Chubs Constructions Pty Ltd v Chamma

Chubs Constructions Pty Ltd v Chamma - [2009] NSWCA 98 - NSWCA 2009 case summary — Zoe

[15]

1 BEAZLEY JA: I agree with Mathews AJA. 2 McCOLL JA: I agree with Mathews AJA. 3 MATHEWS AJA: This is an application for leave to appeal against costs orders made by Patten AJ in the following circumstances. On 18 June 2004 the respondent suffered serious injury when he fell a considerable distance during the course of his employment. In due course he commenced proceedings in this Court seeking damages for personal injuries against the principal contractor at the worksite ("Soliman") and his employer, the present applicant. The proceedings were complex and protracted, occupying some five weeks of hearing. 4 On 5 March 2008, Patten AJ handed down his judgment in the principal proceedings. He entered a verdict against Soliman for $1,402,460 and against the applicant for $890,676. He stood the matter over for final orders, including as to costs. 5 On 7 May 2008, having taken submissions from both parties, his Honour ordered that the applicant pay 25% of the respondent's costs on a party and party basis up to 15 September 2006 and thereafter on an indemnity basis. It is from this order that the applicant seeks leave to appeal. It is submitted that the appropriate order should have been that the applicant and the respondent pay their own costs of the proceedings pursuant to cl 91 of the Workers Compensation Regulation 2003 ("the Regulation"). 6 For reasons which will become apparent, the Court took the view at the outset of the hearing that leave to appeal should be granted. Accordingly, submissions were taken as on an appeal. 7 Two distinct matters were raised on the application. The first was whether the primary Judge had the power to order that costs be paid on an indemnity basis. The second related to his Honour's order that the respondent's costs be paid on a party and party basis. 8 Two offers were made by the respondent which the primary Judge treated as relevant for costs purposes. The first in point of time was contained in a letter sent by the respondent's solicitor to the applicant's solicitor on 31 August 2006 in the following terms: "For the purposes of Regulation 94 of the Workers Compensation Regulation 2003, the Plaintiff offers to settle the past and future economic loss component of this claim against Chubs Construction and against the current Supreme Court Defendant being Soliman & Sons Pty Ltd in the sum of $550,000 plus costs.

[35]

Clause 113 provides: "This Division does not limit any power of a court or the Commission to determine in any particular case the amount of costs payable or that the amount of the costs is to be determined on an indemnity basis." 19 It is apparent that the primary Judge attached particular significance to cl 113. In his judgment on costs, he quoted the relevant applicable provisions of the Regulation as being clauses 89, 90, 91, 94 and 113. Had cl 113 been in the same Division as the other clauses, it might arguably have overridden the apparently peremptory requirements of clauses 89 and 91. However it is not in the same Division, and it therefore has no direct effect upon those other provisions. 20 It is certainly the case that clauses 110 and 113 appear to presuppose that there might be an order for costs on an indemnity basis or that a court might have the power to make such an order. That may reflect the fact that s 346(2) of the WIM Act, contemplates that the regulations may provide for the awarding of costs on other than a party and party basis. However the restrictions on the awarding of costs in work injury damages cases found in clauses 89-94 of the Regulation only permit the awarding of party and party costs. Neither cl 110 or cl 113 operates to confer a power to award costs on any other basis. Clause 110 deals only with issues relating to the assessment of costs. Clause 113 ensures Division 4 does not limit any power of a court to determine that costs be on an indemnity basis. However before such a power can be exercised, it must have been conferred. For the reasons I have explained, the legislative has not conferred such a power in work injury damages cases. The peremptory terms of clauses 89 to 91 leave no discretion to order costs on any basis other than as set out in those provisions. 21 In my opinion, the primary Judge had no power to order costs on an indemnity basis. Relevant error has therefore been demonstrated. 22 I now turn to the remaining matter in contention, namely the primary Judge's order that the applicant pay the respondent's costs on a party and party basis.

[38]

(b) damages for future economic loss due to the deprivation or impairment of earning capacity." 26 In accordance with this requirement, the judgment which the applicant obtained against the applicant, in the sum of $890,676, consisted entirely of damages for past and future economic loss. 27 It follows that the offer to settle the economic loss component of the respondent's claim constituted a final offer to settle the whole of his claim against the applicant. The offer therefore complied with all requirements of cl 89 with the result that, subject to cl 94, the court was required to order that the applicant pay his costs on a party and party basis. 28 Clause 94 is not free of difficulties. It requires, as relevant here, that the offer be made to all defendants in the proceedings and that it be an offer to settle the claim against all of them. 29 In this case the offer was made to both defendants. To this extent it complied with cl 94. For reasons already given, the offer operated as an offer to settle the claim against the respondent, given that this claim was restricted to damages for economic loss. However, in relation to the other defendant, Soliman, the respondent's claim was brought under the Civil Liability Act 2002 and the claim for economic loss was but one of several major components. This is illustrated by the fact that the respondent obtained a judgment against Soliman which exceeded the judgment he obtained against the applicant by more than $500,000. It follows that the respondent's offer of November 2006 was not capable of settling the whole of the claim against Soliman, nor was it intended to do so. 30 The respondent submits that the offer to settle the economic component of his claim was sufficient compliance with cl 94. The applicant disputes this. The real question is whether cl 94(a) requires that the claimant's offer must relate to all components of the claimant's case against all defendants, including claims other than work injury damages; or whether, on the other hand, it is sufficient if the offer covers only the work injury damages component (namely the economic loss component) of the claim against all defendants. The answer to this question turns on what is meant by "the claim" in cl 94(a). 31 The principal legislative enactment in this scheme is the WIM Act. Section 4 of that Act defines "claim" as "a claim for compensation or work injury damages that a person has made or is entitled to make". Section 11 of the Interpretation Act 1987 provides that words that occur in an instrument have the same meaning as they have in the Act under which the instrument is made. Accordingly, "the claim" in cl 94(a) is restricted to a claim in relation to work injury damages. On this basis an offer to all defendants to settle the economic component of a plaintiff's claim would comply with cl 94. If not accepted it would entitle the plaintiff to an order for party and party costs, so long as the other requirements of cl 89 were fulfilled. 32 This interpretation accords with the general scheme of the relevant legislation. Under cl 89, only an offer made at mediation can attract the costs benefits provided in that provision. Under s 318A of the WIM Act a mediation must take place before a claimant can commence court proceedings against an employer for recovery of work injury damages. Section 318B(1) provides that the mediator must use his or her best endeavours to bring the parties to agreement on the claim. It follows that the mediation is concerned only with the claim for work injury damages. Any other head of damages against defendants other than the employer are not within the purview of the mediation. Indeed, they are not within the purview of this legislative scheme. Nor could it be said that an offer, restricted in this manner, was lacking in utility. If accepted by the employer, it would remove one party from the proceedings. If accepted by the remaining party or parties, it would resolve a very significant component of the plaintiff's claim against them. 33 In my view the respondent's offer dated 14 November 2006 complied with the requirements of both clauses 89 and 94. Mr Campbell accepted that if that was the case the appellant was exposed to an order that it pay 25% of the respondent's costs on a party and party basis. In my view that was an appropriate concession.

[39]

Costs on appeal 34 The consequence of this judgment is that the appeal will be upheld and the respondent will lose the indemnity costs order, but nevertheless have an order that the appellant pay 25% of the his costs of the trial on a party and party basis. Both parties to the appeal will, accordingly, have enjoyed success and suffered failure in roughly equal measure. In a case where the costs issues are governed by s 98 of the Civil Procedure Act and Pt 42 of the Uniform Civil Procedure Rules 2005 ("UCPR") this may result in an application for departure from the general rule that costs follow the event: UCPR r 42.1. However the question has arisen as to whether the applicable legislation might require a different result. 35 In Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62 which was handed down the morning this appeal was heard, the Court (Beazley, Giles and Marfarlan JJA) concluded that s 346 of the WIM Act and the Regulation governed the issue of the costs in proceedings in the Court of Appeal relating to claims for work injury damages. In that case, although the appellant worker obtained a verdict against the respondent employer, she did not obtain an order or judgment on her claim that was no less favourable to her than the terms of her final offer of settlement in a mediation under the WIM Act as certified by the mediator under section 318B of the WIM Act: cl 89. Accordingly, the Court ordered that there be no order as to costs, with the intent that the parties were to bear their own costs of the trial and of the appeal: cl 91. 36 This appeal concerned only the issue of the costs outcome on the respondent's claim at trial. The parties did not address any submissions to how the costs of the appeal might be affected in the circumstances of the orders I propose. In my view they should be given the opportunity to file submissions as to how, in the light of Smith (No 2) and the outcome of the appeal, the costs of the appeal should fall with a view to that issue being determined on the papers.

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