Lower and Comcare

[2008] AATA 1124

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 1124

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S 200600263

GENERAL ADMINISTRATIVE DIVISION		)
Re		KEVIN BERTRAM LOWER

Applicant

And COMCARE

Respondent

DECISION

Tribunal Senior Member L Hastwell

Date17 December 2008

PlaceAdelaide

Decision The Tribunal is satisfied that the fair and just outcome as between the parties in this case is to make an order that applicant be granted his costs and disbursements to the 7 November 2007, being the date that the offer was rejected.  Thereafter, each party is to bear its own cost

..............................................

L HASTWELL
  (Senior Member)

CATCHWORDS

COMPENSATION – costs – exercise of discretion to award costs under s 67(8) of the Safety, Rehabilitation and Compensation Act 1988 – Calderbank letter of offer – rejection of offer by applicant – applicant partially successful at hearing, but outcome less favourable overall than offer – costs and disbursements granted to applicant to the date offer was rejected - thereafter each party to bear their own costs

Safety, Rehabilitation and Compensation Act 1988 ss 67(2), 67(8)

Griffiths v Australian Postal Corporation [2008] FCA 19
Perry v Comcare (2006) 150 FCR 319
Calderbank v Calderbank (1975) 3 All ER 333
Re Perry and Comcare [2004] AATA 289

REASONS FOR DECISION

17 December  2008      Senior Member L Hastwell   

1.      Kevin Lower (the applicant) was partially successful on the substantive aspects of his claim before the Administrative Appeals Tribunal.  The reviewable decision was set aside and a decision was substituted that he was entitled to a shift allowance for some of the period for which he was claiming a shift allowance.

2.      He now seeks an order for costs which is opposed by Comcare (the respondent).

relevant legislation

3.      The Tribunal has discretion to award costs which is set out in the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act). The relevant provisions are as follows:

“67  Costs of proceedings before Administrative Appeals Tribunal…

…

(2)Subject to this section, where a proceeding instituted under this Part in respect of a reviewable decision relating to a determination is rendered abortive because a decision has been made, following a reconsideration under subsection 62(1), varying or revoking that determination, the responsible authority is liable to reimburse the claimant for costs reasonably incurred by the claimant in connection with that proceeding.

…

(8)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 claimant; or

(b)setting aside a reviewable decision and making a decision in substitution for the reviewable decision that is more favourable to the claimant than the reviewable decision;

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

the principles to apply in considering an application for costs

4.      In the recent decision of Griffiths v Australian Postal Corporation [2008] FCA 19, the general principles to apply in considering costs applications under the SRC Act were reviewed by the Federal Court.

5. The general principle is set out in s 67(2) of the SRC Act and is that each party is to bear its own costs. Nevertheless, s 67(8) provides that there is discretion to order “the responsible authority”, in this case Comcare, to pay a claimant's costs where a reviewable decision has been set aside or varied in a manner that results in a more favourable decision to the claimant.

6.      In the case of Perry v Comcare (2006) 150 FCR 319 at paragraph 76, Greenwood J commented as follows:

“… In exercising the discretion, the Tribunal ought have regard to the rule of primacy reflected in section 67(1), the circumstances of the case which gave rise to a decision enlivening the qualification upon section 67(1), the background circumstances concerning the claim, the nature and character of proceedings for the purposes of the SRC Act, the complexity of the claim and the conduct of the parties in relation to the proceeding.”

7.      This dictum was endorsed by Justice Madgwick in the more recent case of Griffiths.

8.      The respondent in this case submits that as they made an offer to settle this matter on 30 October 2007, which was more favourable than the ultimate decision of the Tribunal, they should not be required to pay the claimant's costs from the date of that offer.  The letter of offer, which was received as Exhibit A1, was very precise and offered to resolve the matter in the following terms:

“ … by paying the applicant average shift penalties of $77.44 per week for the period   of his incapacity, estimated to be 15 years (namely 24 July 1990 to 27 October 2005).  That is, payment of $77.44 per week, for 48 weeks per year (allowing for four weeks of annual leave per year), for a period of 15 years.”

9.      The letter set out the basis on which the offer had been calculated and offered to provide a spreadsheet setting out the basis for Comcare’s calculations.  It stated that the offer remained open until 4:00pm on Friday 2 November 2007.  Proposed consent orders were enclosed.  The letter also contained the following paragraph:

“Could you please note that if this offer is not accepted Comcare proposes to rely upon the terms of this letter on the question of costs in the event the matter proceeds to hearing.  In particular, if the offer is not accepted and the applicant does not achieve an outcome in the Tribunal proceedings which is materially better than the terms of Comcare’s offer as set out in the enclosed offer, Comcare will, in due course:

(a)oppose the applicant being awarded costs on and from the date of this letter; and

(b) apply to have any costs the applicant would otherwise be awarded up to the date of this letter, reduced by the amount of costs Comcare incurs from the date of this letter.”

10.     The letter was sent by facsimile to the applicant's solicitor on 30 October 2007.  An additional letter was sent on that date requesting that the applicant advise their legal costs and disbursements so that they could be agreed and included in the consent orders.

11.     The draft proposed consent order that was included with that letter calculated the lump sum payment due to the applicant to be $55,756.80.  In addition, Comcare would pay reasonable party /party costs.

12.     There was no response from the applicant's solicitor until 7 November 2007.  On that date, the applicant, through his solicitor, rejected the settlement offer.  The letter from his solicitor (Exhibit R1) stated:

“Mr Lower has instructed me to reject the proposal of settlement contained in your letter.  My client believes that the starting point for his shift penalty is the amount of $123.38 per week …”

13.     The Tribunal was not told of any further relevant discussions between the parties after that date and assumes that at that point both parties prepared for the hearing.

14.     The matter then proceeded to a hearing before this Tribunal for two days in January 2008.  The decision of this Tribunal, which was handed down on 2 May 2008, was considerably less favourable to the applicant than the quantum he would have received had he accepted Comcare’s offer of October 2007.  The decision resulted in the applicant being awarded shift penalties that amount to a lump sum payment to the applicant of approximately $10,000 less overall than the sum that he would have received had he accepted Comcare’s offer.

15.     The decision of the Tribunal was to limit the period of shift penalty payments payable to the applicant to a period of approximately 8 years and the rate set was $103.26 per fortnight.  Comcare’s offer had been to pay a lesser shift penalty, but for a longer period.

16.     The applicant’s application had been for the payment of shift penalties for a period of 15 years from the date that he became incapacitated.

17.     The applicant argues that because the offer made by Comcare was time limited and purported to be only open until 2 November 2007, it is not reasonable for the Tribunal to pay significant regard to that offer in determining the issue of costs. 

18.     The offer complied with the requirements of what is known as a “Calderbank offer” (Calderbank v Calderbank (1975) 3 All ER 333). It was clear, precise, certain and capable of acceptance and the costs consequences were set out clearly on the face of the offer. At first instance, in the matter of Re Perry and Comcare [2004] AATA 289, when considering the costs issues, the Tribunal summarised Calderbank offers in the following terms: 

“Offers like this are common in litigation.  In appropriate circumstances, they can be admitted into evidence on the question of costs notwithstanding the general privilege that attaches to settlement negotiations.  These offers are known as Calderbank offers, … Calderbank offers are not normally considered unless there is a clear indication accompanying the offer that the offeror reserves the right to produce the document in relation to any dispute over costs: … ‘the terms of the offer must be clear, precise, certain and capable of acceptance’.”

19.     Greenwood J in the case of Perry, once it reached the Federal Court, spent some time analysing the discretion arising under s 67 of the SRC Act. He noted that there is no absolute rule grounding the common expectation that the exercise of the cost discretion will be determined by the outcome on the merits.

20.     In that case, he expressed the view that the Tribunal had quite properly had regard to the letter of offer in exercising its costs discretion even though, in his view, it too did not comply with the requirements of a Calderbank offer.  He commented:

“The fundamental obligation of the Tribunal in the exercise of the discretion was to do justice between the parties according to its assessment of the circumstances of the case.”

21.     Comcare points out that the offer was made late in the piece and the time limitation was put on the offer because of the necessity to commence preparation for a hearing.  It is clear from the applicant’s response that the applicant was not concerned about the time limitation and when responding on 7 November 2007, considered the offer to be live.  On that date, the applicant did not put a counter offer, but specifically rejected the Comcare offer as being too low and intimated that a substantially higher sum was due to him.

22.     The commercial reality is that, had the offer been accepted on that day or at any point before further significant costs were incurred by Comcare, then the matter would have undoubtedly settled on that basis.  Had the applicant put a counter offer that was not too far off the mark set in Comcare’s offer, then the parties may have continued a fruitful negotiation that could have obviated the need for a hearing.  The applicant’s response did not really invite any further negotiation and maintained the position he took at the hearing.

23.       The Tribunal is of the view that in rejecting Comcare’s offer, the applicant knew that he was at risk of costs and that is a risk that he took to the litigation with him.  He did not put a counter offer and the claim that he took to litigation was for the award of a sum considerably higher than that which he ultimately achieved.

24.     In reaching its conclusions at the hearing, the Tribunal did not accept aspects of the applicant's evidence and the result was considerably less favourable to the applicant than the outcome that he sought.

25.     Comcare did not seriously pursue the issue of seeking further deduction from the applicant’s costs to the date of the offer, based on their own costs incurred after that date.

26.     Having considered all relevant material and the authorities, the Tribunal is satisfied that the fair and just outcome, as between the parties in this case, is to make an order that Mr Lower be entitled to his reasonable costs and disbursements on a party/party basis to 7 November 2007, being the date that the offer was rejected.  Such costs to be either as agreed between the parties or taxed.  Thereafter, each party is to bear its own costs.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member
L Hastwell

Signed:         ............J Coulthard........................................
  Associate

Date of Hearing  12 August 2008
Date of Decision  17 December 2008
Counsel for the Applicant         Mr S Cole
Solicitor for the Applicant          Langsfords Lawyers
Counsel for the Respondent     Ms K Bean
Solicitor for the Respondent      AGS