Certain Lloyd's Underwriters v. Cross
[2012] HCA 56(2012) 248 CLR 378
(2012) 293 ALR 412
(Judgment by: Kiefel J)
Certain Lloyd's Underwriters
v Cross
Judges:
French CJ
Hayne J
Crennan J
Kiefel JBell J
Judgment date: 12 December 2012
Judgment by:
Kiefel J
[77] The facts, statutory materials and legislative history relevant to these appeals are comprehensively surveyed in the judgments of French CJ and Hayne J and of Crennan and Bell JJ and it is not necessary for me to repeat them all. Each of the respondents suffered injuries as a result of an assault. Each received an award of damages of less than $100,000. An order for costs was made in favour of each respondent on 22 April 2010 in the District Court of New South Wales. The question posed by these appeals is whether the orders for costs are subject to the limitation imposed by s 198D of the Legal Profession Act 1987 (NSW) ("the LP Act"). That question turns upon the meaning to be given to the term "personal injury damages" for the purposes of the LP Act.
The legislation in summary
[78] At the outset it is necessary to mention that the LP Act was repealed by the Legal Profession Act 2004 (NSW), [113] which provides for restrictions on legal costs in terms similar to the LP Act. The determination of these appeals is properly conducted by reference to the LP Act, for the reasons given in the joint judgments. [114]
[79] The LP Act dealt with a number of subjects affecting the conduct and the practice of legal practitioners. Part 11 dealt with legal fees and other costs. Upon its enactment, [115] the Civil Liability Act 2002 (NSW) ("the Liability Act") contained provisions concerning the assessment of damages in cases involving personal injuries. At the same time, the Liability Act inserted Div 5B, entitled "Maximum costs in personal injury damages matters", into Pt 11 of the LP Act. [116] By s 198C(2), the Division was not to apply to costs payable under or pursuant to certain specified legislation, to which reference will be made later in these reasons. [117]
[80] Section 198D(1) in Div 5B fixed the maximum costs for legal services provided to a party in connection with a claim for personal injury damages where the amount recovered on the claim did not exceed $100,000. The costs were fixed at 20% of the amount recovered or $10,000, whichever was greater. Subsection (4) provided that a legal practitioner was not entitled to be paid an amount for legal services in excess of the maximum stipulated, a court or tribunal could not order the payment of costs in an amount more than the maximum, and a costs assessor could not determine an amount in excess of the maximum.
[81] By s 198E(1), Div 5B did not apply to the recovery of costs as between a solicitor or barrister and the solicitor or barrister's client, if recovery was provided for by a costs agreement which complied with Div 3 of Pt 11 of the LP Act. Section 198F(1) provided that Div 5B did not prevent an award, on an indemnity basis, of costs incurred after the date when a reasonable offer of compromise was made if the offer was not accepted. Section 198G allowed a court to order that legal services provided to a party be excluded from the operation of the Division, if they were provided in response to any action on the claim by the other party that was not reasonably necessary.
[82] For the purposes of Div 5B, the term "personal injury damages" was defined in s 198C(1) of the LP Act to have "the same meaning as in the [Liability Act]". "Personal injury damages" was defined in s 3 in Pt 1 of the Liability Act to mean "damages that relate to the death of or injury to a person caused by the fault of another person". "Injury" was further defined, as were "damages" and "fault". [118]
[83] Part 2 of the Liability Act was entitled "Personal injury damages" and contained provisions regulating the assessment of damages associated with actions for personal injuries caused by negligence, including damages for economic and non-economic loss. By s 10, a court could not award damages, or interest on damages, to a claimant contrary to Pt 2. Section 9(1) had the effect that Pt 2 did not apply where an award of personal injury damages was excluded from the operation of the Part. The first of the eight classes of award excluded by s 9(2) was "an award where the fault concerned is an intentional act that is done with intent to cause injury or death or that is sexual assault or other sexual misconduct".
[84] The Civil Liability Amendment (Personal Responsibility) Act 2002 (NSW) ("the Personal Responsibility Act") effected substantial amendment to the Liability Act by expanding the operation of the Liability Act, although not in such a way as to affect its terms or operation so far as is relevant to these appeals. The amendments retained Pt 2 as the Part dealing with personal injury damages. The definition of "personal injury damages" was moved into Pt 2 in s 11 and amended to read "personal injury damages means damages that relate to the death of or injury to a person". The reference to fault was excluded. The definition of "injury" changed, but not in any presently material respect. Section 11A applied Pt 2 to an award of personal injury damages, except where an award was excluded from the operation of Pt 2 by s 3B, which appeared in Pt 1. Section 3B(1)(a) excluded civil liability in respect of intentional acts and sexual assaults, in substantially the same terms as s 9(2)(a) had done. The Personal Responsibility Act also amended the definition of "personal injury damages" in s 198C(1) of the LP Act to read "personal injury damages has the same meaning as in Part 2 of the [Liability Act]".
The issue
[85] Because the injuries suffered by the respondents were caused by intentional acts, a court's assessment of damages arising from the injuries is not subject to the Liability Act, by reason of the express exclusion in s 3B(1)(a). However, the LP Act did not expressly exclude from the application of Div 5B costs for legal services provided to a party in connection with a claim for personal injury damages in respect of intentional acts. The question is whether the LP Act may be taken, nevertheless, to have intended to exclude such costs because of its reference in the definition in s 198C(1) to personal injury damages as having "the same meaning as in" the Liability Act or, more particularly, Pt 2 thereof.
[86] "Personal injury damages" as defined in the Liability Act were damages relating to the death of or injury to a person. Without more, Div 5B of Pt 11 of the LP Act would apply to the costs for the legal services provided to the respondents in connection with their claims. So much was conceded by Basten JA in the Court of Appeal. [119] However, if the words in s 198C(1) of the LP Act, "the same meaning as in", encompassed the application of the Liability Act, which is to say that the Liability Act did not apply to personal injuries caused by intentional acts, then it may be that Div 5B of Pt 11 of the LP Act would not apply to limit the costs that the respondents could recover.
[87] In the Court of Appeal, Basten JA, with whom Hodgson JA and Sackville AJA agreed, [120] held that the definition in s 198C(1) extended beyond the definition of the expression "personal injury damages" in the Liability Act to the scope of its application in Pt 2. [121] The matter which appears to have been most influential to the conclusion reached by their Honours was that the costs limiting provisions of the LP Act were part of a "broader scheme" [122] or a "single package" [123] in conjunction with the Liability Act, that scheme being directed to a perceived crisis in public liability insurance and being one from which awards of damages for personal injuries by intentional acts were excluded.
Approaches to statutory construction
[88] The fundamental object of statutory construction is to ascertain legislative intention, understood as the intention that the courts will impute to the legislature by a process of construction, by reference to the language of the statute viewed as a whole. [124] The starting point for this process of construction is the words of the provision in question read in the context of the statute. Context is also spoken of in a broader sense as including the general purpose and policy of the legislation, in particular the mischief to which the statute is directed and which the legislature intended to remedy. [125]
[89] It is legitimate to resort to materials outside the statute, but it is necessary to bear in mind the purpose of doing so and the process of construction to which it is directed. That purpose is, generally speaking, to identify the policy of the statute in order to better understand the language and intended operation of the statute. An understanding of legislative policy by these means does not provide a warrant for departing from the process of statutory construction and attributing a wider operation to a statute than its language and evident operation permit.
The LP Act -- language, context and purpose
[90] The reference in s 198C(1) of the LP Act to the term "personal injury damages" as having the same meaning as in the Liability Act obviously directs attention to the definition of that term in the Liability Act. The words "as in" may be read as "as given in". Section 198C(1) did not refer to the "meaning and effect" of the Liability Act, [126] which may have encompassed the operation of that Act. Without more, the words in s 198C(1) conveyed that the term was to have the meaning given to it in the Liability Act by way of definition. A construction which is consistent with the ordinary meaning and grammatical sense of the words used in s 198C(1) has a strong advantage over other possible constructions. [127]
[91] The LP Act also identified the circumstances in which the fixing of maximum costs would not apply, as has been previously mentioned. [128] Not all legal costs payable in connection with claims for personal injury damages were subject to Div 5B. Section 198C(2) of the LP Act specifically provided that Div 5B did not apply so as to limit the costs payable under certain statutes. There were four statutes identified, including the Victims Support and Rehabilitation Act 1996 (NSW) and the Workplace Injury Management and Workers Compensation Act 1998 (NSW).
[92] The most likely explanation for the presence of the four exclusions in s 198C(2) is that they identified existing legislative costs regimes so as to avoid any doubt about whether those regimes would continue to have effect following the introduction of Div 5B. [129] So understood, the exclusion of legal costs associated with claims arising from intentional acts is explicable. It remains the case, however, that legal costs charged in connection with such claims have not been excluded from the operation of Div 5B.
[93] The evident purpose of the LP Act was to contain and limit the legal costs which may have been charged on recovered claims for personal injury damages. The limit imposed by Div 5B would have applied to orders for costs made by a court following upon an award of damages, but it was not limited to that circumstance. It would also have applied to legal costs associated with claims which had not been subjected to court processes. It applied to any legal costs charged for services in connection with a claim for personal injury damages where the amount recovered did not exceed $100,000. In all these instances, the amount recovered was the essential criterion.
The LP Act -- part of a broader scheme?
[94] The evident purpose of the Liability Act is to control, in the sense of limit, the amount of damages which may be awarded in personal injury claims. So much was confirmed by the Second Reading Speech to the Liability Act, [130] to which the Court of Appeal referred. [131] In the Second Reading Speech, it was also pointed out that awards for personal injuries caused by intentional acts, or acts involving sexual assault, were deliberately excluded from the purview of the Liability Act because compensation for injuries arising from serious criminal acts should not be subject to limitation. [132] So much may be inferred from the very fact of the exclusion.
[95] The Second Reading Speech also identified a wider common purpose for the controls effected by the Liability Act and the limits placed on costs by the LP Act. The Liability Act was enacted, and the LP Act amended, in response to what was perceived to be a crisis in the affordability of public liability insurance, [133] which was adversely affecting many bodies and small businesses in the community. The crisis had been brought about by substantial increases in premiums charged for insurance of that kind. Premiums are directly affected by the sums insurers are required to pay by way of indemnity for awards of damages and legal costs following upon claims for personal injuries caused by negligence.
[96] The Court of Appeal clearly considered that the identification of a broader purpose meant that the two statutes formed part of a statutory scheme. In one sense that is correct, as they were both directed to that common purpose. The statutes were also connected by their terms. The drafting means chosen effected amendments to the LP Act via the medium of the Liability Act, and the LP Act referred to the Liability Act for the definition of "personal injury damages".
[97] The scheme identified by the Court of Appeal contained the particular element of excluding awards of personal injury damages for injuries resulting from an intentional act. However, that element is found only in the Liability Act. For a scheme to be identified, it must involve two statutes not just having a wider common purpose and some connection, but operating together. If the operation of each statute could be said to depend upon the other, there would be a warrant for construing them together in this way. [134] In that event, it might be said that the definition in s 198C(1) of the LP Act should be read to encompass the operation of the Liability Act.
[98] It does not follow from the identification of a broader purpose beyond the more immediate objects of each of the two statutes, nor from the limited connection between them, that they were interdependent in any meaningful way. It is necessary to consider each of the statutes and the means by which they are intended to achieve their respective objectives, in order to determine whether they form part of a single scheme. There are a number of indicia which tell against the LP Act and the Liability Act operating in this way.
[99] When it is said that statutes form part of a legislative scheme such that they should be read together, the statutes usually deal with the same subject matter. Here the LP Act and the Liability Act each had its own sphere of operation by reference to different subject matter: the Liability Act was concerned with the calculation of awards of damages; the LP Act's concern was with legal costs associated with all claims for personal injury damages where the sum recovered was no more than $100,000.
[100] The LP Act may have operated on orders for costs made following awards assessed in accordance with the Liability Act, but it was not limited in its operation to that circumstance. The size of the sum recovered was the only criterion identified by the LP Act, apart from the existence of a claim for personal injury damages and legal costs payable in connection with it, for the application of Div 5B. That criterion was not connected with any matter in the Liability Act.
[101] Further, there was no symmetry between the exclusions effected by each of the statutes. There were many more statutes and types of awards excluded by s 3B of the Liability Act than there were statutes excluded from the costs regime of Div 5B of Pt 11 of the LP Act. In the LP Act, the evident intention was to exclude only costs provided under existing legislative costs regimes. No intention is evident to exclude costs in other areas or to align the exclusion of costs to the awards excluded by the Liability Act.
[102] These indicia confirm that the two statutes operated independently of each other and provide no warrant for reading the LP Act by reference to the application of the Liability Act. Whether a claim resulted in an award of damages which was, or was not, calculated by reference to the Liability Act had no bearing upon the operation of Div 5B of Pt 11 of the LP Act. Division 5B was concerned with the proportion between the amount of the damages recovered and the legal costs associated with the claim that resulted in recovery. Division 5B operated universally with respect to legal costs where a claim resulted in recovery of damages of no more than $100,000.
[103] The operation of Div 5B read in this way is nevertheless consistent with the broader purpose of reducing the cost of public liability insurance. Division 5B sought to achieve this purpose by means which differed from those employed by the Liability Act. Nevertheless, in so far as the two statutes were both directed to that purpose, it may be expected that they would not operate inconsistently with each other. Division 5B of Pt 11 of the LP Act, applied universally, was not inconsistent with the purpose underlying the exclusion of awards of damages for personal injuries resulting from intentional acts, namely that compensation for such damages not be limited. So far as concerns the costs of legal services in seeking an award, subject to the exceptions in Div 5B, a claimant's lawyer could not charge more than the maximum amount specified except by agreement with the claimant and the other party could not recover more than that amount in the event that the claimant was unsuccessful.
[104] There is no basis for construing the term "personal injury damages" other than by reference to the definition given in the Liability Act.
[105] I agree with the orders proposed by French CJ and Hayne J.