Grima v RFI

Question 1 6Allied claims interest on the amount of the recovery judgment pursuant to s 100 of the Civil Procedure Act 2005. 7In Howard Rotavator Pty Ltd v Wilson (1987) 8 NSWLR 498, Hope JA said this at 500-501: "In my opinion a different position arises under s 64(1)(b). The liability of the tortfeasor is again a statutory one. It does not arise independently of the statute, but the employer is given, by this paragraph, a statutory indemnity in respect of the compensation which he has paid. The ordinary rule in respect of indemnities is, as I would understand it, correctly set out in Halsbury's Laws of England, 4th ed, vol 20, par 315 at 173: 'In law an action on a contract of indemnity does not normally lie until the promisee has paid the third person's claim. Where he has paid, the amount so paid constitutes a debt due to him from the promisor which, save in certain exceptional circumstances, he may recover with interest in an action...' I see no reason why that rule should not be applied to the liability which arises by virtue of the statute under s 64(1)(b). The employer, assuming that the circumstances described in the paragraph are satisfied, has a right of action in respect of each payment that he makes. The right of indemnity arises when he makes this payment and, prima facie, his right to interest is a right to interest from that time, that is, the time of payment. It has been submitted, and correctly submitted, that the liability of the tortfeasor under s 64(1)(b) is limited to the amount of damages. That amount of damages is, as was said by Chief Justice Barwick in Tickle Industries Ltd v Hann (1974) 130 CLR 321 at 331, the damages assessed not in the action by the worker against the tortfeasor but in the action by the employer against the tortfeasor. As it seems to me, that circumstance does not, either at all or in the present case, limit the right of the employer to recover interest if he is otherwise entitled to it." 8That approach was adopted and applied by the Court of Appeal in Kwanchi Pty Ltd v Kocsis (1996) 40 NSWLR 270. Clarke JA in that case said this at 276: "Section 83A(1A) of the District Court Act expressly provides that interest may be awarded where the whole or part of the debt or demand is paid within the currency of the proceedings. It follows that the power to award interest does not depend upon the debt becoming the subject of a judgment. Where an employer sues a tortfeasor to enforce its indemnity pursuant to s 151Z(1)(d) (which is not relevantly different from s 64(1)(b) of the 1926 Act), and where the tortfeasor does not pay the amount claimed prior to judgment, the District Court is, in the event it finds for the employer, empowered under s 83A of the District Court Act to make an award of interest in favour of the employer. Likewise, if the tortfeasor pays the amount claimed after service of a statement of claim but prior to judgment the employer can maintain its claim for interest. Where an award is made, it is made pursuant to the statutory power of the court and the interest is not, strictly speaking, an amount ordered to be paid under the indemnity. Stated succinctly, the payment of interest is not a payment made under par (d) or pursuant to it. The claim for interest is a statutory claim to reimburse the employer who has paid compensation for being deprived of its money pending payment of that compensation by the tortfeasor." 9RFI contended that the decision of the Court of Appeal in J Blackwood & Son v Skilled Engineering [2008] NSWCA 142 at [44]-[46] makes it plain that an order for the repayment of compensation is a statutory indemnity. That proposition does not appear to be in contest. However, as I understand this submission, RFI wishes somehow relevantly to maintain that s 151Z of the Workers Compensation Act therefore operates in that sense as a "machinery provision". What it is that is said to flow from these contentions is unfortunately not otherwise made plain. 10RFI does not appear to contest the position as explained in Howard Rotavator Pty Ltd v Wilson and Kwanchi Pty Ltd v Kocsis, nor indeed Allied's entitlement to interest at all. RFI does, however, contend that, as a matter of discretion, the amount of interest that it is ordered to pay should "reflect the extent to which the employer [that is, Allied] has been adjudged liable to [Mr Grima] so that it is not overcompensated." RFI submitted that Allied should in these circumstances only be entitled to 50 percent of the amount of the interest claimed on the unpaid amount. 11I disagree. The interest claimed has been calculated upon or by reference to the amounts paid that comprise the recovery judgment. The equal apportionment determined by me to be just and equitable as between RFI and Allied has already been factored into the calculation of the amount of the recovery judgment. It has nothing to do with any exercise of the discretion to award interest upon that sum. There is no legal or persuasive basis for reducing RFI's liability to pay interest on the unpaid sum to 50 percent of the amount claimed or any other fraction of the full amount.

Question 2 12Allied contended that RFI should be ordered to pay its costs of both cross-claims. The total amount of compensation payments made by Allied to Mr Grima was substantial, namely $1,933,425.89. Allied contended further that it was inevitable that the amount of these recoverable payments would exceed the amount of contribution that could potentially be recovered from it, given that Mr Grima's work injury damages were agreed at $330,000. In other words, it was inevitable that s 151Z(2)(e)(i) would permit recovery of payments, subject to an allowance for the amount of contribution that could be recovered against Allied. The amount of that contribution in this case could never have exceeded $330,000. 13Allied also contended that there was never any need for RFI to join Allied to the proceedings by way of its cross-claim seeking contribution or indemnity pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946. Simply by raising the application of s 151Z(2) in its defence, Allied's potential liability as Mr Grima's employer would be determined in the course of the proceedings even without Allied being joined as a party. The court would in such circumstances have been obliged to undertake a notional consideration of Allied's liability and in the event of a finding that it would, if sued, have been liable, Mr Grima's damages would have been adjusted in accordance with the section. That is what has ultimately occurred. RFI's cross-claim was therefore unnecessary. 14By way of contrast, Allied contended that it was only able to prosecute its claim against RFI for the recovery of the compensation payments that it made to Mr Grima, together with interest on such payments, by instituting recovery proceedings against it. Allied's claim was therefore not only necessary but also always likely to succeed provided that RFI was found liable to Mr Grima. That was the essential issue in Mr Grima's proceedings against RFI. 15In these circumstances Allied submitted that RFI should be ordered to pay its costs of both cross-claims. 16RFI submitted in response that the appropriate order should be in the circumstances that each party bear its own costs of its respective cross-claim. That is because such an order would effectively reflect the nominal nature of the costs consisting of the filing fees and other formal costs, such as the costs of service of process and the like. 17RFI submitted that it was, contrary to Allied's submissions, "entirely reasonable" for it to join Allied as Mr Grima's employer to proceedings claiming contribution: compare, for example, Maricic v Dalma Formwork (Aust) Pty Ltd (No 2) [2006] NSWCA 237; (2006) 67 NSWLR 712 at [24]-[33]. RFI pointed to the usual, if by no means universal, situation in which a plaintiff employee sues both the employer and the non-employer tortfeasor where his non-economic loss claim is in excess of the 15 percent threshold for which s 151H of the Workers Compensation Act provides. Why Mr Grima did not do so in the present case is not known. Conversely, RFI argued that it is common for an employer to bring proceedings against a non-employer tortfeasor and to have those proceedings determined at the same time as the plaintiff's proceedings. 18In my opinion, there should be no order as to the costs of the cross-claims. The significant issue joined between Allied and RFI was the dispute about their respective contributions to Mr Grima's damages as between them as concurrent wrongdoers pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act. The cross-claim filed by each of them sought corresponding determinations of that same issue. Whether it is raised in one cross-claim or two cross-claims is wholly beside the point. Allied and RFI were each concerned to impugn and implicate the other as the sole or principal contributor to Mr Grima's loss and damage. The issue was well understood, adequately identified and enthusiastically argued by both protagonists. In the end I concluded that the merits of that debate were equal. Allied and RFI were both necessary participants in that particular contest, howsoever they might each have been joined. As in the outcome of a tug-o-war between two opposing teams, the result is unrelated to, and does not depend upon, which of them supplied the rope. In this case, the fact that only one cross-claim was needed to energise the dispute is equally beside the point. 19Dissimilar monetary outcomes in the final result with respect to the comparative liabilities of employer and a non-employer tortfeasors to a plaintiff employee are never a primary reflection or indication of their respective success or failure on the contribution cross-claims. The different amounts for which each may become liable to the plaintiff in the first instance are instead a function of the combined operation of the provisions of the Workers Compensation Act on the one hand and the application of dissimilar damages regimes applying to employer and non-employer tortfeasors on the other hand. Moreover, the particular dissimilar monetary outcomes in the final result between Allied and RFI in this case are not even a secondary reflection or indication of their respective success or failure on the cross-claims. That is for the obvious reason that my conclusions and decision in the contribution proceedings demonstrates that the merits in that dispute were equal. That outcome appears to me most sensibly and fairly to inform the question of who should pay for the cost of resolving that dispute between Allied and RFI. 20In support of the contentions that Allied advanced on this issue, it noted that its cross-claim against RFI included the claim for the recovery of workers compensation payments made by it to Mr Grima pursuant to s 151Z(1)(d) of the Act. The recovery from RFI was limited by that provision to the amount of damages that RFI was liable to pay to Mr Grima. In circumstances where Mr Grima was also entitled to take proceedings independently of the Act against both Allied as the employer and RFI as the non-employer tortfeasor, s 151Z(2)(e) has to be applied to calculate the amount of any indemnity that could be claimed from RFI. 21These provisions are, however, mechanical in their formulation and uncontroversial in their application. They operate independently of the merits of the dispute about whom as between Allied and RFI was the more culpable wrongdoer, or the assessment of what is just and equitable. The fact that Allied or RFI may have pleaded a reference to the terms of the Workers Compensation Act does not in any way assist a consideration of where the burden of the costs of the cross-claims should fall.

Question 3 22When this matter was argued before me, RFI indicated that it intended to rely upon my decision in Collins v Sydney Ports [2012] NSWSC 1316. At that time my decision was the subject of a pending appeal to the Court of Appeal. The Court of Appeal has since published its reasons in that appeal: see Australian Winch and Haulage Company Pty Ltd v Collins [2013] NSWCA 327. RFI argued at the time that I should not determine the present issue until after the Court of Appeal's decision had been published. Allied argued that there was no reason to delay my consideration of the issue because the Court of Appeal decision had no potential application to the present proceedings. Since the publication of the Court of Appeal's decision, RFI has adjusted its position and now wishes to contend that the Court of Appeal did not deal with the issue in a way that is either determinative or binding in this case. That is because in Collins there was no entitlement to costs against the employer. Alternatively, RFI now wishes to submit that the Court of Appeal's decision in Collins is wrong. 23Even prior to the publication of the Court of Appeal's decision in Collins, Allied argued before me that it had no present application. In Collins the plaintiff sued both his employer and a non-employer tortfeasor. Each defendant issued a cross-claim against the other pursuant to s 5(1)(c), with the employer also seeking recovery of workers compensation payments made by it to the plaintiff pursuant to s 151Z(1)(d). The plaintiff succeeded against each defendant and an order was made that each defendant pay the plaintiff's costs of the proceedings against it. However, even though both defendants were found liable to the plaintiff, the employer failed in its recovery action against the non-employer tortfeasor because the amount of its liability to the plaintiff exceeded the amount of the compensation payments it had made. By reason of s 151Z(2)(e)(ii), the employer had a defence to the extent of such compensation payments but was unable to recover any amount from the non-employer tortfeasor. 24Allied emphasised that the present case is different and readily distinguishable from Collins. Not only did Mr Grima not join Allied as his employer, but Allied is entitled to recover the compensation payments made by it to the extent that they have exceeded the amount that could be recovered against it, as provided by s 151Z(2)(e)(i). 25Allied relied upon what was said in Estate of the Late M T Mutton by its Executors and R W Mutton t/as Mutton Bros v Howard Haulage Pty Ltd [2007] NSWCA 340 at [251]-[263] per Ipp JA. Part of what his Honour said is as follows: "[262] The point the respondent made is that, unlike the situation in James Hardie and Company Pty Ltd v Wyong Shire Council, if Mr Kelman had sued the respondent instead of, or as well as, the appellants, the respondent would not have been ordered to pay the costs. Unlike the situation described by Giles JA in James Hardie and Company v Wyong Shire Council, it would then, on the respondent's argument, not be just and equitable that the burden of Mr Kelman's costs should be shared between the appellants and the respondent as tortfeasors. In other words, had Mr Kelman sued the respondent, it would not have been ordered to pay Mr Kelman's costs; therefore, there is no reason why it should contribute towards the costs the appellants are required to pay Mr Kelman. [263] In my opinion, these submissions have cogency and were I to have upheld the appeal, I would have upheld the respondent's arguments in this regard." 26Spigelman CJ at [50] specifically agreed with those remarks. 27The burden of this analysis is that it would not be just and equitable for an employer to be ordered to pay some part of a plaintiff's costs against the non-employer tortfeasor, if in the hypothetical proceedings against the employer, no costs would have been payable by the employer under the applicable costs regulations. Regulation 106 of the Workers Compensation Regulation 2010 provides as follows: "106 Except as provided by this Subdivision, the parties to court proceedings for work injury damages are to bear their own costs." 28It is uncontroversial that none of the relevant exceptions is presently applicable. 29In Ace-Semi Trailer Sales Pty Ltd v Zurich Australia Insurance Ltd [2009] NSWCA 381 the Court of Appeal by majority held that the trial judge had erred in ordering the employer to pay a proportion of the costs ordered against the non-employer tortfeasor in favour of the plaintiff where, as in this case, the plaintiff had not taken proceedings against his employer. Hodgson JA dealt with the matter at [25]-[33] relevantly as follows: "[25] On the question whether Ace should contribute something towards Zurich's liability for Miles' costs, there are two possible routes to this result: (1) Simply as an exercise of the costs discretion in relation to Miles' claim against Zurich; (2) As part of the recovery of contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act. [26] It appears that the primary judge adopted the first route. However, in my opinion, there is no possible justification on that basis. Ace made no contribution to the costs as between Miles and Zurich that was not appropriate as part of its defence of Zurich's cross-claim, and Ace has properly been held to be liable to Zurich for those costs. Ace could not be considered to have intermeddled in any way as between Miles and Zurich, and there is in my opinion no basis for making an order that Ace, being a non-party in the proceedings between Miles and Zurich, should contribute to the costs of the proceedings as between Miles and Zurich. [27] However, there could be a possible basis as part of the recovery of contribution. Under s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act, Zurich is entitled to recover contribution from Ace; and under s 5(2), the amount of that contribution is to be 'such as may be found by the court to be just and equitable having regard to the extent of that person's responsibility for the damage'. The basis of Ace's liability for contribution is that Ace 'would, if sued, have been liable in respect of the same damage'. That makes it relevant to what is just and equitable to consider what Ace's liability, if sued, would have been, including its liability in respect of costs. [28] Relevant to this question are clauses 89 to 93 of the Workers Compensation Regulation 2003, which are as follows..." 30His Honour then proceeded to refer to clauses 89 to 93 of the Workers Compensation Regulation 2003 and continued: [29] The effect of these clauses was considered in Estate of the late M T Mutton v Howard Haulage Pty Limited [2007] NSWCA 340 at [251]-[263], where Ipp JA (Spigelman CJ agreeing) expressed the view that it would not be just and equitable for the employer to be ordered to pay some part of the plaintiff's costs against the other tortfeasor if, in hypothetical proceedings against the employer, no costs would have been ordered against the employer. [30] In my opinion, the chance that, in such hypothetical proceedings, costs would have been ordered against Zurich by reason of cl 89 (whether with or without assistance from cl 92) must be considered remote and speculative; and in my opinion, such a remote and speculative chance could not be a sound basis for ordering Zurich to pay some part of Miles' costs as a just and equitable contribution under s 5 of the Law Reform (Miscellaneous Provisions) Act. [31] I do not think this is altered by cl 93: even if the contribution proceedings were to be regarded as ancillary proceedings, the question being addressed is not what order for costs should be made in the contribution proceedings, but rather what contribution is to be recovered under s 5. [32] I would follow the dicta in Mutton; and in accordance with those dicta, I think there should be no contribution recovered in respect of costs. [33] Although Mutton was not referred to the primary judge, in my opinion error by the primary judge is shown, because the primary judge made the order that he did as an exercise of the costs discretion, not as part of the recovery of contribution. I would allow the appeal on this aspect only." 31Allied contended that these cases were directly referable to the present circumstances and that RFI should be ordered to bear alone any costs of the proceedings that I might otherwise order it to pay to Mr Grima. 32RFI's response did not refer to these authorities at all. It simply contended that there would be an injustice to it if no order were made against Allied to contribute to the costs that RFI may be ordered to pay to Mr Grima in circumstances where Allied has been adjudged liable to him for 50 percent of his damages. Such a so-called injustice is ordinarily dealt with on a cross-claim for contribution: a joint tortfeasor is often found to be entitled to recover, as part of the contribution, the costs it is liable to pay to the plaintiff in proportion to the order for contribution from the contributing party: see James Hardy & Company v Wyong Shire Council [2000] NSWCA 107; (2000) 48 NSWLR 679 at [23], [42] and [46]-[47]. That is the nature of the order that RFI now seeks against Allied. 33Having sought to await the outcome of the Court of Appeal decision in Collins, it is only proper that reference should be made to what the Court said on this question. The relevant reasoning is at [175] and [176] per Sackville AJA as follows: "[175] Ordinarily, the right to contribution conferred by s 5 of the 1946 Act extends to the costs payable to the plaintiff in addition to damages: James Hardie and Company Pty Ltd v Wyong Shire Council [2000] NSWCA 107; 48 NSWLR 679, at [23], per Handley JA; at [36], [40], per Giles JA; at [46], per Heydon JA. However, where a provision such as reg 106 of the WC Regulation prevents a plaintiff from recovering costs against one of two defendants, the view has been expressed that s 5 does not permit the court to order that defendant to contribute to the costs payable by the other defendant to the plaintiff: Estate of the Late M T Mutton by its Executors trading as Mutton Bros v Howard Haulage Pty Ltd [2007] NSWCA 340, at [262]-[263], per Ipp JA (with whom Spigelman CJ and Hodgson JA relevantly agreed); Ace-Semi Trailer Sales Pty Ltd v Zurich Australia Insurance Ltd [2009] NSWCA 381, at [29]-[33], per Hodgson JA; at [66]-[67], per Basten JA. [176] No good reason has been advanced why the view expressed in those cases should not be followed. In particular, no attempt has been made to persuade this Court that the decision in Ace-Semi v Zurich was plainly or clearly wrong in the sense identified in Gett v Tabet [2009] NSWCA 76; 254 ALR 504, at [294]-[295], per curiam. Accordingly, the primary Judge was in error in ordering Ports to pay 65 per cent of the costs AWH was required to pay to Mr Collins." 34In Ace-Semi Trailer Sales v Zurich and Mutton Bros V Howard Haulage the Court was concerned with factual circumstances redolent of the present case, and are accordingly to be contrasted with both Collins and James Hardie v Wyong Shire. Neither case supports the proposition that Mr Grima would have been or would have become entitled to recover costs against Allied if he had chosen to bring proceedings against it. 35There is correspondingly no warrant in this case for an order in favour of RFI against Allied to the effect that Allied should be required in any way to contribute to the costs that RFI is liable to pay to Mr Grima.

Question 4 36Mr Sulke is a witness called by RFI in the proceedings. The allocation of dates for the hearing of the proceedings was slightly delayed, but ultimately scheduled over objection by Mr Grima, so as to accommodate Mr Sulke's availability. That was because Mr Sulke had indicated to RFI's legal representatives that he was proposing to travel to Albania but that he was due to return on 19 August 2013. Arrangements were therefore made for Mr Sulke's evidence to be taken on 20 August 2013 and again on 21 August 2013. Mr Sulke did not attend on either of those days but he did ultimately do so on 22 August 2013. Mr Sulke was unable to give evidence on the days as planned because he was either still in Albania or in transit on his way back to Australia. The costs associated with the loss of those days are the subject of the present application. 37RFI relied upon the affidavit of Brent Arthur Hedges sworn 20 August 2013. Mr Hedges is the solicitor for RFI. Mr Hedges deposes to a conversation with Mr Sulke on 19 August 2013, in which Mr Sulke informed Mr Hedges that he would not be returning to Australia until the following day. That was the last contact Mr Hedges had with Mr Sulke until, presumably, his attendance at court on 22 August 2013. 38More significantly in my opinion is the fact that on 3 May 2013 Mr Hedges served Mr Sulke with a subpoena to attend and give evidence. It was following service of that subpoena that Mr Robert Di Pietro, Mr Sulke's employer and formerly a principal of RFI, advised Mr Hedges for the first time that Mr Sulke would be overseas on 22 July 2012 when the hearing of the matter was scheduled to commence. It was then that Mr Hedges was advised that Mr Sulke would be returning to Australia "on 19 August 2013". Mr Sulke himself had a later conversation with Mr Hedges before he left for overseas in which Mr Sulke confirmed that "he was due to return to Australia on 19 August 2013". 39Allied contends that this demonstrates that Mr Sulke's non-attendance as anticipated was the result of a lack of proper communication between RFI's solicitors and Mr Sulke. Allied's position in these circumstances is that it should not have to bear any of the wasted costs caused or occasioned by these events. That submission translates into an application for an order that RFI pay these costs on an indemnity basis. 40RFI's response is to characterise what occurred as "a misunderstanding" rather than a lack of communication. RFI submitted that Mr Hedges was clearly given to understand that Mr Sulke would be returning on 19 August 2013. Steps would not otherwise have been taken to arrange for him to give evidence on the following day. Indeed, RFI instructed senior counsel appearing for it to make two applications to have the matter resume on 20 August 2013, a circumstance rather suggesting that RFI had no reason to suspect that Mr Sulke would not be available at court on that day. Mr Hedges was not required for cross-examination. 41RFI submitted that "there should be no special order for costs in the circumstances" and that "an order for indemnity costs is not warranted". Although there may be some room for doubt, I take that combination of submissions to be that no order for costs of any sort adverse to RFI should be made. 42I had the opportunity to hear and to observe Mr Sulke in the witness box when he eventually gave his evidence. Without exploring those circumstances in fine detail, it is sufficient for present purposes simply to observe that I have some sympathy for the position in which Mr Hedges found himself. Mr Sulke was not a person obviously familiar with the court process. He was also not a person who had set about to ignore his obligations to comply with the subpoena he had received or the arrangements that had been made in the light of it. It seems to me that everyone thought that Mr Sulke would be at court as arranged and nobody thought that those arrangements would be frustrated. Solicitors' work is both difficult and demanding and organising witnesses to give evidence in contested proceedings in a timely and efficient way is no exception: it is not unlike herding cats. Some concession has to be made to the practical reality that even the best-laid plans do not always come to fruition. 43However, I am also not unmindful of the fact that, without some form of costs order in its favour, Allied will be out of pocket through no fault on its part. That is also true to a lesser extent if anything other than an indemnity costs order is made in its favour. 44On balance it seems to me that RFI should be required to pay Allied's costs thrown away or occasioned by reason of the non-attendance of Mr Sulke. I do not, however, consider that the circumstances of his failure to appear as anticipated call for an order for the costs to be paid on an indemnity basis.

Conclusions 45Allied is entitled to interest on the full amount of the statutory indemnity. There should be no order as to the costs of the cross-claims. Allied is not liable to contribute to any costs that RFI may be ordered to pay to Mr Grima. RFI should pay Allied's costs thrown away or occasioned by reason of the non-attendance of Mr Sulke on the ordinary basis. 46I will direct the parties to bring in short minutes of order giving effect to these reasons so as finally to dispose of all outstanding orders in the proceedings within seven days.

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