VWA v Hickory Building Systems Pty Ltd
[2018] VCC 617
•4 May 2018
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| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Suitable for Publication |
SERIOUS INJURY LIST
Case No. CI-16-05688
| VICTORIAN WORKCOVER AUTHORITY | Plaintiff |
| v | |
| HICKORY BUILDING SYSTEMS PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE BOWMAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14, 21 and 27 November 2017 & 18 April 2018 | |
DATE OF RULING: | 4 May 2018 | |
CASE MAY BE CITED AS: | VWA v Hickory Building Systems Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 617 | |
REASONS FOR CIVIL RULING
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Catchwords: Three related proceedings – action in negligence by plaintiff (Wu) against two defendants, one of which being effectively his own company (I & J) and alleged employer, the other (Hickory) being occupier – second aspect of action being contribution proceedings between defendants – third part being recovery action by VWA against Hickory – in recovery action, VWA asserted and admitted that plaintiff a worker within the meaning of the Act and employed by I & J - Offer of Compromise made by Hickory and accepted by VWA – orders obtained by consent for Hickory to pay VWA’s costs, recovery action otherwise dismissed – Wu’s action also settled and dismissed – contribution proceedings remained on foot – VWA, standing behind I & J, immediately denied that Wu a worker within meaning of the Act – Hickory issued Summons seeking that VWA be restrained from accepting Offer of Compromise, Hickory have leave to withdraw Offer of Compromise and referring to Victorian Model Litigant Guidelines – argument heard in relation to Hickory’s application with references to approbation and reprobation, issue estoppel, behaviour of VWA and the like – decision reserved – whilst decision reserved, ultimately VWA, via I & J or possibly in own right, admitted that Wu a worker within the meaning of the Act and employed by I & J – Hickory’s application no longer necessary – arguments concerning interest and costs – behaviour of the VWA as model litigant – factors to be considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C Spitaleri | Wisewould Mahony |
| For the Defendant | Mr R H Stanley | Terrill & Holmes |
HIS HONOUR:
Preamble
1 This unusual matter effectively comes before me by way of referral from his Honour Judge Brookes, who was aware of the situation and indeed enthusiastically supported such referral. It involves three actions essentially arising from the one injury in the course of employment, two of which were dealt with by his Honour on the basis that they were settled and one of which remains alive. As it was thought that arguments to be advanced may involve discussion of settlement negotiations, it was considered appropriate that the present application be dealt with by a judge other than his Honour. Accordingly, the present dispute was referred to me. Whilst originally it was of substantially broader ambit, what remains are arguments concerning interest and costs. However, in order to rule upon those areas of dispute, some analysis of the factual background is required.
Appearances
2 Ms C Spitaleri of counsel appeared on behalf of the VWA. Mr R H Stanley of counsel appeared on behalf of Hickory. No oral evidence was called, each side essentially relying upon affidavits and exhibits. In addition, quite lengthy, detailed and helpful submissions were made by counsel.
The litigation situation
3 Shenggui Wu (hereinafter referred to as “Wu”) alleged injury arising out of or in the course of his employment as the result of an accident on 5 June 2012 (hereinafter referred to as “the accident”). He alleged employment by what could be described as his own company, I & J Building Services Pty Ltd (hereinafter referred to “I & J”). In relation to the injury suffered, he also sued Hickory Building Systems Pty Ltd (hereinafter referred to as “Hickory”). Hickory was in essence the occupier of the premises at which the accident occurred and the premises were said to be under its management and control.
4 Out of the accident, three actions arose. These are:
(a) Wu against I & J and Hickory – what could be described as the principal action and the one in which damages were sought against both defendants. This shall hereinafter be referred to as “the principal action”;
(b) as an adjunct of the principal action, Notices of Contribution were issued by I & J against Hickory, and by Hickory against I & J. This shall henceforth be referred to as “the contribution action”;
(c) the Victorian WorkCover Authority ( hereinafter referred as “the VWA”) issued a Writ against Hickory pursuant to s138 of the Accident Compensation Act 1985 (hereinafter referred to as “the Act”) seeking to recover weekly benefits, medical expenses and the like paid by the VWA to Wu in respect of the injury sustained. This shall hereinafter be referred to as “the recovery action”.
5 All three actions were listed for hearing before his Honour Judge Brookes on 3 October 2017. As I understand it, the normal practice was to be followed in that the principal and contribution actions were to be heard and determined and then the recovery action would proceed. However, what occurred was that the principal action and the recovery action both settled. The contribution action did not settle and remains alive. I shall come back to the consent orders obtained shortly.
6 The dispute brought before me arose out of the recovery action – that is, No: CI‑16‑05688. It centred upon an Offer of Compromise made by Hickory in that action. The Offer of Compromise was accepted by the VWA. Accordingly, as shall be discussed, the recovery action was settled, with consent orders of a dismissal of that action together with the payment of legal costs.
7 Subsequently, in the recovery action, Hickory issued a Summons dated 25 October 2017, followed by an Amended Summons dated 27 October 2017, seeking the following relief:
(i) that the VWA be restrained or estopped from accepting the Offer of Compromise;
(ii) alternatively, it would be unconscionable for the plaintiff to accept or attempt to enforce the Offer of Compromise, with reference being made to the Victorian Model Litigant Guidelines;
(iii) alternatively, that Hickory have leave to withdraw the Offer of Compromise;
(iv) that the orders made on 3 October 2017 dismissing the VWA’s proceedings with costs be set aside;
(v) costs.
8 Thus, in summary, the Summons which was issued by Hickory and which was to be determined by me is in the action of the VWA against Hickory, that is the recovery action. However, argument concerning that Summons necessarily involves some consideration of the other actions, particularly the contribution action, and the orders made by his Honour. Of course, the contribution action remains on foot.
The pleadings involved in all three actions and the disposal of the principal and recovery actions
9 In the principal action, it was alleged, inter alia, that Wu was a worker employed by I & J pursuant to the provisions of the Act and was so employed when he was injured in the accident. The status of the plaintiff was a key ingredient in what has since transpired. In its Defence, I & J did not admit that Wu was employed by I & J or was working in the course of his employment when injured. It was not a denial, but simply a non-admission. The Notices of Contribution between I & J and Hickory were in what is described as a standard form. As I understand it, there was no reference contained in those Notices in respect of the employment issue.
10 In the recovery action, the VWA specifically asserted that, at all material times, Wu was a worker and that I & J was the employer pursuant to the provisions of the Act. It further asserted that the premises in question constituted a workplace and that at all material times Wu, as the worker, was performing work in the scope and course of his employment with the employer (I & J).
11 On 3 October 2017, his Honour Judge Brookes was informed that the principal action had settled. The only orders sought by Wu were that the case against each of the defendants be dismissed with no order as to costs. Wu was then excused. His Honour was then informed that the recovery action was also settled. It was settled on the basis that Hickory pay the VWA’s costs and that the proceeding be otherwise dismissed. It was confirmed that this was also by consent. In each proceeding, appropriate orders to the above effect were made. The contribution action remained on foot. Generally, I would refer to Transcript (hereinafter referred to as “T”) 1-2 of what occurred before his Honour on 3 October last.
12 The basis of and background to that consent dismissal of the recovery action was as follows. Hickory had made an Offer of Compromise of a quite significant sum. I word it that way because, whilst I do not want to go into the precise amount involved with part of this litigation remaining on foot, it is to be emphasised that what is involved is not a trifling or nominal sum. In any event, an Offer of Compromise had been made by Hickory and, during negotiations on 3 October 2017, this Offer of Compromise was accepted by the VWA, along with an agreement that Hickory pay the VWA’s costs. A consent order of a dismissal, save for costs in favour of the VWA, was obtained accordingly. It is again emphasised that, as one would expect in a recovery action, the VWA had pleaded that Wu was a worker within the meaning of the Act and had been injured in the course of his employment.
Developments immediately subsequent to the obtaining of the consent orders
13 There is no real dispute as to what is contained in the affidavit of Hickory’s solicitor, Mr Jonathan Katsanos, as to what occurred after the obtaining of the consent orders by way of discussion between the representatives of I & J and Hickory. Obviously, his Honour had left the Bench.
14 Counsel for I & J stated that I & J would defend the contribution claim on the basis that it was not Wu’s employer at the relevant time. Whilst employment had not previously been admitted, Mr Katsanos has sworn that this was the first time that such a proposition was raised by either I & J or the VWA. Indeed, as previously mentioned, the VWA had positively pleaded and asserted in the recovery action that Wu was a worker within the meaning of the Act and was injured whilst in the course of his employment with I & J. Further, subsequently the VWA purported to accept the plaintiff’s Offer of Compromise in the recovery action.
15 Thus, the sequence of events on 3 October 2017 seems to have been as follows:
(i) Wu informs I & J and Hickory that the principal action against them is settled. Then -
(ii) the VWA informs Hickory that it is accepting Hickory’s Offer of Compromise in the recovery action, remembering that, at all times, the VWA has pleaded that Wu is a worker who was injured in the course of his employment with I & J. Then –
(iii) consent orders are obtained to the effect that Wu’s action against I & J is dismissed. Then –
(iv) the VWA, having informed Hickory that its Offer of Compromise is accepted, the recovery action of the VWA against Hickory is dismissed by consent and with costs. That leaves on foot the contribution action. Then –
(v) in discussions outside Court, counsel for I & G informs Hickory’s representatives that, for the purposes of the contribution proceedings, I & J will be defending the contribution claim on the basis that it was not Wu’s employer at the relevant time. This was the first time that this proposition had been raised by either I & J or the VWA.
16 It is apparent that all of this happened comparatively quickly and on the one day, if not on the one afternoon.
17 It should also be stated that there is no suggestion that I & J was, at the relevant time, a self-insurer or that it was not properly insured with an insurer authorised to act on behalf of the VWA.
Subsequent developments
18 His Honour apparently ordered that Hickory should plead out its Notice of Contribution and that I & J should file a defence. This was done. Hickory pleaded that at all material times Wu was employed by I & J as a supervisor, this being the same pleading used by Wu in his Statement of Claim and, in essence, being the pleading made by the VWA in the recovery action. However, in response, I & J pleaded that the plaintiff was at common law either acting as a contractor or as an employee of Hickory. There was also an assertion that I & J was merely a means chosen by Wu to provide monies to Hickory for work done. In other words, until comparatively recently, I & J maintained the position which it adopted on 3 October last. It has now resiled from that position, conceded that Wu was, at the relevant time, employed by I & J, (and thus a worker within the meaning of the Act who was injured in the course of his employment), and has amended its pleadings accordingly.
Summary of earlier hearings before me
19 In short, by reason of the above, Hickory was seeking orders restraining or estopping the VWA from accepting the Offer of Compromise. Alternatively, as stated earlier, it was alleging that it was unconscionable for the VWA to accept or attempt to enforce the Offer of Compromise. Alternatively, Hickory was seeking leave to withdraw the Offer of Compromise, whilst also seeking that the orders made on 3 October 2017 dismissing the recovery action with costs be set aside.
20 An important aspect of Hickory’s submissions was that the VWA at all times stood behind I & J as its insurer in the contribution action and appeared as a party in its own right in the recovery action. I would also repeat that, in this somewhat complicated scenario, the orders which I was asked to make and which were at the centre of the dispute were sought by Hickory against the VWA in the recovery action.
21 When the matter was heard by me on 14, 21 and 27 November 2017, extensive and detailed arguments were advanced by Mr R H Stanley of counsel on behalf of Hickory and Ms C Spitaleri of counsel on behalf of the VWA. I reserved my decision. Given subsequent developments, there is no need for me to summarise in detail the lengthy submissions which were made.
22 Suffice to say that there was a certain amount of outrage on the part of Hickory, Mr Stanley pointing out, amongst many other things, that the VWA appeared in its own right in the recovery action and stood behind I & J in the contribution proceedings. Apart from considerable discussion of matters such as approbation and reprobation, issue estoppel and the like, Mr Stanley placed considerable emphasis upon the VWA’s obligation to behave in accordance with the Model Litigants Guidelines. The submissions of Ms Spitaleri were centred more upon such questions as whether the capacity to order withdrawal of an accepted Offer of Compromise existed, the alleged inability for me to go behind the perfected order of dismissal of the recovery action made by his Honour Judge Brookes, the fact that I & J and the VWA were separate parties represented by separate firms of solicitors, ultimately instructed by different parts or divisions of the VWA (a type of “Chinese walls” argument) and the like. I should add that no oral evidence was called by either party, although affidavits were before me. As stated, ultimately I reserved my decision.
23 As I observed to the parties when they were recently before me, I had been on the verge of handing the decision down when word reached me that there may have been developments which would make such a decision on the principal issues unnecessary.
Developments subsequent to the conclusion of submissions and the reservation of judgment by me
24 It is now apparent and not contested that, after the conclusion of evidence and the reservation of my decision on 27 November 2017, the following developments took place.
25 Whilst the precise dates are not entirely clear, in December 2017 it was proposed that the pleadings in relation to the remaining part of the action (the contribution action) be amended so that the title of the first defendant be amended to read “Victorian WorkCover Authority” in lieu of “I & J Building Services Pty Ltd”. This does not seem to have been a contested issue. A draft order to this effect was prepared. Whether this proposed order, which is dated 4 December 2017 and purported to be made by his Honour Judge Brookes, was ever perfected seems highly doubtful. What is clear is that it appears to have been proposed, and not contested, that in the contribution action the VWA be substituted as a party in lieu of I & J.
26 Whatever in fact occurred, the fact that this agreement was reached in the contribution action has the following potential result. The VWA was proposing or agreeing to a proposal that it be substituted for I & J in the contribution action. Whereas previously it had stood behind I & J and effectively been a defendant for the purposes of a contribution action, now it was agreeing overtly to be the main defendant. The “Chinese walls” had become considerably thinner and more transparent.
27 The next development was that, by a document dated 22 March 2018, I & J sought to amend its defence in the contribution action (the fact that it was still described as “I & J” and not the VWA lends support to the proposition that the proposed change of name never became a perfected order). In essence, the proposed amendment was this. It was now admitted that Wu was at all material times employed by I & J.
28 On 12 April 2018, his Honour Judge Brookes granted leave to I & J to amend its defence. It is not contested but that there is now a perfected order amending that defence so as to admit employment. This has had the effect of making it unnecessary for me to make any ruling as to the outcome of what was argued at length before me.
The remaining issues
29 On 18 April last the parties came before me to explain what had occurred and bring me up to date with events. There was agreement that no judgment from me was required, save for rulings in relation to interest and costs. I now turn to these.
(a) Interest
30 On behalf of the VWA, Ms Spitaleri sought the payment of interest. It would appear that the significant amount the subject of the Offer of Compromise in the recovery action had never in fact been paid, a situation which is entirely consistent with the outrage displayed by and the position adopted by Hickory. Needless to say, Hickory opposed the payment of any interest.
31 I would point out the following. I say immediately that I am not minded to order interest, even assuming that I could do so. Pursuant to s50 of the County Court Act 1958, rules of law enacted by Part 5 of the Supreme Court Act 1986 apply. Accordingly, as pointed out in submissions, s60 of the Supreme Court Act operates. Firstly, it seems to me that the operation of s60 is predicated upon the existence of a judgment debt. It contains references to the “debt or damages awarded”, “any sum for which judgment is entered or given by consent”, “damages awarded by the Court”, and the like. In the present case, there is no specified judgment debt. The recovery action was simply dismissed with costs. In that situation, I struggle to see how s60 of the Supreme Court Act would have application. Whether or not there exists some contractual right to interest was not argued before me, nor was any submission concerning Order 26 of the Rules.
32 Further, pursuant to s60, interest is to be ordered “unless good cause is shown to the contrary”. In my opinion, in the present case, the cause to the contrary is not just “good”, but could be described as “excellent”, if not “overwhelming”. Until recently remedying the situation, the behaviour of the VWA as a model litigant has been extremely disappointing. The man in the street may think that it smacks of very sharp practice. Certainly, whether or not that be so, I am of the opinion that it represents behaviour that falls a long way short of what could be expected of a model litigant.
33 Effectively, what occurred is this. The VWA said to Hickory, “This injured man is a worker who was injured in the course of his employment at your premises. Because he was a worker, acting in the course of his employment, we have paid him a lot of statutory benefits. We want some of that amount back.” Hickory paid a substantial sum. The VWA then said, “In the remaining action on foot as to who should pay his damages and in what proportion, we are paying nothing. That is because he was never employed as a worker in the first place. Furthermore, we are going to keep the substantial sum you, Hickory, paid us on the basis that he was employed as a worker, as we had always alleged.”
34 This has all the appearance of approbation and reprobation of a high order. The whole situation necessitating the conduct of the hearing before me has been caused by the VWA. It seems to me preposterous that, having caused this whole situation, which persisted until it resiled from its position, the VWA now wants interest. I have grave doubts as to whether, there being no judgment debt, it has any entitlement to interest. Even if it has the right to at least seek interest, I am certainly not going to order it.
(b) Costs
35 Much of what I have said in relation to interest is also applicable to costs. The whole necessity for Hickory to take out a summons and draft the appropriate documents was precipitated by the behaviour of the VWA. Then, after quite a lengthy period and including three appearances before me, it resiled from the position which it had adopted and agreed that Wu was an employed worker at the relevant time. This was the very position which Hickory had originally assumed to be the case, which had been denied, and which had forced it to take the steps which it has. But for the behaviour of the VWA, none of this would have occurred. Not only is the VWA not entitled to costs, in my opinion, Hickory is. Belatedly, the VWA has given Hickory the relief which it has been seeking and which it should never have been forced to seek in the first place.
36 Accordingly, my order is that the VWA pay Hickory’s costs of this application. If it cannot be agreed, I shall hear arguments as to the appropriate scale, the quantum of counsels’ fees and the like, although the parties can agree to go to the Costs Court if they so desire. Accordingly, if no agreement can be reached, I shall hear the parties as to any further orders that are required. It may also be necessary to hear what is intended to be ordered in relation to the disposal otherwise of the matter that has been before me.
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