Case: Perry v Comcare [2006] FCA 33 ; (2006) 150 FCR 319
Outcome: applied
The legal principles governing costs in proceedings brought under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act) are found in s 67 of that Act. Greenwood J in Perry v Comcare [2006] FCA 33 ; (2006) 150 FCR 319 at [65] - [66] made the following observations: The provisions of s 67 "constitute a code in the area of costs": Riley v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees (1994) 48 FCR 449 per Beaumont J. The elements of that code are these. The primary rule, subject to the operation of the section is, "the costs incurred by a party to proceedings instituted under Pt VI before the Tribunal shall be borne by that party": (s 67(1)). Subsections (2) to (12) of s 67 provide specific circumstances where the primacy of s 67(1) might be displaced. (Emphasis in original.) 3 Subsection (8) gives the Tribunal a discretion to make orders as to costs in certain circumstances. That provision is in the following terms: (8) Where, in any proceedings instituted by the claimant, the Administrative Appeals Tribunal makes a decision: (a) varying a reviewable decision in a manner favourable to the claimant; or (b) setting aside a reviewable decision and making a decision in substitution for the reviewable decision that is more favourable to the claimant than the reviewable decision; the Tribunal may, subject to this section, order that the costs of those proceedings incurred by the claimant, or a part of those costs, shall be paid by the responsible authority. 4 According to Greenwood J in Perry [2006] FCA 33 ; 150 FCR 319 at [76] : In exercising the discretion, the Tribunal ought have regard to the rule of primacy reflected in s 67(1), the circumstances of the case which gave rise to a decision enlivening the qualification upon s 67(1), the background circumstances concerning the claim, the nature and character of proceedings for the purposes of the SRC Act, the complexity of the claim and the conduct of the parties in relation to the proceeding . (Emphasis added.) 5 There was some argument during the hearing in this appeal as to whether the requirements of s 67(8)(b) had been satisfied in this case. I ordered that the matter be remitted to the Senior Member for clarification as to the nature of the decision made by him. Senior Member Allen then directed the Registrar of the Tribunal to alter the decision such that it now expressly states that the decision under review was set aside and a decision favourable to the applicant was made in substitution. 6 All that now remains in this appeal is to determine whether the Senior Member committed any error of law adverse to the applicant in the exercise of his discretion as to costs. 7 It is now to be taken that Senior Member Allen decided that a reviewable decision should be set aside and that the respondent was liable, pursuant to s 14 of the SRC Act, for a temporary exacerbation of symptoms caused by cervical spondylosis suffered by the applicant. 8 In his reasons for his decision that each party should pay its own costs, the Senior Member referred to a letter from the respondent to the applicant dated 15 August 2006. The letter contained a "Calderbank" offer of settlement. The respondent was prepared to concede that the applicant had suffered an aggravation of an existing condition, and that he was entitled to compensation under ss 16 and 19 of the SRC Act, but only from 27 April 2005 to 8 June 2005 (in reliance on a medical report of Dr Olsen, which stated that any aggravation was temporary). The offer included an undertaking by the respondent to pay the applicant's costs of the proceedings. No response was received to this letter. 9 The Senior Member referred to Perry [2006] FCA 33 ; 150 FCR 319 as authority allowing consideration of a "Calderbank letter" in the exercise of the discretion conferred by s 67(8). The Senior Member considered that the letter of offer in this matter satisfied the criteria set out in Perry 150 FCR at 327, 333-5, that it be clear, precise and certain, particularly with respect to the question of costs. 12 Perry 150 FCR at [89] makes it clear that it is not necessary that a Calderbank offer must conform to the principles dictating the validity of such an offer for it to be considered by the Tribunal in the exercise of its discretion under s 67(8). This is because the Tribunal is to have regard to the "circumstances of the case", and any such offer, regardless of validity, forms part of these circumstances. As outlined above, the Senior Member held that the Calderbank offer would not have been capable of being confirmed by the Tribunal, due to the principle in Lees 56 ALD 84. However, he seems to have reasoned that this prevented him from taking the offer into consideration when exercising his discretion as to costs. Such reasoning is incorrect in the light of Perry [2006] FCA 33 ; 150 FCR 319. This was an error of law in the exercise of the Tribunal's discretion, but it was an error in favour of, rather than against, the applicant. Even though the Senior Member purported not to consider the offer while exercising his discretion, he clearly outlined how he would have taken the letter into account, had he considered himself able to do so. Such treatment would not have been favourable to the applicant. 16 The principles governing the exercise of the discretion in a case such as this were articulated in a passage in Perry 150 FCR at [90]: [The] discretion was not fettered by any rule, policy or binding principle. The fundamental obligation of the Tribunal in the exercise of the discretion was to do justice between the parties according to its assessment of the circumstances of the case. Whether, in exercising the discretion, if conferred upon it, the Court might have taken a different view about the allocation of costs or circumstances influencing whether the respondent might be ordered to pay the costs or a part of the costs, is not to the point. The question of whether, in all the circumstances, the applicant acted reasonably is a question of fact to be determined by the Tribunal and it is not open to the Court to substitute its own view of those facts or the exercise of the discretion. 17 I do not understand the Senior Member to have overlooked the general rule of primacy that successful claimants are to have their costs paid, to be deduced from s 67(8), but rather to have considered that, as against that, the proceedings had been unduly prolonged as a result of the applicant's conduct of them. The Tribunal then, in a broad brush way, made the costs order it did to reflect those competing considerations. The Senior Member had the benefit of being apprised in detail of the conduct of the parties throughout the course of the proceedings and of the general standards of conduct by parties in similar litigation before it. The full transcript of proceedings was not before this Court. The facts that are before the Court are not such as to justify a conclusion that the Tribunal erred as a matter of law in a way that was contrary to the interests of the appellant. 18 In my opinion no error of law such as might have assisted the applicant before the Tribunal has been demonstrated. Although there was an error of law by the Senior Member, its correction could only worsen, not improve, the applicant's position.