Iplex Pipelines Australia Pty Ltd v WorkCover Corporation/Employers Mutual Limited [2007] SAWCT 48

WorkCover puts Iplex on notice that it will seek an order for costs

10 By letter dated 10 January 2007 WorkCover's solicitors wrote to Piper Alderman noting that Iplex was opposed to any settlement other than the rejection of the worker's claim. It also included the following advice:-

"I am now instructed to put your client on notice that my client will oppose the payment of your costs, and will seek that you pay our costs and the worker's costs, of all proceedings subsequent to conciliation in the event that your client is unsuccessful in the further proceedings on the basis that the further prosecution of the dispute is unreasonable in the circumstances."

11 The matter thereafter proceeded through the dispute resolution process. It was referred for judicial determination, trial orders were made and the matter was placed in the trial call over list for 16 April 2007.

12 In the meantime, by letter dated 31 January 2007, Piper Alderman advised WorkCover's solicitors as follows:-

"... as we submitted, it is the worker who has the onus of proving on the balance of probabilities that he has sustained a compensable disability. We made it clear that our client's position was that it quite reasonably wanted to put the worker to proof, for the very reasons set out in your client's determination of 24 August 2006. ... Obviously you have formed the view that the worker will succeed and you have advised your client accordingly. However it does not follow that our client is acting unreasonably in disagreeing with the suggestion that the claim should now be accepted."

13 By email sent on 5 April 2007 WorkCover's solicitors put a further proposition to Piper Aldermann in an attempt to settle the action. It relevantly provided as follows:-

"The amount of the claim does not justify the expense of the forthcoming trial.

On 10 January 2007, my instructing solicitor made an offer to accept the claim for the period 5/6/06 - 24/8/06, with AWEs at $1031.81 per week. He also put your client on notice in relation to the issue of costs.

Since then, Dr D'Onofrio's report has been obtained - and it entirely supports the worker. Your client's witness statements do not provide any positive evidence suggesting that there is any other cause of the worker's hernia.

I am instructed to offer to your client that, if it now allows this claim to be accepted in the terms outlined above, then it will pay both your client's and the worker's costs in accordance with the Regulations and the WCT Rules.

This offer is open to close of business on Wednesday 11 April 2007, after which, my client will only consent to the above substantive orders on the basis that the question of costs is reserved ..."

The matter proceeds to trial and the worker succeeds

14 Iplex did not accept this offer and the matter proceeded to trial before the learned President on 16 and 17 April 2007.

15 At the commencement of that hearing WorkCover, with leave, withdrew from the hearing such that the protagonists at trial were the worker and Iplex.

16 For reasons published by him on 9 May 2007 the learned President found that the hernia was caused by Mr Gilbert's work at Iplex and that he was entitled to compensation in accordance with the Act. He made an order that WorkCover pay Mr Gilbert's costs.

17 The issue of costs as between Iplex and WorkCover was adjourned.

18 At the resumed hearing Iplex, through its solicitors, made an application that it recover the costs of the judicial determination.

19 WorkCover opposed that application and sought an order that it recover the costs that had previously been made against it in favour of Mr Gilbert. WorkCover did not seek its own costs.

20 Both parties tendered affidavits in connection with their respective applications. These essentially recorded the history of the dealings between the parties as set out above.

21 The legislative provision that governed these applications was s 95 of the Act and in particular s 95(3). These relevantly provide that in the normal course of events a party will be awarded their costs of a judicial determination regardless of the result unless the party acted unreasonably in the conduct of the proceedings. In that event the Tribunal has a discretion to decline, an award of costs in the party's favour, order costs against the party, or reduce the amount to which the party would otherwise be entitled.

22 Thus the first issue before the learned President was: Did Iplex act unreasonably in the conduct of the proceedings? If not, it was entitled to its costs. If so, then the next issue was: What order for costs was appropriate?

Iplex's application is refused and it is ordered to reimburse WorkCover

23 Having heard submissions from Iplex's counsel the learned President did not call upon counsel for WorkCover.

24 In reasons delivered ex tempore he noted that he had considered the contents of the affidavits and annexures placed before him. He noted that there was an obvious relationship between the lifting work undertaken by Mr Gilbert and the development of his hernia. He said:-

"In that context, the settlement proposed by the compensating authority and agreed to by the worker - which was sent to Iplex by Minter Ellison with its letter of 8 November 2006 - was both reasonable and sensible. Likewise, the offer to settle the dispute contained in Mr Black's email dated 5 April of this year to Mr Ey, was also reasonable and was at least worthy of a response.

In my view it was unreasonable in all the circumstances for Iplex to have rejected both settlement proposals and in particular that contained in Mr Black's email offer." (emphasis ours)

25 He refused Iplex's application for costs and ordered it to reimburse WorkCover in respect of its liability to pay Mr Gilbert's costs. It follows that he found that Iplex had acted unreasonably in the conduct of the proceedings and that this was the appropriate order to make.

26 On appeal Iplex contended that the learned President was wrong to find that it acted unreasonably in relation to the conduct of the proceedings as prescribed by s 95(3) of the Act.

27 It submitted that there was no evidence in existence prior to trial that conclusively established that Mr Gilbert's hernia had occurred in compensable circumstances and that it was well justified in putting Mr Gilbert to proof.

28 It submitted that the learned President erred in making the finding of unreasonableness by reference to the findings of fact that he made at trial. It said that the relevant inquiry should have been made from the perspective of a reasonable party involved in the proceedings up to and including the trial. It contended that the learned President wrongly assumed that the rejection of an offer that he viewed as reasonable must be unreasonable; and that in finding that Iplex acted unreasonably he failed to have regard to earlier decisions by the Tribunal on the issue of costs.

29 It further complained that even if the learned President was entitled to form the view that Iplex had acted unreasonably in the conduct of the proceedings, in all the circumstances, its degree of unreasonableness was at the lower end of the scale and certainly did not justify the order that the learned President made.

30 Finally it said that the learned President's reasons were inadequate in that they did not explain the basis upon which he arrived at the conclusions that he reached.

31 We accept that there have been a number of cases where an unsuccessful worker has been awarded costs and that in many of these decisions the Tribunal, in finding that the worker did not act unreasonably in the conduct of the proceedings, has noted that the worker had an arguable case. These cases do not, however, stand for the proposition that "having an arguable case" is the yardstick from which the issue of "reasonableness in the conduct of the proceedings" is to be measured. It is trite to say it, but each case turns on its own facts.

32 Moreover, none of the cases to which we were referred concerned the facts that confronted the learned President, namely:-

•

the two main protagonists to the dispute, being the compensating authority and the worker had reached agreement between themselves as to the fate of the claim

•

the costs of the proceedings were relatively high when compared to the cost of the claim

•

the party against whom the costs order was made failed to engage in conciliation; would not countenance any possible compromise; did not to put any proposition other than insisting upon the rejection of the worker's claim; and insisted that the matter proceed to trial.

33 We think it is fair to observe that in any jurisdiction in which a party is confronted with litigation, the outcome of which is uncertain, that party should contemplate resolution of the dispute before a hearing and not to do so might be viewed as unreasonable. That must be especially so where the cost of conducting the litigation is disproportionately high, relative to the amount of money in dispute. These factors are of particular relevance in proceedings under the Act. As was noted in South Australian Police Department v Barber [1] the whole focus of the dispute resolution process that the Act provides is directed towards conciliated outcomes.

34 Accordingly, in our view, the learned President was entitled to reflect upon the strength of Mr Gilbert's case in evaluating the reasonableness of Iplex's conduct in insisting that the matter proceed to trial.

35 In the context of the legislative regime that reflects an expectation of conciliated outcomes and has as one of its stated objects, "to avoid adversarial contest to the greatest possible extent"[2], the learned President was entitled based on the facts of this case to find that Iplex had, in all the circumstances, acted unreasonably in its conduct of the proceedings. He was entitled to find that the discretion conferred by s 95(3) of the Act was enlivened.

36 The circumstances in which a Full Bench can interfere with the exercise of that discretion will be extremely rare. The appellant must show that the exercise of the discretion was so unreasonable or unjust as to require the Full Bench to substitute its own discretionary order.[3]

37 Other than being limited by the relevant scale of costs, s 95 imposes no limitation on the extent to which an adverse order for costs can be made. Whilst he was not asked by WorkCover to do so, had the learned President regarded this case as warranting the ultimate sanction, he could have ordered Iplex to pay both the worker's costs and WorkCover's costs of the judicial determination. In other words, his order that Iplex pay the worker's costs was not at the most extreme end of the scale.

38 We are not persuaded that his order reflects some mistake in principle or that it is so extreme that it is out of all proportion with Iplex's unreasonableness in the conduct of the proceedings.

39 As to the complaint about the adequacy of reasons, reasons underpinning a decision on costs do not need to be elaborate or lengthy. Whilst the reasons were brief, they disclosed the evidence and factors relied upon and in our view were sufficient to achieve the purposes for which they were required. They enabled us to review the decision. In the eye of the reasonable hypothetical observer, they were sufficient for justice to be seen to be done.

40 None of the grounds of appeal have been made out. The appeal is therefore dismissed.

[1] [2001] SAWCT 100

[3] See Morris v McEwen and another [2005] SASC 284; (2005) 92 SASR 281 per Besanko J; Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) (Pty Ltd) [1984] HCA 59; (1994) 157 CLR 149 per Brennan J (as he then was) at 176; and Southern Resources Limited and others v Residue Treatment and Trading Co Limited and others (1990) 56 SASR 455 (per Jacobs ACJ, Prior and Mulligan JJ at 480).