Harris v Western NSW Local Health District

Notice of Motion

1. On 18 May 2021, a notice of motion was filed by McCabe Curwood Lawyers for the LHD. It sought the following orders: 1. "(1) McCabe Curwood Lawyers be granted leave to appear on behalf of the defendant, Western NSW Local Health District, in respect of paras 26 to 41 of the Statement of Claim filed 15 March 2021 in these proceedings; 2. Paragraphs 1, 2, 26 to 41, and 42 of the statement of claim filed 15 March 2021 (the professional negligence claim) for the defendant be conducted separately by McCabe Curwood Lawyers pursuant to r7.8 of the Uniform Civil Procedure Rules 2005; 3. Paragraphs 1, 2, 3 to 25 of the statement of claim filed 15 March 2021 (the work injury damages claim) for the defendant be conducted separately by HWL Ebsworth Lawyers pursuant to UCPR r 7.8. 4. The professional negligence claim and the work injury damages claim be subject to separate determination pursuant to s 62(2) of the Civil Procedure Act 2005, UCPR r 28.2. 5. The professional negligence claim and the work injury damages claim be determined in separate proceedings pursuant to s 183 of the Civil Procedure Act."
2. McCabe Curwood were instructed to bring this notice of motion by Gallagher Bassett Services Pty Ltd ("GBS"), acting as an agent of Insurance for NSW. The extent of the agency of GBS and the instructions given to McCabe Curwood related only to the second cause of action pleaded by the plaintiff, namely, the professional negligence claim.
3. HWL Ebsworth were instructed to appear for the LHD by QBE as a "scheme agent" with respect to the first cause of action pleaded by the plaintiff being the work injury damages claim.
4. It is convenient, as the parties did, to describe the first cause of action as the work injury damages claim and the second cause of action as the professional negligence claim.

Submissions of GBS

1. Although it became apparent that it will be necessary for the plaintiff to amend her statement of claim with respect to a limited issue about the correct identification of the employer, having regard to the provisions of the Health Services Act 1997, no submissions were put to the Court which suggested that the plaintiff's cause of action was not properly arguable, nor that the Court would find that the joinder of the two causes of action was an abuse of process. It was submitted that the joinder of the two causes of action was inconvenient.
2. GBS submitted that, because of the differing nature of the two causes of action, the LHD should be entitled to have two sets of lawyers represent it: one, on the instructions of GBS, to deal with the professional negligence claim, and the other, instructed by QBE, to deal with the work injury damages claim. GBS submitted that by reference to the evidence of the plaintiff which had been served to date and all of the facts, matters and circumstances which it anticipated would be proved, the two causes of action were inconveniently, or perhaps inappropriately, joined in the one statement of claim.
3. The remedy, it was submitted, was for the Court to make the order for separate representation as set out in paragraphs 2 and 3 of the Notice of Motion. GBS submitted that this would: "…avoid conflating of the claims and issues, allow appropriate determination of the claims which are subject to separate statutory and insurance regimes and avoid any potential conflict likely to be encountered by the representatives of the LHD in relation to [the two] claims".
4. GBS also drew attention to the provisions of s 318 of the Workplace Injury Management and Workers Compensation Act 1998, which provides for limitations on the admissibility of evidence if not provided prior to the commencement of proceedings. GBS accepted that this restriction was subject to the Court granting leave "otherwise".
5. GBS also submitted that, although there was no evidence identifying an actual conflict of interest for the LHD, such a conflict was evident on the pleadings, the insurable interests and the different outcomes possible under the statutory regime, "which could only be reconciled by one insurer giving way to another should one seek to attribute injury to employment or to the medical treatment".
6. A similar submission was made about the order that there should be separate trials of the proceedings if they remain as presently constituted. It was said by GBS that separate determination (accompanied by separate representation) would allow separate submissions on particular discrete issues relevant to each claim "in the best interests of both the LHD and the relevant insurer interests".

Submissions of QBE

1. QBE joined in the submissions of GBS. In addition, it drew attention to various administrative aspects of the self‑insurance arrangements of NSW and its component organisations, such as the LHD, which it submitted supported the orders sought in the notice of motion.
2. QBE pointed to the differing statutory costs regimes applicable to work injury damages claims and those brought under the Civil Liability Act, which affected the professional negligence cause of action. QBE also pointed to a real risk of conflict of each designated pool of funds seeking to allocate liability to the other.

Submissions of the Plaintiff

1. The plaintiff submitted that there was no actual conflict identified. She also submitted that separate representation, and also a separation of the hearing of each claim, would cause her significant prejudice. She submitted that since the defendant was the same in respect to each cause of action, the proper and appropriate way in which to bring the claim was in one statement of claim. Particularly was this so, the plaintiff submitted, because the torts occurred within the same or immediately adjoining time periods and were interconnected by many common issues of fact. As well, she noted that her claim for damages was made as a single claim.

LHD Indemnity Position

1. Although there was no evidence specifically directed to the question, the parties were content to inform the Court, either by oral submission or else by reference to a decision of Hammerschlag J, QBE Insurance (Australia) Ltd v NSW Self Insurance Corporation [2013] NSWSC 1841, that the position of the LHD with respect to insurance and indemnity was as follows.
2. The LHD, as a component organisation of the Department of Health, does not, relevantly, have any insurance policies which would respond to either of these claims and which have been issued by an insurer authorised under the Insurance Act 1973 (Cth).
3. Rather, the LHD, as a NSW government agency, through the Department of Health, participates in the Treasury Managed Fund, ("TMF"), which is intended to, and does, compensate NSW government agencies, such as the LHD, for any liability which the LHD may incur from claims such as those made by the plaintiff.
4. The TMF is a scheme managed by the NSW Treasury, which conducts the scheme under the NSW Self Insurance Corporation Act 2004. The TMF is not an insurer. It is not subject to the provisions of the Insurance Act 1973, nor is it regulated by the Australian Prudential Regulatory Authority. The TMF is the central part of the self‑insurance arrangements made by the NSW Government for itself and its "budget‑dependent" agencies, such as the Department of Health and the LHD.
5. Insurance and Care (NSW), better known as iCare NSW, is the agency which oversees the administration of, at least, the claims management area of the TMF. QBE is one of the scheme agents which is contracted by iCare NSW to deal with claims for work injury damages. GBS is another agent contracted by iCare NSW to deal with some professional negligence claims.
6. Neither QBE nor GBS are insurers in respect of this function. They are not, themselves, at risk for any monetary liability. They are merely contracted claims agents or managers. As such, they have no financial interest in the claims but, rather, manage the financial interests of their principal, which is the TMF and, through it, the LHD, as a participating government agency.
7. The Department of Health and the LHD, as a participating government agency, are responsible for managing their own operations so as to minimise costs, including costs of claims against them. Administratively, and for accounting and other financial purposes including "benchmark premiums" and "hindsight adjustments", TMF holds pools of funds which are separately accounted for. Funds used to meet work injury damages claims are included within one pool. Funds used to meet professional negligence damages claims are held within another pool. So understood, it is clear that there are no "insurance interests" of the kind which could conceivably give rise to a conflict of interest, as submitted by GBS and QBE.

Discernment

1. There is only one defendant to the plaintiff's tortious claims for damages, namely, the LHD. It is entitled to claim compensation for any damages awarded against it from one source, namely, the TMF. There are no insurance arrangements.
2. Administratively, for its own purposes, the TMF and its managing agent, iCare NSW, choose to appoint different claims managers for different types of claims. Here, both claims managers are acting in the interests of the same, ultimately responsible government agency, namely the LHD.
3. The LHD is the only body ultimately affected by an award of damages in response to either cause of action. It is so affected through its budget. One mechanism of that financial effect is to be found in [23] of the decision of Hammerschlag J, where his Honour says: "Included in the instrument is Appendix 2 which contains information about the funding mechanism for the TMF. This is achieved by way of a budget for claims being allocated to a particular agency and premiums paid by the agency being set which will enable that budget to be made. Appendix 2 states that if an agency's budget allocation exceeds its premium this indicates that the agency has performed better than its benchmarks, or not as well if the premium is greater than the allocation."
4. So understood, the agency, namely, the LHD, is the body directly financially affected in every respect by the plaintiff's claim. As earlier noted, there is no conflict of interest at all for the LHD in respect of dealing with this claim by the plaintiff. There is competition, but no conflict, between the Claims Managers, QBE and GBS, and it is a consequence of that competition that one sees what has happened in this case.
5. A single claim is administratively dealt with by iCare NSW by allocating it to two claims agents. Because that is convenient administratively for iCare, the Court is asked to reorder the ordinary procedure of the plaintiff's claim to suit such administrative allocation. I fail to see why the Court should do anything of the kind.
6. It is a matter entirely for the LHD, on the material before the Court, to decide whether it contests either or both of the causes of action. It is entirely a matter for the LHD to determine in its own interests in what respect, if any, it concedes that it ought be held liable. The LHD is not under the control of the Claims Managers. The LHD is the body, as it seems to me, which bears the budgetary impact of any successful claim, and it is the body which can determine how its interests ought best be met.
7. There was no evidence put before the Court that any executive or officer of the LHD had engaged in the task of determining how it ought best be represented. Merely, the Court was asked to make the orders sought because, loosely, as it seems to me, each of the Claims Managers regarded themselves as in a position akin to an insurer, with competing interests of their own. That conclusion is based on the submissions made by the counsel for both GBS and QBE, which described each of their clients as having different insurance issues and conflicts of insurance.
8. Nothing, in my assessment, based on what is before the Court, could be further from the fact. The State Government has, for many years (no doubt for good reason) insured itself in respect of claims of this kind. It does not take out indemnity policies. It does not seek to move the risk from itself to any other insurance corporation. It seeks to manage it itself. It obliges government agencies, such as the LHD, to act in a way which minimises costs and claims, and, in that circumstance, it is inappropriate, in my opinion, for Claims Managers to seek to be separately represented in respect of a part of a claim which they have been asked to manage.
9. Separate representation comes at a cost. It comes at a cost not just to the plaintiff but because the cases are lengthened, cross‑examination of witnesses is conducted by two sets of lawyers for the LHD, issues are raised by separate sets of lawyers requiring additional correspondence and, in that way, cases are extended and made more complex and costs are increased. That constitutes a real prejudice to the plaintiff which, in my view, in light of all that I have been told and I have found in this judgment, is contrary to the just, quick and cheap resolution of the real issues in the proceedings: s 56, Civil Procedure Act 2005.
10. The principal complaint seems to me, when one puts aside any issue of conflict of interest, that the assessment of the plaintiff's damages will be complex because there are two different statutory regimes. That is true and the complexity arises because of the statutes which affect the causes of action brought by the plaintiff, but that is not a reason to make a claim even more complex. This Court deals, in many cases, with assessing damages in accordance with different statutory regimes. The Court will obtain all of the appropriate assistance it needs from counsel who appear before it.
11. Ultimately, though, it is necessary to keep in mind that the plaintiff's claim is for her present condition, which she attributes to being caused or materially contributed to by both of the torts which give rise to the cause of action.
12. She either succeeds on that claim or she does not. If she succeeds in demonstrating that both causes of action are made out and both were causal, in the sense just described, of her damage, then the Court will need to apportion the consequences of the causes of action between the two torts and assess the causes of action in accordance with the statutory regimes. If she succeeds on only one, then any complications of assessment disappear.
13. The joinder of the cause of action, as I have said, may be regarded as inconvenient to the Claims Managers of the LHD. However, to require the plaintiff to pursue, by the separate determination of each of the causes of action, her claim would itself be a matter of significant inconvenience to the plaintiff and to the Court.
14. Separate determination of the claim could give rise to inconsistent judgments and may well give rise to inconsistent findings about liability, apportionment and the extent of the plaintiff's disability. There is no basis, on the material provided for the Court to make an order that the claims be determined separately, pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 ("UCPR") or s 62(2) of the Civil Procedure Act.
15. I need also to remark on order 5 of the Notice of Motion, which seeks that the claims be determined in separate proceedings pursuant to s 183 of the Civil Procedure Act. Section 183 of the Civil Procedure Act is to be found in Pt 10 of the Civil Procedure Act. It applies to representative proceedings, otherwise colloquially known as class actions. It has no application to this case and is not a statutory basis upon which the order set out in paragraph 5 of the Notice of Motion can be made. That order has no basis to be made separately and apart from r 28.2.

Conclusion

1. The effect of this discernment is that the Notice of Motion brought by GBS must be dismissed. No basis has been shown for the Court to grant leave to the LHD to have two sets of lawyers to meet the plaintiff's claim. No basis has been shown on the material available for an order pursuant to r 28.2 of the UCPR for the separate determination of any question in the proceedings. No basis has been shown for the kind of relief claimed.
2. The order which follows is that the Notice of Motion filed on 18 May 2021 must be dismissed. Costs should follow the event, and the applicant on that Notice of Motion, being the LHD, ought pay the plaintiff's costs, and I would order that those costs be paid forthwith.

Consequent Directions

1. There are some consequential directions and orders which need to be given. As is apparent, the plaintiff needs to amend the Statement of Claim. As is also apparent, the Defence which has been filed by the LHD on 21 May 2021 also needs to be amended because it was purported to be filed in the interests of QBE.

Orders

1. I make the following orders: 1. Grant leave to the plaintiff to file an Amended Statement of Claim on or before 29 October 2021; 2. Direct that the defendant, the Local Health District, file and serve a defence to the Amended Statement of Claim on or before 4pm, 26 November 2021; 3. Fix the matter for directions before Garling J on 15 December 2021. 4. Liberty to apply.

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: 29 October 2021