Hanley v TAC [2002] VCAT 420

3. The respondent opposes such an order for costs. It argues that it is well established that costs in such matters should be taxed on County Court Scale "A". I was referred to a Tribunal Practice Note in this regard. Whilst the respondent did not have such Practice Note immediately available, I would understand it to be Practice Note "GEN3A", a Practice Note originally published on behalf of the Administrative Appeals Tribunal in relation to applications under the Transport Accident Act and since adopted by this Tribunal. Paragraph 12(i) of the Practice Note is somewhat confusing, but basically states that unless the Tribunal otherwise orders, references to costs will be regarded as references to costs calculated in accordance with County Court Scale "A". As pointed out, a similar statement is contained in the Transport Accident Information Sheet on the Tribunal's website.

4. It seems to me that the issue to be decided can be dealt with by asking four questions. These are:-

(i) What are the Tribunal's general powers and practices in relation to costs?

(ii) What is the nature of the proceeding in fact before the Tribunal?

(iii) What order for costs should be made in a proceeding of that type?

(iv) What order for costs should be made in the particular matter before me?

5. Of course, in answering these questions the established practice of the Tribunal and its Practice Notes should be borne in mind.

(i) What are the general powers and practices of the Tribunal in relation to costs?

The Tribunal's basic power to award costs can be found in s.109 of the Victorian Civil and Administration Tribunal Act. That could be summarized as stating that, unless the Tribunal otherwise orders, each party is to bear its own costs. Clearly a discretion is maintained. A set of criteria relating to the ordering of a party to pay costs is contained in s.109(3). These considerations include:-

(e) any other matter the Tribunal considers relevant.

The legislature seems to me to be saying that, generally, it is desirable that each party bear its own costs, but the Tribunal retains a reasonably broad discretion.

Of course, there may be provisions relating to costs in other Acts of Parliament pursuant to which matters come before this Tribunal. The Transport Accident Act is such legislation. Section 79(2) of that Act reads, "The Tribunal may make such order as to costs in respect of a proceeding under this Act as it thinks just ....".

Thus it would appear that the discretion in relation to costs pursuant to the provisions of the Transport Accident Act is even broader than that found in the Victorian Civil and Administrative Tribunal Act. The legislative preference for the position that each party bear its own costs is absent.

The question of how the provisions of the Transport Accident Act in relation to costs fit in with those of the Victorian Civil and Administrative Tribunal Act (or its predecessor, the Administrative Appeals Tribunal Act 1984) was discussed in the case of Transport Accident Commission v O'Reilly & Others (1999) 2VR 436. In particular, at page 441, Tadgell JA refers to and agrees with the observations of Harper J in Transport Accident Commission v Tavares (1996) 9 VAR 251. These observations deal with the inconsistency between s.79(2) of the Transport Accident Act and the section in the Administrative Appeals Tribunal Act which is the equivalent of the section in the Victorian Civil and Administrative Tribunal Act now under consideration. The judgment of Tadgell JA, particularly when read with the judgments of Ormiston and Callaway JJA, seems to me to be authority for the proposition that the discretion in such a case is a very wide one, and that the inhibition, to use the word of Callaway JA, contained in what is now s.109 of the VCAT Act, does not prevail over the general discretion contained in s.79(2) of the Transport Accident Act. Whilst it is clear that costs need not follow the event, as in a curial proceeding, it seems equally clear that the discretion permitted to the Tribunal in Transport Accident Act matters is broad and not inhibited by statute. Of course, rules of natural justice and fairness, including procedural fairness, must be observed.

Accordingly, and within the restraints just mentioned, the powers of the Tribunal to award costs are quite broad, and, in Transport Accident Act matters, that breadth of discretion might be even greater than in matters where there is no provision equivalent to s.79(2) of the Transport Accident Act.

I turn now to the usual practices of the Tribunal. Of course, these are directly affected by the Practice Note referred to above. It is clear that the general practice, and the starting point, has been to award costs on County Court Scale "A". However, it is to be remembered that many of the matters that come before the Tribunal involve small items of medical expense or relatively small impairment claims. The quantum of these would only attract costs on scale "A" in any event.

In appropriate cases, the Tribunal has not hesitated to exercise its discretion and "otherwise order". An example of this has occurred only recently when the President, the Honourable Justice Kellam, determined two matters involving the Transport Accident Commission which involved important threshold points. In each instance, the actual quantum involved was small. However, in each instance the President awarded costs on County Court Scale "D". I refer to the decisions of Sermeno v TAC and Khan v TAC.

In summary, having examined the powers and practices of the Tribunal in relation to costs and particularly in Transport Accident Act matters, the situation could be summarized as follows. Whilst the starting point is that costs are generally awarded on County Court Scale "A", the Tribunal has a broad discretion in relation to the scale of costs, and will exercise that discretion in appropriate cases.

(ii) What is the nature of the proceeding in fact before the Tribunal?

Some argument took place concerning the nature of the matter determined by the Tribunal in this case. Should it be regarded as a "30% case" - meaning effectively a serious injury application - as proposed by Mr Gorton, or was it simply a review of an impairment assessment that should be treated as having no greater ramifications, as urged by Mr Klemens? The answer seems to me to be that there is some element of truth in both propositions.

The wording of the Transport Accident Act would seem to me to demonstrate an acknowledgement by the legislature that what could be described as "30% cases" exist. Section 47(7B), when read in conjunction with s.47(7), clearly refers to the right to apply to the Tribunal for a review of a decision that a degree of impairment of a person is less than 30%. It is equally clear that this is in the context of proceedings for the recovery of damages - in other words, a serious injury application for the purposes of s.93.

It also seems to me that there is no separate procedure specifically designed for "30% cases". Such cases involve a review of a decided impairment assessment by the Commission in the same way as cases where what is sought is simply an increase of the impairment assessment without there being any interest in the magical 30%. Both categories of case seem to me to be initiated in the same fashion, go through the same intermediate steps, and ultimately would be litigated in much the same way in the sense that evidence would be received from witnesses of the same type. There is no distinctive procedure for "serious injury applications".

Two further observations should be made. It is probably predictable that "30% cases" will be fought with greater ferocity and with a different emphasis. Potentially, much hangs on the outcome. Secondly, and as a result, there may then be arguments as to the appropriate scale of costs depending upon the category into which the case falls. For example, in the present case, the dollar value of the order would, as I understand it, place costs on Scale "C". Mr Mighell argued that, if it is treated as a serious injury application, the appropriate scale is "D" as would be the case in the County Court. Thus, the distinction between the types of cases may, if Mr Mighell's argument is correct, have practical connotations, and be of more than academic interest.

The question of into which particular category a case may fall - a 30% case or not - may well depend upon the information that has been provided by the applicant to the respondent Commission. It may well be important that the Commission knows the nature of the case that it is facing. Its approach to the matter and the emphasis which it places upon various items of evidence may vary depending upon whether or not it is aware that it is, in essence, dealing with a serious injury application as opposed to an application for an increase of an impairment assessment where the cut-off figure of 30% is not a vital consideration.

In the present case I am quite satisfied that it was well aware of the 30% argument being a key issue involved in the review of its decision. I say this for a number of reasons.

Firstly, the applicant, through his solicitors, made it clear that he was seeking a serious injury certificate. This was refused by the respondent by way of letter dated 25 July 2000. It may not have been spelled out in the clearest of terms that the applicant was pursuing this particular application in an endeavour to meet the requirements of s.93 of the Transport Accident Act. Indeed the application issued refers only to a review of the impairment assessment. However, the issue of serious injury was hanging in the air from a very early stage, and indeed prior to the issuing of the application for review which brought the matter before the Tribunal.

Secondly, and whilst it was obviously not known to me until after the conclusion of the matter, in late September or early October 2001 the applicant had served upon the respondent an offer of compromise based on a determination that the applicant's level of impairment be assessed at 30%. The significance of that could scarcely be lost on the party that is both the administrator of the scheme and the respondent to such applications, and basically on a daily basis for years. It should be said that the plaintiff's offer of compromise followed an offer of settlement by the respondent determining the applicant's level of impairment at 22%. I also note in passing that, in the plaintiff's offer of compromise, there was a state of preparedness to accept costs on County Court Scale "A", and the foreshadowing of an application for costs on County Court Scale "D" should the applicant be successful in relation to such offer of compromise.

Thirdly, Mr Gorton, on behalf of the applicant, stated at the outset that this was a "30% case". He stated this more than once during his opening, and before the adducing of any evidence. He stated "It is a 30% case"; "Argument may well resolve to come down to whether or not it is more than 30%"; and "It is one of those, can you get to 30% by putting up a whole lot of different parts of the body". This provoked no comment or criticism on the part of the Commission until the evidence was concluded and the subject was raised by Mr Klemens in closing addresses.

Fourthly, the matter was contested, and in a spirited fashion, with the magical figure of 30% apparently very much in the forefront of the parties' minds. Whilst each counsel fought hard to maximise or minimise each assessment, it was quite apparent, particularly in the light of submissions, that the applicant was desperately trying to clear the 30% bar, whilst the respondent was trying to hold him below it. That is no criticism of the matter in which the case was conducted. Given the requirements of the legislation and the importance that attaches to the obtaining of an impairment assessment of 30% or more, it would be surprising if matters were not conducted in such a fashion, and, indeed, hundreds, if not thousands, have been so conducted. I raise this fourth point simply as another reason for my belief that the Commission knew precisely what this contest was about. Certainly it was about the review of a determination of an impairment assessment, but it also seems to me that, at all relevant times, the Commission knew that it was a contest concerning the opening of the gateway in s.93 of the Act.

Clearly I accept the submission of Mr Klemens that the task before the Tribunal is to determine the percentage impairment without regard to the 30% cut-off line. In reviewing the decision originally made, I have been required to look at each item that requires assessment and come to a decision in relation to it. Apart from the fact that each such item is a constituent of the whole assessment concerning which a review has been sought, as I understand it each percentage point has a dollar value. In other words, the whole exercise is not simply one whereby a "yes" or "no" answer is sought in relation to the question as to whether the applicant has reached an impairment assessment of 30%. This concept goes a considerable way towards explaining what I said at the outset, namely that there is some truth in the submission on behalf of each party. Clearly I have to look at and determine the level of permanent impairment in accordance with the AMA Guides, and examine the various constituent elements of that assessment. However, when it comes to this argument concerning costs, and a consideration of what was one of the key issues in the case, it would be hypocritical to pretend that one of, if not the, key issues of the case was not whether the applicant would achieve the level of 30% permanent impairment. This is particularly so when I was told at the outset that this was a "30% case", and there was no opposition to that description of it. This is no criticism of Mr Klemens, who has acted in a most competent and professional manner throughout. It simply repeats what I have said earlier. The Commission knew exactly what this case was about and what an essential element of dispute was.

(iii) What order for costs should be made in a proceeding of that type?

As is apparent from the above, I have arrived at the conclusion that the Tribunal starts from a position of Scale "A" costs but has a broad discretion, and that the matter before me in this particular case, being, of necessity, a review of the respondent's decision relating to the level of permanent impairment, is also a serious injury application. It is not a case concerning a small amount of medical expenses, or evaluation of permanent impairment where there is no interest in the 30% level. In addition to being a review of the respondent's decision concerning the level of impairment, it is, in fact, what could be classified as a serious injury application. As stated, I have no doubt but that the respondent was treating it as such.

What then should be the order for costs, in general terms, in relation to such a proceeding? As a general rule, and without in any way commenting upon the individual cases that will be before the Tribunal, I see no reason why there should be any distinction between the level of costs ordered in this Tribunal and the level of costs ordered in the County Court for a serious injury application. If anything, the cases contested on the basis of percentages of permanent impairment are more complex than those that are contested on the basis of the "narrative" contained in s.93(17) of the Transport Accident Act. As I have stated elsewhere, from my limited experience they involve more witnesses and run for a longer time. They also involve the use of the AMA Guides, and it would be fair to say that the use and interpretation of those Guides involves considerations both complex and intricate. Courageous and brilliant scholars may have found them easy, but they have been productive of a considerable amount of perplexity, head-scratching and dispute in the ranks of medical practitioners and lawyers.

If an accident case involves a multiplicity of injuries involving the impairment assessment of various parts of the body; if it is contested in an adversarial way over several days; if it involves the examination and cross-examination of a large number of witnesses; and if it is of sufficient complexity to necessitate written submissions, I see absolutely no reason why costs should not be awarded on County Court Scale "D". When the consequences to the individual of the ruling in relation to the 30% cut-off line - that is, in relation to leave to commence common law proceedings - are also considered, my belief that my discretion should be exercised in favour of awarding costs on Scale "D" is reinforced. It is the general practice in the County Court that, regardless of the length of the hearings, serious injury applications are of sufficient importance to warrant costs being awarded on the top scale and this also underlines and supports the approach that, as a general rule, applications such as this should attract costs on the top scale. Whilst the case before me may have been more complicated and lengthy than some, I might say that, as a general rule, I do not see why costs in what are obviously serious injury applications should not be on the same scale as that which applies in the County Court.

It was also pointed out by Mr Mighell, and not disputed, that the respondent Commission pays its counsel a daily fee well in excess of that fixed by Scale "A" and frequently in excess of the Scale "D" fee. It would be fair to say that knowledge of this practice is widespread. However frustrating this may be for those appearing on behalf of applicants, it is of borderline relevance to the present argument. If a party, even if it is a government agency, chooses to pay those representing it fees very considerably larger than those it argues should be paid to those representing a private citizen, that is a matter for it. The only possible relevance of this argument is that such a practice may reflect the importance which the respondent attaches to applications such as these.

Two further observations should be made. The first of these is that, of course, each case must be considered on its merits and I am not attempting to give a direction to other members of this Tribunal. Nevertheless, I must say that it seems to me to be logical that the scale of costs to be applied in serious injury applications before this Tribunal should be the same as that applied in the County Court.

The second general observation is this. These same principles may apply to losing applicants but the situation may also be more complicated. One distinction between the serious injury applications contested before this Tribunal and those before the County Court is that here a "half-way house" may exist. In other words, before this Tribunal an applicant may succeed in achieving an increased percentage impairment evaluation, but may still fall short of 30%. Because I have determined that, in this matter, it was made clear that it was a "30% case", the applicant obtained a 43% assessment, and I have awarded costs on Scale "D" accordingly, it is unnecessary for me to comment further. On the question of the scale of costs to be awarded in other situations, or in whose favour such cost orders should be made, it is also to be remembered that the parties can protect their respective positions by the use of offers pursuant to s.112 of the Victorian Civil and Administrative Tribunal Act.

(iv) What order for costs should be made in the particular matter before me?

As is probably apparent from the reasons set out above, in my opinion in this case costs should be ordered in favour of the applicant and, in default of agreement, such costs should be taxed on County Court Scale "D". Mr Mighell asks that Mr Gorton's fee should be fixed above scale at $1,650 on brief, doubtless with refreshers and hours of conference on the appropriate percentage of that amount. I am against him in that regard. Whilst there may be occasions when it is appropriate to fix counsel's fees above scale, in my opinion the fixing of such fees on Scale "D" is appropriate in the present case. Mr Mighell also sought a certificate for four refreshers, one of these being attributed to the time consumed in the preparation of written submissions. I am also against him in this regard. Three refreshers on Scale "D" seems to me to be the appropriate award. I will certainly certify for two hours of conferencing, an estimate which was not seriously challenged, and which seems to me to be very fair.

Both counsel submitted very detailed and very helpful written submissions and calculations. As I pointed out during the costs argument, I did not request written submissions. However, upon reflection, I must say that written submissions from both counsel were particularly useful and almost certainly productive of a saving of time. In the exercise of my discretion, I am of the opinion that Mr Gorton should receive some recompense for the time devoted to the written submissions which were, ultimately, successful. As stated, I am of the view that the equivalent of another refresher fee is not appropriate. I consider that an appropriate fee might be that comparable to what is prescribed for an advice on evidence or opinion, and accordingly certify for that in the sum of $175.00.

Accordingly, the order for costs in this case is that the respondent pay the applicant's cost to be taxed in default of agreement on County Court Scale "D" including a certificate for two hours of conference, a certificate for three refreshers, and a certificate for the equivalent of an additional advice on evidence or opinion. Further, the respondent is ordered to pay to the applicant all costs incurred after the applicant's offer of settlement was made. In the circumstances, I interpret "all costs incurred" as being costs on a solicitor/client basis - see the cases referred to at pp. 273 and 274 of Pizer's Annotated VCAT Act - and order that they be paid on such basis from 3.10.01 and on a party/party basis prior to that date.

The remaining issue of costs relates to the argument concerning that very issue conducted before me by Mr Mighell on 17 May 2002 and any further costs that may relate to the delivery of this ruling. It may be that this issue was addressed on that date, but I can find no note of it and no transcript was provided. At the moment, I see little reason why the applicant's costs in relation to that argument should not be paid by the respondent, but this view is, of course, subject to argument. I would be hopeful that any such dispute could be resolved. If necessary, I will make a further ruling in relation to it. If this ruling is to be delivered in open court and with both parties represented, I would be happy to rule further upon it immediately.

Note: Subsequently the respondent agreed to pay the applicant's costs of the costs argument on Scale "D". The right of the parties to return and argue concerning individual items, and particularly counsel's fee, was reserved.