Foster v Skilled Communication Services P/L

[2002] QDC 213

DISTRICT COURT OF QUEENSLAND

CITATION:

Foster v Skilled Communication Services P/L [2002] QDC 213

PARTIES:

IAN CLYDE FOSTER
Applicant
v
SKILLED COMMUNICATION SERVICES PTY LTD (ABN 067 943 873)
First Respondent
and
WORKCOVER QUEENSLAND
Second Respondent

FILE NO:

2766 OF 2002

PROCEEDING:

Application for declarations

DELIVERED ON:

26 July 2002

DELIVERED AT:

Brisbane

HEARING DATE:

18 July 2002

JUDGE:

Judge Brabazon Q.C.

ORDERS:

(a)       Declare that the respondents are estopped from            asserting that the first respondent was required to            provide against its liability to the plaintiff, according            to the law of New South Wales.

(b) Order that leave be granted to the applicant to commence proceedings against the first respondent for the claim pursuant to s 305 of the WorkCover            Queensland Act 1996.

(c)      Order that the second respondent pay the plaintiff’s
          costs of and incidental to this application to be 
          assessed on the standard basis.

CATCHWORDS:

WORKERS COMPENSATION – application for indemnity – where employee employed in Qld but carried out work in NSW – whether combined operation of Qld and NSW acts precluded indemnity of employer – whether damages sought were within the meaning of Qld legislation – employer not entitled to indemnity

WORKERS COMPENSATION – application for declaration of estoppel – where applicant acted to his detriment on the basis of WorkCover’s actions – whether estoppel may override statute – whether law of NSW a “fact” – estoppel granted

Workcover Queensland Act (Qld) 1996

Workers’ Compensation Act (NSW) 1987

Bonser v Melnacis [2002] 1 QdR 1
Burrows v Workers Compensation Board of Queensland (Court of Appeal, Queensland, Appeal No. 6694/96, 12 June 1997)
The Commonwealth v Verwayen (1990) 170 CLR 394
John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503
Lindsay v Smith and the Nominal Defendant [2001] QCA 229
Newton & Bellamy & Wolfe v SGIO (Qld) [1986] QdR 431
Salisbury v Farley Constructions Pty Ltd [2000] QDC 051
Wilson v Austral Motors (Qld) Pty Ltd [1983] 2 QdR 774

COUNSEL:

Mr Given for the Applicant
Mr McDougall for the second Respondent
Mr Morris for the NSW insurer

SOLICITORS:

Gall Standfield & Smith for the Applicant
Hopgood Ganim Lawyers for the second Respondent

The Application

1. Mr Foster has sued his former employer and WorkCover Queensland, for damages.  He brings this application against the employer and WorkCover Queensland.  He asks for two declarations:

(a)        A declaration that his former employer, Skilled Communication Services, is indemnified by WorkCover, against his claim for damages; or

(b)        A declaration that WorkCover Queensland is estopped, in any event, from denying an obligation to indemnify Skilled Communication Services against Mr Foster’s claim for damages.

It was not suggested that it would be inappropriate to decide the application on the affidavits.  There is no doubt about the essential facts.  The deponents were not cross examined.
(The first respondent was called, but did not appear).

The Indemnity

1. Skilled Communication Services, in 1999, was in the business of installing communication cables.  It carried out work in Queensland and in the other states.  In early 1999 Mr Foster started employment through its Brisbane depot.  Then, in June or July, he was asked to work in New South Wales.  At the latest, he started work in New South Wales on 12 July 1999.  He was based at the Murwillumbah works depot.  The work was intended to be temporary, and that after a few weeks he would either be retrenched or returned to Queensland for further work.

1. He says that he suffered a back injury while lifting equipment onto a truck at Ballina.  That was on 8 August 1999.  Four days later he lodged an application for workers’ compensation with WorkCover.  He was paid compensation. 

1. On 5 June 2001, he started an action in this court to recover damages against Skilled Communication Services, on the basis of negligence, breach of contract or breach of duty.  A defence was filed.  Liability was denied.  It was admitted that he had been working at Ballina in New South Wales. 

1. In resisting the application for a declaration about an indemnity, WorkCover Queensland points to the fact that the injury took place in New South Wales.  It was submitted that the combined effect of the Queensland and New South Wales legislation is that WorkCover does not have to indemnify Skilled Communication Services.

1. Similar submissions were upheld in Burrows v Workers Compensation Board of Queensland (Court of Appeal, Queensland, Appeal No. 6694/96, 12 June 1997) and in Salisbury v Farley Constructions Pty Ltd [2000] QDC 051 (judgment 8 June 2000).

1. In principle, the present situation is indistinguishable from the result in those cases.  That is because:

(a)        In 1999, and up to the present time, s 155 of the New South Wales Workers’ Compensation Act 1987 compelled an employer to obtain from a licensed insurer a policy of insurance that complied with that Act for “the full amount of the employer’s liability under this Act ... and for an unlimited amount in respect of the employer’s liability independent by this Act ... for an injury to any such worker”

(b)        In the 1996 WorkCover Queensland Act, there are two significant definitions:

(i)    “ ‘Accident insurance’ is insurance by which an employer is indemnified against all amounts for which the employer may become legally liable for the liability sustained by a worker employed by the employer for:

(a)     compensation; and

(b)     damages.”

(ii)   ‘Damages’ is defined as follows:

‘Damages or injury sustained by a worker in circumstances creating, independently of this Act, a legal liability in the worker’s employer to pay damages to  ... the worker.

A reference to the liability of an employer does not include a liability against which the employer is required to provide under:

(a)      ...; or

(b)a law of another State, the Commonwealth or of another country.”  (emphasis added)

1. Even though work in New South Wales may be of a temporary nature, and even if the employer and employee are otherwise based in Queensland, the “damages” recoverable by the worker will not be within the meaning of the WorkCover Queensland legislation.  That is illustrated by the decisions in Burrows and Salisbury.  That being so, WorkCover is not obliged to indemnify this employer against a claim for damages arising out of any such injury at Ballina.

1. Indeed, the whole nature of an injured employee’s claim has been changed by the 1996 legislation.  Until the requirements of the Act are satisfied, an employee has no right to claim damages against the employer at all.  See the decision of the Court of Appeal in Bonser v Melnacis [2002] 1 Qd R 1.

1. It was submitted for Mr Foster that recent changes to the New South Wales legislation had an impact on his claim.  Those changes are set out in Miss O’Riordan’s affidavit, where it exhibits advice from New South Wales solicitors, experienced in claims for compensation on damages.  Their letter recounts the procedural steps that have been taken by Mr Foster in Queensland.  Significant amendments made to the New South Wales Workers’ Compensation Act in November 2001 had retrospective operation.  That is to say, irrespective of the date of the injury, the amended Act applied to all claims made in New South Wales after November 2001. 

1. Skilled Communication Services has always held an insurance policy against damages claims in New South Wales.  It is with NRMA Workers’ Compensation (NSW) Pty Ltd.  That insurer has been given notice of Mr Foster’s claims, but well after November 2001.  The New South Wales solicitors express the view, based on the information provided by Mr Foster’s Queensland solicitors, that his present prospects of making a successful claim are nil, for a claim made after November 2001.

1. It is difficult to see that the increasing hurdles for plaintiffs in New South Wales, after November 2001, could make a difference.  Mr Foster’s right to make a damages claim (as opposed to a compensation claim) and his employer’s right to an indemnity from WorkCover, all have to be considered as at the date of his injury.  That date is before the changes were made in New South Wales.  In any event, his employer was always required to have New South Wales insurance, and that requirement did not depend on the extent of an actual injury or the level of damages that might be recovered.

1. His situation in Queensland may be unfortunate, but it is clear.  Because of the definitions of “accident insurance” and “damages”, and the restrictive effect of the Queensland legislation, his employer is not entitled to be indemnified by WorkCover Queensland against claims arising out of New South Wales injuries.  A claim in New South Wales is said to be worthless.

Estoppel

1. It is submitted for Mr Foster that WorkCover should be estopped from denying an obligation to indemnify his employer.  Such an argument has succeeded in the analogous Queensland cases where a statutory insurer has behaved as if it were liable, and it would be unfair to let it resile from that position.  The Queensland cases run from the decision of the Full Court in Newton and Bellamy and Wolfev SGIO (Qld) [1986] Qd R 431 to (for example) the decision of the Court of Appeal Lindsay v Smith and the Nominal Defendant [2001] QCA 229.

1. In this court, it has recently been held that the Workers’ Compensation Board of Queensland was estopped from denying an obligation to indemnify, in Salisbury v Farley Constructions Pty Ltd and Workers’ Compensation Board of Queensland [2000] QDC 051. Because the accident happened in New South Wales, there was no obligation to indemnify the employer. However, employees of the Workers’ Compensation Board had given assurances that the employer was indemnified while employees worked in New South Wales. The employer relied upon the representations, and did not pursue alternative insurance in New South Wales. The learned judge found that it would have been unconscionable to allow the Workers’ Compensation Board to resile from its representations.

1. Counsel for Mr Foster submitted that there was a similar estoppel here:

“If Mr Foster continues with his claim in Queensland there is no certainty that the New South Wales insurer will stand behind Skilled Communication Services (as his claim is nil in New South Wales) and (he) is obviously prejudiced.  It can also be said that he has acted to his detriment on the basis of the “encouragement” of WorkCover with respect to his common law claim and the no doubt considerable expense that has been incurred in the lodgment of a second Notice of Claim for Damages, securing medical reports and incurring legal fees during the pre and post court process.”

1. For WorkCover, it was submitted that:

(a)        an estoppel could not be invoked to negative the operation of the legislation, and that, in any event, Mr Foster’s employer might still have recourse to the insurer in New South Wales.

(b)        There is no relevant prejudice to Mr Foster.

(c)        The recent changes to the New South Wales legislation took place after any injury. 

The Facts

1. It is necessary to examine the facts.  Mr Foster was paid compensation from 13 August 1999 until 17 February 2000.  He reported that his injury had occurred at Ballina, in New South Wales.  Information from both Mr Foster and his employer to WorkCover said that. 

1. His compensation came to an end because WorkCover believed that he no longer had an incapacity caused by the work incident in August 1999.  Accordingly, the Notice of Assessment dated 23 March 2000 said that he had a “non-certificate injury”, that there was no permanent impairment attributed to the injury, and that he would therefore be offered no lump sum compensation.  He made no response to that Notice. 

1. On 10 July 2000, Mr Foster’s solicitors forwarded his Notice of Claim for Damages, in the statutory form.  Paragraph 48 said that the event happened in Ballina, New South Wales.  On 23 August 2000, the solicitors then acting for WorkCover Queensland advised that his Notice of Claim was “compliant” – that is, that it satisfied the statutory requirements of such a notice.  The letter went on: “we will advise you in relation to liability as provided for in the Act.”  Reference was then made to an independent examination by an orthopaedic surgeon, to be chosen from a panel. 

1. Section 285 of the WorkCover Queensland Act required WorkCover’s response about liability, with particulars, if liability were to be denied.  That response had to be made within six months of compliance.  On 28 February 2001, WorkCover’s solicitors said that liability was denied.  Some factual questions about the work incident were mentioned.  There was no mention of the fact that the injury happened in New South Wales.  The letter concluded: “we are prepared to reconsider the issue of liability if you can show us why a liability should be admitted.” 

1. As s 293 of the Act required, a compulsory conference was then convened, on 27 April 2001.  Mr Foster’s claims were not resolved.  However, counsel appeared for WorkCover, and raised the “issue of indemnity” - that is, presumably, whether or not WorkCover would indemnify an employer against the consequences of an injury to a worker in New South Wales.  The claim was not resolved at that conference.  On the day, Mr Foster told his solicitor that he had also suffered a psychiatric illness as a result of the injuries sustained by him in August 1999. 

1. The evidence does not reveal that counsel’s raising the issue had any other immediate consequences.  It is not mentioned in contemporaneous correspondence.  There is no suggestion that WorkCover reserved its position.

1. On 5 June 2001, Mr Foster’s Claim and Statement of Claim was filed in the District Court at Brisbane.  The claim asked for damages for personal injuries, including a spinal injury and a “severe psychological reaction stemming from chronic pain and the disabilities associated with the injury.”

1. Because Mr Foster had not previously asked for compensation for his psychological injury, he was required to apply for a “Damages Certificate”.  That application was lodged with WorkCover in June 2001.  WorkCover was unable to substantiate the psychological claim and accordingly, in its Reasons for Decision dated 2 August 2001, it declined his claim.  In a letter of 9 August 2001, Mr Foster’s solicitors asked that the psychological claim be referred to the Medical Assessment Tribunal for determination. 

1. On 23 August 2001 WorkCover’s solicitors lodged a defence, in the name of Skilled Communication Services.  The pleading admitted that the plaintiff was working at Ballina in New South Wales in August 1999.  The defence did not assert that Mr Foster was not entitled to maintain the claim because he was injured in New South Wales.  It was asserted that he could not recover with respect to his psychological injury, as he had not complied with the pre-court proceedings prescribed by the Act.  (Para. 8).  The pleading concluded with paragraph 9:

“Further, and in the alternative, the defendant states that any damages or entitlement thereto must be determined according to the law of New South Wales.”

It is not submitted here that para 9 was sufficient to alert the plaintiff’s advisers to the indemnity issue.  It seems to have been a reference to the appropriate choice of law.

1. On 29 August 2001, Mr Foster’s solicitors wrote to WorkCover’s former solicitors, complaining about disclosure which, it was asserted, had not been properly made by WorkCover.  An application to the court was mentioned as a possibility.  On 2 November 2001, new solicitors assumed conduct of the matter on behalf of WorkCover Queensland in place of its former solicitors.  They asked for an extension of time within which disclosure might be made.  An extension was granted.  A list of documents was then provided on 26 November 2001.  On the same date, WorkCover’s solicitors provided the necessary Statement of Expert and Economic Evidence, on behalf of the defendant.

1. On 12 November 2001, the Medical Assessment Tribunal gave its decision.  It was decided that Mr Foster had suffered the injury of “adjustment disorder with depressed mood”.  The Tribunal assessed his permanent impairment at 2 ½ per cent.

1. Mr Foster then received a letter from WorkCover, referring to his application for a Damages Certificate.  The letter said: “attached is Damages Certificate which will allow you to continue the proceedings at law for damages.”  The Damages Certificate reflected the Tribunal’s assessment.  The certificate itself said: “this certificate allows proceedings for damages for an injury to be commenced.”

1. On 21 November 2001, Mr Foster’s solicitors wrote to WorkCover’s new solicitors.  Because Mr Foster’s claim now included the psychological injury, his solicitors asked if a re-engrossed Notice of Claim for Damages and a further compulsory conference were required. 

1. In their response of 7 December 2001, WorkCover’s solicitors did require a fresh Notice of Claim, and a further compulsory conference, according to s 293 of the Act.  The letter concluded by saying: “our inquiries concerning the circumstances surrounding your client’s claim are continuing, but at this stage we would expect that a further 293 conference could be held via mediation sometime during the first half of 2002 ...”.

1. The new Notice of Claim was provided by Mr Foster, dated 22 January 2002. 

1. Then followed some exchanges between the solicitors, about procedural matters, and whether or not Mr Foster had given a compliant Notice.  In their letter of 1 March 2002, several areas of non-compliance were identified by WorkCover’s solicitors.  They concluded by saying, in effect, that upon receipt of undertakings to repair those areas of non-compliance, “WorkCover will deem your client’s Notice of Claim compliant”.  During some further exchanges, which included a statutory declaration signed by Mr Foster, his solicitors pursued the steps necessary to achieve compliance.

1. During those exchanges, on 27 May 2002, the solicitors for each side spoke by telephone.  The solicitor for WorkCover said that WorkCover now considered that there was an “indemnity issue” between it and the defendant, Skilled Communication Services.  In his letter of 28 May 2002, Mr Foster’s solicitor said: “We consider that your client has had ample time to consider this issue given that the facts have been known to your client since our client lodged his claim for statutory benefits in August 1999 which we know was accepted by your client.”   

1. WorkCover’s solicitors responded in a letter of 11 June 2002.  Any previously identified issues of non compliance were waived.  The letter continued:

“WorkCover expressly reserves its rights in regards to whether it will indemnify the employer with respect to your client’s claim for damages.  It is WorkCover’s position in this matter that any claim the employer has to indemnity lies solely with its NSW workers’ compensation insurer in accordance with the provisions of the Workers’ Compensation Act 1987(NSW).  In that regard we respectfully draw your attention to the judgments of the Court of Appeal in Burrows, subsequently applied in Salisbury.  We note that your client’s statutory limitation period expires on or about 6 August 2002 and therefore your client should bring this matter to the attention of the employer’s New South Wales workers’ compensation insurer ...”.

1. On 19 June 2002, those solicitors wrote to Skilled Communication Services, advising that WorkCover Queensland would not indemnify that company.

Conclusions

1. There is no need to repeat Judge Shanahan’s careful examination of the law of estoppel, and the effect of the Queensland legislation, in Salisbury’s case.  As he makes clear, by reference to earlier authority, there can be no estoppel “in the face of a statute”.  That is to say, the policy adopted by the legislature in enacting a particular statute cannot be ignored by the court.  As Mr Justice McPherson pointed out in Wilson v Austral Motors (Qld) Pty Ltd [1983] 2 Qd R 774, at 782,

“Although an estoppel may not be raised in the face of a statute, there remains within the limits of those statutory provisions an area of fact, as to which the doctrine of estoppel may apply; for example the Board may be estopped from asserting facts which show that the person injured was not a “worker” within s 9A read with the terms of the definition in s 3 of the Workers’ Compensation Act or that the injury fell within the exception in s 9A(1) because it was caused ‘by, through or in connection with’ an insured motor vehicle ...”

1. I would agree with Judge Shanahan’s decision on the facts before him. There is an additional reason why a similar conclusion should be reached in this case.  The difficulty in this case is caused by the presence or absence, of a liability to insure in New South Wales.  That was treated as a question of fact.  The law of NSW was proved by reading an affidavit which deposed to that law, and its impact in this case.  There may be an issue in Australia, about “foreign” law being treated as a fact.  See Nygh & Davis, “Conflict of Laws in Australia” 7^th Ed 2002, at pp 327-335.  However, in considering a possible estoppel, the NSW position should be seen as raising factual issues.  The operation of the New South Wales statute depends on facts – what was the employer doing in New South Wales?

1. In Salisbury’s case, the Workers’ Compensation Board was estopped from asserting that it was not liable for the New South Wales accident - i.e. it could not assert a liability to insure in New South Wales.

1. Likewise, there is no need to repeat the explanation of the principle of estoppel, in Salisbury.  It is only necessary to recall the explanation by Deane J in The Commonwealth v Verwayen (1990) 170 CLR 394 at 444–446:

“The central principle of the doctrine (of estoppel by conduct) is that the law will not permit an unconscientious departure by one party from the subject matter of an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission which would operate to that party’s detriment if the assumption be not adhered to for the purposes of litigation.”

1. Here, the question of the employer’s indemnity was raised at the compulsory conference held on 27 April 2001.  The point was not again raised by WorkCover, until the telephone conversation between solicitors on 27 May 2002.  In the meantime, proceedings were commenced in the District Court, pleadings exchanged, a Damages Certificate was issued (which assumed litigation would result), and the usual steps were taken about disclosure of documents, and the like.  The employer’s defence did not raise the point, though filed well after the preliminary conference. 

1. Significantly, in November 2001, the New South Wales regime governing an injured worker’s right to claim damages was substantially altered.  Whereas Mr Foster had some prospect of recovering damages before that date, afterwards his prospects became nil.  (The New South Wales laws about damages for negligence always applied to this claim, as the defence rather cryptically asserted.  See the decision of the High Court of Australia in John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 – judgment 21 June 2000. Damages for breach of contract or statutory duty raise different considerations – see “Is there still scope for forum shopping after Rogerson” in (2000) 20 Australian Bar Review, by Professor J. L. R. Davis).

1. It is only necessary to recount those facts, to see that it would be quite unconscientious for WorkCover now to retreat from the position which its actions assumed – that Mr Foster could sue for damages, in Queensland, with WorkCover as the insurer.  That is particularly so, as the contrary position was fleetingly mentioned at the conference, and then not mentioned again.  Mr Foster would be prejudiced, and it is no comfort to him to be told that he can pursue a claim in New South Wales.

1. Therefore, these declarations should be made:

(a)        Declare that the respondents are estopped from asserting that the first respondent was required to provide against its liability to the plaintiff, according to the law of New South Wales. 

(b) Order that leave be granted to the plaintiff to commence proceedings against the first respondent for the claim pursuant to s 305 of the WorkCover Queensland Act 1996.

(c)        Order that the second respondent pay the plaintiff’s costs of and incidental to this application to be assessed on the standard basis.

(There was no contest about the s 305 order – WorkCover did not oppose it. The order about costs is conditional on hearing any submissions about costs.)