Plaintiff v Defendant

2 Before commencing the proceeding, Mr Bishop was deemed to have suffered a serious injury under s 134AB(7)(a) of the Accident Compensation Act 1985 and the procedures required by s 134AB(12) had taken place. Under those procedures, the Herald & Weekly Times made a statutory offer and Mr Bishop made what purported to be a statutory counter offer.

3 The proceeding has been partially settled but there remains an issue as to the proper order for costs under s 134AB(28) of the Act. Its resolution depends upon whether the statutory counter offer was valid, as Mr Bishop contends, or invalid, as the Herald & Weekly Times argues.

4 The statutory offer from the Herald & Weekly Times to Mr Bishop was dated 24 March 2009 and signed by its solicitors. It was stated as the sum of two hundred and thirty thousand dollars. It was made under cover of a letter of the same date which stated that the sum of $230,000 recorded was a net amount, 'after reduction required by s 134AB(25) of the Act'. It also stated that '[f]or the avoidance of doubt, if the offer is accepted, there is no requirement for Glenn Ian Bishop to repay statutory compensation already received pursuant to the Act.'

5 Mr Bishop's purported statutory counter offer was in these terms:

SECTION 134AB(12)(c) STATUTORYCOUNTER OFFER

Worker: Glenn Bishop

Employer: Herald and Weekly Times Limited

Self-insurer: Allianz

Date of Worker's Application under section 134AB: 17 September 2009

Statutory counter-offer for the purposes of Section 134AB(12)(c)

Six Hundred and fourteen thousand six hundred dollars (the settlement sum) less the amounts required to be deducted at settlement or judgement pursuant to Section 134AB(25)(a) and (b) of the Accident Compensation Act. For the purposes of this offer the date of settlement is the date of acceptance of this offer.

($614,600.00 Less the amount required to be deducted at settlement or judgement pursuant to s 134AB(25)(a) and (b).

Worker's Legal Representative: Clark Toop and Taylor Lawyers

6 On 21 April 2009, the solicitors for the Herald & Weekly Times wrote to Mr Bishop's solicitors saying that the 'purported' statutory counter offer was unclear and, specifically, that they were uncertain as to the amount to be paid to accept it. They asked if payment of $614,600 or another sum would be required if the offer were accepted and what the situation would be if more weekly payments of compensation were made before the offer expired. They asked what was contemplated by making the offer of '$614,600 less amounts to be deducted at settlement or judgment?'

7 The solicitors referred to the prescribed form for the statutory counter offer being 'Form C' attached to the Ministerial Directions published on 18 December 2001 in respect of the procedures under s 134AB. They pointed out that the prescribed form provided for a fixed sum which, they said, in practice, enabled a party to identify the precise sum payable to accept the offer.

8 Mr Bishop's solicitors wrote back on 22 April, restating that the counter offer was '$614,600.00 less the amounts required to be deducted at settlement or judgment pursuant to Section 134AB(25)(a) and (b).' The author of the letter went on to say:

I reiterate, that which is enclosed in the statutory counter offer, i.e.:

"For the purposes of this offer that date of settlement is the date of acceptance of this offer."

If, and when, the statutory counter offer is accepted, a deduction pursuant to section 134AB(25)(a) and (b) is required. Your client will know what payments have been made requiring deduction at the date of acceptance of the offer.

9 The solicitors for the Herald & Weekly Times wrote back on 24 April 2009, maintaining that the offer was still unclear. They said that the reference to amounts to be deducted at settlement or judgment remained unexplained and 'confuses the amount' of the statutory counter offer. They stated that Mr Bishop had been paid a total amount of $242,586 but that weekly payments were ongoing. They asked specifically whether that amount was to be deducted from $614,600 and the statutory counter offer amount was $372,014 with retention of the amount paid.

10 Mr Bishop's solicitors responded on 4 May 2009, repeating the same sentence from their counter offer: '[f]or the purposes of this offer, the date of settlement is the date of acceptance of this offer'. They asserted that the Herald & Weekly Times' solicitors had correctly pointed out that the deductions to be taken into account were ascertainable and that therefore the statutory counter offer was able to be quantified.

11 The counter offer was not accepted and this proceeding was commenced on 15 May 2009.

Accident Compensation Act 1985

12 The parties refer in their submissions to the following provisions of the Act:

134AB Actions for damages

(1) A worker who is, or the dependants of a worker who are or may be, entitled to compensation in respect of an injury arising out of or in the course of, or due to the nature of, employment on or after 20 October 1999 -

(a) shall not, in proceedings in respect of the injury, recover any damages for non-pecuniary loss except -

(i) in accordance with the Transport Accident Act 1986 and subsections (25)(b), (26) and (36)(b) of this section; or

(ii) in proceedings of a kind referred to in section 134AA(b) and in accordance with subsections (25)(b), (26) and (36)(b) of this section; or

(iii) if subparagraphs (i) and (ii) do not apply, as permitted by and in accordance with this section; and

(b) shall not, in proceedings in respect of the injury recover any damages for pecuniary loss except -

(i) in proceedings of a kind referred to in a paragraph of section 134AA and in accordance with subsections (25)(a), (26) and (36)(a) of this section; or

(ii) if subparagraph (i) does not apply, as permitted by and in accordance with this section.

...

(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.

...

(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).

(22) A court must not, in proceedings in accordance with this section, award to a worker in respect of an injury -

(a) pecuniary loss damages - ...

(ii) in excess of $1 006 760 or that amount as varied in accordance with section 100 as at the date of the award; or

(b) pain and suffering damages - ...

(ii) in excess of $438 320 or that amount as varied in accordance with section 100 as at the date of the award; or

(c) damages of any other kind, other than damages in the nature of interest.

...

(25) If a judgment, order for damages, settlement or compromise is made or entered in favour of a worker or the dependants of a worker in respect of proceedings referred to in subsection (1), the amount of the judgment, order for damages, settlement or compromise must be reduced by -

(a) to the extent that it is in respect of pecuniary loss, the amount of compensation (if any) paid otherwise than under section 98C, 98E and 99 ...

(b) to the extent that it is in respect of non-pecuniary loss, the amount of compensation (if any) paid under section 98C and 98E.

...

(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) if no liability to pay damages is established, the worker must pay the party and party costs of the employer, Authority or self-insurer and the worker's own costs;

(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.

13 Ministerial Directions published on 20 December 2001 under s 134AF are part of the material relied upon in this application. They were issued under s 134AF of the Act and compliance by those affected was mandatory under s 134AF(4).

14 The Directions have stated objectives which include ensuring that procedures under s 134AB are 'as efficient a means as possible of delivering appropriate damages to injured workers, managed in a consistent manner by the WorkCover Authority, authorised agents and self-insurers.' The objectives also state that:

(c) in applications where "serious injury" is granted, every attempt is made by the Authority, authorised agents, self-insurers, the worker and all legal representatives to settle or compromise claims for the appropriate amount of damages , without resort to legal processes.

15 Direction 12.1 requires a statutory offer to be recorded 'in accordance with' an attached Form B. The offer is to be open for 21 days.

16 Direction 12.2 requires a statutory counter offer to be recorded 'in accordance with' an attached Form C. There is no direction as to the period during which the counter offer remains open.

17 Forms B and C provide for statements of the offer or counter offer, respectively, both as an 'Amount in words' and as a 'Figure'. Significantly, Direction 12.3 requires a worker to execute a release 'where a claim or proceeding under Section 134AB is settled or compromised.'

18 The parties also rely upon the WorkCover Legal Costs Order 2001. It was made under s 134AG of the Act which gives power to the Governor in Council to make a legal costs order 'in respect of any claim, application or proceedings under s 134AB'.

19 Order 3 of the Costs Order defines a 'claim' as 'the proposed claim at common law in respect of each cause of action which the worker seeks to maintain.' Order 4 provides for different costs outcomes in circumstances in which a claim has been settled or compromised and a worker has obtained damages after a s 134AB(12) conference and before proceedings have been commenced and those in which a settlement or compromise and recovery of damages occurs after the worker has instituted proceedings under the subsection.

20 The Herald and Weekly Times first argues that compliance with the form prescribed by the Directions was mandatory and that the purported statutory counter offer was invalid because it did not state a sum as required by the prescribed form.

21 I agree with counsel for Mr Bishop that the failure to record the purported statutory counter offer as a stated sum does not alone invalidate it. Under s 53 of the Interpretation of Legislation Act 1972, substantial compliance with a prescribed form is sufficient. If the statutory counter offer clearly stated an amount, by reference to a mechanism for its calculation, I would have been inclined to conclude that there had been substantial compliance with the Directions. I do not however consider that Mr Bishop did clearly state the amount of the counter offer so that the Herald & Weekly Times could be certain as to the precise amount to be paid for its acceptance.

22 Counsel for Mr Bishop contend that the statement of the offer provided a mechanism for determining what sum was payable on any date upon which the offer was accepted or on the date of judgment. According to them, the amount of compensation received could be easily ascertained and deducted from $614,600.00 to provide the requisite sum on the particular day.

23 Mr Bishop's argument assumes (as both parties appear to have done at the time of the offer and counter offer) that s 134AB(25) would have applied to a settlement of Mr Bishop's claim before any proceeding was issued, despite the fact that the subsection referred to a 'judgment, order for damages, settlement or compromise ... made or entered in favour of a worker in respect of proceedings referred to in subsection (1)'.

24 Whilst the phrase 'in respect of' has been broadly construed as requiring 'no more than a relationship, whether direct or indirect, between two subject matters',[1] at the time of the statutory counter offer there were not and could not have been any proceedings of the kind referred to in sub-s (1).

25 I am not persuaded by counsels' argument that the phrase 'in respect of proceedings referred to in subsection (1)' should be construed as meaning 'in respect of proceedings referred to in subsection (1) or any proposed claim at common law in respect of each cause of action which the worker seeks to maintain' (adopting the definition of 'claim' in the Ministerial Directions). Although, as counsel for Mr Bishop point out, Direction 5.4(c) requires a worker to attach to an application under s 134AB(5) a statement of claim naming each person against whom they claim to have a cause of action, Direction 13, like s 134AB(12)(e), prohibits the commencement of any proceeding before 21 days has passed after the statutory counter offer was made.

26 Under O 4 of the WorkCover Legal Costs Order 2001, there are to be different costs consequences where workers settle or compromise claims and recover damages before commencing proceedings under s 134AB(12) and where they do so afterwards.

27 As counsel for the Herald & Weekly Times submit, it would have been open to Mr Bishop to have argued that acceptance of the statutory counter offer before a proceeding was commenced would require payment of the full amount of the $614,600 (which was described as 'the settlement sum' in the form served). I note that the solicitors for the Herald & Weekly Times did ask whether this sum was payable in their correspondence.

28 Even if sub-s (25) applied to a settlement of Mr Bishop's claim before proceedings were issued under sub-s (12), the amount required to be paid to accept the statutory counter offer as recorded remains unclear for other reasons.

29 First, the statutory counter offer describes the amount of $614,600 as 'the settlement sum' but adds the words 'less the amounts to be deducted at settlement etc'. This makes it unclear whether the amount for which the claim might be settled would be $614,600 less the amount which sub-s (25) would require to be deducted if a settlement had occurred (which settlement amount would then be further reduced by that amount under the subsection), or $614,600, as the settlement sum, which sub-s (25) would require to be reduced by the amount of compensation paid.

30 Then, a further complication is introduced by the presence of the possible alternative settlement amount to be calculated by reducing $614,600 by the sum required to be deducted 'at settlement or judgement' [emphasis added]. Whilst the form might arguably make it clear, prospectively, what sum would need to be deducted under sub-s (25) on the date of a 'settlement' because that date was defined as the date of 'acceptance of the counter offer', the offeree wishing to pay a lesser amount to settle the claim, could not know what amount would be deducted[2] in the hypothetical situation of a proceeding which had gone to judgment.

31 Counsel for Mr Bishop, however, maintain that the words 'or judgment' have the effect that if the matter had proceeded to judgment, the amount of the counter offer could have been retrospectively calculated for the purposes of sub-s (28) because the amount to be deducted from $614,600 would be certain. This does not deal with the problem that that amount could never have been determined beforehand.

32 Even if the statutory counter offer was not uncertain for the reasons I have given, the amount to be taken into account for the purposes of sub-s (28) remains uncertain because neither of the events upon which the amount to be deducted might have become certain has taken place. There has been neither a 'settlement' by acceptance of the counter offer nor a judgment.

33 I am not persuaded by counsel for Mr Bishop's argument that the amount of the counter offer for the purposes of sub-s (28) is certain because it would be determined by reference to the amount by which $614,600 would have been reduced under sub-s (25) if the counter offer been accepted on the date of the settlement of the proceeding when a different amount was agreed to between the parties. This sum again could not have been determined until the parties knew that they had agreed to settle.

34 The terms of an offer must be certain in circumstances where there are statutory consequences in terms of costs for a party which chooses not to accept it. The objectives of the Directions to promote settlement without resort to the legal process can only be achieved if the offeree knows with certainty what the offer is.

35 In White v Director of Housing[3] Gillard J took a similar view of the necessity for clarity in the expression of an offer of compromise which has comparable ramifications. His Honour said:

It is trite to observe that the terms of the offer must be clear, precise, certain and capable of acceptance, so that if a party fails to accept the offer that the Court is in a position to give effect to the Rules relating to a failure to accept, where the offeree obtains a judgment less favourable than the terms of the offer.[4]

36 For all these reasons, as counsel for the Herald & Weekly Times argue, the purported statutory counter offer lacks the necessary clarity to be a statutory counter offer made under sub-s (12) and sub-s (14) applies. In the circumstances, Mr Bishop is deemed to have made a statutory counter offer of the maximum amount that may be awarded as damages under sub-s (22). The consequences are not contentious.

[1] O'Grady v North Queensland Co Ltd [1990] HCA 16; (1990) 92 ALR 213, 228 (McHugh J).

[2] See Raeburn v Tenix Defence Systems Ltd [2007] VSCA 90.

[3] [2003] VSC 124.