Grego v Great Western Insurance Brokers Pty Ltd - [2001] WADC 170

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: GREGO -v- GREAT WESTERN INSURANCE BROKERS PTY LTD & ANOR [2001] WADC 170

CORAM: O'SULLIVAN DCJ

HEARD: 10-11 AUGUST 2000 & 23-25 MAY 2001

DELIVERED : 20 JULY 2001

FILE NO/S: CIV 951 of 1997

BETWEEN: FRANCIS JOSEPH GREGO
Plaintiff
AND
GREAT WESTERN INSURANCE BROKERS PTY LTD
First Defendant
KEVIN WAYCOTT
Second Defendant

Catchwords:

Practice and procedure - Applications for extensions of time within which to bring applications for summary judgment and to strike out statement of claim - Applications for judgment on admissions and counterclaim - Claims for damages for negligence and breach of contract

Legislation:

Nil

Result:

Leave granted to bring applications for judgment under O 16 of the Rules of the Supreme Court and to strike out statement of claim
Applications for judgment under O 16 and admissions dismissed
Paragraphs 10, 11 of statement of claim struck out
Application for judgment on counterclaim dismissed

Representation:

Counsel:

Plaintiff:     Mr R R Cywicki
First Defendant             :     Mr M G Clay
Second Defendant         :     Mr M G Clay

Solicitors:

Plaintiff:     Friedman Lurie Singh
First Defendant             :     Martin De Haas
Second Defendant         :     Martin De Haas

Case(s) referred to in judgment(s):

Bride v Peat Marwick Mitchell [1989] WAR 383
Deering v Norton (1970) 92 WN (NSW) 437
Griffiths v Kerkemeyer (1977) 139 CLR 161
National Insurance Co of NZ Ltd v Espagne (1960-1961) 105 CLR 569
Richards v Faulls Pty Ltd (1971) WAR 129

Case(s) also cited:

Nil

O'SULLIVAN DCJ: The following applications, brought by the defendants, are before me:
1.applications for an extension of time within which to apply for summary judgment under O 16 of the Rules of the Supreme Court and to strike out the statement of claim;
2.an application for summary judgment pursuant to O 16;
3.an application for judgment upon admissions;
4.an application to strike out the statement of claim;
5.an application for summary judgment in favour of the defendants upon their counterclaim.

The action

At all material times the plaintiff was a professional fisherman and the director of a company known as Tappani Pty Ltd ("Tappani"). The first defendant is an insurance broker and the second defendant its employee.
The plaintiff's claim, in broad terms, is that in about June 1993 he engaged the first defendant, through the second defendant, to provide advice in relation to the insurance requirements of himself and Tappani. He claims that he was not advised that a worker's compensation insurance policy should be effected to cover injuries incurred by him as a working director of Tappani and that, consequently, when he was injured in the course of his employment with the company he was unable to claim compensation. Accordingly the plaintiff seeks damages in negligence and for breach of contract.

The statement of claim

The claim is pleaded as follows:
"4.In or about June 1993 the Plaintiff entered into a verbal agreement with the First Defendant through its servant and/or agent the Second Defendant whereby the First Defendant agreed to provide insurance advice to the Plaintiff for the purposes of effecting appropriate insurance cover for the Plaintiff and Tappani Pty Ltd in the operation of the companies wetline fishing business ("the Brokerage Agreement").
5.At all material times it was an implied term of the Brokerage Agreement that the First Defendant would exercise all reasonable care and skill in the provision of insurance advice and in the implementation of appropriate insurance cover.
6.Further and in the alternative at all material times the First and Second Defendants owed a duty of care to the Plaintiff to exercise all reasonable care and skill in the provision of insurance advice and in the implementation of appropriate insurance cover.
7.On or about the 25th February 1994 the Second Defendant, for and on behalf of the First Defendant advised the Plaintiff that Tappani Pty Ltd should take out Employer's Indemnity Insurance with SGIO Insurance Ltd.
8.Acting on the advice as pleaded in paragraph 7 above, the Plaintiff on or about 25th February 1994 completed a Employer's Indemnity Proposal for Tappani Pty Ltd and obtained Employers Indemnity cover with SGIO Insurance Ltd.
9.On or about the 3rd August 1994 the Plaintiff suffered personal injury by accident arising in the course of his employment with Tappani Pty Ltd ("the disability").
10.As a result of the disability the Plaintiff was certified physically incapable of working and incurred medical and related expenses associated with treatment of the disability and rehabilitation.
11.On the 4th day of July 1996 the Plaintiff lodged a claim for workers compensation benefits with the Conciliation and Review Directorate which claim was declined on the grounds that the Plaintiff was deemed not to be a worker within the meaning of the Workers' Compensation and Rehabilitation Act 1981 pursuant to section 10A.
12.The Plaintiff's failure to secure insurance cover for the disability was caused by the First Defendant's breach of implied term of the brokerage agreement as pleaded in paragraph 5 herein.
Particulars of Breach
The First Defendant through its servant and/or agent the Second Defendant:
(i)Failed to advise the Plaintiff that the Plaintiff could secure cover under the Employer's Indemnity Policy if the Plaintiff disclosed himself as a working director in the Employer's Indemnity Proposal form.
(ii)Failed to warn and advise the Plaintiff that if he did not disclose himself as a working director in the Employer's Indemnity Proposal Form he would not be entitled to cover under the Employer's Indemnity Policy.
(iii)Failed to advise and warn the Plaintiff that he did not have sickness and accident insurance in place.
(iv)Failed to take reasonable steps so as to ensure that the Plaintiff had adequate insurance cover in place in the event of the disability.
13.Further and in the alternative the Plaintiff's failure to secure insurance cover for the disability was caused by the First and Second Defendant's negligence as hereinafter particularised:
Particulars of Negligence
The First and Second Defendants were negligent in that they:
(i)Failed to advise the Plaintiff that the Plaintiff could secure cover under the Employer's Indemnity Policy if he disclosed himself as a working director in the Employer's Indemnity Proposal Form.
(ii)Failed to warn and advise the Plaintiff that if he did not disclose himself as a working director he would not be entitled to cover under the Employer's Indemnity Insurance Policy.
(iii)Failed to advise and warn the Plaintiff that he did not have sickness and accident insurance in place.
(iv)Failed to take reasonable steps so as to ensure that the Plaintiff had adequate insurance cover in place in the event of the disability.
14.By reason of the First Defendant's breach of the Brokerage Agreement and/or negligence the Plaintiff has suffered loss and damage as hereinafter particularised:
Particulars of Negligence
(i)The Plaintiff has incurred medical and associated expense for treatment of the disability.
(ii)The Plaintiff has suffered loss of weekly benefits.
(iii)The long term prognosis of the Plaintiff's medical condition arising from the disability is such that the Plaintiff will need to undergo further medical treatment and will incur future medical and associated expenses.
(iv)As a result of the disability the Plaintiff has sustained a permanent loss of function of his lower limb which would entitle him to a lump sum payment pursuant to section 24 of the Workers' Compensation and Rehabilitation Act 1981.
Full particulars of which will be provided prior to trial.
15.By reason of the Second Defendant's negligence the Plaintiff has suffered loss and damage as hereinafter particularised.
Particulars of Loss and Damage
The Plaintiff repeats the particulars as pleaded in paragraph 14 herein.
AND THE PLAINTIFF CLAIMS:‑
1.As against the First Defendant damages for breach of contract and negligence.
2.As against the Second Defendant damages for negligence.
3.Interest on the damages awarded in 1 and/or 2 above at the rate of 8% per annum from the date that expenses were incurred until payment or judgment pursuant to section 32 of the Supreme Court Act 1935 to 1979 as amended."

The applications

The defendants have proceeded upon the basis that their applications should be considered together and not be confined by the manner in which the plaintiff has formulated his case on the pleadings. In taking this approach counsel for the defendants relies, I think, upon the commentary in Seaman par 16.0.1 and par 20.19.21 and upon the authority of Bride v Peat Marwick Mitchell [1989] WAR 383 at 394. Nevertheless I complained to counsel on a number of occasions that I was having difficulty relating his submissions to particular applications and, as these reasons will show, I have proceeded to consider each application separately doing the best I can to deal with the various arguments to which each relates.

Extensions of time

Unless time is extended O 20 r 19(3) of the Rules of the Supreme Court provides that an application to strike out a statement of claim should be made within 21 days of the service of the pleading and O 16 requires an application for summary judgment in favour of a defendant to be made within 21 days after appearance is entered.
In this case a statement of claim was filed on 21 March 1998 and the chamber summons containing the applications was not filed until 29 May 2000.
The plaintiff opposes any extension of time to bring the applications but I would grant leave to do so. The case has a long history and the defendants' claim that it was only after repeated attempts to obtain discovery that they found themselves in a position to proceed. In any event the substantive merits of the applications have now been exhaustively argued and it seems to me that it would be a waste of the court's resources to refuse to consider them. Accordingly I would grant leave to bring them.

The applications for judgment under Order 16 and on admissions

Counsel for the defendants addressed me at great length and advanced the following principal submissions:
1.The plaintiff can have no claim;
2.The claim cannot succeed because:
(a)There was in fact a policy covering the plaintiff's claim
(b)Any injury the plaintiff suffered is not compensable under the Workers Compensation Act
(c)The plaintiff is unable to prove loss and damage in any event.
1. The plaintiff can have no claim
The defendants argue that the complaint which the plaintiff makes is that Tappani did not take out an employer's indemnity insurance policy to cover itself in respect of worker's compensation liability to the plaintiff and that Tappani's failure to do so was the fault of the defendants. In these circumstances it is submitted that the plaintiff can have no claim against the defendants and that any claim must be brought by Tappani.
In my view this submission misunderstands the plaintiff's case. The plaintiff says that he has lost any claim to compensation under the Workers' Compensation & Rehabilitation Act (1981) as amended, ("the Act") and that that was the fault of the defendants. Tappani has no liability to him because the liability of an employer to pay compensation to an injured employee only exists if the employee can be described as a "worker" as defined in the Act. Section 18 provides:
"If a disability of a worker occurs the employer shall, subject to this Act, be liable to pay compensation in accordance with Sch 1."
Section 10A of the Act provides in part:
"1.Notwithstanding anything in s 5 a person is not a worker within the meaning of this Act while the person is -
(a)a director of a company in any share of which the person has a beneficial interest; and
(b)engaged or employed by or working for that company
if the employer company has not complied with s 160 on the basis that the person is a worker."
There is no dispute in this case that s 160 of the Act, was not complied with and that the plaintiff is therefore deemed not to be a worker within the definition contained in s 5 of the Act. Accordingly he is clearly unable to bring a claim for compensation, and it is that inability which gives rise to a claim for damages against the defendants.
2.(a) Policy covering the plaintiff's claim
The position is that at the time of his injury the plaintiff was deemed not to be a worker under the Act by reason of s 10A and Tappani's failure to comply with the requirements of s 160. Accordingly the plaintiff can bring no claim for workers' compensation against Tappani. Nevertheless, counsel for the defendants sought to argue (as I understood him) that there was in fact an SGIO policy in place covering any claim which the plaintiff might make. In written submissions filed to clarify his argument counsel stated:
"31.The uncontroverted evidence is that the plaintiff's claim against SGIO was submitted to SGIO in 1999. There is no evidence that the SGIO denied the claim on the grounds of section 10A or section 160 of the Act. Leaving aside the defendant's application to adduce fresh evidence, there is also no evidence that the claim lodged with the SGIO was denied.
•Affidavit of Mr Clohessy annexures 'WJC16' to 'WJC19' "
The affidavit referred to is an affidavit of Trevor Joseph Clohessy sworn 31 May 2001 after the close of argument and after I had reserved judgment in the matter. On 18 June 2001 counsel sought leave to rely on it and a brief hearing was held for that purpose. I reserved my decision giving leave to the plaintiff to file any affidavit and submissions in reply within 14 days.
Mr Clohessy states in his affidavit that he is an account manager employed by SGIO and was "responsible for dealing with claim number 95/20722 made by Mr Grego against Tappani Pty Ltd under SGIO employer's indemnity insurance policy number 0/942494." Mr Clohessy further states:
"3.Our file indicates that in November 1994 we had verbally advised the client that because he had not complied with section 10A of the Act he was deemed not to be a worker. However on or about 5 August 1999, SGIO received a letter from Martin de Haas Commercial Lawyers dated 3 August 1999 that set out 10 reasons in support of their contention that section 10A had been sufficiently complied with.
4.…
5.SGIO reviewed the matter and determined that SGIO could not rely on section 10A of the Act to reject the claim. I was instructed to manage the claim for SGIO to determine whether the injury was a disability that could be compensated under the provisions of the Act; whether Mr Grego was a share fisherman so as to be excluded from cover under the Act; and whether there had been compliance with section 57A of the Act.
6.SGIO sent a letter to Martin de Haas Commercial Lawyers dated 5 August 1999 seeking further information in respect of the claim."
It will be noted that Martin de Haas Commercial Lawyers are the solicitors for the defendants in these proceedings. Mr Clohessy goes on to state in his affidavit that he then dealt with the solicitors for the plaintiff seeking information from them for sometime but receiving no satisfaction. Ultimately Mr Clohessy states that SGIO denied liability for any claim but not upon the basis that the plaintiff was not a worker under the Act. He states:
"23.SGIO decided to reject the claim in January 2001 having regard to:
23.1the failure of Mr Grego and Friedman Lurie Singh to bring the claim within the terms of the Act (in particular 84I and section 57A) and by insuring Tappani request indemnity of SGIO and by providing the original medical evidence requested; and
23.2the belief of SGIO on the evidence at its disposal that the injury was not covered by the Act."
In my opinion none of this evidence leads to the conclusion that summary judgment dismissing the plaintiff's claim should now be granted.
These proceedings were commenced in 1997 at which time it would appear that the position was that SGIO denied any liability in respect of the plaintiff's claim for compensation upon the basis that he was not a worker as defined in the Act. If, after action was commenced, SGIO has had second thoughts about the basis for its denial that does not change the position. The fact is that the plaintiff was not a worker and could therefore bring no claim for compensation against Tappani.
It follows that although I have had regard to the evidence of Mr Clohessy I do not consider that the plaintiff has established an entitlement to summary judgment upon the ground that there is an SGIO policy covering his claim.

2.(b) Any injury the plaintiff suffered is not compensable under the Workers' Compensation Act

Counsel for the defendants advanced a number of arguments to support the submission that the plaintiff cannot succeed because he cannot establish that he suffered an injury which is compensable under the Act. I turn to consider each of them.
(i)Plaintiff injured on a journey
The plaintiff was injured while walking from the camp on Rat Island to the fishing boat. The defendant argues that that was a "journey" within the meaning of s 19 of the Worker's Compensation Act and, further that it was not a journey of a kind recognised by that section.
On the other hand the plaintiff argues that at all material times he was injured "in the course of his employment".
In par 7 of his affidavit of 30 June 2000 the plaintiff states:
"To the best of my recollection I left Geraldton a day or two before 3 August 1994. I expected to be away five days and I used the fishing vessel owed by Tappani Pty Ltd as part of my work duties for Tappani Pty Ltd. These duties obviously required me to stay away for those five days and consequently to sleep on the boat and utilise some of the facilities on Rat Island. Consequently I say that from the time I left Geraldton a few days before 3 August 1994 everything I did was in the course of my usual employment."
In my view there is no doubt that the plaintiff has made out an arguable case that at the time of his injury he was acting in the course of his employment and not on a journey between his place of employment and another place. If that is so then s 19 of the Act will have no bearing on the result.
(ii)Failure to use protective equipment
The defendants' submission is that the plaintiff cannot succeed because when he fell and injured himself he did not have a torch with him notwithstanding that there was one on the boat. Section 22 of the Act provides, in part, that liability for worker's compensation is excluded where a worker fails "without reasonable excuse, proof of which is on him, to use protective equipment clothing or accessories provided by his employer for the worker's use".
Whether the section would have applied to defeat the plaintiff's claim in this case is clearly a question of fact.
In one of his affidavits dated 30 June 2000 the plaintiff states that when he left the boat to go onto the island it was not dark and there was therefore no need to take a torch. He also states that he was familiar with the area having "literally walked hundreds of times during my 45 years of fishing from the camp to the jetty."
In my view it is by no means clear that a torch would have saved the plaintiff and that he had "no reasonable excuse" for not having one. Accordingly I would reject this submission.
(iii)Serious and wilful misconduct

Section 22(c) of the Act provides that if a disability is attributable to the "serious and wilful misconduct" of a worker any claim for compensation is excluded.
In this case it was submitted that to make a camp on Rat Island was against regulations governing the island and that the plaintiff acted in breach of them. Accordingly it should be concluded that he was guilty of serious and wilful misconduct.
Again, I would reject the submission. The question is one of fact and a worker's misconduct is only to be regarded as "serious" if "it has a real tendency to increase either or both the likelihood of injury being caused or the extent of the injury should it be caused" (Richards v Faulls Pty Ltd (1971) WAR 129 at 133 per Burt J). In my view there is clearly a triable issue.
(iv)Plaintiff contributing to cost of working vessel and entitled to share in profits
Counsel for the defendants submitted that the plaintiff's claim for worker's compensation could never have succeeded having regard to the provisions of s 17 of the Act which provide:
"This Act does not apply in respect of disabilities occurring to such members of the crew as contribute to the cost of working a vessel and are remunerated by shares in the profits …"
I reject the submission. The section itself is clearly designed to apply to share fishing operations and there is no clear evidence that the plaintiff was so engaged. In my view that is a matter which can only be determined after a trial.

2.(c) The plaintiff has not suffered any loss

Counsel for the defendant submitted that it is clear that the plaintiff would not be able to prove that he has any entitlement to damages. Accordingly it is said that the claim cannot succeed in any event.
The plaintiff's plea that he has suffered loss is set out in pars 14 and 15 of the statement of claim. The damages particularised are past and future medical expenses, lost weekly benefits payable under the Act and lump sum entitlement.
(i)Medical and related expenses
It is clear from the evidence that the plaintiff's medical expenses were covered by Medibank Private and Medicare. The plaintiff claims that he may be obliged to refund these amounts but counsel for the defendants submitted that there are no grounds upon which the plaintiff can be required to do so and that these cannot therefore be treated as items of damage.
Counsel referred to two statutory provisions dealing with the circumstances in which a person might become liable to refund Medicare benefits.
Section 18 of the Health Insurance Act 1973 (as amended) provides in part:
"(1)Where:
(a)a person has lodged a claim for Medicare benefit in respect of a professional service that has been rendered to an eligible person in the cost of the treatment of, or as a result of, an injury; and
(b)the eligible has received or established his or her right to receive, in respect of that injury, a payment by way of compensation or damages … under the law that is or was in force in a State … being a payment the amount of which was, in the opinion of the Minister, determined having regard to any medical expenses incurred, or likely to be incurred (whether by the eligible person or by another person), in the course of the treatment of, or as a result of, that injury;
The Minister may determine that the whole or a specified part of the payment referred to in par (b) shall for the purposes of this section be deemed to relate to the medical expenses incurred in respect of the provision of the professional service referred to in par (a)."
Section 8(1) of the Health and Other Services (Compensation) Act 1995 (as amended) provides:
"1.Subject to subsections (2) (3) (6) and (9), if:
(a)a judgment or settlement is made in respect of an injury to a compensable person; and
(b)Medicare benefit has already been paid in respect of a professional service rendered to that person in the course of treatment of, or as a result of, the injury; and
…
There is payable to the Commonwealth an amount equal to the Medicare benefit."
Counsel for the defendants submitted that neither of these sections establish a liability in the plaintiff to refund Medicare benefits because, he argued any award of damages which the plaintiff might receive in this action would not be an award "in respect of" his injuries for which he received treatment.
It is of course true that the plaintiff's claim in this case is not a claim for damages for personal injuries but counsel did not cite any authority on the point which he sought to make and I have been unable to find any. However it is beyond dispute that damages for medical and similar expenses are assessed upon the basis of needs and not upon the basis of costs actually incurred (Griffiths v Kerkemeyer (1977) 139 CLR 161 and see Luntz, Assessment of Damages for Personal Injuries and Death, Third Edition par 4.1.3) although the latter may constitute a measure of assessment. For that reason "benevolent" payments by a third party to an injured plaintiff are not to be deducted from an award (Griffiths v Kerkemeyer supra; Deering v Norton (1970) 92 WN (NSW) 437) and nor are pensions (National Insurance Co of NZ Ltd v Espagne (1960-1961) 105 CLR 569).
It is also well established that the words "in respect of" are capable of being widely construed and I see no reason to decide, in a summary way and without the benefit of any detailed argument, that they should be interpreted in these statutes in such a way as to provide relief from liability to a tortfeasor rather than to provide a benefit to his victim.
In my view the question of whether the plaintiff can recover the cost of medical expenses which have already been paid by Medicare is clearly a triable issue.
(ii)Lost weekly benefits
The defendants' submission is that the plaintiff cannot establish that there is an issue which should go to trial concerning his entitlement to any remuneration as a working director of Tappani.
In support of his argument counsel took me to a great deal of evidence but at the end of the day I consider that the submission should be rejected. The plaintiff's case, after all, is that the defendants failed to ensure that he was covered by workers' compensation against the risks of injury while working for Tappani. He complains, in effect, that the defendants should have advised him of the need to comply with s 160 of the Act and if this had been done he asserts that he would have declared not only that he was a working director but that he was entitled to receive an income of $25,000. In earlier years he made declarations both as to his status and as to his entitlement to income and he argues that that is what would have occurred on this occasion had the defendants not been in breach of their duty to him.
In my view the issues raised in relation to this question will have to be determined at trial in the light of all the evidence including evidence from the plaintiff himself, his accountant and the second defendant.
(iii)Lump sum entitlement
Counsel for the defendants took me to some evidence consisting of medical reports in an attempt to establish that the plaintiff had made such a good recovery from his injury that he would not be regarded as having suffered any permanent disability such as to entitle him to a lump sum by way of compensation.
I reject that submission. In my opinion there is ample evidence for purposes of these proceedings, to establish that there is an issue which should be tested at trial that the plaintiff incurred a significant knee injury resulting in permanent disability.

The applications to strike out

The defendants argue that a number of paragraphs of the statement of claim are defective and should be struck out.
Paragraphs 10 and 11
I agree that these paragraphs plead evidence and should be struck out.
Paragraphs 12 and 13
These paragraphs plead that "[T]he plaintiff's failure to secure insurance cover for the disability" was caused by the first defendant's breach of contract and the negligence of both defendants. The defendants argue that it is nowhere pleaded that the plaintiff acted in reliance upon the defendants in failing to secure appropriate insurance cover but it seems to me that that plea is contained in par 8.
Paragraphs 14 and 15
I have already dealt with the defendant's submissions that the plaintiff cannot make out that he has suffered any loss and damage.

Application for judgment on the counterclaim

For the reasons which I have given it will be apparent that I am of the view that there is no merit in the argument that the defendants should now have summary judgment upon the counterclaim.

Conclusion

I would dismiss all applications save to the extent indicated in these reasons. I will hear from counsel as to the appropriate orders.