Aldridge v Marr Contracting Pty Ltd (No 2) [2013] NSWDC 324

District Court New South Wales

Medium Neutral Citation: Aldridge v Marr Contracting Pty Ltd (No 2) [2013] NSWDC 324 Decision date: 29 August 2013 Before: Cogswell SC DCJ Decision: Interest payable on component of damages representing past wage loss. Catchwords: CIVIL LAW - interest - recoverability of interest - whether interest payable on component of damages representing past wage loss - defendant had reasonable opportunity to make offer of settlement and appropriate to do so - no time limit on offer of settlement in s 151M Workers Compensation Act 1987 (NSW). Legislation Cited: Workers Compensation Act 1987 (NSW) s 151M. Workplace Injury Management and Workers Compensation Act 1998 (NSW) s 318. Cases Cited: Furina v Transfield Construction Pty Ltd (1994) 10 NSWCCR 23. Category: Consequential orders Parties: Raymond Aldridge (plaintiff) Marr Contracting Pty Ltd (defendant) Representation: Counsel: H Kelly SC, G Wilson (plaintiff) D Kelly (defendant) File Number(s): DC 2012/00002871

Judgment 1Litigation is a dynamic phenomenon. It starts in the relative silence of an office or chambers or a registry - documents are drafted and filed. It then progresses to the exchange of correspondence, telephone calls and face-to-face arbitration or mediation. It ends in the forensic arena where there is a good deal of activity and a larger number of people become involved. 2I make those observations because I am asked to award interest to a plaintiff who was successful before me recently. He made a claim for damages against his former employer. I found the employer negligent and awarded him damages. There is a component of the damages which relates to his wage loss up to the time of the judgment. 3Mr G Wilson of counsel, who appeared as junior counsel for the plaintiff in the hearing and who appears today, argued that I should award interest on the damages related to his client's wage loss to the date of judgment. Mr D Kelly of counsel, who appeared for the defendant in the proceedings, argues that I should not award interest. The argument focuses on a particular section of the Workers Compensation Act 1987 (NSW). It is s 151M. I have been assisted by both counsel in their submissions this afternoon about the interpretation of s 151M of the Workers Compensation Act and its applicability in this particular case. 4It is common ground between the parties that no formal offer of settlement was made by or on behalf of the defendant employer. Mr Kelly acknowledged that at the beginning or during the course of the hearing before me, he had some discussions with Mr H Kelly SC, who was senior counsel for the plaintiff, but was not in a position as a result of those discussions to make any formal offer on behalf of his client. 5Mr Wilson has tendered a document which is a chronology of events relevant to his client's present claim. I will mark that document as an exhibit IA ("I" meaning interest). EXHIBIT #IA CHRONOLOGY OF EVENTS RELEVANT TO MR WILSON'S CLIENT'S PRESENT CLAIM TENDERED, ADMITTED WITHOUT OBJECTION It discloses that a pre-filing statement was served on the defendant on 16 November 2011. A month later, an application for mediation was made and documents served on the defendant's lawyers. Just before Christmas, on 22 December 2011, a response to the application was filed. 6Mr Wilson also tendered a document (I will mark it exhibit IB) which is a certificate of mediation outcome. It disclosed that the defendant employer "declined to participate in mediation on the grounds that the defendant wholly disputes liability in respect of the claim". EXHIBIT #IB CERTIFICATE OF MEDIATION OUTCOME TENDERED, ADMITTED WITHOUT OBJECTION 7Mr Wilson's argument is that his client effectively provided the defendant with all of the evidence which his client proposed to rely upon. He reminded me of the structure of s 318 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) which prevents his client from relying upon evidence which has not been disclosed. He argued that the defendant had been supplied with a statement from his client, an expert report and medical evidence. 8Mr Wilson acknowledged that information concerning comparable wage earners had not been provided early but was provided during the course of the hearing. Interestingly, of course, the claim for interest focuses on the component of damages represented by the past loss of earnings, which in part was calculated by reference to wage earnings of workers comparable to the plaintiff. 9Mr D Kelly focused on wording in the provision which Mr Wilson is relying upon. It is appropriate that I set out s 151M - "151M Payment of interest (1) Limited statutory entitlement A plaintiff has only such right to interest on damages as is conferred by this section. (2),(3) (Repealed) (4)(a) Interest is not payable (and a court cannot order the payment of interest) on damages unless: (i)information that would enable a proper assessment of the plaintiff's claim has been given to the defendant and the defendant has had a reasonable opportunity to make an offer of settlement (where it would be appropriate to do so) in respect of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or (ii)the defendant has had a reasonable opportunity to make a revised offer of settlement (where it would be appropriate to do so) in the light of further information given by the plaintiff that would enable a proper assessment of the plaintiff's full entitlement to all damages of any kind but has not made such an offer, or (iii)the defendant has made an offer of settlement, the amount of all damages of any kind awarded by the court (without the addition of any interest) is more than 20% higher than the highest amount offered by the defendant and the highest amount is unreasonable having regard to the information available to the defendant when the offer was made. (b) The highest amount offered by the defendant is not unreasonable if, when the offer was made, the defendant was not able to make a reasonable assessment of the plaintiff's full entitlement to all damages of any kind. (c) For the purposes of this subsection, an offer of settlement must be in writing. (5) Calculation of interest If a court is satisfied that interest is payable under subsection (4) on damages: (a) the amount of interest is to be calculated for the period from the date of the death of or injury to the worker until the date on which the court determines the damages, and (b) the amount of interest is to be calculated in accordance with the principles ordinarily applied by the court for that purpose, subject to this section." 10Mr Kelly focused on the words "where it would be appropriate to do so" and also the words "reasonable opportunity". He pointed out that the proceedings involved various cross-claims early in the piece, and that it would not have been appropriate for his client to make any offer in those early days. As it happened the cross-claims were withdrawn, as Mr Wilson points out. 11This issue raised an aspect of the legislation which did not become apparent to me until Mr Kelly was referring to the cross-claims being filed and withdrawn relatively early in the proceedings. The aspect that became apparent is that there appears to be no time limit expressed within s 151M(4). There is, as Mr Kelly says, a staged process depending upon whether the defendant has made no offer at all, a revised offer, or an offer which needs to be compared with the damages which are ultimately awarded. 12Mr Kelly argued that it was not appropriate for his client to make any offer for a number of reasons. One was that, even as late as during the course of the proceedings, it was apparent that the plaintiff would not be placing significant reliance on his expert's report. That was Mr Kelly's argument. There is some force in that because the plaintiff's expert report was based upon certain assumptions which were not all supported by the plaintiff's evidence. 13Mr Kelly formulated that circumstance as being the plaintiff effectively asking me to reject his expert. I am not sure that it went as far as that, but his point was that there was a real element of compromise surrounding the value to the plaintiff of the expert's report, which would have been reflected on the inclination of the defendant to make an offer of settlement. 14A second reason why Mr Kelly said it was not appropriate for his client to make an offer was that it was not clear to his client until the submissions were made just what the plaintiff's claim was. It was not until the case had run for a day or two and the plaintiff produced a calculation of his damages, which became MFI 7, that Mr Kelly's client was in a position to see the basis of the assessment for the loss in income. 15Another reason was that the plaintiff had made before the trial an offer of settlement of $500,000 inclusive of costs. That was made in a letter from the plaintiff's solicitors to the defendant's solicitors dated 26 June 2013, which Mr Kelly tendered on this application, and I will mark it I1. EXHIBIT #I1 LETTER OF OFFER OF SETTLEMENT FROM PLAINTIFF'S SOLICITORS TO DEFENDANT'S SOLICITORS DATED 26/06/13 TENDERED, ADMITTED WITHOUT OBJECTION 16What happened then was that a couple of months later, on 6 August 2013, that offer was withdrawn by another letter, which I will mark exhibit I2. EXHIBIT #I2 LETTER OF WITHDRAWAL OF SETTLEMENT OFFER FROM PLAINTIFF'S SOLICITORS TO DEFENDANT'S SOLICITORS DATED 06/08/13 TENDERED, ADMITTED WITHOUT OBJECTION 17No other offer was substituted. It was not until the next day, 7 August 2013, by letter bearing that date, which I will mark exhibit I3, that Mr Kelly's solicitors were provided with the plaintiff's group certificate for the year ended 30 June 2013. EXHIBIT #I3 LETTER DATED 07/08/13 ATTACHING PLAINTIFF'S GROUP CERTIFICATE FOR YEAR ENDED 30/06/13 TENDERED, ADMITTED WITHOUT OBJECTION 18Mr Kelly's argument was that the offer went from $500,000 down to $388,000 (which was roughly the amount contained in MFI 7) so that the plaintiff's own lawyers were unable to properly assess his claim. How, then, rhetorically asks Mr Kelly, could the defendant be expected to make that assessment? In addition, Mr Kelly pointed out that there were issues regarding the quantification of the plaintiff's incapacity. He returned to work on light duties and indeed returned to full construction work, which was his area of work before the accident, but found that he was limited in the kinds of things which he could do. 19Mr Kelly argued that it was not appropriate for his client to make an offer because it was not clear that it would serve any purpose. Mr Wilson, in reply, pointed to s 151M(4)(ii) and argued that, even if the defendant had made a nominal offer of, say, $1 at the commencement of the proceedings or very early in the piece, that would be regarded as an offer, and it could be revised when the information became available, and his client would still be entitled to interest. 20Mr Wilson pointed out that experience in civil litigation is such that any offer put on the table by one party can often lead to a resolution of the case by setting off a process of serious consideration of the value of the parties' case and a compromise. Mr Wilson referred me to a judgment of Studdert J in Furina v Transfield Construction Pty Ltd (1994) 10 NSWCCR 23. His Honour was referring to the same provision, but it has since been amended. However, his Honour observed that s 151M "is clearly aimed at encouraging responsible compromise of claims." His Honour made that observation at page 27 and went on to say that if a "defendant in a case where it is appropriate for it to make an offer of compromise fails to do so, it must appreciate that by such failure it is liable to have an order for the payment of interest made against it." To my mind, those observations are equally applicable to s 151M as in its present form. 21Section 151M appears to me to be fairly rigorous in its application. It does not focus on any particular time in the past for its applicability. It applies, it seems to me, right up to just before the time that judgment is entered. In other words, returning to my opening remarks, it not only applies at the quieter time of drafting and filing of documents, but on throughout the time of correspondence and mediation and well into the more active stage of litigation in the forensic arena before a judge. It requires both parties to keep in mind the effect of its provision and, it seems to me, obviously keeps on the agenda in litigation the need for the parties to consider compromise. 22This is not unreasonable, when one thinks about it. Matters which are uncertain or the subject of speculation at the commencement of litigation and in its early stages can fall away or become more certain once the case starts by the calling of witnesses. A plaintiff is examined and cross examined. Any evidence in support, either oral or physical, is seen and examined. The parties have an opportunity to observe the judge and his or her reaction to the evidence, and to submissions which are put. The provision, it seems, requires the parties to bear in mind this question of interest for the whole period of the litigation. 23Another aspect of the provision is that it does not appear to me to make allowance for assessing interest at lesser rates or lesser amounts according to time. It seems to me that the assessment is to be for the period, relevantly in this case, from the date of injury until my judgment. The amount of interest is to be calculated in accordance with principles ordinarily applied according to subsection (5)(b), but it seems to me that that would not allow me to not award interest for some periods in the past because I considered that the defendant was not in a position to make an offer at some period in the past. 24The focus of subsection (5)(b) appears to be on quantum rather than interfering with the emphasis in subsection (4) on putting pressure on the parties to compromise the claim. To my mind, it was appropriate for the defendant to make an offer of settlement, and it had a reasonable opportunity to do so. 25I should say, in fairness to the defendant, that that opportunity probably did not arise until quite late and well into the forensic arena stage of the proceedings when it was armed with calculations based upon information about wages obtained under subpoena and the possession of MFI 7, the plaintiff's calculation of what he would submit should be his damages, but the legislation appears to require a defendant to keep compromise under consideration and to be at risk of paying interest unless it puts an offer on the table even at such a late stage. It seems that only a bold and confident defendant makes no offer under this legislation. 26In my opinion, for those reasons, information that would enable a proper assessment of the plaintiff's claim was given to the defendant. The defendant in this case had a reasonable opportunity to make an offer of settlement and it was appropriate to do so. That offer could have been in respect of the plaintiff's full entitlement to all damages of any kind. It did not make such an offer. 27For those reasons, it is my opinion that interest is payable on that component of the damages representing the past wage loss.