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- Unreported Judgment
DISTRICT COURT OF QUEENSLAND
Smith v Murphy Schmidt  QDC 114
KELLY JO SMITH
D328 of 2018
District Court, Southport
12 June 2020
27 May 2020
Kent QC DCJ
WORKERS’ COMPENSATION – ALTERNATIVE RIGHTS AGAINST EMPLOYER AND/OR THIRD PARTIES AND CONSEQUENCES THEREOF – PREVENTION OF DOUBLE RECOVERY FROM EMPLOYER – EFFECT OF CLAIM OR PROCEEDINGS FOR OR RECEIPT OF COMPENSATION ON RIGHT TO DAMAGES – EFFECT ON QUANTUM OF DAMAGES OF RECEIPT OF WORKERS’ COMPENSATION PAYMENTS – PARTICULAR DEDUCTIONS OR CLAIMS – where the plaintiff was injured at her work premises – where the plaintiff received WorkCover, Medicare and Centrelink benefits or subsidies for medical treatment – where the plaintiff sued her employer and the occupier of the premises for damages at common law – where the defendant acted for the plaintiff in those proceedings – where the plaintiff accepted a written offer of $435,000.00 inclusive of statutory refunds – whether the statutory refunds should have been deducted from the settlement funds – whether the defendant, through its communications with the plaintiff, guaranteed or misrepresented that no statutory refunds would be deducted from the settlement funds – whether the deduction of the statutory refunds was authorised by law.
PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS AGREEMENTS – where the defendant acted for the plaintiff in WorkCover proceedings – where the plaintiff entered a costs agreement with the defendant – where the plaintiff recovered damages from a settlement in the WorkCover proceedings – where the defendant deducted its costs pursuant to the costs agreement – whether the defendant was entitled to retain its costs.
The Plaintiff is self-represented
R Morton for the Defendant
The Plaintiff is self-represented
McInnes Wilson Lawyers for the Defendant
Nature of Claim
- This is a claim for money pursuant to a possible cause of action which is difficult to precisely identify, however may to some extent be claimed as a debt and otherwise as a possible action in either negligence or breach of contract, in the sense of a possible breach of the duties owed either at common law or pursuant to a contract of retainer between the defendant (a firm of solicitors) and the plaintiff, its former client. The proceedings were commenced against “MurphySchmidt Solicitors” with the insertion of an incorrect ABN; however this was pointed out by the defendant at the commencement of the trial, and the matter proceeded on the basis that this, at most, represented a possible misnomer. More precisely, however, in my view it is a matter of irrelevant surplusage; the correct entity is both not in doubt and is contained in the title of the proceedings; and thus the defendant is as named above. I did not understand the parties to take issue with or contest this procedure. To the extent that this may be regarded as a correction of the name, I make the appropriate order under UCPR 376(2), if that is necessary, which for the reasons outlined above I doubt.
- The plaintiff in this action was previously a claimant for damages for personal injuries suffered by her in the course of her employment on 7 April 2011, when at work for her former employer, Accolade Furniture Pty Ltd (“Accolade”); and, concurrently against the occupier of the relevant property, B & P Lowe Investments Pty Ltd (“Lowe”).
- In essence, the plaintiff was significantly injured when a gate at a work premises fell on her. Thereafter she made a claim for WorkCover benefits, and also claimed damages at common law, as regulated by the Workers Compensation and Rehabilitation Act 2003 (“WCRA”) – as regards the action against the employer – and the Personal Injuries Proceedings Act 2002 (“PIPA”), as against the occupier. Although all of the fine details of that action are not before the court (nor are they of central relevance), it is clear enough that the plaintiff sought access to common law damages pursuant to Ch 5 of the WCRA, and thereupon progress of that action was regulated broadly by the pre-court procedures in Ch 5, Pt 5, s 273 and following. No doubt there was an appropriate notice of claim for damages with its attendant consequent steps, and it is clear in any case that the parties attended the required compulsory conference (Pt 6, Div 1 of the WCRA), convened as a mediation, on 11 October 2013. That matter was jointly conducted with the plaintiff’s other concurrent claim against the occupier, which was similarly conducted pursuant to the PIPA; that is, against the employer on the one hand and the occupier on the other hand. The plaintiff’s claims against the employer on the one hand and the occupier on the other hand were regulated by the two separate statutory schemes, but nevertheless liable to be, and were, discussed conjointly at the mediation.
- As set out below, those claims by the plaintiff settled, and thereupon the plaintiff executed a discharge in the relevant form tendered on behalf of WorkCover (but relating to both prospective defendants). There was a consequent distribution of the settlement monies. From the gross amount of the agreed damages various statutory refunds and costs were deducted, and it is this deduction which is the subject of the plaintiff’s complaints. As set out in the plaintiff’s further amended statement of claim, she claims from the defendant the sum of $38,201.45, which was the amount of the refund of statutory benefits to WorkCover; $2,667.91, the amount of the Centrelink refund; $1,838.30, the amount of the Medicare refund; and $105,447.21, which was the amount of the costs payable to the defendant; all of these had been deducted from the settlement sum.
- In essence, the plaintiff’s claim in this action is that the defendant was not entitled to deduct any of those amounts from her settlement moneys, and thus she seeks their return. It is immediately apparent that it is difficult for the plaintiff to pursue this action as a debt, in that the first three amounts outlined above were never in the hands of the defendant; they were statutory refunds (i.e. made under compulsion of statute, which highlights an immediate problem for the plaintiff) made by WorkCover before the defendant ever had such sums in its hands. The only exception is the costs.
- The trial was heard on 27 May 2020 without any oral evidence being given. The plaintiff relied on two affidavits sworn by her. There was also reference to affidavits from the plaintiff’s parents. These were not separately filed but were an exhibit to the plaintiff’s second affidavit.
- The defendant gave evidence by tendering a bundle of documents which were admitted as exhibits, being Exhibits 1 to 15. During the trial the defendant also tendered Exhibit 16, which is a print-out of an email from the defendant to the plaintiff dated 14 October 2013, apparently attaching a letter of the same date, Exhibit 6. This was tendered to establish delivery of Exhibit 6. From the evidence, the following uncontentious narrative emerges.
- It is clear that the plaintiff entered into a costs agreement with the defendant firm. This had at least two iterations, set out in Exhibits 1 - 4. Exhibit 1 is a bundle of documents as to costs disclosure pursuant to the Legal Profession Act 2007 between the parties signed 23 January 2012; Exhibit 2 is the relevant costs agreement of the same date. Exhibit 3 is a further costs disclosure statement signed by the plaintiff on 10 October 2013 and Exhibit 4 is the relevant costs agreement thereto.
- It was explained to the plaintiff by the defendant, in advance of the settlement conference, that the settlement conference would take place with both of the prospective defendants, under the two separate statutory schemes, on 11 October 2013. The details of the legal fees associated therewith were set out. There was in that letter an anticipation of a contribution by the occupier of $35,000 towards the plaintiff’s costs (as indeed did later eventuate). Various other potential costs implications were also explained.
- The compulsory conference/mediation was not successful in settling the action at that stage, however it did result in a joint written final offer from the two prospective defendants (as required, of course, by their separate statutory schemes). This relevantly provided that the respondents jointly would pay to the claimant the sum of $400,000, however this was to be inclusive (i.e. not exclusive) of any statutory refunds including (but not limited to) WorkCover Queensland, Centrelink, Commonwealth Rehabilitation Service, Health Insurance Commission and Private Health Funds. It also provided for the first respondent (i.e. the occupier) to pay the claimant’s costs as agreed or assessed. As required by the legislation, the offer was open for acceptance for a period of 14 days, that is, until 25 October.
14 October 2013
- 11 October 2013 was a Friday. On the following Monday, 14 October, the defendant wrote to the plaintiff explaining her position. I accept that this letter was emailed to the plaintiff on that day, as established by Exhibit 16. The letter clearly explained to the plaintiff that the offer was inclusive of all statutory charges and refunds (the word “inclusive” is underlined), including the WorkCover refund. The amounts of the statutory refunds were set out in the letter and, importantly, it was clearly set out that if the plaintiff accepted the defendants’ joint offer she would receive approximately $288,000 clear after payment of the statutory refunds to WorkCover and Medicare and the defendant’s fees and costs. Importantly, the letter continued as follows:
“In your telephone conversation with Stephanie on 14 October 2013, you have suggested that the defendants’ joint final offer was clear of the WorkCover refund. That is not correct.
The joint final offer which the defendants made on Friday was inclusive of the WorkCover refund. It was not exclusive of the WorkCover refund. This means the sum of $38,281.05 must be refunded to WorkCover.” (emphasis in original)
- The letter went on to recommend that the plaintiff allow the offer to expire (i.e. not be accepted) and brief counsel to draw proceedings within the relevant 60 day limit. It was expressed that there could thereupon still be further negotiations. Alternatively, even if the plaintiff decided she would accept the present offer, it was recommended to her that she instruct the defendant to approach the other side after the final offer had expired in an attempt to negotiate a higher amount.
- It is hard to see how the plaintiff could have been in any doubt as to the correct position as regards the refunds from that point onwards; but the narrative continues, as set out below.
24 October 2013
- The next occurrence was a letter from the defendant to the plaintiff of 24 October 2013 again apparently following a telephone conversation of that date, in which the plaintiff requested details of the calculations. It duly sets out calculation of the amounts due to the plaintiff, including, explicitly, the refund to WorkCover of $38,281.05. It seems by that time the amount of costs payable by the occupier (which, as the offer provided, could be agreed or assessed) had been agreed at $35,000, thus it was disclosed that if the plaintiff accepted the offer, with all the deductions from the settlement of $435,000 she would receive $289,468.44. The letter also sets out that the plaintiff had been advised along these lines at the time of the compulsory conference. The defendant repeated its recommendation to her to let the joint offer expire and brief counsel to draw proceedings. The letter said “we consider your claim is worth more than the joint offer of $400,000 plus costs made by the defendants”. The letter attached a schedule of damages setting out a total (no doubt drawn for the purposes of negotiation) in excess of $1.5m.
25 October 2013
- The next event was a letter from the defendant to the plaintiff of 25 October 2013. Again, this letter was apparently written to confirm the contents of a phone conversation. It sets out that the plaintiff spoke with Mr Chambers of the defendant firm on that date. The second paragraphs says:
“We confirm your instructions are to accept the defendants’ joint offer of $400,000, clear of the WorkCover refund of $38,281.05, plus costs of $35,000.
This means, on the evidence available to us, you should receive $289,468.44 clear to you after payment of all statutory refunds and our fees and costs.
We confirm we strongly recommend you do not accept the defendants’ joint offer.
During your conversation with John, you acknowledged you had given full consideration to our advice, but due to financial pressures you need to accept the offer.”
- The defendant submits that the second paragraph of this letter, containing as it does mention of “$400,000 clear of the WorkCover refund” is in error. As set out earlier, what the offer in fact was, and had always been communicated to be, was that the $400,000 was inclusive of all statutory refunds. I accept that this was in fact an error. Certainly the final result, as to what the plaintiff would actually receive, was clearly set out. The letter concluded with the indication of the expressed intention of the defendant’s immediate future course of action, namely to accept the offer in accordance with the plaintiff’s instructions.
29 October 2013
- Another letter was sent by the defendant to the plaintiff, by express post, on the 29th October. It again refers to a conversation of that day; again wrongly mentioned “$400,000 clear”; confirms the fact of acceptance; and again set out the correct final figure and enclosed the relevant discharge.
- The plaintiff emailed the defendant on 5 and 6 November 2013, and the defendant responded by letter of 6 November, transmitted that day by email (by that time, of course, on the above narrative, the plaintiff’s claim was settled). It answered issues raised by the plaintiff, and inter alia
- Attached her original gross schedule of damages;
- Answered some queries about an issue as to her having worked from home;
- Discouraged her from an expressed wish to contact WorkCover directly;
- Noted that she had, by that time, accepted the defendants’ (i.e. WorkCover and Lowe’s) offer against the defendant’s very strong advice;
- Repeated the figures, including the final figure, from the 24 October letter and that WorkCover had to be refunded $38,281.05 from the settlement;
- Confirmed it had communicated her acceptance;
- Advised that her attempts to get a reduction of the WorkCover refund were an attempt to reopen settlement negotiations, but she could not resile from the settlement;
- Refusal to sign the discharge (which obviously had not been signed by then) would merely invite relevant legal enforcement steps by the defendants with almost certain success, at considerable cost to the plaintiff; a pointless waste of money by her.
- In any case, it is common ground that subsequently on 13 November 2013 the plaintiff signed a discharge in a form tendered by WorkCover but including all of the parties. Importantly, paragraph 1 of the release and discharge clearly sets out that the settlement sum was to be $400,000 (gross) plus $35,000 in PIPA costs (as agreed); and in 3.2 that WorkCover is entitled to a refund of statutory benefits of $38,201.45. Clause 3.3 also mentions, without quantifying, the refunds to Centrelink and Medicare.
- It eventuated that the Centrelink refund was $2,667.91. On 19 December 2013 the defendant wrote to the plaintiff noting that $286,845.13 had been deposited to her bank account. The letter reconciled that amount with the $435,000 received as the settlement sum.
- The plaintiff commenced this proceeding on the 13th November 2018, i.e. almost five years later.
The plaintiff’s pleadings/submissions
- As noted above, it is not easy to precisely tease out the nature of the cause of action upon which the plaintiff relies. This is not to be taken as a criticism of her, as a self-represented person without legal qualifications; however some discussion is necessary. The original Statement of Claim merely sets out that in a conversation at the settlement conference the plaintiff was told by Mr Chambers that the offer was “$400,000 clear” and later the $35,000 was added (for costs, although that is not pleaded). Then it is said that as the plaintiff only received $286,845.13 (after the whole $435,000 had been paid to the defendant, which is of course not correct) the plaintiff claims the balance of $148,154.87 – essentially, it seems, as a debt – plus interest and costs. This was followed in April 2019 by a Reply, of some 40 pages, which with respect is largely a narrative about a number of exhibits.
- The final version was the Further Amended Statement of Claim filed on 19 February 2019. It was much longer and more discursive, and inter alia mentions the Costs Disclosure Statement (which of course disclosed the costs the defendant would quite legitimately charge); some more details about the WCRA/PIPA conference including her own offer; her complaint about a change to the WorkCover refund and that it was wrongly withheld by the defendant; some details of the other statutory refunds; and in paragraph 20 raised for the first time a “breach of contract or trust”. The pleading continues that the defendant falsely advised her that the defendant had to deduct the various statutory refunds, and the amount of the costs. Thus, so it is pleaded, the amounts were wrongly withheld. Again, interest is also claimed.
- Doing the best I can, however, on the current state of the pleadings, the plaintiff seems really to be saying, broadly, two things. Firstly, that the final offer at the settlement conference was “$400,000 clear” and thus, presumably, the defendant was to be taken to be guaranteeing to the plaintiff that no deductions would be made therefrom (such that the deductions amounted to a breach of the contract of retainer); and, secondly, as advanced in submissions, that it was unlawful for the defendant to make any deductions from the settlement sum of $400,000, in reliance on s 110 of the Workers Compensation and Rehabilitation Act 2003 (although this provision does not seem to be mentioned in the pleadings).
First Proposition: Offer was “$400,000 clear”
- Dealing with these propositions in turn, as set out above the written joint final offer indicates clearly enough that the offer was inclusive of statutory refunds. The plaintiff, in an affidavit, makes some submissions about the dictionary meaning of the word “inclusive” to the effect that there is an interpretation thereof which favours her case. I do not accept that this is so, in the context of the correspondence which I have set out above which made the position, in my conclusion, perfectly clear; the settlement sum included the amount to be refunded to WorkCover. True it is that the letter from the defendant of 25 October 2013 wrongly described the $400,000 as being “clear” of the refund (as did the letter of 29th October). However, as noted, by that time the plaintiff had at least twice received written confirmation that the $400,000 was inclusive of the WorkCover refund and that she would receive approximately $288,000 or $289,000; of course, these net figures were only, and could only, be arrived at after the refunds and deductions were properly made (and could only be understood in that way).
- Further, the letter of 14 October 2013 very clearly set out that the statutory refund to WorkCover had to be paid from the damages. At the trial, there was some prevarication by the plaintiff as to receipt of this correspondence. She denied receiving the letter by email at the relevant time; hence Exhibit 16 was tendered by the defendant. I considered whether evidence should be called on this point, however the plaintiff then said that she accepted she had been told things to this effect before signing the release and discharge.
- This seems, with respect, to have been a concession properly made. When one considers her affidavit filed 11 November 2019, Exhibit G thereto is a print-out of an email she sent Ms Dale of the defendant on 16 October 2013. The terms of this email clearly acknowledge that there are amounts owing to WorkCover.
- In fairness, the email trail also attaches an earlier email of 14 October 2013, sent at 12.37pm. This includes the following:
“The only words spoken to me on Friday was $400,000 clear, my mother and father also said that was what they heard I was told and we both (mum and I) made notes that day.”
- However the body of the email goes on to discuss the WorkCover refund, which at that time was thought to be $25,766.45 rather than the final figure. Thus, as at 14 to 16 October the plaintiff, whilst adhering to her version as to what had been said at the settlement conference, also seems to clearly enough acknowledge that a refund was due to WorkCover. This is underlined, as set out above, by the later correspondence.
- In any case, whatever the merits of the understanding as at the time of the settlement conference, the discharge was not signed until considerably later, on 13 November, and following the correspondence outlined above.
- The plaintiff also obtained affidavits from her parents, who accompanied her to the settlement conference. These are exhibited to her affidavit of 11 October 2019, and merely state that the plaintiff was not in the room where the negotiations with the other side took place. This is uncontentious; it is a standard procedure when a mediation of this kind is taking place (normally such a mediation commences with a joint caucus involving all parties and representatives, followed by the parties separating, and the offers thereafter being conveyed between the groups by the mediator) and has no impact on the merits of the action.
- Thus in relation to the first proposition, it is not necessary to determine whether at the mediation the offer had been described to the plaintiff as alleged. For the reasons outlined, the true position was as per the written offer, and remained so during the following period when the plaintiff had it under consideration – as evidenced by, and embodied in, the correspondence - and there is no basis on which the plaintiff could have considered otherwise or relied on this as founding any cause of action against the defendant.
Second Proposition: S 110 of the WCRA prohibits deductions
- As to the plaintiff’s point about s 110 of the Workers Compensation and Rehabilitation Act 2003 (Qld), this sets out that a worker’s entitlement to compensation cannot be relinquished, assigned, or subject to execution. It is a reference to the statutory compensation scheme and in essence provides that statutory compensation cannot be relinquished or otherwise assigned or dealt with. “Compensation” has a particular meaning in this legislation. S5 provides separately for compensation for employment related injury and access to damages; the two are separate concepts. S9 provides that “compensation” is compensation under the Act, for a worker’s injury, payable under chapter 3, 4 and 4A. Chapter 3 deals with compensation; it is of course a no fault scheme. Chapter 4 deals with injury management, including medical and other costs. Chapter 4A deals separately with compensation for serious injuries.
- On the other hand, Chapter 5 deals with the separate concept of access to damages. Such access is regulated in various ways; some have already been discussed above. Importantly, Part 4 thereof deals with the reduction of recoverable damages; s 270 simply and explicitly provides that an employer’s liability for damages is reduced by the total amount of compensation paid.
- Thus s 110 is in a separate part of the Act, and deals with compensation, not damages. It may be designed to prevent, for example, unscrupulous employers, or others, from improperly demanding or having assigned, the worker’s statutory benefits; they are no doubt for the benefit of, and intended by Parliament to be retained by, the worker. The section does not intersect with, or otherwise have any impact upon, the operation of s 270 which understandably provides that an employer found liable for damages should not have to pay, for a second time, amounts already paid by its insurer as compensation. S110 does not assist the plaintiff.
- The defendant submits that the release and discharge clearly authorised the refund to WorkCover as well as the Medicare refund and Centrelink refund. These are statutory refunds which cannot be avoided by the plaintiff; further they have, of course, never been in the hands of the defendant and there is no basis to suggest that the plaintiff can claim them back from the defendant, as a debt or otherwise. It is also pointed out that the offer was inclusive of statutory refunds, and the dictionary meaning of “inclusive of” does not favour the plaintiff. I accept this submission; the amounts of the statutory refunds formed part of the $400,000.
- As to the costs, the defendant submits that the costs are clearly quantified and have never been disputed. They are, of course, authorised by the costs agreement (Exhibit 4) which also (accurately) foreshadowed the estimate of the First Respondent’s contribution of $35,000. The plaintiff well knew, when signing the discharge, that she would receive approximately $288,000 (see e.g. Exhibit 10). Overall there is no basis, by virtue of s 110 or otherwise, for suggesting that the defendant is not entitled to retain its costs. Thus the defendant submits that the proceeding is without merit and should be dismissed with costs.
The plaintiff’s further submissions including “duress”
- The plaintiff has provided some written submissions which amount to a commentary on some of the exhibits. However none of this adds to the way in which I have identified the plaintiff’s case as outlined above. At the hearing of the trial, in oral submissions, the plaintiff agitated arguments to the effect that she had signed the discharge under some form of duress. This was not part of her pleaded case. To the extent that it is discernible, the plaintiff was able to point to some notations on relevant documents. Exhibit EE to her affidavit of 11 November 2019 is the letter from the defendant to her of 29 October forwarding to her the discharge and explaining the merits as outlined above. The calculations are as previously set out, and it represents, of course, as mentioned above, yet another occasion when the terms of the settlement were explained in writing to the plaintiff including the amount that she would be receiving after statutory refunds, fees and costs. However the relevant aspect for present purposes is that attached to the letter is a tax invoice setting out the reconciliation, at the bottom of which the plaintiff has written “Do not agree. Sorry John but I am unable to sign this, as discussed by email and phone call I believe it is wrong”. Further on in the documents the plaintiff has written “No do not agree. As discussed per phone calls and email.”
- It is not clear whether those notations were ever forwarded to the defendant, at least in that or any other written form. Nevertheless, it is accepted by the defendant, as the correspondence sets out, that the plaintiff was concerned about signing the discharge for the reasons outlined. However she also accepted that the letter of 25 October set out the amount she would be receiving and that it was sent to her before the defendant advised the other parties that she wished to accept their joint offer. This clearly communicates the deductions which were necessarily and lawfully made.
- It is also noted that in response to the plaintiff raising concerns in emails of 5 and 6 November 2013, the defendant wrote to the plaintiff on 6 November (Exhibit R to the affidavit of 11 November 2019, also mentioned above), again setting out that she had accepted the defendants’ offer against the defendant’s very strong advice not to. In all the circumstances, any suggestion of any relief along the lines of duress is not pleaded and in any case has no evidentiary basis.
- It follows that for the reasons outlined above the plaintiff’s claim is without legal or factual merit and should be dismissed. Costs should follow the event on the standard basis, unless a party contends otherwise. If such a contention arises, the contending party should do so in a written submission not exceeding two pages, to be filed and served within seven days of delivery of judgment and these reasons; to be followed by a two page written submission by the other party, within a further seven days, whereupon the question will be resolved on the papers.
 Exhibit 14
 Document 5 on the court file.
 This list of amounts is set out at para 20(c)(i) to (iv) of the plaintiff’s further amended statement of claim.
 Court file documents Nos 12 and 13.
 Exhibit 5, letter from defendant to plaintiff dated 12 September 2013.
 Exhibit 11.
 Clause 2 thereof
 Clause 3.
 Exhibit 6.
 Exhibit 7.
 Page 2
 Page 3
 Exhibit 8.
 This case is an exemplar of the wisdom of such a practice by solicitors
 Curiously, and unfortunately in the circumstances of this case, this wrong phraseology was repeated in a letter of the 29th October, Exhibit EE to the plaintiff’s affidavit, court file document no. 13.
 See above
 Exhibit R to the plaintiff’s second affidavit.
 Exhibit 14.
 Exhibit 10.
 Court file document no. 9
 Further amended statement of claim, court file document no. 5, at para 11.
 Exhibits E and F.
- Published Case Name:
Kelly Jo Smith v Murphy Schmidt
- Shortened Case Name:
Smith v Schmidt
 QDC 114
12 Jun 2020