Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Berzins v QBE Insurance (Australia) Ltd [2014] NSWCA 196 Hearing dates: 13 June 2014 Decision date: 23 June 2014 Before: Gleeson JA at [1]; Sackville AJA at [2]; Simpson J at [62] Decision: 1. Appeal allowed. 2. Set aside the judgment for the appellant in the sum of $198,498.94. 3. In lieu thereof, enter judgment for the appellant in the sum of $262,860.53. 4. The Insurer pay the appellant's costs of the appeal, to be assessed on the basis that he has been unrepresented on the appeal. 5. Liberty to the parties to apply within 14 days to correct any error in the calculation of interest. 6. The Insurer, if otherwise qualified, to have a certificate under the Suitors' Fund Act 1951 (NSW). [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: TORTS - personal injury - employee injured at work - whether the primary judge erred in determining the quantum of the employee's entitlements under employer's accident insurance policy - whether the employee was rendered totally disabled within the meaning of the policy - whether the employee's settlement of workers compensation and common law claims against the employer affected his entitlements under the policy PRACTICE - respondent sought to raise an argument not pleaded at trial in a notice of contention - leave to file the notice of contention refused where appellant would be prejudiced and grant of leave would be futile Legislation Cited: Workers' Compensation and Injury Management Act 1981 (WA) Cases Cited: Andris Berzins v QBE Insurance (Australia) Ltd (District Court (NSW), 19 March 2013, unrep) Andris Berzins v QBE Insurance (Australia) Ltd (District Court (NSW), 12 April 2013, unrep) Coulton v Holcombe [1986] HCA 33; 162 CLR 1 Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631 Whisprun Pty Ltd v Dixon [2003] HCA 48; 77 ALJR 1598 Category: Principal judgment Parties: Andris Berzins (Appellant) QBE Insurance (Australia) Ltd (Respondent) Representation: Counsel: In person (Appellant) B McManamey (Respondent) Solicitors: Jarman McKenna (Respondent) File Number(s): 2013/145795 Publication restriction: None Decision under appeal Jurisdiction: 9101 Date of Decision: 2013-04-12 00:00:00 Before: Walmsley SC DCJ File Number(s): 2012/142755 HEADNOTE [This headnote is not to be read as part of the judgment] The appellant claimed benefits under an accident insurance policy (Policy) taken out by his employer with the respondent (Insurer). In proceedings brought by the appellant against the Insurer, the primary Judge gave judgment for the appellant. The sum awarded to the appellant was calculated on the basis that the maximum period for which weekly benefits were payable under the Policy was 104 weeks; the appellant was totally disabled for 91 weeks and thereafter partially disabled for 13 weeks; and $26,000 out of a settlement sum of $60,000 paid to the appellant by the employer's workers compensation insurer should be deducted from the award. The appellant argued that: * the maximum period for which benefits were payable under the Policy was 156 weeks; * the primary Judge should have found that the appellant was totally disabled for the entirety of the relevant period; and * no deduction should have been made by reason of payment to the appellant of the settlement sum. The Court held: 1 The primary Judge did not err in determining the benefit period under the Policy to be 104 weeks: [34]-[36]. 2 The primary Judge should have found that the appellant was totally disabled for the entire benefit period of 104 weeks: [45]-[46], [59]. 3 The primary Judge erred in reducing the award by reason of payment of the settlement sum to the appellant. There was no evidence that any part of the settlement sum represented weekly benefits payable to the appellant under the Western Australian workers compensation scheme, this being the only basis under the Policy for deducting any portion of the settlement sum: [50]-[53]. 4 The Insurer should be denied leave to file a notice of contention out of time because the Insurer was, in substance, attempting to raise a new point on appeal. To grant leave to the Insurer would be unfair to the appellant and in any event would be futile: [54]-[58]. Judgment 1GLEESON JA: I agree with Sackville AJA. 2SACKVILLE AJA: The appellant suffered injuries in late August or early September 2008 while employed by Monadelphous Group Ltd (Monadelphous). He succeeded in a claim against the respondent (Insurer) for weekly benefits payable under a Group Personal Accident Policy (Policy) taken out by Monadelphous. The "Insured Persons" under the Policy were all employees of Monadelphous engaged in a project known as the Cape Lambert Upgrade. There was no dispute that the appellant was an Insured Person. 3The primary Judge (Walmsley SC DCJ) entered judgment for the appellant in the sum of $198,498.94, comprising his entitlement to weekly benefits under the Policy of $139,400.86, plus interest of $59,098.08. His Honour also awarded costs of $9,500 to the appellant, who conducted his case without legal representation. 4His Honour delivered two judgments. In the first, he made findings and indicated that he proposed to enter judgment for the appellant, but deferred doing so until he dealt with interest and costs: Andris Berzins v QBE Insurance (Australia) Ltd (District Court (NSW), 19 March 2013, unrep) (Principal Judgment). His Honour made final orders in a second judgment: Andris Berzins v QBE Insurance (Australia) Ltd (District Court (NSW), 12 April 2013, unrep) (Supplementary Judgment). 5The appellant, who also represented himself in this Court, contends that the primary Judge should have entered judgment against the Insurer for a greater sum. The appellant identifies three errors which he submits were made by the primary Judge and which he asks the Court to correct: (i) the primary Judge incorrectly construed the Policy to provide weekly benefits to each insured, including the appellant, for a maximum period of 104 weeks, when the maximum period for the payment of weekly benefits under the Policy, properly interpreted, was 156 weeks; (ii) the primary Judge found that the appellant suffered "total disablement" (within the meaning of the Policy) for 91 weeks of the 104 week period and was partially disabled for the remaining 13 weeks, when his Honour should have found that the appellant had been totally disabled for the entire period of 104 weeks (or for 156 weeks, if that was the correct maximum period); and (iii) the primary Judge wrongly deducted from the amount due to the appellant under the Policy the sum of $26,000, which the appellant received from his employer as part of a settlement of separate claims arising out of the injuries sustained by him. 6Prior to the hearing of the appeal, the Insurer filed neither a notice of cross-appeal nor a notice of contention. In the course of oral argument on the appeal, Mr McManamey, who appeared for the Insurer, belatedly sought leave to file a notice of contention. This contended that the primary Judge's decision to deduct the sum of $26,000 from the judgment should be upheld on a ground other than that relied on by his Honour. The Court refused leave to file the notice of contention and indicated that it would give its reasons in this judgment. Background 7The appellant's usual trade until he was injured was as a rigger. He began work with Monadelphous as a "rigger (advanced)" on 22 August 2008 at Cape Lambert, about forty kilometres northeast of Karratha in Western Australia. 8One of the jobs the appellant was required to perform involved the use of a trigger gun, a device designed to tighten nuts or bolts on heavy structures. After using the trigger gun for a relatively short time, he complained to a doctor that the vibrations from the gun had caused an injury to his right hand and wrist. 9The appellant was then placed on light duties. However on 7 September 2008, he was dismissed from his employment apparently on grounds unrelated to his injury. The primary Judge, who heard the appellant's claims over four days from 12 to 15 March 2013, found that the appellant had not worked since the date of his dismissal. 10On or about 21 September 2009, the appellant made a claim under the Policy. He claimed to have become totally disabled for work on 4 September 2008 and to have remained totally disabled since that time. 11On 17 March 2010, the appellant, who at that stage had legal representation, and Monadelphous entered into a Settlement Agreement. The Settlement Agreement contained the following recitals (in which the appellant is referred to as "the worker"): "2.1 The worker contends that on or around 25 August 2008 he developed the gradual onset of pain in both his left and right wrists as a result of using a rattle gun ("the accident"). 2.2 The worker has made a claim pursuant to the provisions of the Workers' Compensation and Injury Management Act 1981 [(WA)] ("the WC Act") in respect of the accident ("the workers' compensation claim"). The employer has declined the workers' compensation claim. 2.3 The worker also alleges that the employer's negligence and breach of contract caused the accident and has claimed damages from the employer ("the common law claim"). 2.4 The employer denies liability for the common law claim. 2.5 The parties have agreed to settle the workers' compensation claim and the common [law] claim ("the claims") on the terms and conditions contained in this Agreement." 12Under the Settlement Agreement, Monadelphous agreed, without admissions, to pay the appellant $60,000 plus $10,000 in costs, in full and final settlement of the claims "exclusive of all payments made to the worker pursuant to the WC Act" (cl 3.1). The appellant released Monadelphous from all actions and claims arising out of the accident (cl 6.1) and further agreed (cl 6.2): "that the payment of the settlement sum by the employer finally extinguishes any rights that the worker has or may have had at common law or pursuant to the WC Act against the employer in respect of the accident or the claims." 13On 14 July 2011, solicitors then acting for the appellant wrote to the Insurer. The letter noted that the appellant's claim under the Policy had initially been accepted, at least as to partial disability for the period September 2008 to May 2009, and that some payments had been made to him. The letter asserted that the appellant was entitled to payments under the Policy in respect of total disablement at the rate of $2,000 per week for a period of three years. It appears that the Insurer denied that it was liable to make any further payments to the appellant. 14On 4 May 2012, the appellant commenced proceedings against the Insurer in the District Court of New South Wales. The appellant, who at this stage was resident in New South Wales, seems to have drafted the Statement of Claim himself. In substance he claimed total disablement benefits under the Policy of $1,900 per week for 154 weeks, amounting to $292,600. The period of 154 weeks reflected his claim that weekly benefits were payable under the Policy for 156 weeks, but were subject to a qualifying period of two weeks. The appellant acknowledged that he had received payments from the Insurer totalling $23,397.14. Accordingly he claimed a total of $269,202.86 ($292,600 less $23,397.14). The Policy 15The Policy booklet issued by the Insurer to Monadelphous stated that the Policy consisted of "Part B - Terms and Conditions" of the booklet (Conditions) and the Policy Schedule given to Monadelphous. The Conditions contained the following definitions: "Insured person: any person described in the Policy Schedule as an Insured Person. Partial disablement: disablement as a result of injury covered under Weekly Benefits - Injury that prevents an insured person from carrying out a substantial part of all the normal duties of their usual occupation, business or profession. Period of insurance: the period shown in the Policy Schedule. Policy Schedule: the latest policy schedule we give you, including any endorsement schedule or any renewal schedule. Total disablement: total disablement as a result of injury covered under Weekly Benefits - Injury that entirely prevents an insured person from ● carrying out all the normal duties of their usual occupation, business or profession ..." 16Section B of the Conditions stated that the Insurer would pay: "a weekly benefit of the amounts as set out in the compensation table in this section of the Policy in respect of an insured person if the payable conditions shown: ● occur during the period of insurance ● are a result of injury." 17The section of the Conditions headed "Weekly Benefit - Injury Restrictions" included the following provisions: "(c) Weekly benefits will be paid after the excluded period of claim has elapsed. (d) We will continue to pay weekly benefits while the insured person suffers disablement up to a maximum of 156 weeks or any shorter period shown in the Policy Schedule. The weekly benefit we pay will be ● the amount shown in the compensation table in this section of the Policy, or ● the amount of the insured person's pre disability earnings which they have actually lost, whichever is less, and will be reduced by weekly benefits paid or payable from any ... statutory workers compensation scheme." The compensation table referred to was as follows: Compensation Table - Weekly Benefits - Injury Injury resulting in: Payable Condition Compensation 1. Total disablement (weekly benefit) As per Policy Schedule 2. Partial disablement (weekly benefit) 30% of total disablement 18The Policy Endorsement to the Policy for the period 30 June 2008 to 30 June 2009 identified "the Insured" as "Monadelphous Group". Under the heading "Group Policy", the Policy Endorsement incorporated the following provisions: "INSURED PERSONS CATEGORY 1: ALL EMPLOYEES OF CAPE LAMBERT UPGRADE TIME OF OPERATION OF COVER CATEGORY 1: 24 HOURS Cover under this Policy shall apply 24 hours a day whilst the Policy is in force. GEOGRAPHICAL LIMIT: ANYWHERE IN AUSTRALIA AGGREGATE LIMIT OF LIABILITY: $10,000,000 SECTIONS INSURED A: ... B: WEEKLY ACCIDENT BENEFITS (ACCIDENT ONLY COVER) CATEGORY 1 WEEKLY BENEFITS: $2,000 EXCL PERIOD OF CLAIM: 2 WEEKS BENEFIT PERIOD: 104 WEEKS" 19The annual premium payable for the period 30 June 2008 to 30 June 2009 by the Insured (Monadelphous) was $492,752.45. The Judgments 20In the Principal Judgment, the primary Judge referred in some detail to the medical evidence. He found (at [17]) that the appellant had not had any relevant symptoms prior to sustaining the injuries to his right wrist and arm. His Honour also found (at [26]), on the basis of reports of 8 April and 14 April 2009 by Dr Williams, an orthopaedic surgeon, that at that stage there was very clear evidence that the appellant could not work at his pre-injury job as a rigger. 21The primary Judge noted (at [35]) that the Insurer relied on a report by Dr Williams dated 7 June 2011 (prepared nearly three years after the appellant had been injured) in support of a submission that any ongoing incapacity experienced by the appellant was due to pre-existing degenerative changes (albeit symptomless prior to the injury). It followed, according to the Insurer, that any exacerbation of the appellant's condition attributable to the injury "had long since ceased to exist". 22The primary Judge said that he understood Dr Williams to mean that the appellant had been totally unable to work as a rigger for at least a year and "then his incapacity due to work-caused RSI [repetitive strain injury] had gradually decreased over about six months" (at [36]). However, his Honour also observed (at [38]) that Dr Williams did not specifically say when, in his view, the appellant "became totally or partially unable to work as a rigger due to the work-caused RSI". (The meaning of this sentence in the Principal Judgment is unclear. His Honour may have intended to convey that Dr Williams did not state specifically when the appellant ceased to be totally disabled for work as a rigger and became instead only partially disabled). 23The primary Judge noted (at [47]) that the Insurer had conceded that if the appellant established that he was totally disabled, his entitlement under the Policy would be $2,000 per week (not $1,900 as the appellant initially claimed). His Honour pointed out (at [50]) that the terms of the appellant's project agreement, which formed part of his contract of employment, provided for a maximum weekly benefit of $1,900. The project agreement stated that Monadelphous would provide the employee, at no cost to him or her, income protection insurance providing cover for 100 per cent of the employee's average earnings to a maximum of $1,900 per week for 104 weeks. The Insurer's concession in the District Court was based on the Policy Endorsement, which (despite the terms of the project agreement) specified a maximum weekly benefit of $2,000. 24The primary Judge rejected (at [55]) the appellant's argument that the maximum period for which weekly benefits were payable under the Policy was 156 weeks. In his Honour's view, the correct construction of the Policy, including the Policy Schedule, was that the maximum period was 104 weeks. 25His Honour next dealt with what the Insurer's counsel had identified as the "real dispute", namely "whether [the appellant] was totally incapacitated under the [Policy] or partially". His Honour made the following finding (at [59]): "Having had regard to the arguments, I find that the [appellant] was totally disabled within the meaning of that expression in the policy until at least 91 weeks after he ceased employment with [Monadelphous], and thereafter that he was partially incapacitated within the meaning in the policy for at least thirteen weeks." 26After referring to medical evidence, the primary Judge (at [67]) found that there was a "clear causal connection" between the work-related injuries sustained by the appellant and his incapacity for work for the two year period after his employment had been terminated. His Honour also found (at [62]) that the appellant was a truthful witness and that, on the basis of the appellant's evidence, "there [had] been no appreciable change in his physical symptoms since the work incident" (at [68]). 27His Honour rejected (at [72]) the Insurer's argument that the appellant could theoretically have performed some work following his injuries and thus could not demonstrate that he was totally disabled within the meaning of the Policy. On this argument, as his Honour observed (at [72]), it was "hard to see that anyone could ever qualify as totally disabled". His Honour restated (at [74]) his conclusion as follows: "Thus I find that [the appellant] could not work in his normal duties as a rigger from 8 September 2008 for 91 weeks, and thereafter for at least thirteen weeks he was partially incapacitated, in that his work-caused incapacity prevented him from carrying out a substantial part of all the normal duties of his occupation as a rigger." 28The primary Judge recorded (at [75]) the Insurer's submission that a deduction should be made from the amount payable under the Policy of the full amount of $60,000 received by the appellant under the Settlement Agreement. His Honour observed (at [76]) that there was no evidence as to the makeup of the lump sum, except the appellant's admission that his claim included damages for lost wages, pain and suffering and treatment expenses. 29Nonetheless, the primary Judge considered that a deduction of $26,000 should be made, for the following reasons: "[77] Mr McManamey [counsel for the Insurer] told me that the common law regime of Western Australia provided a modest sum only for pain and suffering, and that a worker needed to achieve a 15% of a whole person impairment before obtaining such an award. There was no evidence before me as to whether [the appellant] would have qualified on that table. Mr McManamey put to me that the bulk of the settlement money would have been for lost wages. In the absence of evidence other than that the lump sum represented compensation for both pain and suffering and lost wages, however, I propose to divide $54,000 by two, and find that half of that was for pain and suffering and half for wages. [78] I accept that there is a degree of arbitrariness in doing this, but this type of division of damages is similar to such a division performed after a civil jury trial has led to a verdict for a lump sum, and interest is calculated where there are different rates of interest for different components of damages. I find that $26,000 of that sum represented wages paid or payable." 30Finally, the primary Judge rejected (at [80]) the Insurer's submission that two weeks benefits should also be deducted since the qualifying period under the Policy was two weeks. His Honour construed the Policy as requiring an insured person to be incapacitated for more than two weeks in order to qualify for a payment. Once the insured person qualified, benefits were to be paid for the full 104 weeks. 31In the Supplementary Judgment, the primary Judge dealt with the calculation of interest and the quantum of costs to which the appellant was entitled as a successful unrepresented litigant (although he had been represented at earlier stages of the litigation). Reasoning The Period for which Benefits are Payable 32In his oral submissions in this Court, the appellant disputed that the Policy comprised the Conditions and the Policy Endorsement. He pointed to a document that was apparently produced by the Insurer by way of discovery. This document is headed "Cape Lambert Upgrade ... Project: Personal Accident and Sickness Insurance" and is said to be based on the "Cape Lambert Upgrade: Monadelphous Engineering (CFMEU & Metal Trades) Agreement 2007". According to the appellant, there is an inconsistency between this document and the Policy. 33It is difficult to see what benefit the appellant would gain, even if the document formed part of the Policy terms and conditions. It expressly states that the maximum benefit period is 104 weeks and provides for a maximum weekly benefit of $1,900 per week. In any event, there is nothing to indicate that the document identified by the appellant was issued by the Insurer or formed part of the Policy. It makes no reference to the Insurer and appears to contain a summary of an agreement between Monadelphous and the union to which the Insurer was not a party. Moreover, as was pointed out to the appellant in oral argument, his pleadings founded his claim on Policy No 70 A017554 PAD, which is the number recorded on the Policy Endorsement. 34The primary Judge was clearly right to proceed on the basis that the terms of the Policy are contained in the Conditions and the Policy Endorsement. The Conditions make it clear that the Policy consists of the Conditions and the Policy Schedule. The latter expression is defined to include "the latest policy schedule we give you [Monadelphous] including any endorsement schedule ...". Thus the Policy Endorsement forms part of the Policy. 35Once this conclusion is reached, it is also clear that the primary Judge was correct to conclude that the maximum period for which weekly benefits were payable under the Policy was 104 weeks. The Conditions (Weekly Benefit - Injury Restrictions, sub-par (d)) state that the Insurer will continue to pay benefits while the insured person suffers disablement, up to a maximum of 156 weeks or any shorter period shown in the Policy Schedule. The Policy Schedule (that is, the Policy Endorsement) expressly states that the benefit period is 104 weeks. The reference to 104 weeks is plainly intended to specify the maximum period for which benefits are payable under the Policy. 36Contrary to the appellant's submissions, it is not possible to interpret sub-par (d) of the Conditions as conferring a right on an insured person to choose between a maximum of 156 weeks or the period of 104 weeks stated in the Policy Endorsement. The Insurer's liability to make weekly payments to an insured person is limited to the period stated in the Policy Endorsement. The reference to 156 weeks in the Conditions is to accommodate a case where the Insurer issues a Policy Endorsement that specifies a benefit period longer than the 104 weeks applicable to the Policy, although no Policy Endorsement can provide for a period longer than 156 weeks. Total or Partial Disablement? 37As Mr McManamey accepted, it is difficult to discern from the Principal Judgment why the primary Judge concluded that the appellant's period of total disablement ended after 91 weeks and that for the remaining 13 weeks of the 104 week period he was only partially disabled. To reach that conclusion, his Honour had to find on the evidence that after 91 weeks the appellant's injury no longer prevented him from "carrying out all the normal duties of [his] usual occupation", but merely prevented him from carrying out a "substantial part of the normal duties of [his] usual occupation" (see the Policy definitions of "Total disablement" and "Partial disablement" at [15] above). His Honour made no express finding that after 91 weeks the appellant was no longer prevented from carrying out all the normal duties of a rigger. 38While acknowledging the difficulty in ascertaining the precise basis for the primary Judge's conclusion, Mr McManamey nonetheless sought to support that conclusion. He submitted that his Honour must be taken to have accepted the opinions expressed by Dr Williams in his reports. Those reports, so Mr McManamey argued, indicated that the appellant had ceased to be totally disabled (within the meaning of the Policy) no later than 91 weeks after the period of incapacity commenced. 39Dr Williams prepared a report for the appellant's then solicitors on 8 April 2009, eight months after the injuries were sustained. In that report, Dr Williams disagreed with Dr Haynes (a Consultant Occupational Physician) who had opined that the appellant's symptoms would resolve themselves within a month or two. Dr Williams' prognosis at this stage was that: "there should be resolution of the acute symptoms with which he presents within a 6-12 month period following injury with the underlying degenerative change remaining and having the potential to progress in the future". Dr Williams also noted that the appellant was "unstable in terms of settling his case" (presumably against his employer) as he had "not reached a plateau of maximum recovery". Dr Williams thought that the appellant might need to consider vocational assessment and a broader range of lighter, less stressful activities. 40In a supplementary report dated 14 April 2009, Dr Williams expressed the opinion that: "at this time [the appellant] is not fit to work in his pre-accident work as a rigger and labourer with activities which involve his right upper limb with heavy lifting, repetitive activities or vibrating activities stresses." 41The next report from Dr Williams was prepared on 20 June 2011, well after the expiration of the two year period following the onset of the appellant's incapacity. The report was prepared after Dr Williams had reviewed the appellant on 7 June 2011. Apparently Dr Williams had not seen the appellant between April 2009 and June 2011. 42In the June 2011 report, Dr Williams noted that the appellant was living on welfare benefits. The appellant could not cope with rigging, scaffolding and heavy labouring work "which is his past area of skill" and indeed simple activities like putting his hands in his pockets could catch his thumb and create wrist pain. Examination of the appellant revealed tenderness over the dorsoradial aspect of the wrist. An x-ray showed that the "most marked focal area of carpal arthritic change [was] between the scaphoid and trapezium joints", but Dr Williams considered that further clarification was required before the need for surgery could be assessed. 43The report included answers to specific questions posed to Dr Williams by the appellant's then solicitors: "What [do] you consider to be the client's current fitness for work having regard to his pre-injury occupation [?] With regard to his current fitness for work, having regard to his pre-injury occupation, there is significant underlying pathology identified in his right wrist carpal area and he is unfit for work activities that involve heavy lifting and repetitive activities and he will not cope with work as a rigger or heavy labourer. I have outlined that his broad capacity for work is in light sedentary work activities at desk or bench level with the use of a protective wrist splint from time to time as required. At some time in the future there is the potential to see surgery required in management. His current incapacity for work activities relates to the underlying wrist pathology defined in the plain x-ray rather than ongoing consequences of the work injury which was a soft tissue injury and exacerbation of symptoms from the underlying pathology. He would have reached a point where the ongoing problems relate to the underlying pathology and he is certainly in that situation currently. ... In your opinion is it more likely than not that Mr Berzins was incapacitated for his normal duties from September 2008 to date as a result of the injury he received to his right hand and arm at work? With regard to his incapacity for normal work duties from September 2008, I reviewed him and reported in April 2009 and he was incapacitated for his previous heavy work activities at that time. I have outlined that he remains limited in terms of coping with heavy, demanding and repetitive work activities at this time but he has the capacity to carry out a range of work activities in the broader light sedentary work area at desk or bench level. Generally one would have expected improvement in function at the point September 2009 which would be one year after his injury and then over a further six months there would be a gradual increase in functional capacities and work in the appropriate area, avoiding the stresses I have outlined." 44The primary Judge characterised (at [66]) Dr Williams' third report as demonstrating "some obliqueness" when commenting on the relationship between the appellant's pre-existing underlying but asymptomatic arthritic condition and his injuries. Nonetheless, his Honour accepted (at [67]) that there was a clear causal connection between the appellant's incapacity and his work-related injuries. He also accepted (at [68]) that there had been no appreciable change in the appellant's physical symptoms since the work injuries. His Honour noted (at [69]) that after the accident and before the appellant's dismissal, he worked for a day as a "spotter", a less onerous job than that of a rigger. But there was no satisfactory evidence of any light duties that a rigger could perform with Monadelphous (at [70]). 45Dr Williams' third report was capable of supporting a finding that by June 2011, the appellant's continuing incapacity for his pre-injury occupation was due to his pre-existing arthritic condition rather than the work-related injuries. But in light of his Honour's other findings concerning the appellant's continuing incapacity for work as a rigger, Dr Williams' guarded and equivocal statement in his third report cannot provide a sound basis for concluding that the appellant's period of total disablement ended 91 weeks after he sustained his injuries or indeed at any other point within the period of 104 weeks for which benefits were payable under the Policy. 46Dr Williams said that generally he would have expected improvement in function one year after the injury and then a gradual increase in fundamental capacities over a further six months. He did not specifically address when, if at all, the appellant ceased to satisfy the Policy definition of "total disablement". Nor did Dr Williams say whether his general expectation was met in the appellant's case. In the absence of more specific evidence about the appellant's work capacity and the nature of a rigger's "normal duties", I do not think that his Honour was entitled to find that the appellant ceased to be totally disabled 91 weeks after his injuries and thereafter became only partially disabled. On the evidence before the primary Judge, the appellant suffered total disablement within the meaning of the Policy for the entire two year period in respect of which benefits were payable. Should the Weekly Benefit Have Been Reduced by Part of the Settlement Sum? 47Under the terms of the Policy, the weekly benefit is reduced "by weekly benefits paid or payable from any ... statutory workers compensation scheme". The primary Judge understood the argument advanced by the Insurer to be that the whole of the settlement sum of $60,000 represented "weekly benefits paid or payable" and thus this sum was to be deducted from the weekly benefit payable under the Policy. His Honour found (at [78]), with a "degree of arbitrariness", that $26,000 of the settlement sum represented compensation for loss of wages and so was to be deducted from the amount awarded to the appellant. 48The Insurer's amended defence pleaded that if the appellant was entitled to any relief, the amount was to be reduced by: "the sum of $60,000, being the sum paid by ... the employer's indemnity insurer for [Monadelphous] in full and final settlement of the workers' compensation claim instituted by the [appellant] against Monadelphous for the injuries allegedly sustained by the [appellant]...". 49The foundation in the wording of the Policy for this pleaded defence is obscure. If the Insurer intended to rely on the appellant's entitlement to be paid weekly benefits under a workers compensation scheme, the defence might have been expected to plead the source of the statutory entitlement to such benefits, the facts establishing the appellant's entitlement and the amount of weekly benefits paid or payable to him under the applicable statutory scheme (presumably the Workers' Compensation and Injury Management Act 1981 (WA)). None of this was pleaded. 50There was no evidence before the primary Judge as to these matters and his Honour's attention was not drawn to the relevant provisions of the Western Australian legislation. Ms Bidois, Monadelphous' Injury and Claims Manager, was asked what the workers compensation entitlement "for someone in [the appellant's] position ... in 2008 in terms of a weekly payment". She answered that the maximum amount payable was $1,904.40. That answer did not demonstrate that the appellant was entitled to any weekly benefits under the applicable workers compensation legislation. All that is known (from the recitals to the Settlement Agreement) is that the employer denied that the appellant was entitled to any such benefits. 51In final submissions to the primary Judge, the Insurer's counsel asserted that, on the basis of Ms Bidois' evidence, the appellant was entitled to $1,904.40 per week by way of workers compensation. However, he said that "because of the way in which the defence was pleaded, we don't seek a set-off of any greater than $60,000". The primary Judge, however, seems to have understood the Insurer to be submitting that the whole of the $60,000 paid under the Settlement Agreement represented weekly benefits under the workers compensation scheme and thus was to be deducted from benefits payable under the Policy. 52It is not surprising that his Honour seems to have misunderstood the argument that was being advanced on behalf of the Insurer. It was simply not correct to submit that Ms Bidois' evidence established that the appellant was entitled to workers compensation benefits of $1,904.40 per week, or of any other amount. While the amended defence pleaded that payment of the settlement sum by the indemnity insurer entitled the Insurer to offset that sum against amounts payable under the Policy, neither the pleading nor the Insurer's argument at the trial explained why that was so. 53It is not self-evident that even if some portion of the undifferentiated settlement sum could be nominally attributed to the appellant's entitlement to weekly workers compensation payments, that portion of the sum paid to him should be deducted from his entitlement to weekly benefits under the Policy. But assuming in the Insurer's favour that the primary Judge correctly concluded that the matter was to be approached in this way, there was no evidentiary foundation for apportioning any part of the settlement sum to the appellant's entitlement to be paid weekly workers compensation benefits. As I have explained, all the evidence showed was that Monadelphous' indemnity insurer denied liability to pay weekly workers compensation benefits to the appellant. The settlement sum was paid not only to compromise the appellant's claims under the workers compensation legislation, but his claim to common law damages as well. In this state of the evidence, it is entirely speculative to conclude that some portion of the settlement sum was intended to satisfy an obligation to pay the appellant weekly workers compensation benefits. 54Mr McManamey recognised the difficulty he faced in upholding the primary Judge's reasoning. He therefore sought leave during the hearing to file a notice of contention in the following terms: "The Respondent contends that the decision of Judge Walmsley in respect of the deduction of $26,000 for workers compensation paid should be upheld for the following ground not relied upon by his Honour: 1. The Respondent was entitled to a reduction in benefits payable by an amount equal to any workers compensation weekly benefits payable to the Appellant. 2. The Appellant was entitled to weekly benefits from date of injury to 17 March 2010 at the rate of $1,904.40 per week. The total weekly benefit payable exceeded the amount of $26,000 which the primary judge deducted from the benefit payable under the policy." 55The Court declined to grant leave to the Insurer to file the notice of contention. It did so for two reasons. 56First, it would have been unfair to the appellant to permit the Insurer to allow it to put forward the arguments identified in the notice of contention. The Insured never pleaded that it was entitled to deduct the settlement sum because the appellant was entitled to weekly workers compensation payments. It is true that Mr McManamey briefly put an argument to this effect in final submissions (limiting the deduction to $60,000), but the primary Judge did not understand it in this way, and approached the submissions by apportioning the settlement sum in the manner I have explained. If his Honour misapprehended the argument, the unrepresented appellant could hardly have been expected to follow it, let alone address adequately in final submissions. Moreover, if the Insurer had raised the contention in its pleadings and in a timely fashion at the trial, the appellant may well have adduced evidence bearing on his entitlement (or lack of entitlement) to weekly workers compensation payments. 57The Insurer restated the argument in its written submissions in this Court, but neither filed a notice of contention with the submissions nor sought to amend its pleadings. Nor did it address why it should be permitted to run what is in substance a new argument on appeal, when the appellant might have answered it by adducing evidence at the trial: see Coulton v Holcombe [1986] HCA 33; 162 CLR 1 at 7-8 (Gibbs CJ, Wilson, Brennan and Dawson JJ); Multicon Engineering Pty Ltd v Federal Airports Corp (1997) 47 NSWLR 631 at 645 (Mason P, Gleeson CJ and Priestly JA agreeing); Whisprun Pty Ltd v Dixon [2003] HCA 48; 77 ALJR 1598 at [51] (Gleeson CJ, McHugh and Gummow JJ). The prejudice to the appellant that would result made it inappropriate to allow the Insurer to rely on the argument at this stage of the proceedings. 58The second reason for the Court refusing to grant the Insurer leave to file the notice of contention is that it would have been futile to grant the leave sought. The Insurer's argument was founded on the proposition that Ms Bidois' evidence established that the appellant was entitled to be paid weekly workers compensation benefits. Her evidence did not establish that proposition and there was no other evidence that did so. Orders 59The appellant fails on his first argument but succeeds on his second and third arguments. He is entitled to payments under the Policy for 104 weeks at $2,000 per week, a total of $208,000. The Insurer is not entitled to deduct any amount from that sum, except for the agreed sum of $23,397.14 which the appellant has already received from the Insurer. Thus the amount of the judgment should be increased from $139,400.86 to $184,602.86. On the assumption that the interest payable by the Insurer must be increased by the same percentage as the sum due under the Policy (that is approximately 32.42 per cent), the amount of interest included in the judgment should be increased from $59,098.08 to $78,257.68. Thus there should be a judgment for the appellant in the sum of $262,860.53. 60The costs order made by the primary Judge in favour of the appellant should stand. The appellant has succeeded in increasing the judgment in his favour. He failed in his contention that he is entitled to be paid benefits for 156 weeks, but that should not deny him his costs of the appeal, assessed on the basis that he is an unrepresented appellant. 61The orders I propose are: 1.Appeal allowed. 2.Set aside the judgment for the appellant in the sum of $198,498.94. 3.In lieu thereof, enter judgment for the appellant in the sum of $262,860.53. 4.The Insurer pay the appellant's costs of the appeal, to be assessed on the basis that he has been unrepresented on the appeal. 5.Liberty to the parties to apply within 14 days to correct any error in the calculation of interest. 6.The Insurer, if otherwise qualified, to have a certificate under the Suitors' Fund Act 1951 (NSW). 62SIMPSON J: I agree with Sackville AJA. ********** 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. Decision last updated: 23 June 2014