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[2018] VSCA 300
General information, not legal advice.
Court of Appeal (Vic)
2018-11-16
Tate JA, Beach JA, Kaye JA
Original judgment source is linked above.
Neate v Air Creations Design & Installation Pty Ltd (Unreported, County Court of Victoria, 14 December 2017)
ACCIDENT COMPENSATION - Appeal - Workplace injury - Statutory offer and counter offer - Construction of statutory counter offer - Effect of statutory counter offer - Whether statutory counter offer invalid - Whether statutory counter offer ambiguous - Whether terms of statutory counter offer uncertain - Identification of claim in respect of which statutory counter offer was made - Statutory counter offer not invalid - Statutory counter offer complying with s 134AB(12)(c) of - , (12), (13), (14) and (28).
CONTRACT - Offer and acceptance - Offer to settle one claim - Counter offer to settle claim by acceptance of sum of money in respect of another claim - Whether counter offer was made to settle first claim - Context - Offer and counter offer to settle same claim - Counter offer, if accepted, settling both claims.
1 The applicant, Mr Phillip Neate, was employed by the respondent, Air Creations Design & Installation Pty Ltd ('ACDI'). The issue in dispute in this application is whether a proceeding commenced by the applicant, against the respondent for common law damages ('the ACDI proceeding') was commenced within the time provided for in s 134AB(12)(e) of the Accident Compensation Act 1985 ('the Act'). That issue falls to be resolved by reference to whether the applicant made a statutory counter offer to a statutory offer in accordance with s 134AB(12)(c) of the Act.
2 The primary judge concluded that the applicant did not make a valid statutory counter offer, and the ACDI proceeding was thus issued outside the time limit provided for in s 134AB(12)(e). Acting on that conclusion, the judge dismissed the proceeding.[1]
3 The applicant now seeks leave to appeal and (if leave is granted) to appeal the judge's order dismissing his proceeding. In summary, he contends that he made a valid statutory counter offer within the time provided for, and as required by, s 134AB(12)(c); and that, having made a valid statutory counter offer, his proceeding was issued within the time provided for in s 134AB(12)(e). In five proposed grounds of appeal, the applicant contends that the primary judge was wrong when he held to the contrary and dismissed the ACDI proceeding.
4 The applicant was employed by the respondent from 1 July 2001 to 30 June 2005, and by MNG Services Pty Ltd ('MNG') from 1 July 2005 to 14 July 2010. He was an electrician specialising in refrigeration and air-conditioning. He alleges that as a result of his exposure to airborne substances and gasses in these employments, he developed emphysema and as a result has severely impaired respiratory function.
5 Prior to commencing the ACDI proceeding, the applicant commenced a proceeding against MNG ('the MNG proceeding'). In order to understand the issues in dispute between the parties, it is necessary to give a brief description of the course of both the MNG proceeding and the ACDI proceeding.
6 On 21 July 2015, the applicant made a serious injury application under s 134AB(4) of the Act in respect of a claim against MNG as his employer. The claim also referred to the respondent as another company against which the applicant claimed to have a cause of action. On 27 August 2015, the application was amended.
7 On 16 December 2015, the Victorian WorkCover Authority's solicitor notified the applicant's solicitors that the injuries referred to in the serious injury application gave rise to a degree of impairment greater than 30 per cent 'and therefore the injury is deemed to be a serious injury within the meaning of s 134AB of the Act'.
8 On 7 March 2016, pursuant to s 134AB(12)(b) of the Act, the Authority made a statutory offer of $NIL in respect of the applicant's claim against MNG. On 24 March 2016, pursuant to s 134AB(12)(c), the applicant made a statutory counter offer of $695,000.
9 The statutory offer process having failed to resolve the matter, on 13 May 2016, the applicant filed a writ and statement of claim, commencing the MNG proceeding. In the MNG proceeding, the applicant claims 'pain and suffering damages' and 'pecuniary loss damages'.[2] There is no dispute between the parties as to the validity of the MNG proceeding.
10 On 22 December 2015, the applicant made a further serious injury application.[3] In this application, the respondent was named as the employer, and MNG was identified as an additional company against whom the applicant claimed to have a cause of action. The application was accompanied by a draft statement of claim that named the respondent and MNG as defendants. The draft statement of claim alleged that the applicant was employed by the respondent and MNG 'collectively between 1 July 2001 and approximately 7 July 2010'; the applicant was exposed to particular gasses in the course of his employment and as a result suffered injury; and the injuries were caused by the negligence of, and/or breach of statutory duty by, the respondent and/or MNG.
11 On 30 March 2016, the solicitor for the Authority wrote to the applicant's solicitors advising that the degree of impairment of the applicant had been assessed at less than 30 per cent and that the injury the subject of the second serious injury application was therefore not deemed to be a serious injury within the meaning of s 134AB of the Act. The letter went on to say, however, that the Authority was satisfied that the applicant had suffered a serious injury within the meaning of s 134AB(38)(b)(i)-(ii), and that a certificate (enclosed with the letter) had been issued under s 134AB(16)(a), giving the Authority's consent to the bringing of a proceeding for pain and suffering and pecuniary loss damages.
12 On 16 June 2016, the Authority's solicitor sent a letter to the applicant's solicitors in the following terms:
Attached is a statutory offer for the purposes of s 134AB(12)(b) of the Accident Compensation Act 1985 (the Act).
The sum recorded in the offer of $NIL is a net amount, after the reduction required by s 134AB(25) of the Act.
For the avoidance of doubt, if the offer is accepted, there is no requirement for Phillip Neate to repay statutory compensation already received pursuant to the Act.
13 The offer attached to the Authority's solicitor's letter was made using the form (Form B) prescribed by Direction 12.1 of Ministerial Directions ('the Ministerial Directions') issued pursuant to s 134AF of the Act. The offer was signed by the Authority's solicitor, and was in the following terms:
Form B
Section 134AB(12)(b) Statutory Offer
Worker: Phillip Neate
Employer: Air Creations Designs & Installation Pty Ltd and MNG Services Pty Ltd and MNG Services Pty Ltd[4]
Agent/Self Insurer: VWA Allianz Workers' Compensation (Vic) Pty Ltd
Date of Worker's 22 December 2015
Application under
Statutory offer for the purposes of Section 134AB(12)(b)
Zero dollars only ($NIL).
__________________________________
Legal Representative of the Authority
Or Self Insurer
Date: 16 June 2016
14 On 7 July 2016, the applicant's solicitors sent a letter to the Authority's solicitor advising that the applicant had provided instructions to reject the statutory offer. The letter went on:
We enclose Form C statutory counter-offer.
The plaintiff offers to accept the sum of $200,000 for pain and suffering damages only in settlement of all claims that he may have against MNG Services Pty Ltd.
We look forward to receiving your response.
15 The counter offer enclosed with the applicant's solicitors' letter was made using the form (Form C) prescribed by Direction 12.2 of the Ministerial Directions. It was signed by the applicant's legal representative, and was in the following terms:
FORM C
SECTION 134AB(12)(c) STATUTORY COUNTER OFFER
Worker: Phillip Neate
Employer: Air Creation Designs & Installation Pty Ltd and MNG Services Pty Ltd
Self-Insurer: Allianz Australia Workers' Compensation (VIC) Ltd
Date of Workers 22 December 2015
Application under
Statutory counter offer for the purposes of Section 134AB(12)(c)
The Plaintiff offers to accept the sum of $200,000 for pain and suffering damages only in settlement of all claims that he may have as against MNG Services Pty Ltd
Two Hundred Thousand dollars
(Amount in words)
($200,000.00)
(Figure)
Worker: _____________________________________
Workers Legal Representative: _________________
Date: 07/07/16
16 On 11 July 2016, the Authority's solicitor wrote to the applicant's solicitors advising the applicant's solicitors that the applicant's statutory counter offer in respect of the respondent did not comply with s 134AB(12) of the Act; accordingly, pursuant to s 134AB(14) of the Act, the applicant was deemed to have made a statutory counter offer of the maximum amount that may be awarded as damages under s 134AB; and that the applicant's solicitors should take note of the operation of s 134AB(12)(e) of the Act (a provision providing for different time limits for the commencement of a proceeding, depending upon whether a worker has made a statutory counter offer, or has been, in the absence of a statutory counter offer, deemed to have made a statutory counter offer of the maximum amount).
17 The applicant's solicitors did not respond to the Authority's solicitors' letter. On 23 August 2016, the applicant filed a writ and statement of claim in the County Court against the respondent, commencing the ACDI proceeding. In the ACDI proceeding, as with the MNG proceeding, the applicant again claimed both pain and suffering damages and pecuniary loss damages.
18 Section 134AB(12) of the Act provides for the making of a statutory offer and a statutory counter offer before a common law proceeding can be commenced. Section 134AB(12) provides:
(12) The worker must not commence proceedings in accordance with this section, other than an application under subsection (16)(b) or the commencement of proceedings with the consent of the Authority under subsection (20) or (20A), unless -
(a) the worker and the Authority or self-insurer hold, or begin, a conference within 21 days after the response date; and
(b) the Authority or self-insurer makes a statutory offer in writing in settlement or compromise of the claim at that conference, or after the conference begins but no later than 60 days after the response date; and
(c) if the worker does not accept that statutory offer within 21 days after it is made, the worker, before the expiration of that period, makes a statutory counter offer in writing in settlement or compromise of the claim; and
(d) the Authority or self-insurer does not accept that counter offer within 21 days after it is made; and
(e) the proceedings are commenced not earlier than 21 days, and not more than 51 days, after the counter offer is made or, if a counter offer is deemed to have been made under subsection (14), not more than 30 days after the day on which the counter offer is deemed to have been made.
19 Sub-sections (13) and (14) of s 134AB deal with the circumstances where a required statutory offer or required statutory counter offer is not made. Those sub-sections provide:
(13) If the Authority or self-insurer does not make a statutory offer under subsection (12), the Authority or self-insurer is deemed, for the purposes of that subsection, to have made, on the 60th day after the response date, a statutory offer of nothing.
(14) If the Authority or self-insurer makes a statutory offer under subsection (12) and the worker does not make a statutory counter offer under that subsection, the worker is deemed, for the purposes of that subsection, to have made, on the 21st day after the statutory offer was made, a statutory counter offer of the maximum amount that may be awarded as damages under subsection (22)(a) and (b).
20 The amount of the statutory offer and the amount of the statutory counter offer is relevant to the issue of costs at the conclusion of a common law proceeding. Section 134AB(28) relevantly provides:
(28) In proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under subsection (12) -
(a) ...
(b) if judgment is obtained or a settlement or compromise is made in an amount not less than 90 per cent of the worker's statutory counter offer under subsection (12) and more than the statutory offer of the Authority or self-insurer, the Authority or self-insurer must pay the worker's party and party costs and its own costs;
(c) if judgment is obtained or a settlement or compromise is made in an amount not more than the statutory offer of the Authority or self-insurer under subsection (12), the worker must pay the party and party costs of the Authority or self-insurer and the worker's own costs;
(d) if judgment is obtained or a settlement or compromise is made in an amount that is more than the statutory offer of the Authority or self-insurer under subsection (12) but less than 90 per cent of the worker's statutory counter offer under that subsection, each party bears its own costs -
and the court must not otherwise make an order as to costs.
21 It was not in dispute before the primary judge that if the applicant's counter offer of 7 July 2016 was valid then the time limit for the applicant to commence a proceeding was 51 days from that date (27 August 2016). Similarly, it was not in dispute that if the counter offer was not a valid counter offer then proceedings were required to be issued within 51 days of the Authority's original offer made on 16 June 2016. Thus, if there was no valid counter offer then proceedings had to be commenced by 6 August 2016 ― and, as we have already observed, the ACDI proceeding was in fact commenced on 23 August 2016.
22 In argument before the primary judge, the applicant submitted that his statutory counter offer was valid because 'it was in the prescribed Form C and it involve[d] settlement of all claims against both ACDI and MNG'.[5] The applicant also submitted that his statutory counter offer, if accepted:
would result in a payment of $200,000 for pain and suffering ... in respect of MNG, and nil dollars for the alleged injury sustained in the course of the ACDI employment. The statutory counter offer therefore would, if accepted, resolve any claim the plaintiff may have against MNG and ACDI.[6]
23 The respondent, however, submitted that the 'purported statutory counter offer' proposed a settlement of only the claim against MNG, and that there was no offer in respect of the proposed claim against ACDI.[7] Alternatively, the respondent submitted that if the 'purported statutory counter offer' was an offer to settle the whole of the applicant's claim against both ACDI and MNG, it was 'invalid as it was of uncertain terms and effect'.[8]
24 The judge accepted the respondent's arguments.[9] The judge said:
The plaintiff alleged causes of action in respect of that injury against both employers MNG and ACDI. That was 'the claim' as that term is used in s 134AB(12)(c).
On its face the purported statutory counter-offer was not, in my opinion, 'in settlement or compromise of the claim' because it was stated as being a sum of money in respect of all claims that the plaintiff may have as against MNG Services Proprietary Limited. I have assumed the word 'only' qualifies the expression pain and suffering damages.
I do not accept that this statutory counter-offer could be interpreted as being an offer to settle the plaintiff's claim against both ACDI and MNG. This is not apparent upon a plain reading of the statutory counter-offer. The submission made on behalf of the plaintiff involves reading into the statutory counter-offer the words, 'and ACDI Proprietary Limited' after 'MNG Services Proprietary Limited'. On its face the offer is silent in respect of any potential claim the plaintiff may have against ACDI.
If I am wrong in my interpretation of the statutory counter offer this is clearly an ambiguous counter offer. Its terms are uncertain and imprecise. This is demonstrated by the vexed debate between the parties as to the meaning and effect of the statutory counter offer and my inability to accept the interpretation proposed on behalf of the plaintiff.[10]
25 In his application for leave to appeal, the applicant identified five proposed grounds of appeal as follows:
26 While the applicant advanced five separate proposed grounds of appeal, he did not argue the grounds separately. The applicant's submissions in this Court were made collectively in support of proposed grounds 1-5.
27 In short, the applicant advanced again the arguments that were advanced before the primary judge. Critically, however, the applicant advanced an argument in this Court that was not advanced below.[11] The argument was that when proper regard was had to the context in which the applicant's counter offer of 7 July 2016 was made, it was plain that it was a counter offer offering to settle the ACDI proceeding. The applicant submitted that the terms upon which he offered to settle 'the whole of the ACDI proceeding' was for a payment of $200,000 in settlement of all claims the applicant had against MNG.
28 Like the applicant, the respondent also argued the proposed grounds of appeal collectively ― although in the course of its argument it identified discrete reasons for why a particular proposed ground of appeal should be rejected.
29 In essence, the respondent supported the judge's reasons for concluding that the applicant's counter offer was not a valid counter offer. Specifically, the respondent contended that the counter offer made no offer as to the claim against the respondent. Alternatively, the counter offer's terms were uncertain or ambiguous and, as a consequence, the counter offer could not be regarded as 'a statutory counter offer in writing in settlement or compromise of the claim' within the meaning of s 134AB(12)(c) of the Act.
30 The statutory scheme in s 134AB of the Act requires a worker to establish the existence of a 'serious injury' within the meaning of the section (either by establishing a 30 percent or more whole person impairment, or by obtaining the consent of the Authority pursuant to s 134AB(16)(a) of the Act, or by obtaining leave from a court under s 134AB(16)(b)), and then to engage in a pre-litigation process involving a statutory conference, a statutory offer and a statutory counter offer as required by s 134AB(12) of the Act, before being able to commence a common law proceeding. In relation to each common law proceeding that a worker might seek to commence, the Act provides for only one statutory offer, to be made by the Authority, and one statutory counter offer to be made by the worker in response to the statutory offer.
31 While there was debate before us about the appropriateness of the statutory offer and the statutory counter offer in this case referring to both the respondent and MNG as the employer, ultimately no party sought to contend that the additional references to MNG invalidated the statutory offer or the statutory counter offer. The debate in this Court centred upon the statement in the applicant's counter offer that the applicant offered to accept a sum ($200,000) 'in settlement of all claims that he may have as against MNG'. The issue was whether the document, purporting to be a statutory counter offer made under s 134AB(12)(c) in relation to a serious injury that the applicant claimed arose out of or in the course of, or due to the nature of, employment with ACDI, and which contained this statement, constituted an offer to settle the applicant's foreshadowed common law claim against ACDI.
32 In our view, the judge was correct to reject the applicant's submission that in making an offer to accept the sum of $200,000 in settlement of all claims that he may have as against MNG, the applicant was offering to settle his claim against MNG for $200,000 and his claim against the respondent for $NIL. That, however, is not the end of the matter.
33 The applicant's primary position now is that, on its face and in context, the counter offer of 7 July 2016 could only be a statutory counter offer to settle the yet to
33 be issued ACDI proceeding. The settlement offered by the service of the counter offer document was that the ACDI proceeding would be settled if the Authority agreed to pay the sum of $200,000 for pain and suffering in settlement of the MNG proceeding. No other construction was open because the counter offer of 7 July 2016 was plainly responsive to the Authority's statutory offer of 16 June 2016 ― and that statutory offer was clearly made in respect of the applicant's foreshadowed common law claim against the respondent (ACDI).
34 In our view, the applicant's submissions must be accepted. We would, however, immediately observe that it is unfortunate that the primary judge was not given the assistance we were given by the applicant's senior counsel who appeared in this Court[12] and advanced this argument.
35 The Act does not prescribe the terms in which statutory offers and counter offers must be made. The Ministerial directions prescribe the forms that must be used (Form B and Form C). While there are spaces in those forms for the insertion of monetary amounts (in words and in figures), there is nothing in the forms that suggests that a party is prevented from making an offer or counter offer that involves additional (or perhaps even unusual) terms. The provision of additional terms may, however, impact upon the issue of costs required to be determined in accordance with s 134AB(28).[13]
36 In the present case, the Authority made an offer to settle the applicant's claim against the respondent. The applicant made a counter offer to settle the same claim. The counter offer involved the payment of a sum of money in settlement of a different claim (the claim against MNG). If the Authority had accepted the applicant's counter offer, the claim against the respondent would accordingly have been settled and, on the terms of the settlement, the applicant's claims against MNG
36 would also have been settled. Direction 12.3 of the Ministerial Directions[14] would then have required the applicant to execute a release in favour of the respondent. By its terms, that release would then have released MNG from all claims that the applicant had against it.
37 It follows that there should be a grant of leave and the appeal should be allowed. The applicant's counter offer of 7 July 2016 was an offer to settle the yet to be issued ACDI proceeding, on terms that the applicant be paid $200,000 in settlement of the MNG proceeding.
38 Leave to appeal will be granted. The appeal will be allowed. The orders made in the County Court on 14 December 2017 will be set aside and, in lieu thereof, it be ordered that the defendant's summons dated 17 October 2017 be dismissed.
[1] Neate v Air Creations Design & Installation Pty Ltd (Unreported, County Court of Victoria, 14 December 2017) ('Reasons').
[2] As those expressions are defined in s 134AB(37) of the Act.
[3] While the letter enclosing the serious injury application was dated 18 December 2015, in subsequent documents passing between the parties, the date of this application is stated as being 22 December 2015.
[4] While the reference to MNG in the employer section of the offer was the subject of argument between the parties, the second typing of its name in this section of the offer was not the subject of any submission or comment before us.
[11] No point, however, was taken by the respondent that the applicant was advancing a new argument in this Court. This was no doubt because the point was a pure point of construction and no additional evidence could have been put before the primary judge to meet it: see generally, MAAG Developments Pty Ltd v Oxanda Childcare Pty Ltd [2018] VSCA 289 [42].
[12] But who did not appear on the hearing before the primary judge.
[13] See Tinworth v WV Management Pty Ltd [2009] VSC 552 [60] (J Forrest J).
Where a claim or proceeding under section 134AB is settled or compromised, the worker must execute a release if and when called upon to do so by the employer, authorised agent, Authority or self-insurer (or their legal representatives). Such a release must be forwarded to the worker or the worker's legal representative within one business day of such settlement or compromise'.
Neate
Air Creations Design & Installation Pty Ltd [2018] VSCA 300