Practice and procedure - Late discovery by party - Whether prejudice caused to the other party - Application to amend defence - Whether prejudice to other party

Workers Compensation and Rehabilitation Act 1981 (WA)

Clough and Rogers v Frog (1974) 4 ALR 615

Deutz Australia Pty Ltd v Skilled Engineering Ltd [2001] VSC 194; (2001) 162 FLR 173

Hewitt v Benale & WMC Resources Ltd v Koljibabic [2002] WASCA 163

State of Queensland & Anor v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146

TNT Australia v Christie [2003] NSWCA 47

1 MALCOLM CJ: In my opinion, the applicant should be granted leave to appeal and the appeal allowed. I have reached that conclusion for the reasons to be published by McKechnie J with which I agree entirely.

2 MCKECHNIE J: At the hearing of this contested application for leave to appeal both parties advanced argument by way of oral and written submissions which canvassed the substantive aspects of the matter. With the agreement of the parties, it was decided to treat the hearing as both an application for leave and the appeal.

3 The facts giving rise to the appeal are set out in the judgment of Jenkins DCJ delivered on 19 June 2003 and reported as Willis v Normandy Golden Grove Operations Pty Ltd [2003] WADC 138. I shall refer to the applicant as the plaintiff and the respondent as the defendant. The plaintiff's statement of claim alleges that the defendant operated the Scuddles Mine at Golden Grove near Yalgoo, upon which was an inspection platform near the feed chute at the crusher at the mine. On 27 September 1996, at the mine, the plaintiff, in the course of his employment as a fitter with Monadelphous Engineering, was working on the platform when the hand rails and stauncheons collapsed, because they were not in a proper state of maintenance and repair and were defective, causing him to fall to the ground below and to suffer significant injuries to his legs and lower back. The claim was based on negligence and breach of duties as an occupier under the Occupiers Liability Act 1985 (WA).

4 The original defence, apparently filed in January 2002, was a simple defence of non-admission or denial. Although contributory negligence was pleaded, no particulars were given.

5 At issue before her Honour was an application by Normandy Golden Grove to amend its defence to plead that the defendant is a deemed employer pursuant to s 175 of the Workers Compensation and Rehabilitation Act and therefore, by virtue of s 93E(3) of the Act, the plaintiff is not entitled to an award of damages against the defendant because the plaintiff has not, at any material time, either agreed with the defendant that the plaintiff's level of disability is not less than a relevant level for the purposes of the Act or obtained a determination as to the relevant level of disability for the purposes of the Act. There was great significance in the pleading of this defence.

6 The action had been entered for trial on 16 September 2002 and on 27 September 2002 any action by the plaintiff against the employer in respect of the accident became statute barred. Therefore, if the

amendment to the defence was allowed, the likely result would be that the plaintiff will be unable to recover common law damages against any party in respect of the accident. Had the defendant pleaded in terms of its amendment prior to the cause of action against the employer becoming statute barred, the plaintiff could have proceeded against his employer instead.

7 The application was resisted by the plaintiff on a number of bases only one of which is relevant for present purposes.

8 On 17 February 2003 the defendant informally discovered a contract between Normandy Grove, or correctly Murchison Zinc Co Pty Ltd, and Monadelphous Engineering Associates Pty Ltd ("Monadelphous"). It was not in dispute that the contract was at all times relevant and should have been discovered prior to entry for trial. The plaintiff argued before Jenkins DCJ, and before this Court, that until the contract was discovered, the plaintiff did not know of the relationship between Monadelphous and the defendant or obligations assumed by Monadelphous with respect to the plant that the plaintiff was using.

9 The Judge correctly noted that the grant or refusal of leave to amend is a matter of discretion and, with respect, correctly identified the relevant authorities and applied them correctly to the exercise of the discretion. She identified the correct question at par 29 as follows:

"The alleged injustice is the fact that the plaintiff is now statute barred from commencing an action against or joining to this action the employer. If that situation has arisen as a consequence of the belated discovery of the contract or the application for leave to amend the defence then that is an injustice that would warrant me disallowing the amendment. Otherwise the application should be allowed."

10 The plaintiff also argued that if it was legitimate for the defendant not to apply to amend its defence until it had discovered the contract and then similarly it was legitimate, and indeed obligatory, for the plaintiff not to commence proceedings against the employer prior to the discovery of the contract. Therefore the failure to discover the contract until February 2003, when the action was statute barred, caused irreparable prejudice and the application for leave to amend the defence should be disallowed.

"35 There are two difficulties that I have with this submission. The first is that I do not accept that it was legitimate for the defendant to await the discovery of the contract before seeking leave to join the employer as a third party, to plead that it did not operate the mine or to plead that it was a deemed employer. It seems to me that the defendant must have at all times known of the basic facts sufficient for it to instruct its solicitors to plead these matters. Further the fact that the contract had been 'archived' is hardly an excuse for the failure of the defendant to discover this document before February 2003, over twelve months after the proceedings had been instituted.

36 Secondly whilst I acknowledge that the plaintiff could not have been expected to know the precise relationship between the employer and the defendant prior to the discovery of the contract, that does not explain why the plaintiff decided not to pursue an action for common law damages against his employer on the basis of a breach of a non delegable duty of care to provide a safe place of work, safe system of work and safe plant for its employee, the plaintiff. Thus I do not accept that the belated discovery of the contract had the prejudicial effect claimed by the plaintiff.

37 Counsel for the plaintiff submitted that until the discovery of the contract the plaintiff did not know and could not be expected to know that the employer had obligations with respect to the plant at the mine. This proposition denies the existence of the non-delegable duties that I have referred to above. In the absence of the discovery of a document which would indicate that the employer had discharged those duties by contracting with the defendant or another party to provide the safe place, plant and system of work the correct assumption would be that liability for failure to provide those matters and to comply with those duties lay with the employer. Thus I do not accept the plaintiff's submissions in this regard."

"44 The defendant's argument is that the plaintiff had the opportunity to commence proceedings against his employer and perhaps because of difficulties in the referral process he made a decision not to commence such proceedings. This was his decision and not one for which the defendant bears any responsibility. I agree with this assessment. Basic principles indicated that there was a case against the employer for damages for injuries arising out of the accident. The plaintiff clearly foreshadowed such a claim by making an application for referral of his degree of disability to the Director and pursuing that to some degree. The fact that those proceedings may not have been able to be determined prior to an action against the employer being statute barred, merely meant that the plaintiff should have commenced his action prior to the six-year limitation period expiring, which he was entitled to do. On the other hand if the plaintiff did not believe he could ever obtain the medical evidence to comply with the requirement of s 93E(3) of the Act, then he had no right to commence an action against the employer and the fact it is now statute barred is irrelevant.

...

50 I conclude that allowing the proposed amendments will not result in injustice to the plaintiff. This is because it was the plaintiff who decided who he sued in relation to his injuries. This defendant has done nothing to prevent the plaintiff from proceeding with his claim against the employer. It was the plaintiff's decision alone not to proceed against the employer. It cannot be that the courts have a duty to protect the interests and decisions of a plaintiff by preventing a defendant from pleading a defence which is likely to be successful because, as a consequence of a separate decision, the plaintiff cannot sue any other person or body. If the plaintiff has decided to put his eggs in one basket, so to speak, by choosing to sue the defendant and not the employer, it is not an injustice for a court to allow the defendant to raise a successful defence. This is even so where the defence is raised at a late point in time after the action against the employer had become statute barred. The inability of the plaintiff to obtain damages against his employer arises from his decision not to commence proceedings within the six-year limitation period and not to pursue the referral to the Director, not from the defendants proposed plea.

51 If the claim against the employer and the difficulties in proving his entitlement to damages against the defendant could only have been discovered by the plaintiff through the contract the situation may have been different. But that is not the case. Any plaintiff, legally advised as this plaintiff was, should have been aware of the potential claim against the employer. The application to the Director for referral in 1999 indicates that this plaintiff was so aware. The potential claim was based on his relationship with his employer and not on the existence of the contract. Similarly the plaintiff, legally advised, should have been aware at least by 14 June 2002, the date of the Full Court's decision in Hewitt's case of the potential difficulties in this case. That gave him three months to take action against the employer."

Evidence as to the plaintiff's attitude about joining Monadelphous as a party

13 The evidence is largely found in various affidavits sworn by Brian George Bradley the plaintiff's solicitor. The plaintiff had been under the care of an orthopaedic surgeon, Dr Schulz, following the accident. On 10 December 1999 Dr Schulz assessed a 45 per cent disability in total, according to Sch 2 of the Workers Compensation and Rehabilitation Act. On 10 December 1999 the plaintiff lodged a Form 22 "Referral of Question of Degree of Disability" with the Conciliation and Review Directorate.

14 In an extensive affidavit sworn 6 June 2003, Mr Bradley explained why the Form 22 was lodged and noted that, prior to 5 October 1999, the plaintiff required leave from the District Court in order to commence common law proceedings against Monadelphous for damages for personal injury. He deposed that at no time before 5 October 1999 was there sufficient evidence to satisfy the criteria for leave required by s 93D. Section 93D was replaced and a new s 93D was substituted from 5 October 1999. Mr Bradley deposed that he received a number of medical reports from Mr Anthony Geddes and that:

"By December 1999 I was not satisfied that the medical evidence which I obtained from Mr Anthony Geddes was sufficient to satisfy Section 93D(6) of the Act. Accordingly I arranged for the Plaintiff to be examined by Mr John Schulz, Consultant Orthopaedic Surgeon."

15 He deposes that after receiving a report from Mr Schulz and asking him to clarify certain aspects, he forwarded the report to the Director of the Conciliation and Review Directorate with the Form 22. He said:

"This was essential to preserve any right by the Plaintiff to bring a claim for damages for personal injuries against Monadelphous."

16 He outlined the progress of the worker's compensation proceedings which culminated in an application for a writ of certiorari taken out by Monadelphous which on 19 October 2001 was adjourned sine die in this Court.

"(i) By lodging the said Form 22 an essential pre-condition to the Plaintiff's right to pursue a common law action against Monadelphous was preserved but there were pre-conditions which remained to be satisfied before the Plaintiff could prosecute such an action to Judgment."

He then detailed the pre-conditions which required further medical evidence, noting that such evidence did not become available until Mr Geddes' report dated 8 January 2003 which "... was received by my firm following surgery which the Plaintiff underwent in December 2002." I interpose to note that by this time the limitation period for bringing an action against Monadelphous had expired.

18 The writ of summons commencing the plaintiff's claim was filed in the District Court on 21 November 2001 shortly after the adjournment of the writ of certiorari. Mr Bradley deposes at par 25:

"(iii) At that time there were not to my knowledge then any impediments to the success of the Plaintiff's cause of action against the Defendant.

(iv) On the other hand there were at the time still pre-conditions to be satisfied on a potential claim by the Plaintiff against Monadelphous as outlined in paragraph 24 above."

19 This is set out in an affidavit of Craig Geoffrey Astill, a solicitor for the defendant, filed 17 March 2003, in support of the application to amend the defence. He deposes the defendant filed a certificate of discovery on 14 June 2002.

20 It is common ground that the defendant did not at that time discover the contract documents, dated January 1995, for plant maintenance services at Scuddles Mine.

21 Part of the General Conditions of Contract provided:

The Contractor hereby guarantees to MZC for a period of 12 months following completion, that all Works shall be and remain free from any defect or deficiency. ..."

22 The reason for the delay is expressed as follows:

"27 The delay in commencing third party proceedings is in part a result of difficulties experienced in obtaining a complete copy of the agreement between the defendant and the proposed third party. On 18 November 2002 Phillips Fox requested a copy of the agreement from the defendant so that Phillips Fox could advise as to the effect of the agreement.

28 Due to the defendant's archiving policy the defendant was unable to locate and provide the agreement until 12 February 2003.

29 Prior to locating the agreement the defendant did not commence third party proceedings against the proposed third party as any claim would be for contribution pursuant to the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947. The plaintiff has failed to obtain a relevant degree of disability under the Workers' Compensation & Rehabilitation Act 1981 (the 'Act') that would allow him to obtain an award for common law damages against his employer. Accordingly the defendant is prohibited by section 93F(4) of the Act from obtaining contribution from the proposed third party in relation to any award of common law damages that may be made in favour of the plaintiff.

30 I believe that the defendant now has a claim against the proposed third party pursuant to the indemnity granted by the agreement and that this claim is independent to the restrictions imposed by section 93F(4) of the Act. The defendant will be entitled to prosecute a claim against the proposed third party irrespective of whether the plaintiff obtains a relevant level of disability.

31 Further, based on the contractual terms contained within the agreement and the work to be performed by the proposed third party I believe that the defendant may be a deemed employer for the purposes of section 175 of the Act. Accordingly, based on the Full Court's authority of Hewitt v Benale Pty Ltd [2002] WASCA 163 the defendant may be entitled to rely upon the constraints imposed by Pt IV Division 2 of the Act. The defendant was not able to raise such a defence previously as it had not provided Phillips Fox with a copy of the agreement and had not been advised of its possible defence pursuant to the Act.

32 For similar reasons, once the agreement was provided, it became apparent that the defendant may have a defence to the plaintiffs claim pursuant to section 6 of the Occupiers' Liability Act 1985."

23 In dealing with the question of prejudice, Mr Astill deposed that the defendant's claim would be prejudiced unless the third party notice was heard at the same time as the defendant. He further deposed:

"36 The only prejudice the plaintiff is likely to suffer is delay of the proceedings. The plaintiff delayed for 5 years before commencing proceedings and has adjourned two pre-trial conferences. The plaintiff has brought substantial delay upon the proceedings by his own actions."

24 Resolution of this case is a matter of balancing competing interests and prejudice. It may be accepted that for the reasons expressed by the Judge, and the cases which she cites, the Court would normally allow an amendment to the defence.

25 However, this case is out of the ordinary because of the failure to disclose the contract between the defendant and Monadelphous within proper time.

26 True it is that the plaintiff might have sued his employer. True also he gave serious consideration to taking that course of action but concluded, not unreasonably, there were difficulties in advancing that claim. The same difficulties arising from the Workers Compensation and Rehabilitation Act did not affect the original claim against the defendant.

27 The key to this appeal, in my opinion, lies in the defendant's failure to comply with its obligation to discover all relevant documents in a timely fashion. Although the discovery of the contract did not alter the legal relationship between the plaintiff and Monadelphous, the relevance of the contract on the relationship between the defendant and Monadelphous would have become apparent to the plaintiff and may have caused the plaintiff to reconsider his position. At the date of the certificate of discovery there was still time to take action against Monadelphous. In these circumstances, the plaintiff has been materially prejudiced by the defendant's failure to discover the contract in time. Nor, with respect, does the explanation proffered by Mr Astill satisfactorily explain the failure to discover the contract. The trial Judge's discretion has miscarried because she has failed to give proper weight to this unusual feature. Although the plaintiff had taken a decision to pursue the defendant, rather than his employer Monadelphous, because of the defendant's omission in discovery, the plaintiff has lost a real chance to reconsider his position in the light of the contractual arrangement and to consider the possible effect of the Workers Compensation and Rehabilitation Act s 175.

28 In the particular and unusual circumstances of this case the application to amend the defence should have been refused.

29 In my opinion, leave should be granted and the appeal allowed.