Stanley Sheehy v Mitchell Crane Hire Pty Limited Sca [1991] ACTSC 25; (1991) 102 ACTR 1; (1991) 104 FLR 96 (22 March 1991)

SUPREME COURT OF THE ACT

STANLEY SHEEHY v. MITCHELL CRANE HIRE PTY LIMITED
S.C.A. No. 1 of 1991
Workmen's Compensation - Costs
[1991] ACTSC 25; (1991) 102 ACTR 1
(1991) 104 FLR 96

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Higgins J.(1)

CATCHWORDS

Workmen's Compensation - Appeal from Magistrates Court - Whether overtime payments should be included in the calculation of preliminary earnings - Allowances - Meaning of "special expenses" for which an allowance is paid - Consideration of authorities.

Costs - Whether Magistrate erred in reducing costs awarded to the appellant by 50% - Discretion of Court - Costs of appeal - Consideration of authorities.

Workmen's Compensation Act 1951 (ACT)

Compensation (Commonwealth Government Employees) Act 1971, s.64

Compensation Court Act 1984 (NSW), s.18(3)

Workers Compensation Act 1988, s.59

Barbaro v Leighton Contractors Pty Ltd [1980] FCA 56; (1980) 44 FLR 204

A.J. Bartlett Pty Ltd v Drenkovski (1982) 40 ACTR 7

Ferguson v University of NSW (1983) 49 ACTR 15

Norman v Walder (1904) 2 KB 27

Bevan v Nixon's Navigation Co (1929) AC 44

Gordon v Jennings (1882) 51 LJQB 417

Ingram v Barnes (1857) 26 LJQB 319

Riley v Warden (1848) 18 LJ Ex 120

Sleeman v Barrett (1863) 33 LJ Ex 153

Picken v Lord Balfour of Burleigh (1945) Ch 90

Cofone v Spaghetti House (1980) ICR 155

Perry v Wright (1908) 1 KB 441

Doyle v Sydney Steel Co Ltd [1936] HCA 66; (1936) 56 CLR 545

Simmonds v Stourbridge Glazed Brick Co (1910) 2 KB 269

Midland Railway Co v Sharpe [1961] UKHL 2; (1904) AC 349

Anslow v Cannock Chase Colliery Co Ltd (1909) 1 KB 352

McKee v John G Stein (1910) 3 BWCC 544

Watts v Niven and Co (1913) 11 NZWCC 15

Skidmore v Bullock, Lade and Co Ltd (1928) 21 BWCC 199

McElrea v Beatty Brothers (NZ) Ltd (1941) NZLR 984

Gregory v Waddington and Co (1933) 26 BWCC 590

Woodhouse v Turnerizing Roofing Co (1933) 26 BWCC 326

Peck v Reg Muirson Ltd (1960) NZLR 1002

Jones v International Anthracite Collieries Co (1919) 1 KB 156

Shipp v Frodingham Iron and Steel Company Ltd (1913) 1 KB 577

Mahoney v Newcastle Wallsend Coal Co (1918) 18 SR (NSW) 578

Fowler v Bartlett (1965) WCR (NSW) 209

Graham v Forestry Commission of NSW (1966) WCR (NSW) 18

Seres v All States Providores Pty Ltd (1975) WCR (NSW) 112

Owen v The Commonwealth (1977) WCR (NSW) 268

Pover v BHP (16.7.86; No. W46 of 1986; Full Industrial Court (SA); unreported)

Jelbarts Pty Ltd v McDonald (1919) VLR 478

Cooper v Whittingham (1880) 15 Ch D 501

Jones v Curling (1884) 13 QBD 262

Donald Campbell and Co Ltd v Pollak (1927) AC 732

O'Sullivan v Morton (1911) VLR 249

Greeves v Freshwater (1938) 55 WN (NSW) 113

Nixon v Howes (1907) 24 WN (NSW) 156

Alexander v McDonald (1923) 40 WN (NSW) 158

Cottle v Craig (1928) 45 WN (NSW) 182

Miller v Australian Telecommunications Commission (1988) WCCCD 91 73-610

Trustees, Executors and Agency Co Ltd v Ramsay [1920] HCA 2; (1920) 27 CLR 279

Currie v Glen [1936] HCA 1; (1936) 54 CLR 445

Gray v Gray (1966) 9 FLR 159

Warburton v Warburton (1943) 60 WN (NSW) 130

McEwen v Siely (1972) 21 FLR 131

Latoudis v Casey (1990) 65 ALJR 153

Hamdorf v Riddle (1971) SASR 398

Fowler v Neild (1961) SR (NSW) 152

Foundling Hospital and Infant's Home v Trustees Executors and Agency Co Ltd (1945) 19 ALJ 383

HEARING

CANBERRA
22:3:1991

Counsel for the Plaintiff: Mr R. Williams QC with

Mr R. Crowe

Instructing solicitors: Messrs Gary Robb and Associates

Counsel for the Defendant: Mr G. Lunney

Instructing solicitors: Messrs Crossin Power Haslem

ORDER

Leave be granted to the appellant to bring in short minutes of orders giving effect to the decision herein.

DECISION

This is an appeal pursuant to s.26 of the Workmen's Compensation Act 1951 (ACT).

2. On 21 December 1990, Magistrate Nicholl, awarded the appellant weekly compensation from 29 November 1989 at the rate of $66.00 per week. He ordered the respondent to pay the appellant's costs of the proceedings leading to the award at the rate of 50% of two-thirds of the Supreme Court Scale of Costs and Disbursements, other than counsel's fees, in full. Counsel's fees were to be paid at 50% of two-thirds, that is one-third, of the rate usual in a Supreme Court matter.

3. The factual background may be shortly stated. On 8 March 1988 the appellant, a mobile crane operator employed by the defendant, was working inside a reservoir under construction in the Isabella Plains area of the ACT. He was obliged, whilst operating a mobile crane with a fixed cabin, to lift, move and place steel beams and columns and to turn and twist in his seat to watch such loads as they were picked up or deposited behind his range of vision from a "straight-forward" seated position at his crane controls. This activity caused aching in the neck and right shoulder. He continued frequent twisting and turning in the course of the above activities for part of the second day. Thereafter, over the next two weeks, the construction continued with the aid of the mobile crane. There was some twisting and turning to keep loads under observation but not with the same frequency.

4. The disability did not go away but worsened. Up to 29 November 1989, at least for the purposes of this appeal, it seems that the appellant was frequently off work and was paid compensation on the basis that during those times he was not working he was totally incapacitated for work.

5. It is not disputed that, at least as from 29 November 1989, the appellant had a physical capacity for work. That capacity was reduced by reference to his previous capacity by his continuing shoulder pain and liability to periodic neck pain on exertion involving repetitive head turning or holding the neck under static muscle load (such as keyboarding). He could not return to construction work. He could do work such as that of a security attendant at the Australian National Gallery (where he has had a special trial placement) or Parliament House. He has, however, applied unsuccessfully for many jobs without finding work.

6. The respondent applied, in these circumstances, to terminate its liability to pay compensation, which it had voluntarily undertaken. It did not concede that there remained any compensable incapacity. This accorded with Barbaro v Leighton Contractors Pty Ltd [1980] FCA 56; (1980) 44 FLR 204. (See also A.J. Bartlett Pty Ltd v Drenkovski (1982) 40 ACTR 7; Ferguson v University of NSW (1983) 49 ACTR 15).

7. The learned Magistrate was satisfied that as from 29 November 1989, the respondent had established that the appellant was no longer totally incapacitated. The appellant then carried the onus of applying for an award on the basis of partial incapacity. This he did. The learned Magistrate was satisfied that the appellant had a partial capacity represented by the rate of pay for a Parliamentary security attendant, that is, $434.00 gross per week. The base rate of pay for a comparable employed mobile crane operator at the same date was $500.00 per week (gross). The difference is the $66.00 weekly which was awarded.

8. In fact, whilst $500.00 represents the weekly base rate of pay at the relevant date, the appellant was, at the date or dates of his injury, also in receipt of overtime payments and of an "allowance" of $38.00 per week. The overtime payments varied markedly. For the week ending 1 March 1988 it was nil. For the week ending 8 March 1988 it was $265.00. The following week, ending 15 March 1988 it was $236.00. (I have rounded off the relevant book entries.) For the week ending 22 March it was $220.00. From 5 January 1988 to 8 February 1988 there was no overtime worked. A review of exhibit 4 (before the learned Magistrate) indicates overtime, whilst not regular, was not unusual. For the period commencing week ending 22 September 1987 up to 3 May 1988 (after which the appellant was paid compensation), the plaintiff earned $2,520.00 in overtime payments. As a rough approximation, the plaintiff was averaging a little over $80.00 per week gross in overtime payments.

9. The "allowance" of $38.00 per week was described as a "travel" allowance. Until the plaintiff ceased work the allowance did not fluctuate. It remained almost invariably the same, irrespective of the number of days above or below the usual number worked. During the Christmas/New Year break 1987-88 the allowance continued although there was only four days attendance at work between 23 December 1987 and 5 January 1988. Mr Deeble, giving evidence before me said that he fixed the sum by reference to an agreement with the relevant Union (the FEDFA). It did not depend in any way on the distance actually travelled.

10. The question whether overtime should be included in the calculation of preliminary earnings was agitated before the learned Magistrate. Whether the allowance should also have been included was not. However, I have given leave to amend the notice of appeal so as to enable that issue to be determined on this appeal. The learned Magistrate did not make any allowance for overtime. Whilst not excluding overtime payments as necessarily irrelevant, he took the view that casual overtime earnings, that is, those not a "permanent feature", could not be included. He observed, rightly, in my respectful view, that a system of fixing a comparison by reference to average weekly earnings would be fairer than ignoring overtime completely (with the possible exception of cases where it was "a permanent feature").

11. The order for costs was fixed by the learned Magistrate to "recognize the (respondent's) relative success" in the matter.
Overtime payments

12. The weekly payments which are required to be made to an injured employee entitled to benefits under the Workmen's Compensation Act (supra) (WCA) are, by virtue of s.7, fixed in accordance with the First Schedule (WCA). That schedule sets out the "scale and conditions of compensation".

13. An employee totally incapacitated is entitled to receive for the first 26 weeks of his incapacity, a sum equalling in aggregate:-

"an amount equal to the amount of the earnings that would,
but for the injury, be payable to the workman in respect of
that week".
(par. 1(b) and 1A(b) 1st Schedule)

14. For the purpose of that entitlement, the reference to "earnings" is defined by paragraph 1B(c) in the following terms:-

"1B For the purposes of paragraph 1A -
(c) a reference to earnings, in relation to a workman -
(i) includes a reference to the earnings that
would be, or would have been, payable to
the workman but for his incapacity; and
(ii) does not include a reference to a payment
in respect of overtime or a reference to
an allowance that is intermittent or is
payable in respect of special
expenses incurred or likely to be incurred
by the workman in respect of his employment."

15. Further, by virtue of paragraph 2(b),

"...no payment shall be made under sub-paragraph 1 of this
Schedule which will be in excess of the amount of the
weekly pay of the workman at the date of the injury."

This applies whether the incapacity is total or partial.

16. The term "pay" is defined by paragraph 4 as follows:

(a) "...the salary or wages of the workman, and includes -
(ii) ...any allowance payable to the workman
in respect of his employment,
but subject to the regulations, does not include any
allowance which is intermittent or which is payable in
respect of special expenses incurred or likely to be
incurred by the workman in respect of his employment;
and
(b) any reference to the weekly pay of the workman at the
date of the injury means, if the rate of pay of
workmen of the same class is subsequently varied by
competent authority or following upon a variation in
the cost of living, the rate of pay as so varied."

17. The result of these provisions is that overtime payments are excluded from consideration in the case of a totally incapacitated employee. The upper limit is the amount of "sick leave on full pay" or the "earnings that would, but for the injury, be payable to the workman in respect of that week" (see para 1A). That excludes "overtime", but it compares the pre-injury earnings with no earnings at all.

18. By way of contrast, paragraph 4(a), consistently with paragraph 1B(c)(ii), excludes certain allowances but no reference is made to excluding "overtime" payments.

19. An initial question is whether any of the terms "earnings" and "salary or wages" would ordinarily include payment for overtime. Whilst "overtime" is defined in s.6(1) (WCA), none of the other terms is defined in any other way than can be inferred from the First Schedule.

20. The definition of "earnings" is such a general term that it would usually include overtime paid. Any emolument as a reward for work done for the employer would be included (see Norman v Walder (1904) 2 KB 27; Bevan v Nixon's Navigation Co (1929) AC 44).

21. "Salary", on the other hand, whilst included within "earnings", has the connotation of being a fixed or usual periodical payment as a reward for other than manual or mechanical work (see Concise Oxford Dictionary). "Wage" refers to a periodic or usual sum for the "time during which workman or servant is at employer's disposal" (see Concise Oxford Dictionary). It is only the class of services rendered that distinguishes between "salary" and "wages" (see, for example Gordon v Jennings (1882) 51 LJQB 417). In Ingram v Barnes (1857) 26 LJQB 319 remuneration by a rate per thousand bricks laid was held not to be "wages". (See also Riley v Warden (1848) 18 LJ Ex 120 and Sleeman v Barrett (1863) 33 LJ Ex 153.) The term "wages" was held not to include a "bonus" paid for punctual and regular attendance. The term has been held, in another context, to include a war bonus but not overtime, Sunday pay and other casual payments (see Picken v Lord Balfour of Burleigh (1945) Ch 90). "Tips" have been held not to be "wages" (see Cofone v Spaghetti House (1980) ICR 155). However, insofar as it rewards time devoted to the employer's service, it does not, necessarily, exclude overtime.

22. No other worker's compensation legislation has been so unwise as to refer variously to "earnings" as well as "salary or wages". The question arising initially is whether weekly "earnings" are to be equated, in context, with the weekly "pay", that is "salary or wages" of the employee or whether the kind of difference perceived in other and different legislative contexts applies to the First Schedule.

23. The term "average weekly earnings" is perhaps productive of a fairer result for both employer and employee (see per Fletcher Moulton L.J. in Perry v Wright ([1908) 1 KB 441, 456). That concept seeks to discover the real rate of remuneration as at the relevant date. Even that process can be complex (see Doyle v Sydney Steel Co Ltd [1936] HCA 66; (1936) 56 CLR 545.

24. In the context of compensation legislation in the United Kingdom, "wages" is regarded as narrower than "earnings" (see, for example, Simmonds v Stourbridge Glazed Brick Co (1910) 2 KB 269). In Midland Railway Co v Sharpe [1961] UKHL 2; (1904) AC 349 a "living away from home" allowance was included in "earnings". It is clear, however, that Lord Davey (at 352) equated those "earnings" with "salary or wages". (See also Lord James, 353.) The word used in the legislation was "earnings". The fact that the allowance varied, depending on whether and to what extent the employee was required to lodge away from home, that the employee was not required to expend the allowance or account for any expenditure, did not prevent it being part of his "wages".

25. It is no doubt because of this authority that the express exemption of certain allowances was made in the First Schedule (WCA).

26. The use of "weekly" creates no real difficulty. It depends on the usual or normal weekly period for the employment (see Anslow v Cannock Chase Colliery Co Ltd (1909) 1 KB 352). In this case, the period was one commencing Wednesday and ending the following Tuesday.

27. The contentious question is, of course, whether the term "weekly pay at the date of the injury" refers to "ordinary" or "standard" pay or whether it includes overtime, even if, at that date, the weekly pay has been boosted by a casual amount.

28. It is perhaps significant that the comparison by reference to which the shortfall is discerned is with "the weekly amount that he is earning, or is able to earn". (See para 1(c).)

29. There is, it seems to me, an intention to compare like with like in order to arrive at the real shortfall. The current "weekly amount" would not include casual or "one-off" overtime payments but would include such overtime as was a normal incident of the employment. There is no doubt that overtime was a normal incident of the appellant's pre-injury employment but the sum that was "normal" at the date of injury cannot be found simply by looking at the week in which the injury occurred. It seems to me that no real distinction is intended in the First Schedule between "pay" (or "salary or wages") and "earnings".

30. In my opinion, a judgment is called for as to what sum, over and above the base pay can aptly be described as usual or normal overtime. This may require a consideration of the entire period of the relevant employment (and of the usual incidents of the current or deemed employment). In this case, I am of the opinion that there was a normal or usual component for overtime included within the pay, salary or wages of the appellant. Given the history of the employment of the appellant by the respondent I consider that this sum was $80.00 per week at the time of the injury. To assess the actual shortfall attributable to this factor it is, of course, necessary to add, as at 29 November 1989 and from time to time thereafter, the variation required by paragraph 4(b) of the First Schedule (cost of living or award variations).
Allowances:

31. The First Schedule clearly contemplates, in my opinion, that allowances will normally be included in "earnings" for the purpose of paragraph 1A and in "pay" for the purpose of the Schedule generally (see para 4(a)). However, in each case there is excluded, "an allowance that is intermittent or is payable in respect of special expenses incurred or likely to be incurred by the workman in respect of his employment" (see paras 1B(c)(ii) and 4(a).)

32. Whatever else it may have been, the "travel" allowance paid to the appellant was not "intermittent". Fortunately, therefore, I do not have to address the question as to how infrequent a payment needs to be to be "intermittent".

33. As to what is a "special" expense for which an allowance is paid, the test is whether, as a matter of real substance rather than form, the payment in question covers special expenses imposed on the employee by the nature of his employment as opposed to a sum paid by way of additional remuneration. If the latter, it is to be regarded as part of the employee's earnings at the date of the injury.

34. In McKee v John G. Stein (1910) 3 BWCC 544, an allowance for hire of an assistant but not for explosives was held to be a "special expense" (per Lord President, Court of Session, Scotland). Why the "explosive" expense was treated differently is unclear.

35. In Watts v Niven and Co (1913) 11 NZWCC 15, Sim J., excluding a plaintiff from statutory compensation rights (5 pound per week was the upper limit for average weekly earnings if the employee was to be regarded as a "worker"), held that "locomotion" expenses and "board and lodging" allowance was not a "special expense". The reasoning is obvious enough. Getting to and from work is an expense normally paid by a worker from his or her wage. So also is board and lodging. Travelling in the course of the employment would be different.

36. Skidmore v Bullock, Lade and Co Ltd (1928) 21 BWCC 199 related to a travel expense allowance paid to a commercial traveller. The Court of Appeal held that, in the absence of evidence as to what part of the allowance was expended (or expected to be expended) on expenses related to carrying out the employee's duties, the allowance was not shown to be for "special expenses" but was part of the ordinary remuneration of the employee. Sankey L.J. emphasised (as did Lord Hanworth MR) that the fact that the designation may have affected tax liability in respect of the income did not change the prima facie character of the payment.

37. By contrast, in McElrea v Beatty Brothers (NZ) Ltd (1941) NZLR 984, the employee was paid an allowance as part of his earnings, a sum to cover motor vehicle travel and a "crew". The plaintiff did provide evidence of his actual expenses. O'Regan J. rightly considered, in my respectful opinion, that the employee had established that such expenditure represented a sum paid for "special expenses".

38. In Gregory v Waddington and Co (1933) 26 BWCC 590, a meal allowance paid only when travelling long distances was held to be "a special expense". In Woodhouse v Turnerizing Roofing Co (1933) 26 BWCC 326 a "board allowance" was held to be capable of being either a "special expense" or additional remuneration. In Peck v Reg Muirson Ltd (1960) NZLR 1002 a "tool allowance" was held to be a "special expense" but a payment for "travelling time" was not. In Jones v International Anthracite Collieries Co (1919) 1KB 156, an allowance for gunpowder used in the course of employment was held to be paid to cover a "special expense". (See also Shipp v Frodingham Iron and Steel Company Ltd (1913) 1 KB 577 and Mahoney v Newcastle Wallsend Coal Co (1918) 18 SR (NSW) 578.)

39. Ferrari J., in Fowler v Bartlett (1965) WCR (NSW) 209, held that a fixed daily sum paid to a worker for "excess fares and travelling time to and from place of work" was not paid for or in respect of a "special expense". It was to be reckoned as part of his earnings. Those expenses were not "special".

40. By contrast, in Graham v Forestry Commission of NSW (1966) WCR (NSW) 18, Dignam J. held a "camping and car allowance" paid to a forestry worker was for "special expenses". The judgment is very brief. On the face of it, the travelling and camping would seem to have been in the course of employment, thus distinguishing the case from Fowler v Bartlett (supra). His Honour, no doubt adverting to a submission that the car allowance had not been shown to have been fully expendable, said:-

"...I hold as regards his car allowance that even if there
was a profit made on it, it was a false profit and
therefore should not be taken into account."

41. That statement indicates a consistency with the earlier decisions noted above rather than a departure. The "camping and car" expenses were incurred in the course of employment. They were not an ordinary incident of employment such as travel to and from work or accommodation after work hours.

42. Nevertheless, it is clear that the question of "profit" or not being made out of the allowance, where an allowance is designated, is, strictly speaking, irrelevant, save insofar as it assists to determine the character of the payment in question. It is necessary to examine the amount actually expended only where the allowance is not expressly designated or separated in order to determine whether there is, in fact, an allowance paid for "special expenses".

43. In Seres v All States Providores Pty Ltd (1975) WCR (NSW) 112, Moffitt P. considered whether a "car allowance" fell within s.14(1)(d) of the Workers Compensation Act 1926 (NSW). The worker was paid the allowance on the basis that no public transport was available. His Honour took the view that such allowance if:- (114)

"...to cover any special expenses entailed by the provision
and running of his car related to his contract of
employment, then, as the admitted purposes of the allowance
is to provide the car to enable or at least facilitate the
worker to get to work in his employer's interest at unusual
hours and on occasions, when required, to use it in his
work, then the contemplated expenses are entailed on him
"by the nature of his employment"."

The allowance was thus excluded from "earnings". His Honour went on to say (115):-

"If however I am wrong in this conclusion and the allowance
does not relate to the contract of employment, then the
payment is pursuant to a contract to provide equipment
similar to a contract to provide a crane or to provide a
bus or other vehicle to transport say a group of workers."

This would, in his Honour's opinion, be a payment in respect of a separate contract, not part of the relevant earnings.

44. Hutley J.A. agreed (as did Glass J.A.) but added an observation that the expense was "entailed" by the employment (119):-

"Where the nature of the employment, which in my opinion
encompasses not only the kind of employment but the time
and place of employment, imposes special expenses upon a
worker for which he receives an allowance from his
employer, this sum has to be excluded from his wages for
the purpose of computing his "earnings"."

45. This contemplates a situation where there is a "special" requirement of the employment that the employee provide his own vehicle to get to work and have it available during the hours of work.

46. In the present case, however, the employer made no stipulation for the provision of a vehicle. There was no purpose to be effected, so far as the employer was concerned, in the employee having a car available for use during the course of his employment.

47. This distinction is illustrated by Owen v The Commonwealth (1977) WCR (NSW) 268. An allowance was payable for "excess fares and travelling time". Langworth J., following Seres v All States Providores Pty Ltd (supra) held that the "excess fares" component was to be characterised as being paid in respect of a "special expense". The question turned on what was "special". Thus, it was held that if the allowance was for (270),

"excess fares and travelling time in contradistinction to
ordinary fares and travelling time and insofar as it
relates to an excess over and above ordinary fares and
travelling time it is special."

48. This decision and Seres v All States Providores Pty Ltd (supra) indicate that an allowance for usual travel to and from work would not be "special", particularly where it does not vary according to the extent or means of the "travel" referred to.

49. I note that in Pover v BHP (16.7.86; No. W46 of 1986; Full Industrial Court (SA); unreported) a "tool allowance" was considered analogous to the "meal allowance" in Gregory v Waddington (supra). The latter allowance was paid only when work was required to be performed at a certain distance away from the usual place of employment. That was considered "special". In the case before the Full Court the "tool allowance" was "for supplying and maintaining tools ordinarily required in the performance of their work as tradesmen". It was not payable where the employer supplied the tools. It followed that the allowance was "special" not merely an additional payment in respect of the ordinary work and labour done. That contrasts with the allowance in the present case which was not varied (save for excess travel, that is, over 40 kms) according to actual expense or actual travel.

50. For present purposes, little or nothing turns on the differences between the wording used in the different statutory provisions referred to in the cases mentioned above.

51. In this case, the "travel allowance" was paid without reference to whether there was, in fact, any travel. It was not paid by the employer to enable the employee to get to work. It was paid as extra remuneration without regard to whether the employee was likely to incur travel expense or not. It was paid as a fixed weekly rate to all employees. It was related to an ordinary, not special, incident of the appellant's employment. In my opinion, the sum of $38.00 per week, updated as required by paragraph 4(a), should have been regarded as part of the weekly pay of the employee at the date of his injury.
Costs:

52. I have referred to the costs order made by the learned Magistrate. The power to order costs is conferred by Rule 7 in the Fourth Schedule (WCA). Costs are "in the discretion of the ... Court". The quantum is prescribed by the Workmen's Compensation Rules. Whilst there is a Schedule fixing costs and disbursements (the Second Schedule), rule 59 has (for practitioners) a welcome proviso, that is:-

"...where, in any such proceedings, difficult questions of
fact or law arise, the Court may, subject to such
conditions whether as to taxation or otherwise, as it
thinks fit, allow costs in excess of the sums so specified."

53. It seems to be accepted that any contested application will warrant the application of this proviso. I agree with that approach. It seems to me that the application of the full Supreme Court Scale would be justified whenever the subject matter of the litigation is such that had it been a civil claim, it would appropriately be brought in this Court, or, where notwithstanding the sums involved are somewhat less than that, the matter involves questions of fact or law of more than usual difficulty and importance.

54. I think this case was one in which the questions, particularly of fact, which arose were not only difficult, but more than usually so. However, the appellant has challenged only the 50% reduction in costs. He does not seek to contend for the application of the full Supreme Court Scale. Indeed, it would be unfair now to amend the Notice of Appeal further so as to raise that issue. Accordingly, I confine my consideration to whether the learned Magistrate correctly exercised his discretion in reducing the costs to be awarded to the appellant by 50% (at least for the legal fees, including counsel's fees, component).

55. In civil litigation, as a general rule, costs follow the event. (See Jelbarts Pty Ltd v McDonald (1919) VLR 478, Cooper v Whittingham (1880) 15 Ch D 501, Jones v Curling (1884) 13 QBD 262, Donald Campbell and Co Ltd v Pollak (1927) AC 732.) Where the proceedings, in substance, involve claim and cross-claim, relative success may well be reflected in a partial order as to costs in favour of a party succeeding more than the other. It could result in an order in favour of each party for the costs of the issue or issues on which that party succeeded (for example, see O'Sullivan v Morton (1911) VLR 249; Greeves v Freshwater (1938) 55 WN (NSW) 113).

56. However, where there is action and cross-action and one party has a verdict for a balance in his or her favour, it is a proper exercise of discretion to award the general costs of the action to that party (see, for example, Nixon v Howes (1907) 24 WN (NSW) 156). Nevertheless, it is also within that general discretion to permit the party who lost overall to have the costs of the issue on which that party succeeded (see, for example, Alexander v McDonald (1923) 40 WN (NSW) 158; Cottle v Craig (1928) 45 WN (NSW) 182).

57. It follows that, if the general rule applicable to civil litigation is one which ought to apply in Workmen's Compensation proceedings, the learned Magistrate exercised his discretion within appropriate limits. It represents a view that the respondent had been one-third as successful as the appellant. Of course, it may be that had the appellant obtained the benefit of consideration of overtime and travel allowance as has now occurred, the learned Magistrate would have increased the percentage awarded. Indeed, in view of that further success on the part of the appellant I will, in any event, be required to exercise afresh the discretion as to costs.

58. In approaching the question of the costs of the arbitration, it is noteworthy that under the relevant Commonwealth legislation an employee who is successful in obtaining a favourable variation to an existing determination will have costs paid but is not liable to pay the employer's costs if unsuccessful. (See s.64 Compensation (Commonwealth Government Employees) Act 1971. See also Miller v Australian Telecommunications Commission (1988) WCCCD 91 73-610.)

59. Under New South Wales legislation (Compensation Court Act 1984 s.18(3)) costs will not be awarded against a claimant worker unless the application was frivolous, vexatious, fraudulent or made without proper justification. As in this jurisdiction, a solicitor's lien over compensation moneys is forbidden.

60. In Tasmania, parties are expected to bear their own costs, (see Workers Compensation Act 1988 s.59), at least before the Commissioner. It appears that provision is designed to lend informality to the determination of the initial application.

61. Even where the discretion as to costs is, in terms, at large, there has been a different practice in relation to costs in some areas as opposed to others. In probate and trust matters, unless a party has been vexatious or lacking in good faith, costs are allowed to all parties out of the fund. (c.f. Trustees, Executors and Agency Co Ltd v Ramsay [1920] HCA 2; (1920) 27 CLR 279; Currie v Glen [1936] HCA 1; (1936) 54 CLR 445 - on appeal by a beneficiary, that party may be refused costs if unsuccessful and will usually be ordered to pay costs). In family law cases under the previous Matrimonial Causes Act 1965 (Cth), it was usual for a breadwinner husband to be ordered to pay his wife's costs even if she was a respondent and unsuccessful (see, for example, Gray v Gray (1966) 9 FLR 159). The wife would have had to have conducted herself in the litigation unreasonably and be able to afford costs to have an order made against her (see Warburton v Warburton (1943) 60 WN (NSW) 130).

62. In summary criminal matters there is a general discretion to order costs in favour of a successful party (see s.244 Magistrates Court Act 1930 (ACT)). In McEwen v Siely (1972) 21 FLR 131, a full bench of this Court held that a successful defendant should, as a matter of public policy, ordinarily have the benefit of an order for costs. It was considered relevant (p 134) that a bona fide informant, performing a public duty, could expect to be indemnified from public funds against any order for costs. The previous practice of ordering costs only where such an informant had acted unreasonably was deprecated as being productive of much injustice. A consideration was the desirability of accused persons being assisted by having legal representation not only in their interests but also that of the court. The court did not, however, embrace as a justification for the rule any notion of mutuality. McEwen v Siely (supra) has been upheld by the High Court in Latoudis v Casey (1990) 65 ALJR 153. Although in Hamdorf v Riddle (1971) SASR 398 the grant of costs to a successful defendant was regarded as the obverse of a grant of costs to a successful informant, the full bench in McEwen v Siely (supra) noted:-

135 "In neither case, therefore, was the court directly
concerned with the question of the costs of a successful
informant...The passage (cited from Hamdorf v Riddle) might
be read as saying that an unsuccessful defendant would
ordinarily have to pay the informant's costs unless the
informant had been guilty of the exceptional type
of conduct which in a civil case would deprive a successful
plaintiff of his costs. We think that such an approach by
courts of petty sessions could so frequently produce
injustice that it would be undesirable to lay down any such
general rule."

A similar reservation was expressed by Mason C.J. in Latoudis v Casey (supra) at p 154.

63. A basis for the reservation referred to above is not hard to find. The informant represents the public interest in prosecuting crime. That interest is publicly funded. It is different, therefore, from ordinary civil litigation. Whilst an informant paying the costs of a successful defendant can be seen to be just, the same would not ordinarily be true in the case of a successful informant seeking costs from an unsuccessful defendant. Indeed, it would simply be adding an arbitrarily discriminatory "user-pays" impost onto the proper penalty for the offence found proved (which can now include fines, compensation, confiscation of criminal profits, etc).

64. Where a fund is set up for the benefit of beneficiaries they are encouraged to assert an interest in its proper administration. The trustee will be indemnified from the fund and, if they act reasonably with respect to litigation concerning entitlement to or administration of the fund, it is considered just that the cost of the litigation be shared amongst all the interested parties by their costs being paid out of the fund rather than being paid by the unsuccessful party or parties.

65. Different policy considerations, will no doubt, justify a different practice in relation to different areas where costs are able to be awarded.

66. In some jurisdictions the State administers the system of worker's compensation and costs are not relevant to the process. In the Australian Capital Territory, the various employers who are nominally applicants are (unless they have failed to insure) indemnified by an authorised insurer. The insurer receives premiums compulsorily extracted from employers to cover both the benefits to be paid and the costs of any necessary litigation. It seems to me therefore, that if, as a general rule, costs are awarded against an unsuccessful employee, the insurer will in fact be awarded a small but undeserved windfall. Small though such an advantage may be to an unsuccessful indemnified employer, the disadvantage to an unsuccessful, non-indemnified employee is disproportionately great. In most cases, the advantage to a successful employer of an order for costs, due to lack of means in the employee, particularly one receiving only the limited benefits under the Act, will be illusory.

67. For the same reason as commended itself to the full bench of this Court in McEwen v Siely (supra), I consider that it is in the public interest that the representation of employees in workmen's compensation proceedings not be discouraged. In general terms, therefore, the discretion to order costs against an employee in such matters should be reserved for circumstances such as those referred to in the Compensation Court Act 1984 (NSW), s.18(3) and then only to the extent necessary to reflect the presence of such circumstances. In the case of the employer, funds for the payment of costs comes from a fund or funds required by statute to be contributed to by all employers. The injured employee has only his or her private funds and, usually, will be reliant on legal aid or the good will of private legal practitioners aided by such protection as his or her trade union, if there is one, can provide. In my opinion, the statutory scheme implies a real justification for applying a different rule to the success on some or all issues by the employer as opposed to the position of an employee in bringing or defending of proceedings under the WCA.

68. In the present case, the employee clearly acted reasonably in defending and conducting the defence of the application brought by the employer to terminate the employer's liability to pay compensation on a total incapacity basis. The application by the employer (as a result of Barbaro v Leighton Contractors Pty Ltd (supra); A.J. Barlett Pty Ltd v Drenkovski (supra) and Ferguson v University of NSW (supra)) was an ordinary incident of the legislative scheme which, like all other costs of the administration of the scheme, should be met out of the various premium pools. If an employee unreasonably resists such an application, the costs occasioned by that resistance could properly be refused to the employee or awarded, in a more extreme case, to the employer. That is not the case here. The material necessary to persuade the learned Magistrate that the employer should succeed in its application was also relevant to the successful application by the employee for an award based on partial incapacity. In those circumstances, it seems to me, the proper order is to order the employer to pay all the employee's costs of the proceedings at a rate properly reflecting the degree of difficulty, factual and/or legal, involved in the whole proceedings. Additionally, in this case, the employee's degree of success in this appeal is greater than it was before the learned Magistrate.
Costs of Appeal:

69. It is one thing to expect the publicly exacted premium pools to bear the ordinary costs of applications for and to terminate awards. It is another matter when the costs of appeals from an initial decision fall to be considered. Trustees, Executors and Agency Co Ltd v Ramsay (supra) and Fowler v Neild (1961) SR (NSW) 152 illustrate the point that whilst an unsuccessful beneficiary in a matter concerning a will or trust may usually expect costs out of the estate at nisi prius, the reverse is the prima facie position if that beneficiary unsuccessfully appeals (c.f. Foundling Hospital and Infant's Home v Trustees Executors and Agency Co Ltd (1945) 19 ALR 383).

70. In this case, important issues of principle potentially affecting many claims fell to be decided. As it happens, the employee has almost entirely succeeded and should have his costs of the appeal but, had the result been otherwise, it is the type of case in which a departure, in whole or part, from the prima facie rule that an unsuccessful appellant should pay the costs of the appeal would have been justified.
Orders:

71. I grant leave to the appellant to bring in short minutes of orders giving effect to this decision.