Ilievska-Dieva v SGIO Insurance Ltd
[2000] WASCA 161
•9 JUNE 2000
ILIEVSKA-DIEVA -v- SGIO INSURANCE LTD [2000] WASCA 161
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASCA 161 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:187/1998 | 8 NOVEMBER 1999 | |
| Coram: | KENNEDY J WALLWORK J MURRAY J | 9/06/00 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Appeals allowed Order striking out claims set aside | ||
| PDF Version |
| Parties: | ILINKA ILIEVSKA-DIEVA SGIO INSURANCE LTD GARY WAYNE VELENSKI |
Catchwords: | Workers' compensation Delay by insurer in paying compensation Claims by workers for economic and non-economic loss Claims struck out by Magistrate Whether claims arguable Procedure Application to strike out claims Whether claims for economic and non-economic loss untenable |
Legislation: | Workers' Compensation & Rehabilitation Act 1981 (WA), s 57A(1), s 57A(2), s 57A(3), s 74(1) |
Case References: | Caltex Oil (Aust) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Gibson v Parkes District Hospital (1991) Aust Torts Rep 81-140 Gimson v Victorian Work Cover Authority (1995) 1 VR 209 Hill v Van Erp (1997) 188 CLR 159 Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986 Lendlease Insurance Ltd v Glenmont Investments Pty Ltd [1999] SASC 171 Perre v Apand Pty Ltd (1999) 164 ALR 606 Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1987] 2 All ER 923; [1990] 1 QB 665; [1991] 2AC 249 Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198 Bryan v Maloney (1995) 182 CLR 609 Claremont Petroleum NL v Cummings (1992) 110 ALR 239 Consolidated Press Holdings Ltd v Wheeler (1992) 109 FLR 241 Coshott Woollahra Municipal Council (1988) 14 NSWLR 675 Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 Durrough v Bank of Melbourne Ltd (1995) 8 ANZ Insurance Cases 61-290 Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295 Foley v Interactive Data Corporation 765P 2d 373 (1988) Glover-Jackson v G & M Construction Pty Ltd, unreported; FCt SCt of WA; Library No 930231; 22 March 1993 Grassby v The Queen (1989) 168 CLR 1 Grimwade v State of Victoria (1997) 90 A Crim R 526 Hungerfords v Walker (1989) 171 CLR 125 Jones v Department of Employment [1989] QB 1 Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 117 ALR 393 Travelers Insurance Company v Savio 706P 2d 1258 (1985) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : ILIEVSKA-DIEVA -v- SGIO INSURANCE LTD [2000] WASCA 161 CORAM : KENNEDY J
- WALLWORK J
MURRAY J
- Appellant
AND
SGIO INSURANCE LTD
- Respondent
- Appellant
AND
SGIO INSURANCE LTD
- Respondent
(Page 2)
Catchwords:
Workers' compensation - Delay by insurer in paying compensation - Claims by workers for economic and non-economic loss - Claims struck out by Magistrate - Whether claims arguable
Procedure - Application to strike out claims - Whether claims for economic and non-economic loss untenable
Legislation:
Workers' Compensation & Rehabilitation Act 1981 (WA), s 57A(1), s 57A(2), s 57A(3), s 74(1)
Result:
Appeals allowed
Order striking out claims set aside
Representation:
FUL 187 of 1998
Counsel:
Appellant : Mr D R Clyne & Mr B L Nugawela
Respondent : Mr C J L Pullin QC & Mr E M Corboy
Solicitors:
Appellant : Friedman Lurie Singh
Respondent : McAuliffe Schwikkard
FUL 188 of 1998
Counsel:
Appellant : Mr D R Clyne & Mr B L Nugawela
Respondent : Mr C J L Pullin QC & Mr E M Corboy
Solicitors:
Appellant : Friedman Lurie Singh
(Page 3)
- Respondent : McAuliffe Schwikkard
Case(s) referred to in judgment(s):
Caltex Oil (Aust) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529
Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Gibson v Parkes District Hospital (1991) Aust Torts Rep 81-140
Gimson v Victorian Work Cover Authority (1995) 1 VR 209
Hill v Van Erp (1997) 188 CLR 159
Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986
Lendlease Insurance Ltd v Glenmont Investments Pty Ltd [1999] SASC 171
Perre v Apand Pty Ltd (1999) 164 ALR 606
Case(s) also cited:
Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1987] 2 All ER 923; [1990] 1 QB 665; [1991] 2AC 249
Beverley v Tyndall Life Insurance Co Ltd [1999] WASCA 198
Bryan v Maloney (1995) 182 CLR 609
Claremont Petroleum NL v Cummings (1992) 110 ALR 239
Consolidated Press Holdings Ltd v Wheeler (1992) 109 FLR 241
Coshott Woollahra Municipal Council (1988) 14 NSWLR 675
Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234
Durrough v Bank of Melbourne Ltd (1995) 8 ANZ Insurance Cases 61-290
Downsview Nominees Ltd v First City Corp Ltd [1993] AC 295
Foley v Interactive Data Corporation 765P 2d 373 (1988)
Glover-Jackson v G & M Construction Pty Ltd, unreported; FCt SCt of WA; Library No 930231; 22 March 1993
Grassby v The Queen (1989) 168 CLR 1
Grimwade v State of Victoria (1997) 90 A Crim R 526
Hungerfords v Walker (1989) 171 CLR 125
Jones v Department of Employment [1989] QB 1
Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 117 ALR 393
Travelers Insurance Company v Savio 706P 2d 1258 (1985)
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1 KENNEDY J: I have had the advantage of reading in draft the reasons to be published by Wallwork and Murray JJ. Generally for the reasons which their Honours give, I have reached the conclusion that these appeals should be allowed and that the orders of the Local Court striking out the appellants' claims should be set aside. In my opinion, the respondents should not be deprived of the opportunity of having their claims determined by the appointed tribunal after the facts have been established - see generally General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, at 130.
2 It is to be noted that s 86 of the Workers' Compensation and Rehabilitation Act 1981 provides that nothing in the Act, except as expressly provided by it, affects any liability that exists independently of the Act, and I do not consider that, if the claims are sustainable, the terms of the Act affect the jurisdiction of the Local Court to adjudicate on it. The appellants' entitlement to workers' compensation is not in issue. What is in issue is their causes of action at common law against their employers' insurer, arising out of its delay in making weekly payments. I do not consider that the claims are properly to be regarded as disputes "in connection with a claim for compensation" in terms of the definition of "dispute" so as to require the proceedings to be brought under Pt IIIA of the Act.
3 WALLWORK J: These two appeals being that of Ilievska-Dieva (Ful 187 of 1998) and Velenski (Ful 188 of 1998) both raise the same issues and can conveniently be dealt with together. They both arise from successful applications by the respondent to have the appellants' (then plaintiffs) summons struck out in the Local Court at Perth.
4 Both appellants had claimed in the Local Court that they were entitled to damages for loss (including economic loss), allegedly brought about as a result of the respondent's delay in authorising payments to them in discharge of their entitlement to worker's compensation payments. The alleged delay of the respondent was said to have constituted breaches of the provisions of the Workers Compensation & Rehabilitation Act 1981 (WA) ("the Act") and/or breach of a duty of care owed by the respondent to the appellants. In the case of the appellant Velenski, the breach was said to have been a breach of s 57A(3) of the Act and in the case of the appellant Ilievska-Dieva, the breach was said to have been a breach of s 74(1) of the Act.
5 In both cases the learned Magistrate decided that the law in Australia did not recognise a duty of care owed by the respondent to the appellants
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- in the circumstances of their cases or in the alternative a duty of good faith and further that the Local Court did not have jurisdiction to determine such matters.
6 It is conceded by the appellants that the learned Magistrate applied the correct legal criteria concerning strike out applications when she applied the principles which are set out in Seaman: Civil Procedure Western Australia at 20.19.6. Those principles were summarised in Kimberley Downs Pty Ltd v Western Australia, unreported; SCt of WA; Library No 6414; 25 August 1986 and include that claims should only be struck out which are not really arguable; further that a court at first instance should be careful not to risk stifling the development of the law by summarily rejecting a claim where there is a reasonable possibility that, as the law develops, it will be found that a cause of action will lie. The learned Magistrate also referred to the principles discussed by Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 - 130.
7 Following the successful strike-out applications, the appellants appealed to a Judge of the District Court. On 4 November 1998, after the hearing of an application, a Judge of this Court ordered that the appeals be removed for consideration to this Court.
8 Counsel for the appellants and the respondent agreed at the hearing of these appeals that for the purposes of the appeals the facts could be presumed to be those which are set out in the submissions received by the Court with respect to each appellant.
9 With respect to the appellant, Ilievska-Dieva (for convenience called the first appellant), the presumed facts are that she was 39 years old at the time of a work accident on 8 February 1995. Whilst packing chicken pieces at a factory process line, a stack of crates fell on her. The first appellant returned to work with the same employer in October 1995. She worked for approximately a further year before she suffered a recurrence of her original disability. At the time of the recurrence in October 1996 the first appellant was 41 years of age. She has remained off work ever since.
10 The first appellant migrated to Australia from Macedonia in 1988. She does not speak English and requires the assistance of friends or family to translate for her. The company QBE Insurance was at risk for the original disability and the respondent was at risk for the recurrence in October 1996. The first appellant received her worker's compensation payments in respect of the original disability. After the recurrence in
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- October 1996, QBE and the respondent disputed which company was liable to indemnify the first appellant's employer in respect of the payments to be made for the recurrence. While this dispute was in existence and for approximately 2.5 months, the first appellant's worker's compensation payments were withheld in breach of the respondent's obligations pursuant to s 74 of the Act. The first appellant consulted her Union representative who brought an application to the Directorate for an immediate payment of the first appellant's worker's compensation entitlements. The application was dated 5 December 1996. It was resolved by conciliation at the Directorate on 5 January 1997 and the respondent agreed to pay the first appellant all her worker's compensation entitlements. By that time a hire purchase company had repossessed and sold the first appellant's car. In May 1997 the first appellant sought legal advice in relation to a common law claim for damages against her employer. She is an unskilled worker with no formal education and with little or no grasp of the English language. The first appellant was still repaying a debt of approximately $5600 arising from the repossession of her car at the time she commenced action in the Local Court.
11 With respect to the second appellant the presumed facts are that he was 32 years of age at the time of his work accident on 21 January 1996. Whilst working as a bogger operator at a mine site in Western Australia he injured his back. He claimed weekly payments of compensation. His employer made a claim against the respondent to be indemnified for worker's compensation payments, in accordance with s 57A(1) and s 57A(2) of the Act. At February 1996 he had not received his worker's compensation payments and his creditors were pressing him. A finance company was requesting payments arising from a hire purchase agreement for the purchase of a motor vehicle. The second appellant paid as much as he could but by March 1996 he had fallen significantly into arrears. He made numerous telephone calls to the finance company asking for leniency and advising that the respondent had advised him that weekly compensation payments would be commencing soon. He made telephone calls to the respondent on 1 February 1996, 2 February 1996, 12 March 1996, 15 March 1996, 17 March 1996, 24 March 1996, 25 March 1996, 26 March 1996, 27 March 1996, 1 April 1996, 4 April 1996, 9 April 1996, 11 April 1996 and 16 April 1996 asking it to speed up the payment of his worker's compensation. He informed the respondent of his increasing difficulties with the finance company. On 15 March 1996 the respondent advised the second appellant that the only hold up in commencing worker's compensation payments was that the respondent was waiting for the employer to forward some documents to it by facsimile. The second
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- appellant's motor vehicle was repossessed and sold at the end of March 1996, allegedly at an undervalue. The second appellant was sued by the finance company in the Local Court for the balance allegedly owing to it under the hire purchase agreement, being approximately $11,500 plus pre-judgment interest. The second appellant's worker's compensation payments were finally received in mid April 1996 when he was back-paid to 21 January 1996. The second appellant was unaware of his legal rights and relied upon representations and assurances of the respondent during the numerous telephone conversations referred to above. He chose not to seek legal advice or representation. He sought legal representation in May 1997 in respect of the repossession of the motor vehicle.
12 It is noted that at the time the reasons of the learned Magistrate were delivered on 23 January 1998, the judgment of the High Court in Perre v Apand Pty Ltd (1999) 164 ALR 606 had not been given. The reasons for that decision were published on 12 August 1999. The question of whether or not the cases of the two appellants were arguable must now be considered in the light of the reasons in Perre.
13 It is apparent from the reasons for judgment in Perre that the law with respect to claims for "pure economic loss", which is not associated with injury to the person or property, is still very unclear.
14 In Perre at 611 [12], Gleeson CJ said that he agreed with the reasons of Gummow J for concluding that in that case the respondent had owed the appellants a duty of care.
15 Gummow J in his reasons at 653 [179] said:
"… what often are identified as the 'economic torts' provide many examples to support the proposition that Cattle v Stockton Waterworks Co (1875) Law Rep 10 QB 453 cannot be taken as establishing any rule against recovery in tort of economic or financial loss unless it be consequential upon damage to the person or property of the plaintiff … Here of course the law is still taking shape."
16 Gummow J said that it needed to be kept in mind, particularly for that case, that the relevant criterion is "reasonable foreseeability". Liability can be imposed for consequences which, judged by the standard of the reasonable man, ought to have been foreseen. His Honour said that in determining whether the relationship between persons is so close that a duty of care arises, attention is to be paid to the connection between the parties. There is no simple formula which can mask the necessity for
(Page 8)
- examination of the particular facts. His Honour approved of the approach taken by Stephen J in the Caltex Oil decision, where Stephen J isolated a number of "salient" features which combined to constitute a sufficiently close relationship to give rise to a duty of care owed by Caltex for breach of which it might recover its purely economic loss. Gummow J said that the appellants in Perre had been brought into such a close relationship with Apand as to give rise to a duty of care by Apand and said that the standard of care was what was reasonable in the circumstances.
17 Gaudron J said in Perre that the law as to liability for economic loss "has not yet developed to a stage where there has been enunciated a governing principle applicable in all cases." Her Honour noted that the law of tort already protects contractual rights from intentional interference and said that it is in the area of legal rights that there is to be discerned a second discrete category of liability for pure economic loss. Her Honour said, at 617 [38]:
"Where a person is in a position to control the exercise or enjoyment by another of a legal right, that position of control and by corollary, the other's dependence on the person with control are, in my view, special factors, or which is the same thing, give rise to a special relationship of 'proximity' or 'neighbourhood' such that the law will impose liability upon the person with control if his or her negligent act or omission results in the loss or impairment of that right and is, thereby, productive of economic loss."
18 Her Honour also said, at 618 [42]:
"In my view, where a person knows or ought to know that his or her acts or omissions may cause the loss or impairment of legal rights possessed, enjoyed or exercised by another, whether as an individual or as a member of a class, and that that latter person is in no position to protect his or her own interests, there is a relationship such that the law should impose a duty of care on the former to take reasonable steps to avoid a foreseeable risk of economic loss resulting from the loss or impairment of those rights."
19 In the same case, McHugh J was of the opinion that the Federal Court had erred in not finding that Apand had a duty to take reasonable care to protect the Perres from economic loss and in not finding that Apand had breached that duty by supplying seed through a selling agent
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- to the Sparnons who were third parties. His Honour found that the losses suffered by the Perres were a reasonably foreseeable consequence of Apand's conduct in supplying the diseased seed. Further that the Perres were members of a class whose members, whether numerous or not, were ascertainable by Apand. His Honour said that the Perres' business was vulnerably exposed to Apand's conduct, because the Perres were not in a position to protect themselves against the effects of Apand's negligence, apart from insurance which was not a relevant factor. His Honour said that imposing the duty on Apand, did not expose it to indeterminate liability, although its liability might be large. That imposing the duty did not unreasonably interfere with Apand's commercial freedom because Apand was already under a duty to the Sparnons to take reasonable care and it knew of the risk to potato growers and the consequences of that risk occurring.
20 In the present case it was said by counsel for the appellants that there was no provision in the Act for the appellants to obtain interest or damages for the late payment of their compensation. He noted that the situation was different in some other States, where interest and other remedies were available to an employee who had not received his or her payments of compensation on time.
21 In the Perre decision, at 622 [66], McHugh J said:
"A defendant only breaches a duty of care when it both knows or ought to know of a risk of harm from doing or failing to do an act and does or fails to do that act and has reasonable means available to it of avoiding that harm."
22 The appellants in this case contend that the respondent knew, or ought to have known of the risk of harm to them when it failed to make the compulsory worker's compensation payments on time. It had failed to make the payments and it had had reasonable means available to it of avoiding the harm.
23 In Perre McHugh J said that in determining whether a defendant owes a duty to care to the plaintiff, the ultimate issue is always whether the defendant in pursuing a course of conduct which caused injury to the plaintiff, or failing to pursue a course of conduct which would have prevented injury to the plaintiff, should have had the interests of the plaintiff in contemplation before he or she pursued or failed to pursue that course of conduct. His Honour said:
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- "That issue applies whether the damage suffered is injury to person or tangible property or pure economic loss. If the defendant should have had those interests in mind, the law will impose a duty of care."
24 His Honour said, at 632 [104] and [105]:
"What is likely to be decisive and always of relevance in determining whether a duty of care is owed is the answer to the question, 'How vulnerable was the plaintiff to incurring loss by reason of the defendant's conduct?' So also is the actual knowledge of the defendant concerning that risk and its magnitude. If no question of indeterminate liability is present and the defendant, having no legitimate interest to pursue, is aware that his or her conduct will cause economic loss to persons who are not easily able to protect themselves against that loss, it seems to accord with current community standards in most, if not all, cases to require the defendant to have the interests of those persons in mind before he or she embarks on that conduct. The principles concerned with reasonable foreseeability of loss, indeterminacy of liability, autonomy of the individual, vulnerability to risk and the defendant's knowledge of the risk and its magnitude are, I think, relevant in determining whether a duty exists in all cases of liability for pure economic loss."
25 McHugh J noted that the concern about indeterminacy most frequently arises where the defendant cannot determine how many claims might be brought against it, or what the general nature of them might be. His Honour also said that indeterminacy depends upon what the defendants knew, or ought to have known, of the number of claimants and the nature of their likely claims, not the number or size of those claims.
26 In the present cases, in my view, indeterminacy does not present a problem.
27 When referring to the Caltex Oil (Aust) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 decision, McHugh J said, at 635 [113]:
"The risk of loss to Caltex was reasonably foreseeable; no question of indeterminate liability arose; the defendant's freedom of action was not impaired by imposing a duty because it already owed a duty to the owner of the pipelines; Caltex
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- could not readily avoid the risk of incurring the relevant expenses; and the defendant 'must be taken to have known that carelessness in those operations causing injury to the pipelines, would affect Caltex in precisely the way it did."
28 His Honour noted that the vulnerability of the plaintiff to harm from the defendant's conduct is ordinarily a prerequisite to imposing a duty.
29 McHugh J said that the degree and nature of vulnerability sufficient to found a duty of care will no doubt vary from category to category and from case to case. Although each category will have to formulate a particular standard, the ultimate question will be one of fact. He also said that the decided cases have recognised that knowledge, actual or constructive, of the defendant that its act will harm the plaintiff is virtually a prerequisite of a duty of care in cases of pure economic loss. Also that: "Conversely, where the defendant is not legitimately protecting or pursuing its own interests, current community standards would also seem to require that the knowledge of a defendant that its actions are likely to harm the interests of an ascertainable class of persons is a factor weighing in favour of imposing a duty."
30 It was conceded for the respondent that s 57A of the Act was designed to prevent delay occurring in the payment of workers' compensation. Section 57A deals with the situation where disputes might exist between the employer and the insurance company. However it was contended that the Act was an elaborate piece of legislation which governs conflicting rights and duties between persons following an injury at work. It was said for the respondent that there were remedies in the Act for any delays and that there were consequences to employers and insurers for failing to do things within certain times.
31 The appellants' answer to that proposition was that there was no real remedy available to workers other than the enforcement of their right to the payments. The appellants in this case had been gravely prejudiced by not receiving their lawful entitlements and they did not have a remedy for that. It did not matter whether the employer could be fined or ordered to make the payments, the damage had been done. There was nothing in the Act to give the appellants a remedy for that damage. The enforcement provisions under the Act were only to ensure that compensation was eventually paid.
32 The provisions of the Act reveal that there is an obligation on the employer to pay compensation promptly and it is the failure of the
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- respondent to do that which is said to ground, or partly ground, the claims of the appellants.
33 It was submitted for the respondent that in any event there was no jurisdiction in the Local Court to deal with claims such as those made by the appellants, due to the fact that the only available procedures to a worker were in the Act itself.
34 The dispute resolution sections in the Act do not provide for compensation for a worker in the circumstances alleged by the appellants in these cases. Although the word "dispute" is defined in the Act in a manner wide enough to include the present claims, there is no provision in the Act which specifically provides for or prohibits the type of claims which are made by the appellants in this case.
35 Although the contentions, or some of them, which were made by the respondent may be correct and ultimately decided in their favour, the question in these appeals is not whether the respondent will ultimately win, but rather whether the appellants have arguable cases which they should be allowed to argue in the Local Court. It may be conceded as the respondents suggest, that the Act does not create a contractual relationship between a worker and the employer's liability insurer, but that is not the end of the matter as is revealed by the reasoning in Perre.
36 The respondent further relies on the reasoning of McDonald J in Gimson v Victorian Work Cover Authority (1995) 1 VR 209 as support for its stand. However, that decision was decided prior to Perre which has thrown new light on the matters in issue.
37 The respondent contended that as long as a person is legitimately protecting or pursuing his or her social or business interests, the common law will not require that person to be concerned with the effect of his or her conduct on the economic interests of other persons. A question in these cases could be whether the respondent was legitimately protecting or pursuing its social or business interests.
38 It was contended for the respondent that the duty of care for which the appellants contend, entirely fails to recognise the divergent interests of workers and insurers created by the Act and the potentially adversarial nature of their relationship. On the other hand it was contended for the appellants that the respondent knew it was liable to make the relevant payments and has since admitted liability, but for no good reason delayed in making the payments.
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39 It is obvious from a reading of the reasons for judgment in Perre, that the state of the law concerning tortious claims for pure economic loss is still undergoing development.
40 In my view in all the circumstances of these cases, it could not be said that the appellants did not have arguable cases. The appeals should therefore be allowed, the orders striking out the claims should be set aside and the matters returned to the Local Court for further consideration.
41 MURRAY J: I have been fortunate in this case to have had access to a draft of the reasons published by Wallwork J. They enable me to shorten my reasons considerably. In particular, I need not canvass what are to be taken as the background facts of the cases which the respective appellants wish to pursue before the Local Court. I respectfully agree with Wallwork J that both appeals should be allowed, the orders made by the learned Magistrate striking out their claims as disclosing no cause of action should be set aside, and the matters remitted to the Local Court to be further dealt with according to law.
42 I wish to add only a few observations of my own. The appellants' summonses in the Local Court at Perth were both issued on 9 May 1997. It seems to have taken an inordinate time for these matters to have progressed to the point where, in thoughtful reasons delivered by the learned Magistrate on 23 January 1998, the claims were struck out. A further considerable period, including the process by which the appeals originally taken from her Worship's decision were transferred from the District Court to the Full Court, has been consumed by the appeal process. The appellants would presumably wish to obtain some resolution of their claims one way or the other with somewhat greater expedition henceforth.
43 According to the particulars of claim endorsed on the summons in each case, each appellant's claim is for general damages for loss, including but not limited to economic loss, brought about as a result of the respondent's delay in authorising payments in discharge of the appellants' entitlement to workers' compensation as a result of incapacity for work which arose out of disabilities suffered by the appellants, so it is alleged, in the course of their employment by companies insured by the respondent. In each case the delay is said to constitute a breach by the respondent of a nominated provision of the Workers' Compensation and Rehabilitation Act 1981 (WA) and/or a breach of a duty of care owed by the respondent to the appellant.
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44 In the case of Ms Elievska-Dieva the section of the Act which is nominated is s 74(1) and Wallwork J has described how that is said to have come about. She is said on 22 October 1996 to have suffered a recurrence of a disability originally suffered in an accident at work on 8 February 1995. The employer's insurer at the time of the original accident was not the respondent. It paid her weekly payments. After the accident in October 1996, that insurer and the respondent fell into a dispute as to which company was liable to indemnify the employer. While they argued about that, weekly payments of compensation were not made by the respondent. By the time it was agreed that they should be made, the appellant's motor vehicle had been repossessed, she was required to pay the balance owing on the hire purchase contract, and she was said to have suffered concern and emotional distress exacerbated by her situation as an unskilled worker with no formal education and little facility in English.
45 Section 74(1) of the Act simply provides that where such a dispute between insurers arises, the insurer of the employer at the time of the last disability or recurrence is liable to indemnify the employer until a dispute resolution body has determined otherwise, in proceedings which may be instituted by an employer or insurer, but not, of course, by the worker, the Act being so structured that a worker entitled to weekly payments of compensation should suffer no temporary deprivation of those entitlements while a dispute between employers or insurers is determined.
46 In Mr Velenski's case the provision of the Act nominated in the particulars of claim is s 57A(3) and again Wallwork J has explained how that section is said to be breached. When Mr Velenski suffered an accident at work on 21 January 1996, he claimed workers' compensation. It is said that there can be no question as to his entitlement to compensation. Section 57A(2) of the Act then requires the employer to make a timely claim under his policy of insurance. That was done. Section 57A(3) allows 14 days after the making of that claim for the insurer to accept liability, to dispute liability or to say that it can not make a decision within the time allowed. It is said that no such action was taken. In fact, no payments of weekly compensation were made until mid-April 1996, when arrears to the date of the accident on 21 January 1996 were also paid.
47 In the meantime the appellant, who, it is said, was unaware of his rights, did not seek legal assistance. Instead, he made numerous telephone calls to the respondent telling it of his financial difficulties which, again, ultimately involved his incapacity to meet hire purchase
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- payments in respect of his motor car to such an extent that the vehicle was repossessed and sold, allegedly at less than its true value. Again, Mr Velenski has been required to pay the balance of the monies owing under the hire purchase agreement, apparently a sum in excess of $11,500. But again it is said that his damages should not be limited to a claim for pure economic loss and it would be contended that Mr Velenski also, by reason of his vulnerability and inexperience and his attempts to resolve the matter unaided, suffered stress and emotional harm.
48 Again, s 57A is so structured that unless action is taken to dispute a worker's entitlement to compensation, he is taken to be entitled to it and the section is generally concerned with disputes between the employer and the insurer. Under s 58 the worker may make an application to the directorate if payment is not received within the periods allowed by s 57A. Mr Velenski did not take that course, but I think that would not prevent him from pursuing a cause of action in negligence if that was otherwise open.
49 The Act is certainly not so structured as to enable a worker to recover against his or her employer or the employer's insurer consequential losses sustained as a result of breaches of the statute; nor is there even an opportunity to recover interest in respect of payments which are delayed. Nor does the Act create any statutory liability by the insurer to the worker, but the references to breaches of the Act should not, I think, be taken as allegations of breach of statutory duty, but as assertions in support of the contention that the respondent was not simply acting in the legitimate pursuit of its own interests viz-a-viz the insured employers, and as an allegation in support of the general claim of liability in tort.
50 That claim, as has been seen, is in each case formulated as an allegation of a breach of a duty of care which may be said to be a duty owed by the insurer to the worker, in a case where the worker's entitlement is plain or undisputed, to use reasonable care to avoid causing personal harm and unnecessary uneconomic loss by delaying the payment of compensation. For the appellants it is said that it would be open to allege, although that has not yet been done, that the respondent owed each appellant a duty to deal fairly and in good faith with the appellant in processing his or her claim for weekly payments and the insurance cover of the employer's liability in that regard. It would be alleged that the respondent would incur tortious liability if it acted in bad faith in causing the weekly payments to be delayed. However, the principal claim is said to lie in negligence.
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51 There is little authority directly in point in respect to the question whether either such claim is arguably maintainable in the circumstances of these cases. Such claims were held to be arguably maintainable by Badgery-Parker J in the Supreme Court of NSW in Gibson v Parkes District Hospital (1991) Aust Torts Rep 81-140. On the other hand, again in somewhat similar circumstances, McDonald J held in Gimson v Victorian Work Cover Authority (1995) 1 VR 209 that in the circumstances of that case, and having regard to the particular statutory provisions which were relevant (which did as the appellants point out provide for the payment of interest and for penalty payments where payments were made late in breach of the Act), there was no basis in law for the allegation of the alleged tort of breach of good faith or the claim for breach of duty of care. As to the suggested tort of breach of good faith, his Honour declined to follow the reasoning of Badgery-Parker J in Gibson.
52 Finally, in Lendlease Insurance Ltd v Glenmont Investments Pty Ltd [1999] SASC 171 (28 April 1999), the Full Court of SA was unanimously of the view that an insurer owed no common law duty of care for damage caused by failing to admit a claim promptly after notification in a case where there was a dispute as to whether the insurer would indemnify the claimants. The appellants point out that such a view is undoubtedly correct where the insurer is legitimately pursuing an interest to determine whether it is liable to indemnify the insured under the policy, but equally they point out, that is not these cases. In addition, they refer to the obiter observation of Debelle J, the only member of the court to make such an observation, at [56]:
"However, as at present advised, I am not prepared to say that under no circumstances could a duty of care arise as between an insurer and a third party who has made a claim against the insured. It is possible to envisage circumstances in which the insurer may act in such a way as to give rise to such a degree of proximity which will result in a duty of care to the third party."
53 I would propose to put to one side the suggested claim for damages for personal injury in the way of emotional distress or harm in each case because there it may be that the argument in favour of permitting the claims to be pursued would be stronger. If one looks at the claim for economic loss, then I think it must be noted, as Wallwork J has observed, that the law would appear to be in a state of development, leading to the well accepted care which needs to be taken not to summarily dispose of litigation in circumstances where a plaintiff may be thereby prevented
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from pursuing a claim which, although relatively novel when brought, might in the end by the judgment of the court, be successful.
54 In Hill v Van Erp (1997) 188 CLR 159 the High Court held a solicitor to be in breach of a duty of care owed to an intended beneficiary under a will prepared by the solicitor for the testator when, by negligence, the will was attested in such a way as to render the intended disposition null and void. The case depended upon the proposition that the loss of a mere expectation interest was recoverable in damages in negligence in the circumstances of that case. The case was concerned with the development of the law in respect of claims for pure economic loss in reliance upon the tort of negligence.
55 The next important case is no doubt Esanda Finance Corp Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241. There a sufficient relationship of proximity to sustain a duty of care in a case of pure economic loss was held not to exist in favour of a financier who made a loan to a corporation in reliance upon an auditor's report which was said to have been compiled negligently for the corporation. The case turned on whether the auditors knew or ought to have known that the report would be communicated to the financier and would be relied upon in considering the loan. There was discussion of the special categories of case where a sufficient relationship of proximity might be held to exist to support the imposition of a duty of care to take reasonable steps to avoid economic loss being occasioned to another person.
56 Finally, in Perre v Apand Pty Ltd (1999) 164 ALR 606, the decision of which case occurred after the learned Magistrate had given her judgment in this case, the High Court engaged in a very substantial reconsideration of the principles governing the imposition of a duty of care to protect another from economic loss. Such matters as the proximity of the parties, the indeterminacy of potential claims, the knowledge of the alleged tortfeasor of the potential to harm the claimant and the vulnerability of the parties sustaining the loss, were considered. I need not canvass the matters discussed in any detail. Wallwork J has referred to many of the particular points made in their Honours' judgments.
57 The short point for present purposes seems to me to be that the law may well impose a duty of care to take reasonable steps to preserve another from the harm of pure economic loss where the defendant ought to have had the plaintiff in his contemplation, the loss suffered is of a kind which was reasonably foreseeable, the plaintiff was in a vulnerable position, unable by his or her own conduct effectively to preserve himself
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or herself from harm, and where it cannot be said that the defendant was simply acting legitimately or properly in its own economic interests.
58 If there appears to be no policy reason against the imposition of a duty of care, and I cannot see from whence such a reason might emerge in these cases, then it seems to me that the consideration of such issues in these cases might lead to the conclusion that the imposition of a duty of care to preserve the appellants from economic harm is fairly arguable. I repeat my view that the law as to the circumstances in which a duty of care to prevent economic loss to another will be imposed seems to be in a state of development. In those circumstances I think it is clear that these cases ought to have been permitted to proceed.
59 For those reasons I would allow these appeals and make the particular orders to which I have referred above. I need not in the circumstances discuss further the proposed allegation of a duty to act in good faith, except to say that it seems to me that if that is to be pursued, it may not be said not to be arguably available having regard to the confused state of the decisions bearing upon the point.
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