Kirika v Zurich Australian Insurance Limited - [2000] WADC 93

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: KIRIKA -v- ZURICH AUSTRALIAN INSURANCE LIMITED & ANOR [2000] WADC 93

CORAM: NISBET DCJ

HEARD: 29 MARCH 2000

DELIVERED : 13 APRIL 2000

FILE NO/S: CIV 3516 of 1999

BETWEEN: PAUL ERIC KIRIKA
Appellant (Plaintiff)
AND
ZURICH AUSTRALIAN INSURANCE LIMITED
First Respondent
CLELANDS COLD STORES (AUST) PTY LTD
Second Respondent

Catchwords:

Practice and procedure - Appeal from decision of Deputy Registrar striking out statement of claim - Hearing de novo - Statement of claim failing to disclose any cause of action in negligence or breach of duty of good faith - Estoppel - Res judicata - Exclusive jurisdiction of conciliation and review directorate - Deed of settlement of workers' compensation and common law claims - Discussion of principles.

Legislation:

Workers' Compensation and Rehabilitation Act 1981

Result:

Appeal fails.

Representation:

Counsel:

Appellant (Plaintiff)      :     Mr B Nugawela
First Respondent           :     Mr R J L McCormack
Second Respondent       :     Mr H M Healy

Solicitors:

Appellant (Plaintiff)      :     D'Angelo & Partners
First Respondent           :     Srdarov Richards Burton
Second Respondent       :     Phillips Fox

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

Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; 120 ALR 42
Gibson v Parkes District Hospital & Anor (1991) 26 NSWLR 9
Gimson v Victorian Workcover Authority & Anor [1995] 1 VR 209
McCarthy v Moreay Nominees Pty Ltd (1995) 13 SR (WA) 357
Sutherland Shire Council v Heyman (1985) 157 CLR 428

Case(s) also cited:

Nil

NISBET DCJ: By an amended writ of summons dated 20 September 1999 the appellant brought an action against the first respondent as the workers' compensation insurer for the second respondent, the appellant's employer. In his statement of claim indorsed on the writ the appellant alleges that during the course of his employment with the second respondent he sustained five injuries on 6 November 1989, 23 April 1990, 24 April 1992, 20 January 1993 and 13 August 1993 respectively. The appellant further alleges that at various times after each of the injuries he was in receipt of weekly payments of workers' compensation pursuant to the provisions of the Workers' Compensation and Rehabilitation Act 1981. He then says that on or about 24 December 1993 the first respondent issued a notice pursuant to the provisions of s61 of the Act seeking discontinuance or reduction of those workers' compensation payments and shortly thereafter instructed the second respondent not to pay any further payments of weekly compensation to the appellant and in consequence (it may be inferred) thereby refused to indemnify the second respondent in respect of any such payments.
At that time s61 of the Act provided that weekly payments of compensation "… shall not be discontinued or reduced without the consent of the worker or an order of the Directorate …". The appellant then pleaded that he did not consent to the discontinuance of payments, the Conciliation and Review Directorate had not ordered discontinuance or reduction of the payments and additionally, by way of a particular of further breach of s61, that he brought an application pursuant to s61(3) of the Act within the time there provided. In consequence, the appellant pleads, the discontinuance of weekly payments was unlawful.
What the appellant then pleads in effect is that the unlawful discontinuance of his weekly payments was designed to "soften him up" for a settlement such that on 15 February 1994 he agreed to settle his claim for the sum of $20,000 by way of a consent judgment at common law in the sum of $17,500 in settlement of his claims in respect of the first four of his injuries and by way of payment of the further sum of $2500 in respect of his fifth injury which settlement was to be effected by a deed of release.
The agreement was given effect in about May 1994 by a payment by the first respondent to the appellant of the sum of $20,000.
The appellant next pleads that the $20,000 was a settlement at an undervalue in consequence of which he has brought an action against his former legal adviser for breach of his duty of care toward him, which action I was informed during the course of the hearing of this appeal was extant and continues in this Court.
The appellant next pleads that the first defendant was under a common law duty of care not to cause (in effect) economic loss to the appellant by unlawfully discontinuing his weekly payments of compensation and further and in the alternative that the first respondent owed him a duty to act in good faith so as not to unlawfully discontinue his payments of weekly compensation. There then followed pleas of the breach of the duty of care and good faith and particulars of damages suggesting that the appellant's claim was undervalued by something in the order of $105,600 (when para 14.4 of the statement of claim is properly understood).
Insofar as may be material precisely the same duties and breaches are pleaded against the second respondent as are pleaded against the first respondent.
The statement of claim was met with an application by the respondents to strike it out on a number of grounds namely:
1.It disclosed no reasonable cause of action.
2.It was scandalous, frivolous or vexatious.
3.It constitutes an abuse of the process of the court because the dispute is within the exclusive jurisdiction of the Conciliation and Review Directorate.
4.It constitutes an abuse of the process of the court by reason of the principle of res judicata.
5.It constitutes an abuse of the process of the court by reason of the principle of issue estoppel.
The second respondent applied to "set aside" the writ of summons on the sole ground that s84B of the Act conferred exclusive jurisdiction on the Directorate of Conciliation and Review in relation to any dispute regarding weekly payments of compensation pursuant to the Act.
The applications came on for hearing before the Deputy Registrar in Chambers on 7 December 1999. The order extracted following that hearing dated 14 December 1999 by the solicitors for the first respondent inadvertently misleads in that it suggests that the writ of summons was only struck out against the first defendant, when a draft of the Deputy Registrar's "reasons" shows that insofar as may be discerned it would appear that his intention was that the whole action against each of the first and second respondents be dismissed ("so my determination is that the applications are successful").
The "reasons" of the Deputy Registrar (if they can be called that) give no clue to the precise ground upon which his order was made save that he appears to have based his decision on the fact of the deed pleaded by the appellant in his statement of claim that he entered into in respect of his fifth injury. The Deputy Registrar regarded the deed as being an end to the matter and one presumes this is because he considered that it would be an abuse of process to permit the action to continue in the face of the deed.
The deed was exhibited to an affidavit filed by the first respondent and it is not all clear in its terms. In fact it is fair to say that it is very poorly drafted. It annexes a letter which is said to set out the terms of the settlement being a letter from the first respondent's solicitors to the appellant's then solicitors dated 24 February 1994. That letter in turn provides in part as follows:
"1.Our client is to pay your client a lump sum amount of $17,500 in full and final settlement of all back injuries sustained by your client arising out of or during the course of your client's employment with Clelands Cold Stores Pty Ltd and specifically including injuries sustained by your client as a result of accidents that occurred on the 6th November 1989 and the 13th August 1989 and for all recurrences and/or aggravations of the aforesaid injuries arising out of or in the course of your client's employment with Clelands Cold Stores Pty Ltd during our insurer client's period of risk.
…
4.Our client is to contribute an amount of $2500 towards payment of your client's legal costs (inclusive of disbursements).
…
6.The manner of giving effect to this settlement is at the discretion of our client.
…
Our client's instructions are that you have not issued any common law proceedings in respect to your client's alleged injury although we confirm from our telephone discussion of the 17th February 1994 that your client was issued with a certificate of common law registration from the Workers' Compensation and Rehabilitation Commission in respect of the alleged accidents of on or about December 1989 (which from our client's records appear to refer to an alleged accident of on or about the 6th November 1989) and the 13th August 1993.
We advise that our client's instructions are to effect settlement by filing consent orders for redemption of your client's workers' compensation claim at the Workers' Compensation Board and also by executing a common law consent judgment at the District Court in respect to all back injuries suffered by your client prior to the 30th June 1993 (which is to be filed with the certificate of common law registration) and to execute a deed of discharge in respect to all back injuries including all alleged back injuries suffered by your client subsequent to the 30th June 1993 … (my emphasis).
We enclose, for your signature, Workers' Compensation Board application and consent orders, District Court consent documents and deed of discharge. You will note that we have allocated an amount of $500 and $1000 for costs in respect of the Workers' Compensation Board consent orders, $15,000 and $1500 for costs in respect to the District Court consent orders and an amount of $2000 is to be paid by our client to your client upon execution of the deed of discharge.
You will also note that we have specifically pleaded six accident dates in the Workers' Compensation Board documents being the 6th November 1989 to the 30th November 1989, 23rd April 1990, 24th April 1992, 20th January 1993 and the 13th August 1993 being the dates on which your client has alleged suffering back injury during the course of his employment with Clelands Cold Stores Pty Ltd (my emphasis). ….."
I next turn to the indorsement on the writ of summons in action number 1051 of 1994 taken out by the appellant in this Court against the second respondent as defendant. It is dated 18 February 1994. The indorsement reads as follows:
"The plaintiff's claim is for general damages and special damages for back injuries and all injuries of whatsoever nature suffered by the plaintiff as a result of an accident that occurred on or about 6 November 1989 (lifting cartons of frozen meat) arising out of or in the course of the plaintiff's employment with the defendant and for all injuries resulting from recurrences and/or aggravations of the aforesaid injuries, such recurrences and/or aggravations arising out of or in the course of the plaintiff's employment with the defendant between the 6th November 1989 and the 30th June 1993, all of the aforesaid injuries being caused by the negligence and/or breach of contract and/or breach of statutory duty of the defendant, its servants or agents."
As the letter from the first respondent's solicitors clearly disclose, all of these documents to be filed in respect of a settlement of the plaintiff's claim were prepared by the first respondent's solicitors! A fair reading of them discloses confusion as to what causes of action are being settled for what consideration, such that a court may indeed be loathe to act in its inherent jurisdiction to prevent an abuse of its process to give effect to a deed which speaking of "aforementioned disabilities", and "alleged disabilities" then goes on to provide the bar relied upon by the first respondent:
"3.This Deed may be pleaded by the Releasees or any of them in bar to any claim for damages brought by the Releasor or any person claiming through the Releasor arising out of the alleged disability."
If this was the only ground upon which the first respondent sought to have the appellant's cause of action struck out I would have no hesitation in refusing the claim. I would oblige the first respondent to plead out its defence because in the circumstances as I have outlined it would probably be met with a plea in reply of non est factum and indeed, other issues might arise such as those which were canvassed by this Court in a very similar situation: McCarthy v MoreayNominees Pty Ltd (1995) 13 SR (WA) 357. Likewise, for the same reasons, namely the lack of precision in the terms of the issues that are said to be subject to the doctrine of res judicata and, alternatively or issue estoppel, I would also refuse to strike out the statement of claim.
The area of greatest difficulty for the appellant however lies in the nature of his pleaded causes of action against each of the respondents. At first glance I had difficulty recognising a duty of care of the type pleaded particularly when the damage alleged is economic loss only. I had even more difficulty recognising a duty to act in good faith by each of an insurer and an insured towards a person upon whom such contract undoubtedly conferred a benefit, but who was not a party to that contract such that a breach of the contract gave rise to an actionable tort at the suit of a party not privy to it.
Counsel for the appellant was not able to identify any authority in which a duty of care had been found in circumstances such as are present here. This makes it difficult for the plaintiff to satisfy the dicta of Brennan J in Sutherland Shire Council v Heyman (1985) 157 CLR 428 at 481 that the law of negligence should proceed "incrementally and by analogy with established categories". A duty of care will be found, it seems, where there is a reasonable foreseeability of a real risk that injury of the kind sustained would be sustained because of the conduct being examined provided that there was the requisite degree of proximity with respect to the relevant act or omission and the nature of the injuries sustained, and provided that there is no legal impediment to finding a duty of care in the circumstances such as might be found in the pursuance of a joint illegal enterprise. As far as Australia is concerned, the requirement of proximity, whilst the subject of much criticism[1], is nevertheless part of the modern law of negligence in Australia today as was made plain by the majority judgment of the High Court in Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; 120 ALR 42 at 56:
"Without it [proximity] the tort of negligence would be reduced to a miscellany of disparate categories among which reasoning by the legal processes of induction and deduction would rest on questionable foundations since the validity of such reasoning essentially depends upon the assumption of underlying unity or consistency.
It is true that the requirement of proximity was neither formulated by Lord Atkin nor propounded and developed in cases in this Court as a logical definition or complete criterion which could be directly applied as part of a syllogism of formal logic to the particular circumstances of a particular case. As a general conception deduced from decided cases, its practical utility lies essentially in understanding and identifying the categories of case in which a duty of care arises under the common law of negligence rather than as a test for determining whether the circumstances of a particular case bring it within such a category, either established or developing."
[1] An example comes from Professor Fleming's 9th ed at 153: "Many judges continue to extol proximity as the self‑answering lodestar, though the term obviously lacks definition when intended to suggest that there is more to it than foreseeability." And see also Brennan J who called it a "Delphic criterion" in Hawkins v Clayton (1988) 164 CLR 539 at 555.
Proximity may be physical, circumstantial or causal. Physical is plain enough. Circumstantial arises from the relationship between the parties and cause is a matter of determining cause and effect such that where it can be seen that the two go so hand in glove each with the other then it can be said that the requirement of proximity has been satisfied.
In looking to identify a relationship with proximity the courts have often looked to see whether to the knowledge or presumed knowledge of a defendant a plaintiff in relying upon an act or statement of that defendant has suffered damage.
In this case no matter how one analyses the relationship between the parties I cannot see a relationship of proximity between them. Nor can I identify a foreseeable risk of damage in the sense in which that is understood in tort law, in the first respondent even deliberately acting unlawfully in ceasing weekly payments of compensation. Even if it could be said that the actions of the first respondent were deliberately unlawful, that is to say, in the knowledge that it was unlawful it deliberately ceased making or permitting payments of weekly compensation to the appellant with the intention to put pressure on him to settle his workers' compensation and any common law claims he might have had for less than their proper value, this would not give rise to a duty of care. Such a case would be capable of being framed as a conspiracy with the second respondent to injure the appellant or otherwise but it could not be properly categorised as an action in negligence.
Notwithstanding that I am aware of the line of authority which suggests that I should be slow to stultify development of the law, in the face of the authorities and in the circumstances of this case I do not think it lies with a judge in an intermediate court to take so bold a step as to recognise the development or potential development of a cause of action for which there is no support in any decided authority, and accordingly the claim under this head will be struck out.
The same I think can be said with more certainty however in respect of the claim based upon the breach of the duty of good faith alleged by the appellant. This has been the subject of an authority from the Supreme Court of New South Wales finding for the existence of such a cause of action: Gibson v Parkes District Hospital & Anor (1991) 26 NSWLR 9 and another from the Supreme Court of Victoria finding against the existence of such a cause of action: Gimson v Victorian Workcover Authority & Anor [1995] 1 VR 209. In the former, Badgery-Parker J had much resort to authorities from State Courts in the United States of America which, with the greatest respect, I think are of little relevance in the Australian setting and they rely in truth in bringing in persons not parties to the contract under the umbrella of protection offered by the contractual relationship itself. I much prefer the analysis in Gimson. Recent, compellingly argued and highly persuasive it is, and absent any authority directly binding on me finding the existence of such a cause of action and absent any authority apart from Gibson finding for the existence of the duty of good faith, I find that there is no such duty known to the law of Western Australia and the plaintiff's claim under this head too must be struck out.
Strictly speaking it is not necessary for me to deal with the remaining grounds they being that the claim is scandalous, frivolous or vexatious and that the claim is not within the jurisdiction of this Court by reason of the provisions of s84A and 84B of the Workers' Compensation and Rehabilitation Act 1981. Nevertheless I shall do so for the sake of completeness. I think the ground that the claim is scandalous, frivolous or vexatious, although difficult to tell, rested mostly upon the settlement of the workers' compensation and common law actions pleaded by the plaintiff and I have already dealt with these, finding that on that ground alone I would not have struck out the statement of claim for the reasons already expressed.

This leaves the question of the jurisdiction of this Court. Section 84B of the Act provides that: "Proceedings for the resolution of a dispute are not capable of being brought other than under this Part." "dispute" is defined in the Act such that it means:
"… A dispute in connection with a claim for compensation under this Act and includes -
(a)a dispute as to liability to make or continue to make weekly payments of compensation;
(b)a dispute between employers as to liability;
(c)a dispute between insurers as to liability to indemnify an employer;"
The subject of the definition of dispute in my opinion clearly refers to a claim for compensation under the Act ie, not a claim for damages for breach of a duty of care or breach of a duty of good faith. True it is that part of the plaintiff's claim involves a complaint that he was obliged to settle his workers' compensation claim for an undervalue but a significant part of his claim is that he was obliged to settle his claim for common law damages at an undervalue too, and by no stretch of language could this be said to be brought within the provisions of the Act and again, if this was the sole ground upon which the application to strike out was based I would refuse it.
In the end result however it must be the case that the plaintiff's claim fails to disclose any reasonable cause of action and must be struck out and accordingly the plaintiff's appeal from the decision of the Deputy Registrar must be dismissed.