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The question of whether a party to litigation is prevented from re-arguing an issue determined by a Court in an earlier proceeding, known as "issue estoppel", can arise in various situations in the workers' compensation context. Two recent Magistrates' Court decisions, Filipovski v Tandem Australia [2016] VMC003 (Filipovski) and Turner v Clinical Laboratories Pty Ltd (Turner), provide guidance on how the Courts will apply issue estoppel in different scenarios.

The Filipovski decision

In the Filipovski decision, the Magistrates' Court dealt with the question of whether a prior consent dismissal of Magistrates' Court proceedings regarding a rejected claim for compensation was final, preventing the Plaintiff from relying on the claimed injuries in a later proceeding for weekly payments.

The Plaintiff, Mr Filipovski, lodged two claims for compensation for injuries arising from a motor vehicle accident on 2 June 2010 during the course of his employment with the Defendant, Tandem Australia. The first claim was for weekly payments and medical and like expenses for neck and knee injuries, which was accepted. The second claim was for weekly payments and medical and like expenses for psychological injuries, which was rejected on the basis of evidence of a pre-existing psychological condition. Mr Filipovski's entitlement to weekly payments under the first claim was later terminated on the basis of independent medical evidence that he had a capacity for work, or work-related capacity. Liability for the first claim injuries, namely neck and knee, continued. The first and second claims were the subject of Magistrates' Court proceedings, which were resolved by consent, with Mr Filipovski signing a terms of settlement agreeing the Defendant would pay a further limited period of weekly payments and reasonable medical and like expenses for "both the claimed physical and consequential psychiatric injuries". However, the rejection of Mr Filipovski's claimed psychological injuries was otherwise specifically maintained in the terms of settlement.

Mr Filipovski subsequently issued the subject proceeding seeking the reinstatement of weekly payments from 29 June 2012, being the date of termination under the previous terms of settlement, as well as a declaration of acceptance of the rejected psychological injuries. In its Defence, Tandem Australia raised defences of issue estoppel and "accord and satisfaction" in relation to the settlement of the earlier Magistrates' Court proceeding.

His Honour Magistrate Wright heard the preliminary issue of whether Mr Filipovski was prevented from re-litigating the rejected psychological injuries and the termination of weekly payments, given the previous terms of settlement and consent orders. His Honour Magistrate Wright held that an order by consent was capable of giving rise to an estoppel. Accordingly, Mr Filipovski could not re-litigate the injuries that were the subject of the second claim as liability, because the psychological injuries had never been accepted and this second claim was ultimately dismissed by the Court. The fact that it was dismissed by consent was of no particular significance to the finding of an estoppel.

The issue in dispute regarding the first claim was capacity, not liability. Mr Filipovski's capacity was determined as at the time of the dismissal of the Magistrates' Court proceedings and terms of settlement. Unlike a worker's capacity, liability is not subject to change once it has been decided. Given liability was still accepted for the first claim injuries, this left the worker's right to seek weekly payments, due to deterioration of his work capacity, open.

The Turner decision

In Turner, the Magistrates' Court addressed the question of whether a worker was prevented from making a claim for further weekly payments post-130 weeks due to a previous settlement of weekly payments.

Ms Turner, the Plaintiff, alleged suffering psychiatric injuries in the course of her employment as a pathology collector with the Defendant Clinical Laboratories between July 2005 and August 2007, particularly on 29 August 2007. She lodged a claim for weekly payments and medical and like expenses with the WorkCover agent, which was accepted. However, the Workcover agent subsequently terminated Ms Turner's weekly payments on the grounds that she was no longer incapacitated for work and that her incapacity was no longer materially contributed to by a work-related injury. 

Ms Turner had previously issued Magistrates' Court proceedings seeking weekly payments and medical and like expenses from 4 August 2008. In an amended notice of defence, Clinical Laboratories argued that Ms Turner was not entitled to receive weekly payments beyond 130 weeks on the grounds that she had a current work capacity, or if she had no current capacity, such incapacity was unlikely to continue indefinitely. Liability was not in dispute. The proceeding ultimately resolved by consent, with Ms Turner signing terms of settlement dated 16 December 2010 in which Clinical Laboratories agreed to pay the balance of Ms Turner's weekly payments up to 130 weeks, together with ongoing medical and like expenses. 

In the subject proceeding, Ms Turner sought the reinstatement of weekly payments from the 130 week mark, being 1 June 2015. Clinical Laboratories, in its notice of defence, raised defences of issue estoppel and "accord and satisfaction". These issues were determined by His Honour Magistrate Garnett at a preliminary hearing.

His Honour found the focus of the earlier Magistrates' Court proceeding was the Plaintiff's capacity for work, rather than any issue of ongoing causation. His Honour also took into consideration the fact that following the earlier settlement, Ms Turner had been assessed by a Medical Panel as having a 20% permanent psychiatric impairment and had also been granted a serious injury certificate allowing her to claim damages, which strengthened her argument that the only issue resolved on 16 December 2010 was her work capacity at that time. While His Honour accepted the agreement reached between the parties in the earlier proceeding extinguished all claims by Ms Turner to weekly payments up to the 130 week mark, he also found that the agreement did not extinguish her right to prove an entitlement to weekly payments beyond 130 weeks, if she could produce evidence to show that her condition had deteriorated to such an extent that she had no current work capacity (which was likely to last indefinitely). Accordingly, Ms Turner was not barred from pursuing her claim for further weekly payments by the agreement on 16 December 2010.

Implications

Filipovski, in particular, demonstrates the importance of ensuring that questions of liability are appropriately determined when resolving entitlements to compensation to avoid any further litigation down the track. Further, Filipovski confirms the Magistrates' Court will uphold terms of settlement and consent orders dismissing proceedings, even where there has been no formal judicial determination.

Both cases demonstrate that for the purposes of estoppel, there is an important difference between a previous dismissal of a proceeding where a denial of liability is maintained, as opposed to a dismissal regarding the question of capacity. Unlike the question of liability, a worker's capacity for employment can deteriorate, leaving it open for workers to prove a subsequent deterioration, resulting in further incapacity.  

We would like to acknowledge the contribution of Scott Newlan to this article.
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