Anastasiou v Moran Health Care Group Pty Ltd [1998] NSWCC 4; (1998) 16 NSWCCR 48 (23 February 1998)

[1998] NSWCC 4; (1998) 16 NSWCCR 48

ANASTASIOU v MORAN HEALTH CARE GROUP PTY LTD

Compensation Court of New South Wales: Neilson J

23 February 1998

Assessment of compensation - Agreement - Agreement registered by WorkCover Authority - When award may exceed the agreed amount - Workers Compensation Act 1987, s66A

Held:

There are four possible ways a worker who has entered into a registered agreement under s66A of the Workers Compensation Act 1987 can obtain an award for an amount exceeding the agreed amount if he or she can prove:

(a) fraud;

(b) undue influence;

(c) manifest inadequacy of the agreed amount; or

(d) that the worker had not received independent legal advice about the agreement before entering into it and that, before the matter reached a hearing in the Compensation Court, the registration of the agreement had been cancelled by the WorkCover Authority.

CASES CITED

The following cases are cited in the judgment:

Mutual Life and Citizens Assurance Co Ltd v Evatt [1970] HCA 46; (1970) 122 CLR 628; 44 ALJR 628; [1971] ALR 235

Spellson v George (1992) 26 NSWLR 666

JUDGMENT ON MOTION

This was a judgment on a motion to dismiss the proceedings as disclosing no reasonable grounds for the claim and as being an abuse of process, and for an order for costs against the applicant. It involved a consideration of how an agreement registered under s66A of the Workers Compensation Act 1987 need not bar an applicant's obtaining an award in excess of the agreed amount of compensation.

M.J. Walsh, for the applicant

B.M. Janssen, for the respondent

Ex tempore

1 NEILSON J: The motion before me has three prayers. The first prayer is that the proceedings be dismissed "on the basis no reasonable grounds for the claim are disclosed".

2 The second prayer is that the proceedings be stayed or dismissed as an abuse of process, and the third prayer is that the worker pay the employer's costs of these proceedings.

3 The proceedings were commenced by application for determination filed on 16 September 1997. In that application the worker recites an injury which befell her at her employer's premises on 24 December 1994 in which she sustained injury to her right knee.

4 The compensation claim is in respect of a 20 per cent loss of efficient use of the applicant's right leg at or above the knee and a consequential lump sum for pain and suffering pursuant to s67, and a consequential order for interest.

5 In par7 of the application for determination the allegation is made that the applicant has previously received a payment in respect of 10 per cent permanent loss of the efficient use of the right leg at or above the knee.

6 By answer filed on 10 November 1997 the respondent employer raised a number of defences including the following:

That the applicant is barred and is estopped from making a claim for compensation pursuant to ss66 and 67 of the Act by virtue of an agreement dated 23 February 1997 in which the applicant accepted a sum in settlement of any alleged injury sustained as a consequence of her work with the respondent.

7 There are before me three affidavits. The affidavits in support of the motion are ones sworn by Christine Denman on 17 December 1997 with the exceptions of pars9 and 11 thereof, and an affidavit of Kate Rapsey sworn 12 February 1998.

8 The worker relies on an affidavit of her solicitor, Mr Twomey sworn on 20 January 1998.

9 The following is the pertinent chronology. In respect of her injury on 24 January 1994, the applicant made a claim for compensation on 11 January 1995. On 22 January 1996, after having the applicant examined by a number of medical practitioners, the respondent's insurer wrote directly to the applicant advising that medical evidence available to it confirmed that the applicant had lost 10 per cent of the efficient use of the right leg at or above the knee, and making her a corresponding offer for lump sum compensation under s66.

10 The letter continues:

Should you choose to accept this offer, please sign all three copies of the enclosed Terms of Settlement and return them to me as soon as possible. Should you require assistance of [sic] further impartial advice concerning this offer, or your rights, you should contact: The Settlement Officer, WorkCover Authority, 400 Kent Street, Sydney, 2000. Telephone [phone]. Or your Trade Union. Please note that this offer of settlement is valid for 28 days from the date of this letter. If I can be of further assistance, please call me.

11 On 6 February 1996 the applicant's solicitors, Messrs McClellands, wrote to the insurer of the respondent and advised that they had been instructed to advise and appear on behalf of the worker in respect of the claim, and that those instructions had been given on 30 January 1996.

12 The letter continued:

Please note that at this stage we are unable to advise Mrs Anastasion[sic] as to whether she should accept your offer of 10 per cent loss of efficient use of the right leg at or above the knee.

13 The letter goes on to ask the insurer to provide copies of medical reports available to it, and pointing out that Messrs McClellands were writing to the applicant's treating specialist Dr Waddell, requesting a report from him as to his opinion as to the extent of the loss of efficient use of the applicant's right leg at or above the knee. The letter goes on to ask that the offer in respect of 10 per cent loss of efficient use of the applicant's right leg at or above the knee remain open until an opinion was obtained from Dr Waddell.

14 On 14 February 1996 the applicant's solicitors again wrote to the insurer of the respondent pointing out that they acted on behalf of the worker in respect of the injuries that she sustained on 24 December 1994 in the employ of the respondent. The letter makes the usual request for details of all compensation payments made.

15 The respondent's insurer would accordingly have been aware that Messrs McClellands were acting for the worker by the middle of February 1996. Nevertheless it appears that the worker herself signed the terms of settlement on 23 February 1996 and sent them to the insurer.

16 The insurer received them on 27 February 1996, and on 29 March 1996 sent them to the WorkCover Authority for registration pursuant to s66A. Besides forwarding the terms of settlement the insurer also filled in an "Application for Registration of Agreement" which recited that the name and address of the worker's solicitor or representative were McClellands Solicitors of 227 Elizabeth Street, Sydney.

17 On 6 August 1996 the WorkCover Authority advised that the agreement had been registered.

18 That the insurer was well aware before the registration of the agreement that McClellands were acting for the worker is confirmed by letter from the insurer to McClellands bearing the date 16 April 1996 replying to the worker's solicitor's letter of 14 February 1996.

19 The report from Dr Waddell, which the worker's solicitors wanted before advising the worker, is dated 29 April 1996 and would have been received by the solicitors shortly thereafter. That report certifies a 20 per cent loss of efficient use of the applicant's right leg at or above the knee.

20 On 23 August 1996 the worker's solicitors wrote to the respondent making a formal claim complying with the provisions of s106E of the Act for a 20 per cent loss of efficient use of the applicant's right leg at or above the knee, and giving details of the applicant's claim under s67.

21 That letter has a "Received" stamp on it, dated 27 August 1996. By whom it was received is not clear but it was probably by the employer itself rather than its insurer. However, it was not long before the insurer replied on behalf of the employer. It replied in a letter of 4 September 1996, and the substance of the reply is as follows:

I enclose copy of signed Terms of Settlement and Registration for Agreement dated 6 August 1996. Your client had previously agreed to a 10 per cent loss of use of right leg at $9,843.75 cents. We await Health Insurance Commission Clearance before settlement moneys are paid.

22 The applicant's solicitors did not reply to the insurer's letter of 4 September 1996 until 1 September 1997. The substance of the letter is as follows:

We were most disconcerted to hear from you that you had gone ahead with a "settlement" of our client's s66 entitlements in relation to her right knee injury, given the fact that we had written to you on 6 February 1996 to inform you that we were seeking further medical evidence in order that we could advise our client of her entitlements. Under the circumstances, would you not regard the settlement entered into by our client as being binding in any way, and we are currently attending to the filing of an Application for Determination seeking compensation in respect of a 20 per cent permanent loss of the efficient use of our client's right leg at or above her knee.

23 The current proceedings were then commenced.

24 The respondent's solicitor requested certain particulars of the claim. The first request was in the following terms:

We note that an agreement was entered into on 23 February 1996 with the applicant regarding compensation. Please advise upon what basis does the applicant say she is able to proceed with her claim?

25 The reply to that request is as follows:

In this regard, we enclose a copy of our letter to your client insurer dated 1 September 1997 which refers to another letter from this firm to your client insurer dated 6 February 1996, a copy of which is also enclosed. We were consulted by our client in January 1996 after she had received a letter from your client dated 22 January 1996 in which an offer was made in respect of our client's injury, pursuant to s66 of the Act. We wrote to the GIO on 6 February 1996 to inform them that Mrs Anastasion [sic] had consulted us in relation to their offer, and that we would be obtaining a report from her treating surgeon prior to advising our client in respect of that offer. Without any further correspondence between this firm and the GIO, our client was provided with `Terms of Settlement' for her signature. Our client signed these papers without seeking further advice from us. Under the circumstances, we are most disconcerted at your client's actions in corresponding directly with our client, especially in relation to a matter so important as a settlement of her claim. Your client was fully aware of the fact that Mrs Anastasiou had consulted us, and that we were seeking a further medical opinion prior to any advice being given to her in relation to your client's offer. We would go so far as to say that we consider it probable your client's actions would be the subject of some adverse comment by the court when the matter is ultimately listed before it. Should you wish to question our client's right to maintain the current proceedings, we would be happy for you to list it before the court.

26 This is a strike out application. It is the modern form of the ancient demurrer. This procedure is authorised by the Compensation Court Rules 1990, Pt10, r3. A similar provision is contained in the Supreme Court Rules 1970, Pt13, r5 and the District Court Rules 1973, Pt9, r17 and Pt11A, r3. If real issues exist between the parties, relief should be denied: Spellson v George (1992) 26 NSWLR 666. If amendment may rescue a deficient pleading, the relief may also be denied: Mutual Life and Citizens Assurance Co Ltd v Evatt [1970] HCA 46; (1970) 122 CLR 628. What is sought is a finding that on the pleadings and particulars there is no cause of action available to the worker. A number of causes of action may be available to a worker who has had a registered agreement. The most obvious example of such a cause of action is where there has been deterioration of the condition of, for example, a knee, since the registration of the agreement, such that the loss is now greater than it was at the time of the agreement. However, this is not the case alleged here.

27 S66A(2) provides as follows:

... [T]he Compensation Court may award additional compensation if it is established that the agreement was obtained by fraud or undue influence, or that the agreed amount of compensation was manifestly inadequate.

28 Here it is open to the worker to allege that the agreement was obtained by fraud because the insurer of the respondent, knowing that solicitors were acting for the worker, chose to ignore them and communicate directly with the worker, although that may be difficult to sustain.

29 It is also open to the worker to argue that undue influence was placed upon her in the obtaining of her consent to the agreement because her bargaining power was manifestly inadequate and because she did not know the ramifications involved.

30 There is another possible cause of action. S66A(4) is in the following terms:

The Authority must refuse to register an agreement unless it is satisfied that the worker received independent legal advice about the agreement before the worker entered into the agreement.

31 I do not know whether the worker did obtain independent legal advice. There is no evidence adduced from her yet but I have not asked the worker to go further into evidence. However, Messrs McClellands have stated that they did not give the worker legal advice. If that is so the agreement ought not to have been registered by the Authority.

32 The insurer, by completing the "Application for Registration of Agreement" appears to have induced the Authority to believe that the worker had obtained independent legal advice. Whether the worker had or not is a matter that is justiciable.

33 If the Authority is satisfied that the agreement was obtained without legal advice it may cancel the registration. If it refuses to do that, action is available to the worker in the Administrative Law Division of the Supreme Court by way of mandamus requiring the Authority to do its duty as it ought to have done.

34 However, it is clear from s66A(5) that the agreement may be cancelled within such period and in such manner as may be authorised by the regulations. However, there are no regulations at the moment. It would appear to me that it is open to the Authority to cancel the agreement at the current time.

35 If either by the Authority's own motion or by order of the Supreme Court or otherwise the registration of the agreement is cancelled or nullified then the worker's cause of action is not barred by s66A.

36 Therefore, there are four possible causes of action open to the worker here. They are to prove fraud, to prove undue influence, to prove manifest inadequacy and to prove that, although it has not yet been done, that before the matter reaches a hearing in this Court, the registered agreement is set aside.

37 In these circumstances, and bearing in mind the particulars delivered by the worker, those causes of action have not been abandoned.

38 Therefore the demurrer, if I may use that expression, must fail, as must the allegation that the proceedings are an abuse of process.

39 For those reasons I dismiss the motion.

40 I order the respondent employer to pay the applicant worker's costs of the motion.

41 Certify for counsel. I certify for a conference on the motion.

Motion dismissed

Solicitors for the applicant: McClellands

Solicitors for the respondent: S Moran & Co