Settlement – To be or not to be. That is the question.

22 July 2008 Topics: Insurance

Bishop v Woolworths Limited [2008] QSC 154

This very recent decision of Justice Wilson of the Supreme Court dispels the long held belief that an oral compromise is as good as a written one, at least in the context of matters involving pre-proceeding settlements regulated by the Workcover Queensland Act 1996 (and by analogy, the Workers Compensation and Rehabilitation Act 2003). It also serves as a reminder of the importance of keeping accurate attendance records of one’s settlement discussions.

The claimant sought damages against the defendant for personal injuries sustained by her during the course of her employment with the defendant. The claim was regulated by the Workcover Queensland Act 1996. The claimant was self represented at all relevant times.

A compulsory settlement conference failed to resolve the claimant’s claim and the parties, as legally required, exchanged written final offers, each with a 14 day acceptance period. On day 14 a telephone discussion took place between the claimant and the defendant’s solicitor. The defendant’s solicitor asserted that during that discussion the claimant accepted the defendant’s written final offer. The claimant later disputed this. The matter subsequently proceeded to trial to determine whether a binding compromise had been reached or not.

As a matter of law, it was for the defendant to prove the existence of a binding settlement. The difficulty for the defendant was twofold: Firstly, the defendant’s solicitor had kept no written file note of the telephone conversation in which the settlement was allegedly reached. Secondly, despite sending a discharge to the claimant following that conversation, the defendant’s solicitor then embarked upon a course of conduct which was inconsistent with an agreement having been reached. The claimant did not sign the discharge.

Ultimately the Court determined that no compromise (oral or otherwise) had been reached. The Court found that even if there had been an oral acceptance of the defendant’s offer the parties did not intend the agreement to be binding until a discharge was signed (due to the defendant not spelling out all of the terms of its proposed discharge at the time of acceptance) and furthermore, section 300 Workcover Queensland Act 1996 operated to make that agreement unenforceable in the absence of a signed discharge.

The Workcover Queensland Act 1996 was repealed in 2003 but remains operative for injuries sustained prior to 1 July 2003. It was replaced by the Workers Compensation and Rehabilitation Act 2003. Section 293 of the current Act is in identical terms to s300 of the former Act and, by analogy, is likely to be interpreted by the Court in the same way.

It is important to note that section 300 (s293) expressly refers to a “settlement before a proceeding”. There is no equivalent provision for settlements reached following the commencement of court proceedings which means that in most cases an oral compromise will bind the parties in the absence of a written discharge being signed. However, if a defendant wishes to “introduce” specific terms into the discharge (for example a confidentiality clause), the defendant is best advised to make those specific terms known at the time any offer of compromise is made, preferably by accompanying such offer with a copy of the defendant’s proposed discharge, if they seek to hold the claimant to those specific terms.

Neither the Motor Accident Insurance Act 1994 or the Personal Injuries Procedings Act 2002 contain a similar provision to s300/s293.

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