Brun v Comalco Aluminium (Bell Bay) Limited

[1991] TASSC 84

71/1991
List "A"

COURT:  SUPREME COURT OF TASMANIA

CITATION:              Brun v Comalco Aluminium (Bell Bay) Limited [1991] TASSC 84; A71/1991

PARTIES:  BRUN
  v
  COMALCO ALUMINIUM (BELL BAY) LIMITED

FILE NO/S:  WC 15/1987
DELIVERED ON:  10 September 1991
JUDGMENT OF:  Crawford J

Judgment Number:  71/1991
Number of paragraphs:  

Serial No 71/1991
List "A"
File No WC 15/1987

BRUN v COMALCO ALUMINIUM (BELL BAY) LIMITED

REASONS FOR JUDGMENT  CRAWFORD J

10 September 1991

1. Pursuant to the Workers' Compensation Act 1927, s13(2) the plaintiff seeks a review of an agreement settling his claims for workers' compensation for injuries sustained in two accidents.

1. On or about 17 March 1987 he entered into the agreement with the defendant. It was recited that he had been employed by the defendant, that on 24 July 1980 he suffered an injury by accident arising out of and in the course of that employment and that on 11 June 1986 he suffered another injury in the same circumstances. The recitals continued that the defendant had made payments to him pursuant to the Act in respect of the injury suffered in the first accident, but the defendant had denied liability to make payments for any injury as a consequence of the second accident. He agreed that in consideration of the payment by the defendant to the Public Trustee on his behalf of the sum of $12,400 he released and discharged the defendant "from all claims actions suits and demands whatsoever which he now has or which but for the execution of these presents he could or might have had against the employer for or in respect of any or all personal injuries suffered by the worker in consequence of the first accident and/or the second accident whether such claims actions suits and demands arise or arose under the Worker's Compensation Act 1927 or any amendments thereto or under any other statute or at common law or otherwise."

1. By virtue of s13(1A) no such agreement has force or effect until registered with the Secretary for Labour. The agreement was so registered on 27 March 1987. By subs(2) the agreement "shall be subject to review by a judge upon application by any party interested therein, made either before the agreement is registered under subs(1A) or within 3 months after it was so registered". This application was filed, within three months, on 16 June 1987. The grounds for the review are particularised:

"(a)The sum of $12,400.00 is manifestly inadequate to compensate the Plaintiff for all claims under the Act relating to his injury by accident on 24th July, 1980 in that it purports to release the Defendant from any further liability under the Act particularly liability pursuant to Section 8A.

(b)The sum of $12,400.00 is manifestly inadequate in that on the terms of the agreement no sum has been paid in respect to the injury by accident arising out of and in the course of the Plaintiff's employment on the 11th day of June, 1986."

1. The reference to liability pursuant to s8A is to the liability of employers for medical and hospital costs. Neither of these grounds has been established by the evidence, but it was common to both parties at the hearing that the main ground relied on, although not expressed in writing, was that $12,400 was a manifestly inadequate sum in settlement of all claims to compensation arising out of either or both of the accidents on the dates specified.

1. The plaintiff was born on 26 February 1929. Although there had been previous periods of employment by the defendant, he was continuously employed by it from 1970 until 20 March 1987 when he voluntarily retired, having entered into the agreement with retirement in mind. On about 13 January 1971 he first injured his back at work. In June or July 1971 a laminectomy was performed and he returned to work in about AuguSt He suffered further injuries to his back, in the same place, in 1972, 1973 and 1974. A further laminectomy was performed in 1973. Apart from relatively short periods of time off work for these injuries, he continued working, suffering from some pain in his lower back and in a leg, but not more than he could usually tolerate.

1. In 1975 he was transferred to the green carbon section where he remained until June 1986. In 1976 he sustained a further injury to his back at work, resulting in about a fortnight off and he then returned, again with a little pain. On 24 July 1980 he injured his back again in the same place and was off work for about two weeks, for which he was paid $682.62 in weekly compensation. Treatment consisted of taking pills, lying on a hot electric blanket on a flat bed and applying liniment. His evidence was that on return to work "I was a bit sore to start and then eventually I came good and didn't have any problems for a long time". He was able to continue work in the green carbon section, mainly sitting and watching dials and operating four pumps in synchronization. Until 1985 there was little physical work, just a small amount of cleaning of spillages with a broom, shovel and air hose.

1. In 1985 his duties altered. He went to work on a crusher, drove a forklift and at times had to manually move heavy blocks of material by pushing and shoving. But he was able to do the work with only a little pain now and again. Between his return to work in 1980 and 11 June 1986 he sought no medical treatment for his back, took no medication for it and used no liniment. At times however he did lie on a hot electric blanket on a flat bed.

1. On 11 June 1986, when working at the crusher, he lifted part of an anode block. It weighed about 80 to 90 kilograms. In the course of doing so he felt a "crack" in his back. He consulted his general medical practitioner next day because of a lot of pain. He said it was more or less equal to what it had been before both laminectomies. It was again in his lower back with tingling in the back of his leg. His doctor arranged for an x–ray and physiotherapy and prescribed pain killers. He saw the defendant's doctor. After about three weeks he returned to work for a few days on restricted duties, but then was off work for about six weeks until about 23 August 1986. Work had aggravated his condition. He returned to work for most of the remainder of 1986 with some days off on workers' compensation, but it was light work for which he was paid less than before and workers' compensation was paid to make up the difference.

1. He gave evidence that in about October 1986 he was sent to do work involving shovelling in a confined space. It worsened the pain in his back and he was unable to finish the job. He had a few days off as a result and again returned on light duties. His suffering was much more than it had been before the June injury.

1. In January 1987 he injured his back again at work. He saw his doctor and the company doctor and was put off work completely for about seven weeks, being paid weekly compensation. On about 5 March 1987 he returned to work, this time in the rehabilitation centre, stripping plastic from copper wires. Once again his pay rate was lower and workers' compensation made up the difference. He was able to do the work and was able to rest whenever he wished. He remained working in the rehabilitation centre until about 9 March. He has not worked since except for a period of about three months in about 1988 when he delivered newspapers once a week, but he stopped that because of increasing pain in his back.

1. In March 1987 he was taking medication. He has continued to take it and to see a doctor about once every month or six weeks for prescriptions. He said that he has been pottering around. He tried to do some trowelling work on concrete, at home, but was unable to finish because of pain in his back. Apart from that it would appear that he has had no further significant back trouble since 1987. He has avoided heavy work on the instructions of his doctor. So far as his pain is concerned it was much better at the time of the hearing than in March 1987 when he retired.

1. The only medical evidence was given by an orthopaedic surgeon, Mr E D McIntyre. He saw the plaintiff once, on 25 August 1987, for the purpose of providing the plaintiff's solicitors with a report. He formed the opinion that the plaintiff had a degenerative disc lesion as a result of a number of injuries at work and surgical intervention on two occasions. He considered that the plaintiff was wholly incapacitated for his previous work (I took this to refer to the plaintiff's full duties and not just light duties) and that at best he could undertake a sedentary occupation involving part sitting, part standing and part walking about. There were no clinical findings that could enable him to distinguish between the incidents on 24 July 1980 and 11 June 1986 but he was of the opinion, based on the history given to him by the plaintiff, that the episode in June 1986 was the major contributing factor to his current problem. On the basis of the evidence I heard I have come to the same conclusion without assistance from Mr McIntyre's opinion. He mentioned that there are degenerative changes present which contribute something towards the plaintiff's incapacity. He thought that the incident in June 1986 was the final one to give the plaintiff sufficient pain to stop him from going on working. The various injuries over the years were recurrences of the same injury, and each episode put the plaintiff one step down, although not necessarily by equal steps.

1. For the history of the injuries and incapacity I accept almost completely the evidence of the plaintiff, for it was not seriously contested, and of Mr McIntyre who was almost unchallenged. However, there were factual disagreements between the plaintiff and the defendant's witnesses concerning the circumstances leading to the making of the agreement. My impression of the plaintiff as a witness was that he was largely honest but his recollection of events was not complete, and in fact he was at times vague and uncertain and I think reconstructed. To a large extent I have preferred the evidence of the defendant's witnesses where it conflicted with his.

1. The defendant's scheme for retirement involved compulsory retirement at age 62. But once an employee had attained 57 years of age he had the option of retiring and receiving full benefits under the company's retirement provident fund. The plaintiff attained that age on 26 February 1986. In about November 1986 the company's doctor mentioned to the plaintiff the possibility of early retirement. In about November or December 1986 Mr R B Millar, the superintendent of the green carbon section, heard that the plaintiff was considering early retirement and therefore approached him about the matter. The plaintiff said he was considering it and asked what his monetary entitlement would be if he did retire. He may have been influenced by his belief that some employees might be offered extra money by way of redundancy payment to retire. Subsequently Mr Millar told the plaintiff that he should attend personally at the pay office to ascertain what money would be payable to him if he did retire. The plaintiff did so and was given a provident fund figure.

1. In December 1986 the plaintiff spoke to Mr N T Barber, the emergency services department superintendent, who was in charge of workers' compensation. He had nothing to do with redundancies but the plaintiff may have thought he would know about the subject. The plaintiff asked what amount he could expect to receive if he retired. I accept the evidence of Mr Barber that the talk was of the possibility of a lump sum workers' compensation payment being made in addition to any other entitlements of the plaintiff. I also accept Mr Barber's evidence that he did not then consider that the plaintiff was permanently and totally incapacitated for work. The plaintiff was undertaking light duties and there was a prospect, in the mind of Mr Barber, that he might get back to normal work, having successfully done so following earlier injuries and operations. Mr Barber told the plaintiff that at that stage he was not prepared to make an offer. The plaintiff's evidence was that he only asked Mr Barber what might be paid if he became redundant. Mr Barber disputes this and I accept his evidence that redundancies were not within his jurisdiction, only workers' compensation. In any event, the difference is of no significance. It was common ground that the plaintiff was offered nothing then.

1. In about January 1987 the plaintiff booked air tickets for him and his wife to travel on a holiday overseas at the end of May 1987. He intended to take long service leave and had been told that he could do so. He paid $4,000 for the fares and prepaid three weeks' hotel accommodation in Scandinavia. The total amount paid was uncertain on the evidence. At about that time there was a further conversation between the plaintiff and Mr Barber. Mr Millar may also have been present. The plaintiff was not attending work at that time because of his back injury, his general practitioner having certified him unfit for work for some period of time. Mr Barber had changed his attitude, to the extent that he thought it "economically viable to talk to him in very broad terms about a settlement at low figures". He explained in evidence that the company never fired an employee because of an injury, but found work for him. If the rate of pay applicable to the light duties was less than he had been earning before his accident, the company would make up the difference with workers' compensation. But although the performance of "lesser duties" would be "useful work ... it is not economically profitable for a company to keep people like that if they wish to go". He believed the figures he mentioned to the plaintiff, for a workers' compensation payout, were between $5,000 and $10,000. The plaintiff disputed in evidence that such figures were mentioned at that time. It is not a material matter.

1. Mr Barber took a holiday and his place was temporarily filled by Mr G J Henderson–Smith, the rehabilitation officer. He spoke to the plaintiff, possibly in February 1987 although the evidence was not clear. The plaintiff told him that he would accept a figure of about $78,000 to retire. Mr Henderson–Smith said that in that figure was about $18,000 for a workers' compensation payout. After speaking to Mr A. Robinson, the plaintiff's manager, Mr Henderson–Smith conveyed a counter–offer to the plaintiff of about $10,000 for a workers' compensation payout in addition to the plaintiff's other entitlements. This conversation occurred in about the first week of March, by which time the plaintiff had returned to very light work in the rehabilitation centre. He obtained advice from a solicitor that $10,000 was very low and should be rejected.

1. At about the same time the possibility was mentioned to him that he might be reclassified in his employment position with the defendant, and that as a result he might not be able to take his long service leave at the end of May as planned. He rejected the offer which had been made to him by Mr Henderson–Smith, but he was concerned about the fact that if he could not take his leave he might lose the money he had pre–paid for air fares and accommodation. He was also concerned about his future employment position with the defendant and thought, not with justification on the evidence, that his employment was in jeopardy even if he remained fit for at least light duties. As a result he came to a decision that he would endeavour to obtain a slightly greater workers' compensation payout than that offered and if successful he would retire. He decided that $71,000 after tax, which he believed would include about $13,000 for a workers' compensation payout, would be acceptable. He believed that he would then be able to retire free of his worries about having to cancel his overseas trip and losing his pre–payments and free of any uncertainty concerning his future employment position. He judged that if he pushed for more than $71,000 he would be unlikely to obtain much more, and the extra he might obtain would be offset by the risk of losing the pre–payments for his trip. Importantly for him, he decided that the injection of $71,000 free of tax into his funds would enable him to enjoy a satisfactory standard of living following retirement.

1. He therefore informed Mr Henderson–Smith that he would accept $71,000 and agreement was reached. His last day of work in the rehabilitation centre was on about 9 March. On that day he signed a notice of desire to terminate his employment effective from 20 March. He did not work thereafter and was paid a further $1,155.59 in weekly compensation for the period of a little less than two weeks until his formal retirement. He also signed the agreement by which he accepted $12,400 in full settlement of his claims under the Workers' Compensation Act 1927 in consequence of either of the accidents on 24 July 1980 and 11 June 1986. He accepted that sum notwithstanding his solicitor's advice that $10,000 was far too low to warrant acceptance.

1. The plaintiff had his overseas trip. He received legal advice that the workers' compensation payout was inadequate and he commenced these proceedings.

1. There was no evidence that there was a real chance that the plaintiff would have been entitled to receive further workers' compensation as a consequence of the injury by accident which occurred on 24 July 1980 if he had not entered into the agreement. The first ground for review therefore fails. However, there was a clear likelihood when the agreement was made that, but for it, the plaintiff would have been entitled to further payments of compensation because of the injury by accident on 11 June 1986. By the date of his retirement on 21 March 1987 he had been paid weekly compensation totalling $15,484.25, all of which should be attributed as having been paid for that injury, despite the defendant's denial of liability in respect of it. The defendant's maximum liability for weekly compensation for that injury would have been $63,729.60 and he had therefore been paid $48,245.35 less than that limit without regard being had to the payment of $12,400 pursuant to the agreement. He had also received the benefit of payments, not identified by the evidence, under s8A for medical services (which expression includes medicines provided by a pharmaceutical chemist) and he had an unlimited entitlement to the reasonable cost of such expenses, and the other expenses referred to in s8A, if they were reasonably incurred by him by reason of that injury.

1. The function of a judge on an application to review an agreement is not simply to brush the agreement aside as if it had never been made and proceed to deal with the matter de novo. Grounds for review may include fraud, duress, mistake and the inadequacy of the amount. In determining the question of inadequacy the judge should have regard to the question whether or not liability to pay compensation under the Act was doubtful. If it appears that there was an appreciable risk that, if proceedings were taken, liability may not have been established, the judge should not determine an amount as inadequate merely because it was less than would have been awarded in the event of success, but he must decide whether the claim was fairly compromised, having regard to all the circumstances, including the risk of failure. Hudson v Naroo [1940] Tas SR 122 at p123.

1. These principles apply not only to a case where there is a genuine dispute about liability, but also where there is a dispute as to duration and extent of future incapacity. As was said by Burbury CJ in Re Oates, 48/1967 at p3, this is a case where "the only ground on which the Court could properly review the compromise is that the amount received by the applicant is so inadequate that it cannot be said to be a fair settlement of the claim within any reasonable limits". Another way of expressing this is by use of the term "manifest inadequacy". In Crowe v Dex Corrosion Control Pty Ltd, 62/1972 Chambers J at p2 said that "manifest inadequacy" is "a proper legal ground for review". He later added, at p4, that the material time for consideration is  when the agreement was entered into, although evidence of events after that date would be relevant and admissible to the extent to which they tend to throw light upon the probabilities as they existed at the date of the agreement. The test of manifest inadequacy was applied by Nettlefold J in Lonergan v E Z Co, 105/1972 and by Green CJ in Re Jacobson, 21/1975.

1. In Saarman v St Mary's College, 43/1979 Everett J, after holding that the burden of proof of manifest inadequacy rested on the applicant, emphasised that the hearing of the application is not to be simply, in effect, a re–hearing. He saw the judicial role as involving a critical examination of the essential elements of the settlement so that it cannot be said that it is manifest that justice is not done. He amplified this at p11:

"In a case such as this it is not a question of substituting a judicial opinion for the expressed agreement of the parties. The inadequacy must be such that it is manifest in the sense that any fair–minded person with knowledge of the facts and the relevant legal provisions would regard it as 'wholly erroneous', to quote the words of Viscount Simon in Nance v British Columbia Electric Railway Co Ltd [1951] AC 601 at p613. If that is the judgment then, on ordinary legal principles, it is appropriate as a matter of justice for a judge to review the agreement."

1. With respect I have difficulty accepting the proposition of Chambers J in Crowe v Dex Corrosion Control Pty Ltd (supra) that evidence of events after the date of the agreement can be used to throw light on the probabilities as they existed at the date of the agreement. A determination of the probabilities at that date could only be made upon the basis of information available at that date. The fact that a penny landed with heads uppermost, would not throw light on what the probabilities of it occurring were before the penny was tossed. Subject to this reservation I accept and apply the statements of law to which I have referred. It is my duty to determine whether $12,400 was a manifestly inadequate amount in full settlement of all the plaintiff's rights to workers' compensation arising out of the injury by accident on 11 June 1986. But before turning to such a determination there is one further matter of principle which requires attention, concerning a submission by the defendant. It can be best expressed in the words of the defendant's counsel as transcribed:

"Here you've got a man who on the defendant's evidence which I submit should clearly be preferred to the plaintiff's, has started negotiations put a figure on it, on our view an initial figure higher than that eventually settled for, but in any view on both sides of the evidence has come up with a figure representing a total that he would like and has taken advice on the workers compensation aspect of that figure has been told, and I don't conceive rightly, but has been told that it is not sufficient and has gone back and deliberately settled his claim for an amount of about $2400 more in order to get money. And so far from protecting the worker you've got a worker who's engaged in a course of deliberate conduct in the full appreciation of his rights with every opportunity to take legal advice, who has taken that advice who has chosen in effect to ignore it, who has taken the rest of the money on offer as part as the package and then wishes to complain about it. In my submission that fact alone should make the court very loath to come to what he now calls his assistance. There's no inequality of bargain here, there's a man greedy for money, keen to get it and having got the money that he wanted now comes back to this court and says its not enough. The – that is to say in my submission is a very relevant afactor [sic] for Your Honour because Section 13 (2) provides a judicial discretion, its [sic] doesn't have to be exercised. And you have a worker coming to the court in that state, in those facts, is a factor to say, in my submission, that the court will not come to your assistance. You had your chance, you took the company for a ride, you got what you could out of the Provident Fund and other things, and now we are not going to review the agreement, for you. But in any event, it is the defendant's submission, that on the evidence, the agreement is not manifestly inadequate ..."

1. I do not agree with counsel that the plaintiff was "a man greedy for money" nor that he "took the company for a ride". The evidence established that, having attained the age of 57 years, he was entitled to retire and receive his full benefit from the company's provident fund. Obviously he would also have been entitled to be paid his accrued entitlement to long service leave and holiday pay. It does not assist the defendant that the plaintiff chose to accept those entitlements in addition to $12,400 for workers' compensation. The adequacy of that amount is to be determined. In this regard I adopt what was said by Everett J in Saarman v St Marys' College (supra) at p17:

   "In considering whether or not the payment of $10,000 was manifestly inadequate, I hold that I should confine my consideration of the material before me to an appraisal of the rights, actual and prospective, of the applicant under the Act at the time of the settlement. The applicant's personal circumstances, her hopes and her expectations are not relevant to the issue of manifest inadequacy. The touchstone is confined within the Act."

2. I find that the injury at work on 11 June 1986 caused the plaintiff's incapacity for work from then until 20 March 1987. At times his incapacity was total but at other times partial. The evidence established that prior to 11 June 1986 he was physically managing to do hard work in the green carbon section and that at all times thereafter, until he retired, he was not able to manage most of it. Incidents at work in October 1986 and January 1987 caused at least temporary exacerbations of his condition, but his incapacity throughout the period to which I have referred all flowed from the injury on 11 June 1986 and was caused by it.

1. Between 11 June 1986 and 21 March 1987 he was paid weekly compensation (not including the $12,400 provided in the agreement) totalling $15,484.25. At the time of his retirement the relevant compensation rate was $650.89 per week. During that 40 week period he was completely off work and paid the full relevant compensation rate for the equivalent of about 20 weeks and part compensation combined with reduced earnings for a limited capacity for work for about 15 weeks. The numbers are approximate.

1. For over half the period of three months prior to his retirement he was paid workers' compensation for total incapacity for work. In fact from about mid–January 1987 the only work he had done was very light work in the rehabilitation centre for a few days prior to the agreement being reached. The agreed sum of $12,400 was equivalent only to about 19 weeks of weekly compensation at the relevant compensation rate.

1. His earning capacity was substantially reduced by the injury by accident in June 1986, and at the time he entered into the agreement it was unlikely that he would ever return to his previous capacity to earn full earnings without supplementation by workers' compensation.

1. Taking all these matters into account the agreed sum of $12,400 was manifestly inadequate.

1. It remains for me to assess what amount would have been adequate at the time the agreement was made. The evidence is insufficient for a finding of the precise amount of make–up compensation which would have been payable if the plaintiff had continued to work at the rehabilitation centre. However prior to him working there, in the weeks for which compensation was paid to make up what he was otherwise able to earn, the amount of compensation paid averaged over $200 and I will accept $200 per week as probably the lowest amount of weekly compensation he would have been paid in the future for partial incapacity. Of course for periods of total incapacity the weekly compensation would have been $650.89 per week. The onus of proof being on the plaintiff, I am not persuaded that the defendant would not have been substantially able to provide some form of work, suitable to his incapacity.

1. But it is not appropriate to simply assess a figure for a lump sum advance payment to replace a loss of $200 per week until the balance of the limit of weekly compensation, that is $48,245.35, would have been paid, taking into account at the same time the risks of periods of total incapacity occurring. Such a figure must be discounted for a number of reasons which I will express, but not necessarily in order of importance.

1. By receiving a lump sum the plaintiff would have had the advantage of receiving a certain sum paid in advance rather than facing an uncertain future of unknown payments. He would also have had the advantage of receiving a lump sum free of income tax.

1. The plaintiff was faced with a risk that in the future some event, unassociated with work, would have terminated his entitlement to further weekly compensation. For example an injury by accident, not work related, or ill health, might have occurred which would have totally incapacitated him regardless of his incapacity caused by the injury by accident in June 1986. In such event his weekly compensation would have ended. See for example Smith v Australian Newsprint Mills Limited, 82/1971 at p2. In this regard I respectfully disagree with what was said by Cosgrove J in Holmyard v Marine Board of Hobart 10/1987 at pp6,7 to the effect that a subsequent unassociated cause of incapacity would not terminate the right to weekly compensation. This statement is contrary to the provision in s21(1)(c) which authorises the termination or diminution of weekly compensation when the incapacity of the worker is no longer wholly due to the accident in respect of which the weekly payment is made.

1. There should also be taken into account that the plaintiff, in March 1987, was faced with the possibility of making a substantial recovery in time, with an increase in his capacity to earn income. Generally the likely extent of his incapacity in the future was uncertain and might subsequently have become a subject for dispute between him and the defendant.

1. It is impossible to make a precise calculation but my assessment is that $26,000 would have been an adequate and fair amount for agreement in March 1987. This is a rounded off amount but includes a sum of less than $1,000 in settlement of the plaintiff's entitlement to payment of the medical and other expenses to which he may have been entitled in the future under s8A.

1. The terms of the agreement should stand but it will be ordered that the defendant pay to the plaintiff $13,600 being the sum of $26,000 I have assessed less the sum of $12,400 paid pursuant to the agreement.