Welcome to the September 2010 issue of the Edwards Michael Lawyers eBulletin.

Profiting from your own mistakes: Common Law Liability and Working Directors

Even Working Directors responsible for devising the system of work responsible for their injuries are now able to bring claims for Work Injury Damages.

Tim Wardell discusses the present High Court attitude on this issue, and warns that possible findings of contributory negligence in such circumstances may well be tempered by Section 151N of the Workers Compensation Act 1987 (damages are not to be reduced by virtue of contributory negligence below an estimated commutation value).

Click here to read Tim’s analysis.

Losing Interest?

In a Paper delivered to the 2010 Personal Injury Conference, Christopher Michael informed delegates that there was no common law entitlement to interest on recoveries pursuant to Section 151Z(1)(d) of the Workers Compensation Act 1987:

“As there is no common law entitlement to interest on statutory indemnities, the only means of enforcing payment of interest is to enliven the power of the Court under Section 100 of the Civil Procedure Act 2005. Unless there are exceptional circumstances, interest will then be awarded from the date of each payment of compensation”.

Chris concluded that in the absence of agreement for payment of interest, the failure to commence court proceedings would inevitably result in a loss of valuable rights to interest.

Click here to read Chris’ Paper.

Scheme Agent Recovers from Overservicing and Negligent Doctor

In Advanced Arbor Services Pty Limited v Phung (2009) NSWSC 1331 a Scheme Agent exercised its right of subrogation under the statutory policy to sue in the name of the employer to recover damages arising from overservicing and negligence by a doctor whose fees had been paid pursuant to s.60 of the 1987 Act.

A worker had suffered a work related injury to his mouth and teeth, as a result of which the employer arranged for treatment by a dentist which was paid for by the insurer. The dentist performed far more work than was necessary and the work was done negligently, meaning that further treatment was required to rectify the damage done by him. It was admitted by the dentist that his treatment was “so inexcusably bad as to constitute a novus actus interveniens (which operated) to terminate the relationship between the injury … and the consequences of the treatment provided”. The relevance of this was that s.151Z could not be invoked by the insurer because the negligence of the doctor effectively gave rise to a further injury which did not result from the work related injury; see Mahony v J Kruschich (Demolitions) Pty Limited (1985) 156 CLR 522.

Instead, the insurer successfully sued on the basis of the equitable principles of restitution and unjust enrichment, in contract and also on the basis of false, misleading or deceptive representations made by the dentist under the Trade Practices Act 1974 (C’Wealth) and the Fair Trading Act 1987 (NSW).

In relation to the equitable claims, the insurer asserted that the monies paid to the dentist had been made under a mistake of fact and/or law on the basis that it initially believed, based on the representations of the dentist, that the work being undertaken was being undertaken competently and was reasonably necessary as a result of the worker’s injury and later, after receiving independent medical opinion to the effect that the work done by the dentist was neither reasonably necessary or competently carried out, that the obligation to make payments under s.60 continued due to the fact that liability for the worker’s injury had been accepted and also because approval for dental work to be carried out had been given and could not be withdrawn.

Johnson J accepted that all monies paid to the dentist had been paid under a mistake of fact and/or law and further that the insurer was entitled to restitution on the basis of the necessary elements for the granting of such relief having been made out, namely that an element of benefit had been received by the dentist at the insurer’s expense and that it was unjust, unfair, unconscionable or inequitable for the dentist to have obtained that benefit. The relevant injustice found to exist was that the dentist had made representations that he was a competent dentist who was providing services of an appropriate standard which were reasonably necessary as a result of the worker’s injury, on which representations the insurer had relied in circumstances where they were false and misleading.

In relation to the claim in contract, it was found that there was a contract between the employer and/or its insurer rather than between the worker and the dentist and that such contract contained implied terms to the effect that the dentist was competent and would provide dental services to an appropriate standard which were reasonably necessary as a result of the worker’s injury. As these terms were breached, the insurer was entitled to damages in contract.

On the basis of the representations made by the dentist as referred to above, which were found to be false, misleading or deceptive, it was further found that the dentist had breached the TPA and the FTA, and it is noted that those Acts contain provisions for the recovery of damages where false, misleading and deceptive conduct has been made out.

The court ordered the dentist to pay damages to the insurer, such damages including not only the amount of the monies paid to the dentist pursuant to s.60, but also damages for remedial work required to be undertaken for the benefit of the worker and in respect of weekly benefits paid for time taken off work by the worker in order to undergo treatment by the dentist.

The dentist appealed to the Court of Appeal (Phung v Advanced Arbor Services Pty Limited (2010) NSWCA 215) but the appeal was dismissed with the findings of the trial judge essentially being upheld.

Schedule 7 Costs

In Chubs Constructions Pty Limited v. Sam Chamma (No.2) [2010] NSW CA 225 the Court of Appeal considered the meaning of “ancillary proceeding” in Clause 93 of the Workers Compensation Regulation 2003.

Firstly, the Court found that an appeal restricted to Work Injury Damages costs falls within the scope of Section 346(1) of the 1998 Act, because the proceedings have a sufficient and obvious connection to the claim for Work Injury Damages. Thus, the restricted (Schedule 7) costs prescribed by the regulations were applicable.

Secondly, the Court was required to determine the application of Clause 93, which provides that Schedule 7 costs do not apply to “proceedings that are ancillary to proceedings on a claim for Work Injury Damages”.

The Appellant sought to argue that proceedings in the Court of Appeal were ancillary to proceedings on a claim for Work Injury Damages.

The Court disagreed, stating that ancillary proceedings would be “proceedings subsidiary to the main litigation, such as applications for further and better particulars, for discovery, for change of venue, and a variety of similar matters”.

The Court drew a distinction between incidental, or ancillary, matters and orders that are final. The Court determined that an appeal could not ever be described as an ancillary proceeding.

Warning on Dispute Notices

The Presidential Members of the Workers Compensation Commission have issued strong warnings in relation to the need for Section 74 Notices to be properly defined.

In Sydney Night Patrol & Inquiry Co Pty Limited v. Spasevski [2010] NSW WCC PD 7, Deputy President Roche stated:

“The Notice must be expressed in plain language and must clearly and succinctly identify the reason the insurer disputes liability and the issues relevant to the decision. A general assertion that an insurer relies upon one or more of the sections in the legislation is unacceptable…The practice of referring to multiple sections of the legislation, regardless of their relevance to the particular claim, and of making generalised denials of entitlement to compensation is unacceptable and must cease“.

President Keating embraced this decision in Irvin v. LA Logistics Pty Limited & Anor [2010] NSW WCC PD 40:

“It has been held in numerous recent cases in this Commission that referring to sections of the legislation, without clearly articulating the issues in dispute, is not proper compliance with section 74”.

The Commission will not allow issues to be ventilated unless they have been properly raised in a Section 74 Notice, or unless it is in the ‘interests of justice to do so’ (Section 289A(4).