ISS Facility Services (NSW) Pty Ltd v State of New South Wales (No 2)

[2016] NSWCA 185

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	ISS Facility Services (NSW) Pty Ltd v State of New South Wales (No 2) [2016] NSWCA 185
Hearing dates:	4 April 2016
Decision date:	09 August 2016
Before:	Leeming JA, Payne JA and Emmett AJA
Decision:	1. The parties’ costs of the appeal and each of the first and second cross appeals in the Court of Appeal be their respective costs in the proceedings in the District Court.  2. The parties’ costs of the original proceedings in the District Court should be left to the discretion of the judge to whom the proceedings are remitted, for determination when the outcome of the litigation is known.
Catchwords:	COSTS – costs where proceedings remitted to District Court for retrial – Workplace Injury Management and Workers Compensation Act 1998, s 346
Legislation Cited:	Civil Liability Act 2002 (NSW) Workers Compensation Act 1987 (NSW), s 151Z Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 346 Workers Compensation Regulation 2003, Pt 19
Cases Cited:	Kubovic v HMS Management Pty Ltd [2015] NSWCA 315
Category:	Costs
Parties:	ISS Facility Services (NSW) Pty Ltd (Appellant/ First Cross-Respondent / Third Cross-Respondent) State of New South Wales (First Respondent / Second Cross-Respondent / Second Cross-Appellant) John King (Second Respondent / First Cross-Appellant / Fourth Cross-Respondent)
Representation:	Counsel: L King SC / P Rickard (Appellant / First Cross-Respondent / Third Cross-Respondent) P Deakin QC / S Torrington (First Respondent / Second Cross-Respondent / Second Cross-Appellant) P Mooney SC / E Grotte (Second Respondent / Cross-Appellant / Fourth Cross-Respondent)   Solicitors: Stiles Lawyers (Appellant / First Cross-Respondent / Third Cross-Respondent) Bartier Perry (First Respondent / Second Cross-Respondent / Second Cross-Appellant) Masselos & Co Lawyers (Second Respondent / Cross-Appellant / Fourth Cross-Respondent)
File Number(s):	2015/186009
Publication restriction:	Nil
Decision under appeal	Court or tribunal: District Court of New South Wales Jurisdiction: Civil Date of Decision: 25 August 2015 Before: Sorby DCJ File Number(s): 2011/374779

Judgment

1. THE COURT: On 29 April 2016, the Court made orders allowing an appeal by ISS Facility Services (NSW) Pty Ltd (ISS) and cross-appeals by the State of New South Wales (the State) and Mr John King (Mr King). The appeal and cross-appeals were brought from orders made by the District Court in proceedings in which Mr King claimed damages for injuries he suffered on 28 January 2009 at the premises of Forster Public School (the School), owned and occupied by the State. At the time of his injury, Mr King was employed by ISS as a cleaner at the School. Having allowed the appeal and cross appeals, the Court ordered that the matter be remitted to the District Court for further hearing on specified questions. The parties were directed to file and serve written submissions as to the costs of the appeals and any directions concerning costs of the proceedings in the District Court.

2. Following receipt of submissions, the Court wrote to the parties on 26 May 2016 inviting them to respond further in relation to the following questions:

• Is it contended that s 346 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) applies to any of the costs, including costs of the appeal;

• If no, on what basis;

• If so, which costs, and how, if at all, does that affect the orders as to costs that that party seeks.

The attention of the parties was directed to Kubovic v HMS Management Pty Ltd [2015] NSWCA 315 at [130]-[134]. The Court has now received further submissions.

3. Mr King alleged that both the State and ISS had breached a duty of care owed to him. Each of them denied that it was negligent. In addition, each of the State and ISS alleged that Mr King’s own negligence caused and contributed to his injury. Each of the State and ISS also sought indemnity or contribution from the other in respect of any liability that it might have to Mr King.

4. ISS appealed on the basis that the District Court erred in making two different assessments of contributory negligence on the part of Mr King and by misconstruing s 151Z of the Workers Compensation Act 1987 (NSW) as to the entitlement of ISS to an indemnity from the State. Mr King cross-appealed on the basis that the District Court erred in finding that he was contributorily negligent and in failing to make appropriate findings and give adequate reasons as to how he contributed to the accident. Mr King also complained about the making of different assessments as to contributory negligence as against the State and ISS. Finally, the State also cross-appealed on the basis that the District Court erred in finding a breach of duty of care on the part of the State that was not pleaded and in apportioning liability between the State and ISS, on the assumption that the State was negligent.

5. This Court ordered that the matter be remitted to the District Court for further hearing on the following questions:

• The liability of the State to Mr King;

• The extent, if any, to which Mr King caused or contributed to his injury:

(1)   in relation to the breach of duty on the part of ISS found by the primary Judge,

(2)   in relation to any breach of duty, if so found, on the part of the State.

• The extent to which ISS is entitled to contribution from the State if any breach of duty to Mr King on the part of the State is found;

• Costs.

6. It is against that background that the questions of costs must be considered. In particular, the Court invited attention to s 346 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW). That provision is in the following terms:

“346      Costs

(1)   This section applies to costs (including disbursements) payable by a party in or in relation to a claim for work injury damages, including court proceedings for work injury damage

(2)     The regulations may make provision for or with respect to the awarding of costs to which this section applies. The regulations may provide for the awarding of costs on a party and party basis, on a practitioner and client basis, or on any other basis.

(3)   A party is not entitled to an award of costs to which this section applies, and a court may not award such costs, except as prescribed by the regulations under this Act or by the rules of the court concerned.

(4)   In the event of any inconsistency between the provisions of the regulations under this section and rules of court, the provisions of the regulations prevail to the extent of the inconsistency.”

7. ISS points out that the appeal and cross-appeals were allowed on the basis of error on the part of the District Court in not deciding the case in accordance with the issues presented by the parties on the pleadings, evidence and arguments of counsel. Therefore, ISS says, the appropriate order for costs is that each party to the appeal bear his and its own costs, since the approach that this Court was compelled to take meant that the issues of real concern to the parties could not be decided. Accordingly, there was no party who could be said to be successful in this Court on the questions that the parties sought to have argued and determined.

8. ISS accepts that Mr King is not an institutional litigant but an individual who has suffered injury in which there is no dispute that the injury was occasioned, at least to some extent, by negligence on the part of at least one party, namely, ISS. ISS therefore accepts that it may be appropriate to afford some indulgence to Mr King, such as a limited order in his favour.

9. The State contends that it was successful in its cross-appeal and that, accordingly, costs should follow the event. It contends that, in circumstances where a finding was made without any foundation in the pleadings or evidence, unfairness to the State was beyond argument. It contends, therefore, that Mr King should pay the costs of the appeal where this Court concluded that a retrial was necessary because Mr King succeeded on a case that was not pleaded or run. Alternatively, the State contends, since the issue under s 151Z was not decided because of the necessity for a new trial, the State’s costs should be paid by ISS or should be apportioned between ISS and Mr King, because ISS conceded the substance of certain of its arguments in relation s 151Z and the appeal was instigated by ISS.

10. The State also contends that the costs of the original trial in the District Court should be borne by Mr King, since he succeeded on a basis that was not pleaded or argued, in that the decision reached by the District Court was that the State was liable on facts that it had not anticipated and should not reasonably have anticipated would be found by the District Court. Therefore, the State says, the costs of the original trial ought to be borne by Mr King. The costs of the new trial would depend upon the outcome at that trial.

11. Mr King contends that the costs of the appeal should be borne by ISS and the State in equal shares. He says that the outcome in this Court was principally because of his submissions and that, in effect, he has been the successful party on the appeal. Thus, there is no dispute as to the liability of ISS in negligence or as to the quantum of damages to which Mr King should be entitled as against ISS, apart from the question of contributory negligence. Similarly, there is no dispute as to the quantum of damages to which Mr King would be entitled as against the State, if the State is ultimately found to be negligent, apart from questions of contributory negligence. He contends that, in effect, he has been a passive party to a dispute between ISS and the State. Alternatively, Mr King contends that the costs of the appeal should be the costs of the parties in the proceedings.

12. Neither ISS nor Mr King made any submission, in the first instance, in relation to the costs of the original trial. In its further submissions, ISS contended that the costs of the original hearing in the District Court should abide the outcome of the further hearing upon remitter. The State made no further submissions.

13. ISS accepts that the claim against it for work injury damages was and is governed, so far as costs are concerned, by s 346 of the Workplace Injury Management and Workers Compensation Act 1998 and the Workers Compensation Regulation 2003 (the Regulation). However, it says that Mr King’s claim against the State is not caught by the provisions of the Workplace Injury Management and Workers Compensation Act or the Regulation. In addition, it says that it is clear from s 346(1) and s 346(2) that recovery proceedings under s 151Z are not caught by those provisions. Thus, it says, the s 151Z recovery proceedings, and the costs, were not in relation to a claim for work injury damages. That recovery action, ISS says, depends squarely upon Mr King’s entitlement to other damages, namely those claimed by him against the State. Accordingly, ISS says, s 346(1) does not apply and therefore no part of 346 applies, such that the Regulation is not made applicable by s 346(2).

14. On the other hand, ISS says, the claim against it, when it was joined as a defendant by Mr King, is undoubtedly caught by the relevant provisions. Therefore, Mr King’s costs in the District Court and in this Court are regulated costs.

15. ISS contends that, if s 346 and the Regulation are applicable to all costs, that can only be on the basis that the original claim brought by Mr King against the State for damages under the Civil Liability Act 2002 (NSW) somehow changed character and became proceedings in relation to a claim for work injury damages. ISS says that contention should be rejected.

16. In his further submissions, Mr King reiterates the stance he took originally. In relation to the question raised by the Court, Mr King acknowledges that s 346 applies to all of the costs, including the costs of the appeal, in respect of a work injury damages matter. However, Mr King says, the original proceedings were brought under the Civil Liability Act against the State as occupier of the School, where the injury occurred. Those proceedings were not a work injury damages claim. While the State relied on s 151Z of the Workers Compensation Act to recover payments from ISS, ISS was not a party to the proceedings when originally commenced.

17. After Mr King was assessed as having 15 per cent whole person impairment, he sought leave to join his employer, ISS, in order to seek work injury damages from ISS. Mr King accepts that his claim against ISS in respect of work injury damages was and is governed by the costs provisions set out in s 346. Mr King adopts the contentions advanced on behalf of ISS.

18. The State makes no submissions in relation to the application of s 346. Clearly enough, that provision has no application to Mr King’s claim against the State, which has nothing to do with the employment of Mr King by ISS.

19. Section 346 applies to costs payable by a party in relation to a claim for work injury damages, including court proceedings for work injury damages. Under s 346(2), the regulations may make provision for or with respect to the awarding of costs to which s 346 applies. Under s 346(3) a party is not entitled to an award of costs to which s 346 applies and a court may not award such costs except as prescribed by the Regulation or by the rules of the court concerned. In the event of inconsistency between the provisions of the Regulation and rules of court, the provisions of the Regulation prevails to the extent of the inconsistency.

20. Part 19 of the Regulation deals with costs. The Regulation does not, relevantly for present purposes, affect the operation of s 346 in providing that the parties bear their own costs.

21. This is a somewhat unusual case. The real issues that the parties sought to have determined have not as yet been determined, and through no fault of any party. Although the State was successful in setting aside the judgment on the basis of the submissions advanced by it, it had a broader interest in the litigation. The essential position was captured in the submissions put by ISS, which acknowledged the State's success, but maintained that:

"it would be unrealistic to say that the State came to the Court only to point out that error on the part of the primary judge. The better view is that, so to speak, the State had bigger fish that it wished to fry but in the circumstances, was unable to do so and was in the same substantive position as the Plaintiff and ISS.”

22. Indeed, senior counsel for the State, after concisely outlining the submission that this Court ultimately upheld, then stated in oral argument "can we then move on to deal with what my friend, Mr King, has accurately described as the major point, which is s151Z(1)(d)."

23. One confirmation of the accuracy of that statement was that the oral submissions of the State on s 151Z occupy more than three times the number of pages of transcript than those directed to the submission that this Court upheld. It seems clear that the lion's share of all parties' costs of the litigation in this Court was directed to matters that have not been determined.

24. Accepting that a broad-brush approach is ordinarily appropriate in exercising the discretion as to costs, and noting that the real issues have not yet been determined, the circumstances suggest that the appropriate order is that the parties’ costs of each of the proceedings in this Court be their respective costs in the proceedings in the District Court. The parties' costs of the original proceedings in the District Court should also be left to the discretion of the judge to whom the proceedings are remitted for determination when the outcome of the litigation is known. In ultimately deciding the appropriate order for costs, it would be incumbent upon the District Court to have regard to the operation of s 346.

25. Orders

26. It will be recalled that on 29 April 2016, the Court made orders setting aside all of the orders made by the primary judge and remitting certain specific matters to the District Court. In addition, the Court now orders:

1. The parties’ costs of the appeal and each of the first and second cross appeals in the Court of Appeal be their respective costs in the proceedings in the District Court;

2. The parties’ costs of the original proceedings in the District Court should be left to the discretion of the judge to whom the proceedings are remitted, for determination when the outcome of the litigation is known.

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Decision last updated: 09 August 2016