Plaintiff v First Defendant

[2009] VSC 578

COMMON LAW - Statutory offer and counter offer - Acceptance of statutory counter offer not required in writing - Circumstantial evidence - Onus of proof - Plaintiff not statute barred from bringing proceedings - Statutory counter offer not accepted in time by first defendant - Plaintiff complied with statutory procedural preconditions - Accident Compensation Act 1985, s 134AB, s 98C, s 20C - Supreme Court (General Civil Procedure) Rules 2005, r 13.05, r 47.04.

1 The plaintiff has brought proceedings in this Court claiming damages for personal injuries suffered in the course of his employment on or prior to 30 December 2004.

2 At the time in issue he was employed by the first defendant, but worked pursuant to a hire arrangement at the second defendant's abattoir.

3 The defendants contend that the plaintiff is precluded from bringing the present proceedings because he has not passed through the procedural sequence specified by s 134AB(12) of the Accident Compensation Act 1985 ('the Act').

4 This contention in turns rests on the allegation that on 17 April 2009 the solicitor for the first defendant accepted a statutory counter offer, which had been made on behalf of the plaintiff, and thereby resolved the plaintiff's potential claim.

5 The first defendant seeks to resolve this issue by summons seeking a variety of alternative forms of relief, but upon the hearing of the summons submitted that the most appropriate vehicle for resolution of this question was by way of trial as a preliminary issue pursuant to r 47.04 of the Rules of the Supreme Court. This procedural course was not opposed.

6 Section 134AB(12) of the Act provides for a sequential procedure as follows:

(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.

7 It may be observed that whereas the sub-section requires that a statutory offer and statutory counter offer be made in writing, it does not require that acceptance of a statutory offer or counter offer be made in writing.

8 Ministerial directions published pursuant to s 134AF and s 20C of the Act and binding upon the Authority, workers and their legal representatives provide:

12.1 A statutory offer by the Authority or self-insurer must be recorded by the authority or self-insurer's legal representative in accordance with Form B attached to these Directions and is to be open for acceptance for 21 days and a copy is to be served on the worker or the worker's legal representative.

12.2 A statutory counter offer must be recorded by the worker or the worker's legal representative in accordance with Form C attached to these Directions and a copy is to be served on the Authority or self-insurer or their legal representatives.

12.3 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.

9 Subsection (12) establishes a procedure for pre-trial conference and offers, which must be complied with before proceedings for damages of the relevant kind can be commenced.[1]

10 In the present case the plaintiff's solicitors served a serious injury application s 134AB(4) on 20 August 2008. On 12 December 2008 the first defendant's solicitor advised that the Authority was satisfied the plaintiff had suffered a serious injury.

11 A compulsory conference was then held on 26 February 2009 in accordance with s 134AB(12)(a).

12 The defendants were each represented by their solicitors, but were unable to resolve contribution as between themselves.

13 A statutory offer of nil dollars was made by the Authority on 31 March 2009 in accordance with sub-s (12)(b).

14 The plaintiff's solicitor then served a statutory counter offer on 31 March 2009, of $320,000, plus retention of weekly benefits and s 98C compensation in accordance with sub-s (12)(c).

15 The defendants contend that on 17 April 2009 the first defendant's solicitor accepted this offer in accordance with sub-s (12)(d).

16 The plaintiff contends that the offer was not accepted in accordance with sub-s (12)(d) and that proceedings were accordingly able to be commenced in accordance with sub-s (12)(e).

17 The communications which took place on 17 April 2009 between the first defendant's solicitor and the plaintiff's solicitor took place as a result of negotiations between the solicitors for the defendants.

18 On 16 April 2009 Mr Hand of the second defendant's solicitors telephoned Mr Stockdale of the first defendant's solicitors and offered 50 per cent contribution towards payment of the plaintiff's statutory counter offer.

19 The following morning at about 9:00 am Mr Stockdale telephoned Mr Hand and advised that the 50 per cent offer was rejected. He further stated the first defendant would contribute 25 per cent towards the plaintiff's statutory counter offer but that he would recommend 35 per cent.

20 Shortly afterwards Mr Hand rang back and advised he was instructed his client would contribute 65 per cent. Mr Stockdale said he believed he would get instructions to settle on this basis and he would send Mr Hand a release.

21 At approximately 9:31 am Mr Stockdale sent Mr Hand an email, confirming that he had been instructed to contribute 35 per cent towards the plaintiff's counter offer and attaching a draft release for response. The release did not contain relevant particulars of the second defendant and the second defendant's solicitors.

22 The covering letter (omitting formal parts) stated:

I confirm I have been instructed to contribute up to 35% of the statutory counter offer in this matter.

Attached is a draft release for you to peruse.

Contact me if there are any changes you would like to make.

23 At 9:49 am Mr Hand had completed amendments to the proposed release and forwarded them to his managing partner for approval.

24 At 2:05 pm Mr Hand sent Mr Stockdale a further email which advised a series of details for inclusion in the release as follows:

I confirm contribution at 65/35 of the s/c/o/.

Paragraph (b) of the definitions to read "...and Swift Australia (Southern) Pty Limited (ACN 005 062 082) of 1 Lock Way RIVERVIEW QLD 4303 ("the second releasee")

Paragraph (e) of the definitions to read "...and DLA Phillips Fox of Level 21, 140 William Street, MELBOURNE VIC 3000..."

Paragraph (g) of the definitions to read "...application under Section 134AB of the Act dated 19 August 2008..."

Can you send the amended copy back for a quick check.

Communications between Mr Stockdale and Mr Connor

25 In the course of the morning Mr Stockdale had sought to contact the plaintiff's solicitor Mr Connor at his Wangaratta office. Mr Connor was travelling from Melbourne to Wangaratta by train and did not respond until he had returned to his Wangaratta office some time after midday.

26 At about 1:45 pm Mr Stockdale checked his mobile phone and obtained a voicemail message from Mr Connor inviting Mr Stockdale to ring Mr Connor back.

27 At this point in time Mr Stockdale was sitting in a waiting area on an upper floor of the Melbourne Magistrates' Court with a client named Betts. In an affidavit sworn on 23 June 2009, Mr Stockdale describes the telephone conversation which he had with Mr Connor as follows:

After exchanging greetings I informed Mr Connor I was calling about the statutory counter offer. I then asked Mr Connor to confirm whether the plaintiff would provide a release in favour of both Yarra Ranges and Swift if the statutory counter offer was accepted. Mr Connor confirmed that the plaintiff would sign such a release. I then informed Mr Connor that I accepted the statutory counter offer.

I then advised Mr Connor that I would send him a letter with a release for his client to sign. I advised Mr Connor it could take a little while to get the release to him as the proposed second defendant had to check that it was happy with the contents of the release before I sent it to him.

Well the exact conversation went I asked him to confirm that he provided a release as against both, he said he would. Then I said on that basis we accept the statutory counter offer and then I said to him what I'll do is I'll send off a letter confirming the acceptance and with that letter there will be a release and then I said to him it could just take me a little bit of time to get the release to you because the second defendant's just got to sign off on it first.

29 Mr Connor deposes by affidavit sworn on 13 July 2009:

... I recall that Mr Stockdale did ask me if acceptance of the statutory counter offer would bind the plaintiff to settle with both defendants. I replied "of course". Mr Stockdale informed me that he would be sending a fax accepting the statutory counter offer but first had to get approval from the second defendant. We agreed that the following Tuesday 21 April 2009 was the last day for acceptance of the statutory counter offer. I commented to Mr Stockdale that [he] had his work cut out. I did not record it but I recall Mr Stockdale saying that he was confident that he would get the second defendant's approval and would be faxing acceptance of the offer by that afternoon.

30 Mr Connor made a file note immediately after the conversation which records as follows:

Date: 17 April 2009

Attending Matthew Stockdale

Will be sending fax accepting counter offer but first has to get approval from second defendant ...

Agreed Tuesday 21/4 is last day for acceptance.

Agreed. He has his work cut out.

31 Both solicitors were cross-examined as to the accuracy of their recollection. In addition, evidence was also called from Mr Betts and from one of Mr Connor's staff members who had a telephone conversation with Mr Stockdale the following week.

32 The critical division between the evidence of Mr Stockdale and Mr Connor turns upon the question whether Mr Stockdale stated as Mr Connor's file note records that he 'will be sending a fax accepting the counter offer' or whether he stated that the counter offer was accepted (ie then and there).

33 On returning to his office on 17 April 2009 Mr Stockdale attached the completed release to a covering letter for the purpose of forwarding to Mr Connor. He placed the documents on top of a printer and by mistake failed to forward them to Mr Connor.

34 Mr Betts gave evidence that he was a school friend of Mr Stockdale and had known him for some 15 years. He was with Mr Stockdale in the foyer area of the Melbourne Magistrates' Court when Mr Stockdale received a phone call on 17 April 2009. The phone call lasted a little longer than two or three minutes. Mr Betts cannot remember whether there was any mention of more than one defendant (a matter both Mr Stockdale and Mr Connor agree was referred to at the outset of their conversation). When asked in cross-examination what he could remember of the conversation, Mr Betts said:

I just remember Matthew saying, you know, "well that's good" - obviously they were speaking, I couldn't hear the other side and all I remember him saying is "well that's good, you've accepted the offer. I'll get some information sent over to you."

Question: So you have a memory of him saying "that's good". Can you remember what he asked or what he said before "that's good"?

Answer: No.

Question: Can you remember insofar as it - "I'll get some information sent over to you", what type of information he was referring to there, from what he said?

Answer: No, but it was something to do with signing, because he said "we have to get it to you so you can sign it."

Question: Did he say how long he'd take to get it to him?

Answer: Um, it was pretty immediate.

Question: And from the conversation that you heard, you understood that Mr Stockdale was going to do that quite quickly to this other person so that they could settle the case, is that right?

Answer: Yes.

35 I do not find Mr Betts' evidence materially assists the defendants or the plaintiff. I am not satisfied that his recollection is sufficiently precise to found a conclusion as to what was relevantly said.

36 An affidavit of Ms Rosemary Bell, a law clerk employed by Mr Connor, was also tendered in evidence. She deposed to conversations she had with Mr Stockdale on Wednesday 22 April 2009. It was these conversations which alerted Mr Stockdale to the fact that the facsimile letter and release had not been transmitted to the plaintiff's solicitor.

37 After these conversations Mr Connor telephoned Mr Stockdale on 23 April 2009 and spoke with him concerning the failure to send a written acceptance of the counter offer. I shall return to the terms of the conversations Mr Stockdale had with Ms Bell and Mr Connor below.

38 I do not accept that either Mr Stockdale or Mr Connor gave deliberately false evidence with respect to the terms of critical conversation of 17 April 2009, but the fundamental question for the Court is what on the balance of probabilities was objectively stated by Mr Stockdale to Mr Connor at about 1:45 pm on this date.

39 There are a series of considerations which favour the plaintiff's case and a further series of considerations which favour the defendant's case. I will seek to summarise them.

40 The following matters favour Mr Connor's account.

(1) The difference between a statement that an offer is accepted and a statement that it will be accepted is essentially one of degree. The only contemporaneous note of the precise words used is that of Mr Connor, which he says was made in his file immediately after the telephone conversation.

(2) The primary purpose of the telephone contact from Mr Stockdale may be regarded as constituted by the first element of the conversation, namely a desire to confirm the plaintiff's solicitor accepted settlement would be binding in respect of both defendants. It is not disputed that reference to this question was the first element of the conversation. Mr Stockdale said in evidence:

At that stage I needed to confirm with the plaintiff's solicitor that he would provide a release as against both defendants before sending that letter. I had to speak to him.

(3) The statement 'will be sending fax accepting counter offer', found in Mr Connor's note, finds some corroboration in the fact that Mr Stockdale subsequently that afternoon finalised a form of letter and release for facsimile transmission to Mr Connor, but misplaced it and failed to send it.

(4) The letter was not in a form which purported to confirm a prior settlement. In terms it advised acceptance of settlement 'now'. It stated (omitting formal parts).

We refer to your facsimile dated 31 March 2009 and advise we have been instructed to accept your statutory counter offer.

We confirm your client's claim for both pain and suffering and pecuniary loss damages has now been resolved for $320,000 plus retention of benefits and costs according to the ministerial directions. We also advice [sic] the second defendant has agreed to contribute 65% of the settlement sum.

We enclose release for signing and return.

I accept Mr Stockdale's evidence that this letter was initially prepared on the morning of 17 April 2009, prior to the conversation with Mr Connor. Nevertheless it was put together with the final form of the release late in the afternoon, and its form corroborates the plaintiff's case not that of the defendants.

(5) The reference to getting approval from the second defendant, which is found in Mr Connor's file note, was made (if the note is accurate) at a time when Mr Stockdale was in fact getting approval of the form of release from the second defendant's solicitor. Mr Connor may have misunderstood the nature of the approval in issue, but there was an approval process underway.

(6) The final two matters noted in Mr Connor's file note are very circumstantial and would be pointless if the effect of the conversation was to convey a concluded settlement.

Agreed Tuesday 21/4 is last day for acceptance.

Agreed. He has his work cut out.

Mr Stockdale concedes that the second remark was made by Mr Connor, although he disputes the first remark was made. The partial concession tends strongly to confirm that Mr Connor spoke with Mr Stockdale in terms conveying anticipation of future settlement. Insofar as counsel for the first defendant floated the notion Mr Connor set a trap for Mr Stockdale, the matters noted are also entirely inconsistent with such a proposition. This said the critical question is of course not what Mr Connor said, but what Mr Stockdale said. Mr Stockdale's evidence is that Mr Connor's statement about having your work cut out made no sense to him.

(7) The usual practice amongst common law solicitors settling matters pursuant to the Act, is for counter offers to be accepted in writing. Mr Connor described this practice as having been in place for more than 10 years. Mr Stockdale maintained however that his practice was to advise acceptance orally and to confirm that advice in writing.

(8) The objective onlooker would expect the acceptance of a statutory counter offer to be in a form which both parties and in particular the plaintiff could rely on and prove readily thereafter.

(9) It is plain that Mr Stockdale did make a mistake, in not sending the facsimile letter which he prepared on 17 April 2009. His subsequent actions and recollections were formulated in this context.

41 I turn then to considerations which in my view nevertheless favour Mr Stockdale's recollections.

(1) Mr Connor believed on 17 April 2009 that it was necessary for the acceptance of the counter offer to be in writing if it were to be valid. This belief may have in effect operated as a prism through which he perceived what he was told.

(2) Mr Connor says he understood there was an outstanding issue of liability between the defendants as to be resolved at the time of the conversation in issue. The question of contribution had in fact been settled between defendants by the 9:31 am email. Further, the reference to 'approval' in Mr Connor's file note of 17 April 2009 sits more comfortably with outstanding approval of a release than with outstanding 'settlement' of the question of contribution.

(3) Ms Bell deposes that on the morning of 22 April 2009 Mr Connor telephoned her from Melbourne and asked her whether a fax had been received from the first defendant's solicitor in the matter of Frilay. She told Mr Connor there had not been any fax and he asked her to telephone Mr Stockdale to ask why they had not accepted the plaintiff's statutory counter offer. When she rang Mr Stockdale on 22 April 2009 she noted him to say:

He said he had spoken to Peter Connor on Friday (17 April)

And they have accepted the offer.

He said they had sent a fax (with Release) on 17 April - but we never rec'd it. (Offer had been accepted for $320,000).

The first response of Mr Stockdale after the event was thus to say 'they have accepted the offer'. This occurred before Mr Connor disputed the fact of settlement. The plaintiff submits the file note is consistent with a belief on the part of Mr Stockdale that the matter had settled when he sent the fax (he 'had' spoken on Friday and they 'have' accepted the offer). I accept this but the terms of the note tend to on balance support the view that Mr Stockdale believed he had accepted the counter offer orally.

(4) On 22 April 2009 Mr Stockdale later made a file note after discovering the facsimile transmission he had prepared on 17 April 2009 was not sent. It recorded his recollection of what was said on the telephone on 17 April 2009:

• Confirmed with him that if we accept the statutory counter offer then he will provide a release as against both defendants;
• he confirmed that he would;
• I therefore accepted the statutory counter offer and told him I would send a release once the second defendant approved it;

(5) When Mr Connor himself spoke with Mr Stockdale on 23 April 2009, Mr Stockdale again asserted that the counter offer had been accepted and Mr Connor's response was that the acceptance had to be in writing. Mr Connor did not say there was no oral acceptance (although he maintains he did not agree that there had been an oral acceptance). Mr Stockdale made a file note to the following effect:

• He said that my verbal acceptance of the statutory counter offer does not count and therefore we missed the deadline for the offer and they will issue a damages writ;
• He says that the acceptance of a statutory counter offer has to be in writing;
• His client put in a low statutory counter offer as they did not believe we would accept it;

(6) Mr Connor hoped the counter offer would not be accepted and this may be said to give him a motive to deny the fact of settlement.

(7) Mr Connor noted that on 23 April 2009 Mr Stockdale was 'too emotional to speak to'. He said in evidence that Mr Stockdale was 'fraught'. It is apparent Mr Stockdale was upset on 23 April 2009 and I accept this was because he believed that the matter had been effectively settled on the previous Friday. Mr Connor's note of this conversation was relatively vestigial compared with that of Mr Stockdale and hence there is a basis for preferring the evidence of Mr Stockdale as a fuller and truer account of what was said.

42 There were a series of further considerations advanced by way of attack on Mr Connor in cross-examination, with which I must deal before weighing up the evidence as a whole.

(1) It was suggested that there was something untoward in Mr Connor's making a counter offer which he hoped would not be accepted. I do not agree. It is plain that the counter offer was made on counsel's advice as being within the lower range of appropriate figures. I also accept it was made having regard to risks facing a plaintiff under the relevant statutory regime and in particular the plaintiff's legal adviser's understanding of the Court of Appeal decision in Raeburn v Tenix Defence Systems Pty Ltd.[2]

(2) It was suggested Mr Connor's file note of 17 April 2009 was not a genuinely contemporaneous business record but a subsequent fabrication. I do not accept this very serious allegation was made out. I note that Mr Connor's first letter after disagreement with Mr Stockdale occurred set out the terms of the file note. The letter which Mr Connor says was dictated on Saturday 25 April 2009 stated:

We refer to your short telephone conversation with the writer on April 23 and to your faxed letter of the same day, which came to the writer's attention on his return from Melbourne this morning.

The writer's clear note of the telephone conversation on April 17 was to the effect that you would be sending a fax accepting the statutory counter offer but first that you had to obtain approval from the second defendant. We agreed that Tuesday, April 21 was the last day for acceptance and the writer has recorded his comment to you that you had your "work cut out".

With respect, there was no acceptance communicated verbally or in writing on April 17.

(3) It was submitted I should conclude Mr Connor knew Mr Stockdale contended he had orally accepted the counter offer before Mr Connor telephoned Mr Stockdale on 23 April 2009. I do not accept that it can be inferred that prior to the conversation between Mr Connor and Mr Stockdale on 23 April 2009 Ms Bell told Mr Connor what Mr Stockdale had said to her on the previous day.[3] Ms Bell was not required for cross-examination by the defendants and this is a matter that should have been squarely put to her, if it were to be relied on. Furthermore, in the absence of further evidence, the background facts are equivocal. There is no proper basis to reject Mr Connor's evidence as to what occurred in this respect.

43 I come then to weigh up the principal factors which support the parties' respective cases. I have been troubled in resolving this issue and have not found it easy to do so. I am ultimately of the view that the circumstantial evidence relating to 17 April 2009 is of greater significance than that relating to communications the following week. In turn I am satisfied that the documentation created on 17 April 2009 makes it more probable than not that Mr Connor's account is to be accepted and the substance of what Mr Stockdale said was that the defendants would be accepting the counter offer by way of a facsimile letter accompanied by a release later that day. Both the terms of the file note made by Mr Connor read as a whole and the terms of the letter sent later that day by Mr Stockdale support this view.

44 The fact that the letter sent by Mr Stockdale was generated in draft form before the conversation with Mr Connor does not materially detract from the above considerations.

45 The conversation may well to some extent have been conducted in shorthand as Mr Connor observed, but I am satisfied he noted its critical content in the first line of his file note.

46 The most powerful factor telling in favour of Mr Stockdale's account is Mr Connor's belief that a statutory counter offer could only be accepted in writing. I accept this raises the real possibility Mr Connor misapprehended what Mr Stockdale told him, but despite this possibility I prefer Mr Connor's evidence on the balance of probabilities having regard to the evidence as a whole.

47 It is unnecessary to decide whether the plaintiff is correct in submitting that the provision by s 134AB(12) that a plaintiff must 'must not commence proceedings' unless specified procedural conditions are met, should be regarded as having similar consequences to a limitations defence in terms of the onus upon the plaintiff.[4]

48 The contrary view is that the provision is a substantive not a procedural provision in the sense explained in Swannell v Farmer.[5]

49 I accept that the issue raised by the defendants was one proper for preliminary determination in this proceeding but for the reasons I have set out above it is to be determined in favour of the plaintiff. I am satisfied that the plaintiff has complied with the procedural preconditions set out in s 134AB(12) of the Act.

50 Subject to any further submissions of counsel I propose to order that the following question be tried before the trial of this proceeding:

Did the first defendant by its solicitor accept the plaintiff's statutory counter offer on 17 April 2009, and thereby settle or compromise the plaintiff's claim against the first and second defendants?

51 I would consequently dismiss the first defendant's summons.

[1] Raeburn v Tenix Defence Systems Pty Ltd [2007] VSCA 90; (2007) 16 VR 290, [4] and [16].

[2] [2007] VSCA 90; (2007) 16 VR 290. Note the submissions on behalf of the worker accepted by the Court at [16] and [17].

[3] Noting that the file note is in any event ambiguous: see [41](3) above.

[4] As to which Pullen v Gutteridge [1993] VicRp 4; [1993] 1 VR 27, 75-6.

[5] [1998] VSCA 104; [1999] 1 VR 299, 307-8, [21], [22], {26] and [27] per Batt and Buchanan JJA.