2. Order the Respondent to otherwise pay the Applicant's costs on County Court Scale "C".

For the Applicant: Mr J Brett instructed by Arnold Thomas and Becker

1. In this matter I have previously ruled concerning the absence of a burden of proof and the carriage of the action and in relation to the merits of the matter. It is to be remembered that the respondent Commission decided to terminate the applicant's entitlement to benefits after many years on the basis that the subject accident did not happen, or did not happen in the manner described by the applicant. It was made perfectly clear that the respondent was alleging fraud.

2. On 10 May 2002 I ruled that, as a matter of fairness, the respondent should lead its evidence prior to the applicant presenting his case.

3. The matter came on for hearing again on 27 May 2002. On this occasion the respondent, going first, called evidence from a surgeon, Mr Miller, who was effectively being asked to reconstruct whether or not the accident had happened some considerable time after the event. As I have previously stated, he made it reasonably clear that he could not and would not say that no accident occurred. His scepticism was in relation to the degree of seriousness of the injuries suffered as opposed to the occurrence of the accident. The only other evidence adduced by the respondent was the tendering of documents and these were almost overwhelming in their support of the proposition that the accident occurred. I repeat that these were tendered by the respondent.

4. The applicant called no evidence, and I refer again to the principal judgment in the matter.

5. It became abundantly clear that the respondent had been hoping that the applicant and his witnesses would give evidence first, and it would then attempt to establish fraud by means of cross-examination. When the respondent was ordered to go first, it found itself essentially in a position where it had no credible evidence to support the serious allegation which it was making. Accordingly, its decision to terminate benefits was found to be erroneous.

6. In these circumstances, Mr Brett, on behalf of the applicant, has sought indemnity costs. He referred me to the judgment of Sheppard J in Colgate Palmolive Co & Another v Cussons Pty Ltd [1993] FCA 536; 118 ALR 248, and to the principles set out therein relating to an order for indemnity costs. Basically Mr Brett argued that the respondent had made a groundless allegation of fraud years after the event; had terminated the applicant's benefits on the basis of reconstruction and some perceived inconsistencies; had so terminated without any correspondence, contact or other meeting with the applicant; had, in the letter setting out the decision taken, given no or no meaningful explanation or reasons; and had hoped to establish some sort of case by means of cross-examination and had persisted with the case even after it had been ordered to go first and the prospect of establishing anything by way of cross-examination had dimmed considerably, if not disappeared altogether. I should point out that Mr Brett had, at the time of argument prior to the first ruling, and subsequently, made it clear that he was extremely unlikely to go into evidence if the Commission was obliged to go first. In these circumstances, he argued, the respondent was making allegations that ought never to have been made and was unduly prolonging the case by groundless contentions. He relied generally upon what was stated in Colgate Palmolive.

7. Mr Lay, on behalf of the respondent Commission, argued that costs should be on Scale "A" and that the respondent had been complying with the objects of the Act and its functions as set out in the Act in ensuring that, pursuant to s.35, compensation is only paid to persons injured as a result of transport accidents. However, he did make some very fair and honest concessions. He agreed that the initial decision may well have been worded better or set out in a clearer fashion. He also agreed that, following the ruling that the Commission go first, it considered its position but it was decided to "push on".

8. Against this background, I turn now to my ruling.

9. Firstly, as a matter of general principle, I see no reason why this Tribunal cannot, in an appropriate case, make an order for indemnity costs. I have previously discussed various considerations in relation to costs in my ruling in Hanley v Transport Accident Commission, delivered 11 June 2002. As stated there, and consistent with the observations of Tadgell JA in Transport Accident Commission v O'Reilly & Others [1998] VSCA 106; (1999) 2 VR 436 at 441, the discretion of the Tribunal in relation to costs in transport accident matters is a broad one. The Supreme Court and County Court are specifically empowered to order costs on an indemnity basis - see for example Order 63A.28(c) of the Rules of Procedure. That the discretion of this Tribunal extends to the making of such an order, and particularly in transport accident cases, seems to me to be a logical and reasonable proposition.

10. Secondly, in exercising the discretion that exists in such a way, there should exist special circumstances which lift the case out of the ordinary. In this regard I refer to the observations of Winneke P in Spencer v Dowling & Another (1997) 2VR 127 at 147, and particularly to the extract there quoted from the decision of Nathan J in Bass Shire Council v King (unreported, 15 August 1994). Of course, and as urged, I have also borne in mind the observations of Sheppard J in Colgate Palmolive.

11. Bearing in mind the above, I have come to the conclusion that, at least from the date of my ruling in relation to carriage of the action (that is, 10 May 2002) there do exist special circumstances that lift the case out of the ordinary. Indeed, it is only after lengthy consideration that I have rejected Mr Brett's submission that indemnity costs should be ordered in respect of the entire action. I appreciate his argument that the fact that the respondent's ability to conduct its case altered dramatically following the ruling that it should go first is a barometer of the weakness of its position at all times, and indicative of the fact that it had little or no evidence to support the serious allegation which it had made.

12. However, I am of the view that the respondent should be given the benefit of the doubt in relation to its position prior to 10 May 2002. With considerable straining and a large amount of optimism on its part, there may have been enough - barely enough, but enough - to suggest that, by means of cross-examination, it could substantiate the allegation of fraud which it had made.

13. However, once the ruling of 10 May 2002 had been given, to use the vernacular, "the jig was up". The respondent effectively was left only with the reports of Mr Miller, which, via reconstruction, may have cast some doubts upon the occurrence of the accident, but a conference of any depth with him - probably even a telephone call - should have been sufficient to ascertain that it was his opinion that he could not say and would not say that the accident never occurred. Indeed, even his report of 23 May 1999 - almost five years after the accident - in which a possible doubt is raised seems to me to state not that the accident did not happen but that the applicant's description of it may not be entirely accurate because he is a poor historian. In any event, as a piece of evidence, it falls a long way short of substantiating a serious allegation such as fraud and even if it were viewed in the most favourable light for the respondent, clarification with Mr Miller would quickly have revealed what his opinion in fact was. However, as stated, even without such clarification, it was an entirely inadequate evidentiary base upon which to rely in pursuing an allegation of fraud.

14. It is little wonder that, as Mr Lay frankly admitted, the respondent Commission reviewed its position following the ruling. However, having come so far, it apparently decided to push on, presumably in the hope of a miracle. The miracle did not eventuate. From 10 May 2002, and to adapt the wording of Sheppard J in Colgate Palmolive, it engaged in the undue prolongation of the case by groundless contentions. It was pursuing an allegation of fraud that had no real evidentiary base.

15. Accordingly, in my opinion, the applicant is entitled to an order for indemnity costs from 10 May 2002. Prior to that date, he is entitled to costs on scale. There was considerable argument concerning the scale to be adopted. If one looked only at the present dollar value of the case, it would fail to get beyond Scale "A". Mr Brett asked for costs on Scale "D", because of the serious nature of the allegation made, the importance to the applicant of establishing that the accident did in fact occur, and the importance of the threshold point concerning the burden of proof and carriage of the action. As I stated during argument, I do not expect my ruling on the preliminary point to turn the legal world upside down. However, the matters argued were important and the decision may well be of benefit in other cases. Certainly these points were argued in a detailed and comprehensive fashion and by very experienced counsel. However, and these things are always a matter of degree, I am not of the view that Scale "D" is appropriate. Mr Lay argued that, if costs were not to be on Scale "A", they should be on either "B" or "C", but not on Scale "D", and I uphold his submission in that regard. I am against him in relation to his argument that costs should be on Scale "A". I have considered all of the matters put to me including the importance of the outcome to the applicant and the importance of the argument considering the preliminary points. Whilst the sheer monetary value of the judgment is very difficult to assess and may not currently go beyond Scale "A" as, in practical terms, it relates only to modest annual medical expenses, the payment of benefits now may be ongoing. I note the observations of Mr Miller that the applicant's prognosis is poor. The potential exists for lengthy, and possibly increased, payment of benefits. It is to be remembered that the applicant is 27 years of age. He has re-established that the accident occurred. Bearing these circumstances in mind and the other matters that have been put to me, I am of the opinion that the appropriate scale for costs is Scale "C".