Palmer v Allianz Australia Workers' Compensation

Costs

As between the plaintiff and defendant, an issue arises as to costs.
The plaintiff served a pre-filing statement in which he claimed: (i) Work injury damages pursuant to the Workers Compensation Act, 1987 (NSW) totalling $1,416,026.00; (ii) Interest pursuant to the Workers Compensation Act, 1987 (NSW); and (iii) Costs.
The defendant did not respond to the pre-filing statement, and no mediation occurred. As such, pursuant to Regulation 97 of the Workers Compensation Regulation 2016 (NSW) (the "Regulations"), the plaintiff is deemed to have made an offer in "the amount of damages specified in the pre-filing statement served under section 315 of the 1998 Act" (Reg 97(1)(e)(ii)), and the defendant is deemed to have made an offer of nil (Reg 97(1)(d)).
Costs are only payable if the plaintiff achieved the Court's 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" (Reg 94) (the "Favourability Equation").
The plaintiff's initial position was that its pre-filing claim in the sum of $1,416,026.00 was exceeded by damages ordered by the Court of $1,553,000.10; and as such, the entitlement to costs is enlivened. It should be noted that the figure of $1,553,000.10 includes the sum of $142,227.63 in interest. The plaintiff's initial position was that, as at the date of the pre-filing statement, the plaintiff's right to interest was yet to be determined under section 151M of the Workers Compensation Act 1987 (NSW), and as such, the interest component of the pre-filing offer should have attributed to it the value of nil.
The defendant's position was that, in determining the issue as to whether the curial result was "more favourable" than the pre-filing statement, it was necessary to compare like with like, or to use the well-tried analogy, compare "apples with apples".
The defendant contended that in adopting this approach, either: 1. interest is to be treated as nil in the pre-filing stage of the equation and interest on judgment is to be similarly disregarded; or 2. alternatively, interest must be included at both temporal points of the Favourability Equation.
The plaintiff, without abandoning its principal position, provided further written submissions on the defendant's "apples with apples" approach. He presented a calculation which demonstrated that the interest claimed, as included on the pre-filling statement claim, was capable of quantification; it amounted to $51,804.20, being interest payable in respect of past economic loss to that date. He submitted that when this interest figure is added to the pre-filing statement claim, the curial outcome is still more favourable to him than the pre-filing claim.
Thus, the plaintiff submitted that comparing "apples with apples", on either approach, it is entitled to a costs order.
The defendant, as I have indicated, urged on the Court the need to compare like with like. Thus, in a practical sense, the parties had come together on this point. At the end of the day, the defendant departed from the plaintiff insofar as it said that as there was no determined entitlement to interest as at the time of the pre-filing statement, the interest to be applied at both temporal points of the Favourability Equation is the same; namely, the interest as determined by the Court on judgment. Adopting this approach, it said that the plaintiff does not succeed on the Favourability Equation, and it is not entitled to its costs.
I am informed that there is neither authority, nor point of principle, to guide the Court in relation to this issue. That seems to be so, though I should note the decision of Scotting DCJ in Fuller v Avichem Pty Ltd [2019] NSWDC 125, where His Honour held that interest should be taken into account in the Favourability Equation. I respectfully agree with His Honour that interest should be taken into account, as inter alia, the interest clearly is part of the claim in the pre-filing statement.
In my view, the plaintiff's alternate approach should be accepted. To achieve a comparison of "like with like", it is in my opinion necessary to achieve comparability, not only in qualitative and quantitative terms, but also in temporal terms; by which I mean that interest must be determined as at both the date of the filing of the pre-filing statement, and the date of judgment. While it is true that at the pre-filing stage, the plaintiff's entitlement to interest has not been established by judgment, its quantum, if established, is capable of calculation at this time.
It follows that I accept the alternate submission of the plaintiff, and on that basis the plaintiff has achieved a curial outcome more favourable than the pre-filing offer, and as such, is entitled to its costs.

Jurisdictional Limit of the Court in respect of the Cross Claim

In respect of the first cross claim, Downer, the first cross defendant, submitted that, notwithstanding that the claim between the plaintiff and the defendant (the "Principal Claim") was not subject to the Court's usual jurisdictional limit, it being a work injury damages claim for the purposes of section 44(1)(d1) of the District Court Act 1973 (NSW) (the "District Court Act"), the cross claim brought by Allianz against Downer was subject to the Court's usual jurisdictional limit of $750,000.
This was so, it was argued, as notwithstanding the obvious connection between the work injury damages claim and the cross claim, the cross claim sought to exercise a statutory right to contribution arising out of the provisions of section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (the "LRMPA"), and as such, the cross claim was not a work injury damages claim (South West Helicopters Pty Ltd v Stephenson [2017] NSWCA 312 at [187]-[188]).
In support of this contention, Downer drew attention to the use of the nouns "action" and "claim" in section 44(1) of the District Court Act, as suggesting that the legislature intended that there was a distinction between the two concepts. It said that the use of "action" in the chapeau to the section, and "claim' in section 44(1)(d1), shows that they are not synonymous.
Downer also drew attention to section 51 of the District Court Act, where in the context of consent to extended jurisdiction, the expressions "action" and "cross claim" are again treated separately.
Finally, it submitted that pursuant to section 22(3) of the Civil Procedure Act 2005 (NSW) (the "Civil Procedure Act"), a cross-defendant has the same rights in the cross claim as if it were sued separately. This, it contended, meant that it could assert the jurisdictional limit by way of defence to an action for contribution, if such proceedings were commenced separately from the principal proceedings.
Allianz submitted that the solution to the issue raised by Downer's contentions can be found in the proper construction of section 5 of the LRMPA. It said that a central element of the power to make orders under section 5, is a finding that the joint tortfeasor was liable "in respect of the same damage" as the defendant. The argument proceeded that, as a consequence, if the Court has unlimited jurisdiction over the claim between the plaintiff and the defendant, and it finds that the cross claim is in respect of the "same damage", it follows that the Court has unlimited jurisdiction over the cross claim.
Allianz's argument based on section 5 of the LRMPA, can be expressed as saying that the statutory right of action created by the section is "parasitic" on the principal claim; in this case, the work injury damages claim. As such, the LRMPA right to contribution cannot exist independently of the cause of action giving rise to the tort to which the section applies.
The parties were in agreement that there was no binding authority to assist the Court. Downer drew attention to two single instance judgments, being Randstad Pty Ltd v Nasralla [2016] NSWSC 232 and The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194. Both of these proceedings concerned procedural applications for the transfer of proceedings between courts, in circumstances where a final determination of the juristic nature of the cross claims was unnecessary. I do not, as a consequence, consider myself bound to follow them, either as a matter of stare decisis, or as a matter of judicial comity. Downer did not submit to the contrary.
Certain of Downer's arguments can be readily met. While section 44 of the District Court Act refers separately to a "claim" and "action", suggesting they are not synonymous, it seems clear to me that the legislature intended that the "claim" is to be a part of an "action", not a notion separate from it. This can be seen from the fact that the chapeau to the section refers to an "action" as encompassing various "claims" (see for example, sections 44(1)(c1), 44(1)(d), 44(d1), 44(2)).
I do not see the section 51 arguments as advancing the matter.
Downer's argument based on section 22 of the Civil Procedure Act, proceeds from the unstated premise that if it had been sued for contribution independently of the principal proceedings, it could have as a matter of course, pleaded the jurisdictional limit defence. It said that it would be an anomalous situation if that right was lost because the proceedings were heard together. I believe that analysis begs the question as to whether the jurisdictional limit defence in fact would have been available to it in those circumstances.
I do not believe that Downer's contention is correct for reasons which I shall set out below. If the argument is correct however, it would provide a powerful incentive for defendants to not cross claim in principal proceedings, await the outcome in the principal proceedings, and commence fresh proceedings in whichever court they chose, having regard to the quantum of the verdict in the principal claim. This would not be an outcome which in my view would sit comfortably with either the provisions of section 56 of the Civil Procedure Act, or indeed section 22 of the same Act.
It seems to me that a cross claim for contribution pursuant to section 5 of the LRMPA, which cannot exist absent an established right in a plaintiff to damages in tort, must take its character from those proceedings, and thus for present purposes, the quality of the principal proceedings' description as a work injury damages claim in respect of which the Court has jurisdiction without limits, provides definition to the cross claim, which is parasitic to it.
The evident purpose of section 22 of the Civil Procedure Act is to bind the party served as a cross defendant to the judgment in the principal proceedings (section 22(3)(b)(ii)). Its design is to create a res judicata between the plaintiff, the defendant and the third party. This has been accepted since the third party procedure was introduced under the Judicature Act 1875 (UK); see Insurance Exchange of Australasia v Dooley (2000) 50 NSWLR 222 at 226.
Cross claims being heard with principal proceedings pursuant to section 22 of the Civil Procedure Act, have been a well-known feature of litigation in this state for a lengthy period, indeed their occurrence is a commonplace. When the legislature saw fit to vest unlimited jurisdiction in this Court in relation to work injury damages claims, it must be taken to be aware of the longstanding availability of the third party procedures embodied in section 22 of the Civil Procedure Act. It is a well-known principle of statutory interpretation, that where the Parliament sees fit to invest a Court with jurisdiction, it is intended to include all of the procedure of the Court. The legislature is said to be taken to take the Court "as it finds it with all its incidents" (Electric Light & Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 560).
To similar effect, in Knight v FP Special Assets Ltd (1992) 174 CLR 178, at 205, Gaudron J stated: It is contrary to long-established principle and wholly inappropriate that the grant of power to a court (including the conferral of jurisdiction) should be construed as subject to a limitation not appearing in the words of that grant (82) See Hyman v. Rose (1912) AC 623, at p 631; FAI General Insurance Co. Ltd. v. Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268, at p 290. Save for a qualification which I shall later mention, a grant of power should be construed in accordance with ordinary principles and, thus, the words used should be given their full meaning unless there is something to indicate to the contrary. Powers conferred on a court are powers which must be exercised judicially and in accordance with legal principle. This consideration leads to the qualification to which I earlier referred. The necessity for the power to be exercised judicially tends in favour of the most liberal construction, for it denies the validity of considerations which might limit a grant of power to some different body, including, for example, that the power might be exercised arbitrarily or capriciously or to work oppression or abuse.
Her Honour's statement was cited with the evident approval of Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ in Mansfield v Director of Public Prosecutions for Western Australia (2006) 226 CLR 486, at [10].
In this case, it is my view that the legislature should be taken to have intended that when it invested this Court with an unlimited jurisdiction in respect of work injury damages claims, it intended that such jurisdiction be exercised in accordance with its usual procedures and powers, and thus would extend to determining cross claims validly brought in respect of work injury damages claims without monetary limit.
As I have previously indicated, the contrary conclusion would lead to a tendency to encourage defendants to not cross claim in such matters at the time of the principal suit, but rather bring third party actions after the verdict in the principal proceedings was known. This outcome would be contrary to the obvious intent of section 22 of the Civil Procedure Act and the "Overriding Purpose" as explained in section 56 of that Act. I do not believe that such an intention should be attributed to the legislature.
For these reasons, it is my view that the "Jurisdictional Limit" of the Court (section 4 of the District Court Act) is not applicable to the cross claim in these proceedings.

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