Safwat Beshara v Australian Postal Corporation; Australian Postal Corporation v Swan Services Pty Ltd; Swan Services Pty Ltd v The Underwriter Insurance Company Pty Ltd; Australian Postal Corporation v The Underwriter Insurance Company Pty Ltd

CATCHWORDS: PRACTICE AND PROCEDURE - pleadings - amendment - notice - Workers Compensation Act 1987 s 151Z - whether defence must be pleaded

Workers Compensation Act 1987 LEGISLATION CITED: Law Reform (Miscellaneous Provisions) Act 1946 Uniform Civil Procedure Rules

CASES CITED: Forstaff Blacktown Pty Ltd v Brimac Pty Ltd [2005] NSWCA 423 Jones v Dyldam Developments Pty Ltd [2007] NSWSC 754

Safwat Beshara (Plaintiff) PARTIES: Australian Postal Corporation (Defendant/Cross Claimant) Swan Services Pty Ltd (Cross Defendant/Cross Claimant) The Underwriter Insurance Company Pty Ltd (Cross Defendant)

E G Romaniuk (Plaintiff) COUNSEL: T McKenzie (Defendant/Cross Claimant) D T Miller SC with M Castle (Cross Defendant/Cross Claimant) R A Cavanagh (Cross Defendant)

Keddies (Plaintiff) SOLICITORS: Graham Jones Lawyers (Defendant/Cross Claimant) Moray & Agnew (Cross Defendant/Cross Claimant) DLA Phillips Fox (Cross Defendant)

1 HIS HONOUR: This is a case where the plaintiff has sued the occupier of premises in which he claims he was injured on 22 April 2002. The occupier by cross-claim has joined a company, Swan Services Pty Ltd, which was a contractor to it. In turn the cross-defendant, it would seem, contracted with another company, Swan Cleaners Pty Ltd, who it is now agreed was the employer of the plaintiff at the time. The plaintiff has not sued the employer and, indeed, the employer is not a party to this action because nobody has joined it.

2 It also appears from both the pleadings and the medical evidence that has been tendered that the plaintiff's medical assessment under the Workers Compensation Act showed that he had a whole person impairment of 10% and, that being so, he is not entitled to recover damages from the employer. Up until yesterday it seems that the provisions of the Workers Compensation Act 1987 s 151Z were not put in issue in the pleadings. Other provisions of the Workers Compensation Act were.

3 Section 151Z is a provision that has the effect of reducing the damages that can be recovered where a person is entitled to sue both the employer and a third person who is not the employer regardless of whether or not the employer is sued. It is a long section and it is not necessary for me to read all of it but I should point out that the relevant provisions to this claim are contained in subs (2) and they have the effect of significantly reducing the amount that a worker can recover where the employer could have been sued, as I say, even if the employer is not sued so long as there may have been an entitlement to sue.

4 The effect of the section is that the responsibility for payment of compensation for the plaintiff's injury is apportioned between the employer and any third person who has contributed to the injury, and I am paraphrasing the section, and if the contribution of the employer is significant the plaintiff may ultimately recover very little indeed.

5 Here, I emphasise that the plaintiff has not sued the employer and the employer has not been joined as a cross-defendant. The allegations of negligence are made against the occupier and the cleaning contractor and the cross-claim, as I understand it, is brought as a claim for contribution and/or indemnity under the Law Reform (Miscellaneous Provisions) Act 1946 s 5.

6 Recently, with the introduction of the Uniform Civil Procedure Rules the rules relating to pleading have changed. Now, as I understand it, it is not necessary for a party to apply to amend a pleading but any other party who objects is entitled to apply to disallow the amendment. Some matters must be pleaded specifically and, as I shall point out shortly, the application of s 151Z normally is one of those matters that, in my view, should be pleaded specifically.

7 Rule 14.14, subr (2) provides: "In a defence or subsequent pleading, a party must plead specifically any matter: (a) that, if not pleaded specifically, may take the opposite party by surprise, or (b) that the party alleges makes any claim, defence or other case of the opposite party not maintainable".

8 The rest of it is not relevant but I think that subpara (b) of that subsection is directly relevant even though it alleges that any claim or case of the opposite party is not maintainable and I think that that should be read in part or in whole, and s 151Z certainly does that.

9 Rule 14.19 provides that a pleading may raise any point of law and r 19.4 is the provision that allows for disallowance of any amendment. So, rather than having to seek leave to amend a pleading under the rules, now a party simply amends the pleading and another party may apply to strike the amendment out.

10 In this case the defendant cross-claimant says that as regards the plaintiff it is not necessary to amend the pleading because the section operates independently of any pleading. The cross-defendant supports this argument but it raises its own argument and says that it wishes to amend its pleading for more abundant caution to make its position perfectly clear.

11 It may be, and I think there are some authorities to suggest that this is the case, that s 151Z does operate independently of any pleading although defences under this section and its predecessor were commonly pleaded and, as I have indicated, r 14.14(2)(b), in my view, requires that it be pleaded.

12 In any event, whether or not that is correct, the plaintiff is entitled to notice, and this was a point considered by McColl JA in Forstaff Blacktown Pty Ltd v Brimac Pty Ltd [2005] NSWCA 423 where at para 92 she said: "It would, of course, be incumbent on a non-employer tortfeasor wishing to invoke s 151Z(2) to give the plaintiff worker notice of that intention. A cross-claim against the employer may be sufficient notice. That would, I would have thought, be the most usual course. If the non-employer tortfeasor chose not to pursue a cross-claim, it should plead its intention to invoke s 151Z(2)".

13 In my view it is significant that her Honour did not say that the filing of a cross-claim against the employer would be sufficient notice to the plaintiff but that it may be.

14 In this application the cross-defendant has produced a copy of a notice of motion and the supporting affidavit of its instructing solicitor which was before the court in connection with one of the amendments to the early pleadings, and says that that notice of motion and the affidavit was served on the plaintiff some years ago. It maintains that this constitutes sufficient notice for the purpose of alerting the plaintiff to the fact that the cross-defendant at least intended to rely on the section.

15 It is not clear that the cross-claimant has ever raised the applicability of this section either against the plaintiff or against any other party. What is clear is that at one stage a medical assessment was made and that has been tendered in evidence.

16 The plaintiff has been extremely careful not to proceed against the employer and the defendant cross-claimant has not raised the Workers Compensation Act in any pleadings served on the plaintiff. It is a peculiarity of these proceedings that the cross-claimant and cross-defendant have served each other with documents and the plaintiff has served the defendant with documents which do not always appear to have been served on all other parties.

17 In the circumstances, if everything else had been equal, because of the prejudice caused to the plaintiff by raising what amounts to be a substantial impediment to his recovery at such a late stage in the proceedings, I would not have given leave to amend the pleading and I would also, if the plaintiff now wished to move to disallow the pleading, disallow it, because of the late stage at which it was raised. However, the cross-claimant is certainly on notice and does not oppose the cross-defendant's application, so I therefore allow that application but I would not allow the defendant to plead against the plaintiff, but it does not seek to do so.

18 My view that the section of the Act operates independently was certainly a view taken by Simpson J in Jones v Dyldam Developments Pty Ltd [2007] NSWSC 754, where at [92]-[96] her Honour gave a very succinct statement of the effect of s 151Z which is worth reading. She said this: "Section 151Z of the Workers Compensation Act is a complex provision which provides for the reduction of damages that may be awarded in favour of a plaintiff where two tortfeasors (one an employer and one not an employer) are involved (whether or not the plaintiff takes proceedings against the non-employer)".

"Dyldam", which was a labour hire company, "claimed the benefit of the subsection". "Senior counsel for the plaintiff argued that it was not open to Dyldam to do so, because it had never pleaded the section. He relied upon the decision of the Court of Appeal in Maricic v Dalma Formwork (Australia) Pty Ltd [2006] NSWCA 174 and BP Australia Pty Ltd v Tarren [2006] NSWCA 305. The latter of these was a judgment delivered extempore by Ipp JA with whom Tobias and McColl JJA agreed. There Ipp JA said: '20. The judge did not make any such allowance [by applying s 151Z(2)]. The reason for this omission was that s 151Z(2) was not pleaded, was not argued and her Honour was not asked to make any allowance based on the section... Forstaff Blacktown Pty Ltd v Brimac Pty Ltd is authority for the proposition that a party should plead or otherwise make known to its opponent any reliance that it proposes to place on s 151Z(2). In my opinion, it is not appropriate on appeal to raise this section as a defence for the first time. Resolution of the issues raised by the section require factual findings to be made, factual findings relating to negligence, factual findings which are best determined (at least initially) by the trial judge'".

19 She quoted the passage from McColl JA's judgment that I have set out and continued: "I observe, in passing, that it is a curiosity of the decisions concerning s 151Z(2) that an onus is cast upon the plaintiff to prove the relevant facts; but, nevertheless, it is the defendant who is obliged to plead the section. Forstaff may be distinguished from the present case in one material respect; because his injuries did not reach the 15% threshold then required by s 151H(1) of the Workers Compensation Act, the plaintiff in those proceedings did not sue his employer. The non-employer whom he did sue cross-claimed against the employer".

20 It is not the situation here because the employer is not joined as a party and that may be significant. It is a matter which I will have to consider in submissions. Simpson J went on: "The difference is significant. The effect of McColl JA's decision in Forstaff was that the plaintiff bears the onus under s 151Z(2) - and yet it is the (non-employer) defendant who is obliged to plead, or bring to notice the intention to rely upon, a subsection".

I emphasise this passage, "That can have no practical application where the plaintiff himself has sued both the employer and the non-employer tortfeasors. In those circumstances, it seems to me, the section operates of its own force and is not required to be pleaded. In any event as is pointed out on behalf of senior counsel for Dyldam, he drew to attention at the commencement of the proceedings, the fact that s 151Z was material to the determinations to be made".

21 That leaves me in the position that if the section operates of its own force, and it is my view that it does, although the passage I have quoted is not direct authority for that, that would be reflected in the amount of compensation, if any, that I award if I find any party liable to compensate any other. If I am correct in that view it is proper for the matter to proceed as if I have disallowed any amendments to the pleading to reach my decision on the basis of the evidence and to leave the matters raised in this application for final submissions.

22 The effect of that is that the matter should proceed as if the amendments sought by the cross-defendant were allowed and no amendments to the pleadings by the defendant have been made or allowed. I will bear in mind what has been said in this application when the parties make their final submissions.

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