Pacific Steel Constructions Pty Limited v Barahona

Uniform Civil Procedure Rules 2005 LEGISLATION CITED: Workers Compensation Act 1987 Workers Compensation Regulation 2003 Workplace Injury Management and Workers Compensation Act 1998

Chubs Constructions Pty Ltd v Chamma [2009] NSWCA 98 CASES CITED: Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411 Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62

PARTIES: Pacific Steel Constructions Pty Limited (Appellant) Luis Barahona (Respondent)

COUNSEL: L King SC; M L Snell (Appellant) B Toomey QC; J Anderson (Respondent)

SOLICITORS: Goldbergs Lawyers (Appellant) Martin Bell & Co Solicitors (Respondent)

LOWER COURT DATE OF DECISION: 18 July 2008, 2 September 2008

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40398/08

ALLSOP P BEAZLEY JA GILES JA

15 February 2010 Pacific Steel Constructions Pty Limited v Luis Barahona & Anor (No 2) Judgment 1 THE COURT: The Court delivered its principal judgment in this matter on 11 December 2009 in which it dismissed Pacific Steel Constructions Pty Limited (Pacific)'s appeal against the first respondent (Mr Barahona) and ordered Pacific to pay Mr Barahona's costs of the appeal. The principal judgment also dealt with Pacific's appeal against the second respondent, Jigsaw Property Group Pty Limited (Jigsaw), and with an appeal brought by Jigsaw and a cross-appeal brought by Mr Barahona: Pacific Steel Constructions Pty Limited v Barahona; Jigsaw Property Group Pty Limited v Barahona [2009] NSWCA 406. 2 The subject of this judgment relates only to the appeal brought by Pacific against Mr Barahona. By written submissions filed on 21 December 2009, Pacific seeks to have the costs order made against it in favour of Mr Barahona set aside and to have the Court order that each party pay its own costs of the appeal. Pacific contends that the order it seeks is mandated by the Workplace Injury Management and Workers Compensation Act 1998 (the WIM Act), s 346 and the Workers Compensation Regulation 2003 (the Regulation), regs 89-94. 3 Pacific sought Mr Barahona's consent to the costs order it seeks and gave notice of its intention to apply to the Court for such order should consent not be forthcoming. Mr Barahona did not respond to Pacific's request and has not filed any submissions in the Court in respect of the order now sought by Pacific. 4 Before dealing with Pacific's application, a question arises as to the basis upon which the Court is asked to act. In dealing with that question, the first consideration is what was sought by the parties. 5 In its notice of appeal, Pacific sought orders that the first respondent pay its costs both at trial and on appeal. However, in its amended notice of appeal there was no reference to any costs order. For the reasons we give below, that was undoubtedly because, under the legislation which governs costs on a claim for workplace injuries, neither party in this case had an entitlement to costs. The trial judge recognised this in her separate costs judgment in the matter. 6 Neither party made submissions on costs on the appeal, no doubt for the same reason, and the Court did not advert to costs in its reasons. Rather, it made the 'usual order' in accordance with the Uniform Civil Procedure Rules 2005 (UCPR), r 42.1, without giving consideration to whether such an order could be made. As we explain below, that rule does not apply to a claim for workplace injuries. Costs in such claims are governed by the WIM Act and the Regulation. No question of the Court's discretion is involved. 7 In its principal judgment, the Court gave the parties liberty to apply in respect of the orders it made. The liberty was granted in the following terms: "[172] We would make the following orders. There may be some complications in framing orders giving effect to these reasons, and we would also reserve liberty to the parties to apply within ten days if it is thought that the orders do not appropriately do so, preferably with agreed variation(s). We intend that Jigsaw and Pacific each bear its own appellate costs on the question of contribution between them."

The judgment then specified the orders made by the Court, including the following order: "Generally:

1. Reserve liberty to apply for variations in the orders as indicated in these reasons." 8 Pacific, in its written submissions, stated that its submissions seeking an order that each party bear its own costs were provided "pursuant to liberty to apply set out at [172] of the principal judgment". 9 There may be a question whether the liberty to apply granted in [172] extends to the order that Pacific now seeks. Nonetheless, the Court considers that Pacific is entitled to have the order it seeks, either pursuant to UCPR, r 36.17 (the 'slip rule'), or in the exercise of the Court's inherent jurisdiction, as both are explained and discussed in Newmont Yandal Operations Pty Ltd v J Aron Corporation and Goldman Sachs Group Inc [2007] NSWCA 195; (2007) 70 NSWLR 411. The Court acted unmindful of the WIM Act and the Regulation. We are satisfied that the order sought by Pacific may be made by the Court both in its inherent jurisdiction and pursuant to the slip rule.

The correct costs order 10 Mr Barahona was employed by Pacific and was injured in the course of that employment. In those circumstances, his claim for damages was governed by the Workers Compensation legislation, viz, the Workers Compensation Act 1987 (the WCA), the WIM Act and the Regulation. Pursuant to that statutory and regulatory regime, costs of proceedings are governed by the WIM Act, s 346 and the Regulation, Pt 19 (Costs), Div 3 (Costs recoverable in work injury damages matters), Subdivision 2 (Restriction on awarding of costs). 11 The WIM Act, s 346 provides: " 346 Costs

(1) This section applies to costs (including disbursements) payable by a party in or in relation to a claim for work injury damages, including court proceedings for work injury damages.

(2) The regulations may make provision for or with respect to the awarding of costs to which this section applies. The regulations may provide for the awarding of costs on a party and party basis, on a practitioner and client basis, or on any other basis.

(3) A party is not entitled to an award of costs to which this section applies, and a court may not award such costs, except as prescribed by the regulations under this Act or by the rules of the court concerned.

(4) In the event of any inconsistency between the provisions of the regulations under this section and rules of court, the provisions of the regulations prevail to the extent of the inconsistency." 12 The relevant clauses of the Regulation, in this case, are cls 89, 90, 91 and 94, which provide: " 89 Costs where claimant no less successful than claimant's final offer

If a claimant obtains an order or judgment on a claim that is no less favourable to the claimant than the terms of the claimant's final offer of settlement in mediation under the 1998 Act as certified by the mediator under section 318B of the 1998 Act, the court is to order the insurer to pay the claimant's costs on the claim assessed on a party and party basis.

90 Costs where claimant less successful than insurer's final offer or insurer found not liable

(1) If a claimant obtains an order or judgment on a claim that is less favourable to the claimant than the terms of the insurer's final offer of settlement in mediation under the 1998 Act as certified by the mediator under section 318B of the 1998 Act, the court is to order the claimant to pay the insurer's costs on the claim assessed on a party and party basis.

(2) If a claimant does not obtain an order or judgment on a claim (that is, if the court finds the insurer has no liability for the claim), the court is to order the claimant to pay the insurer's costs on the claim assessed on a party and party basis.

Except as provided by this Subdivision, the parties to court proceedings for work injury damages are to bear their own costs.

Where 2 or more defendants are alleged to be jointly or jointly and severally liable to the claimant and rights of contribution or indemnity appear to exist between the defendants, this Subdivision does not apply to an offer of settlement unless:

(a) in the case of an offer made by the claimant - the offer is made to all the defendants and is an offer to settle the claim against all of them, and

(b) in the case of an offer made to the claimant: (i) the offer is to settle the claim against all the defendants concerned, and (ii) where the offer is made by 2 or more defendants - by the terms of the offer the defendants who made the offer are jointly or jointly and severally liable to the claimant for the whole amount of the offer." 13 In Chubs Constructions Pty Ltd v Chamma [2009] NSWCA 98 Mathews AJA (Beazley and McColl JJA agreeing) observed, at [15], that these provisions of the Regulation "are mandatory in their terms and permit of no discretion". Her Honour continued: "The general fall-back position is asserted in cl 91, namely that parties in proceedings for work injury damages are to bear their own costs. Only if an offer is made which satisfies the provisions of cl 89 (in the case of a claimant's offer) or cl 90 (in the case of an insurer's offer) and cl 94 (if there is more than one defendant) can any other order be made. In that event the order which the court is required to make is that costs be paid on a party and party basis." 14 A mediation conference was held in this matter on 30 May 2007. In the Certificate of Mediation Outcome, the mediator certified that the parties had failed to resolve the dispute and that: "Neither the Claimant nor the Defendant were able to make any offers as there are multiple defendants, other than the employer, who are involved in the proceedings. These third parties were not prepared to participate in the mediation." 15 As no offers of settlement were made at the mediation, the Regulation, cl 91 applies. In Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62, the Court (Beazley, Giles and Macfarlan JJA) held that the WIM Act, s 346 and the clauses of the Regulation relevant to this judgment applied to proceedings in this Court relating to claims for work injury damages. 16 The Court thus should have ordered that Pacific and Mr Barahona were to bear their own costs. It had no power to make any other order and an order to that effect should be made. Because the Court's attention was not previously drawn to this matter, we consider Pacific should bear its own costs of making this application. Accordingly, we make the following orders: On Pacific's appeal (CA 40398/08):

1. Vacate order (2) made on 11 December 2009 and instead order: (2) The appellant, Pacific Steel Constructions Pty Limited and the first respondent, Luis Barahona, are each to pay it and his own costs of the appeal.

2. The appellant, Pacific Steel Constructions Pty Limited, is to bear its own costs of this application. **********

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