Spotless Services Australia Ltd v Herbath & Anor [2009] VSCA 285

Court of Appeal (Vic)|2009-12-09|Before: BUCHANAN and MANDIE JJA and BYRNE AJA

Herbath v Spotless Services Australia Ltd & anor (Unreported, County Court of Victoria at Geelong, Judge Howie, 26 May 2008)

NEGLIGENCE - Plaintiff claimed damages against two defendants (the employer and the occupier of premises) - Plea of contributory negligence abandoned by defendant employer but maintained by defendant occupier - Jury verdict in favour of plaintiff against both defendants but finding of contributory negligence against plaintiff - Whether defendant employer could take advantage of finding of contributory negligence.

STATUTES - Construction - Accident Compensation Act 1985 (Vic) s 134AB(28) - Plaintiff obtained judgment against both defendants for less than 90 per cent of her statutory counter offer under Accident Compensation Act s 134AB(12) - Defendant occupier ordered to pay plaintiff's costs - Whether plaintiff prevented from obtaining such order due to the operation of s 134AB(28)(d) that required 'each party' to bear its own costs.

2 These appeals arise from a County Court proceeding in which the plaintiff ('Herbath') claimed damages for personal injuries. Herbath made the claim against her employer, the first defendant ('Spotless'), and against the occupier of the premises in Tottenham where the incident occurred, the second defendant ('Feltex'). Herbath was employed by Spotless as a chef and, acting in the course of that employment on or about 7 October 2002, was carrying boxes while ascending stairs at the premises when she slipped and fell and suffered injuries.

3 The appeals raise questions concerning the effect as between Spotless and Feltex of the jury's verdict as to contribution and contributory negligence and concerning the application of s 134AB(28) of the Accident Compensation Act 1985 (Vic) ('the Act') in relation to the costs of the parties to the proceeding.

4 The proceeding came on for trial before a judge and jury. At trial, Spotless withdrew a pleaded allegation of contributory negligence against Herbath but Feltex maintained such an allegation.

5 On 12 May 2008, the jury by its verdict answered questions as set out below:[1]

Was there negligence by [Spotless] which was a cause of [Herbath's] injury, loss and damage?

Was there negligence or breach of statutory duty by [Feltex] which was a cause of [Herbath's] injury, loss and damage?

In what amount do you assess [Herbath's] damages for pain and suffering?

In what amount do you assess [Herbath's] damages for pecuniary loss?

Was there contributory negligence on the part of [Herbath] which was a cause of [Herbath's] injury, loss and damage?[2]

In what percentage is it just and equitable, having regard to [Herbath's] contributory negligence, that [Herbath's] damages be reduced?

By what percentage do you assess the contribution of [Spotless]?

By what percentage do you assess the contribution of [Feltex]?

6 On 16 May 2008, having had time to consider the above verdict, the parties agreed and advised the judge that:

(a) Herbath was entitled to damages by way of interest in the sum of $20,000;

(b) Herbath had received weekly payments of compensation under the Act of $54,659;

(c) a statutory offer of 'nil' had been made on 9 August 2006 by the agent insurer for the Victorian Workcover Authority pursuant to s 134AB(12)(b) of the Act;

(d) on 15 August 2006, Herbath had made a statutory counter offer pursuant to s 134AB(12)(c) of the Act in the sum of $360,000 plus retention of weekly payments and make-up pay;

(e) the judgment obtained by Herbath was less than 90% of her statutory counter offer and she could not therefore obtain an order for costs against Spotless as a result of s 134AB(28)(d).

1"> 7 After hearing argument upon matters arising from the foregoing in respect of which there was no agreement, the judge made a number of rulings as follows:

(i) it was not appropriate to reduce the judgment against Spotless by 5% representing the jury's assessment of contributory negligence;

(ii) it was appropriate to make an order for costs against Feltex;

(iii) the indemnity order between Spotless and Feltex should extend to the costs the subject of the order against Feltex.

8 As a result, the County Court made the following orders:

Judgment for [Herbath] against [Spotless] in the sum of $318,858, being damages of $353,517...reduced pursuant to section 134AB(25) of [the Act] by the sum of $54,659 being the amount of compensation paid, plus the sum of $20,000 being damages in the nature of interest.
Judgment for [Herbath] against [Feltex] in the sum of $302,915 being damages of $353,517...reduced pursuant to section 134AB(25) of [the Act] by the sum of $54,659 being the amount of compensation paid, plus the sum of $20,000 being damages in the nature of interest, the balance being further reduced pursuant to section 26(1)(b) of the Wrongs Act 1958 by the sum of $15,942 in accordance with the verdict of the jury.
[Feltex] pay [Herbath's] costs on Scale D of the County Court Rules ...[3]
Stay of 14 days on payment of judgment and costs.
[Spotless] indemnify [Feltex] to the extent of sixty per cent of the judgment against [Feltex] set out in paragraph 2 herein and of the costs as ordered in paragraph 3 herein.
[Feltex] indemnify [Spotless] to the extent of forty per cent of the judgment against [Spotless] set out in paragraph 1 herein.

9 Spotless appealed against paras 1, 3 and 5 of the above final orders on the following grounds:

The learned primary judge erred in law by misconstruing and/or failing to apply s 134AB(28)(d) of the Act in that he ordered the worker's [Herbath's] costs to be paid by a party to the proceeding [ie Feltex] notwithstanding that the judgment obtained in the proceeding was an amount that was more than the statutory offer under s 134AB(12) of the authority but less than 90% of the worker's statutory counter offer under that subsection.
The learned primary judge erred in law by misconstruing and/or failing to apply s 134AB(28)(d) of the Act in that he ordered that [Spotless] indemnify [Feltex] to the extent of 60% of the worker's costs of the proceeding ordered to be paid by [Feltex] - [this ground was abandoned].
The learned primary judge erred in law by failing to reduce the damages verdict when entering judgment against [Spotless] by 5% contributory negligence pursuant to s 26(1)(b) of the Wrongs Act 1958.

10 Feltex appealed against paras 3 and 6 of the above final orders on the following grounds:

In ordering [Feltex] to pay [Herbath's] costs the learned trial judge erred in failing to apply s 134AB(28)(d) of the Act which required each party to bear their own costs because [Herbath] obtained a judgment that was less than 90% of her statutory counter offer under s 134AB(12).
His Honour misconstrued s 134AB(28)(d) of the Act.
His Honour erred in ordering [Feltex] to indemnify [Spotless] to the extent of 40% of the judgment against [Spotless] in the sum of $318,858 and should have ordered [Feltex] to indemnify [Spotless] to the extent of 40% of the judgment against [Feltex] namely, $302,915.
His Honour erred in ordering [Feltex] to make any contribution to [Spotless] in respect of the amount of $15,942 by which [Herbath's] judgment against [Feltex] had been reduced for [Herbath's] contributory negligence.

11 This ground raises the question whether the judge was correct in failing to reduce the amount of damages adjudged to be payable by Spotless by 5 per cent for Herbath's contributory negligence.

12 In his ruling, the judge noted that Spotless had withdrawn its allegation of contributory negligence and that the case that went to the jury upon which its verdict was sought was that Spotless made no allegation of contributory negligence against Herbath, whereas Feltex maintained its allegation of contributory negligence contending that, as against Feltex, Herbath failed to take care for her own safety by carrying the boxes up the steps in circumstances 'where she deprived herself of a proper lookout of the step'. His Honour said that it was fundamental to an assessment of contributory negligence under s 26(1)(b) of the Wrongs Act that it required a comparison of the responsibility of the claimant (on the one hand) and the tortfeasor alleging contributory negligence (on the other hand). The judge said that the comparison of culpability that had taken place had been confined to a comparison of the culpability of Herbath and Feltex, recognising that the standard of care required of Feltex as occupier was distinct and different from the standard of care required of Spotless as employer of Herbath. It was upon that comparison that the jury determined Herbath's share in the responsibility for the damage and the extent to be considered just and equitable by which the recoverable damages should be reduced. His Honour noted that Spotless had relied upon the decision of the New South Wales Court of Appeal in Barisic v Devenport[4] but he said that that case differed in one important respect in that each of the defendants in that case had alleged contributory negligence by the plaintiff .

13 The judge concluded that s 26(1)(b) of the Wrongs Act permitted, if not required, judgments in different amounts against different defendants in circumstances where one defendant had alleged no failure by the plaintiff to take reasonable care and the jury had only to consider such failure alleged by the other defendant against the plaintiff.

14 On appeal, Spotless again relied on Barisic v Devenport, and subsequent authorities to the same effect, as establishing the propositions that (i) where a plaintiff proceeded against two or more concurrent tortfeasors, the extent to which the plaintiff's damages should be reduced on account of his own negligence should be that which was just and equitable with regard to his departure from the standard of the reasonable man and (ii) the comparison is between the plaintiff's fault on the one hand and the combined fault of the defendants, viewed as a unit on the other - the comparison was not of the culpability of the plaintiff and the defendants individually.

15 Spotless emphasised what was said by Samuels JA in Barisic,[5] namely, that the liability of concurrent tortfeasors causing the same damage was 'in solidum' each of them being responsible to make good the whole of the damage caused and that, in relation to contributory negligence, the invariable practice in both the United Kingdom and in Australia had been to regard the plaintiff as one unit and the defendant concurrent tortfeasors as another, and then to compare the plaintiff's blameworthiness with the aggregate blameworthiness of the defendants, no endeavour being made to balance the plaintiff's responsibility against that of each defendant. The submissions referred to the various reasons given by Samuels JA for concluding that the applicable statutory provisions were to be interpreted in this way. It was submitted that this Court should follow Barisic unless convinced that it was 'plainly wrong'.[6]

16 Spotless submitted that the judge's ruling was inconsistent with the reasoning in Barisic and that the only way in which the ruling could be sustainable was if Spotless was to be taken to have irretrievably waived its entitlement to the benefit of any jury verdict of contributory negligence but this had not been contended for, nor was it open. Spotless submitted that, subject to questions of prejudice, adjournments and costs, it was permissible for it to have changed its position at any time up until the entry of judgment.[7]

17 Notwithstanding the foregoing submissions, Spotless recognised that there were a number of cases that appeared to be authority for the proposition that a defendant who failed to plead contributory negligence could not rely upon it. Spotless recognised that those cases needed to be distinguished but submitted that they could be.

18 It is convenient to go immediately to those cases.

19 In Fookes v Slaytor,[8] the plaintiff, while driving at night, came into collision with the unlighted trailer of an articulated vehicle parked by the side of the road as a result of which he suffered personal injuries. He brought an action for damages for negligence, relevantly, against the driver of the articulated vehicle. The driver did not deliver a defence and did not appear at the trial. The judge found that the defendant had been negligent but that the plaintiff's own negligence had contributed to the accident and that his damages should be reduced to the extent of one-third. The Court of Appeal held that, as contributory negligence had not been specifically pleaded by way of defence, the judge had erred in finding that the plaintiff's negligence had contributed to the accident. The Court of Appeal considered whether, in the absence of a plea of contributory negligence, a court could make a finding that there was such negligence on the part of the plaintiff and, after referring to such authority as there was on the subject, concluded that a court could not. Spotless submitted that the case was distinguishable because unlike the present case, no issue of contributory negligence had been raised.

20 In Brown v Heathcote County Council (No. 2),[9] the plaintiffs had built a house on land near the east bank of the Heathcote River and their house was flooded in consecutive years by overflow from the river. They brought proceedings against the County Council and the Drainage Board claiming damages. The plaintiffs failed against the Council but succeeded against the Drainage Board which was found negligent in all the circumstances. The question of contributory negligence had been pleaded and argued by the Council but not by the Board. In closing submissions counsel for the Board referred to the negligence of the plaintiffs as owner/builders. The Court held that contributory negligence had to be specifically pleaded and refused to allow an amendment to the Board's pleadings to rely upon it.

21 Hardie Boys J said[10] that contributory negligence was an issue in the case but only between the plaintiffs and the Council. No evidence had been called by the Board and there was nothing in the cross-examination of the plaintiff's witnesses by the Board that specifically put contributory negligence in issue between the plaintiffs and the Board and that, accordingly, the Board was only entitled to raise contributory negligence by obtaining an amendment to its defence. On that question, it was contended by the Board that the issues had been canvassed and that the trial would not have been run any differently if the plea had been raised at the outset by the Board as well as by the Council. Hardie Boys J said[11] that he would have been disposed to accept that contention but for one consideration, the determination of what was just and equitable having regard to the plaintiff's share of responsibility could only be made by balancing the conduct of the plaintiff with the conduct of all defendants said to be at fault and 'the extent of the plaintiffs' contribution had they succeeded against [the Council] alone would not necessarily be the same as it would be were [the Board], which I have held solely liable, now entitled to raise the defence' and '[w]hilst the plaintiffs have had full opportunity to put before me every consideration relevant to determining the extent of contribution as between themselves and [the Council], the same cannot with certainty be said of any apportionment between themselves and [the Board]'. The amendment was refused.

22 Spotless submitted that the reasoning about the approach to contributory negligence in Brown v Heathcote County Council was contrary to what was said in Barisic.

23 In Christie v Bridgestone Australia Pty Ltd,[12] a worker sued his employer for damages in negligence and the employer denied liability but did not plead contributory negligence nor raised that issue in the course of the trial. The trial judge apportioned liability and the Full Court of the Supreme Court of South Australia held that he was not entitled to do so in the absence of a plea of contributory negligence. The Court rejected a submission that the court was obliged under the statute to apportion liability whether contributory negligence was pleaded or not, further noting that leave had not been sought nor any argument addressed below on the question of contributory negligence. Spotless pointed out that in that case, unlike the present, contributory negligence was not in issue at all at the trial.

24 In my view, the authorities establish that a defendant generally cannot rely upon a defence of contributory negligence without having specifically pleaded the same, nor should a court apportion liability in the absence of such plea. The only relevant exception is no doubt where, in the absence of a specific plea, the parties have in the way that the case has been conducted put the matter in issue at trial. In the present case, Spotless abandoned its plea of contributory negligence and conducted its case on that basis.

25 Accordingly, Spotless was not in a position to 'take the benefit of' the finding of contributory negligence by the plaintiff as against Feltex. In order to resile from its abandonment thereof and to revive its entitlement to rely upon the plea, it seems to me that it would have had to make out the same kind of case before the trial judge that it would have had to make if it had never pleaded contributory negligence at all and was seeking leave to amend. I do not think that Spotless approached the matter in this way before the judge and, as a result, the question of forensic disadvantage or other prejudice to Herbath was never ventilated. Rather Spotless contended that it was entitled to rely upon the jury's verdict without having to satisfy any discretionary considerations relating to prejudice to Herbath. I think that the same stance was taken on appeal, although perhaps it was implicit if not explicit in Spotless's argument that no prejudice would be suffered by Herbath if Spotless was permitted to 'revive' its plea of contributory negligence.

26 I consider that it was too late, on appeal, to raise discretionary considerations that should have been raised but were not raised before the trial judge. In any event, I do not think that Spotless can discount the real possibility that Herbath would have been prejudiced if Spotless had been allowed to rely upon contributory negligence after verdict because Herbath was denied the opportunity to go into evidence or to canvass the question of fault as between herself and Spotless during the trial.

27 It is not necessary to doubt, and I do not doubt, the correctness of the propositions referred to earlier as established by Barisic. Those propositions do not entail the conclusion that an apportionment of fault as between a plaintiff and one of two defendants (where the other defendant is not alleging contributory negligence) would necessarily lead to the same apportionment of fault between a plaintiff and both of those defendants. Nor does the principle relating to solidary judgments entail that consequence where a party has not relied on or has abandoned a defence of contributory negligence.

28 I think that the judge was right in stating in substance that the jury's comparison of culpability had been confined to a comparison of the culpability of Herbath and Feltex and the jury had not been asked to compare the culpability of Herbath on the one hand and both defendants on the other hand. The same point was made by Hardie Boys J in Brown v Heathcote County Council. That line of reasoning is not in conflict with the principles established in Barisic but simply recognises the reality that only one defendant had put the issue of contributory negligence before the trier of fact with the consequence identified above.

Spotless - ground 1 and Feltex - grounds 1 and 2

29 These grounds raise the question whether the judge was correct in ordering Herbath's costs to be paid by Feltex.

30 The key provision that needs to be interpreted is s 134AB(28) of the Act which provides:

(28) In proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under subsection (12) -

(a) if no liability to pay damages is established, the worker must pay the party and party costs of the employer, Authority or self-insurer and the worker's own costs;

(b) if judgment is obtained or a settlement or compromise is made in an amount not less than 90 per cent of the worker's statutory counter offer under subsection (12) and more than the statutory offer of the Authority or self-insurer, the Authority or self-insurer must pay the worker's party and party costs and its own costs;

(c) if judgment is obtained or a settlement or compromise is made in an amount not more than the statutory offer of the Authority or self insurer under subsection (12), the worker must pay the party and party costs of the Authority or self-insurer and the worker's own costs;

(d) if judgment is obtained or a settlement or compromise is made in an amount that is more than the statutory offer of the Authority or self-insurer under subsection (12) but less than 90 per cent of the worker's statutory counter offer under that subsection, each party bears its own costs -

and the court must not otherwise make an order as to costs.

31 Related to s 134AB(28) are sub-ss (12), (13) and (14) of 134AB of the Act which provides:

(12) The worker must not commence proceedings in accordance with this section, other than an application under subsection (16)(b) or the commencement of proceedings with the consent of the Authority under subsection (20) or (20A), unless -

(a) the worker and the Authority or self-insurer hold, or begin, a conference within 21 days after the response date; and

(b) the Authority or self-insurer makes a statutory offer in writing in settlement or compromise of the claim at that conference, or after the conference begins but no later than 60 days after the response date; and

(c) if the worker does not accept that statutory offer within 21 days after it is made, the worker, before the expiration of that period, makes a statutory counter offer in writing in settlement or compromise of the claim; and

(d) the Authority or self-insurer does not accept that counter offer within 21 days after it is made; and

(e) the proceedings are commenced not earlier than 21 days, and not more than 51 days, after the counter offer is made or, if a counter offer is deemed to have been made under subsection (14), not more than 30 days after the day on which the counter offer is deemed to have been made.

(13) If the Authority or self-insurer does not make a statutory offer under subsection (12), the Authority or self-insurer is deemed, for the purposes of that subsection, to have made, on the 60th day after the response date, a statutory offer of nothing.

(14) If the Authority or self-insurer makes a statutory offer under subsection (12) and the worker does not make a statutory counter offer under that subsection, the worker is deemed, for the purposes of that subsection, to have made, on the 21st day after the statutory offer was made, a statutory counter offer of the maximum amount that may be awarded as damages under subsection (22)(a) and (b).

32 The question considered by the judge was whether, as the judgment obtained by Herbath was less than 90 per cent of her statutory counter offer, the above provision prevented Herbath from obtaining an order for costs against Feltex. His Honour noted that it was common ground that the proceeding, including the proceeding as against Feltex, was a proceeding for the recovery of damages commenced in accordance with s 134AB of the Act. His Honour recorded that the contention of Feltex was that Herbath was a 'party' and that the plain meaning of sub-s (28)(d) was that Herbath had to bear her own costs and that an order for costs against Feltex would be in breach of the clear words of the section.

33 His Honour rejected that submission. His Honour, having looked at the statutory scheme as a whole and the object of the legislation, said:

Only the worker on one hand and the Authority or self-insurer on the other hand, are required to participate in the statutory offer procedure. Any other party to the proceeding who is not the Authority or self-insurer representing the employer but who wishes to make an offer of settlement containing the risk of a sanction with respect to costs, must do so in accordance with the rules of the court. Such a party has no role in the statutory conference and statutory offer scheme.

I agree with [counsel for Herbath] that sub-s (28) is concerned only with the costs implications arising out of the statutory offers made by the worker and the Authority or self-insurer pursuant to sub-s (12) and affects only the costs of the worker and the Authority or self-insurer with respect to the proceedings against each other.

In my view the sub-section has no application to costs with respect to a defendant other than the Authority or self-insurer [of] the employer.

Secondly to construe the sub-section in the manner proposed would be to deny the plaintiff the entitlements she would normally have as a successful litigant to obtain her party and party costs from the party against whom she succeeded. Clear and unequivocal words would be required in order to conclude that the legislature intended to deprive a party of such a long-standing entitlement.

34 His Honour went on to say that the construction proposed by Feltex gave rise to a number of anomalies. He said that one was that, under para (a), if no liability to pay damages is established, the worker would have to pay the costs of the employer, Authority or self-insurer but not of any other successful defendant, such as an occupier in this case, or a surgeon as in the case of Kidman v Sefa.[13] However, as will be seen, I should say that there is a sensible interpretation of sub-s (28) that does not entail that consequence.

35 On appeal, Spotless submitted that s 134AB(28) displaced the County Court's discretion as to costs contained in s 78A of the County Court Act 1958 (and rule 63A.02 of the County Court Rules). Spotless referred to the second reading speech on the introduction of the Accident Compensation (Common Law and Benefits) Bill[14] in which the Minister said:

For other injuries where the worker may have a cause of action against a third party, any proceedings against the third party would be governed by the rules in the Accident Compensation Act 1985 - that is, the worker would be subject to the serious injury test and the thresholds and caps as to quantum.

...

New sections 134AA and 134AB reinstate the right of an injured worker who is or may be entitled to compensation under the Accident Compensation Act 1985 in respect of an injury arising out of or in the course of or due to the nature of employment to recover damages in respect of the injury subject to limitations and conditions imposed by the sections as to date of injury, the application of the Transport Accident Act 1986, whether or not the injury is a serious injury within the meaning of section 134AB, the classes and amounts of damages which may be recovered, the discretion of the court to order costs and procedural requirements, including time limits.

36 Spotless submitted that the above passages demonstrated the intention that s 134AB of the Act was to apply in respect of proceedings not only against employers but also against third parties and that, in that regard, there were to be limitations in respect of a number of matters including costs. One relevant limitation was that provided in s 134AB(12) which required workers to engage in the process of compulsory conferences, statutory offers and counter offers. Spotless said that the requirement to engage in a conference with the Authority applied equally to workers who claimed to have no cause of action against an employer as to those who did. Spotless submitted that the clear language of s 134AB(12) required a conference to occur between the worker and the Authority as a condition precedent to the right to commence common law proceedings even if the worker's only claim was against a third party and despite the facts that there was no requirement that such third party participate in the conference and that no provision was made for such third party to participate in the offer and counter offer process.

37 Spotless submitted that s 134AB(28) governed the entitlement to costs of the parties identified therein, namely, workers, employers, the Authority and self-insurers. It did not purport to limit the entitlement to costs of other parties ie third party defendants, being non-employers. There was no reason to adopt an assumption of 'mutuality' such that the worker was only to bear his or her own costs if and only if the other party was covered by the provision and thus obliged, in an appropriate case, to bear its own costs. In other words, the ruling of the trial judge (and the submission by Herbath) assumed that the worker was not obliged to bear his or her own costs vis-à-vis a third party because the provision did not also deal with the costs of a third party. On the contrary, Spotless submitted that s 134AB(28) governed the costs entitlement of the worker and, thus, in the circumstances of the present case, required Herbath to bear her own costs.

38 Spotless submitted that the concluding phrase in s 134AB(28) 'and the Court must not otherwise make an order as to costs' might be interpreted in two possible ways. One way was an 'exclusionary' way ie that no order other than those referred to in paragraphs (a) to (d) might be made in a proceeding which was subject to s 134AB. The second way was to give the phrase 'must not otherwise' a connotation of inconsistency ie the Court may make other orders as to costs but not orders which were inconsistent with any of paras (a) to (d). Spotless submitted, and I would agree, that the second way was the correct interpretation.[15]

39 In summary, Spotless submitted that s 134AB(28) was capable of applying to the entitlement to costs of the worker even if it did not apply to the obligations of a third party defendant (being a non-employer). Spotless acknowledged that one consequence of this interpretation was illustrated in the following example. If a worker failed to establish a claim against an employer but succeeded against a third party, such as a medical practitioner, an order might be made against the medical practitioner for costs in favour of the worker but only subject to paras (b), (c) or (d) of s 134AB(28). Spotless submitted that the worker's entitlement to costs against the medical practitioner would be governed by paras (b), (c) or (d) despite the fact that the statutory offer and counter offer process was conducted between the Authority and the worker and that the third party (in this example the medical practitioner) was not involved in that process. Taking the same example but assuming that the worker succeeded against the employer but failed against the medical practitioner, Spotless said that it was a consequence of its submitted interpretation that the medical practitioner would be entitled to costs against the worker subject to the general discretion of the court but unaffected by s 134AB(28).

40 Feltex submitted that the plain words of s 134AB(28)(d) were such that they applied to all parties to a proceeding commenced pursuant to s 134AB, including third parties, being non-employers. In the alternative, Feltex was content to adopt the above submissions of Spotless.

41 On the other hand, in support of the ruling of the trial judge, Herbath submitted that s 134AB(28), on its proper interpretation, only applied to costs as between the parties therein mentioned, namely the worker, the employer, and the Authority or self-insurer, and said nothing about the question of costs as between the worker and any third party, being a non-employer. Herbath said that this was the correct interpretation in the context as a whole and, in particular, in the context of s 134AB(12) which set up a process between the worker, on the one hand, and the Authority or self-insurer on the other.

42 At the outset, I will refer briefly to the legislative history of the provisions to be interpreted. Section 135(1) of the Accident Compensation Act 1985 as originally enacted[16] restricted the rights of a worker in respect of an injury arising out of or in the course of employment on or after the 'appointed day' under that Act. Further provisions relating to limitation or reduction of damages were introduced by the Accident Compensation (Further Amendment) Act 1992 [17] which inserted s 135A. Section 135A was substituted by a new provision by the Accident Compensation (WorkCover) Act 1992 [18] and s 135A(13)(b) as then enacted contained an uncomplicated provision, expressed to be subject to the rules of the court, dealing with costs as between 'the claimant' and 'the defendant'.

43 The Accident Compensation (Miscellaneous Amendment) Act 1997[19] introduced s 134A applying to injuries suffered on or after 12 November 1997 and also amended s 135A of the principal Act by, inter alia, inserting sub-ss (2DE) to (2DG) and (13A). Section 135A(2DE) to (2DG) as then introduced provided in substance that a worker must not commence proceedings unless the worker and the Authority[20] had held or begun a conference, the Authority had made a statutory offer and, if the worker did not accept the offer, the worker had made a statutory counter offer and so on. Those provisions contained the same provisions, with differences not presently material, to those now contained in s 134AB(12) to (14). Section 135A(13A) as then introduced made provision in relation to costs, 'in proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under sub-section (2DE)'. It contained the same provisions, with differences not presently material, to those now contained in s 134AB(28).

44 Finally, the Accident Compensation (Common Law and Benefits) Act 2000[21] introduced s 134AB, including sub-ss (12), (13), (14) and (28). Section 134AB thus simply picked up the provisions relevant to this appeal that were originally enacted in 1997, so the reference by Spotless[22] to the Accident Compensation (Common Law and Benefits) Bill 2000 did not relate to the Bill that introduced these provisions. In any event the statements by the Minister in the second reading speech on the introduction of that Bill were somewhat general and really provide no guidance as to the particular problem of interpretation raised on this appeal. Furthermore, what is contained in the second reading speech and the explanatory memorandum relating to the Accident Compensation (Miscellaneous Amendment) Act 1997 that did introduce these provisions is of no assistance.

45 It is evident that the purpose of and policy underlying sub-ss (12), (13), (14) and (28) of s 134AB is to encourage the settlement of proceedings brought under that section and to discourage dubious claims but recognition of that purpose and policy does not, it seems to me, particularly assist in resolving the problem at hand. Nor does it particularly assist the resolution of the problem to refer to anomalies that arise upon one interpretation or another - in that regard there have been numerous judicial statements about the drafting deficiencies in this part of the Act and about the anomalies that seem to result whatever interpretation is adopted in such cases.

46 As is established[23] and as the parties recognised, s 134AB of the Act covers proceedings of the kind described by sub-s (1) in respect of injuries arising out of or in the course of, or due to the nature of, employment, against third parties, being non-employers, even where no claim is made against the employer. That raises the question, to which the parties referred, as to how sub-ss (12) to (14) are to operate where the worker does not intend to make any claim against the employer and intends only to make a claim against a third party, being a non-employer. I will first consider the likely intended application of sub-ss (12) to (14) before considering the terms of sub-s (28).

47 It would seem clear that sub-s (12)(a) must, on its plain words, require a conference between the worker and the Authority even if the worker does not intend to proceed against the employer. The provisions do not require any third party against whom the worker wishes to make a claim to attend such a conference. It may be that the purpose of a conference, in such a case, would simply be to establish the nature of the worker's intention. The succeeding provisions as to offers and counter offers would seem to have no practical relevance in such a case. The Authority is not in a position to make offers on behalf of a third party and it may be that the result in such a case will be the making of a deemed offer and counter offer under sub-ss (12) to (14) that cannot have any relevance to the costs of a proceeding between the worker and a third party.

48 Turning to s 134AB(28), the natural interpretation of the words used is that they are intended to govern the costs of a relevant proceeding as between the worker on the one hand, and the employer, Authority or self-insurer on the other hand. They are the only parties referred to in paras (a), (b) and (c) of sub-s (28) and it must follow that the reference to 'each party' in para (d) of sub-s (28) is a reference only to those parties, namely, the worker, employer, Authority and self-insurer and not to any third party. That makes sense, because the statutory offer of the Authority and statutory counter offer of the worker referred to in paras (b), (c) and (d) could only be relevant to a claim as between those parties and not to a claim against any third party. I would reject the contention of Feltex to the contrary; the plain language of sub-s (28) does not support the interpretation that 'each party' includes third parties. Further, I think that the submission of Spotless is correct but only to the extent that it proceeded on the basis that the words 'each party' in para (d) did not refer to any third party but only to the parties previously identified in paras (a), (b) and (c).

49 However, I do not think that the construction advanced by Spotless is otherwise logical. It does not make sense to suggest that the entitlement of a worker to costs in respect of a claim or proceeding against a third party is governed by para (d). That construction is neither supported by the language of para (d) or of sub-s (28) as a whole, nor is it supportable having regard to the references to statutory offers and counter offers that can have no relevance to a claim against a third party. In my view, the correct and logical construction is that advanced by Herbath, namely, that sub-s (28) is concerned to govern the costs, only as between the worker on the one hand and the employer, Authority or self-insurer on the other, of a relevant proceeding, or that part of a relevant proceeding, brought in respect of a cause of action against an employer.

50 For the foregoing reasons, I consider that ground 1 of Spotless's appeal and grounds 1 and 2 of Feltex's appeal are not made out and that the trial judge was correct in concluding that the statute did not prevent the court from ordering that Herbath's costs be paid by Feltex.

51 Spotless conceded, I think rightly, that Feltex's grounds 3 and 4 were correct. Accordingly, Feltex's appeal should be allowed by amending para 6 of the final orders to the extent necessary to give effect to this concession.

52 Otherwise, I consider that the appeals should be dismissed.

53 I have had the opportunity to read in draft form the reasons for judgment of Mandie JA. I agree with the orders proposed by his Honour and with his reasons. I would venture only one comment.

54 Section 134AB is part of a suite of new provisions introduced by s 18 of the Accident Compensation (Common Law and Benefits) Act 2000. Its purpose, as appears from s 1(a), is to provide for the restoration of the right of a seriously injured worker to bring a proceeding to recover common law damages. As a remedial provision it must be construed as an aid to the achievement of this legislative purpose; not to raise obstacles to or disincentives to the exercise of this restored right. The competing interpretations of s 134AB(28)(d) offered by the parties on this appeal each pose practical difficulties and anomalies when applied in the various factual scenarios which were suggested. The interpretation favoured by Mandie JA, with which I agree, is one which, in my opinion, better achieves this legislative purpose than any other which was offered.

[2] On the appeal, counsel told the Court that the form of this question given to the jury in writing was posited on an affirmative answer to question 2 relating to the negligence of Feltex.

[3] The order went on to specify and certify various matters relating to costs.

[5] [1978] 2 NSWLR 111, 139,142,150.

[6] Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, [135].

[7] Citing Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 and Water Board v Moustakas [1988] HCA 12; (1988) 180 CLR 491.

[14] Victoria, Parliamentary Debates, Legislative Assembly, 13 April 2000, 1008, 1010 (Robert Cameron).

[15] O'Neill v T D Williamson (No 2) [2008] VSC 430, [3]-[8], Papadopoulos v M C Labour & anor (No 3) [2009] VSC 183, [13]-[15].

[20] In addition to the Authority, 'the authorised insurer or self-insurer' is dealt with in these provisions.

[22] See [35] above.

[23] See Kidman v Sefa [1996] VicRp 8; [1996] 1 VR 86.

Compensation Act 1985

Compensation (Further Amendment) Act 1992

Compensation (WorkCover) Act 1992

Accident Compensation (Miscellaneous Amendment) Act 1997

Finally, the Accident Compensation (Common Law and Benefits) Act 2000

Accident Compensation (Common Law and Benefits) Act 2000

At a glance

Court

Decision date

Before

Source

Judgment (92 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (4)