STATE OF NEW SOUTH WALES v CONNOR

LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT 13920/96 FILE NUMBER(S) : LOWER COURT Hidden J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40012/99 CL 13920/96

SHELLER JA HODGSON JA SANTOW JA STATE OF NEW SOUTH WALES v CONNOR

The respondent, while working as a prison officer, suffered injuries on 4 July 1992 when he slipped descending from a watchtower. In July 1994 he further injured himself while changing a fan belt at his home. He was awarded weekly compensation and medical expenses by the Compensation Court for the injuries suffered on both occasions. No award was made for permanent injuries or pain and suffering. On 19 September 1996 the respondent filed a summons in the Supreme Court for leave to begin common law proceedings out of time pursuant to power conferred by s151D of the Workers Compensation Act 1987. On 28 October 1996 Master Greenwood refused leave. On 2 December 1998, on Mr Connor's appeal, Hidden J reversed the Master's decision and gave the respondent leave to commence proceedings for damages against the appellant claiming damages in respect of the 1992 injury. Pursuant to that grant of leave Mr Connor filed a statement of claim in the Supreme Court on 29 December 1998. The appellant then successfully appealed the decision of Hidden J to the Court of Appeal, which reinstated the orders made by Master Greenwood. A further application to the Compensation Court in April 2001 was struck out. On 26 November 2001 the respondent again filed an application against the Department of Corrective Services for determination for compensation for non-economic loss and for permanent injuries to his back, sexual organs and legs. The Department of Corrective Services filed its answer on 6 February 2002 denying the claim on various grounds but not on the ground of election pursuant to s151A of the Act. On 23 October 2002 the Department filed an amended answer claiming that by filing a statement of claim to recover common law damages Mr Connor irrevocably elected pursuant to s151A of the Act, as in force at the time provided, to claim damages in respect of the injury from the employer liable to pay that compensation and thereby, by commencing proceedings in the Supreme Court to recover those damages, lost his entitlement to permanent loss compensation in respect of the injury. Mr Connor filed a notice of motion seeking to have the order of the Court of Appeal of 21 July 1999 and entered on 29 September 1999 varied by adding the following orders:

2A. The leave granted by Hidden J to commence proceedings is revoked ab initio.

2B. The commencement of proceedings by filing a statement of claim pursuant to the orders of Hidden J made on 2 December 1998 was void, as being of no legal effect.

2C. The statement of claim and the filing of the statement of claim, are set aside ab initio. HELD (Per Sheller JA, Hodgson and Santow JJA agreeing):

1. If a person commences proceedings as contemplated by s 151D of the Workers Compensation Act 1987 within three years after the date on which the injury was received, that person runs the risk that the proceedings may fail on grounds that would not have precluded recovery of permanent loss compensation. In that case, the election having been made, permanent loss compensation, even if otherwise available, cannot be recovered.

2. If the three-year limitation period passes and a person then decides to claim damages, there is a risk that the Court may refuse to give leave to commence proceedings. If leave is granted the injured person is put in the position that proceedings to recover damages from the employer may be commenced although out of time. If the proceedings are begun, there has been an irrevocable election and the right to claim permanent loss compensation is lost. This is the case notwithstanding that the order granting leave may be set aside on appeal.

3. The decision to file a statement of claim, even where leave to so file has been given by a court, is still a matter for election by the injured party and the irrevocable nature of that election and the consequences that flow from it cannot and should not be avoided by any order of the Court. An order granting leave to file a Statement of Claim out of time does not require the initiation of proceedings. That a person elects to do so remains the critical factor decisive in the terms of the Act in amounting to an election.

Motor Accidents Act 1988 Workers Compensation Act 1987

Calvin v Carr [1980] AC 574 Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 Jol v State of New South Wales (1998) 45 NSWLR 283 Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 Whisprun Pty Ltd v Sams & Ors [2002] NSWCA 394 Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40012/99 CL 13920/96

SHELLER JA HODGSON JA SANTOW JA

Tuesday, 19 August 2003 STATE OF NEW SOUTH WALES v CONNOR Judgment 1 SHELLER JA: On 21 July 1999 this Court upheld this appeal (CA 40012/99) by the State of New South Wales from a decision of Hidden J made on 2 December 1998. On 29 September 1999 the orders of the Court were taken out. The orders were: "1. Appeal upheld; 2. Orders of Hidden J made 2 December 1998 should be set aside; 3. Orders of Master Greenwood made 28 October 1996 re-instated; 4. Respondent should pay the appellant's costs of the proceedings before Hidden J and on appeal [but] should have in respect of the appeal if qualified a certificate under the Suitors' Fund Act 1951." 2 On 19 September 1996 the respondent, Barry Connor, had filed a summons in the Supreme Court (CL 13920/96) for leave to begin common law proceedings out of time pursuant to power conferred by s151D of the Workers Compensation Act 1987 (the Act). On 28 October 1996 Master Greenwood refused leave. On 2 December 1998, on Mr Connor's appeal, Hidden J reversed the Master's decision and made the following orders which were the subject of this appeal: "1. Appeal upheld; 2. The plaintiff have leave to commence proceedings in the Supreme Court of New South Wales, Common Law Division, for damages against the defendant in respect of an injury to his lower back during the course of his employment with the defendant on 5 July 1992; 3. The plaintiff has leave to file a statement of claim claiming damages in respect of the said injury within 21 days; 4. Costs of the appeal be costs in the cause; 5. Costs to be costs in the cause." 3 Pursuant to that grant of leave Mr Connor filed a statement of claim in the Supreme Court on 29 December 1998 (CL 20504/98). These were separate proceedings from the leave application (CL 13920/96). The order of this Court was entered on 29 September 1999 apparently to enable Mr Connor to apply to the High Court for special leave to appeal from the decision of this Court. On 10 March 2000 the High Court refused leave. 4 The background facts are that Mr Connor, who was born on 20 September 1950, while working as a prison officer with the Department of Corrective Services, suffered injuries on 5 July 1992 when he slipped while descending from a watchtower. In July 1994 he further injured himself while changing a fan belt at his home. On 5 December 1995 the Compensation Court awarded Mr Connor weekly compensation and medical expenses for the injuries suffered both on 5 July 1992 and in July 1994 on the basis of total incapacity for work. No award was sought or made under ss66 and 67 of the Act for permanent injuries or pain and suffering. 5 On 3 April 2001 Mr Connor made a further application for a determination in the Compensation Court against the Department of Corrective Services. This was struck out pursuant to Pt 10 r4 of the Compensation Court Rules, apparently for unexplained delay in filing an answer. On 26 November 2001 Mr Connor again filed an application for determination for compensation under Pt 3 Div 4 of the Act for non-economic loss and for permanent injuries to his back, sexual organs and left and right legs. The claim under s67 was based on 90 per cent of a most extreme case. The respondent, Department of Corrective Services, filed its answer on 6 February 2002 denying the claim on various grounds but not on the ground of election pursuant to s151A of the Act. 6 On 23 October 2002 the Department filed an amended answer claiming that by filing a statement of claim to recover common law damages Mr Connor irrevocably elected pursuant to s151A of the Act to claim damages in respect of the injury from the employer liable to pay that compensation and thereby by commencing proceedings in the Supreme Court to recover those damages lost his entitlement to permanent loss compensation in respect of the injury. Section 151A as in force at the time provided, so far as presently material, as follows: " Election - damages of 'Tables of Disabilities' compensation (1) In this section and in section 151V: "damages" does not include damages to which Part 6 of the Motor Accidents Act 1988 applies; "permanent loss compensation" means compensation under Division 4 of Part 3 (Compensation for non-economic loss). (2) A person to whom compensation is payable under this Act in respect of an injury is not entitled to both: (a) permanent loss compensation in respect of the injury; and (b) damages in respect of the injury from the employer liable to pay that compensation, but is required to elect whether to claim that permanent loss compensation or those damages. (3) The person makes that election: (a) by commencing proceedings in a court to recover those damages or by accepting payment of those damages (in which case the person ceases to be entitled to permanent loss compensation in respect of the injury); or (b) by accepting payment of that permanent loss compensation (in which case the person ceases to be entitled to recover damages in respect of the injury). (4) An election is irrevocable, except that an election to claim permanent loss compensation may be revoked with the leave of the court given in accordance with this section. (5) If: (a) a person elects to claim permanent loss compensation in respect of an injury; and (b) after the election is made, the injury causes a further material deterioration in the person's medical condition that, had it existed at the time of the election, would have entitled the person to additional permanent loss compensation; and (c) at the time of the election, there was no reasonable cause to believe that the further deterioration would occur, the person may, with the leave of the court and on such terms (if any) as the court thinks fit, revoke the election and commence proceedings in the court for the recovery of damages in respect of the injury." 7 On 20 November 2002 Mr Connor's application came on for hearing in the Compensation Court when it was stood over to 17 December 2002. 8 In this appeal (CA 40012/99; CL 13920/96) Mr Connor has filed a notice of motion seeking to have the order of the Court made on 21 July 1999 and entered on 29 September 1999 varied by adding the following orders: "2A. The leave granted by Hidden J to commence proceedings is revoked ab initio. 2B The commencement of proceedings by filing a statement of claim pursuant to the orders of Hidden J made on 2 December 1998 was void, as being of no legal effect. 2C The statement of claim and the filing of the statement of claim, are set aside ab initio."

While the proposed order 2A is directed to the orders made in the appeal, the other two orders relate to the proceedings begun pursuant to leave granted by the statement of claim filed on 29 December 1998 (CL 20504/98). However, the appellant State of New South Wales took no point about this. It was accepted that if the Court was minded to make such orders they could be made in those proceedings. 9 On their face the three orders now sought are unusual if not unprecedented and of little, if any, utility in overcoming the effect of Mr Connor's election to commence proceedings to recover common law damages. That election was made when Mr Connor commenced those proceedings. The irrevocable election springs from Mr Connor's act in doing so on 29 December 1998. Those proceedings presumably remain undefended and have not been disposed of. No application has been made in the common law division to have them dismissed or struck out. One consequence of the orders made by this Court was that Hidden J's orders no longer provided the lawful justification for further action, in this case filing a statement of claim commencing proceedings; see generally Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590 at 603. However, for the reasons given in the High Court in that case that does not mean that so long as Hidden J's decision stood and no stay was operative it was not a lawful decision and action taken in reliance upon it lawful. If the statement of claim had been filed without leave being first obtained, it would have been an irregularity which would have enabled the defendant to have the proceedings dismissed unless the plaintiff successfully applied to the Court for leave and thereby regularised the filing of the statement of claim; see Whisprun Pty Ltd v Sams & Ors [2002] NSWCA 394 and Jol v State of New South Wales (1998) 45 NSWLR 283. In Whisprun s151D of the Act was treated in the same way as s52(4) (of the Motor Accidents Act 1988), which provided that a claimant was not entitled to commence proceedings in respect of a claim more than three years after the date of the motor accident or the making of the claim "except with the leave of the Court in which the proceedings are to be taken". It did not impose a procedural condition precedent to be satisfied before litigation could begin but a condition subsequent which could be satisfied after proceedings had begun. 10 Mr Gross QC, who appeared for Mr Connor, put his submissions in two ways. First he said that the Court would never permit its own orders to be a source of injustice; see Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 at 25. Mr Gross pointed out that Mr Connor commenced proceedings in the Common Law Division only after Hidden J had made an order granting him leave to do so. The Court of Appeal subsequently held that Hidden J had erred in making that order and set it aside. Had Hidden J correctly dismissed the appeal from Master Greenwood, Mr Connor would not have commenced the Common Law proceedings for damages and accordingly could not have been said to have elected to claim for those damages. 11 Section 151A requires a person to whom compensation is payable under the Act in respect of an injury to elect whether to claim that permanent loss compensation or damages in respect of the injury from the employer liable to pay that compensation. The injured person is not entitled to claim both. Subsection (3) provides that the person makes that election, inter alia, by commencing proceedings in a court to recover those damages or by accepting payment of permanent loss compensation. The election is irrevocable except that an election to claim permanent loss compensation may be revoked with the leave of the court pursuant to subs (4) or if, after the election is made, the injury causes a further material deterioration to the person's medical condition, again with the leave of the court pursuant to subs (5). In no circumstance does the Act allow revocation of an election to claim damages in respect of the injury from the employer. 12 If a person commences proceedings as contemplated by s151D within three years after the date on which the injury was received, that person runs the risk that the proceedings may fail on grounds that would not have precluded recovery of permanent loss compensation. In that case, the election having been made, permanent loss compensation, even if otherwise available, cannot be recovered. If the three-year period passes and the person then decides to claim damages, there is the additional risk that the Court may refuse to give leave to commence proceedings. In that case it may be that, the proceedings not having been begun, the injured person can seek leave to bring a claim for permanent loss compensation, without making an election. If leave is granted the injured person is put in the position that proceedings to recover damages from the employer may be commenced although out of time. Again, a decision has to be made. If the proceedings are begun there has been an irrevocable election and the right to claim permanent loss compensation is lost. No doubt, the three year limitation period having expired, there is the additional risk that the order granting leave may be set aside on appeal. That happened in the present case. The risk of that happening might have been avoided by an application to extend the time within which proceedings were to be commenced to allow any appeals to be determined. But, however that may be, once the person injured commences proceedings in a court to recover damages in respect of the injury, that person elects to follow that course and loses the right to claim permanent loss compensation. 13 As I have suggested, the proceedings to recover damages (CL 20504/98) can and should be dismissed or struck out. But in my opinion, the fact remains that those proceedings were commenced by Mr Connor and that fact and the election that flows from it cannot be avoided and indeed should not be avoided by any order of the Court. 14 The second way in which Mr Gross put Mr Connor's case relied upon the power of the Court to declare null and void decisions of an administrative body which follow a denial to one of the parties of natural justice. He referred to the decision of the Court in Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 and particularly those passages at 718 and 729 which consider whether an act done, without compliance with the applicable principles of natural justice in circumstances where the relevant decision makers were obliged to comply with such principles, is to be regarded as void ab initio so that what purports to be an act done is totally ineffective for all purposes. In that context, Aicken J in Forbes v New South Wales Trotting Club Ltd (1979) 143 CLR 242 at 277 said: "Such an act is valid and operative unless and until duly challenged but upon such challenge being upheld it is void, not merely from the time of a decision to that effect by a court, but from its inception. Thus, though it is merely voidable, when it is declared to be contrary to natural justice the consequence is that it is deemed to have been void ab initio." 15 In Macksville & District Hospital v Mayze at 730 Mahoney JA, with whom Priestley JA agreed, referred to what Aicken J said in Forbes and then quoted as follows from the judgment of Lord Wilberforce in Calvin v Carr [1980] AC 574 at 589-90: "This argument led necessarily into the difficult area of what is void and what is voidable, as to which some confusion exists in the authorities. Their Lordships' opinion would be, if it became necessary to fix upon one or other of these expressions, that a decision made contrary to natural justice is void, but that, until it is so declared by a competent body or court, it may have some effect, or existence, in law. This condition might be better expressed by saying that the decision is invalid or vitiated. In the present context, where the question is whether an appeal lies, the impugned decision cannot be considered as totally void, in the sense of being legally non-existent. So to hold would be wholly unreal. The decision of the stewards resulted in disqualification, an effect with immediate and serious consequences for the appellant. This was a fact: the appellant's horses could not run in, or be entered for, any race; the appellant lost his membership of the Australian Jockey Club and could be excluded from their premises. These consequences remained in effect unless and until the stewards' decision was challenged, and, if so, had sufficient existence in law to justify an appeal. An analogous situation in the law exists with regard to criminal proceedings."

Mahoney JA then commented: "Subject, perhaps, to special cases, that view should be adopted as being in accordance with decisions in this country." 16 The reference to this declaratory remedy in administrative law to my mind carries the matter no further. Undoubtedly for reasons already given, Hidden J's judgment must now be treated as providing no lawful justification for the subsequent commencement by Mr Connor of the proceedings at common law. But Hidden J's order did not require Mr Connor to begin proceedings. It did no more than give him leave to do so. That he did so remains the critical factor decisive in the terms of the Act in amounting to an election. 17 During the course of argument it was pointed out that Mr Connor had taken proceedings against the solicitors who had previously acted for him. We were informed that those proceedings were settled for an amount which represented the difference between a value placed on the loss of his common law rights and of his rights to permanent loss compensation. We were informed that those proceedings were settled before the State of New South Wales amended its reply in the Compensation Court to rely on election. Had it been demonstrated, which it was not, that in reaching that settlement Mr Connor's advisers relied upon some act of the State of New South Wales indicating that the State would not rely upon the election, arguably the State may have been estopped from doing so. However on the material before us nothing at all turns upon the settlement of Mr Connor's proceedings against his former solicitors. 18 In my opinion, the summons should be dismissed with costs. 19 HODGSON JA: I agree with Sheller JA. 20 SANTOW JA: I agree with Sheller JA. **********

Last Modified: 08/28/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.