G P & A Sergi v Slavko Jurcevic

COUNSEL : G P McNally - Appellants N/A - Respondent SOLICITORS : Hunt & Hunt, Canberra - Appellants N/A - Respondent CATCHWORDS : WORKERS COMPENSATION - review of weekly compensation - application for determination - no answer filed - Pt 11 r 3 of Rules providing for deemed admission of applicant's claim and particulars subject to matter of defence in answer - whether applied to application for review as well as application for compensation (yes) - whether applied if no answer filed as well as if answer filed which did not traverse matter (yes) - construction of rule. WORKERS COMPENSATION - review of weekly compensation - Workers Compensation Act s 55 - whether discretion not to reduce compensation although proof that worker no longer incapacitated - not necessary to decide - worker duly served but did nothing - if discretion, could only have been exercised to reduce compensation - relief should not be refused because worker does nothing. DECISION : Appeal allowed; order below set aside and in lieu thereof it be ordered that the weekly payment of compensation to the respondent be reduced to nil from 1 July 1993. No order as to costs; grant liberty to the appellant to apply by written request to have matter relisted within fourteen days.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40740/97 CC 4850/94

1 BEAZLEY JA: I agree with Giles JA. 2 GILES JA: In 1990 the respondent obtained in the Compensation Court an order for weekly payment of compensation by the appellant on the basis of partial incapacity for work. The payment was $150.00 per week. In 1994 the appellant applied for review of the weekly payment of compensation. Section 55 of the Workers Compensation Act 1987 ("the Act") provided for review "because of a change of circumstances", and the appellant sought a variation of the payment to nil from 1 July 1993 on the ground that the respondent was not incapacitated for work from that date. O'Toole CCJ declined to order the variation. 3 In accordance with Pt 5 r 4(c) of the Compensation Court Rules, the application was brought by an application for determination. There were difficulties in service of the application for determination on the respondent, it seems because he was an itinerant fruit picker. An order for substituted service was made, and service was effected in accordance with that order. There was also evidence of personal service, on a person said to be the respondent but without the customary evidence of identity: other evidence suggested that the person would have been the respondent. 4 In the manner later described, the Rules provided for the respondent to file an answer or a notice of appearance. The respondent did not file either, and did not participate in the hearing of the application. 5 The appellant argued that cessation of partial incapacity for work was established because of an admission or admissions taken to have been made by the respondent pursuant to the Rules. The application was dismissed because her Honour did not accept the argument, and was not otherwise satisfied that the respondent was not incapacitated for work from 1 July 1993, and because in any event she considered that she had a discretion under s 55 and that the discretion should not be exercised even if cessation of partial incapacity for work had been established by the operation of the Rules. 6 This appeal, which by s 32 of the Compensation Court Act 1984 relevantly lies on point of law only, is concerned with - (a) whether there was or were the admission or admissions pursuant to the Rules; and (b) if there was or were the admission or admissions - (i) whether there was a discretion under s 55; and (ii) whether the discretion could have been exercised otherwise than in favour of the appellant. 7 There was evidence in this Court of service of the notice of appeal on the respondent. He did not appear and did not participate in the hearing of the appeal.

(a) Admission or admissions 8 By Pt 9 r 2 of the Rules, a party filing a document had to include such particulars of his claim as were necessary to enable the opposite party to identify the case he was required to meet. The relevant prescribed form of an application for determination provided for particulars to be set out, indicating certain particulars but stating that further particulars could be given. The appellant's application for determination did not entirely follow the prescribed form, but included - "6. Particulars of variation sought of weekly payment: (a) Diminution - to Nil p.w. as from 1 July 1993 to date (b) Termination as from 1 July 1993 7. Grounds upon which variation is sought: The Respondent worker is no longer partially incapacitated for work and/or any incapacity is unrelated to his employment with the Applicant. 8. Particulars of Applicant's claim as to worker's incapacity: (a) The Respondent worker is no longer incapacitated for work from 1 July 1993 to date. 9. (a) Worker's probable weekly earnings but for the injury: (a) $350.00 per week as adjusted. (b) Worker's actual earnings: (b) Nil (c) Worker's ability to earn: (c) $350.00 per week as adjusted"

9 The appellant argued before her Honour, and again in this Court, that by force of Pt 11 r 3(4) of the Rules the respondent was taken to have admitted its claim and particulars, and specifically was taken to have admitted that he had not been incapacitated for work from 1 July 1993 to the date of the application for determination, that he had an ability to earn equal to his probable weekly earnings but for the injury, and that he was no longer partially incapacitated for work in a manner related to his employment with the appellant. 10 Part 11 r 1 provided for the representation in the appearance of a party to any proceedings - in person, by a barrister or solicitor, in the case of a corporation by an approved authorised representative, or by another person with leave. By Pt 11 r 2, before a respondent to proceedings was heard in the proceedings and unless he had filed an answer, he had to file and serve a notice of appearance. 11 Part 11 r 3 in its form at the time then provided - "3(1) A respondent to proceedings may, not later than 28 days after service on him of the originating process in the proceedings, file, and serve on all other parties to the proceedings, an answer setting out - (a) any grounds on which he intends to deny wholly or partially the applicant's claim; (b) any respects in which he alleges that the applicant's particulars are inaccurate or incomplete, including full particulars of any such allegation; and

(c) any fact and the effect of any document which he intends to bring to the notice of the Court or on which he intends to rely. (2) Without limiting the generality of subrule (1), where a respondent intends - (a) to deny wholly or partially that he is liable to pay to the applicant the compensation claimed or that the applicant is entitled to the relief sought, he shall set out in his answer a statement of the grounds on which and the extent to which he denies that he is so liable or that the applicant is so entitled; or (b) to reply [sic: rely] upon the fact that - (i) any notice of injury or of incapacity or death was not given as required by the Workers Compensation Acts and the respondent is prejudiced in his defence by the want of that notice; or (ii) that the claim for compensation was not made within the time limited by the Workers Compensation Acts, he shall set out in his answer a detailed statement of that fact. (3) A respondent shall not, at any hearing of the proceedings, except by consent of the applicant or by leave, given on terms, of the Court, raise any matter of defence not raised in the answer filed by him under this rule. (4) Without limiting the generality of subrule (3), the applicant's claim and particulars, and any respondent's liability under the Workers Compensation Acts to pay the compensation claimed or to give the relief sought, shall, subject to - (a) any matter of defence contained in an answer filed by the respondent under this rule; (b) any consent of the applicant; or (c) any leave given by the Court (which leave may be given on terms) to file an answer or amend an answer; be taken to be admitted for the purposes of the proceedings. (5) For the purposes of subrule (3) and (4), a matter of defence may be raised in an answer by a denial or by a statement of non-admission, and either expressly or by necessary implication, and either generally or as to any particular allegation." 12 O'Toole CCJ held that the admission by force of Pt 11 r 3(4) was confined to the case where the application for determination had been filed by a worker claiming compensation from an employer. With respect, I consider that this was incorrect. Part 11 r 3(1) referred generally to originating process, and Pt 11 r 3(4) referred to giving the relief sought as well as to liability to pay claimed compensation. I do not think that the references in Pt 11 r 3 to liability to pay compensation or a claim for compensation limited either the application of the rule or the operation of the deemed admission to only that kind of application for determination. 13 If the respondent had filed an answer which did not take issue with some of the allegations in the application for determination, those allegations would have been taken to have been admitted. What was the position when he did not file an answer at all? Rules of court in other jurisdictions have provided for admissions in the event that allegations in a pleading are not denied. Their language and effect have varied. 14 In England in the High Court of Justice O 18 r 13(1) provides that any allegation of fact made by a party in his pleading "is deemed to be admitted by the opposite party unless it is traversed by the opposite party in his pleading or a joinder of issue under rule 14 operates as a denial of it". Order 18 r 14 provides for an implied joinder of issue if there is no reply to a defence, but that there cannot be an express or implied joinder of issue on a statement of claim. The notes to O 18 r 14 in the White Book (The Supreme Court Practice 1997 vol 1 para 18/14/1) say, referring to O 18 r 13(1), that if no defence is served in answer to a statement of claim the allegations of fact made in the statement of claim are deemed to be admitted. The learned editors accept, therefore, that a deemed admission comes about where the defendant fails to file a defence, as well as when the defendant files a defence but does not traverse some of the allegations of fact in the statement of claim. No authority was cited, but the authorities to which I later refer provide some support for that view. 15 In this Court Pt 15 r 20(1) of the Rules provides that an allegation of fact made by a party in his pleading "shall stand admitted by any opposite party required to plead to that pleading unless it is traversed by that opposite party in his pleading or a joinder of issue under rule 21 operates as a denial of it". Rule 21 provides for an implied joinder of issue if there is no reply to a defence, but that there cannot be a joinder of issue on a statement of claim. The substance of the rules is the same as the English rules. The notes to Pt 15 r 20(1) in Ritchie's Supreme Court Practice say that the deemed admission only applies if a pleading is in fact filed by the opposite party, so that a defendant's failure to file and serve a defence does not give rise to a deemed admission of all the matters alleged in the statement of claim. The only authority given is My Distributors Pty Ltd v Omaq Pty Ltd (1992) 36 FCR 578. 16 My Distributors Pty Ltd v Omaq Pty Ltd was a decision of the Full Court of the Federal Court, given in relation to Order 11 r 13 of the Federal Court Rules. Order 11 r 13(1) provided that an allegation of fact made by a party in his pleading "is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue under r 14 operates as a denial of it". Rule 14 provided for an implied joinder of issue if there was no reply to a defence, but that there could not be a joinder of issue on a statement of claim. The substance of the rules was the same as the English rules, and the terms were almost identical to the rules of this Court. The applicant's application was set down for hearing in the normal way, but in the absence of a filed defence, and was heard ex parte. It was held that Order 11 r 13 had no application where no defence had been filed or served. 17 Sweeney J said (at 581) that the rule was part of Order 11 dealing with pleadings, and had the effect that where a defence had been filed and served an allegation of fact made in the statement of claim which was not traversed in the defence was deemed to be admitted. Northrop J said (at 584) that if no defence was filed to a statement of claim, the absence of the defence could not constitute an admission of the facts alleged in the statement of claim ("There is no defence and thus there is nothing in existence on which O 11 r 13 can operate"), and that in the absence of a defence the rule had no application. Their Honours did not go into further detail. 18 Gray J said (at 587) - "This rule appears in the context of a series of rules dealing with the form of pleadings, which constitute Div 1 of O 11. Within O 11, r 13 itself, there are to be found specific provisions as to the form which pleadings must take. It does not appear on the face of the rule that it is designed to apply to a case in which there is no defence at all. Rather, the rule appears to convey that an allegation in a statement of claim will be deemed to be admitted if the opposite party does not traverse it (either denying or not admitting it) in its pleading. It presupposes that the opposite party will file and serve a pleading. Despite this context, there are authorities to the effect that the equivalent of O 11, r 13(1) in the rules of other courts operate to deem all allegations in a pleading to be admitted in the absence of any pleading by the opposite party: see National Bank of Australia v Cohen (1986) 22 VLR 269 at 270; Cribb v Freyberger [1919] WN 22; Nixon v W Phelan & Son Pty Ltd [1959] VR 83 at 84; and Lombank Ltd v Cook [1962] WLR 1133 at 1140; [1962] 3 All ER 491 at 498. Each of these cases was decided in the context of a rule permitting a party to move for judgment in default of defence and providing 'such judgment shall be given as, upon the writ or statement of claim, the Court or a Judge shall consider the plaintiff to be entitled to'. The equivalent provisions in the Federal Court Rules O 10, r 7 and O 11, r 23 provides as follows … I have considerable doubt whether O 11, r 13(1) can have the same effect as the equivalent provision in other rules of court. There is no equivalent in O 10, r 7, or in O 11, r 23, to the words 'such judgment shall be given as, upon the writ or statement of claim, the Court or a Judge shall consider the plaintiff to be entitled to'. The procedures in this Court differ from those in courts whose rules were based on the English rules of court. There are no provisions in this Court for the automatic entry of judgment in default of appearance. Instead, O 4, r 5 of the Federal Court Rules requires an application to bear a note that a respondent will be liable to suffer judgment or an order against him if there is no attendance on his behalf on the return date. The form of application, being Form 5 in the first schedule to the Rules, reflects this requirement. There is no provision for the automatic entry of judgment in default of delivery of a defence. Pleadings are filed as well as served. Order 10 of the Rules provides for directions hearings. The practice of the court is that the interlocutory stages of proceedings are conducted according to directions given at one or more directions hearings. If an occasion arises for a party to move for judgment under O 10, r 7, or O 11, r 23, O 19, rr 1 and 2 require that the motion be by notice and be supported by an affidavit, setting forth the facts relied upon. This Court is a court of limited jurisdiction. No judgment can be given unless the Court is satisfied that it has jurisdiction. At the very least, an affidavit supporting a motion for judgment, where no defence has been filed and served, would need to provide evidence on which the court could be so satisfied. I am inclined to the view that affidavit evidence proving the facts necessary to entitle the party moving the court to judgment would also be necessary."

19 Of the cases cited by Gray J, in Lombank Ltd v Cook (1962) WLR 1133 at 1140; (1962) 3 All ER 491 at 498 it was said that on the hearing of a motion for judgment in default of a defence "it is well established that all facts pleaded in the statement of claim are to be taken as established …"; in National Bank of Australasia v Cohen (1896) 22 VLR 269 it appeared to be accepted that, on a motion of a similar kind, in default of delivery of a defence the allegations of fact in the statement of claim were taken as admitted; and in Nixon v W Phelan & Son Pty Ltd (1959) VR 83 it was said that upon default of pleading the allegations of fact in the counter claim were to be taken to be admitted, again in the context of an application for summary judgment. The report in Cribb v Freyberger (1919) WN 22 is cryptic, but in the context of a default judgment did refer to an allegation in the statement of claim being taken as admitted. 20 The remarks of Gray J in My Distributors Pty Ltd v Omaq Pty Ltd were adopted by Drummond J in Australian Securities Commission v MacLeod (1994) 140 ALR 717, but it was said (at 719, 721) that the original English rule dealing with judgment in default of a defence permitted proof of the plaintiff's case "by the admission by the defendant of the facts alleged in the statement of claim constituted by his failure to plead to them". Smith v Buchan (1888) 58 LT 710 and Young v Thomas (1892) 2 Ch 134 were cited, and illustrate that practice. 21 It is, I think, unnecessary to resolve a degree of tension in these authorities and commentaries. For present purposes, it has undoubtedly been accepted that rules of court may provide for deemed admission of allegations in the document by which a claim is made in the absence of an appropriate document responding to the claim. It is a question of construing the relevant rules in their context. 22 On one view, a rule in the terms of the rule with which My Distributors Pty Ltd v Omaq Pty Ltd was concerned assumes the filing by the opposite party of a pleading, although the express provision that there can be no implied joinder of issue could indicate that, in the absence of a pleading, there will be deemed admission. In the present case, however, although Pt 11 r 3(3) referred to "the answer filed" by the respondent, Pt 11 r 3(4) made clear that it operated to bring the deemed admission even in the absence of an answer, because it provided in Pt 11 r 3(4)(c) that the deemed admission should be subject to leave given to file an answer. And the context did not detract from this. The respondent was not obliged to file and serve an answer, and if he did not file and serve an answer he could still appear and be heard in the proceedings. In the absence of an answer, the applicant would be entitled to apply for default judgment (Pt 10 r 1) with the benefit of the admission, or (as the rule then stood) for summary judgment (Pt 10 r 2) with the same benefit. The respondent would be able to oppose default judgment or summary judgment, but subject to the admission and in all probability with the need to apply for leave to file an answer. Alternatively, the applicant could have the proceedings set down for hearing and, again with the benefit of the admission, obtain judgment either ex parte or on a contested basis, with the respondent similarly constrained. 23 In my view, on the proper construction of Pt 11 r 3 in its context the respondent was taken to have admitted the appellant's claim and particulars, and O'Toole CCJ erred in holding to the contrary.

(b) Discretion 24 Section 55 of the Act in its form in 1994 provided - "55(1) Any weekly payment of compensation may, because of a change of circumstances, be reviewed by the Compensation Court at the request of the employer or the worker or of the Authority. (2) On any such review - (a) the weekly payment may be ended, reduced or increased (but subject to the provisions of this Division relating to the amount of the weekly payment); and (b) the amount of the weekly payment (if any) shall, in default of agreement, be settled by the Compensation Court. (3) On any such review, the amount of any weekly payment payable in respect of an injury may be increased to such an amount as would have been awarded if the worker had, at the time of the injury, been earning the wage or salary which the worker would probably have been earning, at the date of the review, if the worker had remained uninjured and continued to be employed in the same or some comparable employment. (4) A review under this section shall be given such priority as is reasonably practicable, and any necessary directions maybe given to expedite the hearing of the matter." 25 I do not think it necessary to decide whether, because of the use of "may" in subs (1) and elsewhere or for any other reason, the Compensation Court could decline to end or reduce a weekly payment if the requesting employer established that the worker was no longer incapacitated or no longer as incapacitated as he had been at the time of the original order. If there were a discretion, her Honour was required to exercise it judicially, that is, on proper grounds, and in my view in the present case it could only have been exercised in favour of the appellant. 26 Her Honour's reasons for declining to make the orders sought by the appellant appear to have been that she was not satisfied, despite the evidence of substituted service, that the respondent knew of the hearing before her, or that his failure to file an answer or attend the hearing was from disinterest or unwillingness to participate. 27 Her Honour appears to have overlooked the evidence of personal service, evidence of service on a person said to be the respondent at a place where other evidence showed he was working as a fruit picker at the time, and in my view this evidence was sufficient to establish that the application for determination had come to the notice of the respondent. 28 The application for determination included in a notice to the respondent that the court would hear the application at a place and on a date to be fixed by the Registrar in accordance with the rules, and that if the respondent did not then appear in person or by his solicitor or agent such order would be made and proceedings taken as the court might think just and expedient; it also included - "AND FURTHER TAKE NOTICE THAT if you consider that the applicant's particulars are in any respect inaccurate or incomplete or desire to bring to the notice of the Court or to rely upon any fact or document YOU MUST FILE WITH ME AN ANSWER stating your name and address and the name and address of your solicitor or agent if any and stating the grounds on which and the extent to which you deny liability to pay compensation or to furnish the relief claimed and in what respects the applicant's particulars are inaccurate or incomplete and stating concisely any fact and the effect of any document which you desire to bring to the notice of the Court or on which you desire to rely AND THAT, to the extent that you fail to do so, you will be taken to admit the applicant's particulars and your liability to pay compensation or to furnish the relief claimed . AND FURTHER subject to the Rules such answer must be filed with me and a copy thereof must be served by you upon the applicant and each other respondent and his insurer within twenty-eight days after service of the application for determination upon you." [emphasis added]

Although not precisely in accordance with Pt 11 r 3, this sufficiently informed the respondent that he would be taken to have admitted the appellant's allegations if he did not file an answer. 29 The weekly payments had not been made for about eighteen months but the respondent had not protested. Given the evidence of service and the notice to the respondent, when in addition an order for substituted service had been made and service was effected in accordance with that order, I do not see how the Compensation Court could properly have withheld from the appellant relief to which it was entitled, because it had the benefit of the admissions, on the ground of insufficiency of notice to the respondent or that the respondent's failure to file an answer or to participate in the hearing might have been other than from disinterest or disinclination to participate. Where an applicant has brought his application in accordance with the rules, including as to service, and has established an entitlement to relief, the relief should not be withheld because the respondent does nothing. 30 In my opinion, therefore, the appeal should be allowed and it should be ordered that the order below be set aside and that in lieu thereof it be ordered that the weekly payment of compensation to the respondent be reduced to nil as from 1 July 1993. 31 The appellant said nothing about costs in its submissions. The application for determination gave no notice to the respondent of exposure to costs, and while the notice of appeal included "costs" amongst the orders sought the letter which accompanied it did not refer to exposure to costs. An order for costs against the respondent would probably be pointless, and the appellant may have been, and be, content to bear its costs. No order in relation to the costs of the application for determination or the appeal should presently be made, but if the appellant wishes to apply for such an order it should have liberty to apply by written request made within fourteen days to have the appeal relisted for that purpose. 32 DAVIES AJA: I agree with Giles JA. ________________

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