COX CONSTRUCTIONS PTY LTD v DAWES AND ORS No. SCGRG-98-426, SCGRG-98-432,... [1999] SASC 229 | Case summary

Supreme Court of SA|1999-06-17|Before: Mullighan JJ

For the reasons which I have given, I would make significant variations to the orders made by the learned trial judge. If a majority of the Court is in favour of the views which I have expressed as to the appropriate outcome of the appeals, rather than addressing the contentions put forward in the context of the orders made by the learned trial judge, as with the question of interest, it would be better to consider afresh the question of the costs of the proceedings before him and before this Court, within the framework of the orders disposing of the appeals, but bearing in mind the arguments as to costs advanced during the hearing of the appeals.

Before dealing more specifically with the question of costs, I register my concern at the delay involved in bringing these proceedings to trial.

Dawes' proceedings were not instituted until the very last day, having regard to the three year limitation period. They were issued on 15 March 1991 by a summons issued out of the Supreme Court.

Following the transfer of the proceedings to the District Court, the trial commenced in that court in 1 December 1997, some six years and eight months later, or nearly ten years after the accident had occurred.

Although there was a multiplicity of parties, the pleadings were not complex. The defences were what might be described as "pro forma". The contribution proceedings were in conventional terms. There was no substantial quantity of documents to be made the subject of discovery.

When almost a decade goes by after an accident before matters come to trial, the courts and the system of justice is thrown into disrepute. Understandably, the public cannot understand why there should be such delays.

The delays in this case were inexcusable. Ordinarily, a plaintiff owes a duty to get on with proceedings. If he or she fails to do so, the failure may be taken into account in the award of interest.

It is sometimes said that this should not be so because the defendant has had the use of the money in the meantime. With respect to those who hold that view, that has not been the law since the High Court decided Batchelor v Burke.[9]

"Interest is awarded to compensate the plaintiff for the detriment he has suffered for being kept out of his money and not to punish the defendant for having been dilatory in settling the plaintiff's claim."

173 The High Court affirmed that expression of principle in MBP (SA) Pty Ltd v Gogic:[10]

"The function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period. ...."[11]

174 Those statements of principle were applied by the Full Court of this Court in Osborne v Kelly and Anor[12] where it was held that, given that interest is awarded to compensate plaintiffs for being kept out of their money, it follows that if the plaintiff is kept out of his or her money by the plaintiff's own default, interest should not be allowed for that period. The only reason that the plaintiff's default in Osborne v Kelly and Anor did not have that consequence was that the plaintiff was unable to conduct his own affairs due to the accident injuries.

175 Applying those principles in this case, if the delay in prosecuting the action was due to Dawes, and ordinarily a plaintiff is to be held accountable for a failure to get on with proceedings, interest should not be allowed for the period of the delay.

176 It does not appear that the point was taken in this case. It was not raised by counsel on the appeal. In those circumstances, I do not pursue the matter further, except to indicate that, in my view, the courts should now take a more active role with respect to failures to prosecute actions promptly. In particular, courts should, of their own initiative, raise the question of delay where it has been, as was the case here, inexcusable and, where appropriate, reduce the amount of interest to be awarded. Furthermore, in my opinion, the stage has been reached at which the courts should more actively consider the making of orders for costs against solicitors who have been shown to have been dilatory in the prosecution of proceedings.

177 Unassisted by further argument from counsel, I would be inclined to order as to costs at both stage of the proceedings as follows.

If the judgment in the District Court is varied to reflect what I suggest should have been the outcome, Dawes recovers against FHD, Stapledon McMichael and the Stock Exchange and fails against Cox Constructions.

There is no reason why a Bullock order should not be made, as in my opinion, he was justified in suing Cox Constructions.

There should be an order in favour of Dawes against FHD, Stapledon McMichael and the Stock Exchange for Dawes costs of action, to be taxed. Cox Constructions should have an order for its costs of action to be taxed as against Dawes, but Dawes should be entitled to recover his liability for costs to Cox Constructions against the other three defendants.

I would not think it necessary to make separate costs orders on the various contribution proceedings, and I would make no order as to the costs of those proceedings.

There is no reason why the incidence of costs as between the defendants should not be borne on the same percentages as I would apportion liability.

I must say that my first impression was that there seemed to be no reason why WorkCover needed to institute proceedings, or at least to be present at the trial, in view of the fact that it had a first charge on any damages payable by any of the defendants sued by Dawes to the extent of "compensation paid or payable".[13]

184 Mr White QC, who appeared for WorkCover on the hearing of the appeal, when that aspect of the matter was raised with him, responded by submitting that WorkCover has its own cause of action that it was entitled to assert and maintain against the defendants other than FHD. Furthermore, WorkCover was not to know that Dawes would pursue his claim to the end. As Mr White QC put it during the course of argument:

"Mr Dawes was free at any time to compromise his claim or to abandon it or to discontinue it on such terms as to him seemed to be appropriate. WorkCover was not to know whether that would happen, it was entitled to come to court and maintain its own causes of action and set about proving its own entitlement."

There is the added reason in this case that WorkCover had to come to court to establish its right to an extension of time to institute the proceedings, although, of course, if it had simply relied on its charge, that would not have been subject to any limitation of time.

There is a further interest which WorkCover had in the course of the proceedings, in that it was important for it to establish that some person other than FHD was liable to Dawes.

In all the circumstances, I think it was justified in instituting the proceedings and taking an active part in the trial.

Having done so, I think that costs should have followed the event, in the sense that WorkCover should now, having regard to the terms upon which I would vary the judgment pronounced in the District Court, be entitled to an order for its costs against the Stock Exchange and Stapledon McMichael, they being the two defendants against whom WorkCover should succeed in its action.

Furthermore, I see no reason, given the considerations which prompt me to recognise an entitlement on the part of Dawes to a Bullock order, why there should not also be a Bullock order in favour of WorkCover with respect to the costs which it ought to be ordered to pay to Cox Constructions, as against whom, on the revised judgment which I suggest should be entered, it will fail.

There is a further factor to be considered to do with WorkCover's costs. WorkCover's entitlement to recover extends to both the amount of compensation "paid" and the amount of compensation "payable" under the Act. [See s54(7)(d).] One reason for this is that the obligation of WorkCover to maintain payments of compensation to Dawes is unaffected by any recovery which Dawes might make against third parties, such as in this case Stapledon McMichael and the Stock Exchange.

By letter dated 28 November 1997, WorkCover gave notice to the solicitors for Cox Constructions that it had paid compensation to that date amounting to some $95,633.57, and that it estimated its potential liability in respect of future payments at $160,000, a total of $255,633.57.

Mr White QC contended that there was no dispute as to the quantification of that amount, and indeed, there does not seem to have been any issue raised at the trial concerning its accuracy. However, in the judgment which he pronounced in favour of WorkCover, the learned trial judge simply expressed its entitlement in these terms:

"The court orders: 1. ........ 2. That the plaintiff is entitled to recover, pursuant to Section 54(5) and (7) of the Workers Rehabilitation and Compensation Act 1986 ("the Act") from the first defendant by way of a first charge on the damages payable by the first defendant to Stephen John Davies Dawes the plaintiff in action no. 1195 of 1994 in this Honourable Court, the compensation paid or payable by the plaintiff pursuant to the Act to the said Stephen John Davies Dawes."

His Honour did not quantify the "compensation paid or payable" referred to in the formal order.

If it is to be quantified at $255,633.57, this is in excess of a formal Rules of Court offer filed by WorkCover pursuant to R 41.01 of the District Court Rules on 7 November 1997, in which WorkCover gave notice to all of the defendants which it had sued that it would accept in satisfaction of its claim $202,037.67 plus its costs of action.

The offer was not accepted, with the result that under DCR R 41.04, the defendants against whom WorkCover effects a recovery are liable to pay the whole of WorkCover's costs of action to be taxed as between solicitor and client.

In the circumstances, there would appear to be no reason why that consequence should not be visited upon Stapledon McMichael and the Stock Exchange, although I think that their counsel should be given be given an opportunity to comment on the figure of $255,633.57 if they wish to do so.

If an order is made along the lines which I suggest, Cox Constructions will have been successful and should recover its costs of and incidental to its appeals, to be taxed.

Dawes and WorkCover should have their costs of the appeals respectively brought by them against the Stock Exchange and Stapledon McMichael.

I would hear counsel as to whether there should be a Bullock order as to the costs of the appeals in both instances.

If the variations are made as to the assessment of damages and interest as suggested by me, the quantum of Dawes' claim, including interest, would be assessed as follows:

There is a complication with respect to Dawes' entitlement to judgment against FHD. Section 54(1)(b) of the Workers Rehabilitation and Compensation Act 1986, as it stood at the relevant time, provided that no liability attached to an employer arising from the employment except either a liability under the Act or " liability at common law for non-economic loss or solatium".

Applied to this action, that subsection has the result that Dawes' recovery against FHD is subject to a ceiling of the total of the amounts for pain and suffering, together with interest, namely, $94,000.

In view of that ceiling, it seems to me appropriate that the judgment in Dawes' action as against the other two defendants against whom I consider he should succeed, namely, the Stock Exchange and Stapledon McMichael, should be subject to contribution as between those two parties in the ratio of the contributions which would apply to them in the event that liability was shared between all three defendants.

That means that if Dawes' judgment was to be met as to $94,000 by FHD, the balance of his judgment should be apportioned as between Stapledon McMichael and the Stock Exchange on a two-thirds and one-third basis respectively, with the usual order as to contribution between them accordingly.

This means then that while the total amount of the judgment against Stapledon McMichael and the Stock Exchange should be $848.128, their entitlement to contribution from FHD would likewise be limited to $94,000, with rights between themselves for any balance of the judgment to be apportioned on a two-thirds and one-third basis.

I would dismiss Dawes' action against Cox Constructions.

In WorkCover's action, I would give judgment for WorkCover against the Stock Exchange and Stapledon McMichael for $255,633.57, to operate as a charge against the moneys payable to Dawes by those parties in Dawes' own proceedings.

I would dismiss WorkCover's action against Cox Constructions.

The above is subject to counsel confirming that there is no dispute as to the amount of $255,633.57.

As to costs, I would make the orders which I have foreshadowed in my reasons, but I would give to counsel a further opportunity to be heard as to the amount and the incidence of any costs orders in the light of the judgment as re-constructed in accordance with my reasons.

I would also hear counsel as to the costs of the appeals and whether, on the appeals, a Bullock order in similar terms to that which I would make with respect to the trial costs, should be made.

MULLIGHAN J. I agree with the conclusions reached by Perry J and with the orders which he proposes for substantially the reasons which he has given.

No issue was raised on appeal or before the learned trial Judge as to whether there should be any reduction in interest on the award of damages in favour of Mr Dawes and the allowance for interest should be as proposed by Perry J. It appears that there was delay in bringing the action to trial but no information was placed before us as to the reason for that delay or as to who is responsible. Therefore, I am unable to join in the conclusion that the delay is inexcusable.

As no issue about delay has been raised, this is not, in my view, an occasion for a pronouncement by the Full Court as to what should be the response of the Court to delay in this context. It is usually better to consider such a matter in an established factual context and after hearing argument.

[3] Gypsum v Broken Hill Pty Co Ltd (1985) 120 LSJS 458 (Full Court) per King CJ at 460.

[4] The point was taken by Cox Constructions in its defence to the WorkCover proceedings in the District Court that the extension was for a period in excess of five years. [See AB1/110].

[5] See Baulderstone Pty Ltd and Anor v WorkCover Corporation and Male [1995] SASC 5147; (1995) 64 SASR 519 and WorkCover v Mapstone (1993) 60 SAIR 801.

[7] See Wheeler v Page (1982) 31 SASR 1.

[8] See Batchelor v Burke [1981] HCA 30; (1981) 148 CLR 448.

[9] [1981] HCA 30; (1981) 148 CLR 448 per Gibbs CJ at 455.

[11] See the joint judgment of Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ at 196.

[13] See s54(7)(e) of the Workers Rehabilitation and Compensation Act 1986.

Occupational Health, Safety and Welfare Act 1986

Occupational Health, Safety and Welfare (Commercial Safety) Regulations 1987

Workers Rehabilitation and Compensation Act 1986

Limitation of Actions Act 1936

COX CONSTRUCTIONS PTY LTD v DAWES AND ORS No. SCGRG-98-426, SCGRG-98-432, SCGRG-98-433, SCGRG-98-435 Judgment No. S229 [1999] SASC 229

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