Atomic Steel Constructions Pty Ltd v Tedeschi - [2013] NSWWCCPD 33

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:			Atomic Steel Constructions Pty Ltd v Tedeschi [2013] NSWWCCPD 33
APPELLANT:			Atomic Steel Constructions Pty Ltd
RESPONDENT:			Wayne Tedeschi
INSURER:			Allianz Australia Workers Compensation (NSW) Ltd
FILE NUMBER:			A1-7799/12
ARBITRATOR:	Ms N Serventy
DATE OF ARBITRATOR’S DECISION:			14 January 2013
DATE OF APPEAL HEARING:		31 May 2013
DATE OF APPEAL DECISION:			11 June 2013
SUBJECT MATTER OF DECISION:			Consent orders made under mistake; settlement made outside counsel’s instructions; application to set aside consent orders under reconsideration power; s 350(3) of the Workplace Injury Management and Workers Compensation Act 1998; whether mistake by legal representative can ground application for reconsideration; Hurst v Goodyear Tyre & Rubber Co (Australia) Ltd [1953] WCR 29 distinguished; consideration of irrelevant matters; failure to consider injustice to insurer; failure to give reasons; interests of justice; relevance of merits of substantive claim for compensation; Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528 and Broadbent v Medical Board ofQueensland [2010] QCA 352 discussed and distinguished; non-compliance with Practice Direction No 6; appeal unnecessarily protracted by appellant’s conduct; costs on appeal
PRESIDENTIAL MEMBER:			Deputy President Bill Roche
HEARING:			Oral
REPRESENTATION:			Appellant:	Mr B McManamey, instructed by Sparke Helmore Lawyers
Respondent:	Mr P Perry, instructed by Taylor & Scott Lawyers
ORDERS MADE ON APPEAL:			1. The Arbitrator’s decision of 14 January 2013 is revoked and paragraphs 1 and 2 of the consent orders of 31 October 2012 are revoked. Paragraph 3 of the consent orders is confirmed. 2. The matter is remitted to a different Arbitrator to determine the respondent worker’s claim on its merits. Costs of the second arbitration are to follow the result of that arbitration. 3. The appellant employer is to pay part of the respondent worker’s costs of the appeal, assessed at $1,750, plus GST.

INTRODUCTION

In this matter, the parties settled the respondent worker’s claim for weekly compensation on terms that went outside the actual authority of counsel for the employer. The settlement required the employer to pay weekly compensation worth $91,845, when counsel only had authority to effect a settlement worth approximately $45,288 (and when, in any event, the maximum potential value of the claim was only $70,102.85). The Arbitrator refused the employer’s application that the consent orders be set aside, under the reconsideration power in s 350(3) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act), and the employer has challenged that refusal.

BACKGROUND TO THE SETTLEMENT

On 24 January 2001, the respondent worker, Wayne Tedeschi, suffered a serious injury to his right knee while riding his pushbike home from work. At the time of the accident, he had been working for the appellant, Atomic Steel Constructions Pty Ltd (Atomic), for about two weeks as a boilermaker/welder.
Atomic’s insurer, Allianz Australia Workers Commission (NSW) Ltd (Allianz), accepted liability for the injury and has paid lump sum compensation for permanent loss of efficient use of Mr Tedeschi’s right leg at or above the knee under the Table of Disabilities. It also paid weekly compensation for various periods until it gave notice, on 16 September 2004, that liability for weekly compensation would cease from 27 October 2004.
Liability was declined on the ground that Mr Tedeschi had been paid his full entitlement under s 38 of the Workers Compensation Act 1987 (the 1987 Act) and, based on a “capability assessment report” prepared by Recovre, rehabilitation providers, he suffered no economic loss because he was fit to work as a courier/delivery driver, sales assistant, or a telemarketer/telephone customer service officer.
On 16 April 2012, Mr Tedeschi claimed weekly compensation for various periods and amounts between 30 October 2004 and 10 January 2011 (later amended to be 14 June 2011). Allianz denied liability in a s 74 notice, dated 4 July 2012, on grounds in its notice, dated 16 September 2004, namely, that Mr Tedeschi was fit for alternative work that would have paid him the same or more than he would have earned uninjured with Atomic.
Mr Tedeschi commenced proceedings in the Commission on 18 July 2012 and the Commission listed the matter for conciliation and arbitration on 31 October 2012 before Arbitrator Serventy. On that day, separate counsel represented each of the parties.
The events of 31 October 2012 have been set out in a statement prepared by counsel who appeared for Atomic on that day. Mr Tedeschi has not challenged the matters in that statement and the following summary is based on it.
At the request of the employer’s counsel, Mr Perry took instructions to put an offer to settle the claim. That offer was made in writing in the following terms:
“Applicant’s offer – but this is
  final offer
30/10/04 – 20/1/07       = $315 per week
✓     21/1/07 – 24/2/08         = No loss award R[espondent]
25/2/08 – 30/6/08         = $315 per week
✓     1/7/08 – 12/10/08        = No loss award R[espondent]
13/10/08 to 14/6/11      = $360 per week
Claim ends on 15 June 2011”
This offer included two periods that had never been part of Mr Tedeschi’s claim. The first was from 8 August 2005 to 7 July 2006 (worth $15,120 for 48 weeks compensation at $315 per week). The second was from 1 April 2010 to 30 September 2010 (worth $9,360 for 26 weeks at $360 per week). Thus, the offer was outside the ambit of Mr Tedeschi’s claim, as particularised in an amended wage schedule dated 2 October 2012 attached to an Application to Admit Late Documents dated 12 October 2012, and filed with the Commission on 16 October 2012. That offer had a total value of $91,845. Correctly calculated, the maximum potential value of Mr Tedeschi’s claim (as particularised) was $70,102.85.
After receiving this offer, counsel for Atomic made some calculations to determine the value of the offer in terms of “total gross weekly payments”. He divided the claim into three periods:
(a)     30 October 2004 to 20 January 2007;
(b)     25 February 2008 to 30 June 2008, and
(c)     13 October 2008 to 14 June 2011.
He initially arrived at a total of $44,888.
Counsel then sat with Mr Perry and he showed Mr Perry his calculations on a note pad. His subtotals were $36,414 for period (a), $5,670 for period (b) and $2,804 for period (c) (the figure for period (c) was calculated by (wrongly) multiplying 8.9 weeks by $315 and rounding up to the nearest whole dollar).
While pointing at the $2,804 subtotal, he realised that he had incorrectly calculated that figure by using $315 per week instead of $360 per week. Using his telephone as a calculator, and while Mr Perry was sitting next to him, he recalculated the amount for period (c) by multiplying 8.9 weeks by $360 giving $3,204. His new total was $45,288.
After writing $45,288 on his working sheet, counsel said to Mr Perry “[t]hat’s what I work it out to be”. Mr Perry responded, “[w]e worked out a different figure, we will look at it”, and then walked away.
Critically, counsel for Atomic failed to realise that, in respect of period (c), he had only calculated the 8.9 weeks from 13 April 2009 to 30 June 2009, but had not allowed for amounts claimed for the periods 13 October 2008 to 13 April 2009 and 1 July 2009 to 14 June 2011. (Allowing $360 per week for these periods meant that the offer put by Mr Perry (which itself was incorrect) was worth $46,557 more than the $45,288 counsel had calculated.)
Counsel then spoke by phone to his instructing solicitor, Ms Pradesha P’Nathan, and told her that an offer had been put involving three periods, which, on his calculations, came to roughly $45,288. He suggested settlement be attempted up to a higher (unidentified) figure on condition that Mr Tedeschi consent to an award for Atomic for a continuing weekly benefits claim after the end of the last closed period. Ms P’Nathan later instructed counsel that Allianz was prepared to proceed as he had suggested.
Counsel spoke to Mr Perry and said:
“Phillip we can pay the three periods coming to that figure with awards for [Atomic] for the two bits in between but that’s conditional on the application being amended to include an ongoing weekly claim and an award for [Atomic] for that.”
When Mr Perry responded that he did not think Mr Tedeschi would let go of his future rights, counsel said, “[y]ou can assume we will pay a bit more than the 45 odd if he will”.
After obtaining instructions, Mr Perry said to Atomic’s counsel:
“He won’t agree to letting go of his future rights. He is sticking to his offer.”
Counsel rang Ms P’Nathan to see if Allianz was prepared to pay the approximate amount of $45,288 by way of past settlement only without the benefit of any arguable protection from further claims. After a delay, Ms P’Nathan gave instructions that Allianz would settle on that basis.
Counsel then prepared “Short Minutes”, which he signed and gave to Mr Perry. That document, which is essentially in the same terms as the written offer Mr Perry put, and involves a settlement with a total value of $91,845, is in the following terms:
“Workers Compensation   No. 7799 of 2012
Commission of NSW
Applicant: Wayne Tedeschi
Respondent: Atomic Steel Constructions Pty Ltd
Short Minutes
By consent:
1. Awards for the applicant pursuant to s 40 for:
(a)     $315 pw from 30/10/04 to 20/01/07
(b)     $315 pw from 25/02/08 to 30/06/08
(c)     $360 pw from 13/10/08 to 14/06/11
2. Awards for the respondent with respect to claims for weekly benefits over the following periods:
(a)   21/01/07 to 24/02/08
(b)   01/07/08 to 12/10/08
3.Respondent to pay the applicant’s costs as agreed or assessed.”

The Short Minutes were dated 31 October 2012, signed by Mr Perry for Mr Tedeschi and counsel for Atomic, and handed to the Arbitrator, who heard short submissions as to costs.
The Commission issued a Certificate of Determination on 31 October 2012 in substantially the same terms as the Short Minutes, save that, in addition to the order at [3], the matter was certified as “somewhat complex due to medical and factual matters” and the Arbitrator allowed an uplift in Mr Tedeschi’s costs of 15 per cent.
On 1 November 2012, Ms P’Nathan phoned Atomic’s counsel to say she had received the Certificate of Determination from the Commission and had concerns about what was set out. While speaking to Ms P’Nathan, counsel examined his copy of the Short Minutes and realised what had been omitted from his calculations. He advised Ms P’Nathan it would be prudent to seek to have the award set aside and that he would ring Mr Perry to advise him of the problem.
On 2 November 2012, Ms P’Nathan wrote to the Commission requesting that the matter be relisted for teleconference, stating:
“We confirm that this matter was listed for conciliation arbitration on 31 October 2012 before Arbitrator Natasha Serventy.
We refer to the Certificate of Determination issued in this matter.
Unfortunately, due to a significant mathematical miscalculation the consent orders do not reflect what our instructions to Counsel had been and indeed what Counsel had understood the settlement to entail.
We confirm that Counsel’s authority was limited to the entry of awards only totalling approximately $45,288.00 in past weekly benefits.
In the circumstances we are seeking to have the Certificate of Determination set aside. We note that Sorcevski v Steggles Pty Ltd (1991) 7 NSWCCR 315 is illustrative of the Commission’s powers in this regard.
Accordingly we request that the matter be relisted for teleconference at the earliest opportunity before Arbitrator Serventy.
We confirm that a copy of this correspondence has also been forwarded to the Applicant’s solicitors.”
On the same day, Ms P’Nathan wrote to Mr Tedeschi’s solicitors, Taylor & Scott, providing a copy of the letter she had sent to the Commission, and stating that “due to some significant calculation errors our counsel … did not have the authority to consent to the awards entered” and that she sought to have the Certificate of Determination set aside. Taylor & Scott replied on 7 November 2012 that they were instructed to oppose any application to have the Certificate of Determination set aside, pointing out that Atomic’s counsel prepared the settlement documents, and that Mr Tedeschi accepted the offer in “good faith”.
The Commission advised the parties by email on 7 November 2012 that, in view of Mr Tedeschi’s opposition, the Arbitrator was not prepared to set aside the Certificate of Determination. If the employer’s legal representative wished to proceed with a formal request for reconsideration, an application should be made in accordance with the Registrar’s Guideline – Requests for Reconsideration.
On 12 November 2012, Atomic formally sought that the consent orders be set aside under the reconsideration power in s 350(3) of the 1998 Act. In support of that application, it relied on the statement of 2 November 2012 by Atomic’s counsel and submissions prepared by Mr Studdert, solicitor, dated 9 November 2012, in which he referred to Sorcevski v Steggles Pty Ltd (1991) 7 NSWCCR 315 (Sorcevski) and Markulin v Healthwoods Pty Ltd [2007] NSWWCCPD 76; 5 DDCR 527 (Markulin).
Dealing with the matter on the papers, the Arbitrator delivered a decision, on 14 January 2013, in which she declined to set aside the consent orders.
Atomic has appealed that decision.

THE ARBITRATOR’S DECISION

While the Arbitrator noted (at [12]) that Sorcevski was authority that, depending on the circumstances, a party may not be bound by a settlement outside instructions, it would require “highly unusual circumstances such as great hardship and injustice upon the worker”. The present settlement imposed no hardship on Mr Tedeschi who, she imagined, considered he had reached a final agreement on 31 October 2012 and may suffer hardship if there were any reconsideration and consequent further conferences or hearings, all leading to “delayed compensation”.
Relying on Markulin, the Arbitrator added (at [13]) that the reconsideration power required the Commission to balance the public interest that litigation should not proceed indefinitely with the need to do justice between the parties, and that the reconsideration power is not so wide as to allow reconsideration of an award because of a mistake or inadvertence by a party’s legal representative. She said that, when read in full, Markulin “hardly assists this application”.
The Arbitrator said (at [14]) that she accepted that a mistake or oversight by a legal adviser would not give rise to a ground for reconsideration (Samuel v Sebel Furniture Ltd [2006] NSWWCCPD 141, 5 DDCR 482, citing Hurst v Goodyear Tyre & Rubber Co (Australia) Ltd [1953] WCR 29 (Hurst)).
The Arbitrator noted (at [15]) that, from her records, lengthy delays were experienced at the initial teleconference “due to the insurer’s unavailability” and the solicitor for Atomic having no instructions and, after two hours, the parties “came to a position on the claim that was quite close to a resolution”. (This was a reference to the teleconference on 15 October 2012. There is no transcript of that teleconference and no formal record of the outcome, other than that the case did not settle and was listed for hearing on 31 October 2012.)
The Arbitrator concluded:
“16. It was clear to me from the evidence before me and the tenor of the discussions that more could have been done by the insurer to resolve the matter, both before and at the teleconference. Possibly there was a further lack of proper preparation for the conciliation and arbitration. Whether or not I am correct in this view, I consider that if the insurer or its solicitor had attended the conciliation conference the mistake may not have occurred.
17.    A more recent presidential decision, Preston v Randwick City Council [2012] NSWWCCPD 1, confirmed that an order setting aside a consent order will be made only in appropriate cases in the most exceptional circumstances, for example, where the decision is unjust to the worker. This is manifestly not the case in this matter.
18.    Having considered the evidence in this matter, I was satisfied at the time and remain satisfied that the final settlement was appropriate in the circumstances according to the substantial merits of the case. The insurer made no mention in its submissions of any attempt to contact the applicant’s solicitors and come to a fresh agreement.
19.    I need to balance the public interest that litigation should not proceed indefinitely with the need to do justice between the parties, but I see no injustice to the insurer in allowing the agreement to stand.
20.    I decline to reconsider this matter.”

PRELIMINARY MATTER

In non-compliance with Practice Direction No 6, Atomic’s notice of appeal did not identify any grounds of appeal, but merely made general submissions alleging that the Arbitrator had erred in law. As a result, by notice dated 30 April 2013, I listed the matter for teleconference on 2 May 2013 to deal with the non-compliance with the Practice Direction and the fact that neither party had made any submissions as to whether, having regard to the merits of Mr Tedeschi’s claim, it was in the interests of justice that the consent orders be set aside.
On 1 May 2013, Mr Studdert filed by email a document headed “Addendum to Appellant’s Submissions – Addressing Practice Direction No 6” (the amended appeal) in which he sought to rely on five grounds of appeal that, because they were so broad, also failed to comply with Practice Direction No 6 and provided little assistance in determining the real issues. Four of those grounds were said to be dealt with in the submissions already filed and the fifth ground was dealt with in a one-sentence submission. Leave was sought to file further submissions in 21 days dealing with whether it is in the interests of justice that the consent orders be set aside. Because of the unsatisfactory state of the appellant’s notice of appeal and submissions in support, it was necessary to list the matter for an oral hearing.

ISSUES IN DISPUTE

The issues identified in the amended appeal were whether the Arbitrator erred in:
(a)     failing to appropriately consider the absence of Atomic’s consent;
(b)     failing to appropriately consider whether exceptional circumstances existed;
(c)     failing to correctly and appropriately apply the relevant law relating to the Commission’s power to reconsider;
(d)     failing to consider relevant issues and correctly apply the relevant law, and
(e)     relying on an apparently incorrect factual determination, namely, that there was no attempt to contact Mr Tedeschi’s solicitor as soon as the problem was noticed.
At the oral hearing of the appeal, Mr McManamey, who did not appear at the arbitration, appeared for Atomic and Mr Perry appeared for Mr Tedeschi. Without objection, Mr McManamey argued that the Arbitrator erred in that she:
(a)     wrongly concluded that a mistake by a legal adviser will not give rise to a ground for reconsideration (mistake by a legal adviser);
(b)     took into account irrelevant matters (irrelevant matters);
(c)     failed to address whether it would be unjust to the insurer not to set aside the consent orders, but only considered whether it was unjust to the worker (injustice to the insurer);
(d)     gave no reasons for her statement (at [18] of her decision) that she was satisfied that the final settlement “was appropriate in the circumstances according to the substantial merits of the case” (merits of the case), and
(e)     failed to set aside the consent orders (should the consent orders be set aside).

MISTAKE BY A LEGAL ADVISER

Submissions

Mr McManamey submitted that the Commission has power to set aside consent orders made without the authority of counsel, even though counsel had apparent authority and the other side acted in good faith (Sorcevski at 336D). He said that Hurst was not a barrier to the orders being set aside because it concerned mistakes about the preparation and running of a case, not the settlement of it on terms that were beyond instructions.
Mr Perry did not challenge the general statement of principle in Sorcevski and made no submissions about Hurst.

Discussion and findings

In Sorcevski, the worker suffered a repetitive strain injury to both arms and her neck. She agreed to redeem her rights for that injury under the then applicable workers compensation legislation. She did not agree to redeem her rights in respect of any back injury she may have suffered. Without her knowledge or consent, the back was included in the Short Minutes of Order, which were signed by counsel. The Compensation Court “approved” the redemption.
In a later claim for compensation for her back injury, the employer successfully relied on a defence of res judicata. The worker then sought a reconsideration of the redemption on the ground that she did not consent to redemption of her rights in respect of her back.
Burke CCJ accepted (at 329F) that a solicitor (or barrister) retained by a client in respect of litigation has authority to bind his or her client to a compromise settlement of that litigation. However, if the solicitor had no actual authority to effect a particular compromise in the litigation, the client may not, depending on the circumstances of the case, be bound by such a settlement.
His Honour held that, under s 17(4) of the Compensation Court Act 1984 (repealed), the Compensation Court had a discretion to set aside a prior award. His Honour concluded at 330F:
“In summary, the position appears to be that under section 17 of the Compensation Court Act 1984, and at common law, it is possible, though improbable, that a disposal of litigation, concluded by counsel for a party in a manner outside instruction and such being unknown to the other side, could be set aside by the Court. Such would require highly unusual circumstances.” (emphasis added)
After considering the evidence in detail, his Honour held that, in the circumstances before him, it was appropriate to take the “extraordinary step” (336D) of rescinding the prior award. His Honour’s ultimate findings were:
“I am therefore of the view that the worker has shown that she did not consent to the determination on 25 November 1985 of a sum the payment of which would redeem the employer’s liability to make weekly payments in respect of any back injury.
I believe that the worker should not be held bound by the assent of her counsel to such a determination even though within his ostensible authority and that the other side acted upon it in good faith.
I find that such matters are grounds upon which the worker might be granted reconsideration of the award of 25 November 1985.
I am satisfied that to withhold reconsideration would inflict great hardship and injustice upon the worker.”
On appeal to the Court of Appeal (Steggles Pty Ltd v Sorcevski, NSWCA, No 40693/91, 29 July 1994, unreported), it was accepted that it was open to Burke CCJ to set aside the earlier award.
Sorcevski has been considered and applied in the Commission in Markulin, and the principles discussed are applicable in the present matter.
In Hurst, the worker brought proceedings in 1946 to recover compensation for a 1940 injury but neglected to claim medical and hospital expenses incurred at that time. In June 1949, proceedings to recover further payments of compensation for incapacity due to the 1940 injury were instituted. The particulars of this claim included medical and hospital expenses identical in amounts with those known to the worker in 1946 but omitted from his first claim. The second proceedings were determined in favour of the employer because the maximum amount of the employer’s liability had been paid.
In July 1949, the worker again brought proceedings and claimed compensation for the same incapacity, now allegedly due to a 1945 injury. Included in this claim were the medical and hospital expenses that had been omitted from the 1946 proceedings but included in the second proceedings, which had been determined in favour of the employer. This claim failed because the incapacity had resulted from the 1940 injury and not the alleged 1945 injury.
In 1952, the worker commenced further proceedings to recover the cost of the medical and hospital expenses relating to the 1940 injury. Rainbow J held that, as an original application, the claim was misconceived. The proper procedure was to re-open the 1946 proceedings, but there had to be a sufficient reason to set aside an award and re-open a case. However, as the only reason why the amounts had not been claimed before was mistake or inadvertence by the then solicitors, that was insufficient.
His Honour added that, even if the application were “at large”, because the then Commission had a general power to decide matters upon the merits and justice of the case, without being bound by precedent, it would still not be enough to succeed. There had to be “some reason, some merits, and some justice” (30). A factor to be taken into consideration on that score was “surely the passage of time”, noting a delay of six years between 1946 and 1952. His Honour felt that the long delay itself warranted the refusal of any general power to re-open based on the 1946 claim. (It should be noted that, at that time, claims to re-open a case had to be made within six months of the original order. There is no time limit in which a reconsideration must be made under s 350(3), but delay is an important factor that weighs against the granting of relief.)
In the present case, the Arbitrator’s statement (at [14]) that a mistake or oversight by a legal adviser would not give rise to a ground for reconsideration failed to have regard to the context in which that statement was made in Hurst. In that case, the issue was not one concerning a settlement that went beyond counsel’s instructions, but concerned a failure in the preparation and presentation of a case, and a lengthy delay in bringing subsequent proceedings for relief.
The Arbitrator also failed to have regard to the principles discussed in Sorcevski, where it was held that a party (in that case, a worker) was held not to be bound by the assent of her counsel, even though it was within his ostensible authority and the other party acted on it in good faith.
It follows that, having regard to the principles in Sorcevski, and the context in which Hurst considered the relevance of a mistake by a legal adviser, the fact that counsel mistakenly signed consent orders that were beyond his instructions was not, in itself, determinative of whether relief should be granted

IRRELEVANT MATTERS

Submissions

Mr McManamey submitted that the Arbitrator erred in taking into account several matters that were irrelevant to the issue before her. Those matters included:
(a)     the delay in getting instructions at the teleconference due to the insurer’s unavailability;
(b)     the possibility of a lack of proper preparation (by Atomic’s solicitor) for the conciliation and arbitration;
(c)     that more could have been done by the insurer to resolve the matter;
(d)     that the insurer made no mention in its submissions of any attempt to contact Mr Tedeschi’s solicitors and come to a fresh agreement, and
(e)     that, if Atomic’s solicitor had attended the conciliation conference, the mistake may not have occurred.
Mr Perry made no submissions on this issue.

Discussion and findings

The power to set aside consent orders under s 350(3) is discretionary. It is accepted that a decision-maker will err in the exercise of such a power if (among other things) he or she takes into account irrelevant matters or fails to take into account relevant matters (House v The King [1936] HCA 40; 55 CLR 499 at 505).
None of the matters listed at [56] above had any relevance to the issue before the Arbitrator. The question was whether it was in the interests of justice that the consent orders be set aside and the employer be allowed to contest the claim. The delay in getting instructions at the teleconference had no bearing on that issue and was irrelevant. The consent orders were entered on the day of the arbitration, not the day of the teleconference.
Similarly, the possibility of a lack of preparation for the conciliation and arbitration, and the possibility that the insurer could have done more to resolve the matter, were also irrelevant to whether the consent orders should be set aside. As far as the settlement was concerned, there was no issue about the preparation of Atomic’s case. The insurer provided instructions to settle on a basis that was not consistent with the consent orders ultimately filed. There is no suggestion that it could, or should, have done more.
It was also irrelevant to say that the insurer had made no attempt to contact Mr Tedeschi’s solicitor and come to a fresh agreement. After becoming aware of the mistake on 1 November 2012, Atomic’s solicitors acted promptly in writing to the Commission and to Mr Tedeschi’s solicitors on 2 November 2012 seeking to have the consent orders set aside. That was appropriate and it is not to the point that the insurer did not seek to come to a fresh agreement. That is especially so in circumstances where Mr Tedeschi had already indicated that the written offer he made on 31 October 2012 was “final”.
While it is possible that the mistake may not have occurred if Atomic’s solicitor had attended that arbitration, it is difficult to see how that is relevant to the issue of whether the consent orders should be set aside. Any number of different scenarios might have avoided the mistake. The Commission had to deal with the facts as they were, not as they might have been. The fact that Atomic’s counsel did not have an instructing solicitor present on 31 October 2012 was unfortunate but was not something that disentitled Atomic to the relief it sought.
It follows that the Arbitrator erred in considering irrelevant matters.

INJUSTICE TO THE INSURER

Submissions

Mr McManamey submitted that the Arbitrator erred in only considering injustice to Mr Tedeschi and failing to consider injustice to the insurer/employer.
Other than a general submission that the failure to set aside the consent orders involves no error, Mr Perry did not deal specifically with this point.

Discussion and findings

The Arbitrator observed that Preston v Randwick City Council [2012] NSWWCCPD 1 (Preston) confirms that an order setting aside a consent order will only be made in exceptional circumstances. She added (at [17]) that such a circumstance would be where “the decision is unjust to the worker” and that that was “manifestly not the case in this matter”.
The Arbitrator’s first statement was correct. Preston stated, consistent with Sorcevski, that consent orders will only be set aside in “most exceptional circumstances” ([52]). However, that case concerned an appeal against consent orders under s 352. It did not involve an appeal from an Arbitrator’s failure to exercise the reconsideration power in s 350(3), though the appellant (wrongly) attempted to use the reconsideration power on appeal. As a result, it only considered the reconsideration power in that context and did not suggest that the power to set aside consent orders could only be exercised where the decision was unjust to the worker.
In exercising the reconsideration power, the Commission must take into account fairness to all parties, not just one side. To the extent that the Arbitrator failed to consider any potential injustice to Atomic (or the insurer) if the consent orders were not set aside, she erred.

MERITS OF THE CASE

Submissions

Mr McManamey submitted that the merits of the case and the interests of justice favour the consent orders being set aside because they provide for a payment of $91,845, which is well in excess of the maximum value of the Mr Tedeschi’s claim ($70,102.85), as particularised in his amended wage schedule dated 2 October 2012. He added that the Arbitrator gave no reasons for her statement that the final settlement “was appropriate in the circumstances according to the substantial merits of the case” ([18]).
Mr Perry submitted that Mr Tedeschi suffered a severe injury to his right knee and, as a result, suffered a substantial loss of efficient use of his right leg at or above the knee that has significantly affected his capacity to earn in the open labour market. Thus, there was ample evidence for the Arbitrator to say that this was an appropriate settlement.
Mr Perry said that the submission that the amount involved was excessive loses force when one considers the content of the amended wage schedule, which shows that, in making his offer to settle, Mr Tedeschi had compromised his claim.
With respect to Mr McManamey’s submission that the value of the settlement in the consent orders exceeded the value of the claim in the amended wages schedule, Mr Perry said that, if that argument had been put to the Arbitrator, and if she had dismissed it, that might be an error of discretion, but that was not the case. Therefore, the Arbitrator made no error.

Discussion and findings

I do not accept Mr Perry’s submissions.
There is no dispute that Mr Tedeschi suffered a significant injury to his right knee, or that he has an incapacity as a result of that injury. The issue is the quantification of his entitlement to weekly compensation. Before the Arbitrator could conclude that the settlement was appropriate, she had to consider all the evidence, including the quantum of the claim and the terms of the consent orders. She did not do that. She merely made a broad assertion that the settlement was “appropriate in the circumstances according to the substantial merits of the case” ([18]). She said nothing about the settlement, or the evidence, that led her to that conclusion. Moreover, the parties had made no submissions on whether the settlement was appropriate.
The merits of the case strongly favour the consent orders being set aside because they involve a settlement that exceeds the maximum compensation claimed by Mr Tedeschi. This is confirmed by the fact that, as previously noted, the orders provide for the payment of compensation for two periods when Mr Tedeschi concedes he has no entitlement to weekly compensation. They are the periods from 8 August 2005 to 7 July 2006 and from 1 April 2010 to 30 September 2010. Relying on the figures in the consent orders, the total value of the weekly compensation in those periods is $24,480.
Mr Perry made no submission as to why a settlement that includes two substantial periods during which Mr Tedeschi has no entitlement to weekly compensation should be considered appropriate according to the substantial merits of the claim. A determination of the claim on its merits could not have resulted in an award in the terms in the consent orders. Therefore, if the consent orders stand, Mr Tedeschi will receive a windfall of at least $24,480. It is not in the interests of justice that that be allowed.
The figures presented by Mr McManamey, which Mr Perry did not challenge, demonstrate that, contrary to Mr Perry’s submission, the offer Mr Tedeschi put was well above the potential total value of his claim, as set out in his amended wage schedule. On the available evidence, and the submissions made on appeal, I reject Mr Perry’s submission (unsupported by any detailed calculations) that Mr Tedeschi’s offer of settlement was a compromise of the potential maximum value of his claim.
I agree that Mr McManamey’s argument about the excessive value of the settlement compared to the value of the claim made was not put to the Arbitrator, and I accept that a party is not entitled to establish error by relying on appeal on a point not argued below (Brambles Industries Ltd v Bell [2010] NSWCA 162; 8 DDCR 111). However, the failure to put to the Arbitrator the calculations now put on appeal does not go to the establishment of error by the Arbitrator. It goes to the merits of the claim and whether it is in the interests of justice that the consent orders be set aside. This issue is considered in detail below. Having otherwise established error (for the reasons explained above), Atomic is entitled to put the calculations as to the value of the claim compared to the value of the settlement. The fact that these figures were not raised until 26 May 2013 is relevant to costs and is discussed below.

SHOULD THE CONSENT ORDERS BE SET ASIDE

Submissions

Mr McManamey submitted that, notwithstanding his earlier submission on the merits, it was not necessary to consider the ultimate merits of the claim. He contended that, since the compromise resulted from a mistake, and to enforce it would deprive Atomic of the chance to have its case heard on the merits, that was injustice enough to warrant the granting of the relief sought (Harvey v Phillips (1956) 95 CLR 235 (Harvey); Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528 (Lewis); Broadbent v Medical Board ofQueensland [2010] QCA 352 (Broadbent); Mohamed v Farah [2004] NSWSC 482 (Mohamed)). He added that, as the award has been paid, there was no prejudice to Mr Tedeschi if the consent orders were set aside.
Mr Perry submitted that the authorities relied on by Mr McManamey do not assist Atomic. He said that neither Lewis nor Broadbent said that, if there is an error, the courts will assist. They say that, where there is a contract, the court has power not to proceed to enter judgment in certain proscribed circumstances. He posed the question as follows: is an injustice so manifest as to justify interference in this case? He said that the facts in the present matter were nothing like Lewis.
Mr Perry referred to the s 74 notice, where the probable earnings but for injury were said to be $942 per week and compared that with the figure for probable earnings in the amended wage schedule of $913 per week. He argued that there was no support for the injustice argument, because at no time did counsel for Atomic at the arbitration say that the offer was higher than the figure in the amended wage schedule.
Mr Perry further submitted that the common law cases on which Mr McManamey relied look at the courts’ discretion not to enforce a judgment, as opposed to the setting aside of consent orders. He said that the circumstances of the present case do not warrant the relief sought because, if the Arbitrator erred, it makes no difference to the result.

Discussion and findings

The discretionary power conferred by the reconsideration power is in “extremely wide terms” (Hardaker v Wright & Bruce Pty Ltd [1962] SR (NSW) 244 at 248). It is important, however, to remember the distinction between the existence of the reconsideration power and the occasion of its exercise, and that courts should not lose sight of the general rule that the public interest requires that litigation should not proceed interminably (Street CJ in Hilliger v Hilliger (1952) 52 SR (NSW) 105 at 108 (Hilliger)). Nevertheless, as Street CJ further observed, it is clear that the legislature intended to leave with certain tribunals the power of reviewing any decision to see “that justice is done between the parties”.
Consistent with these authorities, it should be accepted that consent orders made by the Commission will only be set aside in exceptional circumstances (Sorcevski).
The common law authorities provide a guide as to the circumstances in which consent orders should be set aside, but must be considered with caution because of the different factual circumstances considered in those cases and because of the different legislation involved.
Halsbury’s Laws of Australia (Halsbury’s) at [250]–[1190] provides a convenient summary of the position at common law where the editor, citing Harvey, among other authorities, said:
“The court retains a discretion to set aside a compromise within the solicitor’s (or counsel’s) ostensible authority but beyond his or her actual authority where to allow the compromise to stand would involve injustice in view of the restriction on the actual authority. As this jurisdiction envisages the setting aside of a compromise even though the lack of authority was not known to the other side, the courts have, as a general rule, restricted the exercise of the jurisdiction to the exceptional case where the solicitor (or counsel) has made the compromise by way of mistake. Although some inducement in, or knowledge of, the mistake by the opponent or his or her lawyer presents a stronger case for setting aside a compromise, it is not a prerequisite for this purpose; the court is concerned with the overall justice of allowing the compromise to stand.”

Dealing with the “overall justice of allowing the compromise to stand”, Halsbury’s cited J R Bryant (Constructions) Pty Ltd v Daniels (unreported, NSW Court of Appeal, 20 March 1996, BC9600672) (Daniels). In that case, a compromise was effected beyond actual authority because of a typing error, which stated a compromise amount of $5,500 to settle the worker’s claim for compensation for pain and suffering under s 67 of the 1987 Act. The insurer purported to accept that offer.
In subsequent proceedings for compensation for pain and suffering in the Compensation Court, the insurer relied on the compromise settlement and submitted that the court had no jurisdiction. The trial judge rejected that argument and awarded $25,500 for pain and suffering.
On appeal, the Court of Appeal (Sheller JA, Powell and Cole JJA agreeing) held that, if an agreement had been reached to settle the claim for compensation for pain and suffering, the “disparity between $25,500 and $5,500 suggests that the counter offer [of $5,500] was made in error”. As the worker’s solicitor was not authorised to settle the claim for any amount, to hold the worker to the agreement to take only $5,500 “when the agreement was the result of an error, probably a typing error” would “cause him such hardship as to amount to an injustice”. Therefore, if an agreement had been reached (which the Court held, for reasons not relevant to the present case, had not occurred), it was not enforceable.
In Lewis, the solicitor for the plaintiff communicated orally an offer to settle for $227,000 but, when reducing the offer to writing, he mistakenly inserted $127,000. Finlay J held that a reasonable solicitor in the position of the solicitor for the defendant would have considered that $127,000 was likely to have been a mistake and would have drawn the matter to the attention of the plaintiff’s solicitor.
His Honour held (at 538D) that it was unnecessary to determine the “ultimate merits” of the plaintiff’s case, which could only be determined in a full hearing of the issues in the action. His Honour added that, in an appropriate case, especially before judgment was entered, “the overriding interests of justice and the court’s concern over its own procedure may mean that the court will not enforce a contract” (538E). His Honour held that it was not in the interests of justice to enforce a settlement for $127,000.
The statement that, where a party is seeking to enforce a settlement made as a result of a mistake, it is unnecessary to determine the ultimate merits of the case has strong support in Broadbent. In that case, the applicant sought leave to appeal from a decision by Queensland Civil and Administrative Tribunal that found he had been guilty of unsatisfactory professional conduct. The applicant had made an offer to settle the appeal proceedings, but changed his mind, because he wanted to pursue the appeal to erase a perceived injustice in the original decision. He advised his solicitor of his change of mind, but due to a mistake by his solicitor, the withdrawal of the applicant’s offer was not conveyed to the respondent’s solicitor before the offer was accepted.
On appeal, the respondent sought a declaration that a valid agreement had been made to discontinue the appeal. The applicant sought to have the compromise set aside so he could proceed with his application for leave to appeal on its merits.
Fraser JA (Chesterman JA and McMurdo J agreeing) held that the compromise was a valid contract that bound the applicant. His Honour observed that the power to refuse to enforce a contractually valid compromise of litigation “should be exercised with caution and only where it is clearly demanded by the interests of justice” (Broadbent at [36]).
Consistent with the authorities cited above, his Honour made the following points, at [37]:
(a)     the implied authority of counsel to compromise an action is qualified by the courts’ power in the interests of justice in some cases to disregard the compromise;
(b)     that did not mean, however, that the mere fact that a lawyer lacks actual authority to compromise litigation constitutes an injustice which justifies the exercise of that power;
(c)     contracts are generally valid if made by an agent with the apparent authority of the principal even if the agent acts in defiance of the principal’s instructions, and
(d)     adjectives such as “clear”, “serious” and “grave” cannot define the nature or degree of the injustice which suffices to justify the exercise of the courts’ power as an exception to that general rule, but they serve to emphasise that, while a compromise of litigation contrary to instructions might be regarded as always involving an injustice, that is not necessarily sufficient.
His Honour said that, applying the “appropriately stringent test” ([38]), the facts justified the exercise of the court’s power to decline to enforce the compromise. His Honour then dealt with why, in the circumstances of the case, the loss of the right to appeal involved an injustice to the applicant. Those circumstances included:
(a)     the compromise was contrary to the applicant’s emphatic instructions;
(b)     the fact that the decision he sought to challenge was of great importance to him, because it involved his reputation as a medical practitioner and surgeon;
(c)     the potentially serious consequential damage to his reputation could not effectively be remedied by suing his solicitor for damages;
(d)     the applicant repudiated the compromise within hours of it being concluded, and
(e)     the respondent had not changed its position in reliance upon the compromise and did not argue that it suffered any injustice other than the loss of the compromise.
In reaching this conclusion, his Honour did not think it appropriate to take into account his view that there was no merit in the application for leave to appeal.
In Mohamed, Barrett J said, at [63]:
“The clear message is that the question of whether a contractual compromise affected by mistake should be enforced is to be judged by reference to considerations beyond the parties’ contract and its status and effect under the law of contract. The court’s inherent jurisdiction to regulate its processes and procedures so that injustice is avoided may override the parties’ agreement.”
Lewis and Mohamed were cited with approval in Bartlett v Coomber [2008] NSWCA 100, where Mason P observed (at [28], Hodgson JA agreeing) that the “overriding principle is that the court is concerned with the interests of justice and cannot allow its processes to become an instrument of injustice or abuse”. In the same case, Bryson AJA referred (at [88]) to the court’s power to decline to make orders giving effect to a compromise where it is unjust to enforce a compromise or it is in the interests of justice that the matter proceed to trial. The Court did not comment on the relevance of the ultimate merits of the case.
It follows that the question in the present matter is whether it is in the interests of justice that the consent orders be set aside. Essentially, this question comes down to whether there is some practical unfairness or injustice in allowing the orders to stand.
I do not accept Mr McManamey’s submission that Atomic has suffered an injustice merely by being deprived of the chance of having the case heard and determined, and that the ultimate merits of the claim are irrelevant. As Fraser JA observed in Broadbent, the mere fact that a lawyer lacks actual authority to compromise litigation does not constitute injustice that justifies the setting aside of the consent orders. Much more is required. If that were the test, then (arguably) any mistake in the preparation of consent orders could result in those orders being challenged. It would not be in the interests of justice, for example, to allow a settlement to be set aside on an application by an insurer in circumstances where the insurer has no arguable defence to the worker’s claim.
While it is not necessary to conduct a full hearing on the “ultimate merits” of Mr Tedeschi’s claim, it is necessary to consider, at least at a prima facie level, the general merits of the claim, the circumstances of the settlement, the potential quantum of the claim and the quantum of the settlement.
That was the approach taken by Burke CCJ in Sorcevski, where his Honour considered whether the worker had a prima facie case capable of establishing a substantial back injury such that to preclude her from litigating a claim for that injury would be unjust. (His Honour also considered whether the worker had delayed in bringing the claim for reconsideration, and whether that delay had caused any prejudice to the employer.)
It is also consistent with the approach by the Court of Appeal in Daniels, where it was held that to hold the worker to the compromise would have caused him hardship as to amount to injustice. That statement was based on a comparison of the alleged settlement ($5,500) with the compensation ultimately awarded ($25,500). Though the Court had the advantage that the ultimate merits of the claim had been determined in a hearing before the Compensation Court, it is difficult to see how the issue of injustice in a workers compensation claim can be properly and fairly determined without considering, at least at a prima facie level, the merits of the original claim.
Finlay J’s statement, in Lewis, that it is unnecessary to determine the ultimate merits of the plaintiff’s case can be distinguished because that case concerned an application by the plaintiff that judgment not be entered in the terms of the offer of compromise. His Honour upheld that application because, in all the circumstances of that case, which included the circumstance that a reasonable solicitor in the position of the defendant’s solicitor would have considered that the offer of $127,000 was a mistake, the interests of justice required that the plaintiff be relieved from the consequences of the mistake and be permitted to have his day in court.
Broadbent can also be distinguished. That case did not concern a claim for damages or workers compensation benefits, but involved an application for leave to appeal a finding of unsatisfactory professional conduct. Unlike the applicant in Broadbent, an insurer is not concerned to erase a perceived injustice that has affected its reputation. It is concerned that it has paid too much. If, in fact, after considering the merits of the claim, it has not paid too much, it is difficult to see that there is any injustice in allowing the settlement to stand. Indeed, in that situation, it would be arguable that there would be a substantial injustice to the worker in having to go through the inconvenience and expense of preparing for another arbitration.
The critical point in Broadbent was that the compromise settlement deprived the applicant of a chance to clear his name. The loss of that right because of a mistake by his legal advisers meant that it was not in the interests of justice to enforce the compromise, even though the application for leave to appeal had no merit.
The present matter is very different. It is an application that formal orders, which have already been entered, be set aside. Therefore, in the circumstances before me, it is proper to consider the merits of Mr Tedeschi’s original claim and to compare its potential value to the value of the orders made by consent to determine if there is any practical unfairness or injustice in allowing the consent orders to stand.
In looking at the merits of Mr Tedeschi’s claim, I have had full regard to Mr Perry’s submissions that the injury was serious and that Mr Tedeschi is partially incapacitated for his pre-injury duties as a result of it. However, the quantification of his entitlement to weekly compensation requires consideration of his probable earnings but for his injury, on the one hand, and his ability to earn in his injured state, on the other. Those figures are set out in his uncontested amended wage schedule dated 2 October 2012.
Mr Perry’s submission that Mr Tedeschi’s written offer on 31 October 2012 was a compromise was not supported with any detailed analysis of the claim and, in light of the undisputed calculations relied on by Mr McManamey, is untenable. Mr Tedeschi’s offer exceeded the potential value of his claim (as particularised in the amended wage schedule of 2 October 2012) by $21,742.15 ($91,845 less $70,102.85). It follows that the settlement involves a payment of a significant sum that, on the merits, Mr Tedeschi had no entitlement to receive and could not have recovered, even if he had complete success with his claim.
In view of the above figures, it is not necessary to consider the merits of the claim in any further detail, but I note in passing that there is also said to be an issue as to probable earnings but for injury. It is sufficient to record that much further evidence is needed on that issue before any concluded view can be expressed as to Mr Tedeschi’s ultimate entitlement.

CONCLUSION

The Arbitrator erred in finding that a mistake by a legal adviser could not support a reconsideration application, considering irrelevant matters, failing to consider injustice to the insurer, and in failing to give reasons as to why the settlement was appropriate in the circumstances.
In the exceptional circumstances of this case, it is in the interests of justice that the consent orders be set aside (save as to costs), and that Mr Tedeschi’s claim for weekly compensation be determined on its merits, because:
(a)     the orders involve payments well in excess of the maximum compensation Mr Tedeschi claimed, as particularised in the amended wage schedule dated 2 October 2012;
(b)     Atomic’s solicitors acted promptly and properly when the mistake was discovered, and
(c)     the award having been paid, there is only minimal prejudice to Mr Tedeschi.
The costs order in the consent orders is not revoked because this is a case where Mr Tedeschi clearly has an entitlement to weekly compensation and the need for a second arbitration has come about as a result of a mistake by Atomic’s legal advisers. In these circumstances, he is entitled to his costs of the first arbitration.

DECISION

The Arbitrator’s decision of 14 January 2013 is revoked and paragraphs 1 and 2 of the consent orders of 31 October 2012 are revoked. Paragraph 3 of the consent orders is confirmed.
The matter is remitted to a different Arbitrator to determine the respondent worker’s claim on its merits. Costs of the second arbitration are to follow the result of that arbitration.

COSTS OF THE APPEAL

Mr Perry sought costs of the appeal. He argued that the submissions ultimately put by Atomic involved a substantial variation at the heel of the hunt from the submissions initially filed and that the appellant had not complied with Practice Direction No 6.
Mr McManamey submitted that the error started with Mr Tedeschi putting an offer that included periods during which no compensation was claimed. He said that Mr Tedeschi could at any time have consented to the orders being set aside, but instead chose to defend the matter.
The fact that Mr Tedeschi’s original offer contained an error is of little relevance to costs on appeal. The appeal, as originally filed, did not comply with Practice Direction No 6. Because of that failure, the matter was listed for a teleconference. The amended appeal filed prior to the teleconference also failed to properly identify the grounds of appeal and the appeal had to be listed for an oral hearing. The issues argued by Mr McManamey at the oral hearing of the appeal had little in common with the submissions initially filed, or with the submissions made to the Arbitrator.
It was not until 26 May 2013 that any critical analysis of the relevant figures was produced. Had those figures been provided to the Arbitrator, and had the Arbitrator been taken to the relevant authorities, the result may have been different and no appeal necessary. While it may well have been appropriate for Mr Tedeschi to reconsider his opposition to the appeal on receipt of those figures, I assume that, by that time, counsel had already been briefed.
The profession has been reminded in several recent Presidential decisions that the repeated non-compliance with Practice Direction No 6 is unacceptable. The disposition of the appeal was unnecessarily protracted because of the appellant’s conduct. In these circumstances, notwithstanding that the appellant succeeded in having the consent orders set aside, it is appropriate to depart from the usual costs order and order the appellant to pay part of the respondent worker’s costs of the appeal (Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72).
The appellant employer is to pay part of the respondent worker’s costs of the appeal, assessed at $1,750, plus GST.

Bill Roche

Deputy President
11 June 2013

I, KATHRYN CAMP, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE