Rodriguez and Telstra Corporation Limited
[2001] AATA 1053
•3 December 2001
CATCHWORDS – COSTS – whether costs order should be made on a party and party basis or on an indemnity basis – whether offers of settlement should be taken into account in determining costs – whether conduct of parties should be taken into account in determining costs – whether costs order should be in accordance with the Tribunal's General Practice Direction – whether costs order should include counsel's fees – whether costs order should include senior counsel's fees – order for costs.
Safety, Rehabilitation and Compensation Act 1988 ss. 4, 19, 24, 25, 26, 27, 38, 58, 60, 62, 64, 66 and 67
Evidence Act 1995 s. 131
Rodriguez v Telstra Corporation Limited [1999] FCA 1400
Mifsud and Australian Postal Corporation ([1999] AATA 782, unreported, 19 October, 1999)
Miller v Australian Telecommunications Commission (1985) 5 FCR 480
Maley v Comcare ([1998] AATA 543, 21 July, 1998)
Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177; 71 ALR 287
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Stanley v Phillips (1966) 115 CLR 470
DECISION AND REASONS FOR DECISION [2001] AATA 1053
ADMINISTRATIVE APPEALS TRIBUNAL )
) Q1999/1286
GENERAL ADMINISTRATIVE DIVISION )
ReGABRIEL RODRIGUEZ
Applicant
AndTELSTRA CORPORATION LIMITED
Respondent
DECISION
Tribunal: Miss S A Forgie (Deputy President)
Dr K P Kennedy OBE (Member)
Date: 3 December, 2001
Place: Brisbane
Decision:The Tribunal decides that:
1.The respondent pay the applicant the costs of the proceedings No. Q97/66 in accordance with the following provisos:
(a)the proceedings encompass both the hearing and re-hearing;
(b)the costs be assessed on the basis of 75% of all professional costs, including counsel's fees, which would be allowable under the Federal Court Scale together with witness expenses at the prescribed rate and all reasonable and proper disbursements; and
(c)counsel fees for senior counsel are not allowable.
2.Those costs are to be agreed between the parties or, should they fail to agree, are to be taxed by the Registrar, a District Registrar or a Deputy Registrar of the Tribunal.
S A FORGIE
Deputy President
REASONS FOR DECISION
Earlier this year we (together with Miss Brennan, who was then a member of the Tribunal) considered an application by the applicant, Mr Gabriel Rodriguez, for review of three decisions made by the respondent, the Telstra Corporation ("Telstra"). Those decisions were generally concerned with whether or not compensation was payable to Mr Rodriguez under the Safety, Rehabilitation and Compensation Act 1988 ("SRC Act"). In the first of those decisions, Telstra denied liability to pay Mr Rodriguez compensation in respect of an aggravation of pre-existing cervical spondylosis on and from 4 March, 1994. That aggravation was of pre-existing cervical spondylosis arising out of an incident on 11 June, 1992. In the second, Telstra denied liability in respect of a permanent neck disability arising out of the same incident on 11 June, 1992. In the third, Telstra denied liability in respect of a major depressive disorder claimed to have arisen as a result of pain associated with his cervical pain, discrimination and victimisation at work and his having been unfairly and unreasonably reprimanded.
A differently constituted Tribunal had considered Mr Rodriguez's applications and decided, on 16 October, 1998, to affirm each of the three decisions. Mr Rodriguez lodged an appeal against the Tribunal's decision in the Federal Court. On 14 October, 1999, Spender J dismissed the appeal against two decisions affirming Telstra's decision that it was not liable to pay Mr Rodriguez compensation in respect of cervical spondylosis and neck disability on and from 4 March, 1994 and refusing his claim for permanent impairment. His Honour allowed the appeal against the Tribunal's third decision to affirm Telstra's decision to reject Mr Rodriguez' claim for compensation in respect of major depressive disorder (Rodriguez v Telstra Corporation Limited [1999] FCA 1400). His Honour remitted the matter to the Tribunal for further consideration according to law. Telstra was ordered to pay Mr Rodriguez' costs of and incidental to the application with those costs to be taxed if not agreed between them.
Having re-heard the application in so far as it concerned major depressive disorder, we decided to set aside Telstra's decision, substitute a decision that his major depressive disorder is an injury within the meaning of the SRC Act from and including 1 July, 1994 up to and including 1 September, 1998 and to adjourn consideration of costs to a date to be fixed. The parties were given an opportunity to discuss the issue of costs and to reach agreement. They have failed to do so. Mr Hampson QC with Mr Moon of counsel represented Mr Rodriguez at the subsequent hearing and Mr Dixon of counsel represented Telstra.
THE ISSUE
The issue in this case is whether an order should be made requiring Telstra to pay Mr Rodriguez' costs of the proceedings and, if so, the terms of that order.
MATERIAL RELIED ON BY MR RODRIGUEZ AND TELSTRA
The engagement of two counsel
In his affidavit sworn on 26 July, 2001, Mr Sarinas, who is Mr Rodriguez' solicitor, said that Mr Moon had initially made submissions to the Tribunal to the effect that a re-hearing of the matter was not contemplated by Spender J's judgement. Although what was contemplated was "… merely an application of the law to the facts as found by the senior member" (paragraph 2), Telstra had taken the view that the application be heard de novo. On 27 April, 2000, the Tribunal directed, among other matters, that the parties file and serve statements of facts and contentions and that there be a hearing de novo but that there be further directions given as to evidentiary matters.
Mr Sarinas said that he was concerned that extra costs would be generated by a second hearing. Consequently, on 25 May, 2000, he filed an application for an order of review in relation to the Tribunal's direction in the Federal Court. That application was discontinued on 30 June, 2000 as a result of counsel's advice.
Mr Sarinas said that he engaged Mr Hampson to represent Mr Rodriguez at a directions hearing on 14 August, 2000 "… in order to secure a sensible and cost effective approach to this litigation" (paragraph 11). Mr Hampson "… presented a draft directions order for the Tribunal to make to assist in simplifying and expediting the hearing and reducing costs" (paragraph 11). The Tribunal declined to make directions in terms of the draft directions and made the following directions on 14 August, 2000:
"(1) the Federal Court Appeal Books will be admitted as evidence at the hearing;
(2)Mr Rodriguez will be called at the hearing and may be cross examined at large;
(3)the parties will prepare and lodge a statement of agreed facts;
(4)the applicant will determine whether he wishes to adduce further medical evidence;
(5)should the applicant wish to adduce further medical evidence, a telephone directions hearing will be held after the preparation of the applicant's medical report; and
(6)the respondent will provide to the applicant a schedule of his normal weekly earnings."
Following these directions, Mr Sarinas formed the view that the case was going to be quite heavy and complex. He believed that, in order to attain justice on Mr Rodriguez's part and to defend his rights, it was necessary and proper to engage two counsel. It became apparent to him that Telstra required Mr Rodriguez to be put to proof on all matters in relation to his claims and condition. As to the complexity of the claim, Mr Sarinas said:
"Despite the applicant and the applicant's witnesses being subject to extensive cross-examination over an eight-day trial on a previous occasion, the applicant's claim was now made more complicated because the same witnesses who gave evidence in the previous hearing would be required to be cross-examined again. The previous hearing took place over several months in 1997 adding a more complicated dimension to the testing of the evidence in this hearing." (paragraph 16)
Mr Sarinas added that the issues of law would be quite complex and the hearing could exceed the length of the first hearing.
Mr Sarinas exhibited to his affidavit, copies of Statements of Facts and Contentions prepared on behalf of both Mr Rodriguez and of Telstra. He included those relating to file No. Q97/65 claiming compensation for a lump sum payment pursuant to ss. 24 and 27 of the SRC Act in respect of a neck and back injury and to file No. Q95/54 claiming compensation for a lump sum payment pursuant to s. 19 in respect of the same injury. Also included was the Statement of Facts and Contentions in file No. Q97/66 relating to what he described as a claim for compensation under ss. 19, 24 and 27 of the SRC Act in respect of major depressive disorder. He continued:
"The respondent's attitude made it correct for the applicant to retain two counsel at the hearing for the achievement of justice. The issues in dispute became so delicate and complex that I considered that two counsel should be briefed." (paragraph 20)
Mr Sarinas stated that the case was a substantial one from Mr Rodriguez' point of view. His reasons for this may be grouped into six broad categories. First, the case potentially involved hundreds of thousands of dollars over Mr Rodriguez' lifetime as he was incapacitated for work, unable to find suitable employment and his incapacity was permanent. Denial of the claim would have the effect of "… forever affecting his and his family's means of support" (paragraph 42). The second was that the first Tribunal had been "dismissive of … [Mr Rodriguez'] case and formed an adverse opinion of him. This made the presentation of the new case heavier and more difficult that it otherwise would have been" (paragraph 25). Telstra's case was that Mr Rodriguez was not a witness of truth. The third reason for the case's being substantial arose from Dr Reddan's evidence and particularly from her reference to the Malingering Probability Scale test ("MPS"). Mr Sarinas asserted that Telstra had objected to his having access to material relied upon by Dr Reddan and so caused her to have separate representation at directions hearings. The fourth reason arose from Telstra's wanting all of the witnesses to be called again. That necessitated the payment of further witness fees and the costs of further attendances by Mr Sarinas and counsel. The fifth was that the litigation of the claim was most difficult as Telstra had not made any concessions and Mr Rodriguez had been put to proof on all issues in relation to his claim. Mr Sarinas asserted that Telstra "… made every attempt to thwart … [Mr Rodriguez] at every stage of the progress of the claim" (paragraph 44). The sixth was that, in providing his gross weekly earnings, Telstra failed to provide Mr Rodriguez with details of his normal weekly earnings. The seventh reason, Mr Sarinas asserted, was Telstra's failure to provide Mr Rodriguez with copies of summonsed material.
The instructions
In an affidavit, Mr Sarinas said that he advised his client of his concerns as to the complexities of the case and the costs involved. Mr Sarinas said that he sought written instructions from Mr Rodriguez to engage Mr Hampson and advised him that, even were he successful in his claim, the costs of engaging Mr Hampson might not be recovered from the other side. As to Mr Moon, Mr Sarinas said that he "… also advised him that we would continue to engage Mr Tony Moon of Counsel" (affidavit, paragraph 6). His recommendation to Mr Rodriguez "… was that two Counsel be engaged and …[he] was instructed in writing to engage two counsel" (affidavit, paragraph 7).
The settlement offers
Mr Paul Johnston is a senior claims officer employed by GIO Australia ("GIO") and had responsibility for the administration of Mr Rodriguez's claim. GIO is the manager of workers' compensation claims made under the SRC Act. He attached copies of various correspondence passing between Telstra's solicitors and Mr Rodriguez's solicitors. That correspondence is to the effect that Telstra's solicitors offered to settle for $100,000 plus the costs of both trials and for the decision to be affirmed. The payment would be made under Telstra's Voluntary Rehabilitation Scheme. That offer was rejected by Mr Rodriguez's solicitors in a letter dated 2 March, 2001 and confirmed in a further letter dated 5 March, 2001. In rejecting the offer, Mr Rodriguez's solicitors made it clear that any offer would have to allow for future entitlements foregone by Mr Rodriguez as they believed that findings would be made favouring Mr Rodriguez on liability and quantum.
On 8 March, 2001, Telstra's solicitors offered to settle the matter on the same basis as previously but raised the sum to $150,000. Mr Rodriguez would be required to make all statutory refunds. That offer was rejected by Mr Rodriguez's solicitors in a letter dated 8 March, 2001 but they then offered to settle the matter on the following basis:
"1) Payment to the Applicant of the sum of $400,000.00 under the Telstra Voluntary Rehabilitation Scheme;
2)From such sum the applicant to pay all statutory refunds;
3)Payment to be made within 21 days of the date of this offer to the trust account of Shine Roche McGowan Solicitors;
4)Respondent to pay the taxed costs of and incidental to Application Numbers Q95/54, Q97/65 and Q1999/1286 including any reserved costs and the costs of all applications for directions;
5)The Respondent pay the costs of Senior and Junior Counsel;
6)The decisions under review be affirmed.
It is clear that the Applicant also has claims for:
·household care, assistance and attendant services both in the past and in the future
·travel for medical treatment
·past and future medical expenses
·declaratory determinations for future entitlements."
On the following day, 9 March, 2001, Telstra's solicitors raised the sum offered to $190,000. The final paragraph of the letter stated that Mr Rodriguez's acceptance of the offer would mean that he "… cannot recover any other compensation or money from Telstra …". Mr Rodriguez's solicitors rejected the offer in a letter also dated 9 March, 2001. In doing so, they noted that it did not include any amount to compensate for "the future". They calculated that their:
"… client's present entitlements to lost wages exceed $170 000.00 and, on Dr Klug's estimate, he is entitled to in excess of $40 000.00 under Section 24 and Section 27.
Medical expenses exceed $5 000.00.
He will also be entitled to travel expenses.
He will also be entitled to home care, assistance and allowances.
Additionally, he will be entitled to large sums in the future if the determination is reversed."
Mr Rodriguez's solicitors noted that their offer of 8 March, 2001 remained open.
On 12 March, 2001, Mr Rodriguez' solicitors advised Telstra's solicitors that he offered to settle his claims against Telstra on the following basis:
"1) Payment to the Applicant of the sum of $370,000.00 under the Telstra Voluntary Rehabilitation Scheme;
2)From such sum the applicant to pay all statutory refunds;
3)Payment to be made within 21 days of the date of this offer to the trust account of Shine Roche McGowan Solicitors;
4)Respondent to pay the taxed costs of and incidental to the Application Numbers Q95/54, Q97/65, Q97/66 and Q1999/1286 including any reserved costs and the costs of all applications for directions;
5)The Respondent pay the costs of Senior and Junior Counsel;
6)The decisions under review be affirmed."
Mr Johnston calculated the monetary value of the Tribunal's decision of 11 June, 1992 and concluded that it was worth $105,403.55 over the period 1 July, 1994 to 1 September, 1998. Mr Johnston also attached the copy of the calculations of past economic loss prepared by Mr Rodriguez's solicitors. Those calculations related to the period from 12 May, 1994 to 5 March, 2001 and amounted to a total gross figure of $218,525.80. The total claim was for $174,546.35.
In a letter dated 12 July, 2001, Telstra's solicitors offered to settle the question of costs on the basis that, among other matters, costs include some of the costs of the two hearings in relation to Mr Rodriguez' claim for major depressive disorder but that only the fees of junior, and not senior, counsel be allowed.
CONSIDERATION
Although we have referred in the main to material put forward on behalf of Mr Rodriguez, it should not be thought that Telstra accepted the assertions made against it in relation to the conduct of the hearing. It did not. From our point of view, neither party can claim the high moral ground on every issue in relation to the manner in which this matter was conducted. There was very little meeting of the parties' minds either on substantive or procedural issues. It seems to us that a significant part of the reason for their adopting entrenched positions lay in their very different view of the consequences of Spender J's judgement of 14 October, 1999 and of their very different view of Mr Rodriguez' entitlements under the SRC Act.
On behalf of Mr Rodriguez, for example, the view adopted from the outset was that the inevitable consequence of his Honour's judgement was that the Tribunal was obliged to find in his favour. Telstra took the view that it was not inevitable. That would be so if, for example, Mr Rodriguez were not telling the truth with regard to certain critical matters. Despite the Tribunal's ruling in favour of Telstra on this aspect and giving written reasons for its view, it is apparent in the submissions that Mr Rodriguez' entitlement to compensation under the SRC Act should not have been challenged for reasons quite apart from Spender J's judgement. We refer, for example, to the following passage in the submissions presented by Mr Hampson at the conclusion of the hearing and in support of a submission that the Model Litigant Policy requires the Commonwealth and its agencies not to take advantage of a claimant who lacks resources to litigate:
"The applicant is on a disability pension. He has no method by which he can litigate this claim since the sole source of his income was his employment with Telstra. Telstra are the cause of his misfortune. Their position as his ex-employer clearly indicates that they are or ought reasonably be aware of his financial position. Telstra is a large company with plentiful resources compared to the applicant who is an individual living off a social security benefit. Their determination to pursue this case and deny liability to the applicant illustrate their taking advantage of the applicant.
…
The applicant is clearly not in a fit psychological state to endure a lengthy, drawn out and frustrated trial. He is medicated and has difficulties conveying information required of him. The respondent is aware of this.
In addition, the applicant was cross examined for nearly four days (during the first AAT hearing) whilst he was medicated. The medication was for the treatment of depression." (paragraph 6)
On behalf of Mr Rodriguez, there has also been a confusion of the various applications. At the re-hearing, we were concerned only with his claim for compensation in respect of a major depressive disorder. It was not concerned with his claims for compensation in respect of his cervical spondylosis and neck disability. Despite that, the submissions made on Mr Rodriguez' behalf assert that Telstra denied liability for physical injuries on the basis that he had not completed a workplace accident report even though it had earlier paid him compensation.
These examples take us back to the words of s. 67 of the SRC Act, which sets out the Tribunal's power to order costs. Subject to that section, the fundamental proposition is that costs incurred by a party to proceedings instituted under Part VI in respect of a decision under ss. 38(4) or 62 (i.e. a "reviewable decision") are borne by that party (s. 67(1)). In general terms and in the context of this case, the Tribunal may make an order for costs in proceedings instituted by a person in respect of whom a determination is made (i.e. the "claimant", s. 60(1)) where the Tribunal makes a decision varying a reviewable decision in a manner favourable to him or her or 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 (s. 67(8)(a) and (b)).
Care must be taken at this stage to identify both the proceedings and the reviewable decision that is varied or set aside and substituted with another for it is only in relation to those that the Tribunal has a power to order costs. In this case, the reviewable decision is that denying liability to pay compensation to Mr Rodriguez in respect of a major depressive disorder. Having regard to the context of Part VI in which it appears, the reference to "any proceedings instituted by the applicant" in s. 67(8) is a reference to an application made to the Tribunal under s. 67(7) for review of a reviewable decision made by, in this case, Telstra. Part VI relates to the reconsideration and review of determinations made under the SRC Act. Section 64(1), which falls within Part VI, provides that "Application to the Administrative Appeals Tribunal for review of a reviewable decision may be made by … the claimant …", among others. Section 66(1) refers to matters that are inadmissible in evidence where a claimant "… has instituted proceedings under this Part". The reference is clearly to proceedings that arise from the claimant's making an application for review of a reviewable decision under Part VI. That this is the correct interpretation is supported also by s. 4(12) which provides that:
"A reference in this Act to the institution of a proceeding under Part VI in respect of a reviewable decision is a reference to the making of an application to the Administrative Appeals Tribunal for review of that decision."
It follows that the word "proceedings" as used in s. 67(8) is limited to an application made in relation to the reviewable decision that is decided in a manner favourable to an applicant. It does not encompass multiple applications relating to multiple reviewable decisions, only one or some of which are decided favourably to a claimant. Certainly, as in this case, it may be that more than one application is heard at the same time in order to save expense and time. That is a matter of practicality and efficiency. Matters of practicality and efficiency, however, cannot lead to the conclusion that a claimant's success in one application means that he or she may recover costs in respect of those applications in which he or she is not successful. That would be contrary to the wording of s. 67(8) which limits the Tribunal's power to order costs to those proceedings in which it varies the reviewable decision in a manner more favourable to the claimant or setting aside the reviewable decision and substituting another more favourable to the claimant.
In terms of this case, that will mean that we may order that Telstra pay Mr Rodriguez' costs only in relation to application No. Q97/66 as that is the only proceeding in relation to which the Tribunal has made a decision more favourable to Mr Rodriguez than the reviewable decision. The proceedings in relation to that application encompass both the first hearing and the re-hearing following the remittal from the Federal Court. That is the only application in relation to which the Tribunal made a decision more favourable to Mr Rodriguez. The Tribunal does not have power to make an order for costs in respect of applications Nos. Q97/65 and Q95/54.
What order may the Tribunal make in respect of costs? The order that it may make is that "… the costs of those proceedings incurred by the claimant, or a part of those costs, shall be paid by the responsible authority" (s. 67(8)). Again in the context of this case, the "responsible authority" is Telstra (s. 67(1A)(c)). As Senior Member Handley said in Mifsud and Australian Postal Corporation ([1999] AATA 782, unreported, 19 October, 1999):
"… the use of the word 'may' as it appears in s.67(8) of the 1988 Act does not mean 'must' and does not impose a discretion as to an award of costs or indeed whether costs should be awarded at all. The use of the words 'a part of those costs' as appears in that sub-section clearly refers also to permission being given to the Tribunal to make a partial award of costs where the discretion to exercise a costs order is made." (paragraph 22)
Although widely expressed, s. 67 itself limits the costs that a responsible authority may be ordered to pay. For example, the Tribunal may not order a person to pay any costs incurred by a claimant in relation to an application for an extension of time for applying to the Tribunal for review of a reviewable decision (s. 67(10)). In certain circumstances, the Tribunal may not make an order for costs where the claimant has been given a notice under s. 58 requesting him or her to give the determining authority a copy of a document specified in that notice and the Tribunal is satisfied that the claimant failed to comply with the notice and, had the authority had that information at the time it made the decision, it would have made a decision more favourable to the claimant than the reviewable decision (s. 67(12)).
Other than express limitations of this type, the SRC Act does not place any limitations upon the Tribunal's exercise of its discretion. Implicitly, those express limitations and the framework of the Act point to the reasonableness of the claimant's conduct as a relevant factor. That this is so is consistent with the principles enunciated by the Full Court of the Federal Court in Miller v Australian Telecommunications Commission (1985) 5 FCR 480 (Keely, Davies and Jenkinson JJ).
In this case, we have considered carefully the conduct of Mr Rodriguez and those representing him. Although there may be aspects of that conduct that have caused us concern, and we express no concluded view on that, we do not consider that any unreasonableness justifies our not making an order for costs in favour of Mr Rodriguez. If costs are ordered, reasonableness of their conduct together with the relevance of the costs incurred to the Tribunal's review of Telstra's reviewable decision to deny liability for a major depressive disorder would, of course, be relevant to the Registrar, District Registrar or deputy registrar in taxing the costs.
We have considered also the offers of settlement made on behalf of Telstra during the course of the proceedings. Evidence of those settlement negotiations was admissible in these proceedings under s. 131(2)(h) of the Evidence Act 1995. As it turns out, Telstra's last offer represented a monetary amount substantially above that represented by the Tribunal's decision. Despite that, Mr Rodriguez rejected the offer and elected to continue to pursue the application in the Tribunal. As Mr Dickson submitted, this added another five days to the hearing. Is that a relevant factor in the exercise of our discretion under s. 67(8) of the SRC Act? In general terms, Senior Member Handley considered that in Mifsud and Australian Postal Corporation:
"27. Additionally there are public policy considerations in all litigation. Courts and Tribunals are established by Governments to provide a forum for the adjudication of disputation between parties. Often that forum is provided without cost. Should a party act in a way which is frivolous or vexatious or imprudent or abusive of the process, it is likely that a Court or Tribunal will take that behaviour into account in the exercise of any discretion with respect to costs. I agree with the submission of Mr McInnis that there is a duty as a matter of public policy on the part of respondents in AAT proceedings – particularly the Australian Postal Corporation being an agency of government – to make reasonable attempts to resolve applications by putting forward offers of settlement, even if the offer is made after proceedings have commenced. Similarly there is a responsibility encapsulated within the notion of public policy on the part of applicants to assess the risks of litigation and respond appropriately to offers of settlement. In applications lodged under the 1988 Act where no order for costs can be made against an applicant worker – irrespective of the outcome of the proceedings – the failure to responsibly discuss and attempt resolution with a respondent and/or being minded to "punish" a respondent by having it incur unnecessary and wasteful costs of its own by permitting litigation to continue may influence the mind of a Tribunal member when exercising a discretion as to costs.
28. It must also be restated that compensation legislation is beneficial and remedial in nature and should be construed and applied liberally (refer Brennan v Comcare (1994) 122 ALR 615)."
In this case, we do not consider that Mr Rodriguez' rejection of Telstra's offer to settle was unreasonable in the circumstances. Each offer was put forward on behalf of Telstra on the basis that an amount of money was paid to Mr Rodriguez but that the decision under review be affirmed. Acceptance of that offer would have meant that Telstra's denial of liability would have stood. As a consequence, Mr Rodriguez would have been prevented from pursuing further entitlements under the SRC Act such as compensation for permanent impairment or for medical treatment. That there would be no further entitlement to compensation was expressly stated in the offer dated 9 March, 2001. That would be an appropriate outcome in practical terms in some circumstances but the evidence was not so clear cut as to make that result inevitable in the Tribunal or even much more likely than not.
Taking all of these matters into account, we have decided that considerations of what is reasonable lead us to conclude that we should make an order that Telstra pay Mr Rodriguez' costs of the proceedings being application No. Q97/66. That then leads us to consider whether there are any limits to the costs that may be recovered.
On behalf of Mr Rodriguez, it has been argued that we should not follow the Tribunal's usual practice, set out in the General Practice Direction, that Telstra be ordered to pay 75% of all professional costs, including counsel's fees, which would be allowable under the Federal Court Scale. Those costs are in addition to witness expenses at the prescribed rate and all reasonable and proper disbursements. Instead of these costs, it is submitted, Telstra should be ordered to pay costs at a higher rate or even on an indemnity basis. In the written submissions, the basis of the argument was put in this way:
"The Applicant ought to be entitled to an additional pecuniary award over and above any compensatory costs. This additional award is necessary to compensate the applicant for additional losses that he has suffered as a result of the following:
·The applicant's common law right to interest has been removed by the application of the Safety Rehabilitation and Compensation Act 1988 (his having been an employee of a Commonwealth agency); and
·Unless the AAT orders otherwise, he will only be entitled to 75% of the full amount of costs that he would be entitled to under the Federal Court Rules; and
·The Safety Rehabilitation and Compensation Act 1988 was enacted for the purpose of ensuring efficient and cost effective litigation between Commonwealth agencies and applicants. It is for this reason that the legislation is justified in removing the common law rights that applicants under the Act would otherwise have. As detailed above, there have been numerous and significant breaches of the Model Litigant Policy. This conduct has compounded the loss suffered by the applicant, and will result in a significantly reduced award of costs if he is to be denied the full amount of costs as well as the losses already suffered owing to the frustrated litigation.
·Breaches of the Model Litigant Policy …" (paragraph 7)
The effect of the submissions made on behalf of Mr Rodriguez on this aspect of the application for costs was that Parliament's basis for removing an applicant's right to recover interest on an award made in his or her favour was that the proceedings would be conducted efficiently. If that basis were removed, then the basis for awarding costs on the basis contemplated by the General Practice Direction was removed.
We should start our consideration of this aspect with a consideration of the difference between party and party costs and indemnity costs, which would seem to be the nature of the costs sought on behalf of Mr Rodriguez. The difference was summarised by Senior Member Beddoe in Maley v Comcare ([1998] AATA 543, 21 July, 1998) when he said:
"In EMI Records Ltd v Ian Cameron Wallace Ltd (1983) 1 Ch 59 at 74 Megarry V-C described the effect of an order for costs on an indemnity basis as being that all costs incurred will be allowed except those costs which have been unreasonably incurred or are unreasonable in amount. In applying the exceptions the successful party is to have the benefit of any doubt. The Vice Chancellor's analysis was approved by Sheppard J in Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248 at 253.
In the Colgate Palmolive case Sheppard J said the costs to be allowed on taxation under the Federal Court Rules are costs on a party and party basis and distinguished such costs from costs on an indemnity basis (118 ALR at 250-1). Sheppard J did not doubt the jurisdiction and power of the Federal Court to make an order for indemnity costs but pointed out in some detail the basis for cost orders to be on a party and party basis being the norm. However his Honour at p 254 said the power to order indemnity costs was not circumscribed in any way. He cited with approval the comments of Davies J in Ragata Developments Pty Ltd v Westpac (FC of A, 5 March 1993, unreported) as follows:
'… it is not open to an individual judge to award costs having regard to his own view as to the adequacy of party/party costs so fixed. An award of costs on an indemnity basis may be made only in a special case, where the circumstances justify departure from the ordinary principle. The circumstances must be such as to justify an award indemnifying the successful party in respect of all of the costs incurred, save only as to those costs which are unreasonable in amount.
The very nature of the award of costs on an indemnity basis gives a guide to the type of case in which such an award is appropriate. Thus, indemnity costs may be awarded where unsuccessful proceedings have been brought and prosecuted, not for the bona fide purpose of protecting and enforcing a legal right, but to achieve an ulterior or extraneous purpose...It is clear that the categories for the award of indemnity costs are not rigid. Each case must be considered on its own particular facts, having regard to the general principle that the usual award of party/party costs to the successful party should be made unless there are special circumstances to justify the making of a different order.'
Sheppard J at p 257 sets out a number of examples of circumstances which have been thought to justify exercise of the Court's discretion to order indemnity costs. Three of those examples are:
(a)the fact that the proceedings were commenced or continued for some ulterior motive;
(b)the fact that the proceedings were commenced or continued in wilful disregard of known facts or clearly established law; and
(c) an imprudent refusal of an offer of compromise.
His Honour cites other examples and as he makes clear, the categories in which the Federal Court's discretion may be exercised are not circumscribed (118 ALR 248 at 257). I have confined the examples cited to those that may be thought to have some relevance to the present case."
We would add to these examples, situations in which a party has made allegations of fraud knowing them to be false or irrelevant to the issues (Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 10 FCR 177; 71 ALR 287 per Woodward J) and situations in which a party, who is properly advised, should have known that he or she had no chance of success (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, per Woodward J).
It seems to us that these are the principles that should determine whether we award costs on a party and party basis or on an indemnity basis rather than any notions that any right a claimant might have had to interest on an award at common law has been traded for an efficient hearing. Parliament clearly turned its mind to the question of interest in drafting the SRC Act for it has required interest to be paid where an amount of compensation assessed to be payable under either ss. 24 or 25 in relation to impairment is not paid within 30 days of that assessment (s. 26(2)). It chose not to require interest to be paid on amounts payable as compensation for incapacity or other expenses. Recognition of an entitlement to interest in respect of one aspect of compensation payments and not in respect of another negates the argument that a costs order can be used to compensate a claimant for interest payments to which Parliament has otherwise decided he or she is not entitled.
We now turn to the particular circumstances of this case in light of the principles set out in the authorities to which Senior Member Beddoe referred and to which we have also referred. Having done so, we have concluded that Telstra defended its position robustly but not in a manner that took it outside the bounds of propriety. Although ultimately not accepted, it was reasonable in the circumstances of the case for Telstra to proceed on the basis that Mr Rodriguez was not entitled to compensation either because he was not telling the truth or, if he was suffering from major depressive disorder, it did not arise from or as a result of his employment as required by the SRC Act. It has been asserted on behalf of Mr Rodriguez that it has acted unreasonably and in breach of standards such as those set out in the Model Litigant Policy. If it has, those breaches do not justify its being required to pay a premium, as it were, on the costs it would otherwise be required to pay. The taxation of those costs will be the appropriate time to consider those assertions when both the relevance of any costs to the proceedings, their reasonableness and their being necessitated by any unreasonable behaviour on behalf of Telstra will be relevant to the Registrar, District Registrar or Deputy Registrar.
We have also considered whether the complexity of the proceedings justifies an award of costs on a different basis from that normally ordered. Again, we do not think that is justified. Although the proceedings were lengthy and the material reasonably lengthy for a compensation case when regard is had to the Appeal Books lodged in the Federal Court, the issues to be considered were no more complex than those raised in many of the compensation cases considered by this Tribunal. The fact that Mr Rodriguez' credit was called in question does not distinguish it from a not insignificant number of cases that proceed to a hearing. The fact that the previously constituted Tribunal had not found him to be a truthful person did not add to the complexities of the case. Although the outcome was extremely important to him, the consequences of the application to Mr Rodriguez in financial, and even emotional terms, were no greater than to many applicants who come to this Tribunal.
That brings us to the question of whether costs should be awarded on the basis that costs of senior and junior counsel should be payable by Telstra. The principles to be taken into account in deciding that were considered by the High Court in Stanley v Phillips (1966) 115 CLR 470 (Barwick CJ, Taylor, Menzies and Owen JJ, McTiernan J dissenting). In essence, the majority said, the question of whether or not costs of two counsel should be allowed is determined by whether it was necessary for the proper attainment of justice or for defending rights. It is determined:
"… upon a consideration of the nature of the case, its importance and its complexities, the desirability of a division of labour and so on. For obvious reasons it is impossible, and in this case unnecessary to attempt, to state exhaustively what the relevant considerations are. It is sufficient to do no more than to refer to the terms of the general rule itself." (per Taylor and Owen JJ, page 485)
Barwick CJ expressed the considerations to be taken into account in answering the question in this way:
"That question concerns the allowance of the fees of more than one counsel. It is not concerned, certainly not directly concerned, with the question of the relative competence of members of the Bar, or of sections of the Bar. It is fundamentally concerned with the attainment of justice, which expanded into its elements, means that it is concerned with the presentation of a case to a court of law in such manner and to such extent that a just result is able to be achieved. As it is to be supposed that the success of the party incurring the fees of counsel will involve the opponent in their payment, the expenditure must be confined to what is necessary, which means reasonably necessary, or proper to ensure such a presentation of the case. Such a limitation on the expenditure recognizes that a litigant in his own sole interest may in all prudence not wish to venture into court with only such counsel as this limitation would allow. Parker J. expressed the distinction in Peel's Case [1907] 1 Ch., at p. 613. McArthur J. in Re Malleson, Stewart, Stawell and Nankivell [1931] V.L.R. 127, at p. 134 embodies the distinction in his formulation of a test which though made in a case involving a solicitor and client taxation is referable to the general limitation contained in the words "necessary or proper" in reg. 29. The emphasis throughout is upon obtaining an adequate presentation to enable justice to be done: it is not upon the propriety of the steps taken by a litigant to ensure the maximum of success in his own cause. That of course he may do but not, in my opinion, at his opponent's expense.
As the question is whether the presentation of a case to ensure a just determination reasonably requires the services of more than one counsel, it is the nature and circumstances of the case which provide the determinants. The matter cannot as a general rule be determined by reference to the court in which the proceedings are taken, though the position of that court in the hierarchy of a judicial system may well be such that only cases of a complicated nature are generally litigated before it." (page 478)
As to whether it was prudent to brief senior counsel, the question is the same. It is a question that:
"… is, of course, a practical one and what may be regarded as a prudent course or an over-cautious course can be determined only by considering whether the case was one which the plaintiff's advisers might reasonably have regarded as calling for skill and experience beyond that of the junior bar. " (per Taylor and Owen JJ, page 486)
In this case, reliance was placed on the delicacy and complexity of the case to be presented. The case was not without complexities but they were not complexities that justified the engagement of two counsel. The test adopted by Dr Reddan was new but the manner of exploration of the issues raised by that test were not new or more difficult than the issues raised by many compensation cases in this Tribunal. We have reached this conclusion in relation to each of the other five categories of reasons advanced on behalf of Mr Rodriguez. The issues had complexity and the consequences to Mr Rodriguez considerable but no more than many of the compensation cases which are heard in the Tribunal and which are conducted by a junior counsel on his or her own.
During the hearing relating to the costs application, we expressed some concern about whether Mr Rodriguez had been able to instruct his solicitors when there was a suggestion in the submissions made on his behalf that he might not have the capacity to make decisions on his own behalf. This is a matter that may be relevant in the taxation of costs between solicitor and client but is not a matter that is relevant to take into account in determining costs under s. 67 of the SRC Act.
For the reasons we have given, we decide that:
1.The respondent pay the applicant the costs of the proceedings No. Q97/66 in accordance with the following provisos:
(a)the proceedings encompass both the hearing and re-hearing;
(b)the costs be assessed on the basis of 75% of all professional costs, including counsel's fees, which would be allowable under the Federal Court Scale together with witness expenses at the prescribed rate and all reasonable and proper disbursements; and
(c)counsel fees for senior counsel are not allowable.
2.Those costs are to be agreed between the parties or, should they fail to agree, are to be taxed by the Registrar, a District Registrar or a Deputy Registrar of the Tribunal.
I certify that the forty-three preceding paragraphs are a true copy of the reasons for the decision herein of
Miss S A Forgie (Deputy President)
Dr K P Kennedy OBE (Member)Signed: ..........................................................................
Clancy Riddiford AssociateDate/s of Hearing 27 July 2001
Date of Decision 3 December 2001
Counsel for the Applicant Mr Hampton QC with Mr Moon
Solicitor for the Applicant Shine Roche McGowan
Counsel for the Respondent Mr Dixon
Solicitor for the Respondent Standish Partners
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