A verbal agreement to settle between the worker’s solicitors and the nominal insurer’s solicitors was held to be binding despite indications that a deed of release would subsequently be prepared for execution.
In issue
- The Tribunal was tasked with identifying if there was a binding settlement agreement between the worker and the employer to terminate all rights in exchange for a cash settlement when on instructions from their client, the solicitors for the worker accepted a counteroffer communicated by the practitioners for the employer.
The background
The worker made a claim for workers compensation on 22 February 2012.
A conciliation conference occurred on 21 November 2017 but did not resolve the claim. On 11 May 2018, the worker, his solicitor and advising counsel had a meeting regarding the claim. He was advised about the way to ‘get damages’ and that the worker was unable to get those damages due to medical evidence. The worker said he wanted the claim to resolve and on 19 December 2018, he provided written instructions to settle the claim in the range of $40,000 to $70,000 plus costs.
On 18 January 2019, during settlement negotiations, the worker purportedly accepted a written counteroffer of $68,500. The Tribunal was notified of the settlement on 23 January 2019.
On 6 February 2019, a deed was sent to the worker. On 20 February 2019, his solicitors had not yet received the signed deed and the worker advised he was seeking further opinion on the terms of the deed.
Subsequently the worker engaged another legal practitioner who assumed carriage of the file.
On 25 March 2019 a referral was made in the Tribunal pursuant to s132A(9) on the grounds that the worker had not received sufficient advice.
Upon the advice of the worker’s ‘new’ legal practitioner, the deed of release was executed on 19 August 2019.
On 22 January 2020, the worker instituted proceedings in the Supreme Court claiming damages for negligence and/or breach of contract against his former solicitors and counsel.
The worker also sought a referral in TASCAT pursuant to sections 42 and 71 of the Workers Rehabilitation and Compensation Act 1988 (Tas) (‘the Act’), seeking determinations in relation to his entitlements under the Act for weekly payments, medical and other services and whole person impairment.
He claimed that the settlement expressed in the deed of release was void as it purported to settle a claim for damages and the worker did not meet the threshold requirement under section 138AB(2) of the Act.
The decision
Deputy President Clues found that the worker’s compensation referral and all claims arising from the injuries were validly settled as a result of his acceptance of the counteroffer on 18 January 2019.
She was satisfied that the worker was given proper detailed advice as to the effect of a settlement in the terms agreed, and that he was aware that his acceptance of the counteroffer would put an end to all claims under the Act and at common law for his injuries.
The worker submitted that the agreement did not fit into any of the three categories of agreement discussed in Masters v Cameron [1954] 90 CLR 353 or the fourth category formed in Feldman v GNM Australia Limited [2017] NSWCA 107 but rather the evidence supported it was the worker’s intention, albeit reluctantly, to only settle his workers compensation entitlement.
Deputy President Clues disagreed and said the evidence supported a finding it was the worker’s intention to settle all of his rights arising from the injury. The deed of release specifically referred to the settlement of all of his rights - including his common law rights - and there was never a request by his solicitors to remove references to common law.
Further, the solicitor acting for the Nominal Insurer/Employer did not insist, over the 8 months that followed that the settlement agreed on 18 January 2019, that the deed be executed before settlement could be affected.
It was contemplated that a deed of release would be executed to give effect to that agreement, but no deed was actually necessary to make the agreement binding.
Deputy President Clues therefore found that it was always the intention of the parties to settle all rights arising from the injury.
Deputy President Clues also said that, even if the settlement reached on 18 January 2019 only related to an extinguishment of the worker’s workers compensation rights, such an agreement constituted a settlement pursuant to section 132A of the Act. As a result, section 138AD applied, meaning the worker would not have an entitlement to claim damages at common law in any event.
Implications for you
This decision makes it clear that, unless there are indications to the contrary, an initial acceptance of a settlement offer by a worker will likely create a binding agreement.
After accepting such an offer, a worker cannot simply change their mind about a settlement sum or its terms and must communicate any concerns or requested modifications prior to the deed of release being executed.
It also provides a good indication on the standard of advice which ought be given by solicitors to clients prior to an agreement to settle. Here the fact that detailed advice was given about the effect a settlement would have on any future claims in respect of the injury was held to be sufficient, and any failure to advise on the verbal effect of accepting an offer did not prevent the agreement from being binding.