Comcare v Stewart

1. Subject to order 2, the applicant pay the respondent's costs, as agreed or assessed.
2. The applicant pay the respondent's costs of meeting its application for a different costs order on an indemnity basis, that is, except in so far as those costs are of an unreasonable amount or unreasonably incurred. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ROBERTSON J: 1 These reasons deal with costs. They are to be read with the reasons on the substantive application: Comcare v Stewart [2019] FCA 365. By orders made on 21 March 2019, I dismissed Comcare's application for review of the decision of the Administrative Appeals Tribunal that the reviewable decision dated 15 June 2016 denying liability to compensate Mr Stewart in respect of adjustment reaction with anxious mood be set aside and, in substitution, that Comcare was liable to compensate Mr Stewart in accordance with s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) in respect of the injury, being adjustment disorder with anxious mood, suffered by him on 15 January 2016. 2 The orders I then made were as follows: 1. The application is dismissed. 2. Subject to order 3, the applicant is to pay the respondent's costs, as agreed or assessed. 3. If either party wishes to contend for a costs order different to the order proposed in order 2, they notify my associate and the other party within 5 business days of the date of these orders and thereafter a timetable to determine that issue will be set. 3 On 28 March 2019, Comcare notified my associate that it wished to contend for a different costs order from order 2. 4 Comcare now submits that the appropriate costs order is not that it should pay the respondent's costs as agreed or taxed, but as follows: 1. Comcare pay Mr Stewart's costs incurred from 1 November 2018 to 16 November 2018, as agreed or assessed. 2. Mr Stewart pay Comcare's costs incurred from 16 November 2018, as agreed or assessed. 3. In the alternative to 2 above, each party bear its or his own costs from 16 November 2018. 5 The significance of 16 November 2018 is that it was the day on which an "offer" made by Comcare ceased to be open for acceptance. 6 Mr Stewart, for his part, resisted the costs orders sought by Comcare and submitted that the appropriate order was that Comcare pay his costs as agreed or assessed and that Comcare pay his costs of responding to Comcare's submissions in relation to costs on an indemnity basis. 7 Comcare relied on an affidavit of Ms Katherine Ellen Watson, solicitor, affirmed 9 April 2019 which annexed correspondence and some pages of transcript. The relevant "offer" was dated 8 November 2018 and was in the following terms: 1. The Federal Court makes orders as follows. a. The appeal be allowed. b. The decision of the Administrative Appeals Tribunal be set aside. c. The matter be remitted to the Tribunal for reconsideration according to law. d. Comcare is to pay Mr Stewart's reasonable costs of the appeal, to be agreed or taxed. 2. The "notes" justifying the making of those orders by the Federal Court, filed in accordance with practice note GPN-TRIB, will specify the following matters. a. The Tribunal erred in law by concluding that the meeting that Mr Stewart attended on 15 January 2016 (the meeting) was not, or did not include, "administrative action ... in respect of" his employment. i. The Tribunal impermissibly limited its consideration of that issue to the "primary focus" of the meeting. That distracted the Tribunal from evaluating whether the meeting actually was, or included, "administrative action ... in respect of" Mr Stewart's employment. ii. However, on the findings of fact that it made, the Tribunal should have concluded that the meeting was, or included, "administrative action ... in respect of" Mr Stewart's employment: Comcare v Drinkwater (2018) 158 ALD 244 (Kenny, Flick and Perry JJ); Drenth v Comcare (2012) 128 ALD 1 (Rares, McKerracher and Murphy JJ); Commonwealth Bank of Australia v Reeve (2012) 199 FCR 463 (Gray J, Rares and Tracey JJ). b. The Tribunal erred in law by concluding that the meeting was not "reasonable" administrative action in respect of Mr Stewart's employment. i. The Tribunal impermissibly limited its consideration of that issue to the non­exhaustive list of examples set out at s 5A(2) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act). ii. The Tribunal should have considered more broadly whether the meeting was "reasonable" for the purpose of s 5A(1) of the SRC Act. iii. It is therefore necessary to set aside the decision and remit the matter to the Tribunal to consider whether the meeting was "reasonable". c. The Tribunal erred in law in concluding that the meeting was not taken, or did not occur, in a "reasonable manner". i. The Tribunal impermissibly evaluated that issue by reference to the judgment in Wiegand v Comcare (2002) 72 ALD 795 at [31] (von Doussa J), which discusses the test for a "disease" under s 5B of the SRC Act rather than the administrative action exclusion from the definition of "injury" in s 5A(1) and (2) of the SRC Act. ii. It is therefore necessary to set aside the decision and remit the matter to the Tribunal to consider whether the meeting occurred in a "reasonable manner". The judgment required by the Tribunal in that connection is whether the meeting occurred in a "reasonable manner", not whether it could have occurred "more reasonably": Comcare v Martinez (No 2) (2013) 212 FCR 272 (Robertson J). 3. On remitter to the Tribunal, Mr Stewart and Comcare will enter into the following consent terms of agreement under s 42C of the Administrative Appeals Tribunal Act 1975 (Cth). a. The decision under review is set aside. b. In substitution, it is decided that Comcare is liable to pay compensation to Mr Stewart in respect of an "adjustment disorder with anxious mood" sustained on 15 January 2016 under s 14 of the SRC Act. c. Comcare is to pay Mr Stewart's reasonable costs and disbursements in accordance with the relevant practice direction, to be agreed or taxed. d. The usual notations. 8 The covering email said that "Comcare is not open to any negotiations in relation to the offer." 9 Comcare submitted that it substantially succeeded in respect of nearly all of the issues that it put before the Court. It submitted that Mr Stewart unreasonably rejected Comcare's offer of settlement and engaged another disentitling conduct. As I understood it, the disentitling conduct was said to be that, although he accepted that Wiegand was not concerned with the application of the exclusion in s 5A of the Safety, Rehabilitation and Compensation Act before this Court, Mr Stewart relied on Wiegand in that context before the Tribunal. Mr Stewart was also said to have persuaded the Tribunal into the error of evaluating the meeting by reference to its purpose, and otherwise as set out in its reasons at [52]-[53]. But he did not maintain that position before the Court. 10 Comcare submitted that it was well accepted that in exercising the discretion to award costs under s 43(2) of the Federal Court of Australia Act 1976 (Cth), the Court may have regard to the issues in respect of which each of the parties has been successful and apportion costs in that way. Comcare also referred to ss 37M and 37N of the Federal Court of Australia Act. 11 In this case, Comcare submitted, its offer would have given Mr Stewart his claim and his costs both before the Court and the Tribunal and although the formal mechanism by which that outcome was to be achieved had not been realised, Mr Stewart was in no better position than he would have been had he accepted Comcare's offer. In fact, Comcare submitted, Mr Stewart was in a worse position because he ultimately did not get his costs before the Tribunal: this Court did not have jurisdiction to order those costs in the present case. Comcare offered Mr Stewart everything that he could have hoped to achieve in respect of his claim, plus his costs before the Court and in the Tribunal, in return for merely agreeing to the contents of a "note" explaining that certain legal errors were made by the Tribunal. Those legal errors were either substantially accepted by the Court or not ultimately contested by Mr Stewart. 12 In the circumstances, Comcare submitted, Mr Stewart's conduct in rejecting Comcare's offer must be regarded as unreasonable. Further, Comcare submitted, it would not have needed to appeal the Tribunal's decision in the first place had Mr Stewart not relied on Wiegand or contended that the meeting was "operational" rather than "administrative action" before the Tribunal, only to abandon or not press that stance before this Court. 13 Mr Stewart relied on an affidavit of Mr William John Gerard McCarthy, solicitor, sworn 15 April 2018. It annexed email correspondence dated 1 March 2019 and 28 March 2019. In the earlier email, the solicitors for Mr Stewart wrote that a real difficulty with the offer made in November 2018 was that the resolution contained in that offer could not be implemented unless the Federal Court agreed that the Tribunal's decision contained a vitiating error of law and should therefore be set aside. 14 The normal procedure in such a case, the email continued, was that the parties agreed on a joint memorandum to the Federal Court pointing out the ground on which the Tribunal's decision should be set aside, and that ground must amount to a consequential error of law. The parties could not simply agree that there was an error of law. The Federal Court had to be persuaded of an error of law and that the error was consequential. Mr Stewart could not see that the errors raised in the notice of appeal, to the extent that they were errors of law, were consequential, that is, were such as to vitiate the Tribunal's decision. That was a critical reason why he was unwilling to accept Comcare's offer. 15 The later email of 28 March 2019 was to the effect that given Comcare did not obtain a judgment that was more favourable than its offer, but obtained a judgment that was less favourable, the solicitors for Mr Stewart could not understand why Comcare would want to persist with the foreshadowed application for a different costs order. The email said that if Comcare did make that application and failed, Mr Stewart would ask for an order that Comcare pay the respondent's costs of answering the costs application on an indemnity basis. 16 Mr Stewart submitted that the matters advanced by Comcare did not justify departure from the standard costs order, that Comcare pay Mr Stewart's costs. He submitted that he was now in no worse position than he if he had accepted Comcare's offer of settlement. The offer was empty - the "settlement" could not be delivered by Comcare. The note asserted errors of law that the Court found provided no ground for setting aside the Tribunal's decision. Mr Stewart submitted that the contention that Mr Stewart was in some way responsible for the Tribunal's errors went nowhere because those errors either did not occur at all or were inconsequential. Comcare's appeal to the Court could only be justified by an error of law on the part of the Tribunal that affected the Tribunal's decision, not by the conduct of Mr Stewart's case in the Tribunal. Mr Stewart submitted that Comcare's submissions reflected a misreading of the Court's reasons. It was wrong of Comcare to assert that the legal errors in the note were substantially accepted by the Court or not contested by Mr Stewart. Mr Stewart submitted he had not lost the opportunity to ask the Tribunal to award him costs. 17 Mr Stewart sought an order that Comcare pay his costs of responding to the current application on an indemnity basis, as foreshadowed in the email to Comcare's solicitors on 28 March 2019. Properly advised, he submitted, Comcare should have known that none of the matters advanced in its submissions justified denying Mr Stewart the normal costs order.