Hatfield Engineering Pty Ltd v Fitzgerald

NEW SOUTH WALES COURT OF APPEAL

CITATION: Hatfield Engineering v Fitzgerald [2003] NSWCA 345

FILE NUMBER(S):
40520/02

HEARING DATE(S): 8 July 2003

JUDGMENT DATE: 25/11/2003

PARTIES:
HATFIELD ENGINEERING PTY LIMITED (Appellant)
Bruce James FITZGERALD (Respondent)

JUDGMENT OF: Hodgson JA Santow JA Ipp JA

LOWER COURT JURISDICTION: Compensation Court

LOWER COURT FILE NUMBER(S): 15813/85

LOWER COURT JUDICIAL OFFICER: Curtis J

COUNSEL:
J D Hislop, QC/ N E Chen (Appellant)
L King, SC/ G Niven (Respondent)

SOLICITORS:
Gillis Delaney Brown (Appellant)
Giles Paynes & Co (Respondent)

CATCHWORDS:
WORKERS' COMPENSATION - Discretion of the Court under s17 Compensation Court Act 1984 (NSW) to reconsider orders made pursuant to s15(1) Workers' Compensation Act 1926 (NSW) - February 1986 redemption of weekly payments by lump sum payment - CHANGED CIRCUMSTANCES - Major injuries to right leg suffered in 1980 - lump sum compensation for 50% loss of use of right leg awarded in 1983 - right leg amputated in 1998 curing problems of recurrent infection and septicaemia. Whether s17(4) incapable of application to an agreement between worker and employer where redemption amount has been determined by the court - Failure to re-consider specifically the lump sum determination as required by s17(4) - Whether trial judge applied a solely subjective test in consideration of the objective requirement for foreseeability of amputation - Whether trial judge's discretion miscarried, taking into account extensive delay.

LEGISLATION CITED:
Compensation Court Act 1984 (NSW) s17
Workers' Compensation Act 1926 (NSW) s15; s36; s60
Workers' Compensation Act 1987 s151A(5)

DECISION:
(1) Appeal dismissed
(2) Appellant to pay respondent's costs of this appeal.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40520/02
HODGSON JA
SANTOW JA
IPP JA
25 NOVEMBER 2003

HATFIELD ENGINEERING PTY LIMITED v Bruce James FITZGERALD

Judgment

HODGSON JA: I agree with Santow JA.
SANTOW JA:
INTRODUCTION
This is an appeal from a decision of Curtis J in the Compensation Court of New South Wales, against his determination that an order earlier made by Freeman J be reconsidered and set aside. The essential circumstances were that Freeman J ordered pursuant to s15(1) of the Workers’ Compensation Act 1926 (NSW) that the liability of the appellant and then defendant, Hatfield Engineering Pty Limited, to make weekly payments to the respondent and then plaintiff, Bruce James Fitzgerald, in respect of an injury suffered by him on 15 July 1980 be redeemed by the payment of $110,000, in addition to the payments already made under that Act.
The original order made by Freeman J was pursuant to s15 of the Workers’ Compensation Act 1926 (NSW), quoted below:
“Redemption of weekly payments either in whole or in part
15. (1) Subject to this Act, the liability in respect of any weekly payment may, with the consent of the worker, be redeemed either in whole or in part by the payment of a lump sum, determined by the Court, having regard to any dispute as to liability to pay compensation under this Act and the injury, age, and occupation of the worker at the time of the occurrence of the injury, as well as to his diminished ability to compete in an open labour market.
(1A) Where the Court determines a lump sum under subsection (1) and the worker agrees that payment of the lump sum should also redeem any liability to make a payment under section 10 or 16 in respect of the injury, payment of the lump sum also redeems any liability to which the agreement of the worker relates.
(1B) The consent or agreement of a worker to a redemption under subsection (1) or (1A) may be dispensed with if, in the opinion of the Court --
(a)the worker is unable, by reason of infirmity of mind or body, properly to consent or agree to the redemption; and
(b)the redemption would be in the best interests of the worker.
(2) An agreement as to the redemption of a payment by a lump sum shall not, nor shall the payment of the sum payable under the agreement exempt the person by whom the payment is payable from any liability under this Act unless such sum has been determined by the court in accordance with this Act.
(3) Such lump sum may by agreement or order of the Court be paid to the Board to be invested, applied, paid out or otherwise dealt with as agreed upon or ordered or, subject to any such agreement or order, as provided by section 57.”
The power to reconsider is contained in s17 of the Compensation Court Act 1984 (NSW) in these terms:
“17.   Decisions of the Court
(1)          A decision of the Court in any matter shall be upon the real merits and justice of the case.
(2)          The Court shall not be bound to follow strict legal precedent.
(3)          Subject to Part 4 of this Act, a decision or proceeding of the Court shall not:
(a)be vitiated by reason of any informality or want of form, or
(b)be liable to be challenged, appealed against, reviewed, quashed or called in question by any court.
(4)          Nothing in subsection (3) shall prevent the Court from reconsidering any matter which has been dealt with by it, or from rescinding, altering or amending any decision previously made or given by the Court, all of which the Court shall have authority to do.”
Section 17 is in similar terms to its predecessor s36, then found in the Workers’ Compensation Act 1926 (NSW). The principal difference between the earlier legislation and s17 is that the earlier Act provided for the relevant discretion to reconsider to be vested in the Commission rather than the Compensation Court. It was common ground between the parties that the authority conferred on the court, whereby the court is not prevented from “reconsidering any matter which has been dealt with by it” or “from rescinding, altering or amending any decision” was extremely wide. In the words of Street CJ in Hilliger v Hilliger (1952) 52 SR(NSW) 105, “no limit is set in the section to the power of the court …”. The joint judgment of Owen and Walsh JJ in Hardaker v Wright & Bruce Pty Limited (1960) 62 SR(NSW) 244 at 248 specifically approved that passage and the following one, quoted below:
“I see no reason for limiting the generality of the words used in the section, and whether the question be one of fact or one of law, if the circumstances warrant it, I think that there is power in the court to entertain an application for variation or rescission so long as the original order is current, and to make such order in the way of variation or rescission as to it may seem proper. It is important, naturally, to keep well in mind the distinction between the existence of the power and the occasion of its exercise, and courts should not lose sight of the general rule that public interest requires that litigation should not proceed interminably. A party who seeks or opposes an order must produce all the available evidence at the original hearing, and courts must be on their guard to refuse to allow the same matter to be litigated again and again. But at the same time it is clear that the legislature intended to leave with the prescribed courts the power of reviewing any decision in order to see that justice is done between the parties.”
Importantly in Hardaker (supra) at 249 it was expressly accepted that changed circumstances, or fresh evidence concerning the original circumstances, was a ground for reconsideration though “such reconsideration is not necessarily [so limited]” but “may, in a proper case, extend to considering whether an error has been made, whether of fact or of law, and to making such new or altered award as the circumstances, when thus reconsidered, appear to require”.
The present case concerned not any error of fact or law made by Freeman J, but dealt with the core of the authority conferred by s17 and its predecessor. That is
(i)whether changed circumstances or fresh evidence concerning the original circumstances required to be taken into account which
(ii)when so taken into account, would require reconsideration of the original decision.
Any limitation in reconsidering the earlier decision principally derives from its subject matter, namely the power of redemption under s15 of the Workers’ Compensation Act. That was the way in which the appellant primarily put its case on appeal, elaborating in argument its Grounds of Appeal. These I quote below:
GROUNDS
1.His Honour erred in setting aside the order of the Compensation Court of New South Wales dated 3 February 1986 in circumstances where the Respondent worker had consented to redemption of his rights whilst he was in full possession of his senses and with the benefit of full advice both medical and legal as to the consequences of his decision.
2.His Honour misdirected himself as to the content of the discretion available to the court pursuant to Section 17(4) of the Compensation Court Act 1984 (NSW).
3.His Honour misdirected himself as to the evidence relating to latency of the conditions of septicaemia and osteomyelitis as at the date of the order of redemption and as to the knowledge of the Respondent worker as to his condition at the time of this consent.
4.His Honour erred in basing the exercise of discretion solely on a conclusion that the Respondent worker did not envisage at the time of his consent that he would at some time in the future suffer amputation of his injured leg.
5.His Honour erred in failing to take into account in the exercise of his discretion the advantages which accrued to the Respondent worker by consenting to the order for redemption and the disadvantages suffered by the Appellant in paying the said redemption amount.
6.His Honour erred in drawing an adverse inference from the absence of medical evidence tendered by the Appellant.”
I now turn to the salient facts before considering the reasoning of the trial judge.
SALIENT FACTS
The respondent at the age of 17 years, was involved in a motorcycle accident with a motor car on his way to work on 15 July 1980, suffering major injuries to his right leg, including a fractured right femur, a compound fracture of the right femur and fibula, ligamentous injury to the right knee, severe soft tissue injuries to the right leg (requiring multiple skin grafts) and vascular injury to the lower right leg (Combined, 54) and de-gloving injury to the right leg (Red, 7F). The respondent was employed by the appellant as an apprentice at this time.
The injury was so severe it required eight units of blood. He spent four days in intensive care and ten weeks in skeletal traction. The injuries required several skin grafts and operations including the insertion of a plate into the leg of the respondent (Combined, 51). The respondent was in hospital for 6 weeks after the accident (Combined, 51).
As the trial judge recounted (Red, 7)
“Dr Lowy reported to the applicant’s solicitors in 1981 that although the applicant had sustained massive injuries to his right leg, ‘apparently he was lucky to avoid amputation’. The doctor went on to say that ‘surgical treatment has been successful and his rehabilitation programme is well under way’. While minimally increasing mobility and further resolution of problems could be expected, the doctor believed the permanent loss of efficient use of the right leg was 50 to 60 per cent. Dr Lowy, noting that the applicant had been a promising wrestler, having represented Australia overseas, said ‘It is strength of character that has enabled him to rehabilitate himself following a most traumatic and disfiguring accident’.
Dr Bruce, [an orthopaedic surgeon] on 23 July 1981 noted a skin graft lying directly on the subcutaneous surface of the tibia which resulted in an adherent scarring which is active and prone to ulceration. Although Dr Bruce expressed the opinion that further surgery to the right foot was probable to provide a greater range of movement and greater control of the foot, he believed that the loss of muscle tone, the stiffness of the ankle and the contour deformity of the leg would be a permanent disability.
Dr Baldwin on 29 July 1981 reported to the applicant’s solicitors that the applicant had been left with severe functional deficit of his right limb; that he had permanent unsightly scarring and that he had a degree of functional impairment.
Dr John Bannister was qualified to express an opinion and in a report of 7 October 1981 said this:
This man has had a shocking injury requiring extensive medical treatment. He still has quite significant disability with a loss of normal sensation and active feet movements. I doubt he will ever play any active sport again and it is unlikely that he will become active in a job where repetitive walking on the plane or going up and down stairs could be anticipated. His prognosis for the future for recovery to these activities is extremely poor. I would feel he does have a significant loss of lower limb function of approximately 50 per cent permanent loss of function of the lower limb for general activities. He may have to give consideration to removal of the plate from the femur if irritation commences.”
In 1983 the respondent received a lump sum compensation in respect of a 50% loss of the use of his right leg (Red, 2 affidavit of respondent para 3) but thereafter continued to receive weekly payments under the Workers’ Compensation Act.
The appellant as employer, with the consent of the respondent worker, as required by s15(1), on or about 3 February 1986 paid to the respondent in redemption of the employer’s liability to make weekly payments, a lump sum of $110,000. That amount was determined by Freeman J “in redemption of my claim for weekly payments and any further lump sum entitlements I may have had” (Red, 2 affidavit para 5).
The trial judge found (Red, 8) that it was upon the basis of this earlier mentioned body of medical opinion that the applicant consented to the award for redemption of his entitlements. He was at the time of full age, under no legal disability, had medical and legal advice in respect of the redemption and understood it was a final settlement. The trial judge recorded that (Red, 8) “Nowhere in any medical opinion do I find an expression of even the remotest possibility that the leg would at some future time be amputated”.
The trial judge accepted the respondent to be a witness of truth, of whom no attack on his credit was made. The thrust of the cross-examination was simply that he knowingly consented to his redemption payment with full “knowledge” of his condition as it then stood. That latter was evidently not disputed by the appellant at trial (Red, 8K).
However, the respondent said that after the order for redemption his condition changed and that he began to get chronic attacks of pain in his leg. He attests to having been told by his treating orthopaedic surgeon, Dr Bruce (amongst others) that he had osteomyelitis. He said he took antibiotics as was prescribed and “getting on the best I could” (Red, 2 para 6 of affidavit). He had however felt healthy enough to set up work as a manufacturer and contractor in about 1986. The business prospered for a while and then he started to “get crook”. But at the time of his consent to the redemption at the time of the order, he says that he was in good health, although he sometimes contracted what he thought was the ‘flu approximately twice a year. He said that he started to get worse during 1988/89 and was “really crook in 1991” when he could not even get out of bed.
By September 1991, he was unable to work at all, and he said he was getting “crook” more frequently, two or three times a month, and going into a coma. He was suffering from high temperature, with sweats and shivers. He would be “out cold” for 12 to 13 hours at a time. He consulted a Dr Husodo and it became apparent that he had developed a cellulitis and osteomyelitis.
In 1993, the respondent visited Dr Coin for a medical opinion, who advised the respondent to consider an amputation.
In 1994, the respondent sought further advice from another doctor, Dr Sheriff, who referred the respondent to a specialist doctor by the name of Dr De Burgh. In 1994 or early 1995 the respondent consulted Dr De Burgh who advised that exploratory surgery should be performed to consider whether amputation was a potential option. As a result of the exploratory surgery, it was found that the respondent had one artery instead of three running from his knee to his foot. It was further revealed that the respondent had a streptococcus G infection (Red, 3).
Antibiotics began to be unsuccessful in treating the reoccurring bouts of illness. In 1996 a further opinion was sought from Dr Harrington in Newcastle because of repeated problems with septicaemia because of poor skin; the skin grafts broke down and became infected (Combined, 55). Dr Harrington observed that “Basically his leg had been ringbarked from the lower thigh to about a hands length above his ankle”. Dr Harrington referred the respondent back to a plastic surgeon and an immunologist. As a result of these consultations it was determined that there were no other options than amputation to prevent the continuing bouts of illness (Red, 2).
On 15 April 1998 Dr Harrington performed the amputation at the John Hunter Hospital in Newcastle (Red, 2).
“A report from the clinical information department of John Hunter Hospital recorded that the applicant had originally suffered injury on 15 July 1980. the report records that he was admitted to hospital on 14 April 1998 and discharged on 22 April 1998. The report records as “complications”, recurrent septicaemia, chronic osteomyelitis, severe muscle wasting, major nerve damage and poor blood supply in the lower right leg, and that on 15 April 1998 an above knee amputation of the right leg was performed.”
The amputation cured the problems of recurrent infection and septicaemia.
In April 2000 the respondent brought an action in the Compensation Court of NSW seeking to have the orders of the Court of 3 February 1986 reconsidered, pursuant to s17(4) of the Compensation Court Act.
The respondent was examined for the purposes of the trial before Curtis J by the appellant’s doctors, Dr Guest and Dr Bodel. The trial judge records that their evidence was not placed before him and he drew the inference that it would not have advanced the appellant’s case on the issue of causation (Red, 9M).
The trial judge (Red, 9) was
“comfortably satisfied that at the time of commutation, Mr Fitzgerald himself did not envisage that he would at some time in the future suffer the amputation of his injured leg. I am also satisfied that if the test were objective, that there is nothing in the medical opinions then extant which would have raised that possibility. That which caused the amputation was recurrent septicaemia and osteomyelitis. Those conditions were merely latent as at February 1986. The applicant considering his future, knew that he had a leg which was the subject of pain and limitation of movement, but he did not know that there was within his body a latent condition of severe septicaemia or of osteomyelitis which would disable him with recurrent infections and which would eventually result in the amputation of his leg.
The applicant has said that had he known of the future, he would not have consented to the commutation. That evidence stands uncontradicted, and I accept it.”
RESOLUTION OF APPEAL
Before turning to the Grounds of Appeal, it is important that I record the following passage from the trial judge’s reasons as it records the basis upon which the case was argued at trial, and in particular an important concession made by the then counsel for the appellant, Mr Wright.
“5.Given the breadth of the powers, it is convenient to approach the questions raised in this case upon such authority as deals with the circumstances in which it is not appropriate to exercise the power of reconsideration.
6.In Humphreys v The Shell Company of Australia Ltd 1947 WCR 134, His Honour Judge Rainbow held that a redemption would not be set aside where an applicant, in full possession of his senses, properly advised by a competent solicitor and his own doctor, was aware of a cause for possible deterioration in his condition.
7.In Fraser v The Water Board (1993) NSWCCR at 263, His Honour Judge Egan applied the provision of s17 and awarded an increased payment pursuant to s67 in circumstances which, having secured an award, the applicant later suffered a complete lower leg amputation. His Honour said: ‘It is reasonably clear that no medical practitioner envisaged the series of operations the applicant has undergone nor the prospects of a lower leg amputation”.
8.As addresses proceeded, it became apparent to me that it is not so much the principle which is in issue between the parties but the facts of the present case. As a matter of principle, if an adult person properly advised, knows of the possible contingencies relating to his injury and one such contingency eventuates, the redemption may not be set aside. Mr Wright for the respondent agrees that redemptions may be set aside for want of consent or for want of knowledge of a latent condition caused by the original injury.” (Red, 6)

I have earlier recorded the findings of the trial judge, to the effect that first, the respondent himself did not envisage that he would at some time in the future suffer the amputation of his injured leg, and second, that if the test were objective, there was nothing in the medical opinions then extant which would have raised that possibility. While it is true that osteomyelitis was subsequently diagnosed by Dr Bruce (amongst others) and the amputation was caused by recurrent septicaemia and osteomyelitis, the trial judge records specifically that “those conditions were merely latent as at February 1986”. That finding stands in the way of an inference that at the time of the redemption on 3 February 1986, the respondent had osteomyelitis that was otherwise than latent. It is true that his affidavit (read at para 6 Red, 2) appears to leave the position open when he says:
“At or about this time [3 February 1986] I began to get chronic attacks of pain in my leg. On my various consultations with the doctors when this occurred, I was told by my treating orthopaedic surgeon Dr Bruce (amongst others) that I had osteomyelitis. This [sic] bouts of illness would last a few days and would occur approximately twice a year …”
However, in the immediately following para 7 he refers back to “this situation”, saying that it “continued throughout 1990 and until mid 1991”. He goes on to say that the evidence was that it was not until the situation worsened after the redemption, namely, at about the middle of 1991 that “my situation however became a lot more severe and I began to get these bouts of illness more frequently and more severely … as a result of these bouts of illness I was no longer able to uphold a part-time job I had with my parents’ family business …” (Red, 3 affidavit para 7).
There was thus a basis for the trial judge to find, as he did, that the respondent did not know and was reasonable in failing to know, that “there was within his body a latent condition of severe septicaemia of osteomyelitis which would disable him with recurrent infections and which would eventually result in the amputation of his leg”; Red, 9. That inference was strengthened by the absence of any evidence from the appellant’s doctors, Guest and Bodel following their examination of the respondent, as the trial judge properly concluded; Red, 9. The trial judge draws the inference that their evidence “would not advance the [appellant’s] case on the issue of causation”.
I turn now to the specific grounds of appeal including matters pertaining to prejudice to the appellant from the trial judge’s reconsideration by reason of the lapse of time between February 1986 (when the redemption occurred) and March 2000, following which the respondent applied to have it reconsidered. Counsel for the appellant at trial, Mr Wright, was said by the trial judge not to “suggest that the prejudice occasioned by the lack of records in March 2000 was any different to that prejudice suffered, if it be so, which would have been suffered had the applicant in April 1998 made his application”. The trial judge concluded that “I do not believe that delay has operated in the present circumstances so as to deny fairness to the respondent”, having earlier described himself as comfortably accepting the content of the medical opinions (Red, 10L-N), strengthened in doing so by the absence of any evidence from Drs Guest and Bodel.
Mr Hislop QC for the appellant, sought to raise four partially interlinked points. I shall set them out first in summary form:
(a)where there is, as here, an agreement between the parties with the consent of the worker being of full age and without disability and having obtained legal and medical advice to accept redemption of any weekly payment by a payment of a lump sum, where the sum has been determined by the court pursuant to s15, that agreement cannot be affected at all by the power of the court under s17(4) of the Compensation Court Act, citing the decision of the High Court in McIlwraith McEarchern Limited v Sweetman (1930) 44 CLR 116;
(b)the trial judge failed to direct himself to the only question applicable under s17(4), namely the actual decision previously made by Freeman J in reconsidering that matter, but instead wrongly decided the case upon a subjective basis, namely the state of mind of the worker. This was in holding that he was satisfied that “at the time of commutation, Mr Fitzgerald himself did not envisage that he would at some time in the future suffer the amputation of his injured leg” and “if the test were objective, that there is nothing in the medical opinions then extant which would have raised that possibility”. The attack amounted to this, that the trial judge should not have considered the matter by looking at the situation only so far as the respondent was concerned. Rather he should have considered the actual decision of Freeman J by asking whether the redemption figure he awarded was appropriate;
(c)the trial judge failed to apply the more stringent objective test, similar to that applied by the High Court in State of New South Wales v Taylor (2001) 204 CLR 461, namely that
“there was no reasonable cause to believe that further deteriorations might occur, the onus being upon the respondent to satisfy that objective test and as there was sufficient knowledge in the respondent to have caused him to seek medical opinion which may well have put him on notice that there was a risk albeit it may have been a remote risk that the infection could worsen with time and could have serious consequences including the amputation that occurred”
and
(d)appellable error by the trial judge in the exercise of his discretion, given that the application to reconsider was made twenty years after the injury, fourteen years after the redemption and when the respondent first complained about continuing problems for two years after the amputation, so giving rise to prejudice from the fact that the respondent would have disposed of its records (as indeed the trial judge found), relating to the circumstances as they stood in 1986 and in particular precluding the possibility of determining whether the worker’s medical problems since 1990 onwards were caused by the initial injury and whether those problems caused him not to be able to work.
I shall take each of these points of attack in turn, starting with the first, to the effect that s17(4) of the Compensation Court Act is incapable of application to an agreement between worker and employer to accept redemption in lieu of weekly payments, or at any rate where the amount of the redemption has been determined by the court. The respondent’s counsel, Mr King SC, at first sought to take issue with that point being now raised for the first time. But it was accepted that the question was one of law, so no prejudice of the kind in Suttor v Gundowda (1950) 81 CLR 418 would arise.
The essential starting point is that s15 of the Workers’ Compensation Act is directed at protecting the worker when the employer seeks to substitute a lump sum in redemption of any further obligation to make weekly payments. It does so by requiring the court to fix the redemption amount. The safeguard is clearly premised on the consent of the worker being insufficient protection without that. Thus it is expressly provided that agreement by the worker as to redemption shall have no efficacy in exempting the employer from continuing to make weekly payments, unless the sum by way of redemption is “determined by the court”; see ss15(1), (1A) and (2). That court determination is therefore an essential integer of the efficacy of any such redemption agreement. Indeed consent or agreement of the worker may be dispensed with if, in the opinion of the court, the worker is unable, by reason of infirmity of mind or body, properly to consent or agree to the redemption and the redemption would be in the best interests of the worker; see s15(1B). That again emphasises the paramount character of the court’s determination.
One could not envisage an agreement of the kind here involved being other than effectively conditional upon the court so determining the sum. This must be so whether the agreement was so expressed or not, since no such agreement would be effective to exempt the employer from the continuing liability to make weekly payments “unless such sum has been determined by the court in accordance with this Act”; s15(2) mandates that result.
I turn now to s17 of the Compensation Court Act and the expansive discretion it confers, a discretion virtually without limit. It was exercised to rescind the previous decision determining the redemption amount. That rescission necessarily removed an essential integer to the efficacy of the redemption agreement. There is nothing in the decision in McIlwraith McEarchern Limited v Sweetman (1930) 44 CLR 118 which stands in the way of that conclusion. Importantly, in McIlwraith McEarchern the High Court was not dealing with s17 or its predecessor but rather with the power of review of weekly payments conferred by s60 of the Workers’ Compensation legislation of 1926. An agreement operating in those circumstances operates in a very difference context from the present. I would not accept that s17(4) can set aside the original court order upon which any agreement depended, yet leave the agreement still valid and intact. I should add that there is nothing in the terms of s17(4) that would preclude rescission ab initio.
I turn now to the second point of attack, namely that, stripped to its essentials, the trial judge was in error in failing to reconsider specifically the determination of $110,000, as required by s17(4). Instead the trial judge focussed upon the respondent’s lack of ability to foresee the amputation. That attack was said not to depend on whether or not the respondent would satisfy the correct objective test in terms of the reasonableness of his inability to foresee amputation in the circumstances. (That indeed is the third point of attack.)
To this second point of attack, the respondent contended that not only was this not a matter raised at trial but was a matter of specific concession by Mr Wright, counsel for the appellant. He, as the trial judge records, agreed that a redemption may be set aside for want of consent or for want of knowledge of a latent condition caused by the original injury; Red, 6. But even if that were not a correct recording of any concession made by Mr Wright in that regard, the respondent presses that had the point been taken at trial (and it was not) there would have been ample evidence available to the respondent to show that the sum of $110,000 was insufficient in relation to the injury culminating in the amputation. The respondent relies on Suttor v Gundowda (supra) contending that the way the case was conducted at trial denied any opportunity to raise that evidence on what was not a pure question of law but of fact.
To this the appellant responded by essentially arguing that while the matter had not been raised at trial, the respondent nonetheless bore the onus of satisfying the jurisdictional requirement of s17. The respondent should have directed the court’s attention to the essential requirement that it is the decision to determine $110,000 which was alone the subject of any rescission. That was the “matter” which had been dealt with by the court when Freeman J made his determination of the lump sum to be substituted for the weekly payments.
However, I consider that the trial judge was fully entitled to concentrate on the substantive matter that underlay that decision, namely whether there was a proper basis for the way the redemption amount was determined, once subsequent events leading to the amputation are taken into account. These were, according to the trial judge, both unforeseen and unforeseeable. He concluded, in the exercise of his wide discretion, that they justified rescinding the decision to award $110,000. Moreover, whether Mr Wright for the respondent expressly or by implication only, conceded that the redemption may be set aside for want of knowledge of a latent condition caused by the original injury, I am satisfied that this was how the trial was conducted. I do not consider that there was any basis upon which it could reasonably be said that the $110,000, with interest from the time of its award, would be likely to exceed the amount of continuing weekly payments which the respondent would seek in further proceedings, should the trial judge’s determination stand. Accordingly, I consider that this second point of attack must fail.
The third point of attack is that the trial judge either applied a solely subjective test or at any rate a test which, in its consideration of the objective requirement for foreseeability of the amputation, should have applied the High Court’s more stringent test in State of New South Wales v Taylor (supra). That test was applied in construing what was said to be an analogous provision, s151A(5) of the Workers’ Compensation Act 1987.
That test as articulated in the majority judgment of Gleeson CJ, McHugh and Hayne JJ was to the effect that s151A(5)(c) required the court to determine as an objective fact whether it would not be unreasonable for a person to believe, on the whole of the evidence concerning the applicant’s condition at the time of election, that the further deterioration would occur; see joint judgment [10] to [15].
Importantly though, s151A(5)(c) does specifically provide, in the active voice, that “at the time of the election, there was no reasonable cause to believe that the further deterioration would occur …”. Only then does the statute permit vacation of an earlier election to pursue common law damages.
It will be readily apparent that there are no equivalent words in s17 of the Compensation Court Act 1984. Moreover, the findings of the trial judge were clear. He not only found that on the medical evidence the respondent did not foresee that an amputation would occur when agreeing to the redemption amount. The trial judge also expressly concluded that if the test were objective, there was nothing in the medical opinions then extant which would have raised that possibility. I consider that finding was properly open on the evidence, and suffices to permit the trial judge to rescind the determination by Freeman J, without substituting a different and more stringent objective test from another statutory context. Indeed based on the evidence before the trial judge, were such more stringent test applied, one would have expected the same result.
I conclude that this point of attack must fail.
I turn finally to the fourth and last point of attack, namely, that the trial judge’s discretion miscarried, taking into account the extensive delay to which I have earlier made reference.
Here, the appellant invokes the judgment of McHugh J in Brisbane South Regional Health Authority v Taylor [1996-97] 186 CLR 541 at 552-3 in relation to applications to extend a limitation period. In referring to the effect of delay on the quality of justice, McHugh J pointed out that though this is one of the most important influences motivating a legislature to enact limitation periods for commencing actions, it is not the only one. Thus:
“Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even “cruel”, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period. …..
……The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible.” [at 552-3 omitting footnotes]
It is not self-evident in the context of a statute which here emphasises that “a decision of the court in any matter shall be upon the real merits and justice of the case” that the factors applicable to extending a limitation period necessarily apply in their full force. This is particularly when liability is not in issue but only the quantum of compensation. Moreover, this is a case where one is not dealing with an action brought by the claimant for compensation (compare s151A(5)(c) directed at permitting common law proceedings notwithstanding an earlier election). Rather it is an action brought by the employer to close off further compensation by a lump sum payment. There s15 clearly has a purpose protective of the worker. In those circumstances, that protective character of s15 of the Workers’ Compensation Act also operates very differently from a limitation statute, where the worker, as here, had latent conditions which led to a far more adverse outcome than foreseen or reasonably foreseeable.
Thus while prejudice may be a factor properly to be taken into account, it does not, in my judgment, carry the weight which it might carry in a limitation context. Moreover, the prejudice here was really in the nature of a presumptive prejudice from the lack of medical records in the fourteen years since 1986. Significantly, neither Dr Guest nor Dr Bodel gave any evidence to the effect that “we can’t express a view on this because of the lack of medical records and the lapse of time”. Had such evidence been forthcoming, it no doubt would have assisted the appellant in demonstrating prejudice. But no evidence from Drs Guest and Bodel was forthcoming at all.
There is cogent evidence, which the trial judge accepted, demonstrating how the original accident led to the eventual amputation. Though the appellant purported to challenge this only in the context of discretionary factors, I do not consider that there was any basis for doing so.
Reference was also made to the difficulty of ascertaining the capacity of the respondent to find employment. But again this could only amount to presumptive prejudice as no concrete demonstration was made of how that difficulty operated in the present case. In any event, any order that would be made would credit the $110,000 with interest paid, against an ongoing obligation to make weekly payments, assuming that the respondent were successful in further proceedings to that end.
I consider that the fourth ground based upon discretionary matters, does not avail the appellant either. The determination of the trial judge in the present case in no way gives rise to any of the recognised bases for appellable interference in the exercise of the trial judge’s discretion by demonstrating appellable error in that exercise; House v the King (1936) 55 CLR 499 at 503.
OVERALL CONCLUSION AND ORDERS
I consider that the appeal fails and propose orders as follows:
(1) The appeal be dismissed.
(2) The appellant pay the respondent’s costs of this appeal.
IPP JA: I agree with Santow JA.

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LAST UPDATED: 25/11/2003

[2003] NSWCA 345

25 November 2003