Unilever Australia Limited v Gunn, Rose Jane & P D Wholesalers Pty Ltd
[1998] TASSC 143
•18 November 1998
143/1998
PARTIES: UNILEVER AUSTRALIA LIMITED
v
GUNN, Rose Jane
P D WHOLESALERS PTY LTD
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: LCA 59/1998
DELIVERED: 18 November 1998
HEARING DATE/S: 10 November 1998
JUDGMENT OF: Underwood J
CATCHWORDS:
Procedure - Costs - Departing from the general rule - Conduct of the parties - Conduct tending to litigation - What constitutes such conduct sufficient to displace the general rule.
Aust Dig Procedure [575].
Workers Compensation - Proceedings to obtain compensation - Determination of claims - Costs - Generally - Unfettered discretion conferred by statute - Discretion to be exercised in accordance with recognised principles - Ordinarily, costs "follow the event".
Farrow v State of Tasmania (1997) 7 Tas R 127; Lowrie v State of Tasmania 109/1998, followed.
Workers Compensation Act 1988 (Tas), s59(1).
Aust Dig Workers Compensation [155]
Workers Compensation - Proceedings to obtain compensation - Determination of claims - Costs - Generally - Unfettered discretion conferred by statute - Jurisdiction to order costs against a non-party.
Workers Compensation Act 1988 (Tas), s59(1).
Knight and Another v F P Special Assets Limited & Others (1991 -1992) 174 CLR 178, applied.
Aust Dig Workers Compensation [155]
REPRESENTATION:
Counsel:
Appellant: S B Carter
Respondent: P W Tree
P D Wholesalers Pty Ltd: A B Walker
Solicitors:
Appellant: Page Seager
Respondent: Levis Stace & Cooper
P D Wholesalers Pty Ltd: Dobson Mitchell & Allport
Court Computer Code:
Judgment ID Number: 143/1998
Number of pages: 8
Serial No 143/1998
File No LCA 59/1998
UNILEVER AUSTRALIA LIMITED v ROSE JANE GUNN &
P D WHOLESALERS PTY LTD
REASONS FOR JUDGMENT UNDERWOOD J
18 November 1998
This appeal is brought by Unilever Australia Limited ("Unilever") against the following order made by the Workers Rehabilitation and Compensation Tribunal on 7 July 1998:
"Having heard the parties it is ordered that both parties pay their own costs."
The other party, and a respondent to the appeal, is Mrs Rose Jane Gunn.
Some relevant background material
It appears that a company, referred to in the Tribunal's reasons for decision as "Streets Icecream" ("Streets") was a wholly owned subsidiary of Unilever. As is commonly known, Streets is in the business of manufacturing and selling icecream. P D Wholesalers Pty Ltd ("PDW") was a wholesale food distributor carrying on business in northern Tasmania. Amongst other things, PDW distributed Streets' products.
Early in 1997, Mrs Gunn read an advertisement in the Advocate Newspaper placed there by the Commonwealth Employment Service. The advertisement sought applications for the position of a sales representative. Mrs Gunn applied for this job and had two interviews. The first was with two employees of Streets. The second was with an employee of Streets and an employee of PDW. Mrs Gunn was the successful applicant. Her duties were to visit sales outlets in northern Tasmania, to sell Streets' products and deal with related matters. She was provided with a car. She was trained in her duties by Streets. On more than one occasion, Streets paid for Mrs Gunn to travel interstate to attend conferences concerning the marketing of Streets' products. However, her salary was paid by PDW, who in turn received an increase in the commission paid by Streets on the sale of its products effected by Mrs Gunn.
On 22 and 27 August 1997, in Sydney and Launceston respectively, there occurred some kind of incidents between Mrs Gunn and a manager of Streets. Mrs Gunn claimed that the incidents constituted sexual harassment. She made a claim to the Human Rights Commission. Mrs Gunn also claimed that she was incapacitated from working by reason of stress caused by the two incidents and sought workers compensation. By reason of the close links between Streets and PDW, she was uncertain as to the identity of her employer within the meaning of the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s3(1). I have given only the very briefest outline of the circumstances of Mrs Gunn's employment, but it was common ground on the hearing of the appeal that those circumstances were such that it was reasonable for Mrs Gunn to be uncertain as to the identity of her employer and to make claims for compensation against both Unilever and PDW. It seems that it was far from clear as to who had the lawful authority to exercise control over Mrs Gunn in the discharge of her duties under her contract of employment.
Upon receipt of a claim for workers compensation, Unilever and PDW each lodged a notice disputing liability pursuant to the Act, s81A. I was informed without objection from the bar table, that Unilever disputed liability (inter alia) on the basis that Mrs Gunn was not its employee, but this point was not taken by PDW in its s81A notice. The Tribunal determined that there was a genuine dispute and made consequential orders.
Proceedings in the Tribunal
Upon the Tribunal finding that there was a genuine dispute, Mrs Gunn filed in the Tribunal two referrals pursuant to the Act, s42. Both sought a determination of her "entitlement to weekly payments of compensation and to the payment of medical and other services consequential to an acute stress disorder which condition presented on or about 27 August 1997 and arose out of and in the course of her employment and to which her employment contributed to a substantial degree". The referrals also sought an order for costs. The respondents to reference 1603/97 were PDW and its insurer. The respondents to reference 1604/97 were Unilever and its insurer.
A Registrar's conference was held. At this stage, PDW also denied that it was Mrs Gunn's employer. It was accordingly agreed at the Registrar's conference that:
the identity of Mrs Gunn's employer be tried as a preliminary issue on reference 1603/97 and reference 1604/97; and
both references be determined together.
The hearing commenced on 13 February 1998. It lasted for three days, the last of which was on 2 April 1998. Each party was represented by a solicitor. Each party adduced such evidence as it wished to adduce on the preliminary issue and each party, by its solicitor, cross-examined the witnesses called by another party. All of the evidence given on those three days was simultaneously given with respect to both referrals.
On 20 May 1998, the Tribunal determined:
on reference 1603/97 that "PD Wholesalers Pty Ltd were (sic) the employer and that this application be listed for further hearing."
on reference 1604/97 "Unilever were (sic) not the employer and the application is dismissed."
On behalf of Unilever, an application was made for an order that Mrs Gunn pay its costs of the proceedings on reference 1604/97. That application was opposed. On reference 1603/97, the solicitor for Mrs Gunn made an application for costs against PDW. At the same time he made an application for a "Bullock order" or a "Sanderson order" with respect to Unilever's costs if the Tribunal made an order against Mrs Gunn on reference 1604/97. The learned Commissioner reserved his decision.
On 17 June 1998, the Tribunal ordered that on reference 1603/97, PDW pay Mrs Gunn's costs. No complaint is made about that. On reference 1604/97, the Tribunal declined to exercise its discretion in favour of Unilever and made the impugned order that each party pay their own costs. Accordingly it was unnecessary for the Tribunal to consider the submission made on behalf of Mrs Gunn that in 1603/97 a "Bullock order" or a "Sanderson order" with respect to Unilever's costs should be made. Written reasons for the determination were published.
Proceedings in this Court after the institution of the appeal and before its hearing
After Unilever filed this appeal against the order that each party pay their own costs, Mrs Gunn's solicitors became concerned that if the appeal was successful, it may not be possible on an appeal between Unilever and Mrs Gunn to argue that there should be a "Bullock order" or "Sanderson order" against PDW. Accordingly, application was made to a judge in chambers and an order made that Mrs Gunn's solicitors serve on PDW a copy of the notice of appeal and a notice to the effect that if Unilever is successful on the appeal, Mrs Gunn will seek a "Bullock order" or "Sanderson order" against PDW. There was compliance with the order and on the hearing of the appeal, PDW appeared by its solicitor, Mr Andrew Walker, and took part in the argument.
Was there error in the order that each party pay its own costs?
There are four grounds of appeal. Ground 2 alleges error of law in that a finding of fact made by the Tribunal was one which no tribunal could reasonably have made. The remaining three grounds all express the same concept in different terms, viz, that no tribunal, properly instructed as to the law and acting reasonably, could have made the order from which this appeal is brought.
In his reasons for making the impugned order, the learned Commissioner refers to Farrow v State of Tasmania (1997) 7 Tas R 127. In that case it was held that the proper exercise of the discretion to order costs conferred by the Act, s59, required that an order be made in favour of the successful party unless there was good reason not to do so. See also Lowrie v State of Tasmania 109/1998.
Although he does not expressly so state, it appears that the learned Commissioner was mindful of correct principle in the exercise of his discretion, for he said in his reasons for decision:
"In so far as application number 1604/97 is concerned I am satisfied that in the circumstances of this case there was [sic] relevant circumstances which justify the displacement of the general rule as to costs. In particular there was clearly confusion and uncertainty created throughout the employment process of the worker and also during her employment which made it extremely difficult for any reasonable person in the worker's position to have a clear understanding as to who her employer was. Unilever Australia Ltd for its own reasons wished to create a legal barrier to any employment contract between it and the worker, however in a number of ways its relationship with the worker could have been construed as that of employer and worker. Given the contribution of Unilever Australia Ltd and its agents and servants in respect of the creation of this uncertainty, I do not consider it appropriate that the worker ought pay that corporation's costs associated with the need for the worker to seek a determination as to this critical question. It clearly could not be said that the worker's perception of her relationship with Unilever Australia Ltd was unreasonable given the various circumstances outlined in the evidence concerning her relationship with that corporation and the determination of with whom the contract of service was made became a difficult determination of fact and law based on common law principles. In the circumstances therefore the application for costs by Unilever Australia Ltd is dismissed and an appropriate order will be that both parties bear their own costs in respect of that application."
It must be borne in mind that the purpose of an order to award costs is to indemnify the successful party for the costs reasonably incurred in defending or bringing the action as the case may be. See Latoudis v Casey (1990) 170 CLR 534.
Counsel referred to Ritter v Godfrey [1920] 2 QB 47 in which Lord Sterndale said, at 53:
"Speaking generally, I think it may be said that, in order to justify an order refusing a defendant his costs, he must be shown to have been guilty of conduct which induced the plaintiff to bring the action, and without which it would probably not have been brought. This is so stated by Vaughan Williams LJ in Bostock v Ramsey Urban Council [1900] 2 QB 635, and it generally may be tested by the question stated in the judgment of the two other members of the Court, A L Smith LJ and Romer LJ in the same case, ie, was the defendant's conduct such as to encourage the plaintiff to believe that he had a good cause of action?"
In the same case, Lord Atkin put the matter in these terms at 60:
"In the case of a wholly successful defendant, in my opinion the judge must give the defendant his costs unless there is evidence that the defendant (1) brought about the litigation, or (2) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3) has done some wrongful act in the course of the transaction of which the plaintiff complains. These principles require further expansion."
Lord Atkin went on to explain that in his view the first proposition should be read subject to the exclusion of conduct which constituted the alleged cause of action.
Counsel also referred to expressions to the same effect in Bostock v Ramsey Urban District Council [1900] 2 QB 616. Vaughan Williams LJ said at 625:
"It is not disputed by the plaintiff's counsel that there must be some facts forming a basis for the exercise of the discretion ; that there must have been some conduct on the part of the defendants, either in the course of the litigation, or conducing to it, which might amount to a cause for depriving the defendants of costs. Both sides accept the law as laid down in Harnett v Vise 5 Ex D 307; and, therefore, really the only question in this case comes to be whether there was conduct on the part of the defendants which can be considered as having led to the action being brought, and but for which it probably never would have been brought."
Those general expressions need to be considered in the context of the facts of each case. In Ritter, the successful defendant was a medical practitioner who attended the unsuccessful plaintiff on the birth of her child. His initial diagnosis of the birth presentation was erroneous. The child was born dead. There followed some correspondence between the parties about the matter. The correspondence ended with the commencement of proceedings by the mother against the doctor for damages for negligence. She failed. The trial judge refused to award the successful defendant costs upon the basis that he did not approve of the defendant's conduct and found the tone of his letters to the plaintiff unjustifiable and deplorable in the circumstances. Upon the issue before the Court of Appeal of whether there had been general error in the exercise of the trial judge's discretion, the cited observations were made. The Appeal Court held that the factors relied upon by the learned trial judge were not such as, in the proper exercise of the discretion, any trial judge acting reasonably could have taken into account and deprived the successful party of his costs.
Bostock was a curious case. The plaintiff was the part owner of a travelling "menagerie". Whilst in the charge of a manager, the menagerie came to the town of Ramsey. There it was set up on a public highway. The manager was told by an officer of the council that it could not set up there, but took no step to enforce that claim. After the performance, the menagerie packed up and left town. Subsequently, the plaintiff, who at the time was living in another town, received a letter from the council advising that they were going to take proceedings against him for parking the menagerie on a public highway. The plaintiff immediately wrote an apology and explained that he had no knowledge of the circumstances as he was in Glasgow at the relevant time. Notwithstanding all this, the local council decided that it had a remedy against the plaintiff by way of indictment and accordingly preferred an indictment against him at the local Assizes for having unlawfully obstructed a highway. Upon his trial, the trial judge found that the plaintiff had no case to answer and directed the jury to acquit him. The plaintiff subsequently brought a civil action against the council for damages for malicious prosecution. It was held that there was no evidence of malice and judgment was entered for the defendants. The learned trial judge deprived the successful defendants of an order for costs because he seemed:
"… to have thought that the conduct of the defendants in instituting this criminal proceeding by indictment under the circumstances was such that the plaintiff might thereby be reasonably induced to think that they were actuated by malice and acted without reasonable cause, or, in other words, that their unreasonable conduct had really been the origin of the action." (621)
The Court of Appeal held that the above consideration was a relevant matter on the issue of costs and the order depriving the successful defendant of costs did not reflect general error in the exercise of the discretion.
There are quite a number of reported cases in which the general principles set out above have been accepted and applied at first instance. In Overbeek v Corporation of Broadmeadows [1971] VR 353, a land owner was relieved of payment of some of the costs in litigation against a local authority because in part the litigation had been caused by the carelessness of the council officers. In Jennings v Zihali-Kiss (1972) 2 SASR 493, land agents acted for both parties and thereby found themselves in a conflict of interest situation. In this state, the agents tried to gloss over breaches of duty they owed the plaintiff. The plaintiff sued the defendant and the agents over the contract of sale and related matters. The plaintiff's action against the agents failed but there was no order for their costs against the plaintiff (except in one small respect) because their conduct had led to the action. See also Harrison v City of Adelaide Development Committee (1976) 12 SASR 593.
I have set out the details of these cases at some length and, I fear, rather tediously, in order to properly illustrate true principle. Applied to the facts of this case, the questions are:
was there in the conduct of Unilever, other than that which gave rise to Mrs Gunn's claim for weekly payments, that could be described as unreasonable or improper; and/or
did Unilever do something connected with the institution or the conduct of the proceedings in the Tribunal calculated to occasion unnecessary litigation and expense?
Expressed this way, it is quite clear that the answer to both questions is in the negative and that the discretion miscarried. There was nothing unlawful or unreasonable about the circumstances that gave rise to Mrs Gunn's employment. It is true that those circumstances were such as to reasonably lead to confusion about the identity of her employer. However, there was nothing sinister about those arrangements. Streets had an interest in seeing that its product was marketed in the best possible manner and uniformly throughout Australia. To that end it exercised a considerable degree of control over Mrs Gunn's conduct. However, it did not wish to directly engage employees and to that end entered into certain arrangements with PDW. None of that could be described as unreasonable or improper, nor did it have anything to do with Mrs Gunn making the claim for weekly payments against Unilever in the relevant sense. The circumstances that gave rise to the claim did not occur until the incidents on 22 and 27 August 1997, long after the contractual arrangements concerning Mrs Gunn's employment were put in place. There was no suggestion that the contractual employment arrangements were designed to avoid any future claim for workers compensation that might be made.
Accordingly, I find that the Tribunal acted on wrong principle, that there was no circumstance to displace the general rule that the successful party should be indemnified for its costs of defending the proceedings and that no tribunal, acting reasonably in accordance with the law, could have made the order that was made. The notice of motion, grounds 1, 3 and 4 are made out.
Ground 2 complains that the finding that "Unilever Australia Limited for its own reasons wished to create a legal barrier to any employment contract between it and the worker …" was not one reasonably open on the evidence. If that finding is construed as carrying with it an implication that Unilever created a legal barrier to an employment contract between it and Mrs Gunn in order to avoid any future workers compensation claim, or for any other sinister reason, then it is not one reasonably open on the evidence. However, I do not understand the finding of fact to mean that. I understand the Tribunal's finding to be that Unilever did not wish to employ Mrs Gunn and other representatives in her position but did wish to control the manner in which representatives marketed Streets' products and to this end Unilever found it commercially expedient for them to enter into the arrangements it did enter into with respect to the employment of Mrs Gunn. In this sense Unilever created a legal barrier to any employment contract between it and the worker. Ground 2 is not made out.
What order should now be made?
The order from which this appeal is brought should be set aside. It was urged upon me by Mr Tree, counsel for Mrs Gunn, that if the impugned order was set aside and in lieu thereof it was ordered that Mrs Gunn pay Unilever's costs, a "Bullock order" or "Sanderson order" with respect to those costs should be made against PDW. The first question is whether this Court or the Tribunal has jurisdiction to make either of such orders.
Is there jurisdiction to make any costs order against PDW?
On behalf of PDW, Mr Walker submitted that there was no jurisdiction to make any order for costs against his client. He submitted that PDW was not a party to the proceedings in the Tribunal, reference 1604/1997. He submitted that PDW was only a party to proceedings in the Tribunal, reference 1603/1997 and there has been no appeal from the order for costs made in those proceedings. This, of course, is not surprising as the Tribunal did not have to consider the exercise of any discretion to make a "Bullock order" or a "Sanderson order" in view of the order that, as between Unilever and Mrs Gunn, there would be no order as to costs.
I have some doubts about the correctness of the submission that PDW was not a party in the strict sense to proceedings reference 1603/1997. The Act, s42(5) obliges the Registrar of the Tribunal to serve notice of the claim for compensation on persons who appear to have an interest in its settlement. I do not know whether PDW was accordingly given notice of Mrs Gunn's claim against Unilever. However, the Act, s45(1) and (2) provides:
"45 ¾ (1) The Registrar is to arrange a time and a place for the hearing and determination of a claim for compensation by the Tribunal and is to serve a notice of that time and place on every person who is served with a notice under section 42(5).
(2) A person who is served with a notice under subsection (1) shall be regarded as a party to the proceeding relating to the claim for compensation to which the notice relates."
It is reasonable to infer, as all parties agreed to a joint hearing, that PDW was given notice of the time and place of the hearing. Accordingly, by virtue of s45(2), it may have been a party to both applications in the Tribunal. Further, it may be noted that in any event, PDW is a party to this appeal by virtue of the definition of "party" in the Supreme Court Civil Procedure Act 1932, s3(1) which provides:
"'party' includes every person served with notice of or attending any proceeding, although not named on the record or in the process;"
However, having regard to the view I have formed of the meaning of the Act, s59(1), I do not need to examine further the question of whether PDW was a party to the proceedings in the Tribunal commenced by Mrs Gunn's claim against Unilever. The Act s59(1) provides:
"59 ¾ (1) Except as provided in subsection (2), the Tribunal may make such order as to costs as it considers appropriate in any proceedings before it."
The meaning of the word "proceeding" is to be ascertained from the statutory context in which it is enacted. See Cheney v Spooner (1928 - 1929) 41 CLR 532 at 536 - 537; Victorian Workcover Authority v CE Heath Underwriting & Insurance (Australia) Pty Ltd, unreported, Court of Appeal (Vic) No 5171 of 1996. The whole tenor of the Act, in particular s49(1), indicates that a liberal construction should be given to the expression "any proceedings" as enacted in s59. It seems to me incontestable that the proceedings in the Tribunal that commenced on 13 February 1998 and in which Mrs Gunn, Unilever and PDW, by their solicitors, took an equal part, was a proceeding within the meaning of the Act, s59(1). This appeal is from one of the orders made in those proceedings and, in any event, the terms of the subsection are sufficiently wide to enable the making of an order against a person even if that person is not a party to the proceedings. In Knight and Another v F P Special Assets Limited & Others (1991 - 1992) 174 CLR 178, the High Court held that the provisions of the Rules of Court, O91, r1 (Qld) were sufficiently wide to confer jurisdiction on the court to order costs against a person not a party to proceedings before it if, in the proper exercise of the discretion, it was appropriate to do so. That rule provided:
"Subject to the provisions of the Judicature Act and these Rules, the costs of and incident to all proceedings in the Court, including the administration of estates and trusts, shall be in the discretion of the Court or Judge."
The breadth of the provisions of that rule are indistinguishable from the breadth of the provisions of the Act, s59(1). In Knight, Brennan J said at 203:
"The wording of O91, r1 does not confine the discretion to award costs to the parties to the proceedings. The circumstances in which it would be appropriate to award costs to a non-party would necessarily be confined, but that is a question of discretion, not jurisdiction. I should add that the discretion to award costs is to be exercised judicially so that a person against whom costs may be awarded must, if not a party, be brought before the court. In many cases the convenient method of bringing him before the court would be to make him a party whereupon, even upon the appellants' argument, any problem of lack of jurisdiction would disappear."
The principle expounded in Knight that a general discretionary power to award costs is not confined to making an order against a party to the proceedings, has been applied on many occasions. See, eg, Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 117 ALR 253; Health & Life Care Ltd v South Australian Asset Management Corporation (1995) 13 ACLC 1148; Re Ayre; Ex parte the Deputy Commissioner of Taxation (1995) 130 ALR 648.
Accordingly, I am of the opinion that this Court, by virtue of the provisions of the Rules of Court, O76, rr54, 55 and 68, or the Tribunal if the matter is remitted to it, has the power to make a "Bullock order" or a "Sanderson order" against PDW with respect to Unilever's costs that Mrs Gunn might be ordered to pay.
The exercise of the discretion
The principles governing the proper exercise of the discretion to make a "Bullock order" or a "Sanderson order", are well established. They can be ascertained from Bullock v London General Omnibus Co [1907] 1 KB 264; Sanderson v Blyth Theatre Co [1903] 2 KB 533; Lackersteen v Jones and Others (No 2) (1988) 93 FLR 442; Bischof and Another v Adams and Others [1992] 2 VR 198. However, in the circumstances of this case, it is appropriate to remit the matter back to the Tribunal to exercise its discretion with respect to costs in accordance with law. The Tribunal will have a better understanding than this Court of the facts relevant to the proper exercise of the discretion. The transcript is 350 pages long. There were quite a number of exhibits tendered at the hearing which were not transmitted to this Court. Mr Walker did not have a copy of the transcript and none of the counsel were in a position on the hearing of the appeal to make detailed submissions with respect to orders of costs. Although it is clear that Unilever is entitled to an order for costs against Mrs Gunn, it is not clear, without a detailed knowledge of the facts, how the discretion to make a "Bullock" or "Sanderson" order should be exercised. Thus, it is appropriate to set aside the order of the Tribunal and remit the matter back to the Tribunal for determination in accordance with law. It can then make the order of costs in favour of Unilever and determine the application that was made to it for a "Bullock order" or a "Sanderson order" with respect to those costs.
The appeal is allowed. The order of the Tribunal that on reference 1604/1997 there be no order of costs is quashed and in lieu thereof the issue of costs be remitted to the Tribunal for hearing in accordance with law.
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