Devlin v Department of Tafe (NSW) [1998] NSWCC 5; (1998) 16 NSWCCR 103 (3 March 1998)

[1998] NSWCC 5; (1998) 16 NSWCCR 103

DEVLIN v DEPARTMENT OF TAFE (NSW)

Compensation Court of New South Wales: Neilson J

3 March 1998

Proceedings to obtain compensation - Determination of claims - Costs - Unreasonably incurred - Reasonable offer of settlement before proceedings commenced - Offer on foot at commencement of proceedings - Offer was an offer in the proceedings - Workers Compensation Act 1987, s119(2)(a)

Words, phrases and axioms - "in the proceedings" - Workers Compensation Act 1987, s119(2)(a)

J.W. Fernan, for the applicant

J.W. Catsanos, for the respondent

Ex tempore

1 NEILSON J: Mr Graham Paul Devlin of Forestville claims a lump sum under s66 of the Workers Compensation Act 1987 (the Act) for 40 per cent loss of efficient use of his right arm below the elbow and a consequential lump sum for pain and suffering pursuant to s67.

2 Mr Devlin was injured in the course of his employment on 9 October 1990. He had attended at a conference between representatives of his employer and the Teachers' Federation concerning an industrial dispute. The meeting was a fiery one. At the end of the meeting the applicant stood up quickly and in so doing managed to get his hand caught between the arm rest of his chair and the underside of the table at which he had been sitting as he was twisting, I assume, to his left.

3 The applicant sustained a dorsiflexion injury of his right wrist as his hand became caught between the arm of the chair and table.

4 The applicant noticed pain in his wrist and hand and shortly after the incident noticed a swelling. He was able to continue with his required duties that day, but on the way home from work found grave difficulty rotating his hand in order to drive his motor vehicle and attended Warringah Medical Centre.

[In pars5 - 46 of his reasons for judgment his Honour considered the medical and the applicant's evidence and concluded that the applicant was entitled to awards under ss66 and 67 of the Act. His Honour made such awards and ordered the respondent to pay the applicant's costs. After further submissions were made, his Honour reconsidered the costs order.]

Further submissions

47 Earlier today I made an award in favour of the applicant for sums totalling $41,125 plus interest. An application has now been made that I discharge the costs order which I automatically announced at the conclusion of giving judgment on the grounds that the costs incurred by the applicant were "unreasonably incurred" as defined in s119 of the Workers Compensation Act 1987.

48 The short facts for deciding this issue are these: on 2 January 1997 the respondent made an offer for $45,396.86, plus interest. That offer was rejected by the applicant on 5 March 1997 when a counter offer was made for $47,936.56. The respondent replied to that offer on 11 March 1997 with an offer of $47,936.56, together with interest from 28 March 1996. On 22 April 1997 the applicant commenced these proceedings.

49 The next step in the negotiations between the parties was on 3 July 1997, when the applicant did reject the respondent's offer of 11 March 1997 by making a counter offer of $55,436.56. There has not been any offer made by the respondent since which exceeds the amount of compensation which I awarded earlier today.

50 The question is, have the applicant's costs been unreasonably incurred? S119(2) provides as follows:

(2) Costs incurred by a party to proceedings are considered to have been unreasonably incurred for the purposes of this section only if they were incurred by the party:

(a) After a reasonable offer of settlement in the proceedings was made to the party, ...

51 The problem here is that the respondent's offers of $45,000, to round them off, and $47,000 were made prior to the commencement of proceedings. Mr Catsanos tried to argue that proceedings meant the claim. However, I cannot accede to that submission. The word "proceedings" is used idiomatically by the populace and technically by lawyers to refer to proceedings before the court. That in the Act the same meaning should be given is clear from a consideration of s116, which refers to costs in relation to proceedings and then in subs(7) speaks of claims in which it was not necessary to have recourse to the court. If the word "proceedings" was to mean "claim" one would have thought that the dichotomy would not have arisen in s116 standing so closely as it does to s119 and s119 indeed being a direction as to how the costs power in s116 is to be exercised.

52 Accordingly, "in the proceedings" means in an offer of settlement made during the currency of the litigation.

53 The argument then became this, the offer of 11 March 1997 was on foot and could have been accepted at any time after the commencement of the proceedings. In fact it was open to have been accepted until 3 July 1997 when it was rejected.

54 I accede to that submission. It did appear to me that the commencement of proceedings was impliedly a rejection of the respondent's offer. However, Mr Catsanos very correctly submitted that the commencement of proceedings can often be a bargaining tool in the hands of a party. That it is often done in the pious expectation that an increased offer will be made so that the other party will obviate the necessity of instructing solicitors and incurring costs. Therefore, in my view the offer of 11 March 1997 of $47,930.56 was open to the applicant to accept after the commencement of the proceedings and therefore can be seen as an offer in the proceedings.

55 I realise that such a finding may implicitly interfere with the interpretation that I have made of s119(2)(a). However, the intention of Parliament was clear from the whole scheme of s119 and in particular from the scheme of Div3A and Div3B of Pt4 of the Workers Compensation Act. The statutory intention is to deny costs if reasonable offers of settlement are not accepted. The problem is the precise words used by the draftsman of s119(2)(a) being not quite consistent with the parliamentary intention. However, the law is clear that where relevant statutory provisions are not clear or are ambiguous the Court will prefer a construction that gives effect to the statutory purpose rather than one that defeats it: see Richardson v Commissioner of Taxation (Cth) (1997) 150 ALR 167 at 181 - 183. The offer being extant from the time of the commencement of the proceedings and for some ten weeks during the currency of the proceedings, the offer can, in my view, be seen as an offer of settlement in the proceedings.

56 I can only categorise an offer which was over $6,000 more than the sum that I awarded to be reasonable. Most of the applications I have to hear under this provision are where the respondent says it has made a reasonable offer even though that offer is less than the amount that I awarded. However, where the sum is greater than the amount that I have awarded, and substantially greater, then in my view it can only be categorised as reasonable. This is so especially when one has to bear in mind that the sum over $6,000 is for an ordinary worker a substantial sum of money, although it might not be for barristers. See my judgment in Esposito v T & T Metals Pty Ltd, No. 19041/97, 17 February 1998, unreported.

57 Accordingly, it appears to me that all work done in connection with these proceedings has been unreasonably incurred within the meaning of s119.

58 Accordingly, I revoke the costs order entered earlier today.

Orders accordingly

Solicitors for the applicant: Cawoods

Solicitors for the respondent: Dunhill Madden Butler