Keevers v Electricity Commission (NSW) & Another [1994] NSWCC 29; (1995) 11 NSWCCR 539 (20 October 1994)

[1994] NSWCC 29; (1995) 11 NSWCCR 539 (Matter No. 31602/93)

KEEVERS v. ELECTRICITY COMMISSION (NSW) & ANOTHER

Compensation Court of New South Wales: Bishop J

Proceedings to obtain compensation - Determinations of claims - Costs - Application by successful respondent for order for costs against unsuccessful respondent - Whether Compensation Court has power to make order - Applicable principles - Compensation Court Act 1984, section 18

Costs - Jurisdiction - Application by successful respondent for order for costs against unsuccessful respondent - Whether Compensation Court has power to make order - Applicable principles

14 September 1994 (H)

20 October 1994 (J)

L.J. Ellison, for the first respondent

L.G. Stone, for the second respondent

Cur adv vult

BISHOP J: This claim was brought by the applicant against two respondents in respect of an injury to his left leg. An award was entered on 14 September 1994 in favour of the first respondent and an award was entered in favour of the applicant against the second respondent. This further judgment deals with an application by the first respondent that its costs should be paid by the second respondent.

Section 18 of the Compensation Court Act 1984 reads as follows:

" (1) In this section, a reference to costs is a reference to the costs payable by a party in or in relation to proceedings, including disbursements.

(2) Subject to this Act and the rules and subject to any other Act:

(a) costs in or in relation to any proceedings are in the discretion of the Court; and

(b) the Court has full power to determine by whom, to whom and to what extent costs are to be paid in or in relation to any proceedings; and

(c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis."

Section 18 (8) should also be noted. This provides:

"An order of the Court for payment of costs may include:

...

(c) costs incurred in relation to any proceedings under the Workers Compensation Act 1987 (...)."

The issue of costs entitlements between respondents has not received very much attention over the years. There is no doubt that under the Compensation Court Act 1984 there are certain special situations that can occur with regard to the joinder of additional parties. See for example the Compensation Court Rules 1991, Part 6 and Part 29, rule 9. Special situations also exist under the legislation for possible claims for contribution between employers. See for example Workers Compensation Act 1987, section 17 and Schedule 1, clauses 3 and 4. Such situations however are outside the scope of the present discussion.

The few decisions that do exist on this area appear to demonstrate two views of the legal situation. The first view is that there is no legal inhibition on a successful respondent claiming an orders for costs against an unsuccessful respondent but that the entitlement rests on an analysis of the attitude taken by the unsuccessful respondent and whether it is " appropriate" under the circumstances of the conduct of the matter for the order for costs to be made. This approach was adopted by McGrath CJ (as he then was) in DE WITT V. MINTON, Compensation Court, No. 2777/84, 11 June 1987, unreported and also by implication by Johns J in Wright v. Cleary Bros (Bombo) Pty Ltd, Compensation Court, No. 9324/90, 16 October 1991, unreported.

The other approach is demonstrated in the most helpful judgment of Burke J in Hunter v. Martins Coal Haulage Pty Ltd [1988] NSWCC 3; (1988) 4 NSWCCR 128. That was a claim against some four respondents by an applicant and, after his Honour identified on which respondent the liability rested, there was an application for costs made by some of the unsuccessful respondents. In reaching the conclusion that a claim for costs by a successful respondent against an unsuccessful respondent was not open to the Court, his Honour made the following remarks [at 130]:

"Several matters are reasonably axiomatic.

1. The power to award costs is a creature of statute. At common law no such power existed.

2. Any court is limited in its power by the terms of the relevant statute.

3. In this Court, as in most, the power is granted in permissive terms; the relief is discretionary.

4. The general rule is that costs follow the event.

5. Costs in an action may only be awarded as between the parties to that action (excepting any power to award costs against legal representatives of parties)."

In explaining point 5, his Honour referred to the decision of Forbes-Smith v. Forbes-Smith [1909] P 258. His Honour pointed out that within the claim with which he was dealing he was in fact dealing with four separate matters. Each of the applications were being heard together pursuant to section 123(1) of the Workers Compensation Act 1987 (now section 25A of the Compensation Court Act). The effect of that section, his Honour pointed out, was that there were four entirely separate actions dealing with separate injuries with which he was dealing. His Honour pointed out that in the decision in the Forbes-Smith matter, there had actually been an order for consolidation of the claims between the husband and wife and a claim against the co-respondent. Despite this, the Court ultimately held that the co-respondent who was not a party to the action by the wife against the husband could not be held liable to pay the husband's costs.

This particular issue has however more recently been the subject of additional examination by the House of Lords in Aiden Shipping Co Ltd v. Interbulk Ltd, The Vimeira [1986] AC 965 and by the High Court in Knight v. FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178.

In the last mentioned case, the High Court was dealing with an order for costs made against the receivers of companies which were unsuccessful parties in the proceedings when the receivers were themselves not actual parties to those proceedings. In the course of dealing with this matter, that arose under the costs rules affecting the Supreme Court in Queensland, the High Court dealt with the issue of whether costs could be ordered against non-parties in considerable detail and by a majority held that the costs orders made against the non-party receivers under the relevant legislation were valid. The relevant wording of the provisions in the Queensland legislation was not dissimilar to that in section 18 of the Compensation Court Act 1984.

Following a very careful and extensive analysis of the old authorities, the High Court basically accepted a proposition that the true position was not that there was a rule that costs would not be awarded against non-parties save in exceptional circumstances, but that the broad wording of the provisions relating to costs ought not to be read down to some narrower meaning on the basis of the lengthy history of this issue under the cases particularly in the United Kingdom. A more appropriate analysis led to the conclusion that a broadly based provision, such as the one under discussion, ought to be read in accordance with its ordinary language. What was established by this historical analysis of the cases was that, like any order for costs, a costs order against a non-party was a discretionary matter and that such discretion should be exercised with very considerable care. See for example per Mason CJ and Deane J at 192-193. See also per Dawson J at page 203 where it is stated that:

"The circumstances in which it would be appropriate to award costs to a non-party would necessarily be confined, but that is a question of discretion, not jurisdiction."

Following the High Court's decision in Knight (supra), I must with respect differ from the reasoning of Burke J in Hunter v. Martins Coal Haulage (supra).

It would seem in view of the wording of section 18 that the issue now is not whether there is a right to award costs against a non-party, but the basis on which the discretion so to do ought to be exercised. In this regard a few general remarks appear appropriate.

With regard to injuries occurring after the introduction of the Workers Compensation Act 1987, the vast majority of respondents are represented by an insurer or insurers which are managers of funds under the legal control of the WorkCover Authority. Thus in general terms, save for claims involving licensed self-insurers and the Treasury Managed Fund, all legal costs involving respondents under these circumstances come from the same pool.

While the concept of costs following the event has been accepted as a general principle once the common law courts were given costs powers by statute, it has never really been part of the workers compensation legislation in this State. The limited circumstances under which an unsuccessful worker may be liable for a respondent's costs, which are now found in section 18(4) of the Compensation Court Act, have been a part of the legislative scheme for many years.

It is interesting to note that the general power to award costs in section 18 of the Compensation Court Act is very similar in terms to the costs provisions in section 76(1) of the Supreme Court Act 1970. Whilst it would seem clear that the discretionary power to order costs against a non-party would seem to exist under that section, the circumstances under which such discretion may be exercised appear to have been deliberately limited by the rule-making committee: see Supreme Court Rules, Part 52, rule 4(2) and 4(5).

In a case such as the present, the range of circumstances which may arise would seem to be as follows with regard to the position between the parties:

1. The applicant's case against a particular respondent may prove to be patently without merit or justification. In such a case, the successful respondent is entitled to make a claim for his costs against the applicant subject to the Court's overriding discretion. This is in fact what was done by Burke J in the matter of Hunter v. Martins Coal Haulage Pty Ltd (supra).

2. Liability between the respondents may only crystallise when the evidence is fully developed in court.

3. An unsuccessful respondent may have taken steps before action to persuade an applicant to join the successful respondent and/or so conduct its defence with regard to the successful respondent as to impede the appropriate and efficient conduct of the litigation.

The exercise of discretion must be by reference to the purposes for which it is provided: Lexington Constructions Pty Ltd v. Coyne (1992) 8 NSWCCR 625 at 634. In Sanderson v. Blythe Theatre Co (1903) 2 KB 533 it was pointed by Romer LJ:

"Of course, in exercising the jurisdiction, a judge should have regard to the circumstances of the case, and be satisfied that it is just that the unsuccessful defendant should, either directly or indirectly, have to pay the costs of the successful defendant."

The foregoing analysis suggests that the structure of the workers compensation legislation is such that, in cases such as the present, the discretion to award costs between respondents should be exercised sparingly (Knight's case) and to do that which is "just" between the parties, the issues to be weighed should be directed to the conduct of the litigation on the part of the unsuccessful respondent. This is similar but more narrow than the approach taken by McGrath CJ and Johns J as mentioned above.

Turning to the facts as found in the present case, the applicant's claim against the first respondent arose from injuries in 1980 and 1981. In broad terms, the evidence showed that he continued in his employment without any economic loss until he left the employ of the first respondent and obtained a job with the second respondent. Whilst employed by the second respondent, he qualified as a plumber and accordingly again had no demonstrable economic loss until the

injury with the second respondent in March of 1993. There was, however, evidence of ongoing disability in the physical sense as evidenced by a medical panel examination of the affected leg in 1990 for which liability was accepted by the first respondent. After the injury in March 1993, the applicant was paid compensation for a period and then it was terminated leading to the current proceedings. As mentioned earlier, the decision of the Court was to impose full liability for the applicant's claim on the second respondent.

The decision of the second respondent to terminate payments was taken on medical advice. This view was not accepted but it did entitle the second respondent to ask the Court to resolve the matter. Proceedings were also initiated and disposed of during a time in which the Court of Appeal has handed down some important decisions on the question of contribution.

Looking at the totality of the matter, I am of the view that there is nothing in the manner in which the second respondent conducted these proceedings that would bring the situation into the exceptional class of proceedings which would on the authorities warrant the exercise of discretion to award the costs of the first respondent against it. Accordingly the first respondent's application for costs is rejected.

Application rejected

Solicitors for the first respondent: C M Thomas (Pacific Power)

Solicitors for the second respondent: Hunt & Hunt