Brown v Comcare
[2003] FCA 261
•21 MARCH 2003
FEDERAL COURT OF AUSTRALIA
Brown v Comcare [2003] FCA 261
WORKERS COMPENSATION – claim for compensation under Safety, Rehabilitation And Compensation Act 1988 (Cth) – applicant completed claim form as well as election form – common law action not sought by applicant – both forms submitted by mistake – assertion by respondent of election by applicant – nature of election – need for specificity and lack of ambiguity – inconsistent rights – applicant not aware of effect of election form – whether applicant made an election within the meaning of s 45(1) of the Act
Safety, Rehabilitation And Compensation Act 1988 (Cth) ss 24, 25, 27, 44, 45
Austral Pacific Group Ltd (in liq) v Airservices Australia (2000) 173 ALR 619 referred to
Commonwealth v Flaviano (1996) 40 NSWLR 199 referred to
WBK Pty Limited v Grogan (1997) 140 FLR 303 cited
Burnett v The Union SS Co of New Zealand Ltd (1936) 36 SR(NSW) 119 cited
Sargent v ASL Developments Ltd (1974) 131 CLR 634 applied
Robertson v Comcare [2002] AATA 96 discussed
Crowe v Comcare Australia (No 2) [2002] FMCA 147 discussedLEONARD BROWN v COMCARE
N1415 OF 2002TAMBERLIN J
SYDNEY
28 MARCH 2003
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N1415 OF 2002
BETWEEN:
LEONARD BROWN
APPLICANTAND:
COMCARE
RESPONDENTJUDGE:
TAMBERLIN J
DATE OF ORDER:
21 MARCH 2003
WHERE MADE:
SYDNEY
THE COURT DECLARES THAT:
The applicant has not made an election in writing to institute an action against the Commonwealth pursuant to s 45(1) of the Safety, Rehabilitation and Compensation Act 1988.
THE COURT ORDERS THAT:
The respondent pay the applicant’s costs on a solicitor-client basis.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N1415 OF 2002
BETWEEN:
LEONARD BROWN
APPLICANTAND:
COMCARE
RESPONDENT
JUDGE:
TAMBERLIN J
DATE:
28 MARCH 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On Friday 21 March 2003, I made orders in this matter and I now publish my reasons.
The applicant seeks a declaration that he has not made an election to institute an action against the Commonwealth pursuant to s 45(1) of the Safety, Rehabilitation And Compensation Act 1988 (Cth) (“the Act”).
That section provides:
“45 Actions for damages – election by employees
(1) Where:
(a)compensation is payable under section 24, 25 or 27 in respect of an injury to an employee; and
(b)the Commonwealth, … would, but for subsection 44(1), be liable for damages for any non-economic loss suffered by the employee as a result of the injury;
the employee may, at any time before an amount of compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against the Commonwealth … for damages for that non-economic loss.
…
(3) An election is irrevocable.(4) In any action … instituted as a result of an election made by an employee, the court shall not award the employee damages of an amount exceeding $110,000 for any non-economic loss suffered by the employee.
(5) The election by an employee under this section to institute an action … against the Commonwealth, … does not prevent the employee, before, or instead of, formally instituting such action or proceeding, doing any other thing that constitutes an action for non-economic loss.”
THE STATUTORY SCHEME
Section 44 of the Act is a general bar on damages claims by Commonwealth employees. It provides that subject to s 45, an action for damages does not lie against the Commonwealth in respect of an injury sustained by an employee in the course of employment, being an injury in respect of which the Commonwealth and several other entities would, but for that provision, be liable for damages. Section 45 is an exception to that general bar on proceedings for damages. It permits an employee to whom compensation is payable under ss 24, 25 or 27 of the Act to make an election. Those sections provide a statutory scheme of lump sum compensation for permanent impairment, not exceeding $80,000. Once an election is made, no compensation is payable after the date of the election and the election is irrevocable. An action to recover damages in accordance with s 45 may be commenced in any court of competent jurisdiction, with damages limited to $110,000. The election to sue for damages may be made before any determination is made by Comcare to the effect that compensation is payable under those sections. In making such a determination Comcare must have regard to the duration of the impairment, the likelihood of improvement, the rehabilitative treatment taken by the employee for the treatment and other relevant matters.
FACTUAL BACKGROUND
Although there is some dispute between the parties as to a conversation on 19 September 2001 and a draft letter, the relevant circumstances necessary to determine the election question are not in dispute.
From 1997, the applicant was employed by the Department of Defence as a tyre fitter at Holsworthy. He did a lot of heavy repetitive work, changing heavy wheels and tyres on large army trucks. In late 1999, he began to experience pain in both arms, which led to incapacity. He made an application for compensation, which was accepted, and received weekly payments and payments for medical expenses.
He later consulted an experienced solicitor, Mr Harrison of Carroll & O’Dea, in compensation matters on 20 April 2001 and was advised to make an application for a lump sum compensation payment under the statutory scheme. Mr Harrison wrote to Comcare on 4 July 2001 foreshadowing a claim for permanent impairment compensation. The letter was sent to the Claims Management Centre of Comcare stating that the applicant was seeking evidence to submit a claim for permanent impairment compensation benefits and requesting copies of medical reports from the Comcare file to avoid medico-legal duplication. Advice was also sought as to the current status of the claim. There was no request in the letter for an election form.
On 13 July 2001, Marilyn Valdez, Senior Claims Manager with Comcare, replied by letter which relevantly read:
“ ….
If your client wish [sic] to make a claim for a permanent impairment payment, please complete Part B of the enclosed ‘Compensation Claim for Permanent Injury’ form and have your treating doctor complete Part C.
…
If your client’s doctor supports his claim for permanent impairment, Comcare may arranged [sic] a medical examination in order to assess the degree of impairment.
An award for permanent impairment carries with it a separate entitlement for Non-Economic Loss. This covers pain and suffering and the loss of amenities of life.
A Non-Economic Loss Questionnaire is also enclosed for completion and should be returned with the claim form.
…
Under section 45 of the Act, your client may elect to sue the Commonwealth, … If your client elects to sue, compensation will not be payable under section 24, 25 or 27 and the maximum amount of damages you can be awarded is $110,000. If your client wish [sic] to sue a copy of the attached Election Form must be returned to Comcare no later than 21 days after the determination of your entitlement under section 24, 25 or 27 of the Act.” (Emphasis added)
The letter from Comcare therefore included both a compensation claim form for permanent injury claim under the statutory provisions and also an election form under s 45 of the Act which was not requested.
Mr Harrison on 31 July 2001 then wrote to the applicant enclosing a copy of the letter from Comcare together with “enclosure original thereto” and this included the election form together with the other two forms. This letter requested that the applicant arrange for the claim form to be completed and thereafter returned to Carroll & O’Dea. There was no reference or explanation in that letter or any advice in relation to the sending of the election form. The forwarding of the election form was admittedly a mistake on the part of the solicitor.
Mr Harrison was cross-examined and he frankly agreed that several important matters which should have been done, were not done. His evidence was that at no time did he seek instructions to commence a common law action nor did the applicant provide any such instructions to him. I accept Mr Harrison as a candid and truthful witness in relation to these matters. The applicant whom I also accept on this point has stated that at no time did Mr Harrison advise him to elect to sue the Commonwealth at common law and at no time did he give instructions to start common law proceedings or to abandon his statutory claim for compensation. He says, that his intention was simply to follow Mr Harrison’s advice to claim lump sum compensation.
All the forms, including the election form sent by the solicitor were duly completed and returned to Mr Harrison approximately two weeks later. The applicant had signed and completed the election form along with the other two forms sent to him. It appears that no checking of the forms was carried out by his solicitors before all the completed forms were sent to Comcare under cover of a letter dated 21 August 2001.
On 13 September 2001, Marilyn Valdez wrote to Carroll & O’Dea acknowledging receipt of the three completed forms and advising that Comcare would not “proceed with any further action in relation to your client’s claim for permanent injury lump sum given his irrevocable election to sue the Commonwealth”.
After reading this letter Mr Harrison says that he spoke with Ms Valdez on or about 19 September 2001 and then drafted a letter to her confirming that conversation. That draft refers to discussions on 19 September. It reads:
“…
We refer to our discussions on 19 September in respect of the issue of election.
We confirm that there appears to have been some confusion on the part of our client.
We confirm that as a determination has not, as yet, been made that there is a 10% permanent impairment, the election has not been formally and properly made.
We note your agreement that the case can go down the normal path and that the election issue will be looked at once a determination is made to the effect that there is a sufficient degree of permanent impairment for our client to have an entitlement to either statutory benefits or Common Law damages.
Would it be possible for you to return the election form at this stage to avoid any further confusion on this issue?
…”
This conversation is denied and Ms Valdez says that she does not recall any such conversation. She gave evidence that there is no record of the conversation or of Comcare having received the letter said to have been drafted by Mr Harrison. Mr Harrison’s evidence was that he could not verify that the letter had been sent. After 20 September Carroll & O’Dea proceeded to obtain evidence to support the claim for permanent impairment compensation. In particular, arrangements were made for a medical examination of the applicant on 9 November 2001. The doctor’s report of 11 November 2001 gave the applicant a total whole person impairment of nineteen per cent. The conduct of the matter after 21 August 2001 was carried out by Mr Tony Mannah of Carroll & O’Dea.
Nothing further transpired until 8 January 2002 when Mr Mannah of Carroll & O’Dea wrote to Ms Valdez enclosing a copy of the report from Dr Berry requesting that a determination be made as to permanent impairment. A reply was received on 23 January 2002 from another Comcare employee, Ms Cannan, referring to the letter from Ms Valdez of 13 September 2001 indicating there would be no further action in relation to the claim in view of the fact that Comcare contended an election had been made. There were further discussions between Ms Cannan and Mr Mannah and Comcare stated that it had received advice that it has “no delegation to supersede the legislation” on the question of election and that its position was that there had been an election made and that a statutory claim for permanent impairment could not be pursued.
I find that the probability is that the letter from Mr Harrison of 20 September 2001 was never sent but that it accurately records the substance of the telephone conversation of 19 September 2001 between Mr Harrison and Ms Valdez.
LEGAL PRINCIPLES
It is well settled that because the making of an election under s 45 involves the surrender of rights otherwise available under the Act, it is essential that there should be an unambiguous informed choice made in writing. As the High Court observed in Austral Pacific Group Ltd (in liq) v Airservices Australia (2000) 173 ALR 619, at [32], [68] and [92], the election required by s 45 is a provision going to the validity of the title to enforce the liability and not merely to the mode of enforcing it. It has been held that the filing of a Statement of Claim does not constitute an election in writing to sue for damages: see Commonwealth v Flaviano (1996) 40 NSWLR 199; WBK Pty Limited v Grogan (1997) 140 FLR 303 at 306, and Burnett v The Union SS Co of New Zealand Ltd [1936] 36 SR(NSW) 119 at 122-3. This indicates the need for a high level of specificity and definition in the election.
In Flaviano, Sheller JA, with whom the other members of the Court agreed, said at 203:
“An election is a choice of alternative rights or claims. It may be made expressly or implied from conduct … While in some circumstances the institution of proceedings may be treated as an act of election, strictly speaking it is conduct from which an election may be inferred. … I would infer that the employee is required so to express his or her election so that there can be no doubt about the matter. The requirements of the subsection are not met by conduct from which an election could be implied …That this is so finds support in the language of s 45. … I do not think that Mr Flaviano made an election in writing to institute an action or proceeding within the meaning of s 45(1) by instituting the action or proceeding.”
In considering the nature of election, in a contractual context, Stephen J, with whom McTiernan ACJ agreed, in Sargent v ASL Developments Ltd (1974) 131 CLR 634, said (at 646):
“The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other; thus for a lessor to continue to receive rent under a lease would be consistent only with his rights as lessor and inconsistent with the exercise of a right to determine the lease. … However, less unequivocal conduct, only providing some evidence of an election, may suffice if coupled with actual knowledge of the right of election. … For an election there need be no actual, subjective intention to elect …, an election is the effect which the law attributes to conduct justifiable only if such election had been made. …” (Emphasis added)
Mason J, in that case, said at 655:
“A person is said to have a right of election when events occur which enable him to exercise alternative and inconsistent rights, i.e. when he has the right to determine an estate or terminate a contract for breach of covenant … and the alternative right to insist on the continuation of the estate or performance of the contract.
…
Essential to the making of an election is communication to the party affected by words or conduct of the choice thereby made and it is accepted that once an election is made it cannot be retracted.” (Emphasis added)
These observations as to the nature of election are apposite to the present case.
In submissions, Comcare referred to the decision of the Administrative Appeals Tribunal in Robertson v Comcare [2002] AATA 96. In that case the election form was signed by the applicant, admittedly on the wrong advice of his solicitor, and a plea of non est factum was raised. The Tribunal rejected this argument on the basis that the solicitor’s wrong advice could not be relied on to negate the statutory effect of s 45 where an election in writing had been made. The Tribunal concluded that Mr Roberston’s personal characteristics and the circumstances in which he signed the election form did not come anywhere near those which would allow him to claim that the signed form was not his document. An argument as to estoppel was also rejected in that case. The case is, however, distinguishable because the circumstances did not involve the sending of two inconsistent forms to Comcare. What was communicated to Comcare in that case was on its face an unequivocal election in writing. Comcare could not be taken to have been privy to the fact that there had been erroneous legal advice which led to the election. The election form alone was sent but the argument was that in signing the election form the applicant had proceeded on wrong legal advice.
Comcare also referred to the judgment of a Federal Court Magistrate in Crowe v Comcare Australia (No 2) [2002] FMCA 147. In that case the applicant submitted that the election was made by mistake. Once the situation was pointed out by the applicant’s solicitors in that case it was submitted that Comcare should have determined that the election purportedly made was no election at all. The applicant said that he did not intend to make any election to pursue common law rights but was intending to facilitate the determination of statutory compensation. These arguments were rejected by Driver FM who accepted that in order to be valid an election must be communicated. Driver FM observed that an election under s 45 serves the purpose of putting Comcare on notice that it is not to proceed further with the determination of statutory compensation and also gives notice of a common law claim. In that case, again, there was no communication to Comcare of two different and inconsistent forms. In conclusion, Driver FM said that the formal requirements for an election had been satisfied and the election had been communicated to Comcare. Accordingly, the applicant in that case was bound by his election notwithstanding that it was the carelessness of his solicitors and himself which caused him to make an election that he did not intend to make.
REASONING ON APPEAL
In this case there is a direct conflict of evidence between Mr Harrison and Ms Valdez as to whether there was a conversation on or about 19 September 2001 in which Mr Harrison pointed out the problem which had arisen and had been corrected and during which he also conveyed the intention of the applicant not to make an election. In this conflict, I prefer the evidence of Mr Harrison that on 19 September 2001, he spoke with Ms Valdez and that on 20 September 2001 he drafted the letter, which is quoted above, referring to the contents of that conversation. I find that on this aspect the recollection of Ms Valdez is faulty. The terms of the draft letter record a conversation which is inconsistent with the recollection of Ms Valdez. It is inherently likely that an experienced solicitor on receiving the letter of 13 September 2001 from Ms Valdez, would have immediately responded. Time sheets in evidence show that on 19 September 2001 the file was perused and that a letter from Comcare was examined. They also show that on the same date there was a consultation with Mr Harrison regarding the file. In all, the time sheets record a charge in respect of nine charging units which amounted to fees of $261, indicating some significant attention was given to the file on that date. It is true that there is no record of charges for the conversation with Ms Valdez, nor for the draft letter, but the explanation given by Mr Harrison, which I accept, is that he did not charge in respect of what he considered was the correction of an oversight on his part. I do not consider that the draft letter of 20 September in evidence was fabricated to present a false verification of the conversation.
I have also taken into account the evidence of Mr Brown, including his cross-examination, as to his understanding in relation to the forms which were sent to him. I accept Mr Brown as a truthful and honest witness and I accept that notwithstanding the wording of the form he did not appreciate the effect of the election form sent to him by the solicitors. Nor do I think that he understood what he was doing in signing both the election form and the claim for payment under the statute simultaneously. I find that Mr Brown was not aware of nor did he understand his statutory rights or liabilities and that he did not intend to make an election to only pursue his common law rights. However, that is not the end of the matter.
The important question is what was communicated in writing to Comcare. The authorities establish that a failure to appreciate the significance of the documents or the lack of explanation and oversight on the part of a solicitor are not determinative of the question whether there has been an election. In signing and returning the claim form together with the election form and the questionnaire, Mr Brown was asserting two inconsistent sets of rights under the Act and did not make an election between them. His conduct and the combined enclosures read together indicate a state of confusion as to what was being done. It is apparent from the evidence that Mr Brown did not have any appreciation that he was electing between two inconsistent rights nor did he have any proper concept of what was involved in signing the forms. He simply thought that he should arrange for completion and sign everything sent to him without realizing the inherent inconsistency.
The mutual inconsistency between the documents received by Comcare in this case arises because there is an express statutory bar to the pursuit of both an entitlement to compensation and an entitlement to damages. The two entitlements cannot stand together at the same time. Put another way, ss 24, 25 and 27 provide for a claim for compensation but where there is an election made under section 45 to seek damages, the former right cannot be pursued. The documents received by Comcare in this case purport to pursue both avenues. It is unrealistic to consider the forms in isolation from each other when they were provided to Comcare simultaneously. It must have been obvious to Comcare that there was no unequivocal election made in this case.
Comcare received documents which were clearly on their face purporting to exercise two mutually, exclusive and inconsistent entitlements under the Act. Specifically, the election form states that an election to sue means that compensation is not payable and the compensation claim form, which was also signed, seeks compensation for permanent injury. These documents read together are clearly equivocal and cannot give rise to an election. In these circumstances Comcare was not justified in choosing to accept the election and ignore the compensation claim form. Reasonably, Comcare ought to have contacted the solicitor and/or the applicant and ask what in fact was intended. This was not done. I do not consider that Comcare was justified in adopting the course which it did by purporting to accept the election and reject the inconsistent claim form. Because the two sets of claims sent to Comcare were inconsistent, there was no election in writing or indeed any effective claim for compensation under the Act.
In these circumstances, no election has been made in writing within the meaning of s 45(1) of the Act.
Two other matters were raised by the applicant. One was directed to the alleged invalidity of the claim form. It is said that it is defective because it is uncertain in that it does not specify any particular impairment. In view of the conclusion which I have reached there is no need to deal with this argument but I would indicate that I do not think it has any substance because the form in this case refers to a specific claim number by reference to which the injury can readily be identified.
There were also arguments relating to the effect of the discussions and correspondence with Comcare in September and over the following months but I do not find it necessary to resolve these issues.
In relation to the question of costs, the applicant has requested solicitor-client costs on the basis that a letter proposing settlement was sent to Comcare before the institution of the proceedings which indicated that an order for solicitor-client costs would be sought if Comcare adhered to its contention that an election had been made and failed in this contention. Having regard to the evident nature of the inconsistency in the documents communicated to Comcare and the fact that the letter was sent by the solicitors, prior to the institution of proceedings, I consider that it is appropriate that there should be an order for solicitor-client costs in favour of the applicant.
I do not accept the submission that because of the oversight by the solicitor and because of the alleged oversight on the part of Mr Brown, costs on an indemnity basis ought not be awarded. The case turns on what was communicated to Comcare. In this case, there is a firm basis for the award of indemnity costs. The authorities relied on by Comcare to justify its unreasonable stance in this matter were clearly distinguishable from the circumstances in this case.
In view of the conclusions which I have reached as to the inconsistency between the forms lodged with Comcare I do not consider that it is necessary or appropriate to make the second declaration concerning the statutory claim for a permanent lump sum. The communication to the respondent did not indicate any meaningful decision in view of the inconsistency and I am not satisfied that there has been any proper application communicated to Comcare in respect of the compensation claim. If a claim for compensation is to be pursued then it will be necessary in my view to make an unambiguous application to that effect rather than relying on the effect of one or two inconsistent sets of documents.
For these reasons I made the orders on 21 March 2003 that the application should be allowed and the first declaration sought should be made and I ordered the respondent to pay the applicant’s costs on a solicitor-client basis.
I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.
Associate:
Dated: 28 March 2003
Counsel for the Applicant:
L T Grey
Solicitor for the Applicant:
Carroll & O’Dea
Counsel for the Respondent:
S Lloyd
Solicitor for the Respondent:
Dibbs Barker Gosling
Date of Hearing:
21 March 2003
Date of Orders Made:
21 March 2003
Publication of Reasons:
28 March 2002
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