New South Wales Supreme Court CITATION : Kathy Craddock & Ors v Bluescope Steel (AIS) Pty Limited [2006] NSWSC 311 HEARING DATE(S) : 19 April 2006 JUDGMENT DATE : 27 April 2006 JURISDICTION : Common Law Division JUDGMENT OF : Associate Justice Malpass at 1 DECISION : The statements of claim filed in proceedings 20173 of 2003, 20174 of 2003, 20175 of 2003, 20176 of 2003 and 20177 of 2003 are each struck out; the costs in each proceedings are to be paid by the plaintiffs in those proceedings. CATCHWORDS : Claims for nervous shock brought by close members of the family of an injured worker alleging fault against his employer - application of damages provisions of workers compensation legislation - pre-litigation process - striking out of statements of claim. Supreme Court Rules 1970 Uniform Civil Procedure Rules 2005 LEGISLATION CITED : Workers Compensation Act 1926 Workers Compensation Act 1987 Workplace Injury Management and Workers Compensation Act 1988 Forstaff Blacktown Pty Limited v Brimac Pty Limited & Anor; Brimac Pty Limited v Johnston & Anor [2005] NSWCA 423 Gifford v Strang Patrick Stevedoring Pty Limited (2003) 214 CLR 269 Gifford & Ors v Strang Patrick Stevedoring Pty Limited [2001] NSWCA 175 CASES CITED : Manufacturers Mutual Insurance Ltd v Hooper (1987) Aust Torts Reports 80-093 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 72 ALJR 841 Rheem Australia Ltd v Manufacturers Mutual Insurance Ltd [1984] 2 NSWLR 370 Thompson v Kimberly-Clark Australia Pty Limited [2005] NSWSC 1009 Workers Compensation Board (Qld) v Technical Products Pty Ltd (1988) 165 CLR 642 Emma Teresa Kendrick bht Kathy Craddock (Plaintiff 20173/03) Kathy Craddock (Plaintiff 20174/03) PARTIES : Mikayla Page Kendrick bht Kathy Craddock (Plaintiff 20175/03) Liam Brett Kendrick bht Kathy Craddock (Plaintiff 20176/03) Kristen Nicole Kendrick bht Kathy Craddock (Plaintiff 20177/03) Bluescope Steel (AIS) Pty Limited (formerly known as BHP Steel (AIS) Pty Limited ) (Defendant) FILE NUMBER(S) : SC 20173/2003; 20174/2003; 20175/2003; 20176/2003; 20177/2003 COUNSEL : Mr A Cooley (Plaintiffs) Mr R R Bartlett SC (Defendant) SOLICITORS : Bussoletti Lawyers (Plaintiffs) Ebsworth & Ebsworth (Defendant) LOWER COURT DATE OF DECISION : 04/19/2006 - 12 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Associate Justice Malpass 27 April 2006 20173 of 2003 Emma Teresa Kendrick bht Kathy Craddock 20174 of 2003 Kathy Craddock 20175 of 2003 Mikayla Page Kendrick bht Kathy Craddock 20176 of 2003 Liam Brett Kendrick bht Kathy Craddock 20177 of 2003 Kristen Nicole Kendrick bht Kathy Craddock v Bluescope Steel (AIS) Pty Limited (formerly known as BHP Steel (AIS) Pty Limited JUDGMENT 1 His Honour: Kathy Craddock is the wife of Alan Kendrick (the injured worker). There are four children of that relationship (Emma, Liam, Mikayla and Kristen). 2 On 5 July 2000, the injured worker suffered severe personal injuries in the course of his employment with the defendant (whilst a Komatsu dump truck was involved, the defendant was neither owner nor driver). He was rendered a quadriplegic. 3 In July 2003, shortly before the relevant limitation period expired, five statements of claim were filed (on behalf of the wife and children) claiming damages for nervous shock. 4 The defendant filed a defence. One of the defences relied on was a failure to comply with pre-litigation process prescribed by Part 6 of Chapter 7 of the Workplace Injury Management and Workers Compensation Act 1988 (WIMA). It relies on a failure to comply with the requirements of ss313, 315 and 318A. 5 A notice of motion was filed by the defendant on 20 April 2005 in each of the proceedings. It seeks to have the statement of claim in each of them struck out. The notice of motion finally came on for hearing on 19 April 2006. 6 The defendant relied on an affidavit sworn by Tanya Smart on 28 April 2005. The plaintiffs relied on an affidavit sworn by Margaret Curran on 19 May 2005. An affidavit in reply was sworn by Thomas Arnold on 24 June 2005. 7 Counsel have prepared written submissions, which have been supplemented orally. There has been reference to numerous decided cases, statutory provisions and parliamentary speeches. 8 There is no dispute between the parties that there has been a non-compliance with prescribed pre-litigation process. The issue between them was whether or not the plaintiffs were required to comply with them. The dispute turns on statutory construction. 9 The starting point is the Workers Compensation Act 1987 (the Act). Amendments were made in 1989 which restored modified common law damages. The relevant provisions, for present purposes, are to be found in Part 5 of the Act (common law remedies). Division 2 thereof deals with common law and other remedies generally. Division 3 thereof deals with modified common law damages. 10 Division 2 comprises, inter alia, s151. It is as follows:- 151 Common law and other liability preserved This Act does not affect any liability in respect of an injury to a worker that exists independently of this Act, except to the extent that this Act otherwise expressly provides. 11 Division 3 comprises, inter alia, ss151E and 151P. Section 151E is as follows:- Application—modified common law damages (1) This Division applies to an award of damages in respect of: (a) an injury to a worker, or (b) the death of a worker resulting from or caused by an injury, being an injury caused by the negligence or other tort of the worker's employer. (2) This Division does not apply to an award of damages to which Part 6 of the Motor Accidents Act 1988 or Chapter 5 of the Motor Accidents Compensation Act 1999 applies. (3) This Division applies to an award of damages in respect of an injury caused by the negligence or other tort of the worker's employer even though the damages are recovered in an action for breach of contract or in any other action. (4) Subsection (3) is enacted for the avoidance of doubt and has effect in respect of actions brought before as well as after the commencement of that subsection. 12 Section 151P is as follows:- Damages for psychological or psychiatric injury No damages for psychological or psychiatric injury are to be awarded in respect of an injury except in favour of: (a) the injured worker, or (b) a parent, spouse, brother, sister or child of the injured or deceased person who, as a consequence of the injury to the injured person or the death of the deceased person, has suffered a demonstrable psychological or psychiatric illness and not merely a normal emotional or cultural grief reaction. 13 "Injury" is defined in s4 to mean personal injury arising out of or in the course of employment. 14 It has been observed that Part 5 is not concerned with the payment of compensation. It provides a common law damages regime that affects the assessment of common law damages against the employer only (see, inter alia, Forstaff Blacktown Pty Limited v Brimac Pty Limited & Anor; Brimac Pty Limited v Johnston & Anor [2005] NSWCA 423 at para 55). 15 Section 155 of the Act deals with compulsory insurance for employers. Subsection (1) thereof is as follows:- (1) An employer (other than a self-insurer) shall obtain from a licensed insurer, and maintain in force, a policy of insurance that complies with this Division for the full amount of the employer's liability under this Act in respect of all workers employed by the employer and for an unlimited amount in respect of the employer's liability independently of this Act (but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the Commonwealth or a liability arising under the law of another country) for any injury to any such worker. 16 The compulsory policy of insurance required by this provision is similar to that which was required under the Workers Compensation Act 1926 (the 1926 Act). It is the contention of the defendant that a claim for nervous shock by a spouse or child of an injured worker responds to the cover provided by such a policy. 17 Chapter 7 of the WIMA deals with new claims procedure. It is comprised of ten parts. I shall mention certain of them and certain of the provisions contained therein. 18 Part 1 is headed "Preliminary" and contains interpretation provisions (s250). Parts 2 and 3 deal with giving notice of injury and making a claim and dealing with claims. Part 6 is headed "Court proceedings for work injury damages". 19 Section 4 of Chapter 1 contains, inter alia, definitions of "claim" and "claimant" (which are referable to "a person"). 20 Part 1 of Chapter 7 comprises, inter alia, s250. It contains interpretation provisions. There is a definition of "damages" (which has the same meaning as in Part 5 of the Act). These provisions also include a definition of "work injury damages". It is as follows:- work injury damages means damages recoverable from a worker's employer in respect of: (a) an injury to the worker caused by the negligence or other tort of the employer, or (b) the death of the worker resulting from or caused by an injury caused by the negligence or other tort of the employer, whether the damages are recoverable in an action for tort or breach of contract or in any other action, but does not include motor accident damages. 21 Part 2 contains also, inter alia, ss253 and 254. Section 253 is also an interpretation provision. It provides that words and expressions used in this Part have the same meaning as in Part 5 of the Act. Section 254 deals with notice of injury. Subsection (1) thereof is as follows:- Neither compensation nor work injury damages are recoverable by an injured worker unless notice of the injury is given to the employer as soon as possible after the injury happened and before the worker has voluntarily left the employment in which the worker was at the time of the injury. It may be observed that this is a provision that applies to an injured worker only. 22 Section 260 is to be found in Part 2. It provides that a claim must be made in accordance with the applicable requirements of the WorkCover Guidelines. 23 At least largely, the guidelines in force are directed to the making of claims by a worker. Be that as it may, the contents therein do not bear upon the construction to be given to the statute. 24 Section 280A is to be found in Part 3. It is in the following terms:- 280A Claim for lump sum compensation a pre-condition to damages claim A claim for work injury damages in respect of an injury cannot be made unless a claim for lump sum compensation in respect of the injury is made before or at the same time as the claim for work injury damages. 25 Part 6 of Chapter 7 of WIMA deals with special provisions for work injury damages. It has five divisions. Division 3 thereof deals with pre-filing statements. Division 4 thereof deals with mediation. Sections 313, 315 and 318A are comprised within these Divisions. These are the provisions which the defendant says have not been complied with by the plaintiffs. There are other provisions contained in this Part which would not have application to the proceedings brought by the plaintiffs. 26 Sections 260 and 280A are two of the provisions that have been the subject of argument presented on behalf of the plaintiffs. 27 It is well established by authority and not in dispute in this case, that s151P of the Act is not a source of rights to damages (Gifford v Strang Patrick Stevedoring Pty Limited (2003) 214 CLR 269; Gifford & Ors v Strang Patrick Stevedoring Pty Limited [2001] NSWCA 175). It is regarded as a limitation on awards of damages. It has been said that it takes away the right to recover damages in an action for nervous shock for workplace injuries, but makes an exception in favour of injured workers and members of their close families (214 CLR 269 at pp 287, 302-303). 28 What is contained in s151E of the Act is similar to the definition provided for "work injury damages" in s250 of WIMA. 29 Similar language to that contained in the provisions has been considered in Rheem Australia Ltd v Manufacturers Mutual Insurance Ltd [1984] 2 NSWLR 370 and Manufacturers Mutual Insurance Ltd v Hooper (1987) Aust Torts Reports 80-093. In those cases, the language was considered in the context of a policy insurance in the form required by the 1926 Act. In Rheem, the view was taken by the Court of Appeal that, in such context, ""liability … for any injury to "a worker" meant "liability to any person consequent upon or in respect of injury to" a worker (at 375). In that case, the claim that was being considered by the Court was a claim by a spouse for loss of consortium. This approach to construction would pick up a claim for nervous shock brought by a close member of the injured worker's family founded on fault by the employer. 30 In that case, at pp374-375, Glass JA referred to a number of decided cases. He expressed a view that all of those decisions were founded upon a recognition that the liability of a tortfeasor for an injury is, in modern parlance, not limited to his primary liability to the injured party, but includes as well the secondary liability he may incur towards others as a result of, or consequent upon, that injury. 31 In Hooper, Clarke J (as he then was) followed what was said in Rheem. His Honour took the approach that he was bound to follow that decision. 32 Questions of statutory construction are to be resolved having regard to the language and objects of the legislation and in the context in which the provisions appear (see, inter alia, Project Blue Sky Inc v Australian Broadcasting Authority (1998) 72 ALJR 841 at para 69). Any conflict is to be alleviated as far as possible by adjusting the meaning of competing provisions to achieve the result that will best give effect to the language and purpose of the provisions. 33 Section 3 of WIMA is headed "System objectives". It purports to express the purpose of that Act. For present purposes, the provisions thereof are not helpful. 34 It might be thought that an objective of this legislation was to introduce reform into the regime provided by earlier legislation. 35 The parliamentary speeches provide some assistance. I shall merely mention certain of what is said therein. There is support for an intention to introduce reform into the existing regime. There is an emphasis on claims by workers. The speeches reveal an intention to implement a recommendation to restrict the recovery of common law damages. They reveal an intention to adopt recommendations that a pre-litigation process be introduced for common law claims because they were twice as expensive to process compared to statutory benefit claims. There was concern to introduce arrangements for compensating permanent psychological or psychiatric impairments. A purpose was to establish the Workers Compensation Commission to further enhance and protect workers' rights. One of the areas in which it was intended to exercise its functions was in the Expedited Assessment Jurisdiction (Part 5 of Chapter 7 of WIMA). No express mention is made of, inter alia, nervous shock claims by close family members. 36 There are the earlier mentioned decided cases which provide guidance as to how similar language has been construed in a policy context. It may be that in the drafting of the legislation, regard was had to what had been said in these cases. 37 The plaintiffs rely on a decision of Patten AJ in Thompson v Kimberly-Clark Australia Pty Limited [2005] NSWSC 1009. It is a decision that is presently under appeal. 38 In that case, Mrs Thompson propounded two separate causes of action. One was brought pursuant to the Compensation to Relatives Act 1897. The other was a claim at common law for nervous shock, as modified by statute. His Honour concluded that Mrs Thompson was required by Chapter 7 of WIMA to comply with the pre-litigation process. However, he came to a different view in relation to the claim for nervous shock. 39 His Honour appears to have reached that result because he decided that Chapter 7 of WIMA did not apply to Mrs Thompson's claim for nervous shock. His Honour said that that was the only matter before him and it turned on a consideration of whether the claim fell within the definition of "work injury damages" (s250). In dealing with that matter, he had regard to Workers Compensation Board (Qld) v Technical Products Pty Ltd (1988) 165 CLR 642. He saw that case as involving a somewhat similar problem. 40 The case saw the delivery of two joint judgments. One was delivered by Wilson and Gaudron JJ. The other was delivered by Deane, Dawson and Toohey JJ. 41 What emerges from those judgments is that the decision in that case concerned Queensland legislation, which was materially different from the 1926 Act. 42 The relevant phrase was "in respect of injury to any worker employed by him". It was said that, undoubtedly, the words "in respect of" have a wide meaning. They gather meaning from the context in which they appear and it is the context which will determine the matters to which they will extend (pp653-654). 43 Reference was made to a number of decisions (including Rheem). It was observed that the most that could be drawn from those decisions dealing with the differently worded provisions was that the use of the phrase "in respect of" does not, of itself, extend the meaning of an expression such as "damages in respect of injury to any worker" so as to include damages payable to a person other than the worker (p657). 44 The decision in Technical Products turned on the context in which the relevant words appeared. The context was different to that considered in Rheem. 45 I prefer the view that the decision does not produce the result advocated by the plaintiffs. The context that the court is concerned with in this case is one that is similar to that considered in Rheem. It is a decision that binds this court. 46 His Honour did not see a need to address the question (which he thought may be difficult) as to whether Part 5 of the Act (or the Civil Liability Act on the other hand) applied to that claim. 47 In these proceedings, the defendant's case is put differently to what was argued before his Honour. In my view, the Gifford decisions establish that Part 5 of the Act has application to the nervous shock claims. In the subsequent retrial, Puckeridge DJC assessed the damages for nervous shock in accordance with Division 3 of Part 5. Further, I consider that Chapter 7 of WIMA has application to the claims made by the plaintiff. In my view, they are claims for "work injury damages". 48 It has been observed that there is a lack of consistency in the legislation that has been introduced to, inter alia, provide for compensation and modify common law damages. 49 It may be that the approach taken in this case requires some alleviation of conflict (such as in dealing with the provisions of s280A of WIMA). However, it seems to me to best serve the language and purposes of the statutory provisions. 50 Whilst it is no longer necessary to dwell on the point, I should briefly address an argument that was faintly put by the plaintiffs. It was one of waiver of the pre-litigation process. 51 It was a contention confronted by insuperable problems. It was factually unsound. There was no conduct on the part of the defendant that could be said to constitute a waiver of the statutory requirements. It also suffered from legal impediment. The provisions have been held to be mandatory. 52 I am satisfied that the defendant is entitled to relief. The relief sought is striking out of the statements of claim. The Uniform Civil Procedure Rules 2005 provide a power to strike out pleadings. It is to be found in Rule 14.28 (it is similar to the power previously had under Part 15 r26 of the Supreme Court Rules 1970). There is old authority (which may or may not be correctly decided) which might be seen as restricting the exercise of this power to those cases where there are defective pleadings. It is not suggested in this case that the power is so restricted. The power enables a striking out of a statement of claim, inter alia, where it discloses no reasonable cause of action or is otherwise an abuse of process of the court. It would seem there is no dispute in this case that, should the defendant's argument be accepted, the power may be exercised to strike out the statements of claim. 53 There is authority to the effect that it should only be exercised in clear and obvious cases. The onus rests with the party seeking relief. I am satisfied that such onus has been discharged. 54 Accordingly, I order that the statements of claim filed in proceedings 20173 of 2003, 20174 of 2003, 20175 of 2003, 20176 of 2003 and 20177 of 2003 are each struck out. The costs in each proceedings are to be paid by the plaintiffs in those proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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