Re Perry and Comcare

[2005] AATA 365

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 365

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  Q2001/624

GENERAL ADMINISTRATIVE DIVISION		)
Re		ROBERT JAMES PERRY

Applicant

And COMCARE

Respondent

DECISION

Tribunal Senior Member McCabe

Date27 April 2005

PlaceBrisbane

Decision The Tribunal orders that the respondent pay the applicant’s costs, taxed if necessary, up to and including 11.22am on 21 August 2002. The applicant is to bear his own costs after that date.

..................[Sgd].......................

SENIOR MEMBER  

CATCHWORDS

Compensation — Commonwealth employees — Costs — Tribunal decision less favourable to applicant than offer of compromise made by respondent before hearing — limit placed on costs – costs recoverable up until the offer of compromise made.

Safety, Rehabilitation and Compensation Act 1988 (Cth) s 67

AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1988) 13 NSWLR 486

Calderbank v Calderbank [1976] Fam 93; [1975] 3 All ER 333; [1975] 3 WLR 586

Cutts v Head [1984] Ch 290; [1984] 1 All ER 597; [1984] 2 WLR 349

Grbavac v Hart [1997] 1 VR 154; BC9601881

Hronopoulos and Telstra Corporation Limited (2002) 68 ALD 419; (2002) 35 AAR 349; [2002] AATA 625

Perry and Comcare [2004] AATA 289

White v Director of Housing [2003] VSC 124; BC200301946

REASONS FOR DECISION

27 April 2005  Senior Member B J McCabe

introduction

1.      The Tribunal decided the applicant’s claim in Perry and Comcare [2004] AATA 289. Ms Cowdroy, the presiding member, did not make any order as to costs. The applicant has now asked the Tribunal to make an order. The applicant says the decision under review was set aside and a more favourable decision was made by the Tribunal. The respondent says the applicant’s right to recover costs is limited because an offer of settlement was made before the hearing that was even more advantageous than the ultimate decision.

2.      The parties made written and oral submissions at a hearing before me on 14 April 2005. (I heard the matter as Ms Cowdroy is no longer a member of the Tribunal.)  Mr Willis represented the applicant and Mr O’Sullivan represented the respondent.

the legislation and the power to make orders as to costs

3. Section 67 of the Safety, Rehabilitation and Compensation Act 1988 deals with the costs of proceedings before the Tribunal upon review. Section 67(8) provides:

(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.

4. Section 67(8) makes it clear the power to award costs is a discretionary one. Successful parties are not entitled to costs as of right. Even so, the Tribunal would ordinarily make an order in favour of a successful applicant.

5.      The respondent does not deny the applicant was successful in the sense he obtained a decision from the Tribunal that was more favourable than the decision of the original decision-maker. But Comcare goes on to argue its solicitors put an offer of settlement to the applicant’s solicitors in a letter dated 21 August 2002. The letter said:

“We confirm that our client is willing to accept liability for your client’s claim and pay compensation for incapacity payments for the period April 1976 to February 1979 with a cessation of liability from the end of February 1979.

Could you please note that, if this offer is not accepted, our client 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 our client’s offer, as set out in this letter, our client will, in due course:

1.      Oppose the Applicant being awarded costs on and from the date of this letter; and

2.      Apply to have any costs the Applicant would otherwise be awarded up to the date of this letter reduced by the amount of costs our client incurs from the date of this letter. “

6.      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, after the decision in Calderbank v Calderbank [1976] Fam 93. In that case, the respondent made an offer of settlement that – with the benefit of hindsight - should have been accepted because it was more favourable to the applicant than the ultimate decision of the court. The letter was produced in relation to a costs application. Cairns LJ said in the circumstances the applicant should not be able to recover costs after the offer was made because it was unreasonable to reject the offer and incur the costs associated with continuing the proceedings. In Messiter v Hutchinson (1987) 10 NSWLR 525, Rogers J explained (at 528) there was no rule to the effect one could not obtain costs if a Calderbank offer were made and rejected when it should have been accepted. However his Honour accepted the Calderbank offer was generally a relevant consideration to be taken into account in the exercise of the discretion.

7.      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: see, for example, Cutts v Head [1984] Ch 290 at 305 per Oliver J; AMEV Finance Ltd v Artes Studios Thoroughbreds Pty Ltd (1988) 13 NSWLR 486 at 487 per Hodgson J. The offers must also be clear and unambiguous before they can be admitted into evidence in relation to the question of costs. As Gillard J explained in White v Director of Housing [2003] VSC 124, “the terms of the offer must be clear, precise, certain and capable of acceptance…”: at [17]. Winneke P suggested in Grbavac v Hart [1997] 1 VR 154 (at 155) that the Court should only admit evidence of the Calderbank offer if “the terms of the offer are such as to leave the offeree in no reasonable doubt as to the nature and extent of what is being offered.”

8.      The offers in White and Grbavac were both made pursuant to the rules of the Victorian Supreme Court. The Tribunal does not have equivalent rules, but the public policy informing the discretion under s 67(8) is the same: an offer should only count against an offeree if he or she was clear on what was being offered. If the offeree was not presented with a clear choice – settle on particular terms, or proceed and assume the risk he will not do better at the hearing – the evidence of the offer should not be admitted.

9.      In those circumstances, I think the Tribunal’s approach needs to be informed by common sense.  If the applicant knew or should have known what was on offer and made an informed decision not to accept and take his chances with a hearing, the existence of the offer weighs against an order for costs incurred after the date of the offer. I do not think it is helpful to make a technical inquiry as to whether or not the offer was legally capable of being immediately and finally accepted so as to give rise to a binding contract.

should a costs order be made in this case?

10.     The respondent does not dispute the applicant is entitled to costs up until the time the Calderbank offer was made because the final decision was more favourable than the original decision. But the respondent says the rejection of the Calderbank offer should weigh heavily against the exercise of the discretion under s 67(8).

11.     The applicant says the offer is defective in several respects and should therefore be disregarded. In particular, the applicant says the offer fails to:

·identify the precise amount of the settlement offer;

·specify the precise duration of the period in respect of which the closed offer was made;

·identify whether the offer was inclusive of costs.

12.     The applicant says the offer is therefore void for uncertainty.

13.     Mr Willis noted that his client was – to the respondent’s knowledge – suffering from a severe psychiatric condition at the time the offer was made. Mr Willis suggested it was therefore incumbent on the respondent to take care to be clear about what was on offer so that the applicant did have the opportunity to make an informed decision.

14.     I will deal with Mr Willis’s last contention first. The respondent does have an obligation to make its offer clear, but I think one makes a judgement about its clarity from the point of view of the applicant’s lawyers. Mr Perry was represented when the offer was made; the respondents addressed the letter of offer to Mr Perry’s solicitors. The respondent was entitled to assume Mr Perry’s lawyers would explain the offer to their client in whatever way they saw fit in the course of obtaining his instructions.  The question is whether the offer was clear to the applicant’s legal representatives.

15.     I think it was. I do not think there is a problem about failing to identify the dollar amount of the settlement. The Tribunal does not award dollar amounts in these circumstances; it makes a decision about entitlements in a period. It was therefore appropriate to make an offer to compensate with respect to a particular period: see, for example, Hronopoulos and Telstra Corporation Limited [2002] AATA 625; (2002) 68 ALD 419.

16.     I am also satisfied that the duration of the closed period was clear enough. The letter referred to liability being accepted “for the period April 1976 to February 1979”. It is clear from other documents (the applicant’s statement of facts, issues and contentions, for example) that the relevant date in April is 3 April, the date of the incident in question. While it would have been better if the date was set out in the letter, I accept the date could be (and was intended to be) ascertained from the surrounding documentation. The end of the closed period is even more clear-cut: there can be no doubt that “the end of February 1979” (when liability was to cease) means 28 February 1979.

17. The letter of offer does not refer to costs, other than to point out the respondent reserved the right to produce the letter at a hearing like this one. I do not think that matters. The applicant would have a statutory entitlement to seek costs under s 67(8) if he had settled on the basis identified in the letter. The absence of a reference to costs in the terms of the settlement offer clearly meant the applicant’s right to seek costs was preserved.

conclusion

18.     I am satisfied the applicant was presented with an offer that was clear, and which he was able to consider in consultation with his lawyers. He chose to go on. With the benefit of hindsight, it is obvious he should not have done so.

19.     In the circumstances, I think it is appropriate to order that the respondent pay the applicant’s costs, taxed if necessary, up to and including 11.22am on 21 August 2002 when the Calderbank offer was made. The applicant is to bear his own costs after that date.

I certify the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe.

Signed:         .....................................................................................
  Associate: Sam J Appleton

Date of Hearing  14 April 2005
Date of Decision  27 April 2005
The applicant was represented by Mr Willis of Counsel.
The respondent was represented by Mr O’Sullivan of Counsel.