Novak Ruskic v Greenwich Contractors Pty Limited (No 2)

[2014] ACTSC 15

NOVAK RUSKIC v GREENWICH CONTRACTORS PTY LIMITED (NO 2)
[2014] ACTSC 15 (10 February 2014)

INTEREST – recoverability of interest – where plaintiff’s claim for damages governed by the Workers Compensation Act 1987 (NSW) – whether interest is considered to be substantive law for the purposes of s 182D Workers Compensation Act 1951 (ACT) – not necessary to decide

COSTS – personal injury proceedings – failure by defendant to plead that NSW law applied to the claim – non-acceptance of Calderbank offer by plaintiff – plaintiff should have assessed offer on the basis that NSW law applied – absence of evidence from plaintiff’s solicitor – costs awarded to defendant from date offer closed

Workers Compensation Act 1951 (ACT) ss 182B, s182D
Workers Compensation Act 1987 (NSW) s 151

Commonwealth v Chessell (1991) 30 FCR 154
Hungerfords v Walker (1989) 171 CLR 125
Ruskic v Greenwich Contractors Pty Limited [2013] ACTSC 263

No.  SC 146 of 2011

Judge:             Master Mossop
Supreme Court of the ACT

Date:              10 February 2014

IN THE SUPREME COURT OF THE     )
  )          No.  SC 146 of 2011
AUSTRALIAN CAPITAL TERRITORY           )

BETWEEN:NOVAK RUSKIC

Plaintiff

AND:GREENWICH CONTRACTORS PTY LIMITED

Defendant

ORDER

Judge:  Master Mossop
Date:  10 February 2014
Place:  Canberra

THE COURT ORDERS THAT:

1. Judgment be entered for the plaintiff in the sum of $110,915.
2.  The usual order as to interest.
3. The defendant pay the plaintiff’s costs of the proceedings up to and including 9 August 2012 and the plaintiff pay the defendant’s costs of the proceedings from 10 August 2012 including any reserved costs.

1. I gave my reasons in this matter on 20 December 2013: Ruskic v Greenwich Contractors Pty Limited [2013] ACTSC 263. I made orders directing the parties to either agree on short minutes to give effect to my decision or to further argue any remaining issues. The parties were only able to agree on one order that should be made as a consequence of my decision, namely, that there be judgement for the plaintiff in the sum of $110,915. The parties were unable to reach agreement about interest or costs.

1. Interest and costs were dealt with at paragraphs 58 and 59 of my decision where I said:

If it is open to do so I would also award the plaintiff interest on such amount of the above as he did not receive by way of workers compensation. I will hear the parties as to whether the plaintiff may also recover interest in the circumstances of this case having regard to the terms of s 182B of the ACT Act and s 151M of the NSW Act.

My preliminary view is that subject to any arguments that the parties wish to advance or evidence they wish to tender, the defendant should pay the plaintiff’s costs of the proceedings including reserved costs.

Submissions of the parties

Costs

1. In relation to costs, the defendant’s submission was that the plaintiff should pay the defendant’s costs of the proceedings on an indemnity basis from the date of an offer to settle the proceedings on 3 August 2012.  On that date the defendant made an offer to settle the proceedings on the basis that it would pay to the plaintiff $225,000 plus costs and disbursements and that that amount was in addition to workers’ compensation payments made to, or for and on behalf of, the plaintiff.  The defendant read an affidavit of the defendant’s solicitor disclosing the offers that had been exchanged between the parties, provided evidence of the amounts paid under workers’ compensation legislation and provided calculations of the interest that might have been payable on the amounts that I assessed on a contingent basis, that is, the amounts that the plaintiff would have been entitled to had ACT law been applicable.

1. The plaintiff did not read any affidavit or tender any evidence in relation to the question of costs.  The plaintiff submitted in relation to the defendant’s amendment to the pleadings at the end of the evidence that the default rule in r 513 was that the defendant should pay the costs of the application for amendment and the costs thrown away.  Further the plaintiff submitted that the evidence of Mr Grigull was part of those costs.  Further he submitted that the evidence of Mr Grigull was not necessary if, as the defendant had submitted, the evidence in relation to the location of the defendant’s business was led from the plaintiff.

1. In relation to the making of settlement offers, the plaintiff pointed to the issue which I dealt with in my reasons, namely, whether or not there was an obligation on the defendant to plead the facts necessary to establish that New South Wales law applied.  The plaintiff submitted that it was significant that the Calderbank letter relied upon did not make it clear that the defendant contended that New South Wales law applied.

Interest

1. The defendant submitted that s 182D of the ACT Act, the Workers Compensation Act 1951 (ACT) picked up the restrictions on the award of interest in s 151M of the New South Wales Act, the Workers Compensation Act 1987 (NSW). The defendant submitted that if those provisions applied then the plaintiff was not entitled to interest. On the other hand the plaintiff submitted that s 151M of the New South Wales Act was not picked up and hence interest should be awarded. The plaintiff accepted that if section 151M applied then the plaintiff was not entitled to interest. Therefore the issue of principle raised by the submissions of the parties was whether or not s 151M is picked up.

Consideration
Costs

1. In order to resolve this issue it is necessary to set out in more detail the offers that were made by the parties and the effect of those offers compared with both the judgment that has been entered for the plaintiff and the contingent assessment of damages that I undertook in my reasons. 

1. The proceedings were commenced by originating claim dated 23 March 2011.

1. The plaintiff offered on 11 July 2012 to settle the proceedings for $400,000 plus costs clear of workers’ compensation payments made by the date of the settlement offer.

1. The defendant responded with the 3 August 2012 offer, namely, $225,000 plus costs clear of all workers’ compensation payments.

1. On 9 August 2012 the plaintiff offered to settle for $350,000 plus costs clear of workers’ compensation payments.

1. More than a year later on 4 November 2013 the plaintiff offered to settle for $225,000 plus costs.

1. It is notable that the plaintiff’s offer of 4 November 2013 was very substantially less than the offers previously made because it was not clear of workers’ compensation payments.

1. The offers made in 2012 were of a quantum that was more consistent with ACT law as opposed to NSW law applying to the assessment of damages.  The evidence of the defendant’s solicitor did not address that issue and there was no evidence from the plaintiff’s solicitor explaining the approach that the parties had taken to the assessment of damages at that time.  Importantly, in relation to the non-acceptance by the plaintiff of the offer made by the defendant on 3 August 2012 there was no evidence from the plaintiff or the plaintiff’s solicitor indicating that there was any misunderstanding about whether NSW or ACT law would govern the assessment of damages either as a result of some misunderstanding about the applicable law or as a result of the manner in which the matter had been pleaded.  In the light of the prominence of the contest over the issue at trial and the terms of my decision, if the plaintiff was to deflect an inference of unreasonableness arising from the terms of the offer compared with the judgment amount, I would have expected such evidence to have been put on by the plaintiff.

1. The affidavit evidence of the defendant’s solicitor indicated that up until 10 August 2012 (shortly after the defendant’s offer was made) the workers’ compensation payments made to or on behalf of the plaintiff were $121,932.09.  Therefore the value of the offer made on 6 August 2012 was $346,932.09.  The contingent assessment of damages that I made based on the application of ACT law led to a sum of $363,437 to which interest would needed to be added.  The defendant has calculated interest up to December 2013 on the contingent assessment of damages on two different bases which would bring the total to approximately $377,000 or $380,000.

1. The offer made by the defendant therefore was more than three times the amount of damages ultimately awarded but was slightly less than the amount assessed on the contingent assessment of damages to which interest up to the date of the offer would need to be added.

1. In my decision I found that the defendant was obliged to plead the facts which it sought to prove that would give rise to the application of New South Wales law to the assessment of damages. In other words, it was obliged to plead the facts which would make New South Wales the Territory or State of connection for the purposes of s 182D of the ACT Act. It did not do so.

1. Had the usual pleading rules applied, the burden would have been on the plaintiff to plead the facts necessary to establish the jurisdiction which would govern the assessment of damages. However, because of the peculiarities associated with the limited pleading necessary for an employment personal injury claim, it was not obliged to do so. Whether Form 2.4, the form for an employment personal injury statement of claim, should be amended so as to require identification by the plaintiff of the jurisdiction which the plaintiff contends governs the assessment of damages is a matter which the Court Procedures Rules advisory committee may wish to consider.

1. However, even without the defendant pleading the additional facts which it sought to prove in assessing damages, the Court would have been obliged to determine the Territory or State of connection and assess damages in accordance with the mandatory terms of s 182D.

1. In my view, a party commencing personal injuries proceedings relating to an employment injury in the Supreme Court of the Australian Capital Territory who is legally represented and acting reasonably should be taken to be aware of the existence and operation of section 182D of the ACT Act. On the facts of this case, which were known to both parties, there was no doubt that if section 182D was given effect then the Territory or State of connection was New South Wales and New South Wales law would apply to the assessment of damages. Therefore a party acting reasonably would have assessed any offer on the basis that NSW law would apply. On that approach the non-acceptance of the offer of 3 August 2012 was not reasonable and the policy considerations underlying Calderbank offers indicate that it is an appropriate case for an award of costs to be made against the plaintiff from the day after the last day for acceptance of the offer, namely from 10 August 2012.  I am not, however, satisfied that costs from that date should be paid on an indemnity basis.  An order on a party and party basis will in my view, in the circumstances of this case, be appropriate to vindicate the policy concerns behind the Calderbank principle.

1. In a case like this, the making of a costs order against a plaintiff who has recovered a modest amount because of the constraints imposed by NSW law is not something done lightly.  However the principles applicable in relation to Calderbank offers are clear.  The possible explanations for the non-acceptance of the offer were either unreasonableness or a misunderstanding of the legal position.  I would have been very reluctant to make a costs order against a plaintiff whose lawyers had mistakenly advised that ACT law applied to the assessment of damages when in fact it was clear on the facts that NSW law would apply.  While that is certainly a possibility in this case, the absence of any evidence put on by the plaintiff to demonstrate that has left me in a position where the evidence is more consistent with unreasonableness, with the costs consequences that follow.

1. Further, had there been evidence of some misconception on the part of the plaintiff or his lawyers as to the applicable law then the lack of any reference to the operation of s 182D or the application of NSW law to the assessment of damages in the 3 August 2012 offer would have been significant. However, in the absence of that evidence from the plaintiff or his solicitor, the absence of such a reference is not significant.

1. Finally, I am not satisfied that there were any additional costs incurred by reason of the defendant’s application to amend its defence or any costs thrown away as a result of that amendment.  I do not accept that Mr Grigull’s evidence gave rise to costs thrown away or was unnecessary.  As a consequence the reserved costs should be dealt with in the same manner as the balance of the costs.

Interest

1. The submissions made by both parties on this issue were minimal. Neither party referred me to any authority dealing with whether or not interest would be considered a matter of substantive law for the purposes of s 182B of the ACT Act or any equivalent statutory provision.

1. The award of interest in a personal injury case is in almost all cases based on a discretionary statutory provision and not part of the common law damages award: see Luntz, Assessment of Damages for Personal Injury and Death, 4^th edition (2002) at [11.3.1]; Hungerfords v Walker (1989) 171 CLR 125; Commonwealth v Chessell (1991) 30 FCR 154. However the word “compensation” in s 182B(1)(e) may be sufficiently broad to cover an award of interest under the rules unless the term “compensation” when read in context takes its meaning from the previous reference to “workers compensation” in s 182B(1)(d).

1. It is not appropriate to resolve this issue of principle in the current case.  That is because the plaintiff has not demonstrated that he has not already received, by way of workers’ compensation payments, compensation for loss of income.  The payments of weekly compensation made to the plaintiff totalled $118,732.45 compared with the award of damages for past loss of earnings, superannuation and Fox v Wood of $110,915.  Therefore the plaintiff suffered no loss of the use of money warranting an award of interest.

1. Further, rule 1616(7) would preclude any award of interest after 3 August 2012 unless the special circumstances of the case warranted such an award.  For the reasons I have described earlier in relation to the award of costs, I would not have been satisfied that special circumstances warranted an award.

Orders

1. Therefore the orders that I make are as follows:

1. Judgment be entered for the plaintiff in the sum of $110,915.

1. The usual order as to interest.

1. The defendant pay the plaintiff’s costs of the proceedings up to and including 9 August 2012 and the plaintiff pay the defendant’s costs of the proceedings from 10 August 2012 including any reserved costs.

   I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master Mossop.

   Associate:

   Date:     12 February 2014

Counsel for the plaintiff:  G Stretton SC
Solicitors for the plaintiff:  NSW Compensation Lawyers
Counsel for the defendant:  J Catsanos
Solicitors for the defendant:  Stephen Lee Legal
Date of hearing:  7 February 204
Date of judgment:  10 February 2014