Supreme Court New South Wales

• Medium Neutral Citation: Belinda Lawlor (nee Latta) v State of New South Wales [2014] NSWSC 1659
• Hearing dates: 14 October 2013
• Decision date: 21 November 2014
• Jurisdiction: Common Law
• Before: Hidden J

Decision

Leave to commence proceedings out of time granted

• Catchwords: LIMITATION - application for leave to commence proceedings for modified common law damages for work related injury after expiry of 3 year limitation period - plaintiff a police officer suffering psychological injury from duties - decision to await her medical discharge before commencing proceedings - whether reasonable explanation for the delay - whether defendant prejudiced
• Legislation Cited: Corporations Act 2001 (Cth); Crown Proceedings Act 1988; Limitation Act 1969; Workers Compensation Act 1987; Workplace Injury Management and Workers Compensation Act 1998
• Cases Cited: Ditchburn v Seltsam Ltd (1989) 17 NSWLR 697; Feltham v Workers Compensation Nominal Insurer [2013] NSWDC 189; Itek Graphix Pty Ltd v Elliot [2002] NSWCA 104, 54 NSWLR 207; JC Equipment Hire Pty Limited v The Registrar of the Workers Compensation Commission of NSW [2008] NSWCA 43, 70 NSWLR 704; Merton v Manildra Engergy Australia Pty Ltd [2013] NSWSC 1482; Oates v Consolidated Capital Services Ltd [2009] NSWCA 183; Opoku v P & M Quality Smallgoods P/L & Ors [2012] NSWSC 478; State of New South Wales v Burton [2008] NSWCA 319; State of New South Wales v Harlum [2007] NSWCA 120; Sydney City Council v Zegarac (1998) 43 NSWLR 195; Tabet v Gett [2010] HCA 12, 240 CLR 537; Wilkinson v Perisher Blue Pty Ltd [2012] NSWCA 250
• Category: Principal judgment
• Parties: Belinda Latta (nee Lawlor) (plaintiff); State of New South Wales (defendant)
• Representation: Counsel: D Graham SC with A Naylor (plaintiff); D Stanton (defendant); Solicitors: Kim Howard Smith, Kim Smith & Associates (plaintiff); Eamonn O'Neill, SMK Lawyers (defendant)
• File Number(s): 2011/353290

Judgment

1 HIS HONOUR: On 4 November 2011, the plaintiff, Belinda Lawlor (nee Latta) filed in this court a statement of claim against the State of New South Wales for damages for psychological injury said to have been suffered by her as a result of her duties as a police officer between 1996 and 2002. She seeks modified common law damages under the Workers Compensation Act 1987. As the statement of claim was filed after the expiration of the 3 year limitation period set by s 151D(2) of that Act, she seeks leave to commence the proceedings. It is that application which is before me.

Background

2 The plaintiff commenced the proceedings using her married name, Lawlor. Since the breakdown of her marriage she has reverted to her maiden name, Latta. I shall refer to her by that name in this judgment. She is now 38 years old. She commenced training as a police officer in 1995, at the age of 18. She was attested as a constable, and commenced her police service, in February 1996. Until July 2001, she mainly performed general duties. From July 2001 until October 2002 she was a member of the police rescue squad.

3 Put shortly, the statement of claim alleges that her duties saw her exposure to a number of traumatic incidents, causing her to suffer a variety of enduring psychological conditions. Between 1996 and 2000 she experienced the following:

• In 1996 she observed a number of autopsies conducted upon deceased of various ages, including two teenagers and a baby. This included a woman of about her own age, who had been almost decapitated, and a teenage boy whose leg had been torn off in a motor vehicle accident.
• In 1996 or 1997, she attended a beach where a deceased person had been washed ashore, and on another occasion the scene of the murder of a man who had been run over several times by a large caravan.
• In 1999, she assisted in the investigation of the murder of a man who had been killed by a shotgun blast to the head.
• Between 1997 and 2000, she attended the scene of several fatal motor vehicle accidents, including one in 2000 in which three persons had been incinerated in a vehicle.

4 Three incidents in 2001 and 2002 are of particular significance. In January 2001, she attended a hotel at Cronulla where a young woman had fallen from a balcony and died. This woman also was about Ms Latta's age and had suffered very serious injuries. Ms Latter secured the scene, spoke with witnesses, and arranged for the woman to be transported to hospital and to be identified by a friend.

5 The 2002 incidents occurred while she was with the police rescue squad. In March of that year, she assisted in the recovery of a badly decomposed body from a house in Narrabeen. In April, she was involved in the recovery of a body from the bottom of the Gap at Watsons Bay. She and a colleague were lowered down to where the body lay. The abdomen was open and she had to pick up intestines and place them back into the cavity. She and her colleague, with the body, were then hauled back up to the top.

6 In summary, it is alleged that as a result of these incidents she suffered acute stress disorder, post-traumatic stress disorder, major depressive disorder and dissociative amnesia. Again in summary, it is alleged that the State was in breach of its duty to her by failing to warn her of the risk of psychological injury from her duties, to provide adequate information and instruction to enable her to recognise psychological symptoms, to have her psychological health professionally assessed after traumatic incidents and to monitor it regularly. In particular, the State is said to have failed to obtain an assessment of her mental state or ascertain her suitability to perform duties in the police rescue squad.

7 Ms Latta was on sick leave for 6 months from April 2002. After her return to work in October of that year, she worked mainly on restricted duties, for the most part at suburban PCYC's and later at suburban police stations. There were further periods of sick leave between April and August 2005 and October 2005 and August 2006. She ceased duties in April 2007, and has not worked since. In November 2008 she was medically discharged from the police force.

8 It is not in contest that the proceedings raise serious questions to be tried. The issues are the delay, Ms Latta's explanation for it, and the prejudice said to be occasioned to the State by it. She claims economic loss, being past loss of earnings, loss of superannuation benefits, and loss of earning capacity. The large body of material before me includes the medical reports upon which she relies. However, I need only refer to so much of that material as is relevant to the disputed issues in the application.

9 It is Ms Latta's case that she first suffered psychological injury, being acute stress disorder (ASD), which manifested itself within a few weeks of the Cronulla incident in January 2001. During February 2001 she developed post-traumatic stress disorder (PTSD). That condition was exacerbated by the Narrabeen incident in 2002. In April 2002, following the incident at Watsons Bay, she suffered a second ASD injury, a further exacerbation of her PTSD, and the onset of a major depressive disorder (MDD). It is common ground that for present purposes there are two injuries which engage the three year limitation period: the original injury of January 2001, the period expiring in January 2004, and the further injury occasioned by the incidents of April 2002, the period expiring in April 2005.

10 The application must be approached in the light of the principles informing the relevant discretion enunciated, after extensive reference to authority, by Ipp AJA, with whom Spigelman CJ and Sheller JA agreed, in Itek Graphix Pty Ltd v Elliot [2002] NSWCA 104, 54 NSWLR 207, at [44]-[98] (215-226). I must determine whether, in the light of Ms Latta's explanation for the delay in commencing the proceedings and an assessment of the prejudice to the State, it would be fair and just to grant her application.

11 Relevant to the application are the pre-litigation requirements enacted in the Workers Compensation Act ("WC Act") and the Workplace Injury Management and Workers Compensation Act 1998 ("WIM Act"). These are steps which must be taken, and requirements which must be met, before proceedings for modified common law damages (referred to in the WIM Act as "work injury damages") can be commenced. Relevantly, these are the following:

A plaintiff must make a claim for work injury damages on the defendant or its insurer: s 262 of the WIM Act. Before or at the same time as that claim is made, the plaintiff must apply for lump sum compensation: s 280A of the WIM Act. By s 65A(3) of the WC Act, no compensation is payable in respect of permanent impairment from a primary psychological injury unless the degree of that impairment is at least 15%. (By subs (5) of that section, a "primary psychological injury" is one which does not arise as a consequence of, or secondary to, a physical injury.)

A claim for work injury damages made upon a defendant (or its insurer) must be accompanied by relevant particulars required by s 282 of the WIM Act. When such a claim has been made, s 281 of that Act requires the defendant to determine whether to accept or dispute liability. If liability is disputed, the plaintiff may serve a pre-filing statement pursuant to s 315(1) of the WIM Act.

That pre-filing statement, setting out particulars of the claim and the evidence to be relied upon, is an essential prerequisite to commencing proceedings. By s 316 of the WIM Act, the defendant must respond to it within 28 days by accepting or denying liability and, if liability is denied, by serving a pre-filing defence.

Following the defendant's response, the claim must be referred to the Worker's Compensation Commission for mediation before court proceedings can be commenced: s 318A(1) of the WIM Act. By subs (4) of that subsection, proceedings cannot be commenced while the claim is subject to mediation. However, by subs (3), the defendant may decline to participate in mediation if liability is wholly in dispute.

Damages cannot be awarded unless the injury causes a degree of permanent impairment of at least 15%: s 151H of the WC Act. By ss 313 and 314 of the WIM Act, that threshold must be established, or accepted by the defendant, before proceedings can be commenced. The rationale of the 15% threshold under s 151H is different from the similar requirement for the purpose of lump sum compensation, and a finding of 15% impairment for an award of lump sum compensation does not determine that issue for the purpose of proceedings for damages: JC Equipment Hire Pty Limited v The Registrar of the Workers Compensation Commission of NSW [2008] NSWCA 43, 70 NSWLR 704, particularly per Tobias JA (with whom Campbell and Bell JJA agreed) at [50]-[70] (718-722).

12 All these steps have been taken, and the threshold has been met, in the present case, albeit over a long period. Section 151DA of the WC Act makes limited provision for the suspension of the limitation period during the pre-litigation procedures. However, that section is not applicable in the present case because those procedures were not undertaken until after the limitation period had expired. (This is subject to an alternative submission made by counsel for Ms Latta, to which I shall refer shortly.)

13 Through her solicitors, Ms Latta applied for lump sum compensation on 24 May 2005. That was an application under ss 66 and 67 of the WC Act as it then stood (there having been relevant amendments since). Liability was denied by the insurer of the NSW Police Force, and the matter had to be resolved through the procedures provided by the WIM Act. Ms Latta's whole person impairment (WPI) was originally assessed at 13%. Her appeal to the Appeal Panel under the Act was successful, and a determination of 15% WPI was made on 1 August 2006. Negotiations led to the settlement of the lump sum claim in September 2006, and on 25 October 2006 a complying agreement under s 66A of the WC Act was registered.

14 What transpired thereafter will need to be examined. It was not until 6 November 2008 that a claim for work injury damages was served on the insurer. The insurer denied liability in a letter of 24 December 2008. However, on 19 March 2009 the insurer accepted, pursuant to s 314(2)(a) of the WIM Act, that Ms Latta met the 15% WPI threshold.

15 A pre-filing statement was served on 12 March 2010. Two months later it was withdrawn and a second pre-filing statement was served on 23 December 2010. A pre-filing defence was served on 24 January 2011. On 5 October 2011 the insurer declined to participate in mediation in the Workers Compensation Commission on the basis that liability was wholly in dispute. A few days thereafter Ms Latta instructed her solicitor to commence proceedings and, as I have said, the statement of claim was filed on 4 November 2011. The proceedings are brought against the State pursuant to the Crown Proceedings Act 1988.

Opoku

16 Mr Graham SC, who appeared with Mr Naylor for Ms Latta, submitted that the proceedings had been commenced within time, relying on the decision of Adamson J in Opoku v P & M Quality Smallgoods P/L & Ors [2012] NSWSC 478. Put shortly, that was a claim for damages against the plaintiff's employer for a work related injury. The injury had been sustained in May 2004 but the proceedings were not commenced until February 2009. In rejecting a defence that the proceedings had been commenced outside the limitation period, Adamson J said at [62-3]:

"[62] By reason of s 151H of the Workers Compensation Act 1987, the plaintiff could not bring a claim for damages in negligence against his employer unless and until he had met the threshold requirement that he suffer a permanent impairment of at least 15%, which was a matter that needed to be assessed. This assessment was not resolved until October 2008 (by a Complying Agreement under s 66A of the Workers Compensation Act ...). Accordingly, the cause of action against the plaintiff's employer did not accrue until that date.

[63] The plaintiff's claim against [the employer] was brought within time because it was brought within three years of the assessment of his permanent impairment, being the date on which his cause of action against [the employer] accrued."

17 This is all her Honour said about that issue. There is no other reference in the judgment to the complying agreement which, presumably, her Honour saw as the starting point of the limitation period because it involved the employer's acceptance that the 15% threshold had been met. Mr Graham noted that in the present case the insurer conveyed its acceptance that the 15% threshold had been met, for the purpose of s 151H of the WC Act, on 19 March 2009. Adapting her Honour's reasoning, he argued that the three year limitation period ran from that date and, accordingly, the statement of claim was filed within time. Alternatively, if the period were considered to run from 25 October 2006, when the complying agreement in the present case was registered, it would be suspended from time to time in accordance with s 151DA of the WC Act. In the result, the statement of claim would still be out of time but not to a marked extent.

18 Mr Graham acknowledged that Adamson J's approach is controversial. Her Honour did not refer in terms to s 151D(2) but, clearly, that was the relevant provision. It stipulates the limitation period by reference to "the date on which the injury was received", not when the cause of action accrued. There was no appeal against her Honour's decision, perhaps because the plaintiff succeeded only to a limited extent. The issue does not appear to have been addressed in any decision of this court, either on appeal or at first instance. However, on several occasions judges of the District Court have declined to adopt her Honour's approach. One of those was Feltham v Workers Compensation Nominal Insurer [2013] NSWDC 189, a decision of Neilson DCJ in which his Honour considered the issue at [8]-[14], referring to other decisions of that court to the same effect.

19 Apart from submitting that I should follow Adamson J's approach as a matter of judicial comity, Mr Graham submitted that the approach is fundamentally correct. He acknowledged that her Honour may have been in error in failing to distinguish between the defendant's acceptance of 15% WPI for the purpose of a lump sum award and the threshold set by s 151H: JC Equipment Hire v Registrar of the Workers Compensation Commission (supra). Nevertheless, he argued that her Honour was attempting to resolve a tension between s 151D and s 151H, in the light of the requirements of the WIM Act.

20 Put shortly, he noted that s 151D requires that proceedings be commenced within three years of the receipt of an injury but s 151H prevents damages being recovered unless the 15% threshold is met. The effect of the WIM provisions is that proceedings cannot be commenced until that threshold has been established (whether by agreement or otherwise). Thus, he argued, the "injury" contemplated by s 151D should be construed as one for which the s 151H threshold has been met. Accordingly, it is from that point that the three year limitation period runs.

21 Attractive as this submission might be as a matter of practical justice, it strains the language of s 151D. Moreover, it encounters a difficulty articulated in submissions in response by counsel for the State, Mr Stanton. It would leave some of the provisions in s 151DA of the WC Act with no work to do. The effect of pars (a), (a2) and (a3) of subs (1) of that section is to suspend the limitation period under s 151D while the procedures under the WIM Act for resolution of a dispute about a claimant's WPI are in train.

22 With respect, I would question the correctness of Adamson J's approach in Opoku, as I would Mr Graham's submission. However, as I have decided that Ms Latta should have leave to commence these proceedings out of time, I need express no concluded view about the matter.

Delay

23 On the issue of delay in commencing the proceedings, I have detailed affidavit evidence of Ms Latta and her solicitor, Ms Kim Smith. Both of them also gave oral evidence and were cross-examined at some length. In addition, on this issue I received a report of 5 September 2013 of Ms Latta's treating psychiatrist, Dr Selwyn Smith, who also gave oral evidence. I have been assisted by comprehensive submissions, written and oral, by counsel on both sides, as well as a detailed chronology furnished by counsel for Ms Latta. It is sufficient to deal with the salient features of this material.

24 It is common ground that Ms Latta was first aware that she suffered a psychological injury attributable to her work in April 2002, when she was told by Dr Smith that she had PTSD. In September of that year she sought legal assistance from the Police Association to claim lump sum compensation, and in the following month Walter Madden Jenkins, solicitors were engaged for that purpose. However, as noted above, the application was not made until May 2005. In the meantime Ms Latta had been receiving treatment, and was hopeful that she could return to work. Indeed, as also noted above, she did return to work, albeit largely on restricted duties and with periods of sick leave, until April 2007.

25 In preparation for a lump sum application, Walter Madden Jenkins arranged for Ms Latta to be examined by Dr Peter Klug, psychiatrist. In a report of 22 February 2005 furnished to those solicitors, Dr Klug expressed the view that she "should no longer be serving as a police officer because of the risk this represents to her health." He assessed her WPI at 19%. Earlier, on 30 April 2003, Dr Leonard Lee reported that she appeared unable to resume normal pre-injury duties, and expressed a doubt if she should ever return to them. He recommended that she be "re-deployed in another area such as Police Citizens Youth Club." He described her prognosis as "guardedly optimistic."

26 By that time Ms Latta was in the process of changing solicitors, engaging the services of Ms Smith. In a letter to the Police Association of 31 January 2005 she asked to be represented by Ms Smith for "a possible Common Law claim against the New South Wales Police." She referred in the letter to a history of traumatic experiences in the course of her work, with particular focus on the Watsons Bay incident of 10 April 2002, her breakdown two days thereafter and her diagnosis of PTSD. It is clear from the terms of the letter that she was aware of the three year limitation period.

27 She had an initial conference with Ms Smith in March 2005, and it is apparent that from that early stage the possibility of proceedings for damages was raised, both she and Ms Smith being conscious of the limitation period. Indeed it is no part of Ms Latta's case that she was ignorant of it. The primary focus of the application is upon when it was that those proceedings were seen to be feasible.

28 On 13 May 2005, Ms Smith wrote to Ms Latta concerning a potential common law claim, advising her of the benefits and pitfalls of such a claim, including the loss of workers compensation benefits following an award of damages and the risk of a substantial costs order against her if the claim were unsuccessful. She emphasised the three year limitation period, but expressed concern that proceedings for damages may not adequately compensate her unless it could be shown that she could not remain in the police force. She advised Ms Latta that if she did not remain with the police because of her injury, it would be worthwhile obtaining a barrister's opinion about commencing proceedings.

29 A file note made by Ms Smith on 25 May 2005 records that Ms Latta told her that she did not wish to start common law proceedings because she did not know whether or not she would be medically discharged from the police force. At that stage, notwithstanding the unfavourable prognosis of Dr Klug, she did not believe that her police career was over. On 10 May 2005, during one of her periods of sick leave, she sent an email to PCYC Commander David Shorrocks in which she wrote of "looking at what restrictions need to be in place for my return to work", thanked him for his support, and wrote, "I really do want to return to work and get the past behind me."

30 This is not to deny that she was conscious of the difficulties in doing so. On 19 September 2005, Ms Smith wrote to Dr Smith seeking a report for the purpose of the lump sum claim but also for investigating a common law claim. In that letter she set out a history from Ms Latta which included her assertions that she could not perform at the level she previously had, and that she could not undertake general duties and "certainly could not do rescue again." Dr Smith supplied a report on 27 September 2005, in which he expressed the opinion that her prognosis was "relatively good provided she not be re-exposed to further significant traumatic events in the course of her duties as a police officer." He assessed her WPI at 15% for the purpose of the lump sum claim and, in a brief supplementary report of the same date, said that "in the light of her significant psychiatric symptomatologies she would not be able to engage in operational police duties", noting that she had only been able to engage in restricted duties.

31 Nevertheless, as I have said, she continued to work on restricted duties, albeit with a period of sick leave between October 2005 and August 2006, until April 2007. In May of that year she embarked with her partner and child on a 3 months overseas trip. Her evidence was that it was during that trip that she decided that she had no prospect of returning to work as a police officer. So much is apparent from an email exchange in June 2007, while they were away, between her and another member of Ms Smith's firm.

32 In a letter of 26 June 2007, Ms Smith informed Ms Latta that a medico-legal report for the purpose of common law proceedings was required and expressed the view that she should be medically discharged before such proceedings were commenced. Ms Smith also asked her to provide "a list of the tragic and/or violent and/or confronting incidents" which she had attended during her police service, suggesting that she do this upon her return from her trip, perhaps with the assistance of Dr Smith.

33 Ms Latta returned from her trip on 11 August 2007. On 27 September, Ms Smith wrote to her to inform her again of the advantages and pitfalls of common law proceedings, and to remind her that she had not yet provided the list of traumatic incidents. Ms Latta did not provide that list until 26 November 2007. Early in the following month she contacted Ms Smith to tell her that she was on the list for medical discharge. Ms Smith said that she would not "qualify a doctor" until there was certainty about that matter. Also in early December, Mr Naylor was briefed to advise on the matter and to settle a letter seeking a medico-legal report.

34 On 14 May 2008, a consultant psychiatrist, Dr M Roberts, reported to the New South Wales Police Force that Ms Latta was unlikely ever to be able to return to work as a police officer and met the definition of "Total and Permanent Disablement" because of post-traumatic stress disorder. She was medically discharged on 27 November 2008.

35 Mr Naylor had a conference with Ms Latta and Ms Smith on 3 July 2008. On 7 July Mr Naylor furnished a comprehensive advice, together with draft letters to Dr Smith and Dr Klug for medico-legal reports and a draft statement of claim. However, he advised that it would be premature to file that statement of claim as there were certain matters for which further evidence was required. On the other hand, he advised that a claim for work injury damages should be made without further delay.

36 As I have said, that claim was served on 6 November 2008. Ms Smith's evidence was that in the interim the reports of Dr Smith and Dr Klug recommended by Mr Naylor were obtained, together with documents provided by Ms Latta concerning economic loss. There then ensued the procedural steps which I have summarised at [14]-[15] above. The explanation proffered for the delay between service of the claim for work injury damages and of the pre-filing statement of 23 December 2010, including the withdrawal of the pre-filing statement of 12 March 2010, was the need to obtain revised medico-legal reports necessary to meet the requirements of a pre-filing statement in the WIM Act, particularly s 318(1)(d) (to which reference will be made later). In the intervening period two important decisions relevant to the issue of damages in the case were handed down: State of New South Wales v Burton [2008] NSWCA 319 and Tabet v Gett [2010] HCA 12, 240 CLR 537. In evidence is extensive correspondence between Mr Naylor and Ms Smith about further reports, and between Ms Smith and Dr Smith and Dr Klug in pursuit of them, together with reports received in response to those requests.

37 It is necessary to have regard to Ms Latta's personal situation throughout the course of these developments. She separated from her husband in December 2003, and has lived with her present partner since January 2005. They have 3 children: Kai, born on 17 March 2006, Camryn, born on 12 March 2008, and Brad, born on 15 July 2011.

38 Thus, for her the period from mid-2005 until November 2011, when the statement of claim was filed, was to a significant extent one of pregnancy, birth and the care of very young children. In an affidavit of 21 February 2013, she deposed to debilitating back pain during her pregnancy with Kai, and a painful hip condition during her pregnancy with Camryn. She went off her medication while she was breastfeeding Kai and she found that "the demands being placed on me being a mother totally pre-occupied me ... ." The period after the birth of Camryn she also found demanding and, again, she did not take her medication while she breastfed the child. Her pregnancy with Brad was normal, but she found it difficult to manage her "psychological well-being" with the demands of the other children and continuing fatigue.

39 It is also appropriate to have regard to the effect of Ms Latta's psychiatric condition upon her capacity to deal with the litigation. As to this, Mr Graham sought to draw an analogy with the notion of disability in s 52 of the Limitation Act 1969. That section provides for the suspension of the running of the limitation period while a person who has a cause of action is under a disability, that term being defined in s 11(3) of that Act. Mr Graham referred to authority on that provision, including State of New South Wales v Harlum [2007] NSWCA 120. However, as argument developed in the light of evidence on this topic, it was not sought to address this issue by the application of the regime in the Limitation Act. Rather, the question is simply whether Ms Latta's condition impeded her capacity to take necessary steps in the progress of her case in a timely fashion.

40 For this purpose a report of Dr Smith of 5 September 2013 was received over objection. The primary basis of the objection was based upon the following provisions in s 318 of the WIM Act:

"(1) For the purposes of court proceedings on a claim for work injury damages:

...

(d) a party to the proceedings is not entitled to have any report or other evidence admitted in the proceedings on the party's behalf if the report or other evidence was not disclosed by the party in a pre-filing statement or defence served under this Division, except with leave of the court.

(2) The court is not to grant leave under this section unless satisfied that:

(a) the material concerned was not reasonably available to the party when the pre-filing statement or defence was served, and

(b) the failure to grant leave would substantially prejudice the party's case."

41 Mr Stanton submitted that the word "proceedings" in those provisions embrace the present application. He referred to the judgment of Campbell JA, with whom Spigelman CJ and Allsop P agreed, in Oates v Consolidated Capital Services Ltd [2009] NSWCA 183, in which the issue of the ambit of the word "proceedings" in certain provisions of the Corporations Act 2001 (Cth) arose. Campbell JA said at [116]:

"... there is no definition of 'proceedings' in the legislation. The word 'proceedings' is capable of covering the whole variety of forensic exercises which may occur in a court: Proust v Blake (1989) 17 NSWLR 267 at 270 per Samuels JA (with whom Mathews J agreed); Re Doran Constructions Pty Ltd (in liq) [2002] NSWSC 215; (2002) 194 ALR 101; 168 FLR 116 at [100]-[102] and cases there cited. There is nothing about the word 'proceedings' in itself that could make it inapplicable to an application for leave to be given to Mr Oates to bring proceedings asserting CCL Australia's right to bring a derivative action that enforces the rights of CCL UK. The question though, is whether a meaning of 'proceedings' that extends so far is the intended one in the context of section 236."

42 Mr Stanton also cited a passage from the judgment of Hoeben JA (as he then was) in Wilkinson v Perisher Blue Pty Ltd [2012] NSWCA 250. That case was concerned with a different provision in s 318. However, speaking of the Part of the WIM Act in which s 318 is to be found, his Honour said at [11]:

"The general scheme of Part 6 of Chapter 7 of the WIM Act is for the Commission to control various preparatory steps before proceedings are commenced in a court. That is why proposed pleadings, with their supporting documents, are referred to as 'pre-filing statements' and 'pre-filing defences'. It is only when all of the steps have been satisfactorily completed and a mediation has taken place pursuant to s 318A, that a Statement of Claim can actually be filed in a court. The purpose of Part 6 is to ensure full disclosure of the position of the parties so that by mediation and otherwise the prospects of settlement can be fully explored."

43 I allowed the evidence because I took the view that, understood in its context within the statutory scheme, "proceedings" in the relevant provisions of s 318 refers to the principal proceedings for damages. While acknowledging the pivotal nature of an application such as the present, I do not consider that those provisions apply to it. Moreover, the report that Dr Smith relied upon does not ventilate any new material. Rather, it is based upon his clinical observations over the years of his treatment of Ms Latta, which are to be found in earlier reports in evidence. Dr Smith gave oral evidence on the issue, and his views were able to be, and were, tested in cross-examination.

44 In the 2013 report Dr Smith noted Ms Latta's history of "avoidance behaviour", consistent with her ongoing PTSD and depressive disorder. He expressed the opinion that she "remains significantly psychiatrically disabled in the sense that she continues to display marked incapability of the management of her affairs in relation to her claim against the NSW Police Force." He referred to her "prevarication" and observed that she "neglects her legal interests." In oral evidence, Dr Smith said that she has "clear and convincing indelible imprints of many of the traumatic events that she had been exposed to during her career ... ." Those events, he said, resulted in "frequent dissociative flashbacks which caused her considerable emotional distress, heightened levels of anxiety and difficulties in focusing and concentrating." She would often display marked confusion and distractibility, and had difficulties in "resolving issues relevant to her ongoing litigation." He added that she "was markedly avoidant in many ways of getting closure of many of the important aspects of her claim, because she would have to deal with revisiting many traumatic memories."

45 Dr Smith said that Ms Latta has a good intellect, and understands and is aware of the issues at hand. However, he expressed the view that her disorders "significantly handicapped her in proceeding to act appropriately." He observed her condition to be worsening "as this hearing has come to the fore ..." He did not maintain that she faced these impediments continually, saying that "there are times when in fact she's functioned relatively well, particularly when she's distanced herself to a degree from pressing matters of litigation."

46 An example of the effect of Ms Latta's condition was said to be the length of time, some three months, it took her to complete the list of traumatic incidents which Ms Smith had requested in June 2007. Ms Latta said in evidence that she found that process itself very traumatic. However, the list is a very lengthy document, and in cross-examination Dr Smith agreed that the delay in producing it was not "extraordinary" and that it did not demonstrate that she was "substantially impeded" in providing those detailed instructions. Dr Smith took a similar view of a four page document of 24 March 2005 prepared by Ms Latta, setting out the psychological effects of her police experience, in response to a request by Ms Smith earlier that month.

47 In her 2013 affidavit Ms Latta deposed that whenever she contacted Ms Smith about her case she would be "reminded of either events that I attended during my service, of what I had lost or how I had felt." She said that it took a lot out of her just to call Ms Smith. However, she added that she "did make the calls and when my solicitor asked for documents or instructions I provided them to her."

48 Ms Smith gave evidence that until 2007 Ms Latta was giving her "very mixed messages" about whether she was staying with the police or leaving, and that she didn't appear to know whether she could stay. Mr Graham cited this as an example of the prevarication to which Dr Smith referred in his report.

49 Mr Graham referred, by way of analogy, to the decision of Hoeben CJ at CL in Merton v Manildra Engergy Australia Pty Ltd [2013] NSWSC 1482. That was an application for leave to proceed out of time under s 151D, in which his Honour granted the application primarily in the light of the extent to which delay had been occasioned by the plaintiff's psychological condition: at [30]-[34]. In the present case, I have no doubt that Ms Latta has struggled to meet the demands of her litigation because of her psychiatric condition and her maternal commitments. It is appropriate that these matters be taken into account, but not a great deal of weight can be given to them. On the whole of the evidence, she appears to have managed reasonably well to provide information and instructions when required, and it cannot be said that these factors have made a marked contribution to delay in the progress of the matter.

50 It is not in question that a decision was made not to commence proceedings until it was clear that Ms Latta would be medically discharged. That necessarily involved an equally conscious decision to allow the limitation period to expire in the meantime. That is a significant factor bearing upon the exercise of my discretion in this matter, and in Itek Graphix v Elliot (supra) it was decisive. It is necessary, then, to consider why that approach was adopted.

51 As I have said, initially Ms Latta hoped that she would recover and wanted to return to work. She did indeed continue to work, for a couple of days a week at least, until 2007. Ms Smith gave evidence of her view that common law proceedings should not be commenced unless they were financially viable. Her evidence was that, given that modified damages in common law proceedings were for economic loss only, and given that an award of damages would deprive Ms Latta of her workers compensation entitlements, any such award would have to be substantial. Accordingly, it was her judgment that proceedings would be viable only if it was clear that Ms Latta's police career was over. Hence her advice to Ms Latta that they should not be commenced until it was known that she would be medically discharged.

52 For the State, Mr Stanton noted that the three year limitation period from the last traumatic event experienced by Ms Latta expired in April 2005. He submitted that by the end of January 2005, before the expiry of that period, Ms Latta was aware that the circumstances of her injury might give rise to a claim for modified common law damages, that her injury was causing her continuing economic loss, that Dr Klug was of the view that she should no longer be serving as a police officer and that he had assessed her WPI at 19%.

53 As to economic loss, Mr Stanton noted evidence that, upon returning to work, Ms Latta's weekly payments were topped up to her base salary. However, she lost overtime and certain allowances of the value of about $200 per week. In addition, he noted the medical reports to which I have referred to earlier conveying that she would be unlikely to be able to return to her pre-injury duties. Accordingly, he argued, there was evidence of significant loss of earning capacity even while she remained in the police force. In those circumstances, he argued, there was no reason to delay embarking upon the process of pursuing a common law claim. He also noted that Dr Smith's report of 27 September 2005, referred to at [28] above, addressed the issue of negligence.

54 Mr Stanton noted that an application for lump sum compensation had been made in May 2005 but not resolved until it was settled in September 2006. He pointed out that, nevertheless, it was not necessary to await the resolution of that application before serving a claim for work injury damages. By s 280A of the WIM Act, the application for lump sum compensation and the claim for work injury damages could have been made at the same time. He also noted that the claim for work injury damages was not served until November 2008 and that, after negotiation, the insurer accepted a 15% WPI in March the following year. That acceptance, he argued, could have been sought much earlier.

55 Following her medical discharge, Ms Latta received payments under a death and disability scheme totalling approximately $600,000. She agreed in cross-examination that to receive those payments it was necessary to have been medically retired. Mr Stanton submitted that this was the true reason for her delaying the commencement of proceedings for damages. She wished to secure this "golden handshake", as he put it, before considering the option of those proceedings. In this respect, Mr Stanton argued, the present case is similar to Itek Graphix v Elliot.

56 Ms Latta denied this when it was put to her in cross-examination. Pressed as to why she waited until she was medically discharged to start proceedings, she said that she remembered that she had to be discharged before they could be commenced. She did not recall why that was, but added that it had made sense when it was explained to her at the time. On this matter, as on a number of others, Ms Latta said in evidence that her memory was poor. It is for this reason that I have relied primarily upon contemporaneous documents to recount the history of the matter. Mr Stanton challenged her credibility, questioning the genuineness of her claimed lack of memory. However, Ms Latta impressed me favourably as a witness. She appeared to be frank, and I accept that her memory of these developments over such a long period of time was not always reliable. From the evidence of Dr Smith it appears that the problem is also consistent with her PTSD, as is the difficulty she sometimes displayed in focusing upon Mr Stanton's questions and responding to them, a feeling she described as "scattered".

57 I am satisfied that the decision to await medical discharge before embarking on common law proceedings was made on the basis explained by Ms Smith. Whether that was the best approach to the matter is not to the point. In the circumstances of the case, it was not irresponsible: cf Ditchburn v Seltsam Ltd (1989) 17 NSWLR 697, per Kirby P at 704. Most importantly, it was an approach Ms Latta adopted on the advice of her solicitor (whom I also found to be a frank and responsible witness).

58 True it is that the progress of the procedural steps leading to the commencement of the proceedings was slow, but I accept the explanation of that progress as reasonable. After careful consideration of the evidence, I am satisfied that a reasonable explanation has been proffered for the whole of the delay in this matter.

Prejudice

59 Mr Stanton submitted that presumptive prejudice is a significant consideration in the present case, given the length of time which has passed since the incidents complained of. However, he relied on evidence pointing to actual prejudice caused by the passage of time, accepting the onus on the State to adduce evidence of prejudice of that kind: Sydney City Council v Zegarac (1998) 43 NSWLR 195, per Mason P at 197. He noted that the nature of Ms Latta's case in negligence outlined at [6] above, alleging a failure to monitor her psychiatric health and to warn her of, and educate her about, the risk of psychological injury from her duties, in the context of a series of traumatic incidents said to have occurred between 1996 and 2002. He argued that it was difficult for the State to identify witnesses to those incidents and to gather evidence about the manner in which Ms Latta's superior officers responded to her reaction to them.

60 Enquiries in August 2012 by Superintendent Greg Antonjuk located COPS records of five of the incidents described by Ms Latta between 1996 and 2001, including the Cronulla hotel incident. What is contained in those entries is not before me. No documentary record of any other incidents could be found.

61 Ms Latta gave evidence that on the first occasion in 1996 that she attended the morgue, she was with a number of other officers and there was an education officer whom she recalled as Peter Borg. She did not know his present whereabouts. On that or another occasion at the morgue, Mr Peter Simpson, the father of the unfortunate Ebony Simpson, was present. Both Mr Borg and Mr Simpson were there for training purposes, but she had no recollection of what they spoke about. She recalled that there was a police chaplain and a police psychologist at the scene of the accident in which people had been incinerated in a vehicle. Her evidence was that they were there in "some kind of an empathetic role", offering support to her and the officers working with her before they undertook their task. She thought that the timing of this was inappropriate as they had a job to do. She could not remember who they were.

62 At the Cronulla hotel incident a chaplain named Paul Bartlett was present. According to Ms Latta, he was there to help with the identification of the deceased. He made a statement on 7 March 2013, in which he described his services to police between 1996 and 2004. He would provide support to officers involved in a critical incident and, if he saw signs of a mental health issue, he would encourage the officer to speak to a senior officer and, where appropriate, would liaise with the Police Psychology Unit. He had no memory of Ms Latta.

63 After the incident at the Gap Ms Latta was contacted by a police psychologist, Jennifer Lette. It was Ms Lette who referred her to Dr Smith. It is apparent from records in evidence that Ms Lette continued to have contact with her for some time. There is a note of what appears to be Ms Lette's initial contact with her on 12 April 2002, together with an exchange of emails on the same day between Ms Lette and Sergeant Woodward of the Rescue Unit about her psychological symptoms and Ms Lette's recommendations to her about action she should take, including referral to a psychiatrist. There is a note of 18 April 2002 recording a conversation in which Ms Latta informed Ms Lette that she had seen Dr Smith, and in which there was discussion about the benefits of the medication which the doctor had recommended for her. There is a later email by Ms Lette of 28 July 2005 relating, apparently, to the nature of duties suitable for Ms Latta at that time.

64 In a brief letter of 22 September 2013 to a workers compensation investigator, Ms Lette disclosed that she had no independent memory of Ms Latta and could offer nothing to the investigation of the matter. She noted, however, that the psychology file could be adequately reviewed and summarised by the current chief psychologist. She disclosed that she herself had been medically discharged because of an anxiety disorder, and expressed a desire that the investigation proceed without her being involved.

65 There is no evidence as to the availability of Mr Peter Borg and Mr Peter Simpson. Ms Latta's affidavit and the lengthy list of traumatic incidents which she supplied to Ms Smith identify a large number of potential witnesses to all the incidents described by her bar one, in respect of which there is a COPS entry. Those witnesses include civilians but are mainly police officers, who were either present at the scene of the incidents or had some involvement in their aftermath. There is no evidence about the availability of any of them to give evidence.

66 Mr Graham submitted that, given the onus borne by the State on this issue, it is not for Ms Latta to establish that these witnesses are available, it is for the State to show that they are not. While that is so, the prejudice inherent in long delay, with the likelihood of fading memories, is clearly present. Nevertheless, there is force in Mr Graham's argument that at the heart of this case are the procedures in place in the police force at the relevant time for dealing with psychological injury resulting from traumatic incidents. It is open to the State to lead evidence about that matter.

67 As to Mr Bartlett and Ms Lette, Mr Graham pointed out that they would be unlikely to have had any recollection of particular incidents involving Ms Latta even if the proceedings had been commenced within time. Ms Lette, like any other professional in her position, would need to have recourse to her notes, which apparently still exist, together with her usual practice in dealing with people in Ms Latta's position. There is no evidence that her anxiety disorder, about which I know nothing, would prevent her giving evidence.

68 Again after careful consideration, it does not appear to me that the delay has occasioned prejudice to the State such that there could not be a fair trial of the matter. I am conscious of my own delay in delivering this judgment, but do not believe that that has made a material difference.

Conclusion

69 This is a troubling matter, which I have not found easy to resolve. I am mindful of the importance of limitation periods, and the fact that normally a putative defendant should be able to expect that a possible claim against it could not be pursued after the relevant period has expired. Nevertheless, the discretion conferred by s 151D(2) is to be exercised in an appropriate case. As I am satisfied that there is a reasonable explanation for the delay in the present case, and that a fair trial can be had, Ms Latta is entitled to the exercise of that discretion in her favour.

70 Accordingly, I would grant Ms Latta an extension of time within which to commence these proceedings up to and including 4 November 2011. I shall consult the parties as to any other order which should be made and hear argument on costs.

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Decision last updated: 28 November 2014