New South Wales Court of Appeal CITATION: Adams v Fletcher International Exports Pty Ltd [2008] NSWCA 238 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 23 September 2008 JUDGMENT DATE: 2 October 2008 JUDGMENT OF: Allsop P at 1; Giles JA at 2; Handley AJA at 3 DECISION: (1) Appeal dismissed. (2) Appellant to pay the respondent's costs. CATCHWORDS: WORKERS' COMPENSATION - Alternative rights - Whether damages recovered - Whether rights to compensation lost LEGISLATION CITED: Workers' Compensation Act 1987 Workplace Injury Management and Workers' Compensation Act 1998 CATEGORY: Principal judgment Luya Julius Pty Ltd v Shepherd [1955] HCA 44 CASES CITED: Smith v Commonwealth Oil Refineries Ltd [1938] HCA 33 Watson v Newcastle Corporation [1962] HCA 6 PARTIES: Anthony Thomas Adams (Appellant) Fletcher International Exports Pty Ltd (Respondent) FILE NUMBER(S): CA 40830/07 COUNSEL: L King SC/ J Dodd (Appellant) G M Watson SC /D G Saul (Respondent) SOLICITORS: McCabe Partners Lawyers (Appellant) Leigh Virtue & Associates (Respondent) LOWER COURT JURISDICTION: Workers' Compensation Commission LOWER COURT FILE NUMBER(S): WCC927-05 LOWER COURT JUDICIAL OFFICER: Acting Deputy President O'Grady LOWER COURT DATE OF DECISION: 24 January 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40830/2007 ALLSOP P GILES JA HANDLEY AJA 2 October 2008 ADAMS v FLETCHER INTERNATIONAL EXPORTS PTY LTD WORKERS' COMPENSATION – Alternative rights – Whether damages recovered – Whether rights to compensation lost. HEADNOTE The appellant was employed by the respondent as a meat worker from 1988 until 2003 when he was dismissed. He brought proceedings in the Australian Industrial Relations Commission against the employer for unfair dismissal. Those proceedings were compromised and the parties entered into a deed in January 2005. This recited claims by the worker that he had sustained work injuries during his employment including, but not limited to, an injury to his left hand and wrist. Under the deed the employer agreed to pay the worker $2,500 in respect of his general and other damages. This amount was paid to the worker and accepted. The worker commenced proceedings for compensation in the Workers' Compensation Commission which held on appeal that his claims to compensation were barred by s 151A(1)(a) of the Workers' Compensation Act 1987. On appeal by the worker HELD: (1) The sum of $2,500 paid under the deed was damages as defined in s 149; (2) The worker had recovered damages within s 151A(1)(a) by accepting payment of the $2,500: Smith v Commonwealth Oil Refineries Ltd (1938) 60 CLR 141, 147-8 followed; (3) Those damages were in respect of the injury to the worker's left hand and wrist; (4) Section 151A(1)(a) applied; (5) The worker had lost his rights to compensation under the Act. ORDERS (1) Appeal dismissed. (2) Appellant to pay the respondent's costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40830/2007 ALLSOP P GILES JA HANDLEY AJA 2 October 2008 ADAMS v FLETCHER INTERNATIONAL EXPORTS PTY LTD Judgment 1 ALLSOP P: I agree with the orders proposed by Handley AJA and with his Honour's reasons therefor. 2 GILES: I agree with Handley AJA. 3 HANDLEY AJA: The appellant was employed by the respondent as a meat worker from 1988 until 20 June 2003. On 19 January 2005 his solicitor filed an application to resolve a dispute with the Workers Compensation Commission in which he claimed weekly benefits, medical expenses, and lump sum compensation from his employer. The claim was referred to Arbitration and, following a rehearing, was finally determined by Arbitrator Duncombe on 15 June 2006. 4 She found that on 20 June 2003 the worker received an injury to his left upper extremity arising out of or in the course of his employment. She awarded him weekly compensation under s 40 from that date, together with medical expenses. She found (paras [93], [95]) that there had been no notification of injury to the worker's neck, right upper limb, back, and left lower limb, and dismissed claims for lump sums for such injuries for want of jurisdiction (Order 3). 5 She found that the worker suffered from psoriatic arthritis in his left hand and wrist (para [96]), that this disease was not caused by his employment (para [106]) but had been aggravated, accelerated, or exacerbated by it. Accordingly the case fell within s 16 of the Workers Compensation Act 1987 (the 1987 Act) and (para [110]) the deemed date of his injury was 20 June 2003. She directed (Red 72) the assessment of his level of impairment as a result of this injury by an approved medical specialist. 6 The employer appealed under s 352 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) to the Commission constituted by a Presidential member. It was heard by Acting Deputy President O'Grady who allowed it, revoked the decision of the Arbitrator, and made an award for the employer. 7 This award in favour of the employer was based on a finding that the worker had recovered damages in respect of his injury from the employer, so that s 151A(1)(a) of the 1987 Act applied, and he had ceased to be entitled to compensation under the Act. The employer had also challenged the award of the Arbitrator on other grounds but the Acting Deputy President found that these had not been established and he would otherwise have dismissed the employer's appeal. 8 The worker appealed to this Court pursuant to s 353(1) of the 1998 Act which limits the appeal to a point of law. 9 The damages which the Acting Deputy President found had been recovered by the worker in respect of the injury concerned were paid by the employer pursuant to an undated deed of release signed in January 2005. The agreed consideration of $2,500 was sent to the worker by cheque under cover of a letter dated 17 January 2005 which stated: "Thank you for providing us with a signed Deed of Release. We enclose a cheque made payable to you in the sum of $2500 being in respect of the agreed work injury damages." 10 The deed recited that the worker had worked for the employer between 15 December 1988 and 20 June 2003, that he had commenced two sets of proceedings in the Australian Industrial Relations Commission and continued: "(C) In addition the employee has alleged that he has sustained work injuries as a result of the nature and conditions of his employment with the employer throughout the entire period of that employment including but not limited to an injury to his left hand and wrist; (D) The employer has denied the allegations made by the employee in the proceedings and otherwise; (E) The employer and the employee have agreed to resolve these proceedings and all other claims or possible claims for damages by or on behalf of the employee against the employer …". 11 The operative provisions relevantly provided: "1. The employer agrees to pay to the employee an amount of two thousand five hundred dollars ($2500) in respect of general and other damages with such payment to be made within 28 days after receipt by the employer of this deed of release signed by the employee. 2. … 3. In consideration of the payment referred to in clause one (1) the employee releases and will release the employer … from all claims and liabilities of any nature (including any costs) connected with or incidental to:- (a) the proceedings and any possible proceeding; (b) the circumstances or allegations referred to in the proceedings and any possible proceedings or upon which the proceedings and any possible proceedings were or could be based; (c) the employment of the employee including but not limited to the circumstances of the termination of that employment and any matter, at, or thing occurring during the course of that employment; (d) any entitlements to damages of any kind including but not limited to any entitlement to work injury damages … consequent upon the injuries referred to in the Recitals or otherwise." 12 The Court does not have, and presumably the Commission did not have, the benefit of the whole of the factual matrix known to the parties when they entered into the deed. The first appellate decision within the Commission, that of Deputy President Byron, of 2 February 2006 stated that the worker had filed in the AIRC on 10 July 2003 an application for relief in relation to the termination of his employment. This had sought reinstatement, or in the alternative compensation for loss of wages or re-employment in a suitable position. Nothing else is known about those proceedings or the negotiations leading up to the signing of the deed. 13 Recital C refers to allegations by the worker that he had sustained work injuries, including, but not limited to his left hand and wrist. The Court has before it the application to resolve the dispute lodged on 19 January 2005. Although this post-dates the deed it refers to earlier events which were known to both parties. The application was filed by solicitors acting on behalf of the worker and it particularised the injuries referred to by Arbitrator Duncombe (Red 12). 14 The application stated that it had been sent in draft form to the respondent in an attempt to resolve the dispute (Red 18), and that the insurer denied liability (Red 19-20). It claimed permanent impairment compensation of $74,000, more than half of which was claimed for fifty percent (50%) impairment of the worker's left arm, and alleged 30 per cent impairment of the whole person (Red 20). 15 The application referred to a letter from the worker's solicitors to the employer dated 11 March 2004 and to consent orders made by the Commission on 26 October that year. Neither of these documents are before the Court, and presumably were not before the Commission. However Deputy President Byron stated that in 2004 the applicant had lodged an earlier application to resolve a dispute (WCC 8419-04) which was the subject of consent orders on 26 October 2004 as follows: "1. The applicant discontinues the Application. 2. The issue of costs incurred to date under Matter No. WCC 8419-04 is reserved and the parties are given leave to raise that issue for determination in subsequent proceedings, which the applicant may Institute in relation to the subject matter of Matter No. WCC 8419-04." 16 Nothing else is known about the earlier application or the reasons for its discontinuance. 17 The deed by itself could not have affected the worker's rights to compensation because s 234 of the 1998 Act provides that the two Acts apply "despite any contract to the contrary". The worker's difficulties flow not from the deed as such, but from his acceptance of the payment of $2500. 18 Section 151A(1)(a) of the 1987 Act provides: "(1) If a person recovers damages in respect of an injury from the employer liable to pay compensation under this Act then …: (a) the person ceases to be entitled to any further compensation under this Act in respect of the injury concerned …". 19 "Recovers" in relation to damages or compensation has a settled meaning in a context such as s 151A. In Smith v Commonwealth Oil Refineries Ltd [1938] HCA 33, 60 CLR 141, 147-8 Latham CJ, giving the judgment of the Court, said: "… there are several authorities which decide that under such a provision as this neither making a demand or claim under the Workers Compensation Acts on the one hand, nor obtaining judgment at Common Law on the other, amounts to recovery. Recovery for the purpose of such a provision as this means receipt of moneys … If the word 'recover' is interpreted as involving receipt, then if the worker receives a sum of money and that sum of money is paid as, and received as, compensation it would appear prima facie to be the case that he has recovered compensation under the Act and therefore would be excluded from recovering damages. This view is supported by actual decisions of the courts …:" 20 This decision was followed in Luya Julius Pty Ltd v Shepherd [1955] HCA 47, 99 CLR 278, 280-1, and treated as settled law in Watson v Newcastle Corporation [1962] HCA 6, 106 CLR 426, 445. 21 It is clear therefore that the worker recovered the sum of $2500 and the only question under s 151A(1)(a) is whether this amount was "damages in respect of an injury". Damages for this purpose is defined in s 149 of the 1987 Act as follows: "Damages includes: (a) any form of monetary compensation, and (b) without limiting (a), any amount paid under a compromise or settlement of a claim for damages (whether or not legal proceedings have been instituted), but does not include: (c) compensation under this Act …". 22 It cannot be denied that the $2500 was monetary compensation within para (a) of this definition. It is not clear that the worker had made "a claim for damages" which would bring the deed within para (b) although the recitals suggest that this may have happened. It is not necessary to decide this question because para (b) does not limit para (a). 23 Mr King SC who appeared for the worker with Mr Dodd submitted that the worker had no claim or possible claim for damages for a number of reasons but since the case is clearly within para (a) it is not necessary to deal with these submissions. 24 The remaining question is whether the payment of $2500 damages, as defined, was "in respect of an injury" so that s 151A(1)(a) applied and the worker ceased to be entitled to "any further compensation under this Act in respect of the injury concerned." The character of the payment is governed by the deed and the letter of 17 January 2005 which accompanied the cheque. 25 Recital C refers to allegations by the worker that he had sustained work injuries as a result of the nature and conditions of his employment "including but not limited to an injury to his left hand and wrist." Recital E refers to possible claims for damages, clause 1 contains the employer's agreement to pay $2500 "in respect of general and other damages" and clause 3 contains the worker's agreement, in consideration of that payment, to release "any entitlement to work injury damages". 26 The deed singled out, without limitation, the injury to the worker's left hand and wrist. The application to resolve the dispute lodged on 19 January 2005 also identified this as the most significant injury, and it appears from Recital C that the earlier application which was discontinued must have done the same. Moreover the award of Arbitrator Duncombe, which was revoked on appeal, was based on this injury alone. The claims for other injuries were dismissed. 27 The amount of $2500 was also paid in respect of other claims, but this cannot matter. The deed and the letter, construed on their face, or in the light of the surrounding circumstances, establish that the payment was made "in respect of" the injury to the worker's left hand and wrist. Accordingly he ceased to be entitled to compensation "in respect of the injury concerned", that is the injury to his left hand and wrist. 28 The decision of Acting Deputy President O'Grady to apply s 151A(1)(a) and set aside the award of Arbitrator Duncombe was therefore correct. It is a most unfortunate result for this worker who gave away rights of substantial value for an immediate payment of a mere $2500. However the 1987 Act in its present form is intractable and the Court has no option but to give effect to the clear language of Parliament. The following orders should be made: (1) Appeal dismissed. (2) Appellant to pay the respondent's costs. ********** 10/10/2008 - Date of Lower Court Decision on coversheet altered to read 24 January 2007 and not 2 February 2006 - Paragraph(s) N/A 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.