Hronopoulos and Telstra Corporation Limited

[2002] AATA 625

DECISION AND REASONS FOR DECISION [2002] AATA 625

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2000/934

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      NICHOLAS HRONOPOULOS    
  Applicant
           And    TELSTRA CORPORATION LIMITED   
  Respondent

DECISION ON COSTS

Tribunal       Senior Member M D Allen Dr M E C Thorpe, Member

Date26 July 2002 

PlaceSydney

Decision      The Respondent is to pay the Applicant's taxed costs up to and including 11am on the 27 June 2001 and the Applicant is to bear his own costs after that date.   

(Sgd)  M D Allen            

....................................
  Presiding Member
CATCHWORDS
WORKERS' COMPENSATION - entitlement to costs when Tribunal's decision less favourable to Applicant than offer of compromise made by Respondent before hearing. Applicant denied his costs after the date of that offer.

Safety, Rehabilitation and Compensation Act 1988 - ss 67(8)

Riley v Comcare [1994] 48 FCR 449
Telstra Corporation v Barrow [1994] 19 AAR 523
Calderbank v Calderbank [1976] Fam 93
Miller v Australian Telecommunications Commission [1985] 5 FCR 480

REASONS FOR DECISION

Mr M D Allen, Senior Member Dr M E C Thorpe, Member                 

1. On 18 June 2002 the Tribunal handed down its decision in this matter but reserved the question of costs for further argument.

2. The operative part of the Tribunal's decision read:

   "that the Respondent is to pay compensation to Nicholas Hronopoulos pursuant to sections 14, 16 and 19 of the Safety, Rehabilitation and Compensation Act 1988 (as amended) for the injury of Major Depression for the period 15 October 1999 to 1 March 2000."

Subsection 67(8) of the Safety, Rehabilitation and Compensation Act 1988 reads:

"where, in any proceedings instituted by the claimant, the Administrative Appeals Tribunal makes a decision:

(a) varying a reviewable decision in a manner favourable to the claimants; or
(b) sitting aside a reviewable decision and making a decision in substitution for the reviewable decision that is more favourable to the claimant and reviewable decision;

the Tribunal may, subject to the section, order that the cost of those proceedings incurred by the claimant, or the part of their costs, shall be paid by the responsible authority."

1. As was pointed out by Beaumont J in Riley v Comcare 48 FCR 449, subsection 67(8) specifically provides that the Tribunal can order that only part of a successful claimant's costs be paid by the Respondent. See also Carr J in Telstra Corporation v Barrow 19 AAR 523 at 539 where it is implicit in His Honour's Judgment that he accepts that an otherwise successful claimant can be deprived of his costs. See also the decision of the Full Court of the Federal Court in relation to the Compensation (Commonwealth Government Employees) Act 1971 in Miller v Australian Telecommunications Commission 1985 5 FCR 480 to the same effect.

2. The substantive hearing in this matter took place on the first, second and third days of May 2002. A prior hearing date had been listed for 20 and 21 January 2002 but that hearing was aborted due to the Applicant's initial failure to attend and on the second day to his failure to comply with the summons to produce documents.

3. An earlier hearing date of 17 and 18 October 2001 had also been vacated due to the late service by the Applicant upon the Respondent of a report by his treating cardiologist Dr Hermann which raised issues not previously raised by the Applicant. At the start of proceedings on 17 October 2001 the Applicant had sought to tender a report by Dr Hermann but that tender was rejected pursuant to subsection 66(1) of the Safety, Rehabilitation and Compensation Act. The Applicant then successfully applied for the matter to be adjourned to a future date.

4. By letter dated 26 June 2001 the Respondent's solicitors had written to the Applicant's solicitors making an offer of compromise. That letter read inter alia:

   "We refer to the above matter and in the interests of early settlement we are instructed that our client will settle this matter on the following terms:

   1. Payment of compensation to the Applicant pursuant to sections 16 and 19 of the Safety, Rehabilitation and Compensation Act 1988 for the period 1 November 1999 to 7 June 2000, plus costs.

   This offer is made in accordance with the principles of Calderbank v Calderbank (1976) and section 131(2)(h) of the Evidence Act and without any admission on the part of our client.
   In the event that this offer is not accepted and your client obtains a judgment no more favourable than the terms of this offer, we advise that our client intend to produce this letter to the court in relation to the question of costs. Our client will seek that your client pays the costs of the proceedings on an indemnity basis from the date of this letter."

The letter was headed as being "without prejudice except for costs."

1. The reference to indemnity costs and the use of the word "Court" evidence that the letter was a standard form of letter and specific regard had not been had to the provisions of the Safety, Rehabilitation and Compensation Act as to costs. Nevertheless the intention of the said letter is clear.

2. The reference to Calderbank v Calderbank in the said letter is a reference to the now well-known case of Calterbank v Calterbank [1976] Fam 93. In particular the following passage in the judgment of Cairns LJ at p106 namely:

   "Mr Miller drew our attention to the provision in the Matrimonial Cause Rules (1968) with reference to damages which were than payable by a co-respondent, provision to the fact an offer might be made in the form that it was without prejudice to the issue as to damages but reserving the right of the co-respondent to refer to it on the issue of costs. It appears to me that it would be equally appropriate that it should be permissible to make an offer of that kind in proceedings as we have been dealing with and I think that it would be an appropriate way in which a party who was willing to make a compromise could put it forward. I do not consider that any amendment to the rules of the Supreme Court is necessary to enable this to be done."

3. What has become known as a "Calderbank letter" has found expression in various rules of Court see for example Order 52A rule 22(6) of the NSW Supreme Court which reads:

   "Where an offer is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains an order or judgment on the claim to which the offer relates not more favourable to him than the terms of the offer, than, unless the court otherwise orders, the plaintiff shall, subject to rule 33, be entitled to an order against the defendant for the plaintiff's costs in respect of the claim up to and including the day the offer was made, assessed on a party/party basis, and the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter assessed on a party /party basis."

See also Order 23 rule 11(5) of the Federal Court Rules to similar effect.

1. One of the reasons for a Calderbank letter is as a salutary inducement to compel a litigant to face up to the task of seriously considering an offer of settlement.  In this matter the Applicant was left in no doubt as to the intention of the Respondent should its offer be rejected.

2. In our view the Tribunal should take all necessary steps to induce parties to settle matters before hearing. To this end the Tribunal has mandated per its Conciliation Conference Direction of 18 May 1998 that in the Compensation Jurisdiction of the Tribunal unless a member or conference registrar has otherwise certified a Conciliation Conference (more accurately described as a settlement conference) will be held.

3. If such so called "Conciliation Conferences" are to have any value the parties must approach them in a realistic manner. There is a little point in a Respondent making a realistic offer of settlement if an Applicant can reject such an offer confident that if he or she is successful before the Tribunal to the slightest extent they will still obtain an order for costs in their favour. For the Tribunal to adopt such an approach is unfair to a Respondent as it places an Applicant in a position whereby he or she has nothing to loose by running up costs.

4. For these reasons therefore the Tribunal should approach the question of costs without any presumption as to beneficial legislation or that an Applicant by the mere fact of having a reviewable decision varied or set aside is entitled to full or indeed any costs. There is nothing new in the concept that for good and sufficient reasons a successful litigant can be deprived of his or her costs.

5. In this matter on the facts of the case as they appeared on the material filed with the Tribunal prior to hearing the offer of settlement was fair and proper and as stated is more favourable to the Applicant than the ultimate decision of the Tribunal. In addition two hearings were adjourned because of the Applicant's or his solicitor's default. The Respondent certainly should not be responsible for the costs thrown away on these two occasions. Having regard to the circumstances of this particular case we find that the Respondent should pay the Applicant's costs up to and including 11am on the 27 June 2001 and pay his own costs after that date.

6. In the default of agreement between the parties the Applicant's costs are to be taxed as per the Tribunal's Practice Direction.

I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen and Dr M E C Thorpe, Member.

Signed:         .....................................................................................
  Associate

Date of Decision  26 July 2002