Saul v Allan Dickinson Holdings, Northaime Holdings, Jack Favaloro [2001] NSWCC 126

Compensation Court of New South Wales

CITATION : Saul v Allan Dickinson Holdings, Northaime Holdings, Jack Favaloro [2001] NSWCC 126 Phillip Saul PARTIES : Allan Dickinson Holdings Pty Limited Northaime Holdings Pty Limited Jack Favaloro Pty Limited MATTER NUMBER(S) : 14150 of 1997 JUDGMENT OF: Walker J at 1 CATCHWORDS: Statutes & Delegated Legislation :- Interest on costs in Workers Compensation Cases LEGISLATION CITED: s 208M(2) and (3) Legal Profession act 19??, s 95(1) Supreme Court Act 1970, s 113 and sch 4 pt 4 cl 7(1 and Sch 6 pt 11 cl (1) Workers Compensation 1987, ss 109 and 110 Workers Compensation Act Supreme Court Rules pt 40 r 7(2) and Sch J Minister Administering the Environmental Planning and Assessment Act v Carson (1994) 35 NSWCR 342; CASES CITED: T A Field Pty Ltd v Frigmobile of Australia Pty Ltd (1978) 2 NSWCR 488; Thomas v Bunn (1991) AC 303 DATES OF HEARING: 22/3/01, 23/4/01 DATE OF JUDGMENT: 06/20/2001

FOR APPLICANT: Mr Lichtenberger instructed by Orchiston Ranzetta Finney appeared for the applicant LEGAL REPRESENTATIVES: FOR RESPONDENT: Mr Burston of Dexter Healy Solicitor appeared for the respondent

JUDGMENT: THE APPEAL 1. The worker appeals by Notice of Motion to set aside a Cost Assessor Certificate seeking orders: 1. That the first respondent pay costs of the Notice of Motion and 2. That the first Respondent pay interest on the assessed costs of the substantive proceedings. BACKGROUND 1. On 9 November 2000 the worker issued proceedings by way of Notice of Motion seeking the following orders against the first respondent: (a) leave to appeal to this Court pursuant to s 208M(2) and (3) of the Legal Profession Act to set aside an assessment of professional costs and disbursements in the substantive claim by Mr J Sharpe Cost Assessor of 18 October 2000. (b) Interest on the costs assessed. (c) The costs of the notice of motion. 1. On 23 November 2000 His Honour Judge Burke referred the Costs Assessors Report to Assistant Registrar O'Dowd for report back to the Court as to whether the costs assessed were fair and reasonable. 2. On 5 March 2001 Assistant Registrar O'Dowd reported back to the Court that in her opinion the workers solicitor was justified in not accepting the Cost Assessors assessment and recommended that the bill of costs be brought in at $26,556.19. 3. The Notice of Motion was listed before me for hearing on 22 March 2001. The parties were agreed that Assistant Registrar O'Dowd's report should be adopted and the Court should order the payment of $26,556.19 in lieu of the amount determined in the certificate of the Cost Assessor of 18 October 2000. 4. The parties could not agree on either the workers claim for interest on the assessed costs or the costs of this Notice of Motion. THE SUBMISSIONS 2. It is Mr Litchenbergers submission for the applicant that s 110 of the 1998 applies. 3. S 110 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 any particular case fixes, and (b) is to be calculated at the rate prescribed for the purposes of section 95(1) of the Supreme Court Act 1970 or, if the regulations under this Act prescribe some other rate, at the other prescribed rate, and (c) forms part of the sum ordered to be paid, but not so as to require the payment of interest on interest. (3) Despite subsections (1) and (2) where: (a) the amount of any sum ordered to be paid (excluding the amount of costs to be assessed) is paid in full within 21 days after the sum becomes payable, or assessed, interest is not payable on the amount so paid, unless the Court otherwise orders. 4. Mr Lichtenberger submits that s 110 allows this Court to order that interest be payable subsequent to a general order for costs being made. 5. He asserts that the cost order in question is that made in the substantive proceedings. However he does not argue that interest should run from the decision of Judge Curtis on 25 February 2000. Rather he suggests it should run from the date of Assessor Sharpe's certificate. 6. Mr Burston for the respondent submits that the entitlement to interest on the costs dispute did not occur within the meaning of s 110 until the date of this hearing (ie 22 March 2001) because that was the day the parties agreed to settle the costs dispute and the quantum of the costs was crystallised. THE LAW 7. S 95(1) of the Supreme Court Act 1970 provides: (1) where judgment is given or an order made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or orders takes effect on so much of the money as is from time to time unpaid. 8. A long debate has raged amongst English and more lately Australian jurists as to whether costs orders take effect at judgment or on certification of taxed costs. The former view is represented by the incipitur rule that absent a contrary order by the Court interest will run from the date the judgment or order is pronounced in Court. However, if for example the judgment merely determines liability and orders damages to be subsequently assessed then interest runs from the point in time the assessment is made. See Thomas v Bunn (1991) AC 303. This represents the latter view called the allocatur rule. 9. In T. A. Field Pty Ltd v Frigmobile of Australia Pty Ltd (1978) 2 NSWLR 488 Master Allen applied the allocatur rule to s 95(1) of the Supreme Court Act 1970 holding that the relevant date to apply interest on costs was the date of the certificate of taxation. 10. The law was reviewed by the Court of Appeal in Minister Administering the Environmental Planning and Assessment Act v Carson (1994) 35 NSWLR 342. 11. The relevant legislative provisions was s 69A(1) of the Land and Environment Court Act 1979 which effectively replicated s 95(1) of the Supreme Court Act. Pt 13 r3 of the Land and Environment Court Rules also provided that unless otherwise ordered by the Court, a final decision judgment or order disposing of any proceedings takes effect when it is given or made. 12. The question before the Court of Appeal was: does interest on costs run from the date of the Courts order (incipitur rule) or from the date of the certificate of taxation? (allocatur rule). The Court was unanimous that as an exercise in statutory interpretation when s 69A(1) and Rule 3 were read together the incipitur rule applied. 13. However another issue canvassed by the judgments was whether Master Allen's decision to apply the allocator rule in interpreting s 95(1) of the Supreme Court Act 1970 was correct. Unfortunately that question was not authoritatively decided because President Kirby and Justice Young were in disagreement and Justice Priestley confined his opinion to the statutory interpretation of s 69A. 14. What is clear from the decision is that whether or not Master Allen's application of the allocatur rule in s 95 cases is correct the Workers Compensation legislation and in particular S 110 of the 1998 Act will be determinative. 15. In this context the judgment of President Kirby at page 352A is of some comfort. He stated: 3. As appears in the above citation of s 95 of the Supreme Court act 1970, that section contains an important subsection (s 95(3)) which has no equivalent in the Land and Environment Court Act 1979. It makes clear that, notwithstanding the primary rule in s 95(1) a special rule is applicable in the Supreme Court in relation to costs. Where such costs are to be paid, and are paid within 21 days of a certificate of taxation (or otherwise following the ascertainment of their amount), interest is not payable on such costs unless the Supreme Court otherwise orders. In such circumstances, the result in T. A. Field may well be quite correct. The key to understanding of the Supreme Court practice is, relevantly to be found in s 95(3). 16. Unlike the Land and Environments Courts legislation s 110(3) of the 1998 Act provides: 3. Despite subsections (1) and (2), where:........ (b) the amount of costs assessed is paid in full within 21 days after the amount is assessed, interest is not payable on the amount so paid unless the Court otherwise orders. 17. The plain meaning of that provision when read with s 110(3)(a) is that interest on costs as opposed to the sum ordered is not to take effect until those costs have been assessed. 18. Accordingly I propose to apply the allocatur rule in this case. THE DATES 19. The relevant dates in this case are: (i) The substantive proceedings were initiated on 4 August 1997. (ii) The Application for Determination was settled by commutation on 25 February 2000. (iii) On 23 March 2000 the Applicants solicitors wrote to the first Respondents solicitors assessing their costs at $19,000 including $12,000 profit costs. The first Respondent solicitors rejected that assessment suggesting $9,000 profit costs. (iv) The applicants solicitors then proceeded to formally assess their costs pursuant to the provisions of the Legal Profession Act 1987 and regulations. (v) The formal bill was taxed by Mr J Sharpe Costs Assessor who made his assessment of $19,762.15 on 18 October 2000. (vi) The applicant pursuant to s 208M(2) and (3) of the Legal Profession Act sought leave to appeal Mr Sharpe's assessment. That Appeal was heard by His Honour Judge Burke (as he then was) on 23 November 2000. He referred the matter to Assistant Registrar O'Dowd for report. (vii) Assistant Registrar O'Dowd reported back to the Court on 5 March 2001 recommending that Cost Assessor Sharpe's assessment be set aside and the applicants costs be brought in at $26,556.19 including $15,489 in profit costs. (viii) The matter then came before me for determination on 22 March 2001. By that time the parties had agreed to abide by the Assistant Registrars determination of costs on the substantive matter but could not agree on the question of interest payable on those costs. A BRIEF HISTORY OF THE STATUTORY PROVISIONS CONCERNING COSTS 20. I recite this history because s 110 does not include the limitation in s 109(2)(b) against payment of interest before claims are duly made and the question arises: whether that limitation nevertheless applies in s 110 cases? · S 19 of the Compensation Court Act 1984 gave the Court discretionary powers to award interest. · S 19 was repealed by s 113 of the 1987 Act the repeal taking affect from 1 February 1996. · Transitory provisions in the form of sch 4 pt 4 cl 7(1) of the 1987 Act applied to protect suits commenced before 1 February 1996. This suit was commenced in August 1997. · Sch 6 pt 11 cl (1) provides that s 113(2) does not apply to restrict the ordering of interest in respect of injuries received before 12 January 1996. (Mr Saul was injured in January 1993). · Sch 6 pt 11 cl 1(a) then applies in respect of injuries received prior to 12 January 1996 where the claim was not commenced before that date and provides that either: (i) No interest is payable before the claim was duly made or (ii) If the claim was not duly made prior to the commencement of proceedings no interest is payable for any period prior to the worker providing particulars of claim to the employer. · S 110 was then enacted in 1998. 21. It can be seen that s 110 needs to be read in conjunction with sch 6 pt 11 cl 1(a). Having said that neither party has put to me that the substantive claim was not duly made and I propose to determine the matter on the assumption that it was in fact duly made prior to the order for interest. QUESTIONS FOR DETERMINATION 22. From counsels submissions I pose the following questions requiring my determination viz: 1. What was the date when the order was made within the meaning of s 110(2)(a)? 2. Should the Court in its discretion fix a later date pursuant to s 110(2)(a)? 3. What is the appropriate interest rate for the purposes of s 95(1) of the Supreme Court Act 1970 as required by s 110(2)(b)? 4. When was the amount of costs assessed within the meaning of s 110(3)(b)? 5. If the amount of costs assessed was paid within 21 days of its assessment should the Court exercise its discretion and order interest be paid nonetheless? RESOLVING THE DATE ORDER WAS MADE 23. The costs order in the substantive case was made on 25 February 2000. Mr Lichtenberger is not an adherent of the incipitur rule and does not argue that is the date the sum was ordered to be paid within the meaning of s 110(2)(a). Rather he adopts the allocatur rule and suggests that interest should run from the date a sum was quantified by Cost Assessor Sharpe. He concedes that that sum was found to be inadequate by Assistant Registrar O'Dowd but submits that the true meaning of s 110(2)(a) requires the Court to order interest from the date any sum was ordered. 24. Mr Burston takes the view that the date the true quantum of the costs was determined is the hearing date namely 22 March 2001. 25. I take the view that the words any sum in s 110(2)(a) strongly suggests that it was the Legislatures intention that interest run from the time the costs were quantified. The general order as to costs fixed no quantity of money payable. It was not until the formal assessment under the Legal Practitioners Act had been carried out by Assessor Sharpe that the first respondent knew the sum that was required and could have been in a position to make payment. 26. It is true as Mr Burston points out that the sum assessed was ultimately found to be wrong. However it would be manifestly unjust to penalise an appellant by reducing the term of his interest entitlement simply because the Court has found in favour of the appellants case that the cost assessor was in error. 27. Accordingly I apply the allocatur rule and determine s 110(2)(a) means that interest is payable from the point in time that the Courts general order for costs was quantified. It follows that means the interest runs on the $19,762.15 from 18 October 2000 and on the further $6,794.04 from 5 March 2001. 2. DISCRETION UNDER S 110(2)(a) 28. I take the view that it would be inappropriate for the Court to deprive the worker of the part of the benefits of his successful appeal by fixing a date that interest becomes payable after the Cost Assessors determination and accordingly do not propose to exercise my discretion to vary the date. 3. S 95(1) INTEREST RATE 29. S 110(b) provides that the interest rate should be that prescribed by s 95(1) of the Supreme Court Act 1970. 30. S 95(1) provides that interest shall be payable at the prescribed rate. 31. The interest rate payable under s 95(1) is set by Pt 40 r 7(2) which provides (2) The prescribed rate of interest for the purpose of s 95 of the Act is, in respect of any period mentioned in column 1 of Sch J, the rate per cent yearly mentioned in column 2 of that schedule beside that period. Sch J reads as follows Period Column 2 Rate After 31 August 2000 11 per cent 4. S 110(3)(b) 32. S 110(3)(b) provides: (3) Despite subsections (1) and (2), where: ….(b) the amount of costs assessed s 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. 33. The motion before me was an appeal from an assessment by Cost Assessor Sharpe who brought the Bill of Costs in at $19,762.15. that was $6,794.04 less than Assistant Registrar O'Dowd's assessment. 34. I have determine that interest runs from 18 October 2000. The respondent was not in a position to pay the additional $6,794.04 at the point in time. That sum was not known until Assistant Registrar O'Dowd's Assessment on 5 March 2000. I have applied the allocatur rule and that means interest on the $6,794.04 runs from 5 March 2000. DISCRETION 35. S 110 3(b) empowers the Court with a further discretion to order interest even if the assessed costs were paid within 21 days. The use of this discretion is academic because I understand that the costs were not paid prior to the expiration of 21 days. 36. If they had been then I would have taken into account the fact that the applicants solicitors offered to settle for payment of only $19,000 costs [ie less than both Assessor Sharpe and Assistant Registrar O'Dowd found) on 23 March 2000. That offer in the light of the ultimate assessments was most reasonable. The applicants solicitors have had to wait for well over a year and have been put in to the inconvenience of protracted litigation to secure payment of their costs. To my mind those circumstances would have entitled me to exercise my discretion to order interest notwithstanding payment within 21 days. THE COSTS OF THE NOTICE OF MOTION 37. The costs of this Notice of Motion cannot be agreed between the parties. Mr Lichtenberger suggests I should arbitrarily assess them at $7,000. I do not propose to accede to that request. 38. If the respondent will not agree to the applicants costs then a formal Bill of Costs should be prepared pursuant to the provisions of the Legal Profession Act. ORDERS 39. I make the following orders: 1. The report of Assistant Registrar O'Dowd dated 5 March 2000 is adopted. 2. The First Respondent pay the Applicants costs of $26,556.19 in lieu of the amount assessed by Cost Assessor Sharpe in his certificate of 18 October 2000. 3. The Respondent pay to the Applicant interest on the assessed sum to be calculated as follows: (a) Interest at the rate of 11 per cent per annum on the sum of $19,762.15 from 18 October 2000 until the costs are paid. (b) Interest at the rate of 11 per cent per annum on the sum of $6,794.04 from 5 March 2001 until the costs are paid. 4. The Respondent pay the applicants costs of this Motion as agreed or if agreement cannot be reached costs should be assessed pursuant to the provisions of s 208 of the Legal Profession Act. Mr J Lichtenberger instructed by Orchiston Ranzetta Finney appeared for the applicant Mr Burston of Dexter Healy Solicitors appeared for the respondent