Commissioner of Police v Bennett

Industrial Relations Commission (NSW)|2011-03-24|Before: Boland P, Walton VP, Kavanagh J, Haylen J

Judgment OF THE FULL BENCH 1In Commissioner of Police v Bennett [2011] NSWIRComm 17 the Full Bench had to determine whether Haylen J had erred in finding that a former police officer, Michelle Bennett, was entitled to a lump sum payment under cl 19 of the Crown Employees (Police Officers Death and Disability) Award 2005 in an amount of $439,956.97: see Bennett v Commissioner of Police [2010] NSWIRComm 25 and Bennett v Commissioner of Police (No 2) [2010] NSWIRComm 70 (" Bennett (No 2) ". 2The Full Bench determined that whilst his Honour had erred in relation to the basis in law entitling the respondent to the lump sum, it did not disturb that part of his Honour's decision regarding the payment of the lump sum. The Full Bench stated: [95] Do all of these factors amount to exceptional circumstances such that it could be concluded the offers made to Ms Bennett were not reasonable? Providing an answer to that question involves very fine judgment. We think it is very much a borderline case. On balance, however, we have decided there is a proper basis for concluding the circumstances are sufficiently exceptional. It is apparent that the respondent would have preferred to remain on operational duties. Her injury was genuine and she had made every effort to overcome it. She did not seek to manufacture a situation to facilitate her exit from the Police Force in order to obtain a lump sum payment. The respondent cooperated in the effort to retain her. She had significant ties to the Dubbo area. [96] In all of the circumstances, we do not propose to interfere with his Honour's decision that the respondent was entitled to a lump sum payment in accordance with the provisions of cl 9 of the Award. We would only uphold the appeal to the extent necessary to correct the errors of law and otherwise confirm the orders made at first instance. 3The reference in the judgment to "exceptional circumstances" refers to the Full Bench's conclusion that in determining whether an offer by the employer to an injured officer of a suitable position in order to retain the officer in the Police Force was reasonable, an officer's personal circumstances may operate in the officer's favourbut only in exceptional circumstances. As the Full Bench stated at [83]: [I]t is not a balancing exercise where an officer's personal circumstances are to be given equal weight to the interests of the employer and the public interest. We consider that it will only be in 'exceptional circumstances' that an officer's personal circumstances will prevail. 4As we have indicated, the Full Bench considered, on balance, the respondent's personal circumstances were to be regarded as exceptional. 5In it decision, the Full Bench extended to the parties "the opportunity of addressing the question of costs both at first instance and on appeal". At first instance, Haylen J ordered that Ms Bennett was "to be paid her costs of the application calculated on a party/party basis until and including 17 November 2009 and from 18 November 2009 is entitled to her costs calculated on an indemnity costs basis, less the sum of $3,500." 6This decision is concerned with costs.

Submissions for the appellant 7The appellant's submissions regarding costs may be summarised as follows: (a) the relevant authorities establish that the governing principle, when approaching the broad discretion to award costs, is one of fairness in all the circumstances of the particular case; (b) the breadth of the Court's discretion (and the focus on fairness) is underscored by the fact that whilst a "successful" party may expect or assume that a costs order will be made in their favour, the principles make it clear that in an appropriate case a successful party may be ordered to pay the costs of an unsuccessful party; (c) applying the relevant principles to all the facts and circumstances of this particular case, at first instance, a fair and just costs outcome would be that no order as to costs or that the respondent should have a limited order for costs in her favour, namely 50 per cent of her costs on a party/party basis as agreed or assessed and that on the appeal, the appellant should have an order for costs in his favour on a party/party basis, as agreed or assessed; (d) the following factors suggests that his Honour's costs order should be quashed with no order as to costs then being made, or at worst for the appellant, by an order for costs in favour of the respondent: (i) In addition to concluding that the appellant's submissions as to the critical tests were correct (hence overruling his Honour's view), the Full Court went on (in effect) to seriously doubt whether there were "exceptional circumstances" in this case, such as to underpin and support the respondent's entitlement to the said substantial monetary sum. (ii) Accordingly, there is a proper basis for concluding that had his Honour applied the correct test at first instance that his Honour may well have found in favour of the appellant rather than the respondent. That is, in effect, that the application of the correct test may well have "tipped the balance" in favour of the appellant's case. (iii) The findings of this Full Court and the appellant's submissions support the conclusion that it was entirely reasonable for the appellant to reject the respondent's settlement proposal and to contest this matter to the end. Indeed, the logic, sense and reasonableness of the appellant's stance in this regard is a fortiori when due regard is had for the following further considerations, namely: (a) This is not private inter partes litigation but litigation involving decisions by a statutory officer of the State, the public interest and the public purse. The appellant had/has a duty not to pay out significant sums of public money, save in circumstances where he is satisfied that there is an obligation to do so. (b) Given that the appellant clearly had a sound basis for believing that its view of the test was correct, such that there should be no payment of any monies to the respondent it was then, in turn, more than reasonable for the appellant not to pay $120,000 of public money to "settle" the matter. (c) It was squarely put to his Honour by the appellant, and indeed seemingly accepted by his Honour, that the claim and the application of the Award provisions had characteristics and complexities that amounted to exceptional circumstances that would, ordinarily warrant a departure from the usual rules in respect to the awarding of indemnity costs. Those considerations, and the undoubted "public interest" in having this award correctly interpreted was confirmed by the Full Court's decision to grant leave to appeal. (iv) In other words, in all the above circumstances, the appellant was justified in refusing to pay the respondent $439,000 in the first place and thereafter entirely justified in prosecuting its defence to the appellant's claim to the end of the appeal process. "Fairness" certainly suggests that the Costs Decision order at first instance should not stand. (e) The appellant should have a costs order in his favour on this appeal for the following reasons: (i) The Full Court in its appeal decision concluded at [35] that: Essentially, it was the appellant's case that it in the statutory/regulatory/Award context applicable to the circumstances of this case the personal circumstances of the police officer are to be accorded little, if any, weight, save in the most exceptional circumstances. Further, that the circumstances of the respondent were not so exceptional that having been made three reasonable offers of a suitable police position, the respondent was entitled to refuse or withhold consent to those offers without jeopardising any benefits or entitlements payable under the Award as a consequence of a medical discharge. (ii) As to those "two grounds of appeal" it is clear that the appellant succeeded on the first ground, but failed on the second ground (albeit only just). It is also clear that the bulk of the preparatory work (by way of detailed written submissions and preparation of oral submission etc) that was undertaken by the appellant, and almost all of the Court time spent on hearing the appeal, was directed to the first (successful) ground of appeal rather than to the second ground of appeal. (iii) The respondent, whilst not opposing leave to appeal being granted, did not concede that his Honour made any error with respect to the correct text to be applied and, indeed, filed a "Notice of Contention" that, whilst ultimately not considered by the Full Court was (on its face) misconceived and yet resulted in the appellant undertaking considerable work, with a view to "answering" that Notice of Contention in its written Submissions in Reply.

Submissions for the respondent 8The respondent's submissions in respect of costs may be summarised as follows: (a) The over-riding principle in respect of costs is that the proper exercise of the discretion mainly require that an order that the successful party's costs be paid by the unsuccessful party, at least to the extent to which the costs have been reasonably incurred in the conduct of litigation. (b) The general rule (costs follow the result), should only be departed from where there have been separate discrete issues. In this case there are no such separate discrete issues. (c) The principles enunciated in Hawkesbury District Health Service Limited v Chaker (No 2) [2011] NSWCA 30 at [10]-[14] set out the appropriate question to ask is, who in substance and reality won? (d) Where there are multiple issues in a case, the Court generally does not attempt to differentiate between issues on which a party was successful and those which it failed. (e) There has been no part of the respondent's claim disallowed. The Full Court's decision reflects a difference in reasoning in one respect. The Court upheld Haylen J's decision on virtually every major respect. (f) Haylen J's conclusion is the same as that of the Full Court and, that is, that the respondent's personal circumstances are such to entitle the respondent to an award in her favour. (g) Haylen J's only error appears to be only the failure to set out explicitly that the respondent's personal circumstances were his secondary consideration and not an equal consideration. (h) There is no principle which suggests that an error in the reasoning process which ends in the same conclusion, once corrected, does not entitle the successful party to costs. (i) The respondent acted entirely appropriately in filing a Notice of Contention. It is a procedure which is well known in every appellate jurisdiction and the rules provide for such an approach. There is no basis for making a submission that such a Notice of Contention was "misconceived"; no basis in fact or in law for such an allegation. (j) In respect of indemnity costs and the appellant's submissions as to costs generally, there is no provision for the escaping of adverse cost order because a party "came a close second". We deny that they came a close second but that is the tenor of the appellant's submissions on costs. (k) The fact that the appellant is responsible for the "public purse" is irrelevant to establishing whether it was reasonable for them not to accept the offer. If it were, it is hard to imagine a situation where a public authority would ever be liable to an indemnity costs order. If it were, it would be inherently unfair to individuals. (l) When viewed properly, the denial of paying the respondent the money to which she is entitled is a failure by the appellant to meet an award condition to which they agreed. They ought not be rewarded for that type of behaviour. All applicants before the Court ought to be treated equally and there should be no special rules to those who believe they represent a "more noble cause". (m) The costs order in the first instance should be upheld and there should be an order for costs in favour of the respondent in respect of the appeal and the costs application.

Consideration 9The "usual" or "ordinary" approach is that applicable to an application for costs made under the Industrial Relations Act 1996 , namely: costs follow the event. Fairness is an essential element in the use of the Court's discretion when considering a costs order ( Cretney v Director General, New South Wales Department of Education and Training (No 4) [2010] NSWIRComm 17 and the references therein to Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 and Bowen Investments Pty Limited v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107). 10The appellant makes two central submissions as to costs. Firstly, he contended because he succeeded before the Full Bench on appeal as to the appropriate principles applicable to any determination of an entitlement to a police officer of a lump sum payment under cl 19 of the said Award, the order for costs allowed by the primary judge should be set aside or, alternatively, the costs order varied to an order that the respondent receive 50 percent of her costs as agreed or assessed. 11Secondly, the appellant contended he should receive, on the appeal, a costs order in his favour on a party/party basis as agreed or assessed. 12In consideration of these two applications it is necessary to comment that the Full Bench on appeal found that the primary judge had made an error of law in his determination as to the applicable principles relevant to a decision under cl 19 of the Award (see [2] above), but the Full Bench also determined, in the particular "exceptional circumstances", the respondent should retain the payment under the Award as ordered at first instance. 13As to the challenge by the appellant to the costs order awarded to the respondent in the primary litigation, the appellant submitted the costs order should be set aside because the reasoning of the Full Court on appeal and its decision has the effect that the appellant was the successful party to the litigation. 14The appellant also, in opposing the costs orders at first instance, argued that had his Honour applied the correct test at first instance ("exceptional circumstances"), his Honour may well have found for the appellant. This proposition is pure conjecture and provides no basis from which to infer that his Honour's costs order was incorrect. 15The appellant further contended that although there was an offer of settlement from the respondent at a lower rate than the Award payment ordered, the appellant, as a guardian of the public purse, was unable to consider any offer of settlement given the applicable principles were at issue. This is a unique proposition and is also rejected. 16Given, "in substance and in reality", the respondent succeeded at first instance in her application for a payment under the Award and, on appeal, retained the payment ordered at first instance, we are of the view the respondent should retain the order for costs given in the first instance hearing. 17The second application of the appellant relates to what is the appropriate order for the costs of the appeal. This application raises a different issue. The appellant did succeed in his substantial ground of appeal as to the applicable principles and proper approach to an application made under the relevant award provision. The critical issue on appeal was: what was the appropriate test to be applied to determine the eligibility for a payment under cl 19 of the Award? This was a complex question, raising a number of issues each of which were given consideration by the Full Bench in the appeal. However, the Full Bench also found in the "exceptional circumstance" revealed through the facts of the matter, the respondent should retain the award payment. 18In such a circumstance, in the exercise of the Court's discretion, we are of the view "fairness" dictates that the appropriate order on the appeal is that the appellant shall pay 60 per cent of the respondent's costs of the appeal.

Orders 19The Full Bench makes the following orders: (1) The costs order at first instance (see Bennett (No 2) at [25(c)]) is upheld. (2) The appellant shall pay 60 per cent of the respondent's costs of the appeal.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 May 2011

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