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[2021] NSWSC 1444

Jeanette Jana BHT Ronald Jana v Western Sydney Local Health District trading as Westmead Hospital

1. The defendants are authorised to make the following deductions from the judgment sum: i. such amount as is owing to Centrelink pursuant to a final notice received by the defendant(s); ii. such amount as is the subject of a notice of charge or recovery from the National Disability Insurance Agency; iii. such amount payable to Medicare pursuant to the Health and Other Services (Compensation) Act 1995 (Cth) and in accordance with any notice of charge. 2. After the deductions referred to in paragraph 2 pursuant to section 77 of the Civil Procedure Act 2005, the defendants are to pay the balance of the judgment sum into Court pending an application for the benefit of the plaintiff or as otherwise ordered by the Court. 3. Payment of costs will not be due and no interest shall be payable in respect of costs if the costs are paid within 28 days after whichever of the following events occurs last: (a) The costs being agreed; or (b) Receipt by the defendants of a Certificate as to Determination of costs by a Cost Assessor; or (c) Receipt by the defendants of a written document signed by the plaintiff authorising and directing payment of the costs. (d) If interest becomes payable in accordance with 5 (a)-(c) the interest will only be calculated from the date which is 28 days after the last event. 4. The Court notes that the parties agree that these terms are not to be disclosed except in the following circumstances: (a) as required by law; or (b) where the defendants seek contribution or indemnity from a third party; or (c) a copy of these terms is provided to Centrelink (Department of Human Services) and NDIA in relation to the determination of any refund.

Catchwords

CIVIL PROCEDURE – plaintiff sued first and second defendant for injuries arising out of medical negligence – Calderbank offer accepted by plaintiff – approval of settlement – where three statutory deductions must be made from amount of settlement – where defendants propose term to be included in consent judgment withholding interest payable until certificates received from Commonwealth entities – whether such term should be implied in consent judgment CONTRACTS – construction -- whether proposed term was a standard term in consent judgments – where implying term into judgment would have effect of varying s 101 of the Civil Procedure Act – where term does not fall within any of categories of implied terms identified in relevant case law – where no basis for implication of term

Cases cited

  • BP Refinery (Westernport) Pty Limited v Shire of Hastings(1994) 180 CLR 266
  • Calderbank v Calderbank [1975] 3 All ER 333
  • Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd(1991) 24 NSWLR 1
  • State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503;[2002] NSWSC 178

Legislation cited

  • Civil Procedure Act 2005 (NSW) § 76, 77, 101
  • Health and Other Services (Compensation) Act 1995 (Cth) § 4, 23, 24, 28, 30, 32, 33, 33B
  • National Disability Insurance Scheme Act 2013 (NSW)
  • Social Security Act 1991 (Cth) § 1184, 1184B

Judgment

  1. [1]

    The plaintiff by her tutor sued Western Sydney Local Health District trading as Westmead Hospital and Dr Mohammed Dowla for failing to diagnose her complaints when she presented to the Hospital and to Dr Dowla, for failing to arrange for the performance of a lumbar puncture to determine that she was suffering from meningitis.

  2. [2]

    On 20 October 2021 solicitors acting for the first defendant forwarded a letter to the plaintiff’s solicitors in these terms:

  3. [3]

    On 27 October 2021 the plaintiff’s solicitors wrote to the solicitors acting for each of the defendants in these terms:

  4. [4]

    The parties came before me for approval of the settlement by reason of the plaintiff’s legal incapacity on 8 November 2021. The lawyers acting for the plaintiff proposed a judgment in these terms:

  5. [5]

    Three statutory deductions must be made from the amount of the settlement being $221,773.74 to the National Disability Insurance Agency; $179,728.00 to Centrelink; and $8,006.55 to Medicare.

  6. [6]

    The defendants proposed a more detailed judgment which authorised the making of deductions of monies owing to Centrelink, the NDIA, and Medicare, the payment of the balance of monies into Court, provisions concerning the payment of costs, and a provision whereby the terms of the judgment were not to be disclosed.

  7. [7]

    The defendants’ proposed judgment also included the following term:

  8. [8]

    Mr Higgs of senior counsel for the plaintiff objected to the inclusion of paragraph 4 in the judgment. His principal position was that an agreement was reached in the terms set out in the correspondence and that no more was needed to reflect that agreement than the judgment put forward by the plaintiff. However, he did not object to the other proposed paragraphs by the defendants except for paragraph 4.

  9. [9]

    Mr Windsor of senior counsel for the first defendant (with whose submissions Ms Epstein of counsel for the second defendant agreed) submitted that the proposed term was a standard term that finds its way into most judgments where personal injuries matters are settled. In that way, the term was one which was implied into the agreement to deal with matters that are required to be dealt with.

  10. [10]

    Section 101 of the Civil Procedure Act relevantly provides:

  11. [11]

    It may be observed that what is contained in paragraph 4 of the proposed judgment is inconsistent with s 101, unless the Court otherwise orders interest to be paid in accordance with paragraph 4.

  12. [12]

    In respect of each of the deductions, there are statutory provisions which ensure that repayment of the amounts is made to the relevant government entity.

  13. [13]

    The National Disability Insurance Scheme Act 2013 (Cth) provides for repayment of amounts paid by the NDIA for amounts that have been paid from that Scheme in relation to the participant’s impairment.

  14. [14]

    Section 109 relevantly provides:

  15. [15]

    Section 114 makes it an offence if a potential compensation payer (here, the defendants) has been given a notice under s 109 and the potential compensation payer makes a compensation payment to the participant (that is, the plaintiff).

  16. [16]

    Repayment of Medicare is governed by the Health and Other Services (Compensation) Act 1995 (Cth). Section 4 defines compensation as a payment of damages or a payment in settlement of a claim for damages that is made in respect of an injury to a person.

  17. [17]

    Section 23 requires a notifiable person (here, the defendants) to notify the Chief Executive Medicare in writing if a judgment or settlement has been made in respect of a claim within 28 days after the judgment or settlement is made. The notice must inform the Chief Executive whether the compensation payer or insurer intends to make an advance payment (defined in s 33B of the Act) in respect of the compensation.

  18. [18]

    Section 24 of the Act relevantly provides:

  19. [19]

    Section 28 of the Act provides that if the Chief Executive Medicare gives a compensation payer a notice under s 24, the compensation payer must pay to the Commonwealth the amount specified in the notice within 28 days. Failure to do so involves a criminal penalty.

  20. [20]

    Section 30 of the Act provides:

  21. [21]

    Section 32 relevantly provides:

  22. [22]

    Section 33 provides:

  23. [23]

    This provision would appear to override the provisions of s 101 of the Civil Procedure Act until the requirements of the Health and Other Services (Compensation) Act have been complied with.

  24. [24]

    Division 2A of Pt 3 of the Act provides for an alternative arrangement whereby the compensation payer or insurer can make what is called an advance payment to the Commonwealth. The advance payment under s 33B(2) is to be equal to 10% of the amount of compensation payable under the settlement. If that advance payment is made, the compensation payer is then in a position to pay the remainder of the compensation to the person entitled (see s 32(1A)).

  25. [25]

    In relation to the money payable to Centrelink, the Social Security Act 1991 (Cth) provides in s 1184 that if a compensation payer is liable to pay compensation to a person, the Secretary may give written notice to the compensation payer that the Secretary proposes to recover from the compensation payer the amount specified in the notice. Section 1184B provides that if such a notice has been given, the compensation payer is not liable to pay the compensation while the notice has effect.

  26. [26]

    It is within that statutory framework, that the defendants seek to imply a term which would not require them to pay interest until the last of the three notices to be received from the NDIA, Medicare and Centrelink is received by the defendants. That is, it is sought to imply a term into the agreement which has the effect of varying the provisions of s 101 of the Civil Procedure Act. In relation to the Federal legislation, it is only s 33 of the Health and Other Services (Compensation) Act which, by force of s 109 of the Australian constitution, varies the operation of s 101. The circumstances where that occurs are limited to the situation identified in s 32(1)(a) and (b) of the Health and Other Services (Compensation) Act.

  27. [27]

    In State of New South Wales v Banabelle Electrical Pty Limited (2002) 54 NSWLR 503; [2002] NSWSC 178, Einstein J said that there were two categories of contractual terms. The first category was express terms. The second category involved implied terms. His Honour then went on to say:

  28. [28]

    It does not seem to me that the proposed implied term in the present matter falls within any of the categories identified. Mr Windsor’s submissions went close to the assertion that a term such as paragraph 4 was a “notorious custom or usage” found in the settlement of personal injuries claims. Mr Windsor put it in this way:

  29. [29]

    Whilst it may be accepted that terms of settlement frequently contain provisions similar to what is contained in paragraph 4, that situation usually results from a negotiation between the parties, generally after the time the settlement figure has been agreed. That seems to me to be some distance from suggesting that such a term can be implied into an agreement. Such a term does not always appear in an agreement of this type.

  30. [30]

    Nor can the term be regarded as a necessary subsidiary term as referred to in Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 38.

  31. [31]

    Finally, this term does not satisfy the requirements set out in BP Refinery (Westernport) Pty Limited v Shire of Hastings (1994) 180 CLR 266 at 282-283. It is not necessary to give business efficacy to the contract, and it is not so obvious that it goes without saying. One particular difficulty in that regard is that, on its face, it seeks to modify s 101 of the Civil Procedure Act.

  32. [32]

    There is nothing inherently unfair in not implying such a term. The prima facie position appears in s 101 of the Civil Procedure Act. The Commonwealth has made one exception to that by precluding the requirement to pay interest, pursuant to s 33 of the Health and Other Services (Compensation) Act. Moreover, until the money is paid either to the plaintiff or to the Commonwealth entity, the defendants have the benefit of the money.

  33. [33]

    No basis has been shown for the implication of paragraph 4 as proposed by the defendants.

  34. [34]

    On 8 November 2021, I approved the settlement pursuant to s 76 of the Civil Procedure Act and made this order:

  35. [35]

    The following further orders should now be made:

  36. [36]

    The parties and their lawyers are to be congratulated for having resolved what was clearly a difficult and complicated case.

Unofficial copy. Source: NSW Caselaw. Refer to the official version for authoritative text.