Saad v J Robins & Sons Pty Limited

[2003] NSWCA 87

CITATION:	Saad v J Robins & Sons Pty Limited [2003] NSWCA 87
HEARING DATE(S):	12/03/03
JUDGMENT DATE:	17 April 2003
JUDGMENT OF:	Mason P at 1; Hodgson JA at 2; Santow JA at 3
DECISION:	Appeal allowed.
CATCHWORDS:	WORKERS COMPENSATION ACT - election to receive lump sum compensation -leave to revoke earlier election, so as to allow claim for common law damages -further material deterioration in the person's medical condition - WORKERS COMPENSATION ACT - leave to commence common law proceedings out of time - lengthy delay - evidence explaining delay - presumptive prejudice only
LEGISLATION CITED:	Motor Accidents Act 1988 (NSW) s52(4) Workers' Compensation Act 1987 (NSW) s151A(5); s151D; s151E; 151W
CASES CITED:	Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Halt v Wynter (2000) 49 NSWLR 128 Itek Graphix Pty Ltd v Elliot (2001) 54 NSWLR 207 McLean v Sydney Water Corporation ([2001] NSWCA 122 Salido v Nominal Defendant (1993) 32 NSWLR 524 Scaltrito v NRMA Insurance Ltd [2003] NSWCA 63 State of NSW v Taylor (2000) 204 CLR 461
PARTIES :	Hasan Saad (Appellant) J Robins & Sons Pty Limited (ACN 000 005 005) (Respondent)
FILE NUMBER(S):	CA 40278/02
COUNSEL:	K Rewell, SC/ J De Berg (Appellant) R Page (Respondent)
SOLICITORS:	Shaw McDonald Pty Ltd (Appellant) Dexter Healey (Respondent)

LOWER COURTJURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	12316/01
LOWER COURT JUDICIAL OFFICER :	Sorby DCJ

CA 40278/02
DC 12316/01

MASON P
HODGSON JA
SANTOW JA

17 APRIL 2003

Hasan SAAD v J ROBINS & SONS PTY LIMITED

Catchwords

WORKERS COMPENSATION ACT

– election to receive lump sum compensation –leave to revoke earlier election, so as to allow claim for common law damages –further material deterioration in the person’s medical condition

– leave to commence common law proceedings out of time – lengthy delay – evidence explaining delay - presumptive prejudice only

Facts

On 29 October 1990 the Appellant injured his right wrist in accident while at work for the Respondent. The injury was later diagnosed as a fracture of the carpal scaphoid bone. The Appellant required surgery on his wrist. This treatment was not successful. In 1996 the Appellant accepted lump sum compensation under the Workers Compensation Act 1987 (NSW). During the period and until 17 June 2001, the Appellant remained employed by the Respondent. The Appellant had continued to consult medical practitioners about his injury following the settlement in 1996. It was clear from the reports that the Appellant continued to suffer disabilities in his right wrist and that his condition worsened over time, with further complications developing in his arm and elbow.

In November 2001, the Appellant filed a Statement of Claim in the District Court seeking common law damages. Prior to filing the Statement of Claim, the Appellant made an application under s151A of the Act for leave to revoke his earlier election to claim lump sum compensation in respect of the injury.

The Judge at first instance dismissed the application for leave to revoke the earlier election, thus barring the Appellant’s claim for common law damages.

Held per Santow JA, with Mason P and Hodgson JA agreeing:

1. The phrase “further material deterioration in the person’s medical condition” in s 151A (5) refers to the actual manner of deterioration derived from, but not limited to, the original injury or its site. A more restrictive view of the injury and its ramifications would not give effect to the intent of the legislation.

State of NSW v Taylor (2000) 204 CLR 461, applied.

2. Having regard to the nature of the deterioration and its extensive ramifications and after reviewing the medical reports from 1995 and 1996, it is evident that there could have been no reasonable cause for a belief that the further deterioration which did occur, would occur.

3. The onus is upon the Appellant to show that it is fair and just that an extension be granted and this generally requires an adequate explanation of the delay in commencing proceedings.

Itek Graphix Pty Ltd v Elliot (2001) 54 NSWLR 207, applied.

4. The decision to delay the commencement of common law proceedings is sufficiently explained by the diary notes of the Appellant’s solicitor and that the Appellant did not want to bring common law proceedings against his employer whilst continuing in employment with the prospects of a commuted capital sum. But that when employment ceased, with that prospect ceasing, the Appellant then did want to revoke his election and bring common law proceedings.

Salido v Nominal Defendant (1993) 32 NSWLR 524; Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, considered.

5. No specific prejudice was advanced by the Respondent beyond general or presumptive prejudice. Moreover, the Respondent was aware of the Appellant’s injury before the relevant time periods expired. It is impossible to assume that a diligent defendant, faced with the possibility, before any election is made, of a common law action in damages would not make some preparation to defend such a claim, at least during the first three years before the limitation period has expired. In the circumstances of this case, despite the lengthy delay, leave under s151D should be granted.

ORDERS

1. The Appeal be allowed.

2. The Order of His Honour Judge Sorby dated 26 March 2002 be set aside.

3. The Orders sought in the Notice of Motion filed in the District Court on 22 November 2001 be allowed.

4. The Respondent pay costs of the Appellant in this Court and in the District Court of New South Wales.

CA 40278/02
DC 12316/01

MASON P
HODGSON JA
SANTOW JA

17 APRIL 2003

Hasan SAAD v J ROBINS & SONS PTY LIMITED

Judgment

1 MASON P: I agree with Santow JA.

2 HODGSN JA: I agree with Santow JA.

3 SANTOW JA:

INTRODUCTION AND OVERVIEW
On 26 March 2002 Sorby DCJ concluded that the Appellant in these proceedings was not entitled to revoke his election under the Workers’ Compensation Act 1987 (NSW) (“the Act”). He had earlier elected to receive statutory compensation under that Act for what began as a wrist injury, rather than recover damages by common law proceedings. Though there had been further deterioration from the injury the Trial Judge denied him the required leave. That denial is challenged in this appeal. If that challenge is successful, leave is also required to bring the proceedings out of time.

4 In order for a worker’s election so made to be revoked, the Court’s leave must be obtained. The discretion to grant that leave only arises when the conditions set out in sub-paragraphs (a), (b) and (c) of s151A(5) of the Act are satisfied. The Trial Judge concluded that the third of the three conditions was not satisfied. This was because, though there had been a material deterioration in the Appellant’s previous medical condition, it could not be said in the circumstances, that “there was no reasonable cause to believe that the further deterioration would occur” (as required by sub-paragraph (c)). In so doing, the Trial Judge also concluded that the further “material deterioration” in the Appellant’s “previous medical condition” had to be deterioration in the Plaintiff’s wrist condition and thus did not include deterioration resulting from the injury in other ways as well. That, if correct, meant that the second condition was not satisfied either, namely that the injury causes a “material deterioration in the previous medical condition”; see sub-paragraph (b). The deterioration which, according to the evidence from the Appellant did occur, was reflex sympathetic dystrophy affecting the Appellant’s right arm, shoulder and to a lesser extent, his neck, and developing pain and disability in the uninjured left arm as a result of compensatory over-use.

5 The primary question for this appeal is whether the Trial Judge was in error in so construing s151A(5). This with the result that the Trial Judge failed to recognise that, in the events that had happened, he had a discretion to grant the leave sought.

6 The second issue is whether, though it be the case that the leave sought could have been granted, it should be granted in the circumstances, taking into account any relevant matters affecting exercise of that discretion and in particular delay.

7 In answering what the Trial Judge referred to as the threshold question against the Appellant, he did not need to consider a still further hurdle in the way of the Appellant commencing common law proceedings for damages. This was the requirement, pursuant to s151D of the Act, to obtain the leave of the Court if proceedings for common law damages were commenced more than three years after the date on which the injury was received. Here, there was delay of some eleven years. On the Appellant’s case this was as a result of

(i) the time taken for the Appellant’s injury to stabilise;

(ii) the unanticipated further deterioration in the Appellant’s medical condition over an extended period; and

(iii) a disinclination to press any common law claim whilst the Appellant continued in the Respondent’s employment with benefit of the statutory payments including prospect of their commutation in a lump sum. He only ceased such employment on 17 June 2001 and commutation of the payments was refused. During the time of his employment, he was on selected duties on a part-time basis for which he was paid less. But he had a make-up of payment from workers’ compensation payments, with his medical expenses also being paid.

8 The Respondent, while not identifying any specific prejudice from the delay, relied upon presumptive prejudice. This was by reason of the undoubted lengthy delay and what was presumed to be the effect of that delay in dimming witness recollections. Thus, depending on the answer to the earlier questions, the final question to be determined is whether leave under s151D of the Act should be granted. It is accepted by the parties that this Court is in as good a position as the Trial Judge to determine that matter, and also the question of leave under s151A(5).

9 It was common ground that no issue estoppel could arise by reason of this Court’s determination of the question posed by s151A(5). In particular it was common ground that the Respondent, if the Appellant succeeds, is not subject to any issue estoppel concerning whether the injury caused the further deterioration in the Appellant’s medical condition beyond the direct injury to the wrist, to which earlier reference has been made. That result would follow in any event were the proceedings before the Trial Judge to be characterised as interlocutory, as would certainly be the case if the Appellant succeeded in this appeal. Such success would not then represent a final disposal of the proceedings between the parties. Self-evidently, obtaining the necessary leaves under, respectively, s151A(5) and s151D of the Act would permit those common law proceedings to be continued.

SALIENT FACTS

10 The following brief chronology highlights in uncontroversial fashion the key events and dates:

29 October 1990 Appellant’s date of injury.

29 October 1993 three-year limitation period expires.

February 1994 Appellant undergoes surgery under the care of Dr Herbert.

2 June 1995 Appellant first instructs solicitors in relation to his injuries.

5 March 1996 Appellant accepts lump sums pursuant to ss 66 and 67 of the Act in respect of 25% loss of use of the Appellant’s right arm below the elbow, by way of consent award in the Compensation Court.

26 February 1997 Appellant undergoes orthoscopic examination of the wrist.

17 June 2001 Appellant’s employment with the Respondent ceases.

23 November 2001 Appellant files Statement of Claim in the District Court of New South Wales.

26 March 2002 Judgment of Sorby DCJ

11 The material facts are as follows:

(1) The Appellant suffered an injury to his right wrist in the course of his employment with the Respondent on 29 October 1990. At the time he noted pain in the wrist, attended the company doctor and was referred for x-rays and physiotherapy. He had suffered, as later diagnosis established, a fracture of the carpal scaphoid bone in the right wrist.

(2) Subsequently the Appellant consulted Dr Hourani. The condition of the Appellant’s wrist deteriorated and he was referred to Dr Bencsik an orthopaedic surgeon. His wrist was immobilised in plaster for a period of at least eight weeks but the facture failed to unite.

(3) In December 1993 the Appellant consulted Dr Herbert, another orthopaedic surgeon. At the time of the consultation the Appellant complained of chronic pain, weakness and stiffness of the wrist causing severe functional disability. Dr Herbert diagnosed a scaphoid non-union with secondary avascular necrosis of the proximal pole fragment associated with a carpal collapse deformity. Dr Herbert recommended that the Appellant undergo surgery in an attempt to avoid wrist fusion at least for some years. The operative treatment was carried out on the Appellant at St Luke’s Hospital in February 1994, by way of bone graft from the left rib. However, the surgery proved unsuccessful, in that the Appellant’s symptoms did not resolve. As is elaborated below, by early 1996, medical opinion was to the effect that the Appellant had suffered a permanent impairment in the right arm below the elbow in the order of 20% to 30% (reports of Dr Herbert of 1 February 1996, Dr Cameron of 18 September 1995 and Dr Wallace of 27 November 1995).

(4) Thus following the surgery, the Appellant continued to complain of limited range of motion in the wrist with discomfort under stress loading.

(5) The limitation period for the commencement of proceedings by the Appellant against the Respondent for damages at common law expired on 26 March 1994. (See ss151D and 151W of the Workers Compensation Act 1987).

(6) The Appellant continued to consult Dr Herbert, at least until 8 August 1995. At that time he was still complaining of wrist pain and stiffness and was advised by Dr Herbert that he would almost certainly require a wrist fusion within the foreseeable future, depending upon the severity of his symptoms. The doctor was of the opinion that the Appellant had been left with a very significant functional impairment.

(7) On 2 June 1995 the Appellant consulted his solicitors for the first time. Following upon that consultation, proceedings were commenced in the Compensation Court of New South Wales on 23 August 1995, seeking lump sum compensation.

(8) The Appellant’s solicitors referred him to Dr Cameron on 18 September 1995 and Dr Wallace on 13 November 1995 for medico legal opinions. Subsequent to those consultations the Appellant’s solicitors received a report from Dr Cameron dated 18 September 1995 and a report from Dr Wallace dated 27 November 1995.

(9) Dr Cameron in his report of 18 September 1995 was of the view that the Appellant had suffered a 20% loss of efficient use of the right upper limb at or above the elbow. However, as regards the words “ above the elbow ” the appellant contended that the words appear to be mistaken but in any event the description “ above the elbow ” was not related to the description of impairment and prognosis in the report, which related entirely to the wrist and below the elbow; Red, 25-6. That appears to be correct. Dr Cameron was also of the opinion that in all probability the Appellant will experience deterioration of that loss to 30%. Dr Wallace in his report of 27 November 1995 (Red, 27) expressed the opinion that the Appellant had suffered a permanent loss of efficient use of the right arm below the elbow of 30%. He was also of the opinion that this disability will increase in severity over the next five to ten years as osteoarthritic changes supervene in the radiocarpal joint and, further, that operative intervention would be required which would result in further loss of function of the right wrist.

(10) On 31 January 1996 the Appellant was examined by Dr McKessar on behalf of the Respondent. Dr McKessar prepared a report subsequent to this examination dated 1 February 1996. A copy of this report was served upon the solicitors for the Appellant by letter dated 27 February 1996.

(11) The proceedings in the Compensation Court were listed for hearing on 5 March 1996. At that time the Appellant and the Respondent agreed to a settlement of the claim on the basis of a 25% loss of the Appellant’s arm below the elbow. A cheque in the sum of $37,500 in payment of the award in the Compensation Court was sent with a letter dated 20th June 1996 by the solicitors for the Respondent to the solicitors for the Appellant.

(12) The Appellant continued to suffer problems with his right arm subsequent to the settlement and was referred to Professor Cumming on 14 November 1996. On 26 February 1997 Professor Cumming performed an arthroscopic examination on the Appellant’s right wrist. Following this procedure the Appellant’s hand and wrist worsened and he required intensive physiotherapy, cortisone injections and pain killing medication.

(13) On 20 May 1997 the Appellant consulted Professor Owen. The pain the Appellant was experiencing resulted in him being referred for psychological assessment on 5 August 1997 to Mr Borenstein. The Appellant remained under the care of Mr Borenstein until at least November 2001.

(14) By June 2000, when the Appellant was examined by Dr Ellis, the Appellant had already undergone a number of procedures referred to above, namely an arthroscopy of the right wrist, cortisone injections to the right wrist, immobilization and physiotherapy, all without benefit. His report recounts how in 1998 pain had commenced in the right shoulder and the right elbow [which had not been present at the time of the election made in March 1996]. In the twelve month period before Dr Ellis’ examination, pain had spread to the neck with headaches. As a result of favouring his left arm over the injured right arm, the Appellant had developed pain and tenderness in the left arm as Dr Ellis’ report of 27 June 2000 records. Of some potential significance is that the report (at Red, 39) states: “ As a result of continued work pressures and his determination to remain at work and in employment, he has developed a repetitive strain injury affecting his right arm, shoulder, elbow and to a less extent, his neck, which has required ongoing intermittent treatment. ”

(15) However it should be noted that though a second injury is described in February 2000 causing lower back pain from a fall on the base of his spine, there is no suggestion that that second injury is responsible for the symptoms of pain and related to his wrist, right arm, shoulder, elbow and neck.

(16) As regards the repetitive strain injury, the Respondent contended that this at least cast doubt as to whether injuries that were not directly to his wrist were caused by the original injury or were the result of his choosing to remain at work. However, the force of that contention is diminished by Dr Ellis’ subsequent report which (at Red, 42U) under the heading “Impression” makes no mention of RSI. There it is said that “ his condition is worse since my previous examination of 20.6.2000 and his symptoms and findings to-day are those of reflex sympathetic dystrophy affecting his right arm, shoulder, and to a lesser extent his neck. ” Further on in the report (Red, 43C) Dr Ellis says of the Appellant “ he has developed pain and disability in his left arm as a result of compensatory over-use and has a 10% permanent loss of efficient use of his left upper limb at and above and below the elbow. ”

(17) Dr Ellis estimates that the Appellant had suffered 70% loss of efficient use of his right arm at and above and below the elbow, together with 15% permanent impairment of the neck and 10% permanent impairment of the left arm.

(18) The Appellant saw Dr Meachin on behalf of the Respondent on 27 November 1998. He saw Dr Ellis, orthopaedic surgeon, at the request of his solicitors on 20 June 2000 (his report is 27 June 2000, Red, 35) and there is a further report following a further visit, dated 20 February 2001 (Red, 40).

(19) On 7 July 2000 the Appellant, through his solicitor, sought additional lump sum compensation pursuant to the Workers’ ompensation Act . Following this on 2 March 2001 the Appellant again sought through his solicitors to increase his previous claim for additional benefits by way of lump sum compensation under the Workers Compensation Act .

(20) On 18 May 2000, the Appellant asked his solicitors about bringing a claim in negligence against the Respondent. On 25 July 2000 the Appellant again consulted his solicitors about the possibility of bringing a claim at common law. He was informed at that time the solicitors would look into the question further. On 21 December 2000 the Appellant again consulted his solicitors about bringing a claim at common law.

(21) In addition to his wrist injury the Appellant sustained an injury to his low back in the course of his employment with the Respondent in February 2000.

(22) On 22 November 2001 the Appellant served a Notice of Motion in the District Court seeking orders relating to s151A and s151E of the Workers Compensation Act 1987, with two affidavits sworn 22 November 2001; the Statement of Claim of the appellant seeking common law damages was filed on 23 November 2001.

Proceedings before Sorby DCJ

12 Sorby DCJ when considering whether the Appellant was entitled to revoke the election made on 5 March 1996 had to consider s151A(5) in particular, which I set out below with the related subsections in the form of those provisions prior to their amendment on 27 November 2001:

“ Election – damages or “table of Disabilities” compensation
S151A (2) a person to whom compensation is payable under this Act in respect of an injury is not entitled to both:
(a) permanent loss compensation in respect of the injury; and

(b) damages in respect of the injury from the employer liable to pay that compensation

but is required to elect whether to claim that permanent loss compensation or those damages.
(3) The person makes the election:
(a) by commencing proceedings in a court to recover those damages or by accepting payment of those damages (in which case the person ceases to be entitled to permanent loss compensation in respect of the injury); or

(b) by commencing proceedings in the Compensation court to recover that permanent loss compensation or by accepting payment of that permanent loss compensation (in which case the person ceases to be entitled to recover damages in respect of the injury).

(4) An election is irrevocable, except that an election to claim permanent loss compensation may be revoked with the leave of the court given in accordance with this section.
(5) If:
(a) a person elects to claim permanent loss compensation in respect of an injury; and

(b) after the election is made, the injury causes a further material deterioration in the person’s medical condition that, had it existed at the time of the election, would have entitled the person to additional permanent loss compensation; and

(c) at the time of the election, there was no reasonable cause to believe that the further deterioration would occur,

the person may, with the leave of the court and on such terms (if any) as the court thinks fit, revoke the election and commence proceedings in the court for the recovery of damages in respect of the injury.”

13 The matter proceeded before Sorby DCJ without any examination of witnesses. He had before him the report of Dr Herbert dated 1 February 1996 together with the reports from the consultant surgeon, Dr Cameron, of 18 September 1995 and Dr Wallace of 27 November 1995 and also Dr McKessar of 1 February 1996. He concluded that

“It is quite clear that the Reports of the three doctors, including the treating specialist Dr Herbert who reported on behalf of the Plaintiff, point to further deterioration in the Plaintiff’s wrist condition. Both Dr Wallace and Dr Cameron predicted a deterioration that if it had existed at the time of the election on 5.3.96 would have entitled the Plaintiff to additional permanent loss compensation.” (Judgment, Red, 11-12)

14 He then refers to the submission of counsel for the now Appellant and to the report of Dr Ellis of 23 January 2001, as supporting the proposition that the Plaintiff’s medical condition had “also deteriorated in other ways as well”, that is in ways distinct from “a deterioration in the Plaintiff’s wrist condition since March 1996”; Judgment Red, 12F. He records Dr Ellis’ report of 23 January 2001 as noting that

“the Plaintiff’s condition had worsened and that his findings ‘ are these of reflex sympathetic dystrophy [sic] affecting his right arm, shoulder and to a lesser extent his neck ’. The doctor also noted that the Plaintiff had also developed pain and disability in his left arm as a result of compensatory over use Dr Ellis gave the Plaintiff 10% loss of efficient use of his left arm above and below the elbow. He also gave him 70% loss of use of his right arm and 15 impairment of his neck.”

15 Sorby DCJ then notes the submission that the additional medical conditions were not prognosticated at the time of the Plaintiff accepting lump sum compensation in March 1996. Nonetheless, in applying the test laid down by the High Court in State of New South Wales v Taylor (2000) 204 CLR 461 at 467 he concludes that only a deterioration of the Plaintiff’s actual right wrist injury is capable of satisfying s151A(5)(b) since that was the “person’s medical condition” there referred to. Thus he rejects the deterioration in other ways when he says:

“However it seems to me, and I so find, that this interpretation of ‘ a person’s medical condition ’ in s151A(5)(b) is too wide. In my opinion the medical condition referred to is the Plaintiff’s right wrist injury for which lump sum compensation was paid in March 1996. To find otherwise would open the ‘gate’ in s151A beyond what the legislators intended. In my view the medical evidence at March 1996 was such and I so conclude, that it would not be unreasonable to believe that further deterioration would occur.”

16 He links that conclusion to his conclusion that the condition in s151A(5)(c) is not satisfied. He concludes as to the deterioration to the actual wrist condition, adopting that narrow localised sense, that there was reasonable cause to believe that the further deterioration would occur. By so doing he eliminates, wrongly the Appellant argues, the sequelae elsewhere than the injured right wrist resulting from that specific injury. He thus concludes that the Plaintiff’s application under s151A fails so that he does not need to consider the application under s151D for leave to commence court proceedings for common law damages.

First appeal issue: application of s151A(5)

17 The essence of the Appellant’s challenge to the decision of Sorby DCJ is this. That while he purported to apply the test laid down in State of New South Wales v Taylor set out below, for whether the relevant conditions were satisfied to enliven the leave discretion, he did not in fact do so. Thus the way in which he applied the test failed to give effect to that test as it bore upon the proper construction of subparagraph (c) of s151A(5). The Appellant contends that a worker will only be prevented from seeking leave to revoke his or her election, if there be reasonable cause to believe, at the time the original election was made, that the worker’s medical condition would deteriorate in the way it actually had; that is, that the nature and extent of that deterioration must be predictable. This is the significance of the use of the words “the further deterioration”. Thus the fact that there was reasonable cause to believe that some of the elements of the further deterioration would occur is not fatal to the Appellant’s case, if it be the case that there was no reasonable cause to believe other elements of that deterioration in the Appellant’s medical condition would occur. While the injury was to the Plaintiff’s right wrist, the Trial Judge was in error in so limiting the expression “the medical condition” and thus merely to so much of the deterioration as was sited in the right wrist itself. That is, as distinct from a medical condition still attributable to the injury to the right wrist but not actually located there or in the lower arm. The Trial Judge’s error can be explained as follows. He first noted the findings of Dr Ellis in his report dated 23 January 2001 and the deterioration consisting of the development of reflex sympathetic dystrophy, the development of adverse symptoms affecting the right arm, shoulder, neck and left arm. Error came when he concluded that these symptoms, though not prognosticated at the time of the election in March 1996, must be disregarded as falling outside the person’s relevant medical condition for the purposes of s151A(5)(b) and in consequence (c).

18 The test to be applied, as the Trial Judge recognised, is to be found in the following passage from the majority judgment of Gleeson CJ, McHugh and Hayne JJ (at 467):

[12] The form of the subordinate clause in s151A(5)(c) is explained by the fact that it is for a court to determine whether “there was no reasonable cause to believe that the further deterioration would occur”. That fact, together with the omission of any reference to the injured person's belief, suggests that the court examines all relevant evidence concerning the medical condition at the time of the election and all relevant evidence that throws light on the prognosis of the condition at that time. If the court holds that the applicant has failed to prove that there was “no reasonable cause to believe that the further deterioration would occur”, it must refuse the application. If it holds that the applicant has proved that there was no reasonable cause for such a belief, it may, but not must, give the applicant leave to revoke the election.
[13] Hence it is the court's view of all the evidence and not the injured person's belief, reasonable or otherwise, that is decisive. On this view, the test for the court is: given the medical condition of the applicant at the time of the election and the expert opinions as to its prognosis at that time, would it be unreasonable for a person to believe that the condition would further deteriorate as it had . The applicant for leave must prove a negative. He or she must show that it would be unreasonable for a person to hold that belief. The applicant will prima facie discharge that onus by tendering evidence indicating that such a belief could not be reasonably held. If a prima facie case is established, the employer has the evidentiary burden of showing that there exists another body of evidence that indicates a contrary conclusion. Ultimately, it is for the court to determine whether “there was no reasonable cause to believe that the further deterioration would occur” in accordance with the test that we have formulated.” [emphasis added]

19 The emphasis that I have placed on the word “the”, as a definite article before the words “further deterioration” in subparagraph (c), is to show how the further deterioration refers to the actual manner of deterioration derived from, but not limited to, the original injury or its site. This supports a wider construction than that adopted by the Trial Judge. He focused upon the immediate effect of the injury, in this case a damaged wrist. He excluded further later material deterioration to the person’s wider medical condition though caused by the original injury to the wrist. Thus taking the facts in State of New South Wales v Taylor, Callinan J, though in the minority, uncontroversially describes the back injury suffered by the plaintiff in that case. He does so not merely in terms of a particular prolapse of a degenerative disc in the back (at 485 [77]) but as including pain and discomfort in the worker’s back more generally and not only in its immediate effect on his right leg but also later in his left leg. There is nothing in the majority judgment which would take any narrower view of the worker’s condition than that uncontroversially adopted by Callinan J and derived in turn from the original trial findings. While the majority judgment concluded that in light of the evidence, including the evidence concerning the worker’s further deterioration, the worker failed to prove that at the time he made his election “there was no reasonable cause to believe that the further deterioration would occur”, that conclusion in no way depended upon a narrow definition of the worker’s medical condition. In particular it did not require exclusion of any deterioration that was not at the site of the original injury but ramified from it as the Trial Judge in the present case sought to do.

20 Indeed to adopt so restrictive an interpretation would lead to consequences, often unjust in result and contrary to an evident legislative intent for such choices not to be loaded in favour of a premature common law action. Take the example of a back injury to a vertebra from a localised blow. Common experience shows that such an injury is not always quarantined to the immediate site of the original blow. Yet on the Trial Judge’s reasoning, if an election were made for the statutory recovery, and the injury were later to have consequential deteriorating effect on the rest of the back or neck, that deterioration would not bring s151A(5) into play. There would simply be no discretion to give leave. Injured workers would be forced to elect common law damages prematurely, for fear of losing rights in the event of a later deterioration in another site than the actual injury, though resulting from it. That would be, prima facie, a surprising result.

21 Nor, contrary to the conclusion of the Trial Judge, is it the case that, “to find otherwise would open the ‘gate’ in s151A beyond what the legislators intended”. A useful discussion of the legislative history appears in the judgment of Kirby J in State of New South Wales v Taylor, though it failed to throw any interpretive light; that is, either favouring a restrictive interpretation in favour of the employer or an expansive interpretation favouring the employee. Thus (at 476) he says,

“[48] In its original form, the Act abolished common law remedies against employers in respect of injuries sustained after its commencement56. The Minister, explaining this measure, stated that it was taken in order to contain the costs of workers' compensation insurance and to make investment in the State more attractive to potential employers57. However, in 1989, the New South Wales Parliament retrospectively restored the right to damages at common law58. This restoration occurred upon terms which restricted the recovery of damages to “seriously injured workers”59. The provisions of s151A were enacted amongst the foregoing amendments which established the new regime for damages claims. That regime imposed severe restrictions upon recovery.”
51. The Act, s149(1), as originally enacted.
52. New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 14 May 1987 at 12205-12206.
53. Workers Compensation (Benefits) Amendment Act 1989 (NSW).
54. New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 1 August 1989 at 8820.

22 The Trial Judge feared opening the gate too wide. But without introducing the further unjustified constraint of a narrow localised notion of “the person’s medical condition” the High Court’s interpretation of s151A(5) recognised the substantial hurdle in the way of revoking an election. That hurdle lies in having to prove a negative, namely that there was no reasonable cause to believe that the condition would further deteriorate as it had.

23 It is that hurdle which the majority judgment did adopt that remains the further issue to be considered.

24 The Trial Judge concluded that, based upon reports of Drs Herbert, Cameron and McKessar, Dr Herbert being the treating specialist it was quite clear these did point to “further deterioration in the Plaintiff’s wrist condition, as would have entitled the Plaintiff to additional permanent loss concentration had it existed at the time of the election on 5 March 1996” (Red, 11-12). He notes the submission concerning deterioration in other ways as well as identified in the report of Dr Ellis (“reflex sympathetic dystrophy affecting his right arm, shoulder and to a lesser extent his neck” and had also developed “pain and disability in his left arm as a result of compensatory overuse, with “10% loss of efficient use of his left arm above and below the elbow” and 70% loss of use of his right arm and 15% impairment of his neck). He notes the submission that “these additional medical conditions were not prognosticated at the time of the Plaintiff accepting lump sum compensation in March 1996”. He determines that, based on his narrow interpretation of medical condition as limited to the actual site of the worst injury (and thus lower arm) “the medical evidence at March 1996 was such … that it would not be unreasonable to believe that further deterioration [scil to the right wrist and inferentially lower right arm] would occur”.

25 The Trial Judge thus does not reject the submission, or evidence, of deterioration beyond right wrist and lower arm. Nor that there was no reasonable cause to believe the latter deterioration would not occur. His holding is based solely on the narrow notion of medical condition and relief in relation to it.

26 On appeal, the Respondent did not argue that these additional medical conditions did not occur. Nor did he put any argument as to their prognostication. The Respondent argued instead that some of these at least were the result of repetitive strain injury rather than the original wrist injury. From a careful review of the evidence, it is clear that at least some of the additional medical conditions, in particular the reflex sympathetic dystrophy, were not attributed to RSI but to the original injury. It is not necessary to go further than this for present purposes. This can be a matter for future consideration if still challenged were a common law trial for damages to proceed. The determination by this Court on appeal concededly gives rise to no issue estoppel concerning whether the injury caused the further injury in the Appellant’s medical condition beyond the direct injury to the wrist.

27 Having regard to the nature of the deterioration and its extensive ramifications, and reviewing the reports from 1995 and 1996, it is evident that there could have been no reasonable cause for a belief that the further deterioration which did occur, would occur. I would conclude that the Appellant succeeds in the first five grounds of appeal pertaining to s151A(5) and thus that the relevant discretion to permit the election to be revoked is enlivened. The only impediment to that discretion being exercised in favour of the Appellant is the extensive delay. The effect of that can be considered as well in the context of s151D of the Act, in relation to leave to bring a common law action for damages more than three years after the date on which the injury was received.

Should leave be granted under s151D of the Act for the commencement of proceedings for common law damages three years after the date on which the injury was received

28 The Trial Judge did not have to deal with this question in light of his conclusion that no discretion arose to give the leave required under s151A(5) of the Act. In light of the conclusion I reach that the discretion to give such leave s151A(5) was enlivened, I do need to consider whether that leave and the additional leave under s151D should be granted, focussing on the common factor of extensive delay.

29 It is convenient to start with the guidelines for the exercise of such a discretion in the analogous context of s52(4) of the Motor Accidents Act 1988 (NSW). These were enunciated by Gleeson CJ in Salido v Nominal Defendant (1993) 32 NSWLR 524 at 532 which can be read substituting for the references to s52(4) section 151D:

“To take up the words of Glass JA in Mc Gee v Yeomans , it is not possible by judicial decision to establish in advance categories of case in which it would be fair and just to grant leave to commence proceedings out of time under s52(4). However the following guidelines may be of assistance in obtaining consistency of decision-making:

1. Section 52(4) confers a discretion which is to be exercised judicially, in a manner that furthers the purposes of the statutory context in which it appears. The immediate purpose, as with any limitation period, is to protect defendants against the injustice of stale claims; the statute is also aimed at promoting forensic diligence.
2. Bearing in mind those statutory purposes, the question is whether, in the circumstances of each individual case, the applicant for leave has demonstrated that it is fair and just that leave should be granted.
3. The diligence, or lack of diligence, shown by a plaintiff or a plaintiff's representatives, in ascertaining and asserting his or her rights will ordinarily be a material factor, as will the extent of the relevant delay, and the reason for it.
4. The nature and extent of any forensic disadvantage to a defendant resulting from a plaintiff's delay will also be material. The effect, if any, of the delay upon the defendant's ability to defend an action is a matter to be taken into account, and may in some cases be of decisive importance.
5. Leave under s52(4) may be refused if it would be plainly futile to grant it, and in that connection an applicant's willingness and ability to give a full and satisfactory explanation of any delays in reporting to police, notifying claims and commencing proceedings will be material.”

30 To those guidelines should be added what was said by the High Court in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 where these propositions emerge:

(i) it is for the respondent to place in evidence sufficient facts that lead the court to the view that actual prejudice would be occasioned and it is then for the applicant to show that these facts do not amount to material prejudice (per Toohey J and Gummow J at 547);

(ii) whether or not an extension of time is prima facie prejudicial to the potential defendant (McHugh J and Dawson J suggesting it was and Toohey J and Gummow J suggesting otherwise), “ the real question is whether the delay has made the chances of a fair trial unlikely … if it has not there is no reason why the discretion should not be exercised in favour of the respondent ” (per Toohey and Gummow JJ at 550);

(iii) “ … when actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period. The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice ” (per McHugh J at 555);

31 In Halt v Wynter (2000) 49 NSWLR 128 the majority (Meagher JA, Handley JA, Sheller JA and Brownie AJA) concluded that the effect of Brisbane South Regional Health Authority v Taylor was therefore that an application for an extension of time under limitation legislation (including s52(4) of the Motor Accidents Act 1988) should be refused if the effect of granting the extension would result in significant prejudice to the potential defendant.

32 Finally, the judgment of Ipp AJA in the Court of Appeal decision in Itek Graphix Pty Ltd v Elliott (2001) 54 NSWLR 207 adds a further important qualification. It is that where there is a broad discretion to grant leave and the applicant, having made a deliberate decision to allow the statutory period to expire, fails to give a satisfactory explanation for such conduct, the application ought not to be granted, even if the respondent would suffer no prejudice by the delay; see Ipp AJA at 226. Nonetheless that court again affirmed that the general question to be asked is what is fair and just, or what does the justice of the case require (Ipp AJA at 224). The recent Court of Appeal case, Scaltrito v NRMA Insurance Ltd [2003] NSWCA 63 reaffirmed the appropriateness of such an approach.

33 Cases can throw up complexities for which these guidelines do not provide an immediate answer. The present is a case where no actual prejudice has been identified by the party opposing an extension but presumptive or general prejudice is relied upon. No submission has been made that such prejudice rises to the level which would make a trial inherently unfair. Nonetheless there is inevitably a degree of unfairness or prejudice to the defendant simply by reason of the length of delay and the consequence of dealing with memories of potential witnesses; compare McLean v Sydney Water Corporation ([2001] NSWCA 122, unreported, at [27] per Giles JA and at [33]-[35] per Hodgson CJ in Eq.

34 Thus in the present case, the Respondent points to no specific prejudice were the relevant leave granted, but opposes the granting of that leave. It claims the presumptive or general prejudice inherent in a delay of eleven years. There is no suggestion that a particular witness is unavailable or that there is a particular difficulty in proving some crucial matter of defence. Indeed, here, the Appellant’s delay in making any election at all for some six years after the injury works to some extent in the Appellant’s favour. That is because it is impossible to assume that a diligent defendant, faced with the possibility before any election is made of a common law action in damages, would not, at least during the first three years before the limitation period expired, make some preparation to defend such a claim against the possibility that it would be brought.

35 Though it be the case that general or presumptive prejudice is not an automatic bar in the absence of demonstrated significant prejudice, the onus remains upon the Appellant to show that it is fair and just that an extension be granted, and this generally requires at least an adequate explanation of the delay in commencing common law proceedings.

36 The Appellant attempted to satisfy the onus upon him in two ways. First, the Appellant emphasised that the Respondent had full and immediate knowledge of the circumstances of the Appellant’s injury from the moment it occurred. Thus the affidavit evidence before Sorby DCJ established that the injuries suffered by the Appellant on 29 October 1990 were promptly reported to the Respondent. The Appellant was referred to a “company doctor”. The Appellant underwent medical treatment immediately, for which payment was met by the Respondent’s insurer.

37 Moreover, the insurer must have investigated the Appellant’s medical condition as the Respondent’s insurer initially denied liability for the cost of surgery that the Appellant was to undergo shortly after his injury. Surgery was indeed later approved and it was undertaken and paid for by the Respondent’s insurer in February 1994.

38 It is true that the issues in a common law damages claim are distinct from the issues in relation to statutory compensation for a permanent loss. Nonetheless, proceedings when they were commenced for lump sum compensation in August 1995 led to an award by consent. That indicated acceptance of liability under the Act and an investigation and an acceptance of the Appellant’s disabilities by the Respondent.

39 Thus I agree that the Respondent has always been in a position to assess the extent of the Appellant’s disabilities, and the relationship of those disabilities to the employment injury which occurred on 29 October 1990. It could be expected that a prudent employer would also investigate any issues concerning negligence against the possibility of a common law action for damages. Indeed, the Respondent did not give any evidence to the contrary.

40 The further matter emphasised by the Appellant was that he continued in the Respondent’s employment albeit at a reduced number of days with the shortfall in his income from that reduced number of days being made up by Workers’ Compensation payments as well as his medical expenses being paid. This continued until his employment was finally terminated on 17 June 2001. A common law claim for damages followed some five months later on 23 November 2001.

41 The Appellant then relies for what is submitted by way of explanation upon the file notes of the Appellant’s solicitor (to be found between Red, 44 to Red, 65). It is important to note that the three year limitation period had already expired on 29 October 1993 with the Appellant first instructing his solicitors after that on 2 June 1995. By then, his condition which clearly had not stabilised at the outset, had worsened considerably. He had had an operation in February 1994, that is to say in the previous year. That had not been successful so that, understandably, having previously been paid statutory compensation, he now was seeking legal advice in light of his worsened condition. Significantly, in his statement of 2 June 1995 titled “Workers’ Compensation Instruction Sheet” he said

“I can get workers to do the physical jobs for me at work, though I’d never had any complaints about my work. In fact I even worked when I had my wrist in plaster, and my injury has not interfered with my dedication to my job and the company and my ability to perform my duties as development manager.
…You have explained the Workers’ Compensation procedure to me and I understand I will be asked to fund disbursements along the way, to be reimbursed on successful completion of any claim that is made on my behalf. I have also signed medical authorities for you to request reports.”

42 The picture that emerges is of an employee working at making shoes. He appears dedicated to his employer and to his job despite the injury he has suffered. He obtains Workers’ Compensation payments but seeks further advice regarding Workers’ Compensation procedure though it appears not at this point concerning a common law action, in circumstances where the surgery has now proved unsuccessful.

43 The next diary note is dated 17 December 1997 and is described as a “Shaw McDonald Internal Memo” (Shaw McDonald are his lawyers). Again at that point there is nothing in the advice to indicate any consideration of a common law claim. Rather the employee, still employed, seeks a payment of further medical expenses from the employer without the necessity of making any further claim for permanent injuries under ss66 and 67 of the Act. In circumstances where the employer was continuing to provide employment and making payments of that kind again that is quite understandable.

44 The next file note is at 15 January 1999 (Red, 48). There is now further deterioration in the Appellant’s right wrist, recorded following medical advice from Professor Cumming in which further surgery is contemplated. The file note indicates that while the Appellant may be offered a continued position at work he fears he also may be sacked. Moreover the injury has yet to stabilise. It then contains the following significant paragraphs:

“He is adamant that he is not interested in a further settlement. He wants his day in Court (to face the Judge).
He then said that he wants the case finalised this year. I said that it is impossible as we cannot even commence proceedings until he has undergone further surgery and his condition has stabilised.”

45 The reference to “further settlement” was in relation to a lump sum in lieu of periodic payments to compensate for permanent impairment, such lump sum being however paid under the Act.

46 Clearly enough there is an explanation for deferring court proceedings. His solicitor is advising him that he, still employed, should not bring them until his condition has stabilised after the contemplated further surgery.

47 The next diary note is 13 May 1999 (Red, 50). There the Appellant indicates that if anything he has got a little worse though he continues to receive physiotherapy as recommended by his doctors, paid for by the insurer. The diary note indicates that at that point the legal advice is focussed upon the possibility of having the insurer pay a sufficient lump sum in commutation not of all of his entitlements but of his s66 claim under the Act and states: “We can advise him in relation to that aspect of the matter after we receive Professor Cumming’s report and after he had been independently assessed by Dr Ellis or someone similar.” The focus remains on seeing if consideration can be given to a total commutation under the Act.

48 Correspondence consistent with the above then follows with the insurer dated 14 March 1999 from Shaw McDonald; Red, 52.

49 The diary note a year later, 18 May 2000, is in fact the first diary note which indicates any serious consideration of a common law damages claim. At Red, 54 the diary note concludes:

“I explained to Hasan [the Appellant] the difficulty in commencing a negligence action against his employer ten years after the event. He said that the extent of the damage only now has become apparent . He feels that he is back to square one. The condition he was in prior to his first operation. Query if we would need to allege negligence in the cause of the original injury (falling off a poorly supported platform) as well as negligence in delaying approval of the operation. I told Hasan that the limitation period normally can be extended for up to eight years. Probably he will need to obtain counsel’s advice.” [emphasis added]

The diary note also notes that while he is still employed, his condition has now significantly worsened.

50 On 7 July 2000 Shaw McDonald writes to the insurer seeking lump sums by way of settlement of the various statutory claims (Red, 55). There is at that point still no pressing of any common law claim at a time when the Appellant is still working for the Respondent and there is the perceived prospect of the lump sum settlement.

51 The next diary note of 26 July 2000 (Red, 57) records further deterioration in his condition and, the prospect that he may get a more sedentary job with the employer. There then follows his enquiry about the possibility of a common law action, to which the solicitor indicates that “He probably has made his election by accepting lump sum compensation pursuant to ss66 and 67 of the Act. However, we will look into that question further …”

52 On 21 December 2000, the next diary notes records the continued pain in his right arm, prospects of further surgery and the Appellant again raises the prospect of a possible common law action. The diary note (Red, 60) records the advice he receives which is essentially to press the insurer to consider a reasonable commutation which can then be compared to possible damages at common law. It concludes “he understands the difficulty that the limitation period has expired, and that he might be caught by the election provisions” (Red, 60). Again the paragraph emphasises that he should continue attending the Pain Management Centre “until such time as the insurer decides that no further treatment or rehabilitation will assist in getting him back to work”. The significance of that observation is he is clearly predicating his future action on the basis that he may cease to be able to work.

53 On 2 March 2001 Shaw McDonald write to the then insurer seeking lump sum commutation based on the then increased deterioration in his medical condition for a sum totalling $64,980.62; Red, 61-2.

54 There is then a file note for a conference on 30 March 2001 where it is agreed that it is inevitable that his employment will be terminated, that he should seek a redundancy package and that commutation of his s66 and s67 non-economic loss claims coupled with commutation of all his remaining rights “could be approved for something like $250,000 at a guess”; Red, 63.

55 The solicitor then records his advice as follows:

“I explained that his acceptance of s66 and s67 benefits for his right arm in 1995 acted as an election to forego his common law rights. Additionally, the limitation period has expired. I explained that we could approach the Supreme Court for an order extending the limitation period, and waiving his election under the Workers’ Compensation Act . We will need to take counsel’s advice as to the evidence necessary to adduce in support of those applications.”

56 The final diary note of 25 June 2001 is just after his employment was finally terminated on 17 June 2001. The diary note confirms that “while he is now receiving 80% of his normal weekly wage” and while “these payments should continue for six months post-termination” “he realises that the situation will not continue indefinitely”.

57 Advice as recorded then indicates that whilst his solicitor has not reached a conclusive view, it is unlikely that he still has a common law entitlement (reference being made to State of New South Wales v Taylor) and that “should he be restricted to Workers Compensation rights, … he will have the choice of remaining on make-up pay until age 65 plus treatment expenses or electing to take a commutation.” The commutation figure is explained to be a “matter for negotiations with the insurer”. However, he never did receive the commutation payment.

58 These were circumstances where the Appellant had thus unsuccessfully sought additional lump sum benefits on 7 July 2000, had continued in employment throughout the eleven years but finally lost his job on 17 June 2001, and where he had received advice about the difficulties of bringing common law proceedings though he had raised these at conferences on 25 July 2000, 21 December 2000, 29 March 2001 and 25 June 2001. What does he do? He finally on 6 August 2001 gave instructions to his solicitors to attempt to pursue an action at common law. A motion seeking leave to commence proceedings was not filed by his solicitors until more than three months later, on 23 November 2001, though that does not bespeak any lack of diligence on his part.

59 The Appellant submits with some force that where an injury does not stabilise, as here, but continues to deteriorate over a considerable number of years well in excess of the three year limitation period, it can be expected that that limitation period will be exceeded, not necessarily through any fault of the injured worker. The worker simply does not know until the injury stabilises whether the Workers’ Compensation payments will sufficiently compensate or whether a common law action for damages should be brought assuming there is negligence on the part of the employer. That indeed was the case here, if one makes that assumption. Thus the initial passing of the three year period is capable of reasonable explanation.

60 I consider that the decision not to bring common law proceedings is sufficiently explained by the diary notes, though the explanation leaves something to inference. One may properly infer that the Appellant did not want to bring common law proceedings against his employer whilst (a) his job continued; (b) he was receiving payments under the Act from his employer; (c) his condition had not stabilised but was getting worse; (d) while he had hope of a substantial payment under the Act by way of settlement and commutation; (e) there would be potential legal impediments; and (f) he had received no legal advice to commence proceedings at common law till very late. But the point was reached where his condition had worsened, where his job was terminated and no commutation payment was forthcoming. At that time, the inhibition against any proceedings would simply have been a potential legal impediment in revoking his election. Reasonably enough, with the benefit of legal advice, he then commenced proceedings in common law.

61 This is not a case like Itek Graphix Pty Limited where a deliberate decision had been made within the three years to allow the statutory limitation period to expire. That was a powerful factor against the grant of leave. Here the employee simply did not obtain legal advice till after that time and was in continued employment receiving payment under the Act so did not at first press for such advice. Moreover, unlike Itek Graphix Pty Limited this was a case of a lengthy period of worsening medical condition which had yet to stabilise and whose full extent was not confirmed by the doctors until Dr Ellis’s report starting 27 June 2000. This is not therefore a case where ordinarily it will be difficult to provide an explanation sufficiently cogent to warrant the grant of leave.

62 Moreover, no specific prejudice has been advanced by the Respondent beyond general or presumptive prejudice. Moreover, this was in circumstances where the Respondent could not reasonably assume at the time of the accident and in the ensuing three years (at least) that a common law action would not be brought. Nor could it reasonably be assumed, with the evident continued worsening of his condition after the election, and the rejection of commutation payments, that the Appellant would not seek to revoke his election as he did, particularly if he lost his job.

Conclusion

63 This case is close to the line. However, weighing up all of the factors both in favour and against giving leave under s151D, I am satisfied that despite the lengthy delay, in the circumstances of this case it is fair and just that leave should be granted. Any prejudice to the Respondent was simply of a general presumptive character and should not in the circumstances have risen to the level which would outweigh the factors in favour of leave.

OVERALL CONCLUSION

64 Having resolved that leave should be granted under s151D notwithstanding the delay, I am also satisfied that the discretion enlivened under s151A(5) should be exercised in favour of the Appellant.

ORDERS

65 I propose orders as follows:

1. The Appeal be allowed.

2. The Order of His Honour Judge Sorby dated 26 March 2002 be set aside.

3. The Orders sought in the Notice of Motion filed in the District Court on 22 November 2001 be allowed.

4. The Respondent pay costs of the Appellant in this Court and in the District Court of New South Wales.


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Last Modified: 04/22/2003