McVey v G J and L J Smith Pty Ltd and VWA

[2011] VCC 135

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
DAMAGES – COMPENSATION

SERIOUS INJURY DIVISION

Case No. CI-09-03519

WILLIAM JAMES McVEY	Plaintiff
(a person under a disability who brings this proceeding by his Litigation Guardian ANTHONY BULLARD)
v
G J & L J SMITH PTY LTD	First Defendant
and
VICTORIAN WORKCOVER AUTHORITY	Second Defendant

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JUDGE:	HIS HONOUR JUDGE PARRISH
WHERE HELD:	Melbourne
DATE OF HEARING:	16 August and 4 October 2010
DATE OF JUDGMENT:	21 January 2011
CASE MAY BE CITED AS:	McVey v G J & L J Smith Pty Ltd & VWA
MEDIUM NEUTRAL CITATION:	[2011] VCC 135

REASONS FOR JUDGMENT

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Catchwords: ACCIDENT COMPENSATION – Accident Compensation Act 1985, section 98C as it was in 2000 – whether first claim under s.98C has no legal effect and worker can submit second claim adding psychiatric injury – relevance of allegation that worker had no legal capacity to give instructions in relation to first claim.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A D B Ingram and	Melbourne Injury Lawyers
Mr C E Hangay	Pty Ltd
For the Defendants	Mr B R McKenzie	Herbert Geer Lawyers
HIS HONOUR:

Introduction

1 The issue in this matter is whether the plaintiff can make a second claim for compensation under s.98C of the Accident Compensation Act 1985, as amended (“the Act”) asserting that an earlier claim made under s.98C had no legal effect because he had no mental capacity to make such a claim.

Pleadings

2          In the Statement of Claim accompanying the Writ filed on 29 July 2009, the plaintiff alleges, amongst other matters:

(a)	That at all material times he was employed by the firstnamed defendant (G J & L J Smith Pty Ltd) as a truck driver;
(b)	That on or about 30 April 1999, during the course of his employment with the firstnamed defendant, he suffered personal injury when the fibreglass hood of his Kenworth truck was blown down by a gust of wind, striking the plaintiff;
(c)	On or about 1 September 2000, the plaintiff, “providing instructions on his own behalf”, purported to file a claim for permanent disability in respect to injuries to his back, both arms, neck and both legs;
(d)	In or about April 2002, the plaintiff, “providing instructions on his own behalf”, purported to resolve the claim for compensation for permanent disability upon an assessment of his impairment level of 17 per cent whole person impairment in accordance with the AMA Guides (4th edition) (“the Guides”) and upon an award of compensation of approximately $19,000;
(e)	That at all material times from the time that he suffered personal injury, the plaintiff was a person “under a disability and in particular suffering from a schizophrenic disorder which incapacitated and disabled him from”:

• providing instructions as to the nature and extent of the injuries which he had suffered;

• submitting a claim for compensation for permanent disability;

• describing to a Medical Panel appointed pursuant to the provisions of the Act the nature and extent of his injuries; and

• providing instructions to resolve the claim for compensation for permanent disability.

(f)	By reason of the matters aforesaid, the “purported claim for compensation for permanent disability signed by the plaintiff on 1 September 2000 lacked any legal effect”, as did any purported award of compensation made in pursuance of the claim;
(g)	On 28 February 2006, His Honour Judge Hicks ordered that a litigation guardian be appointed to represent the interests of the plaintiff in respect of a claim for weekly payments;
(h)	On 28 February 2007, it was determined by a Medical Panel that the plaintiff’s employment with the firstnamed defendant was a significant contributing factor to the diagnosed schizophrenic disorder;

(i) On 16 March 2007, the plaintiff, through his litigation guardian, submitted a claim for impairment benefits pursuant to s.98C of the Act which alleged, in part, that the incident on 30 April 1999 contributed to a “psychiatric deterioration and caused manifestation of symptoms of his diagnosed schizophrenic condition” for which he claimed compensation.

(j) On 19 February 2009, the Accident Compensation Conciliation Services issued a Conciliation Outcome Certificate certifying that all steps had been taken to conciliate the dispute between the parties.

3          By way of its defence, the defendants deny that the plaintiff is entitled to the relief sought, and relies upon sections 104B(5A) and (5AA) of the Act, and asserts that the plaintiff is precluded from seeking to pursue a further impairment benefit claim pursuant to s.98C of the Act.

4          No viva voce evidence was led by either party, and the following material was tendered:

(a)  On behalf of the plaintiff: 

(i)      Pages 14-71 of the Plaintiff’s Court Book (“Exhibit 1”);

(ii)     Pages 146A-162 of the Plaintiff’s Court Book (“Exhibit 2”);

(iii)     Order of his Honour Judge Coish dated 21 March 2007 (“Exhibit 3”);

(iv)    Document prepared by the plaintiff dated 7 November 2005 (“Exhibit 4”);

(v)     Affidavit of plaintiff sworn 1 September 2010 (“Exhibit 5”);

(vi)     Further report of Dr Wijesinghe dated 1 October 2010 (“Exhibit 6”);

(vii)    Affidavit of Vincent Verduci sworn 1 October 2010 (“Exhibit 7”);

(viii) Pages 3-7, 10-18 and 22-27 of the Defendants’ Court Book (“Exhibit 8”).

(b)	On behalf of the defendants:
(i) Pages 120-127 of the Plaintiff’s Court Book (“Exhibit A”).

Chronology

5          There is no issue as to the following matters:

(a)  On or about 18 June 1999, the plaintiff lodged a claim for compensation arising out of an incident during the course of his employment on 30 April 1999 when the bonnet of his truck fell onto his left shoulder. Such claim form described the injuries as follows:

“Inflammation to muscles, left shoulder, injury to lumbar, left muscles inflammation, injury to upper dorsal, left side of neck and spasm to left side of head.”

(b)	By letter dated 26 May 2000, the then solicitors for the plaintiff, Vincent Verduci and Associates (“the former solicitors”), sent a letter to the plaintiff advising him that he may have an entitlement to a lump sum pursuant to s.98 of the Act in respect of his “back injury”.
(c)	By letter dated 2 January 2001, the former solicitors lodged a claim for compensation for permanent disability dated 1 September 2000 (“the first claim”). Such letter also contained an affidavit of the plaintiff sworn 1 September 2000 and medical reports of Dr A Stockman dated 25 October 2000, Dr J Jagoda dated 14 September 2000, and Mr R Gillott dated 1 November 2000.

The claim for compensation for permanent disability was in respect of injuries to the “back, both arms, neck and both legs”.

The affidavit of the plaintiff sworn 1 September 2000 makes reference to pain in his “left shoulder, neck and lower back”.

The report from Dr Jagoda dated 14 September 2000 states, in part:

“On 04/08/99 Mr McVey underwent a CT scan of the brain and this was reported to be normal. I noted from the first time I saw him following this accident that he had become somewhat anxious and depressed and this appeared to be becoming progressively more prominent, these psychological symptoms have become more disabling and more atypical. He has never suffered from any form of depression or anxiety or any form of psychosis in the past. I eventually referred him to a psychiatrist, Dr Channa Wijesinghe, who considered that there was an element of psychosis and he commenced him on treatment with Olanzapine. I believe that the secondary psychological sequelae from the accident played a major role in the continuation of his disability.”

(my emphasis).

(d)	By letter dated 27 April 2001, Allianz Australia Workers’ Compensation (Vic) Ltd, an agent of the Victorian WorkCover Authority, advised the former solicitors that liability was accepted in relation to the alleged injuries.
(e)	By letter dated 10 April 2002, the agent wrote to the former solicitors advising that an independent impairment assessment had been conducted by Mr M Khan in respect of the back, neck, arms and legs, and that a whole person impairment of 17 per cent had been calculated, entitling the plaintiff to $19,000 pursuant to s.98C of the Act.
(f)	By letter dated 10 June 2002, the former solicitors advised the agent that they were instructed to accept the offer of settlement.
(g)	In prosecuting a claim for weekly payments of compensation, the plaintiff lodged a purported “further affidavit” dated 7 November 2005. Such document is more of a signed statement (see Exhibit 4).
(h)	I was informed from the Bar Table that the late Judge Higgins refused to permit the plaintiff’s claim for weekly payments to proceed further until a litigation guardian had been appointed to represent his interests. To that end, on 26 February 2006 Judge Hicks ordered the plaintiff be represented by his present litigation guardian, the solicitor, Mr Bullard.

(i)      On or about 13 December 2006, Judge Coish referred various medical questions to the Medical Panel, and on 11 February 2007, the following questions were answered:

“Question 1: What is the nature of the plaintiff’s medical condition relevant to any injury, or alleged injury, to his neck, back, left shoulder and head and/or psychiatric injury (“the said injuries”)?---

Answer:	The Panel is of the opinion that the plaintiff is not now suffering from any physical medical condition of the left shoulder relevant to the said injuries.
The Panel is also of the opinion that the plaintiff is suffering from schizophrenia relevant to the said injuries.
The Panel is also of the opinion that there is no medical condition of the neck, back or head relevant to the said injuries.

Question 2: Was the plaintiff’s employment in fact a significant contributing factor to any, and if so which, of the said injuries?---

Answer:	The Panel is of the opinion that the plaintiff’s employment was in fact a significant contributing factor to the now resolved soft tissue injury of the left shoulder and the schizophrenia condition.
Question 3:	Does the plaintiff have:
(a)  a current work capacity; or
(b) no current work capacity;
as a result of any, and if so which, of the said injuries?---
Answer:	(a) No.
(b) The Panel is of the opinion that the plaintiff has no current work capacity as a result of the schizophrenia condition.
Question 4:	If the plaintiff has no work capacity, is he likely to continue indefinitely to have no current work capacity?---
Answer:	Yes.

Question 5: If the plaintiff has no work capacity which is likely to continue indefinitely, does the incapacity result from or is it still materially contributed to by any, and if so, which of the said injuries?---

Answer:  The Panel is of the opinion that the plaintiff’s incapacity for work results from and is still materially contributed to by the psychiatric injury.”

(j)

On 21 March 2007, Judge Coish made orders consistent with the opinion of the Medical Panel that the plaintiff was to be paid weekly payments of compensation at the rate for no current work capacity from 10 April 2004, and for such payments to continue in accordance with law. Other ancillary orders were also made. I was informed from the Bar Table that such weekly payments of compensation are continuing.

(k)

On or about 28 August 2008, the plaintiff (now with a litigation guardian), lodged a claim for impairment benefits with respect to injuries suffered by him on 30 April 1999 (“the second claim”). The injuries asserted in this claim form are:

“Psychiatric injury including schizophrenia condition, back, both

arms, neck and both legs.”

(l) By letter dated 8 September 2008, the agent advised the current solicitors acting for the plaintiff that the second claim would not be accepted, as the plaintiff had already been compensated under s.98C for injuries occurring on 30 April 2000. In particular, the agent referred to and relied on s.104B(5A) and 104B(5AA) of the Act.

Relevant Legal Principles

6 Section 98C of the Act was inserted in 1997, and sub-s.1 reads:

“A worker who suffers an injury which entitled the worker to compensation is, in respect of an injury resulting in permanent impairment as assessed in accordance with section 91, entitled to compensation for non-economic loss calculated in accordance with this section.”

7 In particular, s.98C(3) provides for the method of calculation in respect of a permanent psychiatric impairment. However, it is to be noted in s.91 that an impairment is not to include any “psychiatric or psychological injury, impairment or symptoms arising as a consequence of, or secondary to, a physical injury”.

8          Section 104B was also inserted in the Act in 1997, and sub-s.1 provides that in addition to the requirements under s.103, this section applies to a claim for compensation under s.98C of the Act.

9          Section 104B was amended by Act No 26 of 2000 which inserted, amongst other sub-sections, sub-ss.(5A)–(5F). These sub-sections stated:

“(5A)	Unless sub-section (5B) applies, an assessment under this section can only be made in respect of one injury of a worker.
(5B)	If a worker has more than one injury arising out of the same event or circumstance, all of those injuries must be included in the one assessment.

(5C) If the independent examination has been requested by the Authority or a self-insurer under subsection (1C), the Authority or self-insurer must give the worker a written statement of the injury or injuries to be included in the assessments.

(5D) A worker may within 60 days of receiving a written statement under sub-section (5C)—

(a)	make a claim for compensation under section 98C or 98E in respect of any additional injuries that the worker believes have arisen out of the same event or circumstance; or
(b)	advise the Authority or self-insurer that he or she disputes the statement.

(5E) If the worker does not make a claim or dispute the statement within the period specified under subsection (5D) the injury or injuries specified in the written statement are deemed to be the only injury or injuries arising from the same event or circumstance which are to be included in the assessments.

(5F) If the worker was not 18 years of age at the time of the injury, the assessments of the injury can not be made until the worker attains the age of 18 years.”

Such provisions were applicable at the time of the making of the first claim.

10        Act No 102 of 2004 substituted a new sub-s.(5A) and inserted sub-s.(5AA). These sub-sections read:

“(5A) A worker must include all injuries arising out of the same event or
circumstance in a claim for compensation under section 98C.

(5AA) A worker can only make one claim for compensation under section 98C in respect of injuries arising out of the same event or circumstance.”

Such provisions were applicable at the time of the making of the second
claim.

11        Seemingly, the clear legislative intention is that only one claim should be made for injuries “arising out of the same event or circumstance”: (see Victorian WorkCover Authority v Raymond Hartley [2010] VSCA 74; Ali Kaya v Donna Rosa Foods Pty Ltd (unreported decision of Magistrate S Garnett delivered on 5 October 2008, Melbourne Magistrates’ Court Case No. U02743849).

Submissions on behalf of the Plaintiff

12 Counsel for the plaintiff submitted that the plaintiff lacked mental capacity to make the first claim, and accordingly, the first claim was of “no legal effect”. In such circumstances, it was submitted that the second claim is, in legal terms, the only claim which has been lodged under s.98C of the Act and should be dealt with according to law.

13 In making such submissions, Counsel for the plaintiff accepted the general proposition that a plaintiff is only entitled to lodge one claim under s.98C of the Act in respect of injuries “arising out of the same event or circumstance”.

14        It was submitted that the evidence of the plaintiff’s lack of mental capacity is as follows:

(a)  The plaintiff was suffering from schizophrenia from at least 2000 and has at all relevant times – or at least, according to the treating psychiatrist, “at most times” – denied suffering a psychiatric disorder and the need for treatment. Counsel for the plaintiff referred me to the report from the treating psychiatrist, Dr Wijesinghe, dated 6 August 2010, wherein it is stated, in part:

“I first examined Mr McVey on 21.6.2000. I am not in a position to state when Mr McVey’s psychiatric illness commenced. The nature of his symptoms suggested that the illness had been present for some time and was well established. On my first examination of Mr McVey he reported that he was hearing noises in 1993 and that in February 1994 he was admitted to Royal Park Psychiatric Hospital and spent 10 days in the high dependency unit. It is correct to state that his psychiatric disorder was substantially untreated from my first examination on 27.6.2000 to my last examination on 1.8.07 because of his poor compliance.

. . .

I am not able to provide an expert opinion as to his legal capacity with reference to his knowledge and understanding of his schizophrenic disorder during the relevant period because I did not specifically examine him to determine his legal capacity with respect to the matters raised in your question above. However, at most times, Mr McVey denied suffering a psychiatric disorder and the need for treatment.”

In a further report from Dr Wijesinghe dated 1 October 2010, the
psychiatrist stated:

“Further to my telephone conversation with you on 1.10.10 I confirm that his psychiatric disorder was substantially the same on every occasion I had examined him during 27.06.2000 to 01.08.07.”

(b)

Further evidence of his denial of such disorder is:

(i)	his lack of instructions to his former solicitors about his psychiatric disorder;
(ii)	the comments of the psychiatrist, Dr Botvinik in his report dated 8 November 2003 wherein he states the plaintiff lacks “insight into his problems”; and
(iii)	the statement of the plaintiff made on 8 April 2004.

I was also referred to the medico-legal report of Dr Jungfer dated 2 May
2006 wherein she states, in part:

“Mr McVey is likely to have been an individual vulnerable to development of psychiatric illness, but the accident of 1999 precipitated the acute decompensation and he has continued to be symptomatic since this time. Significant abnormalities of behaviour have been evidenced since 2000 and his capacity to function occupationally has deteriorated substantially since then.

. . .

Mr McVey’s condition must be viewed as [a] poor prognosis …
due to his lack of insight … .”

15        It was submitted by Counsel for the plaintiff that because of his lack of mental capacity, the plaintiff was unable to take “appropriate steps” in relation to the first claim. It was said that it is a “fundamental principle across the whole legal spectrum that there are circumstances in which the law says that to carry out legal consequences a certain mental capacity must attach or be establish with respect to the responsible person”. The Court was directed to the Crimes (Mental Impairment and Unfitness to be Tried) Act 1997 which was said to have “application”. Furthermore, the Court was referred to Nicholson v Knaggs [2009] VSC 64 at [85]-[100], which dealt with the testamentary capacity of a deceased. Further, the Court was referred to the matter of Gibbons v Wright (1954) 91 CLR 423 dealing with a plea of non est factum that a contract is void through lack of mental capacity at the time of making an alleged contract.

Submissions on behalf of the Defendants

16        Counsel for the defendants submitted:

(a) The provisions of the Act are clear, and it is not permissible to submit a second claim when a first claim has been dealt with and compensation paid pursuant to s.98C to the Act. In the instant circumstances, the

plaintiff through his former solicitors lodged a claim under s.98C, the

claim was assessed, and compensation paid.

(b)

If conceptually there was a basis for a worker to assert that he had a lack of mental capacity at the time of lodging the first claim (which is denied), then the evidence before the court is such that it cannot be established as a matter of probability that the plaintiff lacked the requisite mental capacity to make the first claim. In particular, Counsel for the defendants referred to:

(i)	none of the doctors (including the treating psychiatrist and treating general practitioner) were making any suggestions at the time of the first claim that the plaintiff lacked mental capacity;
(ii)	Solicitors were acting on behalf of the plaintiff at the time of the making of the first claim and indeed there was no suggestion from them that the plaintiff lacked mental capacity;
(iii)	Dr Jungfer, in a report dated 18 May 2010, states:

“Whether Mr McVey had legal capacity in 1999 and thereafter cannot be clarified from the current records. At the time he was seen in 2006 there was no question raised as to whether he had legal capacity. The mere presence of a mental illness does not preclude a person from having capacity.”

(iv)    It was not until 26 February 2006 that Judge Hicks ordered that a litigation guardian be appointed to represent the interests of the plaintiff.

17        Counsel for the defendants submits that contractual principles are not relevant to a compensation claim and refers to the well known decision of Mynott & Ors v Barnard (1939) 62 CLR 68 at page 91 whereat the High Court made clear that workers compensation is a liability neither in tort law nor contract but rather is annexed to a relationship established by law that is master and servant.

18        In any event, although the law recognises that a person who lacks the mental capacity to understand the consequences of entering into a contract may avoid it, the onus is on the incapacitated party to establish the following elements:

(a)	that he or she was unable, due to mental impairment, to understand the contract at the time of formation; and
(b)	that the other party either knew or ought to have known of the impairment (see generally McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243, per Griffiths CJ at 272; In Estate of Doull (1881) 7 VLR 70; Tremills v Benton (1892) 18 VLR 607 and Gibbons v Wright (1954) 91 CLR 423 at 437-438).

Conclusions

19 I rule that the plaintiff cannot rely on the second claim as it seeks to claim compensation under s.98C of the Act for injuries “arising out of the same event or circumstances” as those in the first claim for which he has been compensated. Although the law does give persons of impaired mental capacity some relief in certain circumstances (for example, see Crimes (Mental Impairment and Unfitness to be Tried) Act 1997), the circumstances of this matter clearly establish that the first claim was made pursuant to the provisions of the Act, was accepted and assessed and compensation paid.

20        In any event, I am not satisfied the plaintiff lacked any relevant mental capacity at the time of the making of the first claim. No one, including treating doctors and the previous solicitors indicate that he lacked mental capacity. It is important, I believe, that he had solicitors acting for him at the time of the making of the first claim who had access to, amongst other things, the report from the general practitioner, Dr Jagoda, who notes that he referred the plaintiff to a psychiatrist who diagnosed the plaintiff to be suffering an element of psychosis and that the “secondary psychological sequelae from the accident played a major role in the continuation of his disability”.

21        There is no evidence whatsoever that the former solicitors sought to include any psychiatric injury but were thwarted by the plaintiff on the basis that he did not accept such disorder. It must be accepted on the evidence that the former solicitors were well aware of him having a psychiatric condition at the time of making the first claim.

22        The proceeding is dismissed and I will hear the parties on the question of costs.

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