Jones v Persal & Co (No 2)

[1999] QDC 205

IN THE DISTRICT COURT
HELD AT MARYBOROUGH
QUEENSLAND

[Jones v. Persal & Co (No. 2)]

[Before McGill DCJ]

Plaint No 136 of 1997
  (Brisbane No 1442 of 1999)
BETWEEN:
  BRETT ANDREW JONES
  Plaintiff
AND
  PERSAL & COMPANY
  Defendant

JUDGMENT

Judgment delivered:                 10 August 1999

Catchwords:  COSTS - offer to settle - employee’s claim from employer for personal injury - whether other “final” - Workers’ Compensation Act 1990 s.182C(4)

WORKERS COMPENSATION - claim for damages at common law - limitation on costs - whether offer “final” - Workers’ Compensation Act 1990 s.182C(4)

Bishoff v. Lyh Australia Pty Ltd (Plaint 198/98, Forno DCJ, 19.3.99, unreported) - not followed

Counsel:R.C. Morton for the plaintiff

M.T. O’Sullivan for the defendant

Solicitors: Carswell & Co for the plaintiff

Tutt & Quinlan for the defendant 

Hearing Date(s):   4 August 1999

IN THE DISTRICT COURT
HELD AT MARYBOROUGH
QUEENSLAND

Plaint No 136 of 1997
  (Brisbane No 1442 of 1999)

BETWEEN:

BRETT ANDREW JONES

Plaintiff

AND

PERSAL & COMPANY

Defendant

REASONS FOR JUDGMENT -McGILL D.C.J.

Delivered the10th day of August1999

In this matter I gave judgment on 23 July 1999 that the defendant pay the plaintiff the sum of $218,601.  When judgment was delivered the question of costs was reserved, since it was necessary to hear argument and counsel were not immediately available.  That argument came on before me on 4 August 1999 and my decision was then reserved. 

The argument turned on the correct interpretation of s.182C of the Workers’ Compensation Act 1990 (“the Act”). That Act was repealed by the WorkCover Queensland Act 1996, but continues to apply in relation to injury sustained before the repeal (see s.551 of the 1996 Act), so it applies in the present case because the plaintiff sustained his injury on 22 August 1996. Section 182C is one of a number of provisions inserted by the Workers’ Compensation Amendment Act (No 2) 1995, which commenced on 1 January 1996. Relevantly, it provides:

“(1) This section applies if the worker is not entitled to, or rejects, lump sum compensation under this Act for an injury and seeks damages at law for the injury. 

(3) No order as to costs, other than an order allowed under this section, is to be made by the court in the proceeding, unless the Board certifies that the worker’s injury is a serious injury.
(4) If a party to the proceeding makes an offer of settlement that is refused and the court later awards damages to the worker, the court must, in the following circumstances, make the order about costs provided for -

(a)if the amount of damages awarded is equal to or more than the worker’s final offer - an order that the defendant pay the worker’s party and party costs from the day of the final offer;

(1)if the amount of damages awarded is equal to or less than the defendant’s final offer - an order that the worker pay the defendant’s party and party costs from the day of the final offer.

(5) If the award of damages is less than the worker’s final offer, but above the defendant’s final offer subsection (3) applies.”

It was common ground before me that the plaintiff was not entitled to or rejected a lump sum compensation, and that the Board had not certified that his injury was a serious injury. It was accordingly submitted on behalf of the plaintiff that the matter fell within para. (a) of subsection (4), so that the plaintiff was entitled to an order that the defendant pay the plaintiff’s party and party costs from the day of the final offer. The plaintiff relied on an offer dated 1 July 1998, a copy of which is Exhibit A to the affidavit of Mr. Ponti, sworn 2 August 1999, and read before me. That offer to settle was expressly made in accordance with Part 9 of the Rules of the District Court and was an offer to settle the claim for $160,000. In terms it covered the whole matter of the claim, and was not contingent or conditional. It was not, however, made expressly as a “final” offer.

There had been an earlier offer, made on 19 December 1997: Exhibit 25.  In addition, there was evidence of a letter dated 7 July 1998 from the plaintiff’s solicitors to the defendant’s solicitors (Exhibit 26) in which the plaintiff’s solicitors said:

“We would appreciate it if you would advise if you are amiable to discussions in relation to settling this matter.  Please also advise if you are prepared to admit liability.”

Counsel for the defendant submitted that the offer of 1 July 1998 was not a “final” offer since it was not expressed to be a final offer, and that Exhibit 26 demonstrated that it did not necessarily reflect the final negotiating position of the plaintiff, that is to say, it was inconsistent with the proposition that the offer of 1 July 1998 was final in the sense of being the furthest that the plaintiff was prepared to go in order to compromise the litigation.  Further, he relied on a decision of his Honour Judge Forno in Bishoff v. Lyh Australia Pty Ltd (Plaint 198/97, Forno DCJ, 19 March 1999, unreported).  In that case his Honour had given judgment for the plaintiff in a matter which fell within s.182C, for $121,911.84, and on 4 November 1998 the plaintiff had made an offer of settlement to accept $109,137.61.  His Honour, noting that there was no definition of “final offer” in the Workers’ Compensation Act, and that it was agreed that there were no further offers made by the plaintiff in that case, continued:

“It seems to me that if an offer is to be made under ss (4) of s.182C then it should clearly be made as a final offer and the circumstances should be such as to indicate that that is so.”

Since there was nothing to indicate from the defendant’s perspective that there would be no further offer made after that offer, the offer was not a final offer and did not form the basis of an order under subsection (4).  Accordingly, his Honour made no order as to costs. 

I was told that there were no other decisions on the point, and presumably that decision has not been the subject of appeal.  The decision was ex tempore, but it may receive some support from the proposition that an offer to settle is not valid for the purpose of Part 9 of the District Court Rules or Order 26 of the Supreme Court Rules (now Part 5 of Chapter 9 of the Uniform Civil Procedure Rules), unless the offer states expressly that it is made in accordance with the relevant provisions. I think there is authority for that proposition, although I have not been able to turn it up, but at least it has the support of the express provisions of the relevant rules. There is no specific provision in s.182C, in that part of the Act, or in the Act generally which requires an offer of settlement, or a “final offer”, to be in any particular form, and as his Honour pointed out, neither term is defined.

When considering s.182C it is not appropriate to assume any particular sophistication or subtlety on the part of whoever is responsible for its formulation.  Leaving aside any consideration of harshness or injustice in the policy which it implements, it is one of the most unsatisfactorily drafted provisions it has ever been my misfortune to come upon.  Whoever is responsible for it seems to have failed to appreciate that it would be possible for a situation to arise where both para. (a) and para. (b) of subsection (4) applied.  A plaintiff may offer to settle for X dollars, which offer is not accepted, and the plaintiff’s position may then deteriorate, after which the defendant may offer to settle for Z dollars, a larger amount.  If that offer is also not accepted but the court awards Y dollars, an amount falling between the two offers, both paragraphs will apply.  The court is then under a mandatory obligation to make what look like inconsistent orders for costs.  What is the court to do, order each party to pay the other party’s costs from the respective dates?  The mind boggles!  There is also the consideration that if subsection (3) is interpreted literally, subsection (5) is mere surplusage, serving no purpose except to generate doubts as to whether subsection (3), and perhaps (4), really mean what they seem to mean. 

In these circumstances it is, I think, unhelpful to be looking too closely to determine some mechanism which will operate rationally and consistently in a range of situations which can occur in practice.  It also means that it is unsafe to assume that the matter should be approached on the basis that a particular construction is not indicated if the outcome produced by that construction would appear to be irrational. 

I think for practical purposes there are two possible meanings of “final” in this context: either it refers to a quality of finality attributed to the offer at the time when it is made (i.e., “that’s my final offer!”), or it reflects such a quality which the offer acquires in retrospect from the absence of a subsequent offer (i.e. “final” means “last”). Indeed, if a particular offer is identified at the time it is made as a “final offer”, that is simply an assertion as to future conduct, that is, that there are not going to be any other offers in the future, so that this offer is going to prove to be the last. These may be identified as prospective and retrospective meanings. It appears that his Honour adopted the former interpretation, on the basis that it was necessary for a defendant to be aware, from the terms of the offer or the circumstances surrounding it, that this was the offer which should be treated as relevant for the purposes of the section, and that there was not going to be any further offer made. The effect of this interpretation is that once an offer is made as a “final offer” the defendant will at once be aware that that is the relevant offer for the purposes of s.182C, and will be able to assess its position in the light of that circumstance. Conversely, if a “final offer” is made by a defendant, the plaintiff will know that that is the offer which will activate s.182C(4) and assess his reaction appropriately.

There are, however, I think two reasons why there are difficulties with this interpretation.  The first is that the only specific provisions in subsection (4) and (5) operate by reference to “final” offers of settlement, so that if a “final offer” is necessarily different from an “offer” it seems strange that subsection (4) is not conditioned on the making of a “final offer of settlement”.  If any offer can become final from the absence of a later offer, the existing wording is appropriate;  if there is only one offer, it will be the final offer.  The second is that it does not adequately address a situation where there is more than one “final offer”.  What if one party makes an offer which is expressed to be a “final offer” and then six months later makes another which is also expressed to be a “final offer”.  At the time when each was made, it was intended to represent the final negotiating position of that party, but as a result of improved access to information in the interim, that attitude underwent modification.  The plaintiff may obtain a more favourable (i.e. pessimistic) medical report, or the defendant may obtain a useful surveillance video of the plaintiff.  If each is expressed to be a “final offer” and each did represent the party’s final negotiating position at the time when the offer was made, how is the court to determine which is the “final offer” by reference to which the relevant paragraph of subsection (4) is to apply.  Even if only one falls on the relevant side of the award of damages, by reference to that one, the court must make a particular order, whereas by reference to the other one, the court cannot: subsection (3).  This difficulty, I think, can only be accommodated by applying the second meaning of “final” referred to earlier, that is, by determining which is in retrospect the final offer.  I do not think that it could sensibly be said that once a person had made a “final offer” for the purposes of s.182C, it was no longer possible to make a further “final offer”; that would require the section to be read as if it impliedly also provided that where there was more than one “final offer” made by a particular party, the section applied by reference to the first such “final offer”.

These difficulties are avoided if one gives “final” a retrospective  rather than prospective connotation.  Since subsection (4) will only operate once the court has awarded damages, it will always be possible to know which offer of settlement from any particular party was the “final” offer in the sense of the “last” offer.  Indeed, the appearance of the word “final” in subsection (4) and (5) can be readily explained on the basis that, if that word is omitted, the sections are difficult to apply rationally (perhaps I should say even more difficult to apply rationally) if there were more than one offer made by the relevant party.  In addition, making the provision operate by reference to the last offer, as distinct from, for example, the first offer or the highest offer, may be thought to encourage a continuation of attempts to settle after the first offer, at least on the part of the defendant; there is precious little encouragement to settle litigation offered to the plaintiff by this regime, however the section is construed, except of course to settle quickly for an amount which is clearly less than the plaintiff deserves.  The section operates as a strong incentive to a plaintiff who has already made one offer not to make another, unless there is no chance of bettering the first.  It is a severe impediment to settlement of proceedings.

By way of contrast the Uniform Civil Procedure Rules deals with the possible existence of multiple offers in different ways: rule 360(2), which deals with the situation where there is more than one offer made by a plaintiff, requires that the rule operate by reference to the offer most favourable to the plaintiff. Rule 361(4), dealing with multiple offers by a defendant, requires that the rule operate by reference to the first offer which satisfies sub-rule (1), which of course may or may not be the first offer actually made.

The second interpretation also means that, whether there is only one offer of settlement or a number from the relevant party, it will always be possible to identify the “final offer” from that party, so it assists in applying the provision with certainty.  It also avoids what might be thought to be something of a trap in the operation of the provision, in that an offer of settlement, even if it was intended to be the only one, will not be effective for the purposes of the subsection unless it is expressed to be a “final offer” or otherwise identified as having that quality. 

I was referred to some cases, although they were all decided in a different context.  In Owners of “Shin Kobe Maru” v. Empire Shipping Co Inc (1994) 181 CLR 404 at 421, the High Court reaffirmed the proposition that:

“It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.”

In the present case, given the prohibition in subsection (3), subsection (4) may be said to grant power, which should therefore not be subject to the limitation that the “final offer” is one which is expressed to be a final offer. 

In Re: Henderson (1888) 20 QBD 509, Lord Esher MR said at p.510, apropos the question of whether an order for alimony could be considered a “final judgment” for the purposes of the Bankruptcy Act:

“It seems to me that the question whether a judgment or order is final or not must be determined upon a view of it at the time at which it is made.  If it is not “final” at that time, it cannot be made so by reason of its not being obeyed, or by any other circumstances which have arisen since that time.”

In fact, what was decided in that case was that the order was not “final” because it was an order to pay pendent lite and therefore an interlocutory order.  As Fry LJ said (p.511):

“I cannot concede of any order made by any court less final in its nature.”

That case was referred to by Rich ACJ in Pepper v. McNiece (1941) 64 CLR 642 at 647. In that case the question was whether an order of a Court of Petty Sessions was a final order for the purposes of the Bankrupty Act, in circumstances where, by s.31(8) of the Moratorium Act 1932, that court could reconsider any matter which had been dealt with by it or rescind or vary any decision or order previously made by it. Rich ACJ at p.647 went on to say that:

“The critical time at which to regard such an order is when the bankruptcy notice is to be issued.  At that time there was an existing order which had determined that £120 should be paid to the respondents.  The court in making it pronounced the order as a final and definitive command that the appellant should pay the money.  No doubt the court could not renounce its power of reconsideration, but it did not mean the order to be provisional or defeasible.  No attempt has been made on the part of the respondents to move the court which made the order to reconsider the matter or to rescind or vary the order.”

His Honour was therefore treating it as being final for the purposes of the Bankruptcy Act if it retained its quality of finality at the time when the bankruptcy notice was applied for. This is contrary to the approach of Lord Esher, and supports a retrospective meaning when the relevant legislative provision operates at a later date.  This approach would overcome the difficulty referred to earlier, that where there are two offers each of which is intended to be the “final offer” at the time when it is made. It confirms that it may be appropriate in a particular case to look at the question of whether something is “final” with the benefit of hindsight.

In Re: Nemeth (1986) 69 ALR 429, Beaumont J held that a particular order made by the Family Court under s.79 of the Family Law Act 1975 was not a ‘final order” for the purpose of the Bankruptcy Act. His Honour held that the existence of a power under s.79A to set aside or vary an order made under s.79 was not inconsistent with that order being “final” for the purposes of the Bankruptcy Act but that in that case the order was by its own terms not “final”. 

The courts in the bankruptcy cases were concerned with the question of whether a particular order did or did not meet the description in the provision of the Bankruptcy Act, and that, I think, necessarily involved a qualitative meaning for the word “final”; it would not have made much sense to have interpreted it there as meaning “last”.  In that context the use of the word “final” indicated that there were some orders which fell within the Bankruptcy Act and some which did not.  It is not immediately clear why there ought to be a distinction for the purposes of subsection (4) between those offers of settlement which do fall within paras. (a) and (b) and those which do not.  Although the Bankruptcy Act provisions had to be satisfied at a later time, when the Bankruptcy Notice was issued, for some purposes the question of whether a judgment or order is final has to be decided at once.  For example, time for appeal was often different for “final” and interlocutory orders, e.g., O.70 r.4 of the Rules of the Supreme Court as it once was.  In such a situation, the quality of finality has to be determined prospectively.

When constructing statutes the primary and natural meaning of words is to be preferred, unless there is some reason to justify some other meaning: Cody v. J H Nelson Pty Ltd (1947) 74 CLR 629 at 647. In my opinion, the second construction referred to earlier, that “final” means “last”, is the more basic or ordinary meaning of that term. When the word is used to identify a particular quality in some judgments or orders, as distinct from other judgments or orders, it is really being used in a technical sense. I have already referred to difficulties which could arise if an offer expressed to be a “final offer” proves not to be because a later offer is made, and there is a risk that, if the word is given a prospective meaning, it will invite attempts to use any later willingness to negotiate as a basis for an argument that the offer did not fall within the terms of the section, as indeed was done in the present case by the use of the letter, Exhibit 26. Even though there little in this section which encourages the resolution of litigation by negotiating and compromise, I would be reluctant to adopt an interpretation of it which positively encouraged parties to adopt a fixed position and never budge.

Section 182C was considered by His Honour Judge Robin in Turner v. Apsoe Pty Ltd (Plaint 1458/97, 7.8.98), although his Honour did not consider this particular question.  His Honour said at p.4:

“With considerable regret, I find myself quite unable to ignore the clear and absolute language of s.182C. ... Subsection (4) is the only warrant for order for costs.  It would assist the plaintiff only if he had done better than his own offer, and then, only from the day of his final offer.  If I have correctly interpreted subsection (4), its effect is that a plaintiff ought to make a modest offer which he or she is likely to better at a trial before any substantial costs are incurred.  As I understand the system, a plaintiff seeking damages for substantial future economic loss is compelled to litigate as the lump sum compensation offered, as referred to in subsection (1) will include nothing in this respect.”

His Honour was critical of one aspect of the operation of these provisions, in that it did not provide a defendant with any incentive to co-operate in the conduct of the trial, since there was no power to punish an absence of co-operation, or even sheer obstructionism, with an adverse order for costs.  It would seem that even the rules about notices to admit facts and documents would not apply in the teeth of this provision.  His Honour’s criticism appropriately exposes one aspect of this harsh and unjust provision, although it is apparent from a portion of the second reading speech quoted by his Honour that this is consistent with the intention in introducing it, since one of the objectives of the relevant amending act was “requiring workers with less serious injuries who choose to proceed to common law to meet their own costs”. 

I suppose that it would be consistent with that objective for me to adopt an interpretation of the expression “final offer” which would make it more difficult for a plaintiff to obtain an order for costs by falling within para. (a), although such an interpretation would also make it more difficult for a defendant who had made an appropriately generous offer which was not expressed to be “final” to fall within para. (b). However, I think it better to adopt the ordinary interpretation of the word “final”, one which provides for a clear and simpler operation of the provision, and one which provides a more obvious justification of the use of that adjective. There is also the consideration that the justification suggested by his Honour Judge Forno for his construction, that it is important from the point of view of the recipient to know whether a particular offer is the “final offer”, is, it seems to me, on consideration more apparent than real. It really assumes that this is the correct interpretation of the provision, and therefore is not, in my respectful opinion a justification for preferring that construction. If any offer can turn out to be the “final offer” then the other party will have to consider the possible operation of s.182C(4) in the light of that offer and in the light of the prospects in the case, and it is not obvious that there would be any particular disadvantage in the system operating in that way; if anything it would operate better than one where an offer could apparently be disregarded as of no significance for the purposes of that section unless it was described as a “final offer”. There is, it seems to me, no reason why it is necessary for the purposes of the proper operation of that section for it to be possible to identify at the time that the offer is made that it is a “final offer”; the section is addressed to a position where the determination can be made with the benefit of hindsight, and in that situation I think it is in principle preferable to adopt a construction which assumes the benefit of that hindsight. That is what was done by Rich ACJ in Pepper.  That is done by treating as the “final offer” the offer which was the last offer prior to the time when subsection (4) comes to be applied by the court.

I am conscious of the importance of considerations of judicial comity and would prefer to follow the decision of Judge Forno.  However, in circumstances where his Honour’s decision was given ex tempore, and where after careful consideration of the relevant issues and the benefit of argument from experienced counsel, I have concluded that his interpretation was the wrong one, I think I should depart from it. In my opinion, what matters for the purpose of s.182C(4)(a), in determining whether a particular offer of settlement is “the final offer of settlement” by a particular party, is simply whether that party made a later offer of settlement. The plaintiff did not make an offer of settlement later than that dated 1 July 1998. It follows that that was “the worker’s final offer”, and as the amount of damages awarded was more than the amount contained in that offer I conclude that I am obliged to make the order for costs provided for in para. (a), subject only to the modification that it is to be costs assessed on the standard basis rather than “party and party” costs, in view of the provisions of s.133(b) of the Supreme Court Act 1991, and r.743 of the Uniform Civil Procedure Rules. It is unnecessary to specify in the order that the costs be assessed on the standard basis; that will follow in the absence of an order to the contrary: r.703(1).

I therefore order that the defendant pay the plaintiff’s costs of the proceeding from 1 July 1998 to be assessed.   I think that it follows anyway, but for the avoidance of doubt I will further order that the costs of the appearance on 4 August 1999 be included in the costs of the proceeding. 

Counsel for the plaintiff:            R.C. Morton

Counsel for the defendant:                   M.T. O’Sullivan

Solicitors for the plaintiff:  Carswell and CO

Solicitors for the defendant:                  Tutt and Quinlan

Hearing Date:   4 August 1999