(2018) 133 ACSR 516
Hall v Nominal Defendant (1966) 117 CLR 423
[1966] HCA 36
James Point Pty Ltd v Minister for Transport (No 3) [2018] WASC 277
Murgolo v AAI Ltd t/as AAMI (2019) 101 NSWLR 376
[2019] NSWCA 295
R v Birks (1990) 19 NSWLR 677
Sophron v Nominal Defendant (1957) 96 CLR 469
[1957] HCA 27
The Owners Strata Plan No 57164 v Yau (2017) 96 NSWLR 587
Source
Original judgment source is linked above.
Catchwords
(2018) 133 ACSR 516
Hall v Nominal Defendant (1966) 117 CLR 423[1966] HCA 36
James Point Pty Ltd v Minister for Transport (No 3) [2018] WASC 277
Murgolo v AAI Ltd t/as AAMI (2019) 101 NSWLR 376[2019] NSWCA 295
R v Birks (1990) 19 NSWLR 677
Sophron v Nominal Defendant (1957) 96 CLR 469[1957] HCA 27
The Owners Strata Plan No 57164 v Yau (2017) 96 NSWLR 587[2017] NSWCA 341
Transport Secretary v Australian Rail Tram and Bus Industry Union [2017] NSWSC 696
UBS AG v Tyne (2018) 265 CLR 77
Judgment (19 paragraphs)
[1]
Solicitors:
Stacks Goudkamp (Plaintiff)
Gillis Delaney Lawyers (First Defendant)
YPOL Lawyers (Second and Third Defendants)
Norton Rose Fulbright Australia (First Cross Defendant)
DLA Piper Australia (Second Cross Defendant)
File Number(s): 2019/181140
[2]
Introduction
By notice of motion filed on 10 June 2021, Stephen Collison (the plaintiff) seeks leave to file a second further amended statement of claim. This application is supported by the first defendant (Paxus Australia Pty Ltd (Paxus)), the second defendant (Malvina Park Pty Limited trading as Firths Superannuation Lawyers (Firths)), and the third defendant (Harmers Workplace Lawyers (Harmers) (collectively, the defendants)), and opposed by the first cross-defendant, Transport for NSW (Transport), and the second cross-defendant, Career Corporation Pty Ltd (Career) (collectively, the respondents). Presently, the respondents are cross-defendants to a cross-claim brought against them by Paxus. The plaintiff seeks, by the amended pleading, to join them as defendants.
In order to address the application it is necessary to set out the factual background to the dispute as well as the relevant procedural history. The summary set out below does not reflect any findings of contested fact and is intended to be used as background to the application. The factual matters are largely drawn from the pleadings or from incontrovertible evidence in the form of contemporaneous documents, including communications between the parties.
[3]
The work injury
At the relevant time, the plaintiff worked as a network architect who designed IT networks and systems. He was recruited by Paxus in 2014. On 5 January 2015, Paxus contracted with Transport for the provision of the plaintiff's services. The plaintiff worked at premises controlled by Transport. While he was working there, he interacted with persons who were employed by Career. The plaintiff alleges that, in the period from 5 January 2015 to 8 August 2015 he was bullied and harassed. He retained, Firths, a law firm, to advise him about his rights against Paxus, Transport and Career.
[4]
The proceedings in the Fair Work Commission
On 15 July 2015, the plaintiff commenced a stop-bullying application, AB2015/424, in the Fair Work Commission (FWC) against Transport, Paxus and Career. Andrew Gay, of Capeseal Limited, acted on behalf of the plaintiff in the matter. Norton Rose Fulbright (Norton Rose) acted on behalf of Transport.
In late 2015, the plaintiff commenced a general protections application, C2015/7511, in the FWC against Transport, Paxus and Career. The FWC decided to deal with both applications together (the FWC proceedings). On 9 December 2015, the FWC conducted a conciliation of the FWC proceedings, which continued on 18 and 21 December 2015. Ultimately, on 21 December 2015, Mr Gay communicated to the other parties that the plaintiff accepted their offer, which was subject to a deed of release being entered into.
In early 2016, the plaintiff made a further general protections application, C2016/2393, in the FWC. On 1 February 2016, Mr Gay informed Norton Rose that the plaintiff had retained Harmers, a law firm, to act on his behalf in the FWC proceedings. Harmers, who were considered to have particular expertise in industrial matters, allocated the plaintiff's claims to Paul Lorraine, a solicitor at the firm.
On 3 February 2016, Mr Lorraine wrote to Norton Rose, in part as follows:
"Our instructions are that in relation to AB2015/424 and C2015/7511, there were three Conferences before Deputy President Sams, an agreement was reached, and we have a copy of the draft Deed of Release that you provided in early January.
Our instructions are to finalise the terms of settlement.
We understand that the agreement includes the following:
1 an appropriate release, to be agreed by Mr Collinson;
2 the Respondent/s to provide letters of acknowledgement to Mr Collinson;
3 payment of $50,339.52 to Mr Collinson (we are instructed that although there was some miscalculation in the Respondents' favour, in good faith Mr Collinson agrees to this figure, in the interests of resolving the matter);
4 the payment to be given the most effective tax treatment;
5 reimbursement of Mr Collinson's medical expenses to $8,000, on production of receipts;
6 payment of Mr Collinson's legal costs to $7,000, plus an amount for the costs of advice about the Deed; and
7 workers compensation claims to be excluded from the release.
There are a number of issues with your proposed Deed that need to be addressed before it can be executed by our client, and other matters we need to discuss. Although we are still in the process of taking instructions, these issues should all be non-controversial, and we suggest they can be resolved without further delay. We will contact you shortly to discuss the matter.
To discuss the matter, please call Paul Lorraine on [XX].
In our opinion, this agreement represents a significant compromise to what Mr Collinson might have otherwise claimed, therefore he must, regrettably, continue to reserve all his rights until the Deed is executed."
[5]
The proceedings in the Workers Compensation Commission
In August 2015, Firths filed a claim on behalf of the plaintiff in the Workers Compensation Commission (the WCC) against Paxus, seeking compensation for psychological harm (the WCC proceedings).
[6]
The Deed
In early May 2016, the FWC proceedings were resolved and a deed was executed by the plaintiff, Transport, Paxus and Career (the Deed). The Deed provided that, in return for payment to the plaintiff of $50,339.52, the plaintiff would release all parties from all claims in relation to the bullying, except for a work injury damages claim under workers compensation legislation and any claim for statutory workers compensation or statutory superannuation contributions. The release, in clause 4.2, provided:
"[The plaintiff] must not at any time bring, institute, support or continue proceedings in any jurisdiction, commission, court or tribunal, in relation to any Claim, whether at common law, in equity or under statute."
The term, "Claim", was defined in clause 1.1(3) of the Deed as follows:
"Claim means any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have, in connection with or arising in any way from:
(a) the Complaints;
(b) the Investigation;
(c) the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings;
(d) [the plaintiff's] employment with Paxus;
(e) [the plaintiff's] engagement to perform the Services for [Transport] under the Contract;
(f) any Entitlements arising out of [the plaintiff's] employment with Paxus or the Contract; or
(g) the expiry of the Contract;
whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed. A Claim does not include:
(h) any claim [the plaintiff] may have for Work Injury Damages under the workers compensation legislation; and
(i) any claim for, or right to seek, statutory workers' compensation or statutory superannuation contributions."
In accordance with the Deed, full payment was made to the plaintiff who accepted the sum and instructed his solicitors to file a notice of discontinuance in respect of the FWC proceedings.
On 3 May 2016, the same date the Deed was executed, Paxus, Transport and Career entered into a Settlement Agreement in which they made provision for their respective contributions to the amount to be paid to the plaintiff under the Deed purported to release each other from claims (which is the subject of the separate question referred to below) (the Settlement Agreement).
[7]
The plaintiff's retainer of Stacks to advise on further actions
[8]
The action against Paxus in the WCC
On about 23 May 2017, the plaintiff retained Stacks to advise him on any available actions. By letter dated 20 July 2017, the plaintiff wrote to Harmers as follows:
"I have been advised that the [Deed] prevents a civil liabilities case against [Transport].
I have also been informed the negligence case against [Transport] is significant, perhaps the strongest case.
I would very much appreciate if you could explain what steps you took to ensure I was provided the correct professional advice in entering in the [Deed], regarding a potential civil liabilities claim."
On 20 September 2017, Stacks commenced proceedings in the WCC on behalf of the plaintiff against Paxus for weekly benefits, lump sum compensation and medical expenses. The plaintiff was assessed as having a whole person impairment greater than 15%. As a consequence, he was entitled to bring a work damages claim against Paxus. It was common ground that this fell within the exclusion from the release in the Deed.
[9]
The request for advice on the effect of the Deed
On 4 April 2018, Stacks briefed Richard Di Michiel of counsel to advise whether the Deed prevented the plaintiff from pursuing a damages claim against Transport. On 9 May 2018, Mr Di Michiel advised him that such a claim would arguably be barred by the Deed. Mr Di Michiel also said:
"Before needing to enter into the legality of the subject deed, it needs to be identified whether in fact [Transport] seek to rely upon it. It will not be until a Defence is filed by [Transport] that their position will be clear and what steps the plaintiff will need to take to progress his claim. In the event that [Transport] did not rely upon the deed as a bar to proceedings, I'm of the view that the proposed claim against them has prospects of success."
[10]
The commencement of the 2018 proceedings against Transport and Career
Mr Di Michiel drafted a statement of claim which Stacks provided to the plaintiff on 6 June 2018. On 12 June 2018, Stacks provided the plaintiff with a draft statement of particulars.
On 22 June 2018, Stacks filed a statement of claim on behalf of the plaintiff commencing proceedings 2018/193375 against the respondents (the 2018 proceedings). Transport was named as the first defendant and Career was named as the second defendant.
[11]
The foreshadowed strike-out application by Transport and Career
On 8 August 2018, Norton Rose, which was again instructed on behalf of Transport, wrote to Stacks and demanded that the claim against Transport be discontinued. Norton Rose foreshadowed a strike-out application on the basis of the Deed if this did not occur.
On 10 August 2018, Mr Di Michiel gave oral advice to Stacks, the substance of which was recorded in a file note which said:
"[Mr Di Michiel] explained that we have taken the right steps so far and that this course of action must happen because we need to show that we have pursued this avenue before taking other avenues such as suing other entities."
By letter dated 22 August 2018, DLA Piper, Career's solicitors, wrote to Stacks and referred to the letter from Transport dated 8 August 2018, the substance of which they adopted. They, too, foreshadowed a strike-out application on the basis of the Deed if the 2018 proceedings were not discontinued.
On 23 August 2018, Stacks responded to DLA Piper, informing them that they wished to investigate the prospect of the plaintiff suing his former solicitors. They proposed that, at the next directions hearing on 31 August 2018, the matter be stood over by consent for four weeks.
On 29 August 2018, Stacks briefed David Campbell SC to advise whether the Deed prevented the plaintiff from suing Transport and Career. In written advice provided on 4 September 2018, Mr Campbell advised that his "preliminary view" was that the effect of the Deed was that both Transport and Career had been "released from any liability to pay damages in an action at common law."
Mr Campbell further advised that the plaintiff should agree to discontinue the proceedings against Transport and Career, and instead sue Paxus for work injury damages and each of Firths and Harmers for damages for professional negligence. The plaintiff was provided with this advice under cover of letter from Stacks dated 10 September 2018. In that letter, Mr Ktenas noted that Mr Campbell had mentioned other decisions which were "almost identical" to the plaintiff's case.
[12]
The Calderbank offer
By email sent at 10.32am on Tuesday 11 September 2018, Alexandra Shields, a solicitor at Norton Rose, served a Calderbank offer on the plaintiff on behalf of the respondents (Transport and Career) offering to settle the 2018 proceedings on condition that the plaintiff discontinued the proceedings immediately and all parties would bear their own costs of the proceedings. The offer was expressed to remain open for acceptance until 9am on Friday, 14 September 2018.
On 12 September 2018, Stacks wrote to Firths, foreshadowing a potential professional negligence action by the plaintiff against them for alleged negligence in failing to advise the plaintiff competently about the effects of the Deed before it was executed. A letter in similar terms was sent to Harmers on 14 September 2018.
At 6.59am on 14 September 2018, Mr Ktenas sent an email to Mr Di Michiel which said:
"The question is that if Firths are correct and we sue Harmers can we still discontinue Supreme Court action [?] We need senior counsel to look at this."
In an email to the plaintiff sent at 8.23am on 14 September 2018 (35 minutes before the Calderbank offer was due to expire), Mr Ktenas said:
"I have sent this to Mr di Michael [sic] and he sent it to Mr Campbell SC. Counsel have conferred.
Both counsel have advised that we should accept the Calderbank offer from Norton Rose and conclude the Supreme Court proceedings.
We will them [sic, then] bring fresh proceedings against Firths and or Harmers for professional negligence, in which case the Court will work out who is negligent and the damages you will obtain … will be what you would have been awarded by the Court if Firhs [sic, Firths] and Harmers did not make a mistake …
In order for this to be done the court will in the new case, look at the actions of both Paxus and [Career]. We will need to file the case for Work Injury damages so as to mitigate the loss. The Court in the new case against Firths and/or Harmers, will need to value that claim before they work out your damages.
Please confirm you agree with this advice by email and/or call me …"
[13]
The acceptance of the Calderbank offer and the plaintiff's undertakings
At 8.37am and 8.50am on 14 September 2018, Mr Ktenas sent two identical emails to Norton Rose, accepting the Calderbank offer, in the following terms:
"We refer to your Calderbank Offer dated 11 September 2018 and the above proceedings.
We are instructed to accept your offer on the terms outlined in the abovementioned letter, namely:
1. The Plaintiff discontinues these proceedings immediately;
2. The First and Second Defendants each forgo any claim either of them may have in relation to their various reserved positions on the costs of these proceedings to date; and
3. All parties bear their own costs in respect of these proceedings to date.
Accordingly, we advise that we will be filing a Notice of Discontinuance shortly."
The evidence did not reveal whether the sending of two identical emails to Norton Rose was an error by Mr Ktenas in that he intended to send emails to each of Transport and Career to accept the Calderbank offer. At all events, the Calderbank offer from Career was not accepted by the plaintiff prior to 9am on 14 September 2018, unless Norton Rose was regarded as having authority to accept the offer not only on behalf of its client, Transport, but also on behalf of Career, for which DLA Piper acted.
At 8.40am on 14 September 2018, Mr Ktenas sent an email to Mr Di Michiel of counsel and other staff at Stacks informing them that the plaintiff had given oral instructions in accordance with his advice.
At 9.05am on 14 September 2018, Mr Ktenas sent an email to Norton Rose as follows:
"I refer to my email and to our discussion a moment ago.
I confirm that my client will never institute further or any proceedings against any and/all of the parties in the Supreme Court action, which I will discontinue shortly.
Thank you for you[r] professional attitude in assisting me to resolve the action.
It is much appreciated."
At 9.08am on 14 September 2018, Norton Rose forwarded Mr Ktenas' email of 9.05am to DLA Piper.
On Monday 17 September 2018, at 9.48am, DLA Piper sent an email to Mr Ktenas as follows:
"We refer to the above matter and attached letter, which was provided to us by the First Defendant's solicitors.
For an abundance of caution we would be grateful if you would confirm your service of the attached letter on our client.
We have also been informed by the solicitors for the First Defendant you have confirmed your client will never institute any proceedings against any or all of the parties in the current Supreme Court action (which will be discontinued shortly). We would be grateful if you would provide a similar undertaking to our client.
Thanks Con, I look forward to hearing from you."
[14]
The commencement of the present proceedings in 2019
On 11 June 2019, the plaintiff, for whom Stacks continued to act, commenced the present proceedings by filing a statement of claim in this Court against Paxus, Firths and Harmers. On 11 September 2019, the plaintiff filed a further amended statement of claim. On 16 December 2019, Paxus filed a cross-claim against Transport, Career, Firths and Harmers.
On 16 September 2020, Transport and Career each filed a notice of motion seeking orders for the determination of a separate question concerning the viability of Paxus' cross-claim in light of the Settlement Agreement. On 29 April 2021, I ordered that the separate question be determined in advance of the final hearing. On 30 April 2021, Paxus filed a notice of motion seeking determination of a separate question concerning the efficacy of the Deed. As referred to above, on 10 June 2021, the plaintiff applied by notice of motion for leave to amend his pleading, in substance to recommence the 2018 proceedings.
Mr Ktenas deposed in his affidavit of 4 June 2021 that "[i]n the last few months" he became aware that each of Firths and Harmers defended the allegations of negligence made against them on the basis that the Deed did not prevent the plaintiff suing Transport or Career for damages. Mr Ktenas deposed that he also became aware that Paxus had issued a cross-claim against Transport and Career seeking indemnity and contribution in respect of money it had paid to the plaintiff pursuant to the Workers Compensation Act 1987 (NSW) and that Transport and Career relied on the Deed in their defences to the cross-claim.
Mr Ktenas also deposed that he sought advice from different counsel who advised that the plaintiff's position would be better protected if he participated in the arguments concerning the separate question and, to that end, that an application ought be made to amend the further amended statement of claim to add Transport and Career as parties. Mr Ktenas explained the forensic purposes sought to be advanced by the further pleading as follows:
"In substance the Second Further Amended Statement of Claim does three things:
(a) It adds Transport for NSW and Career as the fourth and fifth Defendants to the proceedings;
(b) It maintains the old claim against Paxus and the lawyers as previously pleaded, but adds (paragraphs 125 to 140) the claim in the same terms as it was pleaded in the discontinued proceedings against Transport for NSW and Career. It was decided to retain the pleading in its original form so that it allowed the Court to make as clear a judgment as to the effect of the discontinuance;
(c) It adds a section (paragraphs 141 to 152) seeking orders that the Deed of Release be given no effect - either as a matter of interpretation or upon the basis that it should be set aside to the extent that it has the effect of precluding or preventing Mr Collinson pursuing a common law claim against Transport for NSW or Career."
[15]
Consideration
The respondents oppose the amendment on several grounds. As many of the grounds overlaps, it is convenient to address the grounds together. By reason of the concession referred to above, it is not necessary to address the claim under the Contracts Review Act. In substance, the respondents raise the following:
1. the amendment would be futile because the limitation period has expired in relation to the plaintiff's claim for damages in negligence against the respondents;
2. the application for amendment would constitute a breach of the undertakings given by the plaintiff at the time he was granted leave to file the notice of discontinuance and otherwise constitutes an abuse of process;
3. the Deed prevents the plaintiff's claim in negligence against the respondents;
4. by reason of a contract arising from the plaintiff's undertakings to the respondents, the plaintiff is not entitled to claim against them; and
5. the plaintiff's claims are inconsistent and are therefore embarrassing.
[16]
The contention that the amendment would be futile as it is statute-barred
It was common ground that the relevant provisions of the Limitation Act 1969 (NSW) are as follows:
"50C Limitation period for personal injury actions
(1) An action on a cause of action to which this Division applies is not maintainable if brought after the expiration of a limitation period of whichever of the following periods is the first to expire -
(a) the 3 year post discoverability limitation period, which is the period of 3 years running from and including the date on which the cause of action is discoverable by the plaintiff,
…
50D Date cause of action is discoverable
(1) For the purposes of this Division, a cause of action is discoverable by a person on the first date that the person knows or ought to know of each of the following facts -
(a) the fact that the injury or death concerned has occurred,
(b) the fact that the injury or death was caused by the fault of the defendant,
(c) in the case of injury, the fact that the injury was sufficiently serious to justify the bringing of an action on the cause of action.
(2) A person ought to know of a fact at a particular time if the fact would have been ascertained by the person had the person taken all reasonable steps before that time to ascertain the fact.
(3) In determining what a person knows or ought to have known, a court may have regard to the conduct and statements, oral or in writing, of the person.
…"
As set out in the above narrative, the 2018 proceedings were commenced on 22 June 2018. Thus, the plaintiff's cause of action must have been discovered by that date. The date at which an amendment to add a party is operative is the date of the amendment, not the date of original filing: s 64(3) of the Civil Procedure Act 2005 (NSW). Accordingly, subject to the matter referred to below, the plaintiff's claim against Transport and Career will be statute-barred because three years have already passed since the discoverability date.
Mr Sheller argued that the "discoverability date" is not immutable in that the plaintiff might know something on one date and then, not know it on a subsequent date and know it again on a later date. He relied on Murgolo v AAI Ltd t/as AAMI (2019) 101 NSWLR 376; [2019] NSWCA 295 (Murgolo). Because of the importance of Murgolo, it is necessary to examine it in some detail.
Murgolo (M) was injured on a building site in circumstances where either A or B might have caused his injuries. After obtaining legal advice, M sued A's insurer. Subsequently, M was advised to sue B's insurer instead. Accordingly, M's solicitor arranged to substitute B's insurer for A's insurer as a defendant. M's solicitor subsequently discovered that A's insurer was the correct defendant after all. When M sought to sue A again, A's insurer sought to have M's claim struck out on the basis that it was statute-barred. The trial judge struck out the proceedings and the Court of Appeal reinstated them.
[17]
The contention that the application for amendment constitutes a breach of the undertakings given and an abuse of process
Section 91 of the Civil Procedure Act provides that
"91 Effect of dismissal of proceedings
(1) Dismissal of -
(a) any proceedings, either generally or in relation to any cause of action, or
(b) the whole or any part of a claim for relief in any proceedings,
does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claiming the same relief in fresh proceedings.
…"
Rule 12.3 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) is to the same effect and provides:
"12.3 Effect of discontinuance
(1) A discontinuance of proceedings with respect to a plaintiff's claim for relief does not prevent the plaintiff from claiming the same relief in fresh proceedings.
(2) Subrule (1) is subject to the terms of any consent to the discontinuance or of any leave to discontinue."
Mr Sheller submitted that it was at least arguable that the respondents consented to the plaintiff discontinuing the proceedings before the respondents' solicitors sought the undertakings from Mr Ktenas and that this had two consequences. He contended, first, that Mr Ktenas was entitled to file a notice of discontinuance in the Registry, since the leave of the Court is not required for discontinuance by consent, and that there was no need for the matter to be listed and the Registrar's leave sought. Second, Mr Sheller submitted that the undertakings could not affect the terms of the consent to the discontinuance because they post-dated the giving of consent, which was, relevantly, unconditional. Thus, he submitted, UCPR r 12.3(1) applied and, as a consequence, UCPR r 12.3(2) was inapplicable.
Mr Sheller relied on the chronology set out above to submit that the Calderbank offer had been accepted by the plaintiff at 8.37am on 14 September 2018 when Mr Ktenas sent the email to Norton Rose and that the acceptance of the offer gave rise to a contract between the parties that, in return for the respondents' consent to the plaintiff discontinuing the proceedings, there would be no order as to costs. He contended that the contract did not include any term as to the giving of undertakings or any promise not to sue on the same cause of action again. Mr Sheller submitted that these matters constituted issues to be tried and that therefore the plaintiff ought be permitted to amend his pleading to make the allegations. He contended that, if I were to refuse the amendment, I would effectively be shutting the plaintiff out of making arguable submissions and exposing him to the risk that the defendants would succeed in persuading the trial judge that the Deed did not prevent the plaintiff from suing the respondents in negligence but that he would be left without a remedy. He submitted that there was no real prejudice to the respondents in being joined as defendants since they were parties to the proceedings in any event, as cross-defendants.
[18]
Orders
For the reasons given above, I make the following orders:
1. Grant leave to the plaintiff to amend paragraphs 3 and 4 of its draft further amended statement of claim.
2. Otherwise, dismiss the plaintiff's notice of motion filed on 10 June 2021.
3. Unless any party makes a written application within 7 days for a different order:
1. order the plaintiff to pay Transport for NSW's and Career Corporation Pty Ltd's costs of the notice of motion; and
2. order the first, second and third defendants' costs of the notice of motion to be costs in the cause.
[19]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 17 August 2021
Throughout February and March 2016, the parties continued to negotiate the terms of the deed to which settlement of the FWC proceedings was subject. Mr Lorraine's concerns included that statutory workers compensation payments be excluded from the Deed and that the payment be made in the most tax-effective way.
According to Con Ktenas, the plaintiff's current solicitor who works at the law firm Stacks Goudkamp (Stacks), who affirmed an affidavit on 4 June 2021, the plaintiff now says that, at the time he was engaged in negotiations regarding the Deed, he was suffering from serious depression and anxiety and was heavily medicated; he thought that the settlement related only to the FWC proceedings and not to the WCC proceedings; he did not appreciate that the payment under the Deed could "compromise his entitlement to seek full damages against Transport or Career"; and, if he had appreciated that the Deed could have that impact, he would not have entered into it.
Mr Ktenas responded to DLA Piper by email at 11.39am on 17 September 2018 in the following terms:
"I confirm service of my letter on your client and confirm that I make the identical undertaking to your client to never institute proceedings.
This means that I will, with your approval and with the approval of Sally [Woodward, the solicitor from Norton Rose], discontinue the Supreme Court proceedings with there being no order as to costs in those proceedings; and each party bearing its own costs."
On 18 September 2018 at 11.12am, Mr Ktenas wrote to Norton Rose and DLA Piper and said:
"Just for clarification. I have dictated the Notice of Discontinuance and it will be sent to you for your approval as soon as it is typed; probably today.
My undertaking means that we will not bring the same Supreme Court proceedings against your clients again.
I will of course need to maintain my work injury Damages claim against the employer Paxus Australia in order to mitigate my loss in the claim against the two solicitors Firths and Harmers.
These proceedings against Paxus Australia are about to be filed in the Workers Compensation Commission.
Please confirm you are in agreement with this."
At 7.30am on 19 September 2018, DLA Piper wrote to Stacks, in part as follows:
"We understand your client undertakes not to institute any further proceedings against either or both of the parties in the current Supreme Court action. Please let us know immediately if that is not correct.
Assuming it is correct, whether and if so to what extent your client proposes to commence proceedings against his employer appears to be a matter for your client."
The matter was listed for mention before the Registrar on 21 September 2018. The notice of discontinuance was filed in Court. The transcript records the following exchange:
"KTENAS: Mr Ktenas for the plaintiff and I mention the appearance of the second defendant, Mr Morse. Registrar, the reason why I've asked for this matter to be mentioned is because we've discontinued it but we're going to be proceeding against the solicitors and I just need to make the undertaking to my friend for the Court's purposes that we're never going to institute any further proceedings against either of the defendants in these proceedings.
REGISTRAR: All right then.
KTENAS: I just wanted to make that on the record. So may it please the Court, that's all I have to say.
REGISTRAR: Thank you.
…
REGISTRAR: I give leave to file the notice of discontinuance in Court and I'll make the orders that proceedings are discontinued in accordance with the notice of discontinuance and I note the undertaking that's given to the Court.
KTENAS: Thank you.
REGISTRAR: You're excused."
The notice of discontinuance, which was filed in Court on 21 September 2018, set out the following orders which were made by the Court:
"1. The Plaintiff discontinues the whole of these proceedings.
2 The Plaintiff does not represent any other person.
3 Each active party consents to the discontinuance."
In an affidavit affirmed on 4 June 2021, Mr Ktenas deposed:
"I believe that I tried to seek instructions from Mr Collison in respect of the undertaking, but I am no longer confident that I did so. I did not know Mr Collison well and I was very aware that he had emotional problems which I did not wish to stir. I thought I had the instructions, but maybe I did not."
In addition to claiming damages against Paxus, Firths, Harmers, Transport and Career, the draft second further amended statement of claim seeks the following relief in respect of the Deed:
"(i) An order that, to the extent that it would provide a bar to [the plaintiff] recovering damages from [Transport] or Career in these proceedings, [the Deed] be set aside.
(ii) An order pursuant to Section 7(1)(c) of the Contracts Review Act 1980 varying [the Deed] to the extent it would release [Transport] and Career from liability under [the plaintiff's] Common Law Claim or bar [the 2018 proceedings]."
In written submissions dated 21 July 2021, Mr Watson SC and Ms Grotte, who were instructed by Mr Ktenas on behalf of the plaintiff, accepted that relief under the Contracts Review Act 1980 (NSW) was not available. Accordingly, the relief claimed in (ii) above is not pressed. Mr Sheller SC appeared with Ms Grotte on behalf of the plaintiff at the hearing of the application and adopted Mr Watson's written submissions.
Mr King SC appeared with Mr Kelly on behalf of Paxus and supported the plaintiff's application for leave to file the second further amended statement of claim as did Mr Fitzsimmons SC, who appeared on behalf of Firths and Harmers. Mr Ahmad appeared on behalf of Career and Mr Hogan appeared on behalf of Transport. As referred to above, Career and Transport opposed the relief sought.
Basten JA (Macfarlan JA agreeing) said:
"[51] In short, it is true that the court must determine a fixed point in time at which a claimant knew certain facts; it does not follow that the first date on which the claimant thought he knew those facts was frozen in time as the relevant date, regardless of subsequent events revealed in the evidence. If that reasoning were wrong, and the only relevant fact was the first date on which the plaintiff thought he knew a fact, virtually all the subsequent evidence admitted without objection in the present case would have been irrelevant. That proposition should not be accepted.
[52] This analysis demonstrates the inappropriateness of the submission for the insurer, accepted by the primary judge, that one cannot 'unknow' something for the purposes of s 50D(1). That language assumes that a belief formed at a particular point in time is the sole and sufficient factor constituting knowledge for the purposes of s 50D(1). That is a false assumption."
Leeming JA said at [125]:
"Once it is appreciated that knowledge of the 'facts' in s 50D is satisfied by a reasonably held belief in the conclusions identified in that section, it is clear that when further information is provided, a belief that might formerly have been reasonably held may cease to be … The question turns instead on Mr Murgolo's belief from time to time in light of the additional primary facts which became available. The material summarised above comfortably sustains the possibility that there was an insufficiently certain belief from mid-2013 until 2016 to proceed against CW, which altered when further material was provided in 2016."
In the present case, Mr Sheller contended that, at one stage, the plaintiff might have held a belief that his injury was caused by the "fault" of the respondents but he received further advice which undermined that belief. He submitted that, like M, the plaintiff's further advice put him on another course. He argued that, in these circumstances, I should allow the matter to be tried because the application of the limitation period raises matters which are "highly fact sensitive". Mr King also submitted that "fault" in the context of s 50D(1)(b) constituted "actionable fault" and that the question whether a person has knowledge of actionable fault can be affected by extraneous matters, such as the Deed. Mr King submitted that it was a relevant matter that the plaintiff had received certain advice on the effect of the Deed (from Mr Campbell that it was effective to bar his claims against the respondents) but had subsequently received different advice on the effect of the Deed. No inference can be drawn as to the content of the subsequent advice as it had not been produced in answer to a notice to produce and was not in evidence.
Mr Ahmad sought to distinguish the present case from Murgolo. He submitted that the plaintiff had made a forensic choice on advice to discontinue an actionable cause of action for which he had been advised that the respondents had a defence in the form of a Deed. He relied on the circumstance that the plaintiff had neither produced (in answer to the respondents' request) nor tendered any advice he had received to the contrary of the advice he had obtained from Mr Campbell. He submitted that it would be inimical to the proper working of the Limitation Act for limitation periods to depend on such vagaries as a change of mind by a party who had elected not to prosecute an action for want of prospects of success.
I am not persuaded by Mr Sheller's submission that the present case is analogous to Murgolo. However, because of the view to which I have come regarding the respondents' second argument, it is not necessary that I express a concluded view on the question of the limitation period.
Mr Fitzsimmons referred me to authorities of the High Court in which the blamelessness of a party when seeking an indulgence from the Court (such as an extension of time, as in Hall v Nominal Defendant (1966) 117 CLR 423 at 435 (Barwick CJ); [1966] HCA 36 and Sophron v Nominal Defendant (1957) 96 CLR 469; [1957] HCA 27) was held to weigh in favour of the granting of the indulgence. He submitted that the plaintiff was, in effect, a passive party who was "caught up in" the actions of his solicitors and who ought not be prejudiced or shut out of putting his case as a consequence.
In response, Mr Ahmad (whose submissions were adopted by Mr Hogan) submitted that the plaintiff had not accepted the Calderbank offer as far as Career was concerned until after 9am on 14 September 2018 and that therefore there was no contract between the plaintiff and Career before the offer expired. He also submitted that there had obviously been a conversation between Mr Ktenas and Norton Rose prior to 9.05am on 14 September 2018 in the course of which Norton Rose had asked for an undertaking that the plaintiff would not sue Transport again and the undertaking had been forthcoming. Further, he contended that the correspondence between Mr Ktenas and DLA Piper about the acceptance of the Calderbank offer and the request for the undertaking had taken place after the expiry of the Calderbank offer and therefore constituted a new arrangement. He relied on the chronology of events set out above.
Further, Mr Ahmad submitted that for the Court to allow the question whether something amounted to an abuse of process to be determined at trial would have the effect of perpetuating the abuse of process. Thus, he contended that, if I was satisfied that the amendment application was an abuse of process, having regard to the terms of the discontinuance, I should refuse leave to amend.
I regard the argument that because the request for the undertaking was made (at least in the case of Career) after the Calderbank offer was accepted, the plaintiff is not bound by the undertakings given on his behalf by his solicitor to Career and Transport as meretricious. The chronology set out above indicates that the solicitors for the plaintiff, Career and Transport were dealing with each other in good faith to try to resolve proceedings. The evident purpose of the discontinuance was to end the proceedings once and for all, not just pro tem. Further, there were discussions between the solicitors which indicated that Mr Ktenas appreciated that the form of the notice of discontinuance was subject to the approval of the respondents' solicitors. There were communications between them, both in evidence, and implied by the evidence to that effect. Although I accept Mr Sheller's submission that the Court's leave to discontinue the proceedings was not required (since the respondents both consented), I accept Mr Ahmad's submission that the reason for the notice of discontinuance being filed in Court was so that the Court could note the terms of the discontinuance on the transcript for the purposes of s 91 of the Civil Procedure Act and UCPR r 12.3(2), thereby ensuring that the basis of the discontinuance formed part of the Court's record.
The terms of the respondents' consent to the discontinuance or leave to discontinue were that the plaintiff, by his solicitor, Mr Ktenas, undertake not to sue either of the respondents again concerning the subject of the 2018 proceedings. The undertaking from the plaintiff was given by Mr Ktenas to each of the respondents in the correspondence referred to above. When the matter was before the Court on 21 September 2018, Mr Ktenas informed the Court that the plaintiff was "never going to institute any further proceedings against either of the defendants in these proceedings" and confirmed that it was an undertaking. The Registrar noted the undertaking to the Court and, on that basis, granted leave to Mr Ktenas to file the notice of discontinuance. I accept that the Registrar appears to have understood the undertaking as having been made to the Court (rather than, as was the case, to the other parties) and that the Registrar was under the misapprehension that leave to file the notice of discontinuance was required. The parties' representatives sought to correct neither of these apprehensions, presumably because they were immaterial. The plaintiff was content to abide by his undertakings; the notice of discontinuance was actually filed; and the proceedings thereby brought to a conclusion.
The relevant principle was stated by Bellew J in Transport Secretary v Australian Rail Tram and Bus Industry Union [2017] NSWSC 696 at [10]:
"Discontinuation of proceedings does not bar subsequent proceedings, nor does it bar an application to revive the original proceedings by setting aside the discontinuation, unless the discontinuation was ordered on terms that no new proceedings would be brought: see for example The Kronprinz (1887) 12 App Cas 256 at 262."
For the reasons given above, I am satisfied that the discontinuance of the 2018 proceedings was on terms that no new proceedings would be brought. I am satisfied, having regard to the narrative set out above, that had the plaintiff's undertaking not been forthcoming, the respondents would have proceeded with their strike-out application, thereby putting the plaintiff at risk as to costs. The plaintiff can be taken to have chosen to discontinue the proceedings (in light of the advice he had been given that the Deed barred his actions against Transport and Career) and to have given the undertaking in return for the respondents not proceeding with their motion. In these circumstances, as was said in UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 (UBS) at [44] (Kiefel CJ, Bell and Keane JJ, Gageler J agreeing) that:
"The circumstance that the Trust's claim has not been heard on its merits, and that a fair trial may still be had, cannot be determinative of whether the proceeding is unjustifiably oppressive to UBS or whether its continuance would bring the administration of justice into disrepute."
It was common ground that, in litigation, a legal practitioner has both implied and ostensible authority to bind his or her client to a compromise of the proceedings: Donellan v Watson (1990) 21 NSWLR 335 (Donellan) at 343C-D (Handley JA). As Swinfen Eady J said in Yonge v Toynbee [1910] 1 KB 215 at 234:
"It is in my opinion essential to the proper conduct of legal business that a solicitor should be held to warrant the authority which he claims of representing the client; if it were not so, no one would be safe in assuming that his opponent's solicitor was duly authorized in what he said or did, and it would be impossible to conduct legal business upon the footing now existing; and, whatever the legal liability may be, the Court, in exercising the authority which it possesses over its own officers, ought to proceed upon the footing that a solicitor assuming to act, in an action, for one of the parties to the action warrants his authority."
Further, a restriction placed by the client on the legal practitioner's authority will only affect another party who has notice of the restriction: Donellan at 343C-D; followed in The Owners Strata Plan No 57164 v Yau (2017) 96 NSWLR 587; [2017] NSWCA 341 at [172] (Beazley P, Leeming JA and Emmett AJA agreeing). There is no suggestion that either of the respondents had any reason to doubt Mr Ktenas' authority to give undertakings on behalf of the plaintiff as Mr Ktenas had not notified them of any restriction on the authority given to him by his client.
Thus, irrespective of whether the plaintiff instructed Mr Ktenas to give the undertakings to the respondents' solicitors in correspondence, the plaintiff is bound by those undertakings because he is bound by Mr Ktenas' conduct. Further, when Mr Ktenas gave undertakings to the Court on his behalf on 21 September 2018, the plaintiff was bound by them on the basis of the principle that a party to proceedings is bound by the conduct of his or her legal representative: R v Birks (1990) 19 NSWLR 677 at 685D-E (Gleeson CJ, McInerney J agreeing). There is no suggestion that either of the respondents had any inkling that Mr Ktenas might not have explicit instructions from the plaintiff to give those undertakings on his behalf; indeed, to the contrary, Mr Ktenas believed at the time that he had those instructions.
In UBS, the issue arose whether proceedings brought subsequent to an unconditional discontinuance could amount to an abuse of process. The plurality said at [56]:
"It may be accepted that, under r 12.3(1) of the Uniform Civil Procedure Rules 2005 (NSW), the discontinuance of proceedings does not operate as a release of the claims made by the discontinuing party. But that does not mean that discontinuance is irrelevant when the discontinuing party seeks by new proceedings to pursue a discontinued claim. Nor does the possibility that a party might have sought the protection of conditions upon discontinuance, but did not, mean that the disruption and extra costs incurred by that party when confronted by new proceedings is not relevant to whether an abuse of process is being perpetrated. An abuse of process is no less an abuse because the party adversely affected might have, by greater diligence in its own interests, prevented the abuse."
In the present case, unlike in UBS, the respondents did all that could reasonably be done to protect their interests. When faced with the 2018 proceedings, the respondents moved quickly to foreshadow an application to strike out the pleading. They also served a timely Calderbank offer to protect themselves on costs in the event that the strike-out application was successful. When the plaintiff accepted the Calderbank offer, the solicitors for each respondent were careful to ensure that the litigation could not be brought again by eliciting undertakings to that effect from the plaintiff. They insisted that the notice of discontinuance be filed in Court and the plaintiff's undertakings be made orally to the Registrar so that the undertakings would be recorded on the Court transcript. Thus, the respondents have acted in an efficient and timely way to protect their rights. By reason of the settlement of the 2018 proceedings (by the discontinuance and the undertakings), I infer that the respondents did not take steps to resuscitate their defences to the plaintiff's claims, which they understood to have been resolved in the first instance by the Deed. While there is no evidence of actual prejudice, this can be inferred since delay in litigation inevitably occasions prejudice, through the loss of documents, the dimming of the memories of witnesses and the difficulties of locating those involved who may have moved jobs, cities or countries, or died, in the interim. I do not regard the prejudice to be removed by the circumstance that the respondents remain parties to the proceedings as cross-defendants.
The present case is not dissimilar to Galati v Deans (No 2) [2018] NSWSC 1813; (2018) 133 ACSR 516 in which the plaintiffs sought to amend their statement of claim to reintroduce claims which had been disposed of in earlier proceedings. Ward CJ in Eq said, at [130], that the proposed amendment constituted an abuse of process because its effect "would be to force the parties to the litigation that was finally disposed of by consent in 2017 now to face the prospect of revisiting the claims made in those proceedings …": [139]. At [150], her Honour considered that it would be "inconsistent with the principle of finality of litigation (and antithetical to the statutory mandate for the just, quick and cheap resolution of the real issues in dispute)" to allow the claims to be made.
In my view, the application for amendment constitutes a clear breach of the plaintiff's undertakings to Transport and Career that he would not sue them again. In all the circumstances, I regard the plaintiff's application for amendment as an abuse of process. If allowed, it would have the effect of permitting fresh proceedings in breach of the undertakings he gave to the respondents and to the Court: UBS at [1] and [56] (Kiefel CJ, Bell and Keane JJ, Gageler J agreeing) and James Point Pty Ltd v Minister for Transport (No 3) [2018] WASC 277 at [121]-[123] (Vaughan J). Accordingly, I refuse the plaintiff's application for leave to amend his pleading.
It is, accordingly, not necessary to address the third argument based on the construction of the Deed (a matter which would be better determined as part of the final hearing or as a separate question); the fourth argument that, as a matter of contract, the plaintiff cannot sue the respondents; or the fifth argument that the plaintiff's claims are inconsistent and, therefore, embarrassing.
I note that paragraphs 3 and 4 of the draft further amended statement of claim contain amendments which do not affect Career or Transport. Accordingly, there is no reason why these amendments ought not be permitted.