Delay
23On the issue of delay in commencing the proceedings, I have detailed affidavit evidence of Ms Latta and her solicitor, Ms Kim Smith. Both of them also gave oral evidence and were cross-examined at some length. In addition, on this issue I received a report of 5 September 2013 of Ms Latta's treating psychiatrist, Dr Selwyn Smith, who also gave oral evidence. I have been assisted by comprehensive submissions, written and oral, by counsel on both sides, as well as a detailed chronology furnished by counsel for Ms Latta. It is sufficient to deal with the salient features of this material.
24It is common ground that Ms Latta was first aware that she suffered a psychological injury attributable to her work in April 2002, when she was told by Dr Smith that she had PTSD. In September of that year she sought legal assistance from the Police Association to claim lump sum compensation, and in the following month Walter Madden Jenkins, solicitors were engaged for that purpose. However, as noted above, the application was not made until May 2005. In the meantime Ms Latta had been receiving treatment, and was hopeful that she could return to work. Indeed, as also noted above, she did return to work, albeit largely on restricted duties and with periods of sick leave, until April 2007.
25In preparation for a lump sum application, Walter Madden Jenkins arranged for Ms Latta to be examined by Dr Peter Klug, psychiatrist. In a report of 22 February 2005 furnished to those solicitors, Dr Klug expressed the view that she "should no longer be serving as a police officer because of the risk this represents to her health." He assessed her WPI at 19%. Earlier, on 30 April 2003, Dr Leonard Lee reported that she appeared unable to resume normal pre-injury duties, and expressed a doubt if she should ever return to them. He recommended that she be "re-deployed in another area such as Police Citizens Youth Club." He described her prognosis as "guardedly optimistic."
26By that time Ms Latta was in the process of changing solicitors, engaging the services of Ms Smith. In a letter to the Police Association of 31 January 2005 she asked to be represented by Ms Smith for "a possible Common Law claim against the New South Wales Police." She referred in the letter to a history of traumatic experiences in the course of her work, with particular focus on the Watsons Bay incident of 10 April 2002, her breakdown two days thereafter and her diagnosis of PTSD. It is clear from the terms of the letter that she was aware of the three year limitation period.
27She had an initial conference with Ms Smith in March 2005, and it is apparent that from that early stage the possibility of proceedings for damages was raised, both she and Ms Smith being conscious of the limitation period. Indeed it is no part of Ms Latta's case that she was ignorant of it. The primary focus of the application is upon when it was that those proceedings were seen to be feasible.
28On 13 May 2005, Ms Smith wrote to Ms Latta concerning a potential common law claim, advising her of the benefits and pitfalls of such a claim, including the loss of workers compensation benefits following an award of damages and the risk of a substantial costs order against her if the claim were unsuccessful. She emphasised the three year limitation period, but expressed concern that proceedings for damages may not adequately compensate her unless it could be shown that she could not remain in the police force. She advised Ms Latta that if she did not remain with the police because of her injury, it would be worthwhile obtaining a barrister's opinion about commencing proceedings.
29A file note made by Ms Smith on 25 May 2005 records that Ms Latta told her that she did not wish to start common law proceedings because she did not know whether or not she would be medically discharged from the police force. At that stage, notwithstanding the unfavourable prognosis of Dr Klug, she did not believe that her police career was over. On 10 May 2005, during one of her periods of sick leave, she sent an email to PCYC Commander David Shorrocks in which she wrote of "looking at what restrictions need to be in place for my return to work", thanked him for his support, and wrote, "I really do want to return to work and get the past behind me."
30This is not to deny that she was conscious of the difficulties in doing so. On 19 September 2005, Ms Smith wrote to Dr Smith seeking a report for the purpose of the lump sum claim but also for investigating a common law claim. In that letter she set out a history from Ms Latta which included her assertions that she could not perform at the level she previously had, and that she could not undertake general duties and "certainly could not do rescue again." Dr Smith supplied a report on 27 September 2005, in which he expressed the opinion that her prognosis was "relatively good provided she not be re-exposed to further significant traumatic events in the course of her duties as a police officer." He assessed her WPI at 15% for the purpose of the lump sum claim and, in a brief supplementary report of the same date, said that "in the light of her significant psychiatric symptomatologies she would not be able to engage in operational police duties", noting that she had only been able to engage in restricted duties.
31Nevertheless, as I have said, she continued to work on restricted duties, albeit with a period of sick leave between October 2005 and August 2006, until April 2007. In May of that year she embarked with her partner and child on a 3 months overseas trip. Her evidence was that it was during that trip that she decided that she had no prospect of returning to work as a police officer. So much is apparent from an email exchange in June 2007, while they were away, between her and another member of Ms Smith's firm.
32In a letter of 26 June 2007, Ms Smith informed Ms Latta that a medico-legal report for the purpose of common law proceedings was required and expressed the view that she should be medically discharged before such proceedings were commenced. Ms Smith also asked her to provide "a list of the tragic and/or violent and/or confronting incidents" which she had attended during her police service, suggesting that she do this upon her return from her trip, perhaps with the assistance of Dr Smith.
33Ms Latta returned from her trip on 11 August 2007. On 27 September, Ms Smith wrote to her to inform her again of the advantages and pitfalls of common law proceedings, and to remind her that she had not yet provided the list of traumatic incidents. Ms Latta did not provide that list until 26 November 2007. Early in the following month she contacted Ms Smith to tell her that she was on the list for medical discharge. Ms Smith said that she would not "qualify a doctor" until there was certainty about that matter. Also in early December, Mr Naylor was briefed to advise on the matter and to settle a letter seeking a medico-legal report.
34On 14 May 2008, a consultant psychiatrist, Dr M Roberts, reported to the New South Wales Police Force that Ms Latta was unlikely ever to be able to return to work as a police officer and met the definition of "Total and Permanent Disablement" because of post-traumatic stress disorder. She was medically discharged on 27 November 2008.
35Mr Naylor had a conference with Ms Latta and Ms Smith on 3 July 2008. On 7 July Mr Naylor furnished a comprehensive advice, together with draft letters to Dr Smith and Dr Klug for medico-legal reports and a draft statement of claim. However, he advised that it would be premature to file that statement of claim as there were certain matters for which further evidence was required. On the other hand, he advised that a claim for work injury damages should be made without further delay.
36As I have said, that claim was served on 6 November 2008. Ms Smith's evidence was that in the interim the reports of Dr Smith and Dr Klug recommended by Mr Naylor were obtained, together with documents provided by Ms Latta concerning economic loss. There then ensued the procedural steps which I have summarised at [14]-[15] above. The explanation proffered for the delay between service of the claim for work injury damages and of the pre-filing statement of 23 December 2010, including the withdrawal of the pre-filing statement of 12 March 2010, was the need to obtain revised medico-legal reports necessary to meet the requirements of a pre-filing statement in the WIM Act, particularly s 318(1)(d) (to which reference will be made later). In the intervening period two important decisions relevant to the issue of damages in the case were handed down: State of New South Wales v Burton [2008] NSWCA 319 and Tabet v Gett [2010] HCA 12, 240 CLR 537. In evidence is extensive correspondence between Mr Naylor and Ms Smith about further reports, and between Ms Smith and Dr Smith and Dr Klug in pursuit of them, together with reports received in response to those requests.
37It is necessary to have regard to Ms Latta's personal situation throughout the course of these developments. She separated from her husband in December 2003, and has lived with her present partner since January 2005. They have 3 children: Kai, born on 17 March 2006, Camryn, born on 12 March 2008, and Brad, born on 15 July 2011.
38Thus, for her the period from mid-2005 until November 2011, when the statement of claim was filed, was to a significant extent one of pregnancy, birth and the care of very young children. In an affidavit of 21 February 2013, she deposed to debilitating back pain during her pregnancy with Kai, and a painful hip condition during her pregnancy with Camryn. She went off her medication while she was breastfeeding Kai and she found that "the demands being placed on me being a mother totally pre-occupied me ... ." The period after the birth of Camryn she also found demanding and, again, she did not take her medication while she breastfed the child. Her pregnancy with Brad was normal, but she found it difficult to manage her "psychological well-being" with the demands of the other children and continuing fatigue.
39It is also appropriate to have regard to the effect of Ms Latta's psychiatric condition upon her capacity to deal with the litigation. As to this, Mr Graham sought to draw an analogy with the notion of disability in s 52 of the Limitation Act 1969. That section provides for the suspension of the running of the limitation period while a person who has a cause of action is under a disability, that term being defined in s 11(3) of that Act. Mr Graham referred to authority on that provision, including State of New South Wales v Harlum [2007] NSWCA 120. However, as argument developed in the light of evidence on this topic, it was not sought to address this issue by the application of the regime in the Limitation Act. Rather, the question is simply whether Ms Latta's condition impeded her capacity to take necessary steps in the progress of her case in a timely fashion.
40For this purpose a report of Dr Smith of 5 September 2013 was received over objection. The primary basis of the objection was based upon the following provisions in s 318 of the WIM Act:
"(1) For the purposes of court proceedings on a claim for work injury damages:
...
(d) a party to the proceedings is not entitled to have any report or other evidence admitted in the proceedings on the party's behalf if the report or other evidence was not disclosed by the party in a pre-filing statement or defence served under this Division, except with leave of the court.
(2) The court is not to grant leave under this section unless satisfied that:
(a) the material concerned was not reasonably available to the party when the pre-filing statement or defence was served, and
(b) the failure to grant leave would substantially prejudice the party's case."
41Mr Stanton submitted that the word "proceedings" in those provisions embrace the present application. He referred to the judgment of Campbell JA, with whom Spigelman CJ and Allsop P agreed, in Oates v Consolidated Capital Services Ltd [2009] NSWCA 183, in which the issue of the ambit of the word "proceedings" in certain provisions of the Corporations Act 2001 (Cth) arose. Campbell JA said at [116]:
"... there is no definition of 'proceedings' in the legislation. The word 'proceedings' is capable of covering the whole variety of forensic exercises which may occur in a court: Proust v Blake (1989) 17 NSWLR 267 at 270 per Samuels JA (with whom Mathews J agreed); Re Doran Constructions Pty Ltd (in liq) [2002] NSWSC 215; (2002) 194 ALR 101; 168 FLR 116 at [100]-[102] and cases there cited. There is nothing about the word 'proceedings' in itself that could make it inapplicable to an application for leave to be given to Mr Oates to bring proceedings asserting CCL Australia's right to bring a derivative action that enforces the rights of CCL UK. The question though, is whether a meaning of 'proceedings' that extends so far is the intended one in the context of section 236."
42Mr Stanton also cited a passage from the judgment of Hoeben JA (as he then was) in Wilkinson v Perisher Blue Pty Ltd [2012] NSWCA 250. That case was concerned with a different provision in s 318. However, speaking of the Part of the WIM Act in which s 318 is to be found, his Honour said at [11]:
"The general scheme of Part 6 of Chapter 7 of the WIM Act is for the Commission to control various preparatory steps before proceedings are commenced in a court. That is why proposed pleadings, with their supporting documents, are referred to as 'pre-filing statements' and 'pre-filing defences'. It is only when all of the steps have been satisfactorily completed and a mediation has taken place pursuant to s 318A, that a Statement of Claim can actually be filed in a court. The purpose of Part 6 is to ensure full disclosure of the position of the parties so that by mediation and otherwise the prospects of settlement can be fully explored."
43I allowed the evidence because I took the view that, understood in its context within the statutory scheme, "proceedings" in the relevant provisions of s 318 refers to the principal proceedings for damages. While acknowledging the pivotal nature of an application such as the present, I do not consider that those provisions apply to it. Moreover, the report that Dr Smith relied upon does not ventilate any new material. Rather, it is based upon his clinical observations over the years of his treatment of Ms Latta, which are to be found in earlier reports in evidence. Dr Smith gave oral evidence on the issue, and his views were able to be, and were, tested in cross-examination.
44In the 2013 report Dr Smith noted Ms Latta's history of "avoidance behaviour", consistent with her ongoing PTSD and depressive disorder. He expressed the opinion that she "remains significantly psychiatrically disabled in the sense that she continues to display marked incapability of the management of her affairs in relation to her claim against the NSW Police Force." He referred to her "prevarication" and observed that she "neglects her legal interests." In oral evidence, Dr Smith said that she has "clear and convincing indelible imprints of many of the traumatic events that she had been exposed to during her career ... ." Those events, he said, resulted in "frequent dissociative flashbacks which caused her considerable emotional distress, heightened levels of anxiety and difficulties in focusing and concentrating." She would often display marked confusion and distractibility, and had difficulties in "resolving issues relevant to her ongoing litigation." He added that she "was markedly avoidant in many ways of getting closure of many of the important aspects of her claim, because she would have to deal with revisiting many traumatic memories."
45Dr Smith said that Ms Latta has a good intellect, and understands and is aware of the issues at hand. However, he expressed the view that her disorders "significantly handicapped her in proceeding to act appropriately." He observed her condition to be worsening "as this hearing has come to the fore ..." He did not maintain that she faced these impediments continually, saying that "there are times when in fact she's functioned relatively well, particularly when she's distanced herself to a degree from pressing matters of litigation."
46An example of the effect of Ms Latta's condition was said to be the length of time, some three months, it took her to complete the list of traumatic incidents which Ms Smith had requested in June 2007. Ms Latta said in evidence that she found that process itself very traumatic. However, the list is a very lengthy document, and in cross-examination Dr Smith agreed that the delay in producing it was not "extraordinary" and that it did not demonstrate that she was "substantially impeded" in providing those detailed instructions. Dr Smith took a similar view of a four page document of 24 March 2005 prepared by Ms Latta, setting out the psychological effects of her police experience, in response to a request by Ms Smith earlier that month.
47In her 2013 affidavit Ms Latta deposed that whenever she contacted Ms Smith about her case she would be "reminded of either events that I attended during my service, of what I had lost or how I had felt." She said that it took a lot out of her just to call Ms Smith. However, she added that she "did make the calls and when my solicitor asked for documents or instructions I provided them to her."
48Ms Smith gave evidence that until 2007 Ms Latta was giving her "very mixed messages" about whether she was staying with the police or leaving, and that she didn't appear to know whether she could stay. Mr Graham cited this as an example of the prevarication to which Dr Smith referred in his report.
49Mr Graham referred, by way of analogy, to the decision of Hoeben CJ at CL in Merton v Manildra Engergy Australia Pty Ltd [2013] NSWSC 1482. That was an application for leave to proceed out of time under s 151D, in which his Honour granted the application primarily in the light of the extent to which delay had been occasioned by the plaintiff's psychological condition: at [30]-[34]. In the present case, I have no doubt that Ms Latta has struggled to meet the demands of her litigation because of her psychiatric condition and her maternal commitments. It is appropriate that these matters be taken into account, but not a great deal of weight can be given to them. On the whole of the evidence, she appears to have managed reasonably well to provide information and instructions when required, and it cannot be said that these factors have made a marked contribution to delay in the progress of the matter.
50It is not in question that a decision was made not to commence proceedings until it was clear that Ms Latta would be medically discharged. That necessarily involved an equally conscious decision to allow the limitation period to expire in the meantime. That is a significant factor bearing upon the exercise of my discretion in this matter, and in Itek Graphix v Elliot (supra) it was decisive. It is necessary, then, to consider why that approach was adopted.
51As I have said, initially Ms Latta hoped that she would recover and wanted to return to work. She did indeed continue to work, for a couple of days a week at least, until 2007. Ms Smith gave evidence of her view that common law proceedings should not be commenced unless they were financially viable. Her evidence was that, given that modified damages in common law proceedings were for economic loss only, and given that an award of damages would deprive Ms Latta of her workers compensation entitlements, any such award would have to be substantial. Accordingly, it was her judgment that proceedings would be viable only if it was clear that Ms Latta's police career was over. Hence her advice to Ms Latta that they should not be commenced until it was known that she would be medically discharged.
52For the State, Mr Stanton noted that the three year limitation period from the last traumatic event experienced by Ms Latta expired in April 2005. He submitted that by the end of January 2005, before the expiry of that period, Ms Latta was aware that the circumstances of her injury might give rise to a claim for modified common law damages, that her injury was causing her continuing economic loss, that Dr Klug was of the view that she should no longer be serving as a police officer and that he had assessed her WPI at 19%.
53As to economic loss, Mr Stanton noted evidence that, upon returning to work, Ms Latta's weekly payments were topped up to her base salary. However, she lost overtime and certain allowances of the value of about $200 per week. In addition, he noted the medical reports to which I have referred to earlier conveying that she would be unlikely to be able to return to her pre-injury duties. Accordingly, he argued, there was evidence of significant loss of earning capacity even while she remained in the police force. In those circumstances, he argued, there was no reason to delay embarking upon the process of pursuing a common law claim. He also noted that Dr Smith's report of 27 September 2005, referred to at [28] above, addressed the issue of negligence.
54Mr Stanton noted that an application for lump sum compensation had been made in May 2005 but not resolved until it was settled in September 2006. He pointed out that, nevertheless, it was not necessary to await the resolution of that application before serving a claim for work injury damages. By s 280A of the WIM Act, the application for lump sum compensation and the claim for work injury damages could have been made at the same time. He also noted that the claim for work injury damages was not served until November 2008 and that, after negotiation, the insurer accepted a 15% WPI in March the following year. That acceptance, he argued, could have been sought much earlier.
55Following her medical discharge, Ms Latta received payments under a death and disability scheme totalling approximately $600,000. She agreed in cross-examination that to receive those payments it was necessary to have been medically retired. Mr Stanton submitted that this was the true reason for her delaying the commencement of proceedings for damages. She wished to secure this "golden handshake", as he put it, before considering the option of those proceedings. In this respect, Mr Stanton argued, the present case is similar to Itek Graphix v Elliot.
56Ms Latta denied this when it was put to her in cross-examination. Pressed as to why she waited until she was medically discharged to start proceedings, she said that she remembered that she had to be discharged before they could be commenced. She did not recall why that was, but added that it had made sense when it was explained to her at the time. On this matter, as on a number of others, Ms Latta said in evidence that her memory was poor. It is for this reason that I have relied primarily upon contemporaneous documents to recount the history of the matter. Mr Stanton challenged her credibility, questioning the genuineness of her claimed lack of memory. However, Ms Latta impressed me favourably as a witness. She appeared to be frank, and I accept that her memory of these developments over such a long period of time was not always reliable. From the evidence of Dr Smith it appears that the problem is also consistent with her PTSD, as is the difficulty she sometimes displayed in focusing upon Mr Stanton's questions and responding to them, a feeling she described as "scattered".
57I am satisfied that the decision to await medical discharge before embarking on common law proceedings was made on the basis explained by Ms Smith. Whether that was the best approach to the matter is not to the point. In the circumstances of the case, it was not irresponsible: cf Ditchburn v Seltsam Ltd (1989) 17 NSWLR 697, per Kirby P at 704. Most importantly, it was an approach Ms Latta adopted on the advice of her solicitor (whom I also found to be a frank and responsible witness).
58True it is that the progress of the procedural steps leading to the commencement of the proceedings was slow, but I accept the explanation of that progress as reasonable. After careful consideration of the evidence, I am satisfied that a reasonable explanation has been proffered for the whole of the delay in this matter.