Shirreff v Elazac Pty Ltd (No 2)
[2010] VSC 508
•11 November 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
No. 5803 of 2009
| LINTON SHIRREFF | Plaintiff |
| v | |
| ELAZAC PTY LTD | Defendant |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8 November 2010 | |
DATE OF JUDGMENT: | 11 November 2010 | |
CASE MAY BE CITED AS: | Shirreff v Elazac Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 508 | Amended 11 November 2010 |
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PERSONAL INJURY – plaintiff obtained judgment in a proceeding commenced under s 134AB of the Accident Compensation Act 1985 – application for costs – whether statutory counter offer valid – if invalid plaintiff required to pay own costs – if valid defendant to pay plaintiff’s costs – whether counter offer complied with s 134AB(12)(c) – consideration of Ministerial Directions on construction of “offer” for purpose of s 134AB(12)(c) – statutory counter offer valid – s 134AB of the Accident Compensation Act 1985
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T P Tobin SC and Ms M Pilipasidis | Kenyons |
| For the Defendant | Mr D E Curtain QC and Ms B Y Knoester | Hall & Wilcox |
TABLE OF CONTENTS
INTRODUCTION AND SUMMARY............................................................................................ 1
THE RELEVANT LEGISLATION.................................................................................................. 1
DISCUSSION..................................................................................................................................... 5
RELEVANT AUTHORITIES........................................................................................................... 8
DO THESE DECISIONS AFFECT THIS CASE?......................................................................... 9
HIS HONOUR:
INTRODUCTION AND SUMMARY
On 2 September 2010, judgment was entered for the plaintiff in the sum of $897,620.80. The plaintiff had succeeded in a claim for damages for pain and suffering and pecuniary loss damages arising out of injuries he suffered in a lift well whilst employed by the defendant in proceedings brought under s 134AB of Accident Compensation Act 1985 (“the Act”).
The plaintiff seeks an order that the defendant pay the plaintiff’s costs including any reserved costs. The defendant opposes the order. The defendant contends that contrary to s 134AB(12)(c) of the Act and the relevant ministerial direction the plaintiff failed to make a statutory counter offer. As a result the defendant says that under s 134AB(14) of the Act, the plaintiff is deemed to have made a counter statutory offer of the maximum amount that may be awarded as damages under sub-s 134AB(22)(a) and (b). The parties agree that if that is the case then s 134AB(28)(d) applies and each party must bear its own costs. In that event, the plaintiff’s application would be dismissed.
For the following reasons I find that the plaintiff did make a valid statutory counter offer and I will make the order for costs sought by the plaintiff.
THE RELEVANT LEGISLATION
Section 134AB
….
(12)The worker must not commence proceedings in accordance with this section, other than an application under subsection (16)(b) or the commencement of proceedings with the consent of the Authority under subsection (20) or (20A), unless—
(a)the worker and the Authority or self-insurer hold, or begin, a conference within 21 days after the response date; and
(b)the Authority or self-insurer makes a statutory offer in writing in settlement or compromise of the claim at that conference, or after the conference begins but no later than 60 days after the response date; and
(c)if the worker does not accept that statutory offer within 21 days after it is made, the worker, before the expiration of that period, makes a statutory counter offer in writing in settlement or compromise of the claim; and
(d)the Authority or self-insurer does not accept that counter offer within 21 days after it is made; and
(e)the proceedings are commenced not earlier than 21 days, and not more than 51 days, after the counter offer is made or, if a counter offer is deemed to have been made under subsection (14), not more than 30 days after the day on which the counter offer is deemed to have been made.
(13)If the Authority or self-insurer does not make a statutory offer under subsection (12), the Authority or self-insurer is deemed, for the purposes of that subsection, to have made, on the 60th day after the response date, a statutory offer of nothing.
(14)If the Authority or self-insurer makes a statutory offer under subsection (12) and the worker does not make a statutory counter offer under that subsection, the worker is deemed, for the purposes of that subsection, to have made, on the 21st day after the statutory offer was made, a statutory counter offer of the maximum amount that may be awarded as damages under subsection (22)(a) and (b).
….
(22)A court must not, in proceedings in accordance with this section, award to a worker in respect of an injury—
(a)pecuniary loss damages—
(i)if the total pecuniary loss damages assessed, before the reduction (if any) under section 26(1) of the Wrongs Act 1958 and before the reduction (if any) under subsection (25), is less than $44 730 or that amount as varied in accordance with section 100 as at the date of the award; or
(ii)in excess of $1 006 760 or that amount as varied in accordance with section 100 as at the date of the award; or
(b)pain and suffering damages—
(i)if the total pain and suffering damages assessed, before the reduction (if any) under section 26(1) of the Wrongs Act 1958 and before the reduction (if any) under subsection (25), is less than $43 190 or that amount as varied in accordance with section 100 as at the date of the award; or
(ii)in excess of $503 000 or that amount as varied in accordance with section 100 as at the date of the award; or
(c)damages of any other kind, other than damages in the nature of interest.
….
(25)If a judgment, order for damages, settlement or compromise is made or entered in favour of a worker or the dependants of a worker in respect of proceedings referred to in subsection (1), the amount of the judgment, order for damages, settlement or compromise must be reduced by—
(a)to the extent that it is in respect of pecuniary loss, the amount of compensation (if any) paid otherwise than under section 98C, 98E and 99 or to the extent that section 93(10)(a) of the Transport Accident Act 1986 applies, except any such compensation paid in respect of the whole or any part of the period of 18 months after the relevant transport accident;
(b)to the extent that it is in respect of non-pecuniary loss, the amount of compensation (if any) paid under section 98C and 98E.
(26)If the amount of a judgment is subject to a reduction under subsection (25), that reduction must be made before the reduction (if any) under section 26(1) of the Wrongs Act 1958 is made.
….
(28)In proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under subsection (12)—
(a)if no liability to pay damages is established, the worker must pay the party and party costs of the employer, Authority or self-insurer and the worker's own costs;
(b)if judgment is obtained or a settlement or compromise is made in an amount not less than 90 per cent of the worker's statutory counter offer under subsection (12) and more than the statutory offer of the Authority or self-insurer, the Authority or self-insurer must pay the worker's party and party costs and its own costs;
(c)if judgment is obtained or a settlement or compromise is made in an amount not more than the statutory offer of the Authority or self-insurer under subsection (12), the worker must pay the party and party costs of the Authority or self-insurer and the worker's own costs;
(d)if judgment is obtained or a settlement or compromise is made in an amount that is more than the statutory offer of the Authority or self-insurer under subsection (12) but less than 90 per cent of the worker's statutory counter offer under that subsection, each party bears its own costs—
and the court must not otherwise make an order as to costs.
(28A)[1] For the purposes of determining a liability to pay costs, or an entitlement to be paid costs, under subsection (28)(b), (c) or (d), if the amount of a judgment, order for damages, settlement or compromise is required to be reduced under subsection (25), the amount of the reduction must be the amount of compensation paid—
[1]Inserted 9/2010.
(a)to the date of the statutory counter offer under subsection (12); or
(b)to the date of the deemed statutory counter offer under subsection (14).
(28B)[2]A reduction under subsection (28A) must be made before the reduction (if any) under section 26(1) of the Wrongs Act 1958 is made.
[2]Inserted 9/2010.
….
(36)[3] If judgment is obtained, or a compromise or settlement made in respect of proceedings referred to in subsection (1) in respect of an injury, the Authority, the employer or self-insurer is not liable—
[3]Amended 9/2010.
(a)where pecuniary loss damages are awarded, to pay weekly payments in respect of the injury; or
(b)where pain and suffering damages are awarded, to make payments under section 98C or 98E in respect of the injury.
(36A)[4] If judgment is obtained, or a compromise or a settlement is made, in respect of proceedings referred to in subsection (1) and the worker was, at the date of the judgment, compromise or settlement, still in receipt of compensation in the form of weekly payments, where pecuniary loss damages are awarded against the Authority, employer or self-insurer, the Authority, employer or self-insurer must, until the date on which a cheque is drawn for the purpose of payment of the judgment, compromise or settlement, pay to the worker a weekly amount equal to the net weekly amount that, but for subsection (36), would have been payable to the worker as compensation in the form of weekly payments in respect of the injury.
[4]Inserted 9/2010.
(36B)[5]Subsection (36A) applies only in respect of proceedings referred to in subsection (1) against a sole defendant where that sole defendant was the worker's employer at the date of the injury the subject of the proceedings.
[5]Inserted 9/2010.
(36C)[6]An amount paid in accordance with subsection (36A) is, to the extent of the payment, part satisfaction of the liability in respect of the judgment, settlement or compromise.
[6]Inserted 9/2010.
Section 134AF Directions
(1)For the purposes of section 134AB, the Minister may issue directions for or with respect to procedures under that section.
(1A)For the purposes of section 134AB(3)(b), the Minister may issue directions specifying or limiting the classes of cases or circumstances in which an election can be made under that section.
** * * *
(3)The directions may include directions about the provision of information by affidavit and the attending of conferences.
(4)A person to whom a direction under this section applies, and the legal representatives and agents of such a person, must comply with the direction.
(5)The directions may specify that a failure to comply with a particular provision of the directions has the effect of altering a period applicable under that section.
DISCUSSION
Under s 134AB(12) of the Act the plaintiff was not entitled to commence proceedings in accordance with s 134AB, as he ultimately did, unless he followed a certain procedure involving the plaintiff and the Victorian WorkCover Authority (in this case). The Authority is required to make a statutory offer in writing in settlement or compromise of the claim. If the plaintiff does not accept the statutory offer within 21 days after it is made, the plaintiff is to make a statutory counter offer in writing, in settlement or compromise of the claim.
The amount of the statutory counter offer is important on the issue of costs if the matter proceeds to judgment, as it did in this case. Relevantly for this case, if the judgment is obtained in an amount that is more than the statutory offer of the Authority under subsection (12) but less than 90 per cent of the worker’s statutory counter offer under that subsection, each party bears its own costs.[7]
[7]Section 134AB(28)(d)
On 16 February 2009, the Authority made a statutory offer of $nil. The offer was accompanied by a letter of the same date from solicitors for the Authority to the plaintiff’s solicitors which said that “the sum recorded in the offer of $Nil is a net amount after the deduction required by section 134AB(25) of the Act.” The letter also added that “[f]or the avoidance of doubt, if the offer is accepted, there is no requirement for Linton Shirreff to repay statutory compensation already received pursuant to the Act.”
On 6 March 2009, the plaintiff’s solicitors sent a document entitled “statutory offer for the purposes of section 134AB(12)(c) which stated:
“Six hundred and fifty thousand dollars for general damages and loss of earnings, being an amount after reduction pursuant to section 134AB(25), plus costs in accordance with the Ministerial Directions less any amounts of compensation received from the date of this statutory offer until settlement or judgment.
(Amount in words)
$650,000
(Figure)”
The defendant claims that the purported statutory counter offer was invalid as it did not comply with the ministerial directions issued by the minister in 2001 under s 134AF and s 20C of the Act. Relevantly ministerial directions 12.1 and 12.2 provide:
12.1A statutory offer by the Authority or self-insurer must be recorded by the Authority or self-insurer’s legal representative in accordance with Form B attached to these Directions and is to be open for acceptance for 21 days and a copy is to be served on the worker or the worker’s legal representatives.
12.2A statutory counter offer must be recorded by the worker or the worker’s legal representative in accordance with Form C attached to these Directions and a copy is to be served on the Authority or self-insurer or their legal representatives.
Relevantly Form C provided after details of the worker, employee, self-insurer and date of worker’s application under s 134B as follows:
“Statutory counter offer for the purposes of Section 134AB(12)(c)
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(Amount in words)
($ )
__________________________
(Figure)”
The nub of the defendant’s argument is that Form C calls for a single immutable amount to be given, not a formula that allows for different amounts to be offered as time passes after the statutory counter offer is made.
In particular, the defendant contends that under the plaintiff’s statutory counter offer as time passes, from the date of the offer until settlement or judgment, the amounts of compensation received by the plaintiff from the authority will increase and thus the calculated settlement figure will decline. The defendant contends that such an offer is not a statutory counter offer made in accordance with the Act.
The plaintiff contends that the offer may only be accepted for 21 days but concedes that the amount of the statutory settlement offer may decline as time passed both before and after the expiration of 21 days. As it is, Mr Shirreff received some $100,000 in compensation from the Authority by the time judgment was entered. The sum was deducted from the damage assessed before the judgment sum was calculated.
The defendant contends it is unnecessary to resolve whether or not the statutory counter offer remains open for only 21 days.
As discussed above, the defendant says that the plaintiff failed to make a valid statutory counter offer and that if that is the case then s 134AB(28)(d) applies and each party must bear its own costs. In that event, the plaintiff’s application would be dismissed.
RELEVANT AUTHORITIES
In Raeburn v Tenix Defence Systems Pty Ltd[8] the Court of Appeal (Maxwell P, Nettle and Ashley JJA) held that the “judgment” against which the calculations in s 134AB(28) are to be calculated is the amount awarded by the jury reduced by the compensation payments received by the worker under the Act. The Court of Appeal conceded that this could work a hardship against the plaintiff as the plaintiff faces the prospect that the longer the trial is delayed the greater the damages award would be reduced by compensation payments received by the plaintiff. In such a case, the risk of not achieving 90 per cent of the statutory counter offer increases. Nevertheless in the face of long standing authorities the court felt that they could not accept the construction suggested by the plaintiff. As indicated, this was a decision about the meaning of judgment for the purposes of s 134AB(28).
[8][2007] VSCA 90.
The defendant contends that sub-ss 34AB(28A), (28B), (36A), (36B) and (36C) of the Act have been introduced to overcome the decision in Raeburn v Tenix Defence Systems Pty Ltd[9]. The defendant argues that this case falls to be dealt with under the Act as it was before those amendments were made.
[9][2007] VSCA 90.
In Bishop v The Herald and Weekly Times Limited[10] Williams J considered the validity of a statutory counter offer which relevantly said: “Six hundred and fourteen thousand six hundred dollars (the settlement sum) less the amounts required to be deducted at settlement or judgment pursuant to s 134AB(25)(a) and (b) of the [Act]”.
[10][2010] VSC 471.
Williams J accepted that it was not necessary to state a nominated sum of money under the statutory counter offer. She said:
[21]I agree with counsel for Mr Bishop that the failure to record the purported statutory counter offer as a stated sum does not alone invalidate it. Under s 53 of the Interpretation of Legislation Act 1972, substantial compliance with a prescribed form is sufficient. If the statutory counter offer clearly stated an amount, by reference to a mechanism for its calculation, I would have been inclined to conclude that there had been substantial compliance with the Directions. I do not however consider that Mr Bishop did clearly state the amount of the counter offer so that the Herald & Weekly Times could be certain as to the precise amount to be paid for its acceptance.
[22]Counsel for Mr Bishop contend that the statement of the offer provided a mechanism for determining what sum was payable on any date upon which the offer was accepted or on the date of judgment. According to them, the amount of compensation received could be easily ascertained and deducted from $614,600.00 to provide the requisite sum on the particular day.
As it was, Williams J found that a sum certain could not be determined under the terms of the statutory counter offer. She held, inter alia, that the amount to be deducted was not ascertainable as there was not in existence a judgment, order for damages, settlement or compromise made or entered in favour of a worker or the dependants of a worker in respect of proceedings referred to in subsection (1) as no proceedings had in fact been commenced at the time the offer was made.
The difficulty she saw was in applying the deductions required under s 134AB(25) when no such deductions were required as that section had not been activated.
DO THESE DECISIONS AFFECT THIS CASE?
In my view the critical issue is that identified by Williams J. That is would the Authority know precisely what it had to pay if it accepted the statutory counter offer.
The Authority had no issue with the identification of the sum presented by the first part of the calculation. Rather it took issue with the deduction required by “less” and the words following. The Authority did not contend that it would not be able to calculate precisely the sum offered from time to time. Rather, as discussed above, the issue it had was one of compliance with the ministerial direction; that is the offer calculation leads to different statutory counter offer sums depending on the day of judgment or settlement.
In my view, there is no requirement that the statutory counter offer sum be a fixed immutable sum. I agree with Williams J that the sum may be reached by calculation. Williams J was not required to deal with a sum that may vary according to the day on which it is calculated. Her Honour cited with approval the observations of Gillard J concerning the need for clarity of expression in an offer of compromise in White v Director of Housing[11] where his honour said:
It is trite to observe that the terms of the offer must be clear, precise, certain and capable of acceptance, so that if a party fails to accept the offer, the Court is in a position to give effect to the Rules relating to a failure to accept, where the offeree obtains a judgment less favourable than the terms of the offer.
[11][2003] VSC 124 at [17].
As mentioned above, whenever the Authority wishes to accept the counter offer, while it is still open, it is able to do so. There is not suggestion that it will not know precisely what the counter offer sum is at all relevant times.
In my view the relevant issue for the disposition of this case is the proper construction of s 134AB(12)(c). In my view, the Minister by his directions under s 134AF is not able to limit or alter the nature of a counter offer that would otherwise comply with s 134AB(12)(c). In any event I do not consider the Minister has purported to do so.
Under s 134AF(1) the Minister may issue directions for or in respect to procedures under that section. In my view, a direction limiting what is meant by offer is not a matter of procedure.
The ministerial directions may include directions about the provision of information by affidavit and attending of conferences. This power does not apply to defining the nature of the offer.
Sub-section 134AF(4) does not expand the minister’s powers to define the meaning of “statutory counter offer”. Sub-section (5) deals with a failure to comply with a particular provision which again does not assist the Authority.
Normally a valid offer is one which is capable of acceptance giving rise to a binding contract. There is nothing in s 134AB(12)(c) which suggests otherwise. In my view the offer made by the plaintiff was capable of acceptance giving rise to a valid and enforceable contract. The defendant has not sought to argue otherwise. Its objection is founded on the ground that the offer was not in the form directed by the minister in his ministerial directions.
There are further reasons why this construction of the meaning of a statutory counter offer should be so interpreted. The statutory counter offer fulfils several functions. It is a prerequisite to proceedings being commenced. I can see no reason why this purpose would require a statutory offer to be any more than what is required by common law principles of contract.
Secondly, the offer must be capable of acceptance or rejection as envisaged by s 134AB(12)(d). Again there is nothing in this function which would suggest that the offer need be any less than a valid offer at law.
Thirdly, the offer must be one that can properly fulfil the function of being compared to the judgment, settlement or compromise reached in the matter. Judgment is calculated, inter alia, by subtracting from the assessment of loss made by the tribunal of fact the compensation payments made to the plaintiff as required under s 134AB(25). In my view, that purpose is not undermined by the statutory counter offer being calculated by a formula which takes account of compensation payments made. On the contrary, it appears reasonable that a statutory counter offer may be structured to allow for the calculation of the offer to be made without any prejudice to a plaintiff through the passing of time.
The contention made by the defendant that a single fixed immutable figure must constitute the offer would only add difficulty to the plaintiff in making a reasonable and sensible statutory counter offer. The construction of offer contended for by the defendant would limit what may normally be constituted by an offer. That construction may lead a plaintiff to settle for less than he or she otherwise might, to guard against the risk of the case going longer than he or she might expect.
I can not see anything in the Act that would suggest the normal meaning of the word offer (in the context of forming a contract) should be read down to accommodate such an objective.
In my view it is unnecessary for me to resolve the issue of whether or not the statutory counter offer may be accepted beyond 21 days. Even if it can not be accepted beyond 21 days the statutory counter offer still has the other cost entitlement function referred to.
For these reasons I will make the costs order sought by the plaintiff.
CERTIFICATE
I certify that this and the 11 preceding pages are a true copy of the reasons for Judgment of Justice Robson of the Supreme Court of Victoria delivered on 11 November 2010.
DATED this eleventh day of November 2010.
Associate
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