Zrno v Mirvac Pty Ltd; Zrno v Buckingham Cleaners Pty Ltd [1989] NSWCC 12; (1989) 5 NSWCCR 227 (7 September 1989)

[1989] NSWCC 12; (1989) 5 NSWCCR 227 (Matter No. 11754-83)

ZRNO v. MIRVAC PTY LTD

and

ZRNO v. BUCKINGHAM CLEANERS PTY LTD

Compensation Court of New South Wales: Burke J

7 September 1989

PROCEEDINGS TO OBTAIN COMPENSATION - DETERMINATION OF CLAIMS - COSTS - CHANGE OF SOLICITORS - COURT MOVED TO ORDER WORKER TO PAY ORIGINAL SOLICITOR'S COSTS - ORDER MADE - WORKERS COMPENSATION ACT 1987, SECTION 122(1)

COSTS - GENERAL RULE - COSTS FOLLOW THE EVENT - COSTS OF AND INCIDENTAL TO A NOTICE OF MOTION - SOLICITOR OBTAINS ORDER FOR PAYMENT OF HIS COSTS BY WORKER - WHETHER THERE IS A DEPARTURE FROM THE GENERAL RULE - WORKERS COMPENSATION ACT 1987, SECTION 121(1)

P. Stone, for the applicant solicitor

V. Jurisich, for each applicant worker

P. J. Perry, for respondent in the first matter

G. B. Beauchamp, for respondent in the second matter

Cur adv vult

BURKE J: Both these matters involve notices of motion. Both motions are intituled in the substantive matter with the worker as the claimant and the employer as the opponent. They are, in my view, wrongly so intituled. Indeed, the real claimant is the solicitor, Mr Coshott, who formerly acted for each of the workers and the real opponent is the worker in each case. In this particular matter nothing turns on the form of the application and no objection is taken to it by anybody vaguely interested.

In essence, the solicitor claims against his former client an order under the former section 56(2), the present section 122, in respect of his costs of acting for the worker in relation to the claims against the respective employers. The 1987 Act conveniently encompasses a code in relation to costs in sections 120 to 122, re-enacting essentially the 1926 sections 42S, 53H and 56. In essence, section 120 authorises a commissioner, whose powers I am now exercising, to make orders for costs in appropriate circumstances and provides for some limitations, particularly in terms of costs under section 122.

Section 121 contains the embargo on ordering costs against a worker unless satisfied that the claim is frivolous, vexatious, made fraudulently or without proper justification, and section 122, headed Solicitor/client costs in compensation proceedings, provides that such shall not be recovered except if provided by the Court. As I've suggested, those three sections provide a code. The general scheme seems to be fairly clear that no worker is to be precluded by impecuniosity, at least, from enforcing rights vested in him under the Act. He is in effect protected against costs of his own attorney and, indeed, the costs of the other party if unsuccessful, except in circumstances of some turpitude.

Those sections represent an abrogation of the more usual common law consequences of litigation in relation to costs. True, in common law, no court had a power to order costs but in so far as statute permits it. There has been a fair development of precedent as to the circumstances and, by and large, the general rule is costs will follow the event. Under this Act that is not so. In general at common law the contract between solicitor and client gave rise to an obligation by the client to pay the solicitor the proper costs incurred in acting for him. That, in my view, is also impinged upon by section 122. In this case not much turns upon it.

Mr Coshott acted for each of the workers in these two claims and took instructions from them, issued proceedings, prepared the case, presented the case, secured an award of compensation and costs for his client and was then dismissed by the client who chose other attorneys. In one case I think it occurred within a matter of weeks of the successful termination of the litigation for the client and in the other something approaching three months. In neither case is there any suggestion that the dismissal of the former attorney was occasioned by any misconduct of the attorney.

In the substantive litigation between the worker and the employer the worker secured an order for compensation and an order for his costs. The solicitor, Mr Coshott, his instructions being withdrawn, of course could not take any steps on behalf of his erstwhile client, either to enforce the award of compensation or the order for costs. That was solely within the province of the workers and their new attorneys. The solicitor did render a bill of his costs to the new attorneys. The solicitor had acted concurrently for each of the workers in common law proceedings, presumably arising out of the same events.

The bill as rendered was, and in my view properly was, for the entirety of the solicitor's claims for costs against the former client. The new solicitor responded to the bill with a suggestion that perhaps Mr Coshott should submit it to the solicitors for the respective employers, and seemed to ignore the fact that the solicitor probably had absolutely no authority and no right in law so to do. Certainly they also forwarded a copy of the bill to the solicitors for the respective employers, generally suggested that perhaps they should dissect the totality of the bill into the costs referable to the compensation claim and referable to the common law claim and pay as they thought appropriate. That also ignored some legal niceties. If indeed the employer had paid the costs ordered in the primary matters to Mr Coshott it is somewhat debatable whether they could get a proper acquittance for it.

They were the worker's costs, not the solicitor's. Mr Coshott's ultimate resort was to apply to this Court for an order pursuant to section 122(1) which relevantly provides:

" (1) The solicitor or agent of a person claiming compensation under this Act is not entitled -

(a) to recover from the person any costs in respect of any proceedings under this Act (including proceedings before review officers or on appeal to the Compensation Court) or

(b) to claim a lien in respect of those costs on, or deduct those costs from, the sum awarded, ordered or agreed as compensation,

except such sum as may be awarded by the Compensation Court or a commissioner."

It is interesting to notice that the section is reproduced almost identically in the 1989 Act [The Workers Compensation (Compensation Court) Amendment Act 1989, Schedule 1, clause 16, which substituted a new section 122, commenced on 1 October 1989 - Ed] yet to be gazetted, with the exception of the word 'except' which has become 'unless' which I think it meant in any event. I suggested in the course of argument, and it's not really material to these particular cases, that the general operation of section 122 seemed to be to abrogate the liability of the costs of a client to a solicitor arising under the common law, unless for one reason or another the Court thought it appropriate that it should be otherwise.

The response of the worker has been largely of the Pontius Pilate variety. Even on the motion the worker tended to ignore all the legal niceties and regarded the application as inappropriate and suggested that other means were available, without ever suggesting quite what they were. The one thing that is fairly clear is that Mr Coshott did the work, prosecuted the claim and secured the award for his client. It was always open to the worker to furnish Mr Coshott with an authority to receive and to give him instructions limited to the obtaining of the party and party costs ordered in the primary proceedings and to advise the solicitors for the relevant employers accordingly. In my view Mr Coshott, having done the work and having successfully prosecuted the client's claim and the client being entitled to recover party and party costs, Mr Coshott is entitled to the fruits of his labour.

The labourer is worthy of his hire and he should, of course, obtain such costs. Indeed, in the ultimate, there wasn't any real objection raised by the worker to such an ultimate proposal. I suggested that section 122 is somewhat misheaded, suggesting that it relates to solicitor and client costs. It is clear in section 120 that any costs recoverable under section 122 shall not exceed the fees and costs calculated in accordance with the scale of costs prescribed by the regulations which of course is the ordinary party and party costs. So it is not a question, I do not think, that is open to this Court to make a solicitor and client order in the general sense.

In any event the claimant has suggested that he would be happy to recover the party and party costs for the work which he effectively performed for the worker. I certainly propose to make an order giving Mr Coshott access to the funds produced by the order in the primary matter for the party and party costs. There are then applications by (1) the employer (2) the worker and (3) the solicitor, for the costs of and incidental to this notice of motion. The employer through its attorneys appeared. It appears they were served with a notice of motion which certainly was intituled with them as respondent when it shouldn't have been. That appears to have been a matter of courtesy.

It wasn't a matter in which they were directly involved. This was purely an argument between a solicitor and his former client. While there was the outstanding party and party order, the peripheral involvement of the respondent in these proceedings does not seem to represent any special reason why the solicitor should pay their costs of attending, particularly when he was successful in obtaining the orders which he sought. The worker suggests he should obtain an order for his costs for contesting this notice of motion. Prima facie, at common law, costs follow the event. The solicitor will obtain the orders which he sought.

Certainly the applicant would not thereby, or the worker rather would not thereby, have any entitlement to costs. There seems nothing special in the circumstances of this notice of motion, it always being open to the worker to have avoided the necessity of it, as to why he should obtain his order for costs. The solicitor asks that he recover the costs of and incidental to this notice of motion. Prima facie he succeeded and prima facie at common law he would obtain such an order. Section 121, of course, purports to protect a worker unless his claim is frivolous, vexatious, etcetera. That patently, in my view, relates to primary claims for compensation.

This worker had an order for costs. This is essentially an internecine argument between him and the solicitor. It is not a matter in which the worker's claim in any way is in issue. I do not think the worker has any protection under the Act in relation to costs of proceedings such as this. The solicitor having won, it being in effect a necessary application that he must make in accordance with the Act, it seems to me there is no reason why he should not obtain his costs of and incidental to this notice of motion.

Assuming that the intent of the Court is, as indeed it is, that the solicitor should have access to the party and party costs properly recoverable under the order in the primary matter, it seems desirable to give some directions additionally to provide for the implementation of the order. As I have said, the costs in the primary matter are the worker's costs, not Mr Coshott's. Strictly the employer is obliged to pay those to the worker. Certainly the effect of any order I propose would be that the worker would pay those to Mr Coshott. However, it is quite possible, of course, that the worker, acting through an attorney, would authorise the current attorney to receive any moneys payable to him which would include the relevant costs.

It may well be that the current attorney in each case, acting for the client in relation to other matters, receiving funds for and on behalf of the client, may choose to exercise his lien over those funds for the purpose of funding the matters in which he is acting for the client. That would be rather frustrating to the intent of the orders of this Court and I think it is appropriate to give some directions to ensure that the orders are effected in accordance with their intent.

In the matter of Dinka Zrno, I order: (1) pursuant to section 122, that the worker pay to Robert Gilbert Coshott the costs of the proceedings incurred in Matter No. 7 of 1983 between herself and Buckingham Cleaners Pty Ltd; (2) such costs to be limited to the amount recovered on a party and party basis between the worker and the employer.

I direct: (1) Mr Coshott within 28 days to lodge a bill of his costs for taxation as if he acted for the worker; (2) the Registrar to arrange an expeditious taxation of such bill; (3) the worker to furnish an appropriate authority to receive to Mr Coshott forthwith.

I decline: (1) the application for costs of this notice of motion by the employer, Buckingham Cleaners Pty Ltd; (2) the application for costs of this notice of motion by the worker. I further order that the worker pay Mr Coshott the costs of and incidental to this notice of motion, such costs to be agreed or taxed as provided in section 120(4).

In the matter of BOZO ZRNO AND MIRVAC PTY LTD, I order: (1) pursuant to section 122, that the worker pay to Mr Coshott the costs of the proceedings in Matter No. 11754 of 1983 between himself and Mirvac Pty Ltd; (2) such costs to be limited to the amount recovered on a party and party basis between the worker and the employer.

I direct: (1) Mr Coshott within 28 days to lodge a bill of his costs for taxation as if he acted for the worker; (2) the Registrar to arrange an expeditious taxation thereof; (3) the worker to provide Mr Coshott with an appropriate authority to receive forthwith.

I decline the worker's application for costs of this notice of motion and I order the worker to pay Mr Coshott his costs of this notice of motion, such costs to be agreed or taxed in accordance with section 120(4).

Orders accordingly

Solicitors for the applicant solicitor: Robert G. Coshott & Associates

Solicitors for the applicant worker in the first and second matters: Radin Milicevic & Associates

Solicitors for respondent in the first matter: Hunt & Hunt

Solicitors for respondent in the second matter: Dexter Healey & Co