J.R. Bryant (Constructions) Pty Ltd v Daniels S72/1996 [1997] HCATrans 312 (3 October 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S72 of 1996

B e t w e e n -

J.R. BRYANT (CONSTRUCTIONS) PTY LTD

Applicant

and

KENNETH ALAN DANIELS

Respondent

Application for special leave to appeal

BRENNAN CJ

TOOHEY J

HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 OCTOBER 1997, AT 3.08 PM

Copyright in the High Court of Australia

MR J.L. SHARPE: If the Court pleases, I appear for the applicant. (instructed by McCulloch & Buggy)

MR M.F. ADAMS, QC: I appear with my learned friend, MR N.J. POLIN, for the respondent, if the Court please. (instructed by Napier Keen Solicitors)

BRENNAN CJ: Mr Sharpe.

MR SHARPE: This appeal raises questions of general importance involving questions of formation of a contract, enforceability of a contract, the involvement of legal practitioners and dispute resolution in the administration of justice.

The issue arose out of an attempted settlement of a workers compensation claim. It has this scenario as a background. Worker is injured in 1989. He is entitled, apparently, to compensation under the Workers Compensation Act 1987 in New South Wales and that entitlement is both for lump sum compensation and for other rights. One of the things that happened to this man is that he was entitled to lump sum compensation both of a determined amount and a discretionary amount, that is there is a section 66 entitlement which is a determined amount and there is an additional amount if you get through certain thresholds.

Under the second of those matters the New South Wales legislation provides for a formula or a way of dealing with it. The legislation dealing with it, which I can briefly refer to, is section 67(4) which is, in fact, set out at application book, page 12, at the bottom of the page about point 30, and for relevance, it says:

The amount of compensation payable under this section in any particular case shall -

and the next words are the key words -

in default of agreement, be determined by the Compensation Court.

The worker retained lawyers to act on his behalf and an application was filed for compensation in the Compensation Court on 3 May 1991, and that is referred to at page 1 of the application book, about point 28. The employer, through its insurance company, then attempted to negotiate a settlement with the worker through the lawyers that were retained, that is the worker's lawyers. The insurance company had no lawyers.

An offer was put by the insurers on 3 June 1991, so that is about a month after the claim was started, and that appears at page 2 of the application book at the top of the page. If that offer was accepted then all that was needed was a formal order of the court, as is normal in common law proceedings, that terms be handed up dealing with that issue and then an order of the court is made and the matter is brought to an end.

TOOHEY J: Do we know what the offer of settlement was?

MR SHARPE: We do. In the original judgment it is just referred to as "an offer of settlement", the figure is $20,000. It appears from other things.

TOOHEY J: Is that just in relation to the section 67(4) or was it a composite figure?

MR SHARPE: A composite figure. What happened then was that the lawyers for the worker replied with a counter offer and the effect of that counter offer is to increase the total offer to about $20,500. To do that, if I can take your Honours to application book, page 2, point 5:

On 1st July, 1991 the Applicant's solicitors wrote to the insurer referring to an offer of settlement dated 3rd June, 1991. The letter went on to say that those solicitors had been instructed by the Applicant to accept the sum of $15,229.50 -

for the section 66 -

and to make a counter offer of $5,500 -

At that stage one can see that the total of the two figures - previously the figure was $20,000; suddenly it is now $20,729.50. Then the insurance company writes back to the solicitors and that is where this case comes about. At page 2, about point 12, is the key words that appear. The letter states:

"we advise that we are prepared to accept your offer of $5,500.00 in settlement of your client claim pursuant to Section 67 and ask that you draw up Terms of Settlement appropriate to his claims under Sections 66 & 67."

TOOHEY J: Mr Sharpe, why does the letter focus only on the $5,000 and not on the $15,229?

MR SHARPE: The worker agreed with the figure that had been offered for the section 66 aspect of the matter.

TOOHEY J: But you said the original offer was a composite offer.

MR SHARPE: The original offer was expressed to be $20,000 including both figures. The worker said, "Look, we'll take $15", whatever the exact figure - - -

TOOHEY J: I am sorry to interrupt you. I do not understand this. You say there was $20,000 offered by the insurer.

MR SHARPE: Yes.

TOOHEY J: Making a differentiation between the elements of the offer or just saying, "We offer $20,000 in settlement of your claim"?

MR SHARPE: From the documents before you I do not know that I can say that there was any differentiation. We know from page 28 of the - there is some background information there, which I think is common ground, that the original offer was $20,000 and then it was the worker who then set up the composite - the way the figure was to be represented. He said $15,229.50 - this is page 28, at about 20 - and the sum of $5,500 to settle the claim under section 67. So, in other words, it appears to be that the worker was the one who actually quantified the split up of the $20,000, or slightly more than $20,000 that he wanted.

TOOHEY J: It would be unusual though, would it not, in a workers compensation proceeding to make a blanket offer without differentiating between the components? Certainly in the days when you had the old Table 3 or whatever it was with industrial diseases and loss of efficient use of limbs and so on, it would be the ordinary practice to differentiate between each head of compensation. I am asking these questions because it has some bearing upon whether there was a misunderstanding or not between the parties. For instance, is $15,229.50 the prescribed amount for a 27.5 loss of a right foot?

MR SHARPE: Yes, your Honour.

TOOHEY J: It is?

MR SHARPE: Yes.

TOOHEY J: And what is the maximum payable in settlement of a claim for pain and suffering under section 67?

MR SHARPE: As was originally claimed at that time, on page 1 - - -

TOOHEY J: No, not as claimed, what was the amount prescribed?

MR SHARPE: He could have got $42,600, I think it was, your Honour.

TOOHEY J: The amount suggested of $5,000 is a little bit light on.

MR SHARPE: Your Honour, it may be. There may be many reasons why people settle claims or how they settle claims. It may be - and we are not given this information and it is not part of the claim - that there may well have been competing figures for the loss of use of the foot and the mere break up of an overall figure is another matter. Be that as it may, what happened was that the solicitors appearing for the worker accepted the break up of the figure - it was they who nominated it, according to the brief that we have before us - the section 66 amount and nominated a slight increase. It is not as if it is a vast increase - a slight increase of the amount under section 67.

That was conveyed in writing. It is to be remembered that it is a matter of - we are not talking about people talking, like in an office in some cases talk about whether there is an auction and people make a mistake or something like that, we are talking about a month intervening between an original claim being made and correspondence and then correspondence preceding through the worker's solicitors. For whatever reason, that came off the rails so far as the worker claims.

TOOHEY J: The insurers must have thought that it was their lucky day.

MR SHARPE: Not necessarily, with great respect, your Honour, because in looking at any claim there are many competing aspects. It may be, for example, that the man had had some other injury that may be somehow relevant and it may be that an insurer looked at the matter on an overall basis and to say, "All right, $20,000 is a figure for the settlement of this matter, taking all matters into consideration." Litigation, of its very nature, has many pitfalls along the way and what might be today, when we look at it, when we look at the fact that he might have got some other figure or, in fact, did get another figure, with the greatest respect, your Honour, it does not deal with the central issue which is what happens when parties at arm's length, and particularly one of them with a lawyer, enters a negotiation and appears to conclude all terms for that negotiation.

HAYNE J: Is that not the question, whether terms were concluded?

MR SHARPE: Yes, your Honour.

HAYNE J: In particular, what significance, if any, is to be attributed to the request that terms of settlement be drawn up, which takes us off into Masters v Cameron and which are fields which are well ploughed?

MR SHARPE: If your Honour please, there is no doubt that it is well ploughed. The trouble is that the result in this, we say, does not deal with the real issue. That is what happened. With Masters v Cameron, when one talks about the three types of situation - we have had a number of cases since then - .....is one of them that we had. It ploughed the same field. Here we have a situation which, we say, is a vehicle for this Court to give some assistance to because of the fact that the very legislation that we deal with and which is part of an ongoing amount of legislation - he says, "Let's have another way of resolving disputes. Let's deal with this without court time and court involvement", and specifically in this legislation it says if you cannot get agreement then the court has the jurisdiction.

What happened here is a very interesting problem because at first instance, if you read the first instance judge, he took a provision in the Workers Compensation Act which said that the Compensation Court had total or exclusive jurisdiction over section 67 to mean that you had to somehow show that the agreement somehow did not apply or that it still had jurisdiction. That was dealt with in the Court of Appeal to say, certainly, what has happened is that the Compensation Court does have paramountcy but that that is subject to the legislation which calls upon the parties to seek to agree things before they get to that stage.

Now, why it is an issue of some wide importance is because in New South Wales alone there are 20,000 or so matters each year which the court is called upon to look at. In the other States, without knowing specifically the numbers of matters, there are vast numbers of matters coming each day before the court, and one of the key things is to try to get the courts out of being the only way to resolve matters but to get a true measure of resolution between parties.

BRENNAN CJ: Mr Sharpe, is it agreed that the principles referred to in Masters v Cameron are the principles which are to be applied in the application of section 107?

MR SHARPE: Of section 67.

BRENNAN CJ: Section 67.

MR SHARPE: We would submit, yes, your Honour.

BRENNAN CJ: Does this case involve any more than the application of those principles?

MR SHARPE: The way that they are interpreted, yes, your Honour. We say that what has happened is that Masters v Cameron which provides us with the general and the way to deal with matters, of course, does not deal with or is not seen to be dealt with a situation where there is plainly an agreement particularly where there are lawyers involved. Now, that is really the difference that I can only show.

What we would say about that, your Honour, is that Masters v Cameron is not to be restrictively read. We would submit that is the trend of what the law is. One has to look at the surrounding circumstances from an objective point of view. In spite of that, we say that we can go too far and we can get to a stage of no finality because our submission is that in this case there is nothing missing from the written documents at all. There is no element of agreement that is missing. The area which Masters v Cameron does not really deal with which comes up, really, under the second issue which is enforceability, as to whether there is a hardship which flows in some way that in some way deals with the matter.

Now, what was dealt with here in the Court of Appeal: the Court of Appeal sought to read into the word "agreement" the words "enforceable agreement". That was the way Mr Justice Sheller tried to deal with the very words of section - - -

BRENNAN CJ: That is why I asked you did you say Masters v Cameron governs section 67. I thought you said it does.

MR SHARPE: Yes, your Honour.

BRENNAN CJ: Well then, the question is, in accordance with Masters v Cameron, is there or is there not an agreement?

MR SHARPE: Yes, your Honour, we say there is an agreement.

BRENNAN CJ: Now, you say there is? The question is, in accordance with Masters v Cameron is there an agreement?

MR SHARPE: I have to answer that by saying, yes, and as a matter of principle, yes, I have to say that, yes.

BRENNAN CJ: Well then, this case does not involve anything except whether or not, in accordance with Masters v Cameron, there was an agreement.

MR SHARPE: It does in this respect, your Honour, and that is why I was saying what I said. I am sorry if I am not making myself clear. What happened here was - - -

BRENNAN CJ: But you are saying it on the basis that there clearly was an agreement here. That is the question that Masters v Cameron poses for decision. You cannot say that, in other words.

MR SHARPE: All I can say is that the way that the Court of Appeal has dealt with it is to say that there is another element, namely that the word "agreement" has to have the word "enforceable" before it.

BRENNAN CJ: That is what an agreement is. An agreement is not an agreement unless it is enforceable.

MR SHARPE: But you see, your Honour, what happened here was that by importing in the words "enforceable" - I agree with your Honour. By importing into it, the court then sought to say, "But we look at the cases where one can get over the problem by saying that there was some undue hardship." Now, in my respectful submission, what this Court should be called upon to look at is that, firstly, whether there is an agreement but, secondly, that that is not on the basis of enforceability, that the Court of Appeal was wrong in relying on Harvey v Phillips particularly because of the question of price alone.

Your Honour, those matters, in my respectful submission, brought it outside of Masters v Cameron, and that is a totally different matter to what your Honour asked me. I have endeavoured to say to your Honour that while the issue is a Masters v Cameron one - of course I have the difficulty of showing we have now got - and why this Court needs to be involved is to show that Masters v Cameron does not go to a different matter. If I can put it in these words: if the terms of a document - and in this case several documents - indicate the parties intended to be bound immediately, effect must be given to that intention irrespective of the subject matter, magnitude or complexity of the transaction, and that is something which Masters v Cameron needs to have clarified. That statement, in my respectful submission, is - - -

BRENNAN CJ: It is a trite proposition.

MR SHARPE: Your Honour, and this case clearly shows that we have gone off the rails if one applies Masters v Cameron without having regard to that. I accept what your Honour says in that. Your Honours, I could deal with the question of the ex post facto matter. I think I have dealt with that. I do not want to waste the Court's time in that regard.

The key element that I do wish to put before this Court is that when negotiations take place with a lawyer and the other party is not a lawyer, or if there are two lawyers involved, this is not the circumstance that one can then say, "There has been a typographical mistake" and so on. The reality is that if you have a right, if the worker in this case had some rights, he could pursue them against the lawyer. That is not a question for that. That is a matter, we submit, that is a matter for this Court. If the Court pleases.

BRENNAN CJ: Thank you, Mr Sharpe. We need not trouble you, Mr Adams.

This application involves no more than an application of the principles referred to in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353. There is no issue which warrants a grant of special leave. Accordingly, special leave is refused.

MR SHARPE: If the Court pleases.

MR ADAMS: We seek costs, if your Honour pleases.

BRENNAN CJ: Refused with costs.

AT 3.30 PM THE MATTER WAS CONCLUDED