Lowrie, John Clifford v State of Tasmania (Education Department)

[1998] TASSC 109

109/1998

PARTIES:  LOWRIE, John Clifford
  v
  STATE OF TASMANIA

(EDUCATION DEPARTMENT)

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  APPELLATE
FILE NO/S:  LCA 2/1998
DELIVERED:  16 September 1998
HEARING DATE/S:  1 September 1998
JUDGMENT OF:  Underwood J

CATCHWORDS:

Workers Compensation - Proceedings to obtain compensation - Determination of claims - Claims - Generally - Unfettered discretion conferred by statute - Discretion to be exercised in accordance with recognised principles - Ordinarily, costs "follow the event".

Workers Rehabilitation and Compensation Act 1988 (Tas), s59.
Norbis v Norbis (1986) 161 CLR 513; Latoudis v Casey (1990) 170 CLR 534, applied.
Farrow v State of Tasmania (1997) 7 Tas R 127, followed.
Jones v Curling (1884) 13 QBD 262, distinguished.
Aust Dig Workers Compensation [155]

REPRESENTATION:

Counsel:
             Appellant:  C J Bartlett
             Respondent:  P Heerey
Solicitors:
             Appellant:  Bartletts
             Respondent:  Director of Public Prosecutions

Judgment category classification:
Court Computer Code:  
Judgment ID Number:  109/1998
Number of pages:  5

Serial No 109/1998
File No LCA 2/1998

JOHN CLIFFORD LOWRIE v
STATE OF TASMANIA (EDUCATION DEPARTMENT)

REASONS FOR JUDGMENT  UNDERWOOD J

16 September 1998

On 2 May 1995, the appellant suffered a back injury in the region of his L4/5 disc arising out of and in the course of his employment with the respondent.  There was resultant pain and restriction of movement.  A claim for compensation was made and weekly payments commenced.  By a letter dated 23 December 1996, the appellant's solicitors sent the respondent a medical report from Dr Maclaine-Cross.  In it, Dr Maclaine-Cross expressed the opinion that the appellant had suffered a 50 per cent "impairment of function" of his back.  The solicitors sought payment of a lump sum, pursuant to the provisions of the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s71, Item 9: "Total and Permanent Impairment of Back". On the same day that the letter was sent, the appellant lodged a claim for compensation in the Tribunal. It was in the following terms:

"I JOHN LOWRIE of 40 Richard Place Ulverstone in Tasmania, being the worker, refer to the Tribunal for determination of the following:-

1    I seek a lump sum for the permanent impairment I have in my back as a result of injury sustained by me in the course of my employment on 2 May, 1995.  I claim that I have a permanent impairment to the extent of 50% which entitles me to approximately $29,952.

2    I seek costs of and incidental to this application, together with any further or other orders as the Commissioner for Compensation deems appropriate.

This application is made pursuant to Section 71 and 59 of the Act."

On 20 January 1997, a Registrar's conference was held in an attempt to settle the claim.  It was unsuccessful.  The respondent, by its solicitor, Mr Owen, said that he needed to obtain other medical opinions.  There was another Registrar's conference in February.  Mr Owen was then in possession of a medical report in which was expressed the opinion that the impairment of the appellant's back was 15 per cent.  Settlement was not achieved at this conference either.  In the months that followed, Mr Owen obtained more medical reports.  The opinions expressed in them varied between 15 per cent and 35 per cent impairment of the appellant's back.

The respondent offered the appellant $15,000 in settlement of his claim, but the offer was rejected. By his solicitor, the appellant said that he would settle on the basis of a 35 per cent total and permanent impairment of his back. The counter-offer was not accepted. The claim for compensation was listed for hearing by the Tribunal in August 1997. At the end of July, the respondent increased its offer to $19,000. The appellant accepted this sum in settlement of his claim for a lump sum payment, pursuant to the Act, s71.

The appellant asked the respondent to pay his costs of the proceedings in the Tribunal.  The respondent refused to do so and, accordingly, the claim for compensation came on for hearing.  The only issue for the Tribunal was whether the order secondly sought in the referral should be made, viz, that the appellant's costs of and incidental to the application be paid by the respondent. 

The learned Chief Commissioner dismissed the application for an order for costs and this appeal is brought from that order.

The power to make an order for costs is conferred by the Act, s59 in these terms:

"59 — (1)   Except as provided in subsection (2), the Tribunal may make such order as to costs as it considers appropriate in any proceedings before it.

(2)  The Tribunal may not order costs in respect of a conciliation conference conducted under section 43A unless it appears to the Tribunal that a party to the conciliation conference has unreasonably obstructed or prolonged proceedings."

As I noted in Farrow v State of Tasmania (1997) 7 Tas R 127, the relevant provision concerning costs prior to the enactment of the Workers Compensation Act 1988, was to be found in the Local Courts Act, s133.  It provided:

"All the costs of any action or proceeding in the court shall be paid by or apportioned between the parties in such manner as the court or commissioner directs, and in default of any special direction shall abide the event of the action or proceeding ...".

With respect to this provision, I observed in Farrow at 129:

"Pursuant to that section, this Court exercised its discretion in proceedings to obtain compensation by awarding costs in favour of the successful party unless there was good reason not to do so. In this respect, there was no distinction between the exercise of the discretion to award costs in proceedings to recover compensation and the exercise of that discretion pursuant to the Rules of Court, O80, r1 which provides:

'Subject to the provisions of the Act and these rules, the costs of and incidental to al proceedings in the Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge'."

The Workers Compensation Act 1988, s59, changed all that. It provided:

"59 ¾ (1)    Except as provided in an order under section 57(2) or where the Commissioner, in the circumstances of the case, otherwise determines, costs shall not be awarded to or against a party to a proceeding before the Commissioner.

(2)     Costs shall not be awarded in respect of any case referred to the Supreme Court by the Commissioner pursuant to section 58."

With respect to that section I said in Farrow, at 130:

"Since the enactment of that section, this Court has held on several occasions that the proper exercise of the statutory power to order costs required the Workers Compensation Commissioner to consider as a threshold test, whether there was some special feature or features of the case that made the general rule that each party pay its own costs, inappropriate. Only if this is shown does a general discretion to order payment of costs arise.  See Evans v Knight Serial No A89/1991; Trident Seafoods Pty Ltd v Dransfield Serial No A64/1993; Guiney v Bury Serial No A59/1994; The Returned Services League of Australia (Devonport Sub-Branch) v Garwood Serial No A59/1995."

However, by the Workers Rehabilitation and Compensation Reform Act, No16/1995, Parliament changed all that again by repealing s59 and re-enacting it in the terms I have already set out. With respect to that section I said in Farrow at 131:

"Further, by the 1995 amendment, the Legislature took a deliberate step away from conferring a discretion to award costs only if there were some special circumstances about the case, and reverted to the pre-1988 position by conferring a totally unfettered discretion to make such order as the Tribunal considered appropriate in any proceedings before it. I see no distinction between the terms of the Act, s59(1) as now enacted, the Local Courts Act, s133 and the Rules of Court, O80, r1."

It is settled law that even if the statute conferring a discretion imposes no fetter on its exercise, it must be exercised in accordance with established principle.  With respect to that proposition, the High Court said in Norbis v Norbis (1986) 161 CLR 513 at 519:

"The point of preserving the width of the discretion which Parliament has created is that it maximizes the possibility of doing justice in every case. But the need for consistency in judicial adjudication, which is the antithesis of arbitrary and capricious decision-making, provides an important countervailing consideration supporting the giving of guidance by appellate courts, whether in the form of principles or guidelines."

With respect to the exercise of an unfettered discretion to award costs, Mason CJ said in Latoudis v Casey (1990) 170 CLR 534 at 543:

"If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party.  They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings:"

Referring to the proper exercise of the discretion to order costs in civil proceedings, McHugh J said at 567:

"An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v Noumenon Pty Ltd (1988) 47 SASR 182, at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party."

There are many cases that express the same principle.  Some examples of such cases are set out in Farrow at 129.

Thus, with respect to the proceedings before the learned Chief Commissioner, the proper exercise of his discretion required him to order costs in favour of the appellant, unless there was good reason for departing from the general rule.  The learned Chief Commissioner correctly stated the principle in his reasons for judgment when he said:

"The Tribunal has a discretion to make an order as to costs although it is clear that the principle that costs ordinarily follow the event would be applicable."

The learned Chief Commissioner went on:

"As has been observed in Clousen v Taylor A57/1996 however, that principle does not involve a mandatory approach.  The reference to Jones v Curling (1884) 13 QBD at 272 is relevant. In that case the Court said:

'... the judge should look in the first place at the result of the action itself, namely, the verdict of the jury, and he should look also at the conduct of the parties to see whether either of them had in any way involved the other unnecessarily in the expense of litigation, and beyond that he should consider all the facts of the case so far as no particular fact was concluded by the finding of the jury; ...'."

The learned Chief Commissioner then set out some of the history of the proceedings to which I have made general reference and went on to say:

"My view of s71 is that the employer is not bound to accept the claim as put by the worker in relation to assessment of impairment. It is right and proper that an employer might seek its own opinion in relation to such a claim and the provisions of s71 contemplate that a matter involving an assessment of permanent impairment to a back may be referred to the Tribunal for assessment of the amount of compensation payable if the parties cannot agree as to the amount payable. This is precisely what happened in this case and it is not unusual for medical practitioners to disagree as to the degree of permanent impairment involved. That process regrettably can take a considerable period of time but I do not think that what was put to me demonstrated that there was any particular unnecessary delay by the employer in this case to obtain an opinion about impairment."

In my respectful opinion, the above passage reflects error of law in that the learned Chief Commissioner erroneously applied the principle he correctly stated.  Of course, the respondent was not bound to accept the claim made by the worker, just as a defendant in civil proceedings is not obliged to accept the claim made by the plaintiff.  Of course, it was "right and proper" for the respondent to seek its own opinion in relation to the claim.  In submissions in the Tribunal, much attention was paid to whether the respondent had delayed proceedings, but such attention distracted the learned Commissioner from the real issue.  Even if the respondent had acted reasonably throughout the proceedings, absent good reason, the appellant was entitled to an order for costs.  He was entitled to a lump sum payment.  He was entitled to commence proceedings to recover a lump sum payment.  He recovered a lump sum payment.  He should have been compensated by an order for costs for the reasonable expense he incurred in taking those proceedings.  Reasonable conduct on the part of the respondent in response to the proceedings does not deprive the appellant of his entitlement to an order for costs.

It would appear that the learned Chief Commissioner was not referred to the decision of Farrow.  He was referred to, and cited, Clousen v Taylor A57/1996.  He cited a passage from Jones v Curling (1884) 13 QBD 262, a case relied upon in Clousen.  However, as I observed in Farrow at 131, the passage cited from Jones v Curling must be treated with caution.  The dispute in Jones was over possession of several pieces of land.  The jury found "as to about half the land claimed in favour of each of the parties," (267) and an order was made that the costs of both parties be taxed and put together and then equally divided.  The rule of court under which the order for costs was made provided that upon a trial by jury, the costs must follow the event unless good cause was shown to the trial judge.  "Good cause" was a condition precedent to the exercise of a discretion.  The Court was not concerned to ascertain whether there had been any error in the exercise of the discretion, but whether, as a matter of fact, there had been good cause sufficient to ground jurisdiction to make any order other than that costs follow the event.   All the members of the Court of Appeal were agreed that in the circumstances there was no good cause and the learned trial judge had no discretion to make any order other than that the costs followed the event.  It was in that context that Bowen LJ made the remarks that were cited in Clousen and picked up by the learned Chief Commissioner in this case.  Other members of the Court in Jones v Curling used different expressions to illustrate what could constitute good cause to ground jurisdiction to make a discretionary order for costs. As an example of good cause, Brett MR referred, at 268, to "misconduct on the part of the plaintiff to this extent, that the fact of bringing the action is oppressive, or that he has made an exorbitant claim by carelessness or recklessness …". The third member of the Court of Appeal, Fry LJ refrained from giving any illustrations, saying at 274, "I will not attempt to give any definition of what 'good cause' is, but it plainly must be something which renders it reasonable that the judge should interfere with the rule that the costs should follow the event."

With respect to those who might think differently, I do not regard the passage relied upon by the learned Chief Commissioner from the judgment of Bowen LJ as useful authority for the proper exercise of an unfettered discretion to order costs.  Similarly, I doubt whether much reliance can be placed upon any observations made in R v Freshney [1977] Tas SR 126 as a guide to the proper exercise of an unfettered discretion to order costs of civil proceedings. With respect to that case, Mason CJ observed in Latoudis at 541, that he did "not regard the Tasmanian approach as an authoritative or influential guide to the manner in which a general discretion, unconfined except by reference to its subject matter and the scope and purpose of the statute, should be exercised."

The appeal is allowed.  The order of the learned Chief Commissioner is set aside and in lieu thereof it is ordered that the respondent pay the appellant's costs of the proceedings in the Tribunal.  I will hear the parties as to any consequential order necessary to ascertain the quantum of those costs.