Griffiths and Comcare
[2007] AATA 1379
•29 May 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1379
ADMINISTRATIVE APPEALS TRIBUNAL )
) No A2006/146
GENERAL ADMINISTRATIVE DIVISION ) Re JOHN GRIFFITHS Applicant
And
COMCARE
Respondent
DECISION
Tribunal Mr S. Webb, Member Date29 May 2007
PlaceCanberra
Decision The Tribunal orders the Respondent to pay the Applicant’s reasonable costs in these proceedings up to and including 23 January 2007 as agreed or taxed.
..........(Signed)...................
Mr S. Webb, Member
CATCHWORDS
COSTS – whether the respondent should pay the applicant’s costs – offer of settlement – Calderbank principles – no costs awarded from the date on which the settlement offer was made
Safety, Rehabilitation and Compensation Act 1988 ss 67
Calderbank v Calderbank [1976] 3 All ER 333
Riley v Comcare (1994) 48 FCR 449
Perry v Comcare [2006] FCA 33
Miller v Australian Telecommunications Commission (1985) 5 FCR 480
Comcare v Labathas (1995) 133 ALR 744
Re Griffiths and Australian Postal Corporation [2006] AATA 965
Re Salters and Telstra Corporation Limited [2003] AATA 1037
Re Hronopoulos and Telstra Corporation Limited [2002] AATA 625
Re Mifsud and Australian Postal Corporation [1999] AATA 782
Smallcombe v Lockyer Investments Company Pty Ltd (1993) 114 ALR
REASONS FOR DECISION
May 2007 Mr S. Webb, Member 1. On 22 March 2007 I handed down the decision in this matter. No orders were made in relation to costs. The parties were provided seven days in which to make submissions. Submissions have been filed and the question of orders for costs can now be concluded.
2. By the decision under review, Comcare determined that Mr Griffiths’ normal weekly earnings (NWE) from 1 August 1994 included a component of 9.766 hours overtime per week. I decided to vary that determination on the basis that the overtime component of Mr Griffiths’ NWE was 11 hours 8 minutes per week.
3. On 23 January 2007 the respondent made a written ‘Calderbank’ offer of settlement,[1] ‘without prejudice save as to costs’. The terms of the offer included a weekly overtime component of 12 hours 27 minutes and was said to remain open until 8 February 2007. As the offer was in terms more favourable to the applicant than the outcome he achieved in the proceedings in the Tribunal, the respondent is resisting any award of costs from the date of the settlement offer. On 6 February 2007, apparently after obtaining legal advice, Mr Coleman responded to the offer of settlement on Mr Griffiths’ behalf, in the negative.
[1] Referring to Calderbank v Calderbank [1976] 3 All ER 333
4. In Mr Griffiths’ submission, he had good reasons to reject the respondent’s offer of settlement as he had “… good reasons to believe that the AAT would award an amount greater than the respondent’s offer …”[2]. The details of the particular costs in issue are set out in Mr Coleman’s letter dated 10 April 2007 to Sparke Helmore, the respondent’s solicitor.
[2] Applicant’s submissions dated 10 May 2007, p3; applicant’s letter dated 6 February 2007
5. Section 67 of the Safety, Rehabilitation and Compensation Act 1988 sets out matters concerning the costs of proceedings in the Tribunal, providing ‘a code in the area of costs’[3]. The costs incurred by a party to proceedings are to be borne by that party[4] unless the Tribunal exercises the discretion conferred by subs 67(8) or other specified circumstances (which are not presently relevant) pertain. The discretion is broad and it is not controlled by any rule or policy, or fettered by any binding principle[5]. Exercise of the discretion is essentially preconditioned by an outcome of the particular proceedings that is more favourable to a claimant than the decision under review, whether by varying or setting aside that decision. However, exercise of the discretion, once enlivened, is not mandated by the preconditioning factor alone. In order to alter the balance struck by subs 67(1) it is necessary to first consider the particular circumstances of the case. The circumstances in which the costs were incurred, and the behaviour of the parties, must be considered in relation to the particular proceedings[6] and a test of reasonableness applied with an eye to justice and fairness[7]. An otherwise successful applicant may be deprived of his or her costs of proceedings if it is appropriate to do so in the circumstances[8]. Thus a letter setting out an offer of settlement consistent with the principles enunciated in the well known case of Calderbank v Calderbank[9] may be appropriately considered by the Tribunal in relation to an award of costs in particular proceedings. The Tribunal has adopted that approach in previous decisions concerning such matters[10]. The written terms of the offer, including costs, must be clear and precise, so as to leave no doubt in the offeree’s mind about the nature and extent of what is being offered[11]. The timing of the offer and the length of time it remained open are also relevant considerations[12].
[3] Riley v Comcare (1994) 48 FCR 449
[4] Subs 67(1)
[5] Perry v Comcare [2006] FCA 33 at 76; Miller v Australian Telecommunications Commission (1985) 5 FCR 480
[6] Comcare v Labathas (1995) 133 ALR 744 at 750-751
[7] Perry v Comcare (supra n5) at [64]-[77]
[8] Perry v Comcare (supra n5) at [64]
[9] (Supra n1)
[10] See Re Griffiths and Australian Postal Corporation [2006] AATA 965, Re Salters and Telstra Corporation Limited [2003] AATA 1037, Re Hronopoulos and Telstra Corporation Limited [2002] AATA 625 and Re Mifsud and Australian Postal Corporation [1999] AATA 782 at [27]- [28], for example)
[11] Perry v Comcare (supra n5) at [49]-[53]
[12] Smallcombe v Lockyer Investments Company Pty Ltd (1993) 114 ALR 568 at pages 573-574
6. Thus, as the Tribunal’s discretion in relation to costs is enlivened in this case, and cost orders are in issue in relation to the aforementioned settlement offer and the purported Calderbank letter, it is necessary to address the following questions:
(a)Was Mr Griffiths confronted with a clear and precise offer?
(b)Was the offer materially better than the outcome Mr Griffiths obtained ultimately?
(c)Did Mr Griffiths act reasonably in rejecting the offer?
Was Mr Griffiths confronted with a clear and precise offer?
7. I am satisfied that the settlement offer was clear and precise and so find. The letter of offer sets out the offer in general terms and refers to an attached ‘draft Minutes of Consent Orders’. The draft minutes set out the detailed terms of the settlement offer. The issue of costs is dealt with on a party and party costs and disbursements basis. The letter makes plain the respondent’s position in the event that the offer is rejected and the applicant does not obtain a materially better result in the Tribunal proceedings.
8. I am satisfied that the offer was unambiguous and sufficiently clear and precise to permit Mr Griffiths to fully comprehend its terms and the consequences of rejection. The offer was stated to remain open until 8 February 2007, providing Mr Griffiths with approximately 14 days in which to properly consider it. It appears from Mr Coleman’s submissions that he did so, and obtained legal advice. There is nothing to indicate that the timing of the offer was in any way difficult for Mr Griffiths.
Was the offer materially better than the outcome Mr Griffiths obtained ultimately?
9. Plainly enough the terms of the settlement offer were materially better for Mr Griffiths than the outcome he ultimately obtained from the Tribunal proceedings[13]. The settlement offer was made in terms of 12 hours and 27 minutes overtime per week plus party and party costs, whereas the outcome of Mr Griffiths’ proceedings in the Tribunal was 11 hours and 8 minutes overtime per week, with the prospect of orders for costs.
[13] A2006/146
Did Mr Griffiths act reasonably in rejecting the offer?
10. The test of reasonableness requires consideration of the particular circumstances, including the behaviour of the parties in these proceedings. One of the purposes of a Calderbank offer is to encourage an applicant to carefully and seriously consider an offer of settlement, to assess the risks of the litigation and respond appropriately to the offer made. One could hope that a principled Calderbank offer would stimulate a careful analysis of the terms (and benefits) of the settlement offer in relation to the inherent and consequent risks[14] of continuing with the proceedings on foot.
[14] Including in relation to the recoverability of costs
11. Mr Griffiths says, it would be unfair and unjust to deprive him of his costs of the proceedings. I do not agree. It was for Mr Griffiths to carefully weigh-up the inherent and consequent risks of proceeding with the litigation against the terms of the respondent’s offer to settle the matter on 23 January 2007. It appears that he did so and obtained legal advice, before responding to the offer. To that extent, at least, he acted reasonably. Nevertheless his decision to reject the offer was a judgement he made in consideration of the risks he faced in proceeding with the litigation. The offer was not unreasonable and was concordant with Calderbank principles. The matters in dispute were apparent from the documents and were known to Mr Griffiths and his representatives. The respondent did not adduce fresh evidence after the date of the settlement offer. In the circumstances I am satisfied that Mr Griffiths possessed appropriate knowledge and exercised his judgement in deciding to reject the offer of settlement and proceed with the litigation. In so doing Mr Griffiths had clear and precise knowledge of the risks he faced, particularly in relation to costs. Thus I am not persuaded that depriving Mr Griffiths of the costs he incurred in these proceedings after 23 January 2007 will result in any unfairness or injustice to him.
12. Mr Griffiths says that he rejected the respondent’s offer of settlement because he had “ample evidence” that less senior ACT Internal Omnibus Network (ACTION) staff were regularly working amounts of overtime in excess of the amount offered in settlement. He asserts that the decision under review was inconsistent in its terms (the decision was not supported by the review officer’s findings or rationale) and should not have been made. Had the decision been correctly made on the available evidence it would have obviated the need for Mr Griffiths to commence the Tribunal proceedings and incur the costs in issue. It is perhaps for these reasons that the particular offer was made in its terms. The matters in issue were clear and apparent in documents filed and served by the parties well prior to the respondent’s offer of settlement on 23 January 2007. I note that the issues were discussed in conferences in the Tribunal on 10 August 2006 and 22 November 2006. Mr Griffiths’ representatives in the Federal Office of the Superannuated Commonwealth Officers’ Association Inc. and the legal advisers he consulted in relation to the Respondent’s offer should have been familiar with or at least addressed the particular issues concerning notional and actual hours of overtime, to which T31 folio 66 refers, as well as the tests to be applied in relation to comparable employees. At the time Mr Griffiths was aware that the decrease in his weekly overtime hours (for the purpose of calculating his NWE amount) that resulted from the coming into effect of the Australian Capital Territory Public Sector (Enterprise Bargaining) Agreement 1994 was offset by other payments and an increase in his base hourly rate. By the terms of the settlement offer his weekly overtime hours would have increased from 9 hours 46 minutes to 12 hours 27 minutes, an amount of hours in excess of the average overtime hours worked by 5 comparable employees identified by Mr Griffiths. Nevertheless he decided to reject the offer of settlement. The reasonableness of that decision is open to question.
13. Mr Coleman points to alleged statistics concerning the number of Comcare matters in the Tribunal in which the decision under review was affirmed. In his submission, the statistics point to Mr Griffiths having a high likelihood of success in the Tribunal proceedings. That submission is not firmly based on reason and can promptly be dispensed with. It does not represent a rational or sound analysis of the issues relevant to any reasonable assessment of the respondent’s offer of settlement, or a reasonable basis for rejecting it.
14. Furthermore Mr Griffiths asserts that the legal costs of the respondent “pursuing a review of the costs to be awarded by the AAT” is greater than the quantum of costs he incurred after the date on which the settlement offer was made. Thus, in his submission, pursuing the issue of costs is contrary to ‘the model litigant rules’ and Comcare’s Jurisdictional Policy Advice No. 2004/04[15] concerning avoiding litigation wherever possible. Purely from a commercial perspective, it may be true that the respondent’s costs are greater than the quantum of costs Mr Griffiths incurred in relation to these proceedings after the settlement offer was made. However, that alone is not a firm basis for concluding that the respondent’s efforts to resist Mr Griffiths’ claim for costs after the aforementioned settlement offer are contrary to the spirit or the letter of the Attorney-General’s model litigant rules. Other matters must be considered. Mr Griffiths’ submission concerning model litigant rules is not made out.
[15]See at s67
15. Mr Griffiths’ asserts that there is nothing in the costs provisions that limits recovery to costs related to legal representation. I agree. The particularity of costs claimed is a matter for taxation in the absence of agreement.
16. Mr Griffiths says that he will suffer financial loss if the decision is implemented, as interest on arrears is not payable. He asserts that any such ‘loss’ is a relevant factor to take into account in relation to the awarding of costs. Mr Coleman stated that Mr Griffiths is in financially straitened circumstances, being an invalidity pensioner with a dependant wife but no assets other than his house contents. That may be so, but there is no evidence that Mr Griffiths’ financial circumstances have changed since January 2007. If he was in financially straitened circumstances at that time, that was a relevant factor to consider when deciding to reject the respondent’s offer of settlement.
17. Thus, on balance and considering all of the circumstances, I am satisfied that the respondent did not behave unreasonably in relation to the offer of settlement, but there are open questions concerning the reasonableness of Mr Griffiths’ decision to reject the offer.
18. In Comcare’s submission, the costs incurred by the respondent after the date the settlement offer was made should be deducted from any costs ordered in Mr Griffiths’ favour, or in the alternative Mr Griffiths’ costs should be subject to a 50 percent reduction. I do not accept those submissions. Orders concerning costs are not intended or designed as a punishment. Furthermore there is no provision in the Act to make an order of costs against an applicant employee. Thus, Comcare’s submissions are not made out.
19. In all of the circumstances and for these reasons I order that:
(a)Comcare is to pay Mr Griffiths’ reasonable costs incurred in these proceedings up to and including 23 January 2007.
(b)In the absence of agreement between the parties about the quantum, the costs are to be taxed pursuant to the Tribunal’s General Practice Direction on a party and party basis and on the basis that
(i)Mr Griffiths is entitled to reasonable and proper disbursements; and
(ii)all professional costs that would be allowable under the Federal Court Scale are to be taxed at 75 percent.
I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member
Signed: ......Jane Gribble..........................
AssociateDate of decision 29 May 2007
Applicant’s Representative John Coleman
Superannuated Commonwealth Officers’ Association Inc.
Solicitor for the Respondent Andrew Shelley
Sparke Helmore
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