Bowden v BHC Stokes and Workcover Authority [2001] NSWCC 185

Reported Decision : 23 NSWCCR 19

Compensation Court of New South Wales

CITATION : Bowden v BHC Stokes and Workcover Authority [2001] NSWCC 185 Dudley Thomas Bowden PARTIES : B H C Stokes WorkCover Authority of New South Wales MATTER NUMBER(S) : 18193 of 1997 JUDGMENT OF: Walker J at 1 CATCHWORDS: Statutes & Delegated Legislation :- Review of Compensation Court Decisions and Cost Assessors decisions S 17(4) Compensation Court Act 1984 LEGISLATION CITED: SS 208M(5) 208F(4) Legal Profession Act 1987 Regulation 26D Legal Profession Act 1987 SS 110 and 112 Workplace Injury Management Act 1998 Sch J Supreme Court Rules Darrel Lea Chocolates Shops Pty Ltd v Tiricovski (1994) 10NSWCCR 34; Verginis v Clena Service Pty Ltd (1995) 11 NSWCCR 273; CASES CITED: Cramp v Commonwalth & Anor (No 2) (1996) NSWCCR 581; Goal v Jasco Pty Ltd (1997) 14 NSWCCR 59; Southern Tablelands Heath Service v Solomon (1999) NSWCCR 235; Dyktynski v BHP Titanium Minerals Pty Ltd (2001) 7 NSWCCR 581 DATES OF HEARING: 4/10/01, 9/10/01 DATE OF JUDGMENT: 12/12/2001

FOR APPLICANT: J Dodd instructed by McCabe Partners Solicitors appeared for the applicant LEGAL REPRESENTATIVES: FOR RESPONDENT: A Mitchell instructed by William Clinton Solicitor appeared for the respondent

JUDGMENT: THE APPLICATION A. S 17(4) Review 1. Mr Mitchell for the WorkCover Authority of New South Wales firstly seeks leave pursuant to s 17(4) of the Compensation Court Act 1984 to review my extemporaneous ruling of 10 August 2001 in a particular respect. In that decision I overturned a decision of the Cost Assessor who had ordered that the worker pay half the assessor costs of the taxation of the bill. 2. The ground is simply that in giving my ruling I made an error of law in following the decision of my learned colleague Judge Neilson in Cramp v Commonwealth & Anor (No 2) (1996) NSWCCR 461 who had held that the statutory protection offered to workers under the 1998 Act against orders for costs overrode provisions to the contrary in the Legal Profession Act 1987. 3. Counsel had not brought to my attention the recent decision of the Court of Appeal in Goninan & Co Ltd v Gill (2001) CA 40849/99 which had held contrary to Cramps case that the Compensation Court acting as an appellate Court by way of a hearing de novo is not bound by s 112(3) of the 1998 Act and must exercise the discretionary powers given to it by the Legal Profession Act 1987. Mr Dodd for the worker concedes the error of law but submits that the granting of leave to review pursuant to s 17(4) is itself discretionary and that in the circumstances of this case where the workers solicitor has obtained a very substantial increase in profit costs that I should exercise my discretion to deny leave to review. B. Claim for Interest on Costs Orders 4. On 30 July 2001 the solicitors for the respondent wrote to the second respondent claiming interest on the orders for costs from the date the substantive orders were made by Judge Bishop. 5. On 2 October 2001 the worker put on a Notice of Motion claiming inter alia the 2nd respondent pay interest of $3,020.44 in accordance with the decision in "Dyktynski v BHP Titanium Minerals Pty Ltd" [2001] 2 NSWCCR 581. 6. In response the second respondent on 9 October 2001 moved for this Court to strike out the Workers notice of motion and so disallow the claim for interest. 7. As I understand the second respondents affidavit sworn by its solicitor Rodney William Parsons on 9 October 2001 it wishes to strike out the claim for interest because the workers solicitors have failed to provide satisfactory particulars of the claim. C. OTHER COST CLAIMS 8. In the workers notice of motion of 2 October 2001 seven other costs items are also raised for my determination. As I understand Mr Dodd's submission those are matters put before me in respect of the original motion under Division 4 Part 5 of the Compensation Rules which I have failed to mention in my judgment viz: · an account from Dr Berry for $75.00 · an advice on evidence for $200.00 · an additional amount of $603.04 for profit costs · a filings fee totally $110.64 · costs of $140 in items 7, 53, 62 and 117 of the bill of costs · The costs of the Notice of Motion 9. I responded to Mr Dodd at the time that I was under the impression that I had already made extemporaneous orders on 23 July 2001 in respect of most of those items but I would check the Transcript and if any item had not been covered make appropriate orders. THE LAW ON S 17(4) 1984 ACT 10. I reviewed the case law on s 17(4) in Southern Tablelands Health Service v Solomon (1999) NSWCCR 235 at [7] to [26]. There I found that: 1. The Compensation Court At imposes no limits as to the extent of this Court's powers to review its decision. Presumably that means this Court can utilise all the powers conferred upon it by statute as well as its inherent jurisdiction. 2. The powers are wide but their use discretionary. The practice of the Court is such that only in highly unusual circumstance where there is some manifest injustice to be remedied will the Court's discretion be exercised to set aside a prior judgment of the Court. 3. One of the factors that should be weighed in deciding whether or not the discretion should be exercised is the public interest that litigation should not proceed interminably. 4. Reconsideration is not limited to an examination of changed circumstances but may include examination of fresh evidence concerning the original circumstances. However, the material to be adduced must be such that it could not with reasonable diligence have been put before the Court at the original proceedings. It must be moved upon without delay and it must be of such a nature that it would have affected the outcome of the proceedings. 5. In a proper case the Court is allowed to consider whether an error of fact or law has been made. 6. An Anshun estoppel may be available to prevent a party from relying upon a claim or defence which it has unreasonably refrained from raising in earlier proceedings. 7. Mistake or inadvertence by a party's legal advisor is an insufficient ground to permit the exercise of the discretion. However, a disposal of litigation concluded by legal advisors outside instructions can justify the exercise of the discretion in some circumstances. RESOLVING THE LEAVE APPLICATION 11. Errors of law are reviewable under s 17(4). The question here is whether there is a manifest injustice that needs to be remedied. The error of law has had the significant effect of denying WorkCover the right to litigate the merits of its substantive application. That to my mind is a highly unusual circumstance and could have given rise to a manifest injustice. Accordingly I propose to exercise my discretion in the Applicants favour and embark upon a review of the decision. THE SUBSTANTIVE APPLICATION 12. In Goninan v Gill the Court of Appeal held that on a true construction of s 208M(5) of the Legal Profession Act 1987 this Court does not merely affirm the cost assessors decision. Rather it must redetermine the matter, standing in the cost assessors shoes, and may make any determination it considers should have been made by the cost assessor. In other words I can either uphold the cost assessors assessment or make my own determination. 13. Stephen James Bowers the Cost Assessor in his assessment provided detailed reasons for his decision to order the successful worker to pay half his profession costs for conducting the taxation of the bill calling in aid s 208F(4) of the Legal Profession Act 1987 as his source of power to make that decision. 14. On reviewing the evidence I find that I have difficulties with some of those reasons particularly in regard to the relative weight the Assessor appears to have given to Regulation 26D(a) as opposed to 26D(b). Accordingly I proposed to take the course of resolving the matter on is merits on the evidence presented to me at the previous hearing. Mr Mitchell and Mr Dodd agreed with that approach. 15. Mr Mitchell's submission was that I should approach the exercise of my discretion under the Legal Profession Act by taking a holistic approach to the costs negotiation process and the financial outcome of the taxation. 16. Mr Dodd submits that the appropriate approach is to address the real issues that required the taxation in the first place and the manner in which they were resolved. Mr Dodd further suggests that costs should follow the event. Because the real issue in dispute was the workers solicitors profit costs I should give weight to the outcome or that question in making my decision. 17. It has long been the policy of this Court that in exercising its discretion costs follow the event except in circumstances where the application of that rule leads to injustice or involves special circumstances see Gaal v Jascco Pty Ltd (1997) 14 NSWCCR 59, Darrel Lea Chocolate Shops Pty Ltd v Tiricovski (1994) 10 NSWCCR 34. 18. However these cases pre-dated Gonian v Gill and in that case another approach was taken. Mr Bowers consonant with the decision in Gonian v Gill properly turned to Regulation 26D under the Legal Profession Act 1987: 19. Regulation 26D states: In determining under section 208F(4) of the Act by whom and to what extent the costs of the assessment of party/party costs are to be paid, the costs assessor may have regard to the following: (a) the extent to which the determination of the amount of fair and reasonable party/party costs differs from the amount of those costs claimed in the application for assessment. (b) whether or not, in the opinion of the costs assessor, either or both of the parties to the application made a genuine attempt to agree on the amount of the fair and reasonable costs concerned, (c) whether or not, in the opinion of the costs assessor, a party to the application unnecessarily delayed the determination for the application for assessment. RESOLVING THE SUBSTANTIVE APPLICATION 20. Given that costs usually follow the event I take the view that the worker should only be denied the fruits of his victory if the matters mentioned in Rule 26D are sufficient to constitute special circumstances. 21. I propose to consider seriatum the criteria in Rule 26D which I note is expressed in permissory not mandatory language. (a) Difference between the costs claimed and the courts assessment 22. The statistics in this case are susceptible to manipulation. Firstly there were two claims for costs viz: (i) The costs of the substantive proceedings and (ii) The costs of the subsequent s 60 proceedings. 23. Secondly both professional costs and disbursements were assessed. Different outcomes in percentage terms can be massaged from the figures by amalgamating or separating the claims and or separating the professional costs from disbursements. 24. Costs Assessor Bowers at page 4 of his reasons in [11] calculates that for the substantive claim the workers solicitors professional costs claimed were reduced by 35 per cent. A similar result occurred with the s 60 claim. 25. Mr Mitchell works the figures differently noting that the total party/party costs claimed for the substantive claim was reduced from $18,795.07 to $10,453.97 (a reduction of 44 per cent). The s 60 claim was reduced from $3,334.80 to $1412.18 (a reduction of 57 per cent). 26. Clearly on the first criteria the employer has an arguable case. However Mr Dodd's submission is that it is the second criteria that it is the critical one in costs disputes because the Court should be most concerned about the reasons the dispute came to occupy the Courts time and that requires an enquiry into the negotiations prior to the preparation of a formal bill of costs. (b) Was there a genuine attempt to agree on the amount for fair and reasonable costs? 27. It is Mr Dodd's contention that the Cost Assessors and this Court time has been unnecessarily occupied because the WorkCover Authority failed to make a genuine offer of costs that were fair and reasonable. The Second Respondent during the negotiation process before the Cost assessment became wedded to the false notion that this was a Verginis v Cleana Service Pty Ltd (1995) 11 NSWCCR 273 situation where public policy should be taken into account and that costs should be proportionate to the amount recovered. 28. I have previously ruled that because the Verginis discretion resided in Judge Bishop and was not exercised that argument was not viable. 29. Mr Dodd would now sheet home full responsibility for the need to incur the considerable costs of a taxation and appeal in this matter squarely at the feet of WorkCover who has persisted with the Verginis argument. 30. Mr Dodd directs the Courts attention to what he sees as the root cause of the costs litigation namely the letter from WorkCover dated 9 May 2000 offering combined profit costs of $5,000 and disputing the disbursements. Mr Dodd then makes the point that when the bills were eventually taxed the worker secured professional costs of $11,866.15 which represents much more than a 100 per cent increase in the profit costs offered by WorkCover. Mr Dodd asserts that these circumstances reveal that WorkCover made no genuine attempt to agree upon a fair and reasonable amount for the professional costs and so precipitated the need for the taxation. 31. This criteria is certainly very much in the workers favour. (c) Unnecessary delays of the Application for Assessment 32. Neither party suggests this criteria is relevant. 33. I am left to decide therefore whether in balancing the matters raised under Rule 26D I should find that special circumstance exist which would cause the Court to exercise its discretion against costs following the event. I think not. To my mind Mr Dodd is correct and that the necessity for taxation of the bills of costs arose out of the second respondents determination to pursue its Verginis argument and in doing so its offer on profit costs was neither fair nor reasonable and consequently not a genuine attempt to resolve the costs dispute. 34. Accordingly I propose to confirm my previous order that the second respondent should pay in full the Cost Assessors Costs on the taxation of $3,080. (d) Interest on the Costs Orders 35. Dyktynski v BHP held that the only relevant provision in determining interest on orders for costs was s 110 of the 1998 Act which provides: (1) Unless the Compensation Court orders in any particular case that interest be not payable, interest is payable on so much of the amount of any sum ordered to be paid by the Court as is from time to time unpaid. (2) Interest payable under subsection(1) in respect of any sum ordered to be paid: (a) is to be calculated as from the date when the order was made or from such later date as the Court in a particular case fixes. (3) Despite subsections (1) and (2) where: (b) the amount of costs assessed is paid in full within 21 days after that amount is assessed interest is not payable on the amount so paid, unless the court otherwise orders. 36. Justice Meagher held that the relevant date from which interest ordered should be paid and calculated date was the date of the original order by the judicial officer not the date the costs were subsequently quantified. 37. Further Justice Meagher held at [12] that s 110 does not require an exercise of the Courts discretion in awarding interest. On the contrary the recipient of an order for costs carrying with it interest is entitled to that interest from the date the order was made, unless the Court otherwise orders. 38. The facts of this case are that His Honour Judge Bishop made his costs orders on 24 March 1999 and 3 July 2000. On neither occasion was Judge Bishop asked to invoke the Courts discretion pursuant to s 110 and he made no order that the interest be paid from a later date. 39. The orders were not appealed and must stand. 40. Accordingly the second respondent having failed to pay the costs within 21 days of Judge Bishops orders must pay interest upon those costs as eventually assessed by the Cost Assessor and varied by me on 16 August 2001 and in this judgment. 41. Justice Meagher in Dyktynski states categorically at [6] of his judgment on the question of the relevant legislation controlling a workers claim for interest on costs: 6. There is only one section of one Act which seems to me of any significance: namely s 110 of the Workplace Injury Management and Workers Compensation Act 1998. 42. On the other hand Justice Heydon in Goninan v Gill asserts that Judges of this Court when sitting on appeal from cost assessors are not bound by the s 112 of 1998 Act but must apply the provisions of the legal Profession Act 1987 because they are standing in the shoes of the cost Assessor. 43. To reconcile these views I can only draw the conclusion that while reviews of cost assessors assessments are conducted under the Legal Profession Act once that review is completed then all the questions concerning interest payable on those assessed costs are to be determined by the workers compensation legislation. 44. There are no provisions in the Workers Compensation Acts or subordinate legislation fixing the rate of interest payable on orders for costs. 45. In an attempt to secure some uniformity in awards for interest in workers compensation cases Judges of this Court put forward the Jamberoo Schedule in August 1994. That schedule does not touch upon the question of interest on Cost orders. That being the case I take the view that the Supreme Court Schedule J should apply. 46. The rates relevant to both cost orders are as follows: From 24.3.99 to 31.2.00 9.5 per cent From 1.3.00 to 31.8.00 10 per cent From 1.9.00 to 31.8.01 11 per cent From 1.9.01 to date 10 per cent