Supreme Court New South Wales Medium Neutral Citation: Midson v Workers Compensation Commission & Ors (No 2) [2017] NSWSC 147 Hearing dates: On the papers Decision date: 01 March 2017 Jurisdiction: Common Law Before: N Adams J Decision: (1) I make no order for costs against the third defendant in relation to the summons. (2) The plaintiff is to pay the third defendant's costs of this application as agreed or assessed. Catchwords: COSTS – where plaintiff successful – where defendants each filed a submitting appearance – where plaintiff seeks order against a submitting party who was not the decision-maker – general rule that costs follow the event – whether to depart from general rule Legislation Cited: Civil Procedure Act 2005, ss 56(3), 98 Supreme Court Act 1970 (NSW), s 69 Uniform Civil Procedure Act 2005 (NSW), rr 6.11, 42.1 Workers Compensation Act 1966 (NSW), s 66 Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 3 Cases Cited: Buzrio Pty Limited v Consumer, Trade and Tenancy Tribunal (No 4) [2010] NSWSC 41 China Shipping (Australia) Agency Co Pty Limited v D V Kelly Pty Limited (No 2) [2010] NSWSC 1557 Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47 Douglas v James (No. 2) [2015] NSWSC 969 Highland v Labraga (No 3) [2006] NSWSC 871 Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) [2014] NSWCA 317 Latoudis v Casey (1990) 170 CLR 534 Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201 Midson v Workers Compensation Commission & Ors [2016] NSWSC 1352 Noon v The Owners – Strata Plan No. 22422 (No 2) [2014] NSWSC 1642 Nyman v Valmas [1997] NSWCCA 235 Oshlack v Richmond River Council (1998) 193 CLR 72 Seller v Jones [2014] NSWCA 19 Category: Costs Parties: John Midson (Plaintiff) Workers Compensation Commission (First Defendant) Medical Appeal Panel of the Workers Compensation Commission (Second Defendant) Enerka Apex Belting Pty Ltd (Third Defendant) Representation: Counsel: Mr P Stockley (Plaintiff) Solicitors: Slater & Gordon Lawyers (Plaintiff) Kaden Boriss (Third Defendant) File Number(s): 2016/00198913 Publication restriction: Nil Judgment Background 1. The plaintiff makes an application for costs against the third defendant in this matter, Enerka Apex Belting Pty Ltd, in circumstances where that entity filed a submitting appearance and played no part in the proceedings. 2. The plaintiff suffered a wrist injury in the course of his employment. On 30 June 2016 he filed a summons seeking judicial review of a decision of the second defendant, a Medical Appeal Panel of the Workers Compensation Commission, made on 31 March 2016. The first defendant (the Workers Compensation Commission), the second defendant (the Medical Appeal Panel) and the third defendant (the plaintiff's employer at the time of the injury) all filed submitting appearances pursuant to r 6.11 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") described as being "save as for costs". 3. The hearing of the summons came before me on 10 August 2016 in my capacity as Duty Judge. Mr Stockley of counsel appeared for the plaintiff. Consistent with the three submitting appearances filed, there were no appearances by any of the defendants. Notwithstanding that the orders sought were not opposed, it was necessary for the plaintiff to persuade the Court that it ought to grant the relief sought under s 69 of the Supreme Court Act 1970 (NSW). I heard short oral submissions from Mr Stockley that day and reserved my decision. At the conclusion of the hearing, Mr Stockley indicated that if the plaintiff was successful he would be seeking costs against the third defendant. 4. On 23 September 2016, I made orders quashing the decision of the second defendant. In circumstances where there was no appearance by any of the defendants at that time, I granted the plaintiff leave to approach the Court within 14 days to list the matter for further argument concerning the issue of costs: Midson v Workers Compensation Commission & Ors [2016] NSWSC 1352. Mr Stockley undertook to approach the solicitor for the third defendant and inform him of those orders. 5. It was subsequently agreed between counsel for the plaintiff and the solicitor for the third defendant that there was no need for the Court to reconvene to hear oral submissions on the question of costs. Rather, it was agreed that argument as to the appropriate costs order could proceed by way of written submissions. Submissions of the parties Submissions on behalf of the plaintiff 1. In brief written submissions filed on 20 October 2016, Mr Stockley on behalf of the plaintiff submitted that the third defendant ought to be required to pay the plaintiff's costs, there being no reason in this case to depart from the general rule that the costs follow the event. It was submitted that the decision of the second defendant not to disturb the medical assessment certificate ("MAC") issued by the approved medical specialist ("AMS") had the effect of depriving the plaintiff of an entitlement to lump sum compensation under s 66 of the Workers Compensation Act 1966 (NSW). The third defendant had an interest in that decision to the extent that it was no longer obliged to pay compensation to the plaintiff and was relieved of other potential claims for which a 15% whole person impairment ("WPI") was the relevant statutory threshold. 2. Having succeeded in its summons seeking that the decision of the second defendant be quashed, it was submitted that the plaintiff is the successful party and the third defendant an unsuccessful party in the proceedings in this Court. The application of the usual rule that costs follow the event would require that a costs order be made against the third defendant. 3. No relevant authorities were relied upon in support of the application. Submissions on behalf of the third defendant 1. The third defendant filed written submissions on 3 November 2016 opposing the order sought by the plaintiff. The third defendant noted that, having been served with the plaintiff's summons on 5 July 2016, its first real involvement in the proceedings was an appearance before the Common Law Registrar on 8 August 2016, at which time the third defendant advised that Registrar that it intended to file a submitting appearance. It did so later that day. The third defendant submitted that it was by reason of its prompt filing of a submitting appearance that the matter was able to be listed for hearing before me only two days later, on 10 August 2016. It was submitted that the conduct of the third defendant was in accordance with its obligation under s 56(3) of the Civil Procedure Act 2005 (NSW) ("the CPA") to facilitate the just, quick and cheap resolution of the real issues in dispute. 2. Further, the third defendant submitted that it could not properly be described as an "unsuccessful party" because no orders were ever sought against it and it took no active role in the proceedings. The decision that the plaintiff's summons impugned was made by the second defendant. The third defendant submitted that there was nothing that the third defendant could have done to avoid the need for the plaintiff to bring his summons given that it was not the decision-maker and, in any event, the relief sought was within the Court's discretion and not amenable to compromise between the parties. 3. The third defendant submitted that the Court's discretion to award costs must be exercised judicially. It submitted that this Court ought to follow the observations of Young CJ in Eq in Highland v Labraga (No 3) [2006] NSWSC 871 at [23]: "In a case where a defendant has been named as a proper party, but genuinely takes not part in the proceedings and files a submitting appearance, then almost certainly no order for costs will be made against it." 1. Further, the third defendant made application that the plaintiff pay its costs of meeting this costs application. It submitted that, in making such an application, the plaintiff has required the third defendant to take an active role in proceedings, contrary to its desire. The third defendant's submissions attached a letter from the plaintiff's solicitor dated 25 August 2016, in which the plaintiff sought costs from the third defendant and enclosed an itemised bill of costs, and a letter in reply from its solicitor dated 23 September 2016 opposing the order sought and foreshadowing that the third defendant would seek costs of the application against the plaintiff. Submissions in reply on behalf of the plaintiff 1. The plaintiff filed written submissions in reply on 11 November 2016. It was submitted that the third defendant had identified no point of principle against the granting of the relief sought other that the observations of Young CJ in Eq in Highland v Labraga (No 3). It was noted that his Honour made the observations at [25] of his judgment (extracted above at [11]) in circumstances where the defendant was not genuinely a submitting party. Mr Stockley submitted, notwithstanding the principle stated in paragraph [25], that the question whether a costs order should be made against a submitting party cannot be considered in isolation. 2. It was further submitted that that the plaintiff, as an injured worker, had no means of protecting his rights under the workers compensation scheme other than invoking the supervisory jurisdiction of this Court under s 69 of the Supreme Court Act. It was submitted that the third defendant prosecuted the appeal that resulted in the decision of the second defendant which the plaintiff impugned in these proceedings. 3. Mr Stockley submitted that an order for costs against the third defendant is consistent with the objectives of the CPA, UCPR and workers compensation legislation. He cited, in particular, s 3 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW), which provides for a number of "system objectives" of the workplace injury management and workers compensation system, including that it be "fair, affordable and financially viable". Consideration 1. Section 98(1)(a) of the CPA provides that costs are in the discretion of the court. Section 98(1)(b) of the CPA provides that the court has "full power to determine by whom, to whom and to what extent costs are to be paid". 2. The discretion that s 98 of the CPA provides is subject to the qualification that it must be exercised judicially "in accordance with established principle and factors directly connected with the litigation": per McHugh J (in dissent but not relevantly for present purposes) in Oshlack v Richmond River Council (1998) 193 CLR 72 at 96 [65] ("Oshlack"). Among the fetters on the discretion to award costs are the rules of the court contained in Part 42 of the UCPR. The usual rule is that costs follow the event, unless it appears to the court that some other order should be made: r 42.1 of the UCPR. Thus the outcome of the litigation is the most important factor guiding the court's exercise of its discretion: per McHugh J in Oshlack at 96 [66]. 3. The rationale for the principle that costs follow the event is that the successful party to proceedings should be compensated. In Latoudis v Casey (1990) 170 CLR 534, a case concerning the award of costs against a prosecutor in criminal proceedings, Mason CJ observed at 543: "If one thing is clear in the realm of costs, it is that…costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings." (citation omitted) 1. McHugh J reiterated that the compensation principle justified the general rule that costs follow the event in Oshlack at 97 [67] as follows: "The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation." 1. Notwithstanding the general rule that costs follow the event, r 41.2 contemplates that the particular circumstances of a matter may be such that it is appropriate to make some other order. For instance, misconduct on the part of the successful party, such as conduct that unnecessarily prolongs litigation, may disentitle that party to a costs order in its favour: per McHugh J in Oshlack at 95-96. In Mahenthirarasa v State Rail Authority of New South Wales (No 2) (2008) 72 NSWLR 273; [2008] NSWCA 201, Basten JA (Giles and Bell JJA agreeing) observed that the examples given by McHugh J all focus upon the circumstances of the successful party. 2. There are authorities suggesting that the fact that an unsuccessful party has filed a submitting appearance in accordance with r 6.11 of the UCPR may well provide good reason to decline to make the usual order as to costs, notwithstanding the absence of disentitling conduct on the part of the successful party: see, for example, Develtor Property Group Pty Ltd v Newcastle City Council [2001] NSWLEC 47 at [42] per Bignold J and China Shipping (Australia) Agency Co Pty Ltd v D V Kelly Pty Ltd (No 2) [2010] NSWSC 1557 at [8] per Rein J. Despite this, it is not the case that a submitting party will never be ordered to pay costs. That such an order may be made is contemplated by the wording of r 6.11, which provides: "(1) A defendant who intends to take no active part in proceedings may include in the defendant's notice of appearance a statement to the effect that the defendant submits to the making of all orders sought and the giving or entry of judgment in respect of all claims made, to which may be added the words, "save as to costs". (2) Except by leave of the court, a defendant who has filed a notice of appearance containing a statement referred to in subrule (1) may not file a defence or affidavit or take any other step in the proceedings." 1. In Seller v Jones [2014] NSWCA 19 at [59] (cited by Darke J in Noon v The Owners – Strata Plan No. 22422 (No 2) [2014] NSWSC 1642 at [8]), McColl JA (Basten and Ward JJA agreeing) noted at [55] and [59] that r 6.11 of the UCPR does not provide for the costs consequences of a submitting appearance. Thus where an unsuccessful party has made a submitting appearance it is necessary to take into account relevant contextual considerations with respect to the circumstances of the litigation and conduct and role of the parties (citing Basten JA in Mahenthirarasa v State Rail Authority of New South Wales (No 2) at [7]). 2. A relevant contextual consideration in Mahenthirarasa v State Rail Authority of New South Wales (No 2) was the status of the submitting party as a statutory body representing the Crown. The successful appellant sought an order for costs against the State Rail Authority ("SRA"), which had filed a submitting appearance both at first instance and on appeal. The SRA had, by the making of submissions to the Registrar of the Workers Compensation Commission, secured a result that was favourable to it. Thereafter it did not take part in judicial review proceedings. Basten JA stated at [21]: "…the SRA, as the beneficiary of the ruling in the Commission, should, and no doubt did, give proper consideration to whether the proceedings had merit and whether it should defend the order which it had obtained in the Commission. If it had been of the view that the order could not fairly be defended, it should have advised the Court of that fact and its reasons for reaching that conclusion. It was inappropriate for the SRA as a statutory corporation to stand by and in effect require the appellant to persuade the Court of the correctness of his position." 1. Although it is plain that Mahenthirarasa v State Rail Authority of New South Wales (No 2) turns on its own facts, it serves as authority for the proposition that it may, in certain exceptional circumstances, be just and reasonable to make a costs order against a submitting party: see Rothman J in Buzrio Pty Limited v Consumer, Trade and Tenancy Tribunal (No 4) [2010] NSWSC 41 at [11]. 2. In Kisimul Holdings Pty Ltd v Clear Position Pty Ltd (No 2) [2014] NSWCA 317 the Court (Beazley P, Barrett and Gleeson JJA) observed at [14] that the question of whether a costs order should be made against a submitting party is to be approached according to "an appraisal of the circumstances of the case" and that, in particular, attention must be paid to the context in which the submitting appearance was filed. Their Honours went on to cite the observations of Beazley JA (as her Honour then was) in Nyman v Valmas [1997] NSWCCA 235 as follows: "In my opinion, the filing of a submitting appearance does not denote consent to the orders sought. A submitting appearance (both at first instance and in this Court) may be filed for a variety of reasons. The typical situation is where a party has no vested interest in the outcome of proceedings. This typically occurs in statutory appeals where a necessary respondent is the Court or Tribunal from which the appeal is brought. Another is where a party holds funds as a stakeholder or on trust. However, the occasions where a submitting appearance is filed are by no means limited to such obvious circumstances. A party might submit where the costs of appeal outweigh the amount in dispute so that it was too prohibitive or simply not worth the while of a party to contest the matter. The procedure provided by the submitting appearance is a means of facilitating notice to the Court that the party does not propose to put any argument to the court." 1. More recently in Douglas v James (No. 2) [2015] NSWSC 969, McDougall J awarded costs against a defendant who had filed a submitting appearance. His Honour found that the submitting party had delayed ten months before filing a submitting appearance and, in the interim, had "actively promoted and supported the defendant's case". His Honour found at [39] that "she was in a real sense a defendant who took an adversarial position in opposition to the plaintiff's case". 2. In the present application the plaintiff has succeeded in his summons. In the ordinary course, he would be entitled to a costs order against the unsuccessful party or parties. However, having regard to the relevant authorities and the context in which the submitting appearance was filed in this matter, I am not satisfied that it would be fair to order that the third defendant bear the plaintiff's costs in the circumstances of this case. I do not propose to make such an order for the following reasons. 3. First, the third defendant filed a submitting appearance shortly after its first appearance before the Registrar on 8 August 2016. Although it had initially filed a notice of appearance, its prompt filing of a submitting appearance enabled the matter to be set down for hearing only two days later, on 10 August 2016. Its conduct was consistent with its obligation to further the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in dispute contained in s 56(3) of the CPA. This was not a case in which the filing of a submitting appearance came at a late stage of the proceedings. 4. Second, consistent with its position as a submitting party, the third defendant genuinely played no active role in the proceedings before me. It did not contest the relief sought by the plaintiff and did nothing to increase the costs incurred by him in making out his claim for relief. On the contrary, the prompt filing of a submitting appearance by the third defendant enabled this matter to be listed within six weeks of the summons being filed. Although on one view the role of the Court is made easier by the presence of a contradictor (or an active party that merely explains why it does not oppose the relief sought: see Mahenthirarasa v State Rail Authority of New South Wales (No 2) at [13]), the absence of an active defendant avoided the need for a more substantial hearing that would likely not have been accommodated before me as Duty Judge. 5. Third, this was not a case in which the third defendant led the decision-maker into error. Although the third defendant exercised its right to appeal to the second defendant against the initial MAC and was successful on appeal, it was the error made by the second defendant that brought about the need for the plaintiff to commence proceedings in this Court. Moreover, the relief sought by the plaintiff being discretionary in nature, there was nothing that the third defendant could have done to obviate the need for the plaintiff to bring his summons. This was not a matter that was capable of being resolved by agreement between the parties. Even if the third defendant had consented to the orders, a hearing would still have been required in order to satisfy the Court that it was appropriate to exercise its supervisory jurisdiction. 6. Finally, it is to be noted that the present case can be distinguished from Mahenthirarasa v State Rail Authority of New South Wales (No 2) in that the third defendant is not a statutory body representing the Crown and is not expected to conduct itself in the manner of a model litigant: see Rein J in China Shipping (Australia) Agency Co Pty Limited v D V Kelly Pty Limited (No 2) at [12], applying Mahenthirarasa v State Rail Authority of New South Wales (No 2). 7. The remaining question is whether the plaintiff should be ordered to pay the costs incurred by the third defendant in defending this costs application. It seems to me that there is no reason in the circumstances that now arise to depart from the usual order as to costs. Accordingly, I propose to order that the plaintiff pay the third defendant's costs of this application. ORDERS 1. I make the following orders: 1. I make no order for costs against the third defendant in relation to the summons. 2. The plaintiff is to pay the third defendant's costs of this application as agreed or assessed. 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. Decision last updated: 01 March 2017