Thomson v Allianz Australia Workers' Compensation (NSW) Limited [2005] NSWSC 885

New South Wales Supreme Court

Thomson v Allianz Australia Workers' Compensation (NSW) Limited [2005] NSWSC 885 CITATION : This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 01/09/05

JUDGMENT DATE : 1 September 2005

JURISDICTION : Equity Division

JUDGMENT OF : Barrett J

DECISION : Summons dismissed with costs

CATCHWORDS : CONTRACTS - general contractual principles - offer and acceptance - whether notification of workers compensation claim having two elements produced one offer of compromise or two - turns on own facts - no matter of principle

Workers Compensation Act 1987, ss.66(1), 66A(1), 67(1) LEGISLATION CITED : Workplace Injury Management and Workers Compensation Act 1998, s.342

Carolan v Baby's Stuff Pty Ltd, unreported NSWWCC, Arbitrator Brown, 9 November 2004 CASES CITED : Zreika v QBE Workers Compensation (NSW) Ltd [2005] NSWSC 573

Olivia Thomson - Plaintiff PARTIES : Allianz Australia Workers' Compensation (NSW) Limited - Defendant

FILE NUMBER(S) : SC 2986/05

Mr R.I. Goodridge - Plaintiff COUNSEL : Mr L.J. Ellison/Mr J.M. Patey - Defendant

Firths - Plaintiff SOLICITORS : A.O. Ellison & Co - Defendant

LOWER COURT JURISDICTION :

- IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

THURSDAY, 1 SEPTEMBER 2005

2986/05 OLIVIA THOMSON v ALLIANZ AUSTRALIA WORKERS' COMPENSATION (NSW) LIMITED JUDGMENT 1 The plaintiff, Ms Thomson, contends that an agreement of compromise has been reached in respect of a workers compensation claim made by her and that the court should make a declaration accordingly, at the same time awarding her interest on $6,000 from 23 February 2005. Although the claim is cast in that way, it is, in essence, a specific performance claim. The defendant, Allianz Australia Workers' Compensation (NSW) Limited, denies that any agreement of compromise was made. The defendant also says that, if an agreement was made, it is affected by mistake and cannot be enforced. 2 Ms Thomson sustained a workplace injury in 1998. She made a claim for workers compensation for permanent loss of the use of her leg. That claim was settled in November 2000. The settlement was on the basis of 7½% impairment. A registered agreement was formulated accordingly. Ms Thomson's leg later deteriorated and she had further surgery in January 2002. She instructed her solicitors to make a further claim for permanent loss of the use of the leg and for compensation for pain and suffering. That claim was conveyed to the defendant by Ms Thomson's solicitors' letter of 14 December 2004: "We advise that we act for the above named in relation to workers compensation proceedings arising out of injuries sustained on 13 October 1998 and enclose, by way of service upon you, reports of Dr Wallace dated 5 November 2004 and 25 November 2002. We further particularise our claim pursuant to section 102 of the 1998 Act as follows: 1. A further 7.5% permanent loss of use of the left leg at or above the knee. 2. $20,000 with respect to 40% of the maximum for pain and suffering pursuant to Section 67. One half of the above is past pain and suffering. One half of the above is actual pain and one half is anxiety. We advise that at the expiration of eight weeks, we will immediately forward this claim to the Workers Compensation Commission for resolution of this dispute. Kindly review our client's claim and forward this letter onto your solicitor." 3 The defendant replied as follows on 16 February 2005: "We refer to your client's claim for lump sum compensation pursuant to Sections 66 and 67 of the Workers Compensation Act 1987 in respect to a further loss. We had your client medically examined by Mr David Meachin, Orthopaedic Surgeon and enclose a copy of the medical report. Based on the available medical evidence, including the enclosed report, we are prepared to make the following offer of settlement with respect to your client's claim: 1. $6,000.00 being 8% further loss of efficient use of L leg at or above the knee. In addition, we are pleased to offer $4,000.00 for pain and suffering pursuant to sec 67 of the Act. The above offer is made pursuant to s.342 of the Workplace Injury Management and Workers Compensation Act 1998. We consider the above offer constitutes a 'reasonable offer' for the purposes of s.342. We put you on notice that if the above offer is not accepted within 28 days we reserve the right to tender this letter at the appropriate time and make submissions pursuant to s.342 that the Applicant is not entitled to recover any costs beyond the date of this letter. Please obtain instructions from your client and contact us in order that we may attend to settlement procedure." 4 Ms Thomson's solicitors wrote to the defendant's solicitors on 23 February 2005 as follows: "We refer to your letter of 16 February 2005. In relation to your offer of $6,000, being a further 8% loss of use of the left leg above the knee, we have instructions to accept this offer. In relation to your offer for pain and suffering in the amount of $4,000, we have instructions to reject this offer. However, we advise that we do have instructions to make a counter offer of $15,000 solely in relation to pain and suffering. Could we kindly have your response at your earliest convenience." 5 The defendant's response of 3 March 2005 read: "We enclose a sealed copy of our Reply. We refer to the medical report of Dr Meachin dated 10/02/05. Dr Meachin assessed the workers current impairment as a result of the work injury at 8% (10% minus 2% for constitutional factors). Your medicine (Dr Wallace) assesses the workers [sic] as a result of the work injury at 15% (20% minus 5% for constitutional factors). You have rejected our offer, which was 7.5% above our medicine. We consider our offer more than reasonable in light of our medicine. To reach the section 67 threshold the worker will need an increase of 6.5%. There is no certainty that if the matter is referred to an AMS that the worker will get above the section 67 threshold. In these circumstances we are not willing to make any further offers and we will submit that the matter be referred to an AMS. If the AMS does not find an increase of 6.5% or greater then we will rely on offer dated 16/02/05 in respect of any costs orders." 6 Ms Thomson's solicitors wrote to the defendant on 22 March 2005 as follows: "We refer to your letter of 3 March 2005. With respect, we have not rejected your offer in relation to section 66 entitlements and in fact, as confirmed in our letter of 23 February 2005, we have accepted it. The only outstanding issue is the amount of the section 67 entitlements. If you dispute this fact, we will seek instructions from our client to take proceedings in the Equity Division of the Supreme Court to enforce her settlement in relation to section 66. We look forward to your response at your earliest convenience." 7 These proceedings were commenced on 16 May 2005. 8 The parties' correspondence took place in the context of the workers compensation legislation. It is therefore appropriate to refer to certain aspects of that legislation. Relevantly for present purposes, the Workers Compensation Act 1987 contemplates two types of compensation. The first is "permanent impairment compensation" in relation to which it is sufficient to quote s.66(1): "A worker who receives an injury that results in permanent impairment is entitled to receive from the worker's employer compensation for that permanent impairment as provided by this section. Permanent impairment compensation is in addition to any other compensation under this Act." 9 The second relevant type of compensation is "pain and suffering compensation". It is sufficient to quote s.67(1): "A worker who receives an injury that results in a degree of permanent impairment of 10% or more is entitled to receive from the worker's employer as compensation for pain and suffering resulting from the permanent impairment an amount not exceeding $50,000. Pain and suffering compensation is in addition to any other compensation under this Act." 10 Section 66A deals with registration of an agreement by a worker to receive compensation of either type. Section 66A(1) is as follows: "An agreement by a worker to receive an amount of permanent impairment compensation or pain and suffering compensation in respect of impairment may be registered by the Registrar. Once the agreement is registered the worker is not entitled to receive any additional compensation in respect of the impairment under an award of the Commission." 11 It is appropriate to quote also s.342 of the Workplace Injury Management and Workers Compensation Act 1998 to which reference is made in the correspondence and which was also mentioned in the course of correspondence: " Costs unreasonably incurred (1) If the Commission is satisfied that any costs on a claim were unreasonably incurred, the Commission is to order that those costs are to be treated as unreasonably incurred for the purposes of this section and the Commission is not to make an order for payment of those costs by any other party to the claim.