Sneddon v The Speaker of the Legislative Assembly

Judgment 1On 2 June 2011, judgment was delivered as follows:

1. Verdict and judgment for the plaintiff against the first defendant (the Speaker) in the sum of $429,165.96.
2. Verdict and judgment for the plaintiff against the third defendant (Mr Orkopoulos) in the sum of $438,613.75.
3. Verdict and judgment for the second defendant (the State) against the plaintiff. 2It is convenient to mention that Mr Orkopoulos did not defend the plaintiff's claim and default judgment was entered against him on 17 January 2011. The parties (the plaintiff, the Speaker and the State) accepted my invitation that any argument as to costs was to proceed by way of written submissions and submissions have been received from each party. 3The Civil Liability Act 2002 (CLA) applied to the plaintiff's claims against Mr Orkopoulos and the State, whereas the CLA did not apply to her claim against the Speaker which was a claim for work injury damages under the Workplace Injury Management and Workers Compensation Act 1998 (the WIM Act). Should the Speaker pay the plaintiff's costs? 4The plaintiff seeks an order against the Speaker that he pay the plaintiff's costs of the proceedings as agreed or assessed. Such an application would usually be uncontroversial as the prima facie principle is that costs follow the event. However, the plaintiff's claim against the Speaker was for work injury damages and s 346 WIM Act makes specific provision for an award of costs in claims for work injury damages including costs in court proceedings for such claims: Smith v Sydney West Area Health Service (No 2) [2009] NSWCA 62 at [11]. As the Court of Appeal said in Smith at [14]: "The effect of the WIM Act and the WC Reg is that the discretion conferred by the Civil Procedure Act, s 98 does not operate, and costs are governed by the WIM Act and the WC Reg. It should be added that the Uniform Civil Procedure Rules, Pt 42 relating to offers of compromise, also do not operate once a Certificate of Mediation has issued. In short, so far as costs are concerned (but subject to agreement between the parties), parties to court proceedings in a claim for work injury damages are fossilised in their respective positions at the conclusion of the mediation." 5The plaintiff and the Speaker had attended mediation and a Certificate of Mediation Outcome is annexed to the Speaker's submissions dated 16 June 2011. It is common ground that the plaintiff was no less successful than her final offer of settlement at the mediation. The Speaker, however, submits that reg 109 Workers Compensation Regulation 2010 (WCR) applies, so that the plaintiff is not entitled to an order for costs and the appropriate order is that the plaintiff and the Speaker bear their own costs. 6The Speaker's contention is that in the present proceedings there were two or more defendants alleged to be jointly and severally liable and Subdivision 2 did not apply to the plaintiff's offer of settlement as the requirements of subsections (a) and (b) of reg 109 (WCR) were not fulfilled. The Speaker submitted that reg 109 (WCR) prevents the plaintiff from relying on reg 104 (WCR). 7The plaintiff argued that should reg 109 (WCR) effectively oust the operation of Pt 17 Div 3 Subdiv 2 (WCR) Restriction on awarding of costs , then an award of no costs is not the result. Rather s 364(3) WIM Act would then permit the application of "the rules of the court". The rationale behind reg 109 (WCR) operating in this manner was said to be both "fair and logical", in that the potentially restrictive rules in Pt 17 Div 3 Subdiv 2 (WCR) do not apply when there are multiple tortfeasors "that make the compulsory mediation" process ineffectual. This was to be contrasted, the plaintiff put to me, with the capricious and unfair interpretation of the regulation suggested by the Speaker, namely that where there are multiple tortfeasors that make the compulsory mediation process ineffectual, the result is a prohibition on a costs order in favour of the successful plaintiff as against the unsuccessful work injury damages defendant. 8The plaintiff's "narrow interpretation" of reg 109 (WCR), the Speaker argued, ought not to be accepted. The Speaker submitted there is nothing in the wording of the regulation to suggest that its application ought to be limited to cases involving "multiple work injury damages defendants" (or, in other words, two employers). The Speaker contended that such a scenario was unlikely to exist. 9The parties did not refer to any authority to assist in the interpretation of reg 109 (WCR). 10Section 346 WIM Act is as follows: " C o sts (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." 11The relevant regulations for the purposes of s 346(3) WIM Act are found in Pt 2 Div 3 of the WCR. Reg 104 provides: "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." 12Reg 106 is also relevant: " Costs in other cases Except as provided by this Subdivision, the parties to court proceedings for work injury damages are to bear their own costs." 13Reg 108 provides: "Subdivision does not apply to ancillary proceedings This Subdivision does not apply to costs payable in or in relation to proceedings that are ancillary to proceedings on a claim for work injury damages, and a court is to award costs in such ancillary proceedings in accordance with the rules of the court." 14Reg 109 is as follows: " Multiple parties 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." 15It is evident that if the Speaker was the sole defendant, reg 104 (WCR) would apply and the plaintiff would be entitled to her costs "on the claim assessed on a party and party basis". But there are, other than the Speaker, two defendants, Mr Orkopoulos and the State neither of whom participated in mediation under Division 4 WIM Act. The plaintiff's claims against these defendants were not claims for work injury damages and the obligation under s 318A WIM Act to refer these claims for mediation before the commencement of court proceedings did not apply. 16I do not agree with the plaintiff's submission that should reg 109 (WCR) be found to apply in the present circumstances, then s 364(3) WIM Act would permit the application of the rules of the court. Reg 106 (WCR) states plainly that except as provided by subdivision 2, parties to court proceedings for work injury damages are to bear their own costs. 17Should Subdivision 2 not apply to the offers of settlement made by the plaintiff and the Speaker as a consequence of the operation of reg 109 (WCR), then the plaintiff and the Speaker being parties to court proceedings for work injury damages are to bear their own costs: reg 106 (WCR). Reg 109 (WCR) is to be contrasted with reg 108 (WCR), which provides that subdivision 2 does not apply to ancillary proceedings "and a court is to award costs in such ancillary proceedings in accordance with the rules of the court " (italics added). 18I do think, however, that reg 109 (WCR) does not apply where the other defendants (as in the present case) are not parties to court proceedings for work injury damages. 19For the operation of reg 109 there must be "2 or more defendants " alleged to be jointly or jointly and severally liable to the claimant . Moreover, subsections (a) and (b) of the regulation require, respectively, an offer made by the claimant or an offer made to the claimant . 20Section 4(1) WIM Act includes the following definitions: " Claim means a claim for compensation or work injury damages that a person has made or is entitled to make. Claimant means a person who makes or is entitled to make a claim." 21Court proceedings for work injury damages are found in Chapter 7 Part 6 of the WIM Act. Section 311 is as follows: " Interpretation In this Part: " claimant " means a claimant for work injury damages . " defendant " means the person against whom proceedings for the recovery of work injury damages are commenced or are to be commenced." 22Although s 346 WIM Act does not fall within Part 6, it appears in Chapter 7 and applies to costs "in relation to a claim for work injury damages, including court proceedings for work injury damages". 23There is no reason to think that the terms claimant and defendant in reg 109 (WCR) do not have the same meaning as that provided in s 311 WIM Act. Indeed, s 11 Interpretation Act 1987 provides that words that occur in an instrument have the same meaning as they have in the Act under which the instrument is made. In the present case, there are not two or more defendants against whom proceedings for the recovery of work injury damages were commenced by the claimant . The requirement for Reg 109 to have application, being "2 or more defendants ...alleged to be jointly or jointly and severally liable to the claimant " (italics added) is not fulfilled. In my opinion, reg 109 (WCR) does not impact upon the plaintiff's claim for costs against the Speaker. It would make little sense and indeed lead to injustice, if reg 104 (WCR) did not operate because the final settlement offers in mediation under the WIM Act were not made to parties to whom the WIM Act did not apply. Furthermore, the definition of the term employer in s 4 WIM Act embraces the possibility of there being more than one employer. 24I conclude that the Speaker is to pay the plaintiff's costs assessed on a party and party basis: Reg 104 (WCR). Should the plaintiff pay the State's costs? 25The plaintiff was unsuccessful against the State but submits that, in the unusual circumstances of this case, the State should be ordered to bear its own costs or alternatively the third defendant, Mr Orkopoulos should pay the State's costs by the making of a 'Sanderson' order: Sanderson v Blyth Theatre Co [1903] 2 KB 533. 26The unusual circumstances were said to be that on one view, each of the three defendants were part of the wider enterprise that is the State of New South Wales, that it was reasonable to join the State as the State could have represented the interests of both the second and third defendants and an accurate prediction of the State's vicarious liability was made more difficult by Mr Orkopoulos' lack of participation in the proceedings. Furthermore, the application of the Crown Proceedings Act 1988 and the Law Reform (Vicarious Liability) Act 1983 to the facts in this case, were without direct legal precedent. The plaintiff contended that this was a matter that required judicial determination to assist the State to properly understand this legislation. It was further put that to order the plaintiff to pay the costs of the State, would have the practical effect of denying her much of the benefit of the verdict against the Speaker, who is but another branch of the Crown. Another submission was that Mr Orkopoulos was the primary wrongdoer, whose failure to participate in the case or make any offers, contributed to the plaintiff's reasonable decision to continue its case against the State. 27The State submitted that the usual order would be that the plaintiff pays its costs and there were no legal grounds for departing from the usual order. The State contended that it clearly and comprehensively explained in its defence why the plaintiff did not have a claim. Whilst the cause of action was novel, no reservation as to the application of the relevant legislation was expressed by the plaintiff's counsel at any stage of the hearing nor had it been suggested that the proceedings were being brought against the second defendant simply to 'clarify the law'. Joining the State to the proceedings (and seeking substantial damages against it unrestrained by the WIM Act and the costs provisions of the WC Regulations) added significantly to the complexity of the litigation. The State opposed the making of a 'Sanderson ' order. 28The court's power as to costs is found in s 98 Civil Procedure Act 2005 (CPA) and Pt 42 of the Uniform Civil Procedure Rules 2005 (UCPR). The general rule is that costs follow the event and are assessed on an ordinary basis: UCPR r 42.2. In the exercise of its discretion, the court may make orders other than that costs follow the event or that costs be assessed on an ordinary basis: UCPR rr 42.1 and 42.2. 29Costs are in the discretion of the court. This discretion must be exercised judicially. In X and Y (by her Tutor X) v PAL (Court of Appeal 7 June 1991, unreported), Clarke JA observed that "the overriding objective must be to make an order which is appropriate to the justice of the case". When discussing the prima facie principle that costs follow the event in Furber v Stacey & Anor [2005] NSWCA 242, Hodgson JA said at [31]: "However, this principle is subject to the ability of the Court...to make such orders as it appears to the Court should be made, as the justice of the case may require." What orders do the justice of the case require? 30The general rule is that costs will usually be ordered in favour of the successful party. It is, however, true as the plaintiff contends that the case raised difficult questions of the statutory construction that were without direct legal precedent and the court's decision might be of assistance to the State. The fact that the proceedings against the State involved an analysis of statutory provisions that might prove helpful in future cases is a matter to be taken into account but by itself does not deprive the State, the successful party, of its costs. 31It is to be noted that the plaintiff's claim against the State was not confined to the statutory argument but was also based upon an unsuccessful contention that the default judgment entered against Mr Orkopoulos constituted admissions, which bound the State. I should also add that I do not understand how the plaintiff's ability to accurately predict the likelihood of the success of its claim against the State was made more difficult by Mr Orkopoulos' decision not to participate in the proceedings. 32The plaintiff's claim was a private action for damages. There was a real advantage to her in joining Mr Orkopoulos and the State as defendants. The plaintiff's claims against these defendants included aggravated and exemplary damages, which could not be claimed against the Speaker. Furthermore, common law damages were to be assessed for the claim of intentional tort and damages that otherwise arose in the plaintiff's claims against Mr Orkopoulos and the State were governed by the CLA and not by the more restrictive provisions of the WIM Act. Unquestionably, the plaintiff's decision to join the State, added to the complexity of the proceedings. 33I give little weight to the plaintiff's argument that the imposition of the State's costs would be particularly onerous as her entitlement to costs against the Speaker is restricted by the WCR. It is well known that different cost regimes apply under the WCR and the CLA. Nevertheless, it was the plaintiff's decision to embark upon litigation with the Speaker and the State as defendants. 34I do not think that the contention that the Speaker and the State are "part of the wider enterprise that is the State of New South Wales" is of significance when considering the overriding objective to do justice. No submission is made that these defendants should not have been separately represented. Different considerations applied to the plaintiff's claims against the Speaker and the State, and their separate representation was justified. 35I conclude, that the justice of the case requires that the State, the successful party, be entitled to its costs. 36The question remains whether the justice of the case requires the making of a 'Sanderson' order so that Mr Orkopoulos, the unsuccessful defendant, is ordered to pay the costs of the successful defendant, the State, directly to the State. In Furber v Stacey , Einstein J discussed the principles applicable to the making of a 'Bullock' order at [116] - [117]. Those principles also apply to a 'Sanderson' order. Einstein J said: "To a certain extent analogous considerations to those requisite to be taken into account in relation to the present proceedings have fallen for analysis in terms of the principled approach to the making of Bullock orders [where a plaintiff succeeds against one defendant but fails against another]. Such an order is for the unsuccessful defendant to bear the costs payable by the plaintiff to the successful defendant: It is insufficient to justify the making of a Bullock order, to show that it was reasonable for the plaintiff to bring the proceedings against both defendants; It is sufficient to justify the making of such an order if: (a) the costs have been reasonably and properly incurred by the plaintiff as between it and the unsuccessful defendant: Johnson Tyne Foundry v Maffra Corporation (1948) 77 CLR 544 at 572-573 per Williams J and Gould v Vaggelas (1985) 157 CLR 215 at 229-230 per Gibbs CJ; and (b) the conduct of the unsuccessful defendant has been such as to make it fair to impose some liability on it for the costs of the successful defendant or the conduct of the unsuccessful defendant shows that the joinder of the successful defendant was reasonable and proper to ensure the recovery of the damages sought: Fennel v Supervision and Engineering Services (1988) 47 SASR 6 at 7-8, 15. A Bullock order may for example be made in circumstances in which a defendant (who was ultimately successful) can be seen to have been properly joined [as in Lackersteen v Jones (No.2) (1988) 93 FLR 442 where the unsuccessful defendant was a principal who denied the authority of its agent who was then joined and became the successful defendant or if the unsuccessful defendant informed the plaintiff that it should look to the successful defendant for its remedy: cf Altamura v Victorian Railways Commissioners (1974) VR 33; Gould v Vaggelas ; Fennel v Supervision and Engineering Services ]." 37It is unnecessary to form a view as to whether it was reasonable for the plaintiff to bring proceedings against the State and Mr Orkopoulos. I am not persuaded, however, that the third defendant's "failure to participate in the case or make any offers, contributed to the plaintiff's reasonable decision to continue its case against [the State]": PWS 8 June 2011 at par 15. There is nothing, in my opinion, in the conduct of Mr Orkopoulos as to make it fair to impose some liability on him for the State's costs or that his conduct showed that the joinder of the State was reasonable and proper to ensure the recovery of the damages sought. The Registrar of the court received a letter from Mr Orkopoulos on 10 November 2010 in which he advised that he was "not in any position to be involved in the proceedings" and had "no interest in [the plaintiff's] claim". He was entitled not to defend the claim and the plaintiff entered a default judgment against him. I do not accept that his failure to participate in the proceedings amounts to conduct of a kind that would give rise to a 'Sanderson' order. 38I conclude that the plaintiff is to pay the State's costs assessed on an ordinary basis. Should Mr Orkopoulos be ordered to pay the plaintiff's costs? 39The plaintiff seeks an order against Mr Orkopoulos that he pay "the plaintiff's costs of these proceedings as agreed or assessed". The justice of the case requires that the plaintiff be entitled to the costs that she has reasonably and properly incurred against him. As has been mentioned at [2] above, Mr Orkopoulos took no part in the proceedings and default judgment was entered against him on 17 January 2011. He is not responsible for the length or the complexity of the defended hearing and I do not propose to make the order in the terms sought. Such an order would be unjust. 40The plaintiff is entitled to costs on the entry of default judgment in accordance with UCPR r 16.7. Notwithstanding the entry of default judgment, the court, however, was obliged to assess damages under the CLA that the plaintiff was entitled to recover from Mr Orkopoulos. 41It is difficult to be precise as to the time in the case that was devoted to this issue but it was not more than half a day (including submissions). An order appropriate to the justice of the case requires that Mr Orkopoulos pay the plaintiff's costs for a half day hearing, plus preparation on this specific issue. Orders 42For the foregoing reasons, I make the following orders: (1)The first defendant (the Speaker) is to pay the plaintiff's costs on a party and party basis. (2)The plaintiff is to pay the costs of the second defendant (the State) on an ordinary basis. (3)The third defendant (Mr Orkopoulos) is to pay the plaintiff's costs for a half day hearing, plus preparation on the specific issue of the assessment of damages under the CLA. Such costs are to be assessed on an ordinary basis. He is also to pay the plaintiff's costs on the entry of default judgment in accordance with UCPR r 16.7.