Statutory construction - Safety, Rehabilitation and Compensation Act 1988 (Cth) - Election to commence proceedings - Requirements - No new principles lodged - Whether abuse of process

Safety, Rehabilitation and Compensation Act 1988 (Cth)

Respondent (Defendant) : Australian Government Solicitor

Rasen v Merrett [1993] 1 QB 540

1 MALCOLM CJ: This was an application for leave to appeal from the orders made in the District Court on 4 April 2003 by Groves DCJ allowing an appeal from a District Court Registrar. His Honour ordered that the applicant's action in the District Court be dismissed and that the applicant pay the respondent's costs of the appeal.

2 The appeal in the District Court was against a decision of a Registrar who made an order on 12 December 2002 that part of the action relating to a claim for economic loss be struck out, while a claim relating to non-economic loss was allowed to stand.

3 At all material times, the applicant was employed by the Commonwealth as a member of the Australian army. The Commonwealth was his employer for the purposes of the Safety Rehabilitation and Compensation Act 1988 (Cth) ("the Act"). The issue raised by the proposed appeal is whether the applicant elected in writing to institute an action or proceeding against the Commonwealth under s 45 of the Act prior to the commencement of the proceedings.

4 By s 14 of the Act, Comcare is liable to pay compensation in respect of injuries suffered by Commonwealth employees. The injury must be an injury arising out of or in the course of the employee's employment: ss 4 and 5 of the Act. Pursuant to ss 24, 25 and 27 of the Act, Comcare is liable to pay compensation to an employee where the injury results in permanent impairment. Section 44 of the Act provides that an action or other proceeding for damages for work-related personal injuries does not lie against the Commonwealth. Section 45, however, provides that:

"(1) Where

(a) compensation is payable under section 24, 25 or 27 in respect of an injury to an employee and

(b) the Commonwealth, a Commonwealth authority, a licensed corporation or another employee would, but for subsection 44(1) be liable for damages for any non-economic loss suffered by the employee as a result of the injury;

the employee may, at any time before an amount of compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against the Commonwealth, ... or other employee for damages for that non-economic loss.

(2) Where an employee makes an election:

(a) subsection 44(1) does not apply in relation to an action or other proceedings subsequently instituted by the employee against the Commonwealth, the Commonwealth authority, the licensed corporation or the other employee for damages for the non-economic loss to which the election relates; and

(b) compensation is not payable after the date of the election under section 24, 25 or 27 in respect of the injury.

(3) An election is irrevocable.

(4) In an action or proceeding instituted as a result of an election made by an employment, the Court shall not award the employee damages of an amount exceeding $110,000 for any non-economic loss suffered by the employee."

5 If a plaintiff so elects, a number of consequences flow:

(a) compensation under ss 24, 25 and 27 is not payable: s 45(2)(b);

(b) the election is irrevocable: s 45(3); and

(c) the award of damages in the proceedings is limited to $110,000: s 45(4).

6 As Groves DCJ said in pars 10 - 11 of his reasons:

"10. The prohibition on making a claim at common law in the absence of an election under s 45 has been held to be a substantive provision and not merely a procedural one: see Austral Pacific Group Ltd (In liq) v Air Services Australia [2000] HCA 39; (2000) 203 CLR 136 at 148. The requirement of s 45 is not a precondition merely to the commencement of proceedings but rather it is a precondition to the existence of the cause of action. Section 44 and s 45 are substantive in the sense that without an election having been made under s 45 there is no cause of action. This requirement might be contrasted, for example, with s 47A of the Limitation Act where notice is required to be given before proceedings may be commenced but where there is a discretion in the Court to waive compliance with the requirement to give notice.

11. The provisions of s 45(2) make it clear that there must be a two stage process, firstly, the election and secondly the institution of proceedings. The election must be made prior to the commencement of proceedings so that the proceedings have been commenced as a result of the election. The issuing of a writ of itself is not an election in writing within s 45(1): Grogan v Commonwealth of Australia [1999] 1 Qd R 30; and Commonwealth of Australia v Flaviano & Anor (1996) 40 NSWLR 199."

7 Before the learned District Court Judge, the only communication upon which the applicant could rely as satisfying the election requirements of s 45 was a letter dated 10 August 2001 from his solicitors to the Defence Legal Service at the Department of Defence. The letter relevantly stated, "... We now propose to commence proceedings against the Commonwealth of Australia" and concludes with a request that the Department provide an address for service of the proceedings.

8 The Commonwealth contended before Groves DCJ that those words did not amount to an election in the sense required by the Act. The learned Judge correctly held that the applicant bore the onus of demonstrating that an election had been validly made under s 45: Austral Pacific Group Ltd (In liq) v Air Services Australia [2000] HCA 39; (2000) 203 CLR 136 at 149. In Commonwealth of Australia v Flaviano & Anor (1996) 40 NSWLR 199, Sheller JA said at 203:

"An election is a choice of alternative rights or claims. It may be made expressly or implied from conduct; see R P Meagher, W M C Gummow and J R F Lehane, Equity Doctrines and Remedies, 3rd ed (1992), at par 3915. While in some circumstances the institution of proceedings may be treated as an act of election, strictly speaking it is conduct from which an election may be inferred. Section 45 speaks of the employee electing in writing. I would infer that the employee is required so to express his or her election so that there can be no doubt about the matter. The requirements of the subsection are not met by conduct from which an election could be implied, such as the institution of proceedings to recover damages. That this is so finds support in the language of s 45. Subsection (2) provides that when an election is made, subs (1) does not apply in relation to an action or other proceedings subsequently instituted by the employee against the Commonwealth (my emphasis). Subsection (4) speaks of any action or proceeding instituted as a result of an election (my emphasis). With the greatest respect to the opinion of her Honour Judge McMurdo in Grogan v The Commonwealth, I do not think Mr Flaviano made an election in writing to institute an action or proceeding within the meaning of s 45 (1) by instituting the action or proceeding."

9 Groves DCJ concluded at par 16 that the election must be express, so that there could be no doubt about the matter and it could not be implied from conduct. As his Honour pointed out, that was the approach taken to the decision in Grogan v Commonwealth of Australia [1999] 1 Qd R 30 at 34. His Honour also noted that an election is by its very nature an informed choice between two inconsistent rights: Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634 and Commonwealth v Verwayen (1990) 170 CLR 394 at 421 per Brennan J.

10 Groves DCJ held that the making of an informed choice between two inconsistent rights required the plaintiff to consciously make an election in terms of the section, so that the conduct relied upon as constituting the election demonstrated that the employee was making a deliberate choice between:

(a) obtaining compensation for permanent impairment and non-economic loss pursuant to ss 24, 25 or 27 by application under the Act; or

(b) obtaining damages for non-economic loss subject to the limitations imposed by s 45 by way of judgment in proceedings commenced pursuant to s 45.

"The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other."

12 The learned Judge expressed his conclusions in pars 20 - 24 of his reasons as follows:

"20. In my view the words used in the letter of 10 August 2001 do no more than to communicate to the Commonwealth that the [applicant] had made a decision "...to commence proceedings..." As much as those words convey is that the [applicant] had in contemplation or was minded or inclined towards pursuing a common law claim for damages.

21. There is no mention of making or having made an election. The words of themselves do not convey any indication of an election having been made. Nor is there any indication that the effect or requirements of s 44 and s 45 had been considered or addressed.

22. Furthermore, the communication of the decision to commence proceedings can stand on no different footing and be no better than the actual commencement of proceedings. If commencing proceedings is not conduct which is capable of amounting to an election under s 45 because it is not an express statement of election then the writing of a letter simply advising of a decision to commence proceedings clearly could not be conduct which would constitute an election either. In my view it requires something more to be said. As it is, as the [applicant] must necessarily contend, it would require one reading the words to draw the conclusion that there has been an election by implication made by the [applicant]. Such is not permissible.

23. In my view the decision to commence proceedings is not sufficient to constitute an election. Therefore I find that the [applicant] has not made the election required by s 45. In the absence of an election the [applicant] has no cause of action against the Commonwealth."

13 In my opinion, the reasons advanced by the learned Judge in the District Court for his conclusion are compelling and entirely correct.

14 Before this Court, the Commonwealth contended that the application was of itself an abuse of process. As McKechnie J has pointed out, immediately following the decision of Groves DCJ, the applicant made an

express election under s 45 of the Act and, on 8 July 2003, filed and served a writ of summons pleading the same causes of action.

15 I agree with McKechnie J for the reasons which he has expressed that the making of the application for leave did not constitute an abuse of process.

16 In my opinion, the decision by Groves DCJ that the letter dated 10 August 2001 did not constitute an election in writing was entirely correct. I agree with McKechnie J that the subsequent election and institution of proceedings make it clear that there would be no significant injustice if the decision of Groves DCJ were left unreversed. In my opinion, the proposed appeal is entirely without merit and I would refuse leave to appeal.

17 MCKECHNIE J: This is the plaintiff's application for leave to appeal against a decision of Groves DCJ, who, in turn, allowed an appeal from a decision of a District Court Registrar and ordered that the plaintiff's action against the defendant be dismissed. The reasons for decision are reported as Harris v The Commonwealth of Australia [2003] WADC 79.

18 The issue in the appeal to Groves DCJ, and in this application, is whether the plaintiff, as an employee of the defendant, elected in writing to institute an action against the Commonwealth prior to the commencement of the District Court proceedings: Safety, Rehabilitation and Compensation Act 1988 (Cth), s 45. The application for leave is opposed by the Commonwealth on two grounds.

19 The Commonwealth contends that the application is, in the circumstances, an abuse of process.

20 Immediately following the decision of Groves DCJ, the applicant made an election under s 45 of the Act and, on 8 July 2003, filed and served a writ of summons pleading the same causes of action. The election, and the applicant's subsequent right to commence proceedings, are not in contention. It is submitted that the subject matter of the appeal disappeared once the applicant made the election on 22 April 2003 and that the proposed appeal is moot. Further, it is submitted the application tends to undermine the authority of the courts.

21 The election was made by a letter dated 22 April 2003 and which reads in part:

"We refer to the above matter and confirm that we have instructions to lodge an application for leave to appeal to the Full Court of the Supreme Court, which will be lodged prior to 25 April 2003. In addition, we also confirm that this letter is intended to be notice pursuant to Section 45 of the Safety Rehabilitation and Compensation Act that our client elects not to pursue a compensation claim for personal injury pursuant to Sections 24 and 27 of the Act arising out of a claim for depression and post-traumatic stress disorder lodged on 2 September 1999 and accepted on 8 January 2002 or any other matters referred to in paragraph 24 of the minute of substituted statement of claim in District Court Action 2253 of 2001. He instead elects to pursue a fresh common law claim for negligence against the Commonwealth under Section 45 of the Act in respect of his claim for depression and other injuries as set out in paragraph 24 of the Minute of Substituted Statement of Claim filed on 9 January 2003 in District Court Action 2253 of 2001.

...

We confirm we are instructed to issue fresh proceedings in respect of the subject matters of District Court Action 2253 of 2001. ..."

22 In the circumstances, I do not consider that the appeal is an abuse of process. The applicant seeks to maintain his position while wisely preserving his rights if his position proves to be wrong. While abuse may later arise if the two actions are maintained together, the only relevance of the election and institution of later proceedings is whether there will be a substantial injustice caused if leave to appeal is refused.

23 The applicant's solicitors wrote the Commonwealth a letter dated 10 August 2001 which commenced:

"... We now propose to commence proceedings against the Commonwealth of Australia. ..."

24 Groves DCJ held that this letter did not constitute an election in writing to institute an action or proceeding against the Commonwealth. He relied in particular, on Commonwealth of Australia v Flaviano & Anor (1996) 40 NSWLR 199 and Grogan v Commonwealth of Australia [1999] 1 Qd R 30

25 Commonwealth of Australia v Flaviano is authority binding on the Judge, being an authority of the New South Wales Court of Appeal on the construction of the Commonwealth Act. The Judge held that the words used in the letter do no more than communicate to the Commonwealth that the applicant had made a decision "to commence proceedings". There was no mention of making or having made an election and the words do not convey an indication of an election having been made. He further held that the communication of the decision to commence proceedings can stand on no different footing and be no better than the actual commencement of proceedings, which conduct is not capable of amounting to an election: Commonwealth of Australia v Flaviano per Sheller J at 203. The Judge supported his conclusion by reference to the facts [24].

26 In my opinion the decision of Groves DCJ on this aspect is plainly right. In any event, even if there were some merit in the application, I regard the subsequent election and institution of proceedings to be such so as to be satisfied that there would be no significant injustice if the decision were left unreversed.