COYLE v DEPARTMENT OF EDUCATION AND TRAINING

(a) set aside the order of the Acting Deputy President made on 22 May 2006; DECISION: (b) in lieu thereof, dismiss the appeal from the determination of the arbitrator dated 30 March 2005, and

(c) order the Department to pay the employee's costs of the appeal to the Presidential member.

(3) Order the Department to pay the claimant's costs in this Court.

CATCHWORDS: CONTRACT - construction - settlement of claim - whether release from further liability - scope of dispute resolved to be understood by reference to context of agreement.WORKERS COMPENSATION - payment of agreed sum - whether agreement limited to specific period - additional claim made for further period - whether employer could contract out of liability under the Workers Compensation Act 1987 (NSW) - Workplace Injury Management and Workers Compensation Act 1998 (NSW), s234.

LEGISLATION CITED: Workers Compensation Act 1987 (NSW), ss 11A, 66, 66A, 87H, 234, Part 3, Div 9 Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 65, 234, 294, 352, 353

Ashenden v Stewarts & Lloyds (Australia) Ltd [1972] 2 NSWLR 484 Australian Iron and Steel Pty Ltd v McAuley (unrep, NSWCA, 21 December 1984) CASES CITED: Department of Education and Training v Coyle [2006] NSWWCCPD 95 Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 Vital Finance Corporation Pty Ltd v Taylor (1996) 40 NSWLR 25

PARTIES: Karen Coyle - Claimant Department of Education and Training - Opponent

COUNSEL: P.R. Stockley - Claimant J.W. Catsanos - Opponent

SOLICITORS: Bondfield Riley, Lismore - Claimant Moray & Agnew, Sydney - Opponent

LOWER COURT JURISDICTION: Workers Compensation Commission

LOWER COURT JUDICIAL OFFICER: Acting Deputy President Candy

LOWER COURT MEDIUM NEUTRAL CITATION: [2006] NSWWCCPD 95

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40353/06 WCC 8271-04

BEAZLEY JA BASTEN JA HAMMERSCHLAG AJA

8 August 2007 Karen COYLE v DEPARTMENT OF EDUCATION AND TRAINING Judgment 1 BEAZLEY JA: I agree with Basten JA. 2 BASTEN JA: The claimant in these proceedings seeks to review the decision of Acting Deputy President Candy in the Workers Compensation Commission. The decision in effect dismissed a claim by the claimant for payment of compensation during a period from 1 February to 17 September 2003. The claim related to psychological injuries said to have been suffered by the claimant as a result of her employment by the Department of Education and Training as a teacher's aide at Forest House School in Surry Hills, Sydney. 3 Her claim was made on 18 September 2002 and payments were made for the period up to and including 22 October 2002. Thereafter, the employer declined to make payments on the basis that her injury was wholly or predominantly caused by reasonable action taken by the principal of the school, relying on an exemption provided in those terms by s 11A of the Workers Compensation Act 1987 (NSW). 4 There had been a breakdown in communications between the principal and the claimant, each accusing the other of inappropriate behaviour. 5 The claimant continued to press her claims for compensation and, on 12 June 2003, the employer appears to have allowed a further amount for the period up to 18 December 2002. On the same day (12 June 2003) the employer arranged for the claimant to be examined by a psychiatrist, Dr Lovell. 6 On 1 July 2003, solicitors for the claimant requested that payments be made up to 31 January 2003, on the basis of a document not in evidence in this Court, described as "a WorkCover certificate up to 31st January, 2003". In oral argument, counsel for the claimant asserted (without contradiction) that the certificate was a medical certificate of the kind required to accompany a claim for compensation, pursuant to s 65(1)(c) of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the 1998 Act"). 7 On 12 September 2003, the solicitors wrote again to the workers compensation insurer, stating, in full: "We refer to your letter dated 12th June, 2003 and to our facsimile dated 1st July, 2003 which enclosed a WorkCover certificate up to 31st January, 2003. We understood from our discussion with you that it was likely you would meet the claim up to 31st January, 2003 in view of the certificate and in view of the fact that Dr. Lovell did not see our client until six months after that period closed. We are instructed by our client that she will accept payment up to 31st January, 2003 to resolve the dispute. Would you please advise within seven days whether this is acceptable as alternatively we are instructed to commence proceedings in the Workers Compensation Commission." 8 The nature and content of the "discussion" referred to in the second paragraph is not known. Similarly, the precise terms of "the dispute" referred to in the third paragraph is obscure. However, on 18 September 2003, the insurer responded, acknowledging receipt of the letter of 12 September and stating: "We confirm, that payments have been made to the Department of Education up to the 31/01/2003 as agreed." 9 Prior to that exchange of correspondence, an investigation was commenced by a body known as the "Audit Directorate" in the Department of Education and Training. The report of that investigation later stated that, on 11 August 2003, correspondence had been received from the Independent Commission Against Corruption in relation to an allegation by the claimant that she had been harassed and bullied by the principal of the school, and two other teachers, and had been the subject of a report prepared by the principal which "contained lies about her work performance" and which led to the refusal of her claim for workers compensation and to denial of a compassionate transfer to a school on the north coast. The investigation was undertaken "during the period August 2003 to May 2004". In substance, the investigator upheld the major allegations, other than that in relation to the compassionate transfer. 10 Although by no means all of the correspondence is in evidence, there is a letter from the insurers dated 18 May 2004 to the claimant's solicitor in Lismore, which stated in part: "As stated in our letter dated 24 September 2003, we reiterate that this claim was settled for a closed period only from 18/9/02 to 31/1/03. At the time of this settlement is was understood that your client would not pursue any further claim. We have enclosed our medical evidence, a report from Dr Derrick Lovell dated 12 June 2003. This report indicates that your client has been fit for pre-injury duties since December 2002 and is capable of working on a fulltime basis. Therefore, we do not admit any further liability in this matter." 11 The report of the Audit Directorate was apparently completed on 7 June 2004. On 5 October 2004, the employer agreed to make weekly payments to the claimant from 18 September 2003, which were apparently continuing when the matter was heard by the Commission in March 2005. 12 For reasons which remain obscure, the Department, as the employer of the claimant, has accepted liability for all periods between 18 September 2002 and, so far as appears, March 2005 except for the period from 1 February 2003 until 17 September 2003. It seeks to deny liability for this period, not on the basis of a failure by the claimant to establish a relevant incapacity, but on the basis of a "contract", pursuant to which she agreed not to pursue a claim in relation to that period. The claimant denies that there was any such agreement, and says that if there were an agreement, it could not prevent a claim being made under the 1998 Act or the Workers Compensation Act, by reason of the prohibition on contracting out contained in the 1998 Act, s 234. 13 The amount in dispute is an agreed sum of $15,356. Although it is no doubt a sum of some significance to the claimant, it is not of an amount which would normally engage the jurisdiction of this Court, although, pursuant to s 353(4)(c) of the 1998 Act, an appeal may lie from a decision of a Presidential member of the Commission, in point of law, and without leave, if the amount in dispute is not less than $20,000. On this scale, the amount involved is not far below the figure at which leave would not be required. Furthermore, the claimant having received a favourable award from an arbitrator, on behalf of the Commission, it was the Department which saw fit to take the matter further, by bringing an appeal to a Presidential member pursuant to s 352 of the 1998 Act. Accordingly, it would appear that the Department saw the case as involving an issue of significance. 14 The operation of a statutory prohibition on contracting out of a particular legislative scheme may give rise to questions of principle where the agreement in question involves a purported settlement of part or all of a dispute as to entitlements under the statutory scheme: see, Ashenden v Stewarts & Lloyds (Australia) Ltd [1972] 2 NSWLR 484 and Australian Iron and Steel Pty Ltd v McAuley (unrep, NSWCA, 21 December 1984) (both cases dealing with the Workers Compensation Act 1926 (NSW)); Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 (dealing with the Anti-Discrimination Act 1977 (NSW)); Vital Finance Corporation Pty Ltd v Taylor (1996) 40 NSWLR 25 (dealing with the Credit Act 1984 (NSW)). These questions will usually depend upon the specific statutory regime under which they arise which, in relation to the workers compensation legislation in this State, is by no means straightforward. Thus, s 234 of the 1998 Act provides: 234 No contracting out This Act and the 1987 Act apply despite any contract to the contrary. 15 It is clear that this provision is intended to apply not only to pre-accident contracts, but also to those which may be entered into thereafter. Thus, s 66A of the Workers Compensation Act, provides a mechanism by which a worker may enter into an agreement to receive a specific amount of permanent impairment compensation. The legislature deemed it necessary to provide that the section had effect "despite s 234 of the 1998 Act": s 66A(6). Similarly, in relation to commutation of an entitlement to weekly payments, Part 3, Div 9 of the Workers Compensation Act regulates the kinds of agreement which can be entered into and the manner in which they can be effective, also providing that the operative provision has effect despite s 234: see s 87H(7). The latter provision gave rise to a further question of relevance in this case, namely whether the scheme for commutation agreements applied to agreements solely directed to liability which had arisen in the past, or only in circumstances where at least in part the agreement related to a period in the future. 16 This issue gives rise to a question of some nicety which, if it properly arose, would undoubtedly justify a grant of leave. However, it is necessary first to consider an antecedent issue, namely whether there was a contract at all, and if so, whether it purported, in its terms, to resolve questions of liability in relation to the period presently in issue. If there were such a contract, the legal issues noted above will need to be addressed: if there were not such a contract, though the legal issues will not arise it will follow that the claimant has suffered an injustice. In those circumstances it is, in any event, appropriate to grant leave. 17 In seeking to understand what agreement was reached, the parties were content to address the question by reference to the letter from the claimant's solicitor of 12 September 2003 and the "acceptance" conveyed by the insurer's response of 18 September. However, the nature of the agreement, which must be derived solely from the letter of 12 September, is somewhat obscure. The letter made reference to a "discussion" in the course of which, the officer of the insurer appears to have said that it was likely to make a payment up to 31 January 2003. Since she had sought such a payment, it was not surprising that the solicitors had instructions from the claimant to accept such a payment. The question accordingly turns upon what was meant by the final phrase, "to resolve the dispute". In context, the dispute was, broadly speaking, a difference of opinion as to whether the employer had a continuing liability under the Workers Compensation Act for weekly payments to the claimant. However, the dispute also had a temporal element, with one of three possible elements, namely a dispute:

(a) relating to the period ending on 31 January 2003;

(b) continuing up to the date of the letter, namely 12 September 2003, or

(c) as to a continuing liability, extending beyond 12 September 2003. 18 The claimant argued that the first possibility should be adopted because the claim clearly related to a period for which a certificate had been tendered. It should not be understood as relating to any later period, at least at that time. As there was apparently no dispute as to quantum, on that approach the proposal in the letter would have involved full payment of the claim without any element of concession. However, read as a whole, the letter might be understood as a claim limited to the period ending on 31 January 2003, but as including a demand for resolution within seven days, failing which proceedings would be commenced in the Commission. There was an on-going dispute as to that period and the insurer was being given a limited timeframe within which to resolve that dispute by agreement. 19 The second option, which was supported by the employer, was that the offer involved a compromise, namely a payment to 31 January 2003, with an abandonment of any claim thereafter up to the date of the letter. In the abstract, this approach was clearly tenable, but it involved a rejection of the third possibility, namely that the dispute concerned future as well as past liability. The reason for adopting that limitation, as it was contended, was that the solicitors for the claimant would have known that commuting a future liability would require compliance with the legislative scheme for commutation agreements, which was neither proposed, nor available, given the statutory constraints on its availability. 20 This approach had an air of unreality. As noted above, at least by 18 May 2004, the insurer was asserting that there had been a settlement pursuant to which the claimant "would not pursue any further claim". Nor is it obvious why the solicitors for the claimant should have reserved the right to make future claims on behalf of the claimant, without expressly saying so. 21 There is an additional reason why, on an objective assessment of the circumstances, the employer's construction should be rejected. As noted above, the claimant had, little more than four weeks before the offer "to resolve the dispute", instigated an investigation into the assertions made by the school principal which had given rise to the claim for compensation being resisted under s 11A of the Workers Compensation Act. There is no evidence that, as at 12 September, the claimant had or intended to withdraw the complaint which was under investigation. Similarly, there is no evidence that the employer intended to do otherwise than continue with the investigation, as it did. Given the common understanding of the parties to the supposed agreement, it is objectively unlikely that either intended to treat such as matters as "resolved" so as to release the employer from any liability which might be established pursuant to that investigation: c.f. Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112. 22 Reading the letter of 18 September in its entirety, with knowledge of the matters which would have been in contemplation of the parties at that time, the construction contended for by the claimant should be adopted. In other words, the letter contained not so much an offer as a threat to commence proceedings unless payment were made within seven days. On that view, there was no agreement to settle any unresolved claim for the period from 1 February 2003. 23 It remains to note the construction adopted by the Deputy President of the Commission at [33]-[35] of his reasons: Department of Education and Training v Coyle [2006] NSWWCCPD 95: "33. The first question is whether a contract was ever concluded. In my view, the correspondence between the parties establishes that it was. There is clearly offer and acceptance. 34. The second question is whether there is sufficient certainty in terms of the agreement. Again, I think it is reasonably clear that it is. The worker, through her solicitor, was claiming weekly compensation from 18 December 2002 on a continuing basis and offered to settle that claim if compensation were paid to 31 January 2003. The period of entitlement to compensation which was being settled was not specified but I consider that the approach of the employer to be correct, namely to limit the supposed settlement to date of the insurer's letter of 18 September 2003, being the date of acceptance of the offer made by the worker's solicitor. 35. Payment of compensation for the period 19 December 2002 to 31 January 2003 is obviously consideration for the worker abandoning her further claim up to 18 September 2003." 24 The finding as to the existence of a contract, and as to its terms, involve a decision by the Deputy President "in point of law". An appeal lies to this Court from that decision. In my view, the decision was wrong in law and should be set aside. In lieu thereof, the appeal to the Presidential member, from the decision of the arbitrator should have been dismissed. In the result, the determination of the Commission, as set out in the certificate of the arbitrator of 30 March 2005 will stand. 25 The arbitrator ordered the employer to pay the claimant's costs of the proceedings before him. Although the Presidential member made no order as to costs, there would seem to be no reason why the employer should not pay the costs of the claimant in relation to the appeal under s 352. In this Court, the employer resisted the application for leave and did not consent to the application being determined without attendance by the parties. It put no submissions as to why it should not pay the costs of the application and the appeal, if unsuccessful. Accordingly, it should pay the costs of the claimant in this Court. 26 No issue was raised by the parties in relation to the payment of interest, presumably on the basis that it was adequately dealt with in Part 2 of Chapter 4 of the 1998 Act. 27 I would propose the following orders:

(2) Allow the appeal and: (a) set aside the order of the Acting Deputy President made on 22 May 2006; (b) in lieu thereof, dismiss the appeal from the determination of the arbitrator dated 30 March 2005, and (c) order the Department to pay the employee's costs of the appeal to the Presidential member.

(3) Order the Department to pay the claimant's costs in this Court. 28 HAMMERSCHLAG J: I have had the benefit of reading in draft the reasons of Basten JA with whom Beazley JA agrees. 29 On 30 March 2005, pursuant to s.294 of the Workplace Injury Management and Workers Compensation Act ("the WIM Act") the Workers Compensation Commission of New South Wales constituted by an Arbitrator issued a certificate determining that the respondent pay to the applicant weekly benefits compensation for the period 1 February 2003 to 17 September 2003 in the sum of $15,356.24. 30 With leave pursuant to s.352(1) of the WIM Act, the appellant appealed the decision to the Commission constituted by a presidential member, Acting Deputy President Candy. The appeal was determined on 22 May 2006 by Acting Deputy President Candy. 31 The Acting Deputy President upheld the appeal on the basis that the claimant was precluded from claiming weekly compensation for the period 1 February 2003 to 17 September 2003 ("the Period") by a binding agreement entered into between her and the employer's insurer. The agreement was held to be constituted by a letter from the claimant's solicitor to the employer's insurer dated 12 September 2003 and a reply dated 18 September 2003. The Acting Deputy President further found that the dealings between the claimant and the employer's insurer gave rise to an estoppel precluding the claim. 32 An appeal from the Acting Deputy President's decision in point of law where the amount of compensation is in dispute is less than $20,000 lies, with leave, to this Court pursuant to s.353 of the WIM Act. 33 The claimant seeks that leave on the grounds that:

(a) the exchange of correspondence disclose no binding arrangement; (b) if it does, its terms did not preclude the claim in respect of the Period; (c) the circumstances do not give rise to the estoppel found; and (d) in any event the agreement and estoppel found are inoperative in the case of the agreement because it offends s.234 of the Workers Compensation Act ("the Act") and in the case of the estoppel because it cannot outflank the claimant's rights to compensation under the Act. 34 The first letter, that is from the claimant's solicitors to the respondent's insurer dated 12 September 2003 is in the following terms: "We refer to your letter dated 12th June, 2003 and to our facsimile dated 1st July, 2003 which enclosed a WorkCover certificate up to 31st January, 2003. We understood from our discussion with you that it was likely you would meet the claim up to 31st January, 2003 in view of the certificate and in view of the fact that Dr. Lovell did not see our client until six months after that period closed. We are instructed by our client that she will accept payment up to 31st January, 2003 to resolve the dispute. Would you please advise within seven days whether this is acceptable as alternatively we are instructed to commence proceedings in the Workers Compensation Commission." 35 The reply from the respondent's insurer to the claimant's solicitor dated 18 September 2003 (sic) is in the following terms: "We refer to the above claim for Workers Compensation benefits, and acknowledge receipt of your letter dated 12/09/2003. We confirm, that payments have been made to the Department of Education up to the 31/01/2003 as agreed. Please call me on 8299 1953 if you have any questions." 36 Leaving aside any statutory inhibition, there is, in my view, no difficulty applying orthodox principles, in finding that the two letters would otherwise constitute a binding agreement. There is an offer, there is an acceptance of that offer, and there is consideration. There is also no difficulty in inferring both from the terms of the letters and from the identity of the parties who wrote them an intention to create legally binding relations. 37 There is, however, a question of construction thrown up by the terms of the solicitor's letter because it indicates a willingness to accept payment up to 31st January, 2003 "to resolve the dispute" and that dispute cannot readily be identified from the terms of the two letters alone. The letters and certificates referred to in it are not in evidence. 38 It is accordingly necessary to have regard to the factual findings of the Acting Deputy President in that regard. They are as follows: "(a) On 23 October 2002 the insurer wrote to the worker advising that it was ceasing payments of compensation on the grounds that the employer had acted reasonably with respect to performance issues. Compensation was to be paid up to 23 October 2002. (There is a discrepancy as to the date to which compensation was initially paid, either 22 or 23 October 2002. Nothing turns on this.) (b) On 12 June 2003 the insurer wrote to the worker's then solicitor enclosing the report of Dr Derek Lovell of 12 June 2003. The insurer indicated that it was prepared to pay weekly compensation up to 18 December 2002 which was the period for which the worker had WorkCover medical certificates. (c) On 1 July 2003 the worker's then solicitor conveyed by facsimile to the insurer a Certificate of Unfitness up to 31 January 2003 and asked the insurer to consider paying to that date."

39 The claimant had initially been paid weekly compensation up to 18 December 2002 and had received nothing thereafter. The insurer's doctor, Dr Lovell, had given a report on 12 June 2003 and on 1 July 2003 the worker's solicitor transmitted to the insurer a certificate of unfitness up to 31 January 2003 and asked the insurer to consider paying to that date. 40 There is nothing to suggest that the claimant was accepting that she was fit between 31 January 2003 and 12 June 2003, the date of Dr Lovell's report. Indeed, her solicitor in that letter of 12 September 2003 made the point that Dr Lovell did not see her until six months after that period closed. The dispute accordingly covered at least, in my view, an asserted entitlement between 31 January 2003 and 12 June 2003. There was no certificate from the insurer's doctor covering the interim period. There was also no assertion of any entitlement beyond 12 June 2003. 41 It seems to me therefore, that "the dispute" covered at least the period 31 January 2003 to 12 June 2003. 42 It was put that the offer was intended to cover only the period to 31 January 2003 so that the claimant was accepting payment in full for the period to settle a claim for that same period. I would reject that submission because under the arrangement the insurer was receiving no upside in what was clearly to be a compromise, except, as was put, perhaps the avoidance of an award. I do not see that as any real upside given that the respondent had denied liability and had a basis, whether ultimately successful or not, to defend the claim. 43 The Acting Deputy President found that the period intended to be compromised was to 18 September 2003 being the date of acceptance of the offer made by the worker's solicitor. That is not an eccentric finding. The Acting Deputy President approached the matter on the basis that the compensation being settled could not extend beyond that date. But there did not appear to be a claim being pressed expressly or implicitly for the period until Dr Lovell's certificate. For that reason I consider that the compromise did not extend to beyond 12 June 2003. 44 I would accordingly have upheld the Acting Deputy President's finding of a contract but limited its effect to compromising the claimant's potential claim between 31 January 2003 and 12 June 2003. 45 In light of the conclusion of the majority it is not necessary for me to consider whether the agreement would not have a binding effect because of the provisions of s.234 of the Act or the general legal principles underpinning provisions of that sort. **********

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