Industrial Relations Commission of New South Wales in Court Session CITATION : Heather Alison Maciver v Hilton Nursing Home Pty Limited [2001] NSWIRComm 56 APPLICANT: Heather Alison Maciver PARTIES : RESPONDENT: Hilton Nursing Home Pty Limited FILE NUMBER: 513 and 1788 of 1997 CORAM: Schmidt J CATCHWORDS : Costs - s106 application - application by unsuccessful respondent for costs order against applicant - remitted appeal by Full Court - offer of compromise - Rules 166 and 216 of Court Rules - defect in notice of offer - correction of defect by order of Court - s170 of Industrial Relations Act 1996 and Rule 88 - offer of compromise considered in Calderbank basis - order in favour of respondents LEGISLATION CITED : Evidence Act 1995 Industrial Relations Act 1996 Calderbank v Calderbank [1976] Fam 93 Crampton v The Queen [2000] HCA 60 Melville v Tadros [1999] NSWCA 162 CASES CITED : McLean v Commonwealth (unreported, Sperling J, 22 August 1996) Oshlack v Richmond River Council (1998) 193 CLR 72 at 197 Skinner & Edwards (Builders) Pty Ltd v Australian Telecommunications Corporation (1992) 27 NSWLR 567 The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 HEARING DATES: 03/22/2001 DATE OF JUDGMENT: 05/10/2001 APPLICANT: Mr R Moore of counsel SOLICITORS: Sharpe Partners (Formerly Moin & Associates) LEGAL REPRESENTATIVES: RESPONDENT: Mr A Moses of counsel SOLICITORS: Fishburn Watson O'Brien Solicitors JUDGMENT: - 15 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J DATE: 10 May 2001 MATTER NUMBER IRC 513 OF 1997 HEATHER ALISON MACIVER -v- HILTON NURSING HOME PTY LIMITED Application under section 106 of the Industrial Relations Act 1996 MATTER NUMBER IRC 1788 OF 1997 HEATHER ALISON MACIVER -v- HILTON NURSING HOME PTY LIMITED Application for recovery of money under section 365 of the Industrial Relations Act 1996 JUDGMENT 1 Judgment in this matter was given on 20 April 1999, with the parties being directed to prepare orders reflecting the judgment given, including as to costs, within 28 days. Difficulties arose, which led to a further hearing and judgment of 13 August 1999 dealing with matters of quantification, interest and costs. As to costs, the respondent argued that the costs order to be made in favour of the applicant should be reduced by at least 40%, bearing in mind the rejection of a substantial part of the applicant's claim. That argument was refused, having in mind the conduct of both parties. It was concluded that the respondent should bear the applicant's costs as agreed or assessed. The applicant was directed to file the final orders reflecting that judgment within a further 21 days. 2 Further difficulties developed, leading to another hearing on the question of a meal money claim and the tax treatment of the money sums ordered. On 20 April, I made orders, including as to costs, consistent with the judgment of 13 August 1999. 3 The parties appealed these judgments, but also further approached as to a correction of the order made under the slip rule and an application by the respondent for an order for indemnity costs under Rule 216 of the Court's rules. The correction was not pressed and I dismissed the costs application in a further judgment of 22 May 2000. This judgment too was the subject of appeal. 4 Judgment in the appeal and cross appeal was given by the Full Court on 15 December 2000. It was there concluded that contrary to the view I had taken, the Court was not functus as to the question of indemnity costs which the respondent sought to raise. It was held at para 26: 'It may have been that from 14 December 1999, when the issue of an offer of compromise surfaced as an issue, Hilton Nursing Home should have placed more emphasis on reserving its position and on ensuring the question of costs remained open. However, Hilton Nursing Home was entitled to know, with certainty, the extent of its liability arising out of any orders Schmidt J might make. That was not known until her Honour had made the orders on 20 April 2000. Hilton Nursing Home had reserved the issue of its offer of compromise pending any orders and this was by consent of the parties. Once the extent of its liability became clear, Hilton Nursing Home was then entitled to raise its offer of compromise and the implications that that had for costs in the matter. Her Honour was not relevantly functus officio. Accordingly, we remit this matter to Schmidt J for determination.' The slip rule 5 The applicant sought the deletion of the amount of $33,621.46 and the insertion of the amount of $42,751.48 in the orders made. The error was said to have arisen from calculations made in the draft orders put forward for the applicant and the submissions advanced about these orders at the hearing before me. 6 The respondent did not oppose this correction. Some further submissions were later advanced about this. It is unnecessary to deal with them here. 7 Having in mind that in the judgment I sought to give effect to what had been advanced for the applicant as to this issue and that the respondent does not oppose the correction sought, it is accordingly appropriate that this correction be made. The respondent's claim for indemnity costs 8 Here it was the respondent's position in the written submissions filed that it had made an offer in accordance with Part 23 of the Court's Rules on 25 August 1998, in an amount greater than that it was ordered to pay the applicant in these proceedings. Accordingly, it followed that in accordance with Rule 216(6), it was entitled to the benefit of a costs order against the applicant in respect of costs incurred after that date. (Melville v Tadros [1999] NSWCA 162 per Mason J.) 9 The position advanced for the applicant in written submissions was that there had been no offer of compromise made in accordance with the requirements of Rule 166, that accordingly the application could not be considered pursuant to Rule 216 and as the issue remitted on appeal was the application for an order in accordance with that Rule, no order as to costs could otherwise be made in favour of the respondent. The applicant did not address the question of whether, if, contrary to its submissions, the offer did fall within the Rule, anything would displace the respondent from the usual position which the Rule contemplated. 10 At the hearing it was submitted by Mr Moses of counsel for the respondent that in the applicant's written submissions received on the previous day, it had been suggested for the first time in these proceedings, that the offer of compromise which had been made by the respondent did not comply with the requirements of Rule 166. Both at the earlier hearing in these proceedings before me, which led to the judgment of 21 May 2000, and before the Full Bench on appeal, it had been the common position which both parties had adopted that the offer had been made in accordance with the Rule. It followed that the point now taken was technical, too late and that the applicant ought to be estopped from relying upon it. It was submitted that this was an argument which should have been raised at the outset and certainly before the Full Bench on appeal, so that, at the least, the Full Bench could have been asked to exercise its ordinary discretion as to costs on a Calderbank basis, in the alternative. 11 It was further submitted that the difficulty was amenable to being cured by the exercise of the discretion contemplated by s170 of the Industrial Relations Act 1996 ('the Act'). In the event that the view were taken that such steps were not available, the proper course was to adjourn the hearing to enable the respondent to approach the Full Bench to raise the matter now relied upon by the applicant. 12 For the applicant, Mr Moore of counsel candidly conceded that the applicant's legal representatives had only noticed the deficiency in the offer of compromise on the day before the hearing of this reference from the Full Bench. The applicant's legal representatives thus took the view that it was appropriate to draw this difficulty to the Court's attention. In counsel's submission, the defect so identified was not curable, either by order of the Court under s170 of the Act or Rule 88 of the Court's Rules. 13 Mr Moore, nevertheless conceded, that as a matter of justice between the parties, the respondent was entitled to be heard as to the offer of compromise made, albeit on a Calderbank basis. On his submission, that would not necessitate the matter going back to the Full Bench. The Court as presently constituted had the power to deal with the costs order sought, albeit on a Calderbank basis, given the reference made. 14 This position was accepted for the respondent by Mr Moses. Having in mind the way in which the question of a costs order arose in the proceedings and was the subject of an appeal and reference back to the Court as presently constituted, that view has much to recommend it. 15 Mr Moses then addressed the Court as to the orders which could be made on that basis. Mr Moore, not having instructions to put submissions as to those matters, was given 7 days to put such submissions on, with a further period of 7 days for any reply. 16 Unfortunately, once again, this led to further difficulty. The parties were heard on 22 March. Mr Moore's submissions were received on 2 April They dealt with matters other than those going to the matters then remaining to be addressed. Mr Moses' submissions were received some time later and it was not until 2 May, that both counsel confirmed that 'the Respondent's offer as at 25 August 1998 was approximately $1,000 to $2,000 higher than the judgment amount which the Applicant received in her favour from the Commission.' Whether that in fact was the case had been a matter thrown into doubt by the written submissions filed for the applicant after the hearing. Consideration 17 The defect in the offer of compromise said for the applicant to bring it outside the ambit of Rule 216 was the absence of a statement that the offer was made in accordance with Rule 166, a mandatory requirement, the absence of which precluded the Court from considering the offer in accordance with the provisions of Rule 216. 18 There is no doubt that well before the hearing an offer of compromise was here made by the respondent and in an amount greater than that eventually ordered in favour of the applicant. The issue now raised by the applicant as to the deficiency in the offer is not one without substance, given the requirements of the Rules. There are, however, three good reasons why the submissions of the applicant as to the appropriate costs order to be made in these proceedings must be rejected. They are firstly, that the defect in the offer was not relied upon by the applicant, either when the question was first argued before me or on appeal; secondly that the defect is plainly curable under s170 of the Act and Rule 88 and should in the circumstances here revealed be corrected and thirdly, that even if such a cure were not available, regard to the offer could still be had by the Court as a matter of discretion in awarding costs. 19 As to the first point, the respondent relied upon the principle of estoppel discussed by Dawson J in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 453 to 454. Perhaps more to the point is the recent discussion by Gleeson CJ in Crampton v The Queen [2000] HCA 60, at para 4 to 20, of the circumstances in which an appeal court will not entertain a point which was not relied upon in the proceedings below. What was there said was in the context of a criminal trial, but also has much application to appeals in civil proceedings. Here the point now raised was not taken before me, when the issue of costs was argued prior to the judgment of 22 May 2000. There is some question as to whether, in those circumstances, it was a point which could have been taken before the Full Bench on appeal without its leave being granted. Nevertheless, I take the view that not having been so raised by the applicant, it is not appropriate for the point to be now raised and relied upon by the applicant at this stage of the proceedings. The Full Bench rejected the arguments advanced before it for the applicant and has referred to me the question of the offer of compromise made by the respondent, on the footing advanced before it on appeal by both parties, namely that it was an offer made in accordance with Rule 166. 20 Were I to permit the applicant now to rely on the defect it has lately identified in the offer, the difficulties discussed by Gleeson CJ in Crampton at paragraph 15 would plainly arise, namely that if the applicant were not limited as to the issues which might now be raised in relation to the offer of compromise made, then the finality of the Court's appeal process would become illusory. The parties would face uncertainty, with counsel having discovered that the position taken on appeal as to the offer of compromise made did not succeed, then being free to search for new points to be taken after the matter argued on appeal was remitted by the Full Bench to the trial judge for determination. As a matter of justice, the applicant ought to be estopped from doing so. The point not having been argued on appeal, it is simply too late to raise it now. 21 I turn to Rules 166 and 216 of the Court Rules. They provide: 166. (1) An offer or compromise is made to a party under this Part by serving a notice of the offer on the party. (2) A notice of offer must: (a) be prepared in accordance with the directions in Schedule 1 of these Rules; and (b) bear a statement to the effect that the offer is made in accordance with this Part. 216. (1) Upon the making of an order under Rule 168 (9), a party entitled to costs may, unless the Commission otherwise orders, have those costs assessed up to and including the day the offer was accepted. (2) If a notice of offer contains a term which purports to negative or limit the entitlement to costs, that term shall, unless the Commission otherwise orders, be of no effect for any purpose under Part 23 or this Rule. (3) Subrules (4)-(7) apply to an offer which has not been accepted at the time prescribed by Rule 168 (8). (4) Where an offer is made by an applicant and not accepted by the respondent, and the applicant obtains an order on the claim to which the offer relates no less favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim from the day on which the offer was made, assessed on an indemnity basis in addition to costs incurred before and on that day, assessed on a party and party basis. (5) For the purpose of subrule (4), where the offer was made on the first or a later day of the hearing of the proceedings, then, unless the Commission otherwise orders, the applicant shall be entitled to costs in respect of the claim from 11 am. on the day following the day on which the offer was made, assessed on an indemnity basis, in addition to costs incurred before that time, assessed on a party and party basis. (6) Where an offer is made by a respondent and not accepted by the applicant, and the applicant obtains an order on the claim to which the offer relates not more favourable than the terms of the offer, then, unless the Commission otherwise orders, the applicant shall be entitled to an order against the respondent for costs in respect of the claim up to and including the day the offer was made, assessed on a party and party basis, and the respondent shall be entitled to an order against the applicant for costs in respect of the claim thereafter, assessed on a party and party basis. (7) For the purpose of subrule (6), where the offer was made on the first or a later day of the hearing of the proceedings, then, unless the Commission otherwise orders, the applicant shall be entitled to costs in respect of the claim up to 11 am. on the day following the day on which the offer was made, assessed on a party and party basis, and the respondent shall be entitled to costs in respect of the claim thereafter, assessed on a party and party basis. (8) Where an applicant obtains an order for the payment of a remuneration, compensation or damages and: (a) the amount payable under the order includes interest or damages in the nature of interest; or (b) by or under any Act the Commission awards the applicant interest or damages in the nature of interest in respect of the amount, then, for the purpose of determining the consequences as to costs referred to in subrules (4) and (6), the Commission shall disregard so much of the interest as relates to the period after the day the offer was made. (9) For the purpose only of subrule (8), the Commission may be informed of the fact that the offer was made, and of the date on which it was made, but shall not be informed of its terms. (10) Subrules (4) and (6) shall not apply unless the Commission is satisfied by the party making the offer that the party was at all material times willing and able to carry out what the party offered. 22 Rule 166 is to similar effect to Rule 22.1A of the Supreme Court Rules, which also requires that the offer bear a statement to the effect that it is made in accordance with the Rule in question. Irregularities in the form of such orders have been considered by the Supreme Court, but not, as far as I am aware, an absence of the statement that the offer is made in accordance with the Rule. In McLean v Commonwealth (unreported, Sperling J, 22 August 1996) for example, an irregularity in the identity of a party was dealt with, the offer otherwise being in accordance with the Rule. 23 Section 170 of the Act provides: (1) The Commission may, in any proceedings before it, make any amendments to the proceedings that the Commission considers to be necessary in the interests of justice. (2) Any such amendment may be made: (a) at any stage of the proceedings, and (b) on such terms as the Commission thinks fit (including, if it can award costs in the proceedings, terms as to costs). (3) If this Act, the regulations or a rule of the Commission is not complied with in relation to the institution or conduct of proceedings before the Commission, the failure to comply is to be treated as an irregularity and does not nullify the proceedings, any step taken in the proceedings, or any decision in the proceedings. (4) For the purposes of subsection (3), the Commission may wholly or partly set aside the proceedings, a step taken in the proceedings, or a decision in the proceedings. 24 Rule 88 provides: (1) Application to a tribunal to waive strict compliance with any procedural requirement or to exempt any party from compliance with any such requirement either before or after the occasion for compliance arises, may be made by notice of motion or orally in the course of the proceedings and if made separately must, unless the tribunal otherwise directs, be supported by affidavit. (2) Subject to any direction of the Commission, the Presidential Member of the Contracts of Carriage Tribunal or the Chairperson of an Industrial Committee, the Registrar may extend the time fixed by these Rules for the lodging of any document or the doing of any act (whether or not that time has expired). 25 It is plain that the offer of compromise sought to be made by the respondent in accordance with Rule 166, did not comply with the requirements of that Rule in that it failed to contain a statement to the effect required by Rule 166(2)(b). That this was either a failure in the conduct of the proceedings or a failure to comply with a procedural requirement contained in the Rules is obvious, and in accordance with s170 and Rule 88, is an irregularity which, if thought necessary in the interests of justice, may be cured or waived by order of the Court. 26 I take the view that this is a step which ought not lightly to be taken, because of the consequences which flow from the terms of Rule 216. The early settlement of litigation is to be encouraged. Nevertheless, if a party wishes to avail itself of the benefit of the formal compromise provisions of the Rules, it should do so by drawing express attention to Rule 166 as there required, so that the consequences of the offer are properly appreciated by the other party to whom the offer of compromise is directed. This is undoubtedly why the reference to the Rule in the offer is couched in mandatory language in Rule 166(2)(b). 27 Here, there was no statement in the offer of compromise as to the nature of the costs order which would be sought if the offer was not accepted. If the offer had made reference to Rule 166, such a statement would have been unnecessary, because the consequences are spelt out in Rule 216. Similarly in a Calderbank letter, the consequences of refusal of the offer, in the context of costs in the proceedings, is usually explicitly dealt with. (See Calderbank v Calderbank [1976] Fam 93.) 28 In that context, in my view the approach of amendment of the irregularity here contended for by the respondent by order of the Court pursuant to s170 of the Act or Rule 88, is one which would not lightly be granted. 29 Nevertheless, in this case I have been persuaded that were it necessary to do so, it should be granted. I have come to that view given the particular circumstances here existing, where the question of whether an order should be made in accordance with Rule 216 arose and was dealt with in my final judgment in May 2000. At that stage no reference to any defect in the offer was raised by the applicant. The appeal from my judgment was also argued before the Full Bench without any reference to the deficiency. The inescapable inference was that it was appreciated by the applicant that the offer had been made in accordance with the Rule and that the respondent was seeking the benefit which flowed therefrom. 30 In my view, it would be an injustice to allow the applicant to depart from that position now and that justice would require that the irregularity be cured by order of the Court. 31 I have also been influenced in the conclusion which I have reached by the submissions advanced by the parties in respect to the offer considered on a Calderbank basis. 32 Under s181 of the Act, the Court plainly has the power to order costs on other than on the usual basis as a matter of discretion. I have recently outlined the authorities which deal with this point in Lane v Commonwealth Bank [2001] NSWIRComm 57. That power might be exercised in the context of a 'Calderbank' letter, for example, it being undoubted that there is a general public interest in the encouragement of settlements and there being a general discretion as to costs in the Court. 33 This concept was discussed in Skinner & Edwards (Builders) Pty Ltd v Australian Telecommunications Corporation (1992) 27 NSWLR 567 at p 578. Here it was not an indemnity costs order which was sought, but an order for costs on a party/party basis, after the date of the compromise offered. 34 The Court has a discretion to award costs on the basis sought, as a departure from the usual rule. Section 131 of the Evidence Act 1995 now expressly deals with such offers being received in evidence in relation to the question of costs. The position of a Calderbank letter is rather different to that of an offer of compromise made in accordance with Part 23 of the Rules, which gives the party who made the offer certain rights as to costs, which the recipient of the offer may seek to dislodge. A Calderbank letter, on the other hand, provides but a basis for the maker of the offer to ask the Court to exercise a discretion in its favour as to costs. 35 In Oshlack v Richmond River Council (1998) 193 CLR 72 at 97, McHugh J addressed the principles which apply when the ordinary rules as to costs are departed from. His Honour said at para 69 and 70: "The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873 at 874, Devlin J formulated the relevant principle as follows: 'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.' 'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute. Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct. The Court may award costs in favour of a defendant where the plaintiff has obtained only nominal damages. However, this practice can be justified on the basis that, in reality, the successful party lost the litigation and the unsuccessful party won." 36 It was here submitted that this case fell into the type of misconduct discussed in Oshlack, as the applicant had recovered relief less than that which the respondent had already offered and thus it was that the applicant's conduct put it into that class of cases where the ordinary rules as to costs would be departed from. 37 That submission has to be understood in circumstances where the applicant recovered less from the respondent than the offer made in August 1998, before the hearing in Armidale over 5 days in November 1998 and after the subsequent hearings earlier outlined, as well as the appeal. 38 The way in which the parties' respective cases were conducted is also a relevant consideration. This was a case where it was necessary, on the one hand to criticise the approach of the respondent to the contract in question and to its keeping of necessary records. This led to the applicant succeeding on the merits of the claim. The respondent's offer evidenced some practical acceptance of its deficiencies. On the other hand, I took the view that the case advanced and the evidence given by the applicant had to be approached with caution. There was, for example, no basis made out in the evidence for the claim advanced by the applicant that she had worked 70 hours per week. The evidence given by the applicant as to this part of the claim was exaggerated and the claim was abandoned in submissions; it being put that it would be accepted that she had worked 60 hours per week. This also reflected that the applicant called evidence from Mr Brotherhood, which did not support the 70 hour case. It is also relevant that no evidence was led as to some parts of the claim, (namely the motor vehicle claim and claim for use of the applicant's home); and these were also abandoned in submissions. It follows that it cannot be concluded in this case that it was reasonable for the applicant to pursue the claim, rather than settling it in light of the offer received. 39 In the circumstances, I take the view that it would have been just to make the costs order sought by the respondent, even on a Calderbank basis. Order 40 For all of these reasons I make the following orders: 1. The order as to costs sought by the respondent: (a) The Respondent pay the Applicant's costs in matter numbers: IRC 513 of 1997 and IRC 1788 of 1997 up to and including 25 August 1998 assessed on a party and party basis; and (b) The Applicant pay the Respondent's costs in matter numbers: IRC 513 of 1997 and IRC 1788 of 1997 from 26 August 1998 and onwards, assessed on a party and party basis. 2. The alteration to the order of 20 April 2000 sought by the applicant in accordance with the slip rule: The amount of $33,621.46 is deleted from Order 3 in IRC Matter 513 of 1997 and the amount of $42,751.48 is substituted. ------------------------ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.