Aldous v State of New South Wales

1. [1]

   This is an appeal from the whole of the decision of Harrison AsJ handed down on 9 June 2021, ordering that the plaintiff’s statement of claim filed on 21 July 2020 be struck out and that the plaintiff pay the defendant’s costs: Aldous v State of New South Wales [2021] NSWSC 668. Her Honour’s orders were made on the application of the defendant (the State) by notice of motion filed on 22 October 2020.

2. [2]

   The appeal from her Honour’s decision is brought under r 49.4 of the Uniform Civil Procedure Rules (UCPR). The effect of rr 49.1 and 49.4, in combination with Pt 60 r 17(k)(ii) of the Supreme Court Rules 1970, is that the appeal is assigned to a single judge of the Court and not to the Court of Appeal. By force of r 50.16 of the UCPR the appeal is to be by way of rehearing and further evidence may be received. In PAO v Trustees of the Roman Catholic Church [2011] NSWSC 1216 Hoeben J explained the manner in which such an appeal is to be determined, as follows:

3. [3]

   The sole ground of appeal is as follows:

4. [4]

   The plaintiff was a police officer from January 1990 until 13 July 2007. On the latter date he was medically discharged on the basis of psychiatric orders including post-traumatic stress disorder (PTSD). His statement of claim pleads causes of action in contract and in negligence, said to arise from the conduct of proceedings that the State brought against him in the District Court in 2010. To understand the plaintiff’s claim in the present proceedings it is necessary to refer to earlier events.

The Crown Employees (Police Officers Death and Disability) Award 2005

1. [5]

   The plaintiff’s employment as a police officer was subject to, inter-alia, the Crown Employees (Police Officers Death and Disability) Award 2005. Clause 4 of the Award defined the officers to whom it applied. The plaintiff fell within the definition. Clause 5 required that officers who were eligible for coverage under the Award should contribute 1.8% of their salary to NSW Police. The plaintiff duly made contributions, from 2005 until his employment ceased. Clause 7 provided that officers who contributed under cl 5 would be entitled to a lump sum payment calculated under Schedule A to the Award “in the event that an on duty injury results in […] a police officer suffering total and permanent disablement”. Clause 8 provided for lump-sum benefits, on a different scale, for total and permanent disablement resulting from an “off duty” injury.

2. [6]

   Clause 9 of the Award made provision for a police officer who suffered either an on duty or an off duty injury that caused “partial and permanent disability” to receive rehabilitation and retraining and to be offered placement in a suitable position as a “permanent restricted duties police officer”. Alternatively, with the officer’s consent, he or she could be considered for redeployment to an “administrative officer position”. If it should not be possible to place the officer in a restricted duties position and if he or she should not consent to redeployment as an administrative officer, then the officer’s employment would be terminated and NSW Police would pay, in the case of partial and permanent disability resulting from an on duty injury, a lump-sum benefit calculated in accordance with Schedule B to the Award.

3. [7]

   Clause 10 provided that NSW Police would establish an insurance scheme to cover the lump-sum benefits payable under cll 7 and 8. Metlife Insurance Limited (Metlife) was the underwriter with which NSW Police took out this cover. The NSW Police Force itself would fund any benefits for partial and permanent disability under cl 9. Clause 10.6 provided as follows:

The Deed-Undertaking of 25 July 2007

1. [8]

   The plaintiff ceased to perform duties from late 2005 because he was suffering psychiatric symptoms. At some time over the next two years he must have been declared under cl 9 of the Award to be suffering a partial and permanent disability. I infer that no suitable alternative position could be found for him because his employment was terminated on 13 July 2007. By July 2007 NSW Police had determined that the plaintiff was entitled to payment of a benefit under cl 9 for partial and permanent disability. In anticipation of paying that benefit, the plaintiff was required to enter into a Deed-Undertaking with the Commissioner of Police.

2. [9]

   The Deed-Undertaking was signed by the plaintiff on 25 July 2007 and contained the following, referring to the plaintiff as “the Recipient”:

Payments to the plaintiff for partial disability and for total disablement

1. [10]

   On 23 October 2008 a partial and permanent disability benefit of $434,957.88 was paid by NSW Police pursuant to cl 9 of the Award. The payment was taxable as an employment termination payment. NSW Police remitted the tax component directly to the Australian Taxation Office (ATO) and the balance of $301,985.95 was transferred to the plaintiff.

2. [11]

   By May 2009 Metlife had accepted the plaintiff’s claim for a total and permanent disablement benefit under cl 7 of the Award, calculated at $633,488. This was also taxable and again the tax component was remitted to the ATO. Metlife paid the net amount of $582,557.95 to the plaintiff on 20 May 2009. Under cl 10.6 of the Award and by the express terms of the Deed-Undertaking of 25 July 2007, the payment of the permanent and total disablement benefit rendered the plaintiff liable to repay to the NSW Police the permanent and partial disability benefit of $434,957.88 that had been paid on 23 October 2008.

Plaintiff’s claim for damages in negligence – Deed of Release 1 June 2009

1. [12]

   In the meantime, on 26 February 2009 the plaintiff’s solicitors had served on NSW Police a pre-filing statement of a work injury damages claim for his PTSD, alleging that it was caused by negligence of the Police Force as his employer. The statement was served in accordance with s 315 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW). The claim was successfully mediated on 1 June 2009. The terms of settlement were recorded in a Deed of Release made that day. In this instrument the plaintiff was referred to as the employee and NSW Police Force was referred to as the employer.

2. [13]

   The recitals of the Deed of Release make it very clear that its subject matter is the plaintiff’s claim in negligence at common law, as preserved by s 151 of the Workers Compensation Act 1987 (NSW), for work injury damages. That claim was identified at Recitals 2 and 3, as follows:

3. [14]

   In Recitals 4 and 5 reference was made to the plaintiff’s assessed percentage of whole person impairment and to the 15% threshold that he had to meet in order to be entitled to damages in negligence: ss 313 and 314 of the Workplace Injury Management and Workers Compensation Act. At Recital 6 the plaintiff’s pleading of his cause of action in damages for negligence was set out in full, including full particulars of alleged breach of duty. Recitals 7 and 8 were in the following terms:

4. [15]

   Further recitals appeared at cll 9-12, followed by operative provisions, of which the following are presently relevant, with emphasis added in cll 20 and 22:

The State’s action against the plaintiff in the District Court

1. [16]

   On 28 August 2009 an officer of NSW Police Financial Services made demand upon the plaintiff for repayment, in accordance with cl 10.6 of the Award and the Deed-Undertaking of 25 July 2007, of the partial and permanent disability benefit that had been paid on 23 October 2008. He replied on 1 September 2009 expressing surprise that he was obliged to make the repayment and saying that he needed time to liquidate investments and to marshal funds. On 18 September 2009 the Financial Services officer advised him in writing that as soon as he had repaid the full amount of $434,957.88, NSW Police would advise the ATO that this had occurred so that the plaintiff could submit an amended return and obtain a refund of the tax component of this benefit. Thereafter, the plaintiff paid $158,000 by instalments towards refund of the partial and permanent disability benefit. No further repayments were made and by April 2010 NSW Police found it necessary to commence, in the name of the State, recovery action in the District Court. A statement of claim was filed on 7 April 2010.

2. [17]

   The plaintiff defended the District Court proceedings and filed a cross claim seeking relief, under the Contracts Review Act 1980 (NSW), in respect of the Deed-Undertaking of 25 July 2007. There was a long delay in bringing the State’s recovery action to hearing. It was determined by her Honour Judge Balla on 24 November 2017. The following orders were made:

3. [18]

   The plaintiff appealed this decision. The Court of Appeal dismissed the appeal with costs: Aldous v State of New South Wales [2018] NSWCA 261. The bases upon which the plaintiff had in the District Court unsuccessfully resisted the State’s claim for repayment under the Deed-Undertaking of 25 July 2007 are summarised in the judgment of Payne JA at [28]-[38]. It is necessary to repeat those paragraphs in full:

4. [19]

   Notably, the plaintiff did not contend in the District Court that by the terms of the Deed of Release of 1 June 2009 he had been released from the obligation to repay to NSW Police the partial and permanent stability benefit that the State was seeking to recover from him. For the purposes of determining the present appeal from Harrison AsJ’s decision, nothing would be gained from listing the plaintiff’s grounds of appeal from the judgment of Judge Balla or the additional arguments that the plaintiff was permitted to advance orally in the Court of Appeal. No error was found and all grounds were rejected. There was no attempt to raise in the Court of Appeal any argument of release under the Deed of 1 June 2009.

The statement of claim in the present case

1. [20]

   The first five paragraphs of the plaintiff’s statement of claim in the present case are as follows:

2. [21]

   The figure of $334,957.88 in par 5 is the amount of the partial and permanent disability benefit paid to the plaintiff on 23 October 2008, $434,957.88, less $100,000 that had been repaid by the date of commencement of the NSW Police recovery action in the District Court. The plaintiff clearly intends by par 5 to allege that the State’s entitlement to repayment of that benefit, on the basis of cl 10.6 of the Award and the Deed-Undertaking of 25 July 2007, was “settled”, or, more accurately, released, by the Deed of Release made on 1 June 2009. As a matter of construction of the Deed of Release I find this contention untenable, manifestly insupportable and amenable to being struck out pursuant to r 14.28 of the UCPR.

3. [22]

   The inescapable conclusion from Recitals 1-8, from the compromise expressed in cl 13 and from the terms of the plaintiff’s release of the NSW Police in cl 15 is that the “the matters the subject of this Deed”, as referred to in cl 20, and the “matters referred to in this Deed”, as that expression is used in cl 22, are the matters of the plaintiff’s common law claim for damages in negligence for alleged breach of duty of care owed to him by NSW Police as his employer. There is no reference anywhere in the Deed to the plaintiff’s liability to repay the permanent partial disability benefit, on the basis of cl 10.6 of the Award and/or in contract under the Deed-Undertaking of 25 July 2007. At the date of the Deed of Release, NSW Police had made no claim or demand on the plaintiff with respect to that liability. The plaintiff had not raised any issue or dispute about his obligation to repay.

4. [23]

   There is nothing in the wording of the Deed or in the surrounding circumstances to indicate that the parties had in contemplation, as a matter that was in any sense a subject of the Deed, the repayment obligation. That obligation does not fall within the description of “all liabilities, claims, disputes, and differences which now exist or may exist or have ever existed between them relating in any way to the matters the subject of this Deed”, as those words are used in cl 20 of the Deed. Clause 20 therefore does not purport to “settle” that obligation. The action in the District Court to enforce the obligation to repay the benefit was not a proceeding “in connection with any of the matters referred to in this Deed” and cl 22 therefore did not operate as a bar to the claim.

5. [24]

   At pars 6-9 the plaintiff pleads the commencement of the action against him in the District Court, the entry of judgment on 24 November 2017 and the dismissal of his appeal on 9 November 2018. The pleading continues as follows:

6. [25]

   The cause of action for breach of contract pleaded in par 10 depends entirely upon the allegation that the Deed of 1 June 2009 released the plaintiff from his obligation to repay the partial and permanent disability benefit. That cause of action is doomed to fail because the Deed clearly did not work any such release. There has not been identified any evidence concerning surrounding circumstances that if adduced could relevantly bear upon the construction of the deed in such a way as to lead to a different conclusion.

7. [26]

   The State submits that plaintiff is in any event estopped from advancing an allegation that the Deed of 1 June 2009 released him from the obligation to repay the benefit, because that allegation is so connected with the claim that was brought against him in the District Court that it was unreasonable for him not to have raised it there as a defence. In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 at p 598, Gibbs CJ, Mason and Akin JJ adopted the following statement of the applicable principle, taken from the judgment of the Vice Chancellor in Henderson v. Henderson (1843) 3 Hare 115; 67 ER 319:

8. [27]

   At pp 602-604 their Honours added the following. The words that I have italicised appear to be inapposite:

9. [28]

   In Tomlinson v Ramsey Food Processing Pty Limited (2015) 256 CLR 507; [2015] HCA 28 French CJ, Bell, Gageler and Keane JJ reiterated the principle at [22], in these terms (citations omitted):

10. [29]

    The State submits that it was unreasonable for the plaintiff to have failed to raise as a defence to its recovery action in the District Court the release under the Deed of 1 June 2009 that he now seeks to assert as the foundation of a cause of action for breach of that Deed. If the plaintiff were permitted to proceed on his statement of claim and if he should succeed, judgment in his favour for damages on the basis that the State breached the terms of the Deed by suing him in the District Court would be in direct conflict with the judgment of that Court that has been upheld on appeal. In those circumstances it is argued that the plaintiff is estopped from prosecuting a case that depends upon an assertion that liability to repay the permanent and partial disability benefit was released by the terms of the Deed.

11. [30]

    Counsel for the State cited Charafeddine v Morgan [2014] NSWCA 74 at [22]-[33]. He submitted that the judgment of the President in that case casts doubt upon whether there exists any qualification of special circumstances to the extended principle of estoppel recognised in Port of Melbourne Authority v Anshun Pty Ltd. He also submitted that, if there is such a qualification, Charafeddine v Morgan limits it to narrow categories of circumstances. I do not accept that analysis of the case. I read the President’s judgment as concerned only with whether a special circumstances exception qualifies the narrower doctrine of issue estoppel, strictly so-called. Anshun estoppel did not arise in Charafeddine v Morgan. The formulation by Gibbs CJ, Mason and Akin JJ of the wider estoppel principle expressly incorporates the qualification of special circumstances, by reason of which a party “may justifiably refrain from litigating an issue” in an earlier proceeding. In the passage extracted at [27] above their Honours gave examples of such circumstances: “expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few”.

12. [31]

    Differing views have been expressed by the courts as to whether the decision to dismiss proceedings on the basis of Anshun estoppel is an exercise of judicial discretion. In Wong v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 242 the Court (Emmett, Conti and Selway JJ) said this:

13. [32]

    In CG Maloney Pty Ltd v Noon [2011] NSWCA 397 there was a question of what materials might be referred to by the Court in determining whether an Anshun estoppel arose, in particular whether submissions of counsel in the earlier proceedings might be referred to. Campbell JA held as follows (Handley and Tobias AJJA agreeing):

14. [33]

    The divergence of judicial opinion as to whether engagement of the Anshun principle is to be determined as an exercise of discretion or by the application of a legal standard is not, of itself, important to the resolution of the case now before the Court. What is significant is that these and other authorities recognise that matters relevant to the operation of the principle are wider than merely the pleadings in each of the sequential proceedings and the judgment in the earlier one.

15. [34]

    The wider circumstances relied upon by the plaintiff in the present case are the following matters deposed to in his affidavit sworn 12 November 2020:

16. [35]

    Accepting all of the above evidence at its highest, it does not reasonably justify the plaintiff’s failure to raise the Deed as a release in bar of the State’s claim in the District Court. It is manifestly unreasonable that the plaintiff should have understood that any obligation of confidentiality with respect to the settlement could preclude him from submitting it to his own counsel for advice as to its effect. In representing himself in the District Court it is equally unreasonable that he should have thought that any obligation of confidentiality would preclude reference to the Deed where the only other party to the litigation, against whom the Deed would be deployed, was the counterparty to the Deed. The proceedings were conducted in the District Court and in the Court of Appeal by the plaintiff as a person of full legal capacity. No tutor was appointed. Evidence in the District Court concerning the plaintiff’s mental illness was directed only to his state of mind when the Deed-Undertaking of 25 July 2007 was entered into.

17. [36]

    By pars 34, 36 and 39 of his affidavit the plaintiff appears to suggest that when he received the demand for repayment of the permanent and partial disability benefit he thought the demand was inconsistent with the finality of his dealings with NSW Police that had been obtained under the Deed of 1 June 2009. That part of his evidence makes it all the more unreasonable that he failed to obtain advice on the question and/or failed to plead the release that he now alleges, when the District Court proceedings were commenced against him.

18. [37]

    Thus, the grounds upon which the plaintiff submits that his present claim should be spared from Anshun estoppel do not amount to special circumstances and the estoppel applies. This is a matter to be finally determined upon the present application. In answer to the State’s notice of motion the defendant has been required to bring forward whatever evidence he is able to rely upon to substantiate special circumstances. His evidence falls well short of providing reasonable justification for having failed to raise the Deed of 1 June 2009 in the District Court.

19. [38]

    The plaintiff’s causes of action in negligence pleaded in pars 11, 12 and 13 also critically depend upon the allegation that the Deed of 1 June 2009 released him from the obligation to repay the benefit. On the premise of that allegation he alleges that the State’s recovery action constituted a breach of a duty of care owed to him (pars 11 and 12) and that the State was obliged to disclose the Deed to the District Court and to the Court of Appeal (par 13). For the reasons already given, the critical premise is untenable and the causes of action in negligence must be struck out. Further, the plaintiff is estopped under the Anshun principle from alleging the premise of a release under the Deed of 1 June 2009.

20. [39]

    In addition to the above considerations, the count of negligence in pars 11-12 is demonstrably insupportable on its face. The common law does not recognise a duty of care, owed to a counterparty to an agreement such as the Deed of Release, to observe its terms. Failure to perform the terms of a deed gives rise to an action in contract, not in tort. The count pleaded in par 13 is likewise untenable. A party to litigation, such as the State in the District Court, does not owe a common law duty of care to the opposing party to disclose relevant documents to the Court. Provision of documents to the Court is a matter of tender, not disclosure. It is regulated by the forensic decision making of the parties under the rules of adversarial procedure, not by the law of tort.

Orders

1. [40]

   Applying the tests laid down in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69, the plaintiff’s statement of claim discloses no reasonable cause of action because the Deed of 1 June 2009 is not open to the construction that it released the plaintiff from his obligation to repay the permanent partial disability benefit and because the claims in negligence are founded upon an alleged duty of care that is not recognised by the common law. Further, the plaintiff is estopped with respect to all causes of action, upon the principle of Port of Melbourne Authority v Anshun Pty Ltd. Harrison AsJ was right to strike out the statement of claim and to order that the plaintiff pay the defendant’s costs. Her Honour’s orders will stand.

2. [41]

   With reference to the plaintiff’s appeal ground, quoted at [3] of these reasons, it is not apparent from the judgment of the Court of Appeal that the provisions and interpretation of the Deed of 1 June 2009 “were considered in detail by both the primary judge and the Court of Appeal”. However, it is not necessary to determine finally whether Harrison AsJ was in error in so finding because the question is of no significance in the rehearing of the State’s application to strike out the statement of claim, which I have undertaken in accordance with the law cited at [2] above.

3. [42]

   For the above reasons the following orders were entered at the conclusion of the hearing on 20 May 2022:

   1. (1)

      The plaintiff’s appeal from the orders of Harrison AsJ made 9 June 2021 is dismissed.

   2. (2)

      The plaintiff is to pay the defendant’s costs of the appeal.