WA worker accepts offer to settle claim before passing away – The consequences of no settlement documents being signed

[2016] WADC 56 Scott DCJ District Court of Western Australia heard January 2016 decision delivered 15 April 2016

This Appeal from a decision of an Arbitrator at WorkCover WA concerns whether an application before the Arbitrator constituted a "dispute" pursuant to s 176(1)(a)of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act), whether the Arbitrator had jurisdiction and whether the appellant as personal representative of the worker had a maintainable claim.

The decision considers sections s 31C, s 31H, s 31I, s 76(1), s 76(2)(a), s 76(6), s 92(f), s 176(1)(a), s 176(3), s 301 of the Act and  cases including Australasian Correctional Management v Nydegger (2011) WACC C10-2011, Director of Public Prosecutions v White [2010] WASCA 47, Masters v Cameron [1954] HCA 72, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 16 and Zhi (John) Wang v J M Dickman Engineering [2007] WACC C36-2007.

The appellant was the widow of the late Mr Mackellar who was employed by the Respondent. Mr Mackellar sustained a work related injury on 10 August 2010 and two days later he lodged a claim for workers' compensation. The employers insurer promptly accepted liability for the claim one day later.

In 2013 the insurer wrote to Mr Mackellar and offered to settle his claim for $79,025.60 and stated in the letter of offer – "...In accepting this settlement the following will apply:

1. You will have no further entitlement to weekly payments under the Workers' Compensation and Injury Management Act, 1981.
2. You will not have any other claim to redemption of weekly payments.
3. You will have no further entitlement to statutory allowances – medical or surgical, dental, physiotherapy or chiropractic advice or treatment, first aid and ambulance expenses, medical requisites, charges for attendance and treatment by way of rehabilitation, charges for hospital treatment and maintenance, cost of artificial aids and travelling expenses.
4. You will forfeit any entitlement you may have to pursue common law damages under section 93E of the Act. That is, in general terms, you forfeit any entitlements you may have to sue your employer for civil damages.
5. There will be no indemnity for Centrelink, Medicare Australia or any other government agency.

We must advise that settlement amounts greater than $5,000, by law, are subject to a 10% deduction at the time of the payment in favour of Medicare Australia. Medicare then liaise with you directly, checking for any medical treatment paid in association with your work place injury, deducting that amount from the payment and the balance, if any, will then be forwarded on to you.

We enclose the following Election for Schedule 2 Injuries, Memorandum of Agreement, Statement of Consequences of Recording a Memorandum of Agreement and Notice of Settlement for you to review, sign and return to this office as soon as possible.

Upon receipt of the signed documents, (we) will forward them to WorkCover WA for execution. Please note, your entitlement to statutory allowances will cease on the date you sign the agreement.

We take the opportunity to advise that you are able to seek independent legal advice or contact the Customer Assistance Unit at WorkCover WA on (08) 9388 5555 for further information..."

Mr Mackellar was also invited to contact the case officer at the insurer if he wished.

Mr Mackellar had engaged lawyers who wrote to the insurer in response in the following terms –

"...We advise that we are instructed to act for Mr Mackellar in relation to the above workers' compensation claim and enclose an authority signed by our client.

We refer to your letter dated 20 August 2013 with an offer of settlement of:

• Item 67: 60% impairment of leg at or above the knee $77,025.00
• Future medical treatment $ 2,000.00
• Total $79,025.60

We are instructed that Mr Mackellar wishes to accept the offer contained in your letter and we would be grateful if you would please prepare and forward settlement documents to us for signature by our client.

We thank you for your prompt assistance in this matter..."

Sadly Mr Mackellar passed away in September 2013, but not as a result of the work injuries. At the time of his death Mr Mackellar was not in receipt of weekly payments and settlement documents had not been signed or prepared. An application was filed at WorkCover WA seeking the sum of money referred to in the letters between the insurer and his lawyers. The respondent disputed the claim as Mr Mackellar had died before making an election under section 31C and section 31H of the Act and submitted the requirements for registering a Memorandum of Agreement pursuant to s 76 of the Act were therefore not satisfied.

The matter progressed at WorkCover WA and in March 2015 the Arbitrator made orders by consent that the Application be determined on the papers with the parties to file various papers and documents to enable this to occur. In June 2015 the Arbitrator made orders requiring the parties to file and serve supplementary submissions with respect to whether he had jurisdiction to deal with the appellant's claim.

The Arbitrator found that he did not have jurisdiction to deal with the matter and the appellant appealed to the District Court based on the following grounds of appeal –

1. The Arbitrator erred in law and finding that he did not have jurisdiction to determine whether there was a valid and enforceable agreement to redeem a workers' compensation claim.
2. The Arbitrator erred in law in finding that he did not have jurisdiction to determine the dispute within the meaning of s 176(3) of the Act.

In the District Court Appeal decision His Honour states – "The issues which fall to be determined in this appeal are:

1. Whether the matter before the arbitrator was a 'dispute' pursuant to the provisions of s 176(1)(a) of the Act. That is in this case whether the arbitrator had jurisdiction to determine whether any agreement was constituted by the two letters and if so whether it was binding and enforceable.
2. Whether the appellant has standing as the legal personal representative of Mr Mackellar to execute:
   (a) a Form 1A election for sch 2 injuries;(b) a Form 15C Memorandum of Agreement;(c) a Form 15D Statement of the Consequences of the Recording of a Memorandum of Agreement.
3. Whether, pursuant to s 301 of the Act, any agreement was enforceable."

After hearing and considering the matter His Honour stated in his reasons for decision, "A form of election was not signed by Mr Mackellar during his lifetime. Consequently no concluded agreement between Mr Mackellar and the respondent to settle Mr Mackellar's compensation claim came into effect." "In the premises the appellant's claim in the Application must fail."

This case summary is a guide only to the issues and principles and findings as it is a condensed version of the full facts and circumstances of the Appeal decision. The full Appeal decision should be read to gain a full understanding of all the facts and circumstances and the decision. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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