Public Trustee v A M Hoipo Pty Ltd

[1999] NSWCA 466

CITATION:	Public Trustee v A M Hoipo Pty Ltd [1999] NSWCA 466
FILE NUMBER(S):	CA 40298/99
HEARING DATE(S):	12/11/99
JUDGMENT DATE:	17 December 1999
PARTIES :	Public Trustee A M Hoipo Pty Ltd
JUDGMENT OF:	Sheller JA at 1; Beazley JA at 2; Hodgson CJinEq at 39

LOWER COURT JURISDICTION:	Compensation Court
LOWER COURT FILE NUMBER(S) :	31927/97
LOWER COURT JUDICIAL OFFICER:	O'Meally CCJ

COUNSEL:	Appellant: L Ellison Respondent: I G Harrison SC/ M Chan
SOLICITORS:	Appellant: P J Whitehead Respondent: Sparke Helmore
CATCHWORDS:	Workers Compensation; Apportionment; Lump sum entitlements of dependents; Workers Compensation ; parties; apportionment application; Workers Compensation; costs; apportionment application
ACTS CITED:	Workplace Injury Management and Workers Compensation Act 1998 (NSW) Workers Compensation Act 1987 (NSW) Suitor's Fund Act 1951 (NSW)
DECISION:	Appeal allowed; Cross-appeal dismissed

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40298/99
CC 31927/97

SHELLER JA
BEAZLEY JA
HODGSON CJ in Eq

Friday, 17 December 1999


PUBLIC TRUSTEE v A M HOIPO PTY LIMITED





FACTS

A M Hoipo Pty Limited (Hoipo) was the employer of Colin Edward Banville who died in a work related accident in 1997. He was survived by his wife, Helen Banville and several dependent children and step-children (the claimants). The claimants were entitled to lump sum compensation under s 25 of the Workers Compensation Act 1987 (NSW) (the WCA) which, under the provisions of the WCA, was required to be apportioned amongst them, either by the Public Trustee or the Compensation Court.

The Public Trustee as it was entitled to do (s 29(3)) apportion the fund in view of the different relationships and varying degrees of dependency of the children. The widow then brought an apportionment application in the Compensation Court, naming Hoipo as the respondent.

When first before the Court the matter was adjourned to allow separate representation; Hoipo was excused from further attendance, and, on the Court motion, the Public Trustee was joined as a respondent. The order excusing Hoipo from attendance was subsequently vacated.

Consent orders were eventually made in the apportionment application, but the question of costs remained in issue. Curtis CCJ ordered the costs of the claimants be borne by the Public Trustee and Hoipo in equal portions.

The Public Trustee and Hoipo each appealed against the costs order made against it.

HELD

Per Beazley JA (Sheller JA and Hodgson CJ in Eq)

(i) The Public Trustee should not have been made a party. The proper respondent to the application was Hoipo as the party liable to pay compensation.

(ii) Hoipo was liable for the costs: ss 112 and 116 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW).

Per Hodgson CJ in Eq

(i) Considering the Workplace Injury Management and Workers Compensation Act 1998 (NSW) the effect of finding that neither the Public Trustee nor Hoipo liable for the claimants would be that legal advisers of the claimants could not recover costs of disbursement from anyone.

(ii) It could not have been the legislators intention that claimants should be represented in such proceedings only by lawyers who might be willing to receive no payment for their services. The intention of the legislators was to make employers liable for costs of successful claims and if apportionment is required, the costs of that.

(iii) If costs involved in apportionment are increased due to unreasonable conduct by claimants or their lawyers, it would be open for the employer to contend that the costs it is ordered to pay should be no more than if the conduct were reasonable. This was not contended in this case.

ORDERS

(i) Leave to appeal granted

(ii) Appeal allowed

(iii) Set aside the orders made by Curtis CCJ on 15 March 1999

(iv) In lieu thereof, order the respondent, A M Hoipo Pty Limited, to pay all the costs of all parties to the application for an order of apportionment and the appellant’s costs of the appeal, but to have, if qualified, a certificate under the Suitor’s Fund Act 1951 (NSW)

(v) Leave to cross-appeal granted

(vi) Cross-appeal dismissed

(vii) Cross-appellant to pay the costs of the cross-respondent.

THE SUPREME COURT

OF NEW SOUTH WALES

COURT OF APPEAL

CA 40298/99
CC 31927/97

SHELLER JA
BEAZLEY JA
HODGSON CJ in EQ

Friday 17 December 1999


PUBLIC TRUSTEE v A M HOIPO PTY LIMITED

JUDGMENT

1    SHELLER JA: I agree with Beazley JA.

2    BEAZLEY JA: There are two summons before the Court for leave to appeal and cross-appeal from orders made by Curtis CCJ and Walker CCJ respectively. The Court indicated at an early stage of the hearing before it that both matters were appropriate for the grant of leave. These reasons therefore deal with the both summons as an appeal and cross-appeal.

The Parties and the Proceedings at First Instance

3 A M Hoipo Pty Limited (Hoipo) was the employer of Colin Edward Banville who died in a work related accident on 4 August 1997. He was survived by his wife Helen Banville and several dependent children and step-children (the claimants). Helen Banville was totally dependent on the deceased. Of the seven children, three were the children of the deceased and Helen Banville. Three were the deceased’s step-children and one was the deceased’s child from an earlier marriage. The claimants were entitled to claim compensation pursuant to s 25 of the Workers Compensation Act 1987 (NSW) (the WCA), as dependents of the deceased.

4 Compensation payable under s 25 has two components (i) a statutorily determined lump sum which at the relevant date of the determination was approximately $230,000: s 25(1)(a); and (ii) weekly payments: s 25(1)(b). That compensation must be paid to the Public Trustee in trust for the benefit of the persons entitled: s 85(1)(a). The lump sum component was required to be apportioned between the claimants: s 29. Two of the stepchildren were partially dependent on the deceased. Although this did not disentitle them to compensation under either s 25(1)(a) or (b) (see definition of “dependent child of the worker”: s 25 (5)), it was relevant to the question of apportionment.

5    Hoipo at all times acted reasonably and responsibly in relation to the statutory rights of the claimants and subject to being satisfied as to dependency, paid the claim. It was not its function to apportion the lump sum payment amongst the claimants. That function is performed either by the Compensation Court or the Public Trustee: ss 29(1) and (2).

6    In this case the Public Trustee declined to apportion the fund, as it was entitled to do: s 29(3). It informed the Court during the course of the costs application (to which I refer below) that it had declined to exercise its powers under s 29(2) “[i]n view of the different relationships and varying degrees of dependency of the children”. It is pertinent to observe that the Public Trustee informed this Court that it usually exercises the powers of apportionment and that this matter was the first time it had declined to do so because of its complexity

7    The Public Trustee having declined to exercise its powers, the matter came into the court system. Helen Banville commenced proceedings in the Compensation Court for an order of apportionment. Hoipo was joined as a respondent to the proceedings and the other claimants, the dependent children and step children, were also joined as respondents.

8    The application for apportionment came before O’Meally CCJ on 5 August 1998. The matter was adjourned to allow separate representation for the various groups of dependents to be organised. Hoipo was “excused from further attendance” and his Honour ordered that the Public Trustee be joined as a respondent.

9    On 24 February 1999, Helen Banville filed a notice of motion seeking an order that the order of O’Meally CCJ that Hoipo be excused from further attendance be rescinded because there was “no entity to pay the legal costs of these proceedings”. The notice of motion was heard by Walker CCJ on 2 March 1999 and his Honour rescinded O’Meally J’s order.

10    The apportionment application was listed for hearing before Curtis CCJ on 15 March 1999. Four different legal representatives appeared for the different categories of claimants. Hoipo and the Public Trustee were also represented by their respective legal advisers. The proceedings were resolved between the groups of claimants without the necessity for a hearing. Consent orders were duly made. Neither Hoipo nor the Public Trustee played any role in the resolution of the proceedings.

11    The question of costs then arose.

12    Curtis CCJ ordered that the costs of the claimants (being Helen Banville as applicant and the dependent children as respondents) be borne by the Public Trustee and Hoipo in equal portions. His Honour’s reasons for making that order were threefold: (i) it was unfair for the claimants to pay the costs as none had acted unreasonably; (ii) the Public Trustee, who profited from its office had acted unreasonably in declining to make the apportionment under s 29; (iii) however, given the number of parties involved and their representation by four groups of solicitors, it was unreasonable to require the Public Trustee to pay all of the costs. Hoipo should therefore bear half of the costs.

13    There was some debate in this Court as to whether Mrs Banville had made an application to the Public Trustee to apportion the fund. The impetus for that debate was to avoid the trial judge’s finding that the Public Trustee had acted unreasonably in declining to apportion. If there had been no application, there was no basis for the trial judge’s finding that the Public Trustee had acted unreasonably. In my opinion, Mrs Banville had made an application to the Public Trustee. Although her approach to the Public Trustee was more in the form of an inquiry as to whether the Public Trustee intended to apportion, the Public Trustee treated it as an application but “formally decline[d] to apportion”. I should add that the Public Trustee did not suggest to the trial judge that no application had been made to it to apportion.

14    Both the Public Trustee and Hoipo dispute their liability to pay the costs. Each points to the other as the party which should be liable for the costs.

15    The Public Trustee, conscious of the restriction on its right to appeal except on a matter of law, challenged Curtis CCJ’s order on two bases: first it submitted that his Honour had taken into account an irrelevant consideration, namely, that it made a profit from its office; and secondly, that there was no evidence to support his Honour’s finding that it had acted unreasonably in declining to apportion. In my opinion, both these grounds of appeal are made out.

16 Costs orders in the Compensation Court are governed by the provisions of s 112 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW). Section 116 of that Act is also relevant. I will deal with those provisions in more detail below. I will merely comment at this point that, in exercising a discretion to order costs, it cannot be sufficient for a party to have a fund or resource out of which it can pay those costs.

17    The only evidence before Curtis CCJ in relation to the Public Trustee’s decision to decline to make the apportionment was the correspondence from Helen Banville’s solicitor inquiring whether the Public Trustee proposed to apportion and the Public Trustee’s letter advising that it declined to do so. There was also the statement, recorded in his Honour’s judgment, which presumably was a statement made from the bar table that the Public Trustee declined to apportion because of the “different relationships and varying degrees of dependency”. This was not evidence that it had acted unreasonably. It was an explanation as to why it had acted. There was no other evidence of unreasonableness. It is an error of law to making a finding of fact unsupported by evidence. Accordingly, his Honour erred in law in that respect also.

18    Having so concluded, it might be thought that the Court should at this point simply allow the appeal. However, the matter should not be let to rest there. In my opinion, the real error in this matter occurred at a much earlier point in the proceedings, namely when the Public Trustee was joined as a party. For the reasons which follow, I have concluded that the Public Trustee should not have been made a party at all.

19 The function of the Public Trustee in relation to the apportionment of lump sum compensation arises because of the statutory provisions of s 85 and s 29 of the WCA. I have earlier referred to s 85, which provides that compensation payable under s 25 must be paid to the Public Trustee to hold on trust for the persons entitled. Section 29 provides, relevantly:

“(1) The compensation payable under this Division to each dependent of a deceased worker may be apportioned by the Compensation Court or by the Public Trustee.
(2) Application for apportionment may be made by or on behalf of a person entitled to the compensation:
(a) to the Public Trustee, or
(b) to the Compensation Court (whether or not an application has been made to the Public Trustee or the Public Trustee has made a decision)
(3) The Public Trustee may decline to deal with an application for apportionment and advise the parties to apply to the Compensation Court.
(4) The Public Trustee shall not deal with an application for apportionment of compensation if an application for apportionment of the same compensation is before the Compensation Court.
(5) A decision by the Public Trustee to apportion compensation under this Division is subject to any decision made by the Compensation Court with respect to the matter.
…”

20 Section 29 operates where there is more than one person entitled to the lump sum compensation payable under s 25(1)(a) which must then be apportioned amongst the dependents. A person so entitled has an option to apply to the court or the Public Trustee for apportionment of the lump sum. No particular form of application is required for an application to the Public Trustee. If an application is made to it, the Public Trustee may either apportion or decline to apportion. If the Public Trustee declines to make the apportionment, the person must apply to the court. The decision of the court in either of these circumstances, as matter of clear statutory implication, binds the Public Trustee. Although the section does not expressly say so, it is apparent that subs (5) operates where a person entitled to an apportionment of the s 25(1)(a) lump sum is dissatisfied with the Public Trustee’s decision. That person could be the applicant or any other person entitled under s 25. The dissatisfied person is entitled to make an application to the court for apportionment. Subsection (5) provides in that case that the court’s apportionment binds the Public Trustee.

21 In the ordinary course, the parties to an application for compensation are the persons entitled to compensation and the employer. In this case, had it been necessary for any of the claimants to bring an application for compensation to which they were entitled under s 25, Hoipo would have been joined as a respondent. An application for apportionment is a concomitant part of an application for compensation under s 25 and as such, Hoipo was a proper respondent to that application. The fact that it was excused from attendance supports, rather than detracts from the fact that the application was originally properly constituted.

22    When the Public Trustee either declines to make an order, or a person decides to apply to the court notwithstanding that the Public Trustee had made an order, the application to the court is an original application under s 29(2). As such the parties to such an application would be the same parties as if no application had been made to the Public Trustee. It is not an application for a review or reconsideration of the Public Trustee’s decision.

23    There is nothing in s 29 which requires or even makes it desirable that the Public Trustee be joined as a party to such an application. Indeed, the whole tenor of the section suggests that the Public Trustee is not a proper party to such an application. It has no contribution to make to the proceedings. The factual input to the application can only come from the persons entitled to compensation (or those who represent their interests). It is not a contradictor to any party. It has no interest in the outcome of the proceedings and therefore has no relevant submission to make to the court in relation to the apportionment which ought to be made. No order is or can be made against the Public Trustee under the section. As I have already stated, it is bound by the order of apportionment made by the court, in whatever circumstance that order is made either by clear statutory implication or expressly under subs (5).

24    Strictly, the Public Trustee should have applied to the court to be removed as a party. There were understandable reasons why it did not do so, not the least of which was that the joinder had been ordered by a senior judge of the court of his own motion. The Public Trustee also ventured the reason that it would not have been worth the costs of such an application. That was a doomed prediction. Had the Public Trustee applied to be removed, this matter may not have proceeded on the erroneously conceived basis that it did.

25    Having said that, it is apparent that the order for costs against the Public Trustee cannot stand. The appeal should be allowed with costs.

Hoipo’s Appeal

26    Having determined that the Public Trustee ought not to have been joined as a party and therefore should not have been ordered to pay the costs, Hoipo’s cross appeal resolves itself. It cannot succeed. Reference to the statutory provisions relating to costs make this clear. I will turn to them in a moment. I should first deal briefly with grounds one and two in Hoipo’s Notice of Appeal, which proceeded on a misapprehension as to the orders made by O’Meally CCJ and Walker CCJ.

27    Grounds one and two are stated in the following terms:

“1. Walker CCJ erred in determining that the Cross Appellant was a person who ought to have been joined as a party or was a necessary party within the terms of Part 6 Rule 10 of the Compensation Court Rules.
2. Walker CCJ erred in rescinding the Order of O’Meally CCJ (excusing the Cross Appellant from the proceedings) to enable the Cross Appellant to be brought into the proceedings for the singular purpose of enabling a party to the proceedings to secure an order for costs against the Cross Appellant.”

28    Neither O’Meally CCJ or Walker CCJ made orders as are alleged in these grounds. O’Meally CCJ ordered that Hoipo be excused from attendance. That is a very different order from an order that a party be removed from proceedings. As it turned out, it was necessary to vacate that order because, although the apportionment application was resolved by consent, costs remained in issue. Hoipo had an interest in being heard on that application, (unless, or course, it chose for itself not be heard).

29    Walker CCJ did not make an order as to joinder as asserted in ground one. He merely rescinded O’Meally CCJ’s order. It was necessary to do so to prevent any procedural unfairness to Hoipo against whom a costs application was being made.

30    Accordingly, grounds one and two have not been made out and order two in Hoipo’s Notice of Appeal must be refused. That leaves ground three and order three respectively. They are in the following terms:

Ground 3:
“Curtis CCJ erred in ordering the Cross Appellant pay half of the cost of the proceedings in the Compensation Court.”
Order 3:
“That the orders of Curtis CCJ be set aside and in lieu thereof order that the Cross Respondent pay the cost of the Applicant and the Third to Nine Respondents in the Court below.”

31    As I have stated above, the relevant costs provisions under the Workplace Injury Management and Workers Compensation Act are ss 112 and 116. Those sections provide relevantly:

“ 112 Costs
(1) In this section, a reference to costs is a reference to the costs payable by a party in or in relation to proceedings, including disbursements.
(2) Subject to this Act and the regulations and rules of the Compensation Court and subject to any other Act:
(a) costs in or in relation to any proceedings are in the discretion of the Court, and
(b) the Court has full power to determine by whom, to whom and to what extent costs are to be paid in or in relation to any proceedings, and
(c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis
(3) Subject to this section, the Court may not order the payment of costs by a person claiming compensation unless the Court is satisfied that the application for compensation was frivolous or vexatious, fraudulent or made without proper justification.
(4) If the Court is satisfied that a part only of any such application for compensation was frivolous or vexatious, fraudulent or made without proper justification, the Court may order the claimant to pay the costs relating to that part of the application.
…
(7) An order of the Court for payment of costs may include:
(a) the costs actually incurred or to be incurred by a person claiming compensation, and
(b) if liability for a claim for compensation is admitted without recourse to the Court - the reasonable expenses incurred by a person in pursuing the persons claim …
…
(8) In this section:
application for compensation includes any proceedings in connection with an application for compensation.
Compensation means compensation under this Act.
…
116 Solicitor/client costs in compensation proceedings
(1) The legal representative or agent of a person claiming compensation under this Act is not entitled:
(a) to recover from the person any costs in respect of the claim …”

32 Hoipo did not seek an order that the claimants pay the costs, recognising that an order for costs would not be made against them except in accordance with the provisions of s 112 (3) and (4).

33 Neither Hoipo (nor the Public Trustee) suggested that the claim was frivolous. Nor could they. It was statutorily mandated. Nor did they suggest it was unreasonable that the various groups of claimants were separately represented or that the proceedings had in anyway been conducted unreasonably. Nor did Hoipo suggest that they could be made liable for their own costs. Section 116 prohibits such a course except as ordered by the court. No such order was sought or made.

34    As no attempt was made to have the claimants made liable for the costs, it becomes acutely obvious that the only party who could and should be made liable was the employer.

35    The employer protested that it was, at the point of the apportionment application, but an innocent bystander with no interest in the proceedings. There are two reasons why that submission is unappealing. First, it was the party liable to pay compensation. Secondly, the Workplace Injury Management and Workers Compensation Act contemplates that an employer will be liable for costs, even where a claim is paid voluntarily and without recourse to the court

36    In short, the entire scheme of the costs provisions of the Workplace Injury Management and Workers Compensation Act recognises that the employer will be liable for costs of a claim for compensation, regardless of whether an applicant commences proceedings or not, unless the claim is determined to have been made or brought frivolously or vexatiously.

37    Accordingly, as it was never suggested that the apportionment application was brought frivolously or vexatiously, an order for costs against Hoipo as the employer was the inevitable consequence of the application for apportionment.

38    I propose the following orders:

(i) Leave to appeal granted;

(ii) Appeal allowed;

(iii) Set aside the orders made by Curtis CCJ on 15 March 1999;

(iv) In lieu thereof, order the respondent, AM Hoipo Pty Limited, to pay the costs of all parties to the application for an order of apportionment and the appellant’s costs of the appeal, but to have, if qualified, a certificate under the Suitor’s Fund Act 1951 (NSW).

(v) Leave to cross-appeal granted;

(vi) Cross-appeal dismissed;

(vii) Cross-appellant to pay the costs of the cross-respondent.

39    HODGSON CJ in Eq: I agree with the orders proposed by Beazley, JA and with her reasons. I would add the following.

40    Mr. Harrison SC for Hoipo submitted that, since Hoipo had done everything required of it, it should not be liable for the claimants' costs; and that we should not be concerned with who if anyone could then be liable.

41 However, as pointed out by Beazley, JA, ss.112 and 116 of the Workplace Injury Management and Workers Compensation Act make it clear that the claimants cannot, other than in exceptional circumstances, be liable for the costs of other parties or even their own costs. That being so, the effect of a finding that neither the Public Trustee nor Hoipo is liable for the claimants' costs would be that the legal advisers of the claimants could not recover costs or even disbursements from anyone.

42    I do not believe it could have been the legislature's intention that claimants should be represented, in apportionment proceedings, only by such lawyers as might be willing to receive no payment for their professional services and to be out of pocket for disbursements. In my opinion, the intention of the legislature was to make employers liable for the costs of successful claims; and if the final resolution of a claim requires apportionment, then normally the employer will be liable for the costs of apportionment.

43    However, if the costs involved in apportionment proceedings are increased because of unreasonable conduct by claimants or their lawyers, it would be open for the employer to contend that the costs it is ordered to pay (and thus the amounts recovered by the lawyers) should be no more than what the costs would have been but for that unreasonable conduct. No such contention has been advanced in this case.

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