Newell v Waratah Towage Pty Ltd [2000] NSWCC 62; (2000) 21 NSWCCR 126 (10 November 2000)

Last Updated: 23 July 2001

[2000] NSWCC 62; (2001) 21 NSWCCR 126

NEWELL v WARATAH TOWAGE PTY LTD

[2000] NSWCC 62

Compensation Court of New South Wales: Armitage J

10 November 2000

Workers compensation - Costs - Discretionary power to decide whether costs incurred after reasonable offer of settlement in the proceedings are unreasonably incurred - Depends on circumstances - May not be unreasonably incurred if offeror resiles from a component of the offer previously agreed upon - Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 115

M.J. Gollan, for the applicant

A.G. Todd, for the respondent

Ex tempore

1 ARMITAGE J: By judgment on 20 October 2000, after a contested hearing between the parties in this matter, I awarded the applicant $12,000 under s 66 of the Workers Compensation Act 1987 (the 1987 Act) in respect of 15 per cent loss of use of his dominant right arm at or above the elbow and $10,000 under s 67 of that Act in respect of pain and suffering. I made certain other orders which do not require examination, except to observe that I ordered that the matter be relisted today on the question of costs after 13 September 2000, that having been flagged by the respondent's counsel, Mr Todd, as an issue at that time, because he observed that my award totalled $22,000 and the applicant had previously been offered $24,000, which therefore must have been "reasonable" within s 115 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act).

2 Today Mr Gollan of counsel, who appeared for the applicant in the original proceedings, appears again for him and in response to my invitation to him to address first, his client appearing at some risk, read and relied on the affidavit of Lance Julian Beal, an employed solicitor in the office of the applicant's solicitors, that affidavit having been sworn on 3 November 2000. Ms Ivantsoff now appears by leave for the respondent, in lieu of its counsel Mr Todd who appeared in the original proceedings, and tendered a letter of 13 September 2000 in copy form from the respondent's solicitors to the applicant's solicitors.

3 Mr Beal's affidavit briefly traces the dealings between the parties and asserts that the respondent's insurer first made a settlement offer by letter dated 12 July 1999 from the respondent's insurer, which I shall call QBE, to the applicant's solicitors. That letter is annexure "B" to Mr Beal's affidavit and it makes an offer in respect of 20 per cent permanent impairment, as the letter puts it, of the right arm at or above the elbow, sounding in a s 66 entitlement of $16,000, and $8,000 in respect of s 67 compensation for pain and suffering. The applicant's solicitors are asked to notify acceptance of this offer, totalling $24,000, if they are so instructed, and the letter further says that should the offer not be acceptable, or should the respondent's insurer not hear from the applicant's solicitors within 21 days of the date of the letter, the matter will be referred for medical panel assessment. Mr Beal's affidavit further establishes that at that time the applicant's solicitors accepted the s 66 offer of $16,000 referred to above, but rejected the s 67 offer of $8,000. It establishes that the applicant then applied for conciliation, and that the s 67 claim was conciliated with the conciliator noting the s 66 agreement. He annexes to his affidavit a letter from the Workers Compensation Resolution Service signed by a conciliator and dated 14 November 1999, in which it is certified that conciliation is now complete and it is noted that the parties are agreed on s 66 compensation of $16,000 for 20 per cent permanent loss of use of the right arm at or above the elbow, but are in dispute as to the amount of compensation appropriate under s 67, the last offers being $10,000 from the insurer and $12,500 from the worker. The conciliator thought the worker's expectation not reasonable and recommended acceptance of the insurer's last offer of $10,000.

4 Mr Beal's affidavit further attaches the same letter tendered in copy form by the respondent today (doubtless to demonstrate that it earlier made an offer exceeding the sum I awarded, which must therefore have been "reasonable") namely, that of 13 September 2000 from the respondent's solicitors to the applicant's solicitors, and it repeats the offer of settlement in the respondent's insurer's letter detailed above. Mr Beal's affidavit says that before this letter was sent he drew the relevant form of registration of agreement with respect to the s 66 claim following the conciliation referred to above and forwarded it to the respondent's solicitor, and that the respondent's solicitors then disputed that there was any settlement of the s 66 claim, and stated that since the s 67 claim was in dispute, so was the s 66 claim, and that consequently communications broke down between himself and the respondent's solicitors.

5 The affidavit further asserts that on 10 October 2000 the applicant attended a conference with his counsel, Mr Gollan, and at that conference the applicant gave instructions not to pursue any order of specific performance in respect of the previous s 66 agreement. He says that the respondent's solicitors' letter of 13 September 2000, annexure A to the affidavit and Exhibit 1.1 tendered by the respondent today, was received in his office on 18 September 2000, and that in the context of the previous breakdown in communication, and having regard to the proximity of the hearing, it was decided to wait until the hearing to allow the applicant an opportunity to consider the settlement offer and the means of finalising his rights. As to the latter, Mr Gollan says that these last words refer to the possibility of a commutation of the applicant's rights. Mr Beal finally says in the affidavit that on the day of hearing he received instructions to negotiate a settlement on a commutation basis as the applicant's redundancy was imminent, but that unfortunately those negotiations proved fruitless.

6 Mr Gollan takes me to Webster v Gladesville Macquarie Hospital [1996] NSWCC 36; (1996) 13 NSWCCR 731 where Campbell CJ refers to what was then s 119 of the 1987 Act, the same section being substantially reproduced now as s 115 of the 1998 Act. Relevantly, s 119, upon which the respondent presumably relies today, provided, as s 115 does now:

(1) If the Compensation Court is satisfied that any costs in proceedings under this Act before the Court were unreasonably incurred, the Court is to order that those costs are to be treated as unreasonably incurred for the purposes of this section and the Court is not to make an order for payment of those costs by any other party to the proceedings;

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

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

7 I must protest in passing at the legislative use of the impersonal "are considered to have been unreasonably incurred", a phrase to my mind more suited to a bureaucratic communication between public servants than a sovereign legislature. Be that as it may, his Honour at 735 - 736 rejected a submission made by the respondent's counsel that s 119(2) (now s 115(2)) gives no further discretion to the Court, once it is satisfied that a reasonable offer of settlement in the proceedings was made to a party against whom it is sought to invoke the section. His Honour remarked at 735 that:

As a matter of language, s 119(1) deals with the principal question of satisfaction by the Court that costs are unreasonably incurred and what order the Court is required to make once it is determined that they are unreasonably incurred. In my view subsection (2) places a fetter upon the power of the Court to, so far as this section is concerned, determine that costs are unreasonably incurred. For it says that costs incurred are considered to be unreasonably incurred for the purposes of this section only if they were incurred by the party after a reasonable offer of settlement of the proceedings was made to the party, or other alternatives to which it is unnecessary to go. As a matter of language that section fetters the general power rather than requiring it to be exercised in the circumstances set out in the subsection. I see no warrant for concluding that the words "only if" are to be read as "if, and only if", a not unusual phrase in modern statutory drafting.

The construction contended for by Mr Barber would lead to the odd result that the costs of an applicant of taking advice upon and considering an offer of settlement would be unreasonably incurred since they would be incurred after a reasonable offer of settlement had been made. Such an outcome seems an unlikely and indeed absurd one. Interestingly enough, the letter of 7 March 1996 seeks an order that there be no costs after that date without even allowing time for its delivery, let alone the taking of instructions.

The purpose of the section would be adequately served by a construction which allows a Court to determine for itself whether costs have been unreasonably incurred, subject to the limitation contained in subsection (2).

8 His Honour then set out how it is that he considers that the construction he advances is in accordance with the words of the Explanatory Note accompanying the Bill inserting the section and in the Second Reading Speech of the Attorney at that time, referring particularly to the fact that the Second Reading Speech speaks of "unreasonable refusal by either party of a settlement offer", which his Honour considers is consistent with the construction of the section which he prefers.

9 I am in respectful agreement with everything which fell from his Honour in that case. It does not, however, of itself resolve the matter in the applicant's favour here. In response to reservations expressed by myself from the bench as to whether Webster's case resolved the present matter in the applicant's favour, and meant that he should receive costs after a reasonable time have elapsed for acceptance of the offer made by the respondent to the applicant in its solicitor's letter of 13 September 2000, Mr Gollan draws attention to the final paragraphs of Mr Beal's affidavit. In summary, he says that the previous dealings between the parties had "poisoned the well", as it were, because the applicant was entitled to registration of the agreement reached at conciliation between himself and the respondent as to his s 66 entitlements. In effect he says that the respondent resiled from that agreement when the relevant form of registration of agreement with respect to the s 66 agreement between the parties was forwarded to its solicitors, saying then that there was no s 66 agreement if the s 67 claim was not resolved.

10 Mr Gollan deploys this fact to suggest that when the applicant had communicated to him the contents of the respondent's solicitors' letter to his solicitors of 13 September 2000 in conference with himself, Mr Gollan, on 10 October 2000, it was reasonable for the applicant at that point to refuse the offer in view of what had occurred earlier, and that it was also reasonable for him to refuse it in the hope of thus precipitating a reasonable commutation offer from the respondent at the hearing in view of his forthcoming redundancy, at least according to his belief.

11 Ms Ivantsoff did not choose to make any submission in response to what was put by Mr Gollan today, simply indicating that it was a matter for me. With some reluctance, in those circumstances I am of the view that Mr Gollan's submission should prevail. The respondent has not chosen to traverse it by specific submissions today, its counsel who appeared at the hearing, Mr Todd, not being present, and in any event there seems to me to be a strong argument that the respondent's conduct in making a s 66 agreement at a conciliation conference and then resiling from it later--which is how I interpret its conduct as related in Mr Beal's affidavit, it having filed no affidavit in reply--did indeed produce a climate whereby the applicant was arguably entitled to have his rights determined by a court conclusively and firmly, rather than relying upon the willingness of the respondent to implement agreements it had made, it having previously failed to do so by not honouring the agreement it reached at the conciliation conference in relation to the applicant's s 66 claim. That agreement was evidenced by the conciliator's letter to the applicant's solicitors of 14 October 1999, annexed to Mr Beal's affidavit, for Ms Linkenbagh, conciliator, clearly says in that letter that "the parties have agreed to settle the claim under s 66 for $16,000 or 20 per cent of the right arm above the elbow", observing that they remained in dispute as to s 67 compensation. That is clear evidence of the attitude of the respondent at the conciliation conference, as distinct from thereafter.

12 I do not place any particular weight on the assertion in Mr Beal's affidavit that the applicant refused to accept the respondent's offer in its solicitors' letter of 13 September 2000 in an attempt to force a commutation of his rights. I do not think that this consideration has any weight in determining whether or not the applicant's costs after 13 September 2000 were unreasonably incurred, which is what s 115 requires me to do.

13 I consider, however, that the respondent's conduct at the conciliation conference as compared to after it gave the applicant proper reason to fear that any agreement made as a result of the respondent's solicitors' letter of 13 September 2000 may possibly be similarly dishonoured. I do not of course intend to reflect in any way on the respondent's solicitors in this respect, as they were quite clearly simply obeying the instructions of their client. It is their client's behaviour rather than their own to which I am referring in the remarks above. There may have been arguments that could have been made by Mr Todd in reply to this contention or by the respondent's representative appearing today, but the fact is that this did not occur. This is not of great weight in the conclusion I form and I simply note it in passing. The fact is that I think Mr Gollan's contention should prevail for the reasons I have already given. For that reason I order that the applicant's costs include those incurred after 13 September 2000 up to and including today, which I do not consider unreasonably incurred.

Order accordingly

Solicitor for the applicant: R.J. Rimes

Solicitors for the respondent: Gillis Delaney Brown