Wunderlich v Wunderlich Trading Co Pty Ltd [1998] NSWCC 9; (1998) 16 NSWCCR 197 (4 April 1998)

[1998] NSWCC 9; (1998) 16 NSWCCR 197

WUNDERLICH v WUNDERLICH TRADING CO PTY LTD

Compensation Court of New South Wales: Armitage J

2 April 1998

Workers compensation - Assessment of compensation - Agreement - Registration by WorkCover Authority - Worker did not receive independent legal advice about the agreement's content and effect before it was registered - Registration void - Workers Compensation Act 1987, s66A

V. Jurisich, for the applicant

M.J. McGrowdie, for the respondent

Ex tempore

1 ARMITAGE J: This is an application by Wolfgang Wunderlich against his employer Wunderlich Trading Co Pty Ltd of which, for present purposes, the applicant's counsel Mr Jurisich admits the applicant is the effective proprietor, it engaging in the toolmaking business, in respect of injuries to the right leg and right arm alleged to have occurred in circumstances arising out of or in the course of Mr Wunderlich's employment with the above company on 14 November 1995 when while on the factory floor he was accidentally run over by a fork lift injuring his right leg and right arm. The claim is only for the appropriate lump sum pursuant to s66 in respect of 25 per cent permanent loss of use of the right leg below the knee, together with s60 expenses for medical and hospital treatment, a lump sum pursuant to s67 for pain and suffering and interest on all sums claimed.

2 The parties have agreed that I should decide before proceeding to the hearing of the merits of the matter one preliminary point. I should add before describing this that Mr McGrowdie for the respondent suggested that it may be desirable to deal with the preliminary point before the hearing of the main application so that the main application could be heard by another judge. He said that otherwise the nature of the preliminary point meant that some degree of pre-judgment may enter into my determination of the final matter because, as I shall reveal in a moment, the preliminary point involves disclosure of an agreement reached between the parties as to the applicant's compensation pursuant to s66 and s67.

3 When Mr McGrowdie put this to me, I respectfully disagreed with him. I said that if the matter were not dealt with by way of preliminary point, then inevitably the agreement would have to be disclosed and that, in these circumstances, because the respondent itself wanted to plead the agreement, it waived any privilege which might otherwise attach to it as part of the negotiations between the parties, which ought not otherwise be disclosed to a court on the basis that they were without prejudice or on some other basis.

4 I did not see that the applicant should lose the advantage of a prompt hearing of his claim by means of my giving it a part-heard date before myself following the determination of the preliminary point if I determined it in the applicant's favour. I took it from Mr McGrowdie's response to this that he understood that, if I dealt with the preliminary matter in the applicant's favour, I would not consider myself disqualified from hearing the main application. Mr McGrowdie made no application thereafter and indeed, to be fair, I do not think that there was any essential disagreement between him and myself as to the propriety of my hearing the main matter once I had discussed it with him in some detail.

5 Briefly, the preliminary point is that Mr Wunderlich signed a document entitled "Terms of Settlement" dated 26 October 1996 and agreed to receive, in respect of any rights he may have pursuant to ss66 and 67 in relation to the above injury, the sum of $13,891.50 for 15 per cent permanent loss of efficient use of the right leg below the knee and $6,951 compensation under s67 for pain and suffering.

6 Mr Wunderlich, the applicant, gave short evidence in relation to the circumstances in which this agreement was signed. He said that some days before he signed it, he received the agreement through the mail together with a letter and certain further documents. The agreement became Exhibit A in his case and the letter accompanying it became Exhibit 1 in the respondent's case.

7 To deal with the letter first, it is dated 17 October 1996, and after enclosing the Terms of Settlement and giving certain further instructions, the letter read materially "it is required under the Workers Compensation Act for you to consult independent legal advice before entering into this agreement". Mr Wunderlich gave evidence that he thought that the agreement was something that had been "worked out" between his solicitors and the Government Insurance Office, which had sent him the agreement for signature. He readily agreed in cross-examination that some six months before receiving the agreement he had consulted solicitors, being the solicitors presently on the record in these proceedings, and that they had sent him to a Dr W.G. Taylor, an orthopaedic surgeon in Macquarie Street, for the purpose of obtaining a report for these proceedings and that he had also been examined by a doctor for the Government Insurance Office in connection with these proceedings.

8 It therefore seems to me to be perfectly clear that the applicant had earlier received independent legal advice as to his rights under ss66 and 67 of the Act, and the contrary is not contended by his counsel, Mr Jurisich. However, after receiving the agreement the applicant said, and I accept, that he himself signed it and dated it with the date which it bears, namely 26 October 1996, and sent it back to the Government Insurance Office. It would appear that thereafter he was told by them, after he rang them a few days later and asked what was happening, that there were certain further documents which he had to sign before anything further could occur, and that he did so. No doubt, although I am not favoured with a copy of the further documents which the applicant signed, they were something to do with a request that the agreement be registered with the WorkCover Authority. Exhibit B in the applicant's case is a letter from the WorkCover Authority to the Government Insurance Office dated 20 February 1997 confirming that the agreement was registered, and under the heading "Agreement Details" it gives particulars of the agreement identical with the percentages and lump sums set out in the terms of settlement which were Exhibit A in the applicant's case.

9 The applicant gave evidence that he consulted his solicitors about six months after he received the agreement which, since he said that he signed the agreement and returned it to the Government Insurance Office about two days after he got it, would mean that he consulted his solicitors about the agreement about six months after he signed it and returned it to the Government Insurance Office.

10 The matter is covered by s66A of the Workers Compensation Act 1987 which provides a mechanism for such agreements. It reads:

(1) If:

(a) a worker agrees to receive an amount of compensation under section 66 or 67; and

(b) the agreement is registered by the Authority,

the worker is not entitled to receive any additional compensation for that loss under an award of the Compensation Court.

(2) However, the 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.

(3) Any party to an agreement may apply to the Authority for the registration of the agreement.

(4) The Authority may refuse to register an agreement if it considers that the agreement is inaccurate or that the agreed amount of compensation is inadequate.

(4A) 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. (Italics added.)

11 Subs(4A) was inserted in its present form by Act No. 89 of 1995, s3 and Sch1. That amending Act, the WorkCover Legislation Amendment Act 1995, commenced relevantly on 20 December 1995. It will be seen that the present agreement, being dated 26 October 1996, is therefore caught by subs(4A) quoted above.

12 Mr McGrowdie cross-examined the applicant capably and fully and established that Mr Wunderlich was a "businessman", which in some sense at least is true, because his counsel agreed that he was effectively the proprietor of the respondent company, the business of which was toolmaking. Mr McGrowdie also established that, as I have already said, the applicant had consulted his solicitors a considerable time before he received the agreement. Indeed it was on the basis of such consultation that the applicant said in the witness box that he thought that the agreement he had received in the post was something that had already been "worked out" between his solicitors and the Government Insurance Office, no doubt thinking that it was simply a formal requirement that he sign the document and return it to the Government Insurance Office.

13 Mr McGrowdie also established that the applicant could have simply picked up the phone and asked his solicitors whether or not this was so. However, the applicant never said that in fact this is what he had done, and his uncontradicted evidence is that he did not seek advice from his solicitors before signing the agreement. Mr McGrowdie also established in cross-examination that the applicant was perfectly aware when he signed the agreement that it was a final determination, on its face, at least of his rights to ss66 and 67 compensation under the Act and I am satisfied that this was so. However, that does not end the matters which I must determine pursuant to the quoted parts of s66A, in particular subs(4A).

14 Despite Mr McGrowdie's submission, I do not think that subs(4A) simply requires that an applicant worker understand the effect of an agreement under s66A before he executes it, nor that such applicant worker consult solicitors at some time before the agreement is submitted to him for signature so as to be advised about his rights generally under the Act. The words of subs(4A) require that the authority "must refuse to register an agreement" unless it is "satisfied that the worker received independent legal advice about the agreement" (italics added) before the worker entered into the agreement.

15 The words "independent legal advice about the agreement" unmistakably connote to my mind not advice in relation to rights existing under the Act generally or under ss66 and 67 in particular, but rather advice relating specifically to the content and effect of the agreement. The clear legislative intent is to ensure that people do not finally determine by a s66A agreement their rights under ss66 and 67, at least at a particular time (having regard to their right to return for additional compensation under the sections in the event of their condition deteriorating), without seeing a solicitor about it. The obvious purpose is not only that the final nature of the agreement be explained to them, but also that the figures of permanent loss certified to by their doctors as against those of the employer be explained to them, so that an informed decision can then be made whether the sums set out in the agreement should be accepted, or alternatively that the matter be submitted for determination by the Court in a contested hearing.

16 This purpose is hardly satisfied if an applicant goes to solicitors before the agreement is ever sent to him, and in fact some months before that, and receives general advice about his rights under the Act, and then signs an agreement without even having taken the opportunity to ask his solicitors what they think of it. No evidence is led by the respondent here that the WorkCover Authority satisfied itself that the worker had received independent legal advice in accordance with subs(4A) quoted above, and indeed the only evidence that is before me, which is to the effect that the worker returned the agreement to the Government Insurance Office before seeing his solicitors about it, would suggest that the Authority could not possibly have so satisfied itself, because the matter upon which it is required by the statute to satisfy itself had not occurred. That being so, because the words "must refuse" in subs(4A) are mandatory in my view, the purported registration of the agreement by the WorkCover Authority evidenced by Exhibit B is void. No authority was cited to me by either counsel on this question, and in the brief time available to me in a busy duty list I have not been able to find any, but that seems to me to be the inevitable consequence of failure to observe the mandatory requirements of subs(4A) on the part of the Authority. I have not heard from the Authority and it not fair to criticise it without its having a chance to explain its actions, and it is sufficient to observe I think that for whatever reason, it does not appear to have complied with its statutory duty under subs(4A) quoted above, but whether this occurred inadvertently or otherwise I do not know, and it does not much matter.

17 The result therefore is that the applicant is in my view free to pursue the present proceedings, which I note were commenced, according to the filing stamp at the top, on 29 April 1997, well after the present agreement was executed. I declare that the registration of the agreement constituted by the Terms of Settlement which are Exhibit A in this case is void, and does not bind the applicant in these proceedings.

18 I should observe that for the purposes of this application I have not had occasion to assess in any way the credit of the applicant, except in so far as I have determined that his evidence in relation to his not having received legal advice about the agreement before entering it was unchallenged. Such evidence not being glaringly improbable, and because I decided that I would not otherwise be misusing the advantage of first instance which I possess, I took the view that I should accept that evidence. It therefore follows that I may assess the applicant's credit in relation to the merits of the application he presently brings independently of any view I may have formed as to the acceptability of his evidence in relation to the very limited preliminary matter I have just determined, because, as I have said, the applicant's evidence was unchallenged.

19 The further hearing of the application is therefore stood over to a date to be arranged with my Associate today.

Orders accordingly

Solicitors for the applicant: PK Simpson & Co

Solicitors for the respondent: William K Chambers