Chopra v NSW Health Service - South Western Sydney Local Health District

What is a reasonable offer?

1. What are the requirements for a "reasonable offer"? As to form, the court may consider an offer reasonable even if it is requires putting two documents together (Franco v Workers Compensation Nominal Insurer (No 3) at [47]) and the requirement for the document to be put in writing is the main requirement. In practical terms, referral to mediation generally results in such offers being made, as the mediator must use best endeavours to bring the parties to agreement and issue a certificate certifying as to the final offers of settlement made by both parties.

What were the offers?

1. In the present case, the following offers are referred to: 1. The defendant made what was called a "final offer of settlement" of $125,000 clear of payments plus costs following a mediation on 7 April 2022. 2. The defendant made a further offer of $575,000 but this was inclusive of costs, although clear of payments. This offer was then amended on 16 February 2024 to become a further offer of $595,000 "incl/clear".
2. The plaintiff submits that the final offer made by the defendant was effectively an offer of $865,314.03 plus costs, as is set out in the affidavit of Mr Dous.
3. I note that the defendant handed up a schedule of damages conceding the sum of $1,650,273.90 on the final day of the hearing during submissions, which was almost twice its previous offers. I was not addressed on the basis of whether this would amount to an offer in writing of the kind referred to by Rothman J in Franco v Workers Compensation Nominal Insurer (No 3). If I had been, I may have taken the view that an offer made in closing addresses is too late to amount to an offer because the costs have already been incurred in their entirety.

Is there a gap of more than 20%?

1. There is clearly a very substantial gap between the amount that was awarded and the highest amount offered. The plaintiff submits that the gap is 59.4% higher, which is considerably greater than the 20% leeway allowed to a defendant in s 151M.
2. The defendant submits that the repayment of workers compensation that payments of $335,228 would result in a net claim of $1,795,234 in damages and that this figure should be the comparison point. The defendant refers to Abadee DCJ's acceptance of such an approach in Skinner v The State of New South Wales (No 3) [2021] NSWDC 115 where Abadee DCJ referred to the net sum "clear of workers compensation payments" at [8], [9], [12], [20] and [22]. This was not the subject of comment or challenge in the Court of Appeal, where the plaintiff unsuccessfully appealed the refusal of interest: State of New South Wales v Skinner [2022] NSWCA 9 at [132] - [154].
3. If that is the correct way to approach entitlement to interest, it is a very high barrier. Nevertheless, even with the deduction of this sum, there is still more than a 20% difference. Accordingly, the plaintiff has satisfied the first of the requirements in s 151M(4)(a)(iii).

The second limb of s 151M(4)(a)(iii)

1. Establishment of a more than 20% difference in amount is the first of two requirements. In order to demonstrate unreasonableness it must be shown that the highest of the offers was unreasonable having regard to the information available to the defendant when the offer was made. This requires examination of the facts while avoiding making a decision with the benefit of hindsight when the question is to be viewed prospectively, as was pointed out that both first instance and on appeal in State of New South Wales v Skinner. In other words, merely obtaining damages which are more than 20% is not enough, as the second limb of unreasonableness must be satisfied.
2. What are factors that may provide a guide on this issue? In State of New South Wales v Skinner at [144] the court set out certain factors, to which Mr Best has added some additional bases. These are: 1. The "procedural history of the claim" (State of New South Wales v Skinner at [133]). An example would be where the employer was one of a number of defendants and the plaintiff would only have been prepared to settle with all parties: Howarth v Rail Corporation New South Wales (No 2) [2013] NSWSC 236 (but cf Andrew Goodman v Impact Hire Australia Pty Limited & Anor [2009] NSWSC 941). No issue in relation to the procedural history of the claim is raised by the defendant in these proceedings. 2. Delay in bringing a claim (State of New South Wales v Skinner at [135]; the plaintiff required leave to commence the proceedings out of time). However, delays of this kind did not result in refusal of interest in Franco v Workers Compensation Nominal Insurer (No 3). No issue of delay is raised by the defendant in these proceedings. 3. Complexity of liability, quantum and/or causation (State of New South Wales v Skinner at [135]). No issue of complexity could be raised as to quantum or causation as the defendant did not tender any medical or other evidence on these issues. Any complexity of the liability issue arises only from factual proof of what occurred on the night in question, where some additional evidence about Mr Santos, the patient who attacked the plaintiff, was obtained under subpoena. Mr Best's submissions do not suggest any other area of difficulty. 4. Whether the plaintiff's offers were themselves reasonable (State of New South Wales v Skinner at [135]). This has not been put forward as a ground. I note, however, that the highest offer from the plaintiff was still well below the amount awarded. 5. Insufficient information about the plaintiff's costs (State of New South Wales v Skinner at [153]). This issue has not been raised by the defendant. 6. Whether the defendant did in fact have sufficient information to enable an offer to be made (State of New South Wales v Skinner at [132] - [153]). This is the principal basis upon which entitlement to interest is challenged.
3. This is not an exhaustive list, but a summary of the issues that have arisen in the context of applications for interest.
4. The principal basis upon which the entitlement to interest is challenged is that, due to the unavailability of Mr Santos's medical records, the defendant's legal advisers considered there was a strong case on liability and that their offers were made on the basis of that understanding.

Was there a "dearth of information" in relation to liability or quantum?

1. The first point to note is that when the defendant refers to a "dearth of information", this does not mean that the defendant does not know that it has liability and quantum issues. What the defendant means is that the plaintiff had not served the relevant material concerning the Santos documents on the defendant, or otherwise made it known before trial that it has found these weaknesses out (defendant's submissions, paragraph 12).
2. The plaintiff submits that on any reading of the material in this case, the defendant cannot point to any "dearth of information" in terms of the plaintiff's case as pleaded such as to enable a reasonable assessment of the plaintiff's full entitlement to all damages of any kind.
3. The plaintiff points to the very different factual situation in these proceedings as opposed to the issues raised in State of New South Wales v Skinner, in terms of certainty of issues and evidence: 1. The particulars of the plaintiff's claim never changed from the time of service of the particulars required under s 281 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the WIM Act"). The importance of adequate particulars (and medical evidence) is emphasized in Van Opstal v Australian Iron & Steel Pty Limited (No. 2) [2000] NSWSC 1125 at [6]. The plaintiff did not need to refer to the Santos documents in order to make these particulars out. The defendant called no evidence at trial to counter these particulars or the asserted new material in the Santos medical records. 2. Not only did the plaintiff's medical evidence remain the same throughout, but the defendant's case on quantum was so weak that, after the defendant's reports were re-served by the plaintiff, the defendant had no medical evidence of substance at all. The defendant's attack on the plaintiff's psychiatric condition (acknowledged by the defendant's medical evidence as well as by the plaintiff's treating and medico-legal reports) showing the photographs of the plaintiff from social media, smiling at social events to her in cross-examination and putting it to her that she was smiling and well-dressed and therefore exaggerating her condition. The defendant had been forewarned by the findings of the Court of Appeal in Chopra v State of NSW (South Western Sydney Local Health District) [2023] NSWCA 142 that the medical evidence was weak. 3. The plaintiff's liability evidence was never "complex", unlike the claim in State of New South Wales v Skinner (see [138] - [150]).
4. Although the plaintiff's claim as to liability was improved by the tender of hospital records concerning Mr Santos, her counsel submit that she already had a strong case on liability, regardless of whether or not the facts and matters set out in her expert report could be established.
5. The defendant draws my attention to my observations about the errors in the expert report. This expert report was already diminished in value by its factual errors, rather than the defendant had been prepared to disclose prior to these documents being obtained under subpoenae in this litigation. I infer, from Mr Best's submissions at paragraph 12, that the defendant already knew of these much worse factual circumstances, in that he submits that the plaintiff's failure to find these out before the subpoena was issued warrants the defendant to thereby avoid making an offer based on those particulars.
6. This submission is counterintuitively contrary to the purpose of s 151M, namely to encourage responsible compromise of claims. As it happens, the plaintiff's discovery, from post-prefiling material (namely the material provided under subpoena concerning Mr Santos) of the degree of chaos in the hospital only made a strong case stronger. The facts in this case always were that despite attempts by the plaintiff herself as well as the hospital system to obtain the necessary help to deal with a patient so dangerous he had already been allocated a special nurse, she was left on her own in circumstances where, when the patient attempted to kill her, the hospital's already inadequate system for dealing with this well-known problem failed entirely. But for the courageous intervention of a hospital visitor seeing another patient, the plaintiff's physical and psychiatric injuries could have been much worse.
7. Mr Santos's medical records did not change this. What they did do was to reveal post-assault information, namely that the nurse allocated to assist with Mr Santos had indeed been rostered somewhere else and was never returning, that the only way the short-staffed hospital could deal with Mr Santos after he attacked the plaintiff was to use restraints and tie him to his bed and that, to the dismay of one of the hospital psychiatrists, discharging him a few days later to the care of the wife he had tried to strangle some months earlier.
8. This assertedly "central" evidence had little relevance to the case as pleaded or particularised, beyond its embarrassment value. The defendant's submission that these documents were "central to the determination of the plaintiff's claim" (submissions, paragraph 42) is misconceived and the claim that I relied "heavily" (submissions, paragraph 45) on these documents, as opposed to the evidence of the plaintiff and the particulars she provided, is similarly wrong. While Mr Best points to my observations about the inadequacies of the expert report being a hindrance to both sides, that report would have been inadequate whether or not the Santos documents were available, because of the factual inaccuracies it contained.
9. This brings me to the second basis for claiming that there was a "dearth of information", in that the plaintiff is asserted to have failed to foreshadow her intention to use these documents. Mr Medak has deposed to not having this information and having gone on believing that his client had a strong case, and he has expressed surprise at learning only shortly before the hearing that the plaintiff was proposing to raise these issues at trial. However, the fact that evidence has been supplied "recently" is not necessarily a bar to interest: Howarth v Rail Corporation New South Wales (No 2) [2013] NSWSC 236 at [6]. Once this material was provided on subpoena (a subpoena issued by the defendant, it should be noted), the defendant may be taken to possess the information contained in it.
10. There is no obligation on a party, even in work injury proceedings where interest is claimed, to foreshadow its proposed tender of documents where those documents have been produced in answer to a subpoena, the more so if the subpoena in question has been issued by the opposing party. Nor does the bringing of an application under s 318 of the WIM Act (a common occurrence in work injury damages proceedings) entitle a party to claim new and surprising evidence has become available, especially when the documents in question are, in effect, their own.
11. Although I have responded to the defendant's submissions on the basis that Mr Best's reading of s151M(4)(a)(iii) as to the obligations on the plaintiff to make the relevant information available, I consider this is not what this provision says. The requirement is that the defendant's offer was unreasonable having regard to "the information available to the defendant" when the offer was made. The section does not require this information to have been provided by the plaintiff. It may arise from a variety of sources, including material obtained under subpoena and information from the defendant's inquiries or witness interviews. In this regard, it differs materially from ss 151M(4)(a)(i) and 151M(4)(a)(ii), which refer respectively to information "given to the defendant" and "further information given by the plaintiff" and thus clearly impose a burden on the plaintiff to provide such information. Instead, s151M(4)(a)(iii) imposes the quite considerable, but different, burden of bettering the offer by 20%. Consequently, in relation to s 151M(4)(a)(iii), the court not only may, but should, look at the information in the defendant's hands from its own documentation, and not merely material produced by the plaintiff.
12. The degree of obligation for the plaintiff to provide information to the defendant is not expressed in onerous terms. This much is evident from the description of the evidence provided to the defendant by the plaintiff in D R Johnston Group Pty Ltd v Starr and Smith [2001] NSWCA 121. The Court took into account that the defendant had its own evidence as well, stating at [103] - [105]: "[103] At the trial it was submitted on behalf of the respondents that all information was in the hands of the appellant which would enable it to make a proper assessment of the case. This was said by the appellant not to be the situation. However, it is clear from the material before the trial judge that the appellant had its own medical reports and copies of the reports of the medical practitioners who were called in the respondents' cases. None of the appellant's doctors were "called" to give oral evidence in the respondents' cases. However the report of Professor Boughton who was qualified for the appellant was tendered in the case of Mr Smith. The appellant was well aware of the claims made by the respondents and the medical basis for such claims. However, it determined not to make an offer of settlement. This was because it was intent on contesting liability and because the appellant hoped that the respondents would not reach the relevant threshold provided in the Act. [104] The trial judge concluded that by 1 June 1998 the appellant was aware of the extent of the disabilities claimed by the respondents and that they claimed those disabilities to be a consequence of Q fever which had been contracted in the course of their employment with the appellant. The appellant was also aware, and at the trial conceded, that the respondents had contracted their Q fever whilst in the employ of the appellant. Furthermore, disabilities of the kind claimed by each of the respondents were, on the material provided to and in the hands of the appellant, known to be of a kind that was a recognised consequence of Q fever, albeit not a universal consequence. [105] In exercising the discretion to award interest the trial judge made no error of law, indeed on the facts found by him such an award was appropriate."
13. This judgment does not specify which of the three subsections was the basis for the claim, but it is unlikely to be s 151M(4)(a)(iii) as there is no reference to a 20% difference. Similar observations were made in Nationwide News Pty Ltd v Naidu & Anor; ISS Security Pty Ltd v Naidu & Anor [2007] NSWCA 377 at [358] - [360], which also does not specify which of the three subsections the claim for interest was made.
14. What these decisions demonstrate is that the requirement for the plaintiff to give the relevant information to the defendant, even where it is specifically required, as for ss 151M(4)(a)(i) and 151M(4)(a)(ii), is not a counsel of perfection, but an obligation to provide sufficient information for an offer to be made. I repeat, however, that this requirement of the plaintiff actually giving the information to the defendant (as opposed to the defendant looking at the information available as a result of their own inquiries) should not apply to s 151M(4)(a)(iii), provided the plaintiff is also able to establish the necessary gap between the defendant's offer and the sum awarded and the plaintiff is entitled to interest under that provision.
15. If I am correct in my assessment of the Santos documents as making no significant difference to an already strong claim, the plaintiff would be entitled to interest pursuant to these other subsections as well. I am also satisfied that this was the case.

Concluding remarks

1. I am satisfied that the plaintiff has demonstrated that the defendant's offers were unreasonable having regard to the information available to the defendant when the offer was made. I propose to make orders for the award of the interest sum calculated by the plaintiff pursuant to each of the subsections of s 151M(4).
2. I have also made the agreed order as to costs.

Orders 1. Pursuant to ss 151M(4)(a)(i), 151M(4)(a)(ii) and 151M(4)(a)(iii) of the Workers Compensation Act 1987 (NSW), interest totalling $91,152.75 is added to the judgment sum, giving a total judgment sum of $2,221,614.72. 2. The defendant is to pay the plaintiff's costs pursuant to the operation of the Workers Compensation Regulations 2018 (NSW) and in accordance with its provisions.

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