Mitsubishi Motors Australia Ltd v Kowalski [2000] SAWCT 123

* any entitlement to worker's compensation including claims dated 7 April 1998, 2 August 1998 and 13 October 1998, as a result of a heart attack in December 1997, a low back injury in May 1989, a left leg injury in May 1989, an eye injury in December 1986 and a mental breakdown in August 1991;

* any future claims he may make in relation to his employment.

3 The settlement was recorded by Heads of Agreement signed by both parties on 27 October 1998 (AB Vol 1 69). This is a comprehensive document covering all of the relevant aspects of the settlement. It is not necessary to set it out in detail but its salient features were that the respondent agreed to accept $200000 in full and final settlement of any entitlement he may have to superannuation, sick leave, compensation and damages arising out of or in the course of his employment with the appellant. That sum was paid with a denial of liability and in full and final settlement of any injuries or disabilities in respect of an eye injury, middle finger injury, back or left leg injury, stress or mental breakdown and "a heart attack in December 1997". It was also in settlement of any outstanding sick leave, any matters related to the termination of his employment and any superannuation payable by the relevant superannuation fund. (par 1)

4 The Agreement made provision for the manner by which the settlement sum was to be paid (par 2) including an ex gratia payment of $125308.57 "as compensation for permanent disability impairing his future earning capacity" arising from the injuries and disabilities referred to in the Agreement (par 2.2) and $10000 to be paid by the appellant in consideration for the respondent foregoing any claims or future claims in any way arising from his employment (par 2.3).

5 There followed a recitation of certain matters which the parties agreed were in consideration for the payment of the settlement sum. Of significance, the appellant agreed to forego recovery of certain legal costs and agreed not to seek repayment of certain other amounts from the respondent. It also agreed to prepare and execute any documents necessary for the settlement and to arrange any necessary court appearances.

6 For his part the respondent agreed not to institute any legal proceedings or legal complaints with any Court, Tribunal or body in relation to the claims which were the subject of the settlement. He also agreed to discontinue all actions and proceedings currently subsisting between himself and the appellant.

7 It was in compliance with these obligations that the parties arranged for the respondent's application for expedited decision in Action Number 4163 of 1998 filed on 17 July 1998 to be called on before the Conciliation Officer on 3 November 1998.

8 The consent order signed by the Conciliation Officer and stamped with the Tribunal's seal was that the respondent worker's claim for "aggravation acceleration, exacerbation, deterioration of a pre-existing coronary heart disease and depression and heart attack (myocardial infarction)" as stated in the claim form of 7 April 1998 and further claimed on 2 August 1998 and 13 October 1998 were dismissed. The order noted that the parties had entered into an Agreement resolving all matters in dispute and that the consent was made on the express undertaking that if the terms were not met, the respondent would be entitled to make an application under s 88H of the Act to have the orders dismissing the action revoked. Such notation appears to have been made to protect the respondent's interests because the consent order pre-dated the completion of the terms of settlement. A similar notation was made by Judge Gilchrist in the order he made on 28 October 1998 dismissing other claims which were the subject of the settlement agreement. (AB Vol 2 12)

9 The respondent received the settlement monies on 9 November 1998. (AB Vol 1 137). Some 12 months later, by application dated 23 November 1999, he sought to have the consent order revoked on the grounds that

"As a result of an application in District Court Action No 957 of 1996 for Non Party discovery against the employer the applicant discovered that prior to and during the mediation conference the employer had failed to acted (sic) in good faith therefore the terms of an agreement which were made in good faith have not been met."

10 By way of clarification it was the respondent's assertion that the appellant did not act in good faith in reaching the settlement contained in the Agreement because it failed to disclose to him a medical report of Professor McFarlane dated 16 September 1998 and entitled "Draft medical report". The respondent asserted that this medical report supported the compensibility of the heart attack he suffered resulting from the stress of preparing for a court hearing against the appellant. He asserted that he would never have agreed to include the heart attack claim in the agreement had he known the contents of that medical report (AB vol 1 183).

11 Further assertions were contained in the affidavit sworn on 12 January 2000 which was before the learned Member (AB vol 1 143 - 147). In particular he asserted that the failure to disclose this medical report was in breach of s 109 of the Act, and that the Heads of Agreement were in breach of s 119 of the Act; that he agreed to the settlement of his claim because the appellant provided misleading information to him to his detriment; that pursuant to s 114 the ex gratia payment he received could not operate to reduce or affect any entitlement for a permanent disability or any entitlements for accepted disabilities; that the Heads of Agreement breached s 119 of the Act because it was an agreement to settle his compensation claims but also purported to dispose of certain entitlements pursuant to his contract of employment

12 The hearing before the learned Member was confined to the issue whether the Tribunal had jurisdiction to entertain this application. At the commencement of the hearing the respondent clarified the orders he was seeking. In addition to the setting aside of the consent order he also asked the Tribunal to declare "null and void" those parts of the Heads of Agreement which were contrary to s 119 of the Act, namely those parts which purported to exclude the operation of the Act (AB vol 1 170). He specifically identified par 1.1 in respect of which he sought to have reference to the heart attack of December 1997 deleted from the recitation of the claims for injury settled by the Agreement. (AB vol 1 172). He also identified par 2.3 by which the appellant agreed to pay the respondent $10000 in consideration for him "foregoing any claims or future claims in any way arising from his employment" (AB vol 1 68). It is apparent from his submissions that the respondent wishes to proceed with his heart attack claim in the Tribunal.

13 The learned Member's decision that the Tribunal does have jurisdiction was based on the broad grant of power contained in s 88H, and in particular s 88H(1)(c) which authorises the Tribunal to amend or set aside a judgment or order of the Tribunal "if the interests of justice require that the judgment or order be amended or set aside". This was his conclusion notwithstanding that the relevant consent order was "clearly no more than a piece of housekeeping to give effect to the Agreement reached by the parties on 27 October 1998" (AB vol 1 212) and that setting aside the consent order in the interests of justice would "necessarily call into consideration whether the Agreement reached by the parties on 27 November 1998 is binding on them". He addressed his mind to the consideration that the Agreement contains terms "not strictly involving workers compensation matters" but did not regard that as precluding the Tribunal from adjudicating on the Agreement's legal validity because he regarded that to be a necessary task "in the assessment of whether the interests of justice require that the consent orders of 3 November 1998 be set aside" (AB vol 1 213).

14 The appellant's position before the Full Tribunal was that the respondent was using the application to set aside a consent judgment as a vehicle by which to have certain aspects of the Heads of Agreement declared void, and that this Tribunal does not have the necessary jurisdiction which vests more appropriately in the civil courts. Mr Bonig, counsel for the appellant, identified two impediments to the Tribunal's power to set aside the consent order, the first being that the consent order was entered consequent upon an Agreement encompassing matters outside the Tribunal's jurisdiction (matters such as superannuation, sick leave and the termination of employment) and that it was not the entirety of the Agreement which was sought to be declared void, but only selected aspects.

15 With respect, the matters raised by Mr Bonig do not go to the Tribunal's jurisdiction but to the merits of the application. The Tribunal has jurisdiction to set aside an order because s 88H expressly gives that power. However, the Tribunal's jurisdiction is limited to the setting aside of the consent order. It has no jurisdiction to make any orders or declarations whatsoever in relation to the Heads of Agreement.

16 Furthermore, it cannot set aside the consent order unless the interests of justice require that to be done. In other words, the respondent, as the party seeking to set aside the order, must prove to the satisfaction of the Tribunal that an injustice would result if the consent order was not set aside.

17 That may well involve a consideration of the respondent's allegations of misleading conduct, which we might add, were elevated from bad faith in the respondent's application for directions to fraud, misrepresentation and unconscionable conduct in the submissions filed on 3 July 2000. It may also involve a consideration of whether the Agreement "excludes, modifies or restricts" the operation of the Act (s 119) or offends some other provision of the Act.

18 If, after hearing the merits of the application the Tribunal decides that the interests of justice require the setting aside of the consent order, the consequences of such a decision, in relation to the terms of the Agreement, will be matters for the parties to agitate elsewhere.

19 We would therefore dismiss the appellant's appeal.

20 The respondent's cross-appeal filed on 24 February 2000 was directed to a comment made by the learned Member in the course of his decision, namely that "the Agreement reached by the parties on 27 November 1998 will stand or fall in its entirety". The respondent sought an order deleting that passage from the decision. As this was an incidental expression of opinion not essential to the decision as to the Tribunal's jurisdiction to set aside the consent order, it is not an appropriate subject for a cross appeal.

21 It was not until the respondent filed his submissions on 3 July 2000 that he raised a further matter, namely the status of the consent order. He submitted that the consent order should be set aside or declared a nullity because it was not a final or formal order of the Tribunal and had not been made in accordance with r 1 or r 10(f) of the Workers Compensation Tribunal Rules. This was not a matter before the learned Member, or the subject of the appealed decision, and accordingly we do not propose to deal with it. When the application to set aside the consent order is before a single Member to be dealt with on its merits, the respondent may apply to amend his application for directions to plead an alternative order in those terms. The cross appeal is dismissed.