Papercorp Pty Ltd v Nicolaou; Howden v Ansett Australia [2006] VSCA 143

Court of Appeal (Vic)|2006-07-07|Before: MAXWELL, A.C.J., NETTLE and ASHLEY, JJ.A.

Accident compensation - s.135AC(b), Accident Compensation Act 1985 - Whether application under s.135A(2B) made "before the expiration of three years after the date the incapacity became known" - Whether sufficient for a worker to know, outside the three-year period, that compensable injury has brought about long-term serious consequences of the pain and suffering kind - Relevance, if any, of development of serious economic consequences within the three year period - What is meant by the statement that "serious injury" means injury which in its consequences is serious for the particular worker.

2 I have had the advantage of reading in draft the reasons for judgment of Ashley, J.A. and I agree with the disposition of the appeals which his Honour proposes.

3 As Handley, J.A. said in another context in Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd,[1] the problem of defining the boundary between belief and knowledge for legal purposes did not arise for the first time in this case. It has been considered in a number of legal contexts and, generally speaking, it has been defined as including facts, apart from religious beliefs, that we believe to be true. In some contexts - perhaps most - it may also include matters that we wilfully abstain from knowing or against which we wilfully shut our eyes. And, as Ashley, J.A. observes, in others it may include matters of which a mentally disabled victim is incapable of comprehension but which to those around him are evident.

4 It is unnecessary for the present, and therefore it would be undesirable, for one to attempt a comprehensive definition of what is "known" for the purposes of the s.135AC(b) of the Accident Compensation Act 1985. But I should not wish to let the occasion pass without adding to the observations of Ashley, J.A. that I too consider that "Nelsonian knowledge"[2] and facts from which knowledge is objectively capable of ascertainment must, at least in some circumstances, be within the purview of the section's operation.

5 So to say is not intended to depart from what was said in Paget.[3] There is a long way between Callaway, J.A.'s man of fortitude and a man or woman who beyond fortitude or for some other reason deliberately closes his or her eyes to the obvious; and still further to someone so mentally impaired as to be incapable of relevant comprehension. Time does not run against the former, but it may against the others.

6 As Ashley, J.A. demonstrates, the judge in Howden was right to conclude that the appellant had knowledge of serious injury incapacity before 9 September 2001. Mr Howden was well aware before that date that he was afflicted by pain and suffering which on any analysis was serious. So, therefore, in his case there is no need to consider the possibility of any broader conception of knowledge than what in fact he knew. But with Nicolaou it is different.

7 I agree with respect with Ashley, J.A. that the trial judge in Nicolaou was in error in the way in which he approached the determination of the application and for that reason it is necessary for the matter to be remitted for redetermination in accordance with principle. With respect, I also agree with Ashley, J.A. that the principal question for the trial judge upon the redetermination is likely to be whether Mr Nicolaou's stoicism so operated as to prevent him focusing and thus assessing or perceiving accurately the extent of his incapacity. I would add, however, for my own part that the judge should also keep steadily in mind that, according to the facts of any given case, there may come a point at which stoicism gives way to a deliberate refusal to accept the obvious, whereupon knowledge is acquired.

Statement of the case

8 These appeals, brought by leave, raise common questions as to the proper

construction of s.135AC(b) of the Accident Compensation Act 1985 ("the Act"). In the first matter, Lenard Howden made unsuccessful application under s.135A(4)(b) of the Act for leave to bring a common law proceeding. His application failed because, although it was common ground that he had sustained serious injury to his low back in compensable circumstances, the learned County Court judge concluded that, in the language of s.135AC(b), he had not made an application for a determination under s.135A(2B) "before the expiration of three years after the date the incapacity became known". He appeals against that finding. In the second matter, Stefanos Nicolaou made successful application under s.135A(4)(b). The learned County Court judge concluded that Mr Nicolaou had sustained compensable injury which constituted serious injury, and that he had discharged an onus of showing that he had made his s.135A(2B) application within time. His employer appeals against that finding.

9 The common thread to the two matters is that each of the workers, having suffered compensable injury, continued on at work despite the presence of symptoms until, in Mr Howden's case, his employment ended with Ansett's collapse; and until, in Mr Nicolaou's case, he was made redundant when the section in which he was working closed down. It was the job loss, in each instance, which precipitated the worker's s.135A(2B) application. In each instance the employer relied upon s.135AC(b), contending that the worker had known of "the incapacity" - that is, "the incapacity arising from the injury" - well outside the period of three years before the relevant application was made. In Mr Howden's case, the employer went further. It contended that he had known of the relevant incapacity before 12 November 1997 - that bearing upon the operation of what I later describe as the qualifying part of s.135AC(b).

10 At the heart of the argument advanced for the employers was the proposition - disputed by the workers - that it was enough for a worker to know, outside the three year window, as counsel contended was here the case, that compensable injury had brought about long-term serious consequences of the pain and suffering kind. It mattered not that the particular worker only attributed importance to later-occurring economic consequences of injury.

The Course of Statutory Construction

11 It is desirable to refer immediately to some of the main authorities upon which counsel relied in their submissions. They show the path of statutory construction thus far. It is a path which has -

• Equated "serious injury" for the purposes of the Transport Accident Act 1986 with "serious injury" for the purposes of s.135A.

• Linked "serious injury" with "the incapacity arising from the injury" where found in s.135A(2)(b).

• Equated "the incapacity arising from the injury" where found in s.135AC(b) with the meaning given those words in s.135A(2)(b).

• Given meaning to the concept of knowledge that is resident in s.135AC(b).

12 That path of statutory construction was relied upon by counsel to yield the differing outcomes for which they contended. Immediate reference to it will, I think, illuminate the competing submissions.

13 State of Victoria v Collins[4] is authority for the proposition that "serious injury" as defined in s.135A(19) carries the meaning given that term in Humphries v Poljak[5]. In the latter case it was said that -

" To be 'serious' the consequences of the injury must be serious to the particular applicant. Those consequences will relate to pecuniary disadvantage and/or pain and suffering. In forming a judgment as to whether, when regard is had to such consequence, an injury is to be held to be serious the question to be asked is: can the injury, when judged by comparison with other cases in the range of possible impairments or losses, be fairly described at least as 'very considerable' and certainly more than 'significant' or 'marked' "?

Note that the passage just cited refers to serious consequences relating to "pecuniary disadvantage and/or pain and suffering".

14 The question which arose in Collins concerned the construction of s.135A(2)(b), which permits a worker to recover damages for compensable injury -

"if that injury is a serious injury and arose before [1 December 1992], but the incapacity arising from the injury did not become known until that date or a later date."

"I agree with the judge's conclusion that the incapacity arising from the injury is not the temporary incapacity for work produced by the initial insult, but rather is 'serious injury' incapacity which 'becomes known' when events demonstrate that the victim of the injury is, relevantly for the purposes of this case, suffering from a serious long-term impairment or loss of a body function. In other words the 'incapacity' of which s. 135A(2)(b) speaks is the incapacity which becomes known when the injury is demonstrated to be a 'serious' one within the meaning of subs. (19). Not only does s. 135A(2)(b) draw a clear connection between the 'serious injury' and the incapacity arising from that injury but the evident purpose of s. 135A is to entitle workers to recover damages for 'serious injuries.' "

and

"Although the trial judge, and the parties, proceeded upon the basis that 'the incapacity' referred to in the subsection was confined to 'work incapacity', for my own part I cannot see that, in the context of this section, the words are so limited."

and

"Furthermore, the incapacity referred to in s.135A(2)(a) is 'the incapacity arising from the [serious] injury.' Used in the context, it seems to me that the incapacity of which the section speaks is used in its more general and accepted sense of 'physical or mental incapacity', namely an incapacity to the victim deriving from the injury and its consequences. The definition of 'serious injury' in s.135A(19) is not related to incapacity for work although such an incapacity may, at once, be seen as a consequence of such an injury and a demonstration that the injury is a 'serious' one. However an incapacity for work is not necessarily a component of a 'serious injury'. Thus a worker who has been badly lacerated in a work accident might need several weeks off work after such an accident. After much treatment the resultant scarring might be seen to amount to 'permanent serious disfigurement' qualifying as a 'serious injury'. It is the ultimate disfigurement which, in my view, constitutes the 'incapacity' resulting from the injury to which s. 135A(2)(b) refers, and it would be a capricious result if such a worker was to be denied a claim under s. 135A simply because he or she had been temporarily incapacitated for work immediately following the accident. The 'seriousness' of an injury leading to the type of incapacity to which, in my view, s. 135A(2)(b) refers might, in some cases (e.g., loss of limb or sight) be immediately apparent upon the happening of the injury; but in many other cases it will be anticipated that appropriate treatment and management will preclude the injury from becoming 'serious', in the sense that it will forestall serious long-term incapacity. In these cases the nature of the incapacity will not become known until the facts demonstrating that the injury is 'serious'' are themselves known."[6]

16 In Paget v JLT Workers Compensation Services Pty Ltd and Anor[7], questions arose about the application of s.135AC(b). As to what was comprehended by the words, "the incapacity arising from the injury", Callaway JA, who gave the leading judgment, referred to the similarity of the language of s.135A(2)(b), and then said:

"In State of Victoria v. Collins[8] Winneke, P., in whose reasons Brooking and Chernov, JJ.A. concurred, said that 'the incapacity arising from the injury' was not the temporary incapacity for work produced by the initial insult, but rather was 'serious injury' incapacity, which becomes known when events demonstrate that the victim of the injury is, for the purposes of that case and the present case, suffering from a serious long-term impairment or loss of a body function. As I said earlier, it is not enough that events demonstrate that to others: the fact of serious long-term impairment or loss of a body function must become known to the worker."[9]

17 In a footnote to that passage, his Honour said this:

"I take knowledge, in this context, to be at least justified true belief. I do not know something unless I believe it and it is true and I have appropriate grounds for my belief. The last condition is necessary to distinguish knowledge from speculation or a lucky guess. I do not stay to consider whether there may be further conditions in some cases."[10]

18 Concerning "knowledge", his Honour said that -

"...the test is 'knowledge', not suspicion or awareness of facts that convey information to another, but actual subjective knowledge on the part of the [worker]."[11]

and

"All [the worker] had to prove was absence of knowledge, not an absence of suspicion or of facts from which persons of less fortitude might have drawn a more pessimistic conclusion."[12]

19 Edwards v McSaveney & Anor[13] was another case which concerned the application of s.135AC(b). In reasons with which Chernov and Nettle JJA agreed, I said that -

"For the purpose of s.135AC(b), the applicant had to satisfy his Honour that he did not know of serious injury incapacity arising from the compensable injury before 12 February 2000. The applicant gave evidence in his own words, not in the language of the Act; still less, in the language of the Act as interpreted by this Court. His Honour had to decide whether what he found to be the applicant's actual knowledge about the incapacitating effect of his injury - which, as might be expected, rested largely upon the applicant's evidence - meant that the applicant had failed to establish that he had made a s.135A(2B) application before the expiry of three years after the date of the incapacity becoming known to him."[14]

and

"It would have been wrong for the judge to conclude that it followed - assuming the doctors' opinions were to the effect that the applicant's compensable injury met the serious injury test well before 2000 - that the applicant, knowing that he suffered from the symptoms which informed those opinions, must be taken to have known that he was suffering from serious injury; or that he must be taken to have known such a thing if the doctors were shown to have offered him a gloomy prognosis."[15]

and

"On its face, s.135AC presents a somewhat more complicated problem. The judge has to decide the worker's state of knowledge, as a circumstance subjective to the worker. That, see Paget, is a question of pure fact. The judge then has to decide whether that state of subjective knowledge reveals knowledge, not of 'serious injury,' but rather knowledge of 'incapacity arising from the injury,' the latter having been interpreted in this Court to mean not a temporary incapacity for work produced by the initial trauma, but rather the serious injury incapacity which becomes known when events demonstrate that the worker is suffering from a serious long-term impairment or loss of body function; such incapacity not being confined to incapacity for work. The distinction is, however, more apparent than real in the case of s. 135AC(b). Callaway, J.A. made that point in Paget when he said that -

'the fact of serious long-term impairment or loss of body function must become known to the worker.'

It follows from what I have said that in concluding whether circumstances which a judge finds were actually known to the worker mean that the worker subjectively had knowledge of serious injury incapacity, the judge's task involves application of a template which contains elements of fact, degree and value judgment in the characterisation of that subjective knowledge."[16]

Competing submissions upon the construction issue

20 Essentially relying upon the authorities to which I have just referred, counsel for the employers submitted that each of the workers knew, outside the three year period, that he suffered from a serious injury incapacity. That knowledge at least consisted of knowledge of consequences of compensable injury of the pain and suffering kind, which were of the quality described in Humphries, and which had the necessary long-term characteristic. It did not matter that neither worker began to suffer any, or any significant, earnings loss until a time within the three year period mentioned in s.135AC(b). The worker had actual knowledge of the pain and suffering consequences of his compensable injury, notwithstanding that he had not been concerned about those consequences but only with the economic consequences of his injury. A worker could not postpone, as it were, the date of acquisition of relevant subjective knowledge. If the contrary was the case, the operation of s.135AC(b) might yield an extraordinarily long de facto limitation period. In any event, each of the workers knew that his employment options were limited at a time outside the three year window; and that made out a case of knowledge of the "pecuniary disadvantage" aspect of the Humphries formulation.[17]

21 Counsel for Mr Howden emphasized that "serious injury" means injury which in its consequences is serious for the particular worker. What must be determined is when consequences of injury ensued which, known to the particular worker, were serious for him. It was not determinative against a worker that he or she could have made a serious injury application at some earlier time, and could have succeeded in that application. Nor was it in point that, had Mr Howden considered his circumstances - physical and in terms of work capacity - at an earlier time, he could have known then that he had suffered serious injury incapacity. Further, s.135AC(b) should not be construed to encourage "protective applications" - that is, applications made to avoid the risk of a later-made claim falling foul of that section.

22 Counsel for Mr Nicolaou relevantly submitted that "the incapacity" for the purposes of s.135AC(b) is indivisible. Hence the reference to "the incapacity" rather than "an incapacity". It means the totality of the worker's incapacity attributable to compensable injury - that is, where they both ensue, consequences of both the pain and suffering kind and the pecuniary disadvantage kind. In Mr Nicolaou's case, that meant that he could not have had relevant knowledge until he lost his job, and economic consequences ensued. In any event, what had happened here, as the learned County Court judge had in substance found, was that the worker's job loss had altered his perception or assessment of the impact of the injury in terms of its pain and suffering consequences.

Resolution of the issue of construction

23 The main focus of s.135AC is upon s.135A. The latter section is concerned with compensable injuries which arose out of, or in the course of, or which were due to the nature of, employment before 12 November 1997, and which meet the criteria of either s.135A(2)(a) or (b).

24 There is a qualifying and an operative part to each of s.135AC(a) and (b). Compliance with the operative part of whichever paragraph applies in the particular case is a condition precedent to commencement of proceedings. The operation of the qualifying parts of the paragraphs is, in short, that paragraph (a) applies only if paragraph (b) does not do so. The latter applies -

"if the cause of action arose before 12 November 1997 and the incapacity arising from the injury was not known until after 12 November 1997."

25 If the qualifying part of paragraph (b) is satisfied, then an application under s.135(2B) must be made "before the expiration of three years after the date the incapacity became known". In deciding what is meant by "the incapacity" in the operative part of paragraph (b), consideration should be given to the words "the incapacity arising from the injury" in the qualifying part of the paragraph. "The incapacity" where later appearing should be taken to convey the same meaning as that conveyed by the longer description.

26 Central to the operative part of each paragraph is the making of an application under s.135A(2B). Such an application is necessary in every case to which s.135A applies. It is the starting point for the determination of the degree of impairment to which sub-section (2A) refers. Subject only to sub-section (2D), a worker may not bring proceedings - that is, in respect of "the injury" - unless such a determination[18] has been made. The effect of s.135AC is thus to add, when it applies, a further inhibition on commencing proceedings. Not only must a s.135A(2B) application have been made, it must have been made within a certain period. Unless s.135AC(b) applies, it must have been made before 1 September 2000. But in cases falling within paragraph (b), it must have been made "before the expiration of three years after the date the incapacity became known."

27 The different arguments advanced on these appeals proposed, in effect, that a worker's knowledge of "the incapacity [arising from the injury]" means knowledge of -

• All the consequences of compensable injury, such consequences attracting the description, "serious injury".

or

• Particular consequences of compensable injury of importance to the worker, which consequences are sufficient to attract the description, "serious injury".

or

• Any consequences of compensable injury which are sufficient to attract the description, "serious injury".

28 The effect of what was said in Humphries, in the passage which I earlier cited, is that compensable injury may attract the description "serious injury" because its consequences - in terms of pecuniary disadvantage and/or pain and suffering - are serious to the particular plaintiff. In one case, consequences of both kinds may ensue. In another case, there might only ever be consequences of the pain and suffering kind. In a case fitting the latter description, the different meanings which I identified a moment ago will yield the same outcome in the context of s.135AC(b). It will be the same when consequences of the pecuniary disadvantage and pain and suffering kinds ensue contemporaneously. The issue residing in the competing submissions really emerges only where consequences of the two kinds ensue at different times, and where the particular worker attaches importance to the consequence[19] which last ensues.

29 In my opinion, finding the answer to the instant problem of statutory construction is assisted by focusing on what is comprehended by a common law action for damages for personal injuries. Subject to various inhibitions, that is what s.135A is concerned with. That is, s.135A is concerned with the circumstances in which a worker[20] is to be permitted to bring a proceeding for damages in respect of injury sustained in compensable circumstances; and with what damages the worker may recover in such a proceeding.

30 It is fundamental that at common law a person may sue once only for injuries sustained by the negligent conduct of another.[21] The person sues, and can only sue, in respect of injuries which have then manifested themselves, and injuries which it is known or reasonably conjectured may ensue, and in respect of the known or potential effect - whether in terms of pain and suffering or pecuniary disadvantage - of any such injuries. If, after a proceeding is ended, some different injury unexpectedly develops, or some physical or financial consequence of known injury unexpectedly ensues, it is too bad. The Limitation of Actions Act 1958 [22] and the obligation of a plaintiff to prosecute a proceeding, rather than let it lie, in different ways deprive a plaintiff of the luxury of waiting to see whether, with the passage of time, new injuries or new and presently unexpected consequences of known injury will develop.

31 When leave is given to bring a proceeding under s.135A, it is in respect of "the injury" which was caused in compensable circumstances by the negligent conduct of the employer. True it is that a proceeding may only be brought if the injury is in its consequences a serious injury, but whatever the mechanism by which it is recognized as being a serious injury - whether it be a determination under sub-s.(3), the deeming effect of sub-s.(2DB), a consent issued under sub-s.(4)(a), or a grant of leave under sub-s.(4)(b) - the consequences of compensable injury in respect of which damages are recoverable are not delimited. So, for example, injury may be serious, when the relevant determination[23] is made, by reason of its pain and suffering impact. But that will not preclude the worker, at trial, seeking and recovering damages for later-ensuing loss of earnings or loss of earning capacity; or, indeed, for loss of earnings or loss of earning capacity which was present at time of determination of an application under sub-s.(2B) or at time of resolution of an application under sub-s.(4)(b), but which was not then such as constituted it a serious injury consequence.[24] So, once a proceeding is authorized, it is essentially a common law action of the ordinary kind, in which the plaintiff may seek and recover damages for all the consequences of compensable injury. That is so despite, for example, inhibitions upon the quantum of damages recoverable. It is a common law action upon a cause of action which is complete when once the negligent conduct is a cause of harm which is more than negligible;[25] but it is not limited to recovery of damages for the harm which meets the "more than negligible" test sufficient to make the cause of action complete. It is equally a common law action to which the Limitation of Actions Act applies.

32 It is certain, given the context which I have described, that there can only ever be one determination favourable to a worker under s.135A in respect of compensable injury attributable to an employer's particular negligent conduct. Once such a determination is made, a worker may then sue for all the consequences of that injury, regardless whether a particular consequence had ensued at the time of the determination.

33 It appears to me, in the event, that the words "the incapacity arising from the injury" in s.135AC(b) should be taken to mean any consequence, known to the worker, deriving from compensable injury, whether constituted by pain or suffering, or pecuniary disadvantage, or both, which would found a successful serious injury application. So to read the critical words is to recognize that "the [serious injury] incapacity arising from the injury" may be sufficiently constituted for the purposes of the subsection by a single consequence. Indeed, so far as the present issue of construction is concerned, the conception of consequences of different kinds - the presence of one or more of which may enable an injury to be characterized as serious injury - may be regarded as something of a distraction. It is the language of Humphries and not of the statute.

34 The way in which I would read the critical words in s.135AC(b) is in my opinion entirely consistent with what Winneke P said in Collins about the same words where used in s.135A(2)(b). Thus, his Honour said that

"the incapacity of which the section speaks is used in its more general and accepted sense of 'physical or mental incapacity', namely an incapacity to the victim deriving from the injury and its consequences." (my emphasis)

35 Further, to read the words as I propose will not operate to preclude a second application under s.135A when a first application fails because, despite the worker's belief in the seriousness of a particular consequence, it is determined that the consequence does not satisfy the serious injury template. A second application in those circumstances will not necessarily fall foul of s.135AC(b). On the other hand, for reasons which I have given, a second application, founded upon some newly emerging consequence, will either be redundant - if a permitted proceeding remains on foot; or irrelevant, if that proceeding is at an end.

36 That takes me to the question of the worker's knowledge. As I understand it, the effect of what Callaway JA said in Paget is that an applicant must prove absence of knowledge, before a particular date, of something which is true in fact; not absence of suspicion of that thing, or absence of knowledge of facts from which persons of less fortitude might have drawn a more pessimistic conclusion.

37 But knowledge of what thing? According to the submission advanced for the workers, the answer was to be found in the statement in Humphries that "to be 'serious', the consequences of the injury must be serious to the particular worker." That was said to mean, in effect, that "to be 'serious', the consequences of the injury must be serious according to the value judgment of the particular worker." I do not accept that submission.

38 To my mind, the point of the statement upon which counsel relied was this: it would be wrong to say that the same injury must be accounted serious or not serious regardless of the circumstances of the injured person. To take an oft-used example, the loss of the end joint of the ring finger might well be extremely serious for a concert pianist, or even for a keen amateur pianist: but it might well be inconsequential for a farm labourer or a sedentary worker. The same might be said of a knee injury suffered by, on the one hand, a professional footballer and, on the other hand, by a non-sporting and largely inactive person of advanced years.

39 But those examples do not lead to the conclusion that, in effect, an injured person may say, despite suffering known consequences of injury which are evidently serious, that for the purposes of s.135AC(b) those consequences are irrelevant; and that such person may fix on some later-occurring consequence as "the incapacity arising from the injury".

40 Take, for example, the case of a person whose eye is put out, or who loses a limb, by reason of an employer's negligent conduct. Winneke P observed in Collins[26] that the "seriousness" of an injury -

"might in some cases (eg, loss of a limb or sight) be immediately apparent upon the happening of the injury."

I respectfully agree. I reject the proposition, implicit in the submission advanced for the workers, that in such a case the injured person might say that he or she did not care about losing the limb, or losing the sight of the eye, but only about an actual loss of earnings, attributable to such loss, which ensued years later; and that such actual loss of earnings was "the incapacity arising from the injury" for the purposes of s.135AC(b). Not only would it read far too much into the passage in Humphries upon which counsel relied, it would do violence to the common law concept, resident in s.135A, that there is a single cause of action for all the known and reasonably foreseeable consequences of injury which are attributable to particular negligent conduct. Further, such a gloss on the passage in Humphries, if carried into the application of s.135AC(b), might well yield the result that a successful application could be made under s.135A despite the substantive proceeding almost certainly facing an insuperable limitation problem.

41 The question remains: knowledge of what thing? Paget in part provides a conceptual answer. It underlines the fact that knowledge and suspicion differ, and that circumstances which may yield knowledge in person A will not necessarily do so in the case of person B. But beyond that, the answer to the question is provided by the meaning which I have attributed to the words "the incapacity arising from the injury".

42 Paget also shows that, in a particular case, a worker's ability to block out pain can be pertinent to a finding what knowledge that worker possessed. But it does not conclude the circumstances which may bear upon determination of that matter.

43 In that connection it is convenient and desirable to say something about the manner in which the questions of serious injury and knowledge of incapacity arising from the injury are apparently being addressed in evidence upon the hearing of s.135A(4)(b) applications. Evidence of complaints of injury and symptoms made at particular times by a worker to others, most often doctors, can no doubt be relevant to deciding what answers should be given to both of those questions. So also, evidence of examination findings from time to time, and of medical opinion as to the extent of a worker's disability, are surely relevant to the question of serious injury, and may bear upon the question of the worker's knowledge.

44 Against that background, the situation appears to be that, for the purposes of obtaining a finding of serious injury, a worker most often relies upon conclusions expressed by doctors which are informed, in part, by the history, including complaints, provided by the worker to those doctors. In that connection, often enough, the employer's position is that the complaints were exaggerated, and that the medical opinion is, for that reason at least, unsound.

45 But in the context of the worker's state of knowledge of incapacity, the position of the parties appears to be effectively reversed. It is the employer which fastens upon complaints of disability at an early stage, and which emphasizes the significance of examination findings indicative of disability; whilst it is the worker's side which seeks to discount those matters, at least up to the time when s.135AC(b) no longer presents a problem. To add to the unsatisfactory nature of s.135A(4)(b) hearings in the County Court, this toing and froing is conducted almost entirely by reference to medical reports; for most often only the worker and (perhaps) a general practitioner give evidence viva voce.

46 Now, as I said in Edwards, in the circumstances there relevant -

"it would have been wrong for the judge to conclude that it followed - assuming the doctors' opinions were to the effect that the applicant's compensable injury met the serious injury test well before 2000 - that the applicant, knowing that he suffered from the symptoms which informed those opinions, must be taken to have known that he was suffering from serious injury; or that he must be taken to have known such a thing if the doctors were shown to have offered him a gloomy prognosis."[27]

47 Those observations are of general application. It is certainly not the case that a worker must be taken to have known at a particular time that he or she was suffering from serious injury incapacity - which has both a temporal and a qualitative aspect - because he or she made complaint of particular symptoms on one or more occasions at about that time. Neither is it required that pertinent knowledge be inferred from the circumstance that a doctor made findings indicative of serious injury on one or more occasions in a particular time-frame. Neither still must knowledge at a particular time necessarily be inferred from the circumstance that a doctor advised the patient of a gloomy prognosis as to the extent and probable duration of incapacity. Rather, the question whether a worker had relevant knowledge at a particular time requires an assessment of the worker's actual knowledge of those matters[28] at that time in all the circumstances of the case. Those circumstances might include a matter such as a worker's optimism - so long as it is not wholly unfounded[29] - as to prognosis; or, as I noted before, the ability of a particular worker to block out pain.

48 A question arises what should be made of a situation in which a judge at trial was satisfied that the worker failed at a particular time to appreciate the extent of his or her pain and disability which then amounted to a serious injury incapacity; only coming to know, in the sense of perceiving and assessing and so coming to believe in the existence of pain and disability of that magnitude, in consequence of a "focusing" event. That was said by his counsel to be Mr Nicolaou's situation.

49 The situation just described would be, I think, a rarity. It could only arise if very particular findings of fact were made. But in principle I think that want of awareness dictated by the kind of circumstances which I have described would be relevant to determining what knowledge of incapacity a worker had at a particular time.[30] Other circumstances which may be conjectured emphasize, however, that there would always need to be caution in connecting want of awareness and want of knowledge. If there was a necessary linkage, a brain-damaged worker unable to become cognisant of the extent of his or her disability could never acquire relevant knowledge; and that, surely, could not be the case.

The Proper Test for Determining the Appeals

50 It is for the judge hearing a s.135A(4)(b) application to decide what the worker knew about the extent of and probable duration his or her incapacity arising from the compensable injury at a particular time; and, always assuming that what the worker knew represented the truth of the situation, whether what the worker knew fitted the template of serious injury incapacity, that template involving elements of fact, degree and value judgment. It was submitted for Mr Nicolaou,[31] and really conceded by counsel for the employer, that in those circumstances the decision at first instance could only be interfered with if it was demonstrable that the judge had erred in point of principle, if there was a plain error in fact finding, or if the Court was satisfied that the decision was plainly wrong or wholly erroneous.

51 I agree with that submission. There is no basis for distinguishing the judge's task from the task faced by a judge under s.93 of the Transport Accident Act 1986, the task considered in Mobilio.

Resolution of Mr Howden's appeal

52 Mr Howden made application under s.135A(2B) on 9 September 2004. If s.135AC(b) applied - which the employer disputed, contending that s.135AC(a) was applicable - then it was necessary for Mr Howden to establish absence of relevant knowledge before 9 September 2001.

53 The learned County Court judge, expressly or by implication, made the following findings of fact:

• Mr Howden (conveniently, in this connection, "the plaintiff"), who was 57 at the time of hearing, had worked in a variety of manual and supervisory jobs after leaving school at age 15. His last employment was with Ansett, commencing in 1987[32] and finishing up on 13 September 2001 when the company ceased to trade.

• The plaintiff's back problems, upon which he founded his serious injury application, began in 1990, when he developed low back and leg pain.

• By August 1991 the plaintiff was in the hands of an orthopaedic surgeon. He was prescribed a brace, physiotherapy, and needed time off work.

• In 1992 and 1993, the plaintiff attended other specialists for his back problems. In March 1993, an orthopaedic surgeon diagnosed an intervertebral disc lesion with nerve root compression, and mooted surgery.

• In August 1996, the plaintiff was referred to yet another orthopaedic surgeon. A discogram was performed that month. It showed disc damage at the L4-L5 and S5-S1 levels. The surgeon told the plaintiff that he was not likely to improve without surgery. He regarded the plaintiff as being considerably disabled, and as being quite unfit to return to any work involving significant bending or lifting.

• The employer's compensation insurer refused to fund surgery. It held opinion, it seems, that the plaintiff's back problems were not work-related; and opinion that, in any event, surgery was likely to cause other discs to deteriorate. But later on, other surgeons advised the insurer that the plaintiff did suffer from compensable back injury which limited his work capacity.

• The plaintiff was a "very honest witness" and, it was clear, "had a serious physical incapacity due to his back injury, of which he was well aware, at least from September 1996 onwards."

• In the years leading up to his work cessation the plaintiff (as he stated in an affidavit)

"continued to have symptoms affecting his back, legs and feet along with restrictions, particularly relating to physical activity".

However, he

"was able to manage and get by and this was largely due to [his] accommodating employer."

• The plaintiff hoped to work to age 65, and believed he would achieve that goal. For the last three years before his retrenchment he -

"was performing lighter work....The effects of [his] back problem impacted on [his] work but these effects were tolerated by [his] employer."

Thus, as he said, he was permitted time off work where required, he often arrived late or left early because of the state of his back, he tried to ease his back discomfort at work by using a heated wheat bag, he regularly left his work station to move around, on occasions he lay on the floor to alleviate higher levels of pain, and on periodic bad days he required several periods of rest. All this was accepted by his work colleagues and supervisors.

• In 1993 the plaintiff lost nine months off work with his back problem. In 1996 he was five months off work. By 1998, when he was given lighter work, he knew that his ability to work as a storeman had gone.

• In the late nineties, the plaintiff was not working, or attempting much exercise, because it would make his back worse.

• In about 2000 the plaintiff sought legal advice about his back problems.[33] He was sent for medical assessment. He told an examining orthopaedic surgeon, in February 2001, that he was limited in recreational activities. The doctor reported, inter alia, that the plaintiff was able to control his pain to some extent - pain management techniques and change of occupation assisting in that connection.

• As at February 2001, as he agreed in his evidence, the plaintiff was taking "severe analgesics". He was in pretty much constant pain. He had periods of discomfort in getting to sleep. He had spent a substantial amount on a new bed to accommodate his back problem.

• At time of trial in late 2005, the plaintiff's back and leg pain was much worse than five years earlier.

54 Having found those facts, the learned judge recited the competing submissions. There is no suggestion that he did so inaccurately. He rejected the submission of plaintiff's counsel that the plaintiff was not precluded from bringing an application predominantly based upon the financial consequences of his back injury, of which he had no knowledge before his retrenchment, regardless whether at an earlier time he could have successfully applied for leave to bring a proceeding based upon known pain and suffering consequences - it being assumed for the purposes of the submission that the plaintiff had such knowledge well before 9 September 2001. His Honour agreed with the submission for the employer that the question was whether the plaintiff had shown that he did not have knowledge before 9 September 2001 that "he had a serious injury incapacity."

55 Thus far, his Honour's approach was, in my respectful opinion, in accordance with the proper construction of s.135AC(b).

56 The learned judge then distinguished Paget, on the facts. Here, the plaintiff "was well aware of his pain and suffering". Unlike Mr Paget, he had not "learnt to block the pain out of his mind".

57 His Honour then said this:

"Considering the plaintiff's situation objectively, in my view, applying the 'very considerable' comparative test in Humphries v Poljak (op.cit.) at 140, he could have succeeded in an application for leave to bring common law proceedings prior to 9 September 2001, both because of the pain and suffering consequences of his back injury and because his impairment rendered him permanently incapable of work involving heavy lifting and bending, which was the nature of his pre-injury employment (State of Victoria v. Glover [1998] VSCA 93, per Ormiston, J.A. at para.30). Looking at the situation subjectively from the plaintiff's point of view, as I must, it is clear that at least from 1998, if not earlier, the plaintiff had full knowledge of both the pain and suffering consequences of his injury and the work restrictions which the injury imposed upon him. Accordingly, I find that the plaintiff had knowledge of his 'serious injury incapacity' well before 9 September 2001."

58 In my opinion, as an exercise in legal analysis, there was no fault in what his Honour there said. It was one question whether the facts made out a conclusion that the plaintiff was at a particular time suffering from a serious injury incapacity. It is another question whether the plaintiff knew of those facts at that time. If the plaintiff did so, then it should be concluded that the plaintiff had knowledge for the purposes of s.135AC(b).

59 The question which then arises is whether Mr Howden can show that any of his Honour's findings of fact were wrong. In that connection, I should point out that whilst his Honour ultimately concluded that, before 9 September 2001, Mr Howden suffered from, and knew of, both pain and suffering and restriction upon his work capacity which constituted serious injury incapacity, it would have been enough had his Honour concluded that Mr Howden then suffered from, and knew that he suffered from, incapacity of one or other kind.

60 In my opinion, the findings of fact made by his Honour which led on to his ultimate conclusion were plainly open. Indeed, I should have thought that they were inescapable.

61 That leads on to another issue. Counsel for Mr Howden submitted on the appeal that his Honour's findings did not fully address what must be found if relevant knowledge was to be attributed to his client under s.135AC(b). They did not address the time of onset of the consequences which the worker considered to be important. The consequences constituting serious injury incapacity were not made personal to Mr Howden.

62 In my opinion, those submissions should be rejected. They were really premised on the notion that the operation of s.135AC(b) depended upon Mr Howden's identification of what serious injury consequences were important to him.

63 The only question which remains is whether his Honour's findings of fact enabled his ultimate conclusion - that is, as to Mr Howden's state of knowledge before 9 September 2001. If that conclusion was sound, it matters not whether Mr Howden had relevant knowledge before 12 November 1997. The result would be the same, although it would depend upon the operation of s.135AC(a).

64 It is true that many of his Honour's findings did not directly address the question of the plaintiff's subjective knowledge. It would have been wrong for the judge to have reasoned, because Mr Howden attended this or that doctor, or because this or that doctor expressed a particular opinion as to the state of the patient's back at a particular time, that therefore Mr Howden was seised of relevant knowledge. But as I see it, that is not what his Honour did. Whilst he recorded Mr Howden's progress from one doctor to another, from one medical investigation to another - which provided explanation why Mr Howden might have come to believe in a particular state of affairs - he made a number of findings as to Mr Howden's own assessment of his level of pain and suffering, of impairment in daily and recreational activities, and of inhibition upon work capacity. In my opinion, those findings well-entitled his Honour's ultimate conclusion as to Mr Howden's state of knowledge before 9 September 2001, a conclusion addressing both pain and suffering and pecuniary disadvantage consequences of compensable injury.

65 I should add this, although it does not affect my opinion as to the correct outcome of this appeal. Even if I had accepted the meaning of the words "the incapacity arising from the injury" as contended for by counsel for Mr. Howden and Mr. Nicolaou, it would not seem to go far enough to aid Mr Howden. The learned judge was entitled to, and did, find that before 9 September 2001 Mr Howden knew that he suffered from a serious injury incapacity constituted by inability to engage in the kinds of work in which he had historically engaged. If Mr Howden was to overcome that finding, he would have had to successfully contend not simply that a worker's knowledge is knowledge of a kind of serious injury incapacity which is important to him, but is knowledge of a superadded degree of a kind of serious injury incapacity of which he already knows. What I would describe as the greater argument has even less attraction than what might be called the lesser argument.

66 I consider, in the result, that Mr Howden's appeal must be dismissed.

Resolution of Mr Nicolaou's Appeal

67 The serious injury for which Mr Nicolaou (conveniently, in this connection, "the plaintiff") contended was injury to his shoulders. His s.135A(2B) application, which included a reference to lumbar spinal injury that was no longer pursued at trial, was dated 4 August 2004. So the key date for determination of what the plaintiff knew, or did not know, in the event that s.135AC(b) applied, was 4 August 2001.

68 A good deal of what the learned County Court judge said in his reasons as to the facts of the matter was uncontroversial, and may be shortly sketched.

69 The plaintiff was aged 54 at time of trial, and his work history was one of engaging in hard physical labour. He had engaged in work of that kind with Papercorp from 1992 until a few years before his retrenchment.

70 In 1994 the plaintiff had onset of right shoulder pain. He attended a local doctor and was treated with medication and injection.

71 In March 1996 the plaintiff re-attended his doctor with an aggravation of symptoms. By then he had suffered pain in his shoulder for 18 months. It caused him to put more load onto his left shoulder.

72 By March 1998 the plaintiff began to complain to his doctor about left shoulder pain. He was treated by local injection. His left shoulder got much worse over a three month period. By June 1998 his range of left shoulder movement was severely restricted.

73 In August 1998 the plaintiff consulted a surgeon, Mr Hooper, on referral by his general practitioner. X-rays and ultrasound showed damage to the cuff of the shoulder. It was surgically repaired, but with a relatively poor result. Convalescence was slow.

74 The plaintiff was three and a half months off work. Then he resumed on modified duties, although his left shoulder, particularly, was much affected.

75 The plaintiff continued at work for three years, "work[ing] away happily for his good boss". For a period, he underwent physiotherapy twice a week. It stopped when the compensation insurer refused to pay for it.

76 On 28 June 2002, the plaintiff was made redundant.

77 The plaintiff's situation at trial (in late 2005) was that his left shoulder had so little movement that it impinged even on matters of personal hygiene. The poor surgical result had stopped him consenting to surgery on the right shoulder.

78 The opinion of the treating surgeon, as at mid 2005, was that the plaintiff had bilateral cuff pathology which prevented him from doing heavy work or work using his arm above shoulder level.

79 In the opinion of the plaintiff's general practitioner, that had been the situation in May 1999.

80 I go now to his Honour's resolution of disputed matters.

81 The employer contended at trial that the plaintiff's right shoulder injury was not serious injury. The learned judge made this finding:

"In summary, the evidence is clear enough in showing, that in September 1994, the plaintiff had such pain in his right shoulder that not only did he seek treatment but that despite treatment it continued with such severity that the plaintiff, despite his stoic nature, had to protect that right shoulder and dominant arm. That betokens an injury sometime in or before September 1994. The nature of the injury is similar to that of the left shoulder before the surgery. I therefore see the plaintiff as a labourer, illiterate in the English language, with a chronically painful right shoulder, such that he cannot use it freely except in very light tasks. That, to my mind, is a serious long term impairment of a body function, i.e., the function of the right shoulder, both in the enjoyment of life and income earning capacity fields."

82 That was a finding of serious injury as at trial, as is required by the legislation. It was not directed to the plaintiff's state of knowledge.

83 Another question which the learned judge had to consider was whether the plaintiff had suffered his left shoulder injury before 12 November 1997, notwithstanding that symptoms had first developed in March 1998. By a process of reasoning, which it is not necessary to describe, his Honour arrived at the conclusion that the cuff tear on the left side had occurred in about September 1996.

84 The "serious injury" character of the left shoulder injury - as distinct from when compensable injury was sustained - was not in dispute below. The learned judge nonetheless made this finding:

"From [when the left shoulder injury was sustained] onwards the plaintiff was an illiterate labourer with a seriously painful left shoulder which was restricted in movement. In my view, that taken on its own, was a very considerable long-term impairment of that shoulder, with repercussions in both the enjoyment of life and economic fields because that type of labourer would not be able to get a job."

That said nothing as to the plaintiff's pertinent knowledge at that time; or, indeed, at any time.

85 The learned judge noted the opposing submissions as follows:

"On the plaintiff's behalf, Mr Scanlon submits:

'...the plaintiff...did know that his shoulders were causing him to work on restricted duties, he did have an anticipation of relief and/or recovery, but that is not to the point, because the defining moment in his life of incapacity comes when he loses that job and can't get another one, it is a fact ... unchallenged ... that he would have stayed on ... but for the termination ... now having been terminated, it's the realisation of an inability to work that is the incapacity."

and

"Mr Ruskin characterises the plaintiff's case thus:

'...the plaintiff...says..."I did not appreciate that the effects of my injury would, until I was retrenched, stop me getting a job and all the...mental suffering that that brings, as well as the financial loss," he would say, "I didn't know that..."the plaintiff's ignorance is at best only ignorant of only one aspect of serious consequence; he being fully cognizant of all the other aspects of serious consequence."

86 His Honour then said that it was important to bear in mind that the relevant knowledge of a worker was -

"actual subjective knowledge on the part of [the worker]."

87 His Honour's critical conclusion was as follows:

"I note that the plaintiff was a man of stoic disposition rather like Mr Paget. He is an honest witness like Mr Paget. He continued to work on lighter work despite pain and restriction, like Mr Paget. He was not making more money at the light work like Mr Paget, but he was happy with what he got and particularly happy that he could work and earn a wage. He thought that he would work for years for the defendant. He did not regard himself as suffering any economic detriment. The bombshell like realisation of the full extent of his incapacity hit him when he was made redundant. Only then and thereafter did he realise that he was unemployable with all that that meant in the self worth appreciation and economic areas."

88 Did the learned judge err in point of principle? If his conclusionary paragraph should be read as meaning that he accepted the plaintiff's submission that "it's the realization of an inability to work that is [knowledge of the serious injury] incapacity", then for reasons which I have given I consider that his Honour's approach was incorrect. But if his Honour meant that it was only when the plaintiff lost his job that he came to know - because, focusing upon it, he made such an assessment, or perceived the matter clearly - that he was suffering a long-term impairment or loss of body function constituted by one or both of pain and suffering and pecuniary disadvantage, then in my view his Honour's approach was permissible.

89 I have closely considered the conclusionary paragraph in his Honour's reasons. I have done so against the background of the submissions made on behalf of the parties, most particularly on behalf of the plaintiff. To my mind, his Honour's references to the plaintiff not regarding himself as suffering any economic detriment - that is, before he was retrenched - and to the plaintiff only realizing that he was unemployable, "with all that meant in the self worth appreciation and economic areas", strongly suggest - and I conclude - that his Honour did take a faulty approach.

90 In so concluding I have not ignored his Honour's reference to Mr Paget, who "when he ... returned to heavy work ... could not cope and then realized the extent of his incapacity." Neither have I ignored his Honour's reference, more than once, to the plaintiff being a stoic man. Again, I have noted his Honour's observation that "(t)he bombshell like realization of the full extent of his incapacity hit him when he was made redundant." But all around those remarks by his Honour was reference to the plaintiff's realization, at a particular time, of the reality and extent of his economic detriment.

91 The circumstance that his Honour approached resolution of the matter erroneously in point of principle does not mean that the plaintiff's application under s.135A(4)(b) for leave to commence proceeding must fail. A question arises whether this Court should deal with the substance of the application, or remit it for re-hearing. In my opinion the latter course should be taken. That is because, as I perceive it, the learned judge made no findings as to when the plaintiff became seised of knowledge that he was suffering from a serious injury incapacity of either the pecuniary disadvantage or the pain and suffering kind. Such findings depended, in the first place, upon conclusions being reached when it was that incapacity of each kind developed; and then upon whether and when the plaintiff in fact acquired knowledge of those matters. In the latter analysis, it would be relevant to consider whether - as counsel for the plaintiff submitted at trial, the plaintiff "did have an anticipation of relief and/or recovery". So also, it could be relevant to consider whether the plaintiff's stoicism operated to prevent him focusing, and so assessing or accurately perceiving, and thus coming to know, the extent of any incapacity of either kind - at least until he lost his job in mid 2002.

92 It is true that the plaintiff's credit was not in issue below, and that this Court could embark upon the fact-finding exercise. But the subjective state of mind of the plaintiff falls for consideration. I think that it would be much the better course that determination of that issue be made by the judge who heard and saw the plaintiff. In so concluding, I have not ignored the submissions advanced by counsel for each party on the appeal to the effect that the evidence given below compelled a finding in favour of his client. I understand, but I do not agree with, those submissions. In that connection I have considered, and I reject, the submission for the plaintiff that the plaintiff must have failed had he brought a s.135A(2B) application before he was retrenched.

93 In the particular circumstances of this matter, I would allow the appeal, and would direct that the proceeding be remitted for reconsideration before the court constituted by the judge before whom the same was originally heard. Such a course would likely focus the parties upon the relatively narrow issue that will determine the fate of the application.

[1] [2001] NSWCA 20; (2001) 50 N.S.W.L.R. 679 at 688[45].

[2] Baden v Societe Generale pour Favoriser le Developpement du Commerce et de l'Industrie en France SA [1993] 1 W.L.R. 509 at 576, per Peter Gibson, J., which is referred to by Handley J.A. in Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd [2001] NSWCA 20; (2001) 50 N.S.W.L.R. 679 at 688[50].

[3] Paget v JLT Workers Compensation Services Pty Ltd and Anor [2005] VSCA 144.

[4] [1999] 1VR 215 at 217, [4] per Winneke P.

[5] [1992] VicRp 58; [1992] 2 VR 129 at 140 per Crockett and Southwell JJ.

[6] At 222-223 [14].

[7] [2005] VSCA 144.

[8] [1998] VSCA 129; [1999] 1 VR 215 at 222.

[9] At [30].

[10] Footnote 22.

[11] At [29].

[12] At [34].

[13] [2005] VSCA 252.

[14] At [14].

[15] At [15].

[16] At [20], [21]

[17] Citing State of Victoria v Glover [1998] VSCA 93 and Barlow & Anor v Hollis [2000] VSCA 26. As to the former, see per Ormiston JA at [30]. As to the latter, see per Chernov JA at [17] and [30].

[18] Under sub-s.(3).

[19] Necessarily, of which he knows.

[20] Or a worker's dependants.

[21] The availability of a separate action for property loss caused by such conduct, whatever its juridical basis - see Linsley v Petrie [1998] 1 VR 427 - is presently irrelevant.

[22] Whatever be the true meaning of s.5(1A), and notwithstanding s.23A.

[23] I do not use that word as a term of art.

[24] It may be that the same should be said if a worker suffers a multiplicity of injuries in a compensable incident, and one particular injury meets the "serious injury" threshold. That is, it may be that "the injury", for the purposes of permitted common law proceedings, is more than just the "serious injury" which opens the gateway. That, as I understand it, has been the convention upon which litigants have hitherto proceeded. I say nothing to suggest such approach is wrong; but the question, if there is one, need not be decided in this case.

[25] Cartledge v E Jopling & Sons Ltd [1963] AC 758.

[26] In the context of s.135A(2)(b), which also uses the phrase "the incapacity arising from the injury.

[27] At [15].

[28] That is, the extent and probable duration of incapacity.

[29] Edwards at [28] per Ashley JA, and at [32] per Chernov JA.

[30] Edwards is not opposed to that conclusion. The facts as found did not yield the necessary state of affairs.

[31] Citing Mobilio v Balliotis, [1998] 3 VR 833.

[32] Some material suggested that he commenced the employment in 1985. Nothing turn upon it.

[33] In cross-examination, the plaintiff agreed, in effect, that he knew that he then suffered from permanent spinal disability.

At a glance

Court

Decision date

Before

Source

Judgment (53 paragraphs)