Pereira v Beecham (Australia) Pty Limited S225/2001 [2002] HCATrans 269 (31 May 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S225 of 2001

B e t w e e n -

ALEX PEREIRA

Applicant

and

BEECHAM (AUSTRALIA) PTY LIMITED

Respondent

Application for special leave to appeal

GLEESON CJ

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 31 MAY 2002, AT 2.24 PM

Copyright in the High Court of Australia

MR D.A. WHEELAHAN, QC: May it please the Court, in this matter I appear with my learned friend, MR R.L. INGRAM, for the applicant. (instructed by Taylor & Scott)

MR C.R.R. HOEBEN, SC: May it please the Court, I appear with my learned friend, MR J.K. KIRK, for the respondent. (instructed by Nevill & Edwards)

GLEESON CJ: Yes, Mr Wheelahan.

MR WHEELAHAN: Your Honours, this matter raises for consideration the question of issue estoppel. One hundred and twenty five years ago Lord Justice Bramwell, in a matter of Baxendale v Bennett, said estoppels are odious and the doctrine should never be applied without a necessity for it. That is apposite in this application. On 10 October 1989, Judge Davidson in the Compensation Court found that the present applicant suffered injuries on 15 November 1985 and, more particularly, on 18 February 1986, and was thereby totally incapacitated up until 19 March 1986.

The application for compensation on behalf of the applicant was filed in the court on 2 July 1987 and, as subsequently amended, read as follows. On or about 18 February 1986 the applicant was carrying a crate and sustained an injury to his back when he slipped and fell. On or about 15 November 1985 the applicant was attempting to lever a pallet stuck on a conveyor belt when a fellow employee turned on the conveyer, and the applicant was thereby injured.

What is critical is what was then contained in the application for the determination. The question in the application form says, "Nature and severity of injury". The applicant's response to that was, "Injury to back and neck and left leg, right leg, left and right arms and headaches". The applicant claimed various periods of total and partial or partial deemed total incapacity from 18 February 1986. The proceedings were conducted before Judge Davidson on 27 October 1988 and concluded on 10 October 1989. On the latter date, an award was made in favour of the applicant on the basis of total incapacity from 19 February 1986 - the last day upon which he had been paid compensation - and 19 March 1986 - that is one month. On 19 March 1986, Dr Eggins saw the applicant on behalf of Royal Insurance Australia Limited and reported that he could find no evidence of any organic disease and, in particular, no evidence of any work-related injury.

The judge accepted that opinion and made the award accordingly. Concurrent proceedings had been commenced in the Supreme Court and transferred to the District Court, where they were heard by Judge Mahoney of that court between 26 and 29 October 1999 - that is, almost exactly a decade after the award made in the Compensation Court. The statement in the Supreme Court pleaded that the plaintiff suffered from shock, pain, bruising and abrasions. Amended particulars, which unhelpfully are undated but obviously post-date the filing of the statement of claim, were amended to include particulars of a psychiatric injury and particularised disabilities as an abnormal sickness behaviour, sick role behaviour, undifferentiated somatoform disorder and a post-traumatic anxiety state.

Following the filing of those amended particulars, the appellant filed an amended defence - or the respondent, in these proceedings - dated 1 April 1999, where it pleaded that by reason of the formal findings of Judge Davidson, the applicant was estopped from alleging that he had suffered from any physical or psychiatric effects of the injury beyond March 1986, that is, the date of Judge Davidson's finding of cessation of incapacity from what we say were the physical injuries. Your Honours, when the matter came before the Compensation Court, it is alleged on behalf of the applicant that there was no pleading of any psychiatric, psychological or mental state, condition or illness, and that there was no relevant finding in relation to that matter in the findings of Judge Davidson. Judge Mahoney in the District Court, at page 30 of the application book here, analysed what it was that he concluded had been decided by Judge Davidson.

CALLINAN J: But was not the point that the judge had to decide whether your client had been incapacitated or not and for how long?

MR WHEELAHAN: That was the question that the Court of Appeal said that the judge was required to ask himself.

CALLINAN J: Do you say that is wrong?

MR WHEELAHAN: We say that that is wrong. What - - -

CALLINAN J: Where do I find the section of the Act?

MR WHEELAHAN: It is not in these documents, your Honours.

GLEESON CJ: The essence of the reasoning against you is in paragraphs 15 and 16 on pages 79 and 80 of the application book.

MR WHEELAHAN: That is so.

GLEESON CJ: Where do you say that is erroneous?

MR WHEELAHAN: Because, your Honours, we say that the Court of Appeal asked itself in those questions the wrong question.

CALLINAN J: Well, what does the section of the Act say - the section under which the entitlement to compensation has to be assessed? I know you say it is not in our papers. I think the respondent may have - - -

MR WHEELAHAN: Yes, Mr Hoeben corrects me, and he says that it is in his argument.

CALLINAN J: What page is that, Mr Wheelahan?

MR WHEELAHAN: He begins at 103.

CALLINAN J: He might be able to tell us which page it is.

MR WHEELAHAN: I see. I am sorry, it is in Mr Hoeben's list of authorities at the end of it. Section 9: "Total or partial incapacity." Your Honours, what we submit was necessary for the judge in the District Court to determine was exactly what he did determine, namely, what was the nature of the incapacitating injury found by the judge in the Compensation Court?

CALLINAN J: It is obviously undesirable from a policy point of view, Mr Wheelahan, that an applicant should have two goes at this. That is not decisive, but if one wants to look at policy considerations - - -

MR WHEELAHAN: That is so, your Honour, but that is a quasi Anshun principle, of course. The Compensation Court is somewhat different from the standard common law court in that one can go back for review of the very same decision before the very same judge. There are strict rules that are applied. One can go back for review in relation to different aspects of the matter before different judges, or, indeed, the same judge - - -

CALLINAN J: Well, that is really against you in a sense. There is provision for a reopening then, I take it. Is that what you are saying?

MR WHEELAHAN: That is so, but what is the applicant's complaint in relation to this matter is that there was nothing litigated before Judge Davidson in the Compensation Court which would enable that finding, if any, about any mental, psychiatric or psychological aspect of his condition to form an essential or cardinal ingredient of the finding.

CALLINAN J: Was that because, in setting out to prove incapacity, your side did not tender any evidence?

MR WHEELAHAN: That is so. Nor did the respondent.

CALLINAN J: The issue was as to incapacity, not as to any particular form of incapacity.

MR WHEELAHAN: Well, the evidence in support of incapacity was that evidence of a physical type, dealing with the organic injury clearly suffered by the applicant in the two episodes at work. But what the judge in the District Court determined - and, as I indicated, he began his analysis of what Judge Davidson had decided in the Workers' Compensation proceedings - and what he was called upon to decide and then concluded, correctly, we would respectfully submit, that there was no psychiatric evidence - this is at 33 of the application book, line 15:

no psychiatric evidence whatsoever to assist him in evaluating the injured worker.

The aspect of the applicant's presentation in the Compensation Court, namely, his somewhat bizarre behaviour and his extravagant complaints about the extent of the body parts involved in his disorder, was an attack of a credit nature and it did not form part of the then respondent's case that this man had anything other than a mild musculo-ligamentous strain. That position was supported by Dr Eggins, relied upon by the judge in the Compensation Court, and the award made. What is the subject of the complaint is whether or not in the District Court the defence of estoppel is made out.

GLEESON CJ: Mr Wheelahan, if in the Compensation Court a case of the kind that you later sought to make out before Judge Mahoney had been made out before Judge Davidson, what would have been the consequence to the award made by Judge Davidson?

MR WHEELAHAN: Well, if he had found - - -

GLEESON CJ: He would have found a longer period of incapacity, presumably.

MR WHEELAHAN: He would have been required to, because that is one of the peculiarities of his decision. He said that he accepted Dr Eggins on behalf of the respondent who, on 19 March 1986, reported that the plaintiff had an element in his presentation and condition that was either psychiatric or psychological but had nothing to do with any physical incapacity. Dr Eggins, in his second report of 1988 - that is, two years after the award was concluded - said that he still suffered from precisely the same condition.

There is an internal inconsistency in the judge saying that in 1986 he had no condition that incapacitated him as far as his analysis was concerned, and relied upon Dr Eggins, and concluded the period of incapacity in March 1986, but in the same analysis noted that Dr Eggins in 1988 - that is, two years after the period of incapacity was determined to cease - Dr Eggins said that he still suffered from the same emotional, introspective condition, which he described as a sick role, where he became convinced that all his problems were related to the accident.

GLEESON CJ: But your client would have been entitled to a better and different award if Judge Davidson had made the findings made by Judge Mahoney.

MR WHEELAHAN: Absolutely, if the case had been run.

GLEESON CJ: Well, the reason why he did not make the findings may be beside the point.

MR WHEELAHAN: No, your Honour, because there was no suggestion in the Compensation Court that any aspect of a psychiatric or psychological or emotional state was part of the presentation of the applicant as part of his injury profile. The only issue litigated, we respectfully submit, was the issue relating to the musculo-ligamentous condition of his back, and that was the essential finding in so far as there was a finding of any essential matter.

CALLINAN J: But that was the basket that your client put his eggs in at that time.

MR WHEELAHAN: And we say, your Honour, that if it was raised or suggested that there was another basket, or, indeed, other eggs to put in the first basket, then that was a matter that could have been addressed, that was capable of being addressed, either by lay evidence, psychiatric evidence or legal evidence. There may well have been an explanation as to why that was not so. Perhaps the applicant would not accept that there was this element in his condition in addition to a physical incapacity, but we never had the opportunity of raising or debating that issue because it was never pleaded, it was never particularised, there was no medical report directed to it. Now, my learned friends will say - - -

CALLINAN J: Could you have come back under the reopening provisions?

MR WHEELAHAN: We could have argued to and we would - - -

CALLINAN J: In the Compensation Court.

MR WHEELAHAN: Yes.

CALLINAN J: See, I do not understand what the process here is, but say the situation was that a psychiatric condition was only discovered later, then would that not be the appropriate way to deal with it, to seek a reopening in the Compensation Court?

MR WHEELAHAN: One of the appropriate ways, your Honour, or, alternatively, conduct an action at common law for damages, because we say that the finding of the Compensation Court did not preclude us from so doing.

CALLINAN J: That is the point in the case, but I am just trying to find out whether there was some other remedy anyway.

MR WHEELAHAN: Your Honours, when one comes to consider what is the position - and we really would like to touch upon Somodaj and the application of that case to issues pertaining to economic loss and loss of earning capacity. In the Compensation Court, a judge is required to consider whether or not a work-related injury is productive of incapacity, either partial or total or deemed total. It is an entirely different matter that is to be considered in a common law assessment of loss of earning capacity, and this is where we say an opportunity arises for this Court to review Somodaj in that Somodaj has been assumed to apply to this element of damages. That is best explained, we would respectfully submit, by Mr Justice Clarke in Egri, where - - -

GLEESON CJ: Do you disagree with the decision of Justice McHugh in Egri?

MR WHEELAHAN: No, we do not disagree with it, your Honour, but we adopt what his Honour says at page 604. In Egri, it must be readily identified and accepted that the presence of a disc lesion was not only evidence of injury but the injury itself that was litigated. The applicant said, "I had a disc lesion" - the whole of the issue - "And that was my injury". So a finding that he did not have a disc lesion was an essential finding. What Justice McHugh said at 604A:

In the present case one of the ultimate issues for decision in the Workers' Compensation Commission was the nature of the injury which the worker sustained on 12 July 1982. His Honour found that the worker suffered "low and upper back strain". If the existence of a disc lesion had not been litigated in the Workers' Compensation Commission, a question would still arise as to whether it could be raised in the common law proceedings -

now, this is the nub -

The answer, as a matter of principle, would depend upon whether a finding that it did exist was necessarily inconsistent with the finding of a low and upper back strain.

Then he says that that case was different. Now, what we say is that the finding by Judge Mahoney of a serious disabling psychiatric condition in no way challenged the validity of the finding of Judge Davidson in the Compensation Court, and he acknowledged it.

GLEESON CJ: Is that right? Would it not be inconsistent with Judge Davidson's finding about the extent and duration of the incapacity?

MR WHEELAHAN: Because, your Honours, when one looks at what Judge Davidson said - and my learned friend, I think, has helpfully placed that judge's decision before the Court, notwithstanding the fact that it failed to appear in the book. When one goes to his findings at page 5, what Judge Davidson said in the middle of the page, in the middle paragraph, is this:

Accordingly, having found that the applicant suffered the injuries on 15 November 1985 and more particularly the 18 February 1986, I find that he was thereby totally incapacitated up until 19 March 1986.

GLEESON CJ: Now, those words, "up until 19 March 1986", would have been wrong, would they not, if he had made the finding that Judge Mahoney made?

MR WHEELAHAN: Absolutely, but he was not asked to make that finding, and he was not asked to turn his mind to it, he was not asked to consider it. Any finding that any psychological incapacity existed only up until 19 March 1986 was inconsistent with the fundamental medical report on which he relied, which said that he was suffering from the same mental incapacity in 1988, two years later. One last matter, your Honour. I notice the tyranny of the lights.

GLEESON CJ: It is only for your assistance, Mr Wheelahan.

MR WHEELAHAN: Well, that being the case, I have plenty to say, your Honours. What Mr Justice Clarke - - -

CALLINAN J: Page 609, is that the page you want to refer to?

MR WHEELAHAN: I am sorry, your Honour must have a different - in the judgment?

CALLINAN J: Yes.

MR WHEELAHAN: In the report of Egri (1988) 19 NSWLR 600 at 612C, Justice Clarke has analysed Somodaj, and says:

This is not an example of the application of the doctrine to damages issues but, as will be seen, the case has been treated as compelling the conclusion that it applies to damages.

What the judge is saying is that Somodaj, by the way in which it was dealt with in Tringali and Lombardo, was assumed to apply when one was dealing with incapacity in the Compensation Court and a loss of earning capacity in a common law jurisdiction. The judge said - - -

GLEESON CJ: You are trying to extend the time that you are allowed by developing a technique of breathing through the ears, so that you make this sentence continuous. I can see what is happening.

MR WHEELAHAN: Well, how can I respond to that, your Honour? You have made it very difficult.

GLEESON CJ: We had better hear what Mr Hoeben has to say, Mr Wheelahan.

MR WHEELAHAN: If your Honour pleases.

GLEESON CJ: Yes, Mr Hoeben.

MR HOEBEN: Thank you, your Honour. I wonder if your Honours would go to the materials which the respondent placed before the Court, and in particular the judgment of Judge Davidson. I can deal with - with the greatest respect to my learned friend - the errors of fact which he has inadvertently raised. The primary issue of his complaint, apart from the challenge to Somodaj, is that the trial judge - that is, the Compensation Court trial judge - did not have before him a consideration of the psychiatric problems. He did, and he decided them. We have attached to the top of our cases the decision of Judge Davidson, if your Honours have it. If your Honours look at the second page of that report, the top of that page, this is what the judge characterised his job as:

The serious issue in the case has been the extent of any incapacity which resulted from either of those injuries.

GLEESON CJ: I am sorry, what page, Mr Hoeben?

MR HOEBEN: I am sorry, your Honour. It is the second page of Judge Davidson's judgment, the very first document in our bundle. The way he dealt with the case - if you go halfway down that page, at about point M - was to deal with the occurrence of the injuries and the evidence which was placed before him from the various doctors. Now, if you look at about point P, he talks about:

The impression that I have gained, even allowing for the evidence of the applicant's doctors . . . accords with the opinion expressed succinctly by Dr Eggins when in his first report -

and he says he appears "as a physically fit young man". Now, that is a finding by the judge as to physical fitness. He then goes on at about point V:

Dr Eggins further at page 6 of his first report said -

and he then goes on to deal with a history and observations of Dr Eggins which are essentially of a psychiatric or psychological kind.

He continues that over the page, to page 3 - his perceptions about his illness, a likely return to work in the near future. That concludes at about page 3E. He then refers to a further report of Dr Eggins in 1988, "describes behavioural symptoms of bizarre type", at G. He then goes on to deal with what Dr Eggins is saying, all of which is mental and psychiatric:

"mental complaint, loosely called hypochondriasis and the underlining problems is his belief - "

that goes on -

"his perceptions of illness are now so deeply ingrained - "

he is not going to get back to work. His Honour adopts that. If you look at the next sentence:

As I say, that is the impression that I have gained -

That is a finding of fact by the trial judge in the compensation proceedings, on the whole of the evidence in this case. He agrees and adopts and follows what Dr Eggins said. He also then refers further down the bottom of the page, at about point T, to similar observations of a Dr Millons, who also raises specifically these rather bizarre and psychiatric demonstrations. If your Honours look at point U:

I have come to that view also upon the basis -

that is, adopting what Dr Millons says.

Then over the page at about point P is where his Honour comes to the ultimate finding. This really answers another question of my learned friend. At about point Q:

Sadly, it seems to me, as Dr Eggins has said, the applicant has adopted a sick role which may quite genuinely be affecting him from a mental point of view. If that be the case one would have sympathy for him, however I do not see that the evidence supports a finding that that -

that is, the sick role and the psychiatric aspects -

nor indeed any physical injury -

two things - a dichotomy clearly expressed in the opinion -

extended as a result of either of the injuries beyond 15 March -

That, as a result, is a causation finding, in terms of the wording of the statute. So, although he finds that a continuing psychiatric, psychological condition exists and is continuing, it did not result from the injuries. So not only has he considered the issue, he has knocked it out on a causation basis. Now, all that was before the judge, and that was the basis of his finding in the Compensation Court.

A way of testing - as your Honours have discussed with my learned friend in the course of argument - whether or not he did that would be to ask two questions. The one that your Honours asked: "Can that judgment stand with the judgment of Judge Mahoney in the District Court?" It cannot. They are fundamentally at odds. But, more importantly, if the particular applicant had come back to the Compensation Court - I think this was indirectly raised by your Honour Justice Callinan in discussions with my learned friend - a year later, and said, "I am relying upon the same injury, but now I want to claim in relation to psychiatric claims", he could not of course do it, because that had been solved, that had been dealt with. Now, if he could not come back to the Compensation Court and run the same case, how can he come back to the District Court?

Your Honours, the way the Court of Appeal approached this was to say, "What was the issue before Judge Davidson?" - they decided that, incapacity - and, "What did he actually decide?" They also agreed with that basic analysis I have put before your Honours: he did in fact decide and reject the psychiatric side. The contention my learned friend put forward that there was no psychiatric evidence before Judge Davidson is not correct. It is wrongly stated by Judge Mahoney. What he really meant, and the only way he could say it was, there was no evidence from a psychiatrist or a psychologist. It is evident from that judgment there clearly was psychiatric evidence but it was coming from practitioners in another field. There was certainly evidence, if you like, as to psychiatric disability.

The question about why it was or was not run on that basis, some inkling can be given to your Honours in the application book at 75. It is part of the judgment of Justice Brownie, where he says - he was referring to Dr Eggins, and in fact the applicant had been recommended by his doctors to go and see a psychiatrist but he refused to do so. That is, I think, the way in which - yes, at about point 35 in application book page 75. It is referred there - sorry, about line 20:

Dr Eggins saw the respondent again in January 1988. On that occasion the respondent gave a history that included statements that his general practitioner had offered to refer him to a psychiatrist, but he had declined the offer -

So that is why, one suspects, there was no psychiatric evidence given on behalf of the applicant - not because it formed no part of the case and shock, horror, we never knew about it, but because he just refused to do it.

Your Honours, can I just deal with the Somodaj point. That is a decision of the High Court. It is quite old now. It has not only been followed in Egri, it has been followed more recently in Feltham's Case, which we refer to in our supplementary list. That was a 1993 case. It has been consistently followed throughout this State that the estoppel applies not only to actual injury but to damages as well. So far, with respect, my learned friend has not identified why that approach is wrong and why this Court should now change it. As we have said in our challenge to why this is not a special leave matter at all, there have been so many changes to the Compensation Act in this State since the 1926 Act - and we have set them out - to such an extent that last year, it ceased to exist altogether. Why would this Court be concerned with overturning Somodaj or qualifying it in any way? They are our submissions, your Honours.

GLEESON CJ: Yes, Mr Wheelahan.

MR WHEELAHAN: Your Honours, the reason why Somodaj ought not be applied to matters involving an issue between incapacity in the Workers' Compensation Court and loss of earning capacity in a common law court is set out extensively by Justice Clarke in Egri. The only reason we did not talk about it was that we did not get there. In every State of Australia other than New South Wales, there are - and even in New South Wales, there are still remnants of cases that begin in the new style of tribunal that is not a court any more, which can end up in a common law court. But in every other State there is either a court, a tribunal, a commission or an entity that deals with workers' compensation cases, where incapacity for work is an element, and there are common law courts dealing with common law damages. That is why it is different from merely saying it can only apply to New South Wales.

GLEESON CJ: If we were to grant special leave in this matter, would we need to reconsider Somodaj?

MR WHEELAHAN: Yes, you would need to reconsider Somodaj.

GLEESON CJ: It must follow that Somodaj was applied decisively in this case.

MR WHEELAHAN: It was - it does. It needs reconsideration because such distinguished jurists as Mr Justice Walsh, Mr Justice Jacobs, Mr Justice Mahoney and Mr Justice Clarke have all said the application of it to damages aspects of cases required urgent consideration.

GLEESON CJ: The decision of the Court of Appeal in this case turned on the application to the facts and circumstances of the case of longstanding authority of this Court, and we are of the view that there are insufficient prospects of success of an appeal to warrant a grant of special leave. The application is refused with costs.

We will adjourn for a short time to reconstitute.

AT 2.55 PM THE MATTER WAS CONCLUDED