MEDIUM NEUTRAL CITATION: [2002] VCAT 1052

1. The respondent's application that the applicant be ordered to pay the respondent's costs of the application is dismissed.

2. The applicant is to pay the respondent's costs of 5 July 2002 on County Court Scale "A" to be taxed in default of agreement.

For the Applicant: Ms Richards of counsel, instructed by Holding Redlich

For the Respondent: Mr Fleming of counsel, instructed by Moores Legal

1. On 12 February 2002, the applicant, Ms Hurwood, lodged with the Tribunal an application for review of a decision by the Board of the Emergency Services Superannuation, the respondent, that she did not qualify for a s.20F Disability Pension

2. On 22 March 2002, the Tribunal made Directions for the setting of a hearing date and for the filing of statements of the evidence of all witnesses to be called. The matter was listed for a 3 day hearing commencing on 22 May 2002.

3. On 22 May 2002, the hearing did not proceed and was re-listed for 1 August, and for a further Directions Hearing on 22 July 2002. The Tribunal ordered that the applicant pay the respondent's costs thrown away by reason of the adjournment on County Court Scale "A" to be taxed in default of agreement.

4. On 20 June 2002, the respondent sought a Directions Hearing at the earliest convenient time, to make an application for an order that the matter be taken out of the List and an order that the applicant attend medical appointments. The respondent filed an affidavit in support of that application.

5. At a Directions Hearing on 5 July 2002, the Tribunal ordered the applicant to attend appointments detailed, the first being on 23 July 2002. The hearing was re-listed to commence on a date after 1 November 2002 and the respondent's costs of 5 July 2002 were reserved.

6. On 22 July 2002, the Tribunal received advice from Ms Hurwood's solicitors that they had been instructed to withdraw her claim, and requested that the matter be struck out.

7. On 25 July 2002, the respondent's solicitor foreshadowed that Ms Hurwood was seeking leave of the Tribunal to withdraw her application and advised that they would be seeking an order for their costs.

8. The costs application was listed for hearing on 27 August 2002 before me.

9. Ms Hurwood has sought leave to withdraw her application under s.74(1) of the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act). She needs leave of the Tribunal to do so, and that was not opposed by the respondent.

10. Section 74(2)(b) of the VCAT Act empowers the Tribunal to order an applicant who withdraws an application to pay all, or any part of the costs of the other party to the proceeding.

11. Does that provision override the Tribunal's costs powers set out in s.109 of the VCAT Act? Mr Fleming of counsel, who appeared for the respondent, submitted that s.74(2)(b) applied and did not limit the Tribunal to the considerations set out in s.109 of the VCAT Act. He submitted that even if s.109 applied, this was a case where the Tribunal should award costs in favour of the respondent.

12. Ms Richards of counsel, who appeared for Ms Hurwood, drew my attention to the observations of Batt JA in Transport Accident Commission v Coyle (2001) 3VR 589 at 600. Batt JA made the following observation :

"For it seems to me that s.74(2)(b), rather than dealing with the content of a costs order, is an empowering provision, authorising the tribunal to award costs against an applicant after an application has been withdrawn, an order the authority for which might otherwise have been in doubt".

13. Counsel submitted that s.74(2)(b) does not override s.109 which governs the exercise of the Tribunal's power to order payment of costs. She submitted that s.109 is subject to Division 8 of Part 4 of the VCAT Act which does not include s.74(2)(b). Accordingly, Ms Richards submitted, the starting point for this application should be that each party should bear their own costs (s.109(1)), and the Tribunal may only order an applicant to pay a respondent's costs if it is satisfied that it is fair to do so, having regard to all the matters set out in s.109(3).

14. Alternatively, Ms Richards submitted that if s.74(2)(b) involves an unfettered discretion, it does not follow that automatically costs will be ordered against an applicant who withdraws : see eg Fernandez v Amatek Pty Ltd [2001] VCAT 1979. The discretion should be exercised having regard to all the circumstances, including the considerations listed in s.109(3).

15. I agree with Ms Richards that the better view is that s.74(2)(b) is an empowering provision and that when considering an application for an order for costs where leave to withdraw an application is sought, the provisions in s.109 apply.

16. Mr Fleming, counsel for the respondent, made submissions in support of the application. He set out the scheme of the Emergency Services Superannuation Act 1986 and referred to the very strict provisions concerning entitlement to a disability pension under s.20F.

17. He submitted that a central element to entitlement is that one is disabled and not working, which is what Ms Hurwood represented. It turns out, she had been working but told doctors and the Board that she had not worked since 1999. She had represented to the Board right up until the day before the hearing, that she was not working and could not work.

18. Counsel referred to a second statement filed by Ms Hurwood just prior to the hearing which caused the hearing date to miscarry, because that statement was inconsistent with the histories she had given.

19. He submitted that Ms Hurwood was attempting to obtain a pension to which she was not entitled by misrepresentation of fact and that had the Board known, it would have applied for summary dismissal of the application because she could not possibly have had an entitlement because she had been in paid employment. Mr Fleming sought costs on an indemnity basis.

20. Ms Richards submitted that Ms Hurwood should not be ordered to pay costs in the circumstances, submitting that it would not be fair to do so in light of the following considerations :

* Ms Hurwood decided to withdraw her application because of concerns about the effect of the litigation on her health. A brief statement from her treating psychologist was filed supporting this.

* Ms Hurwood's case was that she suffered from a "disability" as defined and her case was not untenable.

* Ms Hurwood volunteered the information about her work, in her statement filed on 21 May 2002.

* Ms Hurwood gave ample notice of her intention to withdraw.

* Ms Hurwood has already been penalised with a costs order for late service of material prior to the hearing listed for 22 May 2002.

21. For the purposes of qualification for a pension under s.20F, "disability" is defined in s.3 of the Emergency Services Superannuation Act 1986 where relevant :

(b) in any other case, the inability of a contributor or member before the age of 60 years or of a police recruit due to a continuing or recurring injury, disease or infirmity to ever -

(ii) perform any other duties for which he or she is suited by education, training or experience or for which he or she would be suited as a result of retraining -

as determined by the Board on the basis of reports provided by at least 2 registered medical practitioners appointed by the Board".

22. Ms Hurwood gave evidence at the costs application hearing and was cross-examined. She started working on a part-time basis for a tennis club in about mid-June 2001 after she sought review of the Board's decision to reject her claim for disability pension. She did this work on the recommendation of her treating psychologist and regarded it as rehabilitation. Her evidence was that she decided to withdraw her application for review because of her health and rejected that it was because of legal advice received. She said it was not really correct to say that the doctors in their reports had omitted to report that she was working. She said this was so because she regarded it as rehabilitation not work, even though she did get paid.

23. This costs hearing has been conducted in unusual circumstances, in that I am really being asked to make assessments of credit and the relevant strengths and weaknesses of the parties' cases without actually hearing the matter.

24. There is nothing in the legislation which precludes one from satisfying the definition of "disability" merely because one has engaged in some paid work.

In all the circumstances, I would not be prepared to dismiss out of hand Ms Hurwood's assertion that she regarded what she was doing more as rehabilitation than working in the ordinary sense.

25. It would seem to me that in circumstances where there is evidence that her treating psychologist has recommended that Ms Hurwood cease litigation as it had become clear it was not helping her condition (Exhibit B) and where the likelihood of success of her claim has become less clear, she should not be penalised for withdrawing her application.

26. Whether it be for her health or because of the merits of her claim, it was proper for her to withdraw. In either case, to require one to persist with an application to avert an unfavourable costs order would seem to me to fly in the face of common sense.

27. I note that there is already an order that Ms Hurwood pay the respondent's costs thrown away by reason of the adjournment of the May hearing. I consider that she should also pay the respondent's costs for the Directions Hearing held on 5 July 2002 when the Tribunal reserved the respondent's costs. That Directions Hearing was properly called by the respondent because it had difficulties arranging attendances by Ms Hurwood for further medical assessments and reports. Ms Hurwood had failed to attend appointments arranged.

28. The Tribunal proceeded to make very specific orders that Ms Hurwood attend particular doctors on fixed dates and at specific times. But for Ms Hurwood's failure to attend appointments, it would not have been necessary for the respondent to have requested and attended a Directions Hearing to obtain those orders. Pursuant to s.109)(3)(e) Ms Hurwood should pay the costs of the Directions Hearing on 5 July 2002.

29. Otherwise, the respondent's application for costs is dismissed.