Franco v Workers Compensation Nominal Insurer

Consideration

The Court first deals with the submission of the plaintiff, in reply, that there is no residual discretion on the awarding of interest. The jurisdiction of the Court to award interest is inherent in a superior court of record of general jurisdiction, including equity, and has existed in the Court, at least since 1824. Interest is compensatory; not punitive. Whatever be the inherent jurisdiction, the current jurisdiction to award interest is contained in ss 100 and 101 of the Civil Procedure Act 2005 (NSW).
Relevantly, the submissions of the parties deal with pre-judgment interest. As a consequence of that circumstance, the relevant provision of the Civil Procedure Act is s 100. The terms of s 100(1) are in the following terms: "100 Interest up to judgment (cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A) (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit - (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect."
The foregoing provision applies to all courts to which the Civil Procedure Act applies and, relevantly, would apply to both this Court and the District Court of New South Wales. As a consequence, any claim for damages, as distinct from compensation, under either the 1987 Act or the 1998 Act, would be resolved in a court to which the provisions of s 100 of the Civil Procedure Act applied. Thus, the jurisdiction to award pre-judgment interest is granted by the provisions of s 100 of the Civil Procedure Act.
The terms of s 151M of the 1987 Act do not grant the Court, or the District Court, jurisdiction to award interest. Rather, the provisions of s 151M qualify the right to interest that might otherwise exist and the capacity of a court to order the payment of interest otherwise than once the statutory preconditions in s 151M(4) of the 1987 Act are satisfied. Further, the provisions of s 151M of the 1987 Act prescribe the rate at which the interest will be calculated.
The effect of the foregoing analysis is that the Court is incapable of ordering pre-judgment interest in the absence of one of the three statutory preconditions in s 151M(4). However, if the statutory conditions are met, the Court is entitled to exercise the discretion that is reposed in it under s 100 of the Civil Procedure Act.
The foregoing does not apply to the interest rate, which is prescribed by s 151M(6) of the 1987 Act. On the foregoing basis, the Court is of the view that there is a residual discretion not to order pre-judgment interest.
Having made that comment, it is important to understand that the promulgation of s 151M of the 1987 Act was intended to achieve a purpose, which has been described by the courts. The achievement of that purpose must be a consideration in the exercise of any discretion and the achievement of that purpose may override any other consideration. Nevertheless, there is a residual discretion.
I turn then to the status of the purported offer of $292,693. That amount derives from the defendant's evidence as to earnings at the time of injury and is a schedule of damages attached to an email which refers to the Informal Settlement Conference ("ISC") that was to occur later that day. It was a schedule of damages and was not described by the defendant or its solicitors as an offer.
The offer at mediation which, was, at its highest, $45,000, exclusive of compensation repayment, was made orally. That oral offer at mediation is, as earlier stated in these reasons, equivalent to $435,500.48, as distinct from approximately $690,000. Further, the offer made during the course of mediation and/or the ISC was made orally. There is no evidence of any other offer.
The Court of Appeal has discussed the operation of s 151M and has said: "[154] Ports made no offer to settle the proceedings at any stage of the proceedings. I do not construe s 151M(4)(a)(i) of the WC Act (set out at [45] above) to mean that interest is unavailable to a plaintiff who amends his or her particulars of damage with the leave of the court, even if the amendment is made at a relatively late stage of the proceedings. The question posed by s 151M(4)(a)(i) is whether a defendant has been given information to enable a proper assessment of the plaintiff's claim and has had a reasonable opportunity to make an offer of settlement, where appropriate, in respect of the plaintiff's full entitlement to damages but has not done so. The words 'in respect of the plaintiff's full entitlement to damages' refer, in my opinion, to the offer to be made by the defendant. [155] A plaintiff will be unable to rely on s 151M(4)(a)(i) to claim interest unless: information that would enable a proper assessment of the plaintiff's claim has been given to the defendant; the defendant has had a reasonable opportunity to make an offer of settlement (where appropriate to do so); the opportunity is to make an offer in respect of the plaintiff's full entitlement to all damages; and the defendant makes no such offer. [156] The information that s 151M(4)(a)(i) requires to be provided to a defendant is that which would enable the defendant to make a proper assessment of the plaintiff's damages claim as then formulated. The defendant can preclude the plaintiff from relying on s 151M(4)(a)(i) to claim interest by making an offer of settlement in respect of the plaintiff's full entitlement to damages in accordance with the claim advanced by the plaintiff at the time. If the defendant makes no such offer, the plaintiff can rely on s 151M(4)(a)(i) to exempt him or her from the prohibition in s 151M(4)(a) on the court awarding interest. This is consistent with the evident purpose of s 151M(4), namely to impose restrictions on the plaintiff's entitlement to interest as a mechanism to encourage the parties, especially defendants, to make reasonable offers of settlement. [157] Section 151M(4) of the WC Act itself contemplates that the nature and extent of the plaintiff's claim to damages might vary during the course of the proceedings. Section 151M(4)(b) states that an offer by a defendant is not unreasonable for the purposes of s 151M(4)(a)(iii) if at the time the offer was made the defendant was not able to make a reasonable assessment of the plaintiff's full entitlement to damages. One reason why a defendant might not have been able to make a reasonable assessment of the plaintiff's 'full entitlement to damages' is that at the time the offer was made the plaintiff had not particularised a particular head of damages that he or she has subsequently claimed. For example, if Ports had made an offer to settle Mr Collins' damages claim at a time when he did not seek the cost of funds management, Ports' offer could not be regarded as unreasonable merely because it failed to take account of a head of damages that Mr Collins had not claimed. This supports a construction of s 151M(4)(a)(i) that relates the reasonable opportunity for a defendant to make an offer of settlement to the plaintiff's claim to damages as formulated at the time the opportunity is said to have been available to the defendant. [158] Ports had a reasonable opportunity to make an offer of settlement of the kind identified in s 151M(4)(a)(i), but it did not do so. Ports' first argument must be rejected." [2] (Emphasis in the original)
If, as has been submitted, the information provided to the defendant in relation to past earnings did not show the plaintiff had capacity to earn, or did in fact earn, amounts of the kind ultimately found by the Court, that does not mean that there was not information upon which an offer could have been made. The offer would have been lower, if the ATO material was used to calculate past earnings. Yet the defendant made no offer in writing.
If the extension of time were a basis upon which no reasonable offer could have been made, such a reason ceased when the extension was granted, namely on 17 July 2020. No offer was made at that point.
Over and above the foregoing, the plaintiff's claim was always based upon the claim that the plaintiff would have and did, but for the accident, work full-time, apart from a period of personal anguish, the circumstances of which are described in the substantive judgment. Further, much of the evidence and calculations of the past economic loss referred to that which was payable under the applicable Award or industrial instrument.
As a consequence, information was available beyond the tax returns and other information on past earnings. In the circumstances outlined in these reasons, based on the evidence before the Court on this supplementary aspect, at least as at July 2020, the defendant had information that would have enabled a proper assessment of the plaintiff's claim and had, at that point in time until the hearing, a reasonable opportunity to make an offer of settlement in respect of the plaintiff's full entitlement to all damages.
Further, without determining that a defendant can make a revised offer of settlement in circumstances where no first offer of settlement has been made, the defendant had a reasonable opportunity to make an offer of settlement at least in terms of that indicated at the informal settlement conference or based upon the schedule of damages that the defendant calculated. No such offer in writing was made.
Further again, to the extent that any offer was made, even orally, that offer was such that the precondition in s 151M(4)(a)(iii) has been satisfied. While the three sub-paragraphs of preconditions prescribed by s 151M(4) of the 1987 Act are in the alternative, save to the extent that there may not be able to be a revised offer if no offer has been made, each of them has been satisfied and the Court is entitled to order the payment of interest.
The provisions of s 151M(5) require that interest, if the Court is satisfied it is payable, is to be calculated for the period from the date of the injury of the worker, relevantly, until the date on which the Court determines the damages and in accordance with the principles ordinarily applicable for that purpose, subject, in the last aspect, to the provisions of s 151M itself. Over and above the provisions of s 151M(5), the provisions of s 151M(6) require that the interest be calculated at three quarters of the rate prescribed for the purpose of s 101 of the Civil Procedure Act.
The defendant submits that the interest should be calculated at the rate prescribed for pre-judgment interest under s 100 of the Civil Procedure Act. The purpose of the provisions on interest, once the statutory preconditions have been satisfied, are plainly intended to encourage defendants to make reasonable offers. This is one of the purposes of both the 1987 Act and the 1998 Act more generally.
While the ordinary principles applicable to the ordering of interest and its calculation apply, they apply subject to the provisions of s 151M of the 1987 Act. As a consequence, even if the ordinary principles were such that the rate of interest was that prescribed for the purposes of s 100 of the Civil Procedure Act, the provisions of s 151M(6) of the 1987 Act render three quarters of the rate prescribed for the purposes of s 101 of the Civil Procedure Act as the applicable rate, and not any other rate. As a consequence, it is that calculation that will be used for the purpose of calculating interest.
The foregoing conclusion that no offer and no reasonable offer were made depends, necessarily, in part, on the requirement in s 151M of the 1987 Act that the offer, at least for the purposes of s 151M, must be in writing. [3] This provision is intended to ensure that there can be no ambiguity about the nature of the offer that is made and its terms. It is possible for an offer of settlement to be in writing and sent by email or text. It is even possible for an offer to be in writing in circumstances where it is necessary to combine two documents.
Thus, if the schedule of damages were in writing, which it was, and a subsequent letter made clear that the defendant was offering that which was calculated on its schedule of damages, that would amount to an offer of settlement in writing.
The evidence before the Court, being the letter of 16 June 2020 over the signature of the solicitors for the defendant, was that the defendant was seeking instructions "as to whether the final offer made by our client at the recent settlement conference is still open for acceptance". Thus, it cannot be said that the offer, made orally at the ISC, was an offer ever made in writing.
For the foregoing reasons, the Court exercises its discretion, having been satisfied of the statutory conditions for the awarding of interest under s 151M of the 1987 Act, to order interest calculated from the date of injury until the date of the judgment.
The calculation of the plaintiff is challenged, but the challenge is confined to that which is stated as the median rate for the interest rates between the date of injury and the date of judgment. The date of judgment was 22 February 2021. The date of injury was 28 December 2003.
As a consequence of the objection, the Court has calculated for itself the median interest rate from 1 January 2004 until 31 December 2020. During that period there were 34 six-monthly periods. The sum of all of the interest rates for each of the periods, applicable under s 101 of the Civil Procedure Act, is 316.5 and the average interest rate is, therefore, 9.308%. Three quarters of 9.308% is 6.98%.
Otherwise, the calculation by the plaintiff is not challenged. The Court calculates interest on the basis of a sum of $413,573.11 over 17 years at 6.98%, which is an amount of $490,745.85. In accordance with the usual practice, half of that amount will be awarded, bringing the amount of interest to $245,372.92. The last calculation is for the purpose of averaging the interest on the damages over the period.
The Court makes the following orders: 1. Order 5 issued by the Court in these proceedings on 22 February 2021 is vacated; 2. Pursuant to the provisions of s 100 of the Civil Procedure Act 2005 (NSW) and s 151M of the Workers Compensation Act 1997 (NSW), the defendant shall pay interest on the damages awarded on 22 February 2021 in the amount of $245,372.92.

At a glance

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Judgment (7 paragraphs)

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Legislation Cited (4)

Cases Cited (2)

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