltd v. Sweetman [1930] HCA 37; (1930) 44 CLR 116). The agreement, therefore, has the full force and effect to which it would otherwise be entitled.

50. However, unless and until an agreement is registered under the Act, it is not an unconditional bar to the continuation of proceedings for the ascertainment of compensation under the Act (see Vine v. North Coast Steam Navigation Co (1921) 22 SR (NSW) 1; c.f. Statham v. Grundy (1917) 19 WALR 61).

51. Clause 9(d) confers a wide discretion to set aside an agreement which otherwise would bar the rights to compensation provided for by the Act.

52. It is for an applicant to satisfy the Registrar, in the first instance, that there is prima facie evidence of (inter alia) inadequacy. If so satisfied, the Registrar must refer the matter to the Court. A Magistrate will then decide whether registration of the agreement should be refused. If it is refused, then the agreement, subject to any other order the Court might make, may be set aside.

53. Prima facie, the declaration sought by the plaintiff represents the present legal relationship between the parties. However, that relationship is capable of modification should the Registrar of the Magistrates' Court refer the question of registration of the agreement to the Magistrates' Court pursuant to Schedule 4, clause 9(d) of the Compensation Act and the Rules. The resolution of that question is still pending.

54. It follows that the present application is premature and must be dismissed.

55. I will hear the parties as to costs.