Salters and Telstra Corporation Limited
[2003] AATA 1037
•14 October 2003
CATCHWORDS – PRACTICE AND PROCEDURE – COSTS – whether respondent should pay applicant’s costs of the proceedings or part of the proceedings – discretion of the Tribunal – costs awarded.
Safety, Rehabilitation and Compensation Act 1988 ss. 14, 38, 58, 60, 62, 66 and 67
Miller v Australian Telecommunications Commission (1985) 5 FCR 480
Comcare v Labathas Comcare v McMahon (1995) 133 ALR 744
Western Australian Cricket Association (Inc) [1986] ATPR 40-748
Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1987) 17 FCR 211
Smallacombe v Lockyer Investment Co Pty Ltd (1993) 114 ALR 568
Calderbank v Calderbank [1975] 3 All ER 333
Messiter v Hutchinson (1987) 10 NSWLR 525
Mifsud and Australian Postal Corporation [1999] AATA 782
Christina Beer and Australian Telecommunications Commission, AAT 5974, 20 June 1990
DECISION AND REASONS FOR DECISION [2003] AATA 1037
ADMINISTRATIVE APPEALS TRIBUNAL )
) Q1999/809
GENERAL ADMINISTRATIVE DIVISION )
ReDAVID McCAULEY SALTERS
Applicant
AndTELSTRA CORPORATION LIMITED
Respondent
DECISION
Tribunal:Deputy President S A Forgie
Dr K P Kennedy, OBE (Member)
Date:14 October, 2003
Place:Melbourne
Decision:The Tribunal orders:
1. the respondent pay the costs of the proceedings incurred by the applicant except in so far as they relate to:
(1)the directions hearings held on 29 and 30 May, 2001; and
(2)counsel’s and solicitors’ fees relating to one day of the hearing;
2. in the absence of agreement between the parties as to their quantum, the costs are to be taxed on a party and party basis and on the basis that:
(1)witness expenses are taxed at the prescribed rate;
(2)the applicant is entitled to all reasonable and proper disbursements; and
(3)professional costs, including counsel’s fees, are to be taxed at the rate of 75% of those that would be allowable under the Federal Court Scale of Costs; and
3. either party has liberty to apply.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 27 July, 1999, the applicant, Mr David McCauley Salters, applied for review of a reviewable decision of the respondent, Telstra Corporation Limited (“Telstra”) dated 9 June, 1999. That reviewable decision affirmed an earlier decision dated 3 March, 1999 that Telstra was not liable to pay Mr Salters compensation under s. 14 of the Safety, Rehabilitation and Compensation Act 1988 (“SRC Act”) in respect of major depression. Submissions were made on a preliminary matter and a decision given on 23 August, 2000. Notices advising that the hearing of the application would be held on 17, 18 and 19 April, 2001 were sent to the parties on 20 December, 2000. A later notice was sent on 1 June, 2001 advising of the further hearing dates of 23 and 24 July, 2001.
A decision was made on 8 February, 2002 to:
“1. set aside the decision of the respondent dated 9 June, 1999; and
2.substitute a decision that:
(a)the respondent is liable to pay compensation in accordance with the Safety Rehabilitation and Compensation Act 1988 in respect of Major Depressive Disorder from 15 April, 1998 to 13 December, 1999; and
(b)the applicant was incapacitated for work as a result of Major Depressive Disorder from 15 April, 1998 to 13 December, 1999.”
THE ISSUE
The issue in this case is whether an order should be made requiring Telstra to pay Mr Salters’ costs of the proceedings, or part of them, and, if so, the terms of that order.
LEGISLATIVE BACKGROUND
When proceedings are instituted in the Tribunal under Part VI in respect of a decision under ss. 38(4) or 62(1) (i.e. a “reviewable decision”) of the SRC Act, the general principle is that each party to those proceedings bears his, her or its costs (s. 67(1)). That general principle is modified by the remaining provisions of s. 67 to the extent, in general terms, that the Tribunal has a discretion to make a costs order in some circumstances and must make a costs order in others. In each case, the costs order may only be made in favour of a person in respect of whom a determination has been made (“claimant”; s. 60(1)) and who has made an application for review of a reviewable decision.
Subject to s. 67, a responsible authority (licensed authority, licensed corporation or Comcare; s. 67(1A)) is liable to reimburse a claimant for costs reasonably incurred in respect of a proceeding instituted under Part VI when that determination has been rendered abortive because a decision has been made under s. 62(1) varying or revoking that determination (s. 67(2)). The liability arises only in respect of those “costs reasonably incurred” by the claimant and it arises as a result of the operation of s. 67(2) and independently of any order of the Tribunal.
The Tribunal is required to make an order relating to costs when it gives a decision setting aside a reviewable decision and remitting the case for re‑determination to the responsible authority (s. 67(9)). In each case, the costs ordered to be paid must be paid by the responsible authority. The Tribunal has no discretion in the matter.
The Tribunal is given a discretion to make an order that a claimant’s costs shall be paid by a responsible authority when it makes a decision varying the reviewable decision in a manner favourable to the claimant or it sets aside a reviewable decision and substitutes a decision that is more favourable to the claimant. The order may be made in respect of the “costs of the proceedings incurred by the claimant, or part of those costs” (s. 67(8)). If the same outcome is the result of proceedings instituted by a licensed authority or licensed corporation, the Tribunal may order that the costs of the “proceedings incurred by the claimant” be paid by the responsible authority (s. 67(8B)). If proceedings are instituted by the Commonwealth and the Tribunal varies the reviewable decision in a manner less favourable to the claimant or sets aside that reviewable decision and substitutes a decision that is less favourable to him or her, the Tribunal may order that the costs incurred by the claimant be paid by Comcare (s. 67(8A)(a)). If there is any other outcome of those proceedings, it may order that those costs be paid by the Commonwealth (s. 67(8A)(b)).
Whether it has a discretion or obligation, that discretion or obligation is modified by the remaining provisions of s. 67. Those modifications also affect the liability to pay costs arising under s. 67(2). The modifications arise if the responsible authority has given the claimant a notice under s. 58 to give it a specified document or information (“relevant document”, “relevant information”). The first set of modifications arises if the following criteria are fulfilled: the claimant had not provided the relevant document or information before the determination was made; the responsible authority did not have the information contained in the relevant document or the relevant information and it was not reasonably available to it; had the claimant provided the relevant document or information, the responsible authority would have made a more favourable determination; and the responsible authority would, but for s. 67(5), be liable to pay costs (ss. 67(3) and (4)). The declaration that the responsible authority may make is that s. 67(2) does not apply in relation to the claimant’s costs. The consequence of that declaration is that the claimant may not recover his or her costs (s. 67(5)). The second set of modifications mirrors the first but relate to circumstances in which the Tribunal could otherwise exercise its power to make a costs order under ss. 67(8) or (9) (ss. 67(11) and (12)).
In each instance, the costs that may be order to be paid or for which a responsible authority is liable to pay relate to the “proceeding” or “proceedings” instituted by the claimant. That the costs do not relate to those incurred by a claimant before the proceedings have been instituted is clear from s. 67(10), which provides that nothing in ss. 67(8), (8A) or (9) authorises the Tribunal to order a person to pay any costs incurred by the 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)).
Where the Tribunal orders a responsible authority to pay costs incurred by a claimant, the amount of those costs may be agreed between the parties. If they do not reach an agreement, the Tribunal may tax or settle the amount of those costs or it may order that they be taxed by the Registrar, District Registrar or a Deputy Registrar of the Tribunal (s. 67(13)).
THE SUBMISSIONS
When it became apparent that the parties were unable to reach agreement as to the terms of a costs order in this matter, they were, on 27 September, 2002, directed to make submissions regarding costs. Mr Koutsoukis, on behalf of Mr Salters, made submissions dated 27 September, 2002, 8 November, 2002 and 25 February, 2003. Acting on behalf of Telstra, Mr Standish made submissions dated 11 October, 2002 and 28 November, 2002. Both agreed that the decision substituted by the Tribunal for Telstra’s reviewable decision was more favourable to Mr Salters than the reviewable decision. Beyond that, though, there was little agreement. On behalf of Mr Salters, Mr Koutsoukis’s initial submission relied simply on the favourable outcome and upon s. 67(8). He submitted that Mr Salters was entitled to have his reasonable costs and outlays paid by Telstra. Mr Standish raised several issues regarding the conduct of the case and submitted that individual costs should be left to the District Registrar on a taxation of the costs but that the Tribunal should make an order that Mr Salters should be entitled to recover only one third of his professional fees. The issues regarding the conduct of the case were disputed by Mr Koutsoukis. I will summarise each party’s position in the following paragraphs.
Mr Salters “overreached” himself
Mr Standish submitted that Mr Salters had sought compensation on an ongoing basis for the whole of the period until the time of the decision. He submitted that Mr Salters had “overreached” himself and that, had he been content with compensation for a closed period as the Tribunal ultimately found, a settlement “was likely to be achievable” (Submissions on Costs dated 11 October, 2002). In response, Mr Koutsoukis referred to the written submissions made at the hearing. Paragraph 45 sought decisions that Mr Salters was suffering from an injury within the meaning of the SRC Act and that he was a person entitled to compensation in accordance with the legislation for that injury resulting in incapacity within the meaning of s. 14(1).
Both parties referred to an offer that had been made on the third day of the hearing. In his Second Submission on Costs dated 8 November, 2002, Mr Koutsoukis submitted that:
“… It is incorrect for the Respondent to assert that the Applicant sought compensation, on an ongoing basis, for the whole of the period up to the date of the decision. The orders sought by the Applicant are set out in paragraph 45 of the Applicant’s written submissions. Further, it is risible for the Respondent to suggest that the matter may have settled if the Applicant had been willing to accept a limited order such as the one eventually made. The Respondent aggressively opposed this application. The Respondent made no offer of settlement at all at any time prior to the hearing commencing. On the afternoon of the third day of the hearing, the Respondent made a verbal offer to settle for $25,000.00 plus costs, which sum was inclusive of all statutory and other refunds the Applicant was obliged to make. That offer was manifestly inadequate. As a result of the Tribunal’s orders the Applicant received $34,428.99 after the payment of all necessary refunds.”
Mr Koutsoukis later said that Telstra’s offer to settle:
“… has been shown to be quite inadequate. The reference to costs in the applicant’s offer of settlement is clearly a reference to costs as allowed by the Tribunal. It cannot be inferred that the applicant was seeking indemnity costs in that offer of settlement.” (Applicant’s Reply to the Respondent’s Submission on Costs in Reply to the Applicant’s Second Submission on Costs, paragraph 3)
In the Respondent’s Submission on Costs in Reply to the Applicant’s Second Submission on Costs dated 28 November, 2002, Mr Standish submitted:
“As to paragraph 8, it is quite clear from the overall presentation of the applicant’s case that he sought maximum weekly compensation from the day of his last attendance at Telstra in April 1998 (be it 15 or 22). No finite period was ever suggested on behalf of the applicant and certainly not in paragraph 45 of the applicant’s written submissions. Thus in settlement negotiations it was never within the contemplation f those on behalf of the applicant that compensation might be settled on a closed period. The respondent’s submissions in this respect at paragraph 6 of the first written submissions amount to no laughing matter. The applicant’s submissions concerning settlement negotiations demonstrates that the respondent was prepared to pay a substantial sum for compensation, that is, reflecting incapacity for a closed period. The response to the respondent’s offer was not to refer to any closed period but to say in the applicant’s solicitor’s letter of 2 May 2001:
‘We are instructed to reject the offer.
Our client will accept a proposal that the appeal be allowed and that his costs be paid in full.’
The reference to costs in full is taken as a reference to costs not on a party and party basis nor on the basis of 75% of the Federal Court scale but on an indemnity basis.”
Dr Holm’s un-availability for the hearing scheduled in April, 2001
Mr Standish submitted that, on 9 April, 2001, Mr Salters’ solicitors had advised him that Dr Holm would be away and unable to give evidence either in person or by telephone. This late notice necessitated Telstra’s incurring the costs of attending a directions hearing held on 11 April, 2001, when the then Senior Member Muller decided that the hearing would proceed on the allocated days. The effect of Dr Holm’s absence was for the hearing to be artificially and unnecessarily lengthened so leading to Telstra’s incurring additional expense.
In his Reply to the Respondent’s Submission on Costs in Reply to the Applicant’s Second Submission on Costs, Mr Koutsoukis said that he had advised Dr Holm of the hearing dates in a letter dated 14 February, 2001. At that time, Dr Holm did not indicate to him that he was not available. In his earlier submission, he had rejected the proposition that the hearing had been artificially and unnecessarily extended and pointed to the fact that no medical witnesses were called on 17, 18 or 19 April, 2001. He submitted that, even had Dr Holm been available, he would not have been called for the first three days of the hearing were taken up with evidence from Mr Salters and Mrs Salters. No medical witnesses were called and the potential problem of Dr Holm had no effect on the length of the hearing. Mr Standish challenged this view and submitted that the days had been “used to fill in, as it were” with submissions regarding the admissibility of the evidence sought to be called on Mr Salters’ behalf from Mr White, Mr Rogers and Mrs Salters. The admissibility was in question as there had been failure to comply with s. 66 of the SRC Act.
Mr Standish submitted that the delays in the preparation of Mr Salters’ case led to Telstra’s having to stand down Dr Nothling, who had been arranged to give evidence in response to Dr Holm’s evidence.
Lack of notice of intention to call Mrs Salters, Mr Rogers and Mr White
Mr Koutsoukis conceded that no notice had been given to Telstra prior to the hearing that Mrs Salters, Mr Rogers and Mr White would be called to give evidence. Mr Standish referred to the absence of that notice and the failure to comply with s. 66 of the SRC Act as demonstrating the “disarray of the applicant’s case” (Respondent’s Reply to the Applicant’s Second Submission on Costs, paragraph 8). Much time was spent in arguing about the admissibility of their evidence and there were rulings both for and against Mr Salters’ case in terms of admissibility. Leave was given for the three witnesses to be called but only on the basis that a copy of the transcript of Mr Rogers’ evidence-in-chief be supplied to Telstra to enable it to prepare its cross-examination.
A statement for Mrs Salters was prepared and signed on 25 May, 2001. Mr Koutsoukis submitted that Mrs Salters was not cross-examined until the hearing resumed on 23 July, 2001. Accordingly, Telstra had ample time to peruse and consider her evidence. Mr White’s evidence was given on the same day and Telstra had been provided with a statement well before that time.
Absence of Dr Gillman’s notes
Mr Standish submitted that Telstra’s solicitors had written to Mr Salters’ solicitors on 17 April, 2001 and advised that no prior notice had been given of the intention to call Dr Gillman by telephone. They advised that Dr Gillman’s personal attendance was required and that he should be accompanied by his notes. Mr Standish submitted that much time was wasted in obtaining Dr Gillman’s notes. Those notes had not been made available to the Tribunal or to Telstra even though Mr Salters’ solicitors had known that Dr Gillman would be called by telephone.
When the notes were obtained, only part of them were obtained but the notes of the psychologist, Mr Witzerman, were not included. Mr Salters had, in his evidence on 18 April, 2001, referred to his having been treated by a psychologist. In a letter dated 24 April, 2001, Telstra’s solicitors had specifically asked for the notes of the psychologist. They followed up this matter again in a letter dated 11 May, 2001 and, in a reply dated 15 May, 2001 from Mr Salters’ solicitors were told:
“We are puzzled by your reference to a psychologist. Dr Holm, psychiatrist, will be giving evidence in person.”
Mr Salters’ evidence was drawn to their attention in a further letter from Telstra’s solicitors dated 21 May, 2001. Among the documents that were subsequently produced was a letter from Mr Witzerman stating:
“It is my opinion that, if Mr Salters chose to engage in full time employment, he is not currently suffering from any psychological or psychiatric condition that would prevent him from doing so.”
Mr Salters’ solicitors, Mr Standish submitted, had not acquainted Dr Holm’s with this letter.
In response, Mr Koutsoukis submitted that Dr Gillman, who was Mr Salters’ treating general practitioner, had been scheduled to give evidence at noon on 17 April, 2001 and then at noon on 18 April, 2001. He submitted that Telstra had known that Dr Gillman would be called by telephone and that it was entitled to “subpoena” his notes for the hearing. Telstra had failed to do so. Mr Koutsoukis agreed that the notes obtained from Dr Gillman were incomplete and illegible when obtained on 19 April, 2001. The applicant obtained them later and had them transcribed.
Adjournment to 4 and 5 June, 2001
Mr Standish submitted that the adjournment of the matter after directions hearings on 29 and 30 May, 1991 until 4 and 5 June, 2001 was to accommodate Mr Salters’ case. This required Telstra to stand down its witnesses. It again had to stand down its witnesses and incurred costs, including counsel’s fees, when the adjourned hearing on 4 and 5 June, 2001 was further adjourned. That further adjournment occurred following a directions hearing, which was held on 30 May, 2001, requested by Mr Salters’ solicitors. The adjournment was caused by the unavailability of Dr Gillman.
Mr Koutsoukis submitted that he had, on 9 May, 2001 in a telephone call to Dr Gillman, “… confirmed with Dr Gillman that the matter had been adjourned to the 4th June and that he would be required to give evidence on that day …” He submitted that it is incorrect for Mr Standish to assert that the hearing was adjourned to accommodate the applicant. All of the witnesses, including Telstra’s Dr Nothling, had to be re-scheduled. On 25 May, 2001, Dr Gillman advised Mr Koutsoukis for the first time that he would be in the United States of America from 28 May, 2001 to 11 June, 2001 in order to attend an advisory group meeting. Mr Koutsoukis stated that he immediately sent a facsimile message to Telstra’s solicitors advising them of this. There was a discussion between them as to whether his cross-examination was necessary.
Mr Koutsoukis submitted that Telstra sought an adjournment of the hearing when the directions hearing was held on 29 May, 2002. At the Tribunal’s request, efforts were made to contact Dr Gillman in the United States of America. Contact was not made and the matter was adjourned until 23 and 24 July, 2001. When Dr Gillman was ultimately cross-examined, it was a perfunctory cross-examination lasting only 15 minutes.
In reply, Mr Standish referred to a letter that he had received from Mr Salters’ solicitors. It was dated 25 May, 2001 and said:
“We advise that we have contacted Dr Gillman who confirmed that our client had seen a Paul Witzerman, psychologist. We have contacted Mr Witzerman who has verified that he saw our client. We have requested for his notes in this matter and will forward them to you once we receive them.
We were advised this morning by Dr Gillman that he will be away in the United States from 28 May 2001 until 11 June 2001. We enclose by way of service medical report of Dr Ivan Holm dated 21 May 2001..”
This indicated that the applicant’s solicitors had failed to comply with s. 66 of the SRC Act in relation to Dr Holm’s report.
Mr Standish expressed the view that it was irrelevant whether or not Telstra had sought the adjournment on 29 May, 2001. Had the hearing proceeded on 4 and 5 June, 2001, it would not have been completed on those days. The difficulties with Dr Gillman would have prevented that. The brevity of the cross-examination of Dr Gillman were irrelevant for, by that time, there had been developments with the identification of Mr Witzerman and Mr Salters’ other witnesses. Matters that would have been explored with Dr Gillman had become apparent from other sources by the time that he was called.
Sleep apnoea
Mr Koutsoukis submitted that the further report of Dr Holm dated 21 May, 2001 was required because Telstra had raised, for the first time, the possibility of Mr Salters’ depression being due to sleep apnoea. The issue had not been considered by either Dr Holm or Dr Nothling up to that time. Sleep apnoea became a major plank upon which Telstra opposed Mr Salters’ claim.
Mr Koutsoukis submitted that the case was never likely to have been completed in fewer than five days of hearing. Apart from the first morning, each day was taken up with relevant evidence. The issue of sleep apnoea contributed to the length of the hearing.
Mr Standish submitted that these submissions do not recognise that sleep apnoea was an important matter and one for which Mr Salters had extensive treatment. That was relevant but it was not a matter about which Dr Holm had been told. This last submission was rejected by Mr Koutsoukis, who said that there was no evidence to support this proposition. Telstra had not made that submission at the hearing.
Unnecessary directions hearings
Mr Standish submitted that the directions hearings held on 11 April and 29, 30 and 31 May, 2001 were unnecessary and were occasioned by the unsatisfactory conduct of Mr Salters’ case. At least a day and a half were wasted in argument concerning the appropriate course to take in view of the disarray of his case.
Dr Reddan’s report
Mr Koutsoukis submitted that Telstra sought to overturn the decision dated 2 February, 2000 to exclude Dr Reddan’s report when the hearing, commenced on 17 April, 2001. He had not been given any advance notice of the application. In relation to the earlier application on 2 February, 2000, Mr Koutsoukis submitted that Mr Salters was entitled to his costs.
Mr Standish opposed this application and did so against the background of what he described as the “… unfolding of the applicant’s evidence which led to the respondent’s application during the course of the hearing proper for the order of 23 August 2000 not to be given effect to with respect to the evidence of Dr Reddan. …” (Respondent’s Submission in Reply to Applicant’s Second Submission on Costs, paragraph 6). He referred to s. 67(8) of the SRC Act.
CONSIDERATION
General principles applicable in this case
Section 67(8) does not set out the principles that the Tribunal should follow in deciding whether it should exercise its discretion but one limitation is implicit in its own terms. This limitation relates to matters that may precede the lodgement of an application or that may be incidental to the proceedings in the Tribunal. In Miller v Australian Telecommunications Commission (1985) 5 FCR 480 (Keely, Davies and Jenkinson JJ), Keely J said:
“I accept the submission put by the respondent's counsel that the Tribunal, in exercising its discretion as to costs, was entitled to take into account, as a relevant consideration, conduct of the applicant or of her solicitors occurring at a time before she lodged her application for a review by the Tribunal. Reliance was placed upon the principle stated by James LJ (in which Brett and Cotton LJJ concurred) in Harnett v Vise (1880) 5 Ex D 307 at 310-311, that a judge was ‘not confined ... to the conduct of the parties in the litigation itself ...’ (but could) ‘consider the whole circumstances of the case, everything which led to the action ... everything in the conduct of the parties which may show that the action was not properly brought ... ‘. That principle was adopted by A L Smith LJ in Bostock v Ramsey Urban District Council [1900] 2 QB 616 at 622.”
This passage from the judgement was not referred to by Finn J in the case of Comcare v LabathasComcare v McMahon (1995) 133 ALR 744. His Honour considered that the analogy that should be drawn is not so much with courts in their original jurisdiction but with courts in their appellate jurisdiction. This analogy was important in his consideration of the recovery of costs of the legal proceedings relating to the determination and the reviewable decision. Finn J noted that s. 67(8) referred to the “costs of the proceedings” being the costs that were recoverable. He drew a distinction between the “costs of the proceedings” and those that are “incidental to the proceedings”. Those that are incidental would include those relating to the determination and reviewable decision and are not recoverable as they are not “costs of the proceedings” to which reference is made in s. 67(8). The distinction between “costs of the proceedings” and “costs incidental to the proceedings” are not, however, to be determined simply by reference to that time at which they were incurred. When considering whether a cost is payable under s. 67(8), the important question is: For what proceedings were the costs incurred? It is not relevant to ask: When were the costs incurred?
Assuming that the costs are costs of the proceedings, what are the factors that influence the exercise of the discretion? We have set out the provisions of s. 67 relating to costs. 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, in which it was held that the appropriate principles are those that apply to the awarding of costs by a court (Miller v Australian Telecommunications Commission (Keely J at page 485).
The principles that generally guide the exercise of a court’s discretion were set out in a judgement of Toohey J in Hughes v Western Australian Cricket Association (Inc) [1986] ATPR 40-748, which was approved by the Full Court of the Federal Court in Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1987) 17 FCR 211 at 222 (Bowen CJ, Morling and Gummow JJ):
“The discretion must of course be exercised judicially. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect.
Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey [1920] 2 KB 47.
Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v Farquhar [1893] 1 QB 564.
A successful party who has failed on certain issues may not only be deprived of the costs of this issues but may be ordered as well to pay the other party’s costs of them. In this sense, ‘issue’ does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v Lombardi (1975) 13 SASR 4 at 12.” (page 48,136)
A court’s discretion is broad enough to permit it to order that a proportion of a successful party’s costs be paid by another. That may occur “ …if the conduct of that party in a trial was such as to unreasonably prolong the proceedings: Latoudis v Casey (1990) 170 CLR 534 at 544-5 per Mason CJ and 565-9 per Toohey J; and see also Re Elgindata Ltd (No 2) [1992] 1 WLR 1207 at 1214-1217 and the judgment of Cooper J (with whom Sheppard and Neaves JJ agreed) in Leckie v Cummings (1993) 41 FCR 559” (Smallacombe v Lockyer Investment Co Pty Ltd (1993) 114 ALR 568 (pages 576-577)).
Offers of settlement made by one or other, or both, of the parties may be relevant in determining liability to pay costs. Unlike the courts, the Tribunal does not have any facility to accept payment into the Tribunal and, consequently, the rules and principles relating to such payments into court have no relevance. Generally, offers are made in writing and on a “without prejudice” basis. When presented in this form when a court proceeding is on foot and when they make an offer of compromise greater than the award subsequently made, they may be described as “Calderbank offers”. They are named after the case in which they were considered by the Court of Appeal: Calderbank v Calderbank [1975] 3 All ER 333 (Cairns and Scarman LJJ and Sir Gordon Willmer). Cairns LJ, with whom Scarman LJ and Sir Gordon Willmer concurred, said that there was no reason why costs should not be awarded on the same basis as if there had been a payment into court (page 342).
That a Calderbank offer has been made, does not determine the order that will be made. Rather, in a court it is a matter that “… should be taken into account by the court in determining whether to make a special costs order displacing the usual order that costs follow the event” (Messiter v Hutchinson (1987) 10 NSWLR 525 at 528 per Rogers J). Where the party making the offer could have made a payment into court but chose not to, his or her reasons for making that choice and the security of payment available to the other party are among the matters that are taken into account in considering the weight that should be accorded to the offer. Quite apart from the absence of a procedure to pay into the Tribunal, this consideration would seem to be irrelevant in a case in which the offer to settle is made by an agency such as Telstra in the context of a proceeding under the SRC Act. It can be presumed that it has the ability to make good its offer should it be accepted and, putting to one side issues of ambiguity in the terms of the offer and its acceptance, it is hard to imagine that an applicant would have to engage in litigation to enforce payment.
Other matters that have been regarded as relevant include the clarity of the offer, the timing of the offer and the period of time for which the offer was open. Spender J considered these in Smallacombe v Lockyer Investments Company Pty Ltd:
“… I would not, in the circumstances of this case, deprive the applicants of any costs. The first reason is the uncertainty inherent in the terms of the offer itself. The second is the timing of the offer: it occurred on the afternoon of a complex and lengthy trial when the person to whom the consideration of the offer fell was engaged in the heavy duties of the trial. The third reason is the extraordinarily short period of time that the offer was open. On any view of the matter, to get realistic instructions as to the likely amount of party and party costs on taxation, the evidence suggests that it would take, at the very least, a full working day.
In my opinion it would be unfair to expect a sensible and considered response to the offer in those circumstances, such that a failure to accept the offer should result in a substantial costs penalty. For those reasons then, I will not order a reduction in any costs to which the applicant might be entitled, in the sense of making orders as to costs up to a certain time, and different costs order after that time.” (pages 573-574)
Not only is the respondent’s behaviour relevant in the context of an offer but also that of an applicant. This is a matter that was considered by Senior Member Handley in Mifsud and Australian Postal Corporation [1999] AATA 782:
“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).”
Consideration of case in context of principles
We will begin our consideration with s. 66(1) of the SRC Act. It provides that:
“Where:
(a)a claimant who has instituted proceedings under this Part seeks to adduce any matter in evidence before the Administrative Appeals Tribunal in those proceedings; and
(b)the claimant had not disclosed that matter to the Tribunal at least 28 days before the day fixed for the hearing of those proceedings;
that matter is not admissible in evidence in those proceedings without the leave of the Tribunal.”
By the expression “matter in evidence”, we understand the provision to be referring to the “Substantial facts forming the basis of claim or defense; facts material to issue …” (Black’s Law Dictionary, 5th edition). Evidence of that sort was sort to be adduced, or presented, in the form of the evidence of Mrs Salters, Mr Rogers and Mr White. There is no question that outlines of their evidence were not disclosed to the Tribunal 28 days before the day fixed for the hearing. The first day fixed for hearing was 17 April, 2001 when the matter was listed to continue over 18 and 19 April, 2001 as well. The matter was adjourned to resume on 4 and 5 June, 2001 but, when those dates had to be vacated, was re-listed for 23 and 24 July, 2001.
Although it could be said, as Mr Koutsoukis has effectively submitted, that Mrs Salters’ statement was given to the Tribunal nearly two months before she was cross-examined and Mr White’s well before he was cross-examined, it is only partly to the point to submit, as he does, that Telstra had ample time to peruse and consider their evidence. Section 66(1) is not simply concerned with enabling Telstra to prepare its cross-examination. It is part of an overall scheme in the SRC Act to ensure that the relevant authority, in this case Telstra, has all the relevant information at every stage of the unresolved matter. The scheme begins with s. 58, which enables it to give a claimant a written notice requiring him or her to produce information or a document that is relevant to the claim. When read with s. 67(11), it is apparent that it is Parliament’s intention that the claimant provide all the information identified by the relevant authority as relevant to the determination. There is a costs penalty upon a claimant who later seeks review in the Tribunal if his or her failure to provide those documents or information led to the relevant authority’s making a less favourable decision than it would otherwise have done.
The scheme then moves to the review process in the Tribunal and s. 66(2) provides a bridge, as it were, between the two processes. If the relevant authority gave a claimant a notice under s. 58 specifying the information or document it sought and the claimant failed to do so, the claimant may not lead evidence of that document or information without leave of the Tribunal. That leave may only be given if the claimant gives a statement of reasons for his or her failure and if the Tribunal is satisfied that there are special circumstances for justifying the admission of the information or document in evidence (s. 66(3)).
Unlike ss. 58 and 66(2) and (3), s. 66(1) is concerned not with information or a document sought by the relevant authority but with the case sought to be made out by the claimant on review of the reviewable decision. Deputy President Todd criticised the formulation of s. 66(1) when he said:
“38. I must pause to say with all respect I consider s. 66 to be an appalling provision. It reflects no understanding of forensic proceedings or of the rules of natural justice. The provision itself has the potential to be a statutorily imposed denial of natural justice. It imposes an obligation on applicants but not on respondents. It provides not that the document be provided to the other side, but rather to the Tribunal. I am amazed that it has not been the subject of greater complaint than I am aware of by those who represent employees. I gave Counsel for Telecom time to consider the report overnight. In fact tender of the report was not eventually pressed and, because now of the applicability of the 1971 Act referred to in paragraph 2 above the point is of no moment in this case.” (Christina Beer and Australian Telecommunications Commission, AAT 5974, 20 June 1990)
Although it is true that the section directs the material to the Tribunal and not to the respondent in the proceedings, the effect of the section when read with the Tribunal’s General Practice Direction is that the statements of all witnesses must be lodged with the Tribunal and given to the other party before the commencement of the hearing. The purpose of this process is two-fold. One purpose is to ensure that both parties, as well as the Tribunal, is aware of all the material considered by the parties to be relevant to the review of the reviewable decision. Each can prepare a case to answer the case of the other. That is an important purpose if the case goes to hearing but, in the context of a non-adversarial tribunal, the second purpose is more important. That is to ensure that both parties have all relevant material before them so that, with or without the assistance of the Tribunal, they may explore settlement. They may do this either together or by one making an offer to the other. Given the statutory responsibilities of the relevant authority under the SRC Act, it needs to have confidence that any offer that it makes is soundly based in fact and in law. Section 66 is part of the scheme that ensures that it has the factual basis.
In failing to comply with s. 66, the operation of this scheme was impaired. Taken on their own, the individual instances of non-compliance could be said not to have unnecessarily lengthened the hearing. The witnesses were fitted in during the course of the extended hearing. They are not taken on their own, though. They are taken with each other and also with other features of the case.
Among those other features of the case are Dr Holm and Dr Gillman. Both were organised to attend on certain days of the hearing and both contacted Mr Salters’ solicitors at very short notice to advise his unavailability. To lose one witness is most unfortunate but to lose two makes one wonder just how firm the arrangements with the witnesses were. It would seem that neither Dr Holm nor Dr Gillman regarded their arrangements to be as firm as Mr Koutsoukis thought they were. However firm they thought that they were, they were certainly less than satisfactory with Dr Gillman. Despite the proposition that was put to us that Telstra could have summonsed his notes, it is normal practice for medical practitioners to bring relevant documents when called to give evidence. Indeed, it is expected that they will bring them. In the case of a medical practitioner who is a treating general practitioner, as is Dr Gillman, the notes that are relevant would include his notes of his consultations with Mr Salters. It is reasonable to expect that the party who calls a witness will advise him or her what notes should be brought to the hearing. The responsibility is no less when a witness is called to give evidence by telephone. Indeed, the responsibility may be a little heavier than when the witness gives evidence in person for the party calling the witness should arrange for him or her to provide his or her notes beforehand and not simply to have them available on the day of the hearing. They might be made available to the Tribunal or to the party calling him or her. This is not a matter that is the subject of a direction by the Tribunal in this case. It is a matter that is known to solicitors experienced in the practice of the Tribunal. Both the solicitors in this case are experienced in that practice.
Another feature to which we will refer in the context of lengthening the hearing is the omission of Mr Witzerman’s report when Dr Gillman’s notes were produced. Their omission led to exchanges of correspondence between the two solicitors that could have been avoided had the notes been requested by Mr Salters at the outset. It is also one of the reasons leading to Telstra’s seeking an adjournment of the hearing that had been listed for 4 and 5 June, 2001. The other reasons were Dr Gillman’s absence overseas and Telstra’s receipt the previous week of Dr Holm’s further report addressing further issues relating to sleep apnoea that had not previously been raised with Telstra. It was noted at that time that Mr White’s statement had been received by Telstra on 21 May, 2001. Telstra had wanted to explore sleep apnoea with its witness, Dr Nothling, and also with Dr Gillman.
An examination of the Tribunal’s records of the hearing time of the case is instructive. Bearing in mind that a “standard” hearing day is five hours, only the second day of the first three days of hearing approached that time. The first, on 17 April, 2001, lasted for 3 hours 10 minutes and the third for 4 hours 35 minutes. The hearing on the third day lasted only 2 hours 35 minutes. That was due in part to there being no statement from Mrs Salters in accordance with s. 66 and partly due to the lack of Dr Gillman’s notes. It was not appropriate for Telstra to commence its case when Mr Salters’ case was not clear from either the evidence led to that time or from written evidence previously exchanged between the parties. The hearings on the fourth and fifth days lasted for 5 hours 25 minutes and 5 hours 30 minutes.
Having regard to the whole of the manner in which the hearing was conducted for Mr Salters, we were of the view at the time, and continue to be of the view, that it was a “work in progress” rather than a completed work being presented. Even with the best endeavours of the Tribunal and the parties to disclose all relevant material before a hearing commences, there may be occasions when an issue arises and evidence has to be sought as the case goes along. This was not such a case. It was a case in which there was every appearance that the fundamentals, such as whether or not to call Mrs Salters, who might be thought to be well placed to observe her husband’s condition, were being decided upon as the case for Mr Salters was being presented. That was particularly so during the first three days of the hearing.
The offer of settlement is a matter which we have not taken into account as such. As it turned out, Mr Salters achieved a result that was worth more to him in monetary terms than that offered to him. In the context of $34,428.99, an increase of $9,000.00 is not insignificant. We would not, however, go so far as to say that the offer of $25,000.00 plus costs was manifestly inadequate for it was made at a time on the third day of the hearing when the applicant’s case was still in the process of unfolding. At that time, Telstra did not have a complete copy of Dr Gillman’s notes or a copy of Mr Witzerman’s report. Nor did it have Dr Holm’s second report that was not written until 21 May, 2001. In short, it did not have the information that it could have expected to have if Mr Salters’ case had been presented as efficiently as it should have been in the circumstances. It did not have all the information it needed to have on which to base its offer and did the best it could in the circumstances.
As for the proceedings relating to Dr Reddan, it seems to us that Mr Salters is entitled to his costs. They are part of the costs of the proceedings. Although there was some movement at the hearing of the merits of the application to have the decision to exclude her evidence set aside, the end result was that she was not called to give evidence and her report was not referred to in the Tribunal’s decision.
Looked at overall, the manner in which the case was presented on behalf of Mr Salters meant that the hearing was necessarily extended and that there was a need to hold directions hearings that would not otherwise needed to have been held. Telstra must bear its own costs in relation to the extended hearing and those directions hearings but it is not reasonable to expect Telstra to pay for Mr Salters’ costs in relation to them in the circumstances of this case.
Having regard to all of the matters that have been raised, we have concluded that Telstra should not be required to pay Mr Salters’ costs for the directions hearings dated 29 and 30 May, 2001 and one day of hearing. Telstra should otherwise pay Mr Salters’ costs in the usual way set out in the General Practice Direction. We have given the parties liberty to apply lest there be some unforeseen difficulty with the precise terms of our order.
For these reasons, we order that:
1.the respondent pay the costs of the proceedings incurred by the applicant except in so far as they relate to:
(1)the directions hearings held on 29 and 30 May, 2001; and
(2)counsel’s and solicitors’ fees relating to one day of the hearing;
2.in the absence of agreement between the parties as to their quantum, the costs are to be taxed on a party and party basis and on the basis that:
(1)witness expenses are taxed at the prescribed rate;
(2)the applicant is entitled to all reasonable and proper disbursements; and
(3)professional costs, including counsel’s fees, are to be taxed at the rate of 75% of those that would be allowable under the Federal Court Scale of Costs; and
3. either party has liberty to apply.
I certify that the fifty-eight preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie
Dr K P Kennedy, OBE (Member)
Signed: ..(sgd. P. Paczkowski)............................
P. Paczkowski Associate
Date of Decision relating to Costs 14 October, 2003
For the Applicant Mr P. Koutsoukis
Solicitor for the Applicant Maurice Blackburn Cashman
For the Respondent Mr K. Standish
Solicitor for the Respondent Standish Partners
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